Perimeter Solutions(PRM) - 2023 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended March 31, 2023, decreased by $13.9 million, or 24%, to $43.9 million compared to $57.8 million in the same period in 2022[113] - Gross profit for the three months ended March 31, 2023, was $12.8 million, down 22% from $16.4 million in the same period in 2022[113] - Operating income decreased by 70% to $12.9 million compared to $43.1 million in the prior year[113] - Specialty Products segment net sales decreased by $14.2 million, with $8.9 million in the Americas and $5.3 million in Europe, attributed to reduced purchases by lubricant additives customers[113] - Adjusted EBITDA for the Specialty Products segment decreased by $8.8 million to $6.5 million, primarily due to lower net sales[121] Sales and Market Trends - The Fire Safety segment saw a slight increase in sales by $0.3 million, driven by a $2.1 million increase in fire suppressant sales, while fire retardant sales decreased by $2.7 million in the Americas due to mild fire activity[113] - The company expects continued growth in demand for fire retardant products driven by increasing fire severity and longer fire seasons[109] Expenses and Cost Management - Selling, general and administrative expenses decreased by $8.7 million, primarily due to a $7.2 million reduction in personnel-related and share-based compensation expenses[115] - Inflationary pressures on raw materials, labor, and transportation are being addressed through contractual price escalation clauses and negotiations with suppliers[149] Cash Flow and Capital Expenditures - Cash used in operating activities decreased to $31.6 million for the three months ended March 31, 2023, compared to $70.9 million for the same period in 2022, a reduction of $39.3 million[125] - The company expects a capital expenditure budget of approximately $7.5 million for the remaining fiscal year 2023, covering both maintenance and growth expenditures[123] - Cash used in investing activities was $2.5 million for the three months ended March 31, 2023, compared to $3.0 million for the same period in 2022[126] Shareholder Actions and Financing - The company repurchased 115,570 Ordinary Shares during the three months ended March 31, 2023, and approximately 1,479,825 Ordinary Shares at an average price of $7.34 from April 1, 2023, to May 5, 2023[137] - The company has a Revolving Credit Facility of up to $100.0 million, with no outstanding borrowings as of March 31, 2023[128][131] - The company assumed $675.0 million principal amount of 5.00% senior secured notes due October 30, 2029, with interest payable semi-annually[132] Market Risks - The company is exposed to market risks including foreign currency exchange rates, interest rates, and commodity price fluctuations, with no current hedging activities[144][145][148] - The decrease in the fair value of founder advisory fees was $24.2 million for the three months ended March 31, 2023, primarily due to a reduction in the average price per Ordinary Share[117] - The fair value of the Fixed Annual Advisory Amount as of March 31, 2023, was calculated to be $91.1 million, while the Variable Annual Advisory Amount was determined to be $201.9 million[141]