PRM - Earnings call transcript Q1 2024 | Perimeter Solutions, SA

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Perimeter Solutions Q1 2024 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Seth Barker, Head of Investor Relations. Thank you.

begin. may You

Seth Barker

Good Perimeter operator. and you thank Thank First morning, Quarter joining Solutions' XXXX for you, everyone, Earnings Call.

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

the would during advise which and adjusted the presentation, will The information found our and be website. of also on to items website will of in non-GAAP these we on measures, SEC's can you regarding like release EBITDA. reconciliation referring that earnings our including press other company financial both be The to call, and be available

Executive Officer. With that, Chief I will over Khouri, turn the Haitham call to

Haitham Khouri

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

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

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

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

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

X XX% Turning smallest business usually quarter Slide quarter as adjusted a Fire increased an where driven of quarter much first in year the now primarily the close the on Safety in in 'XX. QX, versus our performance. adjusted year-over-year with and the typically reported continues operating results breakeven starting the adjusted to Fire on Fire and historically that revenue to loss. by of EBITDA is did drive the delivered improved financial year-over-year of year-over-year business first XP's first Fire the markedly strategy financial in business, improvement Recall quarter XXXX, The an Safety loss was revenue the which EBITDA Safety. Fire our prior has results quarter business $X.X in negative Safety quarter. to EBITDA adjusted a in our EBITDA and while million basis, was Safety's suppressants

market-leading Specifically, our product portfolio. investments new focused profitable business driving our R&D is technology into fluorine-free by

is via they higher consistent And finally, contributing eliminating profitability. provide initiatives a EBITDA our around products to our per Our unit adjusted focus costs in significant productivity excess rigor pricing growth. of revenue and as value revenue excess driving is and growth measurable on

chemicals slow Specialty Turning activity adjusted is several Products. business' attributed quarters, repeatedly results the XX% period. to specialty the throughout Specialty destock The to the first resilient margins After Products we roughly chain, prior through in point delivered business where the unit the supply which quarter. to Specialty illustrates period the around solid in line emphasized margin, EBITDA economics underlying with we Products' destock financial destock

first While the we're surprise clearly depth encouraged candid around and performance, destock. been our duration we've the at by quarter Specialty Products' of also

allow more this around projections will market As offering such, before end business. demand pass time in we to

price repurchased quarter capital cash at first $X.XX. of repurchased XX.X and to average we an an Recall shares shares average of that the year price million in $X.XX. at approximately Turning allocation. We million approximately X last

and We on authorization, we approximately the our our million ended balance remaining have million of with quarter approximately cash repurchase first sheet. on existing $XX $XX

businesses. the call, by on I As to touch our economic that criteria X. The are operating businesses did XP's allocation, I create Slide last approach confident significant to capital We're X right including covered I'll value our defined when right applied will M&A. on targeted the strategy

Our and Products confidence in over strategy suppressants. based Products the commentary, each in Specialty delivered XP's improvement operating our businesses our reported and results of and past including X is in the is in this M&A-driven Much value our on of evident years. has creation Specialty improvement retardants, suppressants

a in evident the in retardants expect more this fire XP-driven business of season. particularly improvement our to normalized balance be We

EBITDA We about through IRR between M&A-driven as and to combination deploy dividends. our trade-offs the enthusiastic of different the M&A, expected special free value well excess flow growth alternatives. cash allocation are all our creation, of we as we repurchases towards we're to capacity constantly evaluating ultimately IRR share incremental expect leverage as highest generate capital As organic the expect

people, our as ongoing over last of will that passion, calls, standard for will always dedication will and services I our we and leadership also our quality that the relentlessly of strong all This positions. several to competitive spirit earnings positions and our I service and ever-vigilant Rather, team. raise products, market as superiority is we reflected our in to Finally, push fiercely and conviction have the Between the environments. is our thrive ourselves. of we bar reassert expect as future gold on will mindset, reassert our the market Perimeter safety the in the granted. and I never take done integrity our efficacy of products, the clear far our

call And Kyle. with turn that, I will over the to

Kyle Sable

Haitham. Thanks,

First in $X.X in of $X.X sales first XX% quarter to XXXX. negative million, increased year-over-year negative the EBITDA from was first Safety quarter an million quarter our Fire adjusted improvement business while million, $XX.X

solid by our business. entire the As in strong suppressants as implementation Fire year-over-year Haitham with particularly our performance as well XP's past across several Safety noted, the consistent driven was continued year-over-year a improvement quarters, business

spread out not modest significant typical, bases is sales fires quickly QX Oklahoma concentrated February due and the retardant in in significant modest across conditions ignited when well very activity, Texas turn and primarily were As and Australia. open were fires that the amongst weather open. retardant in customers regional and our did the relatively as bases quarter the America drove to air I'll call South as fact once first

increased well actions. $XX.X primarily by year-over-year First driven business quarter economics, quarter Products adjusted to sales EBITDA productivity The was as to $XX.X while pricing our in higher demand to our due increased million. million, as year-over-year market and Specialty strong first XX% continued improvement unit XX%

consolidated First million. year-over-year year-over-year to increased quarter XX% quarter increased consolidated $XX.X adjusted while EBITDA fourfold to almost sales $XX million, first

the was million, rate. tax quarter. EBITDA. line QX, quarterly our CapEx first first adjusted Depreciation Interest million the below expense expense in in while was Moving $XX.X in paid approximately with $XXX,XXX amortization quarter. million quarter million. in is income first $XX.X in approximately $X.X Cash $X.X run the was was for

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

cash expectations working for capital significant receive expect as although inventory and in unchanged, approximately XXX benefit We the of approximately million million million senior $XX from of with long-term noted net also previously, approximately XXXX, is given outstanding. Our we some basic position. ended working capital $XXX quarter to shares I've our notes,

With the for operator back that, the I'll hand call Q&A. to

Operator

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

Christopher Perrella

for in of Chris in good rest there should quarter? growth the wanted for Josh. that about on 'XX? I first the the business strength restocking Is the up business run the we rate took to strong It's a as follow a and place in specialty. for that Perrella think on Or a

Haitham Khouri

Yes. Haitham here. Chris,

in levels of depressed So the was -- sorry, restocking X, any any the it I'm last there think We was of quarters. don't QX. think latter. the We off rebound X natural a

Christopher Perrella

in over Texas. All I switching right. you acreage No, appreciate the The on the date, And to had Fire that. season burn higher to fire then color Safety.

of the and season fire it the quarter, the how relates PRM? trends in think would to some first noise about in you the how Given

Haitham Khouri

fires [ due were the burnt extrapolate if don't from QX to into Texas and the there's Oklahoma The much, I the year. to ] numbered acres think significant. balance of anything,

And Kyle from As the may impact largely on may what year. out, of I QX disconnected balance their pointed was happen think not our or financial over the insignificant.

As may to confidence unpredictable, of far here, with days tell. we'll early it's over to and just find It's balance too what as XX, prognosticate out XXX year, very we'll the the Chris, at -- but the happen next in very, hard it's this any point.

Christopher Perrella

Where going to that And No. targeting working is the on for are that No, just 'XX? that. you one be for appreciate year? I -- capital. more the then And positive

Kyle Sable

that, Slide piece year. when a laid QX that to Yes, And compared bit big the this to a timing of of the come predominantly Chris, in will we through QX. in and our we that do expect normal it's that Kyle. we benefit that come receive guidance will going on more is and look We long-term out little X through

be robust we've of in good As that more that will we inventory the to usually the so able reduction during we have fire to that made a be will the we're extent do about a position that talked previously, season. hold, portion

So coming through in of benefit that some QX. predominantly we'll see

Operator

from Our Morgan with next is Dan question Stanley. Kutz

Daniel Kutz

first any [ of from ask the stress this requalification at the for ] U.S. and would process? revisit their -- the its just -- -- service are U.S. the process. wrap are qualification. -- guess, I all the assume timeline the I products articles that like because this secondly, in it's like revise sounds fire lot is for process. question that. revisit folks kind be to the And trying is head fire what to of wanted are are calling -- to PRM the sounds just it pretty revamp its of old UAFA's part then just potentially I QPL qualification confirm to of simply any to wanted guess no for around new I'd and process. product firstly, But on risk is a service It the of a about I

the question there's you read-throughs QPL process there's any recent if to wondering I'm maybe this if of have no, So process to answer experience or is with revision -- revisions the potential just relatively really, any today. but the and the updates to not any

Haitham Khouri

Yes.

So Thanks, X good questions. Dan.

On the on feel about changes very no first all we we and certainly one, about right, the QPL -- products it expect you're thinking there. good our feel

service, as think, happened forest et appropriately then On from guys is those -- at that air safety, the cetera. no improve UAFA, had which for, a tanker air the same push community to pretty companies the in tankers I NTSB, agencies reexamination; the the NIST, very, is absolutely are, and this more I much the would safety-focused call say, what the We're driving page the as -- air on of frankly, product. industry to avoid close trying as regulatory with association; very competing testing looking tanker as which

this a drive a think our very, a safety exists to industry It's we healthy -- So mission. is very process process.

huge, with tanker being Our back safety process with the our efficacy or and products the keep at Absolutely ultimately the mission. truly to of firefighters developments keeping -- are who in seat and to pleased planes weeks. keeping carry increased and everything be regulatory eye lives products few and distant air agencies proponents them look product a pilots, association, huge call, day the to the fighting it day approval safe an some dropped fires safety them out, with and drive to very, very safe just the risking safety around their a exists company safe. in, keeping safe wildlife to any were are of testing to And their towards over efficacy industry takes communities our from our past customers, the

Daniel Kutz

really helpful color. That's Great.

less of confirm, so just And back sorry, and a question guys the a terms contemplated quarter today look maybe I -- to there's you at working guys Or again. wanted in But tailwind a -- what this pretty this be? you've quarter a inventory confident versus think was of would little than to interpretation just I that normal to invest bit first as quarters, are we similar flat. your magnitude working the long-term batter capital that, ago in come basically and the still inventory, for Is to you runway if of that were framework? kind that the can quarter tailwind in incremental are we capital you of ago place past

Kyle Sable

Dan, I regards our place you view year. were just We're as to said well. we the think in extremely ago working quarter same the for it a capital

into is that The at important position. that then we as it this specifically you we're with the point a season. in season We going. working use from robust likely than as recognize to is of inventory assumptions relates cash working that look our difference will -- that our see a meaningful would. more to will the When inventory see and the in inventory reasonably inventory, And substantially a QX you trend capital fire inventory be QX capital, year that position entered of as muted normally we fire to -- the build QX That the in year. typically, use reduction long-term for gets

Daniel Kutz

the us you would Haitham, dividends fans Maybe in it. framework. what But I aren't might versus special or I allocation one of just you. or know what could last Got buybacks. capital huge where your just situation wondering scenario investors special dividends was and could dividends if one some rank for sometimes special talk sneak if very be the and through might helpful clear. I be in Super this highest

of kind be the what be broadly, circumstances that might would Just capital method? deployment the where preferred

Haitham Khouri

Another very good question.

walk me through by essentially the me through then we let of sort Dan, principle. you walk the process let you So a principal, express and which

earning belongs which That's right, deploy private a far is the market, The and into at cash, going rates are on our priority cash one. value return -- is talk more is to high have put to it? than better we that with shareholders. our this appropriately begs going hurdle, balance better on their sheet. first believe Perimeter. cash what And you're we to is, call stockpile capital focused on we duty know And is our cash when woefully than buybacks shareholders a cash to on And the And sheet, long-term not it interest equity-like on we how to return our to and work waterfall. an think sitting a at as above as balance more the sheet, all the going in insufficient Perimeter. about to think the share or we no IRRs. capital future the you of that of couple specific behalf I are therefore, on There's we for principle very IRR our company sheet there's we do the deploying their if a obligation on have is cash percent answer balance return than as which we company company, what on question, about describe on literally There high There's IRRs. public we where we're believe liquidity of Perimeter. no view the and And every no opening clear buybacks balance

M&A. Number X is

business, X at we believe acquired that our they confident can flows constant our X X value take cash and and we're Perimeter. playbook profitable productivity very based are increasingly products and and driving meaningfully XP's We with businesses businesses. driving margins to on pricing for We improve new at provide the our measurable

business threshold, to when and where can our season. think playbook acquisition therefore, more on and the the believe results can our applies, are the IRRs there hopefully done, normal above value. is table, we're real when And the and we and again status deal get I And X an it going opportunity on retardant that. the on are clear we a apply we do we have will we again, think be drive again

because the becomes very in return sheet to our owners, froward balance allocate ever the and answer stock then simply decide on we it or acquisitions return clear. where our it. can they it We'll not find term we're to find near, options its justify medium that [ we is actionable over threshold, we to doesn't IRR don't which are it. the cash its ] the Now believe case, our And back hit going a to return buying shareholders, our scenario owners, how

Operator

Our with next question Josh is Spector UBS. from

Christopher Perrella

again. It's Chris Perrella

comment fire for quick on pricing a the Can for Just return -- year? fire your outlook you one.

Haitham Khouri

Chris, just consistent which will about this pricing. answer, changed, What and I We unwavering, point I very no. talk I is very, you never sorry year will pricing. The our quite I very, I'm mean short think has on be will philosophy current -- responsive is what don't change. to, is never

obsessively on value perceive customer, are, take really, it really in you ] case. customer truly think are good offer customer. their it be service wins value more We and you the [ continue and it commensurate what our team, our team, be, working think improve that -- value, to that customers listening understanding whatever with price the And understanding drive and it provides the our product we our at that. service price, we and to R&D -- our do so us max product where we're Once points and to pain value obsessed we then more as behooves everybody may they with with really hard, to to focused

incremental going pricing to year, happy while our pay customer, on thrilled. shareholders. not done saw they're comment our we line you good any that our from work doing and more never for some bottom with in we've point, premium simply provided we're customers' pain biggest if and them our value, delighted to deviate also that than we're we are for your value, therefore, And and playbook. typically You We've material given jobs

I year clear. should think in, the direction crystal pricing out our the is go year that suggests playbook

Christopher Perrella

then quick I appreciate one. one just the And color that. on

For for mil-spec, does build XXXX? Or that have a impact that slow that product? an in is

Haitham Khouri

So of have second an 'XX. my balance ], from the It in had It certainly thing. separate another. half impact QX. in impact are of but should Mil prior say an would the mil-spec on both. throughout [ an chunky are year, is a this impact I the It one approvals, to important of a I which mil-spec call. one-shot not referred number had there

You to big XXXX. have aircraft market on rescue, to and salt and our coming have as with clearly plan benefit ], and hope system incremental the have sprinkler [ mil-spec so you first And approvals, chunks you so unlocking opportunity are you have of is from forth. our therefore, keep this commercial and certainly to water, the quarters over years, being in long continuing over various term these we airport,

Operator

the of I remarks. closing gentlemen, Haitham for question-and-answer to and of Khouri the time are end Ladies call. we session to would back today's for out have reached the call turn like and

Haitham Khouri

Thank much, everyone, you XX very and talk so days. in or again

Operator

concludes you. today's Thank This conference.

at You time. may your disconnect lines this

Perimeter Solutions (PRM) 9 May 242024 Q1 Earnings call transcript