Perimeter Solutions, Wildfire Retardant Contracting & Pricing
Here is a selection of interviews published last week. Visit our platform for all research published.
Published Last Week
Perimeter Solutions
Perimeter Solutions is a US-listed holding company. Its core operating company provides mission-critical wildfire retardant to the United States Fire Service (USFS) and agencies globally. It is the sole-source provider to the USFS to help contain wildfires. While the retardant business generates an estimated ~75% of group LTM EBITDA, the company redeploys cash flow into acquiring niche industrial products. In five years, the group’s earning power will be less concentrated compared to today.
We curated a couple years of primary research exploring the durability and potential risks to Perimeter's Fire Safety business. We explore how the USFS and USDA is structured, its mission and incentives, and how the USDA forced a competing retardant into the market before it failed due to corrosion:
"Perimeter had been in place for decades, and the operational challenges of introducing a second retardant were going to be significant. Not every tanker base has room for two different retardants... The whole process of qualifying the Fortress product kept getting delayed... There were concerns that the Forest Service was slow-rolling that process because they didn't want a second retardant... And the fact that they wanted to maintain both retardants meant they would have had to ensure both companies remained viable, which means the two weren't really competing against each other." - Former Procurement Head at USDA
We explore the unit flow of how a gallon of retardant moves through the value chain from manufacturing to air tanker operators dropping the chemical ahead of the fire:
We explore why operating fire bases are important and complex:
The moat seems to be as much service as product-led. Not only must Perimeter have the chemical formulation to contain wildfire, it must have the proprietary mixing equipment, expertise, and supply chain efficiency to have retardant at the right place at the right time. In the USFS contract, there is a clause stipulating required delivery times, called "ready delivery status":
"Ready delivery status is defined as the ability to begin pumping and loading operations within 3 minutes after an order is placed." Loading must run at a minimum 400 and maximum 500 gallons per minute per pit, 250 to 350 for single-engine air tankers. Out-of-spec product must be brought back into specification within 10 minutes. Miss any of these and the Government deducts against the daily operations rate, calculated per inoperable pit per hour. - Contract 1202SC26T2500
Any wildfire retardant supplier to the USFS must run a JIT supply chain:
"By the time the fire season starts, probably only 50% of the anticipated product is manufactured." - Former Global Director at Perimeter Solutions
We also break down how wildfire budgets are structured and potentially changing under the current administration:
The following research further explores the competitive and legal history of Perimeter versus Fortress and the contract renewal risk within and after the five year term:
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