Investment Thesis
Despite impressive operating margins (58%) and revenue growth (16.4%), Perimeter Solutions is burning substantial cash with operating cash flow of -$89M and free cash flow of -$94.8M, indicating a critical disconnect between reported profitability and actual economic performance. The 3,325% YoY EPS decline combined with consistently negative cash generation suggests either significant working capital deterioration, accounting adjustments inflating net income, or underlying operational distress that fundamentals do not reflect.
Strengths
- Strong revenue growth of 16.4% YoY demonstrates market demand
- Exceptional operating margin of 58% and net margin of 58.3% indicate efficient cost structure
- Excellent liquidity with current ratio of 3.09x and quick ratio of 1.61x provides short-term financial flexibility
Risks
- Operating cash flow of -$89M starkly contradicts reported profitability, signaling unsustainable business model or major working capital drain
- Negative free cash flow of -$94.8M indicates company cannot self-fund operations and must rely on external financing
- EPS collapsed 3,325% YoY amid unclear circumstances; combined with N/A net income YoY change suggests accounting anomalies or major structural changes
- Low ROE of 6.1% and ROA of 2.3% despite high net margins indicate poor capital efficiency or asset utilization problems
- Cash position of only $91.6M against $1.2B long-term debt and $2B total liabilities leaves limited buffer
Key Metrics to Watch
- Operating cash flow trend - critical to determine if negative cash is structural or temporary working capital issue
- Cash balance depletion rate and funding sources - monitor if company must dilute equity or increase debt
- Working capital components - track accounts receivable, inventory, payables to identify root cause of cash burn
- EPS and share count changes - clarify the dramatic YoY EPS decline and any dilution events
Financial Metrics
Revenue
125.1M
Net Income
72.9M
EPS (Diluted)
$0.44
Free Cash Flow
-94.8M
Total Assets
3.2B
Cash
91.6M
Profitability Ratios
Gross Margin
40.6%
Operating Margin
58.0%
Net Margin
58.3%
ROE
6.1%
ROA
2.3%
FCF Margin
-75.8%
Balance Sheet & Liquidity
Current Ratio
3.09x
Quick Ratio
1.61x
Debt/Equity
1.00x
Debt/Assets
61.9%
Interest Coverage
6.81x
Long-term Debt
1.2B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T11:59:15.457888 |
Data as of: 2026-03-31 |
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