Perimeter Solutions, SA (NYSE:PRM) Q3 2023 Earnings Conference Call November 9, 2023 8:30 AM ET Company Participants Seth Barker - Head, Investor Relations Haitham Khouri - Chief Executive Officer Chuck Kropp - Chief Financial Officer Conference Call Participants Brian DiRubbio - Baird Operator Greetings. Welcome to Perimeter Solutions Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instr ...

Fire Safety Segment Performance - The Fire Safety segment accounts for approximately 74% of the company's 2022 annual revenues, with 15% from Europe, 5% from Canada, and 2% from Mexico[112] - The Fire Safety segment is expected to grow due to increasing fire severity, longer fire seasons, and a growing wildland-urban interface, driving demand for fire retardant products[115] - The company is expanding its fire prevention and protection business, focusing on ground applications for long-term fire retardant and proactive treatments in high-risk areas[116] - Fire retardant sales decreased by $30.4 million for the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to decreased fire activity in the Americas and Europe[146] - Fire Safety segment Adjusted EBITDA decreased by $4.3 million to $56.0 million for the three months ended September 30, 2023[157] - Fire Safety segment Adjusted EBITDA decreased by $12.0 million to $69.2 million for the nine months ended September 30, 2023[159] Financial Performance and Results - Net sales decreased by $17.9 million (11%) for the three months ended September 30, 2023 compared to the same period in 2022, driven by lower fire retardant sales in the Fire Safety segment and reduced purchases in the Specialty Products segment[136] - Gross profit decreased by $13.4 million (16%) for the three months ended September 30, 2023 compared to the same period in 2022, primarily due to lower net sales[136] - Net income decreased by $86.9 million (82%) for the three months ended September 30, 2023 compared to the same period in 2022, primarily due to lower operating income and higher intangible impairment[136] - Net sales decreased by $56.6 million (18%) for the nine months ended September 30, 2023 compared to the same period in 2022, driven by lower fire retardant sales in the Fire Safety segment and reduced purchases in the Specialty Products segment[146] - Gross profit decreased by $13.9 million (11%) for the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to lower net sales[146] - Net income decreased by $71.4 million (47%) for the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to lower operating income and higher intangible impairment[145] - Income tax benefit increased by $12.1 million for the nine months ended September 30, 2023 compared to the same period in 2022[154] Specialty Products Segment Performance - The company operates seven business units within its Fire Safety and Specialty Products segments, focusing on profitable new business, value-based pricing, and productivity improvements[114] - Specialty Products segment Adjusted EBITDA decreased by $9.8 million to $5.4 million for the three months ended September 30, 2023[158] - Specialty Products segment Adjusted EBITDA decreased by $25.7 million to $16.4 million for the nine months ended September 30, 2023[160] Goodwill and Impairment Analysis - As of September 30, 2023, total goodwill was $1,028.8 million, with $858.2 million assigned to the Fire Safety reporting unit and $170.6 million to the Specialty Products reporting unit[128] - The fair value of the Fire Safety reporting unit exceeded its carrying value by 5.9%, and the Specialty Products reporting unit exceeded its carrying value by 15.3% as of September 30, 2023[129] - The company uses a weighted average cost of capital (WACC) of 15.0% for its impairment analysis as of September 30, 2023[127] - Intangible impairment increased by $40.7 million for the three months ended September 30, 2023 compared to the same period in 2022, due to an impairment on the carrying value of the technology underlying the contingent earn-out eligible fire retardant product[141] Cash Flow and Financing Activities - Cash used in operating activities decreased by $33.0 million to $10.2 million for the nine months ended September 30, 2023 compared to the same period in 2022[165] - Cash used in financing activities increased by $30.5 million to $37.5 million for the nine months ended September 30, 2023 compared to the same period in 2022[167] - The company repurchased 5,845,161 Ordinary Shares during the nine months ended September 30, 2023[178] - The company has no borrowings outstanding under the Revolving Credit Facility as of September 30, 2023[186] Market Risks and Inflationary Pressures - The company's financial performance is significantly impacted by weather conditions and climate trends, with higher sales typically occurring during the summer season due to wildfire prevalence[118] - The company is mitigating inflationary pressures through actions such as aggregating purchase requirements, negotiating cost reductions, and identifying more cost-competitive suppliers[119] - The company is exposed to market risks from foreign currency exchange rates, short-term interest rates, and commodity price fluctuations, but does not engage in hedging activities[184] - Foreign currency risks are attributed to sales to foreign customers, purchases from foreign suppliers, and intercompany transactions, with exposure to the Euro, Canadian dollar, Norwegian krone, and Australian dollar[185] - The company's realized margins depend on the differential between sales prices and total supply costs, with potential disruptions from market, weather, or other conditions[187] - The company is subject to inflationary pressures on raw materials, labor, and transportation, and is taking actions to mitigate these pressures with customers and suppliers[188] Financial Reporting and Advisory Amounts - The company's financial statements are prepared in accordance with U.S. GAAP, with significant accounting policies and estimates consistent with those in the 2022 Annual Report[183] - The fair value of the Fixed Annual Advisory Amount was calculated to be $59.2 million as of September 30, 2023[181] - The fair value of the Variable Annual Advisory Amount was determined to be $64.6 million as of September 30, 2023[181] Business Expansion and Acquisitions - The company plans to continue investing in the expansion of its fire safety business through acquisitions to grow its global customer base[117] - Fire suppressant sales increased by $13.6 million for the nine months ended September 30, 2023 compared to the same period in 2022, driven by strong performance in emergency response business and geographic expansion[146]

August 3, 2023 2 Disclaimer Certain statements in this presentation and discussion are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on Perimeter Solutions, SA's (the "Company") expectations, intentions and projections regarding the Company's future performance, anticipated events or trends and other matters that are not historical facts. Words such as "anticipate," "estimate," "expect," "forecast," "project," "plan," "intend," "believe," ...

Perimeter Solutions, SA (NYSE:PRM) Q2 2023 Earnings Call August 3, 2023 8:30 AM ET Company Participants Seth Barker - Head of Investor Relations Haitham Khouri - Chief Executive Officer Chuck Kropp - Chief Financial Officer Conference Call Participants Josh Spector - UBS Brian DiRubbio - Baird Daniel Kutz - Morgan Stanley Operator Ladies and gentlemen, good morning, and welcome to the Perimeter Solutions Second Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. A ...

[Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) - This report contains forward-looking statements concerning future events and financial performance. These statements are based on current expectations and are subject to risks and uncertainties, meaning actual results could differ materially[8](index=8&type=chunk) - Key areas covered by forward-looking statements include future financial performance, expansion of the fire safety business, capital expenditures, demand for products, and the impact of economic conditions[9](index=9&type=chunk) - Significant risks that could affect results include dependence on government customers (USDA Forest Service, California), seasonality, supply chain issues, and litigation[11](index=11&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Unaudited financial statements for June 30, 2023, show assets decreased, net sales declined, but net income increased, primarily due to a non-cash fee reduction [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $22,118 | $126,750 | | Total current assets | $262,011 | $308,522 | | Goodwill | $1,033,642 | $1,031,460 | | **Total assets** | **$2,387,916** | **$2,456,616** | | **Liabilities & Equity** | | | | Total current liabilities | $66,427 | $74,154 | | Long-term debt | $665,879 | $665,280 | | **Total liabilities** | **$1,212,854** | **$1,317,716** | | **Total shareholders' equity** | **$1,175,062** | **$1,138,900** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 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 | | Gross profit | $31,997 | $28,915 | $44,843 | $45,330 | | Operating income | $63,347 | $15,639 | $76,199 | $58,697 | | Net income | $52,014 | $8,927 | $61,445 | $45,890 | | Diluted EPS | $0.31 | $0.05 | $0.36 | $0.26 | - A significant driver of the increase in operating and net income was a **$60.0 million** and **$84.3 million** non-cash reduction in founders advisory fees for the three and six months ended June 30, 2023, respectively, due to a decrease in the company's share price[15](index=15&type=chunk)[88](index=88&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(72,936) | $(89,351) | | Net cash used in investing activities | $(4,375) | $(5,644) | | Net cash used in financing activities | $(27,315) | $(4,479) | | **Net change in cash and cash equivalents** | **$(104,632)** | **$(100,052)** | - The decrease in cash used in operating activities was primarily due to a **$48.9 million** reduction in cash-settled founder advisory fees compared to the prior year period[20](index=20&type=chunk)[147](index=147&type=chunk) - Cash used in financing activities increased significantly due to **$27.2 million** in ordinary share repurchases during the first six months of 2023, compared to **$5.0 million** in the same period of 2022[20](index=20&type=chunk)[149](index=149&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail company structure, accounting policies, and financial components, including segment operations, debt, advisory fees, and declining Adjusted EBITDA - The company operates in two segments: Fire Safety (fire management products and services) and Specialty Products (primarily Phosphorus Pentasulfide for various industrial applications)[24](index=24&type=chunk)[25](index=25&type=chunk) - Long-term debt primarily consists of **$675.0 million** in 5.00% Senior Notes due 2029. The company also has an undrawn **$100.0 million** Revolving Credit Facility[53](index=53&type=chunk)[54](index=54&type=chunk)[60](index=60&type=chunk) - The company has a Share Repurchase Plan authorizing up to **$100.0 million** in repurchases. During the six months ended June 30, 2023, the company repurchased **4,108,626** Ordinary Shares[74](index=74&type=chunk)[75](index=75&type=chunk)[159](index=159&type=chunk) Segment Net Sales and Adjusted EBITDA (in thousands) | Metric | Period | Fire Safety | Specialty Products | Total Segment | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | Q2 2023 | $53,140 | $22,997 | $76,137 | | | Q2 2022 | $66,577 | $34,388 | $100,965 | | | H1 2023 | $71,884 | $48,111 | $119,995 | | | H1 2022 | $85,047 | $73,676 | $158,723 | | **Adjusted EBITDA** | Q2 2023 | $16,532 | $4,458 | $20,990 | | | Q2 2022 | $24,219 | $11,463 | $35,682 | | | H1 2023 | $13,171 | $10,935 | $24,106 | | | H1 2022 | $20,885 | $26,774 | $47,659 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes net sales decline to lower fire activity and destocking; operating income rose significantly due to non-cash gains; liquidity is sufficient [Known Trends and Uncertainties](index=27&type=section&id=Known%20Trends%20and%20Uncertainties) - The Fire Safety segment is expected to benefit from secular growth drivers including increasing fire severity, longer fire seasons, and a growing wildland-urban interface[114](index=114&type=chunk) - The company is focused on growing its fire prevention and protection business, particularly for high-hazard industries like utilities and railroads, with products like Phos-Chek Fortify[115](index=115&type=chunk) - The business is highly dependent on weather conditions, with sales historically higher in the summer season. Global inflationary pressures on materials and labor are being monitored and mitigated through various actions with customers and suppliers[117](index=117&type=chunk)[118](index=118&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Comparison of Results for the Six Months Ended June 30 (in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $119,995 | $158,723 | $(38,728) | (24%) | | Cost of goods sold | $75,152 | $113,393 | $(38,241) | (34%) | | Gross profit | $44,843 | $45,330 | $(487) | (1%) | | Operating income | $76,199 | $58,697 | $17,502 | 30% | | Net income | $61,445 | $45,890 | $15,555 | 34% | - For H1 2023, Fire Safety net sales decreased by **$13.1 million** due to lower fire activity in the Americas. Specialty Products net sales decreased by **$25.6 million** due to inventory destocking by customers[128](index=128&type=chunk)[129](index=129&type=chunk) - Cost of Goods Sold for H1 2023 decreased by **$38.2 million**, primarily due to a **$24.1 million** decrease in amortization of inventory step-up related to the 2021 Business Combination, which was present in the 2022 period[130](index=130&type=chunk) - Adjusted EBITDA for the Fire Safety segment decreased by **$7.7 million** to **$13.2 million** in H1 2023, while Specialty Products Adjusted EBITDA decreased by **$15.8 million** to **$10.9 million**, both driven by lower sales[141](index=141&type=chunk)[142](index=142&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) - The company believes its existing cash of **$22.1 million**, cash from operations, and availability under its **$100.0 million** Revolving Credit Facility will be sufficient to meet requirements for at least the next 12 months[144](index=144&type=chunk) Summary of Cash Flows for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Operating activities | $(72,936) | $(89,351) | | Investing activities | $(4,375) | $(5,644) | | Financing activities | $(27,315) | $(4,479) | - The company has a Founder Advisory Agreement that entitles the EverArc Founder Entity to fixed and variable annual advisory amounts, payable in a mix of cash and shares. For 2022, this resulted in a payment of **$4.7 million** in cash and **1,831,653** Ordinary Shares in February 2023[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks including foreign currency, interest rates on its undrawn credit facility, and commodity price volatility, with inflationary pressures actively managed - The company is exposed to foreign currency exchange risk from international sales and operations, primarily involving the Euro, Canadian dollar, Norwegian krone, and Australian dollar[167](index=167&type=chunk) - Interest rate risk is present due to the variable-rate Revolving Credit Facility. As of June 30, 2023, there were no borrowings outstanding under this facility[168](index=168&type=chunk) - The company faces commodity price risk, as some material supply contracts follow market prices while product sales prices may be fixed, potentially impacting margins[169](index=169&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of June 30, 2023, due to material weaknesses in complex accounting, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of June 30, 2023, due to existing material weaknesses[171](index=171&type=chunk)[172](index=172&type=chunk) - Material weaknesses include failure to design and implement sufficiently precise review controls over accounting for performance-based stock, business combinations, and goodwill impairment[172](index=172&type=chunk) - A remediation plan is in progress, involving implementing new controls, hiring qualified personnel, and engaging external resources to improve internal controls over financial reporting[172](index=172&type=chunk)[173](index=173&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, notably multi-district litigation related to aqueous film forming foam (AFFF), with potential losses not considered probable or reasonably estimable - The company is involved in legal proceedings arising in the ordinary course of business, including multi-district litigation concerning aqueous film forming foam (AFFF)[177](index=177&type=chunk) - Potential losses from these legal matters are not considered probable or reasonably estimable at this time[177](index=177&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes have been made to the risk factors disclosed in the 2022 Annual Report[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended June 30, 2023, the company repurchased a total of 3,993,056 of its Ordinary Shares at an average price of $6.58 per share under its publicly announced share repurchase program Share Repurchases for the Quarter Ended June 30, 2023 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2023 | 1,183,226 | $7.35 | | May 2023 | 1,291,385 | $6.44 | | June 2023 | 1,518,445 | $6.09 | | **Total** | **3,993,056** | **$6.58** | [Other Information](index=37&type=section&id=Item%205.%20Other%20Information) On June 9, 2023, CEO Haitham Khouri entered into a Rule 10b5-1 sales plan for the sale of up to 600,000 Ordinary Shares - On June 9, 2023, CEO Haitham Khouri entered into a 10b5-1 sales plan for the sale of up to **600,000** Ordinary Shares[183](index=183&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications (Sarbanes-Oxley Sections 302 and 906) and XBRL data files - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer, as well as XBRL data files[184](index=184&type=chunk)

Perimeter Solutions, SA (NYSE:PRM) Q1 2023 Earnings Conference Call May 10, 2023 8:30 AM ET Company Participants Seth Barker - Investor Relations Haitham Khouri - Chief Executive Officer Charles Kropp - Chief Financial Officer Conference Call Participants Josh Spector - UBS Operator Greetings. Welcome to the Perimeter Solutions Q1 2023 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Seth Barker. You may begin. Seth Bark ...

For the quarterly period ended March 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________ FORM 10-Q __________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-41027 _______________________________ PERIMETER SOLUTION ...

[Explanatory Note — Restatement of Financial Information](index=3&type=section&id=Explanatory%20Note%20%E2%80%94%20Restatement%20of%20Financial%20Information) The company restated Q2 and Q3 2022 financials due to material accounting errors, identifying internal control weaknesses - The company identified two key accounting errors: one related to stock option compensation (Stock Options Error) and another concerning inventory amortization (Inventory Amortization Error)[12](index=12&type=chunk) - These errors were deemed material to the Q2 and Q3 2022 financial statements, necessitating a restatement; the errors were immaterial to Q1 2022 and the 2021 period, which will be revised rather than fully restated[12](index=12&type=chunk) - Due to the restatement, investors are advised not to rely on previously issued financial statements for the affected periods; this annual report contains the corrected financial information[11](index=11&type=chunk) - As a result of these errors, management identified **material weaknesses in internal control over financial reporting**, concluding that both internal controls and disclosure controls were not effective as of December 31, 2022[12](index=12&type=chunk) PART I [Business](index=8&type=section&id=Item%201.%20Business) Perimeter Solutions provides fire safety and specialty chemicals, with US-centric revenue and customer concentration - The company operates through two reporting segments: Fire Safety (fire retardants and foams) and Specialty Products (primarily Phosphorus Pentasulfide for lubricant additives)[32](index=32&type=chunk) Revenue by Geography (Annual) | Region | Percentage of Revenue (%) | | :--- | :--- | | United States | ~74 | | Europe | ~15 | | Canada | ~5 | | Mexico | ~2 | | Other | ~4 | - The company has significant customer concentration; in fiscal year 2022, the **USDA Forest Service** and **Afton Chemical** accounted for **27%** and **12% of consolidated revenues**, respectively[70](index=70&type=chunk) - The Fire Safety segment experiences significant seasonality, with the majority of sales occurring in the second and third quarters, corresponding to the North American fire season[74](index=74&type=chunk) - Key market drivers for the Fire Safety business include an increase in acres burned by wildfires, longer fire seasons, and the expansion of the Wildland-Urban Interface (WUI)[48](index=48&type=chunk)[49](index=49&type=chunk) - As of December 31, 2022, the company had **226 full-time employees** and **14 temporary, seasonal, or part-time employees**; none are represented by a labor union[78](index=78&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from customer concentration, seasonal demand, PFAS litigation, debt, and internal control weaknesses - A small number of customers represent a significant portion of revenue; sales to the **USDA Forest Service** and the **state of California** accounted for approximately **54% of the Fire Safety segment's revenue** in fiscal year 2022[89](index=89&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The company is a defendant in a multi-district litigation (MDL) related to Aqueous Film Forming Foam (AFFF) and alleged contamination from PFAS chemicals, facing **over 2,000 pending cases**[141](index=141&type=chunk) - Management has identified **material weaknesses in internal control over financial reporting**, which could prevent the company from accurately or timely reporting its financial condition[173](index=173&type=chunk) - The company has substantial indebtedness, with **$675.0 million in Senior Notes outstanding** as of December 31, 2022, which may adversely affect cash flow and operational flexibility[127](index=127&type=chunk) - The Founder Advisory Agreement requires significant fee payments to the EverArc Founder Entity, which could reduce cash available for operations and dilute existing shareholders through share-based payments[186](index=186&type=chunk)[188](index=188&type=chunk) - Demand for fire retardant products is highly seasonal and dependent on environmental factors outside of the company's control, such as the severity and duration of fire seasons[88](index=88&type=chunk) [Unresolved Staff Comments](index=42&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) None - The company reports no unresolved staff comments[224](index=224&type=chunk) [Properties](index=43&type=section&id=Item%202.%20Properties) The company's principal manufacturing, distribution, and headquarters are across North America, Europe, and Australia, mostly leased - The company's principal manufacturing and service locations are spread across the U.S., Canada, Europe, and Australia; most facilities are leased[226](index=226&type=chunk) Key Property Locations by Segment | Location | Segment | Ownership Status | | :--- | :--- | :--- | | Rancho Cucamonga, CA | Fire Safety | Leased | | Green Bay, WI | Fire Safety | Owned | | Mieres, Spain | Fire Safety | Owned | | Knapsack, Germany | Specialty Products | Leased | | Sauget, IL | Specialty Products | Tolling Facility | | Clayton, MO | Corporate HQ | Leased | [Legal Proceedings](index=43&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, including AFFF multi-district litigation, with losses not yet probable or estimable - The company is involved in legal proceedings arising in the ordinary course of business, including the multi-district litigation related to aqueous film forming foam (AFFF)[228](index=228&type=chunk) - Management has determined that the exposure to losses from these legal proceedings is not considered probable or reasonably estimable at this time[228](index=228&type=chunk) [Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - This item is not applicable to the company[229](index=229&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=44&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's ordinary shares trade on the NYSE under 'PRM', with no anticipated cash dividends and a **$100.0 million** share repurchase plan - The company's Ordinary Shares are traded on the New York Stock Exchange (NYSE) under the symbol **"PRM"**[232](index=232&type=chunk) - The company does not anticipate paying any cash dividends on its Ordinary Shares in the foreseeable future[233](index=233&type=chunk) - The Board authorized a Share Repurchase Plan allowing for the repurchase of up to **$100.0 million** of its Ordinary Shares, with shareholders approving a plan to repurchase up to **25% of outstanding shares** over five years[238](index=238&type=chunk)[302](index=302&type=chunk) Share Repurchases for Q4 2022 | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | Oct 2022 | 4,934,376 | $7.55 | | Nov 2022 | 584,144 | $7.58 | | Dec 2022 | — | $— | | **Total** | **5,518,520** | **$7.55** | [Reserved](index=46&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales decreased **1%** to **$360.5 million** in 2022, with net income improving to **$91.8 million** due to reduced Founder Advisory Fees liability and strong liquidity - The report includes restated and revised financial information for prior periods due to material errors in accounting for stock options and inventory amortization, stemming from **material weaknesses in internal controls**[256](index=256&type=chunk)[259](index=259&type=chunk) Consolidated Results of Operations (2022 vs. 2021 S/P Combined) | Metric (in thousands) | 2022 | 2021 (S/P Combined) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $360,505 | $362,338 | $(1,833) | (1%) | | Gross profit | $142,652 | $166,492 | $(23,840) | (14%) | | Operating income (loss) | $130,065 | $(600,134) | $730,199 | (122%) | | Net income (loss) | $91,758 | $(661,520) | $753,278 | (114%) | - The significant improvement in operating and net income was primarily driven by a **$770.3 million decrease in the fair value liability of the Founder Advisory Fees**[274](index=274&type=chunk) - **Fire Safety segment Adjusted EBITDA decreased by $40.5 million** in 2022 due to a mild fire season, while **Specialty Products segment Adjusted EBITDA increased by $24.5 million** due to higher sales[279](index=279&type=chunk)[280](index=280&type=chunk) - As of Dec 31, 2022, liquidity sources include **$126.8 million in cash**, an undrawn **$100.0 million Revolving Credit Facility**, and **$675.0 million in Senior Notes**[293](index=293&type=chunk)[298](index=298&type=chunk)[311](index=311&type=chunk) - Critical accounting policies include goodwill impairment (no impairment found in the Oct 1, 2022 test), business combinations, income taxes, and share-based compensation[322](index=322&type=chunk)[330](index=330&type=chunk)[335](index=335&type=chunk)[338](index=338&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency, interest rate changes on its variable-rate credit facility, and commodity price volatility - The company is exposed to foreign currency exchange risk from sales and operations in Europe, Canada, and Australia[345](index=345&type=chunk) - Interest rate risk is primarily associated with the variable-rate Revolving Credit Facility, while the **$675.0 million Senior Notes** have a fixed **5.00% interest rate**[346](index=346&type=chunk)[347](index=347&type=chunk) - The company faces commodity price risk, as fluctuations in raw material costs may not be immediately passable to customers, potentially compressing margins[349](index=349&type=chunk) - The business is subject to inflationary pressures on raw materials, labor, and transportation, which it attempts to mitigate through contractual clauses and supplier negotiations[351](index=351&type=chunk) [Financial Statements and Supplementary Data](index=64&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements, with an unqualified opinion on financials but an adverse opinion on internal controls due to material weaknesses - The independent auditor, BDO USA, LLP, issued an **adverse opinion on the company's internal control over financial reporting** as of December 31, 2022, due to material weaknesses[356](index=356&type=chunk)[369](index=369&type=chunk) Key Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $126,750 | $225,554 | | Total Assets | $2,456,616 | $2,578,383 | | Long-term debt | $665,280 | $664,128 | | Total Liabilities | $1,317,716 | $1,496,765 | | Total Shareholders' Equity | $1,138,900 | $1,081,618 | Key Consolidated Statement of Operations Data (in thousands) | Account | Year Ended Dec 31, 2022 | | :--- | :--- | | Net sales | $360,505 | | Gross profit | $142,652 | | Operating income | $130,065 | | Net income | $91,758 | | Diluted EPS | $0.52 | - Note 18 provides a detailed breakdown of the restatement's impact on quarterly financial statements for June and September 2022, and revisions to March 2022 and the 2021 period, resulting from accounting errors for stock options and inventory[597](index=597&type=chunk)[598](index=598&type=chunk) - As of December 31, 2022, **goodwill was $1.03 billion**, with **$860.3 million** allocated to the Fire Safety segment and **$171.1 million** to the Specialty Products segment[479](index=479&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=129&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) None - The company reports no changes in or disagreements with its accountants on accounting and financial disclosure[625](index=625&type=chunk) [Controls and Procedures](index=129&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were ineffective due to material weaknesses - Management concluded that the company's disclosure controls and procedures were **ineffective** as of December 31, 2022[626](index=626&type=chunk) - A material weakness was identified related to the failure to design and implement precise review controls for accounting for performance-based stock options (ASC 718)[629](index=629&type=chunk) - Material weaknesses previously reported in the 2021 Annual Report related to complex accounting areas (business combinations, goodwill impairment) and cash flow statement presentation continue to exist[630](index=630&type=chunk) - Remediation efforts include enhancing the precision of review controls, improving oversight, and engaging outside resources to help design and implement a system of risk-based internal controls[631](index=631&type=chunk) [Other Information](index=130&type=section&id=Item%209B.%20Other%20Information) None - The company reports no other information under this item[633](index=633&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=130&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) Not applicable - This item is not applicable to the company[634](index=634&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=131&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's 2023 Proxy Statement - Information regarding directors, executive officers, and corporate governance will be provided in the forthcoming 2023 Proxy Statement[636](index=636&type=chunk) [Executive Compensation](index=131&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's 2023 Proxy Statement - Information regarding executive compensation will be provided in the forthcoming 2023 Proxy Statement[637](index=637&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=131&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's 2023 Proxy Statement - Information regarding security ownership will be provided in the forthcoming 2023 Proxy Statement[638](index=638&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=131&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's 2023 Proxy Statement - Information regarding certain relationships, related transactions, and director independence will be provided in the forthcoming 2023 Proxy Statement[639](index=639&type=chunk) [Principal Accounting Fees and Services](index=131&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's 2023 Proxy Statement - Information regarding principal accounting fees and services will be provided in the forthcoming 2023 Proxy Statement[640](index=640&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=132&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements and various exhibits filed with the report, noting the omission of schedules as not applicable - This item lists the financial statements, schedules, and exhibits filed with the Form 10-K[643](index=643&type=chunk) [Form 10-K Summary](index=132&type=section&id=Item%2016.%20Form%2010-K%20Summary) None - The company has not provided a summary under this item[644](index=644&type=chunk)

Perimeter Solutions, SA (NYSE:PRM) Q4 2022 Earnings Conference Call February 28, 2023 8:30 AM ET Company Participants Seth Barker - Investor Relations Haitham Khouri - Vice Chairman Edward Goldberg - Chief Executive Officer Chuck Kropp - Chief Financial Officer Conference Call Participants Josh Spector - UBS Thomas Jonsson - Morgan Stanley Brian DiRubbio - Robert W. Baird Operator Greetings, and welcome to the Perimeter Solutions Fourth Quarter 2022 Earnings Call. At this time, all participants’ are in a li ...

Perimeter Solutions SA Disclaimer Certain statements in this presentation and discussion are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on Perimeter Solutions, SA's (the "Company") expectations, intentions and projections regarding the Company's future performance, anticipated events or trends and other matters that are not historical facts. Words such as "anticipate," "estimate," "expect," "forecast," "project," "plan," "intend," "bel ...