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4Q24 Update.
PRM reported 4Q24 and the stock dropped 15% over the next couple days. While it is always hard to understand what the market is pricing in, there is little in their results that would suggest such a move was warranted.
4Q revenue increased +45% y/y and their Fire Safety segment grew +72% y/y. This drove a +193% y/y jump in Adj. EBITDA.
For the full year, Perimeter Solutions generated $561mn in revenue and $280mn in Adj. EBITDA. These figures represent +74% y/y and +190% y/y growth, respectively.
We see below that Fire Safety is now 78% of their total revenues, up about 800bps y/y. This is generally a positive as the Fire Safety segment (specially the fire retardant business) is a higher quality business than their oil additives business that is the crux of the Specialty Product Segment.
While many things broke during Los Angeles wildfires, Perimeter’s operations didn’t. They deployed 3 mobile retardant bases and had 6 other tanker bases that remained fully inventoried and active during the entire firefighting period. This helps exemplify the importance of a geographically dispersed manufacturing base, the closest of which was just East of Los Angeles and helped ensure the critical fire retardant solution was fully stocked for firefighting operations. Perimeter currently has 5 retardant manufacturing facilities with 1 more currently under construction (to be completed by the end of 2025). They also have two more plants in Canada.
They did note that relative to the total acreage burned in a year, the Los Angeles fire’s financial impact to them was relatively modest. However, they note that virtually every firefighting season the nation runs out of aerial capacity. Given the visibility and damage the Los Angeles fire caused, it is likely that more will be invested in aerial assets, which could help perimeter (and firefighting efforts) longer term.
Perhaps even more important than their strong financial results was the announcement of their first acquisition since going public, which gives them a foothold into a new industry and extends their capital allocation opportunities. This puts them one step closer to following the Transdigm model.
The rest of the valuation is paywalled.
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For further reading, check out our Perimeter Exploratory Research Report here.
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*At the time of this writing, one or more contributors to this report has a position in PRM. Furthermore, accounts one or more contributors advise on may also have a position in PRM. This may change without notice.
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