Perimeter Solutions Q2 2025 Earnings Report

Perimeter Solutions EPS Results

• Actual EPS: $0.39
• Consensus EPS: $0.28
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: N/A

Perimeter Solutions Revenue Results

• Actual Revenue: $162.64 million
• Expected Revenue: $108.91 million
• Beat/Miss: Beat by +$53.73 million
• YoY Revenue Growth: N/A

Perimeter Solutions Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:30AM ET

Perimeter Solutions (NYSE:PRM) manufactures and supplies firefighting products and lubricant additives in the United States, Germany, and internationally. It operates in two segments, Fire Safety and Specialty Products. The Fire Safety segment provides fire retardants and firefighting foams, as well as specialized equipment and services for federal, state, provincial, local/municipal, and commercial customers. The Specialty Products segment produces and sells Phosphorus Pentasulfide, which is primarily used in the preparation of lubricant additives, including a family of compounds called Zinc Dialkyldithiophosphates. The company offers its products under the PHOS-CHEK, FIRE-TROL, AUXQUIMIA, and SOLBERG brands. Perimeter Solutions, SA was founded in 1963 and is headquartered in Clayton, Missouri.

Perimeter Solutions Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second quarter adjusted EBITDA reached $91.3 million, up 41% year-over-year, on consolidated sales growth of 28%, highlighting strong overall execution.
• Positive Sentiment: Fire Safety segment revenue rose 22% to $120.3 million, driven by normalized U.S. wildfire activity and robust international retardant and suppressant market performance.
• Negative Sentiment: Specialty Products results were hampered by safety and operational disruptions at the Flexus-operated Saje plant, with ongoing litigation and no clear resolution timeline delaying performance improvements.
• Positive Sentiment: The IMS acquisition is outperforming underwriting assumptions, leading to a more than three-fold production capacity expansion and positioning the business to exceed Perimeter’s 15% IRR target.
• Neutral Sentiment: Perimeter deployed nearly $62 million of capital in Q2—including $12.8 million in CapEx, $32 million in share repurchases, and a $20 million litigation settlement—demonstrating disciplined allocation.

Presentation

[Operator]

Greetings, and welcome to the Perimeter Solutions Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Seth Barker, Head of Investor Relations. Please go ahead.

[Seth Barker, Head - Investor Relations & VP - FP&A at Perimeter Solutions]

Thank you, operator. Good morning, everyone, and thank you for joining Perimeter Solutions' second quarter twenty twenty five earnings call. Speaking on today's call are Haitham Khoury, Chief Executive Officer and Kyle Sabol, Chief Financial Officer. We want to remind anyone who may be listening to a replay of this call that all statements made are as of today, 08/07/2025, and these statements have not been nor will they be updated subsequent to today's call. Also, today's call may contain forward looking statements.

[Seth Barker, Head - Investor Relations & VP - FP&A at Perimeter Solutions]

These statements made today are based on management's current expectations, assumptions and beliefs about our business and the environment in which we operate, and our actual results may materially differ from those expressed or implied on today's call. Please review our SEC filings, particularly any risk factors included in our filings for a more complete discussion of factors that could impact our results, expectations or assumptions. The company would also like to advise you that during the call, we will be referring to non GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, LTM adjusted EBITDA, adjusted EPS and free cash flow. The reconciliation of and other information regarding these items can be found in our earnings press release and presentation, both of which will be available on our website. With that, I will turn the call over to Haytham Khoury, Chief Executive Officer.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

Thank you, Seth, and good morning, everyone. We're pleased to report Perimeter's second quarter and first half results. Second quarter adjusted EBITDA reached $91,300,000 and first half adjusted EBITDA reached $109,400,000 reflecting number one, execution on our operational value drivers number two, normalized first half fire activity in The U. S and number three, strong performance in our international retardant markets, our suppressants business and our specialty products businesses. We continue to deploy capital during the second quarter, investing nearly $62,000,000 across a range of priorities, including increased capital expenditures, continued share repurchases and the purchase of assets to support our retardant business.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

Before getting into details on the quarter, I'll provide a summary of our strategy, give a brief operational update and discuss the settlement of our litigation with Compass Minerals. After that, Kyle will walk through our financial results and capital allocation in more detail. Starting on Slide three with a summary of our strategy. Our goal is to fulfill our critical mission by providing customers with high quality products and exceptional service, while delivering our investors private equity like returns with the liquidity of the public market. Our strategy is built on three key operational pillars.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

First, we own exceptional businesses. These are niche market leaders that play critical roles in solving complex customer problems, qualities that support high returns on invested capital and durable earnings growth. Second, we rigorously apply our three operational value drivers to the businesses we own. We drive profitable new business, achieve continual productivity improvements and provide increasing value to customers, which we share in through value based pricing. And third, we operate our businesses in a highly decentralized manner, granting our business unit managers full operating autonomy, paired with the accountability to deliver results and a tightly aligned incentive structure for our managers to think and act like owners.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

We believe that our operational pillars will optimize our durable long term free cash flow. We then seek to maximize term per share equity value through a clear focus on the allocation of our capital as well as the management of our capital structure. Turning to development in the quarter on slide four and starting with Fire Safety. As I remarked at the outset, Fire Safety's financial results were driven by execution on our operational value drivers, normalized first half fire activity in The United States and strong results from our international retardant markets and our suppressants business. We continue to invest in our fire safety businesses to best support our customers' mission to save lives and protect property and the environment, including the opening of 110,000 square foot retardant production facility in Sacramento, California.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

Our network of manufacturing facilities, logistics and distribution systems and air based infrastructure has a six year track record of performance reliability. With the addition of the Sacramento facility, we pair our never failed delivery network with fully duplicated infrastructure that leaves no doubt about the supply chain resiliency of our solution. The cost of the facility along with other investments we're making in our business is reflected in our first half capital expenditures, which nearly equal our capital expenditures for the entirety of 2024 and which exceed our total capital expenditures in any full year prior to 2024 over our company's history. Capital expenditures are the most visible sign of our internal reinvestment. However, we're also investing into several areas less visible to investors, but highly visible to customers, including research and development, field service and customer support.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

We concluded our trade secret litigation against Compass Minerals during the second quarter, culminating in a settlement that returned our intellectual property and allowed us to acquire surplus assets for our retardant business. Compass announced the wind down of the retardant business in the first quarter, which provided an opportunity to resolve our intellectual property dispute, which centered around phosphate based formulations that we maintain were developed using misappropriated trade secrets from Perimeter. Relative to the time and expense of litigation and combined with the excess assets of the Shutter business, which we acquired in conjunction with the settlement, we believe the $20,000,000 paid to resolve this matter is a fair outcome. With our trade secrets resecured, we can continue to invest in the R and D innovation that jointly drives our customers' success and our performance. Switching now to our Specialty Products segment.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

For the past two decades, our primary North American phosphorus pentasulfide plant in Saje, Illinois has been operated by a third party under a tolling agreement. In 2021, a private equity fund called OneRock Partners purchased a collection of assets which they renamed Flexus and as part of the transaction assumed the tolling agreement to operate the Saje plant. There has been a market degradation in the plant safety standards and operational performance in Swan Rock's acquisition. To illustrate the magnitude of this degradation, the Saje plant experienced more unplanned downtime in the 2025 than our P2S5 plant in Germany, which we own and operated and operate, excuse me, has experienced over the entire last decade. To reiterate, the Flexus operated plant experienced more unplanned downtime in a single quarter this year than the perimeter operated plants that experienced in an entire decade.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

As a result of escalating safety and operational issues, we exercise our contractual right to assume operation of the Saje plant. Unfortunately, and in what we believe is a clear violation of our contracts, OneRock and Flexis have prevented us from taking over the plant. After exhausting all options, we filed a complaint in Illinois State Court in June to enforce our rights. Given that Flexus maintains operational control over the plant while our complaint is litigated, we expect to encounter ongoing operational and financial challenges. We are committed to taking back operational control of the Saje plant per our rights under the tolling agreement.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

And when we do, we will implement the necessary operational improvements and restore the consistency, safety and quality of production that our customers rightly demand. Finally, a brief update on our IMS acquisition. IMS is performing well and the introduction of our value driver strategy is proceeding quickly with strong early operational results. IMS is performing ahead of our underwriting assumptions and is poised to deliver returns that meaningfully exceed our targeted IRR threshold. In support of IMS' recent growth and reflective of our confidence in IMS' future organic and inorganic growth, we recently expanded our production capacity by executing on a new 87,000 square foot lease, more than tripling IMS' space.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

We look forward to investing significantly more capital behind IMS, primarily through additional product line acquisitions. We consider IMS to be an excellent template for our future acquisitions, where one, acquired a niche market leader that plays a critical role in solving complex customer problems two, introduced our cultural principles of business unit autonomy, accountability and alignment three, implemented our operational value drivers to sustainably boost operating and financial performance four, ramped investment into the business in order to offer our customers the best products, services and overall value proposition and finally, launched an inorganic growth initiative, including the $10,000,000 we spent in the first quarter to acquire new product lines. With that, I'll turn the call over to Kyle for a more detailed review of our financials and capital allocation in the quarter.

[Kyle Sable, CFO at Perimeter Solutions]

Thanks, Jason. I'll begin on slide five, where growth figures shown are versus the prior year comparable period. Starting with Fire Safety. Revenue for the quarter came in at $120,300,000 reflecting a 22% year over year improvement and $157,400,000 year to date, a 27% gain. These results were primarily driven by our retardant products and related services.

[Kyle Sable, CFO at Perimeter Solutions]

U. S. Fire retardant volumes benefited from a more typical wildfire pattern in Q2 compared to a milder season last year, while our international operations including Canada, Europe, The Middle East and Asia Pacific gained from ongoing contributions from our value drivers alongside more severe conditions. Our suppressants product lines resumed their growth in the second quarter. Recall that after nine consecutive quarters of growth, our suppressants revenue declined on a year over year basis in Q1, primarily due to an unusually strong product introduction benefiting the prior year period.

[Kyle Sable, CFO at Perimeter Solutions]

In the second quarter, our fire suppression sales returned to growth, increasing $2,700,000 from the prior year quarter. Fire Safety's adjusted EBITDA for the quarter was $77,700,000 representing a 40% increase over last year and $87,700,000 year to date, marking a 58% gain. U. S. Wildfire activity was approximately normal in the six months ending 06/30/2025 and wildfire risk conditions across our footprint are also within a range we would consider normal.

[Kyle Sable, CFO at Perimeter Solutions]

Having observed normal activity levels through Q2 and into early Q3, we believe it unlikely that the full season will be exceptionally mild. That said, conditions for the remainder of the year could still vary above or below average, but we remain prepared for the full range of potential scenarios. In our Specialty Products segment, Q2 net sales came in at $42,400,000 representing a 47% lift from the prior year. This performance reflects a $9,300,000 contribution from the IMS acquisitions and a 4,400,000 uplift from the base business. Year to date net sales reached $77,200,000 up 23%, driven by $16,900,000 from the IMS acquisitions, partially offset by a $2,300,000 decline attributable to the previously noted unplanned downtime at the Saje plant in Q1.

[Kyle Sable, CFO at Perimeter Solutions]

Specialty Products Q2 adjusted EBITDA rose to $13,700,000 compared to $9,300,000 in the prior year quarter and remains approximately steady year to date at $21,700,000 While Q2's operational challenges were less severe than those in Q1, ongoing downtime contributed to elevated costs in the business and dampened EBITDA. While it's impossible to predict the plant's performance under Flexus' control, we anticipate a continued drag from operational issues until we assume operational control of the plant. Viewing the segments together, consolidated second quarter sales grew 28% to $162,600,000 while adjusted EBITDA improved 41% to $91,300,000 Year to date consolidated sales reached $234,700,000 up 26 and adjusted EBITDA rose 42% to $109,400,000 Moving below adjusted EBITDA for Q2 twenty twenty five, our GAAP loss per share was $0.22 versus GAAP earnings per share of $0.14 in the prior year quarter. Q2 twenty twenty five adjusted EPS was $0.39 compared to $0.25 in Q2 twenty twenty four. On a year to date basis, GAAP earnings per share was $0.16 as compared to a GAAP loss per share of $0.42 in the same period last year.

[Kyle Sable, CFO at Perimeter Solutions]

Year to date adjusted EPS was $0.41 as compared to $0.23 in the same period in the previous year. Turning to our long term assumptions as shown on slide six. We are increasing the high end of our assumptions for capital expenditures from $20,000,000 to $30,000,000 This increase reflects our success in finding capital expenditures that align with our investment criteria, namely that investments improve our ability to serve our customers and generate returns that exceed our minimum targeted return threshold. Our new production facility in Sacramento is a clear example of this investment in action, but it's far from the only one. Last year, we shared how upgrades at several of our air bases significantly boosted throughput.

[Kyle Sable, CFO at Perimeter Solutions]

Building on that momentum, we continue to implement these enhancements across our network. The result, higher return volumes that help our customers achieve their mission, while delivering strong returns on the capital we deployed. As we build on these initiatives, we will continue investing in air based infrastructure while seeking new opportunities with comparable potential. Aside from CapEx, the remainder of our assumptions are unchanged and with normally quarterly variation, Q2 is consistent with those expectations. Q2 interest expense was $9,900,000 while taxable depreciation, amortization and other tax deductions totaled $5,400,000 Tax paid for income tax was $12,300,000 in Q2 as compared to $3,600,000 in the prior year quarter.

[Kyle Sable, CFO at Perimeter Solutions]

Here, I will note that variation in taxes is typically timing related in any given quarter and our full year tax expectation is unchanged. Capital expenditures for the quarter were $12,800,000 Our working capital needs fluctuate seasonally, and Q2's working capital levels and the associated use of cash are consistent with our expectations given the level of activity in Q2. Our year end networking capital outlook is unchanged. We define free cash flow as cash flow from operations less capital expenditures. In total, we had free cash flow in Q2 of negative $15,600,000 primarily due to the seasonal build in net working capital as well as purchases of property and equipment.

[Kyle Sable, CFO at Perimeter Solutions]

We generated free cash flow of $3,300,000 for the six months ended 06/30/2025. 2025 cash flow generation seasonality is in line with our expectations and consistent with history, where we invest significantly in working capital in the first half of the year in preparation for the fire season to convert these investments into cash in the second half. Our full year EBITDA to cash generation conversion is consistent with the assumptions shown on this slide, with the vast majority of cash generation occurring over the next few months. We allocated nearly $62,000,000 of capital in the quarter, the returns on which we expect will exceed our minimum targeted equity return to 15%. We continue to invest in our business organically, with $12,800,000 allocated to capital expenditures in the quarter.

[Kyle Sable, CFO at Perimeter Solutions]

The majority of these capital expenditures supported our growth and productivity initiatives. Our pipeline of projects continues to build and is an important element supporting our long term organic EBITDA growth trajectory. Moving to M and A, as discussed previously, we invested $20,000,000 in select Compass assets comprised of $1,700,000 of raw materials and $3,100,000 of property and equipment, with the remainder allocated to intangibles. More broadly, we continue to search diligently for acquisitions that meet our investment criteria. Finally, we repurchased 2,900,000.0 shares for approximately $32,000,000 in Q2.

[Kyle Sable, CFO at Perimeter Solutions]

While many companies have systematic share repurchase programs, our view is to repurchase shares when we believe our equity trades meaningfully below intrinsic value and when repurchases would not preclude higher potential IRR investments, notably in M and A. Both conditions were true in Q2. Turning to slide eight. I'd like to highlight our favorable debt structure, a single series of fixed rate notes at 5%, maturing in the 2029 with no financial maintenance covenants. As of Q2, we were levered 1.7 times net debt to LTM adjusted EBITDA, driven by $675,000,000 of gross debt, dollars 141,000,000 in cash and nearly three thirteen million dollars of LTM adjusted EBITDA.

[Kyle Sable, CFO at Perimeter Solutions]

We also have substantial liquidity with an undrawn $100,000,000 revolver as of quarter end in addition to our cash. We ended the quarter with about 145,900,000.0 basic shares outstanding. To conclude, Perimeter's second quarter reflected our team's execution of our strategy combined with normalized end markets. Despite the solid start, we remain disciplined in our approach to the full year, continuing our work to deliver for our customers and apply our operational value drivers across the business. With that, I'll hand the call back to the operator for Q and A.

[Operator]

Thank you. We will now be conducting a question and answer session. Session. A Your first question comes from Dan Katz with Morgan Stanley. Please go ahead.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Hey, thanks a lot. Good morning. I wanted to ask, I think you guys have kind of quantified this in the past. When you think about when you speak to kind of a range of normal wildfire activity or acreage spend, can you help us can you remind us how you guys think about that? Is it kind of over the course of the year, I think I remember like a 6,000,000 to 7,000,000 lower 48 acres burned range on one of your past slide decks?

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Is it kind of a percentage versus a trailing five or ten year trend? Just hoping that you could as we're trying to think through, what it means when you say within a normal range, I was just hoping you could share a little bit more color on how you guys think about that. Thank you.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

Yes, you bet, Dan. This is Haitan. Thanks, of course, for the question. So I'll refer back to a slide we presented in our Q4 twenty twenty four earnings call where we tried to break down for investors exactly how we think about what a normal fire season is. To sort of recap the message from six or so months ago, you're right, we think a normal fire season is roughly in the range of 6,000,000 to 7,000,000 acres burned in The U.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

S. Excluding Alaska. Given that there's secular growth in acres, we think that range will creep up slowly yet steadily over time. We describe 2024 as a fairly normalized acreage year because if you exclude the Smokehouse Creek fire which occurred in Q1 in Texas and Oklahoma and which used almost no retardant, acres burned in 'twenty four were right about $7,000,000 excluding Alaska. So near the top end of what we would consider normal.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

I'll note that if you take our year so far and look at acreage burned through early August and assume normalization through the balance of the year, which of course is an unknown what happens here on out, we're again looking like we're going to be in that roughly 6,000,000 to 7,000,000 normal range.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Awesome. Super helpful. And then maybe so a question has come up. If you look empirically, there does seem to be somewhat of an inverse relationship between a revenue per acre burned or EBITDA per acre burned if you did try and isolate just The U. S.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Lower 48 components of those revenue streams versus The U. S. Ex Alaska acres burned. There does seem to be somewhat of an inverse correlation over time. Now, the direction of travel for those metrics has been higher, has been an improvement over time in terms of the dollar number of EBITDA or revenue per acre burn.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Still, there does seem to be somewhat of a negative correlation. Was hoping if you could help us understand, I mean, A, to determine if that phenomenon is true or just kind of noise in the data? And then B, if so, what some of the drivers are that drives that relationship? Yes,

[Kyle Sable, CFO at Perimeter Solutions]

absolutely, Dan. It's Kyle. A couple of things on this. I'll make two points on ACRES. One is that when we look at the ACRES data, we believe that it's a good indicator of our activity over longer term timeframes.

[Kyle Sable, CFO at Perimeter Solutions]

There's a more challenging metric to use at short term timeframes. And the related piece of that, which you've identified here is that particularly large swings in ACRES will result in smaller changes in our retardant usage for a number of factors. So let me walk through so you can understand what those are. When you think about the factors that go into retardant usage for any acre, there's a number of things that go in. First, have to have the acre itself and fire activity.

[Kyle Sable, CFO at Perimeter Solutions]

It also matters where that acres burning in a remote area, there's less likely to be retardant usage than when it is closer to structures and has a near proximity to lives and property. And then the second piece that comes into this is both the ability to fly, so the weather, and then in particular, and the one that drives a lot of the variability you're seeing here is resource availability. So for instance, if you saw a very large spike in fire activity, what will happen is that all the resources can oftentimes be in utilization, right? That means that all the planes are busy. And so when another call comes in, there's simply not a plane to dispatch to that incremental call.

[Kyle Sable, CFO at Perimeter Solutions]

When we see these spikes, that's a big reason why we are a big proponent of supporting our air tanker partners and expanding the fleet capacity. We believe that there's an amazing ability to drive ROI for the government, for the agencies, for our air tanker partners and most importantly, perform the mission, protecting lives and property through the expansion of the air tanker fleet. You also see the inverse of that when there's a large decline in acres. When there's a decline in acres, the availability of planes for any given fire are much higher. So you're exactly right.

[Kyle Sable, CFO at Perimeter Solutions]

When you look at this, there is a muted impact where big spikes will see less retardant usage because of the availability of aircraft and the inverse is true when it falls. Does that make sense?

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Yes. That makes kind of sense. And maybe if I could squeeze one last one in on the resource availability point. We've seen a ton of different headlines higher fire suppression spending, budget allocations lower. I've seen some headlines about California getting some, I believe, new air tankers.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

I was wondering if you could just kind of you guys are obviously super close to this. I was wondering if you could kind of give us some of the highlights of how some of the upstream factors that would drive resource availability have evolved maybe since last quarter Thank you.

[Kyle Sable, CFO at Perimeter Solutions]

Yes, Dan. There's two pools of resource availability to think about here. One is the government owned assets. And as you've highlighted, California has done a really good job of expanding their air tanker fleet through the acquisition of a number of C-130s, which are pretty large aircraft and dump a fair bit of retardant on each run. So that's one piece that's going on and we continue to see that progression as states think more and more about owned resources.

[Kyle Sable, CFO at Perimeter Solutions]

The second piece, as I alluded to before, is the typically contracted resources that the federal government tends to use. And in those, what we're really trying to support there, what really helps provide more availability is both the funding, but also the structure of the contracts. We always work with our industry groups to help provide the best structural contracts where they have availability and guaranteed contracts that allows them to invest in that fleet. That allows them to bring more resources into the ecosystem and allows them to be more available when they're needed.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Awesome. Really helpful. Thank you both very much. Congrats on a great quarter and I will turn it back.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

Thanks, Dan.

[Operator]

Next question, Josh Spector with UBS. Please go ahead.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

Yes. Hey, good morning, guys. I was wondering if you could talk about kind of the sustainability of what you did in 2Q in Fire Safety. I mean, the margins are kind of above what we've assumed for peak margins in 3Q. The incremental margin looks like it was pretty much 100% year on year.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

So just as we think forward and we're saying 2Q is kind of a normal ish fire season in terms of acres burned, Is this something you build off of? Or is there anything you would call out as maybe one time helping you within the quarter?

[Haitham Khouri, CEO & Director at Perimeter Solutions]

Hey, good morning, Josh. It's Haitham. It's something we build off of. There was nothing notable in Q2 in Fire Safety that is unsustainable.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

So then how would you help us think about what you should be doing in a peak quarter in 3Q? Is the incremental margin much higher than in the past? Should you be much higher than the mid-60s percent margins? Any help there?

[Haitham Khouri, CEO & Director at Perimeter Solutions]

Yes. As much as I'd like to, Josh, I'm going to hold back and ask you to wait ninety days on that one.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

I'd expect nothing less. Shifting gears, the specialty side, honestly, I don't know if we would have really known about the outages unless you talked about them considering what the performance was in the quarter. So I was wondering if you could pick apart the moving pieces there. In terms of the $5 ish million growth in EBITDA you've had year over year, what was the impact that you had from the outages and the poor operating performance of that one facility? How much was growth in base specialty?

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

And how much is like the build out of IMS, if you could help us kind of frame that?

[Haitham Khouri, CEO & Director at Perimeter Solutions]

Yes. I'll try to be directionally helpful here, Josh, although I don't want to get into too much quantification. The IMS acquisition is purely incremental on a year over year basis, and IMS had a hell of a second quarter. And so that's clearly part of it. Our base P2S5 business, which is a combination of The U.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

S. Plant and our owned and operated European plant, did well. Those are on the positive side. And then on the negative side, the ongoing operational issues and in excess way in excess of normal unplanned downtime at the Flexus operated Saje plant was a headwind in Q2, and those netted out to a good overall result of puts and takes there.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

Okay. I mean, I guess if I could try again just on the Sajj impact. I mean, it a $1,000,000 $2,000,000 impact? Just trying to think about what we should be baking in when you say go forward there's going to be an impact the next couple of quarters.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

There has been so first of all, it's a significant impact. It's a situation we take very, very seriously. It is harming our financial performance. It is impacting our customers. And most importantly, is creating safety issues for the plant employees.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

And so I don't want to underplay significance for an operational safety or financial perspective. That said, this underperformance at Flexis has been ongoing really since OneRock acquired the business in 2021. And therefore, unfortunately, it's in the run rate numbers you've been seeing. And until we resolve this dispute, take control of the plant, address safety and address quality, what you've been seeing, which includes, again, the negative impact of their operating is going to continue to be reflected in the financials.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

Okay. And a couple of other follow ups, if I can go through them. I guess, first, on the $20,000,000 payment to resolve the dispute with Compass, is that primarily just intangibles and the ability to maintain your formulations? Is there any assets or anything there you'd call out as part of that?

[Kyle Sable, CFO at Perimeter Solutions]

Josh, it's Kyle. Yes, there are actually assets that we acquired in his that we would have otherwise had to purchase from a normal CapEx transaction or normal inventory purchase transaction. There's about $5,000,000 of book value of those two buckets of assets that came with the transaction.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

Okay. Thanks for that. And then last, just another follow-up around kind of The U. S. Wildfire management tactics here.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

I mean you talked about helping with plane availability and that being a factor. I know for years you guys have been talking about trying to maybe change how you're paid on some of your suppressants, make sure you guys get more of maybe a fixed payment in the slower parts of the year to start or you have a sliding scale, I think, in place now to help you maintain your profitability. Is there any changes you foresee with your basic contract structure with the government around this to help enable more investments, profitability, etcetera, through any of this? Or are you thinking about it more in terms of the aerial fleet as where you see potential changes?

[Haitham Khouri, CEO & Director at Perimeter Solutions]

So it's both. And Tyler did a very clear job addressing the opportunity for the aerial fleet where we're very involved primarily through the industry association, UEFA. Separate from that, we have for the past couple of years been working, I would say, slowly and steadily with our customers around the world to mutually beneficially de variabilize our business and make it so we have more predictability on our cash flows and our customers have more predictability on their spend with us, which mutes, it doesn't eliminate, we'll never be able to eliminate, I don't think, but mutes the impact of fire season seasonality. And again, it's not a step function change with a single customer. It's something we've been increasingly doing over the past couple of years.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

You pretty clearly see evidence of it in our financial results. We're very happy with it. Our customers are very happy with it. And you'll see and you'll find that we will continue to push for these mutually beneficial changes going forward, and we'll continue to see our financial results de variabilized going forward. But I emphasize, we'll never quite be able to decouple from acres burned.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

Understood. Thank you very much.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

You bet.

[Operator]

Thank you. I would like to turn the floor over to Haytham for closing remarks.

[Haitham Khouri, CEO & Director at Perimeter Solutions]

Thank you, everybody, for the time and support, and we'll speak in ninety days or so.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.

Participants

Executives

• Seth Barker, Head - Investor Relations & VP - FP&A
• Haitham Khouri, CEO & Director
• Kyle Sable, CFO

Analysts

• Daniel Kutz, VP & Equity Analyst at Morgan Stanley
• Josh Spector, Executive Director - Chemicals Equity Research at UBS Group