Summary of Primo Brands (PRMB) Update - August 11, 2025 Company Overview - **Company**: Primo Brands Corporation - **Industry**: Bottled Water and Beverage Industry Key Points and Arguments Operational Challenges - **Impact of Weather and Natural Disasters**: The company faced significant challenges in Q2 due to tornado damage at the Hawkins, Texas retail plant and adverse weather conditions in the Northeast, where it holds a 40% market share [2][60]. - **Merger-Related Issues**: The company closed 40 facilities in Q2, totaling 48 closures to date, as part of a restructuring effort post-merger [3][4]. This aggressive approach aimed to expedite synergy delivery but led to supply chain disruptions [4][10]. - **Workforce Reduction**: A total of 1,600 associates were laid off to prioritize speed in synergy delivery [4]. Service Levels and Recovery - **Service Restoration**: The company reported a 92% daily service rate, aiming to return to pre-merger levels of over 95% by Q4 [6][11]. Minor disruptions are expected to continue for the next 8-10 weeks [6]. - **Customer Impact**: Approximately 10-20% of customers experienced delivery issues, but the company noted resilience in customer retention, with only a slight increase in attrition [17][18]. Financial Performance - **Growth Metrics**: Despite challenges, the company reported a net growth of 11 basis points in the first half of the year and a 3% top-line growth in Q1 [3][13]. - **Churn Rate**: The company experienced a net customer loss of about 1-1.5%, equating to approximately 50,000 customers out of a 3 million user base [22][53]. - **Win-Back Campaigns**: The company is implementing win-back strategies to recover lost customers, offering discounts and free products to encourage re-engagement [56]. Market Position and Strategy - **Market Share Growth**: The company has grown its market share by 11 basis points in the first half of the year, with a 2.2% dollar share growth reported recently [3][60][61]. - **Product Portfolio**: The company offers a diverse range of products across various price points, which helps maintain competitiveness in a fluctuating market [62][63]. - **Private Label Competition**: There has been a slight increase in private label share, indicating a shift in consumer confidence [60]. Future Outlook - **Synergy Goals**: The company aims to achieve $200 million in synergies by the end of year three post-merger, with a focus on operational efficiency and cost reductions [9][92]. - **Long-Term Growth**: The company is targeting a 25% adjusted EBITDA margin by 2027 through synergies, efficiency gains, and pricing optimizations [93]. - **Innovation and Market Expansion**: The company is positioned for long-term growth with plans for innovation and market expansion beyond 2025 [94]. Additional Insights - **ERP Transition**: The transition from Oracle to SAP has not caused significant issues, although some delays were noted due to the adoption of new technology by associates [43][45]. - **Office Coffee Services**: The company has decided to discontinue its office coffee services due to declining demand and to simplify its operations [48][49]. Conclusion Primo Brands is navigating through operational challenges stemming from weather-related disruptions and merger integration issues. Despite these hurdles, the company remains optimistic about its market position, growth potential, and long-term financial targets. The focus on restoring service levels and customer engagement through win-back campaigns is critical for recovery in the upcoming quarters.

Core Insights - SR Bancorp returned to profitability in Q4 2025, reporting GAAP net income of $823,000 ($0.10 per share), a significant recovery from a GAAP net loss of $3.0 million ($0.34 per share) in Q4 2024 [1][2] - Revenue reached $7.97 million, marking a 96.7% increase year-over-year, primarily due to improved asset quality and the absence of merger-related costs from the previous year [1][2] - The net interest margin narrowed to 2.90% from 3.22%, reflecting rising funding costs and competitive pressures in the deposit market [1][7] Financial Performance - Net income increased by $3.9 million compared to the prior year, driven by the completion of merger-related restructuring and normalization of taxes and credit provisions [5] - Adjusted net income (Non-GAAP) was $515,000, compared to a loss of $499,000 in the previous year [2][5] - Total deposits rose to $846.0 million, a 4.8% increase from $807.1 million in Q4 2024 [2][7] Business Overview - SR Bancorp operates as a community bank in New Jersey, offering a range of banking services including deposit accounts, residential and commercial mortgages, and business lending solutions [3] - The company's growth strategy focuses on market expansion, particularly following the acquisition of Regal Bancorp, which enhanced its commercial lending capabilities [3] Operational Highlights - Loan portfolio growth was robust, with net loans increasing by 8.9% year-over-year, driven by residential and multi-family loans [7] - Noninterest income improved significantly, moving from a loss in the prior period to a positive figure, as the company did not repeat last year's loss from security sales [6] - Noninterest expense rose by 3.3%, with higher salaries and benefits partially offset by lower data processing costs post-merger [8] Future Outlook - Management did not provide explicit forward guidance for fiscal 2026, highlighting ongoing challenges related to net interest margin pressure and rising funding costs [11] - Investors are expected to monitor the bank's core profitability and seek clarity on potential margin stabilization, with asset quality and deposit mix being key factors [12]

Financial Data and Key Metrics Changes - Reported earnings were $1,000,000 or $0.01 per diluted share, while adjusted earnings were approximately $66,000,000 or $0.69 per diluted share [5] - Loans increased by $312,000,000 or 7% from the previous quarter, and deposits rose by $361,000,000 or 7% [6] - Core net interest margin expanded from 3.42% to 3.58%, while reported margin increased from 3.45% to 3.85% for the quarter [6] Business Line Data and Key Metrics Changes - Adjusted pre-provision net revenue was $103,000,000, with net interest income growth driven by improved net interest margin and balance sheet growth [11] - Non-interest income was $48,300,000, reflecting a linked quarter increase of $11,900,000, largely driven by the mortgage division [11] - Non-interest expense for the quarter was $183,200,000, with merger and conversion expenses of $20,500,000 included [11] Market Data and Key Metrics Changes - The fair value of assets acquired in the merger totaled $7,900,000,000, including total loans of $5,200,000,000 [9] - The fair value of liabilities assumed was $6,900,000,000, including total deposits of $6,400,000,000 [9] - All regulatory capital ratios remained above required minimums, indicating a well-capitalized status [9] Company Strategy and Development Direction - The company is focused on successfully integrating teams from both merged entities and meeting customer needs [4] - Management expressed confidence in achieving modeled synergies by year-end and emphasized the importance of cultural integration [12] - The company aims for mid-single-digit loan and deposit growth, with a strong pipeline and opportunities in key markets [25] Management's Comments on Operating Environment and Future Outlook - Management noted that the merger has created a strong foundation for future growth, with expectations for modest expansion in core margin [17] - The company is on track to achieve its long-term strategic goals regarding profitability metrics such as ROA and efficiency ratio [39] - Management remains cautious about potential economic impacts but is optimistic about the integration and growth opportunities [26] Other Important Information - The company recorded a credit loss provision on loans of $14,700,000, with net charge-offs primarily from two credits [10] - The adjusted efficiency ratio improved by about seven percentage points, reflecting better revenue and cost containment [12] - Management indicated that additional conversion-related expenses are expected in the third quarter [12] Q&A Session Summary Question: Can you walk through the margin and expectations for core margin moving forward? - Management expects modest expansion in core margin, with a spot margin in June at 3.60% [18][20] Question: What are the expectations for core expense levels in the next few quarters? - Management indicated that efficiencies from the merger will start to show in Q3, with a goal for a clean income statement by Q1 next year [35][36] Question: What is the outlook for loan growth and pipeline? - Management reported a strong pipeline and guided for mid-single-digit loan and deposit growth, with efforts to capture market share [25][26] Question: Can you provide color on elevated charge-offs and future expectations? - Management clarified that recent charge-offs were not systemic and expected future charge-offs to revert to historical averages of around 10 basis points [50][51] Question: What are the thoughts on potential buybacks and capital allocation? - Management stated that capital is primarily for organic growth, with buybacks considered but not prioritized at this time [52][54] Question: When might the company consider whole bank M&A opportunities? - Management indicated that it is too early to plan for M&A, focusing instead on the successful integration of the current merger [60][62]