PRMW - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Primo Water Corporation’s Second Quarter 2019 Financial Results Conference Call. [Operator Instructions] Also as a reminder, this conference call is being recorded. At this time, I’d like to turn the call over to your host, Madeleine Kettle of ICR.

Madeleine Kettle

Good afternoon, and welcome to Primo Water’s Second Quarter 2019 Conference Call.

On the call with me today are Matt Sheehan, Chief Executive Officer, and David Mills, Chief Financial Officer. have at the Time. approximately should out that everyone afternoon this X:XX now access release to went By p.m., Eastern

you’ve available of press the today’s being webcast, www.primowater.com. not is replay is company’s If on will website. a available be This release, call Investor the Water’s Primo it portion and website on at Relations received

in remind financial Before statements. we additional response statements prepared including guidance, remarks forward-looking be management the your statements forward-looking begin, regarding applicable we meaning considered to statements laws everyone would The questions. within such contain that and regulations like of make and to securities may should forward-looking the the

Many update the section statements, press afternoon, Primo participants accuracy factors from and release read results can them. materially the to assumes this all carefully of with differ these Water and documents obligation no in We their could Water forward-looking included the files issued encourage that in SEC. Primo to cause give actual on to we no statements forward-looking and assurance

I’d like to Sheehan. to Matt CEO, now call the Water’s Primo over turn And

Matt Sheehan

Thank to and quarter, quarter believe with I expansion we provide am our and us location pleased is answer financial joining thanks to I’ll guidance. business We’ve you, of our which line to great with the made on results. review overview with efforts. details began begin in for our grow an second financial initiatives the results well were accelerate the progress then on several today’s David Good quarter two of Madeleine. as the positioned afternoon, us everyone, will before call more for questions.

strong long-term as our in and dispensers. in remainder be growth dispensers exchange performance the with will bright by locations by opportunities. to continue specifically driven in well and towards look we some More as lights, see driven sales along expect business to e-commerce retail we same-store the growth some of year, headwinds investment As growth

IRC is our in promotions our activity far investments they redemption We operations water pricing promotional of have meaningful year. half to Refill, free our impact expectations. that the back our also In in business confidence now coming outperformed has the future even program of have perspective. though The also We the which growth number from our continues to EBITDA will near-term. and improve are expected in negatively drive a

we with some examples of And the the quarter ability year-over-year. improvements our to sequential have seen first over business grow clear

part the second However in the back first we and by store more in the quarter have experienced retail part into attrition of closures. QX driven half of

sales high-end QX, $XX.X increased Focusing and at near $XX.X line the for on million expectations million. the adjusted to was quarter of EBITDA our in

by dispensers XXX,XXX a of increase XX%. driven e-commerce units of a growth record including of were significant Sales over up by sell-through XX% XX% over led in

sales million that Depot into expanded in with creating new SKU. down we quarter unit strong businesses which the an quarter. the Exchange of U.S. in our water growth Exchange the addition growth increased initiatives Home is driven $XX Refill we Overall, same-store initial connectivity was by In X% resulted should the to and stores many exchange majority dividends have sales for continued XX.X% which a our for pay believe households this road.

and X%. the the over unit quarter is plus consecutive growth of unit sales X% same-store This XXth same-store consecutive of growth sales sixth quarter

such CD grocery new as aggressively as an home roll seeing our joints improvement Walmart. of we out in growth accelerated Exchange beyond signage are We rate channels in

retail despite Lastly year. the line sales we I’m current in have attrition Exchange led grow that to to location has past which continued over environment top pleased the

of is overall contributed in an only with QX. the sales quarter. decrease fundamentals with the operational down X.X% use of efforts X.X% Refill, to an team's the the Refill of In in to improvement This business technology the total improvement improve over the

have seen improved business. Refill sequential operational and of improvement the This the We U.S. same-store sales. uptime continued fundamentals demonstrates in

and all the to two card to from to the days. With of to credit completion us reader downtime outdoor four telemetry historical technology Refill the days reduce seven to rollout has XX locations. allowed The

sales seen place. the steady improvements have longer pricing and operating telemetry We volume uptime in the are and same-store locations, model in that

something We discuss continue can this location sales more with to be a detail believe in we which quarters due shortly. that in progress. of replace to note the To portion coming gap attrition Refill is we encouraged the I and will good in quarter

In forward. the ice remains operational of elements. efficiencies the addition back, in has intact improve segment we we overall will of strategy divestiture the completed our which three expect going Stepping Refill successfully profitability and business June Refill which primary

second uptime through changes, and operational drive technology technology. improve sales pricing marketing, and same-store using First

we have focus previously operational as same-store place, initiatives and our expanding mentioned sales improvements with we locations. turning in Third the to are

these we resulting in the we relates seeing and same-store to completed the credit downtime the seen the Accordingly QX. improvements telemetry expect card strategies, We’ve QX sales. in signs in sales from readers another in As sequential positive improvement in the are it same-store sales are already credit card rollout improve place. longer of readers and same-store

are Walmart time fruit. These bearing In addition, and same-store pricing on focused locations sales on we technology. efforts some indoor which marketing, been our have driving underway are through for

This outdoor believe over after X% last our price these with gains volume for in of a also indicative the Refill can even indoor locations. locations up at occur what Sales is fall. increase were quarter we

we the same-store initiatives in With in the and growth drive can marketing sales improvements that confident underway, Refill. we’re place

retailers to basis. and terms pricing ongoing pricing review positive we’re signs an on In of continue markets seeing optimization, strategically certain across will and

our it not a to segments strategy, Refill. of to location broader all only applies on Moving

to that improvements were location same-store our operational and increased sales businesses. have We future and across believed of key expansion all long communicated

to We’re of the confident store impact that brick in closures retail with mortar locations and headwinds our our offset the are quality to ability of retailers overall gain in control. out

now Exchange Refill. across Today with Dispensers, drive and same-store tactics to proven sales

I'll expand accelerating our efforts discuss aggressively. are examples. We locations more to several

their at to additional led success an expansion. Exchange First support has Walmart same-store for our strong sales

to the locations of since expect over is of locations XXXX. year in have of between Exchange added XXX and this half Walmart We on the the XXX XXX top add Exchange which beginning second we

Retailers can get produce a have experienced of sales Walmart. way level we same-store you you at consistent a in behind that when growth big

brand of Second partnership new and along to a that relationship in Refill our years long-term with provides cross-selling differentiators Glacier, our and with represented been Albertsons Albertsons XXXX Exchange. when product a our Albertson’s to with awarded for consumer with being portfolio working. we Refill purchased invest expertise, approximately the indicated envision is coupled for Albertsons into focus contract passion Glacier announcement locations, Glacier research our has willingness Exchange marketing led that Exchange Exchange sales in and additional same-store that the we partner for opportunity. our with us evidence locations largest strategy Refill our

over example the our This win. deal for key a initially sales power that our performance locations business a more played the new time for clear is Exchange. prime and potential Exchange of also and same-store around portfolio Refill this and of X,XXX factor Exchange It is in

perspective and our like Our Giant Albertsons success growing investment us Home at to Meyer, give and locations in Eagle accelerate amongst retailers other victories sales. confidence Depot Wal-Mart our

and allow the business, operations in expand improved In our to now invest improved to in us the Refill same-store locations. resources trends uptime addition much and sales

of retail mind previously Moving to closures. year attrition onto part mentioned our second more half driven the outlook. now by first expect in in the as Two we keep factors store in

in which investment As are time. aggressively sales efforts our locations increased will in This location efforts continues, to will environment this the retail QX result we QX. an offset increasing believe in and expand we in losses

the in and second the new Secondly, addition marketing also year investments. impact promotional of IRC in activity will and the to half the promotional require margins

expectations in With and factors reducing for EBITDA. our these mind, sales we’re XXXX

growth. believe summary, are in long-term shortly. our half transitory are with to made team's to in and lead our about the efforts the I’m results of and we across pleased XX,XXX nature to our opportunity business. remain will invest we have details the to locations. in business that year impacting the David the entire will XX,XXX second making progress more excited We investments items provide our However expand and In profitable we the

that, With to turn I'll call over David. the

David Mills

I year. discuss Today then the Thanks financial will for and of for outlook quarter our Matt. the our review remainder the results

return in available this understanding investors closing measures start-off, adjusted To remarks. utilized results. as non-GAAP back to we website. operating income afternoon's call the is such financial reconciliation for assist I'll included net our release to of in Matt on our which EBITDA Finally, is A and adjusted each press

near an for quarter Dispenser prior in for the XX% continued our $XX.X expectations million sales of was the year. over high our million results. was record $XX demand Turning driven end second Exchange. quarter strong growth by increase and our of the dispensers the Sales for to quarter

demand retail of level high by a sell-through. was experience to record continue We which driven

sales quarter. other in-store $XX the grow the of be at million and impact increased Exchange increase IRC between overall drivers same-store locations spot free primary initiatives increase. and now retail display and difference bright Once water new the and the sales sales double-digit Fewer to despite were retailers sales for the brick unit or the at U.S. XX.X% and the the growth a of Walmart again signage specifically marketing Walmart exchange and mortar the IRC program continues same-store to X% of challenges.

will consumers sales As not will are and believe Primo included we in free and producing units effect we our while sales long-term. the see the a over compounding same-stores the water units these total households become reminder, as

to Also the Refill down keep the X.X% of adding mind in exchange XXXX million. quarter the locations Albertsons that second during sales for be half will approximately year. were we $XX.X

quarter. improvement As from incremental the Matt this first mentioned an was

we our sales same-store In have operational improvement addition, a taken saw basis initiatives dollar in U.S. as on hold.

a for year higher The compared well both total in dispenser Exchange. result to compared sales a in Refill represented and XX.X% of the as quarter as XX.X% decrease lower XX.X% was XX.X% prior in the the which margins prior gross margin to year. sales of of was mix Our

gross for growth driving are investments which in both Exchange. the Dispensers margin for XX.X% program margin to increased from Exchange the quarter the to related and believe X.X%. XX.X% the primarily to the decreased gross in to continue quarter IRC we XX.X% making we Dispenser from is

margin lower from costs and While to the for as that the is quarter term, downtime XX.X% over margins from believe to decreased million. of related this IRC quarter XX.X% gross million operating growth $X.X long-term the continue addressing impacting Refill decreased incremental the costs the issue. result SG&A for to we volumes time. overall $X.X to a drive near will in

compensation sales, non-cash percent a was SG&A year. As based in X.X% of stock XX.X% to compared excluding prior the

to SG&A forward the terms as the million June $XX.X an decreased we X% on related a of to as to significantly improved the the expect range. million benefited for percent refinancing. have Interest XX% annualized from lower we XXXX Going quarter expense continue sales $X.X basis, in debt to and balances from

compared $XX.X This and A million balance on drive a On demand sheet. dispenser $X.XX domestic unchanged EBITDA net the our $XX.X On we Adjusted million million. business. share prior GAAP compared at a or $XXX,XXX to for share the comparable basis, year. that growth continues or up at adjusted $X.XX for $X.XX basis year-end. $X.X dispenser or income from of to were income of net in per the and had the to was e-commerce $XXX,XXX income per net quarter, million per $XX compared to $X.XX points in share is the Inventories or due share. million quarter strong few the to million $X.X was $XX per prior

X.X working due year-end we fleet. capital capital improve Total going currently Overall vehicles costs in increase debt our from $X.X ratio was to leverage maintenance up and to cycle our to million new annual related in times of an leverage our in the addition we as $XXX.X reliability leases typical forward. and was to our expect ratio million decrease

compared statement the was new half cash the and signage. Exchange from expenditures million operations readers increased of XXXX. to $XX.X roll-out card flow our for of Capital and primarily the at the million million provided flows credit in $X.X the million to of Looking the year, displays result $XX.X by in-store first cash $X.X of

full-year range the we of For million. expect in $XX capital to for million $XX XXXX, be to to the expenditures continue

expect forward, to return addition expenditures we capital $XX in going cash million driving levels future In normalized of to growth approximately free flow.

the noted, are we that Refill second we address adjusting the continued Matt the our we and trends to believe said the to retail to the seeing as outlook headwinds opportunities. investments in Again future the of promotional and in positive are confident are promotions our growth. business, turnaround important fuel are outlook Turning half we sales

be to the in $XXX million $XX in million $XXX to EBITDA the With million mind, sales these we factors $XX and the adjusted expect now range for to to be full-year range of in million. of

third $XX With closing range will to EBITDA adjusted Looking sales for to the expect be over $XX of range to to million call million be the the at and that, Matt of million in $XX to I million. in remarks. the quarter, $XX we turn

Matt Sheehan

Thanks David.

our to better over Before to True turning our value drive great shareholders. to retailers, team the each to of consumers, quarters as operator sustainable of to something like is we a of. I'm That for significant what company required mission healthier for the have lives long-term effort. ability and proud are day and for long-term the is thank inspiring manage we business in the questions, and it Primo believe I water, our last would improving type makes few grit employees

remain before, On wellness driver. our that Consumer use plastics note press water ever trends gather Demand steam. the that focused market and Before the concerns in and environment. to quality closing, water continue bottles impact consumers consumers than sustainability on it's solutions specifically of their health a will the important negative on the for long-term tap and to fuel are over more remember growth homes business. better and

like close, which and touted well upon drive open we as trends that, forward. To have fact our platform questions. investors confident within long-term going believe us preferences. and environment recurring consumers, enough our line to products Operator? business consumer of to the our strong In not these of ability retailers a position very invest. the for to see With we I'd which growth positive We I'm more about aspect to nearly have we'll

Operator

Thank you. first from come Argento [Operator Mark will Instructions] Our Lake Street. question from

Your line is now open.

Unidentified Analyst

is question. on this taking guys Thanks my John Hey for Mark. for

to in readers you're you telemetry interesting? you curious retail any on and insights any have that data the that weren't the of trends if card Thank early kind getting before consumer Now you you. get all able machines, that up the find there of might just

David Mills

is this David. Hey John,

With the better look installed positive go or have information the at January those get in these in year-over-year Matt have we were if and units. call, credit mentioned on as information. and ones the seeing benefit to place, basis year, we don't credit said we the access are consumers, card seeing to trends really back the of we're prior direct the a we're longer card the this that readers, on cards but the we individual's don't credit That

better So perform. they they're the longer place, the in

Matt Sheehan

John for the add closer is specific Matt. just can do we to I we're specific we And reader things with code gift one to consumer card thing this use get the consumer. question. to that believe like I and codes, cards your credit getting as pretty a closer digital

info So exact we're working our way you mentioned. the towards getting

Unidentified Analyst

coming through Got any it. should follow-up, are just And running you as promotions or guys of expect sort Refill we that a the yet future? in

Matt Sheehan

and readers the are things cards. card like credit using We gift

those us way. we we It’ll but with are up a quarters of promotions of some for couple in are to of but But early results. come John as take localized some We are those testing of the innings speak. now under

Unidentified Analyst

Thanks All guys. right.

Matt Sheehan

you. Thank

Operator

Thank comes you Capital. Imperial question Kelly George and next from our with

is now line Your open.

George Kelly

Thanks for taking Hi my guys. questions.

are maybe just driving impacts difference your I about change you side, what give So the about talked prior main granularity what more you've revenue that start. but versus the the just the know change? to view guidance any is on can the

David Mills

is George Dave Yes, again. this

quarter unexpectedly are of specifically and retail first a little A continue starting to QX, we attrition So we in in in of number latter it side. saw half as than the the of location now hit more the bit of we part closures the anticipated. significant lot K-Marts see to the

some smaller over and continue dollar -- of little the seeing last to We've independent channel grocery really the see pickup and We’re consolidation months. smaller seen in couple the a channel. also bit a of

George Kelly

are when just ROI roll you hear seeing technology marketing are testing initiatives all didn't as different been that I these any What these all? to at has initiatives, them kind you as you've things Okay. or surprised you said, out and continue you implemented related the fully of

Matt Sheehan

we all No, month is together. or than just positive rolled Hey finished some more card this Again readers ago when a this George credit seen a lights little have we've Matt. we so.

our work are some and of optimization the the seeing our plan telemetry but benefit. So readers even of credit with card to marketing, we pricing the our

So second the as look of it's going half the at all direction. we right the we year, think in

George Kelly

And What was think Okay. just dollar question then unit same-store XX.X% same-store mentioned last sales? me from I sales. about -- you the

David Mills

the Exchange Refills Exchange that significantly the Matt as was dollar side. same-store but Exchange in mentioned. was changes attrition location sales really by Total on because don't pricing We the X% the disclose there's dollar side, been on on impacted change little

George Kelly

all you. Okay, right. Thank

David Mills

Thanks.

Operator

our you. William comes question next Andersen Thank with And Blair. from Jon

now line open. Your is

Jon Andersen

afternoon half and the second guess promotion. Good everybody. also I couple about a things impacting outlook of location talked incremental attrition you

Black You've kind little Friday Could you're more half Is these bit of addressed color do some just the are about ago. more like incremental year continuation events some the second you the a around the to of the of you're or IRC, planning planning think. with of Walmart years bigger couple attrition in that of issue there? promotion what I talk do it Thanks. a

Matt Sheehan

keep Matt. sight have ask it’s brighter are much promotions, a best of do question. promotions. given we much nature But this much promotions, about Thanks and lot well. of point the at can't talk as to about for where -- of all Yes, to Jon the those us they this cost the the Unfortunately line they retailers two we

David Mills

to to to equation. expand another of IRC program other piece the retailers makes it And that's sense and where we're also continuing the work

Jon Andersen

you this greater a water of in business business relatively Is can about piece both Exchange on proportion. is the within one having that's the equal affecting impact that's Refill the on? Okay. there part something attrition talk And or other, the

Matt Sheehan

with a quarter it's than I quarter Refills Yes, in more this higher of last this some been Refill, and leveled bit mean the with terms has numbers worse out than of is to not level but far, chains far struggle of still too little, Refill smaller Exchange bit more versus little exchange. but regional Refill compared independent that a different Exchange quarter. historically too not a but

David Mills

parts some and one now, we at as that, part environment in retail it consolidation of seen last over has of other look in and smaller within think retail Jon itself the And that in note couple seen years industry. weeks, a happen of not that And we've the solved we've more hasn't. few retail, just in the the change even on part the we

doors. So you have more but through sure long we a saying because invest really that hard have which knock now base sort and strategy of leans have get on you time now asset back our drive the more there what assets to sales, is make is some same-store our we're for some more going working in on we're tools salespeople out to and

So transition we that's of tools continue and closures consolidation but sort to because retail to happen. a fight have for that us

Jon Andersen

other mentioned think are could that about kind for this it or things is assumptions plus Okay. Albertsons And expansion. of Home where the announce attrition, at the there the be now in there we'd doors looking the XXXX term talking Depot seeing those at cycles of and guidance, selling there in longer pipeline location point? you kind it the is or we level you -- are the baseline what's how locations Is should about what XXXX run you're rate

David Mills

between we the the and Albertsons It and segment install big XXX Jon that that the by believe side, we XXX of play week. largely And process can started Walmart’s but the we part. varies in year we a the have by end this Exchange

in the The cycle in you the longer are in the on retail is getting retailer. past on side, regional sales cycle the door a cycle Depot much those that as a the it an smaller can big obviously our is talked as foot nationwide there on basis we've was important depends a more accelerate much bigger On chains Home sales Albertsons the ones initial retailer then but big getting and SKU well. the two

Matt Sheehan

invest also our resources a in have Jon. pipeline going healthy and it, We to we're

more focus more just retailers to going more the cross-selling and more we're So already have. or mix and in what getting on we

Jon Andersen

Thanks.

it us into an Just better timeframe here? and but going a that conversions a performing for mind the machine dollar of overall sense one lot. On volume on sequentially from is inflection for from improvement expectations business the sequential forward there things are of on. of you growth in Refill basis. Thanks me pass understand last can basis in some getting have that kind I either the or and well conversions, give that sales a are same-store on earlier your better you a

Matt Sheehan

Dave then will start I'll in. probably jump Jon

and groups your to are right going of we locations question, frankly think seen again the comping year-over-year that locations the absolutely in more expand and more of will group a over So We've are trends that and of time, host direction. examples just so locations year-over-year. comping

some So the pass is we'll but all I again to we through growing long-term those be this of bright we're we attrition, those good. once think a seeing need of location if lights keep and --

So you Dave if don’t know other. any have I

David Mills

on. that’s No, spot

Operator

question Thank our you. Northland Mike Capital Markets. And from Grondahl with comes next

Your open. line is now

Unidentified Analyst

for going that IRC there? rollout you questions. Hi talk Mike. how about Can progress just this first on on Michael the is at Thanks for Lowe's. Maybe taking is our

Matt Sheehan

just again second. for maybe Yes, semantics for a

program So way a just only at do they IRC going Walmart run we're really the it. is to

free We’re program the IRC that at specific free programs, working are innings of pretty different on water speak early is clot we Lowe's of water types in but as we now.

Unidentified Analyst

SKUs Depot mentioned What for then SKU term? three just is to we two on how that do And look that think can you like Okay. about like stores those Dispensers. or Home longer initial the

Matt Sheehan

four in peg environments. anywhere everything space, can foot to But feet so XX Bay Again for be opportunity a a to good see it's single a Home fleet on hard this number. just a Yes, -- us. those from on think is depend we that of Bay the SKUs from three store, think retail across depend we SKU seven could We this is a that's Depot. to

since big for to we'll have looked a our small said on Depot make really connect and opportunity like and that we have we already Does we for such only and clearly Lowe's. are the when happens what the can, two that we And help? the water as that dispensers dispensers do when ability Walmart have the margin, not we So demonstrated water. us we've revenue in Home but consistently well dispensers in

Unidentified Analyst

yes, And more one e-commerce, company company maybe or that Amazon that’s Web retail Okay, helpful. follow-up website? just was on or more site

Matt Sheehan

Amazon the and And do Yes, is site just better with that and own to getting promote we're e-commerce our and website. category own messages. within our majority to getting Amazon all at and the more of traction in channel communicate and more our to how frankly working so different using learning

So as a in continue of at to better see to in that work that remember, important them engage world we're that to ability our need dispensers continue getting that. We're business to as well, that we business. lot getting drive also not really so we well, connectivity to just on we just selling keep we're

e-commerce whether So it's great it that I ship to specifically to to and our a the about we it product. just home of feel going again It's Amazon. it's to perfect product from as the or Web relates size relates well site think early growth we're

Unidentified Analyst

Thanks.

Operator

Sharma Capital. Thank question you comes and BMO our Amit with from next

open. is Your line now

Amit Sharma

everyone. afternoon good Hi,

Matt Sheehan

Amit. Hi

David Mills

Amit. Hi

Amit Sharma

A may Yes. of then and be questions, couple more. couple clarifications

provide you that? update quarter some pricing last on about Refill. we issues based having talked So Can some in promotion

Matt Sheehan

a a about but larger good optimization it any needs if before to where as make doing areas quarter optimize we will while of pricing level need continue a far As to it regional initiative. and be pricing we’re well, going is Amit, said think basis we’ve a we’re understand that so in for and talked to small in optimized for we we that very as on local to on said going last is localized we you chunks decisions watch while, in and we lot so

Amit Sharma

on scale a that still being you model of on it that adjustments that or or addressed pricing or your did? volumes sort with Is it's drag

Matt Sheehan

the talking or year-ago You’re more? you talking about price about change

Amit Sharma

at acting prices is the No. if was Or least your guys understanding those adjust you in happened? in Is still back. Well, some if remember competitors are markets drive aggressively, to happening? more would of process that my

Matt Sheehan

We to overshoot certainly again we do because the we pricing early careful the is want on have we examples testing it but have volume. where can be based drive

Amit Sharma

of are completely continuation at the then Refill. mean now? and the margins those I for the And you is mentioned with terms of new it. a first saw quarter? the or we in issues, the we downtime fourth are that what in that done Got quarter that And in

Matt Sheehan

those in first Yes, the in the past of a this in what we've discussed of continuation are quarter, the fourth quarter year.

and expect we card So credit QX. QX improve readers those obviously should the into ongoing costs there'll margins with costs in so be the to but overall

David Mills

pretty ability I just And let this Amit just impact when down our us, it. to beforehand. side of me that been help remotely is machine for drastically clarify has on clear I a mean than think the goes from sort of see different cost

basis a business with we And manage very at about technology. so ability to much this tighter feel our good tighter, the

seen been So pleased very, far. we've with very what we've so

Amit Sharma

the is you've to in even keep really should volume expect the half back think asked back that Or Jon it Refill which pricing year? is from I Matt half you as we accretion side lap second of in almost for fair an all that us to this that in still negative the on the the the on then volumes. assume lapped losses side, question, the you quarter And last positive in going as

David Mills

believe than noted as that or and better quarter this returning start year better from it on. dollar to that's real gains on positive look true are is versus it to perspective continue from on the we'll was than going with a first believe a ago volumes we see start we'll perspective Yes, a dollar pricing the same-store volume we'll Matt a the perspective attrition we at quarter. basis, The

Matt Sheehan

going is the to isolate Refill If deals sure attrition and combat sort natural really business. ability just We of business goes to feel hard predict feel on is attrition really goes we pretty about good the retail's that that. away, to do we to tell where good more out variables. the more drive attrition we if away mean about going make offset to there, it's get through and get more a story what feet have folks the street, I

Amit Sharma

you that to I feel reception in mean I on portfolio, to little question the is more continuation what opportunity, is is last be right? unwelcome, this been And hate that of quarter, see like a this anyway you stores that store even new look chasing what and lot the was to you count, I aggressive, this stores shifted, -- something and new of wanted quarter, your not if you've maybe retailers that's focus your or last right? you're quarter the And a to just opportunity doing? a realize stepping fourth compared more product enabling up really

Matt Sheehan

Great question.

step we've sure almost me we saw the let years few to a that now inward little to So worked wanted and and assets talking harder. in look been begin make back to a we a our need specifically Exchange had for about bit attrition starting we lot some

that expansion, door want they is that their So growing, we've what very a be want to growing. tried same-store foot location we've well, been want, every to consistent key in be retailers square know saying we they we know sales driver on to they

And tools And to like That's Exchange, so we've matters what now you get frankly just about story and in Dispensers same-store in lot when excited drive a that, frankly outdoor refill, indoor sales. to And retailers. they more have really refill. we a you. in have in

XXX we the down that a production come sales right, break Walmart The has us for while is the years to two been let's which So you've so because of three has growth expansion transition some let's right a that seen grow mode. store a same-store around over our then to last, count business exchange think about that that a grow get for minute. locations that and out and said strategy into buying levers of I location come just

sure improve well is as get business. done grow businesses are the We’ve path that working We've doing path indoor And you start you and shared to in to our And really We've clearly we three on are that business we some when find to the so marketing And Frankly taken talking and exciting. your our dispensers. some the numbers. levers out way really we're make the has outdoor as that certainly that operational and business. ops make hard sure found of the taking. if go that then levers nature retailers. grow of tight, find ability same that road we've do of will some been frankly found and those Exchange that which Refill that is in to other

lot And when for did them, reliance really last a get us up what them So more the few we've out We this that to much gives they years. last there what put communicate we've and show show same-store us growth. to to tools why we to operational operational that cares and we excited. tried that support, and across a that in a businesses about we the for the retailer them backbone in are show have now That's year, to get more seen that. matter sales conference on lot those of seeing drive

for So I strategy in We at do it seen a that think we've you're transition longer term shift. time. a look a a seeing long as

growth. that that of businesses location because And have so we that a we're really driving excited certainly for built are lot before

feet a We've combination to of now that back tools that had XX,XXX, in help? just and again to foundation We had points place for across distribution. hit consistent operational excited and we energized in make that in tools really street pocket. general. sure bit good their Does pause businesses been to of that. on XX,XXX retail of our lean frankly go get the a the team sales to on that we we more and the That's same-store little And really into what's combination with have after with really reset, locations the to just on environment sales to all happening very believe that we're the the street

Amit Sharma

That’s helpful. really

like is realistic Just get how XX,XXX a XX,XXX short well? for couple business a term as to on be like to is it more long is there, that could so this goal that, that that a

Matt Sheehan

can locations. lean somewhere right years do we XX,XXX into that and then that we certainly we’ve to well long-term on get and I it business over that, aggressive Yes, number. we’re for think three at more today but always get Remember five let’s said

five So I’d three say to strategy. year

Amit Sharma

be these a How margins? there think initially? one or these you and is are Matt, And should to so about at in periods is, then more we last better similar stores stores, have profitable onboarding you have as the as add stores may coming that? Or do system not them in

Matt Sheehan

created right. take things will step couple all in a it mind Dave and in. can is not one are locations equal I of Keep Yes,

had So location not like you even numbers, it XXX same at losing if look when close. XXX Kmart’s. you’re that's as It’s Walmart’s the looking just may

and investors And versus smaller do. between the what have that's locations to difference that Walmart so some what a really understand

one I that's it. can talk thing, of Dave think lot the about margins have So a we

our Refill trucks team We our because and have more that's our that. all expandability in and business really

have it margins can Dave expandability Exchange. call Dave? more we So into step do we that than Refill but I'll in in the

David Mills

number Exchange be similar locations for from have the or I a one volume we involved Albertsons of The the the category in what with currently years. margins Yes, or mean been place. have there bulk a in should pretty consumers velocity with advantage engaging perspective, to

they mature book store traditional So the on at a come volume board where there. than have more in didn't base category a they should the in water

in we more with in And Matt the similar. expand mentioned be grows, then the is side and Refill very so have as that. Refill should volume will the margins margin as expands And

bit little different a each So of in businesses. two the

Amit Sharma

Got it. so Thank much. you

David Mills

Amit. Thanks

Operator

with Barrington from Research. question comes Thank Petusky And next you. Mike our

now is line open. Your

Mike Petusky

my Number quickly. answered asked ask guys. of let real and been but have me questions Hi just

total what locations I is well You XX,XXX the around have something rough like today, there? over you it a XX,XXX or said of mean total

David Mills

the into XXX and We we just locations. that It’s quarter XX,XXX the keep quarter. the over the at sold of end that in ice business mind sold was

Mike Petusky

where Depot in in already the And SKU? majority of a majority, Dispensers you're right. with on I Home one occurred -- said that's you then All Okay. Home the guess Depot stores with one least at

Matt Sheehan

correct. That's

Mike Petusky

I rough is the to price. $XX mean have that machine, $XXX a machine, you that share? that What's do is

Matt Sheehan

of of size the runs. early it's It's price Mike it’s so one It’s points $XX, one, It’s early question. slightly one the Yes, items. not want good Matt. full around

David Mills

tops. the Yes, and mostly manual pumps some maybe table

Matt Sheehan

goes from side the that on $XX, lower of to means it. $XX it's It

Mike Petusky

Okay, all right.

Matt Sheehan

opportunity show will. Then we Mike can of is you on the per if we store a other we the certainly is how expand obviously that opportunity that’s SKU The number them get will. in we we can perform side we SKUs if of which can it, in,

we and our excited in way really ability our So sort get to about to of lean on growth. SKU

Mike Petusky

Right.

term growth then of you what longer a be is I do gross at Okay. XX.X% to the little what years term mean tracking five is how Refill on David you meaning And XX% a think XX% sort the the Refill? touched see is margin. mean longer opposite, bit but you margin term and I three can longer there do business, XX% opportunity that that or to

David Mills

good volumes everything business quarters question. back be this coming the margin a can QX XX% in believe we with Yes, In definitely else place. and to in QX peak and season XX%

talked could improvement over XXX QX basis would about basis in XXX historically you we've in about where in the QX. XXX XX% XXX range quarters it's off-peak be been put before I you think to the point which improvement point or to

Mike Petusky

Have media, more I trying to really just think I this don't on All then do last right. in a with podcast you're And guys can related over touched wins even few there you one social have Thanks. know anecdotal had while. the things gotten But past some may talk guys have or traction where to you quarters? you health about any and you that fitness.

Matt Sheehan

a a level. bunch localized Mike. Yes, done We've at

leaning a and not social space. lot but necessarily It's Refill first the of that's almost a are traction using been outdoor and basis, that for we us you positive time in really on the our national a we've been that early target business local even testing done really frankly will work for if as lot before. never of is getting the have So of influencers, we media that's in Refill and into media we're social lot of that

for innings early are tell letting help influencers that of really in And so for out the bright, story innings there, a early excited us really bright us those some story us we a telling the frankly get about markets getting spot. important but

Mike Petusky

All guys. good. right, very Thanks

Matt Sheehan

Thanks Mike.

Operator

and we Andersen Blair. follow-up you have William Thank question from Jon from a

now Your open. line is

Jon Andersen

hi. for follow-up. the Yes, Thanks taking

of the between was on the the Can pronounced XX% first quantify units impact the was the of U.S. Exchange of On and more attrition order maybe which the the explain location dollar Exchange sales GAAP, the or magnitude IRC in gap one sales and quarter you X%. Delta? same-store versus just

Matt Sheehan

that Delta it, units you at occurred in majority XXX remove only attrition of the but unit does IRC The from the if quarter. the IRC about it you basis Yes, location same-store the was look the number of is the impact point XX.X, if impact.

really strong still it's excluding total of the free units in So growth terms ones.

So quarter. mostly the location attrition in story

Jon Andersen

then I'm a can exchange bit the more the so happening super of how pretty of from productivity were And assuming on on And these QX, ramp, locations precise little right of existing new That's QX. good a that helpful, the timing Albertsons out that the is thanks. competitors, you locations rollout, quickly then be kind you is gates?

David Mills

remainder rollout this didn't will the the the believe on better and start through will quarter much we category will replacing you're spot of take this have past. in will than so competitor, and perform the these that Yes, it a the year location

Matt Sheehan

Jon later. smart be come high I’ll locations, location and our we're in And to more in target lifecycle growth, profile, locations high productive so to we're as just add we go after, earlier going they than more going the we after go about really more

those of going as a much lot target as we can. So information location that we have we're to

Jon Andersen

from one last Great, me.

rate impact ice the second it would EBITDA half to of run basis? -- be what's I guess the or the On annual for an the business the on year

David Mills

just million XX% that. on under $X about EBITDA just It under was was business and margins annualized the

Jon Andersen

Great. Thanks luck. so Good much.

David Mills

Thanks.

Operator

you. Thank with BMO is Sharma follow-up And from Capital. our Amit question a next

Your now line open. is

Amit Sharma

so think that you so follow-up. guidance for of how that be last greater And point, the year, the the behind thank much into investment factor a than versus about as a can can may of you on quarter bit provide Hi, the ice this you you color sales for this is attrition dig Is more promotions? Dave, that? into change then it? much rest in this taking expected

David Mills

ice So Amit. of the has out number been

in and this quarter. the revenues during $X the quarter think was I about So quarter million second it

-- Going overall much the much of originally has location expected and revenue impact the keeping been the obviously on we some in that away or forward margins. what’s does guiding bottles investment not IRC excess impacts but it change with impact what more attrition side, farther promotions there their the driving towards

rates we’ve higher continues talked much that to seen as in we accelerate. than seeing redemption We’re even as QX

So were to before. the attrition compared we majority of location the overall where is but changes

Matt Sheehan

the leaning in us the to really because drag our on -- having But EBITDA excited ability add it’s promotions and know IRC past see a just term driving drive impact. in use we well is our Yes, Amit to a the promotions we second seen to we gets is our these to But what for but dispensers. it it be additional we’re does have to short business. in connectivity it love ability expected the I long-term. And above the of kind and have what invest half that we of future have

Amit Sharma

look, given asking you are reason on really you more to really the really good for good perfectly investment. will investment? on this good down, fine the are this I'm but going This if be that’s IRC that. is is, That's and judge reason spending ROI for Nobody And EBITDA investors your right?

understanding just closure driven want I more XX% they should just So reasons know two store right? that bit if minds in that know. And they know investor in that? and mind, the is about help Any how don't a of they better so out I it? look negative by of what's EBITDA at are XX%, of our we XXXX, driving versus those think wanted this have on what to the little a I yes, So is know clarity is get to driving down,

Matt Sheehan

that an from and about perspective Yes, promotions IRC location XX:XX comparing yes the probably EBITDA the to attrition. the

Amit Sharma

XX:XX, all okay so much I wanted know. Thank guys. perfect. you That’s to

Matt Sheehan

Thanks.

Operator

any call queue remarks. no would Matt Sheehan the for to I’m turn time. showing Thank you. at like in the questions I And final back further this to

Matt Sheehan

you Thank in a interest Have for night. great Water. Primo and your participation call today’s on

Operator

Ladies and gentlemen, participation. for thank you your

Everyone have day. disconnect. You great a may now

Primo Water (PRMW) 6 Aug 192019 Q2 Earnings call transcript