Perimeter Solutions Q2 Earnings Call Highlights

Key Points

• Strong second-quarter performance: Perimeter Solutions reported net sales of $313.8 million, up 31% year over year, while adjusted EBITDA rose 16% to $105.6 million. Adjusted net income increased to $68.6 million, although adjusted diluted EPS remained $0.41.
• Fire Safety faced temporary pressures: A first-year federal contract pricing reduction and limited Defense Logistics Agency deliveries during a vendor-managed inventory transition constrained quarterly growth. Management expects deliveries to ramp in the second half of 2026, with a larger contribution beginning in 2027.
• Acquisitions are expanding growth: Specialty Products revenue doubled, driven largely by the MMT medical-device business, while the company completed its approximately $120 million acquisition of Monaco Enterprises. Monaco adds recurring, installed-base revenue from fire alarm and mass-notification systems used across more than 200 U.S. military installations.

Perimeter Solutions NYSE: PRM reported second-quarter 2026 adjusted EBITDA of $105.6 million, up 16% from a year earlier, as growth in its Specialty Products portfolio and acquisitions helped offset temporary pressures in Fire Safety. The company said adjusted net income increased to $68.6 million from $61.2 million, while adjusted diluted earnings per share was unchanged at $0.41.

Chief Executive Officer Haitham Khouri said second-quarter net sales increased 31% to $313.8 million. Year-to-date adjusted EBITDA rose 34% to $146.7 million.

The company also announced that it closed the acquisition of Monaco Enterprises for approximately $120 million in cash following the end of the quarter. Monaco designs and manufactures fire alarm reporting and mass-notification networks used at more than 200 U.S. military installations globally.

Fire Safety Results Reflect Contract Transition

Fire Safety revenue rose 7% year over year to $129.1 million in the second quarter, while adjusted EBITDA increased to $78.8 million from $77.7 million. For the first half, segment revenue grew 11% to $174.5 million and adjusted EBITDA increased to $97.5 million from $87.8 million.

Khouri and Chief Financial Officer Kyle Sable attributed the relatively modest quarterly EBITDA increase to two temporary factors: a 5% pricing reduction in the first year of the company’s federal retardant contract and minimal foam deliveries to the Defense Logistics Agency during a transition to a vendor-managed inventory model.

Sable said the company incurred costs associated with preparing for the Defense Logistics Agency contract, including facility expansion, IT and logistics capabilities, and supply-chain inputs, while sales remained limited during the quarter. He said deliveries are expected to begin ramping in the second half of 2026, with a more substantial contribution anticipated beginning in 2027.

“Absent those, we would’ve been double-digit EBITDA growth,” Sable said in response to an analyst question on the Fire Safety segment’s performance.

Management expects the impact of the federal pricing step-down to be increasingly offset by contributions from its CAL FIRE agreement as fire activity shifts toward California in the second half. Khouri said recent fire activity in California, the Pacific Northwest and much of the Southwest represents “retardant-heavy acres,” compared with earlier-season fires in areas such as Florida, Georgia and Nebraska.

Perimeter said fire-retardant demand in the U.S. was stronger year over year, supported by increased fire activity and aggressive initial-attack strategies. Canadian activity was lower than in the prior year, while strength in Europe offset slower conditions in Asia-Pacific. The company said global fire activity through the second quarter and early third quarter had been within a normal range, though full-year volumes could still finish above or below normal levels.

Canada and Global Fleet Investments

Khouri highlighted Canada’s federally funded Pan-Canadian Aerial Asset Program, which is supported by C$316.7 million over five years and includes a national surge fleet of 10 aircraft, including four retardant-capable air tankers. He said the four tankers will be newly built large air tankers with 4,000-gallon capacity.

The program has expanded access to aerial firefighting resources for provinces and territories, and Ontario used retardant in 2026 for the first time in decades, supported by one of Perimeter’s mobile retardant bases, according to Khouri.

Management said the Canadian initiative could support long-term demand growth. Khouri noted that there are roughly 30 air tankers currently in service globally, carrying virtually all of the company’s retardant products. He also cited new air tanker activity in Texas, several U.S. states and Europe.

“Virtually every fire season, in fact, every fire season, we can drop more retardant than we do,” Khouri said, adding that the company is constrained during peak periods by the availability of air tankers.

Specialty Products Growth Led by Acquisitions

Specialty Products revenue doubled from the prior-year quarter to $84.7 million, while adjusted EBITDA rose to $26.8 million from $13.7 million. Year-to-date revenue increased 113% to $164.3 million and adjusted EBITDA rose to $49.3 million from $21.7 million.

The increase primarily reflected acquired businesses, particularly MMT, the company’s medical-device manufacturing operation. Perimeter said MMT continued to perform ahead of its underwriting model, supported by its installed base and recurring aftermarket demand. The company has invested in research and development, product launches, productivity projects and pricing actions at MMT.

At PDI, Perimeter’s P2S5-based lubricant additives business, adjusted EBITDA declined year over year due largely to production disruptions at the Sauget, Illinois, facility operated by Flexsys. On June 10, the Circuit Court of St. Clair County, Illinois, appointed an independent receiver over the plant.

Khouri said the court’s order cited safety lapses, including fires, at least one explosion, hydrogen sulfide gas releases that resulted in injuries, and the storage of decaying P2S5. Perimeter said it is taking steps to eliminate PDI’s reliance on Flexsys and expects the effects of capacity constraints to diminish progressively during the second half as production capacity is restored.

IMS, Perimeter’s aftermarket electronics business, also posted a strong quarter, according to management. The company said integration of product lines acquired during the fourth quarter is progressing and that IMS continues to evaluate further product-line acquisitions.

Monaco Acquisition Expands Fire Safety Portfolio

Monaco will be reported within the Fire Safety segment and becomes Perimeter’s sixth operating business. Khouri said more than 95% of Monaco’s sales come from its installed base through spare parts, repairs, expansions, upgrades and support. Monaco’s systems use proprietary communications protocols, meaning that maintaining or expanding an installed network requires Monaco equipment, management said.

Khouri said Monaco has a particularly strong position with the U.S. Air Force and opportunities to expand within other Department of Defense branches and related regulated government markets. He said the company’s underwriting model assumes low-single-digit industry growth and does not include profitable-new-business assumptions.

Perimeter funded the transaction with cash on hand and borrowings under its existing credit facility. At quarter-end, the company had approximately $83 million of cash, a fully undrawn $200 million revolving credit facility, and net debt of about 3.1 times last-12-month adjusted EBITDA. Following the Monaco acquisition, Perimeter said its liquidity exceeded $150 million.

The company reiterated expectations for annual cash interest expense of about $75 million, capital expenditures of $30 million to $40 million, and a cash tax rate of approximately 20% or better over time. Management said full-year capital spending is expected to trend toward the upper end of its range as it invests in retardant bases, suppressant-production capacity and MMT productivity initiatives.

About Perimeter Solutions (NYSE:PRM)

Perimeter Solutions Ltd. NYSE: PRM is a global specialty chemicals company focused on delivering performance-driven solutions for the oil and gas, coatings, plastics, water treatment and packaging markets. Established as an independent publicly traded company in December 2019 following its spin-off from NewMarket Corporation, Perimeter Solutions has positioned itself as a leading provider of highly engineered chemical products designed to optimize upstream oil recovery, protect infrastructure and enhance the performance of industrial processes.

The company's core product portfolio spans several key segments.

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