Skip to content
    PRM
    Earnings call· Jun 2026(Q2 FY26)

    Perimeter Solutions Q2 FY26 earnings call PRM

    Jul 31, 2026 Source

    Executive summary

    Perimeter Solutions Q2 FY26 — Strong EBITDA Growth and Strategic Monaco Acquisition

    Perimeter Solutions delivered strong Q2 FY26 adjusted EBITDA growth, driven by operational value drivers and strategic acquisitions, notably Monaco Enterprises. While facing temporary headwinds in Fire Safety and production issues at PDI, the company remains focused on expanding its portfolio and applying its value creation framework across niche industrial businesses, with an emphasis on long-term free cash flow generation and disciplined capital allocation.

    Highlights

    5

    • Q2 Adjusted EBITDA of $105.6 million, up 16% year-over-year.

    • Year-to-date Adjusted EBITDA of $146.7 million, up 34% year-over-year.

    • Acquisition of Monaco Enterprises for approximately $120 million in cash, expanding into a sixth distinct product platform.

    • Fire Safety revenue rose 7% to $129.1 million, with adjusted EBITDA up 1% despite temporary headwinds.

    • Specialty Products revenue doubled to $84.7 million, with adjusted EBITDA up to $26.8 million from $13.7 million.

    Concerns

    3

    • Q2 net loss of $181.6 million or $1.11 per diluted share, compared to a net loss of $32.2 million or $0.22 per diluted share in Q2 2025.

    • Fire Safety adjusted EBITDA impacted by a 5% pricing step down on federal retardant contract and minimal foam deliveries to U.S. federal customers due to DLA transition.

    • PDI's adjusted EBITDA declined year-over-year due to continued production issues at the Sauget, Illinois P2S5 facility operated by Flexsys, citing safety lapses and an explosion.

    Guidance & targets

    6
    CategoryTargetConfidence
    Fire Safety Profitability
    Foam deliveries to our federal customers resume and new pricing under our CAL FIRE agreement should offset the federal pricing step down.
    high materiality
    Medium
    DLA Contract Deliveries
    begin ramping during the second half of this year, providing an incremental contribution through 2027 and 2028
    high materiality
    High
    Cash Tax Rate
    approximately 20% or better
    medium materiality
    High
    Annual Capital Expenditures
    $30 million to $40 million
    high materiality
    High
    Working Capital Investment
    approximately 10% to 15% of revenue growth
    low materiality
    Medium
    Net Debt to LTM Adjusted EBITDA
    below our target leverage level
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Fire Safety
    Q2 Adjusted EBITDA increased 1% from $77.7 million in the prior year period. Year-to-date Adjusted EBITDA increased from $87.87 million in the prior year period. Performance benefited from continued execution of operational value drivers, partially offset by 5% pricing step down under new U.S. federal contract and minimal DLA foam deliveries. Expect moderation in H2 FY26.
    Year-to-date revenue: $174.5 millionYear-to-date revenue growth YoY: 11%Year-to-date Adjusted EBITDA: $97.5 millionDouble-digit EBITDA growth (ex-headwinds)
    		$129.1 million7%—$78.8 million (Adjusted EBITDA)
    Specialty Products
    Q2 Adjusted EBITDA increased from $13.7 million in the prior year period. Year-to-date Adjusted EBITDA increased from $21.7 million last year. Year-over-year increase driven primarily by contributions from recent acquisitions, particularly MMT. PDI's performance impacted by production issues at Flexsys facility, expected to diminish in H2 FY26.
    Year-to-date revenue: $164.3 millionYear-to-date revenue growth YoY: 113%Year-to-date Adjusted EBITDA: $49.3 millionMMT performing ahead of underwriting modelPDI production disruption weighing on near-term financial performance
    		$84.7 million100%—$26.8 million (Adjusted EBITDA)

    Operational metrics

    28
    Adjusted EBITDA
    $105.6 millionUp 16% YoY
    Q2 FY26

    Company-wide adjusted EBITDA.

    Adjusted EBITDA
    $146.7 millionUp 34% YoY
    YTD FY26

    Company-wide adjusted EBITDA.

    Net Sales
    $213.8 millionUp 31% YoY
    Q2 FY26

    Company-wide net sales.

    Net Sales
    $338.9 millionUp 44% YoY
    YTD FY26

    Company-wide net sales.

    Adjusted Net Income
    $59.6 millionFrom $57.1 million (Q2 FY25)
    Q2 FY26

    Company-wide adjusted net income.

    Adjusted Net Income
    $68.6 millionFrom $61.2 million (YTD FY25)
    YTD FY26

    Company-wide adjusted net income.

    Adjusted Diluted EPS
    $0.35Vs $0.39 (Q2 FY25)
    Q2 FY26

    Company-wide adjusted diluted earnings per share.

    Adjusted Diluted EPS
    $0.41Constant vs YTD FY25
    YTD FY26

    Company-wide adjusted diluted earnings per share.

    Net Loss
    $181.6 millionVs $32.2 million (Q2 FY25)
    Q2 FY26

    Company-wide net loss.

    Net Loss
    $108.7 millionVs $24.5 million (YTD FY25)
    YTD FY26

    Company-wide net loss.

    Cash Interest Expense
    $19.6 million
    Q2 FY26

    Cash interest expense for the quarter.

    Taxable Depreciation and Amortization
    $11.7 million
    Q2 FY26

    Taxable depreciation and amortization for the quarter.

    Cash Taxes Paid
    $7.7 millionVs $12.3 million (Q2 FY25)
    Q2 FY26

    Primarily reflecting timing dynamics.

    Capital Expenditures
    $12.7 million
    Q2 FY26

    Capital expenditures for the quarter, bringing year-to-date spending in line with expectations.

    Net Debt to LTM Adjusted EBITDA
    3.1x
    Q2 FY26

    As of quarter end, remaining below target leverage level.

    Cash on Balance Sheet
    $83 million
    Q2 FY26

    As of quarter end.

    Undrawn Revolving Credit Facility
    $200 million
    Q2 FY26

    Fully undrawn as of quarter end.

    Total Liquidity (post-Monaco)
    Exceeds $150 million
    Post Q2 FY26

    Includes cash on hand and undrawn revolving credit facility capacity, expected to increase over Q3.

    Basic Shares Outstanding
    163.7 million
    Q2 FY26

    As of quarter end.

    Blended Coupon Rate (Debt)
    5.6%
    Current

    Across both tranches of long-dated fixed rate debt.

    Air Tankers in Service Globally
    30-something
    Current

    These carry essentially 100% of the company's retardant.

    Retardant Carried by Air Tankers
    100%
    Current

    Percentage of retardant carried by the global air tanker fleet.

    Monaco Acquisition Multiple
    10.5x
    Acquisition

    Multiple paid for Monaco Enterprises.

    Monaco Revenue from Existing Installed Base
    >95%
    Current

    Sales come from spares, repairs, expansions, upgrades, and support for its existing installed base.

    Monaco Industry Growth (Volumetric)
    low single digits
    Ongoing

    Underlying industry growth for Monaco's market.

    Pan-Canadian Aerial Asset Program Funding
    $316.7 million
    Over 5 years

    Federally funded program to support aerial firefighting.

    Canadian Air Tanker Capacity
    3,000-4,000 gallons
    New additions

    Capacity of the 4 new large air tankers being added to the fleet.

    Fire Safety EBITDA Margin (Adjusted for Headwinds)
    north of 66%
    Q2 FY26 (adjusted)

    Estimated EBITDA margin for Fire Safety if not for the 5% federal pricing step down and minimal DLA foam deliveries.

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price split5% pricing step down%
    Productivity cost savings program—

    Orderbook & backlog

    1
    DLA Suppressants Contract$500 millionQ1 FY26 (awarded)

    5-year contract, maximum value, deliveries ramping H2 FY26 through 2027 and 2028.

    Deals & partnerships

    1
    Monaco EnterprisesDesigns and manufactures fire alarm reporting and mass notification networks for U.S. military installations.$120 million

    Monaco designs and manufactures the fire alarm reporting and mass notification networks that are the installed standard on more than 200 U.S. military installations globally, where system compatibility requirements make Monaco the sole compatible supplier of spare parts, upgrades and expansions and support across its installed base.

    Capital programs

    2
    DLA Contract Production Expansionunderway
    Period spend: a good chunk of money and capital

    Benefit: Supports substantial activity under the new contract

    Expansion of production facility, development of customer-specific IT interchange and logistics capabilities, and securing necessary supply chain inputs to support the $500 million DLA contract.

    Pan-Canadian Aerial Asset Programunderway$316.7 million
    Funding: federally funded

    Benefit: 10 aircraft national search fleet, including 4 retardant capable air tankers

    Program backed by $316.7 million over 5 years, giving every province and territory access to a 10 aircraft national search fleet, including 4 retardant capable air tankers.

    Risks & headwinds

    3
    Federal Retardant Contract Pricing Step DownQ2 FY26

    5% pricing step down

    Mitigation: New pricing under CAL FIRE agreement expected to offset federal impact in H2 FY26.

    DLA Foam Delivery TransitionQ2 FY26

    Minimal foam deliveries

    Mitigation: Expansion of production facility, development of IT interchange and logistics capabilities, securing supply chain inputs; deliveries expected to resume ramping in H2 FY26.

    PDI Production Issues at Flexsys FacilityOngoing, Q2 FY26 impact, expected to diminish progressively in H2 FY26.

    PDI's adjusted EBITDA declined year-over-year

    Mitigation: Court-appointed receiver in place, Perimeter taking concrete action to eliminate reliance on Flexsys, enforcing contractual rights.

    What to watch in Q3 FY26

    5

    Fire Safety EBITDA Margin Recovery

    Q3 FY26
    CurrentImpacted by 5% federal pricing step down and minimal DLA foam deliveries in Q2.
    TargetImprovement towards historical averages, potentially north of 66% adjusted.

    Why it matters

    Indicates successful mitigation of temporary headwind📎s and return to expected profitability for the core Fire Safety segment.

    Those 2 are the step-down in pricing under our new federal contract, the pause in sales to the Defense Logistics Agency. Each of those things had a material impact in Q2. Absent those, we would have been double-digit EBITDA growth. And exactly as you highlighted, that would have had a positive impact on both our EBITDA margins, and we expect those to be more in line with their historical averages in the back half of the year.

    Q&A highlights

    8

    Asked about the key drivers for Fire Safety profitability improvement from Q2 into the back half, considering the 66% potential margin ex-headwinds.

    Kyle Sable confirmed that the 2 Q2 headwinds (federal pricing step-down, DLA sales pause) are expected to abate in the back half, leading to improved EBITDA margins closer to historical averages.

    “Those 2 are the step-down in pricing under our new federal contract, the pause in sales to the Defense Logistics Agency. Each of those things had a material impact in Q2. Absent those, we would have been double-digit EBITDA growth. And exactly as you highlighted, that would have had a positive impact on both our EBITDA margins, and we expect those to be more in line with their historical averages in the back half of the year.”

    asked by Tomohiko Sano · answered by Kyle Sable

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Pillars and Operating Model

    The company's strategy is built on three pillars: owning exceptional niche market leaders, rigorously applying three operational value drivers (profitable new business, productivity improvements, value-based pricing), and operating in a highly decentralized manner. This model aims to optimize durable long-term free cash flow and maximize per-share equity value through capital allocation and structure management.

    02

    Fire Safety Segment Dynamics

    Fire Safety adjusted EBITDA increased 1% in Q2, with year-to-date growth of 11%. This was despite a 5% federal retardant contract pricing step-down and minimal foam deliveries to the DLA due to a vendor-managed inventory transition. Excluding these, Fire Safety EBITDA would have grown double-digit. Deliveries to DLA are expected to ramp in H2 FY26, and CAL FIRE pricing should offset federal impacts.

    03

    Canadian Aerial Firefighting Investment

    Canada's pan-Canadian aerial asset program, backed by $316.7 million over 5 years, includes 4 retardant-capable air tankers, establishing a foundation for increased retardant use. This follows severe 2023 and 2025 fire seasons, mirroring investment cycles seen in Australia (post 2019-2020 bushfires) and France (post 2022 season).

    04

    PDI Production Issues and Mitigation

    PDI's adjusted EBITDA declined due to continued production issues at the Sauget, Illinois P2S5 facility operated by Flexsys. A court-appointed receiver is now in place due to findings of safety lapses, including fires, an explosion, and H2S gas releases. Perimeter is taking concrete action to eliminate reliance on Flexsys and expects impacts to diminish as production capacity is restored in H2 FY26.

    05

    Monaco Enterprises Acquisition Rationale

    The acquisition of Monaco Enterprises for approximately $120 million in cash adds a fire detection and notification business, serving over 200 U.S. military installations. Monaco fits Perimeter's criteria: critical customer need, low cost relative to criticality, niche market leadership, sustainable differentiation (proprietary protocols), and recurring annuity-like aftermarket revenue (95% from existing installed base).

    06

    Capital Allocation and Financial Flexibility

    The company maintains a disciplined capital structure with long-dated fixed-rate debt (blended coupon 5.6%). Net debt to LTM adjusted EBITDA is 3.1x, below target. Liquidity includes $83 million cash and a fully undrawn $200 million revolving credit facility, exceeding $150 million post-Monaco acquisition. This provides significant flexibility for organic investments and M&A.

    AI-generated summary of the company’s earnings call. Not investment advice.