Perimeter Solutions, Inc. 10-Q

Item 1. Financial Statements PERIMETER SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) March 31, 2025 December 31, 2024 ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 200,050 $ 198,456 Accounts receivable, net 44,651 56,048 Inventories 122,714 116,347 Prepaid expenses and other current assets 18,028 23,173 Total current assets 385,443 394,024 Property, plant and equipment, net 67,686 64,777 Operating lease right-of-use assets 17,184 17,298 Finance lease right-of-use assets 6,088 6,173 Goodwill 1,039,306 1,034,543 Customer lists, net 629,616 637,745 Technology and patents, net 172,864 173,307 Tradenames, net 86,209 87,365 Other assets, net 750 1,162 Total assets $ 2,405,146 $ 2,416,394 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 20,128 $ 23,519 Accrued expenses and other current liabilities 35,773 30,450 Founders advisory fees payable - related party 11,402 6,677 Deferred revenue 6,406 1,842 Total current liabilities 73,709 62,488 Long-term debt, net 668,104 667,774 Operating lease liabilities, net of current portion 15,395 15,540 Finance lease liabilities, net of current portion 5,975 6,013 Deferred income taxes 161,314 152,203 Founders advisory fees payable - related party 148,068 240,083 Preferred stock 111,066 109,966 Preferred stock - related party 2,831 2,831 Other liabilities 2,314 2,226 Total liabilities 1,188,776 1,259,124 Commitments and contingencies (Note 9) Stockholder’s equity: Common stock, $ 0.0001 par value per share, 4,000,000,000 shares authorized; 171,267,518 and 169,426,114 shares issued; 148,775,583 and 147,822,633 shares outstanding at March 31, 2025 and December 31, 2024, respectively 17 17 Treasury stock, at cost; 22,491,935 and 21,603,481 shares at March 31, 2025 and December 31, 2024, respectively ( 136,010 ) ( 127,827 ) Additional paid-in capital 1,913,747 1,911,035 Accumulated other comprehensive loss ( 31,347 ) ( 39,232 ) Accumulated deficit ( 530,037 ) ( 586,723 ) Total stockholders’ equity 1,216,370 1,157,270 Total liabilities and stockholders’ equity $ 2,405,146 $ 2,416,394 See accompanying notes to condensed consolidated financial statements. 6 Table of Contents PERIMETER SOLUTIONS, INC. 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, 2025 2024 Net sales $ 72,030 $ 59,044 Cost of goods sold 43,877 38,342 Gross profit 28,153 20,702 Operating expenses: Selling, general and administrative expense 16,299 13,462 Amortization expense 14,099 13,771 Founders advisory fees - related party ( 80,613 ) 68,333 Other operating expense 561 — Total operating expenses ( 49,654 ) 95,566 Operating income (loss) 77,807 ( 74,864 ) Other expense (income): Interest expense, net 9,644 10,648 Foreign currency (gain) loss ( 1,159 ) 1,293 Other expense, net 143 27 Total other expense, net 8,628 11,968 Income (loss) before income taxes 69,179 ( 86,832 ) Income tax (expense) benefit ( 12,493 ) 4,274 Net income (loss) 56,686 ( 82,558 ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 7,885 ( 5,543 ) Total comprehensive income (loss) $ 64,571 $ ( 88,101 ) Earnings (loss) per share: Basic $ 0.38 $ ( 0.57 ) Diluted $ 0.36 $ ( 0.57 ) Weighted average number of shares outstanding: Basic 148,556,284 145,326,933 Diluted 156,727,696 145,326,933 See accompanying notes to condensed consolidated financial statements. 7 Table of Contents PERIMETER SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands, except share data) (Unaudited) Common Stock Treasury Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity Shares Amount Shares Amount Balance, December 31, 2024 169,426,114 $ 17 21,603,481 $ ( 127,827 ) $ 1,911,035 $ ( 39,232 ) $ ( 586,723 ) $ 1,157,270 Stock-based compensation — — — — 2,671 — — 2,671 Shares issued related to founders advisory fees - related party 1,837,304 — — — — — — — Shares repurchased — — 888,454 ( 8,183 ) — — — ( 8,183 ) Options exercised 4,100 — — — 41 — — 41 Net income — — — — — — 56,686 56,686 Other comprehensive income — — — — — 7,885 — 7,885 Balance, March 31, 2025 171,267,518 $ 17 22,491,935 $ ( 136,010 ) $ 1,913,747 $ ( 31,347 ) $ ( 530,037 ) $ 1,216,370 Ordinary Shares Treasury Shares Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity Shares Amount Shares Amount Balance, December 31, 2023 165,066,195 $ 165,067 18,615,190 $ ( 113,407 ) $ 1,701,163 $ ( 19,710 ) $ ( 580,818 ) $ 1,152,295 Stock-based compensation — — — — 1,742 — — 1,742 Shares issued related to founders advisory fees - related party 1,758,464 1,758 — — ( 1,758 ) — — — 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. 8 Table of Contents PERIMETER SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net income (loss) $ 56,686 $ ( 82,558 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Founders advisory fees - related party (change in fair value) ( 80,613 ) 68,333 Depreciation and amortization expense 16,893 16,412 Interest and payment-in-kind on preferred stock 1,833 1,764 Stock-based compensation 2,671 1,742 Non-cash lease expense 1,395 1,392 Deferred income taxes 8,927 ( 4,835 ) Amortization of deferred financing costs 444 427 Foreign currency (gain) loss ( 1,159 ) 1,293 Loss (gain) on disposal of assets 3 ( 10 ) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable 11,830 874 Inventories 2,145 231 Prepaid expenses and other current assets 766 ( 1,819 ) Accounts payable ( 3,513 ) ( 7,208 ) Deferred revenue 4,564 — Income taxes payable, net 1,660 ( 174 ) Accrued expenses and other current liabilities 7,253 10,947 Founders advisory fees - related party (cash settled) ( 6,677 ) ( 2,702 ) Operating lease liabilities ( 994 ) ( 838 ) Financing lease liabilities ( 127 ) ( 130 ) Other, net ( 241 ) ( 355 ) Net cash provided by operating activities 23,746 2,786 Cash flows from investing activities: Purchase of property and equipment ( 4,813 ) ( 1,553 ) Proceeds from short-term investments — 1,081 Purchase of businesses, net of cash acquired ( 10,000 ) — Net cash used in investing activities ( 14,813 ) ( 472 ) Cash flows from financing activities: Common stock repurchased ( 8,183 ) — Ordinary shares repurchased — ( 14,278 ) Proceeds from exercise of options 41 — Principal payments on finance lease obligations ( 251 ) ( 172 ) Net cash used in financing activities ( 8,393 ) ( 14,450 ) Effect of foreign currency on cash and cash equivalents 1,054 ( 758 ) Net change in cash and cash equivalents 1,594 ( 12,894 ) Cash and cash equivalents, beginning of period 198,456 47,276 Cash and cash equivalents, end of period $ 200,050 $ 34,382 Supplemental disclosures of cash flow information: Cash paid for interest $ 6 $ 151 Cash paid for income taxes $ 530 $ 818 See accompanying notes to condensed consolidated financial statements 9 Table of Contents PERIMETER SOLUTIONS, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS Basis of Presentation The accompanying condensed consolidated financial statements of Perimeter Solutions, Inc. and its subsidiaries (collectively, the “Company”) 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 2024 Annual Report filed with the SEC on February 20, 2025 . Business Operations The Company is a global solutions provider for the Fire Safety and Specialty Products industries. Approximately 79 % of the Company’s 2024 annual revenues were derived in the United States, approximately 10 % in Europe and approximately 6 % in Canada with the remaining approximately 5 % sprea d across various other countries. The Company’s business is organized and managed in two reporting segments: Fire Safety and Specialty Products. The Fire Safety segment 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 segment 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 includes operations that develop, produce and market products for non-fire safety markets. The Company’s largest end market application for the Specialty Products segment is Phosphorus Pentasulfide (“P 2 S 5 ”) based lubricant additives. P 2 S 5 is also used in pesticide and mining chemicals applications, and emerging electric battery technologies. The Specialty Products segment also includes Intelligent Manufacturing Solutions (“IMS”), which is a manufacturer of electronic or electro-mechanical components of larger solutions. IMS has a flexible, vertically integrated production facility centered on its printed circuit board (“PCB”) line that allows it to acquire and produce a variety of product lines across a range of end markets, including large medical systems, communications infrastructure, energy infrastructure, defense systems, and industrial systems, with a substantial focus on aftermarket repair and replacement. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS Summary of Significant Accounting Policies 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 10 Table of Contents 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, the valuation of goodwill, stock options, and founder advisory fees, and the realizability of deferred tax assets. Actual results could differ from those estimates. Accounting Policies As of March 31, 2025, 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 2024 Annual Report. Recently Issued and Adopted Accounting Standards On November 4, 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Disaggregation of Income Statement Expenses, which requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The new guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Although the ASU requires comparative disclosures for all periods presented, entities will be permitted to begin applying the guidance prospectively. Therefore, comparative disclosures are not required for reporting periods beginning before the effective date. Entities can elect to apply this ASU retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of this ASU will have on its 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. The Company adopted this ASU prospectively for the annual period beginning on January 1, 2025. While we expect the adoption of this standard will expand our disclosures within the “Income Taxes” note on our Form 10-K, we do not expect it to have any impact on our financial position or results of operations. 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 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 most significant provision of this standard required 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 adopted this ASU retrospectively for the annual period beginning on January 1, 2024 and for interim periods beginning on January 1, 2025. While the adoption of this standard expanded our disclosures within the “Segment Information” note on our Forms 10-K and 10-Q, it did not have any impact on our financial position or results of operations. 11 Table of Contents 3. BALANCE SHEET COMPONENTS Details of certain balance sheet items are presented below (in thousands): March 31, 2025 December 31, 2024 Inventories: Raw materials and manufacturing supplies $ 58,792 $ 65,872 Work in process 390 286 Finished goods 63,532 50,189 Total inventories $ 122,714 $ 116,347 Prepaid Expenses and Other Current Assets: Advance to vendors $ 2,174 $ 2,471 Prepaid insurance 4,020 3,667 Prepaid value-added taxes 1,090 2,552 Income tax receivable 6,646 11,091 Other 4,098 3,392 Total prepaid expenses and other current assets $ 18,028 $ 23,173 Property, Plant and Equipment: Buildings $ 3,962 $ 3,912 Leasehold improvements 3,051 2,975 Furniture and fixtures 542 584 Machinery and equipment 74,534 74,406 Vehicles 4,317 4,317 Construction in progress 12,719 9,721 Total property, plant and equipment, gross 99,125 95,915 Less: accumulated depreciation ( 31,439 ) ( 31,138 ) Total property, plant and equipment, net $ 67,686 $ 64,777 Accrued Expenses and Other Current Liabilities: Accrued bonus $ 1,116 $ 6,216 Accrued salaries 2,001 1,514 Accrued employee benefits 1,567 1,381 Accrued interest 17,618 8,448 Accrued purchases 4,112 2,558 Accrued taxes 388 3,185 Operating lease liabilities 2,730 2,677 Finance lease liabilities 699 732 Other 5,542 3,739 Total accrued expenses and other current liabilities $ 35,773 $ 30,450 Depreciation expense related to property, plant and equipment for the three months ended March 31, 2025 and 2024 wa s $ 2.8 million and $ 2.6 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). As of March 31, 2025 and December 31, 2024, the allowance for doubtful accounts was immaterial. 12 Table of Contents 4. BUSINESS COMBINATION On March 28, 2025, IMS acquired substantially all of the assets and technical data rights of certain product lines from a third party, which met the definition of a business, for a total purchase price of $ 10.0 million. The Company used the acquisition method of accounting for the transaction and has reflected the preliminary value of the acquired assets and liabilities assumed in the consolidated balance sheet including, inventories, intangible assets and property, plant and equipment. The accounting is provisional as the Company is pending valuation of certain tangible and intangible assets that is subject to final adjustment as the Company evaluates information during the measurement period. Acquisition-related costs, primarily consisting of legal and advisory fees, were recognized as an operating expense in the current period and were not material. 5. 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, 2024 $ 852,754 $ 181,789 $ 1,034,543 Foreign currency translation 3,178 1,585 4,763 Balance, March 31, 2025 $ 855,932 $ 183,374 $ 1,039,306 Intangible assets and related accumulated amortization as of March 31, 2025 and December 31, 2024 are as follows (in thousands): March 31, 2025 Estimated Useful Life (in years) Gross Value Accumulated Impairment Foreign Currency Translation Accumulated Amortization Net Book Value Definite Lived Intangible Assets: Customer lists 10 to 20 $ 767,000 $ — $ ( 9,268 ) $ ( 128,116 ) $ 629,616 Technology and patents 10 to 20 259,150 ( 40,738 ) ( 3,433 ) ( 42,115 ) 172,864 Tradenames 10 to 20 104,500 — ( 1,218 ) ( 17,073 ) 86,209 Balance, March 31, 2025 $ 1,130,650 $ ( 40,738 ) $ ( 13,919 ) $ ( 187,304 ) $ 888,689 December 31, 2024 Estimated Useful Life (in years) Gross Value Accumulated Impairment Foreign Currency Translation Accumulated Amortization Net Book Value Definite Lived Intangible Assets: Customer lists 10 to 20 $ 767,000 $ — $ ( 10,659 ) $ ( 118,596 ) $ 637,745 Technology and patents 10 to 20 257,100 ( 40,738 ) ( 4,187 ) ( 38,868 ) 173,307 Tradenames 10 to 20 104,500 — ( 1,393 ) ( 15,742 ) 87,365 Balance, December 31, 2024 $ 1,128,600 $ ( 40,738 ) $ ( 16,239 ) $ ( 173,206 ) $ 898,417 Amortization expense for definite-lived intangible assets for the three months ended March 31, 2025 and 2024 w as $ 14.1 million and $ 13.8 million , respectively. 13 Table of Contents Estimated annual amortization expense of intangible assets for the next five years ended December 31, and thereafter is as follows (in thousands): Amount 2025 remaining $ 41,411 2026 55,215 2027 55,215 2028 55,215 2029 55,215 Thereafter 626,418 Total $ 888,689 6. LEASES Lease cost for the three months ended March 31, 2025 and 2024 is as follows (in thousands): Three Months Ended March 31, 2025 2024 Operating lease cost (1) $ 1,016 $ 913 Finance lease cost: Amortization of right-of-use assets 252 341 Interest on lease liabilities 127 138 Total lease cost $ 1,395 $ 1,392 Reported in: Cost of goods sold $ 1,224 $ 1,233 Selling, general and administrative expense 171 159 Total lease cost $ 1,395 $ 1,392 (1) Operating lease cost does not include short-term leases or variable costs, all of which are immaterial. As of March 31, 2025, the weighted-average remaining lease terms of the Company’s operating leases and finance leases were approximately 7.5 years and 6.1 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 three months end ed March 31, 2025 and 2024 is as follows (in thousands): Three Months Ended March 31, 2025 2024 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows for operating leases $ 994 $ 838 Operating cash flows for finance leases 127 130 Financing cash flows for finance leases 251 172 Right-of-use assets obtained in exchange for new lease obligations: Operating leases $ 574 $ 97 Financing leases 199 686 Net change in operating lease right-of-use assets due to lease modifications resulting in reclassification of leases from operating to finance $ ( 32 ) $ — 14 Table of Contents As of March 31, 2025 , the estimated future minimum payment obligations for non-cancelable operating and finance leases are as follows (in thousands): Operating Leases Finance Leases Remainder of 2025 $ 2,909 $ 903 2026 3,564 1,136 2027 3,322 1,034 2028 2,480 1,679 2029 2,473 952 2030 2,045 552 Thereafter 6,596 2,739 Total lease payments 23,389 8,995 Less: imputed interest 5,264 2,321 Present value of lease liabilities $ 18,125 $ 6,674 7. LONG-TERM DEBT AND PREFERRED STOCK Long-term debt consists of the following (in thousands): March 31, 2025 December 31, 2024 Senior Notes $ 675,000 $ 675,000 Less: unamortized debt issuance costs ( 6,896 ) ( 7,226 ) Long-term debt, net $ 668,104 $ 667,774 Maturities of long-term debt as of March 31, 2025 are as follows (in thousands): Years Ending December 31, Amount 2025 $ — 2026 — 2027 — 2028 — 2029 675,000 Thereafter — Total $ 675,000 Revolving Credit Facility Perimeter Holdings, LLC’s, a Delaware limited liability company (“Perimeter Holdings”), 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 Perimeter Holdings 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 Perimeter Holdings 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 15 Table of Contents 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 40.00 % 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 Perimeter Holdings’ 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 Perimeter Holdings’ 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 are carried as a long-term asset and are 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, 2025 and December 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 Perimeter Holdings 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. The Senior Notes are general, secured, senior obligations of Perimeter Holdings; rank equally in right of payment with all existing and future senior indebtedness of Perimeter Holdings (including, without limitation, the Revolving Credit Facility); and together with the Revolving Credit Facility, are effectively senior to all existing and future indebtedness of Perimeter Holdings 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 Perimeter Holdings’ existing or future restricted subsidiaries (other than certain excluded subsidiaries) that guarantee the Revolving Credit Facility. The Senior Notes contain certain covenants limiting Perimeter Holdings’ 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 Perimeter Holdings 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, 2025, the Company was in compliance with all covenants. Deferred financing costs incurred in connection with securing the Senior Notes 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 Stock The Company’s Certificate of Incorporation authorizes the issuance of 20 million shares of Preferred Stock which are entitled to a preferred annual cumulative right to a dividend equal to 6.50 % of its nominal value. The preferred dividend will be paid 40.00 % in cash and 60.00 % in kind each year within three business days following the Company's annual meeting. Holders of the Preferred Stock have no voting rights (only protective rights). As of March 31, 2025, the Company had issued 10 million shares of Preferred Stock, par value $ 0.0001 per share, stated value $ 100.0 million. The Company, under its Certificate of Incorporation, is mandatorily required to redeem the Preferred Stock at any time prior to the earliest of (i) six months following the latest maturity date of the above-mentioned Senior Notes, (ii) nine 16 Table of Contents years after the date of issuance of the Preferred Stock or (iii) upon the occurrence of a change of control, as defined in the Company’s Certificate of Incorporation. Due to the fact that the shares of Preferred Stock are mandatorily redeemable, the shares of Preferred Stock are classified as a liability in the accompanying consolidated balance sheets, and $ 1.8 million of dividends on these shares of Preferred Stock were recorded as interest expense for each of the three months ended March 31, 2025 and 2024 in the accompanying condensed consolidated statements of operations and comprehensive income (loss). Preferred dividends in arrears were $ 13.9 million and $ 12.8 million at March 31, 2025 and December 31, 2024, respectively. The shares of Preferred Stock have an aggregate liquidation preference of $ 100.0 million, plus any accrued and unpaid dividends thereon and are senior to the Company's Common Stock with respect to dividends and with respect to dissolution, liquidation or winding up of the Company. At March 31, 2025 and December 31, 2024, the redemption price was $ 113.9 million and $ 112.8 million, respectively. 8. 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 18.06 % for the three months ended March 31, 2025. The primary differences between the effective tax rate and the amount computed by applying the U.S. statutory rate of 21 % are related to losses not expected to result in an income tax benefit 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 was 4.92 % for the three months ended March 31, 2024. Prior to the conversion into a corporation under the laws of the State of Delaware on November 20, 2024 (“Redomiciliation Transaction”), the Company was incorporated under the laws of the Grand Duchy of Luxembourg. 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 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, 2025 and 2024 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, 2025, it is not expected that the Company’s unrecognized tax benefits will decrease within twelve months. 9. 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. 17 Table of Contents Commitments The Company does not have any material unconditional purchase obligations as of March 31, 2025. 10. EQUITY The Company is authorized to issue 4,020,000,000 shares of capital stock, consisting of (i) 4,000,000,000 shares of Common Stock and (ii) 20,000,000 shares of Preferred Stock. As of March 31, 2025 , there were 171,267,518 and 148,775,583 shares of Common Stock issued and outstanding, respectively. Due to the fact that the shares of Preferred Stock are mandatorily redeemable, the Preferred Stock is classified as a liability on the accompanying consolidated balance sheets. R efer to Note 7, “Long-Term Debt and Preferred Stock” f or additional information about the Preferred Stock. The Board has re-established the limit for Common Stock repurchases at $ 100.0 million. The approximate dollar value of shares that may yet be repurchased under the Share Repurchase Plan was $ 89.0 million as of March 31, 2025. During the three months ended March 31, 2025, the Company repurchased 888,454 shares under its Share Repurchase Plan . The repurchased shares are recorded at cost and are being held in treasury. 11. STOCK-BASED COMPENSATION 2021 Equity Plan A total of 31,900,000 shares of Common Stock are authorized and reserved for issuance under the 2021 Equity Incentive Plan (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 Common Stock. 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, 2025, the Company granted 2,938,000 performance-based non-qualified stock options (“ PBNQSO”) to its executive officers, non-employee directors and other members of senior management under the 2021 Equity Plan. The PBNQSO granted consist of two types of vesting criteria. T he Company recognizes compensation costs for PBNQSO granted in the first three months of 2025 based on the estimated fair value of the awards on the date of grant. The Company estimates the grant date fair value, and the resulting stock-based compensation expense, using the Hull-White model or Monte Carlo model, as applicable. 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. 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 February 2025, based on the Company’s performance for 2024, the compensation committee verified and determined the Annual Operational Performance per Diluted Share (“AOP”) for 2024 to be $ 25.02 , which was above the maximum vesting AOP target. As of March 31, 2025, there were 17,768,071 PBNQSO outstanding. The exercise prices of these PBNQSO ranged from $ 2.94 to $ 13.24 per share and expire ten years from the grant date. 18 Table of Contents The table below summarizes the PBNQSO activity for the three months ended March 31, 2025: Number of Options Weighted-Average Exercise/ Conversion Price Weighted-Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2024 15,134,171 $ 8.49 Granted 2,938,000 $ 11.80 Exercised ( 4,100 ) $ 10.00 Forfeited ( 300,000 ) $ 10.00 Cancelled — $ — Outstanding at March 31, 2025 17,768,071 $ 9.01 8.00 $ 27,482 Options vested and exercisable 5,880,404 $ 9.28 7.05 $ 5,287 The assumptions used to fair value the PBNQSO granted during the three months ended March 31, 2025 using the Monte Carlo model were as follows: March 31, 2025 Dividend yield — % Risk-free interest rate 4.57 % Expected volatility 49.00 % Expected term (years) 10.00 Suboptimal exercise multiple 2.50 Weighted average exercise price of options granted $ 11.80 Weighted average fair value of options granted $ 5.41 Non-cash stock-based compensation expense recognized by the Company for the three months ended March 31, 2025, and 2024 was $ 2.7 million and $ 1.7 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 estimates. As of March 31, 2025, there was approximately $ 30.2 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 1.7 years. Founder Advisory Amounts On November 9, 2021, the Company assumed the advisory agreement entered into on December 12, 2019 (“Founder Advisory Agreement”) by EverArc Holdings Limited, a company limited by shares incorporated with limited liability in the British Virgin Islands (“EverArc”), 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 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 shares of Common Stock and the remainder in cash. The Fixed Annual Advisory Amount will be equal to 2,357,061 shares of Common Stock ( 1.5 % of 157,137,410 Ordinary Shares outstanding on November 9, 2021) for each year through December 31, 2027 and is valued using the period end volume weighted average closing share price of the Company’s Common Stock 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 the Company’s Common Stock 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 19 Table of Contents 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, 2025 and December 31, 2024, the fair value of the Fixed Annual Advisory Amount was calculated to be $ 68.4 million and $ 90.8 million, respectively, based on the period end volume weighted average closing share price for ten consecutive trading days of $ 9.67 and $ 12.85 , respectively. As of March 31, 2025 and December 31, 2024, the fair value of the Variable Annual Advisory Amount, determined using a Monte Carlo simulation model, was $ 250.5 million and $ 389.3 million, respectively. For the three months ended March 31, 2025, 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 $ 80.6 million. 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. 12. 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 accrue 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 Preferred Stock equals the redemption price, which approximates fair value. At March 31, 2025 and December 31, 2024, the estimated fair value of the Company's Senior Notes, calculated using Level 2 inputs, based on bid prices obtained from a broker was approxima tely $ 633.3 million a nd $ 629.5 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. Liabilities by Hierarchy Level The following table sets 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, 2025 and December 31, 2024 (in thousands): Fair Value Measurements Using: March 31, 2025 Level 1 Level 2 Level 3 Total Liabilities: Founders advisory fees payable - related party $ 34,208 $ — $ 125,262 $ 159,470 December 31, 2024 Liabilities: Founders advisory fees payable - related party $ 52,098 $ — $ 194,662 $ 246,760 20 Table of Contents The fair value of the founders advisory fees payable is based on the appreciation of the market price of 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 11, “Stock-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): Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 Founders Advisory Fees Payable - Related Party Founders Advisory Fees Payable - Related Party Fair value, beginning of period $ 194,662 $ 35,647 Founders advisory fees - related party, change in fair value ( 69,400 ) 57,489 Fair value, end of period $ 125,262 $ 93,136 13. RELATED PARTIES As discussed in Note 11, “Stock-Based Compensation,” the Company assumed, and agreed to pay, perform, satisfy and discharge in full, all of EverArc’s liabilities and obligations under the key terms and conditions of the Founder Advisory Agreement previously executed between EverArc and EverArc Founder Entity. For 2024, the average price of the Company’s Common Stock was $ 12.85 per share. The EverArc Founder Entity was entitled to receive the Fixed Annual Advisory Amount of 2,357,061 shares of Common Stock or a value of $ 30.3 million, based on average price of $ 12.85 per share of Common Stock (the “2024 Fixed Amount”). The EverArc Founder Entity was not entitled to receive the Variable Annual Advisory Amount for 2024, as the average price of $ 12.85 per share of Common Stock for 2024 was lower than the previous highest average price of $ 13.63 per Ordinary Share established in 2021. Per the Founder Advisory Agreement, the EverArc Founder Entity elected to receive approximately 78 % of the 2024 Fixed Amount in Common Stock ( 1,837,304 shares of Common Stock) and approximately 22 % of the 2024 Fixed Amount in cash ($ 6.7 million). On February 18, 2025, the Company issued 1,837,304 shares of Common Stock and paid $ 6.7 million in cash in satisfaction of the 2024 Fixed Amount. 14. REVENUE RECOGNITION Disaggregation of revenues 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 months ended March 31, 2025 and 2024 are presented below (in thousands): Three Months Ended March 31, 2025 2024 Revenues from products $ 67,632 $ 57,881 Revenues from services 4,382 1,083 Other revenues 16 80 Total net sales $ 72,030 $ 59,044 21 Table of Contents 15 . EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share represents income available to common or ordinary shareholders divided by the weighted average number of Common Stock or Ordinary Shares outstanding during the reported period. Diluted earnings (loss) per share is based upon the weighted-average number of shares outstanding during the period plus additional weighted-average potentially dilutive share equivalents during the period when the effect is dilutive. Basic and diluted weighted average shares outstanding and earnings (loss) per share were as follows (in thousands, except share and per share data): Three Months Ended March 31, 2025 2024 Net income (loss) $ 56,686 $ ( 82,558 ) Weighted-average shares outstanding: Weighted average shares used in computing earnings (loss) per share, basic 148,556,284 145,326,933 PBNQSO 1,100,229 — Founders advisory fees 7,071,183 — Weighted average shares used in computing earnings (loss) per share, diluted 156,727,696 145,326,933 Basic earnings (loss) per share $ 0.38 $ ( 0.57 ) Diluted earnings (loss) per share $ 0.36 $ ( 0.57 ) The number of anti-dilutive securities not included in the calculation of diluted earnings per share were as follows: Three Months Ended March 31, 2025 2024 PBNQSO 235,000 245,004 Founders advisory fees — 9,428,244 Warrants — 8,460,860 Total 235,000 18,134,108 16. 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 provides fire retardants and firefighting foams, as well as specialized equipment and services typically offered in conjunction with the Company’s retardant and foam products. The Specialty Products segment includes operations that develop, produce and market products for non-fire safety markets. The Company’s largest end market application for the Specialty Products segment is Phosphorus Pentasulfide ("P 2 S 5 ") based lubricant additives. P 2 S 5 is also used in pesticide and mining chemicals applications, and emerging electric battery technologies. The Specialty Products segment also includes IMS, which is a manufacturer of electronic or electro-mechanical components of larger solutions. IMS has a flexible, vertically integrated production facility centered on its printed circuit board (“PCB”) line that allows it to acquire and produce a variety of product lines across a range of end markets, including large medical systems, communications infrastructure, energy infrastructure, defense systems, and industrial systems, with a substantial focus on aftermarket repair and replacement. The CODM is the Company's CEO. The CODM uses Segment Adjusted EBITDA for each segment predominantly in the annual budget and the forecasting process. The CODM considers budget/forecast-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources to each segment. 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 on a segment basis. These non- 22 Table of Contents recurring or unusual items may include acquisition and restructuring related costs, management fees and other non-recurring items. Interest income, interest expense, other income (expense) and certain corporate operating expenses are not included in the measures of segment performance reviewed by the CODM. The corporate category is not considered to be a segment. Information related to net sales, Segment Adjusted EBITDA, depreciation and amortization and purchases of property and equipment are summarized below (in thousands): Three Months Ended March 31, 2025 Fire Safety Specialty Products Total Net sales: Product $ 32,765 $ 34,867 $ 67,632 Services and others 4,398 — 4,398 Total net sales $ 37,163 $ 34,867 $ 72,030 Less: Adjusted cost of goods sold $ 18,582 $ 22,620 $ 41,202 Adjusted selling, general and administrative expense 8,496 4,249 12,745 Segment Adjusted EBITDA $ 10,085 $ 7,998 $ 18,083 Less: Depreciation and amortization 16,893 Interest and financing expense 9,644 Founders advisory fees - related party ( 80,613 ) Non-recurring expenses 1,468 Share-based compensation expense 2,671 Foreign currency gain ( 1,159 ) Income before income taxes $ 69,179 Depreciation and amortization $ 12,765 $ 4,128 $ 16,893 Purchases of property and equipment $ 3,262 $ 1,551 $ 4,813 Three Months Ended March 31, 2024 Fire Safety Specialty Products Total Net sales: Product $ 23,992 $ 33,889 $ 57,881 Services and others 1,163 — 1,163 Total net sales 25,155 33,889 59,044 Less: Adjusted cost of goods sold $ 16,852 $ 18,775 $ 35,627 Adjusted selling, general and administrative expense 8,544 2,737 11,281 Segment Adjusted EBITDA $ ( 241 ) $ 12,377 $ 12,136 Less: Depreciation and amortization 16,412 Interest and financing expense 10,648 Founders advisory fees - related party 68,333 Non-recurring expenses 540 Share-based compensation expense 1,742 Foreign currency loss 1,293 Loss before income taxes $ ( 86,832 ) Depreciation and amortization $ 12,889 $ 3,523 $ 16,412 Purchases of property and equipment $ 793 $ 760 $ 1,553 23 Table of Contents Total segment assets reconciled to consolidated amounts are as follows: March 31, 2025 Fire Safety Specialty Products Total Segment assets 52,584 217,871 $ 270,455 Cash and cash equivalents 200,050 Goodwill 1,039,306 Customer lists, net 629,616 Technology and patents, net 172,864 Tradenames, net 86,209 Tax assets 6,646 Total consolidated assets 2,405,146 December 31, 2024 Fire Safety Specialty Products Total Segment assets 83,677 189,912 $ 273,589 Cash and cash equivalents 198,456 Goodwill 1,034,543 Customer lists, net 637,745 Technology and patents, net 173,307 Tradenames, net 87,365 Tax assets 11,389 Total consolidated assets 2,416,394 Net sales by geographical area is as follows (in thousands): Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 United States 68 % 68 % Other international sales (1) 32 % 32 % Total net sales 100 % 100 % (1) The Company did not have net sales in excess of 10% in any other countries for the three months ended March 31, 2025 and 2024. Property, plant and equipment, net by geographical area consisted of the following (in thousands): March 31, 2025 December 31, 2024 United States $ 49,131 $ 46,580 Canada 2,205 2,180 Germany 12,788 12,643 Other foreign jurisdictions 3,562 3,374 Total property, plant and equipment, net $ 67,686 $ 64,777 24 Table of Contents