Perimeter Solutions(PRM)2023-11-09 15:22Fire 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 4.3 million to 12.0 million to 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 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 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 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 5.4 million for the three months ended September 30, 2023[158] - Specialty Products segment Adjusted EBITDA decreased by 16.4 million for the nine months ended September 30, 2023[160] Goodwill and Impairment Analysis - As of September 30, 2023, total goodwill was 858.2 million assigned to the Fire Safety reporting unit and 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 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 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 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]