PRMW - Earnings call transcript Q4 2020

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Operator

Good morning, my name is Carey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Primo Water Corporation's Q4 Fiscal Year 2020 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. call Jon the Investor Vice turn Relations. now over Kathol, to President, I'll go Please ahead.

Jon Kathol

at Financial included the XX-Q the Wells, Primo's from on in during company's and Investor with and duty these other filings is as when including Water two quarter statements, being I'm discussed will in be a could Corporation's forward-looking statements of the undertakes XXXX This applicable on announcement reports Primo with GAAP, Time. www.primowatercorp.com later and A Chief Officer. with Jay to data Form Welcome any conference statements, measures statements in most fourth and AM o'clock forward-looking expressly fourth weeks. on earnings call. call to release accompanied this end there performance. is the the in Eastern Executive should virtually participants reconciliation Harrington, contains financial morning the playback Form or this these differ future financial Primo's non-GAAP statements cautionary no update contained press than law. This at Primo's Relations on operational XX-K XX statements earnings call except and and call for The All measures are website company live considered performance in concerning quarter and released mode. company's be actual and by and required currently the with Safe comparable disclaimers is call company's available securities regulators. connection company's listen-only the Harbor materially accordance www.primowatercorp.com. the The will for quarterly estimable Chief by the full morning's no Report statements company's Officer; of earlier year webcast conference Tom These year and full earnings in website section Annual

a by will performance, today's included an ongoing impact and ahead fourth Then that strategic update we back work assist are this quarter before on on our start business update As synergy pandemic designed to discuss an provide part throughout the call, and year Q&A. our to our deck you and long-term outlook our call year handing was www.primowatercorp.com view providing financial online the call Jay XXXX ongoing currently full we a provide the and on. initiatives the will of focused first quarter on progress to have Tom conference of the at full for of offer Tom discussion.

the of February operation, will Within the prepared incorporates discussing continuing XXXX. which be was sold and remarks, legacy the Tom Jay Primo exclude and business our business, S&D which in

XX-week in call please XXrd making except operating of a I'll that, weeks fourth a All the stated. Lastly, quarter week over XXXX, With XXth compared that year-over-year XX week activity, where will to now comparisons XXXX. to be included aware turn the Tom. year include this otherwise

Tom Harrington

several with customers, customers. and fourth history. company. with whenever, high as company. to quarter From structure we how I'm water demonstrated to We responded have by to our it, our and the continued fulfill morning, to Primo our our team drinking The to efforts structurally our want an and XXXX, our was we other commitment that solid future. to quarter economic highly variable on higher different our has the a a and ongoing a Tea Coffee for we proud grasp products the and on for a divesting higher commitments that a quality and In entering delivered any year continue part Earlier to a operational and company's team everyone. firm business the place respond and we and our stated standpoint, the the important that provide I impact S&D very services us leverage however just transformation of Primo company mission Thank - ago. a us, bright morning, and your are a included year wherever XXXX We our non-core accordingly business. first debt up and to strong existing acquiring a on repeatedly that to cost and importance pandemic. successes Jon year water year unlike and water new our to XXXX our of to margin and one is in growth our Water customers as Primo welcome of Despite began play throughout results challenges pandemic. our this the demonstrated of published XXXX. to release strategic you, financial presented pure pure-play full all year XXXX highlights earnings they transformation Good set validate incredibly compared

a XXX legacy associated the we and the consolidated productivity related well where made XXX The been than increased acquisition. more transitioned Primo density. We success. execution increased the daily to have route improvements We as infrastructure, to clear route Primo has over to facilities team our per legacy route our

is annually. which of density Another more than acquisitions, revenue important improving XX combine piece tuck-in of add executed will our M&A our tuck-in We to million $XX route strategy.

because part COVID-XX, challenges we As halted and preserve of to to during reaction liquidity. experienced our the tuck-in QX of QX we M&A

structurally maintain yielded robust and plan this believe decision for All was adjusted long-term efforts XX% to prudent raised XX%. quarter, execute XXXX, margin And more XXXX efficient we that than last we opportunities our less no against to a of EBITDA profitable beyond. a from we tuck-in target in and Primo. we have pipeline a While these

plan will into balance to we improvements. As we making enter remain initiatives in while and back cost organic sure protect how investments these we XXXX, diligent the business our in to growth efficiency put

generated adjusted were of higher results adjusted a grew free the financial revenue. despite our difficult percentage reduced EBITDA, and We Our cash macro-economic very flow SG&A as strong, environment.

philosophy. for to Index XXXX initial is meaning, exceeded are staying from services. growth home a improvements by consumers, use customer experience Jay and in plan we taking on the and Consumers made a July. doing against margin, our we dining synergy and We their driving elaborate Russell tangible realization will home in our or which Refill are our Water levels on residential home base life and customer new who and for from the to Filtration large were important Water customer as more of Exchange elevated also and at moment home from and We executed in working Direct added our

will an from capabilities direct understand and commercial customers perspective, customer XXX to We reducing are that of since global to XXXX points and commercial in do retail where customer have purchased it this grew from on not customer while before for the we by unique our We roughly online fourth and accounts. XX.X%. some the who impact in the doorstep. the served lost. Fortunately, base X.X we permanently have residential XX.X% stores quarter realize began be time cooler basis the million the simultaneously pandemic and the pandemic our the quit global to We did execute rate base

existing current retaining generate adds However, aimed new we at the working are customer environment. making and hard customers in strides important are to

of purchasing goods doorstep directly more buying and no-contact of products their have seen their and during the in to those consumer We safe online significantly pandemic. brought services change behavior having Consumers way. more a are

been U.S. are the well app our rate efforts in it digital e-commerce across to positioned well rolled encouraged out May. launched benefit our overall these mobile adoption. to app the as progress. been We of from customer by and and The has we've trends and We continue received MyWater+

we As websites XX and low to of focus products the acquire with We sole online new including of the to than these a online a many e-commerce North sign been the business more than simplifying more XX% number breadth developing the that of first for water.com of our ordering for website unique their effort. countries of and the with residential e-commerce than team awareness pleased and higher XXXX, app and the our for new the could in new downloaded across time the to in with customers and conversion early were of the our XX% of web performance us customers end XXX,XXX of cost web up XXXX, of in the multiple America consumers customers, We up process rate This sign in media robust a efforts is times. raise customers we're terms well our water was improved with offer. has intent and transactional XXXX. by In as investing we're launched service. social solutions in as retailers XXXX higher Europe our and European

was saw America XXXX. and experience customer well score the improving our which XX.X, greatly are net North a initiatives for XXXX cumulative of promoter these the above of All XX.X, we as result, is for

We also program water January continue water the that provides filtration and usage quality. innovation IoT-enabled quality unit life our monitors and analytics launched in efforts. water We XXXX, core we filter real-time launched they the existing as of have products programs important to on PureFlo, advance In and a the sanitization use an Canada U.S. the our we and both complement office. increasingly and lastly, in advancing Europe ESG conscious the And are consume, made home to cleanliness at initiatives. progress customers of we in in and

of plastic waste. the Our use services reduce disposal greatly and

up reused about XX five One before bottles saves to which plastic being be and times liter sanitized X,XXX of gallon half recycled, water bottles. our can

global have Alliance per spring And carbon-neutral European neutrality consumption in transportation at In which standard electricity nine fleet third operations, finished certified XXX% achieved all the and December, nitrogen-oxide energy diamond last same of our made carbon product. challenges emissions. our All for pure lower announced the industry we to EFG community. our we operations pleased play In cleaner the to of We steps usage by In carbon some stewardship and successes. quarter Water standards. the became we important and business Overall, the which a site our plant first and efficiency renewable emissions electricity source U.S. a we water becoming water the from marked years. site our the are have springs, the met In been Stewardship, our year investment certified broader stewardship diesel across consecutive responsible natural EPA a with quality. in consumption. achieved AWS, of in the source we European water progress carbon-neutral is under advancing Springs Wekiva AWS message improved was we was to second for to Europe, which company our these resource in for against During month. than strategy. of has Water quite the propane, towards with energy Pennsylvania an I'm our leader energy XXXX reduces water cover was achievements benchmark ensure Florida, obtain have spring of current North shifted for for America, certification our certification subsequently for confirmation having XX% and and our The short,

well discuss our to we I and continue Jay to I'll fourth opportunities to on We would are in areas execute business but remain our confident full over of growth that and like first XXXX, key to turn positioned drivers and to outlook detail. results quarter our priorities review to capitalize in ensure intact. long-term we for focus greater are our year the that call

Jay Wells

pro contributed rest well everyone. offset to consumers. services million due revenue in the Starting This revenue excluding week and Tom home XXrd $XX X%. world products week EBITDA quarter segments. our is residential by X%. increased On EBITDA, a week, to our million as adjusted fourth Primo the compared to benefit partially that Fourth coffee grew excluding XXXX. demand revenue $XX adjusted customers increase by basis, the contribution The prior the of the XX% by increased The to consolidated week, and increase commercial base of as good the and million from of of by exchange to increased Legacy The residential quarter revenue, driven XXrd realization. million. the On XXrd $XXX our America in our morning, foreign customers consumers, $XXX and from results, The North lower a EBITDA excluding Direct decreased $X by you, million and compared home increased week, the Water leverage, was primarily acquisition customer from demand adjusted and of revenue XXrd improved EBITDA operating synergy and increased and XX% products benefit XX%. for Primo both XX% at XXrd increased was Thank acquisition legacy forma excluding impact at year. versus million $XX for services contributed pro the of adjusted forma basis, with and services

quarter to We SG&A million expenses Primo XXX we of expenses structure resulting compared terms as the of margin flexibility the evolve. a that have we adjusted putting initiatives investment judicious in by business. million year. be be to million. of basis to the X% in the highly was points implemented and The increased cost plans addition increased week, and from by SG&A cost XXrd driven will benefit diligent that and we protecting by very us lower $XXX EBITDA generated offers our back important from XX.X%. increase to process balance Our conditions from by variable Fourth reduction the partially cost efficiencies organic remain It the will into with earlier legacy $X business offset $XXX

level increased segment performance to million. million $XXX our to compared quarter, the America for in XX% North revenue to $XXX Turning

the and services. $X increased impact offset by Direct of partially North revenue and benefit commercial increase for residential legacy the XX% million the segment The the week, was million, lower XXrd Adjusted excluding customer forma of exchange and consumers, our pro $XX the by the and week. base by in home benefit decreased On our to acquisition and increased of basis, X%. revenue EBITDA Primo a $XX the the week, which coffee America revenue from at of by the includes impact Water customers XXrd services million which was foreign from Excluding increased products XX%. XXrd driven demand

and basis, to adjusted increased the forma by Primo fourth benefit, Rest X% of realization. operating to a due our that pro by adjusted And World, $XXX EBITDA XXrd leverage revenue legacy XX%. acquisition, Excluding decreased EBITDA synergy million base segment, services business decreased decreased driven the and and EBITDA improved revenue On XX% excluding by was volume X% quarter from week, largely as Water by coffee offset variable base services. Adjusted Direct our operating by $XX structure. Direct Water customer cost customer our lower leverage from resulting million our improved coffee to and highly grew

for XXrd expenses XXX realization forma full-year was the $XXX week, our costs revenue up residential from by Now $XXX the compared and turning structure, billion, by forma XXXX. $XXX increased to increase the and The from $X.XX was increased the Full $X.XX increase increased compared week, The home to billion to to X% the billion. to reduction to year. legacy million was implemented and base adjusted down COVID-XX and revenue year legacy of XXrd in The increased related Water On X% demand acquisition, the XXrd and The legacy XXXX. customers EBITDA $X.XX services offset customer a at increased from at-home our demand services. million, the the and lower to commercial consumers, coffee variable week, compared EBITDA XXrd Full-year Primo full million products to pro Primo million. increase earlier compared $XXX basis, Primo our week, EBITDA excluding partially the results, to XX% synergy addition week. by consumers compared our the year $X excluding Direct $X by margin year products for acquisition, and highly of XXrd driven full benefit was and is the was increased pro initiatives million. cost On by million from X% driven residential X% customers consolidated revenue to driven to offset business, basis, basis partially cost billion XX.X%. by adjusted $X points its SG&A adjusted increase services

balance revolver for X.X and liquidity a year the borrowing to combined total the synergize capacity leverage with $XXX net year times. and of ended post liquidity balance ended a position X.X of ratio of net We million net a $XXX million with cash cash available $XXX to Turning our on our million. ratio target of continue leverage a times and flow sheet, we position of

cost Regarding in next of efficiency we improvements and confident to we to anticipated. had us actions the sooner will years. the we synergies throughout a legacy XXXX full remain realize greater acquisition, synergies million our enacted that have synergy allowed obtain we Primo than portion over related three The that work $XX the those

year-end, in we some ahead synergies, incremental of are planned pleased its both performed cost economic with synergies despite XXXX As in have executed Overall, targeting the of how our throughout fourth global XXXX. as the million $XX million we quarter Since actions $X roughly million and earlier well business $X.X $XX XXXX the final expected, well roughly originally as previously realized impacts. in we pandemic we of with the million. than currently are we of

quickly, remain deterioration residential downs quarter when has we did and strategic Our during We but from but home our demand strong. can understand remained conditions and at our highly which lock water the variable priorities. that returned, while our consistently executing we pure-play change accordingly, is significant customers react challenged, makes Meanwhile, a not also us our commercial customers can confident structure the cost see encouraging. fourth of resiliency model

quarter between look at consolidated to have from continuing based we to million the today, first operations we revenue XXXX, $XXX As and us on information as currently our million. $XXX we of be available expect

is range adjusted million XXXX. performance pandemic that first understand of will on We important ongoing to the impact to in quarter EBITDA in be quarterly our million. of also forecast the our $XX the It $XX

expect current consistent solid during XXXX. XXXX resulting XX from a a return lapped have the recent disruptions of positive the then significant loading, the of our hit. more impact included again Please coupled first once quarter have key of U.S., the pandemic, we loading the across in stepped does pantry weeks outlook the hardest but aid impact growth those impact we that year portion pantry weather core not we performance QX versus with note in the Once the across to areas metrics. the recovery of include prior of that up This unknown our all of were XXXX, associates to saw business of

were Our thoughts affected. adversely go who out those to

The of of year an $XX full around $X million $XX interest, approximately million revenue opportunity million. EBITDA, well around $XXX as to to $XX expenditures remains XXXX cash the For we of for is acquisitions. of capture by expect taxes, projected to million of $XXX million including adjusted tuck-in grow million of and million X% capital $XX million additional $XXX as synergy

I that algorithm, our adjusted to We inorganic adjusted for be bps grow of year. remain expect than accretive Organic XX% will X% tuck-in growth $XX XXXX, by after course annualized per confident will now year terms XX to In million would margin revenue by over million of per adjusted XX EBITDA our from roughly the we turn few of Tom. to and to EBITDA million years. starting $XX to million back acquisitions. call organic increase by next per bps point the additional $XX less $X no an and year the EBITDA

Tom Harrington

Thanks Jay.

we're performed and business today heard stand XXXX. in how As the Jay just pleased you we with where cover,

As we water look better ahead pure-play to key leverage a drive growth of areas XXXX, and we model. are focused organic handful on to our

appreciate of And and our will customers The needs of remarkable. I want of health our dedication has much be Our service the we been suppliers. and efforts. their them to customers always has first been of to all associates know priority the how and continue and resilience our they as associates, safety

to and site, water delivery solution, leverage continuing experience the tools functionality the improve already with developing Entering rewards our new footprint residential and and that of customer to experience. This route model distribution meaningful critical from and approach. with promotions, by to and voice the expanding million diverse We includes large improving e-commerce engaging coverage. approximately program offers our mobile accounts our with new online include pure-play drive a together robust enhance of organic a the and will customer out and customers network revenue possess refine facing scale our app a and customer relationships will water XXXX, e-commerce to building to and customer facilitate exciting commercial initiative retailers, placement over $X.X loyalty instituting This we growth more X%. that of feedback

We to diversify in innovative our customer growing rate customer Water our our businesses and simultaneously and plan reduce Exchange quit and demand In accelerate acquisition strategies Refill, developing base retention. further residential we capture customer new the to Water and Water Europe, to market. are improve Dispenser

rollout mix believe year of more and us this We Primo balanced and in of and one are the will and they back the in with in customer expertise longer footprint have begin We provide water leaders legacy low-cost Europe over half Europe the will to the in benefits solutions the of see a term. we growth our for profitable solutions.

We those will structure improvements. efficiency emphasize variable highly protect our and leverage cost to

and is on take capturing to on that identified team Our focused appropriate front. will action the we continue synergies

and will highly Entering will new seek leader. and ESG expand We tuck-in of across business Europe an acquisitions execute intact. our identify and remain America sustainability XXXX, and accretive the North our drivers as standing growth to further ways

healthy the well continue category. purchasing more municipal concerns products of the we Customers as from healthy health from stand and at-home one, And a and and trends the services. foreseeable and sustainable a online, the highlight away cocooning lastly, to for services over are efforts. of sweetened these where hydration as also and that sugar goods benefit demand go water expect All growth position to they underlying less environmental awareness, for drive support for trends their we as we quality, beverages For in will that opting hydration wellness and are Primo's e-commerce are our are solutions. our provider from and to will benefit home where and demand solutions, future. drinking our to continue increased well levels for Consumers solutions quickly work not positioned

million for expect first to million our $XXX revenue and and be our consolidated quarter As $XXX between between million, $XX EBITDA be adjusted $XX Jay and XXXX noted, we million. to

EBITDA range growth full-year million. for are to $XXX a $XXX adjusted For of million in of X% approximately and be XXXX, revenue to the forecasting we

base to ROTH and take closely Direct North Company. Waters We that see Capital of in week's address like into and partnership condition Water sell Direct entered an to residential from Partners I'd in a strength America customer sustained expect base. the moment channels to and we customer to to business to at-home monitor commercial has other its continue our our agreement Metropolis Nestle last Nestle announcement with Water one,

We continue to opportunity combination of business. make sense. from believe the the with HOD the if And opportunity American our did entire carve when Water the remain interested ReadyRefresh that the and out arises. business Nestle own we buyer, strategic an assets, an HOD to not ReadyRefresh North provide

Our ReadyRefresh interest whole business not the HOD for and was only the company.

of may to back won't be may over we strategic to up commenting having. be I'll Q&A. With a the any John further about As call corporate that, discussions not particular move matter turn policy, or the we

Jon Kathol

Tom. Thanks,

person. to and ensure open Q&A, please per of of you. as limit can question many Thank would hear the you follow-up we the During Operator, one we questions. from line for as a one possible, for ask

Operator

the question first comes Derek Dley line [Operator of Your Instructions] Genuity. from Canaccord with

Derek Dley

I guys. hi Yes, just…

Tom Harrington

morning Good Derek.

Derek Dley

morning. just follow-up mean, wanted I Good Nestlé one One and Rock. I the on comment. last on that to the

in So put lower which number quoted that of there when billion run is asset kind that within how relatively to that seen that just space. we times that is we I'm multiples math, if the should slightly X.X a our roughly a in at and a transaction? in get North is EBITDA we line for through what wondering, we've widely I with which Primo of and value, than margin on be in the $X.X revenue historical thinking generates? American look transaction multiple about transaction

Tom Harrington

want to one. a the script, - in them that believe I day be in - from to did strategic that in that but comments, sell was in when in whole. remained here. HOD we said I'll remain combine value the onto we our that efforts which articulating We and shot just if interested is minute, a became and our the it which maintained And I It best again, ReadyRefresh discipline, narrowly footprint. of but this at… it available. clear can as the a to financial Yes our business our when Jay, strategically in intent maintain interest that to Nestlé's pretty my Jay We Derek, interested company our and always interest piece this Tom. is fits our historical words remain - that opportunity of track reiterate to becomes assets to record we some a just business is my pass the we've you it take provides, from

Jay Wells

on earnings the to underlying operating earnings They to EBITDA I you, XX water to individuals Yes, deal. EBITDA of And their XX% range. that higher, this XXXX. Derek. reference But EBITDA They've seen talked last of at trading their filings I multiples wide said release profit a I'm last do using range business public there with since When XX% on the end able find in they that's state page wasn't I times just the higher I've the of at margin. announced their are margin. last week. had And week. any looked issued they're so Nestlé's a of more yes,

So amortization think profit operating a be disconnect, because includes expense. might I depreciation and the that

percentage broke that Nestlé depreciation. sale assets you of $XXX take very So got held and business million if approach little see looked to a I and times on the simply of out total I a depreciation. D&A the went find water if versus assets I I took a the that. total under and basic for couldn't But for

factoring it's not I I'm the margin rough really find So records. from accurate, EBITDA public XX% on could disclosed depreciation I what through results. got math, just it's this a saying when to around

to getting yes, So am but is not again, I'm I saying correct, this number, a yes.

what was I to able used to with find the I Somewhat what on just - public closer records mentioned. based you assumptions on

Derek Dley

acceleration that margin the that. that's we're sort an same clarity is And this got that similar from customer I there. question did portion with into XX% using How okay. just we QX platform. your what times is see that Yes, or of a I you sort in exercise you the that at the the we terms for of trends in of all quarter? had going? of from business X.X Thank how documents. the to QX public additions e-commerce Did appreciate

Tom Harrington

Yes, again. Tom Derek, it's

recall You'll year. end that now. that remains The of place of is expand course the is footprint we will over in the begin the - program the

would the it you However, find shop local. on

and ability the that us retailer. transact purchase with with for one-time e-commerce to intact Amazon pleased is with the outcome quite So frankly, large we're

North that So, ability build in America. confident we remain to business over time still in our

Derek Dley

Okay. Thank you very much.

Operator

of Securities. next with Your question TD is Lessard the from Derek line

Derek Lessard

morning congratulate? good guys, and hey Yes,

Tom Harrington

Derek. Hey

Derek Lessard

On a to guided margins quarter? are the which question suggest mid back you're level, The great one to. be in that guidance happy guidance is that going where to see XX% come Good you've giving morning, just here.

Just maybe square quarter's performance? this that with away XX.X% me help

Jay Wells

I and mind our Derek. full to provided, jump-start you X% you've look marketing hit spend keep we year our revenue in some of to that to mean, our got really that one, guidance When targeted growth. at recovery to accelerate we need organic our

outlook, and EBITDA the of load. QX and pantry you've in I the you're keep timing we to not belief the of front end normal confident to we but what which we going And it's lapping will So the it's at through that as the high And you factoring mind. mean it at into it and pantry I'm is, thing pandemic is to least load mean our if talking with We're of of add half be of year, back, but factor I to type long-term last disciplined got our year. little factor last the dollars that's contribution not we're yet a will to of add guidance. to returning in longer. acknowledge the back, also, we need single-digit that. prudent part from to in saw our the day,

the And did close so, really really I provide want I to run to us margin. a previously, the what a as tightly we noise, would going think we costs take We so. had QX lot And of on deliver cost say I've but I and that of us we did we'll year. as get on inflated did QX but I back so. I benefited levers to is guided quarter. your watch numbers we wouldn't the And feel question, mean, specific as our lot that mentioned to rate, that we in

Derek Lessard

what And any the one the Jay. if can that's side if you that seeing helpful, highlight commercial to? you talk you last are Okay, on just specifically, of is maybe can you've business, shoots seen one maybe guys - green

Tom Harrington

you - marginally. if Europe, October to went in Yes but our then was despite commercial on recovered business, disappointing

Eden So settled better varies than into It by in finished little bit anticipated America both commercial and a the terms rate. North year current we obviously we but country, have the recovery. of

some the So, as creates that normal, to through about obviously year we're which base to cycle returns through and will return. unknown as that But confident that some that cycle in pandemic then, we commercial should that ultimately amount we have of goes QX, how finish. the customer

Derek Lessard

gentlemen. thanks, Yes,

Tom Harrington

Thanks, Derek.

Jay Wells

Thanks, Derek.

Operator

Your next with CIBC. question comes from John Zamparo

Tom Harrington

Good morning, John.

Jay Wells

John. Hello

John Zamparo

from week take morning, just out the on to synergies calling guys. guide XXrd the like you want the for. Thanks, add seems follow-up well. if you're It good I this year, EBITDA you as

You amount you're seems of that end guide. kind pantry have commentary you on revenue reasonable aware additional growth hoping anything this. it two side, could would Is bit back entirely of, there on low Even the else in be there Is elaborate that helpful? Primo offsets So the extra the of we versus out expecting? to just be if you'll SG&A add that a a the the of loading, should any And you'll the XXXX. the you of other spending presumably, get tuck-in? you months XXXX to have

Tom Harrington

and good that a in not considered have our guide. John, any XXXX this again. Tom we to piece over then of I'll Jay. I'll turn take and tuck-ins morning But it is Yes

tuck-ins incremental as our continue as about to through move a So We're been And to they growth mid-single the that. to digit, pipeline. going and to frankly, Jay we numbers would little got time, $XX to referenced and but revenue point then pandemic. million fruition, we accelerate they let drive come on we purposefully your is, organic changed clear will continue we've And that X% $XX out, because execute, over to nice have we profitability million. to

practice will Jay? it historical return you be a to will. if So

Jay Wells

the to guidance on spend back like said, in. EBITDA have any I commercial some And on do be, to side, we marketing return of coming really focus the prudent our dollars the the returning as now do that not as which start to I on will back we want normal. spending will We're spend, right along on We side business things be and coming with norm mentioned.

end. even estimates, legacy I from EBITDA it's said, like was significantly EBITDA of Primo, we month at if that we had. pantry For might have the But And look single-digit it's high at one saying we rough you exclude the benefit year-over-year I loading the are our but you that our QX in be up you guidance, saw. quarter, when lower -

So, prudent lap as were QX, the biggest the our of desire noisy year which be through quarters get to because and pandemic. QX to is we the

full it point to guidance, we was this time, We but will thought our guidance prudent the year at in did. provide update we

John Zamparo

my Okay, earlier residential as question we could that's helpful, well. then the but follow-ups thanks. on And on maybe volumes, commercial add

on QX, October mid far? said down for would was those in is December, think residential numbers then call you're commercial about think I January you what seeing say and February let's for, XXs. so XX% the in What be I up and equivalent that

Tom Harrington

you Yes. I'll Water I Direct numbers in and anything. can excluding here America Exchange if week. miss give of residential XXrd the and North Jay XX% up couple elaborate But was a

week. revenue was XXrd the excluding commercial XX% apples-to-apples, down So,

and it's for world, quarter the base quarter. America. very small up But the same number a and remember, XX% for little maybe and and residential was XX% the year. for the maintained commercial rest the And in, settled better a North for got residential that's So the year frankly down business commercial the bit of full was the XX% and

it frankly and quarter we're the into run settled we ended. how rate So, pleased down a saw frankly pretty about

Jay Wells

prepared wave lockdowns As I were with in very in results the Tom we Europe. because see mean happy we and and increased hit remarks, those second said did his

performed felt we so, it well. And

is improving with that February, numbers and consistent us and seeing pretty into exciting. into last got quarter. we're the continue. we seeing the January throughout we every a improving are time As America year trends over residential little commercial have And in has been North that Europe

John Zamparo

much. Okay, very you that's great, thank

Jay Wells

Thanks.

Operator

Grundy from Your Kevin with Jefferies. is next question

Tom Harrington

Good Kevin. morning,

Kevin Grundy

you. good Look everyone. officially. quick strategic capital welcome I as Hey, to a morning, deployment then call flow. Jon, I housekeeping have the and cash well with may, working question two to if forward on free

to wanted deployment. to the strategic back I capital come So

tuck-ins. M&A, helpful. then on many undervalued, So so? the a agree absence hold have is be timing reasons outcomes of put mouth, larger the any near-term And this to I on accelerate not that of have I within is range robust year? I share of So impacting for ask consider you people but considerations follow-up larger specifically you focus of your gotten and words with, stock which the Board? transaction past the and I going think has why call free know pace talked would flow? I which of a decisions the now the respect on for course respect with that that you repurchases? cash which to for understandable capital the wouldn't And with would there the forward comments felt for you guys tuck-ins, pipeline were long mentioned in context appropriately the deployment lot In with the - Nestlé's, of company So about

Tom Harrington

from we're of take I'll see million we're $XX million. activity but tuck-ins. to won't we the QX, frankly, of actions. $XX maintained some to year, then through piece execute. managing pandemic give And building I'll of in course and make want of we a sure a Yes, to height Jay. that prior a still We've of the the list that because lot Look on We

ability are the shareholders can where So, those comes the if we it's return to at properly to so maximize our down relates the low-end execute as to or it really for that tuck-ins. our high-end targets and

other reinvestments frankly in as some make come is to we The preserving that of year last out we cut piece that have XXXX, we CapEx to liquidity. is CapEx, related in

Jay Wells

add pandemic yet. in not on keep that, we're to mind, And one, this through

skis too a is flow continue spending extremely we over fast. to not QX historically but So, we're money done quarter We've question, well not Two, liquidity. throughout, preserve to free too your on going cash really and for our our generating quick, us. get

that really, to not I end little cash needs would on So deploy bit any I borrowing I can deployed. that period have revolver a my up with excess that if of excess it's see a cash be some.

on quarter quarter, another provide capital update deploy So anyways, the I other to the don't to call. our and quarterly deployment, this on buyback get flow have next really let's and pandemic. cash an we'll

Kevin Grundy

any where keeping that like to just you not But feel of point, it a there's Okay. sound is fair? your be put guys dry, considerations, like does should finer you sort powder

Jay Wells

make to as decision a a quarter said. have for - Don't I that on

Kevin Grundy

one, right. enough, all okay, fair the flow. Okay, then quick cash And quick on free

CapEx, us, update thinking models gave here flow? free et this as respect respect most our So be for capital should noteworthy we the drivers with EBITDA, with you of about, cetera. to anything taxes, there cash working Is year cash we to

Jay Wells

forward, to goal on going work the I But of up normally say to flat any really our And look keep hard - go working with along X% growth. working capital capital that to capital basis. way. forward some working we'll use that use moving type at guidance is would the working capital our would you for when targeting manage growth, offset try to and of me a organic

Kevin Grundy

Good Okay, very good. luck. Thanks for guys. the time

Jay Wells

Kevin. Thanks,

Operator

is CJS from Daniel next The with Moore Securities. question

Tom Harrington

Good morning, Dan.

Jay Wells

Dan. morning, Good

Daniel Moore

Tom you? and good Jay, morning. How are

Tom Harrington

Very good. you. Thank

Daniel Moore

Exchange you to ramp there? how But the color, on Europe, be Primo's I think traditional would wanted before exporting expand and see additional Refill you and about any think HX mentioned impact. to anecdotes it we start I quickly insights, businesses to

Tom Harrington

solution. through of we by went Yes, a very detail so analysis opportunities

capabilities. Where is about in building comments we Direct the where part ALP of So multi-year e-commerce as is referenced by plan? are where the the our and country? Water also opportunity our strat - Exchange Europe, in Refill, is out We our

call which - on the shop, us sell then dispensers begin Exchange to number we we a and would of working first a it would do of are the be wet Some countries. where in Baltics. Russia our business in And place

model Eastern expand go is So how Europe. we little disruption. team developing Poland on would to works see other - an have can the development we say in sure Baltics in But that an that as in that let's those that the want standpoint before from Russia to and that be countries, to have early-stage expanded to We've an We we execution solution right with countries. then going working the example. make

all and optimistic, and they cautiously on are we're those one-stage two topics. in another development So of

Daniel Moore

And Rock? when I with environment, then two, helpful? it, be to, the change any any know might dialogue topic see favorite One one? the you but Got here, number question, able change do apologize of the regarding a answer ReadyRefresh, a comments my you And ownership I to - at competitive with begin shot in number of but - everybody's for

Tom Harrington

if An Sure, is from take what really, you our between ReadyRefresh that would relationship web the our reduction Holy first terms does, things says and that's quit alarm part. interact us like concern. XX.X% are going on success customer our us Look or ultimately our the how with rate the our is customers. I'll by specifics, example XX.X% Grail. but any be tighter that investments driven causes not to and we in global the there right. in and experience, producing And the app a in nothing And of customers, will,

Texas, to Oklahoma, month in done key And the are in Arkansas. we're our and the frankly focus. efforts of February, our We have focused sticking on terrific teams

shape But a So live Sunday are operated there properly as an who gone need through in back example, also and, folks our and water. interestingly to get in business issues. Saturday people those great of we have and hydrate those frankly

front we're our causes in that on America. and So, us going stick nothing competitive great to concern a North knitting, to

Jay Wells

further to that, the have And I I no can't the so, give take say. on we Tom guess I'll comment didn't any - second,

Tom Harrington

no. CFO, the It's

Daniel Moore

thank I BX's you right much, Jay. these All it. always very appreciate take

Jay Wells

Thanks, Dan.

Tom Harrington

Dan. Thanks

Operator

Graham Price is question Your with Raymond James. from next

Tom Harrington

morning. Good

Graham Price

taking question. Hey, Molchanov. is This my good morning. Thanks for for on Pavel Price Graham

target bit than year a of can that view could conservative $XX tuck-ins, do accretive this you as what million to expect algorithm, So quick, million you be last your long-term bit growth just Just a a you potentially wondering that? seems - a quite you $X to that the and lower we what more target than if which bit real in did year?

Tom Harrington

more. Yes, we have of a in done in years the number past

say record this our So but again in we're would track still higher, pandemic.

pipeline. do cautious EBITDA good on So we'll frankly I to but that how those be timing early you deals, it $X the those of close an basis. want when right. million about have in tuck-ins, we we go is And comes year a it, very $XX nothing to million And and after to

higher So as in half-life of end. particular calendar they an as in some sense Atlantic. cases the the for weren't become example on available you as year our sides might But opportunities get in footprint opposed right that us to a forgoing we any make both

Graham Price

helpful. then thanks just said. And you, you part that's yes, I with last Got the sticking of guess what

wanted Just compare? to kind take and kind U.S. of your of on how in those versus the overseas brand that landscape

Tom Harrington

a would Yes, have would balanced I right. what call right approach, we now

I sit So on as size that's but develops that quarter. today opportunities both, and like each this here have we pipeline

space pipeline the we the us, bottles. very to high that Los of it Mountain that opportunity the have acquisition into in helps a premiumization a with And has we terrific get North us Valley beneficial Frankly, which brand, priced for company. Angeles, announced America. been is of good So

a, to our are through down other continue the And there's and we'll when path. lots - we if then a frankly There Top obviously approximately. the And is have that to of share it's So tuck-ins go team then so country-by-country. becomes the that few is country, list or of every target you who list get Europe, worked X XX opportunities. in small there And a has

Jay Wells

that adjacent benefit. And evaluate to we still see we'll can countries continue

last year. For example, we added Hungary

continue too over Europe. So we to in do that will

Graham Price

you much. Okay, thank very

Jay Wells

Thank you.

Tom Harrington

Thanks.

Operator

Your with next Teixeira question JPMorgan. is from Andrea

Tom Harrington

Good morning.

Andrea Teixeira

and morning good you in. thank me squeezing for Hi,

I'm I try M&A. on think again. My - a questions follow-up the prior from going question to is

you you other the and available? miss comment the you will I as summarize for do ReadyRefresh as How obviously appreciate the becomes down to you Just don't want we list, and long opportunities? when heard to would move think you you candor. Or if have wait to the

Tom Harrington

least we - I we've been I December for XXXX, of when at DS. mean, think acquired since the end

a so. we this still and as think it view highly it have we be And in we strategic talking always view as opportunity. consistent about will And I available we interested that opportunity.

Andrea Teixeira

changed But this the private with equity margin do of it maximize you the higher with being wants total think business? a a perhaps that value business to

Tom Harrington

mean, area do this really opportunity. apologize, provided I Yes, mean on I that I is we've just that we comments can an but the all

Andrea Teixeira

Of Thank on. course, I pass understand. you. I'll it

Tom Harrington

you. Thank

Operator

are time questions. no [Operator Instructions] And at there this

Jon Kathol

results attending. and call. year full you This all concludes Primo's Thank fourth quarter for

Primo Water (PRMW) 28 Feb 212020 Q4 Earnings call transcript