Primo Water Corporation Announces Third Quarter 2021 Results and Planned Exit of its North American Single-Use Retail Bottled Water Business
Nov 04, 2021
Company reaffirms full year Adjusted EBITDA guidance and shares multi-year growth algorithm
TAMPA, Fla.,
(Unless stated otherwise, all third quarter 2021 comparisons are relative to the third quarter of 2020; all information is in
- Announced plan to exit the North American single-use retail bottled water category (primarily 1-gallon, 2.5 gallon and case-pack water) as part of its overall strategy to increase profitability and further reduce its carbon footprint. The plan does not affect its large format exchange, refill, and dispenser business or the Company’s Mountain Valley brand, which sells products primarily in glass bottles.
- Total revenue increased 6% to
$551 million compared to$518 million as North America Water Direct experienced a substantial increase in demand. - Reported net income and net income per diluted share were
$18 million and$0.11 , respectively, compared to reported net income and net income per diluted share of$22 million and$0.14 , respectively. Adjusted net income and adjusted net income per diluted share were$36 million and$0.22 , respectively, compared to adjusted net income and adjusted net income per diluted share of$38 million and$0.24 , respectively. - Total Adjusted EBITDA decreased 4% to
$106 million compared to$111 million and Adjusted EBITDA margin decreased to 19.2% due to the impact of the Delta variant on the route delivery labor force primarily in July and August which caused route inefficiencies resulting in short term higher operating costs. - Repurchased approximately 1.8 million outstanding common shares for
$29 million . - Expects approximately 6% organic revenue growth in 2021, plus growth from tuck-in M&A, and maintained its full year outlook for Adjusted EBITDA between
$390 million and$400 million .
For the Three Months Ended | ||||||||
(in millions of | Y/Y Change | |||||||
Revenue, net | $ | 550.8 | $ | 517.5 | 6% | |||
Net income | $ | 18.1 | $ | 22.3 | $ | (4.2) | ||
Net income per diluted share | $ | 0.11 | $ | 0.14 | $ | (0.03) | ||
Adjusted net income | $ | 36.4 | $ | 38.3 | $ | (1.9) | ||
Adjusted net income per diluted share | $ | 0.22 | $ | 0.24 | $ | (0.02) | ||
Adjusted EBITDA | $ | 105.9 | $ | 110.6 | -4% | |||
Adjusted EBITDA margin % | 19.2% | 21.4% | -220bps |
“Our pure-play water model continues to drive higher demand for our products and services,” said
“As we continue to the next phase of our transformation as a pure-play water company and leader in ESG, we are planning to exit the single-use plastic retail bottled water business in
“We look forward to our Investor Day scheduled for
OUTLOOK
Primo is targeting the following results from continuing operations for the fourth quarter and full year 2021:
Q4 2021 | FY 2021 | |||
Range | Range | |||
($ in millions) | Low | High | Low | High |
Revenue | + ~6% | |||
Adjusted EBITDA | ||||
Cash Taxes | – | ~ | ||
Interest | – | ~ | ||
CapEx | – | ~ |
THIRD QUARTER 2021 RESULTS CONFERENCE CALL
International: (416) 764-8659
Conference ID: 46080719
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.
THIRD QUARTER GLOBAL PERFORMANCE – CONTINUING OPERATIONS
- Revenue increased 6% to
$551 million compared to$518 million (increased by 5% excluding the impact of foreign exchange). The increase is due primarily to pricing initiatives, increased demand from residential and B2B customers and the favorable impact of foreign exchange, partially offset by lower revenue from Water Refill and Water Dispenser sales. Revenue by channel is tabulated below:
For the Three Months Ended | ||||||||||
(in millions of | Change | %Change | ||||||||
Revenue, net | ||||||||||
Water Direct/Water Exchange | $ | 344.2 | $ | 312.3 | $ | 31.9 | 10% | |||
Water Refill/Water Filtration | 55.6 | 57.0 | (1.4) | -2% | ||||||
Other Water | 66.8 | 59.5 | 7.3 | 12% | ||||||
Water Dispensers | 16.1 | 28.5 | (12.4) | -44% | ||||||
Other | 68.1 | 60.2 | 7.9 | 13% | ||||||
Revenue, net as reported | $ | 550.8 | $ | 517.5 | $ | 33.3 | 6% | |||
Foreign exchange impact | (5.7) | – | (5.7) | n/a | ||||||
Revenue excluding foreign exchange impact | $ | 545.1 | $ | 517.5 | $ | 27.6 | 5% |
- Gross profit increased 1% to
$308 million compared to$304 million . Gross margin was 56.0% compared to 58.8%, due to operational challenges experienced in the quarter. - SG&A expenses increased 2% to
$264 million compared to$257 million driven primarily by higher selling and operating costs that supported the volume and revenue growth of the business. - Reported net income and net income per diluted share were
$18 million and$0.11 , respectively, compared to reported net income and net income per diluted share of$22 million and$0.14 , respectively. Adjusted net income and adjusted net income per diluted share were$36 million and$0.22 , respectively, compared to adjusted net income and adjusted net income per diluted share of$38 million and$0.24 , respectively. - Adjusted EBITDA decreased 4% to
$106 million compared to$111 million and Adjusted EBITDA margin decreased to 19.2%, driven by higher selling and operating costs associated with the volume growth and labor availability. - Net cash provided by operating activities of
$83 million , less$37 million of capital expenditures, resulted in$46 million of free cash flow, or$49 million of adjusted free cash flow (adjusting for the items set forth on Exhibit 7), compared to adjusted free cash flow of$35 million in the prior year period.
THIRD QUARTER REPORTING SEGMENT PERFORMANCE – CONTINUING OPERATIONS
- Revenue increased 5% to
$413 million compared to$393 million (increased by 5% excluding the impact of foreign exchange) driven by increased pricing and demand from residential and B2B customers partially offset by lower revenue from Water Refill and Water Dispenser sales.
For the Three Months Ended | ||||||||||
(in millions of | Change | %Change | ||||||||
Revenue, net | ||||||||||
Water Direct/Water Exchange | $ | 281.9 | $ | 252.1 | $ | 29.8 | 12% | |||
Water Refill/Water Filtration | 47.0 | 48.9 | (1.9) | -4% | ||||||
Other Water | 42.6 | 39.0 | 3.6 | 9% | ||||||
Water Dispensers | 16.1 | 28.5 | (12.4) | -44% | ||||||
Other | 25.7 | 24.7 | 1.0 | 4% | ||||||
Revenue, net as reported | $ | 413.3 | $ | 393.2 | $ | 20.1 | 5% | |||
Foreign exchange impact | (0.9) | – | (0.9) | n/a | ||||||
Revenue excluding foreign exchange impact | $ | 412.4 | $ | 393.2 | $ | 19.2 | 5% |
Rest of World (“ROW”)
- Revenue increased 11% to
$138 million compared to$124 million (increased by 7% excluding the impact of foreign exchange) driven by improved volume and pricing in all channels.
For the Three Months Ended | ||||||||||
(in millions of | Change | %Change | ||||||||
Revenue, net | ||||||||||
Water Direct/Water Exchange | $ | 62.3 | $ | 60.2 | $ | 2.1 | 3% | |||
Water Refill/Water Filtration | 8.6 | 8.1 | 0.5 | 6% | ||||||
Other Water | 24.2 | 20.5 | 3.7 | 18% | ||||||
Water Dispensers | – | – | – | – | ||||||
Other | 42.4 | 35.5 | 6.9 | 19% | ||||||
Revenue, net as reported | $ | 137.5 | $ | 124.3 | $ | 13.2 | 11% | |||
Foreign exchange impact | (4.8) | – | (4.8) | n/a | ||||||
Revenue excluding foreign exchange impact | $ | 132.7 | $ | 124.3 | $ | 8.4 | 7% |
SHARE REPURCHASE PROGRAM
During the third quarter, the Company repurchased approximately 1.8 million common shares for a total of approximately
Under the program, the Company’s common shares may be repurchased periodically in open market or privately negotiated transactions through the facilities of the NYSE.
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 to separate its impact from Primo’s results of operations. Primo utilizes adjusted net income (loss), adjusted net income (loss) per diluted share, Adjusted EBITDA and Adjusted EBITDA margin to separate the impact of certain items from the underlying business. Because Primo uses these adjusted financial results in the management of its business, management believes this supplemental information is useful to investors for their independent evaluation and understanding of Primo’s underlying business performance and the performance of its management. Additionally, Primo supplements its reporting of net cash provided by (used in) operating activities from continuing operations determined in accordance with GAAP by excluding additions to property, plant and equipment to present free cash flow, and by excluding the items identified on the exhibits hereto to present adjusted free cash flow, which management believes provides useful information to investors in assessing our performance, comparing Primo’s performance to the performance of the Company’s peer group and assessing the Company’s ability to service debt and finance strategic opportunities, which include investing in Primo’s business, making strategic acquisitions, paying dividends, repurchasing common shares and strengthening the balance sheet. With respect to the Company’s expectations of its performance, the Company’s reconciliations of Q4 2021 and full year 2021 estimated Adjusted EBITDA, along with targeted 2024 Adjusted EBITDA, are not available, as the Company is unable to quantify certain amounts to the degree of precision that would be required in the relevant GAAP measures without unreasonable effort. These items include taxes, interest costs that would occur if the Company issued debt, and costs to acquire and or sell a business if the Company executed such transactions, which could significantly affect our financial results. These items depend on highly variable factors and any such reconciliations would imply a degree of precision that would be confusing or misleading to investors. Primo expects the variability of these factors to have a significant, and potentially unpredictable, impact on the Company’s future GAAP financial results. The non-GAAP financial measures described above are in addition to, and not meant to be considered superior to, or a substitute for, Primo’s financial statements prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this earnings announcement reflect management’s judgment of particular items, and may be different from, and therefore may not be comparable to, similarly titled measures reported by other companies.
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 and full year 2021 revenue and Adjusted EBITDA and Primo’s multi-year growth algorithm), Primo’s planned exit from its single-use bottle retail water business in North America, 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: the impact of the spread of COVID-19, related government actions and Primo’s strategy in response thereto on our business, financial condition and results of operations; Primo’s ability to compete successfully in the markets in which it operates; fluctuations in commodity prices and Primo’s ability to pass on increased costs to its customers or hedge against such rising costs, and the impact of those increased prices on its volumes; Primo’s ability to maintain favorable arrangements and relationships with its suppliers; Primo’s ability to manage its operations successfully; currency fluctuations that adversely affect the exchange between currencies including 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 | $ | 550.8 | $ | 517.5 | $ | 1,555.3 | $ | 1,448.5 | |||
Cost of sales | 242.4 | 213.4 | 685.2 | 616.4 | |||||||
Gross profit | 308.4 | 304.1 | 870.1 | 832.1 | |||||||
Selling, general and administrative expenses | 263.6 | 257.2 | 771.5 | 759.0 | |||||||
Loss on disposal of property, plant and equipment, net | — | 2.3 | 5.4 | 6.2 | |||||||
Acquisition and integration expenses | 2.6 | 3.3 | 6.3 | 28.4 | |||||||
— | — | — | 115.2 | ||||||||
Operating income (loss) | 42.2 | 41.3 | 86.9 | (76.7) | |||||||
Other expense (income), net | 4.3 | (4.8) | 29.5 | 0.6 | |||||||
Interest expense, net | 16.7 | 20.4 | 53.4 | 60.8 | |||||||
Income (loss) from continuing operations before income taxes | 21.2 | 25.7 | 4.0 | (138.1) | |||||||
Income tax expense (benefit) | 3.1 | 3.4 | 4.4 | (1.3) | |||||||
Net income (loss) from continuing operations | $ | 18.1 | $ | 22.3 | $ | (0.4) | $ | (136.8) | |||
Net (loss) income from discontinued operations, net of income taxes | — | (0.3) | — | 26.3 | |||||||
Net income (loss) | $ | 18.1 | $ | 22.0 | $ | (0.4) | $ | (110.5) | |||
Net income (loss) per common share | |||||||||||
Basic: | |||||||||||
Continuing operations | $ | 0.11 | $ | 0.14 | $ | 0.00 | $ | (0.89) | |||
Discontinued operations | $ | — | $ | — | $ | — | $ | 0.17 | |||
Net income (loss) | $ | 0.11 | $ | 0.14 | $ | 0.00 | $ | (0.72) | |||
Diluted: | |||||||||||
Continuing operations | $ | 0.11 | $ | 0.14 | $ | 0.00 | $ | (0.89) | |||
Discontinued operations | $ | — | $ | — | $ | — | $ | 0.17 | |||
Net income (loss) | $ | 0.11 | $ | 0.14 | $ | 0.00 | $ | (0.72) | |||
Weighted average common shares outstanding (in thousands) | |||||||||||
Basic | 160,481 | 160,101 | 160,892 | 153,723 | |||||||
Diluted | 161,932 | 161,433 | 160,892 | 153,723 |
EXHIBIT 2 | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(in millions of | |||||
Unaudited | |||||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | $ | 125.3 | $ | 115.1 | |
Accounts receivable, net of allowance of | 287.6 | 222.3 | |||
Inventories | 95.7 | 83.8 | |||
Prepaid expenses and other current assets | 21.1 | 21.3 | |||
Total current assets | 529.7 | 442.5 | |||
Property, plant and equipment, net | 689.5 | 685.6 | |||
Operating lease right-of-use-assets | 174.6 | 180.6 | |||
1,277.0 | 1,284.3 | ||||
Intangible assets, net | 948.4 | 987.6 | |||
Other long-term assets, net | 23.9 | 24.1 | |||
Total assets | $ | 3,643.1 | $ | 3,604.7 | |
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Short-term borrowings | $ | 172.9 | $ | 107.7 | |
Current maturities of long-term debt | 14.1 | 17.9 | |||
Accounts payable and accrued liabilities | 442.1 | 387.7 | |||
Current operating lease obligations | 33.9 | 35.5 | |||
Total current liabilities | 663.0 | 548.8 | |||
Long-term debt | 1,308.4 | 1,345.1 | |||
Operating lease obligations | 143.8 | 148.0 | |||
Deferred tax liabilities | 149.6 | 148.1 | |||
Other long-term liabilities | 64.8 | 67.8 | |||
Total liabilities | 2,329.6 | 2,257.8 | |||
Shareholders’ Equity | |||||
Common shares, no par value – 160,135,328 ( | 1,277.8 | 1,268.0 | |||
Additional paid-in-capital | 83.0 | 84.5 | |||
Retained earnings | 29.7 | 81.1 | |||
Accumulated other comprehensive loss | (77.0) | (86.7) | |||
Total shareholders’ equity | 1,313.5 | 1,346.9 | |||
Total liabilities and shareholders’ equity | $ | 3,643.1 | $ | 3,604.7 |
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) | $ | 18.1 | $ | 22.0 | $ | (0.4) | $ | (110.5) | |||
Net (loss) income from discontinued operations, net of income taxes | — | (0.3) | — | 26.3 | |||||||
Net income (loss) from continuing operations | $ | 18.1 | $ | 22.3 | $ | (0.4) | $ | (136.8) | |||
Adjustments to reconcile net income (loss) from continuing operations to cash flows from operating activities: | |||||||||||
Depreciation and amortization | 53.3 | 53.6 | 158.4 | 151.4 | |||||||
Amortization of financing fees | 0.8 | 0.9 | 2.5 | 2.7 | |||||||
Share-based compensation expense | 3.8 | 6.2 | 10.0 | 13.5 | |||||||
Provision (benefit) for deferred income taxes | 1.9 | 1.8 | 1.3 | (2.6) | |||||||
(Gain) loss on sale of business | — | — | — | (0.6) | |||||||
Loss on extinguishment of debt | — | — | 27.2 | — | |||||||
— | — | — | 115.2 | ||||||||
Loss on disposal of property, plant and equipment, net | — | 2.3 | 5.4 | 6.2 | |||||||
Other non-cash items | 3.9 | (2.8) | 2.9 | 1.7 | |||||||
Change in operating assets and liabilities, net of acquisitions: | |||||||||||
Accounts receivable | (3.3) | (48.6) | (65.2) | (38.5) | |||||||
Inventories | (9.6) | 0.5 | (12.7) | 3.0 | |||||||
Prepaid expenses and other current assets | 3.6 | (3.9) | (0.6) | (3.5) | |||||||
Other assets | 0.1 | (0.3) | 0.4 | (0.9) | |||||||
Accounts payable and accrued liabilities and other liabilities | 10.8 | 21.2 | 42.5 | 12.6 | |||||||
Net cash provided by operating activities from continuing operations | 83.4 | 53.2 | 171.7 | 123.4 | |||||||
Cash flows from investing activities of continuing operations: | |||||||||||
Acquisitions, net of cash received | (12.9) | (1.2) | (13.2) | (435.7) | |||||||
Additions to property, plant and equipment | (37.5) | (21.4) | (99.3) | (85.0) | |||||||
Additions to intangible assets | (2.6) | (2.5) | (6.7) | (7.9) | |||||||
Proceeds from sale of property, plant and equipment | 0.7 | 0.2 | 1.4 | 1.0 | |||||||
Other investing activities | (1.2) | — | (1.2) | 1.1 | |||||||
Net cash used in investing activities from continuing operations | (53.5) | (24.9) | (119.0) | (526.5) | |||||||
Cash flows from financing activities of continuing operations: | |||||||||||
Payments of long-term debt | (3.5) | (2.3) | (760.5) | (7.6) | |||||||
Issuance of long-term debt | — | — | 750.0 | — | |||||||
Proceeds from short-term borrowings | 38.2 | — | 83.2 | 323.9 | |||||||
Payments on short-term borrowings | (18.0) | (70.0) | (28.0) | (279.9) | |||||||
Premiums and costs paid upon extinguishment of long-term debt | — | — | (20.6) | — | |||||||
Issuance of common shares | 3.4 | 1.2 | 19.1 | 2.0 | |||||||
Common shares repurchased and canceled | (29.3) | (0.2) | (45.6) | (32.3) | |||||||
Financing fees | — | (0.6) | (11.3) | (3.4) | |||||||
Equity issuance fees | — | — | — | (1.1) | |||||||
Dividends paid to common shareholders | (9.6) | (9.6) | (29.2) | (29.9) | |||||||
Payment of deferred consideration for acquisitions | — | — | (1.8) | (1.2) | |||||||
Other financing activities | 1.1 | 7.9 | 5.4 | 19.1 | |||||||
Net cash used in by financing activities from continuing operations | (17.7) | (73.6) | (39.3) | (10.4) | |||||||
Cash flows from discontinued operations: | |||||||||||
Operating activities of discontinued operations | 0.1 | (0.7) | (1.7) | (18.7) | |||||||
Investing activities of discontinued operations | — | (4.0) | — | 388.9 | |||||||
Financing activities of discontinued operations | — | — | — | (0.1) | |||||||
Net cash (used in) provided by discontinued operations | 0.1 | (4.7) | (1.7) | 370.1 | |||||||
Effect of exchange rate changes on cash | (1.2) | 0.8 | (1.5) | (0.2) | |||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 11.1 | (49.2) | 10.2 | (43.6) | |||||||
Cash and cash equivalents and restricted cash, beginning of period | 114.2 | 211.1 | 115.1 | 205.5 | |||||||
Cash and cash equivalents and restricted cash, end of period | 125.3 | 161.9 | 125.3 | 161.9 |
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 | $ | 281.9 | $ | 62.3 | $ | — | $ | 344.2 | ||||||||
Water Refill/Water Filtration | 47.0 | 8.6 | — | 55.6 | ||||||||||||
Other Water | 42.6 | 24.2 | — | 66.8 | ||||||||||||
Water Dispensers | 16.1 | — | — | 16.1 | ||||||||||||
Other | 25.7 | 42.4 | — | 68.1 | ||||||||||||
Total | $ | 413.3 | $ | 137.5 | $ | — | $ | 550.8 | ||||||||
Gross profit | $ | 233.0 | $ | 75.4 | $ | — | $ | 308.4 | ||||||||
Gross margin % | 56.4 | % | 54.8 | % | — | % | 56.0 | % | ||||||||
Selling, general and administrative expenses (a) | $ | 183.6 | $ | 70.5 | $ | 9.5 | $ | 263.6 | ||||||||
SG&A % of revenue | 44.4 | % | 51.3 | % | — | % | 47.9 | % | ||||||||
Operating income (loss) (a) | $ | 48.6 | $ | 4.4 | $ | (10.8) | $ | 42.2 | ||||||||
Depreciation and amortization | $ | 37.8 | $ | 15.1 | $ | 0.4 | $ | 53.3 | ||||||||
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 profit | $ | 232.4 | $ | 71.7 | $ | — | $ | 304.1 | ||||||||
Gross margin % | 59.1 | % | 57.7 | % | — | % | 58.8 | % | ||||||||
Selling, general and administrative expenses (a) | $ | 184.2 | $ | 62.4 | $ | 10.6 | $ | 257.2 | ||||||||
SG&A % of revenue | 46.8 | % | 50.2 | % | — | % | 49.7 | % | ||||||||
Operating income (loss) (a) | $ | 45.4 | $ | 8.5 | $ | (12.6) | $ | 41.3 | ||||||||
Depreciation and amortization | $ | 38.5 | $ | 14.8 | $ | 0.3 | $ | 53.6 | ||||||||
For the Nine Months Ended | ||||||||||||||||
Rest of World | All Other | Total | ||||||||||||||
Revenue, net | ||||||||||||||||
Water Direct/Water Exchange | $ | 785.6 | $ | 169.2 | $ | — | $ | 954.8 | ||||||||
Water Refill/Water Filtration | 137.2 | 24.5 | — | 161.7 | ||||||||||||
Other Water | 125.7 | 62.0 | — | 187.7 | ||||||||||||
Water Dispensers | 48.7 | — | — | 48.7 | ||||||||||||
Other | 78.3 | 124.1 | — | 202.4 | ||||||||||||
Total | $ | 1,175.5 | $ | 379.8 | $ | — | $ | 1,555.3 | ||||||||
Gross profit | $ | 663.1 | $ | 207.0 | $ | — | $ | 870.1 | ||||||||
Gross margin % | 56.4 | % | 54.5 | % | — | % | 55.9 | % | ||||||||
Selling, general and administrative expenses (a) | $ | 540.0 | $ | 204.2 | $ | 27.3 | $ | 771.5 | ||||||||
SG&A % of Revenue | 45.9 | % | 53.8 | % | — | % | 49.6 | % | ||||||||
Operating income (loss) (a) | $ | 114.8 | $ | 2.4 | $ | (30.3) | $ | 86.9 | ||||||||
Depreciation and amortization | $ | 112.1 | $ | 45.2 | $ | 1.1 | $ | 158.4 | ||||||||
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 profit | $ | 644.4 | $ | 187.7 | $ | — | $ | 832.1 | ||||||||
Gross margin % | 58.2 | % | 55.1 | % | — | % | 57.4 | % | ||||||||
Selling, general and administrative expenses (a) | $ | 537.9 | $ | 192.5 | $ | 28.6 | $ | 759.0 | ||||||||
SG&A % of revenue | 48.6 | % | 56.5 | % | — | % | 52.4 | % | ||||||||
Operating income (loss) (a) | $ | 92.5 | $ | (122.0) | $ | (47.2) | $ | (76.7) | ||||||||
Depreciation and amortization | $ | 107.1 | $ | 43.4 | $ | 0.9 | $ | 151.4 |
(a) We revised the allocation of information technology costs from the All Other category to our
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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 | |||||||||||||
Change in revenue | $ | 20.1 | $ | 13.2 | $ | — | $ | 33.3 | |||||||
Impact of foreign exchange (a) | $ | (0.9) | $ | (4.8) | $ | — | $ | (5.7) | |||||||
Change excluding foreign exchange | $ | 19.2 | $ | 8.4 | $ | — | $ | 27.6 | |||||||
Percentage change in revenue | 5.1 | % | 10.6 | % | — | % | 6.4 | % | |||||||
Percentage change in revenue excluding foreign exchange | 4.9 | % | 6.8 | % | — | % | 5.3 | % | |||||||
For the Nine Months Ended | |||||||||||||||
Rest of World | All Other | Primo | |||||||||||||
Change in revenue | $ | 67.7 | $ | 39.1 | $ | — | $ | 106.8 | |||||||
Impact of foreign exchange (a) | $ | (3.9) | $ | (22.9) | $ | — | $ | (26.8) | |||||||
Change excluding foreign exchange | $ | 63.8 | $ | 16.2 | $ | — | $ | 80.0 | |||||||
Percentage change in revenue | 6.1 | % | 11.5 | % | — | % | 7.4 | % | |||||||
Percentage change in revenue excluding foreign exchange | 5.8 | % | 4.8 | % | — | % | 5.5 | % | |||||||
For the Three Months Ended | |||||||||||||||
Rest of World | All Other | Primo | |||||||||||||
Change in gross profit | $ | 0.6 | $ | 3.7 | $ | — | $ | 4.3 | |||||||
Impact of foreign exchange (a) | $ | (0.4) | $ | (1.8) | $ | — | $ | (2.2) | |||||||
Change excluding foreign exchange | $ | 0.2 | $ | 1.9 | $ | — | $ | 2.1 | |||||||
Percentage change in gross profit | 0.3 | % | 5.2 | % | — | % | 1.4 | % | |||||||
Percentage change in gross profit excluding foreign exchange | 0.1 | % | 2.6 | % | — | % | 0.7 | % | |||||||
For the Nine Months Ended | |||||||||||||||
Rest of World | All Other | Primo | |||||||||||||
Change in gross profit | $ | 18.7 | $ | 19.3 | $ | — | $ | 38.0 | |||||||
Impact of foreign exchange (a) | $ | (2.0) | $ | (11.2) | $ | — | $ | (13.2) | |||||||
Change excluding foreign exchange | $ | 16.7 | $ | 8.1 | $ | — | $ | 24.8 | |||||||
Percentage change in gross profit | 2.9 | % | 10.3 | % | — | % | 4.6 | % | |||||||
Percentage change in gross profit excluding foreign exchange | 2.6 | % | 4.3 | % | — | % | 3.0 | % |
(a) 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 | $ | 18.1 | $ | 22.3 | $ | (0.4) | $ | (136.8) | |||||||
Interest expense, net | 16.7 | 20.4 | 53.4 | 60.8 | |||||||||||
Income tax expense (benefit) | 3.1 | 3.4 | 4.4 | (1.3) | |||||||||||
Depreciation and amortization | 53.3 | 53.6 | 158.4 | 151.4 | |||||||||||
EBITDA | $ | 91.2 | $ | 99.7 | $ | 215.8 | $ | 74.1 | |||||||
Acquisition and integration costs (a) | 2.6 | 3.3 | 6.3 | 28.4 | |||||||||||
Share-based compensation costs (b) | 3.8 | 6.2 | 10.0 | 13.5 | |||||||||||
COVID-19 costs (c) | 0.8 | 1.6 | 2.0 | 18.4 | |||||||||||
— | — | — | 115.2 | ||||||||||||
Foreign exchange and other losses (gains), net (e) | 5.7 | (2.0) | 4.6 | 3.2 | |||||||||||
Loss on disposal of property, plant and equipment, net (f) | — | 2.3 | 5.4 | 6.2 | |||||||||||
Loss on extinguishment of long-term debt (g) | — | — | 27.2 | — | |||||||||||
Gain on sale of business (h) | — | — | — | (0.6) | |||||||||||
Other adjustments, net (i) | 1.8 | (0.5) | 10.3 | 5.1 | |||||||||||
Adjusted EBITDA | $ | 105.9 | $ | 110.6 | $ | 281.6 | $ | 263.5 | |||||||
Revenue, net | $ | 550.8 | $ | 517.5 | $ | 1,555.3 | $ | 1,448.5 | |||||||
Adjusted EBITDA margin % | 19.2 | % | 21.4 | % | 18.1 | % | 18.2 | % | |||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||
Location in Consolidated Statements of Operations | ||||||||||||
(Unaudited) | (Unaudited) | |||||||||||
(a) Acquisition and integration costs | Acquisition and integration expenses | $ | 2.6 | $ | 3.3 | $ | 6.3 | $ | 28.4 | |||
(b) Share-based compensation costs | Selling, general and administrative expenses | 3.8 | 6.2 | 10.0 | 13.5 | |||||||
(c) COVID-19 costs | Selling, general and administrative expenses | 0.8 | 1.6 | 2.0 | 18.4 | |||||||
(d) | — | — | — | 115.2 | ||||||||
(e) Foreign exchange and other losses (gains), net | Other expense (income), net | 5.7 | (2.0) | 4.6 | 3.2 | |||||||
(f) Loss on disposal of property, plant and equipment, net | Loss on disposal of property, plant and equipment, net | — | 2.3 | 5.4 | 6.2 | |||||||
(g) Loss on extinguishment of long-term debt | Other expense (income), net | — | — | 27.2 | — | |||||||
(h) Gain on sale of business | Other expense (income), net | — | — | — | (0.6) | |||||||
(i) Other adjustments, net | Other expense (income), net | (0.9) | (2.6) | (1.4) | (1.8) | |||||||
Selling, general and administrative expenses | 2.7 | 2.1 | 11.7 | 6.5 | ||||||||
Cost of sales | — | — | — | 0.4 |
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 | $ | 83.4 | $ | 53.2 | ||
Less: Additions to property, plant, and equipment | (37.5) | (21.4) | ||||
Free Cash Flow | $ | 45.9 | $ | 31.8 | ||
Acquisition and integration cash costs | 2.1 | 2.9 | ||||
COVID-19 related cash costs | 0.8 | 5.0 | ||||
Deferred payroll tax related cash costs – government programs | 0.3 | (4.8) | ||||
Adjusted Free Cash Flow | $ | 49.1 | $ | 34.9 | ||
For the Nine Months Ended | ||||||
Net cash provided by operating activities from continuing operations | $ | 171.7 | $ | 123.4 | ||
Less: Additions to property, plant, and equipment | (99.3) | (85.0) | ||||
Free Cash Flow | $ | 72.4 | $ | 38.4 | ||
Acquisition and integration cash costs | 9.4 | 28.5 | ||||
Transaction cash costs paid on behalf of acquiree | — | 13.4 | ||||
COVID-19 related cash costs | 2.3 | 15.2 | ||||
Deferred payroll tax related cash costs – government programs | 1.2 | (14.0) | ||||
Adjusted Free Cash Flow | $ | 85.3 | $ | 81.5 |
| EXHIBIT 8 | ||||||||||
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) | $ | 18.1 | $ | 22.3 | $ | (0.4) | $ | (136.8) | |||
Adjustments: | |||||||||||
Amortization expense of customer lists | 12.5 | 14.7 | 37.2 | 38.6 | |||||||
Acquisition and integration costs | 2.6 | 3.3 | 6.3 | 28.4 | |||||||
Share-based compensation costs | 3.8 | 6.2 | 10.0 | 13.5 | |||||||
COVID-19 costs | 0.8 | 1.6 | 2.0 | 18.4 | |||||||
— | — | — | 115.2 | ||||||||
Foreign exchange and other (gains) losses, net | 5.7 | (2.0) | 4.6 | 3.2 | |||||||
Loss on extinguishment of long-term debt | — | — | 27.2 | — | |||||||
Gain on sale of business | — | — | — | (0.6) | |||||||
Other adjustments, net | 1.8 | (0.5) | 10.3 | 5.1 | |||||||
Tax impact of adjustments (a) | (8.9) | (7.3) | (24.0) | (21.9) | |||||||
Adjusted net income from continuing operations | $ | 36.4 | $ | 38.3 | $ | 73.2 | $ | 63.1 | |||
Earnings Per Share (as reported) | |||||||||||
Net income (loss) from continuing operations | $ | 18.1 | $ | 22.3 | $ | (0.4) | $ | (136.8) | |||
Basic EPS | $ | 0.11 | $ | 0.14 | $ | — | $ | (0.89) | |||
Diluted EPS | $ | 0.11 | $ | 0.14 | $ | — | $ | (0.89) | |||
Weighted average common shares outstanding (in thousands) | |||||||||||
Basic | 160,481 | 160,101 | 160,892 | 153,723 | |||||||
Diluted | 161,932 | 161,433 | 160,892 | 153,723 | |||||||
Adjusted Earnings Per Share (Non-GAAP) | |||||||||||
Adjusted net income from continuing operations (Non-GAAP) | $ | 36.4 | $ | 38.3 | $ | 73.2 | $ | 63.1 | |||
Adjusted diluted EPS (Non-GAAP) | $ | 0.22 | $ | 0.24 | $ | 0.45 | $ | 0.41 | |||
Diluted weighted average common shares outstanding (in thousands) (Non-GAAP) (b) | 161,932 | 161,433 | 162,626 | 155,003 |
(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 |
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