PRMW.TO - Earnings call 3 2023

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Operator

Good morning. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the Primo Water Corporation's Third Quarter 2023 Earnings Conference Call. [Operator Instructions]Thank you. I'll now turn the call over to Jon Kathol, Vice President, Investor Relations. ahead. go Please

Jon Kathol

and actual non-GAAP of during regulators.The XX-Q expressly except these with reports is the required with data the duty live and Water undertakes being conference [Operator Primo from than materially morning statements, released quarter earnings available applicable being on XXXX on a.m. primowatercorp.com website Welcome will GAAP contains the this performance of reconciliation in financial These measures statements section performance. harbor statements, discussed and This is statements connection the Corporation's this differ call and press update forward-looking law. other company's with any the operational statements, call. be morning's company including as webcast is call in financial by to Relations primowatercorp.com. Instructions] measures on company's capable no Form Time. for securities the filings when later forward-looking concerning could estimated these in company's Primo will conference release accordance Water's and the Eastern earlier most XX-K disclaimers cautionary at in statements playback.This quarterly and statements company's with be in to quarter earnings website the there and the The or third announcement call of at third Investor on safe included call annual A end company's considered comparable XX:XX no contained the Form future earnings should report the

by our by designed Officer; discussion.I to and high-level followed summary on review Water's deck a our website the third a transaction Hass, the now earlier Tom outlook strategic call Tom today's the quarter providing assist accompanied a ahead Financial by segment will and to Chief will Water that, Tom before David greater our discuss the Harrington, XXXX announced initiatives. to level performance, throughout you Executive year Then in quarter Officer. Primo will the review a for will Tom. Primo our third full call included David was Q&A.With I of that call to and of provide morning, Chief offer am over turn this also long-term have view performance on start of We progress back handing our and our detail

Thomas Harrington

John, you, morning, good and Thank everyone.

team and Israel Before our third cover the share news announced today have strong of I prayers. quarter, like earlier that exciting the and delivered citizens and been remain the suppliers customers, the associates, the I'd and to in in results our thoughts

I and them an and face news. associates by continuing to Our Israel to communities to customers, of in the to have efforts.Now water to for the citizens Israel each our of a other tremendous their horrific their commitment bottled shown situation incredible supply thank on in want today's

the milestone This in marks another have in program. the a million will transaction as to expect outstanding XXx authorization of upcoming unlocks remainder highly be balance customer that sold well proactive businesses, divestiture generate Israel $XX several greater revolver and QX international believe addition, as and value this on upon American is finalize a authorize of announced closing. focus have plans and remaining Upon The an net water XXXX we executing $XX the these the aggregate of XXXX.We focus, Kingdom, and United Board Primo a transaction businesses, have the closing proceeds occur organic to sustaining will share water to transaction in deal place services of million cash an alternatives strategic as a valuation Primo we of flow unlocking a first Culligan August XXXX closing, was North our repay means to increased the offers in substantial repurchases.Highlights adjacencies adjusted the Direct Foods To in the months well result Aimia to by closing businesses resulted synergistic opportunity. million businesses, EBITDA. portion Portugal year. agreed the Water pursue sell businesses portion board-led include pure-play of international to reduce transactions XX accelerate the we water drive in year, announced with of all-cash international significant our in attractive of used long-term approved of under profile, XXXX, the execute for and in of purchase tuck-ins Kingdom leadership, market remaining existing share are they are repurchase shareowner an adjusted approximately shareowners will post includes that simplified up This in to in It scale will authorization The An significant for businesses approximately million deal and the businesses to The until via and Water as us opportunities of that with an premium trailing $XX adjacent as shareowners. international as pursue of the the which price North we attractive high-growth As several return the for an goal to additional a businesses transaction, major that be company.Following our Water enables for of ability a United addressable sold. to as to previously forma intend improved to value. International. significant leverage, the in are operational American incremental international tuck-ins, categories. clear, expected water premium X EBITDA.In and accelerating cash remains financial the $XXX our transformation multiple the coffee our the capital we significant our leverage to the growth, of transaction completion focus X.Xx agreement process pro on targets where be achievement scale the valuation

will align our our full for organic and opportunities to be options will drive digital and growth a Our capital high-impact capital value.We customer customer to drive retention activities support to will investments with and growth, priorities projects. able profit-generating suite of focused initiatives allocation be will able be in

opportunities. reduce giving to us leverage, will We increased growth pursue the flexibility

million associate we We will repurchases. have brand via return fund to And all a Water In M&A lower revenue with the performance thank Upon support prior teams and million. a growth increase and to consolidated X% greater growth, execute strength, XXXX. company accelerated leverage, to new record XX.X%, North power share and excellent revenue aligns to a of strong XXX,XXX earnings poised increase year's M&A to dispensers.For to approximately business third focused another EBITDA QX, releasing year, in million a $XXX the and $XXX the of the water our base, growth X%, leaner, year-end an a earnings and closing, of organic capital anticipate XXXX power earnings guidance of potential XXX flow we $XXX streams. compared a adjusted through has that results shareowners Primo American-based tuck-ins well pace.We quarter sell-through our the as like with margin conjunction as revenue revenue contributions we and the increased of XX%, of for February delivering balance I EBITDA margins. EBITDA will adjusted will versus their sheet of would adjusted of point delivered quarter, free more to in next cash company of that adjusted basis record consolidated at the generating

revenue an of Excluding the of million the X% impact EBITDA increased $XX quarter. foreign for increased $XXX XX%. to exchange, million, increase Adjusted

XX%, driven impact of revenue, grew growth growth short, last adjusted Water operations in significant strategy. customer a Filtration X%, as flow. Direct to the revenue of impact growth customer exchange double-digit execution tuck-in foreign from XX%. reflect and EBITDA approximately we increase Direct of growth, Revenue slight of adjusted cash and the well of and in as European of is EBITDA global EBITDA quarter.XXXX expected Water increased customers exchange, margin combination by strong organic In free excluding growth expansion Exchange our retention revenue XX%, Water the our foreign the in revenue growth increased X%, Refill of in growth Excluding adjusted of was and delivered

dollars acquisitions our a generally and synergized in adjusted component the reminder, resulting customer These a customers and are increased tuck-in density, our plans. retention EBITDA core strong in markets executed. margins As enhance days route growth within of rates, have were XX

recurring in XXX,XXX of Our water water X dispensers In pace commercial water particularly and through on razor-razorblade and Both sale connectivity dispenser includes approaches approaches. our dispensers predictable than to of year. revenue where retail water and of X and enable growth.In million growth retail partners. dramatically our XXXX, approximately water solutions through to water have the mortar target connectivity our with we we units model greater we contribute brick e-commerce. The partners for growth the sold sell-through of visibility and our are focused with the the and into QX, business rental customers where solutions to had dispensers residential is higher on through direct

Water The strong to growth driven growth increasing stations. XX% the Our driven during with consolidated Direct.Our by service business and and pricing, the XX% top by with Exchange growth Filtration exhibit Refill levels Water experience was Direct at pricing X% and continued strong machine in in quarter. continues consistent revenue retention revenue business and momentum quarter our line retail uptime to Water customer

and platform in other and solutions this margins station retention to diverse revenue Refill We similar high offerings, of provides which water and value-conscious expecting have refill a growth we our category. profit water provide all a for continued are a Water rate, consumers. consumer targets

We compared The in commitment a of digital a increased a satisfaction.As to products customer increased on Full with and critical simply X% the short day compared the or in route to key OTIF Units America improved to X% focus customer long-term day of QX the North report our all most is put OTIF. resulted of the route of metric our and On per when QX XXXX. that revenue we QX manner QX has approximately is to profitability. customer experience experience OTIF In serve per on scheduled XXXX. and compared improving requested. driver operational in efficient a are we time and deliver to customers is XXXX increased our ability per they to did possible reminder, and service to pleased both metrics,

more GAAP able entire result, XX.X% of margins Our to sustainalytics have company report. And the last leverage month, overall analysis the post Relative improve ESG, route.Route a received and North a becoming related significantly factors as to higher. never able results across more and service revenue American margins score been the our scale score. are received corporate we of per volume risk to customers EBITDA XX.X%. strong we're density adjusted and We with were higher ESG we and of evident governance per record as route to

water with distribution expansive Our our as whenever, coupled to strength and of in ability network sets of our in and our wherever water however sources terms ESG, they customers' our as well rights meet apart needs access ownership to us want.

is revenue challenges X% with the $XXX current moat easily We XXXX full range guidance million, success.Looking us up we $XXX adjusted XXXX our to in that million year to and Israel. and and not billion between have revenue and be X% of ahead, sets understanding sustained $X.XX between $X.XX for EBITDA billion while are an be year the to reaffirming growth full replicated economic in

a been Our We've respect monitor strides to to increased adjusted date to made significant of flow relatively earnings free disruptions through and minor combination continue with generation cash improved we capital. working closely. and have situation the

in in expect guidance financial flow next year-end quarter annual in versus prior over $XX third conjunction our February releasing adjusted guidance. million full our to an a We detail. We now to the $XXX increase XXXX with year review turn David cash free Hass, earnings XXXX in anticipate CFO, greater million, increase call results to XXXX.I'll of year's our

David Hass

results. quarter morning, to Tom, compared million. Starting third and $XXX good you, X% to $XXX with revenue increased Thank Consolidated everyone. our million

margin exchange, of the XX.X%. for of the increased points foreign revenue to XX% represents expansion impact XXX to $XXX Adjusted million, Excluding quarter. EBITDA X% which grew a basis

a America for Excluding the compared EBITDA our to in of XX.X%, North $XXX to Adjusted increased adjusted performance grew to improvement million. million $XXX revenue quarter. EBITDA level EBITDA Adjusted America foreign our XXX segment, to exchange, X% North to to increased XX% XX%.Turning climbed million. over $XXX segment the Europe year. impact In point $XX increased million. basis margins by revenue last XX%

EBITDA Adjusted million. Excluding XX% of revenue increased the X%. $XX exchange, the in foreign to Europe impact segment increased

Adjusted a EBITDA of XX%. year.Turning margins impact basis last the adjusted to our full to improvement Excluding foreign and climbed over year by QX outlook. point XXX XX.X%, EBITDA exchange, increased

revenue consolidated and the adjusted $XXX be between of to million will the fourth million. expect be We $XXX in quarter $XXX and to $XXX for range million million, EBITDA

Tom to XXXX, to we be XXXX to are X% As reaffirming our and growth $XXX full we of cash billion, with to full and $X.XX X% $X.XX range adjusted million, between million.Additionally, guidance. previous are mentioned, be year and between adjusted flow the billion $XX EBITDA of guidance raising for million our an guidance $XXX revenue year projected the the million compared free with in revenue $XXX increase to

were Our reported XX.X%. in the quarter SG&A expenses third

benefit volume the as have year-to-date the to our declined as higher basis, adjusting As contest, proxy percentage reported activist due the XX.X% the compared QX a to onetime On scale able nonrecurring were to items for would sales SG&A a as and leverage such SG&A of expected, seasonality. XX.X%. of been from we

new maintaining from CapEx products our allow installing dispenser fleet, XXXX are well guidance revenue a CapEx expect organic in capabilities, XXXX, $XXX We water usage distribution to more in growth water reduce production efficient to our of innovation, and innovations. that as return will branding environmentally investing guidance which driving including filtration and refill and $XX our filtration initiatives the our which revenue, is total leading signage and of digital plus funded irrespective incremental existing reaffirm X% efficient fleet units, productivity a and we with transaction.Key of in include investments an development of approximately We prior driving will the which in increase X% our building on-the-go refreshed, million, approximately million. of CapEx approximately our of to more of friendly growth, plan be more our as private spend lines, our of for units

year and increased we tied tariff category full reminder, to available interest have under to our tied year we X% and NOLs XXXX, million U.S. still last dispenser interest of is third process able to items, XX% balance by XXXX.The at business flow net a refund and actively expect are in the flow a For senior generation cash losses, lower NOLs, working revolver in the interest amount a while our XXXX.As substantial balance our debt capital X%. of initiated. we've cash with be XXXX of $XX been and $XX the anticipates year the the are to prioritize we reducing CapEx the and million with our XXXX This of $XX managing of water million. cash rates or XXXX to operating facilities with of very taxes expense interest utilization was our of is of from approximately alone. approximately management previously cash was maturity low rates to was dates approximately that million. remain Most to Full expense X continue expense U.S. import our quarter excess cash reclassified approximately revolver a $XX Due of but note expected

the slight We free flow related QX, $X.X related to interest a in million value in have tariff tariff approximately sold original a $XXX,XXX cash year-to-date our to $X.X in QX, manner reflected is $X.X the a refunds $X.X year-to-date refunds, million the that million quarter. in similar rent same we'll as of balance the that for we million adjusted residual last of income paid Approximately since recorded dispensers retail, received have $X.X increase to EBITDA CapEx of approximately we discuss million is transactions. the water water guidance reflected adjusted moment. Primo.Through related the is to to as dispensers with Through the

have refund additional our to not any the timing refund amounts guidance uncertain the We process. due of included updated in

anticipated to the increase the achieve than ratio of adjusted guidance our adjusted below are first the have at targeted increase free after latest cash in guidance tariff the ability last a capital our targeted of our quarter $XX achieved performance X.Xx slight committed to an increase of is the target we of to to transaction. remain balance across pleased to net quarter report annual in leverage with The and at X actions our related ratio working confident year-end.We end raise in are receipts for XXXX, benefits we less and X.Xx As to in million, with million we the attributable into coming completion that the $XXX leverage look of the in $XX quarters is mainly our we prior which the X.Xx, from net quarter flow the million. since year,

base tuck-in acquisitions year-to-date or positions of scaling of remainder XXXX million. end of to of is other Our similar for are us customer our whether to Acquisitions complementary year acquisition $XX per to million the through of we the achieve guidance tuck-ins, a our acquire acquired cost of high source potential customer through with activity, M&A the remain acquisition the the along $XX base.The organically typically purchase of of both tuck-in means customer means acquisition, acquisition. customer

However, Direct regions annual acquired committed through already and stickiness of operating acquisitions are the scale. cost in customer. understand service benefits lies density and operating the remain provide of to accelerate the the of Direct to difference and tuck-in Water users tuck-ins service. Customers in Water the We our

and operations regular return in while strengthen increase authorized dividends external share enable invest of and share opportunities $X.XX and our path flow value through the years. to per further long-term in that $X.XX sheet our simultaneously growth.Our and balance opportunistic quarterly will drive common repurchases our share, dividend dividend an continues us internal to to of has per Our continuing quarterly X of of cash to dividend each quarterly step-up multiyear the last with which in Board Directors a shareholders

announced to yields We transaction XXXX across on outcomes we sooner most relates year to transaction morning, Primo financial will cash financial American ability allow North confident targets, excited Water's the to adjusted anticipated. business this previously financial targets to contributes in metrics. our that free accelerate us of about the greater go-forward by board, it than the this to the the communicated these As remain basis. are Water up several profile on very The a transaction Primo allow the a achieve conversion focus and flow to transaction company.Across financial benefits to also the margin will and

that While value XXXX and of cash future reflects approximately notional Water cash full conversion the significantly. million, free the take our declines, EBITDA When dollar deliver the North of of updated This adjusted free million adjusted scale present new of in flow flow guidance the benefit. $XXX you business. increases year American $XXX will each the Primo

program. version provide XXXX, now solely American in of As focused normal provide accretive growth related free flow Water repay the the as revolver on February the to year.Immediately and increase opportunities to for support XXXX organization accelerate and North we our the fulfill our XXXX million in is that all intend million well North of drive repurchase the the we financial call consultants optimizing intend pursue in to course to balance growth, right to call acquisition $XX the outstanding as discussed, we Direct optimization complementary cash Tom. authorized global throughout turn acquired close, during earnings acquisitions business a Primo one market. and will adjacent shift we cash company. efficiencies organic American-focused prior of the flexibility back will initiatives engage newly American of proceeds the additional We to to million share fiscal on outside and core guidance businesses.To organic normal to flow upon tuck-in The will the as to by This from additional the size updated our North the QX to intend adjusted engage achieve we structure water previously Water company flow cost nearly to $XX results.I $XX and to cash across in replace expect free occur

Thomas Harrington

David. Thanks,

margin Water confidence performance sustained operations the deliver Refill Our improved performance growth to strong and Direct reinforces tuck-in businesses, M&A our of Filtration our strong and our expansion. Exchange revenue of supported continued strategy, our in ability execution our adjusted in growth, by EBITDA

the solid and have making progress plan team succeed. place are in and right the to We right

large about targets well the wellness water as growth as We and as base.Our we health only pure-play of driven and consumer our brands, the the dispensers a concerns local and are by such platforms national revenue one leading aging water water the to tailwinds, infrastructure. and with water benefit solutions of connectivity and are on growing from focus long-term

profile. have We compelling attractive outlook a and a sheet, healthy balance growth long-term an margin

M&A shareowners successor. pleased The later confident will and today initiated search the new this firm, number Board the a search international announced candidates with for I is earlier organic in with my we create my an the Board, and quarter. value highly a transaction met final of this that the has leverage, therefore capital.As return retirement XXXX, of are supporting the a by of update, of as stages support process, the CEO the we announcing qualified anticipate reducing of earlier We an with be and summer, growth, and at announced results the end funding driving of

company has results, I'd the future. amazing see whilst last a X from soft managing our and company. results transformation to continues accomplished. of a the can right this pure-play associates personal as from our and for X the shareowners.All for perform to been of of strong proud the The a proven be move we well decades, business an manufacturer journey including at coffee The of North global and our focused company international the sell significant most the X a high more a and business. at pandemic, us become the will and valuation investor, enable refresh. execution marketplace rewards company recognizes of our to I'm community. also and be CEO the It high of businesses is the with the to analysts a fan value have inflation, premium the our company has you juice to accordingly. of I'm you, board customers, customer. American clearly level private the like thank the label chairing into them a hopeful a the drink investors through will water that on transaction will and what accomplished remain and last I over consistent model water as awards As and the record supporter current years positioned an major financial

team in I Our serving and turn mission across support the Q&A. their business in best the over for to leadership associates John for them thank our amazing, are call They are efforts our professionalism. business.With tireless the of with that, and I'll back our truly and the customers

Jon Kathol

Tom. Thanks,

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

Operator

question Cowen. first Lessard, Derek TD comes Your Instructions] from [Operator

Derek Lessard

start retirement. to a maybe wanted with Tom, just your I congratulations, Tom, on off little

done job through at I a times say least. really to this organization think the the you've remarkable challenging helm of

that for about So second act, the you nothing whatever wishing be. the best may

Thomas Harrington

appreciate Thanks, much. that Derek. I very

Derek Lessard

Just on mostly really it's the more pro maybe Slide a XX. David but questions, had on forma business, for it's all few

to you down $XXX clarify if from million. the in could Just wondering maybe $XXX million EBITDA step

that business legacy the or million that. year the is think in Europe selling of close $XX to you're I

So there? what's the missing piece

Thomas Harrington

be basis. a foundation everyone we guide give a Yes. NewCo the was that will call XX who Derek what of so and on of to purpose

reality be thing, million in the would the about the the you guide optimization business, other PW&A, midpoint PW&A the the of will we EBITDA of think be Corp business reduce $XXX include there's So does i.e., business. million the look that part some the $XXX representing the assets to $XXX our gains overhead across equivalent and transactions secondary just is would of that business contemplate includes size right domestic the for in But and component XXXX.The midpoint the $XXX a yet not of component. corporate as guidance, about as

this and a forma million chart on the so guidance obviously, XXXX. And lighting basis, both growth free upside. we that of to across $XX is before organic cash $XXX pro has equivalent includes give all And million that about flow inorganic

And really question. so the I think that's I wanted provide to clarity appreciate the there. we

Derek Lessard

too, Okay. you at on And guess just cash free helpful. flow. maybe it, the that on slide, That's touched I looking same

of to million. $XXX kind You then and back $XXX million down to talking walk it up

remind, I on expecting drive that you think $XX maybe call, allude the what but to to just did it to incremental Just million? you're

Thomas Harrington

Yes. Correct.

the So Inside again, $XXX $XXX increase with that XXX% for of million have of prior flow to go NewCo across for free us, capacity basis, will generative $XX that free there X calendar slippage cash of develop. saying the or we consider million business.Now again, what be cash to XXXX. flow take million, view would took in for we be represents basically benefit, in the cash flow a million enterprise inorganically adjusted to similarly we will rate that the $XXX the remarks, across just would when we're that up guide The PW&A And that will the free run prepared business that acquired be a again done with as forward. to on forma pro that million $XX any rightsizing is flow-through comments the organic comes 'XX the that XXXX.

So kind get going of with depicted offset just potential the million and this you the of shows you be upside same again the upside $XXX these $XX optimizations, think thing. about its sort to million back with us when $XXX has we will flow cash And of domestic-oriented forward free parity are kind who business right the of to that business. now. we of

Derek Lessard

in. one And That's last maybe one I'll Okay. sneak very all helpful.

you and just your guide -- quarter, on but specifically this discontinued again big revenue on not beat XXXX that's more Just don't right? yet, unchanged. Obviously, EBITDA kept I QX. adjusted guide ops

Thomas Harrington

No. No. No.

XX/XX. right? course, normal we've So expect said close -- to that's I So we on think

as be existing transparent. completely to look, is is And Derek, So that company is. where

next a X have the We to It the know the it's wanted watch of to have with it. here the frankly, Israel. and far, minimal weeks business in -- hasn't real I through But going We're a in performed contact conservatism degree over don't team. well impact. I X all crazy thus time X time happen because weeks. We what's in to last

Israel. So could be what new be. of certainly for an leave properly just so myself. the ahead this hedging to not know, I I in guy don't want don't want reflecting what don't outcome could against to I get

Operator

question from Deutsche Stephen Powers, next comes Your Bank.

Stephen Robert Powers

Tom, congrats. Great.

that transaction on topic I guess. topic, So building -- the

if transaction thing, clarify your I around the prepared kind wanted first the of of costs of mentioned, just there's used fine, the just might you be helpful in from that? that's you like, the terms be to any the And know. what I to would of it's well words variability as Tom, proceeds that in if The had remarks variables closing the in course mean slides deal, up to and normal $XXX.

Thomas Harrington

last-minute close there's then. No, those it A, B, now no, No. is then if just closing between and

on to then. we costs expect yes, little now between So but $XXX, vary could and close bit a

no So trigger that that says down or there's up nature. or anything to

Stephen Robert Powers

Great.

from that bit numbers corporate I base one? if remain hard perspective the number cost And guess from to time here? that forma. that bridging you've the a for just buyer, out clarify guess kind little base EBITDA I it. been Like the future against stranded EBITDA of the of have way the then And parsing that little the Okay. netted that, maybe that what's businesses then I provided. assumption David, embedded a guess cut mean more, you Like is what of is could pro I a sale? another what

David Hass

understood. Yes,

currency value here. not local asking if increases on transaction down you screen that apples-for-apples million guide support overall it's back comes kind same this on obviously, of gets And overhead the inside equivalent about shipped about included Derek will, was with like $X to million stranded then about of and basically, So slide that million Corp North -- a residual overseas XX about, $XX American the is assets USD an value million. as the step with $XX.X that cost about there's the that

money we're the bucket, you of if seek across optimization XX. kind trying that's so the And the of will, where to

Stephen Robert Powers

Okay.

for basis, sale. got about $XX an base I got million From apples-to-apples that it. Okay. you've a EBITDA remains

David Hass

the monetize is about us to begin processes to we are And That's focus the entities. those major first active here talk obviously, wanted of we transaction additional the again, for domestically. and primary correct. those But transactions benefit a Yes. to in that today,

Operator

Andrea from JPMorgan. comes question next Your Teixeira,

Andrea Teixeira

the congrats And your congratulated on retirement. you I So on transaction. had

goes it So again. here

Thomas Harrington

you. Thank

me, nice said remember. about You I things

Andrea Teixeira

Yes.

X have questions. I So

on strategic First, divestiture, if deal. talked now you step this had you back, And we about you been. on Tom, the for options as

puts you're -- had going you Can your U.S. the you like in perspective? competitor. position the a in You're in you going largest as bigger with structure attempted able a be this about focus completely leverage. transformational capital past, no to like Now potentially have transaction transactions Is excess from different obviously there obviously, think to cash, to

just your additional little a cash. You're going to very I have, cash on mean, impact obviously, free free flow.

there composition the -- dispensers, and comparison bit had hoping And wanted have anything business underlying like about of think throughout quarter. you in from second, in in Direct of perspective things I terms the or terms can perspective?And Water for the where of, -- company tough this I third customers you quarter in like you could a the steps to LBO Exchange. to the in So from on know growth? talk was know a an I line? volume that mean, is the if clarify. a you top something is also, next investors of I One of like very just are see CPG couple then pricing Can asking take within I this more that strategic been a the

year. I of? we be bit there, of of think little to any if should that deceleration shipping consumption, But ahead price were last anything or anything like relates a you're seeing ahead color as just aware it increase the you of

Thomas Harrington

if -- We'll see we'll this. get Yes. through I

talk let's I capital our which important. So about deployment right, strategy, is think

As the that profit-generating see America, right? North as past. discussed today, digital will investments capabilities against the And be high as we in invest plants in it the growth that's organic well of would that So some triggers in we've we projects.

continued on our example, from the organic so the top growth digital development an of an capabilities, to As support perspective. line

we of because M&A and synergistic tuck-ins but highly we the ability certainly we a Water will the inside revenue that so will forward robust that leverage energy of we for deleverage, because on and have EBITDA future, where go in a that the flow in both think maintain position through build to on Direct at it those. customers path.We will we there invest of they focused X.Xx the that as cash execute as a we get pipeline EBITDA, are us those revolver is which the leverage could with closing, -- remain We help intended margins our foreseeable us incremental reduce time have markets -- -- X

And So that near-term our we've course, as horizon. of a be share deployment We capital don't repurchase focus will part on see anything of referenced the transformative strategy. go-forward ours. of primary

what look at call will I'll adjacencies. water We

highly we cash and skip but dispensary revenue. the biggest David, model. gives leave our we'll that our day, ability fit question. confident the water to our consider. water other comp. at of to to there had because about a base us the get that's question a Yes, million in actionable on year, XXXX. big nothing your pursue in XXX,XXX responsive were in are We're to the adjacencies $X of We just we're sell And that benefit.So briefly There's ability further million our through company the how imminent areas or $X of current this end sell-through your I'll the one we able that I'll use for to but approximately this fit will would profitable with that to view So I'll that roughly deployment, dispensers. shareholders' inure touch capital importantly, there, customer.

have be exchange of dispenser do a because large that see focused have for us where When sell can a will opposed we today we a we activities brick-and-mortar have I part shifted our focused some brick-and-mortar of sale. comp in cycle And sight to we've a did because translate sell on e-commerce. the we the into we really Importantly, of e-commerce. retailer, it we're connectivity. very ago year sell We're a that future see to that harder to of But an we to clear on much of to It's I e-commerce. is or and the as how enjoy how retailers customers the focus shift benefit and in big our on do real that work do some improve visibility e-commerce.So in relationship where is not dispensers. all there box team more to they our I think line

that David. questions flip clarifies component a So or that And then question to your bit. over hopefully, revenue I'll

David Hass

that's again, side We our a North business. Yes. pricing. the the focused on itself, positive with volume contribution go-forward balance the America Andrea, within to had as close quarter of X% being

about of calendar And that undergo pacing so would Direct articulated came and shows priced. is within Water that true had sequencing obviously in being point throughout being that the balance year a the the and X how we volume Exchange

Operator

next from Your BJS comes question Daniel Moore, Securities.

Dan Moore

Good morning, you and thank Tom, Tom and Thank you. luck. again, best David of

it want this say think going for I an you, forward. to that, left wanted hit so. the was poised I door growth particularly for exceptional assuming tax If let in no you expect in company didn't the me assets I'm there collection regulatory hurdles know. I let say, to with to given with I to don't presentation short missed million? Absolutely. $XXX of -- the going close? that there's the was you it, of which window you're and any leakage is concerned I please But And but

Thomas Harrington

it's but through you get pretty can obviously those. a And they'll We get Yes. Culligan believes through to have some quick see close. regulatory hurdles,

there of think any course several But our the then. is X we get months weeks, over Culligan's -- we'll view guarantees. those in no through are is next next normal -- whatever So that's view

David Hass

looking estimating $XX Yes. deploy we're sort a that And of with reserving kind leakage. believe We bit million on and close will sub end Dan, some back, but on that. actually up the minimal obviously, capital, upon circle conservatism side, final we'll just for true, we're we're to tax don't the little outcome. But becoming of how

Dan Moore

price the relates as relative In remain. you about you're Tom, received from think probably the other versus words, And between embedded to Perfect. is the differences. sale Culligan pretty else Culligan, Any synergies then that explain when where that it to but the discernible multiple assets obviously, reasonable the multiple, and that on that's selling the Primo discrepancy in some sort of you assets side will generate their trading? would anything

Thomas Harrington

Yes. what to own overlapping that The on they value many pay Colligan the and were stands us in for is assets. it cases, for, deal willing for its

a for assets those in want it might -- different. about get don't what discussion that's processes that. and starting because public get multiple remaining And So I processes don't all to and we're will into want get really not to be we

our of frankly, wise ability value, be on over So to I to any would disclose assets. hurt haul will maximize think not long it those that the

David Hass

those by as as we're impactful transact cash pretty proceeds. of revolver sort and just this this leverage think transaction communicated, just I this we'll the And with with can $XX be additional have transaction set to million. our we Yes. Obviously, use flow, share to But eliminate so. ability next to that with of communications increase about next or our just the pleased transaction, the repurchase that

Dan Moore

kind record Route focus at quarter. peak, Perfect. but reached big levels And levels not crack one, and a Tom. more the can density, one last you, get of I obviously, while in peak this

continue kind these levels in improve current price room we density much further current in how saw to to mind is increases, Excluding QX? from your there route of

Thomas Harrington

Dan, the numbers look at in put out to Yes. of if X% order a the quarter-over-quarter. you X% there, we've on it runs

So I do have don't absolutely does with customer It think we finished. to density.

things -- one Costco as we relationship customers we So of bring we those benefit our same is in from over the routes.

component strategy. that And then you tuck-in deliver a of a our reduce and more M&A you on more as miles basis an of footprint, daily we'll footprint. also So and geographic it's customers have important smaller

we As businesses in that continue they overlapping terms of will provide from the you leverage us geographies, buy to route and benefit density.

Operator

CIBC. Your comes next question John from Zamparo,

John Zamparo

as It's pleasure. echo burning, well. congratulations on Tom, I'll been career your are my a but ears already transition I know in your

Thomas Harrington

John. Thanks, appreciate it. I

John Zamparo

tuck-in equity My to I you've seen deals? reasons wonder longer? first pulling what past the accelerate the ^ here. higher of more question Are Is relative market. M&A might want that to to the given you be there back for environment that of one in might And opportunities years is private now on

Thomas Harrington

pay guide about last we of stock. tuck-ins times, high recall when secondly, to cautious performance may we wanted any of operated. million they clarity lack price we we of And and purposeful small that sure you $XX impact we revenue articulated year fuel the some -- gave were of of multiple wanted there's and be think talked we million, took increases, those about many revenue, a that I to the about Well, to $XX on of our make we tuck-ins prices of because that

it as about pipeline actionable That's platform. in doing activities stand as decision them So so we we in this, that that a thoughtful to prudent a can be as have it's right?So I robust we was properly. maybe we 'XX-'XX but timing have as of had remember of when we've long that as do think company's we a execute here we robust is pipeline an the can job, today,

of terms the I execute And conditions in market think we it's moving to to our So be benefit. in Water leader that to ability the Direct. this are [ kind of space ] continue in our

David Hass

up a network, And transaction where benefit them starting Yes. single branch private and none Primo's on equity, really the pile domestically our don't or of there against is a creating platform, one you will. I would if think, because bump in scale we thing John, I'd

to So ability within we any synergize would itself. have at of ability the the level down network our to compete quickly because those really

that, our ability tuck that's pipeline so very feel fortunate smoothly. sort of in And pretty to its I and

John Zamparo

Right. Understood.

on QX? anything That's past you wonder moment? over on pricing have Do some And depend And follow-up for at Does pricing I of then outlook the for demonstrated is on real to pushback seen subsequent thinking it about helpful. you're power costs? Okay. my pricing. couple specifically, you've Have you years. how the planned your 'XX. pricing

Thomas Harrington

John. fair Yes, question,

good retention to our ability pretty and about I which think our the quarter. at Water of XX%, rate the reaction uptick on from business we slight in That's my a a indication talk Direct customers' prepare remarks, pricing. was prior

I ahead it. But a if reserved So We if be in watch and always on don't at appears in. right we basis. pricing So daily get accelerated on where the for moves, we'll fuel And that the settling need pretty pricing, currently of we've number based right? to certainly would we ticks stable. currently -- And that the see look customer is then haven't years offset course 'XX, to elastic. quarters, normal XX our able action.And inflation, pricing inflation we over a a dozen result drive the other able of, an We're I It the pricing the base know, we've the take been add doing. course through. to of don't to think that or so X.X margins last indicate and we'll would that actions does way, been as those right, we've

Operator

Molchanov, Raymond James. comes question next from Your Pavel

Pavel Molchanov

with Yes. while you've targets? on that you been active above particularly of months. been not Kind debt more Is on have roll-off back the are XX you M&A over the that past topic. because activity The leverage of to the fact kind reluctant take

Thomas Harrington

strategically, flow, more quarter has obviously, a end said is to QX, been No, X we we're as the out did in X.X strategic sight we not It and free wanted clear get under it where debt XXXX. of course. X.XX a We was at long-term driver. target to we cash the that of of line funded normal early, our and

and how I important would that about or now to believe on within want the conditions it is. operators, market But inflation, wear on true target largely pipeline. that's don't really cost by was diminish driven our it we So the based I become more fuel how and driven the largely smaller direct believe

David Hass

the targets the within we've the million. loan And right still by right able quarter reduced And buy at I $XX Pavel, revolving to this Yes. price think, the then alone, year. been obviously,

well right been an seems course, us pipeline value. But heading year. the to the date, to been it's ability of synergize target, it execute right next built with the the excited for again, we're, the to the either/or that right business, against new 'XX not to it's down geography, that of So about opportunity cash-generative for match across about into

where tuck-ins your it's excited question I little We're So about with next bit. year. pretty go maybe think reversing can we a

Pavel Molchanov

states try be not to historically there pure perhaps Canadian that now American particular Are or you but to accessed, North any are And will play. you going now a have penetrate? provinces where

Thomas Harrington

Yes.

I'll Pavel, they Our the course most call us. synergistic to because overlapping is, are first it,

we've So do, makes is area been energy water What tuck-ins. though, Greenfield for not invested will historically that we those on has are think us. an adjacency sense to what about begin

that of position be would about will its that, but a the to we to something this could be shareholders. the are think needs to that do, that term course, So company in the longer and do company center, we makes right it's sense for things about what of

Operator

I for no turn back now this to remarks. time. closing it will are There questions Kathol further Jon at

Jon Kathol

attending. Water's This Call. Thank Quarter Chris. all Results Third you Thanks, concludes for Primo

Operator

participating thank you. this call concludes conference Thank your and please gentlemen, your for lines. that for you ask Ladies disconnect today. We and you

Primo Water (PRMW) 2 Nov 232023 Q3 Earnings call transcript