Perimeter Solutions SA
10/30/2025 | Press release | Distributed by Public on 10/30/2025 07:22
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this quarterly report on Form 10-Q for the quarter ended September 30, 2025 (this "Quarterly Report"). This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, such statements are subject to the "safe harbor" created by those sections and involve risks and uncertainties. Forward-looking statements are based on our management's beliefs and assumptions and on information available to our management as of the date hereof. As a result of many factors, such as those set forth under "Item 1A. Risk Factors" included in our 2024 Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements, accordingly, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Overview
Perimeter Solutions, Inc. ("we," "us," "our," or the "Company") is a global solutions provider for the Fire Safety and Specialty Products industries. Approximately 79% of our 2024 annual revenues were derived in the United States, approximately 10% in Europe and approximately 6% in Canada with the remaining approximately 5% spread across various other countries. Our 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 ("P2S5") based lubricant additives. P2S5is 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.
We operate five business units within our two reporting segments. The business unit structure is meant to promote decentralized execution and accountability, and maintain the geography and product-specific focus and granularity necessary to drive continued improvement in our key operational value drivers. Our key operational value drivers are profitable new business, pricing our products and services to the value they provide, and continued productivity improvements. Each business unit has a business unit manager, who is responsible for achieving targeted financial and operational results.
Our focus is on maintaining our existing customers, expanding their utilization of our products and services, growing our business in the emerging technologies markets and growth through business acquisitions. When analyzing changes in the Results of Operations section below, we define our base business as our existing operations plus operations of an acquired business once it has been owned for a full four quarters after the date of acquisition.
Known Trends and Uncertainties
Growth in Fire Safety
We believe that our Fire Safety segment benefits from several secular growth drivers, including increasing fire severity, as measured by higher acres burned, longer fire seasons and a growing wildland urban interface resulting in a need for higher quantity of retardant use per acre and thereby necessitating an increase of the airtanker capacity. We believe that these trends are prevalent in North America, as well as globally, and we expect these trends to continue and drive growth in demand for fire retardant products.
We are also working to grow our fire prevention and protection business, which is primarily focused on expanding use of ground-applications for long-term fire retardant. This includes use of ground assets in response to active fires (protection), as well as proactive treatments around critical infrastructure and known high-risk areas (prevention). The protection business expands on our existing aerial support to enhance the ability of customers to effectively fight active fires. Fire prevention products can be used to prevent fire ignitions and protect property from potential fire danger by providing proactive retardant treatment in high-risk areas such as roadways, and critical infrastructure like electrical utilities and railroads. Treating these areas ahead of the fire season can potentially stop ignitions from equipment failures or sparks.
Weather Conditions and Climate Trends
Our financial condition and results of operations are significantly impacted by weather as well as environmental and other factors affecting climate change, which impact the number and severity of fires in any given year. Historically, sales of our products have been higher in the summer season in the northern hemisphere of each fiscal year due to weather patterns which are generally correlated to a higher prevalence of wildfires. This is in part offset by the disbursement of our operations in both the northern and southern hemispheres, where the summer seasons alternate.
Global Economic Environment
In recent years, the global economy and labor markets have experienced significant inflationary pressures attributable to ongoing economic recovery and supply chain issues, in part due to the impacts of the conflicts in Ukraine and the Middle East. While the Company has limited exposure in regions with active conflicts, it continues to monitor and take actions with its customers and suppliers to mitigate the impact of these inflationary pressures in the future. Actions to mitigate inflationary pressures with suppliers include aggregation of purchase requirements to achieve optimal volume benefits, negotiation of cost-reductions and identification of more cost competitive suppliers. While these actions are designed to offset the impact of inflationary pressures, the Company cannot provide assurance that they will be successful in fully offsetting increased costs resulting from inflationary pressure. In addition, interest payments for borrowings under the Company's revolving credit facility are based on variable rates, and any continued increase in interest rates may reduce the Company's cash flow available for other corporate purposes.
Additionally, amid broader volatility in the global economy, certain raw materials and components used in our manufacturing processes may be subject to the recently announced tariffs on imported goods by the United States, Canada, and other countries. However, tariffs have not had, and we do not currently expect tariffs to have, a material impact on our financial position or results of operations, as substantially all of the Company's products sold in the United States are supported by domestic manufacturing capabilities. The Company prioritizes sourcing raw materials domestically and continues to maintain alternative supply sources. Although the ultimate impact of tariff policies, coupled with broader macroeconomic challenges, remains uncertain, the Company is actively monitoring developments to identify necessary actions to maintain its competitiveness and adapt to changing economic conditions.
Results of Operations
Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024
Consolidated
The following table sets forth our results of operations for each of the periods indicated (in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| Net sales | $ | 315,443 | $ | 288,417 | $ | 27,026 | 9 | % | |||||||||||||||
| Cost of goods sold | 116,334 | 107,195 | 9,139 | 9 | % | ||||||||||||||||||
| Gross profit | 199,109 | 181,222 | 17,887 | 10 | % | ||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Selling, general and administrative expense | 23,477 | 18,520 | 4,957 | 27 | % | ||||||||||||||||||
| Amortization expense | 15,199 | 13,765 | 1,434 | 10 | % | ||||||||||||||||||
| Founders advisory fees - related party | 247,684 | 184,176 | 63,508 | 34 | % | ||||||||||||||||||
| Other operating expense | 96 | - | 96 | - | % | ||||||||||||||||||
| Total operating expenses | 286,456 | 216,461 | 69,995 | 32 | % | ||||||||||||||||||
| Operating loss | (87,347) | (35,239) | (52,108) | 148 | % | ||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Interest expense, net | 9,870 | 10,054 | (184) | (2 | %) | ||||||||||||||||||
| Foreign currency loss (gain) | 6 | (1,354) | 1,360 | (100 | %) | ||||||||||||||||||
| Other (income) expense, net | (73) | 151 | (224) | (148 | %) | ||||||||||||||||||
| Total other expense, net | 9,803 | 8,851 | 952 | 11 | % | ||||||||||||||||||
| Loss before income taxes | (97,150) | (44,090) | (53,060) | 120 | % | ||||||||||||||||||
| Income tax benefit (expense) | 6,490 | (45,077) | 51,567 | (114 | %) | ||||||||||||||||||
| Net loss | $ | (90,660) | $ | (89,167) | $ | (1,493) | 2 | % | |||||||||||||||
Net Sales.Net sales increased by $27.0 million for the three months ended September 30, 2025, compared to the same period in 2024. Net sales in the Fire Safety segment increased by $21.5 million, representing higher fire retardant sales of $9.1 million and higher fire suppressant sales of $12.4 million. Fire retardant sales increased $3.6 million in North America and increased $5.5 million in other geographies. In the United States, sales of fire retardant products rose despite a decline in total acres burned. This increase primarily reflected a more proactive initial attack strategy by U.S. agencies, and by continued successful implementation of the Company's strategies on profitable new business. Fire suppressant strength was primarily driven by increased sales to governmental agencies. Net sales in the Specialty Products segment increased $5.5 million, including a $10.8 million increase in revenue due to recently acquired businesses, offset by a $5.3 million decrease in the base business due to unplanned downtime at our tolling facility in Sauget, Illinois, operated by Flexsys Chemical Company, that primarily serves our P2S5customers in North America. The Company considers that revenue attributable to base business includes revenue from an acquired business that has been owned for a full four quarters after the date of acquisition.
Cost of Goods Sold. Cost of goods sold increased $9.1 million for the three months ended September 30, 2025 compared to the same period in 2024. The increase in the Fire Safety segment of $1.5 million was primarily due to a $1.2 million increase in personnel related expenses. The $7.6 million increase in the Specialty Products segment was primarily due to $7.4 million from recently acquired businesses.
Selling, General and Administrative Expense.Selling, general and administrative expense increased by $5.0 million for the three months ended September 30, 2025 compared to the same period in 2024. The increase was primarily due to a $3.3 million increase in stock-based compensation expense.
Founder Advisory Fees - related party.Founder advisory fees - related party represents the change in the fair value of the liability-classified Fixed Annual Advisory Amount and Variable Annual Advisory Amount (collectively, the "Annual Advisory Amounts"). The increase in the fair value of the Annual Advisory Amounts for the three months ended September 30, 2025 of $247.7 million was primarily due to an increase in the Company's average price per share from
$13.62 as of June 30, 2025 to $21.89 as of September 30, 2025. The increase in the fair value of the Annual Advisory Amount for the three months ended September 30, 2024 of $184.2 million was primarily due to an increase in the average price per share from $7.75 as of June 30, 2024, to $12.85 as of September 30, 2024.
Income Tax Benefit (Expense). Income tax benefit was $6.5 million for the three months ended September 30, 2025, compared to income tax expense of $45.1 million in the same period in 2024. The change is primarily due to changes in earnings in jurisdictions that were not covered by a valuation allowance and the impact of non-deductible compensation and accrued withholding taxes on the annualized effective tax rate.
Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
Consolidated
The following table sets forth our results of operations for each of the periods indicated (in thousands):
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| Net sales | $ | 550,112 | $ | 474,737 | $ | 75,375 | 16 | % | |||||||||||||||
| Cost of goods sold | 221,354 | 199,546 | 21,808 | 11 | % | ||||||||||||||||||
| Gross profit | 328,758 | 275,191 | 53,567 | 19 | % | ||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Selling, general and administrative expense | 55,743 | 45,888 | 9,855 | 21 | % | ||||||||||||||||||
| Amortization expense | 43,902 | 41,291 | 2,611 | 6 | % | ||||||||||||||||||
| Founders advisory fees - related party | 263,954 | 253,097 | 10,857 | 4 | % | ||||||||||||||||||
| Other operating expense | 925 | - | 925 | - | % | ||||||||||||||||||
| Total operating expenses | 364,524 | 340,276 | 24,248 | 7 | % | ||||||||||||||||||
| Operating loss | (35,766) | (65,085) | 29,319 | (45 | %) | ||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Interest expense, net | 29,444 | 31,292 | (1,848) | (6 | %) | ||||||||||||||||||
| Foreign currency (gain) loss | (3,249) | 163 | (3,412) | (2093 | %) | ||||||||||||||||||
| Other (income) expense, net | (142) | 252 | (394) | (156 | %) | ||||||||||||||||||
| Total other expense, net | 26,053 | 31,707 | (5,654) | (18 | %) | ||||||||||||||||||
| Loss before income taxes | (61,819) | (96,792) | 34,973 | (36 | %) | ||||||||||||||||||
| Income tax expense | (4,316) | (53,283) | 48,967 | (92 | %) | ||||||||||||||||||
| Net loss | $ | (66,135) | $ | (150,075) | $ | 83,940 | (56 | %) | |||||||||||||||
Net Sales.Net sales increased by $75.4 million for the nine months ended September 30, 2025, compared to the same period in 2024. Net sales in the Fire Safety segment increased by $55.3 million, representing higher fire retardant sales of $45.6 million and higher fire suppressant sales of $9.7 million. Fire retardant sales increased $33.8 million in North America and increased $11.8 million in other geographies. In the United States, sales of fire retardant products rose despite a decline in total acres burned. This increase primarily reflected a more proactive initial attack strategy by U.S. agencies, and by continued successful implementation of the Company's strategies on profitable new business. Fire suppressant sales increased $5.5 million in North America driven by increased sales to governmental agencies and increased $4.2 million in other geographies. Net sales in the Specialty Products segment increased $20.1 million, including a $27.7 million increase in revenue due to recently acquired businesses, offset by a $7.6 million decrease in the base business due to unplanned downtime at our tolling facility in Sauget, Illinois, operated by Flexsys Chemical Company, that primarily serves our P2S5customers in North America. The Company considers that revenue attributable to base business includes revenue from an acquired business that has been owned for a full four quarters after the date of acquisition.
Cost of Goods Sold. Cost of goods sold increased $21.8 million for the nine months ended September 30, 2025 compared to the same period in 2024. The increase in the Fire Safety segment of $2.4 million was primarily due to a $3.6 million increase in personnel related expenses, offset by a $1.2 million decrease in material, manufacturing and freight costs. The $19.4 million increase in the Specialty Products segment was primarily due to $18.3 million from recently acquired businesses.
Selling, General and Administrative Expense.Selling, general and administrative expense increased by $9.9 million for the nine months ended September 30, 2025 compared to the same period in 2024. The increase was primarily due to a $3.5 million increase in stock-based compensation expense and a $6.9 million increase in other personnel related expenses.
Founder Advisory Fees - related party.Founder advisory fees - related party represents the change in the fair value of the liability-classified Fixed Annual Advisory Amount and Variable Annual Advisory Amount (collectively, the "Annual Advisory Amounts"). The increase in the fair value of the Annual Advisory Amounts for the nine months ended September 30, 2025 of $264.0 million was primarily due to an increase in the Company's average price per share from $12.85 as of December 31, 2024 to $21.89 as of September 30, 2025. The increase in the fair value of the Annual Advisory Amount for the nine months ended September 30, 2024 of $253.1 million was primarily due to an increase in the average price per share from $4.51 as of December 31, 2023, to $12.85 as of September 30, 2024.
Foreign Currency (gain) loss. Foreign currency gain of $3.2 million for the nine months ended September 30, 2025 reflects weakening of the U.S. dollar, primarily against the Euro. Foreign currency loss of $0.2 million for the nine months ended September 30, 2024 reflects strengthening of the U.S. dollar, primarily against the Euro.
Income Tax Expense.Income tax expense was $4.3 million for the nine months ended September 30, 2025, compared to income tax expense of $53.3 million in the same period in 2024. The change is primarily due to changes in earnings in jurisdictions that were not covered by a valuation allowance and the impact of non-deductible compensation and accrued withholding taxes on the annualized effective tax rate.
Business Segments
Segment Adjusted EBITDA is defined as (loss) income before income taxes plus net interest and other financing expenses, and depreciation and amortization, adjusted on a consistent basis for certain non-recurring, unusual or non-operational items. These items include (i) restructuring, (ii) acquisition related costs, (iii) founder advisory fee expenses, (iv) stock-based compensation expense and (v) foreign currency loss (gain). We use Segment Adjusted EBITDA to evaluate operating performance by segment for business planning purposes and to allocate resources. The following tables provide information for our net sales and Segment Adjusted EBITDA (in thousands) for the three and nine months ended September 30, 2025 compared to the same periods in 2024:
| Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||
| Fire Safety |
Specialty Products |
Total | Fire Safety |
Specialty Products |
Total | ||||||||||||||||||||||||||||||
| Net sales | $ | 273,384 | $ | 42,059 | $ | 315,443 | $ | 251,845 | $ | 36,572 | $ | 288,417 | |||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 177,210 | $ | 9,107 | $ | 186,317 | $ | 157,479 | $ | 12,897 | $ | 170,376 | |||||||||||||||||||||||
Segment Adjusted EBITDA for our Fire Safety segment increased by $19.7 million during the three months ended September 30, 2025 compared with the same period in 2024. The increase was primarily due to higher net sales, as described above.
Segment Adjusted EBITDA for our Specialty Products segment decreased by $3.8 million during the three months ended September 30, 2025 compared with the same period in 2024 due to the reasons described above.
| Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||
| Fire Safety | Specialty Products | Total | Fire Safety | Specialty Products | Total | ||||||||||||||||||||||||||||||
| Net sales | $ | 430,831 | $ | 119,281 | $ | 550,112 | $ | 375,538 | $ | 99,199 | $ | 474,737 | |||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 264,954 | $ | 30,784 | $ | 295,738 | $ | 212,877 | $ | 34,543 | $ | 247,420 | |||||||||||||||||||||||
Segment Adjusted EBITDA for our Fire Safety segment increased by $52.1 million during the nine months ended September 30, 2025 compared with the same period in 2024. The increase was primarily due to higher net sales, as described above.
Segment Adjusted EBITDA for our Specialty Products segment decreased by $3.8 million during the nine months ended September 30, 2025 compared with the same period in 2024 due to the reasons described above.
The following table provides a reconciliation of financial measures that are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") to non-GAAP measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide investors with a better understanding of the Company's past financial performance and future results. The Company's management uses these non-GAAP financial measures when it internally evaluates the performance of its business and makes operating decisions, including internal operating budgeting, performance measurement, and discretionary compensation. Segment Adjusted EBITDA should not be considered an alternative to net income (loss), operating income (loss), cash flows provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP (in thousands).
| (Unaudited) | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||
| Fire Safety |
Specialty Products |
Total | Fire Safety |
Specialty Products |
Total | ||||||||||||||||||||||||||||||
| Loss before income taxes | $ | (62,022) | $ | (35,128) | $ | (97,150) | $ | (27,398) | $ | (16,692) | $ | (44,090) | |||||||||||||||||||||||
| Depreciation and amortization | 14,433 | 4,360 | 18,793 | 12,819 | 3,625 | 16,444 | |||||||||||||||||||||||||||||
| Interest and financing expense | 5,956 | 3,914 | 9,870 | 9,848 | 206 | 10,054 | |||||||||||||||||||||||||||||
| Founders advisory fees - related party | 213,008 | 34,676 | 247,684 | 158,391 | 25,785 | 184,176 | |||||||||||||||||||||||||||||
|
Non-recurring expenses (1)
|
557 | 5 | 562 | 1,427 | 407 | 1,834 | |||||||||||||||||||||||||||||
| Acquisition costs | 2 | 31 | 33 | - | - | - | |||||||||||||||||||||||||||||
| Stock-based compensation expense | 5,234 | 1,285 | 6,519 | 2,297 | 1,015 | 3,312 | |||||||||||||||||||||||||||||
| Foreign currency loss (gain) | 42 | (36) | 6 | 95 | (1,449) | (1,354) | |||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 177,210 | $ | 9,107 | $ | 186,317 | $ | 157,479 | $ | 12,897 | $ | 170,376 | |||||||||||||||||||||||
(1) For the three months ended September 30, 2025 $0.6 million was related to restructuring and other non-recurring costs. For the three months ended September 30, 2024, $1.7 million was related to the Redomiciliation Transaction and other non-recurring Luxembourg related costs and $0.1 million was related to other non-recurring costs.
| (Unaudited) | Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||
| Fire Safety |
Specialty Products |
Total | Fire Safety |
Specialty Products |
Total | ||||||||||||||||||||||||||||||
| Loss before income taxes | $ | (30,212) | $ | (31,607) | $ | (61,819) | $ | (81,432) | $ | (15,360) | $ | (96,792) | |||||||||||||||||||||||
| Depreciation and amortization | 40,818 | 12,792 | 53,610 | 38,507 | 10,708 | 49,215 | |||||||||||||||||||||||||||||
| Interest and financing expense | 18,090 | 11,354 | 29,444 | 29,860 | 1,432 | 31,292 | |||||||||||||||||||||||||||||
| Founders advisory fees - related party | 227,000 | 36,954 | 263,954 | 217,663 | 35,434 | 253,097 | |||||||||||||||||||||||||||||
|
Non-recurring expenses (1)
|
818 | 690 | 1,508 | 1,816 | 581 | 2,397 | |||||||||||||||||||||||||||||
| Acquisition costs | 98 | 764 | 862 | - | - | - | |||||||||||||||||||||||||||||
| Stock-based compensation expense | 8,817 | 2,611 | 11,428 | 5,813 | 2,235 | 8,048 | |||||||||||||||||||||||||||||
| Foreign currency (gain) loss | (475) | (2,774) | (3,249) | 650 | (487) | 163 | |||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 264,954 | $ | 30,784 | $ | 295,738 | $ | 212,877 | $ | 34,543 | $ | 247,420 | |||||||||||||||||||||||
(1) For the nine months ended September 30, 2025 $0.4 million was related to the Redomiciliation Transaction and $1.1 million was related to restructuring and other non-recurring costs. For the nine months ended September 30, 2024, $2.2 million was related to the Redomiciliation Transaction and other non-recurring Luxembourg related costs and $0.2 million was related to other non-recurring costs.
Liquidity and Capital Resources
We have historically funded our operations primarily through cash flows from operations, borrowings under our revolving credit facility, and the issuance of debt and equity securities. However, future cash flows are subject to a number of variables, including the length and severity of the fire season, growth of the wildland urban interface and the availability of air tanker capacity, and higher costs from inflation, all of which could negatively impact revenues, earnings and cash flows, and potentially our liquidity if we do not moderate our expenditures accordingly.
We believe that our existing cash and cash equivalents of $340.6 million, net cash flows generated from operations and availability under the Revolving Credit Facility as of September 30, 2025 will be sufficient to meet our
current capital expenditures, working capital, and debt service requirements for at least 12 months from the filing date of this Quarterly Report. As of September 30, 2025, we expect our remaining fiscal year 2025 capital expenditure budget to cover both our maintenance and growth capital expenditures. We may also raise capital through other various financing sources available to us, including the issuance of equity and/or debt securities through public offerings or private placements, to fund our acquisitions, the Annual Advisory Amounts and long-term liquidity needs. Our ability to complete future offerings of equity or debt securities and the timing of these offerings will depend upon various factors including prevailing market conditions and our financial condition.
We have the following financing arrangements in place to, among other things, fund our operationsand supplement our liquidity position.
Revolving Credit Facility
On November 9, 2021, a wholly owned subsidiary of the Companyentered into a five-year revolving credit facility (the "Revolving Credit Facility"), which 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. 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 certain exceptions.
Borrowings under the Revolving Credit Facility bear interest at a rate equal to (i) an applicable margin, plus (ii) at Perimeter Holding LLC's option, either (x) Secured Overnight Financing Rate for the applicable corresponding tenor ("Term SOFR") as published by CME Group Benchmark Administration, adjusted for certain additional costs or (y) a base rate determined by reference to the highest of (a) the prime commercial lending rate published by the Wall Street Journal, (b) the federal funds rate plus 0.50% (c) the one-month Term SOFR rate plus 1.00% and (d) a minimum floor of 1.00%. The applicable margin is 3.25% in the case of Term SOFR-based loans and 2.25% in the case of base rate-based loans, with two step downs of 0.25% each based upon the achievement of certain leverage ratios.
As of September 30, 2025, the Company did not have any outstanding borrowings under the Revolving Credit Facility and was in compliance with all covenants.
Senior Notes
On November 9, 2021, a wholly owned subsidiary of the Company assumed $675.0 million principal amount of 5.00% senior secured notes due October 30, 2029 (the "Senior Notes"), under an indenture dated as of October 22, 2021 ("Indenture"). 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, LLC; rank equally in right of payment with all existing and future senior indebtedness of Perimeter Holdings, LLC (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, LLC that is not secured by the collateral.
For additional information about our long-term debt, refer to Note 7, "Long-Term Debt and Preferred Stock," in the notes to the condensed consolidated financial statements included in this Quarterly Report.
Share Repurchase Plan
Under our share repurchase plan (the "Share Repurchase Plan"), we are authorized to repurchase, from time-to-time, shares of our Common Stock through open market purchases, in privately negotiated transactions or in such other manner as permitted by the securities laws and as determined by management at such time and in such amounts as management may decide. The Share Repurchase Plan does not obligate us to repurchase any specific number of shares and may be modified, suspended or discontinued at any time. The timing, manner, price and amount of any repurchases are determined by management in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions.
On August 6, 2025, the Board re-established the limit for Common Stock repurchases at $100.0 million. The Company expects to periodically re-establish the limit for Common Stock repurchases based on subsequent repurchase activity. The approximate dollar value of shares that may yet be repurchased under the Share Repurchase Plan was $100.0
million as of September 30, 2025. During the three months ended September 30, 2025, the Company did not repurchase any shares under its Share Repurchase Plan. For the nine months ended September 30, 2025, the Company repurchased 3,774,675 shares under the Share Repurchase Plan. During the three and nine months ended September 30, 2024, the Company repurchased 399 and 2,988,291 shares, respectively. The repurchased shares are recorded at cost and are being held in treasury.
Founder Advisory Agreement
On November 9, 2021, the Company assumed the advisory agreement entered into on December 12, 2019 by EverArc ("Founder Advisory Agreement") with EverArc Founders, LLC, a Delaware limited liability company ("EverArc Founder Entity"), pursuant to which the EverArc Founder Entity, for the services provided to the Company, including strategic and capital allocation advice, is entitled to receive both a fixed amount (the "Fixed Annual Advisory Amount") and a variable 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.
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 an 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.
For additional information about the Founder Advisory Agreement, refer to Note 11, "Stock-Based Compensation," Note 12 "Fair Value Measurements" and Note 13, "Related Parties," in the notes to the condensed consolidated financial statements included in this Quarterly Report.
Cash Flows:
The summary of our cash flows is as follows (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash provided by (used in): | |||||||||||
| Operating activities | $ | 219,549 | $ | 194,375 | |||||||
| Investing activities | (59,825) | (3,688) | |||||||||
| Financing activities | (21,582) | (14,964) | |||||||||
| Effect of foreign currency on cash and cash equivalents | 4,049 | 54 | |||||||||
| Net change in cash and cash equivalents | $ | 142,191 | $ | 175,777 | |||||||
Operating Activities
Net cash provided by operating activities was $219.5 million and $194.4 million for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, the primary components of operating cash flows were net loss of $66.1 million, non-cash charges of $279.2 million and net operating asset reductions of $6.4 million.For the nine months ended September 30, 2024, the primary components of operating cash flows were a net loss of $150.1 million, non-cash charges of $321.7 million andnet operating asset reductions of $22.8 million.
Investing Activities
Net cash used in investing activities was $59.8 million for the nine months ended September 30, 2025. During the nine months ended September 30, 2025, we purchased property and equipment of $22.6 million, purchased intangible assets of $15.2 million, and purchased businesses for $22.0 million. Net cash used in investing activities was $3.7 million for the nine months ended September 30, 2024. During the nine months ended September 30, 2024, the Company
purchased property and equipment of $9.1 million offset by proceeds from short-term investments of $5.4 million upon settlement of a Euro denominated certificate of deposit.
Financing Activities
Net cash used in financing activities was $21.6 million and $14.9 million for the nine months ended September 30, 2025 and 2024, respectively. During the nine months ended September 30, 2025, we repurchased shares of outstanding Common Stock for $40.4 million and made $0.7 million in principal payments on finance lease obligations offset by proceeds received from exercises of options of $19.5 million. During the nine months ended September 30, 2024, we repurchased outstanding Ordinary Shares for $14.4 million and made $0.5 million in principal payments on finance lease obligations.
Critical Accounting Estimates and Policies
The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements which have been prepared in accordance with U.S. GAAP. Our significant accounting policies and estimates are consistent with those discussed in Note 2, "Summary of Significant Accounting Policies and Recent Accounting Pronouncements" of our consolidated financial statements included in our 2024 Annual Report filed on Form 10-K with the SEC on February 20, 2025. Significant estimates made by management in connection with the preparation of the accompanying condensed consolidated financial statements include the fair value of purchase consideration and assets acquired and liabilities assumed in a business combination, the useful lives of long-lived assets, the fair value of financial assets and liabilities, indefinite life intangible assets, stock options, and founder advisory fees. We are not presently aware of any events or circumstances that would require us to update our estimates, assumptions or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur and additional information is obtained. As a result, actual results may differ significantly from our estimates, and any such differences may be material to our financial statements. For information on the impact of recently issued accounting pronouncements, see Note 2, "Summary of Significant Accounting Policies and Recent Accounting Pronouncements" in the notes to the condensed consolidated financial statements included in this Quarterly Report.
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