Good day, everyone, and welcome to today's Perimeter Solutions Q1 2025 Earnings Call. (Operator Instructions.) Please note, this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Seth Barker, Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining Perimeter Solutions' First 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, May 8, 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. 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 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 and on the SEC's 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 strong start to 2025. First quarter adjusted EBITDA reached $18.1 million, reflecting solid execution of our operational value drivers as well as fire activity in both North America and international markets. We accelerated capital deployment during the first quarter, investing $23 million across a range of priorities, including increased capital expenditures, our first product line acquisitions at IMS, and share repurchases. Before getting into the details on the quarter, I'll provide a summary of our strategy, offer context on our IMS acquisition, and give a brief operational update. After that, Kyle will walk through the quarter's 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 three operational pillars. First, we seek to own exceptional businesses. These are typically 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 through value-based pricing. And third, we operate our businesses in a highly decentralized manner. Decentralization is a principle we discussed extensively within Perimeter and which we're happy to discuss with investors today as the third pillar of our operating strategy. We believe our operational pillars will optimize our durable free cash flow. We then seek to maximize long-term per share equity value through a clear focus on the allocation of our capital as well as the management of our capital structure. I'll now spend a moment on the importance of decentralization to our operating model. Perimeter currently consists of multiple business units, and we expect that number to grow through future acquisitions. Each of our business units operates independently with minimal integration at the corporate level. Our general managers have full autonomy to run their businesses and drive long-term performance. In turn, they're held accountable to deliver results across each of our three operational value drivers. And finally, they are incentivized to do so as we closely align compensation to outcomes. This decentralized approach accelerates and improves operational decision-making by placing it in the hands of those closest to the customer. We believe that there is no substitute for empowered and incentivized managers focused on driving value creation via the rigorous implementation of our three operational value drivers. Our highly decentralized operating philosophy also supports our acquisition strategy. If a business meets our exceptional quality criteria, we believe we can drive value creation through our proven operational playbook and without relying on unproven synergies. Our recently acquired IMS business, described in detail on Slide 4, demonstrates this point well. IMS is a high-quality platform where we see meaningful opportunity to apply our operational value drivers and deploy capital into targeted product line acquisitions to generate returns above our threshold. IMS produces printed circuit board-centered components used in mission-critical applications. These components are typically used in the repair and replacement aftermarket for larger, higher-value systems, small in cost, but essential in function and are well suited to our strategy of building durable, high-margin, high-return businesses. IMS' strategy has two critical components that differentiate it from a typical PCB manufacturer. First, IMS increasingly owns the intellectual property of the components it manufactures, both through developing production IP and owning the underlying designs, certifications, and specifications necessary to develop these components. Second, IMS is focused on highly flexible short-run production. This enables IMS to own niche aftermarket components with smaller volumes, which larger manufacturers often struggle to service. The result of these two differentiating characteristics is that IMS is often the sole source provider of critical components into niche aftermarket applications. Our goal is to expand IMS' portfolio of proprietary components by acquisition. IMS completed its first add-on product line acquisitions in the first quarter for a total purchase price of $10 million. We anticipate deploying significant capital annually into add-on acquisitions at IMS, all at expected IRRs which exceed our return threshold based on our ability to apply our operational value driver playbook to these acquired product lines. Turning to recent operational developments on Slide 5. Wildfire activity in the early part of the North American fire season was elevated, including devastating wildfires in Southern California and activity across Texas, Oklahoma, Florida, and the Carolinas. This early season activity reinforces the critical importance of resource readiness. Timely availability of firefighting assets not only improves response effectiveness but also delivers a meaningful return on investment for governments and communities, reducing long-term costs, protecting property in the environment, and most importantly, helping safeguard lives in the threatened communities. International markets also contributed positively to the quarter with a return to more typical fire activity levels in Australia and increased use of retardants across several international markets. Our suppressants product line faced a more difficult comparison in Q1 as it lapped a stronger prior year period due to the launch of our fluorine-free MIL-SPEC products in late 2023. In our Specialty Products business, we experienced operational challenges at our U.S. P2S5 manufacturing facility, which is operated by a third party via tolling arrangement. The extended Q1 plant outage weighed on EBITDA for the segment. We are actively addressing the downtime issues with our tolling partner. With that, I'll turn the call over to Kyle for a more detailed review of our financials and capital allocations in the first quarter.

Thanks, Haitham. I'll begin on Slide 6 where growth figures shown are versus the prior year comparable period. Starting with Fire Safety, revenue was $37.2 million, up 48% from last year, and adjusted EBITDA was $10.1 million compared to a small loss in the same period last year. The increase in Fire Safety's Q1 revenue and adjusted EBITDA is attributable to our retardant products and associated services, which overcame a decline in our suppressants business. The increase in fire retardant sales was driven by above-average fire activity in multiple states, most notably in California during Q1. First quarter 2024 benefited from a major suppressants product launch in late 2023, which boosted results in Q1 2024 and led to lower sales in suppressants in Q1 of 2025. While wildfire activity in Q1 was elevated, wildfire risk conditions across our entire footprint are still within the range we would consider normal, and we continue to prepare for the full range of potential outcomes. In our Specialty Products segment, Q1 net sales increased $7.5 million due to our IMS acquisition, offset by a $6.5 million decrease in the base business due to unplanned plant downtime at our outsourced manufacturing provider for a net increase of $1 million. Specialty Products Q1 adjusted EBITDA decreased to $8 million as compared to $12.4 million in the prior year quarter. While demand for our base P2S5 business was strong in Q1, extensive downtime at our manufacturing provider caused Specialty Products to miss out on those sales in Q1. While our team is focused on resolving the underlying issues to ensure more stable operations going forward, these missed sales will not be fully recovered in the balance of 2025 and will reduce this year's adjusted EBITDA. We anticipate that the earnings power of the business will rebound to normalized levels in 2026. Combined, the fire safety outperformance offset Specialty Products third-party plant issues with consolidated first quarter sales up 22% to $72 million and adjusted EBITDA rising 49% to $18.1 million as compared to $12.1 million a year ago. Let me take a moment to discuss the impact of trade policy on our operations. We expect a modest direct impact as virtually all of our U.S. sales are produced domestically. We prioritize domestic suppliers when available, and we have plans in place to mitigate even this limited exposure. Our direct exposure equates to 2% to 3% of annual EBITDA, which we are working to mitigate. Moving below adjusted EBITDA for Q1 2025, our GAAP EPS was $0.36 as compared to a $0.57 loss in the prior year quarter. Q1 2025 adjusted EPS was $0.03 as compared to a $0.01 loss in the prior year quarter. Turning to our long-term assumptions as shown on Slide 7. Our assumptions are unchanged and with normal quarterly variation, Q1 is consistent with those expectations. Q1 interest expense was $9.6 million, while taxable depreciation, amortization, and other tax deductions totaled $5.3 million. Cash paid for income tax was $0.5 million in Q1 2025 as compared to $800,000 in the prior year quarter. Here, I will note that variation in taxes is typically timing related in any given quarter, and our full-year tax expectation is unchanged. Our capital expenditures are consistent with expectations at $4.8 million. Our working capital needs fluctuate seasonally, and Q1's working capital levels reflected our team's effort to manage this cash flow with a decline in accounts receivable that more than offset a slight seasonal inventory increase. We define free cash flow as cash flow from operations less capital expenditures. In total, we generated free cash flow of $18.9 million in Q1 2025. We allocated nearly $23 million of capital in the quarter, the returns on which we expect will exceed our targeted equity returns of 15% or higher. We continue to invest in our business organically with $4.8 million allocated to capital expenditures, the majority of which supported our growth and productivity initiatives. The pipeline of outstanding projects continues to build and is an important element supporting our long-term organic EBITDA growth trajectory. Moving to M&A, we invested $10 million in Q1, kicking off the inorganic expansion of IMS that was a key part of the original investment thesis. The acquired product lines are being integrated into our manufacturing footprint, and our team is working on implementing our operational value driver strategy. Finally, we repurchased 900,000 shares for approximately $8 million in Q1. 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 will not preclude higher potential IRR investments, notably in M&A. Both conditions were true in Q1. Turning to Slide 9, I'd like to highlight our favorable debt structure, just a single series of fixed-rate notes at 5%, maturing in the fourth quarter of 2029 with no financial maintenance covenants. As of Q1, we were levered 1.7x net debt to LTM adjusted EBITDA. We also have substantial liquidity with around $200 million in cash and an undrawn $100 million revolver as of quarter end. We ended the quarter with about 148.8 million basic shares outstanding. To conclude, Perimeter's first quarter reflected good execution and some early tailwinds. Despite the strong start, we remain disciplined in our approach to the full year, continuing our work to implement our operational value drivers across the business.

(Operator Instructions.) We'll take our first question from Josh Spector with UBS.

I just wanted to follow up on the comment on tariffs. So, the 2% to 3% EBITDA exposure risk, is that primarily cost that you're talking about? And can you talk about your ability to offset that? Do you have full ability to do that? Or do you think some of that is going to remain a headwind?

Josh, it's Kyle. Thanks for the question. Yes, that is — it is almost entirely a cost-based metric for us. One of the attributes of our business is we're less levered to the impact that those tariffs might have on demand side. On the cost side, the 2% to 3% of adjusted EBITDA for the year is really a reflection of our imports, and we really believe that we're going to have some levers to pull to be able to do that. Will we be able to get the entire amount back? We're still uncertain, and we're still working through the alternatives there, but we do suspect we'll be able to mitigate a reasonable proportion of that.

And just on the customer side, I mean, I know most of your sales are within the region, but your customers' customer may be sending some oil additive blends from the U.S. to China or some other areas. Have you assessed that piece from a sales exposure perspective? Is there any comments you can make there?

We have less visibility on the supply chain than that. However, when we look back and think about the likelihood that the end market demand for that product changes meaningfully, we don't see that as material. It would be a very minor variation in demand due to that.

Okay. And just on suppressants. So, the sales down year-over-year on the tough comp. I think it's the toughest year-over-year growth comp, but the sales of suppressants are higher in 2Q and 3Q. I guess what I'm trying to ask here is, do you expect that 2Q and 3Q are tough comps that you expect to be down? Or would you expect to grow 2Q and 3Q based on what your order books look like today?

Yes, Josh, Q1 of last year was an unusually tough comp for us in the scheme of the cadence of the year overall. So, I expect that we will have a — as the year builds through, we should get a little bit better on that front.

Okay. And if I could squeeze in one more just on fire retardants. During the quarter, one of your potential competitors basically exited the market. So, I'm just curious if you have any comments there around competitive dynamics within the industry today? And as we think longer-term, do you think — does the USDA U.S. Fire Service still have a goal to qualify and bring in alternative materials? Or has that goal changed at all?

Josh, it's Haitham. So, I think one or two things have changed in the competitive environment and market backdrop, and then a lot of things haven't changed. What has changed is it's just less likely that an alternate non-ammonium phosphate chemistry is attempted or qualified anytime soon. What hasn't changed, which is where our focus has always been and continues to be is Perimeter is the gold standard of retardant programs. I've said this before, but there's a reason that literally every meaningful retardant program in the world partners with us. It's an attractive market. We understand that there will always be competitors looking for ways to improve on our offering and enter the market. And the way we combat that is remaining highly, highly vigilant and obsessively trying to raise the bar on ourselves. We invest very heavily in R&D to remain at the absolute cutting edge of the industry. We invest heavily in our equipment and our people to ensure we have the best of the best in the field at all times. And we continue to very intently listen to our customers, understand their needs, understand their pain points, and move expeditiously to address those and therefore provide increasing value. And as long as we do that, it will just be harder and harder for folks to outpace us over time.

We'll take our next question from Dan Kutz with Morgan Stanley.

So, I wanted to ask, I guess, as folks are thinking about different economic scenarios, I guess, maybe at a higher level, could you kind of walk us through your business lines and talk through which business lines do have some level of economic exposure correlation with broader market trends? And then I guess, more importantly, and what is one of the, I think, key components of the value proposition of Perimeter is that a lot of the big parts of your business have very little, if any, economic correlation. So yes, just wondering if you could talk through the sensitivities of your business lines to broader market trends.

Yes. You bet, this is Haitham again. So, our retardant business has close to no economic sensitivity. As you can imagine, based on the use case, what's happening in the broader economic environment has close to 0, if not in fact, 0 impact. Our suppressant business is largely an aftermarket replenishment, replacement, and emergency response business. So, when there's a fire in a facility with flowable liquids such as an airport, we're going to respond. Again, very, very little, if not no economic sensitivity to that part of the business. There is a portion of our suppressants business that is new installed. So, if a new chemical plant is built, for example, or a new airport is built, we'll go in there and put in a stocking order; you may see that portion of the business slow a little bit if the economy slows, but we expect any impact there to be pretty modest. And then our phosphorus pentasulfide business is very closely tied to miles driven by internal combustion engine vehicles in BOECD. It really is just that simple, and that metric will move in very, very small 1%, 2% increments in periods of economic fluctuation. You just don't see huge changes in miles driven, and therefore, we expect to see a modest impact there as well.

Great. That's all really helpful. Maybe just one more specific one along that similar line of questioning. It very well may be too early to tell. But in your conversation with customers around the fluorine-free switching tailwind for the suppressants business, have you seen any indications of customers potentially slowing that program or potentially waiting to make the decision to switch to fluorine-free products against kind of looming macroeconomic uncertainty? Or is this kind of an overarching trend of let's get a cleaner, greener, safer product installed and therefore, that trend may also be relatively less sensitive to the broader macro backdrop?

We have not seen any change in customer enthusiasm or the pace of customer conversions to fluorine-free foams. That is an area where if the economy slows materially, you may see people defer these conversions because there is meaningful CapEx and stocking order spend, working capital associated with them. But we so far have seen and heard no signs of any slowdown in that switch.

Yes, Dan, thanks for the question. I don't think there's anything that would change overall for the year at this point in time. When you look at Q1, you'll see that networking capital was a little bit better. We did a really good job on chasing down accounts receivable this quarter. That's the one thing where we got a little benefit in Q1. But honestly, it's a small enough impact to the total year that that's going to end up being noise, I think. And so, I probably wouldn't change anything about the full year view.

(Operator Instructions.) It appears we have no further questions in the queue. I'll turn the program back over to our presenters for any additional or closing remarks.

Thank you, operator. And once again, thank you, everybody, for your time, and we'll be here again in 90 days or so.

This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful day.