Primo Water Corporation Announces Second Quarter 2020 Results
Aug 06, 2020
Pure-play water strategy delivers adjusted EBITDA growth of 10% and 170 basis points of margin expansion
(Unless stated otherwise, all 2020 comparisons are relative to the comparable period in 2019; all information is in
SECOND QUARTER HIGHLIGHTS – CONTINUING OPERATIONS
- Revenue increased to
$457 million compared to$456 million (increased by 1% excluding the impact of foreign exchange). - As a result of the impact COVID-19 had on the Company’s operations, notably in
Europe andCanada , as well as higher overall discount rates, the Company recorded a pre-tax non-cash impairment charge of approximately$115 million related to goodwill and certain intangible assets. As a result, reported net loss and net loss per diluted share were$132 million and$0.82 , respectively, compared to reported net income and net income per diluted share of$3 million and$0.02 , respectively. Adjusted net income and adjusted net income per diluted share were$13 million and$0.08 , respectively, compared to adjusted net income and adjusted net income per diluted share of$17 million and$0.12 , respectively. - Adjusted EBITDA increased 10% to
$83 million compared to$75 million and adjusted EBITDA margin increased by 170 basis points. - The Company returned approximately
$10 million to shareowners through quarterly dividends.
“Our second quarter results came in ahead of our revised expectations as we responded swiftly to rapidly changing market conditions,” commented
SECOND QUARTER GLOBAL PERFORMANCE – CONTINUING OPERATIONS
- Revenue increased to
$457 million compared to$456 million (increased by 1% excluding the impact of foreign exchange), as the benefit from the legacy Primo acquisition was offset by lower revenue from our Water Direct commercial customer base inNorth America and Rest of World (ROW). Revenue growth by channel is tabulated below:
Continuing Operations | |||
Change% | |||
2019 Q2 Revenue | $ 455.6 | ||
Water Direct / Water Exchange | -25.9 | ||
Water Refill / Water Filtration | +42.4 | ||
Water Dispensers | +20.8 | ||
Other Water | -1.6 | ||
Other | -32.0 | ||
Change before adjustments | +3.7 | 0.8% | |
Foreign exchange | -2.5 | ||
2020 Q2 Revenue | $ 456.8 | 0.3% | |
- Gross profit declined by 6% to
$255 million , while gross profit as a percentage of revenue was 55.8% compared to 59.6%. The decline in gross profit and gross profit margin were 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
$247 million compared to$246 million . The slight increase was due primarily to the addition of the legacy Primo business, largely offset by cost reduction initiatives implemented during the quarter. Costs related to COVID-19 such as severance and personal protective equipment were approximately$15 million . On a pro forma basis, adjusted for COVID-19 related costs, SG&A decreased 14%. - Reported net loss and net loss per diluted share were
$132 million and$0.82 , respectively, a result of the impairment charge, compared to reported net income and net income per diluted share of$3 million and$0.02 , respectively. Adjusted net income and adjusted net income per diluted share were$13 million and$0.08 , respectively, compared to adjusted net income and adjusted net income per diluted share of$17 million and$0.12 , respectively. - Adjusted EBITDA increased 10% to
$83 million compared to$75 million . The increase was primarily driven by growth in volumes from increased Water Direct services and products to residential customers within theU.S. , improved operating leverage and the benefit of the legacy Primo acquisition. - Net cash provided by operating activities of
$66 million , less$29 million of capital expenditures, resulted in$37 million of free cash flow, or$51 million of adjusted free cash flow (adjusting for the items set forth on Exhibit 7), compared to adjusted free cash flow of($19) million in the prior year.
SECOND QUARTER REPORTING SEGMENT PERFORMANCE – CONTINUING OPERATIONS
- Revenue increased 13% to
$364 million driven by the benefit of the legacy Primo acquisition, partially offset by coffee services revenue declines.
Change% | |||
2019 Q2 Revenue | $ 323.5 | ||
Water Direct / Water Exchange | -3.6 | ||
Water Refill / Water Filtration | +42.4 | ||
Water Dispensers | +20.8 | ||
Other Water | +0.9 | ||
Other | -19.7 | ||
Change excluding foreign exchange impact | +40.8 | 12.6% | |
Foreign exchange impact | -0.4 | ||
2020 Q2 Revenue | $ 363.9 | 12.5% |
- Gross profit increased 5% to
$206 million driven by the benefit of the legacy Primo acquisition. - SG&A expenses increased 2% to
$176 million driven by the acquisition of the legacy Primo business, largely offset by cost reduction initiatives enacted during the period. Costs related to COVID-19 were approximately$7 million . On a pro forma basis, adjusted for COVID-19 related costs, SG&A decreased 14%. - Operating income increased 11% to
$24 million . Adjusted EBITDA increased 38% to$78 million , primarily the result of the legacy Primo acquisition as well as improved operating leverage.
Rest of World
- Revenue decreased 30% to
$93 million driven by decreased volume in our Water Direct commercial customer base and coffee services business.
Rest of World | ||||
Change% | ||||
2019 Q2 Revenue | $ 132.1 | |||
Water Direct | -22.3 | |||
Other Water | -2.5 | |||
Other | -12.3 | |||
Change excluding foreign exchange impact | -37.1 | -28.1% | ||
Foreign exchange impact | -2.1 | |||
2020 Q2 Revenue | $ 92.9 | -29.7% |
- Gross profit decreased 35% to
$49 million driven primarily by decreased volume in our Water Direct commercial customer base and coffee services business. - SG&A expenses decreased 7% to
$60 million primarily driven by cost reduction initiatives enacted in our European business. Costs related to COVID-19 were approximately$8 million . On a pro forma basis, adjusted for COVID-19 related costs, SG&A decreased 19%. - Operating income decreased to
$(127) million compared to$9 million , driven by the impairment charge of approximately$114 million . Adjusted EBITDA decreased by 53% to$12 million driven by decreased volume in our Water Direct commercial customer base and coffee services business.
THIRD QUARTER 2020 REVENUE AND ADJUSTED EBITDA OUTLOOK
Primo is targeting third quarter 2020 consolidated revenue from continuing operations of approximately
SHARE REPURCHASE PROGRAM
On
Primo did not repurchase any outstanding shares during the second quarter of 2020 under its share repurchase program.
During the quarter, roughly 20,000 shares totaling approximately
There can be no assurance as to the precise number of shares, if any, that will be repurchased under the share repurchase program in the future, or the aggregate dollar amount of the shares to be purchased in future periods. Primo may discontinue purchases at any time, subject to compliance with applicable regulatory requirements. Shares purchased pursuant to the share repurchase program were subsequently cancelled.
SECOND QUARTER 2020 RESULTS CONFERENCE CALL
International: (647) 427-7450
Conference ID: 7191008
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 third 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; potential liabilities associated with our recent divestitures; our ability to realize the revenue and 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 Six Months Ended | ||||||||||
Revenue, net | $ | 456.8 | $ | 455.6 | $ | 931.0 | $ | 883.3 | |||
Cost of sales | 202.1 | 184.0 | 403.0 | 368.6 | |||||||
Gross profit | 254.7 | 271.6 | 528.0 | 514.7 | |||||||
Selling, general and administrative expenses | 246.7 | 245.7 | 501.8 | 481.5 | |||||||
Loss on disposal of property, plant and equipment, net | 2.5 | 1.7 | 3.9 | 3.6 | |||||||
Acquisition and integration expenses | 4.3 | 2.7 | 25.1 | 7.4 | |||||||
115.2 | — | 115.2 | — | ||||||||
Operating (loss) income | (114.0) | 21.5 | (118.0) | 22.2 | |||||||
Other (income) expense, net | (1.6) | (2.2) | 5.4 | 3.3 | |||||||
Interest expense, net | 20.7 | 18.8 | 40.4 | 38.1 | |||||||
(Loss) income from continuing operations before income taxes | (133.1) | 4.9 | (163.8) | (19.2) | |||||||
Income tax (benefit) expense | (1.4) | 2.2 | (4.7) | 0.8 | |||||||
Net (loss) income from continuing operations | $ | (131.7) | $ | 2.7 | $ | (159.1) | $ | (20.0) | |||
Net income from discontinued operations, net of income taxes | (4.3) | 1.7 | 26.6 | 4.7 | |||||||
Net (loss) income | $ | (136.0) | $ | 4.4 | $ | (132.5) | $ | (15.3) | |||
Net (loss) income per common share | |||||||||||
Basic: | |||||||||||
Continuing operations | $ | (0.82) | $ | 0.02 | $ | (1.06) | $ | (0.15) | |||
Discontinued operations | $ | (0.03) | $ | 0.01 | $ | 0.18 | $ | 0.04 | |||
Net (loss) income | $ | (0.85) | $ | 0.03 | $ | (0.88) | $ | (0.11) | |||
Diluted: | |||||||||||
Continuing operations | $ | (0.82) | $ | 0.02 | $ | (1.06) | $ | (0.15) | |||
Discontinued operations | $ | (0.03) | $ | 0.01 | $ | 0.18 | $ | 0.04 | |||
Net (loss) income | $ | (0.85) | $ | 0.03 | $ | (0.88) | $ | (0.11) | |||
Weighted average common shares outstanding (in thousands) | |||||||||||
Basic | 159,931 | 135,569 | 150,535 | 135,758 | |||||||
Diluted | 159,931 | 137,306 | 150,535 | 135,758 |
EXHIBIT 2 | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(in millions of | |||||
Unaudited | |||||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | $ | 211.1 | $ | 156.9 | |
Accounts receivable, net of allowance of | 223.3 | 216.7 | |||
Inventories | 73.2 | 62.9 | |||
Prepaid expenses and other current assets | 23.5 | 19.1 | |||
Current assets of discontinued operations | — | 186.7 | |||
Total current assets | 531.1 | 642.3 | |||
Property, plant and equipment, net | 693.1 | 558.1 | |||
Operating lease right-of-use-assets | 179.5 | 185.7 | |||
1,244.9 | 1,047.5 | ||||
Intangible assets, net | 980.7 | 597.0 | |||
Other long-term assets, net | 24.4 | 20.5 | |||
Long-term assets of discontinued operations | — | 339.8 | |||
Total assets | $ | 3,653.7 | $ | 3,390.9 | |
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Short-term borrowings | 217.7 | 92.4 | |||
Current maturities of long-term debt | 9.9 | 6.9 | |||
Accounts payable and accrued liabilities | 410.4 | 370.6 | |||
Current operating lease obligations | 37.9 | 36.5 | |||
Current liabilities of discontinued operations | — | 101.2 | |||
Total current liabilities | 675.9 | 607.6 | |||
Long-term debt | 1,282.2 | 1,259.1 | |||
Operating lease obligations | 147.5 | 155.2 | |||
Deferred tax liabilities | 138.3 | 90.6 | |||
Other long-term liabilities | 61.6 | 58.7 | |||
Long-term liabilities of discontinued operations | — | 53.5 | |||
Total liabilities | 2,305.5 | 2,224.7 | |||
Shareholders’ Equity | |||||
Common shares, no par value – 160,019,274 ( | 1,263.3 | 892.3 | |||
Additional paid-in-capital | 75.2 | 77.4 | |||
Retained earnings | 99.7 | 265.0 | |||
Accumulated other comprehensive loss | (90.0) | (68.5) | |||
Total shareholders’ equity | 1,348.2 | 1,166.2 | |||
Total liabilities and shareholders’ equity | $ | 3,653.7 | $ | 3,390.9 |
EXHIBIT 3 | |||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||
(in millions of | |||||||||||||||||||||||||
Unaudited | |||||||||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||||
Cash flows from operating activities of continuing operations: | |||||||||||||||||||||||||
Net (loss) income | $ | (136.0) | $ | 4.4 | $ | (132.5) | $ | (15.3) | |||||||||||||||||
Net (loss) income from discontinued operations, net of income taxes | (4.3) | 1.7 | 26.6 | 4.7 | |||||||||||||||||||||
Net (loss) income from continuing operations | $ | (131.7) | $ | 2.7 | $ | (159.1) | $ | (20.0) | |||||||||||||||||
Adjustments to reconcile net (loss) income from continuing operations to cash flows from operating activities: | |||||||||||||||||||||||||
Depreciation and amortization | 52.8 | 42.9 | 97.8 | 82.6 | |||||||||||||||||||||
Amortization of financing fees | 0.9 | 0.9 | 1.8 | 1.7 | |||||||||||||||||||||
Share-based compensation expense | 4.9 | 3.2 | 7.3 | 6.5 | |||||||||||||||||||||
Benefit for deferred income taxes | (0.9) | (0.9) | (4.4) | (6.1) | |||||||||||||||||||||
(Gain) loss on sale of business | (0.6) | 0.6 | (0.6) | 6.0 | |||||||||||||||||||||
115.2 | — | 115.2 | — | ||||||||||||||||||||||
Loss on disposal of property, plant and equipment, net | 2.5 | 1.7 | 3.9 | 3.6 | |||||||||||||||||||||
Other non-cash items | (1.5) | (3.8) | 4.5 | (3.6) | |||||||||||||||||||||
Change in operating assets and liabilities, net of acquisitions: | |||||||||||||||||||||||||
Accounts receivable | 39.0 | (20.4) | 10.1 | (21.7) | |||||||||||||||||||||
Inventories | 3.1 | (1.5) | 2.5 | (4.3) | |||||||||||||||||||||
Prepaid expenses and other current assets | 1.9 | 1.9 | 0.4 | 0.3 | |||||||||||||||||||||
Other assets | (1.3) | 0.6 | (0.6) | 1.2 | |||||||||||||||||||||
Accounts payable and accrued liabilities and other liabilities | (18.8) | (26.7) | (8.6) | (29.9) | |||||||||||||||||||||
Net cash provided by operating activities from continuing operations | 65.5 | 1.2 | 70.2 | 16.3 | |||||||||||||||||||||
Cash flows from investing activities of continuing operations: | |||||||||||||||||||||||||
Acquisitions, net of cash received | (11.9) | (21.8) | (434.5) | (25.5) | |||||||||||||||||||||
Additions to property, plant and equipment | (28.7) | (24.3) | (63.6) | (46.3) | |||||||||||||||||||||
Additions to intangible assets | (2.4) | (0.9) | (5.4) | (2.8) | |||||||||||||||||||||
Proceeds from sale of property, plant and equipment | 0.5 | 0.8 | 0.8 | 1.9 | |||||||||||||||||||||
Proceeds from sale of business, net of cash sold | — | — | — | 50.5 | |||||||||||||||||||||
Other investing activities | 1.1 | — | 1.1 | — | |||||||||||||||||||||
Net cash used in investing activities from continuing operations | (41.4) | (46.2) | (501.6) | (22.2) | |||||||||||||||||||||
Cash flows from financing activities of continuing operations: | |||||||||||||||||||||||||
Payments of long-term debt | (2.6) | (1.3) | (5.3) | (2.8) | |||||||||||||||||||||
Proceeds from short-term borrowings | 188.0 | 37.9 | 323.9 | 62.9 | |||||||||||||||||||||
Payments on short-term borrowings | (100.0) | (9.1) | (209.9) | (61.9) | |||||||||||||||||||||
Issuance of common shares | 0.2 | 0.3 | 0.8 | 0.7 | |||||||||||||||||||||
Common shares repurchased and canceled | (0.2) | (20.0) | (32.1) | (31.0) | |||||||||||||||||||||
Financing fees | (0.3) | — | (2.8) | — | |||||||||||||||||||||
Equity issuance fees | — | — | (1.1) | — | |||||||||||||||||||||
Dividends paid to common shareholders | (10.5) | (8.0) | (20.3) | (16.2) | |||||||||||||||||||||
Payment of deferred consideration for acquisitions | (1.0) | (0.2) | (1.2) | (0.2) | |||||||||||||||||||||
Other financing activities | 2.4 | 2.0 | 11.2 | 3.4 | |||||||||||||||||||||
Net cash provided by (used in) financing activities from continuing operations | 76.0 | 1.6 | 63.2 | (45.1) | |||||||||||||||||||||
Cash flows from discontinued operations: | |||||||||||||||||||||||||
Operating activities of discontinued operations | (0.7) | 7.1 | (18.0) | 15.6 | |||||||||||||||||||||
Investing activities of discontinued operations | (1.6) | (4.1) | 392.9 | (23.2) | |||||||||||||||||||||
Financing activities of discontinued operations | — | (0.2) | (0.1) | (0.2) | |||||||||||||||||||||
Net cash (used in) provided by discontinued operations | (2.3) | 2.8 | 374.8 | (7.8) | |||||||||||||||||||||
Effect of exchange rate changes on cash | 1.1 | 0.1 | (1.0) | 1.4 | |||||||||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 98.9 | (40.5) | 5.6 | (57.4) | |||||||||||||||||||||
Cash and cash equivalents and restricted cash, beginning of period | 112.2 | 153.9 | 205.5 | 170.8 | |||||||||||||||||||||
Cash and cash equivalents and restricted cash, end of period | 211.1 | 113.4 | 211.1 | 113.4 | |||||||||||||||||||||
Cash and cash equivalents and restricted cash from discontinued operations, end of period | — | 32.0 | — | 32.0 | |||||||||||||||||||||
Cash and cash equivalents and restricted cash from continuing operations, end of period | $ | 211.1 | $ | 81.4 | $ | 211.1 | $ | 81.4 |
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 | $ | 225.8 | $ | 42.3 | $ | — | $ | 268.1 | ||||||||||||||||||||||||
Water Refill/Water Filtration | 51.2 | 6.3 | — | 57.5 | ||||||||||||||||||||||||||||
Other Water | 42.5 | 14.3 | — | 56.8 | ||||||||||||||||||||||||||||
Water Dispensers | 20.8 | — | — | 20.8 | ||||||||||||||||||||||||||||
Other | 23.6 | 30.0 | — | 53.6 | ||||||||||||||||||||||||||||
Total | $ | 363.9 | $ | 92.9 | $ | — | $ | 456.8 | ||||||||||||||||||||||||
Gross Margin | $ | 205.9 | $ | 48.8 | $ | — | $ | 254.7 | ||||||||||||||||||||||||
Gross Margin % | 56.6 | % | 52.5 | % | — | % | 55.8 | % | ||||||||||||||||||||||||
Selling, general and administrative expenses | $ | 175.5 | $ | 60.1 | $ | 11.1 | $ | 246.7 | ||||||||||||||||||||||||
Operating income (loss) | $ | 24.4 | $ | (126.6) | $ | (11.8) | $ | (114.0) | ||||||||||||||||||||||||
Depreciation and amortization | $ | 38.0 | $ | 14.3 | $ | 0.5 | $ | 52.8 | ||||||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||||||||||||||
Rest of World | All Other | Total | ||||||||||||||||||||||||||||||
Revenue, net | ||||||||||||||||||||||||||||||||
Water Direct/Water Exchange | $ | 229.7 | $ | 66.0 | $ | — | $ | 295.7 | ||||||||||||||||||||||||
Water Refill/Water Filtration | 8.8 | 6.5 | — | 15.3 | ||||||||||||||||||||||||||||
Other Water | 41.6 | 16.5 | — | 58.1 | ||||||||||||||||||||||||||||
Water Dispensers | — | — | — | — | ||||||||||||||||||||||||||||
Other | 43.4 | 43.1 | — | 86.5 | ||||||||||||||||||||||||||||
Total | $ | 323.5 | $ | 132.1 | $ | — | $ | 455.6 | ||||||||||||||||||||||||
Gross Margin | $ | 196.3 | $ | 75.3 | $ | — | $ | 271.6 | ||||||||||||||||||||||||
Gross Margin % | 60.7 | % | 57.0 | % | — | % | 59.6 | % | ||||||||||||||||||||||||
Selling, general and administrative expenses | $ | 171.8 | $ | 64.4 | $ | 9.5 | $ | 245.7 | ||||||||||||||||||||||||
Operating income (loss) | $ | 21.9 | $ | 9.0 | $ | (9.4) | $ | 21.5 | ||||||||||||||||||||||||
Depreciation and amortization | $ | 29.1 | $ | 13.8 | $ | — | $ | 42.9 | ||||||||||||||||||||||||
For the Six Months Ended | ||||||||||||||||||||||||||||||||
Rest of World | All Other | Total | ||||||||||||||||||||||||||||||
Revenue, net | ||||||||||||||||||||||||||||||||
Water Direct/Water Exchange | $ | 463.2 | $ | 100.1 | $ | — | $ | 563.3 | ||||||||||||||||||||||||
Water Refill/Water Filtration | 74.9 | 13.4 | — | 88.3 | ||||||||||||||||||||||||||||
Other Water | 84.7 | 27.5 | — | 112.2 | ||||||||||||||||||||||||||||
Water Dispensers | 26.7 | — | — | 26.7 | ||||||||||||||||||||||||||||
Other | 65.1 | 75.4 | — | 140.5 | ||||||||||||||||||||||||||||
Total | $ | 714.6 | $ | 216.4 | $ | — | $ | 931.0 | ||||||||||||||||||||||||
Gross Margin | $ | 412.0 | $ | 116.0 | $ | — | $ | 528.0 | ||||||||||||||||||||||||
Gross Margin % | 57.7 | % | 53.6 | % | — | % | 56.7 | % | ||||||||||||||||||||||||
Selling, general and administrative expenses | $ | 352.7 | $ | 126.7 | $ | 22.4 | $ | 501.8 | ||||||||||||||||||||||||
Operating income (loss) | $ | 48.1 | $ | (127.1) | $ | (39.0) | $ | (118.0) | ||||||||||||||||||||||||
Depreciation and amortization | $ | 68.6 | $ | 28.6 | $ | 0.6 | $ | 97.8 | ||||||||||||||||||||||||
For the Six Months Ended | ||||||||||||||||||||||||||||||||
Rest of World | All Other | Total | ||||||||||||||||||||||||||||||
Revenue, net | ||||||||||||||||||||||||||||||||
Water Direct/Water Exchange | $ | 436.2 | $ | 123.7 | $ | — | $ | 559.9 | ||||||||||||||||||||||||
Water Refill/Water Filtration | 17.7 | 12.9 | — | 30.6 | ||||||||||||||||||||||||||||
Other Water | 81.3 | 27.6 | — | 108.9 | ||||||||||||||||||||||||||||
Water Dispensers | — | — | — | — | ||||||||||||||||||||||||||||
Other | 86.4 | 90.3 | 7.2 | 183.9 | ||||||||||||||||||||||||||||
Total | $ | 621.6 | $ | 254.5 | $ | 7.2 | $ | 883.3 | ||||||||||||||||||||||||
Gross Margin | $ | 371.9 | $ | 142.5 | $ | 0.3 | $ | 514.7 | ||||||||||||||||||||||||
Gross Margin % | 59.8 | % | 56.0 | % | 4.2 | % | 58.3 | % | ||||||||||||||||||||||||
Selling, general and administrative expenses | $ | 334.4 | $ | 124.8 | $ | 22.3 | $ | 481.5 | ||||||||||||||||||||||||
Operating income (loss) | $ | 32.1 | $ | 14.3 | $ | (24.2) | $ | 22.2 | ||||||||||||||||||||||||
Depreciation and amortization | $ | 55.8 | $ | 26.7 | $ | 0.1 | $ | 82.6 |
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 | $ | 40.4 | $ | (39.2) | $ | — | $ | 1.2 | |||||||
Impact of foreign exchange (b) | $ | 0.4 | $ | 2.1 | $ | — | $ | 2.5 | |||||||
Change excluding foreign exchange | $ | 40.8 | $ | (37.1) | $ | — | $ | 3.7 | |||||||
Percentage change in revenue | 12.5 | % | (29.7) | % | — | % | 0.3 | % | |||||||
Percentage change in revenue excluding foreign exchange | 12.6 | % | (28.1) | % | — | % | 0.8 | % | |||||||
For the Six Months Ended | |||||||||||||||
Rest of World | All Other | Primo (a) | |||||||||||||
Change in revenue | $ | 93.0 | $ | (38.1) | $ | (7.2) | $ | 47.7 | |||||||
Impact of foreign exchange (b) | $ | 0.5 | $ | 2.2 | $ | — | $ | 2.7 | |||||||
Change excluding foreign exchange | $ | 93.5 | $ | (35.9) | $ | (7.2) | $ | 50.4 | |||||||
Percentage change in revenue | 15.0 | % | (15.0) | % | (100.0) | % | 5.4 | % | |||||||
Percentage change in revenue excluding foreign exchange | 15.0 | % | (14.1) | % | (100.0) | % | 5.7 | % | |||||||
For the Three Months Ended | |||||||||||||||
Rest of World | All Other | Primo (a) | |||||||||||||
Change in gross profit | $ | 9.6 | $ | (26.5) | $ | — | $ | (16.9) | |||||||
Impact of foreign exchange (b) | $ | 0.2 | $ | 1.1 | $ | — | $ | 1.3 | |||||||
Change excluding foreign exchange | $ | 9.8 | $ | (25.4) | $ | — | $ | (15.6) | |||||||
Percentage change in gross profit | 4.9 | % | (35.2) | % | — | % | (6.2) | % | |||||||
Percentage change in gross profit excluding foreign exchange | 5.0 | % | (33.7) | % | — | % | (5.7) | % | |||||||
For the Six Months Ended | |||||||||||||||
Rest of World | All Other | Primo (a) | |||||||||||||
Change in gross profit | $ | 40.1 | $ | (26.5) | $ | (0.3) | $ | 13.3 | |||||||
Impact of foreign exchange (b) | $ | 0.3 | $ | 1.1 | $ | — | $ | 1.4 | |||||||
Change excluding foreign exchange | $ | 40.4 | $ | (25.4) | $ | (0.3) | $ | 14.7 | |||||||
Percentage change in gross profit | 10.8 | % | (18.6) | % | (100.0) | % | 2.6 | % | |||||||
Percentage change in gross profit excluding foreign exchange | 10.9 | % | (17.8) | % | (100.0) | % | 2.9 | % | |||||||
(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 Six Months Ended | ||||||||||
Net (loss) income from continuing operations | $ | (131.7) | $ | 2.7 | $ | (159.1) | $ | (20.0) | |||
Interest expense, net | 20.7 | 18.8 | 40.4 | 38.1 | |||||||
Income tax (benefit) expense | (1.4) | 2.2 | (4.7) | 0.8 | |||||||
Depreciation and amortization | 52.8 | 42.9 | 97.8 | 82.6 | |||||||
EBITDA | $ | (59.6) | $ | 66.6 | $ | (25.6) | $ | 101.5 | |||
Acquisition and integration costs (a), (b) | 4.3 | 2.7 | 25.1 | 7.4 | |||||||
Share-based compensation costs (c) | 4.9 | 3.0 | 7.3 | 6.1 | |||||||
COVID-19 costs (d) | 15.4 | — | 16.8 | — | |||||||
115.2 | — | 115.2 | — | ||||||||
Foreign exchange and other (gains) losses, net (f) | (1.1) | (0.7) | 5.2 | 0.3 | |||||||
Loss on disposal of property, plant and equipment, net (g) | 2.5 | 1.7 | 3.9 | 3.6 | |||||||
(Gain) loss on sale of business (h) | (0.6) | 0.6 | (0.6) | 6.0 | |||||||
Other adjustments, net (i) | 1.5 | 0.8 | 5.6 | 3.5 | |||||||
Adjusted EBITDA | $ | 82.5 | $ | 74.7 | $ | 152.9 | $ | 128.4 |
(a) Includes |
For the Three Months Ended | For the Six Months Ended | |||||||||||
Location in Consolidated Statements of Operations | ||||||||||||
(Unaudited) | (Unaudited) | |||||||||||
(b) Acquisition and integration costs | Acquisition and integration expenses | $ | 4.3 | $ | 2.7 | $ | 25.1 | $ | 7.4 | |||
(c) Share-based compensation costs | Selling, general and administrative expenses | 4.9 | 3.0 | 7.3 | 6.1 | |||||||
(d) COVID-19 costs | Selling, general and administrative expenses | 15.4 | — | 16.8 | — | |||||||
(e) |
| 115.2 | — | 115.2 | — | |||||||
(f) Foreign exchange and other (gains) losses, net | Other (income) expense, net | (1.1) | (0.7) | 5.2 | 0.3 | |||||||
(g) Loss on disposal of property, plant and | Loss on disposal of property, plant and | 2.5 | 1.7 | 3.9 | 3.6 | |||||||
(h) (Gain) loss on sale of business | Other (income) expense, net | (0.6) | 0.6 | (0.6) | 6.0 | |||||||
(i) Other adjustments, net | Other (income) expense, net | 0.1 | (2.0) | 0.8 | (2.3) | |||||||
Selling, general and administrative expenses | 1.2 | 2.8 | 4.4 | 6.2 | ||||||||
Cost of sales | 0.2 | — | 0.4 | 6.8 | ||||||||
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 | $ | 65.5 | $ | 1.2 | |
Less: Additions to property, plant, and equipment | (28.7) | (24.3) | |||
Free Cash Flow | $ | 36.8 | $ | (23.1) | |
Plus: | |||||
Acquisition and integration cash costs | 13.6 | 4.3 | |||
COVID-19 related cash costs | 9.9 | — | |||
Less: | |||||
Deferral of payroll tax related costs – government programs | (9.2) | — | |||
Adjusted Free Cash Flow | $ | 51.1 | $ | (18.8) | |
For the Six Months Ended | |||||
Net cash provided by operating activities from continuing operations | $ | 70.2 | $ | 16.3 | |
Less: Additions to property, plant, and equipment | (63.6) | (46.3) | |||
Free Cash Flow | $ | 6.6 | $ | (30.0) | |
Plus: | |||||
Acquisition and integration cash costs | 25.6 | 8.5 | |||
Transaction cash costs paid on behalf of acquiree | 13.4 | — | |||
COVID-19 related cash costs | 10.2 | — | |||
Less: | |||||
Deferral of payroll tax related costs – government programs | (9.2) | — | |||
Adjusted Free Cash Flow | $ | 46.6 | $ | (21.5) |
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) | $ | 24.4 | $ | (126.6) | $ | (11.8) | $ | (114.0) | |||
Other (income) expense, net | (0.4) | (0.6) | (0.6) | (1.6) | |||||||
Depreciation and amortization | 38.0 | 14.3 | 0.5 | 52.8 | |||||||
EBITDA (a) | $ | 62.8 | $ | (111.7) | $ | (10.7) | $ | (59.6) | |||
Acquisition and integration costs | 2.4 | 1.0 | 0.9 | 4.3 | |||||||
Share-based compensation costs | 1.6 | 0.4 | 2.9 | 4.9 | |||||||
COVID-19 costs | 7.2 | 7.9 | 0.3 | 15.4 | |||||||
1.2 | 114.0 | — | 115.2 | ||||||||
Foreign exchange and other (gains) losses, net | (0.5) | (0.5) | (0.1) | (1.1) | |||||||
Loss on disposal of property, plant and equipment, net | 2.2 | 0.3 | — | 2.5 | |||||||
Gain on sale of business (c) | — | — | (0.6) | (0.6) | |||||||
Other adjustments, net (b) | 0.7 | 0.6 | 0.2 | 1.5 | |||||||
Adjusted EBITDA | $ | 77.6 | $ | 12.0 | $ | (7.1) | $ | 82.5 | |||
For the Three Months Ended | |||||||||||
Rest of World | All Other | Total | |||||||||
Operating income (loss) | $ | 21.9 | $ | 9.0 | $ | (9.4) | $ | 21.5 | |||
Other (income) expense, net | (0.9) | (0.3) | (1.0) | (2.2) | |||||||
Depreciation and amortization | 29.1 | 13.8 | — | 42.9 | |||||||
EBITDA (a) | $ | 51.9 | $ | 23.1 | $ | (8.4) | $ | 66.6 | |||
Acquisition and integration costs | 1.0 | 1.8 | (0.1) | 2.7 | |||||||
Share-based compensation costs | 0.6 | 0.2 | 2.2 | 3.0 | |||||||
Foreign exchange and other losses, net | (0.6) | 1.6 | (1.7) | (0.7) | |||||||
Loss on disposal of property, plant and equipment, net | 1.7 | — | — | 1.7 | |||||||
Loss on sale of business (c) | — | — | 0.6 | 0.6 | |||||||
Other adjustments, net (d) | 1.5 | (1.1) | 0.4 | 0.8 | |||||||
Adjusted EBITDA | $ | 56.1 | $ | 25.6 | $ | (7.0) | $ | 74.7 |
For the Six Months Ended | ||||||||||||
Rest of World | All Other | Total | ||||||||||
Operating income (loss) | $ | 48.1 | $ | (127.1) | $ | (39.0) | $ | (118.0) | ||||
Other (income) expense, net | 1.3 | 4.7 | (0.6) | 5.4 | ||||||||
Depreciation and amortization | 68.6 | 28.6 | 0.6 | 97.8 | ||||||||
EBITDA (a) | $ | 115.4 | $ | (103.2) | $ | (37.8) | $ | (25.6) | ||||
Acquisition and integration costs | 6.5 | 2.1 | 16.5 | 25.1 | ||||||||
Share-based compensation costs | 2.5 | 0.7 | 4.1 | 7.3 | ||||||||
COVID-19 costs | 7.7 | 8.8 | 0.3 | 16.8 | ||||||||
1.2 | 114.0 | — | 115.2 | |||||||||
Foreign exchange and other (gains) losses, net | 0.6 | 4.6 | — | 5.2 | ||||||||
Loss on disposal of property, plant and equipment, net | 3.5 | 0.4 | — | 3.9 | ||||||||
Gain on sale of business (c) | — | — | (0.6) | (0.6) | ||||||||
Other adjustments, net (e) | 3.0 | 1.3 | 1.3 | 5.6 | ||||||||
Adjusted EBITDA | $ | 140.4 | $ | 28.7 | $ | (16.2) | $ | 152.9 | ||||
For the Six Months Ended | ||||||||||||
Rest of World | All Other | Total | ||||||||||
Operating income (loss) | $ | 32.1 | $ | 14.3 | $ | (24.2) | $ | 22.2 | ||||
Other (income) expense, net | (1.2) | (0.5) | 5.0 | 3.3 | ||||||||
Depreciation and amortization | 55.8 | 26.7 | 0.1 | 82.6 | ||||||||
EBITDA (a) | $ | 89.1 | $ | 41.5 | $ | (29.1) | $ | 101.5 | ||||
Acquisition and integration costs | 1.9 | 3.3 | 2.2 | 7.4 | ||||||||
Share-based compensation costs | 1.3 | 0.4 | 4.4 | 6.1 | ||||||||
Foreign exchange and other losses, net | (0.9) | 2.0 | (0.8) | 0.3 | ||||||||
Loss on disposal of property, plant and equipment, net | 3.6 | — | — | 3.6 | ||||||||
Loss on sale of business (c) | — | — | 6.0 | 6.0 | ||||||||
Other adjustments, net (f) | 1.6 | (0.6) | 2.5 | 3.5 | ||||||||
Adjusted EBITDA | $ | 96.6 | $ | 46.6 | $ | (14.8) | $ | 128.4 |
(a) EBITDA by reporting segment is derived from operating (loss) income as operating (loss) income 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 Six Months Ended | ||||||||||
Net (loss) income from continuing operations (as reported) | $ | (131.7) | $ | 2.7 | $ | (159.1) | $ | (20.0) | |||
Adjustments: | |||||||||||
Amortization expense of customer lists | 11.6 | 12.6 | 23.9 | 23.7 | |||||||
Acquisition and integration costs | 4.3 | 2.7 | 25.1 | 7.4 | |||||||
Share-based compensation costs | 4.9 | 3.0 | 7.3 | 6.1 | |||||||
COVID-19 costs | 15.4 | — | 16.8 | — | |||||||
115.2 | — | 115.2 | — | ||||||||
Foreign exchange and other (gains) losses, net | (1.1) | (0.7) | 5.2 | 0.3 | |||||||
(Gain) loss on sale of business | (0.6) | 0.6 | (0.6) | 6.0 | |||||||
Other adjustments, net | 1.5 | 0.8 | 5.6 | 3.5 | |||||||
Tax impact of adjustments (a) | (6.1) | (4.6) | (14.6) | (9.6) | |||||||
Adjusted net income from continuing operations | 13.4 | 17.1 | 24.8 | 17.4 | |||||||
Earnings Per Share (as reported) | |||||||||||
Net (loss) income from continuing operations | $ | (131.7) | $ | 2.7 | $ | (159.1) | $ | (20.0) | |||
Basic EPS | $ | (0.82) | $ | 0.02 | $ | (1.06) | $ | (0.15) | |||
Diluted EPS | $ | (0.82) | $ | 0.02 | $ | (1.06) | $ | (0.15) | |||
Weighted average common shares outstanding (in thousands) | |||||||||||
Basic | 159,931 | 135,569 | 150,535 | 135,758 | |||||||
Diluted weighted average common shares outstanding | 159,931 | 137,306 | 150,535 | 135,758 | |||||||
Adjusted Earnings Per Share (Non-GAAP) | |||||||||||
Adjusted net income from continuing operations (Non-GAAP) | $ | 13.4 | $ | 17.1 | $ | 24.8 | $ | 17.4 | |||
Adjusted diluted EPS (Non-GAAP) | $ | 0.08 | $ | 0.12 | $ | 0.16 | $ | 0.13 | |||
Diluted weighted average common shares outstanding (in thousands) (Non-GAAP) (b) | 160,415 | 137,306 | 151,553 | 137,571 |
(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) Includes the impact of dilutive securities of 484 and 1,018 for the three and six 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 Six Months Ended | |||||||||||||
Revenue, net | $ | 456.8 | $ | 455.6 | $ | 931.0 | $ | 883.3 | ||||||
$ | — | $ | — | $ | — | $ | (7.2) | |||||||
Adjusted Revenue | $ | 456.8 | $ | 455.6 | $ | 931.0 | $ | 876.1 | ||||||
Change in adjusted revenue | $ | 1.2 | $ | 54.9 | ||||||||||
Percentage change in adjusted revenue | 0.3 | % | 6.3 | % | ||||||||||
Impact of foreign exchange (b) | $ | 2.5 | $ | 2.7 | ||||||||||
Percentage change in adjusted revenue excluding | 0.8 | % | 6.6 | % | ||||||||||
(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. |
EXHIBIT 11 | ||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – PRO FORMA ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE (“SG&A”) EXPENSES | ||||||||
(in millions of | ||||||||
Unaudited | ||||||||
For the Three Months Ended | ||||||||
Rest of World | All Other | Total | ||||||
Selling, general and administrative expenses, as reported | $ | 175.5 | $ | 60.1 | $ | 11.1 | $ | 246.7 |
Less: COVID-19 related costs | 7.2 | 7.9 | 0.3 | 15.4 | ||||
Selling, general and administrative expenses, adjusted | $ | 168.3 | $ | 52.2 | $ | 10.8 | $ | 231.3 |
For the Three Months Ended | ||||||||
Rest of World | All Other | Total | ||||||
Selling, general and administrative expenses, as reported | $ | 171.8 | $ | 64.4 | $ | 9.5 | $ | 245.7 |
Plus: Legacy Primo selling, general and administrative expenses – | 23.5 | — | — | 23.5 | ||||
Pro forma selling, general and administrative expenses, | $ | 195.3 | $ | 64.4 | $ | 9.5 | $ | 269.2 |
For the Six Months Ended | ||||||||
Rest of World | All Other | Total | ||||||
Selling, general and administrative expenses, as reported | $ | 352.7 | $ | 126.7 | $ | 22.4 | $ | 501.8 |
Less: COVID-19 related costs | 7.7 | 8.8 | 0.3 | 16.8 | ||||
Selling, general and administrative expenses, adjusted | $ | 345.0 | $ | 117.9 | $ | 22.1 | $ | 485.0 |
For the Six Months Ended | ||||||||
Rest of World | All Other | Total | ||||||
Selling, general and administrative expenses, as reported | $ | 334.4 | $ | 124.8 | $ | 22.3 | $ | 481.5 |
Less: | — | — | 1.3 | 1.3 | ||||
Selling, general and administrative expenses, adjusted | $ | 334.4 | $ | 124.8 | $ | 21.0 | $ | 480.2 |
Plus: Legacy Primo selling, general and administrative expenses – | 31.4 | — | — | 31.4 | ||||
Pro forma selling, general and administrative expenses, | $ | 365.8 | $ | 124.8 | $ | 21.0 | $ | 511.6 |
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