Executive Summary

Q3 2025 delivered strong top-line growth and non-GAAP profitability: net sales rose 9% to $315.4M, Adjusted EBITDA increased 9% to $186.3M, and Adjusted EPS reached $0.82; GAAP diluted EPS was a loss of $0.62 due to large founder advisory fee expenses .
Results materially beat Wall Street consensus: revenue beat by ~$77M (+32%) and EPS beat by ~$0.14; coverage depth was limited (1–2 estimates). These beats, plus management’s commentary on structural contract changes, are positive stock reaction catalysts [GetEstimates].
Strategic momentum: a transformative five-year USDA contract shifts mix toward services, lowers price per gallon initially, and transitions to powder retardant—management expects EBITDA growth in 2026 in North America Fire on like-for-like acres despite the price cut .
Specialty Products headwinds persist from operational and safety issues at the third-party Sauget P2S5 plant (Flexsys/One Rock), compressing segment EBITDA; IMS continued to outperform with add-on product lines acquired .
Free cash flow was robust: management reported Q3 FCF of $193.6M and 9M FCF of ~$197M, supported by seasonal working capital conversion and restrained capex; net leverage was ~1.0x with $675M gross debt and $340.6M cash .

What Went Well and What Went Wrong

What Went Well

Strong core execution: consolidated net sales +9% YoY to $315.4M; Adjusted EBITDA +9% YoY to $186.3M; Adjusted EPS $0.82 vs $0.75 prior-year quarter .
Structural improvements in fire safety contracts decoupled results from acres burned variability; customers’ more aggressive initial attack also supported retardant usage. “We have purposely shifted sales toward fixed services revenue… thereby improving the quality of our revenue base” .
Landmark USDA five-year contract adds consistency and predictability, transitions federal bases to full-service model, and moves to all-powder footprint; “We expect to grow our various financial metrics, certainly EBITDA… in 2026 inclusive of this contract” .

What Went Wrong

Specialty Products EBITDA fell to $9.1M from $12.9M YoY on significant Sauget plant downtime and safety issues; management warned the drag may persist until they regain operational control .
GAAP results overshadowed by founder advisory fee expense ($247.7M in Q3), producing a GAAP net loss of $90.7M and diluted EPS of -$0.62; large non-GAAP adjustments required to assess core performance .
Mix effects and year-one price cuts under the new USDA contract will reduce gallon-based revenue proportion near term; earnings growth relies on services expansion and efficiency capture .

Financial Results

Headline Metrics (Quarterly)

Metric	Q1 2025	Q2 2025	Q3 2025
Net Sales ($USD Millions)	$72.0	$162.6	$315.4
Gross Profit ($USD Millions)	$28.2	$101.5	$199.1
Gross Margin %	39.1%	62.4%	63.1%
GAAP Diluted EPS ($)	$0.36	$(0.22)	$(0.62)
Adjusted Diluted EPS ($)	$0.03	$0.39	$0.82
Adjusted EBITDA ($USD Millions)	$18.1	$91.3	$186.3
Adjusted EBITDA Margin %	25.1%	56.2%	59.1%

Year-over-Year (Q3 2025 vs Q3 2024)

Metric	Q3 2024	Q3 2025
Net Sales ($USD Millions)	$288.4	$315.4
GAAP Diluted EPS ($)	$(0.61)	$(0.62)
Adjusted Diluted EPS ($)	$0.75	$0.82
Adjusted EBITDA ($USD Millions)	$170.4	$186.3
Fire Safety Net Sales ($USD Millions)	$251.8	$273.4
Specialty Products Net Sales ($USD Millions)	$36.6	$42.0
Fire Safety Adjusted EBITDA ($USD Millions)	$157.5	$177.2
Specialty Products Adjusted EBITDA ($USD Millions)	$12.9	$9.1

Segment Breakdown (Q1–Q3 2025)

Metric	Q1 2025	Q2 2025	Q3 2025
Fire Safety Net Sales ($USD Millions)	$37.2	$120.3	$273.4
Specialty Products Net Sales ($USD Millions)	$34.9	$42.4	$42.0
Fire Safety Adjusted EBITDA ($USD Millions)	$10.1	$77.7	$177.2
Specialty Products Adjusted EBITDA ($USD Millions)	$8.0	$13.7	$9.1

Consensus vs Actuals (Quarterly) – S&P Global

Metric	Q1 2025 Estimate	Q1 2025 Actual	Q2 2025 Estimate	Q2 2025 Actual	Q3 2025 Estimate	Q3 2025 Actual
Revenue ($USD)	$75.0M*	$72.0M	$139.7M*	$162.6M	$238.3M*	$315.4M
Primary EPS ($)	$0.01*	$0.03	$0.26*	$0.39	$0.68*	$0.82

Values marked with * retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Capital Expenditures	FY 2025	High-end increased to $30M (from $20M) in Q2	Unchanged in Q3; capex $5M in Q3	Maintained
North America Fire EBITDA	FY 2026 vs 2025	n/a	Expect EBITDA growth in 2026 on like-for-like acres inclusive of new USDA contract	Raised (directional)
Revenue/EBITDA Mix	FY 2026 onward	n/a	Higher proportion from services/fixed components; lower from gallons due to year-one price cut	Mix shift to services
Price per Gallon	USDA Year 1	n/a	Lower pricing in first year; overall multi-year savings to taxpayer	Lowered
Trade Policy Exposure	FY 2025	~2–3% of EBITDA (Q1 commentary)	Tracking at or below initial expectations; <2% of consolidated Adj. EBITDA	Improved vs initial
Taxes (Cash)	FY 2025	Unchanged long-term assumptions	Unchanged; Q3 cash tax $15.4M	Maintained
Leverage	Ongoing	Moderate leverage strategy	~1.0x net debt/LTM Adj. EBITDA; $675M debt, $340.6M cash	Maintained

No formal revenue/EPS guidance provided in Q3 materials .

Earnings Call Themes & Trends

Topic	Q1 2025 (Prev)	Q2 2025 (Prev)	Q3 2025 (Current)	Trend
Fire activity & initial attack	Elevated early-season U.S. activity; normal risk range	Normalized first-half activity; preparedness emphasis	Aggressive initial attack directive boosted retardant use and limited acres burned	Improving operational posture; lower sensitivity to acres
Contracting & mix	Decentralized execution; value-based pricing	Capex up; contract quality emphasized	New USDA 5-year contract adds services, predictability, powder conversion	More fixed revenue, multi-year visibility
Supply chain resiliency	n/a	Sacramento retardant facility opened; duplicated infrastructure	All federal product manufactured in U.S.; domestic raw materials focus	Resilience strengthening
Specialty Products (Sauget)	Outsourced plant outage weighed on EBITDA; recovery expected by 2026	Drag persisted; litigation initiated to assume operations	Safety events escalated; continued drag expected until takeover	Negative; ongoing risk
IMS execution	First add-on acquisitions; strong thesis	Performing ahead of underwriting; capacity expansion	More product lines acquired; continued outperformance	Positive; scalable
Trade policy/tariffs	2–3% EBITDA exposure; mitigations planned	n/a	Effects tracking <2% of consolidated Adj. EBITDA	Slightly improved
Capital allocation	$23M deployed; buybacks	~$62M deployed; buybacks; Compass settlement	~$17M deployed; IMS add-ons + capex	Consistent discipline
Leverage & liquidity	~1.7x net debt/LTM Adj. EBITDA; single 5% notes	~1.7x; $141M cash; $100M revolver	~1.0x; $340.6M cash; $100M revolver	Deleveraging with cash build

Management Commentary

Strategic mission and returns: “Our goal is… exceptional service while delivering our investors private equity-like returns… built on three key operational pillars” .
Contract predictability: “We renewed substantially all key retardant contracts… prioritized adjustments to drive greater consistency and predictability” .
Initial attack outcomes: “This more aggressive initial attack posture helped limit acres burned… while driving meaningful use of retardant” .
USDA contract impact: “We expect to grow… EBITDA in our North America fire business in 2026 inclusive of this contract… further moves our business towards consistency… increasing proportion from services” .
Capacity: “We were not tapped out on capacity this year and wouldn’t expect to be tapped out in a stronger fire season” .
International momentum: “Our international business really is firing on all cylinders… Europe, Middle East, Asia, Australia and South America were strong” .
Specialty plant issues: “Significant safety events… demonstrate the urgent need to get these assets out of Flexsys control… expect continued financial impact until resolved” .
Free cash flow and leverage: “We define free cash flow… we had FCF in Q3 of $193.6M and ~$197M for nine months… levered ~1x net debt to LTM adjusted EBITDA” .

Q&A Highlights

Earnings power and acres sensitivity: Management views 2025 fire safety earnings as indicative of normalized earnings power; initial attack reduces sensitivity of gallons to acres .
Capacity and dispersion: Benefit from more even dispersion of acres across geography and time; air tanker fleet growth and base throughput increases support volumes .
USDA contract economics: Despite year-one price cuts, mix shift to services and efficiency gains expected to grow EBITDA in 2026 on like-for-like acres .
Agency merger implications: Federal contract already spans five agencies; a merged U.S. Wildland Fire Service aligns with streamlined, joint contracting .
Contracting philosophy: Collaborative, customer-centric contracting can drive outsized value; 2025 results reflect two years of disciplined contracting .

Estimates Context

Q3 2025: Revenue beat by ~$77.2M ($315.4M actual vs $238.3M consensus); EPS beat by ~$0.14 ($0.82 vs $0.68)*. Strength driven by international retardants, suppressants, services mix, and proactive initial attack .
Q2 2025: Revenue beat ($162.6M vs $139.7M); EPS beat ($0.39 vs $0.26)*, aided by normalized U.S. fire activity and international strength .
Q1 2025: EPS modestly above consensus ($0.03 vs $0.01); revenue slightly below ($72.0M vs $75.0M) as suppressants faced prior-year product launch comp .
Coverage depth is limited (1–2 estimates), increasing potential for outsized surprises*.
Values retrieved from S&P Global.

Key Takeaways for Investors

Q3 was a clean beat on revenue and EPS versus limited consensus, with broad-based strength and structural contract improvements—supportive for near-term stock performance* [GetEstimates].
Mix shift toward services under the USDA contract and powder conversion should reduce volatility and enhance predictability; management explicitly expects EBITDA growth in 2026 despite a year-one price cut .
Specialty Products remains the key risk: Sauget plant safety/operational issues are meaningful and ongoing until operational control is secured; monitor litigation progress and segment recovery timing .
Cash generation and balance sheet are strengths: Q3 FCF ~$193.6M and net leverage ~1.0x provide ample capital flexibility for IMS add-ons and opportunistic M&A .
International retardant adoption remains early and strong across multiple regions, forming a durable multi-year growth vector .
Near-term trading: Focus on service-mix narrative, initial-attack benefits, and additional contract disclosures; watch for any incremental updates at the Baird conference .
Medium-term thesis: Durable cash flows, decentralized execution, structural contract changes, and IMS roll-ups support earnings compounding; specialty operational resolution is the gating factor for multiple expansion .

KPIs and Additional Data

Free Cash Flow: $193.6M in Q3; ~$197M for 9M; capex $5.0M in Q3 .
Liquidity and Leverage: $675M gross debt; $340.6M cash; $100M undrawn revolver; ~1.0x net debt/LTM Adjusted EBITDA .
Year-to-date (9M) totals: Net sales $550.1M (+16% YoY), Adjusted EBITDA $295.7M (+20% YoY), Adjusted EPS $1.24 .

Note: All non-GAAP measures (Adjusted EBITDA, Adjusted Net Income/EPS) are per company definitions and reconciliations in Q3 materials -.

Perimeter Solutions, Inc. (PRM)·Q3 2025 Earnings Summary