Q2 2022 Perimeter Solutions SA Earnings Call
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Greetings and welcome to the perimeter solutions 2nd quarter, 2022 earnings call. At this time, all participants are in a listen only mode. At this time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the call over to Nori Yokozupa. General Counsel, thank you, you may begin.
Thank you, operator. Good morning, everyone, and thank you for joining Perimeter Solutions second quarter 2022 earnings call. Speaking on today's call are Haetham Corey, Vice Chairman, Edward Goldberg, Chief Executive Officer and Chuck Krop, Chief Financial Officer.
You want to remind anyone who may be listening to a replay of this call that all statements made are as of today, August 5th, 2022. And these statements have not been, nor will they be updated and subscribed 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 a business and the environment in which we operate, and our actual results may materially differ from those expressed 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 a bit done.
Please refer to our earnings press release and presentation. As well as our SEC filing, both of which will be available on a website on the SEC's website.
With that, I will turn the call over to Hatham Kory, Vice Chairman.
Thank you, Norey. 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. I'll start with summary comments on our strategy.
Starting with our strategy on slide three. 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. One, recurring and predictable revenue streams.
2. Long-term Secular Growth Tailwinds
Three, products that account for critical but small portions of larger value streams.
4. Significant free cash flow generation with higher returns on tangible capital. 5. Potential for opportunistic consolidation.
We believe that these economic criteria are present at perimeter as described on slide four.
And we also use these criteria to evaluate potential new acquisitions.
as described on slide five.
We seek to drive long-term equity evaluation via consistent improvement in our three operational value drivers. We seek to drive long-term equity
equity value creation via consistent improvement in our three operational value drivers, which are as follows.
Crossable 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 EVDA is up 39% year to date. The solid growth in both our fire safety and specialty products businesses. Note that specialty products is the new name for our oil additive business and Eddie will elaborate on the name change later in this call.
And just to EBDA 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 and adjusted EBDA over the first half of 2022, which comfortably exceeds the adjusted EBDA 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 EPA 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 EBA growth consistent with and perhaps above our long-term framework of mid-teens growth. 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 America fire season.
As we approach, it's halfway point.
We'll observe that the North America fire season through the end of July has been soft.
According to the National Interagency Coordination Center.
excluding the Alaska and southern areas.
both of which historically use relatively little retardant.
Year to date, US 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 EBDA 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. I will start programming from the start to the end of the day.
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 season weakness in 2022 and deliver results in line with a 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 America fire season.
A close discussion by noting that we don't believe the slow start to the fire season has much predictive value to 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 cap 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 fly 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 strengths of the fire season.
We greatly value this financial flexibility, specifically as it relates to potential M&A opportunities. 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 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, Daddy.
Thanks, Hatham.
We're pleased with our strong first half performance with consolidated EBIT, up 39% year to date. With consolidated EBIT, 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-trendline 2022 fire season. cloves ventral steel sem hockey league Orange Mitchell FL Dodger Fie F, H, H, H, H, H. H, H, H, H, H, H, H, H, H, H, H, H, H, E, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H, H. H, H, H, H, H, H, H, you
Let me take this opportunity to note some of the key accomplishments in our fire safety business during the second quarter.
We continue to demonstrate our expertise, experience and reliability in support of our customers while land 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 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. 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 have also made significant progress this year in Italy.
For the past several years, Italy has also primarily used cheaper and less effective phone products with minimal and sporadic use of retardant.
After concluding that retardants are the superior solution to their growing wildfire issues. Ascuts of oncology besteht o must reach any of the unallowable issues from partially 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 admissions, and the ability to conduct night retardant operations.
We are now also working with San Diego County to provide retarded services for fire prevention protection of critical infrastructure. We are now working with San Diego County County to provide retarded services for fire prevention We are now working with San Diego County County We are now working with San Diego County
In our suppressive business, we have developed and commercialized several new Florian-free firefighting foams this year, and we continue to demonstrate our leadership in the growing Florian-free foam market and expect 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 in markets.
Please note that 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, the productivity gains, and pricing to reflect the value we provide to our customer.
We expect to continue to deliver solid performance in our specialty products business this year and should comfortably exceed the approximately $24 million of a gestive EBITDA this business delivered in each of the prior two years. In each of the prior two years.
And with that, I'll turn the call over to Chuck.
Thanks Eddie, turning to slide seven.
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 fire burdens 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 in $20.9 million a year to date. $20.9 million a 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 and our specialty products business was $11.5 million, up 50% versus the prior year.
And 26.8M dollars year to date, up 74% versus the prior year.
Moving on to the consolidated business.
Second quarter consolidated sales were $101 million.
up 16 percent 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, $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, and 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 of the weighted average basic shares outstanding of 162.9 million.
The next row, labeled one in the table on slide nine, 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 role, Label 2, captures the dilutive impact of the fixed shares.
Issue below under the Founder Advisory Agreement.
This figure includes 100% of the maximum number of fixed shares issueable between Q1, A23 and Q1, 2028.
While in practice, we expect these shares to be issued radically over the next six years. To be issued radically over the next six years.
The accounting treatment is such that the entire maximum future amount is required to be included in the full-included share count for each reporting period.
The row labeled 3 captures the dilutive impact of the variable shares, issueable under the founder advisory agreement.
This is calculated on a mark-to-market basis relative to the payment price.
which is essentially the high water mark on the variable incentive amount.
This is the contingencies related to the variable.
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 radically over the next six years. I'll reiterate that this figure includes 100% of the 14.1 million fixed shares,
With that, I'll hand the call back over to the operator for Q&A.
Thank you. We will now be conducting the question and answer session. We will now be conducting the question and answer session.
If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
You may press star two if you would like to remove your question from the queue. For participants using speaker equipment and maybe not starting to pick up your hands before pressing the star keys.
One moment please, what we pull for your questions.
Our first questions come from the line of Joshua Spector with UBS. Please proceed with your questions.
Good morning, this is Lucas Baumann on Pajosh. I just want to start on my safety if we could. So, your sales are set up 16% in the quarter that I've only grew 3%. So, you just kind of help us understand why the drop through the I've had 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 rules as you make emissions.
earlier and then just how we should think about that dynamic as we progress through the year. Thanks.
Sure. So, as we talked about during the call, we experienced significant amount of inflation of which we were able to, through our contract mechanisms, pass through those additional costs in our pricing to our customers. The net effect of that is, as we said, increase in revenue without an associated increase in EBITDA, which tends to depress margins quite significantly.
In addition, again, as we said, we have added some costs related to our public company.
Operations, which also served to depressed margins, is Parts Irrelated Presents.
I think we can expect to see similar results going forward in terms of our ability to pass through those raw material costs, which will again protect our EBITDA dollars but tend to depress margins.
Great, thanks. So I suppose then in terms of the raw materials, I guess either at the total company level or by statement 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, like in dollars or percentage raises?
Yeah, so you can see what's kind of going on in the world from the raw material standpoint or a general inflation standpoint and the impact around the world on the commodity markets and the pricing there. Or 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 are 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. Thanks. And I guess just on the volume side.
So, USA can burn sort of 50% above the 10-year average, I think, year to date, and up 77% or so year and year. So, I was just curious if you could kind of help us understand why that doesn't seem to have fled through to higher volumes, sort of, so far. And then whether you think that's going to kind of take the take quarter of the season or how we should sort of think about that done in the next. Thanks.
Yeah, sure, it's a good question. As we have said before, acres burned is a typically a generally okay way to look at overall fire season severity but is not necessarily reflective of our efforts or retardant sales. The reason for that is very well illustrated this year. So a couple of things on acres burned. A significant amount of those acres were burned in areas as Haitham mentioned.
in his talk in areas that typically are lower retardant use areas, Alaska, Texas, the South, etc. So the effective acres for us were not up nearly as much as the total acres reported. In addition, because much of the activity in the second quarter was early in the quarter, that's a period of time before most of the tanker bases are open or most of the tankers are on activation.
So activity early in the quarter doesn't generate as much business as activity later in the quarter. And the late part of the quarter was much less significant from an acres burned standpoint. Generally we are in the middle part of the fire season right now. And while up until now the season has been relatively softer than average, that's really not an indication.
of what we may see in the period August , September , October . So as Haifa mentioned, also the conditions are such that we could expect to see an active season or an on-trend line season going forward, but up until now we haven't experienced that.
Right, thank you.
Thank you. Our next question has come from the line of Connor Lyneall with Morgan Stanley . Please proceed with your questions.
Yeah, thanks. Just to close out the conversation on the cost escalators, is the right way to think about this that you're sort of protecting a dollar of EBITDA margin per ton of return and sold? So how exactly are these designed? So how exactly are these designed?
I'm sorry, I didn't hear. Can you repeat the last part of your question?
How basically are your contract designs? Because basically it seems like, although your percentage margin is coming down year over year, the dollars of EBITDAG generated are flat up. So I guess is the way to understand it that your revenue line item might move a lot with your EBITDAG's per unit sold are going to be relatively protected in a given year.
That's exactly right. So these contract mechanisms, and we do have a number of contracts, and although the mechanisms in each one are a little bit different, generally they're designed to protect our EBITDA dollars when we experience these kinds of inflationary periods. So exactly what you'll see is as we pass through these cost increases, you'll see revenue go up but no impact on EBITDA. So we are protected from a dollar standpoint, but it does tend to depress margins.
Right, yeah, 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 US as a starting point, just how successful are you seeing competition that's attempting 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 is down to blight.
entirely different products, but are there competing solutions similar to yours in many international markets?
So let me take the first part of that question first. So relative to competition in the U.S. or North America, our perspective really is unchanged from our previous discussions. It's still unknown whether or when our potential competitor can get qualified, but assuming that they do get a qualified product, we do still believe it's going to be very difficult for them.
to win market share in North America. From an international market perspective, similar dynamics. The methods of wildfire fighting, the use of different products, foams, retardants, etc., are basically the same as they are in North America and we maintain a very good position in our international markets relative to wildfire fighting. And as we talked about in the call, we're very happy with it.
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.
So, you know, we talked about the addressable market or the end markets that we're really focusing on. Lubricant additive has traditionally been our largest end user market, but we're making a lot of good progress in agricultural mining and new emerging technology markets, which we think could add significant new business to the company.
I don't know that I can really detail the size of that other than to say we're seeing good success across those opportunities and we expect to see more success as time goes on, particularly in some of these new emerging 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 say. The lubricant market has traditionally been our biggest market. These are right now smaller than the lubricant market, but are...
There's a lot of potential growth there. So I think it's too early to say how big these markets can be, but we're very excited about some of the opportunities. Understood, that's all. Thank you, I'll turn it back.
Thank you. Our next question has come from the line of Brian DeRuvia with Baird. Please proceed with your questions. Good morning. We're starting off on the specialty products business. I know you're touching a further cut.
So if you look at the progress that we're making in our specialty products business, it really is the result of us working on all three of our value drivers, working hard on productivity, generating new business, and getting the value for what we provide to our customers in terms of price. And getting the value for what we provide to our customers in terms of price.
And I firmly believe that I'm very confident that the work that we're doing across the entire spectrum of the business will continue to benefit and be sustainable certainly over the medium term. And as I mentioned just a few minutes ago, I think there's a lot of long-term opportunity to grow this business into new end markets, which could have benefits for as long into the future.
So none of this and I get the question I'm getting is you know none of this has been driven by sort of 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. This is going to be sustainable.
Fair enough, fair enough.
switching gears. I know you said you're holding off on dividends of bad backs in terms of capital allocation, but what are you seeing on the M&A front?
Hey, Ryan, it's Nathan here. So we tend to like M&A environments like this. It's more challenged for most potential buyers. And we find ourselves very well capitalized with a good amount of dry pad on the balance sheet and the expectations that I should grow significantly between now and year end. That said, in these periods of...
swift public capital market dislocations, both equity and debt, the first reaction in the private market is almost always freezing up. Buyers tend not to quickly, excuse me, sellers tend not to quickly capitulate and drop prices in line with declines in the public equity markets, and buyers tend to be constrained for various reasons, primarily more challenging.
credit availability. So we think our position is quite attractive in a market like this. Activity however is slower and that needs two things for us going forward. What is eventually activity will have to pick up. Private markets can pause transactions but can't cease transactions. So in time that'll take care of itself. Number two, the only thing is very much iris to be proactive.
in times like this. If we think most buyers are somewhat sidelined and we're not, which we do not believe is the case, less stuff will come to us, but that means we need to press a harder and knock on doors and shake things loose and we're putting maximum effort into that process and we'll see what happens. Got it. And just final for me, the cash portion of the founders fee, what is that expected to be?
The what portion of that your part? The cash portion of the cash payment related to the founders fees. What is that expected to be?
Based on the current stock price, roughly a maximum of $13 million approximately.
That's for the full year, correct?
Full year, correct? Yeah. Yeah.
on that gets paid out in the first quarter of next year correct
Yes.
Great. Thank you so much.
Thank you. Our next question has come from the line of Chris Joolgayton with Wellington. Please proceed with your questions.
Hey guys, thanks for the time. I take the point that it matters where the acres burn are, obviously closer to the urban interface is 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 Biden administration has been heavily focused on this with some. Dr. with some...
declarations, executive orders on forestry, and kind of buried in the revised Mansion Bill.
is some money for quote protecting forest, although it's very big. Any thoughts on the potential for all of that? Any thoughts on the potential for all of that?
Yeah, that's a great question. And it's completely consistent with...
both our view of the long-term trends and our experience over the last few years where we see continued growth in acres burned, continued growth in spending on fighting wildfires, continued growth in the resources, including air tankers that are used to bite fire. And we think that those trends are solid and will continue some of the money that is now being allocated toward forest health and forest protection.
You know, we think there's opportunity there to help us grow our prevention and protection business. So, you know, from what I can see, all of those things that you're talking about really just support and maybe even accelerate the trends that we see going 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. Not just the stuff that's closer to residential areas.
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 general recognition at both the federal, state, and local levels that something has to be done to...
prevent fires, improve forest health, protect communities, but also deal with climate change. So carbon capture or just the general view of climate change and forest health is definitely a very, it's a large focus right now along with the other focuses relative to firefighting. So it's, I wouldn't say that it's...
It's the primary focus, but it is definitely becoming a bigger focus in terms of the money being spent on dealing with forest health.
at all levels and we are working at the local
community, municipality, county, state level, so that the organizations that are focusing on this are definitely broader than they have been in the past.
Yeah, 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 could just be the depth with which. I would say equally 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 of travel on net zero and carbon capture focus, so that's why I asked the question, but thank you guys.
forests beyond the urban interface could also be a material opportunity given the field of travel on net-zero and carbon capture focus. So that's why I asked the question but thank you guys. Totally agree.
Thank you. There are no further questions at this time. I would now like to turn the call back over to Eddie Goldberg for any closing comments.
Yeah, 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.
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.