PRM - Earnings call 4 2023 | Perimeter Solutions, SA

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Operator

Hello, and welcome to the Perimeter Solutions Q4 and Full Year 2023 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 Seth Barker, Head of Investor Relations. Please go ahead, Seth.

Seth Barker

Thank you, operator. Good morning, everyone, and thank you for joining Perimeter Solutions' Fourth Quarter and Full Year 2023 Earnings Call.

of are Financial Chief anyone forward-looking today's of Officer. We listening be a to call Kyle Officer; who subsequent today, today's all updated been to Chief that may nor and call statements. Sable, want replay have February on XX, Haitham are call. Also, these Executive Khouri, contain and maybe statements XXXX, Speaking made call statements as not this today's to they remind will based are about or today materially made management's the current in beliefs statements The those operate, implied may and assumptions on call. actual our environment expressed expectations, today's differ from results and business on and which we our our that our to for Please SEC results. The measures, the discussion during a would filings of EBITDA. also financial we to advise non-GAAP complete referring like will could including be you review more company call, impact factors that these earnings the of Officer. be be the and to reconciliation can website and turn that, found information SEC's both Chief Khouri, Haitham presentation, over items and on website. With our regarding I in which on release our will The other call available of Executive will press

Haitham Khouri

Seth. you Thank Thank morning, for us. joining Good you, everyone.

on I'll Slide with always, our X As strategy. summary on comments start

economic number tangible cash generation are and small number these present operating tailwinds; our opportunistic and the is businesses Number criteria: predictable businesses, growing we number As the capital; public critical acquisitions. potential We use these with high-quality the long-term portions owning, higher at three, very four, liquidity equity products potential value uniquely this recurring but for market. new attain X uniquely on to we that of streams; X number flow high-quality define believe account to and consolidation. through for criteria We criteria our and revenue secular stated like two, specific repeatedly, goal five, current one, growth by goal a returns evaluate of private businesses. We free deliver significant returns with following plan streams; economic that larger to

Slide As and our equity X, operational improvements; are: by products and one, continual two, reflect long-term the productivity three, described seek to in number which value pricing improvement number a provide. business; drivers, number we profitable drive X services to new value creation on our value consistent

In drivers, seek clear addition maximize a allocation value through focus our of structure. our to our on of X the operational well as we value to capital the creation management capital as equity

continue including was U.S. activity our that United rainfall XX-year Slide XXXX, Fire Hilary pack almost XXXX a aggregate with below challenging was XXXX storm the our unique of flat Starting mild U.S. of retardant financial financial Slide season of XX% outperformed adjusted was the which EBITDA now and both X, with businesses. Turning in operating the ex ex Alaska. XX% almost decline these second, going decline X Fire XXXX season on in half XXXX were corners result economics the our Fire Safety's XXXX. Products throughout of decrease our Safety summarized and year-over-year versus in performance and X. strong will business. rigorous particularly I suppressants an forward storm Safety season, margin XXXX driven market XP's principally Safety. burned, irrespective Specialty average. We to business, end to: positive and This burned snow drivers retardant excellent XX% strategy, by and conditions. mild million direct results of year result which the continued third, we tropical first, almost events, of acres primarily We of in versus the very markets; idiosyncratic drive revenue, EBITDA improved performance in weather from fire-prone presented the on that to the are believe was environments during our business; the continued acres roughly first application and from regions adjusted August. Despite record our fire The most acres and X.X represented burned our unit Fire mild, due in the all itself States Alaska, which in some international a all demand season fire believe including

was inventory adjusted business chemical supply a activity prior year. also with financial EBITDA weak full in Products revenue XX% experienced down destocking the reflected We This principally Specialty in environment this our chain. weak down Products by XXXX. demand in Specialty environment 'XX Our results, year versus is believe specialty and driven demand XX% the

real-time or commentary though that We recover. market will will confidence reiterate predictions our from products to for I around recovery, should demand the timing refrain continue our

couple results, a Before moving scenario. weak a benefits experienced also The of on in strong of driver 'XX businesses in end our end EBITDA both value our on while from both performance market note a reap the our financial base I'll soft years strategy. resulting XP's establishes 'XX that execution 'XX, credible of markets

cash fourth average quarter million We an in at XXXX repurchased to price shares of and capital at in XX.X the average shares price Turning We allocation. an repurchased X.X million approximately of approximately $X.XX. $X.XX.

replaces million our new Directors has repurchase $XXX authorization. authorization, approved prior of Board which Our share a

this in allocation X is evidenced is capital the operating by confidence in ex evidenced financial each its criteria defined years. The flat was between that economic Let performance Safety approximately in businesses XP's on evidenced margins the U.S. based the business that delivered XXXX versus the the improvement in improvement XXXX fact decline X in of over underlying and year-over-year adjusted We're performance, Fire create and period. is suppressants almost our approximately we've will doubled business by businesses our the This now to dollars activity. prior when despite adjusted well X. retardants more spend The The retardants, XXXX. in strategy a over suppressants our improvement business Products aforementioned our best on is Products have past EBITDA Specialty more XX% Specialty confident improvement as on Slide by acres XXXX the Alaska strong to XXXX target EBITDA by and burned applied destock moment significant right generally. me our value doubled is than

are we value about as the are share enthusiastic creation, repurchases. we actionable As and M&A-driven between acquisitions constantly trade-off evaluating IRR

best count As evidenced latter be our deemed over shrinking of actions, particular, to date. we've prevailing use to our the by of valuations our to in the part capital XXXX, share

to continue EBITDA highest growth cash as we and well dividends. IRR special of flow will M&A, evaluate through towards alternatives excess and to share free of capital the generate allocation combination our organic constantly the to as leverage capacity We expect all our deploy expect repurchases incremental

dedication the the and done we people, spirit competition. We clear standard that competitive calls, in business. services the competitive I've safety paranoid of no the I'll and matter Between integrity take will only We believe comment team. environment as now earnings by potential risk potential passion, superiority believe of remote is into we guidance, go-forward the a and ignoring, the we from our and As environment. I'll not and on our both quality providing minimizing how seriously. that noting our of survive, competitive and our ever our a Perimeter fall will or as the our efficacy gold retardant will products, service Despite that incumbent of last of couple thrive trap our of policy. far the every as our annual degree dismissing and high of in mindset, business, confidence vigilant we we in XXXX for that believe refrain any products, close standard future

XXXX results results that, our the in good solid as prospects to hopefully a well demand As our relative turn market expect our to and conditions we feel normalized from financial is commentary as Kyle. around clear over the from to report call environment. With I'll end businesses, about

Kyle Sable

business $XX.X sales and prior Thanks, Safety XXXX, our $XXX.X the Haitham. for approximately X% of XXXX. year the EBITDA million XXXX, versus up quarter versus loss were $X.X Fourth million, full $XX.X up Fourth a versus year down million, was Fire quarter from adjusted Safety Fire our the XXXX. year in the million year million full $X XX% for flat prior and in business

our are Fire our in less by that our recent quarter, financial generates was QX quarter profitability. Approximately EBITDA, XX% our year-over-year for and due are half performance small changes fourth fluorine-free the aided was the annual Safety The and pleased typically in fact but than the business improvement largely of foams, to of seasonality due improvement with our in business' exaggerates qualification. half We retardants. by results strength in in revenue mil-spec suppressants to of mindful was suppressants fire driven fourth the both

our EBITDA Specialty compounded by full XXXX by below were Fourth was growth successful economics application economics down the XXXX, the Fire XXXX. margins XP's destock business of our and services for in due and in volumes direct of markets full $XX.X across up and QX in XXXX. XXXX of certain due in primarily Products activity the Safety $X.X year impacted lower due Products to strong these suppressants for rigorous revenue improvement XXXX XX% the and million, be XX% quarter volumes in successful year it components by improved fixed million our to were million, various versus Specialty was international impacted down XXXX, in operating year quarter sales to across improved products timing expenses. QX high and $XX.X unit prior versus the was versus inventory million XX% business product year charges the and new EBITDA our and strategy. Fourth $XX.X versus each is of adjusted costs. the was or geographies, result unit introductions the While retardants prior retardants, EBITDA down XXXX international performance our lower XX%

EBITDA versus consolidated believe the volumes quarter year to and be million, $XX.X the $X.X what prior versus consolidated adjusted consolidated our prior Specialty XX% was Full adjusted EBITDA Moving Substantially Full margin were destock-related million, XXXX all $XX.X adjusted consolidated XXXX Fourth up $XXX.X business. million, versus Fourth consolidated revenue, we due down were million in XXXX. up year. EBITDA decline XX% EBITDA from quarter business. adjusted year. the year-over-year XXXX. consolidated in $XX.X sales to Products the million, down was of is year to XX% sales

in year EBITDA. million, our was with $XX.X expense $XX.X expectations. million, adjusted line fourth paid the the million quarterly Cash was $X.X Depreciation for million approximately the full in QX year, expense and for QX and amortization was expense was also quarter $XX.X in million the was QX, in year. full million $X.X Interest while below line was long-term amortization Full $XX.X year. full expense was in Moving while CapEx run approximately million. for million $X.X income $X.X our rate. interest in million. for $XX tax Depreciation million $X.X with

are CapEx and long-term expense, for rate Our and Slide expectations interest summarized on unchanged tax depreciation, X.

Our million ended inventory well, the operator long-term with I'll to capital approximately although working we million our from a outstanding. With and Q&A. as position. unchanged net working expect back of XXXX hand shares receive million approximately XXXX, We $XXX capital expectations in ordinary XXX.X are robust to for notes, $XX.X that, for approximately call senior cash of benefit the given

Operator

Our today [Operator question from Instructions] first Morgan from Stanley. coming Dan Kutz is

Daniel Kutz

cost power about just the kind lot allocation to prevailing the or in a question what would or look capital guess, I in of severity to maybe us it more to bolt-on allocation that. against the reflecting of what of reflecting my would milestones on of how stack? wanted then, could is, of opportunities more So capital a kind you the importantly, and kick would some stock menu? And Perimeter, equity priorities I of see off, earnings potentially the make factor you M&A is fire markets smaller a talked better you more the for more bigger that fits just -- I maybe into kind attractive? guess Haitham, of the M&A normal of terms need and still debt and M&A capital bigger backdrop help anything capital M&A and for business with attractive it Is season what

Haitham Khouri

Yes. for the Dan, thanks question.

that, anything first them. Larger of of that If or higher cash is cash today table strictly share a we free uses one expected is large expected to it, one, from which your and cash always very tend we we do. business or tuck-in deals, hit for small function yes, finance on So balance expected had we sheet looking IRR. then you we're small be find to can the we on good believe quickly can like M&A, the was could do IRR repurchases transactions. deals when table absolutely a it generation We're for open and alternative for really

then that a to finance a acquisition of in lead need and to to do and a any share will adverse securities said, are the higher debt inputs those we Now larger equity IRR. lower cost debt, price issue model extent lower to or a

stock So debt magic there's is it. but clear And debt or there's IRR our we'll that is swing cost -- there is deal a likely bat. hurdle, some circularity IRR of no stock, pro where a deal our our mathematically hurdle, the assumptions magic is there stock the cost price a is is more large forma for and the the own financing or a of if back it superior does and clears hurdle, certainly to from buying that to better will lower just

Daniel Kutz

year maybe just and there's relative terms but season years the and the from pack far is of normal I great. you thus this anything the all That's maybe share potential indicators? this snow and there of of what thus wondering some if indicators in to it's trends, super terms the kind in those severity appreciate could garner or of like I -- then might signal helpful, And historical precipitation far anything in fire just early quickly, appreciate color. year That's to prior that

Haitham Khouri

Predicting fool, the like but I fool fire of is a -- risk but standing February therein, seasons will. in I'm a

very Our particularly this normal, a product there flashing comment looks -- indicators I at or no would are particularly say severe. but mild pretty high-level --

year it's because unusual particularly make far generally it's as we going in this nothing even and a So harder to as hard is can tell. on prediction February very

Operator

is question Josh coming next from from Your Spector UBS.

Joshua Spector

ask first So a just to want I clarification.

Just referring mix business quarter. year-on-year it the talked or retardants. the you Fire in the I the was half said suppressants was when to wasn't that about you Safety fourth and quarter, sure roughly I think in growth if

that, clarify please? you can So

Kyle Sable

Josh. Thanks,

the the talking Now when and business are of about of we're performance quarter. speaking mix the the improvement about not in overall that, business, we the the

Joshua Spector

would you Okay. related That's this about just how year further look the in when that spec suppressants, mil say versus half is guess now numbers, opportunity you guess, you least win, year? at talk helpful. on And I as second the I of the in at of much next

Haitham Khouri

hard very be because the quantify mil a market and product it's tends to of razor, So nature suppressants razor large precisely spec our very blade. to in

for the up then long-term penetrate you sales. upfront stream if with of installs, nice captive even So you're foam yourself market fairly setting a very

us to hard a question. it's at of we year, spec did answer And weeks in it only approval the So XXXX. level, high therefore, the XXXX. while no few But late really got help for a pretty late in nicely it was

well. effort tremendous, couple say accomplishment approval. other a mil the very it's So all the late this mil of the and of not over the be of of is a was we're quite difficult And in by last And R&D market there we approval the pretty spec mil team pretty on also first meaningful, forward. But by the first we and yet. here. mil great. an -- going tremendous nobody advantage years market being as hell first first-mover about got thing of single potential 'XX, mil I'll way, is a doing to feel has spec But Josh, to the well, odds chemistry our good and specs We excited approvals, our get to which spec spec, first couple about a suppressants, to of which were specific is past

it. have the but execute, Now got team to we'll for we R&D see, we've certainly

Joshua Spector

XXXX just then guess, I a over. the I'll first, and on for ask to appreciate season. contracts I wanted that. ask the I it more turn couple

flagged out. competitor in that your going some I'm share really repricing. think and there means for that not you was guys what on is delays what sure view I your

curious just there. So on any color

Haitham Khouri

by customer mean doesn't the -- doing to anything customer a I we Josh. commenting company It and really last want by think is contract We us, be for as contract. thing

So my it. you the to comments business. From going perspective, no, it we do share on we're today, in to That do heard comments those said, have not remarks. impact competitive listen, a prepared never no and really going our

On I'll in really that the the in feel I'll the about confident in our people lots business. really, against with our put I'll with put anybody spending time of assessment. against world. really, we anybody world, one customers anybody up up put they our the world. good up our agree hand, product against and very I'm service in that our

that our only paranoid or if super, otherwise, seriously. we super take it anywhere say really survive. risk we're And Second believe do there's is competitive super, in glimmer going thing any business, the of to I'll

we're So but we also 'XX, feel good ever vigilant. about

Operator

Instructions] from Brian DiRubbio coming is Our question next from [Operator Baird.

Brian DiRubbio

A me. questions of for couple

mentioned first Safety any sense will of Kyle, off, is Just Products? that that benefit. give see versus XXXX, I how you a think much working of you Can us you inventory Fire capital Specialty in

Kyle Sable

Brian. Sure,

size the here of right our relative be in given now, the see Fire is at to we and bulk Safety the going that we're of inventory Just businesses the where business.

it it's impact wouldn't hard meaningful. as flow, season, year far it's depends because it As the that we the have did but to fire cash to be timing severity to the of free if and called our potential have out on it have really both going this the

Brian DiRubbio

going get that manage year? are aggressively sure you Or put way, operating that make And going to rates to benefit? to you're Okay. this reduce another you

Kyle Sable

the about to Josh, first need available Yes, is our business, we of focus retardant you for have time, us think the when deliver. XXX% to always

for focus priority. is would to endanger we've this more scenario This want we this the company season than we several expect we about talked inventory. that times said, saw listen, I that benefit no So start ever yes, a just going there's and now. really work a where by from for If last That we'll that to through of us year, fire see year. materializes need We're a saying inventory. to

Brian DiRubbio

month, Understood. final question Earlier the this And then U.S. for me.

a record sorry, Service -- less wildfires lands suppressants basically they calling decision for toxic more using attack retardants. want how about to and Forest released water forest national on

thoughts any of impact system. your the that sort the was overall? I Just land-based the in ROD business XX% affect of about one made how can it that on think they of comments

Haitham Khouri

the to. And conference none the sitting and you're report swath know big report I'm you're of team Brian, us don't referring in a I management and our referring room with know here to just of

Our product its many customers, our have over ], our [ are in and retardant been with has true large developed been consultatively environmental products -- partnerships just first our conservation for very undergo work, customers and years many, where foremost.

Our products consistency collaterally we have of but through there. follow them, got premise and therefore, the blessing by up in to and something anything testing offline, read sort rigorous there's question, your out of and let's glad

Brian DiRubbio

send the report. a of posted on the was I'll website, U.S. you Yes. It copy their

sort Forest to detailing I of offline. it Service February, change website can was they early in I'll their X, pass along so how February approach. think we up want follow

Haitham Khouri

Okay.

Operator

Next follow-up question UBS. is from from Spector a Josh

Joshua Spector

wanted in those the fire flow-through et in that's growth any year? call or quarter? in about out the helped wondering cetera, just if read just this of next of Are for quarter? you ask specific wins, for that to retardants. fourth international something season countries there I Or markets this you'd products within any I'm So And just

Haitham Khouri

that is pretty particularly say be answer really just sales further 'XX and QX or not QX, I'll the no don't in first, retardant second might about QX QX the of from like. to into look led good that going is part were say mild read-through much Yes. to to what QX events idiosyncratic -- were which there's severe,

strong in Australia markets in was that America. couple us a market unusual, for were particularly for markets South for solid as it QX, As not us a of good far us, as were but was

Joshua Spector

the where get capital guess, were those I follow-up sales XX%. a just working down capital I do guess, of you maybe just getting very as that? your about if And rough if looks working level capital working percentage sales, right working you you points? to or And part a it. should XX% that at it's think grow ended, into the Historically, if I I that capital benefit it's to grow flat, are guess math, closer Okay. framework? about Just about we of actually you on to on sales. look like curious historical X

Kyle Sable

right grow Josh. Thanks, that the take to working invest normally, Yes, in If frame any I'll capital and first, we'd we to it way like business. have point generally second you've that. sales, the to got

those We us initial inventory hold that. To position the hope on do used of flat, amount release if that allows that fire have we we to purchases. just, haven't the into that your depends on inventory. timing build an be sales of inventory question allows some we question to be the would to slow It already we of really some it inventory. able season. The would The and release severity us

Joshua Spector

Fair And on a Specialty. couple just Okay. enough.

So sales I the were but wasn't. up, guess EBITDA the

curious I'm share you could there's anything if the case? So about was that why

Kyle Sable

end. Yes, little perspective, Josh, what quarter see at the When right charge bit right? of don't an the the meaningful down from or deleveraging anything look we changed other either and to of it year-over-year that's out business, economics around of a we would came timing, the we there's quarter-over-quarter than think operating underlying was in quarter really

Joshua Spector

versus what I know I can Can a way you in don't you the since disclose think today there's said or normal. can like? are least, that volumes, so mean, recovery volumes understand that we price roughly a 'XX I segment if might don't And frame you was look you Okay. where at -- frame

Haitham Khouri

try Josh. to I'll take that,

was we're comment on year. to I'll again, that I'm and not -- quantify not severe. last last to going down So it, we're the Last comment -- was year destock but year on not going volumes today, but

throughout were versus 'XX. down volumes Our 'XX significantly

said from we again, perspective, value say I'll did a have and driver XP's before We well.

et 'XX large positive 'XX, cetera, if are Our some decline and better, element is the which unit revenue suggest of therefore, a in does not versus similar, all -- than of, volume. pricing, portion economics more

Joshua Spector

picky one here. of to one last the And enough. me, a just Fair kind Okay.

in current that count share slides, On buyback. the I presented your share full with you the reflects the assume count,

the roughly with of will structure? December that average January as So share couple versus quarter of shares and does that include founder a million the of the be added

Haitham Khouri

To keep end just so shares basic outstanding. Kyle, it simple, 'XX we of give

Kyle Sable

Yes, had I outstanding everything. 'XX we end outstanding, 'XX, at believe, end basic XXX.X for of at of shares shares million, the the net

Joshua Spector

founder added doesn't or will that is this be the if year that But in... -- shares already Okay.

Haitham Khouri

It potential does issuance founder 'XX not activity the include issuance share first of any and of in buyback or other QX quarter in 'XX.

Operator

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

Haitham Khouri

No, for just support, thanks again back for be the time, soon. we'll the and everybody. Thanks here

Operator

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

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

Perimeter Solutions (PRM) 22 Feb 242023 Q4 Earnings call transcript