Thank you, operator. Good morning, everyone, and thank you for joining Perimeter Solutions' Second Quarter 2020 Earnings Call. Speaking on today's call are Haitham Khouri, Vice Chairman; Edward Goldberg, Chief Executive Officer; and Chuck Kropp, 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 5, 2022, 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 for a more complete discussion of factors that could impact our results. The company would also like to advise you that during the call, we will be referring to non-GAAP financial measures, including EBITDA. Please refer to our earnings press release and presentation as well as our SEC filings, both of which will be available on our website and on the SEC's website. With that, I will turn the call over to Haitham Khouri, Vice Chairman.

Thank you, Nori. Good morning, everyone, and thank you for joining us today. As usual, I'll start with summary comments on our strategy, then I'll touch on financial performance and capital allocation, before turning the call over to Eddie and Chuck. Starting with our strategy on Slide 3. As you've heard from us before, our goal is to deliver private equity-like returns with the liquidity of a public market. We plan to attain this goal by owning, operating, and growing uniquely high-quality businesses. We define uniquely high-quality businesses through the following five very specific economic criteria: one, recurring and predictable revenue streams; two, long-term secular growth tailwinds; three, products that account for critical but small portions of larger value streams; four, significant free cash flow generation with higher returns on tangible capital; and five, the potential for opportunistic consolidation. We believe that these economic criteria are present at Perimeter as described on Slide 4. And we also use these criteria to evaluate potential new acquisitions. As described on Slide 5, we seek to drive long-term equity value creation via consistent improvement in our three operational value drivers, which are as follows: profitable new business, continual cost improvement and pricing to reflect the value we provide, plus a clear focus on the allocation of our capital and the management of our capital structure. Moving on to our financial results. Our consolidated adjusted EBITDA is up 39% year-to-date, with solid growth in both our Fire Safety and Specialty Products businesses. Note that Specialty Products is the new name for our Oil Additives business, and Eddie will elaborate on the name change later in this call. Adjusted EBITDA in our Fire Safety business is up 11% year-to-date. Adjusted EBITDA in our Specialty Products business is up 74% year-to-date. Our Specialty Products business has generated almost $27 million in adjusted EBITDA over the first half of 2022, which comfortably exceeds the adjusted EBITDA generated by this business in each of the last several fiscal years. As such, we're now confident that our Specialty Products business should deliver solid year-over-year adjusted EBITDA growth this year. Turning to our full-year expectations for the consolidated business. We've consistently stated that, assuming a roughly on-trend 2022 fire season and incorporating our best assumptions around all the other aspects of our business, we expect consolidated adjusted EBITDA growth consistent with, and perhaps above, our long-term framework of mid-teens growth. We've also consistently highlighted that within the highly predictable and dependable long-term growth we expect in our Fire Safety business, we also expect quarterly and annual variability tied primarily to the severity of the North American fire season. As we approach its halfway point, we'll observe that the North American fire season through the end of July has been soft. According to the National Interagency Coordination Center, excluding Alaska and southern areas, both of which historically use relatively little retardant, year-to-date, U.S. acres burned through the end of July are down over 35% year-over-year. Despite the slower early fire season, strong execution on our operational value drivers has driven year-to-date adjusted EBITDA growth above our mid-teens long-term framework. In fact, we now expect to deliver 2022 consolidated adjusted EBITDA growth consistent with and perhaps above our long-term framework of mid-teens growth, assuming flat to modestly down volumes, as the benefit from our operational value drivers should offset modest potential softness in the fire season. That said, and consistent with what we repeatedly emphasized regarding near-term variability tied to the severity of the fire season, while we expect to offset modest seasonal weakness in 2022 and deliver results in line with our long-term targets, we still expect our financial results for the year to move in line with any significant year-over-year variability in the severity of the North American fire season. I'll close this discussion by noting that we don't believe the slow start to the fire season has much predictive value for the balance of the season. In fact, climate conditions across much of the Western United States remain conducive to an active season, although that has not necessarily transpired to date. Regarding capital allocation. As you’re all aware, we're in the midst of a challenging period across global capital markets, with meaningfully restricted access to capital essentially across the board. In this environment, we're especially pleased to have significant dry powder on hand with approximately $126 million of cash on our balance sheet at the end of Q2 and an expectation that we will generate significant free cash flow in the second half of the year, almost irrespective of the strength of the fire season. We greatly value this financial flexibility, specifically as it relates to potential M&A opportunities. Therefore, the bar for allocating capital to buybacks or dividends is especially high at the moment. With this high bar in mind, we repurchased approximately 600,000 shares in May at an average price of $8.36 for total consideration of approximately $5 million. The valuation opportunity proved short-lived, however, and we remain disciplined. With that, I'll turn the call over to Eddie.

Thanks, Haitham. We're pleased with our strong first half performance with consolidated EBITDA up 39% year-to-date. I'll review our financial performance for the quarter and the year-to-date period for each of our two businesses, starting with our Fire Safety business. Second quarter and year-to-date revenue increased 16% and 31%, respectively, while adjusted EBITDA increased 3% in the quarter and increased 11% year-to-date. Adjusted EBITDA margins were negatively impacted by roughly 450 basis points in the year-to-date period. We're experiencing significant raw material inflation in 2022. As expected, we're successfully passing on this inflation through contractual mechanisms in place across the vast majority of our Fire Safety business. While this is a powerful feature of our business that protects our EBITDA dollars during inflationary periods, it also serves to dampen our reported margins as the inflation pass-throughs grow revenue while keeping EBITDA flat, which leads to reported margin compression. This dynamic, coupled with the incremental public company costs we are adding this year, is impacting our reported margins. Despite this, Fire Safety had a solid first half with 11% year-to-date adjusted EBITDA growth, and we believe the business is well positioned assuming an on-trend line 2022 fire season. Let me take this opportunity to note some of the key accomplishments in our Fire Safety business during the second quarter. We continued to demonstrate our expertise, experience, and reliability in support of our customers' wildland firefighting efforts. We supported aerial firefighting activity throughout North America as well as in various countries around the world, ensuring a continuous supply of fire retardant to all of our customers, air bases, and facilities without fail, and providing our own mobile retardant bases, or MRBs, when called upon to do so by our customers. Let me spend a moment on our international business. We've been extremely pleased with the performance of our international wildfire business over the last few years. Our consistent experience is that as fire severity increases around the world, it's more a question of when rather than if most fire-prone countries adopt the use of retardant and therefore become Perimeter customers. Our experience is also that when a country makes the necessary investments to use retardant, they rarely switch away and typically exhibit meaningful growth over time. We therefore make a concerted and consistent effort to engage with various countries and help them progress along the retardant adoption curve. We've continued to see this strategy and investment pay off in 2022, and I'll touch on two examples. Greece has historically used cheaper and less-effective foam products rather than retardant to combat wildfires. As their wildfire problem grows in severity and after significant consultations between the Greek authorities and Perimeter Solutions this year, Greece has contracted for one of our mobile retardant bases and the associated fire retardant for the 2022 fire season. This is often an important step toward more meaningful adoption of Perimeter's fire retardant products and services. We've also made significant progress this year in Italy. For the past several years, Italy has also primarily used cheaper and less-effective foam products, with minimal and sporadic use of retardant. After concluding that retardants are the superior solution to their growing wildfire issues and after significant consultations with Perimeter, Italy made the decision to switch their entire aerial firefighting effort to retardant starting this year. Furthermore, Italy is implementing a model very similar to the full-service model in the United States, where, in addition to providing the fire retardant, Perimeter Solutions also provides the logistics, equipment, and staffing necessary to run a national retardant operation. We continue to be very positive around the long-term growth potential of our international wildfire business. Our prevention and protection business is making good progress. We are once again partnering with Orange County Fire Authority to support their Quick Reaction Force, or QRF, program that provides protection, quick response to emissions, and the ability to conduct night retardant operations. We are now also working with San Diego County to provide retardant services for fire prevention and protection of critical infrastructure. In our suppressant business, we have developed and commercialized several new fluorine-free firefighting foams this year, and we continue to demonstrate our leadership in the growing fluorine-free foam market and expect to further expand our product portfolio over the coming months. Now turning to Specialty Products. First, let me address the name change in this business. As we mentioned on previous calls, we're working very diligently to expand the applications and end markets for our P2S5 product line beyond the traditional oil additives market with encouraging results. P2S5 currently serves diverse end markets and applications, including lubricant additives, various agricultural applications, various mining applications, and emerging electric battery technologies. As such, we renamed the segment Specialty Products to better represent this diversity of applications and end markets. Please note this is strictly a name change with no associated impact to current or historical financial results. Now addressing the financial performance in our Specialty Products business. Second quarter and year-to-date revenue increased 15% and 31%, respectively, while adjusted EBITDA increased 50% in the quarter and increased 74% year-to-date. Our strong performance in the Specialty Products business stems from our continued focus on our operational value drivers, specifically, winning profitable new business with both existing and new customers, improving our cost structure via productivity gains, and pricing to reflect the value we provide to our customers. We expect to continue to deliver solid performance in our Specialty Products business this year and should comfortably exceed the approximately $24 million of adjusted EBITDA this business delivered in each of the prior two years. And with that, I'll turn the call over to Chuck.

Thanks, Eddie. Turning to Slide 7. Second quarter sales in our Fire Safety business were $66.6 million, up 16% versus the prior year; and $85 million year-to-date, up 31% versus the prior year. Sales of retardants and fire suppressants both increased in the second quarter as well as in the six-month period. Second quarter adjusted EBITDA in our Fire Safety business was $24.2 million, up 3% versus the prior year; and $20.9 million year-to-date, up 11% versus the prior year. Switching to Specialty Products. Second quarter sales in our Specialty Products business were $34.4 million, up 15% versus the prior year; and $73.7 million year-to-date, up 31% versus the prior year. Second quarter adjusted EBITDA in our Specialty Products business was $11.5 million, up 50% versus the prior year; and $26.8 million year-to-date, up 74% versus the prior year. Moving on to the consolidated business. Second quarter consolidated sales were $101 million, up 16% versus the prior year; and $158.7 million year-to-date, up 31% versus the prior year. Second quarter consolidated adjusted EBITDA was $35.7 million, up 10% versus the prior year; and $47.7 million year-to-date, up 39% versus the prior year. Now moving below adjusted EBITDA. Interest expense in the quarter was approximately $12 million. Of this, approximately $1.5 million was a one-time non-cash accounting accrual item. Depreciation was approximately $2.9 million, while amortization expense was $13.8 million. Taxes were an approximately $0.6 million benefit in the quarter. CapEx during the quarter was approximately $2.7 million. Our expectations around interest expense, depreciation, taxes, CapEx and working capital are largely unchanged and are summarized on Slide 8. We ended the first quarter with approximately $675 million of senior notes, cash of approximately $126 million, and approximately 163 million basic shares outstanding. Let me spend a moment on Slide 9, which walks investors through the differences between our basic and diluted share count. The table's top row shows our second quarter weighted average basic shares outstanding of 162.9 million. The next row, labeled 1 in the table on Slide 9, captures the dilutive impact of performance-based employee stock options as well as warrants. Since as of the end of the reporting period the contingencies related to the options had not been met and the effect of the warrants would have been anti-dilutive, they are excluded from the period's diluted share count calculation. The following row, labeled 2, captures the dilutive impact of the fixed shares issuable under the Founder Advisory Agreement. This figure includes 100% of the maximum number of fixed shares issuable between Q1 in '23 and Q1 2028. While in practice, we expect these shares to be issued ratably over the next six years, the accounting treatment is such that the entire maximum future amount is required to be included in the diluted share count each reporting period. The row labeled three captures the dilutive impact of the variable shares issuable under the Founder Advisory Agreement. This is calculated on a mark-to-market basis relative to the payment price, which is essentially the high watermark on the variable incentive amount. Since the contingencies related to the variable shares had not been met in the reporting period, they are excluded from the diluted share count calculation for the period. The final row in the table shows our Q2 weighted average diluted shares outstanding of 177 million. I'll reiterate that this figure includes 100% of the 14.1 million fixed shares, which, in practice, we expect to issue ratably over the next six years. With that, I'll hand the call back over to the operator for Q&A.

This is Lucas Beaumont on for Josh. I just wanted to start on Fire Safety, if we could. So your sales are sort of up 16% in the quarter, but EBITDA only grew 3%. So can you just kind of help us understand why the drop-through, the EBITDA was much weaker this quarter than we've seen historically, touching on sort of the price and volume impacts from growth in the quarter and the price cost dynamics related to the higher costs that you mentioned earlier? And then just how we should think about that dynamic as we progress through the year?

Sure. As we mentioned during the call, we faced significant inflation, which we managed to offset through our contract mechanisms, allowing us to pass those increased costs onto our customers. The outcome of this is an increase in revenue without a corresponding increase in EBITDA, which significantly impacts our margins. Additionally, we've incurred some costs associated with our public company operations, further affecting margin percentages. We can anticipate similar results moving forward regarding our ability to pass on raw material costs, which will protect our EBITDA but continue to pressure our margins.

Great. And so I suppose then, in terms of the raw materials, I guess either at the total company level or by segment if you think it's quite different, could you give us a feel for sort of like what the impact was in the quarter and the outlook for the rest of the year, either like in dollars or a percentage basis?

Yes. So you can see what's kind of going on in the world from a raw material standpoint or a general inflation standpoint and the impact around the world on the commodity markets and the pricing there. While I can't get into specifics for raw materials or even by segment, I think we expect to continue to see similar types of costs through the remainder of the year. We're, of course, hopeful like everyone is hopeful that those costs will moderate as we go into next year. But we are expecting to see similar costs for the remainder of the year and the similar ability to pass those costs through.

Okay. Great. And I guess just on the volume side. So U.S. acres burned sort of 50% above the 10-year average, I think, year-to-date and up 77% or so year-on-year. So I was just curious if you could kind of help us understand why that doesn't seem to have flowed through to higher volumes sort of so far. And then where do you think that's going to kind of hit the peak third quarter of the season, or how we should sort of think about that dynamic.

Yes, that's a great question. As we've mentioned before, while acres burned is generally a useful indicator of fire season severity, it doesn’t necessarily reflect the impact on our retardant sales. This year illustrates this point clearly. Many of the acres burned were in regions like Alaska, Texas, and the South, where retardant use is typically lower. Therefore, the effective acres for us didn't rise as much as the total reported acres. Additionally, much of the activity in the second quarter occurred early on, before most tanker bases were operational or tankers had been activated. Activity during this early period doesn't generate as much business compared to later in the quarter, and the latter part of the quarter saw significantly less acreage burned. Currently, we are in the middle of the fire season, which has been relatively milder than average so far. However, this doesn’t necessarily predict what we might encounter in August, September, and October. As Haitham noted, conditions suggest we could see more activity or a typical seasonal trend going forward, but we haven't seen that yet.

Yes. To summarize the discussion on cost escalators, should we consider that you are effectively safeguarding a dollar of EBITDA margin for each ton of retardants sold? Can you explain how these are structured?

I'm sorry, I didn't hear. Can you repeat the last part of your question?

How are your contracts structured? It seems that even though your percentage margin is decreasing year-over-year, the absolute EBITDA generated appears to be stable or increasing. Is it correct to understand that while your revenue may fluctuate significantly, your EBITDA per unit sold will remain relatively stable in any given year?

That's exactly right. We have a number of contracts with different mechanisms, all aimed at protecting our EBITDA during inflationary periods. As we pass through cost increases, revenue will rise, but there will be no effect on EBITDA, so we are safeguarded from a dollar standpoint, although margins may be negatively impacted.

Right. Yes. Okay. That makes sense and seems logical. So just one high-level question that we get a lot on your story. So can you speak to the competitive environment within the U.S. as a starting point, just how successful are you seeing competition as something to make inroads into the industry? And then I guess the flip side is in the international markets where you're making inroads, what type of competition are you generally going against? From your comments, it sounded like entirely different products, but are there competing solutions similar to yours in many international markets?

Let me address the first part of your question. In terms of competition in the U.S. and North America, our view remains the same as we have previously stated. It is still uncertain whether or when a potential competitor will be able to qualify. However, we believe that even if they do, it will be quite challenging for them to gain market share in North America. Regarding international markets, the situation is similar. The techniques for wildfire suppression, including the use of various products like foams and retardants, are largely consistent with those in North America, and we hold a strong position in international wildfire fighting markets. As mentioned in the call, we are pleased with the progress of our programs, particularly the expansions in Italy and France, as well as new initiatives in countries such as Greece. We are very optimistic about our international prospects, and our efforts are yielding positive results.

Makes sense. Maybe I'll throw one more in here. Just on the market expansion on Specialty Products, could you speak to some of the big areas you're targeting? And have you guys assessed the addressable market or the market size relative to what you're currently selling into?

We discussed the addressable market and the key areas we are focusing on. Lubricant additives have long been our largest end-user market. However, we are making significant progress in agricultural, mining, and emerging technology markets, which we believe could provide substantial new business for the company. While I can't provide exact figures, I can say that we are experiencing success in these areas and expect to achieve even more as we continue to explore these new applications.

It's okay if you want to just punt on this, but I guess I'm just wondering, are these new markets similar size? 10% of the size? I mean just order of magnitude relative to the lubricants market.

I would say it's too early to determine. The lubricant market has traditionally been our largest market. Currently, these markets are smaller than the lubricant market, but there is significant potential for growth. Therefore, I think it's too early to assess how large these markets could become, but we're very excited about the opportunities ahead.

Starting off on the Specialty Products business. I know you touched on it further, but what gives you the confidence that the current run rate of EBITDA there is sustainable over the near to medium term?

If you examine the progress we are making in our Specialty Products business, it is truly the result of our efforts on all three of our value drivers: enhancing productivity, generating new business, and ensuring we are receiving appropriate value for our offerings. I am confident that the initiatives we are implementing across the business will continue to yield benefits and remain sustainable, particularly in the medium term. Furthermore, as I noted earlier, I believe there are significant long-term opportunities to expand this business into new end markets, which could be advantageous for us moving forward.

So none of this, and I guess the question I'm getting is, none of this has been driven by any near-term volatility, especially given some of the disruptions in Europe?

I would say no. I think this is the result of efforts that have been going on for quite a while and are starting to pay dividends for us. And I believe that the progress that we're seeing is going to be sustainable.

Fair enough. Switching gears, can you share what you are seeing on the M&A front, considering you mentioned you are holding off on dividends or buybacks in terms of capital allocation?

Ryan, it's Haitham here. We generally appreciate M&A environments like this, as they tend to be more challenging for most potential buyers. We are well-capitalized with significant resources available on our balance sheet, and we expect that to grow considerably by year-end. During periods of rapid dislocation in public capital markets, both equity and debt, the private market often reacts by freezing up. Sellers usually do not quickly lower their prices in response to declines in public equity markets, and buyers often face constraints, primarily due to tighter credit availability. This positions us advantageously in such a market. However, activity is slower, which means two things for us moving forward. First, we anticipate that activity will eventually pick up. While private markets can pause transactions, they cannot stop them entirely, so this will resolve itself over time. Second, it’s crucial for us to be proactive in these times. If we believe most buyers are somewhat sidelined and we are not, then fewer opportunities will come our way, which means we need to work harder to engage and create opportunities. We are fully committed to that effort, and we'll see how things unfold.

Got it. And just final for me. Just the cash portion of the founders fee, what is that expected to be?

So what portion, I beg your pardon?

The cash payment related to the founders fees, what is that expected to be?

Based on the current stock price, roughly maximum of $13 million approximately.

That's for the full year, correct?

Yes.

And just remind me, that gets paid out in the first quarter of next year, correct?

Correct.

Yes.

I take the point that it matters where the acres burned are obviously closer to the urban interface, there's more attention paid from the municipalities. That said, I have an idea that there's going to be far more focus on protecting forests for carbon capture and other reasons. And the Biden administration has been heavily focused on this, with some declarations, executive orders on forestry. And kind of buried in the revised management bill is some money for 'protecting forest,' although it's very vague. Any thoughts on the potential for all of that?

Yes, it's a great question. It's aligned with our perspective on long-term trends and our recent experiences. We observe ongoing increases in the acreage affected by wildfires, rising expenditures on wildfire fighting efforts, and a growing number of resources, such as air tankers, dedicated to fire management. We believe these trends are robust and will persist. Additionally, the funding now being directed toward forest health and protection presents opportunities to enhance our prevention and protection business. Overall, the elements you mentioned reinforce and may even expedite the trends we anticipate moving forward.

Understood. And maybe it's just too early, but have you had any discussions with municipalities or otherwise, where they're saying, look, we also have to protect the deep forest for carbon capture reasons, not just the stuff that's closer to residential areas? Or is that not coming up yet?

No, I think there's a widespread understanding at the federal, state, and local levels that action is needed to prevent fires, improve forest health, protect communities, and address climate change. Both carbon capture and the overall perspective on climate change and forest health are significant priorities right now, alongside firefighting efforts. While I wouldn't categorize it as the main focus, it is certainly gaining attention as more funding is allocated to forest health initiatives at all levels. We are collaborating at the local community, municipality, county, and state levels, and the organizations involved in this work are indeed more extensive than they have been in the past. Yes. Understood. I mean I would just say, I think the European market is obviously a material opportunity, and you've already noted some growth there. I would say, equally, it could just be the depth with which we decide to protect forests beyond the urban interface could also be a material opportunity given the field to travel on net zero and the carbon capture focus. So that's why I asked the question. Totally agree. Yes. Thank you. I want to thank everybody for calling in and participating with our second quarter earnings call, and we look forward to talking to you again next quarter. Thank you.

This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.