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Perimeter Solutions (PRM)
NYSE:PRM
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Perimeter Solutions
(NYSE:PRM)
50Neutral
Positive Factors
Competitor Exit
Plans to cease operations by a looming competitor for PRM's Retardant business led to a significant share price increase.
Earnings Growth
PRM's consolidated revenues and EBITDA have shown strong growth over a three-year period, highlighting effective execution of its operating model.
Market Position
PRM is a leader in fire retardants used to fight wildfires, which should catalyze growth in PRM’s volumes and provide more firepower to PRM’s earnings algorithm.
Negative Factors
Competition Risk
Concerns about competition risk from a new US Retardant competitor weighed on PRM shares for an extended period.
Perimeter Solutions (PRM) vs. S&P 500 (SPY)
Market Cap
$1.54B
Dividend YieldN/A
Average Volume (3M)1.30M
Price to Earnings (P/E)―
Beta (1Y)1.31
Revenue Growth74.16%
EPS Growth-112.26%
CountryUS
Employees319
SectorBasic Materials
Sector Strength59
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)-0.15
Shares Outstanding149,664,030
10 Day Avg. Volume1,589,552
30 Day Avg. Volume1,299,203
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.41
Price to Cash Flow (P/CF)-56.50
P/FCF Ratio106.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$16.00Price Target Upside55.34% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Perimeter Solutions Business Overview & Revenue Model
Company DescriptionPerimeter Solutions, SA manufactures and supplies firefighting products and lubricant additives in the United States, Germany, and internationally. It operates in two segments, Fire Safety and Oil Additives. The Fire Safety segment provides fire retardants and firefighting foams, as well as specialized equipment and services for federal, state, provincial, local/municipal, and commercial customers. The Oil Additives segment produces Phosphorus Pentasulfide which is primarily used in the preparation of lubricant additives, including a family of compounds called Zinc Dialkyldithiophosphates. The company offers its products under the brands PHOS-CHEK, FIRE-TROL, AUXQUIMIA, SOLBERG. and BIOGEMA. Perimeter Solutions, SA was founded in 1963 and is headquartered in Clayton, Missouri.
How the Company Makes MoneyPerimeter Solutions generates revenue through the sale of its fire safety and oil additives products. The company's key revenue streams include contracts with government agencies for fire retardant products used in wildfire suppression, as well as sales of firefighting foams to industrial and commercial clients for fire prevention and control. Additionally, Perimeter Solutions earns income from its oil additives division, which provides specialty chemicals that enhance fuel performance, thereby appealing to a wide range of industries including automotive and aviation. Significant partnerships with government bodies and large industrial clients contribute to the company's stable revenue base and growth potential.
Perimeter Solutions Financial Statement Overview
Summary
Perimeter Solutions shows a mixed financial performance with strong revenue growth but challenges in profitability and cash flow efficiency. The company benefits from low leverage, providing a stable financial base, yet it must address operational inefficiencies and improve cash flow from operations to enhance overall financial health.Income Statement
The income statement reveals fluctuating revenue with a significant increase in 2024, but consistent negative EBIT and net income in recent years indicate challenges in achieving profitability. The gross profit margin in 2024 was 56.54%, reflecting efficient production, but a negative net profit margin of -15.66% underscores the company's struggle with operational costs.45
Neutral
Balance Sheet
Perimeter Solutions maintains a strong equity position with a debt-to-equity ratio of 0.02 in 2024, indicating low leverage. However, the equity ratio stood at 47.90%, suggesting a balanced use of equity and liabilities. The return on equity has been declining, with a negative ROE in 2024 due to losses, which may concern investors.55
Neutral
Cash Flow
The cash flow statement shows improving free cash flow in 2024, moving from negative in previous years, indicating better cash management. The operating cash flow to net income ratio of 0.06 in 2024 suggests low efficiency in converting revenue to cash flow. The company needs to further improve cash generation from operations.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 560.97M | 322.11M | 360.50M | 362.34M | 339.58M | Gross Profit |
| 317.09M | 138.85M | 142.65M | 113.06M | 162.04M | EBIT |
| -3.77M | 94.45M | 130.06M | -600.13M | 71.48M | EBITDA |
| -3.77M | 173.07M | 211.01M | -546.68M | 134.87M | Net Income Common Stockholders |
| -5.91M | 67.49M | 91.76M | -661.52M | 24.25M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 198.46M | 52.80M | 126.75M | 225.55M | 22.48M | Total Assets |
| 2.42B | 2.32B | 2.46B | 2.59B | 1.14B | Total Debt |
| 21.55M | 689.70M | 684.30M | 664.13M | 687.27M | Net Debt |
| -176.90M | 642.42M | 557.55M | 438.57M | 664.79M | Total Liabilities |
| 1.26B | 1.16B | 1.32B | 1.50B | 846.78M | Stockholders Equity |
| 1.16B | 1.15B | 1.14B | 1.09B | 291.42M |
| Cash Flow | Free Cash Flow | |||
| 5.47M | -9.24M | -48.78M | 62.60M | 63.33M | Operating Cash Flow |
| 5.47M | 193.00K | -40.17M | 72.35M | 70.83M | Investing Cash Flow |
| 20.57M | -14.89M | -10.25M | -1.23B | -9.47M | Financing Cash Flow |
| 8.35M | -64.45M | -48.81M | -761.43M | -45.61M |
Perimeter Solutions Technical Analysis
Neutral
10.30
Price Trends
11.00
Negative
11.96
Negative
11.31
Negative
Market Momentum
-0.25
Negative
54.39
Neutral
77.97
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRM, the sentiment is Neutral. The current price of 10.3 is above the 20-day moving average (MA) of 9.44, below the 50-day MA of 11.00, and below the 200-day MA of 11.31, indicating a neutral trend. The MACD of -0.25 indicates Negative momentum. The RSI at 54.39 is Neutral, neither overbought nor oversold. The STOCH value of 77.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PRM.
Perimeter Solutions Risk Analysis
Perimeter Solutions disclosed 47 risk factors in its most recent earnings report. Perimeter Solutions reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Perimeter Solutions Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.06B | 10.44 | 19.70% | 0.47% | 28.48% | 150.59% | |
75 Outperform | $70.77B | 33.85 | 25.14% | 0.95% | 2.75% | 54.39% | |
65 Neutral | $571.35M | 11.33 | 10.61% | 1.00% | -2.88% | -41.29% | |
64 Neutral | $105.12M | 18.64 | 4.51% | 1.06% | -12.19% | -67.95% | |
61 Neutral | $2.97B | 27.59 | 6.35% | 1.62% | 0.99% | -27.62% | |
50 Neutral | $1.54B | ― | -0.51% | ― | 74.16% | -112.26% | |
47 Neutral | $2.66B | -3.14 | -22.17% | 3.33% | 3.73% | -29.29% |
* Basic Materials Sector Average
Performance Comparison
PRM
Perimeter Solutions
10.30
2.69
35.35%
ECL
Ecolab
249.51
23.80
10.54%
FRD
Friedman Industries
15.08
-3.04
-16.78%
FUL
H.B. Fuller Company
54.77
-23.21
-29.76%
KOP
Koppers Holdings
27.89
-26.47
-48.69%
WLFC
Willis Lease Finance
160.16
112.38
235.20%
Perimeter Solutions Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -12.41% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with significant EBITDA growth, successful M&A activity, and an effective share repurchase program. However, there were challenges related to increased cash tax payments and higher capital expenditures. The response to Southern California wildfires demonstrated operational strength but also highlighted the need for increased resources.Highlights
Significant Growth in Adjusted EBITDA
Consolidated adjusted EBITDA doubled from $141 million in 2021 to $280 million in 2024, representing a three-year CAGR of 26%.
Fire Safety Segment Performance
Fourth quarter revenue increased by 72% to $60.7 million, and full-year revenue grew by 93% to $436.3 million. Adjusted EBITDA for the segment rose 289% in Q4 and 215% for the full year.
Successful M&A Activity
Acquired Intelligent Manufacturing Solutions (IMS) for $33 million, with expected strategic synergies in the PCB market.
Strong Share Repurchase Program
Repurchased approximately 3 million shares in 2024 at an average price of $4.81, representing an approximately 160% return on investment.
Lowlights
Increased Cash Tax Payments
Cash paid for income taxes increased to $74.6 million for the full year, impacting cash flow.
High CapEx
Capital expenditures increased to $15 million to $20 million annually, indicating higher spending to support business growth.
Impact of Southern California Wildfires
While the financial impact was modest relative to full-year earnings, the Southern California wildfires required significant operational response and resources.
Company Guidance
During the Perimeter Solutions fourth quarter and year-end 2024 earnings call, the company provided guidance highlighting several key metrics and strategic directions. The Chief Executive Officer, Haitham Khouri, emphasized the company's substantial progress in increasing normalized earnings power through their operational value driver strategy, which focuses on profitable new business, productivity improvements, and value-based pricing. Over a three-year period, their consolidated adjusted EBITDA approximately doubled from $141 million in 2021 to $280 million in 2024, translating to a 26% compound annual growth rate (CAGR). The adjusted EBITDA margin expanded by 1,100 basis points over this period. Additionally, the company reported a full-year adjusted EPS of $1.11 and free cash flow of $172.9 million in 2024. Looking forward, Perimeter Solutions plans to continue allocating capital towards high-return internal reinvestments, mergers and acquisitions, share repurchases, and special dividends, with a focus on delivering private equity-like returns with the liquidity of a public market.Perimeter Solutions Corporate Events
Business Operations and StrategyFinancial Disclosures
Perimeter Solutions Achieves Strong Q3 Sales Growth
Positive
Nov 12, 2024
Perimeter Solutions reported a remarkable 102% increase in net sales for the third quarter of 2024, reaching $288.4 million, driven by strong performance in both its Fire Safety and Specialty Products segments. Despite a net loss of $89.2 million, the company achieved a 177% surge in adjusted EBITDA to $170.4 million, showcasing the effectiveness of its operational strategies and market recovery. With considerable cash reserves and reduced net leverage, Perimeter remains well-positioned for future capital allocation, supporting its mission-critical offerings in firefighting and specialty chemicals.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.