Primo Water Announces Results for the Fourth Quarter and Fiscal Year Ended December 31, 2012

Primo Water Announces Results for the Fourth Quarter and Fiscal Year Ended
December 31, 2012

WINSTON-SALEM, N.C., March 19, 2013 (GLOBE NEWSWIRE) -- Primo Water
Corporation (Nasdaq:PRMW), a leading provider of multi-gallon purified bottled
water, self-serve filtered drinking water and water dispensers, today
announced financial results for the fourth quarter and fiscal year ended
December 31, 2012.

Business Highlights:

  oTotal sales for the year increased 10.1% to $91.5 million compared to the
    prior year and were consistent at $20.9 million for Q4 compared to the
    prior year.

  oWater segment sales for the year increased 6.8% to $62.7 million compared
    to the prior year and increased 8.2% to $15.0 million for Q4 compared to
    the prior year.

  oTotal adjusted EBITDA for the year increased 84.5% to $5.5 million for
    fiscal 2012 compared to $3.0 million for 2011 and increased to $1.1
    million compared to $(0.8) million in Q4 of the prior year.

  oWater segment operating income increased 17.5% to $15.9 million for the
    full year and increased 36.2% to $3.6 million for Q4 compared to the prior
    year.

  oWater dispenser unit sell-thru to consumers increased 36.4% to 398,619
    units for the full year and increased 27.9% to 91,870 units in Q4 of 2012
    compared to Q4 of the prior year.

  oAs of December 31, 2012, 24,500 total locations offered water and/or
    dispensers, a 4% increase in locations compared to December 31, 2011.

"We are pleased with our net sales growth and operating improvements which
enabled us to report our fourth consecutive quarter of adjusted EBITDA
improvement as we focused on distribution cost optimization in our water
business and increased gross margins in our dispenser business," commented
Billy D. Prim, Primo Water's President and Chief Executive Officer. "We
continue to see positive business trends in 2013 and are focused on increasing
EBITDA, which will be driven by water segment revenue growth, improved gross
margins and decreased expenses. Water segment revenue growth will continue to
be driven by new end-user customers, as we believe consumer growth in the
water segment will further increase with consumer purchases of water
dispensers, and our dispenser sales continue to experience strong growth."

Fourth Quarter Results

Adjusted EBITDA increased to $1.1 million from $(0.8) million in the fourth
quarter of 2011. Total net sales of $20.9 million were comparable to $21.1
million in the fourth quarter of 2011. This slight decrease was primarily due
to the one-time sale of $0.8 million in inventory that occurred in the prior
year and $0.6 million lower dispensers sales into the retail channel compared
to fourth quarter last year.

Water segment sales in the fourth quarter of 2012 increased 8.2% to $15.0
million compared to $13.9 million in the fourth quarter of 2011. Sales in the
Water segment consist of sales of multi-gallon purified bottled water
("Exchange") and self-serve filtered drinking water vending services
("Refill"). The Water segment sales increase was primarily due to a 17.0%
increase in Exchange sales that resulted from U.S. Exchange same-store unit
growth of 21.2% for the fourth quarter of 2012. The increase in U.S. Exchange
sales was partially offset by a 1.6% decrease in Refill sales.

Dispenser segment sales for the fourth quarter of 2012 decreased 9.2% to $5.8
million compared to $6.4 million in the fourth quarter of 2011. The change was
primarily due to a decrease in units sold into the retail channel partially
offset by a sales mix shift towards higher priced dispensers. While sell-in to
retail was down in the fourth quarter of 2012, sell-thru to consumers
continued to grow, increasing 27.9% compared to the fourth quarter of 2011 to
91,870 units, driven by increased locations and same-store sales unit
increases. The Company believes that increased water dispenser penetration
will lead to increased recurring Water sales.

The following table sets forth information regarding locations where the
Company's dispensers and water are sold as well as certain sales information.

                                             4Q12 4Q11  % Change
Total locations (thousands)                   24.5 23.6  3.8%
Dispenser locations (thousands)               8.1  6.9   17.4%
Dispenser units sell-in to retail (thousands) 73.9 101.4 (27.1%)
Dispenser units sell-thru (thousands)         91.9 71.8  27.9%
Water Locations (thousands)                   16.4 16.7  (1.5%)

Gross margin increased to 23.4% for the fourth quarter from 18.2% for the
fourth quarter of 2011.Gross margin for the Water segment increased to 30.9%
compared to 27.0% in the same period in the prior year due improvements for
both Exchange and Refill.Gross margin for the Dispenser segment increased to
4.1% from 1.3% for the prior year, primarily due to retail price increases
that were initiated during the third quarter of 2012.

The Company's Water segment continues to perform well, experiencing sales and
profitability growth. The Water segment's operating income for the fourth
quarter of 2012 increased 36.2% to $3.6 million from $2.6 million for the
fourth quarter of 2011.The Dispenser segment's loss from operations improved
for the fourth quarter of 2012 to $(0.1) million from $(0.6) million for the
fourth quarter of 2011, primarily due to price increases initiated during the
third quarter of 2012.The Company expects to achieve positive operating
income going forward in the Dispenser segment as a result of the full impact
of price increases and strong continuing consumer demand.

Fiscal Year 2012 Results; Goodwill Impairment

Fiscal year 2012 adjusted EBITDA increased 84.5% to $5.5 million from $3.0
million in 2011.Fiscal year 2012 total net sales increased 10.1% to $91.5
million from $83.1 million in 2011.Water sales for 2012 increased 6.8% to
$62.7 million compared to $58.7 million in 2011.Dispenser sales for 2012
increased 22.1% to $28.8 million compared to $23.6 million in 2011.

As previously disclosed the Company now reports the Flavorstation business
under discontinued operations and will focus on its core water and dispenser
businesses.In addition to discontinuing the Flavorstation business, in 2012
the Company took non-cash charges of $82.0 million to write off goodwill and
other intangibles on its balance sheet. The non-cash impairment charges are a
primarily a result of Primo's stock price, which is lower than the book value
of assets.Despite a cash flow valuation that supports a significantly higher
book value, the Company took the charges to present a more conservative
balance sheet.The charge does not impact bank covenants, financing of the
business or cash of the business, but it aligns our book value with the
Company's stock price.

The GAAP net loss from continuing operations for 2012 was $(93.3) million or
$(3.93) per share, compared to $(12.0) million or $(0.55) per share for the
prior year, driven primarily by the impact of the one-time non-cash charges in
2012. The GAAP net loss from continuing operations for the fourth quarter of
2012 was $(74.0) million or $(3.11) per share, compared to $(5.7) million or
$(0.24) per share for the fourth quarter of the prior year.

Guidance

The Company expects total full year 2013 net sales to increase 2% to 4% or in
the range of $93.3 to $95.2 million and full year adjusted EBITDA to range
between $9.2 and $9.4 million. The Company expects Water segment revenue to
increase 5% to 7% to $65.8 to $67.1 million. The Company expects total first
quarter 2013 sales to increase 3% to 5% or in the range of $20.4 to $20.8
million and adjusted EBITDA to increase 25% to 30% or in the range of $1.5 to
$1.6 million.

Conference Call and Webcast

The Company will host a conference call to discuss these results at 4:30 p.m.
ET today, March 19, 2013.Participants from the Company will be Billy D. Prim,
Chief Executive Officer, Mark Castaneda, Chief Financial Officer, and Matt
Sheehan, Chief Operating Officer. The call will be broadcast live over the
Internet hosted at the Investor Relations section of Primo Water's website at
www.primowater.com, and will be archived online through April 2, 2013.In
addition, listeners may dial (866) 712-2329in North America, and
international listeners may dial (253) 237-1244.

About Primo Water Corporation

Primo Water Corporation (Nasdaq:PRMW) is a leading provider of multi-gallon
purified bottled water, self-serve filtered drinking water and water
dispensers sold through major retailers throughout the United States and
Canada. Learn more about Primo Water at www.primowater.com.

The Primo Water Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11942

Forward-Looking Statements

Certain statements contained herein are not based on historical fact and are
"forward-looking statements" within the meaning of the applicable securities
laws and regulations. Generally, these statements can be identified by the use
of words such as "anticipate," "believe," "could," "estimate," "expect,"
"feel," "forecast," "intend," "may," "plan," "potential," "project," "should,"
"would," "will," and similar expressions intended to identify forward-looking
statements, although not all forward-looking statements contain these
identifying words. Owing to the uncertainties inherent in forward-looking
statements, actual results could differ materially from those stated here.
Factors that could cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, the loss of major
retail customers of the Company or the reduction in volume or change in timing
of purchases by major retail customers, lower than anticipated consumer and
retailer acceptance of and demand for the Company's Exchange and Refill
services and its water dispensers, changes in the Company's relationships with
its independent bottlers, distributors and suppliers, the entry of a
competitor with greater resources into the marketplace and competition and
other business conditions in the water and water dispenser industries in
general, the Company's experiencing product liability, product recall or
higher than anticipated rates of warranty expense or sales returns associated
with product quality or safety issues, the loss of key Company personnel,
changes in the regulatory framework governing the Company's business, the
Company's inability to efficiently and effectively integrate acquired
businesses with the Company's historical business, the Company's inability to
efficiently expand operations and capacity to meet growth, the Company's
inability to develop, introduce and produce new product offerings within the
anticipated timeframe or at all, the Company's inability to comply with its
covenants in its credit facilities, the failure of lenders to honor their
commitments under the Company's credit facilities, as well as other risks
described more fully in the Company's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K filed on March 15, 2012
and its subsequent filings under the Securities Exchange Act of 1934
(including its Annual Report on Form 10-K for the year ended December 31,
2012). Forward-looking statements reflect management's analysis as of the date
of this press release. The Company does not undertake to revise these
statements to reflect subsequent developments, other than in its regular,
quarterly earnings releases.

Use of Non-GAAP Financial Measures

To supplement its financial statements, the Company also provides investors
with information related to adjusted EBITDA, which is a non-GAAP financial
measure.Adjusted EBITDA is calculated as earnings (loss) before income tax
expense, interest expense, depreciation and amortization expense, goodwill and
other impairment, non-cash stock-based compensation expense, non-recurring and
acquisition-related costs, loss (gain) on disposal of assets and other.The
Company believes adjusted EBITDA provides useful information to management and
investors regarding certain financial and business trends relating to its
financial condition and results of operations.Management uses adjusted EBITDA
to compare the Company's performance to that of prior periods for trend
analyses and planning purposes. Adjusted EBITDA is also presented to the
Company's board of directors and is used in its credit agreements.

Non-GAAP measures should not be considered a substitute for, or superior to,
financial measures calculated in accordance with generally accepted accounting
principles in the United States ("GAAP"). Adjusted EBITDA excludes
significant expenses that are required by GAAP to be recorded in the Company's
financial statements and is subject to inherent limitations.

FINANCIAL TABLES TO FOLLOW

Primo Water Corporation
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
                                                               
                              Three months ended     Years ended
                              December 31,           December 31,
                              2012        2011       2012         2011
                                                               
Net sales                      $20,886   $21,112  $91,479    $83,062
Operating costs and expenses:                                   
Cost of sales                  16,000     17,276    70,081      63,201
Selling, general and           4,051      4,996     17,708      18,206
administrative expenses
Non-recurring and              178        924       743         2,091
acquisition-related costs
Depreciation and amortization  3,173      2,457     11,102      8,863
Goodwill and other impairment  70,525     --       82,013      --
Total operating costs and      93,927     25,653    181,647     92,361
expenses
Loss from operations           (73,041)   (4,541)   (90,168)    (9,299)
Interest expense and other,    961        734       4,043       1,690
net
Loss from continuing           (74,002)   (5,275)   (94,211)    (10,989)
operations before income taxes
Income tax (benefit) provision --        452       (961)       961
Loss from continuing           (74,002)   (5,727)   (93,250)    (11,950)
operations
Loss from discontinued
operations, net of income      (3,022)    (1,266)   (17,779)    (2,429)
taxes
Net loss                       $(77,024) $(6,993) $(111,029) $(14,379)
                                                               
Basic and diluted loss per                                      
common share:
Loss from continuing           $(3.11)   $(0.24)  $(3.93)    $(0.55)
operations
Loss from discontinued         (0.13)     (0.06)    (0.75)      (0.11)
operations
Net loss                       $(3.24)   $(0.30)  $(4.68)    $(0.66)
                                                               
Basic and diluted weighted
average common shares          23,752     23,645    23,725      21,652
outstanding
                                                               
                                                               
                                                               
Primo Water Corporation
Segment Information
(Unaudited; in thousands)
                                                               
                              Three months ended     Years ended
                              December 31,           December 31,
                              2012        2011       2012         2011
Segment revenues                                                
Water                          $ 15,044    $ 13,908   $ 62,667     $ 58,696
Dispensers                     5,842      6,432     28,812      23,595
Other                          --        772       --         771
Total revenue                  20,886     21,112    91,479      83,062
                                                               
Segment income (loss) from                                      
operations
Water                          3,607      2,650     15,942      13,563
Dispensers                     (96)       (619)     (1,319)     (1,021)
Corporate                      (2,676)    (3,191)   (10,933)    (10,887)
Adjustments:                                                    
Non-cash, stock-based          208        326       1,252       984
compensation expense
Loss (gain) on disposal of     70         4         509         315
assets and other
Adjusted EBITDA                $1,113    $(830)   $5,451     $2,954




Primo Water Corporation
Consolidated Balance Sheets
(in thousands, except par value data)
                                                                
                                                  December 31, December 31,
                                                  2012           2011
                                                  (unaudited)    
ASSETS                                                           
Current assets:                                                  
Cash                                               $234         $751
Accounts receivable, net                           9,894         12,513
Inventories                                        7,572         6,331
Prepaid expenses and other current assets          812           3,590
Current assets of disposal group held for sale     3,009         3,743
Total current assets                               21,521        26,928
                                                                
Bottles, net                                       3,838         3,704
Property and equipment, net                        41,947        45,838
Intangible assets, net                             12,477        13,107
Goodwill                                           –             78,823
Other assets                                       1,960         1,086
Assets of disposal group held for sale, net of     –             14,963
current portion
Total assets                                       $81,743      $184,449
                                                                
LIABILITIES AND STOCKHOLDERS' EQUITY                             
Current liabilities:                                             
Accounts payable                                   $11,455      $9,509
Accrued expenses and other current liabilities     4,305         2,838
Current portion of capital leases and notes        15            14,514
payable
Current liabilities of disposal group held for     2,752         3,205
sale
Total current liabilities                          18,527        30,066
                                                                
Long-term debt, capital leases and notes payable,  21,251        44
net of current portion
Other long-term liabilities                        352           1,710
Liabilities of disposal group held for sale, net   –             3,000
of current portion
Total liabilities                                  40,130        34,820
                                                                
Commitments and contingencies                                    
                                                                
Stockholders' equity:                                            
Preferred stock, $0.001 par value - 10,000 shares  –             –
authorized, none issued and outstanding
Common stock, $0.001 par value - 70,000 shares
authorized, 23,772 and 23,658 shares issued and    24            24
outstanding at December 31, 2012 and 2011,
respectively
Additional paid-in capital                         272,336       271,220
Common stock warrants                              8,420         7,007
Accumulated deficit                                (239,131)     (128,102)
Accumulated other comprehensive loss               (36)          (520)
Total stockholders' equity                         41,613        149,629
Total liabilities and stockholders' equity         $81,743      $184,449




Primo Water Corporation
Consolidated Statements of Cash Flows
(in thousands)
                                                                 
                                                     Year Ended December 31,
                                                     2012         2011
                                                     (unaudited)  
Cash flows from operating activities:                             
Net loss                                              $(111,029) $(14,379)
Less: Loss from discontinued operations               (17,779)    (2,429)
Loss from continuing operations                       (93,250)    (11,950)
Adjustments to reconcile net loss to net cash                     
provided by (used in) operating activities:
Depreciation and amortization                         11,102      8,863
Stock-based compensation expense                      1,252       984
Non-cash interest expense                             2,002       1,024
Deferred income tax (benefit)expense                 (961)       961
Bad debt expense                                      410         417
Goodwill and other impairment                         82,013      –
Other                                                 (152)       (275)
Changes in operating assets and liabilities:                      
Accounts receivable                                   2,253       (6,691)
Inventories                                           (1,257)     (2,634)
Prepaid expenses and other assets                     (100)       (1,047)
Accounts payable                                      943         4,874
Accrued expenses and other liabilities                1,602       (2,697)
Net cash provided by (used in) operating activities   5,857       (8,171)
                                                                 
Cash flows from investing activities:                             
Purchases of property and equipment                   (4,033)     (16,843)
Purchases of bottles, net of disposals                (1,291)     (2,367)
Proceeds from the sale of property and equipment      81          25
Business acquisitions                                 –           (1,576)
Additions to and acquisitions of intangible assets    (663)       (439)
Net cash used in investing activities                 (5,906)     (21,200)
                                                                 
Cash flows from financing activities:                             
Borrowings under prior revolving credit facility      500         36,126
Payments under prior revolving credit facility        (15,000)    (39,538)
Borrowings under revolving credit facility            45,694      –
Payments under revolving credit facility              (38,617)    –
Borrowings under term loan                            15,150      –
Note payable and capital lease payments               (14)        (15)
Debt issuance costs                                   (2,203)     (813)
Proceeds from sale of common stock, net of issuance   (491)       39,444
costs
Stock option and employee stock purchase activity,    39          392
net
Net cash provided by financing activities             5,058       35,596
                                                                 
Net increase in cash                                  5,009       6,225
Cash, beginning of year                               751         443
Effect of exchange rate changes on cash               9           (46)
Cash used in discontinued operations from:                        
Operating activities                                  (5,226)     (2,608)
Investing activities                                  (309)       (3,263)
Financing activities                                  –           –
Cash used in discontinued operations                  (5,535)     (5,871)
Cash, end of period                                   $234       $751




Primo Water Corporation
Non-GAAP EBITDA and Adjusted EBITDA Reconciliation
(Unaudited; in thousands, except per share amounts)
                                                               
                               Three months ended     Year ended
                               December 31,           December 31,
                               2012        2011       2012        2011
                                                               
Loss from continuing operations $(74,002) $(5,727) $(93,250) $(11,950)
Depreciation and amortization   3,173      2,457     11,102     8,863
Interest expense and other, net 961        734       4,043      1,690
Income tax (benefit) provision  --        452       (961)      961
EBITDA                          (69,868)   (2,084)   (79,066)   (436)
Goodwill and other impairment   70,525     --       82,013     --
Non-cash, stock-based           208        326       1,252      984
compensation expense
Non-recurring and               178        924       743        2,091
acquisition-related costs
Loss (gain) on disposal of      70         4         509        315
assets and other
                                                               
Adjusted EBITDA                 $1,113    $(830)   $5,451    $2,954

CONTACT: Primo Water Corporation
         Mark Castaneda, Chief Financial Officer
         (336) 331-4000
        
         ICR Inc.
         John Mills
         Katie Turner
         (646) 277-1228

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