Primo Water(US:PRMW)2021-11-06 21:31Financial Data and Key Metrics Changes - Revenue increased by 6% to $551 million compared to $518 million, with a 5% increase excluding foreign exchange impact [11][20] - Adjusted EBITDA decreased by 4% to $106 million compared to $111 million, primarily due to higher operating costs [11][21] - The company maintains its full-year adjusted EBITDA guidance of between $390 million and $400 million [10][18] Business Line Data and Key Metrics Changes - In North America, revenue increased by 5% to $413 million, driven by strong volume and pricing in the Water Direct business [22] - Revenue from residential consumers in North America grew by 2%, while B2B revenue increased by 12% [22] - In the Rest of World segment, revenue increased by 11% to $138 million, with residential consumer revenue up by 24% [24] Market Data and Key Metrics Changes - The global customer base grew to nearly 2.7 million [14] - The addressable market for 3- and 5-gallon water in U.S. residential households is estimated to be between $22 billion to $29 billion [14] - The company expects to capture a significant share of the growing demand for residential water services [14] Company Strategy and Development Direction - The company plans to exit the North American single-use retail bottled water business to increase profitability and reduce environmental footprint [10][28] - Focus on enhancing the customer experience through improved e-commerce solutions and operational efficiency [36] - The company aims for targeted annualized adjusted EBITDA in excess of $500 million by 2024 and a net leverage ratio of less than 2.5x by 2024 [34][42] Management's Comments on Operating Environment and Future Outlook - Management noted that COVID-19 had a significant impact on operations, but cases have declined, allowing a return to normal service levels [12][40] - The company expects sustained demand from its Water Direct and Exchange residential customer base [40] - Management remains optimistic about achieving high single-digit organic revenue growth in the coming years [33][39] Other Important Information - The company achieved carbon neutrality in U.S. water operations and has been carbon neutral in Europe for the last 10 years [17] - The company has a cash balance of $125 million and a total liquidity position of $266 million [26] - The company repurchased approximately 1.8 million shares for $29 million during the third quarter [31] Q&A Session Summary Question: Cost perspective around labor and route inefficiencies - Management discussed the impact of the Delta variant on route sales associates, with a significant percentage affected, leading to increased operational costs [47][49] Question: Long-term guidance on organic sales growth - Management expressed confidence in achieving high single-digit growth, particularly after exiting the retail business [54] Question: Revenue impact from exiting the retail business - The retail business accounted for approximately $140 million in revenue, which is expected to improve overall margins [59] Question: Impact of the Delta variant on customer service complaints - Management noted that customer service levels were affected but highlighted improvements in customer retention [62] Question: Dispenser business performance - Management acknowledged challenges due to freight costs and tariffs but remains optimistic about future growth [67] Question: ESG efforts and customer awareness - Management emphasized the need for better communication of ESG initiatives to customers [71] Question: Capital allocation and share buybacks - Management confirmed a disciplined approach to capital allocation, focusing on share repurchases and tuck-in acquisitions [92]