Perimeter Solutions(US:PRM)2022-11-04 19:48Financial Performance - Net sales for the three months ended September 30, 2022, decreased by $34.9 million (18%) to $160.5 million compared to $195.4 million in the same period in 2021, primarily due to a $50.5 million decline in the Fire Safety segment [126]. - Gross profit for the three months ended September 30, 2022, was $85.8 million, down $23.5 million (22%) from $109.3 million in the prior year [126]. - Operating income rose by $43.0 million (54%) to $123.4 million for the three months ended September 30, 2022, compared to $80.4 million in the same period in 2021 [126]. - Net income for the three months ended September 30, 2022, was $78.7 million, an increase of $26.7 million (51%) from $52.0 million in the prior year [126]. - Net sales increased by $2.8 million to $319.2 million for the nine months ended September 30, 2022, compared to $316.5 million in the same period in 2021, representing a 1% increase [135]. - Gross profit decreased by $29.1 million to $127.5 million, reflecting a 19% decline from $156.6 million [135]. - Operating income increased by $101.8 million to $174.9 million, a 139% increase compared to $73.1 million in the previous year [135]. - Net income surged by $94.1 million to $123.7 million, marking a 318% increase from $29.6 million [135]. Expenses and Costs - Selling, general and administrative expenses increased by $7.0 million (46%) to $22.4 million, driven by higher personnel-related and share-based compensation expenses [128]. - Selling, general and administrative expenses increased by $22.3 million to $64.8 million, a 52% rise from $42.5 million [138]. - Cost of goods sold rose by $31.9 million to $191.8 million, a 20% increase from $159.9 million in the prior year [135]. - Interest expense increased by $1.9 million (23%) to $9.9 million, primarily due to higher interest rates on outstanding debt and dividends on redeemable preferred shares [130]. - Interest expense increased by $8.6 million to $32.6 million, a 36% increase from $24.0 million [141]. Segment Performance - The Fire Safety segment experienced a decrease in fire retardant sales by $50.8 million in the Americas, attributed to a mild fire season, while Specialty Products segment sales increased by $15.6 million [126]. - Adjusted EBITDA for the Fire Safety segment decreased by $37.5 million to $60.4 million, primarily due to lower sales from a mild fire season [146]. - Adjusted EBITDA for the Specialty Products segment increased by $12.8 million to $15.3 million, driven by higher sales [147]. Cash Flow and Financing - Cash used in operating activities was $(43.2) million for the nine months ended September 30, 2022, compared to $32.4 million in the same period in 2021 [154]. - The Revolving Credit Facility matures on November 9, 2026, with a total commitment capacity of up to $143.0 million or 100% of consolidated EBITDA for the most recent four-quarter period [159]. - As of September 30, 2022, the Company had no outstanding borrowings under the Revolving Credit Facility and was in compliance with all financial covenants [161]. - The Company assumed $675.0 million principal amount of 5.00% senior secured notes due October 30, 2029, with interest payable semi-annually [162]. Shareholder Actions - The Company repurchased approximately 5,054,856 Ordinary Shares at an average price of approximately $7.55 from October 1, 2022, to November 1, 2022 [166]. - The total Variable Annual Advisory Amount for 2021 was 7,525,906 Ordinary Shares, valued at $102.5 million, with a Fixed Annual Advisory Amount of 2,357,061 Ordinary Shares valued at $32.1 million [168]. - The fair value of the Variable Annual Advisory Amount was calculated at $170.8 million, while the Fixed Annual Advisory Amount was valued at $118.0 million as of September 30, 2022 [169]. Market and Operational Risks - The ongoing inflationary cost environment has led to significant pressures on raw materials, labor, and transportation costs, impacting overall financial performance [122]. - The Company is exposed to market risks including foreign currency exchange rates, interest rates, and commodity price fluctuations, with no current hedging activities [173][174][176]. Internal Controls and Compliance - The Company is implementing remediation measures to address material weaknesses in internal controls over financial reporting as of September 30, 2022 [179][181]. - The Company has engaged outside resources to assist in designing and implementing a system of risk-based internal controls aligned with COSO 2013 [181]. Strategic Initiatives - The company plans to continue investing in the expansion of its fire safety business through acquisitions to grow its global customer base [119]. - The company is focused on developing new fire prevention products, such as Phos-Chek Fortify, to enhance its offerings in high hazard industries [118].