Primo Water Corporation Announces Third Quarter 2020 Results
Nov 05, 2020
Pure-play water strategy delivers operating income growth of 8%, adjusted EBITDA growth of 28% and 310 basis points of adjusted EBITDA margin improvement
(Unless stated otherwise, all 2020 comparisons are relative to the comparable period in 2019; all information is in
THIRD QUARTER HIGHLIGHTS – CONTINUING OPERATIONS
- Revenue increased 10% to
$518 million compared to$472 million (increased by 9% excluding the impact of foreign exchange). - Gross profit increased 6% to
$304 million compared to$286 million . - Reported net income and net income per diluted share were
$22 million and$0.14 , respectively, compared to reported net income and net income per diluted share of$7 million and$0.05 , respectively. Adjusted net income and adjusted net income per diluted share were$38 million and$0.24 , respectively, compared to adjusted net income and adjusted net income per diluted share of$24 million and$0.18 , respectively. - Adjusted EBITDA increased 28% to
$111 million compared to$87 million and adjusted EBITDA margin increased by 310 basis points to 21.4%. - Returned approximately
$10 million to shareowners through quarterly dividends.
“Continued strong performance in our Water Direct/Exchange residential customer base along with steady improvement from our commercial customer base allowed us to once again exceed expectations for the quarter,” commented
THIRD QUARTER GLOBAL PERFORMANCE – CONTINUING OPERATIONS
- Revenue increased 10% to
$518 million compared to$472 million (increased by 9% excluding the impact of foreign exchange), as the benefit from the legacy Primo acquisition was partially offset by lower revenue from our Water Direct commercial customer base and Coffee Services inNorth America and Rest of World (ROW). Revenue growth by channel is tabulated below:
Continuing Operations | |||||
Change% | |||||
2019 Q3 Revenue | $ 472.1 | ||||
Water Direct / Water Exchange | -3.4 | ||||
Water Refill / Water Filtration | +40.9 | ||||
Water Dispensers | +28.5 | ||||
Other Water | -0.9 | ||||
Other | -23.6 | ||||
Change before adjustments | +41.5 | 8.8% | |||
Foreign exchange | +3.9 | ||||
2020 Q3 Revenue | $ 517.5 | 9.6% |
- Gross profit increased 6% to
$304 million driven by the acquisition of the legacy Primo business as well as higher gross profit in theNorth America segment. Gross profit as a percentage of revenue was 58.8% compared to 60.6%. The decline in gross profit margin was the result of lower gross profit in the ROW segment and the lower gross margin profile of the legacy Primo business. - SG&A expenses were
$257 million compared to$244 million . The increase was due to the addition of the legacy Primo business, largely offset by lower SG&A resulting from cost reduction initiatives implemented earlier this year. Costs related to COVID-19 such as severance were approximately$2 million . - Reported net income and net income per diluted share were
$22 million and$0.14 , respectively, compared to reported net income and net income per diluted share of$7 million and$0.05 , respectively. Adjusted net income and adjusted net income per diluted share were$38 million and$0.24 , respectively, compared to adjusted net income and adjusted net income per diluted share of$24 million and$0.18 , respectively. - Adjusted EBITDA increased 28% to
$111 million compared to$87 million . The increase was driven primarily by growth in volumes from increased Water Direct services and products to residential customers, improved operating leverage, the benefit of the legacy Primo acquisition and synergy realization. - Net cash provided by operating activities of
$53 million , less$21 million of capital expenditures, resulted in$32 million of free cash flow, or$35 million of adjusted free cash flow (adjusting for the items set forth on Exhibit 7), compared to adjusted free cash flow of$59 million in the prior year.
THIRD QUARTER REPORTING SEGMENT PERFORMANCE – CONTINUING OPERATIONS
- Revenue increased 16% to
$393 million driven by the benefit of the legacy Primo acquisition, partially offset by lower revenue from our Water Direct commercial customer base and Coffee Services.
Change% | |||||
2019 Q3 Revenue | $ 337.6 | ||||
Water Direct / Water Exchange | +7.5 | ||||
Water Refill / Water Filtration | +39.9 | ||||
Water Dispensers | +28.5 | ||||
Other Water | -2.7 | ||||
Other | -17.4 | ||||
Change before adjustments | +55.8 | 16.5% | |||
Foreign exchange | -0.2 | ||||
2020 Q3 Revenue | $ 393.2 | 16.5% |
- Gross profit increased 11% to
$232 million driven by the benefit of the legacy Primo acquisition. - SG&A expenses increased 8% to
$184 million driven by the acquisition of the legacy Primo business, partially offset by cost reduction initiatives enacted earlier this year. - Operating income increased 26% to
$46 million . Adjusted EBITDA increased 38% to$91 million , primarily the result of the legacy Primo acquisition, improved operating leverage and synergy realization.
Rest of World
- Revenue decreased 8% to
$124 million driven by decreased volume in our Water Direct commercial customer base and coffee services business.
Rest of World | |||||
Change% | |||||
2019 Q3 Revenue | $ 134.5 | ||||
Water Direct | -10.9 | ||||
Water Filtration | +1.0 | ||||
Other Water | +1.8 | ||||
Other | -6.2 | ||||
Change before adjustments | -14.3 | -10.6% | |||
Foreign exchange | +4.1 | ||||
2020 Q3 Revenue | $ 124.3 | -7.6% |
- Gross profit decreased 8% to
$72 million driven primarily by decreased volume in our Water Direct commercial customer base and coffee services business. - SG&A expenses decreased 6% to
$61 million driven primarily by cost reduction initiatives enacted in our European business. - Operating income decreased 11% to
$10 million . Adjusted EBITDA was flat at$28 million as decreased volume in our Water Direct commercial customer base and coffee services business was offset by improved operating leverage resulting from cost reduction initiatives implemented earlier this year.
FOURTH QUARTER 2020 REVENUE AND ADJUSTED EBITDA OUTLOOK
Primo is targeting fourth quarter 2020 consolidated revenue from continuing operations of approximately
THIRD QUARTER 2020 RESULTS CONFERENCE CALL
International: (647) 427-7450
Conference ID: 1031839
A slide presentation and live audio webcast will be available through Primo’s website at https://www.primowatercorp.com. The earnings conference call will be recorded and archived for playback on the investor relations section of the website for a period of two weeks following the event.
ABOUT
Primo’s water solutions expand consumer access to purified, spring, and mineral water to promote a healthier, more sustainable lifestyle while simultaneously reducing plastic waste and pollution. Primo is committed to its water stewardship standards and is proud to partner with the
Primo is headquartered in
Non-GAAP Measures
To supplement its reporting of financial measures determined in accordance with GAAP, Primo utilizes certain non-GAAP financial measures. Primo excludes from GAAP revenue the impact of foreign exchange and the results of the divested
Safe Harbor Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 conveying management’s expectations as to the future based on plans, estimates and projections at the time Primo makes the statements. Forward-looking statements involve inherent risks and uncertainties and Primo cautions you that several important factors could cause actual results to differ materially from those contained in any such forward-looking statement. The forward-looking statements contained in this press release include, but are not limited to, statements related to future financial and operating trends and results (including Primo’s outlook on fourth quarter 2020 adjusted revenue and adjusted EBITDA) and related matters. The forward-looking statements are based on assumptions regarding management’s current plans and estimates. Management believes these assumptions to be reasonable, but there is no assurance that they will prove to be accurate.
Factors that could cause actual results to differ materially from those described in this press release include, among others: our ability to compete successfully in the markets in which we operate; fluctuations in commodity prices and our ability to pass on increased costs to our customers or hedge against such rising costs, and the impact of those increased prices on our volumes; our ability to manage our operations successfully; our exposure to intangible asset risk; the impact of national, regional and global events, including those of a political, economic, business and competitive nature; the impact of the spread of COVID-19, related government actions and our strategy in response thereto on our business, financial condition and results of operations; our ability to fully realize the potential benefit of transactions (including the Primo and S&D transactions) or other strategic opportunities that we pursue; our ability to realize cost synergies of our acquisitions due to integration difficulties and other challenges; our limited indemnification rights in connection with the legacy Primo acquisition; currency fluctuations that adversely affect the exchange between the
The foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in Primo’s Annual Report on Form 10-K and its quarterly reports on Form 10-Q, as well as other filings with the securities commissions. Primo does not undertake to update or revise any of these statements considering new information or future events, except as expressly required by applicable law.
Website: www.primowatercorp.com
EXHIBIT 1 | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(in millions of | |||||||||||||||
Unaudited | |||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
|
|
|
| ||||||||||||
Revenue, net | $ | 517.5 | $ | 472.1 | $ | 1,448.5 | $ | 1,355.4 | |||||||
Cost of sales | 213.4 | 185.8 | 616.4 | 554.4 | |||||||||||
Gross profit | 304.1 | 286.3 | 832.1 | 801.0 | |||||||||||
Selling, general and administrative expenses | 257.2 | 244.2 | 759.0 | 725.7 | |||||||||||
Loss on disposal of property, plant and equipment, net | 2.3 | 1.1 | 6.2 | 4.7 | |||||||||||
Acquisition and integration expenses | 3.3 | 2.6 | 28.4 | 10.0 | |||||||||||
— | — | 115.2 | — | ||||||||||||
Operating income (loss) | 41.3 | 38.4 | (76.7) | 60.6 | |||||||||||
Other (income) expense, net | (4.8) | 3.8 | 0.6 | 7.1 | |||||||||||
Interest expense, net | 20.4 | 20.2 | 60.8 | 58.3 | |||||||||||
Income (loss) from continuing operations before income | 25.7 | 14.4 | (138.1) | (4.8) | |||||||||||
Income tax expense (benefit) | 3.4 | 7.1 | (1.3) | 7.9 | |||||||||||
Net income (loss) from continuing operations | $ | 22.3 | $ | 7.3 | $ | (136.8) | $ | (12.7) | |||||||
Net (loss) income from discontinued operations, net of income | (0.3) | 2.8 | 26.3 | 7.5 | |||||||||||
Net income (loss) | $ | 22.0 | $ | 10.1 | $ | (110.5) | $ | (5.2) | |||||||
Net income (loss) per common share | |||||||||||||||
Basic: | |||||||||||||||
Continuing operations | $ | 0.14 | $ | 0.05 | $ | (0.89) | $ | (0.09) | |||||||
Discontinued operations | $ | — | $ | 0.02 | $ | 0.17 | $ | 0.05 | |||||||
Net income (loss) | $ | 0.14 | $ | 0.07 | $ | (0.72) | $ | (0.04) | |||||||
Diluted: | |||||||||||||||
Continuing operations | $ | 0.14 | $ | 0.05 | $ | (0.89) | $ | (0.09) | |||||||
Discontinued operations | $ | — | $ | 0.02 | $ | 0.17 | $ | 0.05 | |||||||
Net income (loss) | $ | 0.14 | $ | 0.07 | $ | (0.72) | $ | (0.04) | |||||||
Weighted average common shares outstanding (in thousands) | |||||||||||||||
Basic | 160,101 | 134,667 | 153,723 | 135,395 | |||||||||||
Diluted | 161,433 | 136,208 | 153,723 | 135,395 | |||||||||||
EXHIBIT 2 | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(in millions of | |||||
Unaudited | |||||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | $ | 161.9 | $ | 156.9 | |
Accounts receivable, net of allowance of | 275.1 | 216.7 | |||
Inventories | 79.3 | 62.9 | |||
Prepaid expenses and other current assets | 28.0 | 19.1 | |||
Current assets of discontinued operations | — | 186.7 | |||
Total current assets | 544.3 | 642.3 | |||
Property, plant and equipment, net | 669.9 | 558.1 | |||
Operating lease right-of-use-assets | 177.1 | 185.7 | |||
1,258.9 | 1,047.5 | ||||
Intangible assets, net | 982.0 | 597.0 | |||
Other long-term assets, net | 28.7 | 20.5 | |||
Long-term assets of discontinued operations | — | 339.8 | |||
Total assets | $ | 3,660.9 | $ | 3,390.9 | |
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Short-term borrowings | 148.8 | 92.4 | |||
Current maturities of long-term debt | 18.5 | 6.9 | |||
Accounts payable and accrued liabilities | 428.3 | 370.6 | |||
Current operating lease obligations | 38.3 | 36.5 | |||
Current liabilities of discontinued operations | — | 101.2 | |||
Total current liabilities | 633.9 | 607.6 | |||
Long-term debt | 1,306.5 | 1,259.1 | |||
Operating lease obligations | 144.9 | 155.2 | |||
Deferred tax liabilities | 140.3 | 90.6 | |||
Other long-term liabilities | 73.7 | 58.7 | |||
Long-term liabilities of discontinued operations | — | 53.5 | |||
Total liabilities | 2,299.3 | 2,224.7 | |||
Shareholders’ Equity | |||||
Common shares, no par value – 160,171,008 ( | 1,264.8 | 892.3 | |||
Additional paid-in-capital | 79.6 | 77.4 | |||
Retained earnings | 112.0 | 265.0 | |||
Accumulated other comprehensive loss | (94.8) | (68.5) | |||
Total shareholders’ equity | 1,361.6 | 1,166.2 | |||
Total liabilities and shareholders’ equity | $ | 3,660.9 | $ | 3,390.9 |
EXHIBIT 3 | |||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(in millions of | |||||||||||||||
Unaudited | |||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
Cash flows from operating activities of continuing operations: | |||||||||||||||
Net income (loss) | $ | 22.0 | $ | 10.1 | $ | (110.5) | $ | (5.2) | |||||||
Net (loss) income from discontinued operations, net of income taxes | (0.3) | 2.8 | 26.3 | 7.5 | |||||||||||
Net income (loss) from continuing operations | $ | 22.3 | $ | 7.3 | $ | (136.8) | $ | (12.7) | |||||||
Adjustments to reconcile net income (loss) from continuing operations to cash flows from operating activities: | |||||||||||||||
Depreciation and amortization | 53.6 | 41.7 | 151.4 | 124.3 | |||||||||||
Amortization of financing fees | 0.9 | 0.9 | 2.7 | 2.6 | |||||||||||
Share-based compensation expense | 6.2 | 1.5 | 13.5 | 8.0 | |||||||||||
Benefit for deferred income taxes | 1.8 | 7.1 | (2.6) | 1.0 | |||||||||||
(Gain) loss on sale of business | — | — | (0.6) | 6.0 | |||||||||||
— | — | 115.2 | — | ||||||||||||
Loss on disposal of property, plant and equipment, net | 2.3 | 1.1 | 6.2 | 4.7 | |||||||||||
Other non-cash items | (2.8) | 3.6 | 1.7 | — | |||||||||||
Change in operating assets and liabilities, net of acquisitions: | |||||||||||||||
Accounts receivable | (48.6) | (7.2) | (38.5) | (28.9) | |||||||||||
Inventories | 0.5 | (2.5) | 3.0 | (6.8) | |||||||||||
Prepaid expenses and other current assets | (3.9) | 0.3 | (3.5) | 0.6 | |||||||||||
Other assets | (0.3) | 0.1 | (0.9) | 1.3 | |||||||||||
Accounts payable and accrued liabilities and other liabilities | 21.2 | 34.1 | 12.6 | 4.2 | |||||||||||
Net cash provided by operating activities from continuing operations | 53.2 | 88.0 | 123.4 | 104.3 | |||||||||||
Cash flows from investing activities of continuing operations: | |||||||||||||||
Acquisitions, net of cash received | (1.2) | (5.2) | (435.7) | (30.7) | |||||||||||
Additions to property, plant and equipment | (21.4) | (32.9) | (85.0) | (79.2) | |||||||||||
Additions to intangible assets | (2.5) | (3.1) | (7.9) | (5.9) | |||||||||||
Proceeds from sale of property, plant and equipment | 0.2 | 0.4 | 1.0 | 2.3 | |||||||||||
Proceeds from sale of business, net of cash sold | — | — | — | 50.5 | |||||||||||
Other investing activities | — | 0.4 | 1.1 | 0.4 | |||||||||||
Net cash used in investing activities from continuing operations | (24.9) | (40.4) | (526.5) | (62.6) | |||||||||||
Cash flows from financing activities of continuing operations: | |||||||||||||||
Payments of long-term debt | (2.3) | (1.3) | (7.6) | (4.1) | |||||||||||
Proceeds from short-term borrowings | — | 1.2 | 323.9 | 64.1 | |||||||||||
Payments on short-term borrowings | (70.0) | (1.2) | (279.9) | (63.1) | |||||||||||
Issuance of common shares | 1.2 | 0.2 | 2.0 | 0.9 | |||||||||||
Common shares repurchased and canceled | (0.2) | (0.1) | (32.3) | (31.1) | |||||||||||
Financing fees | (0.6) | — | (3.4) | — | |||||||||||
Equity issuance fees | — | — | (1.1) | — | |||||||||||
Dividends paid to common shareholders | (9.6) | (8.2) | (29.9) | (24.4) | |||||||||||
Payment of deferred consideration for acquisitions | — | — | (1.2) | (0.2) | |||||||||||
Other financing activities | 7.9 | 2.0 | 19.1 | 5.4 | |||||||||||
Net cash used in financing activities from continuing operations | (73.6) | (7.4) | (10.4) | (52.5) | |||||||||||
Cash flows from discontinued operations: | |||||||||||||||
Operating activities of discontinued operations | (0.7) | (5.9) | (18.7) | 9.7 | |||||||||||
Investing activities of discontinued operations | (4.0) | (3.0) | 388.9 | (26.2) | |||||||||||
Financing activities of discontinued operations | — | (0.2) | (0.1) | (0.4) | |||||||||||
Net cash (used in) provided by discontinued operations | (4.7) | (9.1) | 370.1 | (16.9) | |||||||||||
Effect of exchange rate changes on cash | 0.8 | (0.9) | (0.2) | 0.5 | |||||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (49.2) | 30.2 | (43.6) | (27.2) | |||||||||||
Cash and cash equivalents and restricted cash, beginning of period | 211.1 | 113.4 | 205.5 | 170.8 | |||||||||||
Cash and cash equivalents and restricted cash, end of period | 161.9 | 143.6 | 161.9 | 143.6 | |||||||||||
Cash and cash equivalents and restricted cash from discontinued operations, end of period | — | 24.7 | — | 24.7 | |||||||||||
Cash and cash equivalents and restricted cash from continuing operations, end of period | $ | 161.9 | $ | 118.9 | $ | 161.9 | $ | 118.9 |
EXHIBIT 4 | ||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
(in millions of | ||||||||||||||||
Unaudited | ||||||||||||||||
For the Three Months Ended | ||||||||||||||||
Rest of World | All Other | Total | ||||||||||||||
Revenue, net | ||||||||||||||||
Water Direct/Water Exchange | $ | 252.1 | $ | 60.2 | $ | — | $ | 312.3 | ||||||||
Water Refill/Water Filtration | 48.9 | 8.1 | — | 57.0 | ||||||||||||
Other Water | 39.0 | 20.5 | — | 59.5 | ||||||||||||
Water Dispensers | 28.5 | — | — | 28.5 | ||||||||||||
Other | 24.7 | 35.5 | — | 60.2 | ||||||||||||
Total | $ | 393.2 | $ | 124.3 | $ | — | $ | 517.5 | ||||||||
Gross Margin | $ | 232.4 | $ | 71.7 | $ | — | $ | 304.1 | ||||||||
Gross Margin % | 59.1 | % | 57.7 | % | — | % | 58.8 | % | ||||||||
Selling, general and administrative expenses | $ | 183.6 | $ | 60.7 | $ | 12.9 | $ | 257.2 | ||||||||
Operating income (loss) | $ | 46.0 | $ | 10.2 | $ | (14.9) | $ | 41.3 | ||||||||
Depreciation and amortization | $ | 38.5 | $ | 14.8 | $ | 0.3 | $ | 53.6 | ||||||||
For the Three Months Ended | ||||||||||||||||
Rest of World | All Other | Total | ||||||||||||||
Revenue, net | ||||||||||||||||
Water Direct/Water Exchange | $ | 244.7 | $ | 69.5 | $ | — | $ | 314.2 | ||||||||
Water Refill/Water Filtration | 9.0 | 6.8 | — | 15.8 | ||||||||||||
Other Water | 41.8 | 18.0 | — | 59.8 | ||||||||||||
Water Dispensers | — | — | — | — | ||||||||||||
Other | 42.1 | 40.2 | — | 82.3 | ||||||||||||
Total | $ | 337.6 | $ | 134.5 | $ | — | $ | 472.1 | ||||||||
Gross Margin | $ | 208.8 | $ | 77.5 | $ | — | $ | 286.3 | ||||||||
Gross Margin % | 61.8 | % | 57.6 | % | — | % | 60.6 | % | ||||||||
Selling, general and administrative expenses | $ | 170.5 | $ | 64.9 | $ | 8.8 | $ | 244.2 | ||||||||
Operating income (loss) | $ | 36.5 | $ | 11.4 | $ | (9.5) | $ | 38.4 | ||||||||
Depreciation and amortization | $ | 27.6 | $ | 14.0 | $ | 0.1 | $ | 41.7 | ||||||||
For the Nine Months Ended | ||||||||||||||||
Rest of World | All Other | Total | ||||||||||||||
Revenue, net | ||||||||||||||||
Water Direct/Water Exchange | $ | 715.3 | $ | 160.3 | $ | — | $ | 875.6 | ||||||||
Water Refill/Water Filtration | 123.8 | 21.5 | — | 145.3 | ||||||||||||
Other Water | 123.7 | 48.0 | — | 171.7 | ||||||||||||
Water Dispensers | 55.2 | — | — | 55.2 | ||||||||||||
Other | 89.8 | 110.9 | — | 200.7 | ||||||||||||
Total | $ | 1,107.8 | $ | 340.7 | $ | — | $ | 1,448.5 | ||||||||
Gross Margin | $ | 644.4 | $ | 187.7 | $ | — | $ | 832.1 | ||||||||
Gross Margin % | 58.2 | % | 55.1 | % | — | % | 57.4 | % | ||||||||
Selling, general and administrative expenses | $ | 535.9 | $ | 187.5 | $ | 35.6 | $ | 759.0 | ||||||||
Operating income (loss) | $ | 94.1 | $ | (116.9) | $ | (53.9) | $ | (76.7) | ||||||||
Depreciation and amortization | $ | 107.1 | $ | 43.4 | $ | 0.9 | $ | 151.4 | ||||||||
For the Nine Months Ended | ||||||||||||||||
Rest of World | All Other | Total | ||||||||||||||
Revenue, net | ||||||||||||||||
Water Direct/Water Exchange | $ | 680.9 | $ | 193.2 | $ | — | $ | 874.1 | ||||||||
Water Refill/Water Filtration | 26.7 | 19.7 | — | 46.4 | ||||||||||||
Other Water | 123.1 | 45.6 | — | 168.7 | ||||||||||||
Water Dispensers | — | — | — | — | ||||||||||||
Other | 128.5 | 130.5 | 7.2 | 266.2 | ||||||||||||
Total | $ | 959.2 | $ | 389.0 | $ | 7.2 | $ | 1,355.4 | ||||||||
Gross Margin | $ | 580.7 | $ | 220.0 | $ | 0.3 | $ | 801.0 | ||||||||
Gross Margin % | 60.5 | % | 56.6 | % | 4.2 | % | 59.1 | % | ||||||||
Selling, general and administrative expenses | $ | 504.9 | $ | 189.7 | $ | 31.1 | $ | 725.7 | ||||||||
Operating income (loss) | $ | 68.7 | $ | 25.6 | $ | (33.7) | $ | 60.6 | ||||||||
Depreciation and amortization | $ | 83.4 | $ | 40.7 | $ | 0.2 | $ | 124.3 | ||||||||
EXHIBIT 5 | |||||||||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – ANALYSIS OF REVENUE AND GROSS PROFIT BY REPORTING SEGMENT | |||||||||||||||
(in millions of | |||||||||||||||
Unaudited | |||||||||||||||
For the Three Months Ended | |||||||||||||||
Rest of World | All Other | Primo (a) | |||||||||||||
Change in revenue | $ | 55.6 | $ | (10.2) | $ | — | $ | 45.4 | |||||||
Impact of foreign exchange (b) | $ | 0.2 | $ | (4.1) | $ | — | $ | (3.9) | |||||||
Change excluding foreign exchange | $ | 55.8 | $ | (14.3) | $ | — | $ | 41.5 | |||||||
Percentage change in revenue | 16.5 | % | (7.6) | % | — | % | 9.6 | % | |||||||
Percentage change in revenue excluding foreign exchange | 16.5 | % | (10.6) | % | — | % | 8.8 | % | |||||||
For the Nine Months Ended | |||||||||||||||
Rest of World | All Other | Primo (a) | |||||||||||||
Change in revenue | $ | 148.6 | $ | (48.3) | $ | (7.2) | $ | 93.1 | |||||||
Impact of foreign exchange (b) | $ | 0.7 | $ | (1.9) | $ | — | $ | (1.2) | |||||||
Change excluding foreign exchange | $ | 149.3 | $ | (50.2) | $ | (7.2) | $ | 91.9 | |||||||
Percentage change in revenue | 15.5 | % | (12.4) | % | (100.0) | % | 6.9 | % | |||||||
Percentage change in revenue excluding foreign exchange | 15.6 | % | (12.9) | % | (100.0) | % | 6.8 | % | |||||||
For the Three Months Ended | |||||||||||||||
Rest of World | All Other | Primo (a) | |||||||||||||
Change in gross profit | $ | 23.6 | $ | (5.8) | $ | — | $ | 17.8 | |||||||
Impact of foreign exchange (b) | $ | 0.1 | $ | (2.3) | $ | — | $ | (2.2) | |||||||
Change excluding foreign exchange | $ | 23.7 | $ | (8.1) | $ | — | $ | 15.6 | |||||||
Percentage change in gross profit | 11.3 | % | (7.5) | % | — | % | 6.2 | % | |||||||
Percentage change in gross profit excluding foreign exchange | 11.4 | % | (10.5) | % | — | % | 5.4 | % | |||||||
For the Nine Months Ended | |||||||||||||||
Rest of World | All Other | Primo (a) | |||||||||||||
Change in gross profit | $ | 63.7 | $ | (32.3) | $ | (0.3) | $ | 31.1 | |||||||
Impact of foreign exchange (b) | $ | 0.4 | $ | (1.2) | $ | — | $ | (0.8) | |||||||
Change excluding foreign exchange | $ | 64.1 | $ | (33.5) | $ | (0.3) | $ | 30.3 | |||||||
Percentage change in gross profit | 11.0 | % | (14.7) | % | (100.0) | % | 3.9 | % | |||||||
Percentage change in gross profit excluding foreign exchange | 11.0 | % | (15.2) | % | (100.0) | % | 3.8 | % | |||||||
(a) | |||||||||||||||
(b) Impact of foreign exchange is the difference between the current period revenue and gross profit translated utilizing the current period average foreign exchange rates less the current period revenue and gross profit translated utilizing the prior period average foreign exchange rates. |
EXHIBIT 6 | |||||||||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION | |||||||||||||||
(EBITDA) | |||||||||||||||
(in millions of | |||||||||||||||
Unaudited | |||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
|
|
|
| ||||||||||||
Net income (loss) from continuing operations | $ | 22.3 | $ | 7.3 | $ | (136.8) | $ | (12.7) | |||||||
Interest expense, net | 20.4 | 20.2 | 60.8 | 58.3 | |||||||||||
Income tax expense (benefit) | 3.4 | 7.1 | (1.3) | 7.9 | |||||||||||
Depreciation and amortization | 53.6 | 41.7 | 151.4 | 124.3 | |||||||||||
EBITDA | $ | 99.7 | $ | 76.3 | $ | 74.1 | $ | 177.8 | |||||||
Acquisition and integration costs (a), (b) | 3.3 | 2.6 | 28.4 | 10.0 | |||||||||||
Share-based compensation costs (c) | 6.2 | 1.9 | 13.5 | 8.0 | |||||||||||
COVID-19 costs (d) | 1.6 | — | 18.4 | — | |||||||||||
— | — | 115.2 | — | ||||||||||||
Foreign exchange and other (gains) losses, net (f) | (2.0) | 4.3 | 3.2 | 4.6 | |||||||||||
Loss on disposal of property, plant and equipment, net (g) | 2.3 | 1.1 | 6.2 | 4.7 | |||||||||||
(Gain) loss on sale of business (h) | — | — | (0.6) | 6.0 | |||||||||||
Other adjustments, net (i) | (0.5) | 0.4 | 5.1 | 3.9 | |||||||||||
Adjusted EBITDA | $ | 110.6 | $ | 86.6 | $ | 263.5 | $ | 215.0 | |||||||
(a) Includes a reduction of | |||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
Location in Consolidated Statements of Operations | ||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
(b) Acquisition and integration costs | Acquisition and integration expenses | $ | 3.3 | $ | 2.6 | $ | 28.4 | $ | 10.0 | |||||||
(c) Share-based compensation costs | Selling, general and administrative expenses | 6.2 | 1.9 | 13.5 | 8.0 | |||||||||||
(d) COVID-19 costs | Selling, general and administrative expenses | 1.6 | — | 18.4 | — | |||||||||||
(e) | — | — | 115.2 | — | ||||||||||||
(f) Foreign exchange and other (gains) losses, net | Other (income) expense, net | (2.0) | 4.3 | 3.2 | 4.6 | |||||||||||
(g) Loss on disposal of property, plant and equipment, net | Loss on disposal of property, plant and | 2.3 | 1.1 | 6.2 | 4.7 | |||||||||||
(h) (Gain) loss on sale of business | Other (income) expense, net | — | — | (0.6) | 6.0 | |||||||||||
(i) Other adjustments, net | Other (income) expense, net | (2.6) | (0.6) | (1.8) | (2.9) | |||||||||||
Selling, general and administrative expenses | 2.1 | 0.9 | 6.5 | 7.1 | ||||||||||||
Cost of sales | — | 0.1 | 0.4 | 6.9 | ||||||||||||
Revenue, net | — | — | — | (7.2) |
EXHIBIT 7 | ||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – FREE CASH FLOW AND ADJUSTED FREE CASH FLOW | ||||||
(in millions of | ||||||
Unaudited | ||||||
For the Three Months Ended | ||||||
Net cash provided by operating activities from continuing operations | $ | 53.2 | $ | 88.0 | ||
Less: Additions to property, plant, and equipment | (21.4) | (32.9) | ||||
Free Cash Flow | $ | 31.8 | $ | 55.1 | ||
Plus: | ||||||
Acquisition and integration cash costs | 2.9 | 3.4 | ||||
COVID-19 related cash costs | 5.0 | — | ||||
Less: | ||||||
Deferral of payroll tax related costs – government programs | (4.8) | — | ||||
Adjusted Free Cash Flow | $ | 34.9 | $ | 58.5 | ||
For the Nine Months Ended | ||||||
Net cash provided by operating activities from continuing operations | $ | 123.4 | $ | 104.3 | ||
Less: Additions to property, plant, and equipment | (85.0) | (79.2) | ||||
Free Cash Flow | $ | 38.4 | $ | 25.1 | ||
Plus: | ||||||
Acquisition and integration cash costs | 28.5 | 11.9 | ||||
Transaction cash costs paid on behalf of acquiree | 13.4 | — | ||||
COVID-19 related cash costs | 15.2 | — | ||||
Less: | ||||||
Deferral of payroll tax related costs – government programs | (14.0) | — | ||||
Adjusted Free Cash Flow | $ | 81.5 | $ | 37.0 |
EXHIBIT 8 | |||||||||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION (EBITDA) AND ADJUSTED EBITDA BY REPORTING SEGMENT | |||||||||||||||
(in millions of | |||||||||||||||
Unaudited | |||||||||||||||
For the Three Months Ended | |||||||||||||||
Rest of World | All Other | Total | |||||||||||||
Operating income (loss) | $ | 46.0 | $ | 10.2 | $ | (14.9) | $ | 41.3 | |||||||
Other (income) expense, net | (0.7) | (4.0) | (0.1) | (4.8) | |||||||||||
Depreciation and amortization | 38.5 | 14.8 | 0.3 | 53.6 | |||||||||||
EBITDA (a) | $ | 85.2 | $ | 29.0 | $ | (14.5) | $ | 99.7 | |||||||
Acquisition and integration costs | 1.0 | 0.5 | 1.8 | 3.3 | |||||||||||
Share-based compensation costs | 1.9 | 0.3 | 4.0 | 6.2 | |||||||||||
COVID-19 costs | 1.0 | 0.6 | — | 1.6 | |||||||||||
Foreign exchange and other gains, net | (0.1) | (1.8) | (0.1) | (2.0) | |||||||||||
Loss on disposal of property, plant and equipment, net | 2.3 | — | — | 2.3 | |||||||||||
Other adjustments, net (b) | (0.1) | (1.0) | 0.6 | (0.5) | |||||||||||
Adjusted EBITDA | $ | 91.2 | $ | 27.6 | $ | (8.2) | $ | 110.6 | |||||||
For the Three Months Ended | |||||||||||||||
Rest of World | All Other | Total | |||||||||||||
Operating income (loss) | $ | 36.5 | $ | 11.4 | $ | (9.5) | $ | 38.4 | |||||||
Other (income) expense, net | (0.1) | 4.3 | (0.4) | 3.8 | |||||||||||
Depreciation and amortization | 27.6 | 14.0 | 0.1 | 41.7 | |||||||||||
EBITDA (a) | $ | 64.2 | $ | 21.1 | $ | (9.0) | $ | 76.3 | |||||||
Acquisition and integration costs | 0.5 | 1.4 | 0.7 | 2.6 | |||||||||||
Share-based compensation costs | 0.5 | 0.2 | 1.2 | 1.9 | |||||||||||
Foreign exchange and other losses (gains), net | 0.3 | 4.3 | (0.3) | 4.3 | |||||||||||
Loss on disposal of property, plant and equipment, net | 1.0 | 0.1 | — | 1.1 | |||||||||||
Other adjustments, net (d) | (0.2) | 0.5 | 0.1 | 0.4 | |||||||||||
Adjusted EBITDA | $ | 66.3 | $ | 27.6 | $ | (7.3) | $ | 86.6 | |||||||
For the Nine Months Ended | |||||||||||||||
Rest of World | All Other | Total | |||||||||||||
Operating income (loss) | $ | 94.1 | $ | (116.9) | $ | (53.9) | $ | (76.7) | |||||||
Other (income) expense, net | 0.6 | 0.7 | (0.7) | 0.6 | |||||||||||
Depreciation and amortization | 107.1 | 43.4 | 0.9 | 151.4 | |||||||||||
EBITDA (a) | $ | 200.6 | $ | (74.2) | $ | (52.3) | $ | 74.1 | |||||||
Acquisition and integration costs | 7.5 | 2.6 | 18.3 | 28.4 | |||||||||||
Share-based compensation costs | 4.4 | 1.0 | 8.1 | 13.5 | |||||||||||
COVID-19 costs | 8.7 | 9.4 | 0.3 | 18.4 | |||||||||||
1.2 | 114.0 | — | 115.2 | ||||||||||||
Foreign exchange and other losses (gains), net | 0.5 | 2.8 | (0.1) | 3.2 | |||||||||||
Loss on disposal of property, plant and equipment, net | 5.8 | 0.4 | — | 6.2 | |||||||||||
Gain on sale of business (c) | — | — | (0.6) | (0.6) | |||||||||||
Other adjustments, net (e) | 2.9 | 0.3 | 1.9 | 5.1 | |||||||||||
Adjusted EBITDA | $ | 231.6 | $ | 56.3 | $ | (24.4) | $ | 263.5 | |||||||
For the Nine Months Ended | |||||||||||||||
Rest of World | All Other | Total | |||||||||||||
Operating income (loss) | $ | 68.7 | $ | 25.6 | $ | (33.7) | $ | 60.6 | |||||||
Other (income) expense, net | (1.3) | 3.8 | 4.6 | 7.1 | |||||||||||
Depreciation and amortization | 83.4 | 40.7 | 0.2 | 124.3 | |||||||||||
EBITDA (a) | $ | 153.4 | $ | 62.5 | $ | (38.1) | $ | 177.8 | |||||||
Acquisition and integration costs | 2.4 | 4.7 | 2.9 | 10.0 | |||||||||||
Share-based compensation costs | 1.9 | 0.6 | 5.5 | 8.0 | |||||||||||
Foreign exchange and other (gains) losses, net | (0.6) | 6.3 | (1.1) | 4.6 | |||||||||||
Loss on disposal of property, plant and equipment, net | 4.6 | 0.1 | — | 4.7 | |||||||||||
Loss on sale of business (c) | — | — | 6.0 | 6.0 | |||||||||||
Other adjustments, net (f) | 1.4 | (0.1) | 2.6 | 3.9 | |||||||||||
Adjusted EBITDA | $ | 163.1 | $ | 74.1 | $ | (22.2) | $ | 215.0 | |||||||
(a) EBITDA by reporting segment is derived from operating income (loss) as operating income (loss) is the performance measure regularly reviewed by the chief operating decision maker when evaluating performance of our reportable segments. | |||||||||||||||
(b) Impact of other adjustments, net for | |||||||||||||||
(c) (Gain) loss on sale of | |||||||||||||||
(d) Impact of other adjustments, net for | |||||||||||||||
(e) Impact of other adjustments, net for | |||||||||||||||
(f) Impact of other adjustments, net for |
EXHIBIT 9 | |||||||||||||||
SUPPLEMENTARY INFORMATION-NON-GAAP-ADJUSTED NET INCOME AND ADJUSTED EPS | |||||||||||||||
(in millions of | |||||||||||||||
Unaudited | |||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
Net income (loss) from continuing operations (as reported) | $ | 22.3 | $ | 7.3 | $ | (136.8) | $ | (12.7) | |||||||
Adjustments: | |||||||||||||||
Amortization expense of customer lists | 14.7 | 12.0 | 38.6 | 35.7 | |||||||||||
Acquisition and integration costs | 3.3 | 2.6 | 28.4 | 10.0 | |||||||||||
Share-based compensation costs | 6.2 | 1.9 | 13.5 | 8.0 | |||||||||||
COVID-19 costs | 1.6 | — | 18.4 | — | |||||||||||
— | — | 115.2 | — | ||||||||||||
Foreign exchange and other (gains) losses, net | (2.0) | 4.3 | 3.2 | 4.6 | |||||||||||
(Gain) loss on sale of business | — | — | (0.6) | 6.0 | |||||||||||
Other adjustments, net | (0.5) | 0.4 | 5.1 | 3.9 | |||||||||||
Tax impact of adjustments (a) | (7.3) | (4.1) | (21.9) | (13.7) | |||||||||||
Adjusted net income from continuing | $ | 38.3 | $ | 24.4 | $ | 63.1 | $ | 41.8 | |||||||
Earnings Per Share (as reported) | |||||||||||||||
Net income (loss) from continuing operations | $ | 22.3 | $ | 7.3 | $ | (136.8) | $ | (12.7) | |||||||
Basic EPS | $ | 0.14 | $ | 0.05 | $ | (0.89) | $ | (0.09) | |||||||
Diluted EPS | $ | 0.14 | $ | 0.05 | $ | (0.89) | $ | (0.09) | |||||||
Weighted average common shares outstanding (in thousands) | |||||||||||||||
Basic | 160,101 | 134,667 | 153,723 | 135,395 | |||||||||||
Diluted weighted average common shares | 161,433 | 136,208 | 153,723 | 135,395 | |||||||||||
Adjusted Earnings Per Share (Non-GAAP) | |||||||||||||||
Adjusted net income from continuing operations | $ | 38.3 | $ | 24.4 | $ | 63.1 | $ | 41.8 | |||||||
Adjusted diluted EPS (Non-GAAP) | $ | 0.24 | $ | 0.18 | $ | 0.41 | $ | 0.30 | |||||||
Diluted weighted average common shares | 161,433 | 136,208 | 155,003 | 137,126 | |||||||||||
(a) The tax effect for adjusted net income is based upon an analysis of the statutory tax treatment and the applicable tax rate for the jurisdiction in which the pre-tax adjusting items incurred and for which realization of the resulting tax benefit (if any) is expected. A reduced or 0% tax rate is applied to jurisdictions where we do not expect to realize a tax benefit due to a history of operating losses or other factors resulting in a valuation allowance related to deferred tax assets. | |||||||||||||||
(b) GAAP diluted weighted average common shares outstanding were used for the three months ended |
EXHIBIT 10 | |||||||||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – ANALYSIS OF REVENUE | |||||||||||||||
(in millions of | |||||||||||||||
Unaudited | |||||||||||||||
Primo (a) | Primo (a) | ||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
|
|
|
| ||||||||||||
Revenue, net | $ | 517.5 | $ | 472.1 | $ | 1,448.5 | $ | 1,355.4 | |||||||
$ | — | $ | — | $ | — | $ | (7.2) | ||||||||
Adjusted Revenue | $ | 517.5 | $ | 472.1 | $ | 1,448.5 | $ | 1,348.2 | |||||||
Change in adjusted revenue | $ | 45.4 | $ | 100.3 | |||||||||||
Percentage change in adjusted revenue | 9.6 | % | 7.4 | % | |||||||||||
Impact of foreign exchange (b) | $ | (3.9) | $ | (1.2) | |||||||||||
Percentage change in adjusted revenue excluding foreign exchange impact | 8.8 | % | 7.4 | % | |||||||||||
(a) | |||||||||||||||
(b) Impact of foreign exchange is the difference between the current period revenue translated utilizing the current period average foreign exchange rates less the current period revenue translated utilizing the prior period average foreign exchange rates. |
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