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Perimeter Solutions Reports Second Quarter 2023 Financial Results

Fire Safety results down YoY, though significantly outperform the 70% YTD decline in U.S. acres burned ex-Alaska

International retardant markets, and global Suppressants business, continue their strong performance

Specialty Products fundamentals solid despite a continued weak end-market

Over $26 million in share repurchases in Q2 2023

Clayton, Missouri--(Newsfile Corp. - August 3, 2023) - Perimeter Solutions, SA (NYSE: PRM) ("Perimeter" or the "Company"), a leading provider of mission-critical firefighting products and services, as well as high-quality specialty chemicals, today reported financial results for its second quarter ended June 30, 2023.

Second Quarter 2023 Results

  • Net sales decreased 25% to $76.1 million in the second quarter, as compared to $101.0 million in the prior-year quarter.

    • Fire Safety sales decreased 20% to $53.1 million, as compared to $66.6 million in the prior-year quarter.

    • Specialty Products sales decreased 33% to $23.0 million, as compared to $34.4 million in the prior-year quarter.

  • Net income during the second quarter was $52.0 million, or $0.31 per diluted share, an increase of $43.1 million from $8.9 million, or $0.05 per diluted share in the prior year quarter.

  • Adjusted EBITDA decreased 41% to $21.0 million in the second quarter, as compared to $35.7 million in the prior-year quarter.

    • Fire Safety Adjusted EBITDA decreased 32% to $16.5 million, as compared to $24.2 million in the prior-year quarter.

    • Specialty Products Adjusted EBITDA decreased 61% to $4.5 million, as compared to $11.5 million in the prior-year quarter.

Year-to-Date 2023 Results

  • Net sales decreased 24% to $120.0 million during the year-to-date period, as compared to $158.7 million in the prior-year period.

    • Fire Safety sales decreased 15% to $71.9 million, as compared to $85.0 million in the prior year period.

    • Specialty Products sales decreased 35% to $48.1 million, as compared to $73.7 million in the prior year period.

  • Net income during the year-to-date period was $61.4 million, or $0.36 per diluted share, an increase of $15.6 million from $45.9 million, or $0.26 per diluted share in the prior year period.

  • Adjusted EBITDA decreased 49% to $24.1 million in the year-to-date period, as compared to $47.7 million in the prior year period.

    • Fire Safety Adjusted EBITDA decreased 37% to $13.2 million, as compared to $20.9 million in the prior year period.

    • Specialty Products Adjusted EBITDA decreased 59% to $10.9 million, as compared to $26.8 million in the prior year period.

CEO Haitham Khouri commented: "Our key end-markets, in both our Fire Safety and Specialty Products businesses, were slow in the second quarter. Both our businesses significantly outperformed their end-markets, however, due primarily to successful implementation of our value-driver initiatives. We're particularly pleased with the continued strong results in our global suppressants businesses, as well as in our international retardant markets."

Conference Call and Webcast

As previously announced, Perimeter Solutions management will hold a conference call at 8:30 a.m. ET on Thursday, August 3, 2023 to discuss financial results for the second quarter 2023. The conference call can be accessed by dialing (877) 407-9764 (toll-free) or (201) 689-8551 (toll).

The conference call will also be webcast simultaneously on Perimeter's website (https://ir.perimeter-solutions.com), accessed under the Investor Relations page. The webcast link will be made available on the Company's website prior to the start of the call; go to the investor relations page of our website to the News & Events menu and click on "Events & Presentations."

A slide presentation will also be available for reference during the conference call; go to the investor relations page of our website to the News & Events menu and click on "Events & Presentations."

Following the live webcast, a replay will be available on the Company's website. A telephonic replay will also be available approximately two hours after the call and can be accessed by dialing (877) 660-6853 (toll-free) or (201) 612-7415 (toll). The telephonic replay will be available until September 2, 2023.

About Perimeter Solutions

Perimeter Solutions is a leading global solutions provider, providing high-quality firefighting products and specialty chemicals. The Company's business is organized and managed in two reporting segments: Fire Safety and Specialty Products.

The Fire Safety business consists of formulating, manufacture and sale of fire retardants and firefighting foams that assist in combating various types of fires, including wildland, structural, flammable liquids and others. Our Fire Safety business also offers specialized equipment and services, typically in conjunction with our fire management products, to support our customers' firefighting operations. Our specialized equipment includes airbase retardant storage, mixing, and delivery equipment; mobile retardant bases; retardant ground application units; mobile foam equipment; and equipment that we custom design and manufacture to meet specific customer needs. Our service network can meet the emergency resupply needs of over 150 air tanker bases in North America, as well as many other customer locations in North America and internationally. The segment is built on the premise of superior technology, exceptional responsiveness to our customers' needs, and a "never-fail" service network. The segment sells products to government agencies and commercial customers around the world.

The Specialty Products business produces and sells high quality Phosphorus Pentasulfide ("P2S5") primarily used in the preparation of specialty chemicals, including a family of compounds called Zinc Dialkyldithiophosphates ("ZDDP") that provide critical anti-wear protection to engine components. P2S5 is also used in pesticide and mining chemicals applications.

Forward-looking Information

This press release may contain "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods.

Any such forward-looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Although Perimeter believes any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Perimeter's actual financial results and cause them to differ materially from those anticipated in any forward-looking statements, including the risk factors described from time to time by us in our filings with the Securities and Exchange Commission ("SEC"), including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 1, 2023. Shareholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements.

Any forward-looking statement made by Perimeter in this press release speaks only as of the date on which it is made. Perimeter undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

SOURCE: Perimeter Solutions, SA.

CONTACT: ir@perimeter-solutions.com

PERIMETER SOLUTIONS, SA AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income
(in thousands, except share and per share data)
(Unaudited)



Three Months Ended June 30, 2023



Three Months Ended June 30, 2022



Six Months Ended June 30, 2023



Six Months Ended June 30, 2022


Net sales

$

76,137


$

100,965


$

119,995


$

158,723


Cost of goods sold


44,140



72,050



75,152



113,393


Gross profit


31,997



28,915



44,843



45,330


Operating expenses:


 



 



 



 


Selling, general and administrative expense


14,897



19,679



25,362



38,833


Amortization expense


13,771



13,802



27,534



27,657


Founders advisory fees - related party


(60,026

)


(20,465

)


(84,262

)


(80,313

)

Other operating expense


8



260



10



456


Total operating expenses


(31,350

)


13,276



(31,356

)


(13,367

)

Operating income


63,347



15,639



76,199



58,697


Other expense (income):


 



 



 



 


Interest expense, net


10,344



12,142



20,490



22,638


Loss (gain) on contingent earn-out


146



(9,398

)


392



(9,398

)

Unrealized foreign currency loss (gain)


93



3,156



(628

)


4,036


Other expense (income), net


17



(200

)


89



(35

)

Total other expense, net


10,600



5,700



20,343



17,241


Income before income taxes


52,747



9,939



55,856



41,456


Income tax (expense) benefit


(733

)


(1,012

)


5,589



4,434


Net income


52,014



8,927



61,445



45,890


Other comprehensive income (loss), net of tax:


 



 



 



 


Foreign currency translation adjustments


2,215



(16,371

)


3,808



(16,245

)

Total comprehensive income (loss)

$

54,229


$

(7,444

)

$

65,253


$

29,645


Earnings per share:


 



 



 



 


Basic

$

0.33


$

0.05


$

0.39


$

0.28


Diluted

$

0.31


$

0.05


$

0.36


$

0.26


Weighted average number of ordinary shares outstanding:


 



 



 



 


Basic


156,525,006



162,917,478



157,109,418



161,591,704


Diluted


168,310,311



177,059,844



168,894,723



175,734,070


 

PERIMETER SOLUTIONS, SA AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)



June 30, 2023



December 31, 2022


Assets


(Unaudited)





Current assets:







Cash and cash equivalents

$

22,118


$

126,750


Accounts receivable, net


62,635



26,646


Inventories


163,122



142,961


Income tax receivable


3,415



214


Prepaid expenses and other current assets


10,721



11,951


Total current assets


262,011



308,522


Property, plant, and equipment, net


58,844



58,846


Operating lease right-of-use assets


14,946



18,582


Finance lease right-of-use assets, net


4,811



-


Goodwill


1,033,642



1,031,460


Customer lists, net


692,965



710,329


Technology and patents, net


227,169



232,818


Tradenames, net


91,986



94,293


Other assets


1,542



1,766


Total assets

$

2,387,916


$

2,456,616


Liabilities and Shareholders Equity


 



 


Current liabilities:


 



 


Accounts payable

$

32,174


$

36,794


Accrued expenses and other current liabilities


24,655



32,705


Founders advisory fees payable - related party


6,945



4,655


Deferred revenue


2,653



-


Total current liabilities


66,427



74,154


Long-term debt


665,879



665,280


Operating lease liabilities, net of current portion


12,655



15,484


Finance lease liabilities, net of current portion


4,349



-


Deferred income taxes


267,722



278,270


Founders advisory fees payable - related party


79,511



170,718


Redeemable preferred shares


103,775



101,279


Redeemable preferred shares - related party


2,751



3,209


Other non-current liabilities


9,785



9,322


Total liabilities


1,212,854



1,317,716


Commitments and contingencies


 



 


Shareholders' equity:


 



 


Ordinary shares, $1 nominal value per share; 4,000,000,000 shares authorized; 165,066,195 and 163,234,542 shares issued; 154,520,833 and 156,797,806 shares outstanding at June 30, 2023 and December 31, 2022, respectively


165,067



163,235


Treasury shares, at cost; 10,545,362 and 6,436,736 shares at June 30, 2023 and December 31, 2022, respectively


(76,553

)


(49,341

)

Additional paid-in capital


1,695,070



1,698,781


Accumulated other comprehensive loss


(21,663

)


(25,471

)

Accumulated deficit


(586,859

)


(648,304

)

Total shareholders' equity


1,175,062



1,138,900


Total liabilities and shareholders' equity

$

2,387,916


$

2,456,616


 

PERIMETER SOLUTIONS, SA AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)



Six Months Ended June 30, 2023



Six Months Ended June 30, 2022


Cash flows from operating activities:







Net income

$

61,445


$

45,890


Adjustments to reconcile net income to net cash used in operating activities:







Founders advisory fees - related party (change in accounting fair value)


(84,262

)


(80,313

)

Depreciation and amortization expense


32,217



33,086


Interest and payment-in-kind on preferred shares


3,396



3,268


Share-based compensation


(1,879

)


8,396


Non-cash lease expense


2,271



2,642


Deferred income taxes


(11,076

)


(129

)

Amortization of deferred financing costs


824



793


Amortization of acquisition related inventory step-up


-



24,138


Loss (gain) on contingent earn-out


392



(9,398

)

Unrealized (gain) loss on foreign currency


(628

)


4,036


Loss on disposal of assets


20



9


Changes in operating assets and liabilities, net of acquisitions:







Accounts receivable


(35,640

)


(44,477

)

Inventories


(19,963

)


(41,431

)

Prepaid expenses


1,260



7,301


Accounts payable


(4,744

)


15,834


Deferred revenue


2,653



4,991


Income taxes payable, net


(10,479

)


(10,872

)

Accrued expenses and other current liabilities


(1,805

)


3,050


Founders advisory fees - related party (cash settled)


(4,655

)


(53,547

)

Operating lease liabilities


(2,263

)


(2,511

)

Finance lease liabilities


(67

)


-


Other liabilities


47



(107

)

Net cash used in operating activities


(72,936

)


(89,351

)

Cash flows from investing activities:







Purchase of property and equipment


(4,375

)


(4,006

)

Purchase price adjustment under Business Combination Agreement


-



(1,638

)

Net cash used in investing activities


(4,375

)


(5,644

)

Cash flows from financing activities:







Ordinary shares repurchased


(27,212

)


(5,008

)

Proceeds from exercise of warrants


-



529


Principal payments on finance lease obligations


(103

)


-


Net cash used in financing activities


(27,315

)


(4,479

)

Effect of foreign currency on cash and cash equivalents


(6

)


(578

)

Net change in cash and cash equivalents


(104,632

)


(100,052

)

Cash and cash equivalents, beginning of period


126,750



225,554


Cash and cash equivalents, end of period

$

22,118


$

125,502


Supplemental disclosures of cash flow information:


 



 


Cash paid for interest

$

17,153


$

17,919


Cash paid for income taxes

$

18,317


$

6,572


Non-cash investing and financing activities:


 



 


Liability portion of founders advisory fees - related party reclassified to additional paid in capital

$

-


$

13,783


 

Non-GAAP Financial Metrics

Adjusted EBITDA

The computation of Adjusted EBITDA is defined as net income plus income tax expense, net interest and other financing expenses, and depreciation and amortization, adjusted on a consistent basis for certain non-recurring, unusual or non-operational items in a balanced manner. These items include (i) expenses related to the Business Combination, (ii) founder advisory fee expenses, (iii) stock compensation expense, (iv) non-cash impact of purchase accounting on the cost of inventory sold and (v) unrealized foreign currency loss (gain). To supplement the Company's condensed consolidated financial statements presented in accordance with U.S. GAAP, Perimeter is providing a summary to show the computations of Adjusted EBITDA, which is a non-U.S.GAAP measure used by the Company's management and by external users of Perimeter's financial statements, such as investors, commercial banks and others, to assess the Company's operating performance as compared to that of other companies, without regard to financing methods, capital structure or historical cost basis. Adjusted EBITDA should not be considered an alternative to net income (loss), operating income (loss), cash flows provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP (in thousands).

(Unaudited)

 

Three Months Ended
June 30, 2023


 

Three Months Ended
June 30, 2022



Six Months Ended
June 30, 2023



Six Months Ended
June 30, 2022


Income before income taxes

$

52,747


$

9,939


$

55,856


$

41,456


Depreciation and amortization

 

16,130


 

16,715



32,217



33,086


Interest and financing expense

 

10,344


 

12,142



20,490



22,638


Founders advisory fees - related party

 

(60,026

)

 

(20,465

)


(84,262

)


(80,313

)

Non-recurring expenses 1

 

361


 

2,144



1,920



3,620


Share-based compensation expense

 

1,195


 

3,433



(1,879

)


8,396


Non-cash purchase accounting impact 2

 

-


 

18,016



-



24,138


Loss (gain) on contingent earn-out

 

146


 

(9,398

)


392



(9,398

)

Unrealized foreign currency loss (gain)

 

93


 

3,156



(628

)


4,036


Adjusted EBITDA

$

20,990


$

35,682


$

24,106


$

47,659


Net sales

$

76,137


$

100,965


$

119,995


$

158,723


 

____________________

1Adjustment to reflect non-recurring expenses; severance costs and fees related to internal audit support.
2Represents the non-cash impact of purchase accounting on the cost of inventory sold in connection with the business combination with Perimeter Solutions. The inventory acquired received a purchase accounting step-up in basis, which is a non-cash adjustment to the cost.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/175903

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