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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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PRIMO WATER CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required
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☐
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Fee paid previously with preliminary materials
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Primo Water’s transformation into an environmentally responsible, international pure-play water company. Prior to 2018, the Company operated a disparate collection of
businesses, primarily concentrated in the low margin private label soft drink sector with high customer concentration. Under the stewardship of the Board, the Company rationalized its product portfolio, acquired several higher-margin
water businesses (including "Legacy Primo"), invested in high-ROI operational and customer-facing initiatives, restructured management, and reconstituted the Board.
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Primo Water has focused on its long-term strategy optimized for profitable growth. The Company’s successful growth strategy involves selling a full range of water
solutions to a recurring customer base. The Company is driving growth and improved profitability through better operating efficiencies while building customer loyalty and retention.
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Primo Water is making great progress despite numerous and complex challenges. The Company’s strategy is clearly working and producing results, including double-digit
top-line growth (on a foreign-exchange neutral basis) in 2022 and the expansion of Adjusted EBITDA margin from 13% to 19% over the last five years, despite challenges from the pandemic and exiting its Russian business due to the war in
Ukraine among other factors, such as, high inflation, fluctuating foreign currencies, tight labor markets, tariffs on imported water dispensers and global supply chain constraints.
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Primo Water has the right leadership team and a substantially refreshed, diverse Board. The Company has added seven new directors since the business transformation began
five years ago, while reducing the overall size of the Board during that period. This was achieved through a proactive and deliberate process, to ensure that the Board has the right complement of skills, experience, and gender balance.
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Legion launched a proxy contest without first having a meaningful conversation with us. Legion began buying stock in October 2022, has had very little engagement with
management, and has never asked to speak with our independent directors to voice its concerns privately. Nevertheless, we have made several good faith attempts at a resolution; all have been rejected by Legion.
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Legion’s candidates will not add value to Primo Water’s Board and may displace directors with unique skills and industry knowledge. The Board does not believe Legion’s
nominees would bring any differentiated perspectives to the Board, and the election of Legion’s candidates could be detrimental to our progress.
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For the Year Ended
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||||||||||||||||||||
2022
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2021
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2020
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2019
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2018
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||||||||||||||||
(December 31, 2022)
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(January 1, 2022)
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(January 2, 2021)
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(December 28, 2019)
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(December 29, 2018)
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||||||||||||||||
Net income (loss)
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$
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29.6
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$
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(3.2
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)
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$
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(156.8
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)
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$
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(10.8
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)
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$
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28.9
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|||||||
Interest expense, net
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69.8
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68.8
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81.6
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77.6
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77.6
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|||||||||||||||
Income tax expense
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19.7
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9.5
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4.3
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4.5
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(4.8
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)
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||||||||||||||
Depreciation and amortization
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242.8
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219.1
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202.1
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168.6
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194.6
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|||||||||||||||
EBITDA2
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$
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361.9
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$
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294.2
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$
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131.2
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$
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239.9
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$
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296.3
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||||||||||
Acquisition and integration costs (a)1
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15.3
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10.8
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33.7
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16.4
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15.3
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|||||||||||||||
Share-based compensation costs (b)
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17.2
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17.5
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22.1
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9.9
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18.4
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|||||||||||||||
COVID-19 costs (c)
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(0.6
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)
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2.4
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20.8
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—
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—
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||||||||||||||
Commodity hedging loss (gain), net (d)
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—
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—
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—
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—
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0.3
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|||||||||||||||
Impairment charges (e)
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29.1
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—
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115.2
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—
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—
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|||||||||||||||
Foreign exchange and other losses (gains), net (f)
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15.1
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8.7
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1.5
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0.9
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(10.7
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)
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||||||||||||||
Loss on disposal of property, plant and equipment, net (g)
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8.5
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9.3
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10.6
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7.6
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9.4
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Loss (gain) on extinguishment of long-term debt (h)
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—
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27.2
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19.7
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—
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(7.1
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)
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||||||||||||||
Gain on sale of business (i)
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(0.8
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)
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(3.8
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)
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(0.6
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)
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6.0
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(6.0
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)
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|||||||||||
Gain on sale of property (j)
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(38.8
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)
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—
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—
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—
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—
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Other adjustments, net (k)
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13.2
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13.7
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7.3
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6.4
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(3.9
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)
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Adjusted EBITDA2
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$
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420.1
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$
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380.0
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$
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361.5
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$
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287.1
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$
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312.0
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||||||||||
Revenue, net
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$
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2,215.1
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$
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2,073.3
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$
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1,953.5
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$
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1,795.4
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$
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2,372.9
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Adjusted EBITDA margin %
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19.0
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%
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18.3
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%
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18.5
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%
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16.0
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%
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13.1
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%
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For the Year Ended
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2022
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2021
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2020
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2019
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2018
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Location in Consolidated
Statements of Operations
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(December 31,
2022)
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(January 1,
2022)
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(January 2,
2021)
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(December 28,
2019)
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(December 29,
2018)
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(Unaudited)
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|||||||||||||||||||||
(a) Acquisition and integration costs
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Acquisition and integration expenses
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$
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15.3
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$
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10.8
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$
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33.7
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$
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16.4
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$
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15.3
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||||||||||
(b) Share-based compensation costs
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Selling, general and administrative expenses
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17.2
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17.5
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22.1
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9.9
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18.4
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|||||||||||||||
(c) COVID-19 costs
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Selling, general and administrative expenses
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(0.6
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)
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2.4
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20.8
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—
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—
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||||||||||||||
(d) Commodity hedging loss (gain), net
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Cost of Sales
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—
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—
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—
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—
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0.3
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|||||||||||||||
(e) Impairment charges
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Impairment charges
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29.1
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—
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115.2
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—
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—
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(f) Foreign exchange and other losses (gains), net
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Other (income) expense, net
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15.1
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8.7
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1.5
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0.9
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(10.7
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)
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(g) Loss on disposal of property, plant and equipment, net
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Loss on disposal of property, plant and equipment, net
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8.5
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9.3
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10.6
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7.6
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9.4
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|||||||||||||||
(h) Loss (gain) on extinguishment of long-term debt
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Other (income) expense, net
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—
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27.2
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19.7
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—
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(7.1
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)
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||||||||||||||
(i) (Gain) loss on sale of business
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Other (income) expense, net
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(0.8
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)
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(3.8
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)
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(0.6
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)
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6.0
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(6.0
|
)
|
|||||||||||
(j) Gain on sale of property
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Gain on sale of property
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(38.8
|
)
|
—
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—
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—
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—
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||||||||||||||
(k) Other adjustments, net
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Other (income) expense, net
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(4.3
|
)
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(2.8
|
)
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(1.7
|
)
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(2.8
|
)
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(14.9
|
)
|
||||||||||
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Selling, general and administrative expenses
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17.5
|
15.7
|
8.6
|
9.4
|
8.8
|
|||||||||||||||
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Cost of Sales
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—
|
0.8
|
0.4
|
7.0
|
2.2
|
|||||||||||||||
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Revenue, net
|
—
|
—
|
—
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(7.2
|
)
|
—
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