Primo Water Corporation Announces Full Year and Fourth Quarter 2022 Results; Increases Quarterly Dividend Again
Revenue growth of 17% in Water Direct & Water Exchange, approximately 1 million dispensers sold-through in 2022
TAMPA, Fla., Feb. 23, 2023 /PRNewswire/ --Primo Water Corporation (NYSE: PRMW) (TSX: PRMW) (the "Company" or "Primo"), a leading provider of sustainable drinking water solutions in North America and Europe, today announced its results for the full year and fourth quarter ended December 31, 2022.
(Unless stated otherwise, all fourth quarter 2022 comparisons are relative to the fourth quarter of 2021 and all fiscal year 2022 comparisons are relative to fiscal year 2021; all information is in U.S. dollars. Non-GAAP reconciliations presented on the exhibits to this press release. Q4 and fiscal year 2022 period ended December 31, 2022, Q4 and fiscal year 2021 period ended January 2, 2022).
FISCAL 2022 HIGHLIGHTS
- Revenue increased 7% (increased 10% excluding the impact of foreign exchange) to $2,215 million compared to $2,073 million driven by revenue growth of 17% in Water Direct / Water Exchange, and 7% in Water Refill / Water Filtration, partially offset by the exit from our North America single use bottled water retail business and the exit of our business in Russia, as well as foreign exchange headwinds.
- Reported net income and net income per diluted share were $30 million and $0.18, respectively, compared to reported net loss and net loss per diluted share of $3 million and $0.02, respectively. Adjusted net income and adjusted net income per diluted share were $108.2 million and $0.67, respectively, compared to adjusted net income and adjusted net income per diluted share of $91 million and $0.56, respectively.
- Adjusted EBITDA increased 11% to $420 million compared to $380 million and Adjusted EBITDA margin increased 70 bps to 19%.
- Full year 2022 sell-through of approximately one million dispenser units to consumers.
- Full year 2023 revenue expected to be between $2,300 million and $2,350 million, and full year 2023 Adjusted EBITDA outlook expected to be between $450 million and $470 million.
For the Year Ended | ||||||
(in millions of U.S. dollars, except per share amounts, | 2022 | 2021 | Y/Y Change | |||
Revenue, net1 | $ 2,215.1 | $ 2,073.3 | 7 % | |||
Net income (loss) | $ 29.6 | $ (3.2) | $ 32.8 | |||
Net Income (loss) per diluted share | $ 0.18 | $ (0.02) | $ 0.20 | |||
Adjusted net income | $ 108.2 | $ 90.9 | $ 17.3 | |||
Adjusted net income per diluted share | $ 0.67 | $ 0.56 | $ 0.11 | |||
Adjusted EBITDA | $ 420.1 | $ 380.0 | 11 % | |||
Adjusted EBITDA margin % | 19.0 % | 18.3 % | 70bps | |||
1Reported revenue for 2021 includes $142.1 million of revenues associated with our North American single use bottled water retail business and $13.6 million of |
"Fiscal year 2022 was another successful year for our pure-play water company. We continued to execute our differentiated Water Your Way platform, by delivering strong revenue and adjusted EBITDA growth. Our investment thesis is attractive with a portfolio of leading water solutions across multiple channels and geographies, strong customer demand, and a compelling financial profile. The continued investment in our digital platforms, increased dispenser sell-through driving connectivity of dispensers to our water solutions, and continued optimization of our route-based operations provides a strong foundation to achieve our long-term growth targets," said Tom Harrington, Primo's Chief Executive Officer.
"As a result, we are confident in our 2023 revenue outlook of between $2.3 billion and $2.35 billion, and Adjusted EBITDA outlook of between $450 million and $470 million," said Mr. Harrington.
"In recognition of our 2022 results, strong financial position, and confidence in the future of Primo, our Board of Directors authorized a quarterly dividend of $0.08 per common share, which represents a 14 percent increase over previous quarterly dividends and marks the 2nd consecutive year the Board has increased the quarterly dividend per share by $0.01," continued Mr. Harrington.
OUTLOOK
Primo is targeting the following results from continuing operations for the first quarter and full year 2023:
Q1 2023 Range | FY 2023 Range | |||
($ in millions) | Low | High | Low | High |
$ Revenue | $520 | $540 | $2,300 | $2,350 |
Adjusted EBITDA | $90 | $95 | $450 | $470 |
Cash Taxes | $20 | $25 | ||
Interest | $70 | $75 | ||
Cap-Ex | ~$200 | |||
FOURTH QUARTER AND 2022 RESULTS CONFERENCE CALL
Primo will host a conference call, to be simultaneously webcast, on Thursday, February 23, 2023, at 10:00 a.m. Eastern Time. A question-and-answer session will follow management's presentation. To participate, please call the following numbers:
North America: (888) 664-6392
International: (416) 764-8659
Conference ID: 80388633
This is a live, listen-only dial-in telephone line.
A live audio webcast and slide presentation will be available through the Company's investor relations section of the website at www.primowatercorp.com. The webcast will be recorded and archived for playback on the investor relations section of the website for two weeks following the event.
FISCAL YEAR GLOBAL PERFORMANCE
- Consolidated revenue increased 7% (increased by 10% excluding the impact of foreign exchange) to $2.2 billion compared to $2.1 billion. The increase was driven by revenue growth of 17% in Water Direct / Water Exchange and 7% in Water Refill / Water Filtration, partially offset by the exit from our North America single use bottled water retail business and the exit of our business in Russia, as well as foreign exchange headwinds. Revenue growth by channel is tabulated below:
For the Year Ended | ||||||||
(in millions of U.S. dollars) | 2022 | 2021 | Change | %Change | ||||
Revenue, net2 | ||||||||
Water Direct/Water Exchange | $ 1,490.7 | $ 1,276.5 | $ 214.2 | 17 % | ||||
Water Refill/Water Filtration | 227.4 | 213.4 | 14.0 | 7 % | ||||
Other Water | 151.8 | 244.3 | (92.5) | -38 % | ||||
Water Dispensers | 70.5 | 65.4 | 5.1 | 8 % | ||||
Other | 274.7 | 273.7 | 1.0 | 0 % | ||||
Revenue, net as reported | $ 2,215.1 | $ 2,073.3 | $ 141.8 | 7 % | ||||
Foreign exchange impact | 55.6 | - | 55.6 | n/a | ||||
Revenue excluding foreign exchange impact | $ 2,270.7 | $ 2,073.3 | $ 197.4 | 10 % | ||||
2Reported revenue for 2021 includes $142.1 million of revenues associated with our North American single use bottled water retail business and $13.6 million of revenues associated with our Russia business; Reported revenue for 2022 includes $41.0 million of revenues associated with our North American single use bottled water retail business and $7.4 million of revenues associated with our Russia business. |
- Gross profit increased 12% to $1.3 billion compared to $1.2 billion. Gross margin increased 260 bps to 58.4% compared to 55.8%, driven by price increases, volume growth in water direct and additional water exchange locations, partially offset by foreign exchange headwinds.
- SG&A expenses increased 11% to $1.2 billion compared to $1.0 billion. The increase was driven by higher operating costs in labor, fuel and freight to support volume and revenue growth, in addition to higher unit prices due to inflation.
- Reported net income and net income per diluted share were $30 million and $0.18, respectively, compared to reported net loss and net loss per diluted share of $3 million and $0.02, respectively. Adjusted net income and adjusted net income per diluted share increased to $108 million and $0.67, respectfully, compared to the prior year, at $91 million and $0.56, respectively.
- Adjusted EBITDA increased 11% to $420 million compared to $380 million, driven primarily by price increases, resilient consumer demand across our customer base and effective expense management. Adjusted EBITDA margin increased to 19%.
- Net cash provided by operating activities of $282 million, less $217 million of capital expenditures and additions to intangible assets, resulted in $65 million of free cash flow, or $85 million of adjusted free cash flow (adjusting for the items set forth on Exhibit 7), compared to adjusted free cash flow of $124 million in the prior year.
FOURTH QUARTER GLOBAL PERFORMANCE – CONTINUING OPERATIONS
For the Three Months Ended | ||||||
(in millions of U.S. dollars, except per share | 2022 | 2021 | Y/Y Change | |||
Revenue, net 3 | $ 533.0 | $ 518.0 | 3 % | |||
Net income (loss) | $ 57.5 | $ (2.8) | $ 60.3 | |||
Net income (loss) per diluted share | $ 0.36 | $ (0.02) | $ 0.38 | |||
Adjusted net income | $ 25.3 | $ 17.7 | $ 7.6 | |||
Adjusted net income per diluted share | $ 0.16 | $ 0.11 | $ 0.05 | |||
Adjusted EBITDA | $ 107.3 | $ 98.4 | 9 % | |||
Adjusted EBITDA margin % | 20.1 % | 19.0 % | 110bps | |||
3Reported revenue in Q4 2021 includes $31.4 million of revenues associated with our North American single use bottled water retail business and $3.6 million of |
- Consolidated revenue increased 3% to $533 million compared to $518 million (increased by 7% excluding the impact of foreign exchange). The increase was driven by revenue growth of 13% in Water Direct / Water Exchange and 14% in Water Refill / Water Filtration, partially offset by the exit from our North American single use bottled water retail business and foreign exchange headwinds. Revenue growth by channel is tabulated below:
For the Three Months Ended | ||||||||
(in millions of U.S. dollars) | 2022 | 2021 | Change | %Change | ||||
Revenue, net4 | ||||||||
Water Direct/Water Exchange | $ 364.7 | $ 321.7 | $ 43.0 | 13 % | ||||
Water Refill/Water Filtration | 58.7 | 51.7 | 7.0 | 14 % | ||||
Other Water | 24.9 | 56.6 | (31.7) | -56 % | ||||
Water Dispensers | 14.1 | 16.7 | (2.6) | -16 % | ||||
Other | 70.6 | 71.3 | (0.7) | -1 % | ||||
Revenue, net as reported | $ 533.0 | $ 518.0 | $ 15.0 | 3 % | ||||
Foreign exchange impact | 18.7 | - | 18.7 | n/a | ||||
Revenue excluding foreign exchange impact | $ 551.7 | $ 518.0 | $ 33.7 | 7 % | ||||
4 Reported revenue in Q4 2021 includes $31.4 million of revenues associated with our North American single use bottled water retail business and $3.6 million of |
- Gross profit increased 9% to $313 million compared to $287 million. Gross margin increased 330 bps to 58.8% compared to 55.5%, driven by price increases, volume growth in water direct and operational efficiencies, partially offset by foreign exchange headwinds.
- SG&A expenses increased 8% to $284 million compared to $263 million. The increase was driven by higher operating costs in labor, fuel and freight to support volume and revenue growth, in addition to higher unit prices due to inflation.
- Reported net income and net income per diluted share were $58 million and $0.36, respectively, compared to reported net loss and net loss per diluted share of $3 million and $0.02, respectively. Adjusted net income and adjusted net income per diluted share increased to $25 million and $0.16, respectfully, compared to the prior year, at $18 million and $0.11, respectively.
- Adjusted EBITDA increased 9% to $107 million compared to $98 million, driven primarily by higher volumes, price increases, and effective expense management. Adjusted EBITDA margin increased to 20.1%.
- Net cash provided by operating activities of $99 million, less $53 million of capital expenditures and additions to intangible assets, resulted in $46 million of free cash flow, or $56 million of adjusted free cash flow (adjusting for the items set forth on Exhibit 7), compared to adjusted free cash flow of $45 million in the prior year.
FOURTH QUARTER REPORTING SEGMENT PERFORMANCE
North America
- Revenue increased 5% to $405 million driven by revenue growth of 17% in Water Direct / Water Exchange, and 15% in Water Refill / Water Filtration resulting from growth in our customer base and increased retention, partially offset by the exit from our single use bottled water retail business.
For the Three Months Ended | ||||||||
(in millions of U.S. dollars) | 2022 | 2021 | Change | %Change | ||||
Revenue, net5 | ||||||||
Water Direct/Water Exchange | $ 309.3 | $ 265.4 | $ 43.9 | 17 % | ||||
Water Refill/Water Filtration | 49.9 | 43.3 | 6.6 | 15 % | ||||
Other Water | 8.0 | 36.9 | (28.9) | -78 % | ||||
Water Dispensers | 14.1 | 16.7 | (2.6) | -16 % | ||||
Other | 23.7 | 25.1 | (1.4) | -6 % | ||||
Revenue, net as reported | $ 405.0 | $ 387.4 | $ 17.6 | 5 % | ||||
Foreign exchange impact | 1.1 | - | 1.1 | n/a | ||||
Revenue excluding foreign exchange impact | $ 406.1 | $ 387.4 | $ 18.7 | 5 % | ||||
5Reported revenue in Q4 2021 includes $31.4 million of revenues associated with our North American single use bottled water retail business; there is no revenue |
Europe
- Revenue decreased 1% to $60 million (increased 13% excluding the impact of foreign exchange) driven by Water Direct, with growth in our residential customer base and B2B volume as Europeans return to the office, offset by foreign exchange headwinds.
For the Three Months Ended | ||||||||
(in millions of U.S. dollars) | 2022 | 2021 | Change | %Change | ||||
Revenue, net6 | ||||||||
Water Direct/Water Exchange | $ 44.4 | $ 44.1 | $ 0.3 | 1 % | ||||
Water Refill/Water Filtration | 8.0 | 8.2 | (0.2) | -2 % | ||||
Other Water | 0.3 | 0.2 | 0.1 | 50 % | ||||
Water Dispensers | - | - | - | - | ||||
Other | 7.0 | 8.0 | (1.0) | -13 % | ||||
Revenue, net as reported | $ 59.7 | $ 60.5 | $ (0.8) | -1 % | ||||
Foreign exchange impact | 8.5 | - | 8.5 | n/a | ||||
Revenue excluding foreign exchange impact | $ 68.2 | $ 60.5 | $ 7.7 | 13 % | ||||
6Reported revenue in the three months ended Q4 2021 includes $3.6 million of revenues associated with our Russia business; there is no revenue attributable to this |
SHARE REPURCHASE PROGRAM
During 2022, the Company repurchased approximately 1.8 million shares of common stock for approximately $24 million under its share repurchase program.
QUARTERLY DIVIDEND
The Company announced that its Board of Directors declared a dividend of $0.08 per common share. The dividend is payable in cash on March 27, 2023, to shareowners of record at the close of business on March 10, 2023.
ABOUT PRIMO WATER CORPORATION
Primo is a leading pure-play water solutions provider in North America and Europe and generates approximately $2.2 billion in annual revenue. Primo operates largely under a recurring revenue model in the large format water category (defined as 3 gallons or greater). This business strategy is commonly referred to as "razor-razorblade" because the initial sale of a product creates a base of users who frequently purchase complementary consumable products. The razor in Primo's revenue model is its industry leading line-up of innovative water dispensers, which are sold through approximately 10,000 retail locations and online at various price points. The dispensers help increase household and business penetration which drives recurring purchases of Primo's razorblade offering or water solutions. Primo's razorblade offering is comprised of Water Direct, Water Exchange, and Water Refill. Through its Water Direct business, Primo delivers sustainable hydration solutions across its 21-country footprint direct to customers, whether at home or to businesses. Through its Water Exchange business, customers visit retail locations and purchase a pre-filled bottle of water. Once consumed, empty bottles are exchanged at our recycling center displays, which provide a ticket that offers a discount toward the purchase of a new bottle. Water Exchange is available in approximately 17,500 retail locations. Through its Water Refill business, customers refill empty bottles at approximately 23,500 self-service refill drinking water machines. Primo also offers water filtration units across its 21-country footprint.
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 International Bottled Water Association (IBWA) in North America as well as with Watercoolers Europe (WE), which ensure strict adherence to safety, quality, sanitation and regulatory standards for the benefit of consumer protection.
Primo is headquartered in Tampa, Florida (USA). For more information, visit www.primowatercorp.com.
Non-GAAP Measures
To supplement its reporting of financial measures determined in accordance with U.S. GAAP (Generally Accepted Accounting Principles), 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 also 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 and additions to intangible assets 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, and strengthening the balance sheet. With respect to the Company's expectations of its future performance, the Company's reconciliations of Q1 2023 and full year 2023 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 regarding future financial and operating trends and results (including Primo's outlook on first quarter and full year 2023 revenue and Adjusted EBITDA and Primo's multi-year growth algorithm), 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: Primo's ability to compete successfully in the markets in which it operates; Primo's ability to manage supply chain disruptions and cost increases related to inflation; 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 U.S. dollar, the British pound sterling, the Euro and the Canadian dollar; the impact on Primo's financial results from uncertainty in the financial markets and other adverse changes in general economic conditions, including inflation and interest rates; any disruption to production at Primo's manufacturing facilities; Primo's ability to maintain access to its water sources; the impact of climate change on Primo's business; Primo's ability to protect its intellectual property; the seasonal nature of Primo's business and the effect of adverse weather conditions; the impact of national, regional and global events, including those of a political, economic, business and competitive nature; the impact of COVID-19, related government actions and Primo's strategy in response thereto on our business; Primo's ability to fully realize the potential benefit of transactions or other strategic opportunities that it pursues; Primo's ability to realize cost synergies of its acquisitions due to integration difficulties and other challenges; Primo's exposure to intangible asset risk; Primo's ability to meet its obligations under its debt agreements, and risks of further increases to its indebtedness; Primo's ability to maintain compliance with the covenants and conditions under its debt agreements; fluctuations in interest rates, which could increase Primo's borrowing costs; Primo's ability to recruit, retain and integrate new management; Primo's ability to manage increased labor costs; Primo's ability to renew its collective bargaining agreements from time to time on satisfactory terms; disruptions in Primo's information systems; Primo's ability to securely maintain its customers' confidential or credit card information, or other private data relating to Primo's employees or the Company; compliance with product health and safety standards; liability for injury or illness caused by the consumption of contaminated products; liability and damage to Primo's reputation as a result of litigation or legal proceedings; changes in the legal and regulatory environment in which Primo operates; Primo's ability to adequately address the challenges and risks associated with its international operations and address difficulties in complying with laws and regulations including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act of 2010; the impact on Primo's tax obligations and effective tax rate arising from changes in local tax laws or countries adopting more aggressive interpretations of tax laws; Primo's ability to maintain its quarterly dividend; or credit rating changes.
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
PRIMO WATER CORPORATION | EXHIBIT 1 | ||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(in millions of U.S. dollars, except share and per share amounts, U.S. GAAP) | |||||||
Unaudited | |||||||
For the Three Months Ended | For the Year Ended | ||||||
December 31, | January 1, | December 31, | January 1, | ||||
Revenue, net | $ 533.0 | $ 518.0 | $ 2,215.1 | $ 2,073.3 | |||
Cost of sales | 219.7 | 230.7 | 921.7 | 915.9 | |||
Gross profit | 313.3 | 287.3 | 1,293.4 | 1,157.4 | |||
Selling, general and administrative expenses | 284.2 | 262.8 | 1,151.4 | 1,034.3 | |||
Loss on disposal of property, plant and equipment, net | 4.1 | 3.9 | 8.5 | 9.3 | |||
Acquisition and integration expenses | 2.8 | 4.5 | 15.3 | 10.8 | |||
Impairment charges | — | — | 29.1 | — | |||
Gain on sale of property | (38.8) | — | (38.8) | — | |||
Operating income | 61.0 | 16.1 | 127.9 | 103.0 | |||
Other (income) expense, net | (25.8) | (1.6) | 8.8 | 27.9 | |||
Interest expense, net | 18.5 | 15.4 | 69.8 | 68.8 | |||
Income before income taxes | 68.3 | 2.3 | 49.3 | 6.3 | |||
Income tax expense | 10.8 | 5.1 | 19.7 | 9.5 | |||
Net income (loss) | $ 57.5 | $ (2.8) | $ 29.6 | $ (3.2) | |||
Net income (loss) per common share | |||||||
Basic | $ 0.36 | $ (0.02) | $ 0.18 | $ (0.02) | |||
Diluted | $ 0.36 | $ (0.02) | $ 0.18 | $ (0.02) | |||
Weighted average common shares outstanding (in thousands) | |||||||
Basic | 159,857 | 160,481 | 160,763 | 160,778 | |||
Diluted | 161,061 | 160,481 | 161,885 | 160,778 | |||
PRIMO WATER CORPORATION | EXHIBIT 2 | ||
CONSOLIDATED BALANCE SHEETS | |||
(in millions of U.S. dollars, except share amounts, U.S. GAAP) | |||
Unaudited | |||
December 31, 2022 | January 1, 2022 | ||
ASSETS | |||
Current assets | |||
Cash and cash equivalents | $ 122.6 | $ 128.4 | |
Accounts receivable, net of allowance of $20.4 ($20.8 as of January 1, 2022) | 258.6 | 261.6 | |
Inventories | 112.1 | 94.6 | |
Prepaid expenses and other current assets | 44.7 | 25.2 | |
Total current assets | 538.0 | 509.8 | |
Property, plant and equipment, net | 714.4 | 718.1 | |
Operating lease right-of-use-assets | 198.6 | 177.4 | |
Goodwill | 1,293.0 | 1,321.4 | |
Intangible assets, net | 894.7 | 969.8 | |
Other long-term assets, net | 28.3 | 26.9 | |
Total assets | $ 3,667.0 | $ 3,723.4 | |
LIABILITIES AND EQUITY | |||
Current liabilities | |||
Short-term borrowings | 212.3 | 222.1 | |
Current maturities of long-term debt | 17.5 | 17.7 | |
Accounts payable and accrued liabilities | 425.1 | 437.7 | |
Current operating lease obligations | 35.7 | 32.3 | |
Total current liabilities | 690.6 | 709.8 | |
Long-term debt | 1,283.8 | 1,321.1 | |
Operating lease obligations | 174.5 | 148.7 | |
Deferred tax liabilities | 170.0 | 158.8 | |
Other long-term liabilities | 65.2 | 64.9 | |
Total liabilities | 2,384.1 | 2,403.3 | |
Equity | |||
Common shares, no par value -159,752,299 shares issued (January 1, 2022 - | 1,283.2 | 1,286.9 | |
Additional paid-in-capital | 91.3 | 85.9 | |
(Accumulated deficit) retained earnings | (9.4) | 16.4 | |
Accumulated other comprehensive loss | (82.2) | (69.1) | |
Total Primo Water Corporation equity | 1,282.9 | 1,320.1 | |
Total liabilities and equity | $ 3,667.0 | $ 3,723.4 |
PRIMO WATER CORPORATION | EXHIBIT 3 | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in millions of U.S. dollars, U.S. GAAP) | |||||||
Unaudited | |||||||
For the Three Months Ended | For the Year Ended | ||||||
December 31, | January 1, | December 31, | January 1, | ||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ 57.5 | $ (2.8) | $ 29.6 | $ (3.2) | |||
Adjustments to reconcile net income (loss) from continuing | |||||||
Depreciation and amortization | 61.8 | 60.7 | 242.8 | 219.1 | |||
Amortization of financing fees | 0.8 | 0.9 | 3.3 | 3.4 | |||
Share-based compensation expense | 6.5 | 7.5 | 17.2 | 17.5 | |||
Provision for deferred income taxes | 8.9 | 2.7 | 14.1 | 4.0 | |||
Loss on extinguishment of long-term debt | — | — | — | 27.2 | |||
Gain on sale of business | (0.4) | (3.8) | (0.8) | (3.8) | |||
Impairment charges | — | — | 29.1 | — | |||
Loss on disposal of property, plant and equipment, net | 4.1 | 3.9 | 8.5 | 9.3 | |||
Gain on sale of property | (38.8) | — | (38.8) | — | |||
Other non-cash items | (16.8) | 3.9 | 18.2 | 6.8 | |||
Change in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 35.7 | 32.6 | (10.4) | (32.6) | |||
Inventories | 4.3 | 1.8 | (22.2) | (10.9) | |||
Prepaid expenses and other current assets | (5.5) | (3.9) | (6.4) | (4.5) | |||
Other assets | (3.0) | (0.2) | (3.2) | 0.2 | |||
Accounts payable and accrued liabilities and other liabilities | (16.5) | (16.3) | 0.6 | 26.2 | |||
Net cash provided by operating activities from continuing operations | 98.6 | 87.0 | 281.6 | 258.7 | |||
Cash flows from investing activities of continuing operations: | |||||||
Acquisitions, net of cash received | (7.6) | (77.3) | (20.3) | (90.5) | |||
Additions to property, plant and equipment | (52.5) | (52.7) | (207.7) | (152.0) | |||
Additions to intangible assets | — | (3.0) | (8.9) | (9.7) | |||
Proceeds from sale of property, plant and equipment | 2.3 | 0.5 | 3.9 | 1.9 | |||
Proceeds from sale of business, net of cash sold | — | 7.1 | — | 7.1 | |||
Proceeds from sale of property | 50.3 | — | 50.3 | — | |||
Other investing activities | 2.9 | 3.5 | 1.2 | 2.3 | |||
Net cash used in investing activities from continuing operations | (4.6) | (121.9) | (181.5) | (240.9) | |||
Cash flows from financing activities of continuing operations: | |||||||
Payments of long-term debt | (6.1) | (3.4) | (20.0) | (763.9) | |||
Issuance of long-term debt | — | — | — | 750.0 | |||
Proceeds from short-term borrowings | 15.0 | 51.0 | 37.0 | 134.2 | |||
Payments on short-term borrowings | (51.0) | — | (51.0) | (28.0) | |||
Premiums and costs paid upon extinguishment of long-term debt | — | — | — | (20.6) | |||
Issuance of common shares | 0.4 | 6.4 | 2.5 | 25.5 | |||
Common shares repurchased and canceled | (14.7) | (2.5) | (27.7) | (48.1) | |||
Financing fees | — | (0.3) | — | (11.6) | |||
Dividends paid to common and preferred shareholders | (11.2) | (9.7) | (45.4) | (38.9) | |||
Payment of contingent consideration for acquisitions | (1.2) | (1.1) | (3.5) | (2.9) | |||
Other financing activities | (0.7) | (1.9) | 5.3 | 3.5 | |||
Net cash (used in) provided by financing activities from continuing operations | (69.5) | 38.5 | (102.8) | (0.8) | |||
Cash flows from discontinued operations: | |||||||
Operating activities of discontinued operations | — | (0.1) | — | (1.8) | |||
Investing activities of discontinued operations | — | — | — | — | |||
Financing activities of discontinued operations | — | — | — | — | |||
Net cash used in discontinued operations | — | (0.1) | — | (1.8) | |||
Effect of exchange rate changes on cash | 2.6 | (0.4) | (3.1) | (1.9) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | 27.1 | 3.1 | (5.8) | 13.3 | |||
Cash and cash equivalents and restricted cash, beginning of year | 95.5 | 125.3 | 128.4 | 115.1 | |||
Cash and cash equivalents and restricted cash, end of year | $ 122.6 | $ 128.4 | $ 122.6 | $ 128.4 | |||
PRIMO WATER CORPORATION | EXHIBIT 4 | ||||||||
SEGMENT INFORMATION | |||||||||
(in millions of U.S. dollars, U.S. GAAP) | |||||||||
Unaudited | |||||||||
For the Three Months Ended December 31, 2022 | |||||||||
North America | Europe | Other | Eliminations | Total | |||||
Revenue, net | |||||||||
Water Direct/Water Exchange | $ 309.3 | $ 44.4 | $ 11.0 | $ — | $ 364.7 | ||||
Water Refill/Water Filtration | 49.9 | 8.0 | 0.8 | — | 58.7 | ||||
Other Water | 8.0 | 0.3 | 16.6 | — | 24.9 | ||||
Water Dispensers | 14.1 | — | — | — | 14.1 | ||||
Other | 23.7 | 7.0 | 39.9 | — | 70.6 | ||||
Total | $ 405.0 | $ 59.7 | $ 68.3 | $ — | $ 533.0 | ||||
Gross profit | $ 248.6 | $ 39.7 | $ 25.0 | $ — | $ 313.3 | ||||
Gross margin % | 61.4 % | 66.5 % | 36.6 % | — % | 58.8 % | ||||
Selling, general and administrative expenses | $ 206.8 | $ 40.3 | $ 37.1 | $ — | $ 284.2 | ||||
SG&A % of revenue | 51.1 % | 67.5 % | 54.3 % | — % | 53.3 % | ||||
Operating income (loss) | $ 74.5 | $ (0.8) | $ (12.7) | $ — | $ 61.0 | ||||
Depreciation and amortization | $ 45.8 | $ 9.5 | $ 6.5 | $ — | $ 61.8 | ||||
For the Three Months Ended January 1, 2022 | |||||||||
North America | Europe | Other | Eliminations | Total | |||||
Revenue, net | |||||||||
Water Direct/Water Exchange | $ 265.4 | $ 44.1 | $ 12.2 | $ — | $ 321.7 | ||||
Water Refill/Water Filtration | 43.3 | 8.2 | 0.2 | — | 51.7 | ||||
Other Water | 36.9 | 0.2 | 19.5 | — | 56.6 | ||||
Water Dispensers | 16.7 | — | — | — | 16.7 | ||||
Other | 25.1 | 8.0 | 38.2 | — | 71.3 | ||||
Total | $ 387.4 | $ 60.5 | $ 70.1 | $ — | $ 518.0 | ||||
Gross profit | $ 217.9 | $ 40.1 | $ 29.3 | $ — | $ 287.3 | ||||
Gross margin % | 56.2 % | 66.3 % | 41.8 % | — % | 55.5 % | ||||
Selling, general and administrative expenses | $ 180.6 | $ 45.5 | $ 36.7 | $ — | $ 262.8 | ||||
SG&A % of revenue | 46.6 % | 75.2 % | 52.4 % | — % | 50.7 % | ||||
Operating income (loss) | $ 31.2 | $ (6.8) | $ (8.3) | $ — | $ 16.1 | ||||
Depreciation and amortization | $ 44.8 | $ 10.0 | $ 5.9 | $ — | $ 60.7 | ||||
For the Year Ended December 31, 2022 | |||||||||
North America | Europe | Other | Eliminations | Total | |||||
Revenue, net | |||||||||
Water Direct/Water Exchange | $ 1,242.8 | $ 201.9 | $ 46.0 | $ — | $ 1,490.7 | ||||
Water Refill/Water Filtration | 192.0 | 32.6 | 2.8 | — | 227.4 | ||||
Other Water | 73.8 | 1.6 | 76.4 | — | 151.8 | ||||
Water Dispensers | 70.5 | — | — | — | 70.5 | ||||
Other | 106.5 | 29.2 | 139.0 | — | 274.7 | ||||
Total | $ 1,685.6 | $ 265.3 | $ 264.2 | $ — | $ 2,215.1 | ||||
Gross profit | $ 1,013.5 | $ 178.9 | $ 101.0 | $ — | $ 1,293.4 | ||||
Gross margin % | 60.1 % | 67.4 % | 38.2 % | — % | 58.4 % | ||||
Selling, general and administrative expenses | $ 830.8 | $ 174.8 | $ 145.8 | $ — | $ 1,151.4 | ||||
SG&A % of revenue | 49.3 % | 65.9 % | 55.2 % | — % | 52.0 % | ||||
Operating income (loss) | $ 203.7 | $ (28.4) | $ (47.4) | $ — | $ 127.9 | ||||
Depreciation and amortization | $ 179.6 | $ 38.9 | $ 24.3 | $ — | $ 242.8 | ||||
For the Year Ended January 1, 2022 | |||||||||
North America | Europe | Other | Eliminations | Total | |||||
Revenue, net | |||||||||
Water Direct/Water Exchange | $ 1,051.0 | $ 182.4 | $ 43.1 | $ — | $ 1,276.5 | ||||
Water Refill/Water Filtration | 180.5 | 32.3 | 0.6 | — | 213.4 | ||||
Other Water | 162.6 | 1.2 | 80.5 | — | 244.3 | ||||
Water Dispensers | 65.4 | — | — | — | 65.4 | ||||
Other | 103.4 | 31.7 | 139.6 | (1.0) | 273.7 | ||||
Total | $ 1,562.9 | $ 247.6 | $ 263.8 | $ (1.0) | $ 2,073.3 | ||||
Gross profit | $ 881.0 | $ 168.3 | $ 108.1 | $ — | $ 1,157.4 | ||||
Gross margin % | 56.4 % | 68.0 % | 41.0 % | — % | 55.8 % | ||||
Selling, general and administrative expenses | $ 720.6 | $ 176.6 | $ 137.1 | $ — | $ 1,034.3 | ||||
SG&A % of revenue | 46.1 % | 71.3 % | 52.0 % | — % | 49.9 % | ||||
Operating income (loss) | $ 146.0 | $ (10.2) | $ (32.8) | $ — | $ 103.0 | ||||
Depreciation and amortization | $ 156.9 | $ 39.4 | $ 22.8 | $ — | $ 219.1 | ||||
PRIMO WATER CORPORATION | EXHIBIT 5 | ||||||||||||||||
SUPPLEMENTARY INFORMATION - NON-GAAP - ANALYSIS OF REVENUE AND GROSS PROFIT BY REPORTING SEGMENT | |||||||||||||||||
(in millions of U.S. dollars, except percentage amounts) | |||||||||||||||||
Unaudited | |||||||||||||||||
For the Three Months Ended December 31, 2022 | |||||||||||||||||
North America | Europe | Other | Eliminations | Primo | |||||||||||||
Change in revenue | $ 17.6 | $ (0.8) | $ (1.8) | $ — | $ 15.0 | ||||||||||||
Impact of foreign exchange (a) | 1.1 | 8.5 | 9.1 | — | 18.7 | ||||||||||||
Change excluding foreign exchange | $ 18.7 | $ 7.7 | $ 7.3 | $ — | $ 33.7 | ||||||||||||
Percentage change in revenue | 4.5 % | (1.3) % | (2.6) % | — % | 2.9 % | ||||||||||||
Percentage change in revenue excluding foreign exchange | 4.8 % | 12.7 % | 10.4 % | — % | 6.5 % | ||||||||||||
For the Year Ended December 31, 2022 | |||||||||||||||||
North America | Europe | Other | Eliminations | Primo | |||||||||||||
Change in revenue | $ 122.7 | $ 17.7 | $ 0.4 | $ 1.0 | $ 141.8 | ||||||||||||
Impact of foreign exchange (a) | 2.4 | 33.6 | 19.6 | — | 55.6 | ||||||||||||
Change excluding foreign exchange | $ 125.1 | $ 51.3 | $ 20.0 | $ 1.0 | $ 197.4 | ||||||||||||
Percentage change in revenue | 7.9 % | 7.1 % | 0.2 % | (100.0) % | 6.8 % | ||||||||||||
Percentage change in revenue excluding foreign exchange | 8.0 % | 20.7 % | 7.6 % | (100.0) % | 9.5 % | ||||||||||||
For the Three Months Ended December 31, 2022 | |||||||||||||||||
North America | Europe | Other | Eliminations | Primo | |||||||||||||
Change in gross profit | $ 30.7 | $ (0.4) | $ (4.3) | $ — | $ 26.0 | ||||||||||||
Impact of foreign exchange (a) | 0.6 | 5.0 | 3.6 | — | 9.2 | ||||||||||||
Change excluding foreign exchange | $ 31.3 | $ 4.6 | $ (0.7) | $ — | $ 35.2 | ||||||||||||
Percentage change in gross profit | 14.1 % | (1.0) % | (14.7) % | — % | 9.0 % | ||||||||||||
Percentage change in gross profit excluding foreign exchange | 14.4 % | 11.5 % | (2.4) % | — % | 12.3 % | ||||||||||||
For the Year Ended December 31, 2022 | |||||||||||||||||
North America | Europe | Other | Eliminations | Primo | |||||||||||||
Change in gross profit | $ 132.5 | $ 10.6 | $ (7.1) | $ — | $ 136.0 | ||||||||||||
Impact of foreign exchange (a) | 1.4 | 22.4 | 5.5 | — | 29.3 | ||||||||||||
Change excluding foreign exchange | $ 133.9 | $ 33.0 | $ (1.6) | $ — | $ 165.3 | ||||||||||||
Percentage change in gross profit | 15.0 % | 6.3 % | (6.6) % | — % | 11.8 % | ||||||||||||
Percentage change in gross profit excluding foreign exchange | 15.2 % | 19.6 % | (1.5) % | — % | 14.3 % | ||||||||||||
(a) Impact of foreign exchange is the difference between the current period revenue and gross profit translated utilizing the current period average | |||||||||||||||||
PRIMO WATER CORPORATION | EXHIBIT 6 | ||||||
SUPPLEMENTARY INFORMATION - NON-GAAP - EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION | |||||||
(EBITDA) | |||||||
(in millions of U.S. dollars) | |||||||
Unaudited | |||||||
For the Three Months Ended | For the Year Ended | ||||||
December 31, 2022 | January 1, 2022 | December 31, | January 1, 2022 | ||||
Net income (loss) | $ 57.5 | $ (2.8) | $ 29.6 | $ (3.2) | |||
Interest expense, net | 18.5 | 15.4 | 69.8 | 68.8 | |||
Income tax expense | 10.8 | 5.1 | 19.7 | 9.5 | |||
Depreciation and amortization | 61.8 | 60.7 | 242.8 | 219.1 | |||
EBITDA | $ 148.6 | $ 78.4 | $ 361.9 | $ 294.2 | |||
Acquisition and integration costs (a) | 2.8 | 4.5 | 15.3 | 10.8 | |||
Share-based compensation costs (b) | 6.5 | 7.5 | 17.2 | 17.5 | |||
COVID-19 costs (c) | (0.6) | 0.4 | (0.6) | 2.4 | |||
Impairment charges (d) | — | — | 29.1 | — | |||
Foreign exchange and other (gains) losses, net (e) | (21.6) | 4.1 | 15.1 | 8.7 | |||
Loss on disposal of property, plant and equipment, net (f) | 4.1 | 3.9 | 8.5 | 9.3 | |||
Loss on extinguishment of long-term debt (g) | — | — | — | 27.2 | |||
Gain on sale of business (h) | (0.4) | (3.8) | (0.8) | (3.8) | |||
Gain on sale of property (i) | (38.8) | — | (38.8) | — | |||
Other adjustments, net (j) | 6.7 | 3.4 | 13.2 | 13.7 | |||
Adjusted EBITDA | $ 107.3 | $ 98.4 | $ 420.1 | $ 380.0 | |||
Revenue, net | $ 533.0 | $ 518.0 | $ 2,215.1 | $ 2,073.3 | |||
Adjusted EBITDA margin % | 20.1 % | 19.0 % | 19.0 % | 18.3 % | |||
For the Three Months Ended | For the Year Ended | ||||||||
Location in Consolidated Statements of | December 31, | January 1, 2022 | December 31, | January 1, 2022 | |||||
(Unaudited) | (Unaudited) | ||||||||
(a) Acquisition and integration costs | Acquisition and integration expenses | $ 2.8 | $ 4.5 | $ 15.3 | $ 10.8 | ||||
(b) Share-based compensation costs | Selling, general and administrative expenses | 6.5 | 7.5 | 17.2 | 17.5 | ||||
(c) COVID-19 costs | Selling, general and administrative expenses | (0.6) | 0.4 | (0.6) | 2.4 | ||||
(d) Impairment charges | Impairment charges | — | — | 29.1 | — | ||||
(e) Foreign exchange and other (gains) losses, net | Other (income) expense, net | (21.6) | 4.1 | 15.1 | 8.7 | ||||
(f) Loss on disposal of property, plant and equipment, net | Loss on disposal of property, plant and equipment, net | 4.1 | 3.9 | 8.5 | 9.3 | ||||
(g) Loss on extinguishment of long-term debt | Other (income) expense, net | — | — | — | 27.2 | ||||
(h) Gain on sale of business | Other (income) expense, net | (0.4) | (3.8) | (0.8) | (3.8) | ||||
(i) Gain on sale of property | Gain on sale of property | (38.8) | — | (38.8) | — | ||||
(j) Other adjustments, net | Other (income) expense, net | (3.1) | (1.4) | (4.3) | (2.8) | ||||
Selling, general and administrative expenses | 9.8 | 4.0 | 17.5 | 15.7 | |||||
Cost of Sales | — | 0.8 | — | 0.8 | |||||
PRIMO WATER CORPORATION | EXHIBIT 7 | ||
SUPPLEMENTARY INFORMATION - NON-GAAP - FREE CASH FLOW AND ADJUSTED FREE CASH FLOW | |||
(in millions of U.S. dollars) | |||
Unaudited | |||
For the Three Months Ended | |||
December 31, 2022 | January 1, 2022 | ||
Net cash provided by operating activities from continuing operations | $ 98.6 | $ 87.0 | |
Less: Additions to property, plant, and equipment | (52.5) | (52.7) | |
Less: Additions to intangible assets (a) | — | (3.0) | |
Free Cash Flow | $ 46.1 | $ 31.3 | |
Acquisition and integration cash costs | 1.6 | 3.7 | |
COVID-19 related cash costs | (0.6) | 0.3 | |
Cash costs related to additions to property, plant and equipment for integration of acquired entities | 1.3 | 2.0 | |
Deferral of payroll tax related costs - government programs | 7.5 | 7.8 | |
Adjusted Free Cash Flow | $ 55.9 | $ 45.1 | |
For the Year Ended | |||
December 31, 2022 | January 1, 2022 | ||
Net cash provided by operating activities from continuing operations | $ 281.6 | $ 258.7 | |
Less: Additions to property, plant, and equipment | (207.7) | (152.0) | |
Less: Additions to intangible assets (a) | (8.9) | (9.7) | |
Free Cash Flow | $ 65.0 | $ 97.0 | |
Acquisition and integration cash costs | 11.8 | 13.1 | |
COVID-19 related cash costs | (0.6) | 2.6 | |
Cash costs related to additions to property, plant and equipment for integration of acquired entities | 1.3 | 2.0 | |
Deferral of payroll tax related costs - government programs | 7.5 | 9.0 | |
Adjusted Free Cash Flow | $ 85.0 | $ 123.7 | |
(a) Prior period has been recast to include additions to intangible assets. | |||
PRIMO WATER CORPORATION | EXHIBIT 8 | ||||||
SUPPLEMENTARY INFORMATION-NON-GAAP-ADJUSTED NET INCOME AND ADJUSTED EPS | |||||||
(in millions of U.S. dollars, except share amounts) | |||||||
Unaudited | |||||||
For the Three Months Ended | For the Year Ended | ||||||
December 31, 2022 | January 1, 2022 | December 31, 2022 | January 1, 2022 | ||||
Net income (loss) (as reported) | $ 57.5 | $ (2.8) | $ 29.6 | $ (3.2) | |||
Adjustments: | |||||||
Amortization expense of customer lists | 11.9 | 12.7 | 48.6 | 49.9 | |||
Acquisition and integration costs | 2.8 | 4.5 | 15.3 | 10.8 | |||
Share-based compensation costs | 6.5 | 7.5 | 17.2 | 17.5 | |||
COVID-19 costs | (0.6) | 0.4 | (0.6) | 2.4 | |||
Impairment charges | — | — | 29.1 | — | |||
Foreign exchange and other (gains) losses, net | (21.6) | 4.1 | 15.1 | 8.7 | |||
Loss on extinguishment of long-term debt | — | — | — | 27.2 | |||
Gain on sale of business | (0.4) | (3.8) | (0.8) | (3.8) | |||
Gain on sale of property | (38.8) | — | (38.8) | — | |||
Other adjustments, net | 6.7 | 3.4 | 13.2 | 13.7 | |||
Tax impact of adjustments (a) | 1.3 | (8.3) | (19.7) | (32.3) | |||
Adjusted net income | $ 25.3 | $ 17.7 | $ 108.2 | $ 90.9 | |||
Net income (loss) | $ 57.5 | $ (2.8) | $ 29.6 | $ (3.2) | |||
Basic EPS | $ 0.36 | $ (0.02) | $ 0.18 | $ (0.02) | |||
Diluted EPS | $ 0.36 | $ (0.02) | $ 0.18 | $ (0.02) | |||
Weighted average common shares outstanding (in thousands) | |||||||
Basic | 159,857 | 160,481 | 160,763 | 160,778 | |||
Diluted | 161,061 | 160,481 | 161,885 | 160,778 | |||
Adjusted Earnings Per Share (Non-GAAP) | |||||||
Adjusted net income (Non-GAAP) | $ 25.3 | $ 17.7 | $ 108.2 | $ 90.9 | |||
Adjusted diluted EPS (Non-GAAP) | $ 0.16 | $ 0.11 | $ 0.67 | $ 0.56 | |||
Diluted weighted average common shares outstanding (in thousands) (Non-GAAP) (b) | 161,061 | 162,085 | 161,885 | 162,595 | |||
(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 |
(b) Includes the impact of dilutive securities of 1,604 for the three months ended January 1, 2022 and 1,817 for the year ended January 1, 2022,. These dilutive |
CONTACT: Jon Kathol, Vice President, Investor Relations, Tel:813-544-8515, investorrelations@primowater.com
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