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Primo Water Corp /CN/ (PRMW)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue was $452.0 million (+9.6% YoY) and adjusted EBITDA was $94.0 million (+24.2% YoY), both exceeding the high end of prior guidance; gross margin expanded 160 bps to 64.4% while adjusted EBITDA margin rose 250 bps to 20.8% .
  • Management raised FY 2024 outlook: revenue to $1.855–$1.885 billion, adjusted EBITDA to $410–$430 million, and adjusted free cash flow to $175–$185 million; Q2 2024 guidance set at revenue $472–$482 million and adjusted EBITDA $103–$111 million .
  • Growth was broad-based: Water Direct/Exchange +9%, Refill/Filtration +11%, and “Other Water” (primarily Mountain Valley) +57%, with volume +5.1% and price +4.5% contributing to revenue gains .
  • Stock reaction catalysts: margin expansion, raised guidance, strong Mountain Valley momentum and throughput, and improving operational KPIs (units per route/day +5%, revenue per route +8%, OTIF 93%, retention ~85%) supporting confidence in sustained performance .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based growth with balanced volume and pricing; CEO highlighted total revenue $452 million (+9.6% YoY), volume +5.1%, price +4.5%, organic +8.3% .
    • Premium brand momentum: Mountain Valley retail revenue up ~57% YoY; capacity quadrupled with new spring source and expanded formats (glass, aluminum single-serve) across >12,000 locations .
    • Operational KPIs improved: OTIF 93% in Water Direct, units per route/day +5%, revenue per route +8%; business optimization program tracking toward $20 million run-rate savings by YE 2024 .

  • What Went Wrong

    • SG&A rose 6% YoY to support selling and operating costs (e.g., delivery commissions), partially offsetting margin gains .
    • Water Dispensers: wholesale price declines due to tariff elimination pressured pricing, though unit sell-in grew 32% and sell-through was ~222,000 units; tariff refunds timing is uncertain beyond amounts received .
    • Consensus comparison visibility: S&P Global estimates were unavailable due to a mapping issue, limiting formal “Street vs actual” benchmarking; third-party sources indicate an EPS and revenue beat, but these are not SPGI .

Financial Results

MetricQ1 2023Q4 2023 (Continuing Ops)Q1 2024
Revenues ($USD Millions)$413.0 $439.0 $452.0
Gross Margin (%)62.8% —64.4%
Adjusted EBITDA ($USD Millions)$76.0 $95.0 $94.0
Adjusted EBITDA Margin (%)18.3% 21.6% 20.8%
Reported Diluted EPS ($USD)$0.02 —$0.12
Adjusted Diluted EPS ($USD)$0.07 —$0.19

Segment/Channel growth (Q1 2024):

ChannelYoY Growth (%)
Water Direct / Exchange+9%
Water Refill / Filtration+11%
Other Water (primarily Mountain Valley retail)+57%

KPIs and Operating Metrics:

KPIQ3 2023Q4 2023Q1 2024
Units per Route per Day (YoY change)+4% +5% vs Q4’22 +5% vs Q1’23
Revenue per Route (YoY change)+7% +8% vs Q4’22 +8% vs Q1’23
OTIF (Water Direct)——93%
Water Direct Retention86% (global) ~85% (NA) ~85% (NA)
Dispenser Sell-Through (Units)~252,000 ~264,000 ~222,000
Net Leverage (Adj. EBITDA basis)2.9x ~2.1x ~2.0x
Adjusted Free Cash Flow ($USD Millions)$102.0 $67.2 $28.4

Guidance Changes

MetricPeriodPrevious Guidance (Feb 22)Current Guidance (May 9)Change
Revenue ($USD Billions)FY 2024$1.840–$1.880 $1.855–$1.885 Raised
Adjusted EBITDA ($USD Millions)FY 2024$402–$422 $410–$430 Raised
Adjusted Free Cash Flow ($USD Millions)FY 2024$170–$180 $175–$185 Raised
CapExFY 2024~7% of revenue + $22.5M strategic ~7% of revenue + $22.5M strategic Maintained
Cash Taxes ($USD Millions)FY 2024$30–$40 $30–$40 Maintained
Net Cash Interest ($USD Millions)FY 2024$30–$50 $30–$50 Maintained
Revenue ($USD Millions)Q2 2024—$472–$482 New
Adjusted EBITDA ($USD Millions)Q2 2024—$103–$111 New
Dividend per Share ($USD)Quarterly$0.09 per common share $0.09 declared for Q2’24 payment Maintained

Rationale: Guidance raised reflects strong Q1 start and expected benefits from optimization program and operational efficiencies; Q2 guide implies adjusted EBITDA margin ~22.4% (up 60 bps YoY) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023 & Q4 2023)Current Period (Q1 2024)Trend
Route optimization & densityRecord adjusted EBITDA margin; units/route +4%, revenue/route +7%; continued ARO efficiencies ARO 2.0 rollout; units/route +5%, revenue/route +8%; expanded 6–7 day schedules Improving
Premium brand (Mountain Valley)Brand strength; NA margins 25.7% Retail revenue +57% YoY; capacity quadrupled; expanded aluminum/glass formats; >12,000 doors Accelerating
Pricing vs volume2023 volume +1%, pricing +7%; 1M dispenser sell-through Q1’24 volume +5.1%, price +4.5%; balanced growth Healthy mix; volume strengthening
Digital/customer experiencePlanned enhancements to MyWater+ and water.com; focus on frictionless CX MyWater+ Spanish; expanded hours/channels; SEO branch pages; chat/social adoption rising Execution progressing
M&A tuck-insRobust pipeline; targeted $20–$30M tuck-ins in 2023 Expect higher end of historical ranges in 2024; geography opportunistic Active pipeline
Business optimizationTarget $20M run-rate savings by YE 2024 Confident in $20M; early cost reductions in guidance On track
Balance sheet & capital allocationNet leverage 2.9x; lowering revolver; dividend step-up Net leverage ~2.0x; $498M cash; $9M repurchases; dividend $0.09 Stronger flexibility

Management Commentary

  • “Total revenue of $452 million, increased 9.6%, consisting of volume growth of 5.1% and pricing growth of 4.5%... Adjusted EBITDA was $94 million, up 24%... margin was 20.8%” – CEO Robbert Rietbroek .
  • “We were able to maintain our on-time and full rate of 93% in our Water Direct channel... units per route per day increased approximately 5% and revenue per route increased more than 8%” – CFO David Hass .
  • “During the first quarter, we increased our Mountain Valley retail revenue by approximately 57% over the prior year... launching single-serve and multipack aluminum... now available in more than 12,000 stores” – CEO Robbert Rietbroek .
  • “We are forecasting second quarter revenue... $472–$482 million... adjusted EBITDA... $103–$111 million... increasing full year 2024 adjusted EBITDA to $410–$430 million” – CFO David Hass .

Q&A Highlights

  • Mountain Valley growth and supply: demand outpacing supply; capacity quadrupled at new spring source; glass bottling expansion; aluminum single-serve rollout in Whole Foods and >12,000 stores .
  • Volume trends and guidance pacing: momentum carried from late 2023; broad-based volume strength in Direct, Exchange, Refill; guidance flow-through of Q1 beat, measured outlook given macro .
  • Retention and CX: Water Direct retention improved to ~85%; expanded service availability, digital channels (chat/social), and save-rate tracking .
  • Route optimization ceiling: continued runway with ARO 2.0 and flexible schedules; natural truck capacity limits, but better weekly asset utilization .
  • Capital allocation: progressing on asset sales in discontinued ops; disciplined tuck-ins; progressive dividend policy maintained into planning for 2025 .

Estimates Context

  • S&P Global consensus estimates were unavailable due to a data mapping issue in the SPGI feed; we attempted to retrieve “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q1 2024 but mapping failed. Values from S&P Global could not be obtained.
  • As secondary reference, InvestorPlace reported Q1 2024 adjusted EPS of $0.19 vs consensus $0.13 and revenue of $452.0 million vs consensus $439.42 million (non-SPGI source) .
MetricQ1 2024 Consensus (S&P Global)Q1 2024 Consensus (InvestorPlace)Q1 2024 Actual
Revenue ($USD Millions)Unavailable$439.42 $452.0
Adjusted EPS ($USD)Unavailable$0.13 $0.19

Note: S&P Global data was not retrievable due to a CIQ mapping error; comparisons above use third-party published figures for directional context.

Key Takeaways for Investors

  • Strong execution: Broad-based volume and pricing gains with operating KPIs improving; margin expansion and raised FY guidance support positive estimate revisions risk skew .
  • Premium brand optionality: Mountain Valley’s 57% retail growth and capacity adds create incremental mix tailwinds; watch glass/aluminum scaling and retail door expansion .
  • Free cash flow and capital returns: FY adjusted FCF raised to $175–$185 million alongside dividend continuity ($0.09) and repurchases ($9 million in Q1); balance sheet leverage ~2.0x provides flexibility .
  • Near-term trading lens: Q2 guide implies continued margin uplift (~22.4% adj. EBITDA margin), with seasonality and optimization benefits; beats against non-SPGI consensus suggest positive sentiment momentum .
  • Medium-term thesis: Execution on $20 million optimization run rate, tuck-in M&A density, and digital CX upgrades should sustain margin expansion and volume growth; monitor SG&A discipline and tariff refund timing .
  • Risk checks: Macro sensitivity remains (consumer, interest rates), dispenser pricing architecture post-tariff elimination, and timing/valuation of discontinued ops sales .
  • Focus points for next quarter: Q2 volume progression across channels, Mountain Valley supply/demand balance, ARO 2.0 impact on route metrics, and updated view on optimization/tariff refunds .

Sources: Q1 2024 Earnings Call Transcript –; Q4 2023 Earnings Call Transcript – ; Q3 2023 Earnings Call Transcript –; Q1 2024 Earnings Press Release ; Secondary estimate context .