Net sales decreased 18% in Q3-2022 as compared to Q3-2021 driven by the mild North America fire season

Fire Safety Q3 Adjusted EBITDA of $60.4 million; Specialty Products Q3 Adjusted EBITDA of $15.3 million

Year-to-date net income of $123.7 million and consolidated Adjusted EBITDA of $123.3 million

New $100.0 million share repurchase authorization *

CLAYTON, Mo., Nov. 4, 2022 /PRNewswire/ -- Perimeter Solutions, SA (NYSE: PRM) ("Perimeter" or the "Company"), a leading provider of mission-critical firefighting products and services, as well as specialty products used in several end markets, today reported financial results for the three and nine months ended September 30, 2022.

Year-to-Date 2022 Results

  • Net sales increased 1% to $319.2 million during the year-to-date period, as compared to $316.5 million in the prior-year period.

  •  
    • Fire Safety sales decreased 13% to $207.0 million, as compared to $237.3 million in the prior year.

  •  
    • Specialty Products sales increased 42% to $112.2 million, as compared to $79.2 million in the prior year.

  • Net income during the year-to-date period was $123.7 million, or $0.70 per diluted share, an increase of $94.1 million from $29.6 million, or $0.56 per diluted share, for the same period of 2021.

  • Adjusted EBITDA decreased 8% to $123.3 million during the year-to-date period, as compared to $134.6 million in the prior-year period.

  •  
    • Fire Safety Adjusted EBITDA decreased 30% to $81.2 million, as compared to $116.7 million in the prior year.

  •  
    • Specialty Products Adjusted EBITDA increased 135% to $42.0 million, as compared to $17.9 million in the prior year.
Third Quarter 2022 Results

  • Net sales decreased 18% to $160.5 million in the third quarter, as compared to $195.4 million in the prior-year quarter.

  •  
    • Fire Safety sales decreased 29% to $122.0 million, as compared to $172.4 million in the prior year.

  •  
    • Specialty Products sales increased 68% to $38.5 million, as compared to $23.0 million in the prior year.

  • Net income during the third quarter was $78.7 million, or $0.45 per diluted share, an increase of $26.7 million from $52.0 million, or $0.98 per diluted share, for the same period of 2021.

  • Adjusted EBITDA decreased 25% to $75.6 million in the third quarter, as compared to $100.4 million in the prior-year quarter.

  •  
    • Fire Safety Adjusted EBITDA decreased 38% to $60.4 million, as compared to $97.9 million in the prior year.

  •  
    • Specialty Products Adjusted EBITDA increased 512% to $15.3 million, as compared to $2.5 million in the prior year.





*

On November 3, 2022, the Company's board of directors approved the repurchase of up to $100.0 million of the Company's ordinary shares during the next 24 months.

Conference Call and Webcast

As previously announced, Perimeter Solutions management will hold a conference call at 8:30 a.m. ET on Friday, November 4, 2022 to discuss financial results for the third quarter 2022. 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 December 4, 2022.

About Perimeter Solutions

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

The Fire Safety segment 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 segment 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.

In June 2022, the Oil Additives segment, which produces and sells Phosphorus Pentasulfide ("P2S5"), was renamed the Specialty Products segment to better reflect the current and expanding applications for P2S5 in several end markets and applications, including lubricant additives, various agricultural applications, various mining applications, and emerging electric battery technologies. Within the lubricant additive end market, currently our largest end market application, P2S5 is primarily used in the production of a family of compounds called Zinc Dialkyldithiophosphates ("ZDDP"), which is considered an essential component in the formulation of engine oils with its main function to provide anti-wear protection to engine components.

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, 2021 filed with the SEC on March 31, 2022. 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.

CONTACT:
ir@perimeter-solutions.com

 

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



Successor



Predecessor


Successor



Predecessor


Three Months Ended
September 30, 2022



Three Months Ended
September 30, 2021


Nine Months Ended
September 30, 2022



Nine Months Ended
September 30, 2021











Net sales

$           160,509



$           195,414


$           319,232



$           316,460

Cost of goods sold

74,707



86,081


191,757



159,895

Gross profit

85,802



109,333


127,475



156,565

Operating expenses:










Selling, general and administrative expense

22,381



15,333


64,803



42,544

Amortization expense

13,738



13,276


41,395



39,818

Founders advisory fees - related party

(73,713)




(154,026)



Other operating expense

(51)



313


405



1,066

Total operating expenses

(37,645)



28,922


(47,423)



83,428

Operating income

123,447



80,411


174,898



73,137

Other expense (income):










Interest expense, net

9,944



8,065


32,582



23,951

(Gain) loss on contingent earn-out

(3,644)




(13,042)



2,763

Unrealized foreign currency loss

4,705



1,634


8,741



3,892

Other (income) expense, net

(785)



66


(820)



(252)

Total other expense, net

10,220



9,765


27,461



30,354

Income before income taxes

113,227



70,646


147,437



42,783

Income tax expense

(34,516)



(18,637)


(23,692)



(13,151)

Net income

78,711



52,009


123,745



29,632

Other comprehensive loss, net of tax:










Foreign currency translation adjustments

(18,181)



(2,020)


(34,426)



(2,424)

Total comprehensive income

$             60,530



$             49,989


$             89,319



$             27,208

Earnings per share:










Basic

$                 0.48



$                 0.98


$                 0.76



$                 0.56

Diluted

$                 0.45



$                 0.98


$                 0.70



$                 0.56

Weighted average number of ordinary shares outstanding:










Basic

162,635,592



53,045,510


161,943,492



53,045,510

Diluted

176,777,958



53,045,510


176,085,858



53,045,510

 

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



September 30, 2022


December 31, 2021

Assets

(Unaudited)



Current assets:




Cash and cash equivalents

$         166,256


$         225,554

Accounts receivable, net

85,612


24,319

Inventories

120,467


110,087

Income tax receivable

655


816

Prepaid expenses and other current assets

4,876


14,161

Total current assets

377,866


374,937

Property, plant, and equipment, net

57,187


62,247

Goodwill

1,019,387


1,041,325

Customer lists, net

715,829


753,459

Technology and patents, net

233,861


247,368

Tradenames, net

95,047


100,005

Other assets, net

1,877


2,219

Total assets

$      2,501,054


$      2,581,560

Liabilities and Shareholders Equity




Current liabilities:




Accounts payable

$           31,856


$           27,469

Accrued expenses and other current liabilities

124,429


19,025

Founders advisory fees payable - related party

9,836


53,547

Deferred revenue

1,272


445

Total current liabilities

167,393


100,486

Long-term debt

664,986


664,128

Deferred income taxes

222,952


298,633

Founders advisory fees payable - related party

134,598


312,242

Redeemable preferred shares

100,263


96,867

Redeemable preferred shares - related party

3,245


3,699

Other non-current liabilities

8,951


22,195

Total liabilities

1,302,388


1,498,250

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; 162,316,326 and 157,237,435 shares outstanding at September 30, 2022 and December 31, 2021, respectively

163,235


157,237

Treasury shares, at cost; 918,216 shares at September 30, 2022 and no shares at December 31, 2021

(7,572)


Additional paid-in capital

1,697,644


1,670,033

Accumulated other comprehensive loss

(41,561)


(7,135)

Accumulated deficit

(613,080)


(736,825)

Total shareholders' equity

1,198,666


1,083,310

Total liabilities and shareholders' equity

$      2,501,054


$      2,581,560

 

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



Successor



Predecessor


Nine Months Ended
September 30, 2022



Nine Months Ended
September 30, 2021

Cash flows from operating activities:





Net income

$               123,745



$                 29,632

Adjustments to reconcile net income to net cash (used in) provided by operating activities:





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

(154,026)



Depreciation and amortization expense

49,536



45,593

Interest and payment-in-kind on preferred shares

4,903



Share-based compensation

19,297



Deferred income taxes

(72,441)



(5,195)

Amortization of deferred financing costs

1,196



2,432

Amortization of acquisition related inventory step-up

27,973



(Gain) loss on contingent earn-out

(13,042)



2,763

Unrealized loss on foreign currency

8,741



3,892

Loss on disposal of assets

9



Changes in operating assets and liabilities, net of acquisitions:





Accounts receivable

(63,838)



(72,103)

Inventories

(40,759)



(5,554)

Prepaid expenses and other current assets

9,058



3,104

Other assets



346

Accounts payable

4,975



12,971

Deferred revenue

889



831

Income taxes payable, net

88,673



11,180

Accrued expenses and other current liabilities

15,547



2,725

Founders advisory fees - related party (cash settled)

(53,547)



Other liabilities

(73)



(200)

Net cash (used in) provided by operating activities

(43,184)



32,417

Cash flows from investing activities:





Purchase of property and equipment

(6,024)



(5,149)

Purchase price adjustment under Business Combination Agreement

(1,638)



Purchase of businesses, net of cash acquired



(7,464)

Net cash used in investing activities

(7,662)



(12,613)

Cash flows from financing activities:





Ordinary shares repurchased

(7,572)



Proceeds from exercise of warrants

529



Proceeds from revolving credit facility



19,500

Repayments of revolving credit facility



(19,500)

Repayments of long-term debt



(4,211)

Net cash used in financing activities

(7,043)



(4,211)

Effect of foreign currency on cash and cash equivalents

(1,409)



1,510

Net change in cash and cash equivalents

(59,298)



17,103

Cash and cash equivalents, beginning of period

225,554



22,478

Cash and cash equivalents, end of period

$               166,256



$                 39,581

Supplemental disclosures of cash flow information:





Cash paid for interest

$                 18,299



$                 21,502

Cash paid for income taxes

$                   7,588



$                   7,092

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, (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).


Successor



Predecessor


Successor



Predecessor

(Unaudited)

Three Months Ended
September 30, 2022



Three Months Ended
September 30, 2021


Nine Months Ended
September 30, 2022



Nine Months Ended
September 30, 2021

Income before income taxes

$        113,227



$          70,646


$        147,437



$          42,783

Depreciation and amortization

16,450



15,212


49,536



45,593

Interest and financing expense

9,944



8,065


32,582



23,951

Founders advisory fees - related party

(73,713)




(154,026)



Non-recurring expenses 1

1,168



3,855


4,788



12,805

Share-based compensation expense

6,832




19,297



Non-cash purchase accounting impact 2

658




27,973



(Gain) loss on contingent earn-out

(3,644)




(13,042)



2,763

Management fees 3



313




937

Contingent future payments 4



625




1,875

Unrealized foreign currency loss

4,705



1,634


8,741



3,892

Adjusted EBITDA

$          75,627



$        100,350


$        123,286



$        134,599

Net sales

$        160,509



$        195,414


$        319,232



$        316,460






(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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SOURCE Perimeter Solutions

Copyright 2022 PR Newswire

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