What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-01 · 143 added, 109 removed, 507 unchanged (33% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

ASSETS (Unaudited)

34 unchanged sentences

166,843,819 and 165,066,195 shares issued;

145,221,577 and 146,451,005 shares outstanding at June 30, 2024 and December 31, 2023, respectively

145,240,338 and 146,451,005 shares outstanding at September 30, 2024 and December 31, 2023, respectively

166,844 165,067

Treasury shares, at cost;

21,603,082 and 18,615,190 shares at June 30, 2024 and December 31, 2023, respectively

21,603,481 and 18,615,190 shares at September 30, 2024 and December 31, 2023, respectively

( 127,827 ) ( 113,407 )

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE (LOSS) INCOME

(in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

Founders advisory fees - related party 184,176 ( 24,544 ) 253,097 ( 108,806 )

Intangible impairment — 40,738 — 40,738

Other operating expense — — — 10

Total operating expenses 216,461 42,665 340,276 6,190

Operating income (loss) 45,018 63,347 ( 29,846 ) 76,199

Operating (loss) income ( 35,239 ) 27,168 ( 65,085 ) 103,367

Other expense (income):

Interest expense, net 10,054 10,448 31,292 30,938

Loss on contingent earn-out — 146 — 392

Foreign currency loss (gain) 224 93 1,517 ( 628 )

Other expense, net 74 17 101 89

Gain on contingent earn-out — ( 7,665 ) — ( 7,273 )

Foreign currency (gain) loss ( 1,354 ) 1,384 163 756

Other expense (income), net 151 ( 60 ) 252 29

Total other expense, net 8,851 4,107 31,707 24,450

Income (loss) before income taxes 34,130 52,747 ( 52,702 ) 55,856

(Loss) income before income taxes ( 44,090 ) 23,061 ( 96,792 ) 78,917

Income tax (expense) benefit ( 45,077 ) ( 3,779 ) ( 53,283 ) 1,810

Net income (loss) 21,650 52,014 ( 60,908 ) 61,445

Net (loss) income ( 89,167 ) 19,282 ( 150,075 ) 80,727

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 10,637 ( 8,673 ) 4,105 ( 4,865 )

Total comprehensive income (loss) $ 20,661 $ 54,229 $ ( 67,440 ) $ 65,253

Earnings (loss) per share:

Total comprehensive (loss) income $ ( 78,530 ) $ 10,609 $ ( 145,970 ) $ 75,862

(Loss) earnings per share:

Basic $ ( 0.61 ) $ 0.13 $ ( 1.03 ) $ 0.52

18 unchanged sentences

Ordinary shares repurchased — — 2,969,357 ( 14,278 ) — — — ( 14,278 )

Net income — — — — — 9,431 9,431

Other comprehensive income — — — — 1,593 — 1,593

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

2 unchanged sentences

Net income — — — — — — 21,650 21,650

Other comprehensive income — — — — — 2,215 — 2,215

Other comprehensive loss — — — — — ( 989 ) — ( 989 )

Balance, June 30, 2024 166,824,659 $ 166,825 21,603,082 $ ( 127,824 ) $ 1,704,141 $ ( 26,242 ) $ ( 641,726 ) $ 1,075,174

165,066,195 $ 165,067 10,545,362 $ ( 76,553 ) $ 1,695,070 $ ( 21,663 ) $ ( 586,859 ) $ 1,175,062

Share-based compensation — — — — 3,312 — — 3,312

Ordinary shares repurchased — — 399 ( 3 ) — — — ( 3 )

Warrants exercised 19,160 19 211 230

Net loss — — — — — — ( 89,167 ) ( 89,167 )

Other comprehensive income — — — — — 10,637 — 10,637

Balance, September 30, 2024 166,843,819 $ 166,844 21,603,481 $ ( 127,827 ) $ 1,707,664 $ ( 15,605 ) $ ( 730,893 ) $ 1,000,183

See accompanying notes to condensed consolidated financial statements.

PERIMETER SOLUTIONS, SA AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands, except share data)

Ordinary Shares Treasury Shares Additional

Capital Accumulated

Comprehensive

Loss Accumulated

Deficit Total

Shareholders'

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

2 unchanged sentences

Ordinary shares repurchased — — 115,570 ( 864 ) — — — ( 864 )

Net loss — — — — — — ( 82,558 ) ( 82,558 )

Other comprehensive loss — — — $ — $ — $ ( 5,543 ) $ — $ ( 5,543 )

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

2 unchanged sentences

Net income — — — — — — 52,014 52,014

Other comprehensive loss — — — — — ( 989 ) — ( 989 )

Other comprehensive income — — — — — 2,215 — 2,215

Balance, June 30, 2023 165,066,195 $ 165,067 10,545,362 $ ( 76,553 ) $ 1,695,070 $ ( 21,663 ) $ ( 586,859 ) $ 1,175,062

Share-based compensation — — — — 1,749 — — 1,749

Ordinary shares repurchased — — 1,736,535 ( 10,035 ) — — — ( 10,035 )

Net income — — — — — — 19,282 19,282

Other comprehensive loss — — — — — ( 8,673 ) — ( 8,673 )

Balance, September 30, 2023

165,066,195 $ 165,067 12,281,897 $ ( 86,588 ) $ 1,696,819 $ ( 30,336 ) $ ( 567,577 ) $ 1,177,385

3 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

7 unchanged sentences

Deferred income taxes 663 ( 11,302 )

Intangible impairment — 40,738

Amortization of deferred financing costs 1,291 1,243

Loss on contingent earn-out — 392

Foreign currency loss (gain) 1,517 ( 628 )

Gain on contingent earn-out — ( 7,273 )

Foreign currency loss 163 756

Loss on disposal of assets 13 3

15 unchanged sentences

Proceeds from short-term investments 5,383 —

Net cash provided by (used in) investing activities 187 ( 4,375 )

Net cash used in investing activities ( 3,688 ) ( 6,630 )

Cash flows from financing activities:

9 unchanged sentences

Cash paid for income taxes $ 31,414 $ 20,562

Non-cash activities:

Warrants exercised $ 230 $ —

See accompanying notes to condensed consolidated financial statements

5 unchanged sentences

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 by PSSA (collectively, the “Company”).

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 by PSSA (collectively, the “Company”).

Business Operations

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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.

The Specialty Products segment produces and sells Phosphorus Pentasulfide ("P 2 S 5 ") in several end markets and applications, including high quality specialty chemicals, various agricultural applications, various mining applications, and emerging electric battery technologies.

Within the high quality specialty chemicals 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.

23 unchanged sentences

Accounting Policies

As of June 30, 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.

As of September 30, 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

1 unchanged sentence

The change has been applied retrospectively to the condensed consolidated financial statements for the prior periods presented in this Quarterly Report.

The impact to the accompanying condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2023 is presented in the following table (in thousands).

The impact to the accompanying condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2023 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 June 30, 2023 Six Months Ended June 30, 2023

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

As Previously Reported As Adjusted Effect of Change As Previously Reported As Adjusted Effect of Change

18 unchanged sentences

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 ASU requires disclosure of incremental segment information, primarily through enhanced disclosures about significant segment expense 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.

The most significant provision of this standard requires the Company to disclose information about significant segment expenses and other segment items that are regularly provided to the chief operating decision-maker (“CODM”).

The Company will adopt this ASU retrospectively for the annual period beginning on January 1, 2024 and for interim periods beginning on January 1, 2025.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements:

6 unchanged sentences

Details of certain balance sheet items are presented below (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Raw materials and manufacturing supplies $ 55,163 $ 77,657

31 unchanged sentences

Total accrued expenses and other current liabilities $ 65,040 $ 30,710

Depreciation expense related to property, plant and equipment was $ 2.6 million and $ 5.2 million for the three and six months ended June 30, 2024, respectively, and $ 2.4 million and $ 4.7 million for the three and six months ended June 30, 2023 , 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 $ 1.0 million as of June 30, 2024 and December 31, 2023, respectively.

Depreciation expense related to property, plant and equipment was $ 2.7 million and $ 7.9 million for the three and nine months ended September 30, 2024, respectively, and $ 2.5 million and $ 7.2 million for the three and nine months ended September 30, 2023 , respectively, substantially all of which was presented in cost of goods sold in the accompanying condensed consolidated statements of operations and comprehensive (loss) income.

The Company had an allowance for doubtful accounts, included in accounts receivable, net of $ 1.1 million and $ 1.0 million as of September 30, 2024 and December 31, 2023, respectively.

GOODWILL AND OTHER INTANGIBLE ASSETS

4 unchanged sentences

Foreign currency translation ( 393 ) 595 202

Balance, June 30, 2024

Balance, September 30, 2024

$ 863,496 $ 172,985 $ 1,036,481

Intangible assets and related accumulated amortization as of June 30, 2024 and December 31, 2023 are as follows (in thousands):

June 30, 2024

Intangible assets and related accumulated amortization as of September 30, 2024 and December 31, 2023 are as follows (in thousands):

September 30, 2024

(in years) Gross Value Impairment Foreign

5 unchanged sentences

Tradenames 20 101,000 — ( 747 ) ( 14,493 ) 85,760

Balance, June 30, 2024

Balance, September 30, 2024

$ 1,112,000 $ ( 40,738 ) $ ( 8,508 ) $ ( 159,465 ) $ 903,289

12 unchanged sentences

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 was $ 13.8 million and $ 27.6 million for the three and six months ended June 30, 2024, respectively, and $ 13.7 million and $ 27.5 million for the three and six months ended June 30, 2023, respectively.

Amortization expense for definite-lived intangible assets was $ 13.8 million for the three months ended September 30, 2024, and 2023, and $ 41.3 million for the nine months ended September 30, 2024 and 2023.

Estimated annual amortization expense of intangible assets for the next five years ended December 31 and thereafter is as follows (in thousands):

2 unchanged sentences

Total $ 903,289

Lease cost for the three and six months ended June 30, 2024 and 2023 are as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Lease cost for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

9 unchanged sentences

(1) Operating lease cost does not include short-term leases or variable costs, all of which are immaterial.

As of June 30, 2024, the weighted-average remaining lease terms of the Company’s operating leases and finance leases were approximately 8.0 years and 6.7 years, respectively, and the weighted-average discount rates applied were 6.8 % and 7.6 %, respectively.

Supplemental cash flow information related to leases for the six months ended June 30, 2024 and June 30, 2023 are as follows (in thousands):

Six Months Ended June 30,

As of September 30, 2024, the weighted-average remaining lease terms of the Company’s operating leases and finance leases were approximately 7.9 years and 6.5 years , respectively, and the weighted-average discount rates applied were 6.8 % and 7.6 %, respectively.

Supplemental cash flow information related to leases for the nine months ended September 30, 2024 and 2023 are as follows (in thousands):

Nine Months Ended September 30,

Cash paid for amounts included in the measurement of operating lease liabilities:

6 unchanged sentences

Net change in operating lease right-of-use assets due to lease modifications resulting in reclassification of leases from operating to finance $ ( 34 ) $ ( 1,514 )

As of June 30, 2024 , the estimated future minimum payment obligations for non-cancelable operating and finance leases are as follows (in thousands):

As of September 30, 2024 , the estimated future minimum payment obligations for non-cancelable operating and finance leases are as follows (in thousands):

Operating Leases Finance Leases

10 unchanged sentences

Long-term debt consists of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Senior Notes $ 675,000 $ 675,000

12 unchanged sentences

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 June 30, 2024, the Company did no t have any outstanding borrowings under the Revolving Credit Facility and was in compliance with all covenants.

As of September 30, 2024, the Company did no t have any outstanding borrowings under the Revolving Credit Facility and was in compliance with all covenants.

SK Intermediate II has $ 675.0 million principal amount of 5.00 % senior secured notes due October 30, 2029 (“Senior Notes”).

14 unchanged sentences

and change the Company’s line of business.

As of June 30, 2024 the Company was in compliance with all covenants.

As of September 30, 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).

6 unchanged sentences

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, $ 3.5 million, $ 1.7 million, and $ 3.4 million of dividends on these Redeemable Preferred Shares for the three and six ended June 30, 2024 and June 30, 2023 , respectively, were recorded as interest expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss).

Preferred dividends in arrears were $ 10.7 million and $ 8.6 million at June 30, 2024 and December 31, 2023, respectively.

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, $ 5.3 million, $ 1.7 million, and $ 5.1 million of dividends on these Redeemable Preferred Shares for the three and nine ended September 30, 2024 and 2023 , respectively, were recorded as interest expense in the accompanying condensed consolidated statements of operations and comprehensive (loss) income.

Preferred dividends in arrears were $ 11.7 million and $ 8.6 million at September 30, 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 June 30, 2024 and December 31, 2023, the redemption price was $ 110.7 million and $ 108.6 million, respectively.

At September 30, 2024 and December 31, 2023, the redemption price was $ 111.7 million and $ 108.6 million, respectively.

The Company is subject to U.S.

2 unchanged sentences

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 36.57 % and ( 15.57 )% for the three and six months ended June 30, 2024, respectively, and 1.39 % and ( 10.01 )% for the three and six months ended June 30, 2023, respectively .

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.

The Company’s effective tax rate w as ( 102.24 )% and ( 55.05 )% f or the three and nine months ended September 30, 2024, respectively, and 16.39 % and ( 2.29 )% for the three and nine months ended September 30, 2023, respectively .

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 be benefited 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.

2 unchanged sentences

While the 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 June 30, 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 valuation allowance for deferred tax assets as of September 30, 2024 and 2023 primarily relates to net operating loss and interest deduction limitation 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, June 30, 2024, it is not expected that the Company’s unrecognized tax benefits will decrease within twelve months.

As of September 30, 2024, it is not expected that the Company's unrecognized tax benefits will decrease within twelve months.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

The Company has an agreement to purchase various types of capital equipment up to $ 5.0 million through October 2027.

As of June 30, 2024 , the Company has paid $ 3.2 million to the supplier and the remaining $ 1.8 million will be paid through October 2027.

As of September 30, 2024, the Company has paid $ 3.2 million to the supplier and the remaining $ 1.8 million will be paid through April 2027.

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.

2 unchanged sentences

The Board had re-established the limit for Ordinary Share repurchases at $ 100.0 million on February 21, 2024, which is within the repurchase limit approved by the Company’s shareholders’ on May 23, 2024.

During the three and six months ended June 30, 2024 , the Company repurchased 18,535 and 2,987,892 Ordinary Shares, respectively, under its Share Repurchase Plan.

During the three and nine months ended September 30, 2024 , the Company repurchased 399 and 2,988,291 Ordinary Shares, respectively, under its Share Repurchase Plan.

The repurchased Ordinary Shares were recorded at cost and are being held in treasury.

As of June 30, 2024, there were 145,221,577 Ordinary Shares, 33,843,440 warrants and 10,000,000 Redeemable Preferred Shares outstanding.

During both the three and nine months ended September 30, 2024 , the Company issued 19,160 Ordinary Shares related to 76,640 warrants that were exercised in September 2024.

As of September 30, 2024, there were 145,240,338 Ordinary Shares, 33,766,800 warrants and 10,000,000 Redeemable Preferred Shares outstanding.

SHARE-BASED COMPENSATION

2 unchanged sentences

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 six months ended June 30, 2024, the Company granted 3,980,000 performance-based non-qualified stock options ("PBNQSO") that vest based on the achievement of certain performance goals to its employees and independent directors.

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 nine months ended September 30, 2024, the Company granted 4,655,000 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 2024 based on the estimated fair value of the awards on the date of grant.

5 unchanged sentences

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 June 30, 2024, there were 14,634,171 PBNQSO outstanding.

As of September 30, 2024, there were 15,134,171 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 six months ended June 30, 2024:

The table below summarizes the PBNQSO activity for the nine months ended September 30, 2024:

Number of Options Weighted-Average

11 unchanged sentences

Cancelled ( 240,000 ) $ 8.63

Outstanding at June 30, 2024

Outstanding at September 30, 2024

15,134,171 $ 8.49 8.10 $ 76,230

Options vested and exercisable 245,004 $ 10.00 5.36 $ 845

The assumptions used to fair value the PBNQSO granted during the six months ended June 30, 2024 using the Hull-White model was as follows:

June 30, 2024

The assumptions used to fair value the PBNQSO granted during the nine months ended September 30, 2024 using the Hull-White model was as follows:

September 30, 2024

Dividend yield — %

5 unchanged sentences

Weighted average fair value of options granted $ 3.45

Non-cash share-based compensation expense recognized by the Company for the three and six months ended June 30, 2024 was $ 3.0 million and $ 4.7 million, respectively.

Non-cash share-based compensation expense recognized by the Company for the three and six months ended June 30, 2023 was $ 1.2 million and $( 1.9 ) million, respectively.

Non-cash share-based compensation expense recognized by the Company for the three and nine months ended September 30, 2024 was $ 3.3 million and $ 8.0 million, respectively.

Non-cash share-based compensation expense (benefit) recognized by the Company for the three and nine months ended September 30, 2023 was $ 1.7 million and $( 0.1 ) million, respectively.

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 June 30, 2024, there was approximately $ 21.1 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 2.1 years.

Such probability assessments are subject to revision and, therefore, unrecognized compensation expense is subject to future changes in estimates.

As of September 30, 2024, there was approximately $ 21.6 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 1.59 years.

Founder Advisory Amounts

6 unchanged sentences

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 June 30, 2024 and December 31, 2023, the fair value of the Fixed Annual Advisory Amount was calculated to be $ 73.1 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 $ 7.75 and $ 4.51 , respectively.

As of June 30, 2024 and December 31, 2023, the fair value of the Variable Annual Advisory Amount, determined using a Monte Carlo simulation model, was $ 178.6 million and $ 71.3 million, respectively.

For the three and six months ended June 30, 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 $ 0.6 million and $ 68.9 million, respectively.

For the three and six months ended June 30, 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 $ 60.0 million and $ 84.3 million, respectively.

As of September 30, 2024 and December 31, 2023, the fair value of the Fixed Annual Advisory Amount was calculated to be $ 121.2 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 $ 12.85 and $ 4.51 , respectively.

As of September 30, 2024 and December 31, 2023, the fair value of the Variable Annual Advisory Amount, determined using a Monte Carlo simulation model, was $ 498.8 million and $ 71.3 million, respectively.

For the three and nine months ended September 30, 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 $ 184.2 million and $ 253.1 million, respectively.

For the three and nine months ended September 30, 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 $ 24.5 million and $ 108.8 million, respectively.

FAIR VALUE MEASUREMENTS

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The carrying amount of the Company's Redeemable Preferred Shares equals the redemption price, which approximates fair value.

At June 30, 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 $ 611.2 million and $ 587.9 million, respectively.

At September 30, 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 $ 649.1 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.

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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 June 30, 2024 and December 31, 2023 (in thousands):

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 September 30, 2024 and December 31, 2023 (in thousands):

Fair Value Measurements Using:

June 30, 2024

September 30, 2024

Level 1 Level 2 Level 3 Total

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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.

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 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.

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The reconciliations for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows (in thousands):

Three Months Ended June 30, 2024 Six Months Ended June 30, 2024

Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

Founders Advisory Fees Payable - Related Party Founders Advisory Fees Payable - Related Party

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Fair value, end of period $ 249,417 $ 249,417

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Founders Advisory Fees Payable - Related Party LaderaTech

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Founders advisory fees - related party, change in fair value ( 19,414 ) — ( 86,175 ) —

Loss on contingent earn-out — 146 — 392

Gain on contingent earn-out — ( 7,665 ) — ( 7,273 )

Fair value, end of period $ 32,315 $ — $ 32,315 $ —

1 unchanged sentence

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 June 30, 2024.

For this reason, the Company no longer recognizes a contingent earn-out payable as of September 30, 2024.

RELATED PARTIES

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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 June 30, 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 $ 7.75 and used a Monte Carlo simulation model to calculate the fair value of the Variable Annual Advisory Amount.

As of September 30, 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 $ 12.85 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 $ 121.2 million fo r the Fixed Annual Advisory Amount and $ 498.8 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 and six months ended June 30, 2024, the Company recognized an increase in share-based compensation expense related to an increase in fair value for liability-classified Advisory Amounts of $ 0.6 million and $ 68.9 million primarily due to the increase in price of its Ordinary Shares .

For the three and nine months ended September 30, 2024, the Company recognized an increase in share-based compensation expense related to an increase in fair value for liability-classified Advisory Amounts of $ 184.2 million and $ 253.1 million primarily due to the increase in price of its Ordinary Shares .

REVENUE RECOGNITION

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Amounts for products sold are recognized at a point in time, whereas amounts for contract services associated with full-service and portable retardant are recognized over time.

Revenues for the three and six months ended June 30, 2024 and 2023 are presented below (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Revenues for the three and nine months ended September 30, 2024 and 2023 are presented below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Total net sales $ 288,417 $ 142,658 $ 474,737 $ 262,653

EARNINGS (LOSS) PER SHARE

(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.

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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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Net income (loss) $ 21,650 $ 52,014 $ ( 60,908 ) $ 61,445

Net (loss) income $ ( 89,167 ) $ 19,282 $ ( 150,075 ) $ 80,727

Weighted-average shares outstanding:

Weighted average shares used in computing earnings (loss) per share, basic 145,236,526 156,525,006 145,279,938 157,109,418

Weighted average shares used in computing (loss) earnings per share, basic 145,222,189 153,694,160 145,247,477 155,958,492

Founders advisory fees — 11,785,305 — 11,785,305

Weighted average shares used in computing earnings (loss) per share, diluted 154,664,770 168,310,311 145,279,938 168,894,723

Basic earnings (loss) per share $ 0.15 $ 0.33 $ ( 0.42 ) $ 0.39

Diluted earnings (loss) per share $ 0.14 $ 0.31 $ ( 0.42 ) $ 0.36

As of June 30, 2024, 14.6 million PBNQSO and 23.1 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, as applicable, from the diluted earnings per share calculation as their effect would have been anti-dilutive.

As of June 30, 2023, 11.2 million PBNQSOs and 17.6 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.

Weighted average shares used in computing (loss) earnings per share, diluted 145,222,189 165,479,465 145,247,477 167,743,797

Basic (loss) earnings per share $ ( 0.61 ) $ 0.13 $ ( 1.03 ) $ 0.52

Diluted (loss) earnings per share $ ( 0.61 ) $ 0.12 $ ( 1.03 ) $ 0.48

As of September 30, 2024, 38.8 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 contingency related to the instrument had not been met.

In addition, 15.1 million PBNQSO, 8.4 million Ordinary Shares equivalent warrants and 9.4 million Ordinary Shares issuable under the Founder Advisory Agreement towards Fixed Annual Advisory Amount were excluded, as applicable, from the diluted earnings per share calculation as their effect would have been anti-dilutive.

As of September 30, 2023, 11.5 million PBNQSOs and 12.9 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.

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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.

The Specialty Products segment produces and sells P 2 S 5 used in several end markets and applications, including high quality specialty chemicals, various agricultural applications, various mining applications, and emerging electric battery technologies.

Within the high quality specialty chemicals 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 CODM is the Company's Chief Executive Officer.

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”).

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.

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Founders advisory fees - related party 184,176 ( 24,544 ) 253,097 ( 108,806 )

Intangible impairment — 40,738 — 40,738

Non-recurring expenses 1,834 22 2,397 1,942

Share-based compensation expense 2,994 1,195 4,736 ( 1,879 )

Loss on contingent earn-out — 146 — 392

Foreign currency loss (gain) 224 93 1,517 ( 628 )

Income (loss) before income taxes $ 34,130 $ 52,747 $ ( 52,702 ) $ 55,856

Share-based compensation expense (benefit) 3,312 1,749 8,048 ( 130 )

Gain on contingent earn-out — ( 7,665 ) — ( 7,273 )

Foreign currency (gain) loss ( 1,354 ) 1,384 163 756

(Loss) income before income taxes $ ( 44,090 ) $ 23,061 $ ( 96,792 ) $ 78,917

SUBSEQUENT EVENT

On July 31, 2024, the Company filed a registration statement on Form S-4 with a preliminary proxy statement to convert PSSA (the “Redomiciliation Transaction”) into a corporation incorporated under the laws of the State of Delaware, after which, PSSA will continue as an entity under the name “Perimeter Solutions, Inc.” and the existing PSSA shareholders would hold shares in Perimeter Solutions, Inc.

On July 31, 2024, the Company filed a registration statement on Form S-4 with a preliminary proxy statement seeking shareholder approval to convert PSSA into a corporation incorporated under the laws of the State of Delaware (the “Redomiciliation Transaction”), after which, PSSA will continue as an entity under the name “Perimeter Solutions, Inc.” and the existing PSSA shareholders would hold shares of common stock in Perimeter Solutions, Inc.

rather than in PSSA.

The Company expects to complete the Redomiciliation Transaction by December 31, 2024 and does not expect that the Redomiciliation Transaction will have a significant impact on the Company’s consolidated financial statements.

On October 25, 2024, the Company filed Amendment No.

1 to the registration statement on Form S-4 to amend certain information on the registration statement on Form S-4 filed on July 31, 2024.

The Company expects to complete the Redomiciliation Transaction by December 31, 2024, subject to shareholder approval at a special meeting of shareholders on November 20, 2024.

The Company is currently evaluating the potential impact on deferred taxes, resulting from and subject to the completion of the Redomiciliation Transaction.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements