Perimeter Solutions SA Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Daniel Kutz - Morgan Stanley - Analyst : So I just wanted to kick it off with a high-level question about the relative intensity of suppression spending in the lower 48 given that in the first month of the third quarter, we've seen pretty significant acres burned in California and then also in the broader US lower 48. We can -- based on disclosure from you guys and from (inaudible) and Cal Fire, we can triangulate to what seems to indicate that California is significantly more suppression spend intensive per fire or per acre burned versus the rest of the lower 48. And -- but there's a lot of guesswork involved in that. So I just wanted to ask the question. Could you talk us through just the relative spending per acre burn across the different regions in the US or at least maybe California and the rest of the US as we're trying to convert these acres burn numbers to financial estimates for the quarter? Thank you.

Question: Daniel Kutz - Morgan Stanley - Analyst : Great. Understood. That's super helpful. And then Haitham, I know you've addressed this in the past on earnings calls. And I feel like it does come across clear to some folks, but maybe not to others. And as we have more investors getting interested in the story, I just wanted to ask the question which I think I've asked in the past and just give you a chance to remind everyone. So when you're thinking about M&A and you clearly highlight the five targeted economic criteria. But then outside of that, the question comes up, are you looking for synergy for vertical integration for companies in similar industries to your existing businesses. And I was just wondering if you REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2024 / 12:30PM, PRM.N - Q2 2024 Perimeter Solutions SA Earnings Call could refresh everyone on what the answer to is -- what the answer to that is. And then if you could maybe parse it out for like a major transaction versus a smaller like bolt-on acquisition because I think maybe the answer might be a little bit different between those two types of deals.

Question: Daniel Kutz - Morgan Stanley - Analyst : Awesome. Helpful. And if I could sneak one quick one in, maybe for Kyle. So you endorsed the long-term $10 million to $15 million CapEx number for this year, but also flags what I would assume would be some capitalized investments in air bases that you already completed at the Albuquerque based for 2024, and you said there's probably going to be a few more going into the 2025 season. I thought that you said that, that $10 million to $15 million, I thought of that as the underlying maintenance number. But I wanted to confirm that because it does seem like you -- like there was some capital investments that could maybe push that number higher. And I just wanted to square that with the comment that you were still endorsing the $10 million to $15 million CapEx number for this year. Thank you.

Question: Lucas Beaumont - UBS - Analyst : This is Lucas Beaumont on for Josh. So I just wanted to go back to the performance of fire safety in the quarter. So I mean the acres burned data was down 45% versus the 10-year average and down to the high single-digit percentage year on year. But I mean you guys did really well on the sales side. So you mentioned potentially some of the drivers there. I was just wondering if you could pass this out a bit more. So it sounded like you're alluding to maybe higher intensity of usage on the aerial side. Were there any other factors in the quarter to think about in terms of volumes not related to like the (inaudible) burn data? I mean, is there anything, for instance, that we should think about like in terms of pull forward from the main season in 3Q like stocking in advance or anything like that? That would be great. Thanks.

Question: Lucas Beaumont - UBS - Analyst : Right. I mean I guess like the obvious follow-on from that then is then just thinking about the third quarter. So I mean, July has been off to a strong sale. I mean it's 2x the 10-year average been tracking towards, I guess, 3Q '21 levels, which was an above average yield. So, I mean with the changes you've made to the business, how should we think about that pulling through to volumes with that above-average activity level?

Question: Lucas Beaumont - UBS - Analyst : Right. And so then just also going back to the second quarter. So I mean the EBITDA was really strong in South Fork as well. You had basically 85% incremental margins during the quarter, which is very high. So I was just wondering if you can talk to, I guess, what was the driver of that portion of it being so high on the drop-through there. And how should we think about the sustainability of that going forward as we get volumes as well?

Question: Lucas Beaumont - UBS - Analyst : Right. And I guess just lastly, I mean I just wanted to give you an opportunity to help us maybe frame the third quarter a bit, if you can. So obviously it's off to a strong start. You've had those underlying improvements. It looks like it's set up to be similar to probably the third quarter of '21 the way things are tracking. Back then, you did $98 million in EBITDA. But obviously the underlying operating leverage has changed. So I guess how should we think about how much better that would be in a similar volume environment this year? Any thoughts on (inaudible)? Thanks.

Question: Lucas Beaumont - UBS - Analyst : Right. Maybe if I could just ask one more follow-up. Just you mentioned earlier that there's some seasons when the data is strong, but basically they run out of the aerial capacity. Is there any of those that you point to historically when that happened? And just any thoughts on how the aero capacity is evolved since then overall?

Question: Lucas Beaumont - UBS - Analyst : All right. Thanks very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2024 / 12:30PM, PRM.N - Q2 2024 Perimeter Solutions SA Earnings Call