Q2 2025 Perimeter Solutions SA Earnings Call

Speaker #5: Greetings and welcome to the Perimeter Solutions second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.

Speaker #5: If anyone should require operator assistance, please press *0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Seth Barker, head of Investor Relations.

Speaker #5: Please go ahead.

Speaker #6: Thank you, operator. Good morning, everyone, and thank you for joining Perimeter Solutions' second quarter 2025 earnings call. Speaking on today's call are Haitham Khouri, Chief Executive Officer, and Kyle Sable, Chief Financial Officer.

Speaker #6: We want to remind anyone who may be listening to a replay of this call that all statements made are as of today, August 7th, 2025, and these statements have not been nor will they be updated subsequent to today's call.

Speaker #6: 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.

Speaker #6: And our actual results may materially differ from those expressed or implied on today's call. Please review our SEC filings, particularly any risk factors included in our filings, for a more complete discussion of factors that could impact our results, expectations, or assumptions.

Speaker #6: The company would also like to advise you that during the call, we will be referring to non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, LTM adjusted EBITDA, adjusted EPS, and free cash flow.

Speaker #6: 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.

Speaker #6: With that, I will turn the call over to Haitham Khouri, chief executive officer.

Speaker #7: Thank you, Seth, and good morning, everyone. We're pleased to report Perimeter's second quarter and first half results. Second quarter adjusted EBITDA reached 91.3 million, and first half adjusted EBITDA reached 109.4 million.

Speaker #7: Reflecting number one, execution on our operational value drivers. Number two, normalized first half fire activity in the US. And number three, strong performance in our international retardant markets, our specialty products businesses.

Speaker #7: We continue to deploy capital during the second quarter. Investing nearly $62 million across a range of priorities. Including increased capital expenditures, continued share repurchases, and the purchase of assets to support our retardants business.

Speaker #7: Before getting into details on the quarter, I'll provide a summary of our strategy, give a brief operational update, and discuss the settlement of our litigation with Compass Minerals.

Speaker #7: After that, Kyle will walk our financial results and capital allocation in more detail. Starting on slide three 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.

Speaker #7: While delivering our investors private equity-like returns with a liquidity of the public market. Our strategy is built on three key operational pillars. First, we own exceptional businesses.

Speaker #7: These are niche market leaders that play critical roles in solving complex customer problems. Qualities that support high returns on invested capital and durable earnings growth.

Speaker #7: Second, we are rigorously applying 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 in through value-based pricing.

Speaker #7: And third, we operate our businesses in a highly decentralized manner. Granting our business unit managers full operating autonomy paired with the accountability to deliver results and a tightly aligned incentive structure for our managers to think and act like owners.

Speaker #7: We believe our operational pillars will optimize our durable long-term free cash flow. We then seek to maximize long-term per-share equity value through a clear focus the allocation of our capital as well as the management of our capital structure.

Speaker #7: Turning to development in the quarter on slide four and starting with fire safety. As I remarked at the outset, fire safety's financial results were driven by execution on our operational value drivers, normalized first half fire activity in the United States, and strong results from our international retardant markets and our suppressants business.

Speaker #7: We continue to invest in our fire safety businesses to best support our customers' mission to save lives and protect property and the environment. Including the opening of 110,000 square foot retardant production facility in Sacramento, California.

Speaker #7: Our network of manufacturing facilities logistics and distribution systems and airbase infrastructure has a six-year track record of performance reliability. With the addition of the Sacramento facility, we pair our never-fail delivery network with fully duplicated infrastructure that leaves no doubt about the supply chain resiliency of our solution.

Speaker #7: The cost of the facility along with other investments we're making in our business is reflected in our first half capital expenditures. Which nearly equal our capital expenditures for the entirety of 2024 and which exceed our total capital expenditures in any full year prior to 2024 over our company's history.

Speaker #7: Capital expenditures are the most visible sign of our internal reinvestment. However, we're also investing into several areas less visible to investors but highly visible to customers.

Speaker #7: Including research and development, field service, and customer support. We concluded our trade secret litigation against Compass Minerals during the second quarter. Culminating in a settlement that returned our intellectual property and allowed us to acquire surplus assets for our retardant business.

Speaker #7: Compass announced the wind down of the retardant business in the first quarter. Which provided an opportunity to resolve our intellectual property dispute, which centered around phosphate-based formulations that we maintain were developed using misappropriated trade secrets from Perimeter.

Speaker #7: Relative to the time and expense of litigation, and combined with the excess assets of the shuttered business, which we acquired in conjunction with the settlement, we believe the $20 million paid to resolve this matter is a fair outcome.

Speaker #7: With our trade secrets resecured, we can continue to invest in the R&D innovation that jointly drives our customers' success and our performance. Switching now to our specialty product segment.

Speaker #7: For the past two decades, our primary North American phosphorus pentosulfide plant in Sauget, Illinois, has been operated by its third party under a tolling agreement.

Speaker #7: In 2021, a private equity fund called One Rock Partners purchased a collection of assets which they renamed Flexis and, as part of the transaction, assumed the tolling agreement to operate the Sauget plant.

Speaker #7: There has been a market degradation in the plant's safety standards and operational performance since One Rock's acquisition. To illustrate magnitude of this degradation, the Sauget plant experienced more the first quarter 2025 than our P2S5 plant in Germany, which we own and excuse me, has experienced over the entire last decade.

Speaker #7: To reiterate, the Flexis-operated plant experienced more unplanned downtime in a year than the Perimeter-operated plants that experienced in an entire decade. As a result of escalating safety and operational issues, we exercised our contractual right to assume operation of the Sauget plant.

Speaker #7: Unfortunately, and in what we believe is a clear violation of our contract, One Rock and Flexis have prevented us from taking over the plant.

Speaker #7: After exhausting all options, we filed a complaint in Illinois State Court in June to enforce our rights. Given that Flexis maintains operational control over the plant while our complaint is litigated, we expect to encounter ongoing operational and financial challenges.

Speaker #7: We are committed to taking back operational control of the Sauget plant per our rights under the tolling agreement, and when we do, we will implement the necessary operational improvements and restore the consistency of safety and quality of production that our customers rightly demand.

Speaker #7: Finally, a rief update on our IMS acquisition. IMS is performing well. And the introduction of our value driver strategy is proceeding ickly with strong early operational and financial results.

Speaker #7: IMS is performing ahead of our underwriting assumptions and is poised to iver returns that meaningfully exceed our targeted IRR threshold. In support of IMS's recent growth and reflective of our confidence in IMS's future organic and inorganic growth, we recently expanded our production capacity by executing on a new 87,000 square foot lease more than tripling IMS's space.

Speaker #7: We look forward to investing significantly more capital behind IMS, primarily through additional product line acquisitions. We consider IMS to be an excellent template for our future acquisitions.

Speaker #7: Where, one, acquired a niche market leader that plays a critical role in solving complex customer problems. Two, introduced our cultural principles of business unit autonomy and accountability and alignment.

Speaker #7: Three, implemented our operational value drivers to sustainably boost operating and financial performance. Four, ramped investment into the business in order to offer our customers the best products, services, and overall value proposition.

Speaker #7: And finally, launched an inorganic growth initiative including the $10 million we spent in first quarter to acquire new product lines. With that, I'll turn the call over to Kyle for a more detailed review of our financials and capital allocation in the quarter.

Speaker #7: Thanks, Haitham. I'll begin on slide five, where growth figures shown are versus the prior year comparable period. Starting with fire safety, revenue for the quarter came in at $120.3 million.

Speaker #7: Reflecting the 22% year-over-year improvement. And $157.4 million year to date, a 27% gain. These results were primarily driven by our ardant products and related services.

Speaker #7: US fire retardant volumes benefited from a more typical wildfire pattern in Q2. Compared to a milder season last year. While our international operations including Canada, Europe, the Middle East, and Asia Pacific gained from ongoing contributions from our value drivers alongside more severe conditions.

Speaker #7: Our suppressants product lines resumed their growth in second quarter. Recall that after nine consecutive quarters of growth, our suppressants revenue declined on the year-over-year basis in Q1.

Speaker #7: Primarily due to an unusually strong product introduction benefiting the prior year period. In the second quarter, our fire suppressant sales returned to growth, increasing 2.7 million dollars the prior year quarter.

Speaker #7: Fire safety's adjusted EBITDA for the quarter was $77.7 million. Representing a 40% increase over last year. And $87.7 million year to date. Marking a 58% gain.

Speaker #7: US wildfire activity was approximately normal in the six months ending June 30th, 2025. And wildfire risk conditions across our footprint are also within a range we would consider normal.

Speaker #7: Having observed normal activity levels through Q2 and into early Q3, we believe it's likely that the full season will be exceptionally mild. That said, conditions for the remainder of the year could still vary above or below average.

Speaker #7: And we remain prepared for the full range of potential scenarios. In our specialty product segment, Q2 net sales came in at $42.4 million. Representing a 47% lift from the prior year.

Speaker #7: This performance reflects a 9.3 million dollar contribution from the IMS acquisitions and a 4.4 million dollar uplift from the base business. Year to date net sales reached $77.2 million.

Speaker #7: Up 23%. Driven by 16.9 million dollars the IMS acquisitions, partially offset by a 2.3 million dollar decline attributable to the previously noted unplanned downtime at the Sauget plant in Q1.

Speaker #7: Specialty products Q2 adjusted EBITDA rose to 7 million dollars. Compared to 9.3 million dollars in the prior year quarter. It remains approximately steady year to date at 21.7 million dollars.

Speaker #7: While Q2's operational challenges were less severe than those in Q1, ongoing downtime contributed to elevated costs in the business and dampened EBITDA. While it's impossible to predict the plant's performance under Flexis's control, we anticipate a continued drag from operational issues until we assume operational control of the plant.

Speaker #7: Viewing the segments together, consolidated second quarter sales grew 28% to 162.6 million dollars, while adjusted EBITDA improved 41% to 91.3 million dollars. Year to date, consolidated sales reached 234.7 million dollars, up 26%.

Speaker #7: And adjusted EBITDA rose 42% to 109.4 million dollars. Moving below adjusted EBITDA, for Q2 2025, our gap loss per share was 22 cents. Versus gap earnings per share of 14 cents in the prior year quarter.

Speaker #7: Q2 2025 adjusted EPS was 39 cents, compared to 25 cents in Q2 2024. In the year to date basis, gap earnings per share was 16 cents, as compared to a gap loss per share of 42 cents in the same period last year.

Speaker #7: Year to date adjusted EPS was 41 cents. As compared to 23 cents in the same period in the previous year. Turning our long-term assumptions, as shown on slide six.

Speaker #7: We are increasing the high end of our assumptions for capital expenditures from $20 million to $30 million. This increase reflects our success in finding capital expenditures that align with our estment criteria.

Speaker #7: Namely that, investments improve our ability to serve our customers, and generate returns that exceed our minimum targeted return threshold. Our new production facility in Sacramento is a clear example of this investment in action.

Speaker #7: But it's from the only one. Last year, we shared how upgrades at several of our airbases significantly boosted throughput. Building on that momentum, we continue to implement these enhancements across our network.

Speaker #7: The result, higher return volumes that help our ustomers achieve their mission while delivering strong returns on the capital we've deployed. As we build on these initiatives, we will continue investing in airbase infrastructure while seeking new opportunities with comparable potential.

Speaker #7: Aside from CapEx, the remainder of our umptions are unchanged and, with normally quarterly variation, Q2 is consistent with those expectations. Q2 interest expense was 9.9 million dollars, while taxable depreciation, amortization, and other tax deductions total 5.4 million dollars.

Speaker #7: Tax paid for income tax was 12.3 million dollars in Q2, as compared to 3.6 million 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.

Speaker #7: Capital expenditures for the quarter were 12.8 million dollars. Our working capital needs fluctuate seasonally, and Q2's working capital levels, and the associated use of cash, are consistent with our expectations given the level of activity in Q2.

Speaker #7: Our year-end networking capital outlook is unchanged. We define free cash flow as cash flow from operations less capital expenditures. In total, we have free cash flow in Q2 of negative 15.6 million dollars, primarily due to the seasonal build in networking capital as well as purchases of property and equipment.

Speaker #7: We generated free cash flow of 3.3 million dollars for the six months ended June 30th, 2025. 2025's cash flow generation seasonality is in line with our expectations, and consistent with history.

Speaker #7: Where we invest significantly in working capital in the first half of the year in preparation for the fire season, to convert these investments into cash in the second half.

Speaker #7: Our full year EBITDA to cash generation conversion is consistent with the assumptions done on this shown on this slide, with the vast majority of cash generation occurring over the next few months.

Speaker #7: We allocated nearly $62 million of capital in the quarter. The returns on which we expect will exceed our minimum targeted equity return to 15%.

Speaker #7: We continue to invest in our business organically, with 12.8 million dollars allocated to capital expenditures in the quarter. The majority of these capital expenditures supported our growth and productivity initiatives.

Speaker #7: Our pipeline of projects continues to build and is an important element supporting our long-term organic EBITDA growth trajectory. Moving to M&A, this discussed previously, we invested $20 million in select Compass assets, comprised of 1.7 million dollars of raw materials and 3.1 million dollars of property and equipment.

Speaker #7: With the remainder allocated to intangibles. More broadly, we continue to search diligently for acquisitions that meet our investment criteria. Finally, we repurchased 2.9 million shares for approximately $32 million in Q2.

Speaker #7: 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 would not preclude higher potential IRR investments, notably in M&A.

Speaker #7: Both conditions were true in Q2. Turning to slide eight. I'd like to highlight our favorable debt structure. A single series of fixed-rate notes at 5%, maturing in the fourth quarter 2029 with no financial maintenance covenants.

Speaker #7: As of Q2, we were levered 1.7 times net debt to LTM adjusted EBITDA. Driven by 675 million dollars of gross debt, 141 million dollars in cash, and nearly 313 million dollars of LTM adjusted EBITDA.

Speaker #7: We also have substantial liquidity with an undrawn 100 million dollar revolver as a arter end in addition to our cash. We ended the quarter with about 145.9 million basic shares outstanding.

Speaker #7: To conclude, Perimeter's second quarter reflected our 's execution of our strategy combined with normalized end markets. Despite the solid start, we remain disciplined in our approach to the full year.

Speaker #7: Continuing our work to deliver for our customers and apply our operational value drivers across the business. With that, I'll hand the call back to the operator for Q&A.

Speaker #5: Thank you. We will now be conducting a question and answer session. If ou would like to ask a estion, please press star one on your telephone keypad.

Speaker #5: A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #5: Your first question comes from Dan Cox with Morgan Stanley. Please go ahead.

Speaker #6: Hey, thanks a lot. Good morning. Where I'm really wanted to ask I think you guys have kind of quantified this in the past, but when you think about when you speak to kind of a range of normal wildfire activity or acres burned, can you help us can you remind us how you guys think about that?

Speaker #6: Is it kind of over the, you know, course of a year, I ink I remember like a six to seven million US lower 48 acres burned range on one of your past slide decks or is it kind of a percentage versus a trailing 5 or 10 year trend?

Speaker #6: Just hoping that you could, you know, as we're trying to think through what it means when you say within a normal range, was just hoping you could share a little bit more color on how you guys think about that.

Speaker #7: Thank you. Yeah, you bet, Dan. It's Haitham. Thanks, of course, for the question. So I'll refer back to a slide we presented in our Q4 2024 earnings call where we tried to break down for investors exactly how we think about what a normal fire season is.

Speaker #7: To sort of recap the message from six or so months ago, you're right, we're inking normal fire season is roughly in the range of six to seven million acres burned in the US excluding Alaska.

Speaker #7: Given that there's secular growth in acres, we think that range will creep up slowly yet steadily over time. We described 2024 as a fairly normalized acreage year because if you exclude the smokehouse creek fire, which occurred in Q1 in Texas and Oklahoma, and which used almost no retardant acres burned in '24 were right about 7 million excluding Alaska.

Speaker #7: So near the top end of what we would consider normal. I'll note that if you take our year so far and look at acreage burned through early August, then assume normalization through the balance of the year, which of course is an unknown what appens here on out, we're again looking like we're going to be in that roughly six to seven million normal range.

Speaker #6: Awesome. Super helpful. And then maybe so a estion has come up. If ou look empirically there, it es seem to be somewhat of a inverse relationship between a revenue per acre burned or, you ow, EBITDA per acre burned if you did try and isolate just, you know, the US lower 48 components of those revenue streams versus the US Alaska acres burned.

Speaker #6: There does seem to be somewhat of a of an inverse correlation over time now. You know, the direction of travel for those metrics has been higher, has been improvement over time in terms of the, you know, the dollar number of EBITDA revenue per acre burned.

Speaker #6: But still, there does seem to be somewhat of a negative correlation with something if you could help us understand. I mean, A, determine if that that phenomenon is true or just kind of noise in the data and then B, what if so, what some of drivers are that drive that relationship.

Speaker #6: Thank you.

Speaker #7: Yeah, absolutely, Dan and Kyle. A couple of things on this. I think two points on acres. One is that when we look at the acres data, we believe that it's a good indicator of our activity over longer term, timeframes.

Speaker #7: There's a more challenging metric to use on short-term timeframes. And it related piece that, which you've identified here, is that particularly large swings in the res or result in smaller changes in our retardant usage for a number of factors.

Speaker #7: So let me walk through so you can understand what those are. When you think about the factors that go into retardant usage, for any acre, there's a number of things that go in.

Speaker #7: First, you have to have the acre itself and fire activity. It also matters where that acre is burning. In a remote area, there's less likely to be retardant usage than when it is closer to structures and has a near proximity to lives and property.

Speaker #7: And then the second piece that comes into this is both the ability to fly, so the weather, and then in particular, and one that drives a lot of the variability you're eing here is resource availability.

Speaker #7: So for instance, if you w a very large spike in fire activity, what happen is that all the resources can oftentimes be in utilization.

Speaker #7: Right? That means that all the planes are busy. And so when another call comes in, there's simply not a plane to dispatch to that incremental call.

Speaker #7: And we see these spikes. That's a big reason why we are a big proponent of supporting our air tanker partners and expanding the fleet capacity.

Speaker #7: We believe that there's an amazing ability to drive ROI for the government, for the agencies, for our air tanker partners, and most importantly, perform the mission, protecting lives and property through an expansion of the air tanker fleet.

Speaker #7: You also see their inverse of that when there's a large decline in acres. When there's a decline in acres, the availability of planes for any given fire are much higher.

Speaker #7: So you're exactly right. you look at this, there is a muted impact where big spikes will see less retardant usage, because of the availability of aircraft and the inverse is true when it falls.

Speaker #7: Does that make sense?

Speaker #6: Yep, that makes kind of sense. And maybe if I could squeeze one last one in on the resource availability point. We've en a ton of different headlines on, you know, higher fire suppression spending budget allocations, lower seen some headlines about California getting some, I believe, new air tankers.

Speaker #6: I was wondering if you could just kind of, you ow, you guys are obviously super close to this. I was wondering if you could kind of give some of the highlights of how some of the upstream factors that would drive resource availability have have evolved maybe since last quarter or year to date.

Speaker #6: Thank you.

Speaker #7: Yeah, Dan. There's two pools of resource availability to think about here. One is the government-owned assets, and as ou've lighted, California has done a really good job of expanding their air tanker fleet through the acquisition of a number of C-130s, which are pretty large aircraft and dump a fair bit of retardant on each run.

Speaker #7: So that's one piece that's going on, and we continue to see that we continue to see that progression as states think more and more about owned resources.

Speaker #7: The second piece, as I alluded before, is to typically contracted resources that the federal government tends use. And then those, what we're really trying to support there, and what really helps provide more availability is both it's both the funding but also the structure of the contracts.

Speaker #7: We are we always with our industry groups to help provide the best structural contracts where they have availability and guaranteed contracts that allows them to invest in that fleet that allows them to bring more resources into the ecosystem and allows them to be more available when they're eded.

Speaker #6: Awesome. Really helpful. Thank you both very much. Congrats on a great quarter, and I will turn it back.

Speaker #7: Thanks, Dan.

Speaker #5: Next question. Josh Specter with UBS. Please go ahead.

Speaker #8: Yeah, hey, good morning, guys. I was wondering if you could k about kind of the sustainability of what you did in 2Q and fire safety.

Speaker #8: I mean, margins are kind , you know, above what we've assumed for peak margins in 3Q. The incremental margin looks like it pretty much 100%.

Speaker #8: Year on year. So just as we think forward and we're saying, you know, 2Q is kind of a normal-ish fire season in terms of acres burned, is this something you build off of or is there anything you would call out as maybe one-time helping you within the quarter?

Speaker #7: Yeah, hey, good morning, Josh. It's Haitham. It's something we build off of. There was nothing notable in Q2 in fire safety that is unsustainable.

Speaker #8: So then how would you help us think about what you should be doing in a peak quarter in 3Q? Is the incremental margin much higher than in the past?

Speaker #8: Should ou be much higher than the mid-60s percent margins? Any help there?

Speaker #7: Yeah, as much as I'd like to, Josh, I'm going hold back and ask you to wait 90 days on that one.

Speaker #8: I'd ect nothing less. So shifting gears, on the specialty side, honestly, I don't know if we would have really known about the outages unless you talked them, considering what the performance was in quarter.

Speaker #8: So I was wondering if you could pick apart the moving pieces there in terms of the five-ish million growth in EBITDA, you've had year over year, what was the impact that you had from the outages and the poor operating performance of that one facility?

Speaker #8: How much was growth in base specialty? And how much is like the build-out of IMS that you could help us kind of frame that?

Speaker #7: Yeah, I'll probably be directly helpful here, Josh, although I 't want to get into too quantification. The IMS acquisition is purely incremental on a year-over-year basis, and IMS had a hell of a second quarter.

Speaker #7: And so that's clearly part of it. Our base P2S5 business, which is a combination of the US plant and our owned and operated European plant, did well.

Speaker #7: Those are on the positive side. And then on the negative side, the ongoing operational issues and in excess, way in excess of normal unplanned downtime, at the Flexis-operated Sauget plant was a was a was a headwind in Q2.

Speaker #7: And those those netted out to a good overall result, but puts and takes there.

Speaker #8: Okay. I mean, I guess if I could try try again just on the Sauget impact. I mean, is it a 1 million, 2 million impact?

Speaker #8: Just trying to think about what we should be baking in when ou say go forward, there's going to an impact the next couple of quarters.

Speaker #8: You know.

Speaker #7: There has been so first of all, it's a significant impact. It's a situation we take very, very seriously. It is harming our financial performance.

Speaker #7: It is impacting our ustomers. And most importantly, it is creating safety issues for the client's employees. And so I don't want to underplay its significance for an operational safety or financial perspective.

Speaker #7: That said, this underperformance at Flexis has been ongoing really since One Rock acquired the business in 2021. And therefore, unfortunately, it's in the run rate numbers you've been seeing.

Speaker #7: And until we resolve this dispute, take control of the plant, address safety, and address quality, what you've been seeing which includes, again, the negative impact of their operating is going to continue to be reflected in the cials.

Speaker #8: Okay. No, thanks for that. And a couple of other follow-ups if I can go through them. I guess first on the 20 million payment to resolve the dispute with Compass, is that primarily just intangibles and the ability to maintain your formulations?

Speaker #8: Is there any assets or anything there you'd call out as part of that?

Speaker #7: Josh is Kyle. Yeah, there are actually assets that we acquired in his that we would have otherwise had to purchase from a normal CapEx transaction or normal inventory purchase transaction.

Speaker #7: There's about $5 million of book value of those two buckets of assets that came with the transaction.

Speaker #8: Okay. Thanks for that. And then last, just another follow-up around kind of the US wildfire management. Tactics here. I mean, you talked helping with plane availability and that being a factor.

Speaker #8: I know for years you guys have been talking about trying to maybe change how you're paid on some of your suppressants, you know, make re you guys get more of maybe a fixed payment and the slower parts of the year to start.

Speaker #8: Or you have a sliding scale, I think, in place now. To help you maintain your profitability. Is there any changes you've foreseen with your basically contract structure with the government around this to help enable more investments, profitability, etc.

Speaker #8: through any of this? Or are you thinking it more in terms of the aerial fleet as where you see potential changes?

Speaker #7: So it's both. And Kyle, did a very clear job addressing the opportunity for the aerial fleet where we're very involved primarily through the industry association UEFA.

Speaker #7: Separate from that, we have for the past couple of years been working I would say slowly and steadily with our ustomers around the world to mutually beneficially devariabilize our business.

Speaker #7: And make it so we have more predictability on our cash flows and our customers have more predictability on their spend with us, which mutes.

Speaker #7: It doesn't eliminate, will never be able to eliminate, I don't think, but mutes the impact of fire season seasonality. And again, it's not a step function change with a single customer.

Speaker #7: It's something we've been increasingly doing over the past couple of years. It's been pretty clearly see evidence of it in our financial results. We're very happy with it.

Speaker #7: Our customers are very happy with it. And you'll see and you'll you'll find that we will continue to push for these mutually beneficial changes going forward.

Speaker #7: And we'll continue to see our our financial results devariabilize going forward. But emphasize, we'll never quite be able to decouple from from acres burned.

Speaker #8: Understood. Thank you y much.

Speaker #7: You bet.

Speaker #5: Thank you. I would like to turn the floor over to Haitham for closing remarks.

Speaker #7: Thank you, everybody, for the time and support. And we'll speak in 90 days or so.