The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Christopher Perrella - UBS Securities LLC - Analyst
: It's Chris Perrella on for Josh. Could you dig in a little bit more about the PCB market and how it fits into Perimeter's strategy?
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FEBRUARY 20, 2025 / 1:30PM, PRM.N - Q4 2024 Perimeter Solutions Inc Earnings Call
Question: Christopher Perrella - UBS Securities LLC - Analyst
: I appreciate that, Haitham. And then I guess as a follow-up, the higher CapEx spending, is that a function of investments in Fire Safety? Or is that
your expected step-up to grow the potential PCB business organically, realizing I know that you're going to do some bolt-ons and you're going to
use it as an M&A platform. Just I guess, what's driving the uptick in CapEx?
Question: Daniel Kutz - Morgan Stanley & Co. LLC. - Analyst
: So I feel like you guys have already addressed this question, but I think it's on a lot of folks' mind. So I figured it's still worth asking. And firstly,
thoughts and prayers go out to the families impacted by the Southern California wildfires. But basically, the question is, it seems like undoubtedly,
the California catastrophe will catalyze an increased focus on resilience and preparedness.
And basically, what I'm trying to ask is, are there any implications for Perimeter's business as there's heightened efforts around fire suppression,
fire prevention? Or is it -- as you've consistently reiterated that you are committed to and have executed on loading 100% of their tankers, 100%
of the time, basically 100% preparedness.
Just wondering if there's any implications for perimeter specifically as the country bolsters its wildfire fighting efforts. Thanks.
Question: Daniel Kutz - Morgan Stanley & Co. LLC. - Analyst
: Awesome. That's all super helpful color. And then for the next question, two parts, but both related to the new administration in the US. I guess,
firstly, any implications for the PRM manufacturing, supply chain input costs from tariffs and trade wars?
And I guess, more broadly, are there any implications from proposed or implemented policies from the new administration that could impact PRM's
businesses one way or another? I guess the one that comes to mind is that the less supportive electric vehicle legislation seems like a tailwind for
ICE miles driven and specialty products demand. But yeah, basically, just thoughts on tariffs and trade wars and more broadly, policies from the
new administration in terms of the implications for PRM's business lines. Thanks.
Question: Chris Fidyk - Pacific Asset Management - Analyst
: Just a couple of housekeeping ones, probably for Kyle on the financials. The first one is just -- there's a bit of -- it looks like noise with taxes in the
cash flow statement this year. Cash taxes look like they've gone up. There's a big drawdown on deferred income taxes. Is that related to the
redomicile, or is there something different?
Question: Chris Fidyk - Pacific Asset Management - Analyst
: Okay. Super. And the other one, thanks for the disclosure about adjusted net income. Would you be willing to offer any guidance on a long-term
basis about the relationship between free cash flow and adjusted income? Would it be 90%, 100%, 80%?
Is there any range we should be thinking about in terms of cash per dollar of adjusted net income, please?
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FEBRUARY 20, 2025 / 1:30PM, PRM.N - Q4 2024 Perimeter Solutions Inc Earnings Call
Question: Christopher Perrella - UBS Securities LLC - Analyst
: It's Chris again. Just a follow-up on the leverage ratio. It's lower historically. You've grown in the leverage. I think do you have a target there? Do
you want to get back to about 3.5 or over 3.5 times levered? And how quickly now that you have the PCB base acquisition in, do you think M&A
will progress as part of the strategy?
Question: Christopher Perrella - UBS Securities LLC - Analyst
: Fair enough. So it's not just focused on PCB at this point. You're still scouring for other businesses that fit the strategy.
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