Perimeter Solutions Reports Second Quarter 2023 Financial Results

Download as PDF

Related Documents

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

SOURCE Perimeter Solutions

Released August 3, 2023