Perimeter Solutions, Inc. 10-Q

Item 1. Financial Statements PERIMETER SOLUTIONS, SA AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) March 31, 2024 December 31, 2023 ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 34,382 $ 47,276 Accounts receivable, net 38,393 39,593 Inventories 144,674 145,652 Prepaid expenses and other current assets 19,426 18,493 Total current assets 236,875 251,014 Property, plant and equipment, net 58,194 59,402 Operating lease right-of-use assets 15,870 16,339 Finance lease right-of-use assets 6,748 6,064 Goodwill 1,031,388 1,036,279 Customer lists, net 663,573 674,786 Technology and patents, net 176,811 180,653 Tradenames, net 88,084 89,568 Other assets, net 1,204 1,317 Total assets $ 2,278,747 $ 2,315,422 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 14,345 $ 21,639 Accrued expenses and other current liabilities 40,208 30,710 Founders advisory fees payable - related party 8,028 2,702 Total current liabilities 62,581 55,051 Long-term debt, net 666,808 666,494 Operating lease liabilities, net of current portion 14,520 14,908 Finance lease liabilities, net of current portion 6,200 5,547 Deferred income taxes 247,981 253,454 Founders advisory fees payable - related party 117,222 56,917 Redeemable preferred shares 106,831 105,799 Redeemable preferred shares - related party 2,791 2,764 Other liabilities 2,155 2,193 Total liabilities 1,227,089 1,163,127 Commitments and contingencies (Note 8) Shareholders’ equity: Ordinary shares, $ 1 nominal value per share, 4,000,000,000 shares authorized; 166,824,659 and 165,066,195 shares issued; 145,240,112 and 146,451,005 shares outstanding at March 31, 2024 and December 31, 2023, respectively 166,825 165,067 Treasury shares, at cost; 21,584,547 and 18,615,190 shares at March 31, 2024 and December 31, 2023, respectively ( 127,685 ) ( 113,407 ) Additional paid-in capital 1,701,147 1,701,163 Accumulated other comprehensive loss ( 25,253 ) ( 19,710 ) Accumulated deficit ( 663,376 ) ( 580,818 ) Total shareholders’ equity 1,051,658 1,152,295 Total liabilities and shareholders’ equity $ 2,278,747 $ 2,315,422 See accompanying notes to condensed consolidated financial statements. 3 Table of Contents PERIMETER SOLUTIONS, SA AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net sales $ 59,044 $ 43,858 Cost of goods sold 38,342 33,461 Gross profit 20,702 10,397 Operating expenses: Selling, general and administrative expense 13,462 8,016 Amortization expense 13,771 13,763 Founders advisory fees - related party 68,333 ( 24,236 ) Other operating expense — 2 Total operating expenses 95,566 ( 2,455 ) Operating (loss) income ( 74,864 ) 12,852 Other expense (income): Interest expense, net 10,648 10,146 Loss on contingent earn-out — 246 Foreign currency loss (gain) 1,293 ( 721 ) Other expense, net 27 72 Total other expense, net 11,968 9,743 (Loss) income before income taxes ( 86,832 ) 3,109 Income tax benefit 4,274 6,322 Net (loss) income ( 82,558 ) 9,431 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments ( 5,543 ) 1,593 Total comprehensive (loss) income $ ( 88,101 ) $ 11,024 (Loss) earnings per share: Basic $ ( 0.57 ) $ 0.06 Diluted $ ( 0.57 ) $ 0.06 Weighted average number of ordinary shares outstanding: Basic 145,326,933 157,700,326 Diluted 145,326,933 169,485,631 See accompanying notes to condensed consolidated financial statements. 4 Table of Contents PERIMETER SOLUTIONS, SA AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands, except share data) (Unaudited) Ordinary Shares Treasury Shares Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Shareholders' Equity Shares Amount Shares Amount Balance, December 31, 2022 163,234,542 $ 163,235 6,436,736 $ ( 49,341 ) $ 1,698,781 $ ( 25,471 ) $ ( 648,304 ) $ 1,138,900 Share-based compensation — — — ( 3,074 ) — — ( 3,074 ) Ordinary shares issued related to founders advisory fees - related party 1,831,653 1,832 — ( 1,832 ) — — — Ordinary shares repurchased — — 115,570 ( 864 ) — — — ( 864 ) Net income — — — — — 9,431 9,431 Other comprehensive income — — — — 1,593 — 1,593 Balance, March 31, 2023 165,066,195 $ 165,067 6,552,306 $ ( 50,205 ) $ 1,693,875 $ ( 23,878 ) $ ( 638,873 ) $ 1,145,986 Balance, December 31, 2023 165,066,195 $ 165,067 18,615,190 $ ( 113,407 ) $ 1,701,163 $ ( 19,710 ) $ ( 580,818 ) $ 1,152,295 Share-based compensation — — — — 1,742 — — 1,742 Ordinary shares issued related to founders advisory fees - related party 1,758,464 1,758 — — ( 1,758 ) — — — Ordinary shares repurchased — — 2,969,357 ( 14,278 ) — — — ( 14,278 ) Net loss — — — — — — ( 82,558 ) ( 82,558 ) Other comprehensive loss — — — — — ( 5,543 ) — ( 5,543 ) Balance, March 31, 2024 166,824,659 $ 166,825 21,584,547 $ ( 127,685 ) $ 1,701,147 $ ( 25,253 ) $ ( 663,376 ) $ 1,051,658 See accompanying notes to condensed consolidated financial statements. 5 Table of Contents PERIMETER SOLUTIONS, SA AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net (loss) income $ ( 82,558 ) $ 9,431 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Founders advisory fees - related party (change in fair value) 68,333 ( 24,236 ) Depreciation and amortization expense 16,412 16,087 Interest and payment-in-kind on preferred shares 1,764 1,698 Share-based compensation 1,742 ( 3,074 ) Non-cash lease expense 1,392 1,153 Deferred income taxes ( 4,835 ) ( 6,322 ) Amortization of deferred financing costs 427 410 Loss on contingent earn-out — 246 Foreign currency loss (gain) 1,293 ( 721 ) (Gain) loss on disposal of assets ( 10 ) 5 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable 874 1,670 Inventories 231 ( 13,119 ) Prepaid expenses and current other assets ( 1,819 ) 360 Accounts payable ( 7,208 ) ( 10,878 ) Income taxes payable, net ( 174 ) ( 7,381 ) Accrued expenses and other current liabilities 10,947 8,785 Founders advisory fees - related party (cash settled) ( 2,702 ) ( 4,655 ) Operating lease liabilities ( 838 ) ( 1,169 ) Financing lease liabilities ( 130 ) — Other, net ( 355 ) 94 Net cash provided by (used in) operating activities 2,786 ( 31,616 ) Cash flows from investing activities: Purchase of property and equipment ( 1,553 ) ( 2,456 ) Proceeds from short-term investments 1,081 — Net cash used in investing activities ( 472 ) ( 2,456 ) Cash flows from financing activities: Ordinary shares repurchased ( 14,278 ) ( 864 ) Principal payments on finance lease obligations ( 172 ) — Net cash used in financing activities ( 14,450 ) ( 864 ) Effect of foreign currency on cash and cash equivalents ( 758 ) ( 25 ) Net change in cash and cash equivalents ( 12,894 ) ( 34,961 ) Cash and cash equivalents, beginning of period 47,276 126,750 Cash and cash equivalents, end of period $ 34,382 $ 91,789 Supplemental disclosures of cash flow information: Cash paid for interest $ 151 $ 142 Cash paid for income taxes $ 818 $ 10,155 See accompanying notes to condensed consolidated financial statements 6 Table of Contents PERIMETER SOLUTIONS, SA AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Organization and General Perimeter Solutions, SA, (“PSSA”), a public company limited by shares ( société anonyme ) was incorporated on June 21, 2021 under the laws of the Grand Duchy of Luxembourg. PSSA is headquartered in the Grand Duchy of Luxembourg with business operations across the globe. PSSA's ordinary shares, nominal value, $ 1.00 per share (the “Ordinary Shares”), are listed on the New York Stock Exchange ("NYSE") and trade under the symbol "PRM." The condensed consolidated financial statements herein include the assets, liabilities, and results of operations of PSSA and its subsidiaries, all of which are wholly owned (collectively, the “Company”). Business Operations The Company is a global solutions provider for the fire safety and specialty products industries. Approximately 65 % of the Company's 2023 annual revenues were derived in the United States, approximately 15 % in Europe, approximately 14 % in Canada with the remaining approximately 6 % spread across various other countries. The Company’s business is organized and managed in two reporting segments: Fire Safety and Specialty Products. The Fire Safety business is a formulator and manufacturer of fire management products that help the Company’s customers combat various types of fires, including wildland, structural, flammable liquids and other types of fires. The Company’s Fire Safety business also offers specialized equipment and services, typically in conjunction with its fire management products to support firefighting operations. The Company’s specialized equipment includes air base retardant storage, mixing, and delivery equipment; mobile retardant bases; retardant ground application units; mobile foam equipment; and equipment that it custom designs and manufactures to meet specific customer needs. Significant end markets include primarily government-related entities and are dependent on approvals, qualifications, and permits granted by the respective governments and commercial customers around the world. The Specialty Products segment produces and sells Phosphorus Pentasulfide ("P 2 S 5 ") in several end markets and applications, including lubricant additives, various agricultural applications, various mining applications, and emerging electric battery technologies. Within the lubricant additive end market, currently the Company’s largest end market application, P 2 S 5 is primarily used in the production of a family of compounds called Zinc Dialkyldithiophosphates (“ ZDDP ”) , which is considered an essential component in the formulation of engine oils with its main function to provide anti-wear protection to engine components. P 2 S 5 is also used in pesticide and mining chemicals applications. Global Economic Environment In recent years, the global economy and labor markets have experienced significant inflationary pressures attributable to ongoing economic recovery and supply chain issues, in part due to the impacts of the conflicts in Ukraine and the Middle East. While the Company has limited exposure in regions with active conflicts, it continues to monitor and take actions with its customers and suppliers to mitigate the impact of these inflationary pressures in the future. Actions to mitigate inflationary pressures with suppliers include aggregation of purchase requirements to achieve optimal volume benefits, negotiation of cost-reductions and identification of more cost competitive suppliers. While these actions are designed to offset the impact of inflationary pressures, the Company cannot provide assurance that they will be successful in fully offsetting increased costs resulting from inflationary pressure. In addition, interest payments for borrowings under the Company’s revolving credit facility are based on variable rates, and any continued increase in interest rates may reduce the Company’s cash flow available for other corporate purposes. 7 Table of Contents 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes thereto included in the Company’s 2023 Annual Report . Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned, after elimination of intercompany transactions and balances. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management in connection with the preparation of the accompanying condensed consolidated financial statements include the useful lives of long-lived and intangible assets, the fair value of financial assets and liabilities, valuation of goodwill, stock options, founder advisory fees and realizability of deferred tax assets. Actual results could differ from those estimates. As of March 31, 2024, the Company’s significant accounting policies are consistent with those discussed in Note 2 - “Summary of Significant Accounting Policies and Recent Accounting Pronouncements” to its consolidated financial statements included in the Company’s 2023 Annual Report. Reclassification During the three months ended March 31, 2024, the Company changed the presentation to present freight expense as a component of cost of goods sold rather than selling, general and administrative expense to better align freight expense with freight income. The change has been applied retrospectively to the condensed consolidated financial statements for the prior period presented in this Quarterly Report. The impact to the accompanying condensed consolidated statements of operations and comprehensive income (loss) is presented in the following table (in thousands). There was no impact on previously reported balances in the accompanying condensed consolidated balance sheet or statement of cash flows. Three Months Ended March 31, 2023 As Previously Reported As Adjusted Effect of Change Cost of goods sold $ 31,012 $ 33,461 $ 2,449 Gross profit 12,846 10,397 ( 2,449 ) Selling, general and administrative expense 10,465 8,016 ( 2,449 ) Total operating expenses ( 6 ) ( 2,455 ) ( 2,449 ) Operating income 12,852 12,852 — Net income 9,431 9,431 — 8 Table of Contents Recently Issued and Adopted Accounting Standards In March 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2024-02 “Codification Improvements,” which amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. ASU 2024-02 is effective January 1, 2025 and the Company does not expect that the application of this standard will have a material impact on its consolidated financial statements and disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to disclose disaggregated information about a reporting entity’s effective tax rate reconciliation, using both percentages and reporting currency amounts for specific standardized categories, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company does not plan to early adopt and is currently assessing the potential effects of this standard. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires disclosure of incremental segment information, primarily through enhanced disclosures about significant segment expenses categories and amounts for each reportable segment on an annual and interim basis. This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is currently assessing the potential effects of the standard. In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the ASC. These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company does not expect that the application of this standard will have a material impact on its consolidated financial statements and disclosures. 9 Table of Contents 3. BALANCE SHEET COMPONENTS Details of certain balance sheet items are presented below (in thousands): March 31, 2024 December 31, 2023 Inventories: Raw materials and manufacturing supplies $ 74,398 $ 77,657 Work in process 216 224 Finished goods 70,060 67,771 Total inventories $ 144,674 $ 145,652 Prepaid Expenses and Other Current Assets: Advance to vendors $ 3,088 $ 3,197 Prepaid insurance 3,960 5,567 Prepaid value-added taxes 1,028 897 Short-term investments 4,317 5,519 Income tax receivable 2,056 1,714 Other 4,977 1,599 Total prepaid expenses and other current assets $ 19,426 $ 18,493 Property, Plant and Equipment: Buildings $ 3,956 $ 3,986 Leasehold improvements 2,720 2,743 Furniture and fixtures 513 516 Machinery and equipment 65,692 63,202 Vehicles 4,073 4,114 Construction in progress 3,131 4,695 Total property, plant and equipment, gross 80,085 79,256 Less: Accumulated depreciation ( 21,891 ) ( 19,854 ) Total property, plant and equipment, net $ 58,194 $ 59,402 Accrued Expenses and Other Current Liabilities: Accrued bonus $ 1,048 $ 3,483 Accrued salaries 2,102 2,336 Accrued employee benefits 1,360 1,185 Accrued interest 17,485 8,342 Accrued purchases 3,926 2,072 Accrued income taxes 7,419 7,100 Operating lease liabilities 2,146 2,146 Finance lease liabilities 761 600 Other 3,961 3,446 Total accrued expenses and other current liabilities $ 40,208 $ 30,710 Depreciation expense related to property, plant and equipment for the three months ended March 31, 2024 and 2023 was $ 2.6 million and $ 2.3 million, respectively, substantially all of which was presented in cost of goods sold in the accompanying condensed consolidated statements of operations and comprehensive income (loss). The Company had an allowance for doubtful accounts, included in accounts receivable, net of $ 1.0 million and $ 0.9 million as of March 31, 2024 and December 31, 2023, respectively. 10 Table of Contents 4. GOODWILL AND OTHER INTANGIBLE ASSETS The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands): Fire Safety Specialty Products Total Balance, December 31, 2023 $ 863,889 $ 172,390 $ 1,036,279 Foreign currency translation ( 3,928 ) ( 963 ) ( 4,891 ) Balance, March 31, 2024 $ 859,961 $ 171,427 $ 1,031,388 Intangible assets and related accumulated amortization as of March 31, 2024 and December 31, 2023 are as follows (in thousands): March 31, 2024 Estimated Useful Life (in years) Gross Value Impairment Foreign Currency Translation Accumulated Amortization Net Book Value Definite Lived Intangible Assets: Customer lists 20 $ 761,000 $ — $ ( 7,079 ) $ ( 90,348 ) $ 663,573 Technology and patents 20 250,000 ( 40,738 ) ( 2,846 ) ( 29,605 ) 176,811 Tradenames 20 101,000 — ( 924 ) ( 11,992 ) 88,084 Balance, March 31, 2024 $ 1,112,000 $ ( 40,738 ) $ ( 10,849 ) $ ( 131,945 ) $ 928,468 December 31, 2023 Estimated Useful Life (in years) Gross Value Impairment Foreign Currency Translation Accumulated Amortization Net Book Value Definite Lived Intangible Assets: Customer lists 20 $ 761,000 $ — $ ( 5,294 ) $ ( 80,920 ) $ 674,786 Technology and patents 20 250,000 ( 40,738 ) ( 2,096 ) ( 26,513 ) 180,653 Tradenames 20 101,000 — ( 691 ) ( 10,741 ) 89,568 Balance, December 31, 2023 $ 1,112,000 $ ( 40,738 ) $ ( 8,081 ) $ ( 118,174 ) $ 945,007 During the year ended December 31, 2023, due to a downward revision in the revenue forecast related to a contingent earn-out eligible fire retardant product acquired by the Company in May 2020 during the purchase of LaderaTech, Inc. (“LaderaTech”), the Company determined that the $ 40.7 million in carrying value of the technology underlying the contingent earn-out eligible fire retardant product is no longer recoverable. As a result, during the year ended December 31, 2023 the Company recorded an impairment of $ 40.7 million. Amortization expense for definite-lived intangible assets for the three months ended March 31, 2024 and 2023 was $ 13.8 million and $ 13.8 million, respectively. Estimated annual amortization expense of intangible assets for the next five years ended December 31 and thereafter is as follows (in thousands): Amount 2024 remaining $ 40,013 2025 53,350 2026 53,350 2027 53,350 2028 53,350 Thereafter 675,055 Total $ 928,468 11 Table of Contents 5. LEASES Lease cost for the three months ended March 31, 2024 and 2023 are as follows (in thousands): Three Months Ended March 31, 2024 2023 Operating lease cost (1) $ 913 $ 1,153 Finance lease cost: Amortization of right-of-use assets 341 — Interest on lease liabilities 138 — Total lease cost $ 1,392 $ 1,153 Reported in: Cost of goods sold $ 1,233 $ 1,092 Selling, general and administrative expense 159 61 Total lease cost $ 1,392 $ 1,153 (1) Operating lease cost does not include short-term leases or variable costs, all of which are immaterial. As of March 31, 2024, the weighted-average remaining lease terms of the Company’s operating leases and finance leases were approximately 8.2 years and 7.0 years, respectively, and the weighted-average discount rates applied were 6.7 % and 7.6 %, respectively. Supplemental cash flow information related to leases for the three months ended March 31, 2024 and 2023 are as follows (in thousands): Three Months Ended March 31, 2024 2023 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows for operating leases $ 838 $ 1,169 Operating cash flows for finance leases 130 — Financing cash flows for finance leases 172 — Right-of-use assets obtained in exchange for new lease obligations: Operating leases $ 97 $ 10 Financing leases 686 — As of March 31, 2024 , the estimated future minimum payment obligations for non-cancelable operating and finance leases are as follows (in thousands): Operating Leases Finance Leases Remainder of 2024 $ 2,371 $ 949 2025 3,142 1,177 2026 2,811 1,049 2027 2,667 889 2028 1,995 1,632 Thereafter 9,065 4,063 Total lease payments 22,051 9,759 Less: imputed interest ( 5,385 ) ( 2,798 ) Present value of lease liabilities $ 16,666 $ 6,961 12 Table of Contents 6. LONG-TERM DEBT AND REDEEMABLE PREFERRED SHARES Long-term debt consists of the following (in thousands): March 31, 2024 December 31, 2023 Senior Notes $ 675,000 $ 675,000 Less: unamortized debt issuance costs ( 8,192 ) ( 8,506 ) Long-term debt, net $ 666,808 $ 666,494 Revolving Credit Facility SK Invictus Intermediate II S.à r.l.’s, a private limited liability company governed by the laws of the Grand Duchy of Luxembourg (“SK Intermediate II”), five-year Revolving Credit Facility (the “Revolving Credit Facility”) provides for a senior secured Revolving Credit Facility in an aggregate principal amount of up to $ 100.0 million. The Revolving Credit Facility matures on November 9, 2026. The Revolving Credit Facility includes a $ 20.0 million swingline sub-facility and a $ 25.0 million letter of credit sub-facility. The Revolving Credit Facility allows SK Intermediate II to increase commitments under the Revolving Credit Facility up to an aggregate amount not to exceed the greater of (i) $ 143.0 million and (ii) 100.00 % of consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") for the most recent four-quarter period (minus the aggregate outstanding principal amount of certain ratio debt permitted to be incurred thereunder). All borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties, subject to customary exceptions. Borrowings under the Revolving Credit Facility bear interest at a rate equal to (i) an applicable margin, plus (ii) at SK Intermediate II’s option, either (x) Secured Overnight Financing Rate for the applicable corresponding tenor (“Term SOFR”) as published by CME Group Benchmark Administration, adjusted for certain additional costs or (y) a base rate determined by reference to the highest of (a) the prime commercial lending rate published by the Wall Street Journal, (b) the federal funds rate plus 0.50 %, (c) the one-month Term SOFR rate plus 1.00 % and (d) a minimum floor of 1.00 %. The applicable margin is 3.25 % in the case of Term SOFR-based loans and 2.25 % in the case of base rate-based loans, with two step downs of 0.25 % each based upon the achievement of certain leverage ratios. Solely to the extent that on the last day of the applicable fiscal quarter, the utilization of the Revolving Credit Facility (excluding cash collateralized letters of credit and up to $ 10.0 million of undrawn letters of credit) exceeds 40 % of the aggregate commitments, the Revolving Credit Facility requires compliance on a quarterly basis with a maximum secured net leverage ratio of 7.50 :1.00. The Revolving Credit Facility is fully and unconditionally guaranteed by the Company and each of SK Intermediate II’s existing and future wholly-owned material restricted subsidiaries, subject to customary exceptions, and is secured by a first priority lien, subject to certain permitted liens, on substantially all of SK Intermediate II’s and each of the guarantors’ existing and future property and assets, subject to customary exceptions. Deferred financing costs incurred in connection with securing the Revolving Credit Facility were $ 2.3 million, which are carried as a long-term asset in the accompanying condensed consolidated balance sheets and is amortized on a straight-line over the term of the Revolving Credit Facility and included in interest expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss). As of March 31, 2024, the Company did no t have any outstanding borrowings under the Revolving Credit Facility and was in compliance with all covenants. Senior Notes SK Intermediate II has $ 675.0 million principal amount of 5.00 % senior secured notes due October 30, 2029 (“Senior Notes”). The Senior Notes bear interest at an annual rate of 5.00 %. Interest on the Senior Notes is payable in cash semi-annually in arrears on April 30 and October 30 of each year. 13 Table of Contents The Senior Notes are general, secured, senior obligations of SK Intermediate II; rank equally in right of payment with all existing and future senior indebtedness of SK Intermediate II (including, without limitation, the Revolving Credit Facility); and together with the Revolving Credit Facility, are effectively senior to all existing and future indebtedness of SK Intermediate II that is not secured by the collateral. The Senior Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by all of SK Intermediate II’s existing or future restricted subsidiaries (other than certain excluded subsidiaries) that guarantee the Revolving Credit Facility. The Senior Notes contain certain covenants limiting SK Intermediate II’s ability and the ability of the restricted subsidiaries (as defined in the indenture governing the Senior Notes) to, under certain circumstances, prepay subordinated indebtedness, pay distributions, redeem stock or make certain restricted investments; incur indebtedness; create liens on the SK Intermediate II’s assets to secure debt; restrict dividends, distributions or other payments; enter into transactions with affiliates; designate subsidiaries as unrestricted subsidiaries; sell or otherwise transfer or dispose of assets, including equity interests of restricted subsidiaries; effect a consolidation or merger; and change the Company’s line of business. As of March 31, 2024 the Company was in compliance with all covenants. Deferred financing costs incurred in connection with securing the Senior Notes were $ 11.0 million, which were capitalized and amortized using the effective interest method over the term of the Senior Notes and included in interest expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss). The unamortized portion of the deferred financing costs is included as a reduction to the carrying value of the Senior Notes which have been recorded as long-term debt, net in the accompanying condensed consolidated balance sheets. Redeemable Preferred Shares The Company issued 10 million redeemable preferred shares of PSSA (“Redeemable Preferred Shares”), nominal value $ 10 per share, valued at $ 100.0 million. The Redeemable Preferred Shares are entitled to a preferred annual cumulative right to a dividend equal to 6.50 % of its nominal value. The preferred dividend will generally be paid 40.00 % in cash and 60.00 % in kind each year within three business days following the Company's annual general meeting. Holders of the Redeemable Preferred Shares have no voting rights (only protective rights). The Company, under its articles of association (the "Articles") is mandatorily required to redeem the Redeemable Preferred Shares at any time prior to the earliest of (i) six months following the latest maturity date of the above-mentioned Senior Notes, (ii) nine years after the date of issuance of the Redeemable Preferred Shares or (iii) upon the occurrence of a change of control, as defined in the Company’s Articles. Due to the fact that the Redeemable Preferred Shares are mandatorily redeemable, the Redeemable Preferred Shares are classified as a liability in the accompanying condensed consolidated balance sheets, and $ 1.8 million and $ 1.7 million of dividends on these Redeemable Preferred Shares for the three months ended March 31, 2024 and 2023, respectively, were recorded as interest expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss). Preferred dividends in arrears were $ 9.6 million and $ 8.6 million at March 31, 2024 and December 31, 2023, respectively. The Redeemable Preferred Shares have an aggregate liquidation preference of $ 100.0 million, plus any accrued and unpaid dividends thereon and are senior to the Ordinary Shares with respect to dividends and with respect to dissolution, liquidation or winding up of the Company. At March 31, 2024 and December 31, 2023, the redemption price was $ 109.6 million and $ 108.6 million, respectively. 7. INCOME TAXES The Company is subject to U.S. federal income tax, U.S. state and local tax and tax in foreign jurisdictions. The Company estimates its annual effective tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates. The Company’s effective tax rate was 4.92 % for the three months ended March 31, 2024, and ( 203.35 )%, for the three months ended March 31, 2023 . The primary differences between the effective tax rate and the amount computed by applying the Luxembourg statutory rate of 24.94 % are related to losses not expected to result in tax benefits in certain jurisdictions that have a valuation allowance, permanently non-deductible compensation, withholding taxes accrued on unremitted earnings and the impact of foreign tax rate differences. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. While the 14 Table of Contents Company expects to realize the remaining net deferred tax assets, changes in future taxable income or in tax laws may alter this expectation and result in future increases to the valuation allowance. The valuation allowance for deferred tax assets as of March 31, 2024 and 2023 primarily relates to net operating loss carryforwards that, in the judgment of the Company, are not more likely than not to be realized. The Company evaluates its tax positions and recognizes only tax benefits that, more likely than not, will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax position is measured at the largest amount of benefit that has a greater than 50.0% likelihood of being realized upon settlement. As of March 31, 2024, it is not expected that the Company’s unrecognized tax benefits will decrease within twelve months. 8. COMMITMENTS AND CONTINGENCIES Legal Proceedings The Company is involved in various claims, actions, and legal proceedings arising in the ordinary course of business, including a number of matters related to the aqueous film forming foam litigation consolidated in the District of South Carolina multi-district litigation and other similar matters pending in other jurisdictions in the United States. The Company’s exposure to losses, if any, is not considered probable or reasonably estimable at this time. Commitments The Company has an agreement to purchase various types of capital equipment up to $ 5.0 million through October 2027. As of March 31, 2024 , the Company has paid $ 3.2 million to the supplier and the remaining $ 1.8 million will be paid through October 2027. 9. EQUITY The Company’s authorized share capital is $ 4,100.0 million, consisting of 4,000.0 million Ordinary Shares with a nominal value of $ 1.00 per share and 10.0 million Redeemable Preferred Shares with a nominal value of $ 10.00 per share. Each Ordinary Share entitles the holder thereof to one vote. On February 21, 2024, the Board re-established the limit for Ordinary Share repurchases at $ 100.0 million, which is within the repurchase limit approved by the Company’s shareholders on July 21, 2022. During the three months ended March 31, 2024 , the Company repurchased 2,969,357 Ordinary Shares under its Share Repurchase Plan. The repurchased Ordinary Shares were recorded at cost and are being held in treasury. As of March 31, 2024, there were 145,240,112 Ordinary Shares, 33,843,440 warrants and 10,000,000 Redeemable Preferred Shares outstanding. 10. SHARE-BASED COMPENSATION 2021 Equity Plan The Company’s Board adopted, and its shareholders approved, the 2021 Equity Incentive Plan (the “2021 Equity Plan”). A total of 31,900,000 O rdinary Shares are authorized and reserved for issuance under the 2021 Equity Plan which provides for the grant of stock options (either incentive or non-qualified), stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance shares, performance share units and other share-based awards with respect to the Ordinary Shares. Shares associated with underlying awards that are expired, forfeited, or otherwise terminated without the delivery of shares, or are settled in cash, and any shares tendered to or withheld by the Company for the payment of an exercise price or for tax withholding will again be available for issuance under the 2021 Equity Plan. During the three months ended March 31, 2024 (“Q1-2024”) , the Company granted 3,855,000 performance-based non-qualified stock options ("PBNQSO") that vest based on the achievement of certain performance goals to its employees and independent directors. T he Company recognizes compensation costs for PBNQSO granted in Q1-2024 based on the estimated fair value of the awards on the date of grant. The Company estimated the grant date fair value, and the resulting share-based compensation expense, using the Hull-White model. The Company records forfeitures as they are incurred. The grant date fair value of the PBNQSO is expensed proportionately for each tranche over the applicable service period. 15 Table of Contents The fair value of PBNQSO is recognized as compensation expense beginning at the time in which the performance conditions are deemed probable of achievement, over the remaining requisite service period. In March 2024, based on the Company’s performance for 2023, its compensation committee verified and determined the Annual Operational Performance per Diluted Share (“AOP”) for 2023 to be $ 5.31 . As the AOP for 2023 was below the minimum vesting AOP target of $ 12.10 employees separated from the Company through the date of determination of the 2023 AOP relinquished 240,000 options retained by them and such options were cancelled by the Company. As of March 31, 2024 there were 14,509,171 PBNQSO outstanding. The exercise prices of these PBNQSO ranged from $ 2.94 to $ 14.00 per Ordinary Share and expire ten years from the grant date. The table below summarizes the PBNQSO activity for the three months ended March 31, 2024: Number of Options Weighted-Average Exercise/Conversion Price Weighted-Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2023 11,244,171 $ 9.30 Granted 3,855,000 $ 5.23 Exercised — $ — Forfeited ( 350,000 ) $ 9.37 Cancelled ( 240,000 ) $ 8.63 Outstanding at March 31, 2024 14,509,171 $ 8.23 8.50 $ 9,403 Options vested and exercisable 245,004 $ 10.00 5.89 $ — The assumptions used to fair value the Q1-2024 PBNQSO using the Hull-White model were as follows: Q1- 2024 Option Grants Dividend yield — % Expected volatility 44.00 % Expected term (years) 10.00 Suboptimal exercise multiple 2.50 Drift rate 4.23 % Weighted average exercise price of options granted $ 5.23 Weighted average fair value of options granted $ 2.89 Non-cash share-based compensation expense recognized by the Company for the three months ended March 31, 2024 and 2023 was $ 1.7 million and $( 3.1 ) million, respectively. The remeasurement of the PBNQSO to the period end fair value resulted in the Company recognizing negative compensation expense during the three months ended March 31, 2023, the reduction in fair value was primarily due to a decrease in the Ordinary Share price as of the period end and also due to reversal of share-based compensation expense upon forfeitures. Compensation expense is recognized based upon probability assessments of PBNQSO that are expected to vest in future periods. Such probability assessments are subject to revision and, therefore, unrecognized compensation expense is subject to future changes in estimate. As of March 31, 2024, there was approximately $ 23.6 million of total unrecognized compensation expense related to non-vested PBNQSO expected to vest, which is expected to be recognized over a weighted-average period of 2.3 years. Founder Advisory Amounts On November 9, 2021, the Company assumed the advisory agreement entered into on December 12, 2019 by EverArc ("Founder Advisory Agreement") with EverArc Founders, LLC, a Delaware limited liability company ("EverArc Founder Entity"), pursuant to which the EverArc Founder Entity, for the services provided to the Company, including strategic and capital allocation advice, is entitled to receive both a fixed amount (the “Fixed Annual Advisory Amount”) and a variable 16 Table of Contents amount (the “Variable Annual Advisory Amount,” each an “Advisory Amount” and collectively, the “Advisory Amounts”) until the years ending December 31, 2027 and 2031, respectively. Under the Founder Advisory Agreement, at the election of the EverArc Founder Entity, at least 50 % of the Advisory Amounts will be paid in Ordinary Shares and the remainder in cash. The Fixed Annual Advisory Amount will be equal to 2,357,061 Ordinary Shares ( 1.5 % of 157,137,410 Ordinary Shares outstanding on November 9, 2021) for each year through December 3 1, 2027 and is valued using the period end volume weighted average closing share price of Ordinary Shares for ten consecutive trading days. The Variable Annual Advisory Amount for each year through December 31, 2031 is based on the appreciation of the market price of Ordinary Shares if such market price exceeds certain trading price minimums at the end of each reporting period and is valued using a Monte Carlo simulation model. Because up to 50 % of the Advisory Amounts could be settled through a cash payment, 50 % are classified as a liability and the remaining 50 % are classified within equity. For Advisory Amounts classified within equity, the Company does not subsequently remeasure the fair value. For the Advisory Amounts classified as a liability, the Company remeasures the fair value at each reporting date, accordingly, the compensation expense recorded by the Company in the future will depend upon changes in the fair value of the liability-classified Advisory Amounts. As of March 31, 2024 and December 31, 2023, the fair value of the Fixed Annual Advisory Amount was calculated to be $ 64.2 million and $ 42.5 million, respectively, based on the period end volume weighted average closing share price for ten consecutive trading days of Ordinary Shares of $ 6.81 and $ 4.51 , respectively. As of March 31, 2024 and December 31, 2023, the fair value of the Variable Annual Advisory Amount, determined using a Monte Carlo simulation model, was $ 186.3 million and $ 71.3 million, respectively. For the three months ended March 31, 2024, the Company recognized an increase in the compensation expense related to the founders advisory fees-related party due to an increase in fair value for liability-classified Advisory Amounts of $ 68.3 million. For the three months ended March 31, 2023 , the Company recognized a decrease in the compensation expense related to the founders advisory fees-related party due to a decrease in fair value for liability-classified Advisory Amounts of $ 24.2 million. 11. FAIR VALUE MEASUREMENTS Fair Value Measurement The carrying value of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses and other current liabilities approximates fair value due to the short-term nature of their maturities. Borrowings under the Company’s Revolving Credit Facility accrues interest at a floating rate tied to a standard short-term borrowing index, selected at the Company’s option, plus an applicable margin. The carrying amount of this floating rate debt approximates fair value based upon the respective interest rates adjusting with market rate adjustments. The carrying amount of the Company's Redeemable Preferred Shares equals the redemption price, which approximates fair value. At March 31, 2024 and December 31, 2023, the estimated fair value of the Company's Senior Notes, calculated using Level 2 inputs, based on bid prices obtained from a broker was approximately $ 604.0 million and $ 587.9 million, respectively. The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or a liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: • Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. • Level 2 inputs: Other than quoted prices in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. • Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. 17 Table of Contents Liabilities by Hierarchy Level The following tables set forth the Company’s liabilities that were measured at fair value on a recurring basis, by level, within the fair value hierarchy as of March 31, 2024 and December 31, 2023 (in thousands): Fair Value Measurements Using: March 31, 2024 Level 1 Level 2 Level 3 Total Liabilities: Founders advisory fees payable - related party $ 32,114 $ — $ 93,136 $ 125,250 December 31, 2023 Liabilities: Founders advisory fees payable - related party $ 23,972 $ — $ 35,647 $ 59,619 The fair value of the founders advisory fees payable is based on the appreciation of the market price of Ordinary Shares if such market price exceeds certain trading price minimums at the end of each reporting period and is valued using a Monte Carlo simulation model, which requires the input of highly subjective assumptions, including the fair value of the underlying Ordinary Shares, the risk-free interest rate, the expected equity volatility, and the expected term of the Founder Advisory Agreement. See Note 10, “Share-Based Compensation” for discussion of the fair value estimation on the founders advisory fees payable. Changes in Level 3 Liabilities The reconciliations for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows (in thousands): For the three months ended March 31, 2024: Founders Advisory Fees Payable - Related Party Fair value, beginning of period $ 35,647 Founders advisory fees - related party, change in fair value 57,489 Fair value, end of period $ 93,136 For the three months ended March 31, 2023: Founders Advisory Fees Payable - Related Party LaderaTech Contingent Earn-out Fair value, beginning of period $ 118,490 $ 7,273 Founders advisory fees - related party, change in fair value ( 17,552 ) — Loss on contingent earn-out — 246 Fair value, end of period $ 100,938 $ 7,519 During the year ended December 31, 2023, due to a downward revision in the revenue forecast of the contingent earn-out eligible fire retardant product, the Company determined that $ 7.7 million in contingent earn-out payable to LaderaTech is no longer probable. Accordingly, the Company recorded a gain of $ 7.7 million during the year ended December 31, 2023. For this reason, the Company no longer recognizes a contingent earn-out payable as of March 31, 2024. 12. RELATED PARTIES On November 9, 2021, the Company, EverArc and the EverArc Founder Entity entered into an Assignment and Assumption Agreement (the “Founder Assignment Agreement”) pursuant to which the Company assumed, and agreed to pay, perform, satisfy and discharge in full, all of EverArc’s liabilities and obligations under the Founder Advisory Agreement. In exchange for the services provided to the Company, including strategic and capital allocation advice, the EverArc Founder Entity is entitled to receive both the Fixed Annual Advisory Amount and the Variable Annual Advisory Amount from the Company. 18 Table of Contents The Fixed Annual Advisory Amount will be equal to 2,357,061 Ordinary Shares ( 1.5 % of 157,137,410 Ordinary Shares outstanding ) for each year through December 3 1, 2027 and valued using the period end volume weighted average closing share price for ten consecutive trading days of Ordinary Shares. The Variable Annual Advisory Amount for each year through December 31, 2031 is based on the appreciation of the market price of Ordinary Shares if such market price exceeds certain trading price minimums at the end of each reporting period and is valued using a Monte Carlo simulation model. For 2023, the EverArc Founder Entity was entitled to receive the Fixed Annual Advisory Amount of 2,357,061 Ordinary Shares or a value of $ 10.6 million, based on an average price of $ 4.51 per Ordinary Share (the “2023 Fixed Amount”). The EverArc Founder Entity did not qualify to receive the Variable Annual Advisory Amount for 2023 as the average price of $ 4.51 per Ordinary Share for 2023 was lower than the average price of $ 13.63 per Ordinary Share established in 2021 (the “2023 Variable Amount” and together with the 2023 Fixed Amount, the “2023 Advisory Amount”). The EverArc Founder Entity elected to receive approximately 74.6 % of the 2023 Advisory Amount in Ordinary Shares ( 1,758,464 Ordinary Shares) and approximately 25.4 % of the 2023 Fixed Amount in cash ($ 2.7 million). On February 15, 2024, the Company issued 1,758,464 Ordinary Shares and paid $ 2.7 million in cash in satisfaction of the 2023 Advisory Amount. As of March 31, 2024, the Company calculated the fair value of the Fixed Annual Advisory Amounts using the period end volume weighted average closing share price of Ordinary Shares for ten consecutive trading days of $ 6.81 and used a Monte Carlo simulation model to calculate the fair value of the Variable Annual Advisory Amount. These approaches resulted in fair values of $ 64.2 million fo r the Fixed Annual Advisory Amount and $ 186.3 million for the Variable Annual Advisory Amount , of which 50 % may be paid in cash and recorded as a liability and the remaining 50 % would be settled in Ordinary Shares . While the entire instrument is subject to the fair value calculation described above, the amount classified and recorded as equity remains consistent while the amount classified and recorded as a liability is updated each period. For the three months ended March 31, 2024, the Company recognized an increase in share-based compensation expense related to an increase in fair value for liability-classified Advisory Amounts of $ 68.3 million primarily due to the increase in share price of its Ordinary Shares . 13. REVENUE RECOGNITION Disaggregation of revenues Amounts recognized at a point in time primarily relate to products sold whereas amounts recognized over time primarily relate to services associated with the full-service and portable retardant contracts. Revenues for the three months ended March 31, 2024 and 2023 are as follows (in thousands): Three Months Ended March 31, 2024 2023 Revenues from products $ 57,881 $ 43,140 Revenues from services 1,083 709 Other revenues 80 9 Total net sales $ 59,044 $ 43,858 14. (LOSS) EARNINGS PER SHARE Basic earnings per share represents income available to ordinary shareholders divided by the weighted average number of Ordinary Shares outstanding during the reported period. Diluted earnings per share is based upon the weighted-average number of Ordinary Shares outstanding during the period plus additional weighted-average potentially dilutive Ordinary Share equivalents during the period when the effect is dilutive. 19 Table of Contents Basic and diluted weighted average shares outstanding and (loss) earnings per share were as follows (in thousands, except share and per share data): Three Months Ended March 31, 2024 2023 Net (loss) income $ ( 82,558 ) $ 9,431 Weighted-average shares outstanding: Weighted average shares used in computing (loss) earnings per share, basic 145,326,933 157,700,326 Founders advisory fees — 11,785,305 Weighted average shares used in computing (loss) earnings per share, diluted 145,326,933 169,485,631 Basic (loss) earnings per share $ ( 0.57 ) $ 0.06 Diluted (loss) earnings per share $ ( 0.57 ) $ 0.06 As of March 31, 2024, 14.5 million PBNQSO and 16.9 million Ordinary Shares issuable under the Founder Advisory Agreement towards Variable Annual Advisory Amount were excluded from the diluted earnings per share calculation as the contingencies related to such instruments had not been met. In addition, 8.5 million Ordinary Shares equivalent warrants and 9.4 million Ordinary Shares issuable under the Founder Advisory Agreement towards Fixed Annual Advisory Amount were excluded from the diluted earnings per share calculation as their effect would have been anti-dilutive. As of March 31, 2023, 11.3 million PBNQSOs and 26.1 million Ordinary Shares issuable under the Founder Advisory Agreement were excluded from the diluted earnings per share calculation as the contingencies related to such instruments had not been met. In addition, 8.5 million Ordinary Shares equivalent warrants were excluded from the diluted earnings per share calculation as their effect would have been anti-dilutive. 15. SEGMENT INFORMATION The Company’s products and operations are managed and reported in two operating segments: Fire Safety and Specialty Products. The Fire Safety segment manufactures and sells fire retardant and firefighting foam products, as well as specialized equipment and services typically offered in conjunction with these retardant and foam products. The Specialty Products segment produces and sells P 2 S 5 used in several end markets and applications, including lubricant additives, various agricultural applications, various mining applications, and emerging electric battery technologies. Within the lubricant additive end market, currently the Company’s largest end market application, P 2 S 5 is primarily used in the production of a family of compounds called ZDDP, which is considered an essential component in the formulation of engine oils with its main function to provide anti-wear protection to engine components. P 2 S 5 is also used in pesticide and mining chemicals applications. Interest income, interest expense, other income (expense) and certain corporate operating expenses are neither allocated to the segments nor included in the measures of segment performance by the chief operating decision-maker (“CODM”). The corporate category is not considered to be a segment. The CODM is the Company's CEO. The Company’s CODM uses the segment net sales and segment Adjusted EBITDA to assess the ongoing performance of the Company’s business segments and to allocate resources. The Company defines segment Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items in a balanced manner and on a segment basis (“Segment Adjusted EBITDA”). These non-recurring or unusual items may include acquisition, integration and restructuring related costs along with other non-recurring items. 20 Table of Contents Summarized financial information for the Company’s reportable segments are presented and reconciled to consolidated financial information in the following tables (in thousands): Three Months Ended March 31, 2024 2023 Net sales: Fire safety Products $ 23,992 $ 18,026 Service and others 1,163 718 Total fire safety 25,155 18,744 Specialty products 33,889 25,114 Total net sales $ 59,044 $ 43,858 Segment Adjusted EBITDA: Fire safety $ ( 241 ) $ ( 3,361 ) Specialty products 12,377 6,477 Total Segment Adjusted EBITDA 12,136 3,116 Less: Depreciation and amortization 16,412 16,087 Interest and financing expense 10,648 10,146 Founders advisory fees - related party 68,333 ( 24,236 ) Non-recurring expenses 540 1,559 Share-based compensation expense 1,742 ( 3,074 ) Loss on contingent earn-out — 246 Foreign currency loss (gain) 1,293 ( 721 ) (Loss) income before income taxes $ ( 86,832 ) $ 3,109 21 Table of Contents