Perimeter Solutions Q2 2026 earnings: Specialty Products drives 31% sales growth

Perimeter Solutions (NYSE: PRM) reported Q2 2026 net sales of $213.8 million, up 31% from $162.6 million a year earlier, while its GAAP diluted loss per share widened to $1.11 from $0.22. Specialty Products supplied most of the revenue increase and adjusted EBITDA rose 16% to $105.6 million, but $266.3 million of related-party Founders advisory fees pushed the GAAP net loss to $181.6 million.

Core Earnings Results

Revenue growth outpaced gross profit growth, causing gross margin to decline to approximately 55.1% from 62.4%. The company identified a $4.5 million purchase-accounting inventory step-up as one cost affecting the quarter, although it did not quantify all factors behind the margin decline.

GAAP and adjusted results diverged sharply. Adjusted net income increased approximately 4% to $59.6 million, but adjusted EPS fell to $0.35 because adjusted diluted shares rose to 171.1 million from 148.3 million.

Business and Segment Performance

Specialty Products generated approximately $42.3 million of the company’s $51.2 million year-over-year sales increase, or about 83%. Fire Safety continued to grow, but its adjusted EBITDA increased more slowly than revenue.

Fire Safety’s adjusted EBITDA margin was approximately 61.0%, down from 64.6%, while Specialty Products’ margin was approximately 31.7%, compared with 32.3% a year earlier. Management attributed consolidated adjusted EBITDA growth to continued execution of its operating strategy and recent acquisitions, but did not separate organic growth from acquisition-related contributions.

Specialty-led growth lifted adjusted EBITDA while Founders fees widened the GAAP loss

Consolidated adjusted EBITDA increased in dollars, but its margin declined to approximately 49.4% from 56.2% because revenue grew 31% while adjusted EBITDA increased 16%. This indicates that the higher sales base did not translate into proportional adjusted profit growth during the quarter.

The gap between GAAP and adjusted profitability was primarily associated with the $266.3 million related-party Founders advisory fee, up from $96.9 million a year earlier. That expense exceeded the quarter’s $117.9 million gross profit and was excluded from adjusted EBITDA and adjusted net income. Quarterly interest expense also increased to $19.6 million from $9.9 million, adding to the difference between operating performance and the bottom-line GAAP loss.

Cash Flow, Balance Sheet, and Capital Allocation

Cash-flow figures were provided for the six months ended June 30 rather than for Q2 alone. First-half operating activities used $89.6 million of cash, compared with $20.9 million generated in the prior-year period. Disclosed uses included a $95.7 million cash settlement of Founders advisory fees, a $69.5 million increase in accounts receivable, and a $15.9 million increase in inventory.

First-half business acquisitions used $682.3 million, while capital expenditures totaled $18.5 million, including $12.7 million during Q2. Perimeter raised $550.0 million through long-term debt issuance. At June 30, cash stood at $82.8 million, down from $325.9 million at the end of 2025, while long-term debt increased to $1.21 billion from $669.1 million. Current and long-term Founders advisory fee payables totaled approximately $630.6 million.

Monaco was acquired after quarter-end

On July 30, Perimeter acquired Monaco Enterprises for a net cash purchase price of $120.0 million, funded with cash on hand and proceeds from existing credit facilities. Monaco will become part of Fire Safety and is expected to contribute more than $11 million of annualized adjusted EBITDA, corresponding to an acquisition multiple of approximately 10.5 times enterprise value to adjusted EBITDA. Because the deal closed after June 30, Monaco did not contribute to Q2 results.

Recent Insider Transactions

The supplied insider data reports 19,419,495 shares purchased in 12 transactions and 7,035,514 shares sold in eight transactions over the last six months, resulting in net purchases of 12,383,981 shares. The latest reported entries, however, mainly consisted of sales and exercise or conversion transactions.

Exercise and conversion entries are distinct from open-market purchases or sales, and the disclosed activity alone does not establish insiders’ views of the company’s outlook.

Investor Risks to Watch

• Founders advisory fees and potential dilution: The advisory fee caused substantial GAAP earnings volatility. As of June 30, up to 2.4 million shares were issuable within 12 months under the fixed fee and up to 6.1 million under the variable fee based on period-end prices.
• Cash use and higher leverage: Negative first-half operating cash flow, acquisition spending, and the Monaco purchase must be considered alongside the decline in cash and increase in long-term debt.
• Dependence on acquisitions: Recent acquisitions contributed to adjusted EBITDA growth, but the company did not disclose how much of Q2 growth was organic. Integration and cash conversion will therefore be important measures of acquisition performance.
• Uneven segment profitability: Specialty Products produced most of the sales increase, while Fire Safety adjusted EBITDA grew only 1%. Both segments recorded lower calculated adjusted EBITDA margins than a year earlier.

Summary

Perimeter Solutions delivered rapid Q2 revenue growth led by Specialty Products and increased adjusted EBITDA, but gross and adjusted EBITDA margins declined. Large Founders advisory fees drove the much wider GAAP loss, while acquisition spending and working-capital movements weakened first-half cash flow and increased leverage. Future results will depend on cash conversion, margin performance, and the integration and contribution of Monaco and other acquired businesses.