*New Synopsis Company Podcast Released* Perimeter Solutions: Replicating the TransDigm Model
We just dropped our latest in-depth company podcast episode on Perimeter Solutions ($PRM)
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This is a new company episode podcast announcement.
We are announcing the release of our latest company deep dive episode on Perimeter Solutions! We now have in-depth company episodes on Constellation Software, Floor & Decor, Meta, Copart, Evolution, CoStar Group, Porsche AG, Coupang, Etsy, RH, and Dream Finders Homes! We research each company for hundreds of hours prior to recording, so we can confidently say these are the most comprehensive podcasts you will find on each of these companies! See our podcast episode directory here.
Find it on Apple, Spotify, or wherever else you listen to your podcasts.
Company Background
This ~$2bn market cap company is Co-Chaired by Billionaire Nick Howley (TransDigm Co-founder) and William Thorndike (Author of "The Outsiders"). They created a SPAC in 2019 to find businesses that fit their five economic criteria:
1) Recurring revenue streams
2) Long-term secular growth tailwinds
3) A product that accounts for a small portion of the customer’s overall costs and provides a lot of value
4) Significant free cash flow generation with high returns on tangible capital
5) Significant M&A opportunities
After sifting through hundreds of companies they found Perimeter Solutions, a company that specializes in fire safety and is the sole provider of a key firefighting product. Similar to TransDigm, they aim to deliver “private equity-like returns in the public market”. However, they had a very rocky start since going public via a SPAC in 2021, with the stock dropping almost 80% from peak. In true “Outsiders” fashion, they responded by buyback around ~12% of the company in a single year.
The business is larger now then ever before, with the operational improvements they implemented driving normalized earnings over 70% higher. They also have ample growth opportunties and limited competition. But what about that unusual compensation structure? Can they really grow earnings at a 15% CAGR? And is there really no competitors trying to enter their core markets? All this and more in our 1 hour 19 minute podcast on Perimeter Solutions!
Perimeter Solutions Show Notes
(0:47) Background Story on their Main Firefighting Product
(4:42) — Corporate History and Everarc SPAC
(7:57) — Aren’t SPACs a red flag? Weird Compensation Agreement
(13:03) — Business High Level Overview: Fire Safety and Specialty Products
(18:45) — Adjusted EBITDA???
(20:30) — Figures and Margins
(24:30) — Competitive Advantages of each Business Lines
(40:17) — Growth Opportunities
(53:22) — Capital Allocation and Transdigm Parallels
(1:04:53) — ROIC
(1:07:55) — Odd Compensation Arrangement
(1:15:47) — Valuation
(1:17:34) — You Should Know This
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Thanks for the new idea.