Greetings, and welcome to the Perimeter Solutions Second Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Seth Barker, Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining Perimeter Solutions' Second Quarter 2025 Earnings Call. Speaking on today's call are Haitham Khouri, Chief Executive Officer; and Kyle Sable, 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, August 7, 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. 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 Haitham Khouri, Chief Executive Officer.

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 $91.3 million and first half adjusted EBITDA reached $109.4 million, 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 million across a range of priorities, including increased capital expenditures, continued share repurchases and the purchase of assets to support our retardant business. 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 3 with a summary of our strategy. Our goal is to fulfill our critical mission by providing our 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 3 key operational pillars. 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 3 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…

Thanks, Haitham. I'll begin on Slide 5, where growth figures shown are versus the prior year comparable period. Starting with Fire Safety. Revenue for the quarter came in at $120.3 million, reflecting a 22% year-over-year improvement and $157.4 million year- to-date, a 27% gain. These results were primarily driven by our retardant products and related services. 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 9 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. In the second quarter, our fire suppressant sales returned to growth, increasing $2.7 million from the prior year quarter. Fire Safety's adjusted EBITDA for the quarter was $77.7 million, representing a 40% increase over last year and $87.7 million year- to-date, marking a 58% gain. U.S. wildfire activity was approximately normal in the 6 months ending June 30, 2025, and wildfire risk conditions across our footprint are also within a range we would consider normal. 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, and we remain prepared for the full range of potential scenarios. In our Specialty Products segment, Q2 net sales came in at $42.4 million, representing a 47% lift from the prior year. This performance reflects a $9.3 million contribution from the IMS acquisitions…

[Operator Instructions] Your first question comes from Dan Kutz with Morgan Stanley.

I wanted to ask, I think you guys have kind of quantified this in the past. But when you think about -- when you speak to kind of a range of normal wildfire activity or acres burned, 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 million to 7 million U.S. Lower-48 acres burn range on one of your past slide decks? Or is it kind of a percentage versus a trailing 5- or 10-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.

Yes, you bet, Dan. It's Haitham. Thanks, of course, for the question. So I'll refer back to a slide we presented in our Q4 2024 earnings call where we've tried to break down for investors exactly how we think about what a normal fire season is. To sort of recap the message from 6 or so months ago, you're right, we think a normal fire season is roughly in the range of 6 million to 7 million acres burned in the U.S., excluding Alaska. Given that there is 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, acreage burned in '24 were right about 7 million, excluding Alaska. So near the top end of what we would consider normal. 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 million to 7 million normal range.

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. 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, but still there does seem to be somewhat of a negative correlation. I was hoping if you could help us understand, I mean, a, confirm if that phenomenon is true or just kind of noise in the data? And then b, what -- if so, what some of the drivers are [indiscernible] that relationship?

Yes, absolutely, Dan, it's Kyle. A couple of things on this. I'll make 2 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 time frames. It is a more challenging metric to use on short-term time frames. 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, you have to have the acre itself and fire activity. It also matters where that acre is 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. 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 an 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. 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?

Yes, that makes a ton 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 on higher fire suppression spending, budget allocations lower. I've seen some headlines about California getting some, I believe, new air tankers. 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 or year-to-date?

Yes, Dan. There's 2 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. 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 it's 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.

Next question, Josh Spector with UBS.

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. So just as we think forward and we're saying 2Q was 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 onetime helping you within the quarter?

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

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?

Yes. As much as I'd like to, Josh, I'm going to hold back and ask you to wait 90 days on that one.

I'd expect nothing less. So shifting gears. On 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 at that one facility? How much was growth in base specialty? And how much is like the build-out of IMS, if you could help us kind of frame that.

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.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 Flexsys-operated Sauget plant was a headwind in Q2, and those netted out to a good overall result, but puts and takes there.

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

There has been -- so first of all, it's a significant impact. This situation we take very, very seriously, is harming our financial performance, is impacting our customers and most importantly, is creating safety issues for the plant's employees. And so I don't want to underplay significance from an operational safety or financial perspective. That said, this underperformance at Flexsys has been ongoing really since One Rock 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.

Okay. And a couple of other follow-ups if I can go through them. I guess, first, on the $20 million 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?

Josh, it's Kyle. Yes, there are actually assets that we acquired in this that we would have otherwise had to purchase from a normal CapEx transaction or normal inventory purchase transaction. There's about $5 million of book value of those 2 buckets of assets that came with the transaction.

Okay. And then last, just another follow-up around kind of the U.S. wildfire management tactics here. 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 basically contract structure with the government around this to help enable more investments, profitability, et cetera, through any of this? Or are you thinking about it more in terms of the aerial fleet as where you see potential changes?

So it's -- and Kyle 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 devariabilize 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 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. We 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 devariabilize going forward. But I emphasize, we'll never quite be able to decouple from acres burned.

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

Thank you, everybody, for the time and support, and we'll speak in 90 days or so.

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