prm-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________

FORM 10-Q

__________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number 001-41027

_______________________________

PERIMETER SOLUTIONS, SA

(Exact name of Registrant as specified in its Charter)

_______________________________


Grand Duchy of Luxembourg			98-1632942
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

12E rue Guillaume Kroll, L-1882 Luxembourg Grand Duchy of Luxembourg 352 2668 62-1
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (314) 396-7343

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Ordinary Shares, nominal value $1.00 per share

PRM

New York Stock Exchange

Warrants for Ordinary Shares

PRMFF

OTC Markets Group Inc.

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 3, 2024, there were 145,240,112 ordinary shares, nominal value $1.00 per share, outstanding.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q for the period ended March 31, 2024 (this “Quarterly Report”) contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements involve risks and uncertainties and reflect our current views with respect to, among other things, future events and our financial performance. When used in this Quarterly Report, the words “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “indicate,” “seek,” “should,” “would,” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements contain these identifying words. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. These forward-looking statements include, without limitation, statements about the following matters:

•future financial performance, financial projections or estimates used, including any growth or expansion plans and opportunities;

•our ability to expand our fire safety business;

•our beliefs regarding certain trends and growth drivers in our fire safety business, including weather and climate trends;

•our ongoing commitment to manufacturing high-quality products in an environmentally conscious way as well as our ongoing commitment to promoting diversity;

•our ability to grow long-term value through, among other things, the continuing performance improvement of our existing operations, execution of a disciplined capital allocation and management of our capital structure;

•our expectations regarding future capital expenditures;

•cash flow projections;

•our ability to maintain a leadership position in any market as well as our ability to remain an innovation leader by enhancing our products and services and investing in expansions through acquisitions;

•expectations concerning sources of revenue;

•expectations about demand for fire retardant products, equipment and services, including our ability to accurately identify key market drivers and leverage our relationships with customers and stakeholders;

•our expectations regarding the impact of significant infrequent events such as the ongoing regional conflicts between Russia and Ukraine or Israel and Hamas, on our business as well as our ability to mitigate inflationary pressures;

•expectations concerning certain of our products’ ability to protect life and property as population settlement locations change;

•expectations concerning the markets in which we currently operate and intend to expand to in the coming years, overall economic conditions and disruptive weather events;

•our expectations regarding market risk;

•expectations concerning repurchases of our Ordinary Shares (as defined below) under the Share Repurchase Plan (as defined below);

•our beliefs regarding the sufficiency of our current sources of liquidity to fund our future liquidity requirements, our expectations regarding the types of future liquidity requirements and our expectations regarding the availability of future sources of liquidity;

•our beliefs regarding assumptions and estimates used in goodwill, including our beliefs regarding the methods and approaches a market participant would use;

•our ability to maintain an inventory position that is substantially balanced between our purchases and sales;

•our expectations and beliefs regarding accounting and tax matters;

•our ability to pursue intellectual property protection on product and equipment enhancements; and

•the expected outcome of litigation matters and the effect of such claims on business, financial condition, results of operations or cash flows.

Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date of this Quarterly Report, actual results may prove to be materially different from the results expressed or implied by the

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forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to those summarized below:

•negative or uncertain worldwide economic conditions;

•volatility, seasonality and cyclicality in the industries in which we operate;

•our substantial dependence on sales to the U.S. Department of Agriculture ("USDA") Forest Service and the state of California and the risk of decreased sales to these customers;

•changes in the regulation of the petrochemical industry, a downturn in the specialty chemicals and/or fire retardant end markets or our failure to accurately predict the frequency, duration, timing, and severity of changes in demand in such markets;

•changes in customer relations or service levels;

•a small number of our customers represent a significant portion of our revenue;

•failure to continuously innovate and to provide products that gain market acceptance, which may cause us to be unable to attract new customers or retain existing customers;

•improper conduct of, or use of our products, by employees, agents, government contractors or collaborators;

•changes in the availability of products from our suppliers on a long-term basis;

•production interruptions or shutdowns, which could increase our operating or capital expenditures or negatively impact the supply of our products resulting in reduced sales;

•changes in the availability of third-party logistics suppliers for distribution, storage and transportation;

•increases in supply and raw material costs, supply shortages, long lead times for components or supply changes;

•adverse effects on the demand for our products or services due to the seasonal or cyclical nature of our business or severe weather events;

•introduction of new products, which are considered preferable, which could cause demand for some of our products to be reduced or eliminated;

•current ongoing and future litigation, including multi-district litigation and other legal proceedings;

•heightened liability and reputational risks due to certain of our products being provided to emergency services personnel and their use to protect lives and property;

•future products liabilities claims where indemnity and insurance coverage could be inadequate or unavailable to cover these claims due to the fact that some of the products that we produce may cause adverse health consequences;

•compliance with export control or economic sanctions laws and regulations;

•environmental impacts and side effects of our products, which could have adverse consequences for our business;

•compliance with environmental laws and regulations;

•our ability to protect our intellectual property rights and know-how;

•our ability to generate the funds required to service our debt and finance our operations;

•fluctuations in foreign currency exchange;

•potential impairments or write-offs of certain assets;

•the adequacy of our insurance coverage; and

•challenges to our decisions and assumptions in assessing and complying with our tax obligations.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please read (1) Part I, Item 1A. “Risk Factors” in the annual report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”); (2) Part II, “Item 1A. Risk Factors” in this Quarterly Report; (3) our reports and registration statements filed from time to time with the Securities and Exchange Commission (the “SEC”), and (4) other public announcements we make from time to time. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

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		Page
Cautionary Statement Regarding Forward-Looking Statements		3
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of March 31, 202 4 (Unaudited) and December 31, 202 3	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three months ended March 31, 202 4 and 202 3 (Unaudited)	4
	Condensed Consolidated Statements of Shareholders' Equity for the Three months ended March 31, 202 4 and 202 3 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Three months ended March 31, 202 4 and 202 3 (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
	1. Description of Business and Basis of Presentation	7
	2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements	8
	3 . Balance Sheet Components	10
	4 . Goodwill and Other Intangible Assets	11
	5 . Leases	12
	6 . Long-Term Debt and Redeemable Preferred Shares	13
	7 . Income Taxes	14
	8 . Commitments and Contingencies	15
	9 . Equity	15
	10 . Share-Based Compensation	15
	11 . Fair Value Measurements	17
	12 . Related Parties	18
	13 . Revenue Recognition	19
	1 4 . (Loss) E arnings Per Share	19
	15 . Segment Information	20

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

SIGNATURES		32

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

PERIMETER SOLUTIONS, SA AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	March 31, 2024		December 31, 2023
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	34,382	$	47,276
Accounts receivable, net	38,393		39,593
Inventories	144,674		145,652
Prepaid expenses and other current assets	19,426		18,493
Total current assets	236,875		251,014
Property, plant and equipment, net	58,194		59,402
Operating lease right-of-use assets	15,870		16,339
Finance lease right-of-use assets	6,748		6,064
Goodwill	1,031,388		1,036,279
Customer lists, net	663,573		674,786
Technology and patents, net	176,811		180,653
Tradenames, net	88,084		89,568
Other assets, net	1,204		1,317
Total assets	$	2,278,747	$	2,315,422
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14,345	$	21,639
Accrued expenses and other current liabilities	40,208		30,710
Founders advisory fees payable - related party	8,028		2,702

Total current liabilities	62,581		55,051
Long-term debt, net	666,808		666,494
Operating lease liabilities, net of current portion	14,520		14,908
Finance lease liabilities, net of current portion	6,200		5,547
Deferred income taxes	247,981		253,454
Founders advisory fees payable - related party	117,222		56,917
Redeemable preferred shares	106,831		105,799
Redeemable preferred shares - related party	2,791		2,764
Other liabilities	2,155		2,193
Total liabilities	1,227,089		1,163,127
Commitments and contingencies (Note 8)
Shareholders’ equity:
Ordinary shares, $1 nominal value per share, 4,000,000,000 shares authorized; 166,824,659 and 165,066,195 shares issued; 145,240,112 and 146,451,005 shares outstanding at March 31, 2024 and December 31, 2023, respectively	166,825		165,067
Treasury shares, at cost; 21,584,547 and 18,615,190 shares at March 31, 2024 and December 31, 2023, respectively	(127,685)		(113,407)
Additional paid-in capital	1,701,147		1,701,163
Accumulated other comprehensive loss	(25,253)		(19,710)
Accumulated deficit	(663,376)		(580,818)
Total shareholders’ equity	1,051,658		1,152,295
Total liabilities and shareholders’ equity	$	2,278,747	$	2,315,422

See accompanying notes to condensed consolidated financial statements.

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PERIMETER SOLUTIONS, SA AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share data)

(Unaudited)


	Three Months Ended March 31,
	2024		2023
Net sales	$	59,044	$	43,858
Cost of goods sold	38,342		33,461
Gross profit	20,702		10,397
Operating expenses:
Selling, general and administrative expense	13,462		8,016
Amortization expense	13,771		13,763
Founders advisory fees - related party	68,333		(24,236)
Other operating expense	—		2
Total operating expenses	95,566		(2,455)
Operating (loss) income	(74,864)		12,852
Other expense (income):
Interest expense, net	10,648		10,146
Loss on contingent earn-out	—		246
Foreign currency loss (gain)	1,293		(721)
Other expense, net	27		72
Total other expense, net	11,968		9,743
(Loss) income before income taxes	(86,832)		3,109
Income tax benefit	4,274		6,322
Net (loss) income	(82,558)		9,431
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(5,543)		1,593
Total comprehensive (loss) income	$	(88,101)	$	11,024
(Loss) earnings per share:
Basic	$	(0.57)	$	0.06
Diluted	$	(0.57)	$	0.06
Weighted average number of ordinary shares outstanding:
Basic	145,326,933		157,700,326
Diluted	145,326,933		169,485,631

See accompanying notes to condensed consolidated financial statements.

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PERIMETER SOLUTIONS, SA AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands, except share data)

(Unaudited)


	Ordinary Shares			Treasury Shares			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2022	163,234,542	$	163,235	6,436,736	$	(49,341)	$	1,698,781	$	(25,471)	$	(648,304)	$	1,138,900
Share-based compensation	—	—			—		(3,074)		—		—		(3,074)
Ordinary shares issued related to founders advisory fees - related party	1,831,653	1,832			—		(1,832)		—		—		—
Ordinary shares repurchased	—	—		115,570	(864)		—		—		—		(864)
Net income	—	—			—		—		—		9,431		9,431
Other comprehensive income	—	—			—		—		1,593		—		1,593
Balance, March 31, 2023	165,066,195	$	165,067	6,552,306	$	(50,205)	$	1,693,875	$	(23,878)	$	(638,873)	$	1,145,986

Balance, December 31, 2023	165,066,195	$	165,067	18,615,190	$	(113,407)	$	1,701,163	$	(19,710)	$	(580,818)	$	1,152,295
Share-based compensation	—	—		—	—		1,742		—		—		1,742
Ordinary shares issued related to founders advisory fees - related party	1,758,464	1,758		—	—		(1,758)		—		—		—
Ordinary shares repurchased	—	—		2,969,357	(14,278)		—		—		—		(14,278)
Net loss	—	—		—	—		—		—		(82,558)		(82,558)
Other comprehensive loss	—	—		—	—		—		(5,543)		—		(5,543)
Balance, March 31, 2024	166,824,659	$	166,825	21,584,547	$	(127,685)	$	1,701,147	$	(25,253)	$	(663,376)	$	1,051,658

See accompanying notes to condensed consolidated financial statements.

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PERIMETER SOLUTIONS, SA AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net (loss) income	$	(82,558)	$	9,431
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Founders advisory fees - related party (change in fair value)	68,333		(24,236)
Depreciation and amortization expense	16,412		16,087
Interest and payment-in-kind on preferred shares	1,764		1,698
Share-based compensation	1,742		(3,074)
Non-cash lease expense	1,392		1,153
Deferred income taxes	(4,835)		(6,322)

Amortization of deferred financing costs	427		410
Loss on contingent earn-out	—		246
Foreign currency loss (gain)	1,293		(721)
(Gain) loss on disposal of assets	(10)		5
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	874		1,670
Inventories	231		(13,119)
Prepaid expenses and current other assets	(1,819)		360
Accounts payable	(7,208)		(10,878)

Income taxes payable, net	(174)		(7,381)
Accrued expenses and other current liabilities	10,947		8,785
Founders advisory fees - related party (cash settled)	(2,702)		(4,655)
Operating lease liabilities	(838)		(1,169)
Financing lease liabilities	(130)		—
Other, net	(355)		94
Net cash provided by (used in) operating activities	2,786		(31,616)
Cash flows from investing activities:
Purchase of property and equipment	(1,553)		(2,456)
Proceeds from short-term investments	1,081		—

Net cash used in investing activities	(472)		(2,456)
Cash flows from financing activities:
Ordinary shares repurchased	(14,278)		(864)

Principal payments on finance lease obligations	(172)		—






Net cash used in financing activities	(14,450)		(864)
Effect of foreign currency on cash and cash equivalents	(758)		(25)
Net change in cash and cash equivalents	(12,894)		(34,961)
Cash and cash equivalents, beginning of period	47,276		126,750
Cash and cash equivalents, end of period	$	34,382	$	91,789
Supplemental disclosures of cash flow information:
Cash paid for interest	$	151	$	142
Cash paid for income taxes	$	818	$	10,155

See accompanying notes to condensed consolidated financial statements

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PERIMETER SOLUTIONS, SA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Organization and General

Perimeter Solutions, SA, (“PSSA”), a public company limited by shares (société anonyme) was incorporated on June 21, 2021 under the laws of the Grand Duchy of Luxembourg. PSSA is headquartered in the Grand Duchy of Luxembourg with business operations across the globe. PSSA's ordinary shares, nominal value, $1.00 per share (the “Ordinary Shares”), are listed on the New York Stock Exchange ("NYSE") and trade under the symbol "PRM." The condensed consolidated financial statements herein include the assets, liabilities, and results of operations of PSSA and its subsidiaries, all of which are wholly owned (collectively, the “Company”).

Business Operations

The Company is a global solutions provider for the fire safety and specialty products industries. Approximately 65% of the Company's 2023 annual revenues were derived in the United States, approximately 15% in Europe, approximately 14% in Canada with the remaining approximately 6% spread across various other countries. The Company’s business is organized and managed in two reporting segments: Fire Safety and Specialty Products.

The Fire Safety business is a formulator and manufacturer of fire management products that help the Company’s customers combat various types of fires, including wildland, structural, flammable liquids and other types of fires. The Company’s Fire Safety business also offers specialized equipment and services, typically in conjunction with its fire management products to support firefighting operations. The Company’s specialized equipment includes air base retardant storage, mixing, and delivery equipment; mobile retardant bases; retardant ground application units; mobile foam equipment; and equipment that it custom designs and manufactures to meet specific customer needs. Significant end markets include primarily government-related entities and are dependent on approvals, qualifications, and permits granted by the respective governments and commercial customers around the world.

The Specialty Products segment produces and sells Phosphorus Pentasulfide ("P2S5") in several end markets and applications, including lubricant additives, various agricultural applications, various mining applications, and emerging electric battery technologies. Within the lubricant additive end market, currently the Company’s largest end market application, P2S5 is primarily used in the production of a family of compounds called Zinc Dialkyldithiophosphates (“ZDDP”), which is considered an essential component in the formulation of engine oils with its main function to provide anti-wear protection to engine components. P2S5 is also used in pesticide and mining chemicals applications.

Global Economic Environment

In recent years, the global economy and labor markets have experienced significant inflationary pressures attributable to ongoing economic recovery and supply chain issues, in part due to the impacts of the conflicts in Ukraine and the Middle East. While the Company has limited exposure in regions with active conflicts, it continues to monitor and take actions with its customers and suppliers to mitigate the impact of these inflationary pressures in the future. Actions to mitigate inflationary pressures with suppliers include aggregation of purchase requirements to achieve optimal volume benefits, negotiation of cost-reductions and identification of more cost competitive suppliers. While these actions are designed to offset the impact of inflationary pressures, the Company cannot provide assurance that they will be successful in fully offsetting increased costs resulting from inflationary pressure. In addition, interest payments for borrowings under the Company’s revolving credit facility are based on variable rates, and any continued increase in interest rates may reduce the Company’s cash flow available for other corporate purposes.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes thereto included in the Company’s 2023 Annual Report.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned, after elimination of intercompany transactions and balances.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management in connection with the preparation of the accompanying condensed consolidated financial statements include the useful lives of long-lived and intangible assets, the fair value of financial assets and liabilities, valuation of goodwill, stock options, founder advisory fees and realizability of deferred tax assets. Actual results could differ from those estimates.

As of March 31, 2024, the Company’s significant accounting policies are consistent with those discussed in Note 2 - “Summary of Significant Accounting Policies and Recent Accounting Pronouncements” to its consolidated financial statements included in the Company’s 2023 Annual Report.

Reclassification

During the three months ended March 31, 2024, the Company changed the presentation to present freight expense as a component of cost of goods sold rather than selling, general and administrative expense to better align freight expense with freight income. The change has been applied retrospectively to the condensed consolidated financial statements for the prior period presented in this Quarterly Report. The impact to the accompanying condensed consolidated statements of operations and comprehensive income (loss) is presented in the following table (in thousands). There was no impact on previously reported balances in the accompanying condensed consolidated balance sheet or statement of cash flows.


	Three Months Ended March 31, 2023
	As Previously Reported		As Adjusted		Effect of Change
Cost of goods sold	$	31,012	$	33,461	$	2,449
Gross profit	12,846		10,397		(2,449)
Selling, general and administrative expense	10,465		8,016		(2,449)
Total operating expenses	(6)		(2,455)		(2,449)
Operating income	12,852		12,852		—
Net income	9,431		9,431		—

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Recently Issued and Adopted Accounting Standards

In March 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2024-02 “Codification Improvements,” which amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. ASU 2024-02 is effective January 1, 2025 and the Company does not expect that the application of this standard will have a material impact on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to disclose disaggregated information about a reporting entity’s effective tax rate reconciliation, using both percentages and reporting currency amounts for specific standardized categories, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company does not plan to early adopt and is currently assessing the potential effects of this standard.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires disclosure of incremental segment information, primarily through enhanced disclosures about significant segment expenses categories and amounts for each reportable segment on an annual and interim basis. This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is currently assessing the potential effects of the standard.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the ASC. These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company does not expect that the application of this standard will have a material impact on its consolidated financial statements and disclosures.

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3. BALANCE SHEET COMPONENTS

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


	March 31, 2024		December 31, 2023
Inventories:
Raw materials and manufacturing supplies	$	74,398	$	77,657
Work in process	216		224
Finished goods	70,060		67,771
Total inventories	$	144,674	$	145,652

Prepaid Expenses and Other Current Assets:
Advance to vendors	$	3,088	$	3,197
Prepaid insurance	3,960		5,567
Prepaid value-added taxes	1,028		897
Short-term investments	4,317		5,519
Income tax receivable	2,056		1,714
Other	4,977		1,599
Total prepaid expenses and other current assets	$	19,426	$	18,493

Property, Plant and Equipment:
Buildings	$	3,956	$	3,986
Leasehold improvements	2,720		2,743
Furniture and fixtures	513		516
Machinery and equipment	65,692		63,202
Vehicles	4,073		4,114
Construction in progress	3,131		4,695
Total property, plant and equipment, gross	80,085		79,256
Less: Accumulated depreciation	(21,891)		(19,854)
Total property, plant and equipment, net	$	58,194	$	59,402

Accrued Expenses and Other Current Liabilities:
Accrued bonus	$	1,048	$	3,483
Accrued salaries	2,102		2,336
Accrued employee benefits	1,360		1,185
Accrued interest	17,485		8,342
Accrued purchases	3,926		2,072
Accrued income taxes	7,419		7,100
Operating lease liabilities	2,146		2,146
Finance lease liabilities	761		600
Other	3,961		3,446
Total accrued expenses and other current liabilities	$	40,208	$

SEC Form 10-Q filed by Perimeter Solutions SA