Perimeter Solutions, SA (NYSE:PRM) Q3 2022 Earnings Call Transcript

Edward Goldberg: Yeah, let me say a couple of things. So we had said previously that first quarter results were very good, because our customers were having very good results on their own, no production interruptions, etc. And the second quarter results were probably a little bit more typical of a mix of different customer behaviors. The third quarter did look a lot like the first quarter, but we still think on an ongoing basis, somewhere in the Q2 performance is probably the right way to look at this business. And we are optimistic that we’re going to continue to make progress across all of our value drivers and continue to improve this business going forward.

Lucas Beaumont: Right, thanks very much.

Operator: Thank you. Our next question comes from the line of Connor Lynagh from Morgan Stanley. Please go ahead.

Connor Lynagh: Yeah, thanks. So obviously, as you’ve highlighted, this was at least year-over-year, a very weak fire season. I’m wondering if you can help us think through, if we were to see normalized fire activity next year, how should we think through the various drivers of what you guys have done on pricing? What you guys have done on cost? Also the inflation pass-throughs that you’ve been dealing with, can you give us sort of a framework as to, should we think about EBITDA dollar growth or what’s sort of the logical way to think through what the impact on EBITDA would be for your business?

Edward Goldberg: Sure. So we believe that that what we’ve been saying all along will continue to hold true. When we return to normal fire season, we believe we’ll continue to see mid-teens EBITDA growth. Going forward, really nothing has changed there. We continue to work, again, hard across the value drivers of making sure we price to value, taking very aggressive actions to take cost out of the system, and looking for new business. We continue to be protected in our ability to pass through unusual cost increases. So we feel good about that. And I think our performance will return to what’s expected when and as we get to a more normal fire seasons.

Chuck Kropp : And Connor, I’ll just add real quick, it’s mid-teens EBITDA growth off of a normalized fire season. You just got to be careful on peak-ish or trough-ish years, which is what we know, is in the earnings call, if 2022 had been a roughly normalized fire season, we think roughly mid-teens growth off of the $141 million of adjusted EBITDA, we delivered last year would be reasonable. So that’s a pretty good, albeit rough approximation of on-trend 22 EBITDA, and then mid-teens growth off that, makes good sense as a very preliminary starting point going forward.

Connor Lynagh: And so just clarify that point. Thank you for the color — just but just to clarify that. So if I were to call, just for example 2021, call it normal year, you think you’ve done underlying improvements to the business in 2022 that would have driven mid-teens EBITDA. And then if 2023 is a normalized year, you would not only have the volume benefit, but you would also have an incremental, mid-teens EBITDA growth, or is it just the one year worth of improvements? How do I think about that?

Chuck Kropp : We think you can take 2021, which was $141 million spot for, had this year been normal or at least a normalized fire season, it will be roughly mid-teen, the EBITDA growth that’ll get you to 141.4 times 1.15, right, to be very specific. And then wherever that number is, assume mid-teens growth in ’23 over ’22 assuming ’23 is a normalized fire season.

Connor Lynagh: Got it. Thanks. And then obviously one of the big conversations on your stock is competition. So I’m wondering if you could just provide an update on what the state of competitors attempting to enter the market and qualify for use is right now?