Perimeter Solutions(PRM) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements The company's unaudited condensed consolidated financial statements for the period ended June 30, 2025, show improved net income and increased operating cash flow Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $420,079 | $394,024 | | Accounts receivable, net | $121,416 | $56,048 | | Inventories | $150,049 | $116,347 | | Total Assets | $2,486,262 | $2,416,394 | | Total Current Liabilities | $103,964 | $62,488 | | Long-term debt, net | $668,439 | $667,774 | | Total Liabilities | $1,307,631 | $1,259,124 | | Total Stockholders' Equity | $1,178,631 | $1,157,270 | - The increase in total assets was primarily driven by a significant rise in accounts receivable and inventories, reflecting seasonal business activity. Total liabilities also increased, mainly due to higher current liabilities including deferred revenue and founders advisory fees payable[13] Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $162,639 | $127,276 | $234,669 | $186,320 | | Gross profit | $101,496 | $73,267 | $129,649 | $93,969 | | Operating (loss) income | $(26,226) | $45,018 | $51,581 | $(29,846) | | Net (loss) income | $(32,161) | $21,650 | $24,525 | $(60,908) | | Diluted (Loss) EPS | $(0.22) | $0.14 | $0.16 | $(0.42) | - For the six months ended June 30, 2025, the company reported net income of $24.5 million, a significant improvement from a net loss of $60.9 million in the prior-year period. This was driven by a 26% increase in net sales and a substantial decrease in 'Founders advisory fees' expense, which fell from $68.9 million to $16.3 million[16] - For the three months ended June 30, 2025, the company posted a net loss of $32.2 million, compared to a net income of $21.7 million in the same period of 2024. The loss was primarily due to a large $96.9 million expense for 'Founders advisory fees - related party', which reflects the change in fair value of the liability[16] Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $20,894 | $11,418 | | Net cash (used in) provided by investing activities | $(42,803) | $187 | | Net cash used in financing activities | $(40,560) | $(14,784) | | Net change in cash and cash equivalents | $(57,798) | $(4,114) | - Cash from operations increased to $20.9 million for the first six months of 2025 from $11.4 million in the prior year, despite a significant increase in accounts receivable, aided by higher net income and deferred revenue[23] - Investing activities used $42.8 million, primarily for property and equipment purchases ($17.6 million), intangible asset purchases ($15.2 million), and a business acquisition ($10.0 million)[23] - Financing activities used $40.6 million, dominated by $40.4 million in common stock repurchases[23] Notes to Condensed Consolidated Financial Statements - The company operates in two segments: Fire Safety and Specialty Products. In 2024, approximately 79% of revenues were from the United States[26] - On March 28, 2025, the IMS division acquired assets and data rights for certain product lines for $10.0 million in cash[36] - In May 2025, the company settled trade secret litigation with a subsidiary of Compass Minerals International, Inc. and acquired related assets for $20.0 million, with $15.2 million allocated to technology-related intangible assets[37] - As of June 30, 2025, the company had $675.0 million in Senior Notes due 2029 and no outstanding borrowings under its $100.0 million Revolving Credit Facility[43][52][53] - On May 7, 2025, the Board re-established the limit for common stock repurchases at $100.0 million. As of June 30, 2025, $78.3 million remained available under the plan[70] Segment Net Sales (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Fire Safety | $120,284 | $98,538 | $157,447 | $123,693 | | Specialty Products | $42,355 | $28,738 | $77,222 | $62,627 | | Total | $162,639 | $127,276 | $234,669 | $186,320 | Segment Adjusted EBITDA (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Fire Safety | $77,659 | $55,639 | $87,744 | $55,398 | | Specialty Products | $13,679 | $9,269 | $21,677 | $21,646 | | Total | $91,338 | $64,908 | $109,421 | $77,044 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, noting a 26% increase in net sales for the first six months of 2025, a $24.5 million net income, and strong liquidity with $140.7 million cash Results of Operations Consolidated Results - Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Net sales | $162,639 | $127,276 | $35,363 | 28% | | Gross profit | $101,496 | $73,267 | $28,229 | 39% | | Operating (loss) income | $(26,226) | $45,018 | $(71,244) | (158%) | | Net (loss) income | $(32,161) | $21,650 | $(53,811) | (249%) | - Q2 2025 net sales increased 28% YoY, driven by a $21.7 million increase in the Fire Safety segment and a $13.7 million increase in the Specialty Products segment, including $9.3 million from recent acquisitions[112] - The Q2 2025 net loss was driven by a $96.9 million expense for Founders advisory fees, reflecting the change in fair value of the liability due to an increase in the company's share price[115] Consolidated Results - Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Net sales | $234,669 | $186,320 | $48,349 | 26% | | Gross profit | $129,649 | $93,969 | $35,680 | 38% | | Operating income (loss) | $51,581 | $(29,846) | $81,427 | (273%) | | Net income (loss) | $24,525 | $(60,908) | $85,433 | (140%) | - For the first six months of 2025, net sales grew 26% YoY. Fire Safety sales increased by $33.7 million, while Specialty Products sales rose by $14.6 million, including $16.9 million from acquisitions[118] Business Segments Performance - Fire Safety Segment Adjusted EBITDA increased by $22.0 million (39.5%) in Q2 2025 and $32.3 million (58.3%) in the first six months of 2025 compared to the prior year periods, primarily due to higher net sales[124][126] - Specialty Products Segment Adjusted EBITDA increased by $4.4 million (47.5%) in Q2 2025, driven by higher sales from acquisitions. For the first six months, it was relatively flat compared to the prior year[125][127] Liquidity and Capital Resources - The company believes its existing cash of $140.7 million, cash from operations, and availability under its $100.0 million Revolving Credit Facility will be sufficient to meet its requirements for at least the next 12 months[133] - As of June 30, 2025, the company had no outstanding borrowings under its Revolving Credit Facility[137] - During the six months ended June 30, 2025, the company repurchased 3,774,675 shares for $40.4 million under its Share Repurchase Plan[142][151] - In February 2025, the company settled the 2024 Fixed Annual Advisory Amount by issuing 1,837,304 shares of Common Stock and paying $6.7 million in cash[146] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from foreign currency exchange rates, interest rates on its variable-rate revolving credit facility, and commodity price fluctuations - Primary market risks include foreign currency fluctuations, interest rate changes on variable-rate debt, and commodity price volatility[154] - Foreign currency exposure is mainly to the Euro, Canadian dollar, Norwegian krone, and Australian dollar[155] - Interest rate risk is tied to the Revolving Credit Facility, which had no outstanding balance as of June 30, 2025[156] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of June 30, 2025[160] - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025[161] PART II OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings, including AFFF litigation, but does not expect a material adverse effect on its financials - The company is involved in litigation related to aqueous film forming foam (AFFF) but does not expect it to have a material adverse effect[162] Item 1A. Risk Factors No material changes to the company's previously disclosed risk factors were reported since the 2024 Annual Report - No material changes to the company's risk factors were reported since the 2024 Annual Report[163] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details common stock repurchases for the quarter ended June 30, 2025, with 2,886,221 shares repurchased and a re-established $100.0 million repurchase limit Common Stock Repurchases for the Quarter Ended June 30, 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,071,885 | $9.70 | | May 2025 | 1,443,727 | $11.90 | | June 2025 | 370,609 | $12.28 | | Total | 2,886,221 | N/A | - On May 7, 2025, the Board re-established the limit for Common Stock repurchases at $100.0 million. As of June 30, 2025, approximately $78.3 million remained available for repurchase[166] Other Items (Items 3, 4, 5, 6) Items 3 and 4 are not applicable, Item 5 notes no Rule 10b5-1 trading plan changes, and Item 6 lists report exhibits - No defaults on senior securities or mine safety disclosures were reported[167] - No officers or directors adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[168]