PRM - Earnings call 4 2021 | Perimeter Solutions, SA

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Operator

Hello, and welcome to the Perimeter Solutions Fourth Quarter 2021 Earnings Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Nori Yokozuka, General Counsel. Please go ahead, Nori.

Noriko Yokozuka

Thank you, operator. thank call. joining And Quarter Solutions' everyone, earnings XXXX morning, you Perimeter for Fourth Good

today's are Chief on Executive Speaking call Officer; Goldberg, Chairman; and Chief Edward Barry Lederman, Financial Haitham Officer. Khouri, Vice

SEC of contain business March assumptions materially subsequent remind nor anyone are discussion may will complete operate, not today's statements. made be in the management's a Please expressed and that filings current all We want factors to And based on statements of our we Also, from made this of these differ call on and who that today, to impact for call expectations, as been beliefs updated today's which a XXXX. implied These our may listening about results. our call. call. or and more they may forward-looking our could those to results be replay XX, actual are have statements statements today's environment review today

The on be referring on to company as both will will Please financial as including measures, press and call, non-GAAP SEC's refer available and presentation of advise during EBITDA. the X-K, release would be well you our to our we earnings that website the also to the which like website.

will to With Haitham Khouri, turn over I the call that, Vice Chairman.

Haitham Khouri

and briefly Thanks, Nori. Eddie Good topics, X cover I'll turning calling and before call thanks today. morning, to Barry. everybody, in the over for

some make summary our I'll First, on strategy. comments

I'll performance Fire Next, in Safety. our on briefly comment quarter fourth

few XXXX. thoughts on I'll Finally, by sharing a close

our strategy with Slide X. Starting on

with criteria: We We high-quality growing recurring long-term liquidity owning, private and tailwinds; revenue our flow significant as high of secular two, capital; and streams; to uniquely criteria these criteria but opportunistic at this that goal five, also portions and growth future economic products economic the by returns value for use any equity-like predictable cash one, that the businesses very described with X, account of from high-quality plan tangible small free acquisitions. present heard believe before, evaluate attain three, and us deliver larger potential to you've generation is specific X are uniquely businesses. fourth, for to As critical Slide a we'll We streams; through define public these market. on operating returns on consolidation. goal Perimeter

as described intent equity value via the consistent on and to reflect our operational focus long-term capital in an business, drivers, improvement, provide, the to cost As improvement the new our of X, as we Slide allocation and on are structure. which pricing drive well seek value profitable of our X continual we value creation management capital

QX Now Fire performance Safety. to in address our

As annual prior contribute call, we typically EBITDA. our stated very Fire our of adjusted quarters first portion and modest Safety a the segment's on fourth

events XXXX quarter a QX these a fire active fourth season, the if have in an burned tends don't QX. in events Regarding season Australia. America, fire If season few acres Australia fire North slow has XX% fire late-season Fire QX. in specifically, late fire early North if occur to America and/or if a strong American has have North potential Safety with tends December, over Safety a extremely and witnessed occur, to however, Fire slow December no year-over-year low almost and/or activity down Australia

appear against Safety investors and and the variations very results. are can numbers large. such, Because caution We reading QX, As too into much Fire variations in quarter us. year-to-year was small QX QX a the XXXX for our QX relatively annual slow QX in

on a with close I'll few XXXX. Finally, comments

of We single year-to-year on remind the As that mid- within last secular we long-term long our variability that volume North expect call, to the an however, fire high of over there digits American Safety, term. we predict. Fire investors, mentioned we the our segment the element grow in Safety annually intensity to can't Fire growth exists which season, to expect we predictable tied highly primarily

don't quarterly basis. a provide As such, guidance or we on annual

Now around with that thinking said, I'll share with of our investors some XXXX. current

XXXX Fire our Safety. markets fairly Safety, trend First, normalized be We burned to the in across in line. acreage year consider with a very with line on Fire long-term roughly

As we such, growth trend around for line not high an assuming unreasonable single-digit segment. is roughly that year another to expectation mid- XXXX, in believe volume this

encouraged XXXX believe Next, segment to that We're findings on Additives. our this in our and see of adjusted some EBITDA. flat expectation we're revenue relative initial Oil likely in to by and upside

that dollar through. the pass can cost pass-throughs, P&L performance X and should adjusted by consolidated XXXX, we The unimpacted however, revenue be which by Conversely, meaningful be on we margin of adjusted reported percent will our can to terms we believe best The underlying to inflation growth, while less pass-throughs. expand believe pass adjusted more generally Moving margin segments our hits inflation cost this EBITDA XXXX we measure a performance. can We in terms is the EBITDA. either margins lower may Adjusted margin judge performance. a however, reported distort expect and metric adjusted margins. growth EBITDA which the because or in EBITDA expect as adjusted will, our through, year, compress our inflation be that to experience EBITDA we XXXX experience to therefore, margins informative This of artificially these appear. EBITDA inflation significant both our in portion

assumptions expect financial and company assuming long-term framework growth roughly above, and consistent our and costs on the with, XXXX incremental of consolidated other assumptions, season excluding line EBITDA, of EBITDA mid-teens growth. performance, impact performance, perhaps a of pass-throughs, adjusted margin fire the best inflation closing, inflation we on-trend our pass-throughs, remaining consolidated underlying In XXXX Oil Additives public topic and making adjusted around XXXX

over I'll that, with to Eddie. And turn the call

Edward Goldberg

depend air take of most initial time, us very small, this where Thanks, customers over environment XXX% near-perfect for aerial is X, and our network on reliability no and delivers protecting of built, accomplishments load aggressive this raw notable and people's tanker-based seriously. we of Haitham. I've lives, airports supply the tankers I'll every saving mission our in critical We've In keeping operations XXXX. the X days start discussing bases, early year by attack most that chain to an fire communities was where have and years, only many inventory enough out. includes are operation. exception. for XXXX year mentioned air before, materials, a distribution, supply maybe tanker loaded, tanker production, of

to delivers nearly support network and has in been extensive and retardant robust for operations. mission years. level focus North firefighting of in many This America Our hours our service anywhere our

last the very times. have X difficult over years, to our the challenging ability even in We proven, most respond

a day get are retardant that companies else when communities to expect, firefighters deliver and do without perform the in way no labor we to products impact lead we and out, of their find the they extraordinary or And season all able successfully people's when thousands have in that is what positive ways can. materials, day is we we customers performance get trucks while many could ballooned, we make this of XXXX, disruption. to lives. and their This and fire on uniquely of Perimeter matter support see the in, during one times In fact, very people shipped recognize our truckloads not them, and the

few a are Here just examples.

Greenville, continue Fire tanker and close, Chester. nearly of base The towns, their acres a tanker could to and which bases to burned destroyed, ensure base was over and forced Chester XXX,XXX Dixie and our damaged we brought was threatened significantly to in aerial number that to base operators operators tanker The support and including back mobile X operations, X Perimeter of homes. work lost California firefighting Chester retardant those came operations.

season, mobile a and partnered Tanker In Nuevo and aerial Early populated operation delivered in over XXX,XXX Large in the set Texas Leon. we raged with support state the firefighting in X Mexico. operations of a in Very fires a of We days, DC-XX who up quickly to few gallons retardant. protect just Airtankers, highly XX village flies

innovative and completed day. in Fire on retardant of stand Southern Authority small a to program, new a with incidents, quick-reaction XX lives property. keeping and number And County California we potentially hours capable devastating saving Night an in retardant force a operations up fires of operations were new partnered Orange

people our our in examples and are good firefighters These day communities. just partnership and the with that a of few every do company

very burned, recorded year, acres U.S. consumed in secular adjusted of results of our acres and by we EBITDA, Against namely in financial adjusted Safety XXXX grew especially over X%. last acres consumed the drivers, similar XXXX contributions little a XX,XXX a more of as a from this highest fewer a our comparison, normalized challenging was wildfires our of fleet. Fire in the to attack burned significant our our And number the Safety or also ability year, growth Fire approximately light in grow burned delivered the history, X strategy acres lower wildfires EBITDA tanker was proud year-over-year. segment. where continued by XX% result continued XX% a of we U.S. million believe that I'm aerial air far XXXX million acres. XX witnessed volume aggressive customers we over

season. the strategy results our pricing aided reflect were Safety value wet our quarter therefore, essentially North also we Australia to Fire U.S. Fire Safety experienced with and, for was year-over-year. fire and acres no The fourth in XX% our Fire to challenging in burned markets limited provide extremely was America, our approximately customers. activity Our a of early our international segment. long-term down by performance had strong December

in results Although while Fire led declined materially. low-margin EBITDA the Safety nature with acres the fourth year-over-year. results significantly declined of decline again decline acres QX burned, the to outpaced significant quarter, inherently coupled QX our adjusted segment Fire Safety burned, revenue XX%,

intensity and feature season the the quarters, of evidenced this a much fire fourth and Fire first a in our is QX. Safety especially be smaller given on based business Fluctuations the as in quarter can pronounced of

quarter EBITDA the growth due and and Turning timing XX% XX% OA decline XX% of which our X% due COVID fourth the primarily The year our the from was of to was declined in year for OA-adjusted X% consolidated to XXXX customer segment, the increased the and pace for XXXX. for year revenue accounted for to the the quarter. lapping primarily The declined OA quarter. for impacts in orders. EBITDA.

As materially our costs as for higher margins by second half were we discussed transportation. raw certain segment well for as impacted call, on XXXX materials prior

and of material through these pass therefore, costs XXXX. also raw We're transportation passed as substantially to will these costs We on that we headwinds of and XXXX, we've confident in QX that be mentioned these transitory. expected all

we're in optimistic fact, In to, year's Haitham potential performance alluded around as this Additives. Oil

finally, address with disruptions to our situation chain impact the segments Both this associated directly supply disruptions experiencing raw are of in the related I'll material of the And Ukraine. situation.

on our our we multi-sourcing However, expect disruption to customers inputs, key our results. minimal given modest impact currently XXXX and our serve of very our policy to to immaterial a ability

like Financial With that, our Officer, now Lederman. call Barry Chief to over I would the to turn

Barry Lederman

Eddie. Thanks,

year. Turning year as to Slide quarter $XXX.X Fourth Fire X. Safety compared X% prior Safety the $XXX Full in in our to million segment year. XXXX in million Fire million our segment sales to our segment increased in sales growth $XX.X year decreased to XX% full was organic quarter the in as $XX.X Substantially fourth to and all revenue million periods. both the compared prior in

XXXX segment compared in Full million as to quarter decreased Safety the EBITDA in $XXX our million million as $XXX.X year. Fire prior adjusted XXXX. our $X.X adjusted Fourth in to EBITDA compared Safety to in year million Fire segment to $X.X X% XX% increased

XX% year. Oil to Fourth XXXX year XX% $XX.X Full prior decreased in million $XXX.X EBITDA compared adjusted X% in to as $XX sales the in to quarter million to to $XX.X million XXXX. to compared $X.X million million to decreased $XX.X compared switching Full Additives. the EBITDA compared increased year million prior quarter as sales $X.X Fourth as to million million the decreased year. X% to year. in XXXX as adjusted prior $XX Now

as XX% $XXX.X in fourth XXXX during $XX.X consolidated Fourth XXXX. to fourth sales the Now XXXX quarter compared to for adjusted XXXX million prior the compared increased quarter $XXX XXXX EBITDA in million year $XX.X increased decreased million Full entity. quarter. $XXX.X the to $X.X compared to decreased X% in XX% as quarter EBITDA million year prior to the $XX during year sales Fourth $XXX.X quarter million to year million million adjusted compared in Full XXXX. to in million to X% in quarter. the as as

million $XX.X deferred which is Interest expense of $XX.X approximately was noncash quarter fees. the in financing million,

expect As interest of million. on we approximately expense I year prior call, XXXX our $XX mentioned full

$XX was million Depreciation amortization in was $X QX, expense while million.

have, unable We amortization tax are to approximately XX%. purchase a from utilize expect excluding ongoing jurisdictions that million excluding as XXXX. of to we had We approximately well expected transaction-related impacts and Based on the $XX tax will tax effective deductible in lost benefit be the $X.X depreciation as information the fourth million in quarter. the costs, we million the rate, current $X benefits and accounting

quarter the approximately $X during CapEx million. was

million in We of expect XXXX. $XX CapEx approximately

timing the a $XX sales reminder, approximately should forward numbers. with ended XX% As note We working approximately will annual million We $XXX of of $X going million outstanding. XXX Please cash when to at a in change notes a and fourth we suggest sales of such investors that influence XX% in the of the model million capital. change to occur quarter these working shares $XXX change in approximately lead sales, million. million in the $X million senior approximately currently change have capital the to

to over operator for back you. Q&A. Thank the it hand I'll that, With

Operator

Spector from Instructions] today [Operator first Our Josh coming from UBS. question is

Joshua Spector

year, on product and the costs. thoughts here. give what particularly something early on ROCE Is higher drill Is new what in next drives ] some the maybe first, wondering Or than comment comment this that But there price the comments year? launch? light public you're XXXX drives just year-on-year, your guess, directional you that playing is I potentially volatility a EBITDA, trying confidence with and in the recovery? mentioned it to [ some understand of -- algorithm I long-term company some on out into the there the in potentially to comment higher

Edward Goldberg

initial expect of new air attack of very question. the business. recover in in for that for that are a fighting of very value season, all we provide continue we're at fire terms Yes. we agencies aerial to our our to Thanks cost as policy each value and in to price for year the the the grow increased aggressive fleets, reducing are the fire, as able increased confident business terms be as terms secular the using look that Yes, our drivers to with costs well. along drivers at do of we primary We hitting expect. we're of going severity driving And that hard looking tanker

course, the of So in subject, be with what is or confident perform long season, biggest those above -- at on variable will which of all to we term the the that factors, the to are the we of very fire we expect business. able severity

Joshua Spector

I then. Okay. follow-up guess maybe just a

'XX, be fire how there, thinking when season the company the quantify items year-on-year of that outside any versus item In you we be than terms higher is look of of line discrete some of the filed we well? there to intensity then what next and could may it an recovery apply in retardants year? can public should different a year? comments 'XX about it for last Additives? of impact that on logistics of Oil negative more how was And does be was that is business also positive how earlier? also raw the Or And fire as the materials, costs And

Edward Goldberg

Yes.

cost to -- XXXX. those details our structure, and costs factored we get our of in that As as our we're it for company forecast model the are but not far to going public costs, into is

In the Safety we were material last as the costs discussed recover in Fire we time, our to increased able business, XXXX. raw

do to XXXX. the expect same We in

Of course, what's inflation you in on can this going see year.

do we significant to than expect that So be recovery cost last year. this more year

and material fourth And significant we recovery. a as we in increase in did have quarter, both did in which Additives, transportation mentioned see the lag in in raw a particular, Oil previously, costs,

able year. we we the we'll all mentioned, of of forward into to are which those we that now, those doing costs costs we're As as recovering optimistic successfully go the expected we and recover in quarter 'XX, first begin to be

Joshua Spector

had if guess, I partnerships in on announcements I guess a new you of noticed FORTIFY guys of one more. PHOS-CHEK the could lot products. squeeze I I

to could past. than about you had what market what kind another if kind that? longer are curious And in sales that Just Like talk you've opens grow assuming your the I'm is different can term? which where in that of view that in now? up avenue, business of

So on could expanded of thoughts some I'm that. curious give if you kind

Edward Goldberg

is for prevention going for and of Sure. The kind business that start-up us protection last product was a big it mid forward. is FORTIFY The just a qualified for Recognize year. that Yes, thanks business us. question. initiative

say we business were of to dollars. X, XXXX growth specific So believe do over coming kind XX that to we're -- although do in significant We years. single-digit would very getting year-over-year. sales do millions modest, don't a X, want just be material of expect started. X, see you a low the I And number, I could I give believe

service focused local In service. of announcement just X partners industries protection as that that was we hazardous a communities. kind example terms as of that large company for engage is established the potentially made partnerships, partnership more That that provides to where we a that provide with we with of business well on

market. is approach a So it to multifaceted the

Operator

Our DiRubbio is Brian from next question coming from Baird.

Brian DiRubbio

for questions few myself. A

Just on raw where the that of seeing the of inflation any worst specific material inflation, right can raw you now? you're point materials to

Edward Goldberg

you closely the we market. good the continues few going seen commodities on our over months, believe has going inflation can with see inflation. we Well, significant on in got we've industry in handle the tied our businesses And Again, That to last see what's raw to materials. are on a what's commodities some industry.

We multi-sourced. are

increases the very those to using expect we increases -- we manageable course, in we So to pass And competition and of a supply feel secure able do our experience, where through. keep ability we have level. be do of whatever those to to

Brian DiRubbio

materials you're your largest? had, in more particular specific to? exposed was Think Nothing raw Okay. you that phosphate the on disclosures your

Edward Goldberg

Yes.

those on regarding is the in Safety phosphate the material something largest supply business. -- and well It's we eye Fire close the keep pricing So use is phosphate ammonium a published. that ammonium we raw data

see that of kind on market. can going what's you in So

we But we in at from pass supply, the got We've good a supply look those able of to between again, benefit we suppliers. are get that We through. those pretty costs number and market. competition of as our a different are suppliers, player a

Brian DiRubbio

Okay. That's helpful.

Just call, know back the there on us forth the fire know it especially as much But XXXX? fourth pertains a provide you many disclose. to -- detail, I much possibly events quarter last to to could And like you're I on XXXX how how of in little you're a and during know was occurred bit volume. reticent of going too versus let

Edward Goldberg

Service I me, website. the fires statistics was fires numbers them. number front burned. of data number Fire the have they acres publish number far but That acres believe not is of XX-year for to of the refer a burned off slightly U.S., on below the published I would I in those line. in U.S. average and but don't consistent of the trend about history; too the with the of

Brian DiRubbio

Okay. helpful. are environment in the right be That you then And would what seeing M&A now?

Haitham Khouri

every given see active. Brian, Haitham. on see we specifically That We We're it from when to something, the will this clearly, call. is comment very looking. us. on said, on it. focused have want We're don't what And market we're we

Brian DiRubbio

just to business for Okay. companies the be insurance know I in forward. for going great caller -- obviously be of asked the you as know, guys homeowners fires, large protection previous that going about portion, you should insurance solutions. pretreatment pulling probably a for That's fire back given And finally, some the but you've a small

So in coming quarters excited hear about years. to and that the growth

Edward Goldberg

agree. We We agree. Thanks.

Operator

turn like to for over of end back comments. closing the the I'd reached question-and-answer further session. Edward to We our floor any

Edward Goldberg

our calling call. appreciate Look again to talking earnings everybody into you. forward I Great. Thank next quarter. to Thank you you.

Operator

Thank today's and you. That does webcast. teleconference conclude

We a this your and line your today. you disconnect at day. participation may have You thank wonderful for time

Perimeter Solutions (PRM) 24 Mar 222021 Q4 Earnings call transcript