Perimeter Solutions, SA — FY2021 Form 10-K
Business context and reporting period. The filing covers the fiscal year ended December 31, 2021. Perimeter provides fire retardants, firefighting foams, related equipment and services, and phosphorus pentasulfide used mainly in lubricant additives. It reports Fire Safety and Oil Additives segments. The Business Combination closed November 9, 2021; acquisition accounting created separate Successor and Predecessor reporting periods, so year-over-year combined figures below are management’s non-GAAP comparison, not GAAP pro forma results.
Financial performance and liquidity
| Metric | FY2021 / year-end | Comparable period / context |
|---|---|---|
| Net sales | $362.3 million on management’s combined basis | $339.6 million in 2020; up 7% |
| Gross profit and margin | $169.7 million; approximately 46.8% | $162.0 million; approximately 47.7% in 2020 |
| Adjusted EBITDA | $141.4 million; approximately 39.0% of sales | $136.0 million; approximately 40.1% in 2020; up 4% |
| GAAP net income (loss) | Combined result: loss of $659.8 million | Includes $653.0 million of Founder Advisory Agreement expense; not representative of underlying operating performance |
| Operating cash flow | $68.0 million in the Jan. 1–Nov. 8 Predecessor Period and $4.4 million in the Nov. 9–Dec. 31 Successor Period | $70.8 million in 2020; reporting periods have different accounting bases |
| Cash and debt | $225.6 million cash; $675.0 million Senior Notes principal ($664.1 million net of issuance costs); no revolver borrowings | $100 million revolving facility, maturing 2026; notes bear 5.00% and mature in 2029 |
| Redeemable preferred shares | $100 million issued; recorded as a liability | 6.50% cumulative preferred dividend; mandatory redemption under specified terms, no later than 2029 |
Segment trends. Combined-basis Fire Safety sales were $261.2 million versus $245.0 million in 2020; Adjusted EBITDA was $117.9 million versus $112.0 million. Oil Additives sales were $101.2 million versus $94.6 million; Adjusted EBITDA was $23.5 million versus $24.0 million.
Material changes versus the prior comparable period
- Sales rose 7%, with higher wildfire activity and growth in European and fluorine-free foam sales supporting Fire Safety, and increased lubricant-additive demand supporting Oil Additives.
- Higher raw-material, supply-chain, labor and transportation costs contributed to cost of goods sold rising 9%, faster than sales; combined gross margin declined by about 0.9 percentage points.
- SG&A increased $18.2 million, principally from personnel and share-based compensation, management bonuses, Business Combination advisory and professional costs, and marketing and logistics.
- Fire Safety Adjusted EBITDA increased $5.9 million; Oil Additives Adjusted EBITDA decreased $0.4 million.
- The November Business Combination brought a new fair-value accounting basis, including substantial increases in goodwill and identifiable intangible assets. FY2021 comparisons are therefore affected by both transaction timing and accounting-basis differences.
Outlook, risks and unusual items
- Management expects secular drivers—including longer and more severe fire seasons, expanding wildland-urban interfaces, and investment in fire prevention—to support demand. It also sees potential in fluorine-free foams and preventive retardant applications. These are expectations, not quantified financial guidance.
- The company budgeted $10 million of FY2022 capital expenditures and said cash, operating cash flows and available revolver capacity were expected to cover capital, working-capital and debt-service needs for at least 12 months from the filing date. No formal revenue or earnings guidance is provided.
- Customer concentration is significant: in 2021, the USDA Forest Service and California represented 40% and 19%, respectively, of Fire Safety segment revenue. Fire Safety demand is seasonal and weather-dependent.
- Perimeter is a defendant in AFFF/PFAS-related multidistrict litigation and other claims. The filing says potential losses were not considered probable or reasonably estimable; outcomes and insurance or indemnity coverage remain uncertain. PFAS regulation, environmental liabilities and product-liability claims are material risks.
- Management reported ineffective disclosure controls and several material weaknesses in internal control over financial reporting, including journal-entry segregation, review of acquisition valuation assumptions, entity-level controls and controls over complex accounting. Remediation was underway but not complete.
- The $653.0 million Founder Advisory Agreement charge reflects fixed and variable fees accrued over long contract terms, with equity and cash settlement. The 2021 amount was settled in February 2022 with $53.5 million cash and 5.95 million shares. The agreement can also create future dilution, cash obligations and a potentially substantial termination payment.
- The Board authorized a share repurchase plan of up to $100 million, subject to shareholder approval; no shares had been repurchased by year-end. The company did not expect to pay cash dividends in the foreseeable future.
Important facts for investors to verify
- Reconcile the reported GAAP Successor and Predecessor results with management’s non-GAAP combined comparison, especially the $653.0 million advisory charge and post-acquisition accounting effects.
- Track operating cash generation, working-capital needs, raw-material and logistics cost pass-through, and the seasonal variability of Fire Safety sales.
- Review debt-service capacity and covenants alongside the $675 million notes, preferred-share redemption and dividend terms, and the Founder Advisory Agreement’s cash and dilution impacts.
- Monitor AFFF/PFAS litigation, environmental regulation and any changes to the filing’s assessment that losses are not presently probable or estimable.
- Assess progress in remediating material weaknesses and whether internal controls become effective in subsequent filings.