Perimeter Solutions Reports Fourth Quarter 2022 Results

Net sales decreased 1% year-over-year in 2022, due primarily to the mild North America fire season, and strong growth in Specialty Products

Fire Safety Adjusted EBITDA decreased 34% in 2022 due primarily to the mild fire season; Specialty Products Adjusted EBITDA increased 104% in 2022 due primarily to strong value driver implementation

Repurchased approximately 5.5M shares in the fourth quarter at an average price of $7.55; repurchased approximately 6.4M shares in full year 2022 at an average price of $7.65

Clayton, Missouri--(Newsfile Corp. - February 28, 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 lubricant additives, today reported financial results for its fourth quarter ended December 31, 2022.

Full Year 2022 Results

Full year net sales decreased 1% to $360.5 million, as compared to $362.3 million in the prior year.
- Fire Safety sales decreased 13% to $226.6 million, as compared to $261.2 million in the prior year.
- Specialty Products sales increased 32% to $133.9 million, as compared to $101.2 million in the prior year.
Full year net income was $91.8 million, or $0.52 per diluted share, an increase of $753.3 million from a net loss of $661.5 million, or $(9.70) per diluted share in the prior year.
Full year Adjusted EBITDA decreased 11% to $125.4 million, as compared to $141.4 million in the prior year.
- Fire Safety Adjusted EBITDA decreased 34% to $77.4 million, as compared to $117.9 million in the prior year.
- Specialty Products Adjusted EBITDA increased 104% to $48.0 million, as compared to $23.6 million in the prior year.

Fourth Quarter 2022 Results

Net sales decreased 10% to $41.3 million in the fourth quarter, as compared to $45.9 million in the prior year quarter.
- Fire Safety sales decreased 18% to $19.6 million, as compared to $23.9 million in the prior year quarter.
- Specialty Products sales decreased 1% to $21.7 million, as compared to $22.0 million in the prior year quarter.
Net loss during the fourth quarter was $60.4 million, or $(0.38) per share, a decrease of $630.8 million from a net loss of $691.2 million, or $(6.12) per diluted share in the prior year quarter.
Adjusted EBITDA decreased 69% to $2.1 million in the fourth quarter, as compared to $6.8 million in the prior year quarter.
- Fire Safety Adjusted EBITDA decreased 420% to $(3.9) million, as compared to $1.2 million in the prior year quarter.
- Specialty Products Adjusted EBITDA increased 7% to $6.0 million, as compared to $5.6 million in the prior year quarter.

While finalizing its financial results for the year ended December 31, 2022, the Company determined that its previously issued unaudited condensed consolidated financial statements for the periods ended June 30, 2022 and September 30, 2022 should no longer be relied upon due to an error related to the accounting treatment of the Company's non-cash share-based compensation awards and an error related to non-cash amortization of the step-up in basis of inventory which resulted in an overstatement of the Company's non-cash share-based compensation expense and non-cash amortization of step-up in basis of inventory. Accordingly, the Company will restate its unaudited consolidated financial statements for the periods ended June 30, 2022 and September 30, 2022 in its 2022 Form 10-K to reflect the corrected share-based compensation expense and amortization amount. The Company plans to file a current report on Form 8-K with the U.S. Securities and Exchange Commission on February 28, 2023 which will include additional information regarding the restated results.

Conference Call and Webcast

As previously announced, Perimeter Solutions management will hold a conference call at 8:30 a.m. ET on Tuesday, February 28, 2023 to discuss 2022 fourth quarter operating results. 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 March 30, 2023.

About Perimeter Solutions

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

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 lubricant additives, 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 contains "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 U.S. Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Stockholders, 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
Consolidated Statement of Operations and Comprehensive Income (loss)
(in thousands, except share and per share data)
(Unaudited)

		Fourth Quarter									Full Year
		Successor						Predecessor			Successor						Predecessor
		Three Months Ended December 31, 2022			November 9, 2021 Through December 31, 2021			October 1, 2021 Through November 8, 2021			Year Ended December 31, 2022			November 9, 2021 Through December 31, 2021			January 1, 2021 Through November 8, 2021

Net sales	$	41,273		$	21,023		$	24,855		$	360,505		$	21,023		$	341,315
Cost of goods sold		30,699			23,710			12,241			217,853			23,710			172,136
Gross profit		10,574			(2,687	)		12,614			142,652			(2,687	)		169,179
Operating expenses:
Selling, general and
administrative expense		19,836			16,982			(3,563	)		74,319			16,982			38,981
Amortization expense		13,710			8,004			5,606			55,105			8,004			45,424
Founders advisory fees
- related party		36,724			652,990			-			(117,302	)		652,990			-
Other operating expense		60			92			3,087			465			92			4,153
Total operating expenses		70,330			678,068			5,130			12,587			678,068			88,558
Operating (loss) income		(59,756	)		(680,755	)		7,484			130,065			(680,755	)		80,621
Other expense (income):
Interest expense, net		10,003			6,352			15,136			42,585			6,352			39,087
(Gain) loss on contingent
earn-out		336			198			202			(12,706	)		198			2,965
Unrealized foreign
currency (gain) loss		(5,279	)		1,006			134			3,462			1,006			4,026
Other expense (income), net		317			(2	)		30			(503	)		(2	)		(222	)
Total other expense, net		5,377			7,554			15,502			32,838			7,554			45,856
(Loss) income before
income taxes		(65,133	)		(688,309	)		(8,018	)		97,227			(688,309	)		34,765
Income tax benefit (expense)		4,774			6,160			(985	)		(5,469	)		6,160			(14,136	)
Net (loss) income		(60,359	)		(682,149	)		(9,003	)		91,758			(682,149	)		20,629
Other comprehensive
income (loss), net of tax:
Foreign currency translation
adjustments		16,090			(7,135	)		2,660			(18,336	)		(7,135	)		236
Total comprehensive (loss)
income	$	(44,269	)	$	(689,284	)	$	(6,343	)	$	73,422		$	(689,284	)	$	20,865
(Loss) earnings per share:
Basic	$	(0.38	)	$	(4.34	)	$	(0.17	)	$	0.57		$	(4.34	)	$	0.39
Diluted	$	(0.38	)	$	(4.34	)	$	(0.17	)	$	0.52		$	(4.34	)	$	0.39
Weighted average number of
ordinary shares outstanding:
Basic		157,945,813			157,158,579			53,045,510			160,937,575			157,158,579			53,045,510
Diluted		157,945,813			157,158,579			53,045,510			175,079,941			157,158,579			53,045,510

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

		December 31, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	126,750		$	225,554
Accounts receivable, net		26,646			24,319
Inventories		142,961			106,910
Income tax receivable		214			816
Prepaid expenses and other current assets		11,951			14,161
Total current assets		308,522			371,760
Property, plant, and equipment, net		58,846			62,247
Operating lease right-of-use assets		18,582			-
Goodwill		1,031,460			1,041,325
Customer lists, net		710,329			753,459
Technology and patents, net		232,818			247,368
Tradenames, net		94,293			100,005
Other assets, net		1,766			2,219
Total assets	$	2,456,616		$	2,578,383
Liabilities and Shareholders Equity
Current liabilities:
Accounts payable	$	36,794		$	27,469
Accrued expenses and other current liabilities		32,705			19,025
Founders advisory fees payable - related party		4,655			53,547
Deferred revenue		-			445
Total current liabilities		74,154			100,486
Long-term debt		665,280			664,128
Operating lease liabilities		15,484			-
Deferred income taxes		278,270			297,148
Founders advisory fees payable - related party		170,718			312,242
Redeemable preferred shares		101,279			96,867
Redeemable preferred shares - related party		3,209			3,699
Other non-current liabilities		9,322			22,195
Total liabilities	$	1,317,716		$	1,496,765
Commitments and contingencies
Shareholders' equity:
Ordinary shares, $1 nominal value per share, 4,000,000,000 shares
authorized; 163,234,542 and 157,237,435 shares issued; 156,797,806 and
157,237,435 shares outstanding at December 31, 2022 and 2021, respectively		163,235			157,237
Treasury shares, at cost; 6,436,736 shares at December 31, 2022 and no
shares at December 31, 2021		(49,341	)		-
Additional paid-in capital		1,698,781			1,670,033
Accumulated other comprehensive loss		(25,471	)		(7,135	)
Accumulated deficit		(648,304	)		(738,517	)
Total shareholders' equity		1,138,900			1,081,618
Total liabilities and shareholders' equity	$	2,456,616		$	2,578,383

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

		Successor						Predecessor
		Year Ended December 31, 2022			November 9, 2021 Through December 31, 2021			January 1, 2021 Through November 8, 2021
Cash flows from operating activities:
Net income (loss)	$	91,758		$	(682,149	)	$	20,629
Adjustments to reconcile net income (loss) to net cash (used in) provided
by operating activities:
Founders advisory fees - related party (change in accounting fair value)		(117,302	)		-			-
Depreciation and amortization expense		65,795			9,379			52,000
Interest and payment-in-kind on preferred shares		6,537			944			-
Stock-based compensation		14,649			4,821			156
Non-cash lease expense		5,390			-			-
Founders advisory fees - related party (equity settled)		-			287,200			-
Deferred income taxes		(17,000	)		(2,155	)		(11,244	)
Amortization of deferred financing costs		1,602			224			14,592
Amortization of acquisition related inventory step-up		24,796			6,125			-
(Gain) loss on contingent earn-out		(12,706	)		198			2,965
Unrealized loss on foreign currency		3,462			1,006			4,026
Loss on disposal of assets		9			-			-
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(6,190	)		27,977			(28,872	)
Inventories		(61,934	)		(13,259	)		(10,201	)
Prepaid expenses and other current assets		1,922			(5,230	)		(9,426	)
Other assets		-			54			884
Accounts payable		9,696			8,194			10,108
Deferred revenue		(383	)		332			(149	)
Income taxes payable, net		8,920			(8,985	)		18,835
Accrued expenses and other current liabilities		(647	)		436			146
Founders advisory fees - related party (cash settled)		(53,547	)		365,789			-
Operating lease liabilities		(5,072	)		-			-
Other liabilities		73			3,458			3,542
Net cash (used in) provided by operating activities		(40,172	)		4,359			67,991
Cash flows from investing activities:
Acquisition of SK Invictus, net of cash acquired		-			(1,209,155	)		-
Purchase of property and equipment		(8,613	)		(1,468	)		(8,282	)
Purchase price adjustment under Business Combination Agreement		(1,638	)		-			-
Purchase of businesses, net of cash acquired		-			-			(7,464	)
Net cash used in investing activities		(10,251	)		(1,210,623	)		(15,746	)

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

		Successor						Predecessor
		Year Ended December 31, 2022			November 9, 2021 Through December 31, 2021			January 1, 2021 Through November 8, 2021
Cash flows from financing activities:
Ordinary shares repurchased		(49,341	)		-			-
Proceeds from exercise of warrants		529			-			-
Sale of PSSA Ordinary Shares issued to Director Subscribers		-			2,000			-
Shareholders' capital distributions		-			-			(60,000	)
Proceeds from revolving credit facility		-			40,000			19,500
Repayments of revolving credit facility		-			(40,000	)		(19,500	)
Repayments of long-term debt		-			(696,971	)		(4,210	)
Payment of debt issue costs		-			(2,250	)		-
Net cash used in financing activities		(48,812	)		(697,221	)		(64,210	)
Effect of foreign currency on cash and cash equivalents		431			(738	)		435
Net change in cash and cash equivalents		(98,804	)		(1,904,223	)		(11,530	)
Cash and cash equivalents at the beginning of year		225,554			2,129,777			22,478
Cash and cash equivalents at the end of year	$	126,750		$	225,554		$	10,948
Supplemental disclosures of cash flow information:
Cash paid for interest	$	35,488		$	174		$	24,559
Cash paid for income taxes	$	13,488		$	4,517		$	7,092
Non-cash investing and financing activities:
Liability portion of founders advisory fees - related party reclassified
to additional paid in capital	$	19,568		$	-		$	-
Redeemable preferred shares issued as consideration for business
combination	$	-		$	100,000		$	-
Management Subscribers rollover contribution	$	-		$	11,048		$	-

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, (v) contingent future payment related to an acquired business, (vi) management fees related to the services provided by SK Capital Partners IV-A, L.P. and SK Capital Partners IV-B, L.P (collectively, the "Sponsor") when acting in a management capacity and (vii) unrealized foreign currency loss (gain). To supplement the Company's 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).

Three Months Ended					S/P Combined			Successor			Predecessor
(Unaudited)		Three Months Ended December 31, 2022			Three Months Ended December 31, 2021			November 9, 2021 Through December 31, 2021			October 1, 2021 Through November 8, 2021
Loss before income taxes	$	(65,133	)	$	(696,327	)	$	(688,309	)	$	(8,018	)
Depreciation and amortization		16,259			15,786			9,379			6,407
Interest and financing expense		10,003			21,488			6,352			15,136
Founders advisory fees - related party		36,724			652,990			652,990			-
Non-recurring expenses ¹		2,097			(2,380	)		5,580			(7,960	)
Share-based compensation expense		7,098			4,977			4,821			156
Non-cash purchase accounting impact ²		-			6,125			6,125			-
Loss on contingent earn-out		336			400			198			202
Management fees ³		-			136			-			136
Contingent future payments ⁴		-			2,500			-			2,500
Unrealized foreign currency (gain) loss		(5,279	)		1,140			1,006			134
Adjusted EBITDA	$	2,105		$	6,835		$	(1,858	)	$	8,693
Net sales	$	41,273		$	45,878		$	21,023		$	24,855

Year Ended					S/P Combined			Successor			Predecessor
(Unaudited)		Year Ended December 31, 2022			Year Ended December 31, 2021			November 9, 2021 Through December 31, 2021			January 1, 2021 Through November 8, 2021
Income (loss) before income taxes	$	97,227		$	(653,544	)	$	(688,309	)	$	34,765
Depreciation and amortization		65,795			61,379			9,379			52,000
Interest and financing expense		42,585			45,439			6,352			39,087
Founders advisory fees - related party		(117,302	)		652,990			652,990			-
Non-recurring expenses ¹		6,885			10,425			5,580			4,845
Share-based compensation expense		14,649			4,977			4,821			156
Non-cash purchase accounting impact ²		24,796			6,125			6,125			-
(Gain) loss on contingent earn-out		(12,706	)		3,163			198			2,965
Management fees ³		-			1,073			-			1,073
Contingent future payments ⁴		-			4,375			-			4,375
Unrealized foreign currency loss		3,462			5,032			1,006			4,026
Adjusted EBITDA	$	125,391		$	141,434		$	(1,858	)	$	143,292
Net sales	$	360,505		$	362,338		$	21,023		$	341,315

(1) Adjustment to reflect non-recurring professional fees and integration costs including expenses related to the business combination with Perimeter Solutions.
(2) Represents 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.
(3) Adjustment to reflect fees pertaining to services provided by the Sponsor when acting in a management capacity on strategic and other non-operational matters which do not represent expenses incurred in the normal course of our operations. These fees did not continue following the closing of the business combination.
(4) Adjustment to reflect deferred consideration paid with respect to a 2019 acquisition.

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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/156449

SOURCE Perimeter Solutions

Released February 28, 2023

Perimeter Solutions Reports Fourth Quarter 2022 Results

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