Primo Water Announces Results for the First Quarter Ended March 31, 2013

Primo Water Announces Results for the First Quarter Ended March 31, 2013

WINSTON-SALEM, N.C., May 14, 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 first quarter ended March 31, 2013.

Business Highlights:

  oQ1 sales increased 12.8% to $22.3 million compared to the prior year
    driven by strong Dispenser segment sales growth.
  oTotal adjusted EBITDA for Q1 increased 57.9% to $1.9 million compared to
    $1.2 million in Q1 of the prior year.
  oWater dispenser unit sell-thru to consumers increased 11.6% to 104,200
    units for Q1 compared to Q1 of the prior year.
  oWater gross margin improved sequentially to 32.3% in Q1 of 2013 from 30.9%
    in Q4 2012.
  oGenerated $4.0 million in cash flow from operations and $2.6 million in
    free cash flow during the quarter compared to $1.1 million and $0.2
    million in the prior year's first quarter, respectively.

"We exceeded our expectations for sales and operating results in the first
quarter of 2013 and reported our fifth consecutive quarter of positive
adjusted EBITDA as we focused on execution and cost improvements across our
core businesses," commented Billy D. Prim, Primo Water's President and Chief
Executive Officer. "We are optimistic about our growth opportunities in 2013
as we further expand our distribution network while optimizing our corporate
expense structure to realize additional operating efficiencies, improve cash
flow and adjusted EBITDA."

First Quarter Results

Total net sales increased 12.8% to $22.3 million compared to $19.8 million in
the first quarter of 2012. The increase in net sales was driven by a $2.6
million increase in Dispenser sales.

Dispenser segment sales for the first quarter of 2013 increased 53.7% to $7.4
million compared to $4.8 million in the first quarter of 2012. The increase
was due to the increase in the number of retail locations offering dispensers,
increased sell thru of dispenser units and better than expected dispenser
sell-in orders as retailers pulled orders forward to the first quarter.
Dispenser unit sales to retailers increased by 19.1% for the first quarter
compared to the same period in the prior year. The dispenser unit sales to
consumers increased 11.6% for the first quarter compared to the same period in
the prior year. This represents thirteen consecutive quarters of positive
quarter-over-quarter growth in consumer purchases. Sales increased at a
greater level than unit sales due to the increase in sales mix for higher
priced dispensers and a price increase implemented last year. The Company
believes that increased water dispenser penetration will lead to increased
recurring Water sales.

Water segment net sales were essentially flat at $14.9 million for the first
quarter compared to the prior year. The first quarter is a seasonally slower
period for water sales and the Company believes first quarter 2013 sales were
also negatively impacted by unfavorable weather.Sales in the Water segment
consist of sales of multi-gallon purified bottled water ("Exchange") and
self-serve filtered drinking water vending services ("Refill").Water sales
were impacted by a 4.0% decline in Refill sales, primarily due to lower empty
bottles sales and unfavorable weather conditions. The decrease in Refill sales
was offset by an increase of 2.1% in Exchange sales driven bysame-store unit
growth of 12.1% forU.S. Exchange services compared to the first quarter of
2012.

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

                                             1Q13  1Q12 % Change
Total locations (thousands)                   24.3  24.1 0.8%
Dispenser locations (thousands)               8.1   7.4  9.5%
Dispenser units sell-in to retail (thousands) 88.9  74.7 19.1%
Dispenser units sell-thru (thousands)         104.2 93.3 11.6%
Water Locations (thousands)                   16.2  16.7 (2.4%)

Gross margin percentage decreased to 23.7% for the first quarter from 26.6%
for the first quarter of 2012. The decrease was primarily the result of a
higher mix of lower-margin Dispensers segment sales. Gross margin for the
Dispenser segment increased to 6.3% from 1.0% for the prior year, primarily
due to retail price increases that were initiated during the third quarter of
2012. Gross margin for the Water segment decreased to 32.3% for the first
quarter compared to 34.9% in the same period in the prior year. The decrease
was due to a greater mix of lower-margin Exchange net sales as well as slight
decreases in gross margin percentages for Exchange and Refill.

Selling, general and administrative ("SG&A") expenses decreased 15.8% to $3.8
million for the first quarter of 2013 from $4.6 million for the first quarter
of 2012. In addition, as a percentage of net sales, SG&A decreased to 17.2%
for the first quarter of 2013 from 23.0% for the first quarter of 2012.

Cash flow from operations increased 279% to $4.0 million from $1.1 million in
the first quarter of 2012.The increase in cash flow from operations resulted
in free cash flow, defined as net cash provided by operating activities less
net cash used in investing activities, of $2.6 million during the first
quarter of 2013.The free cash flow allowed the Company to pay down $2.0
million of borrowings outstanding under its senior revolving credit facility.

Adjusted EBITDA increased 57.9% to $1.9 million from $1.2 million in the first
quarter of 2012.The net loss from continuing operations for the first quarter
of 2013 was $(2.4) million or $(0.10) per share, compared to $(3.1) million or
$(0.13) per share for the first quarter of the prior year.On a pro forma
fully taxed basis, net loss from continuing operations was $(1.0) million or
$(0.04) per share, compared to $(1.1) million or $(0.05) per share for the
first quarter of 2013 and 2012, respectively.

Guidance

The Company reiterates its full year 2013 guidance for net sales to increase
2% to 4% or in the range of $93.3 to $95.2 million and full year adjusted
EBITDA is expected to range between $9.2 and $9.4 million. The Company
continues to expect Water segment revenue to increase 5% to 7% to $65.8 to
$67.1 million. The Company expects total second quarter 2013 sales in the
range of $21.0 to $22.0 million and adjusted EBITDA in the range of $2.0 to
$2.2 million or an increase of 54% to 70% over the second quarter of prior
year.

Conference Call and Webcast

The Company will host a conference call to discuss these results at 4:30 p.m.
ET today, May 14, 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 May 28, 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 include our financial
guidance and can otherwise 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 herein. 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 22, 2013 and its subsequent
filings under the Securities Exchange Act of 1934. 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-U.S. GAAP Financial Measures

To supplement its financial statements, the Company provides investors with
information related to adjusted EBITDA, free cash flow and pro forma fully
taxed net loss from continuing operations, which are not financial measures
calculated in accordance with generally accepted accounting principles in the
United States ("U.S. GAAP").Adjusted EBITDA is calculated as earnings (loss)
from continuing operations before depreciation and amortization; interest
expense and other, net; income tax provision; non-cash, stock-based
compensation expense; non-recurring and acquisition-related costs; and loss on
disposal of assets and other.Free cash flow is defined as net cash provided
by operating activities less net cash used in investing actives.Pro forma
fully taxed net loss from continuing operations is defined as loss from
continuing operations before income taxes less amortization of intangible
assets; non-cash, stock-based compensation expense; non-recurring and
acquisition related costs as adjusted on a pro forma basis for the full effect
of income taxes.The Company believes these non-U.S. GAAP financial measures
provide useful information to management and investors regarding certain
financial and business trends relating to the Company's financial condition
and results of operations.Management uses these non-U.S. GAAP financial
measures to compare the Company's performance to that of prior periods for
trend analyses and planning purposes. These non-U.S. GAAP financial measures
are also presented to the Company's board of directors and Adjusted EBITDA is
used in its credit agreements.

Non-U.S. GAAP measures should not be considered a substitute for, or superior
to, financial measures calculated in accordance U.S. GAAP. Adjusted EBITDA
excludes significant expenses that are required by U.S. GAAP to be recorded in
the Company's financial statements and is subject to inherent limitations.

Primo Water Corporation
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
                                                                  
                                                        Three months ended
                                                         March 31,
                                                        2013       2012
                                                                  
Net sales                                                $22,328  $19,801
Operating costs and expenses:                                      
Cost of sales                                            17,039    14,528
Selling, general and administrative expenses             3,836     4,554
Non-recurring and acquisition-related costs              13        26
Depreciation and amortization                            2,765     2,396
Total operating costs and expenses                       23,653    21,504
Loss from operations                                     (1,325)   (1,703)
Interest expense and other, net                          1,043     904
Loss from continuing operations before income taxes      (2,368)   (2,607)
Income tax provision                                     --       527
Loss from continuing operations                          (2,368)   (3,134)
Loss from discontinued operations, net of income taxes   (225)     (730)
Net loss                                                 $(2,593) $(3,864)
                                                                  
Basic and diluted loss per common share:                           
Loss from continuing operations                          $(0.10)  $(0.13)
Loss from discontinued operations                        (0.01)    (0.03)
Net loss                                                 $(0.11)  $(0.16)
                                                                  
Basic and diluted weighted average common shares         23,789    23,675
outstanding
                                                                  
                                                                  
Primo Water Corporation
Pro forma fully taxed net loss from continuing operations
(Unaudited; in thousands, except per share amounts)
                                                                  
                                                        Three months ended
                                                         March 31,
                                                        2013       2012
                                                                  
Loss from continuing operations                          $(2,368) $(3,134)
Income tax (benefit) provision                           --       527
Loss from continuing operations before income taxes      (2,368)   (2,607)
Amortization of intangible assets                        365       317
Non-cash, stock-based compensation expense               325       411
Non-recurring and acquisition-related costs              13        26
Pro forma effect of full income tax                      633       704
Non-GAAP net loss                                        $(1,032) $(1,149)
                                                                  
Basic and Diluted non-GAAP net loss per share            $(0.04)  $(0.05)
                                                                  
Basic and diluted shares used to compute non-GAAP net    23,789    23,675
loss per share
                                                                  
                                                                  
Primo Water Corporation
Segment Information
(Unaudited; in thousands)
                                                                  
                                                        Three months ended
                                                         March 31,
                                                        2013       2012
Segment revenues                                                   
Water                                                    $14,910    $14,974
Dispensers                                               7,418     4,827
Total revenue                                            22,328    19,801
                                                                  
Segment income (loss) from operations                              
Water                                                    3,953     4,001
Dispensers                                               165       (482)
Corporate                                                (2,665)   (2,800)
Adjustments:                                                       
Non-cash, stock-based compensation expense               325       411
Loss on disposal of assets and other                     115       69
Adjusted EBITDA                                          $1,893   $1,199



Primo Water Corporation
Consolidated Balance Sheets
(in thousands, except par value data)
                                                                
                                                     March 31,   December 31,
                                                      2013        2012
                                                     (unaudited) 
ASSETS                                                           
Current assets:                                                  
Cash                                                  $215      $234
Accounts receivable, net                              9,362      9,894
Inventories                                           5,750      7,572
Prepaid expenses and other current assets             1,086      812
Current assets of disposal group held for sale        2,285      3,041
Total current assets                                  18,698     21,553
                                                                
Bottles, net                                          3,885      3,838
Property and equipment, net                           40,673     41,947
Intangible assets, net                                12,063     12,477
Other assets                                          2,711      1,960
Total assets                                          $78,030   $81,775
                                                                
LIABILITIES AND STOCKHOLDERS' EQUITY                             
Current liabilities:                                             
Accounts payable                                      $11,766   $11,455
Accrued expenses and other current liabilities        4,321      4,305
Current portion of capital leases and notes payable   15         15
Current liabilities of disposal group held for sale   1,017      2,784
Total current liabilities                             17,119     18,559
                                                                
Long-term debt, capital leases and notes payable, net 19,384     21,251
of current portion
Other long-term liabilities                           316        352
Liabilities of disposal group held for sale, net of   2,000      –
current portion
Total liabilities                                     38,819     40,162
                                                                
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, 23,826 and 23,772 shares issued and       24         24
outstandingat March 31, 2013 and December 31, 2012,
respectively
Additional paid-in capital                            272,650    272,336
Common stock warrants                                 8,420      8,420
Accumulated deficit                                   (241,724)  (239,131)
Accumulated other comprehensive loss                  (159)      (36)
Total stockholders' equity                           39,211     41,613
Total liabilities and stockholders' equity            $78,030   $81,775



Primo Water Corporation
                                                               
Consolidated Statements of Cash Flows
(in thousands)
                                                               
                                                 Three months ended March 31,
                                                 2013           2012
Cash flows from operating activities:                           
Net loss                                          $(2,593)     $(3,864)
Less: Loss from discontinued operations           (225)         (730)
Loss from continuing operations                   (2,368)       (3,134)
Adjustments to reconcile net loss to net cash                   
provided by operating activities:
Depreciation and amortization                     2,765         2,396
Stock-based compensation expense                  325           411
Non-cash interest expense                         305           675
Deferred income tax expense                       –             527
Bad debt expense                                  (131)         (69)
Other                                             37            (9)
Changes in operating assets and liabilities:                    
Accounts receivable                               632           575
Inventories                                       1,818         1,475
Prepaid expenses and other assets                 128           (549)
Accounts payable                                  443           (446)
Accrued expenses and other liabilities            36            (800)
Net cash provided by operating activities         3,990         1,052
                                                               
Cash flows from investing activities:                           
Purchases of property and equipment               (687)         (1,041)
Purchases of bottles, net of disposals            (709)         216
Proceeds from the sale of property and equipment  1             6
Additions to and acquisitions of intangible       (25)          (47)
assets
Net cash used in investing activities             (1,420)       (866)
                                                               
Cash flows from financing activities:                           
Borrowings under revolving credit facilities      19,955        500
Payments under revolving credit facilities        (21,987)      (340)
Note payable and capital lease payments           (4)           (4)
Debt issuance costs                               (11)          (498)
Stock option and employee stock purchase          (12)          (8)
activity, net
Net cash used in financing activities             (2,059)       (350)
                                                               
Net increase (decrease) in cash                   511           (164)
Cash, beginning of year                           234           751
Effect of exchange rate changes on cash           (20)          (40)
Cash used in discontinued operations from:                      
Operating activities                              (510)         (168)
Cash used in discontinued operations              (510)         (168)
Cash, end of period                               $215         $379



Primo Water Corporation
EBITDA and Adjusted EBITDA Reconciliation
(Unaudited; in thousands, except per share amounts)
                                                     
                                           Three months ended
                                            March 31,
                                           2013       2012
Loss from continuing operations             $(2,368) $(3,134)
Depreciation and amortization               2,765     2,396
Interest expense and other, net             1,043     904
Income tax provision                        –         527
EBITDA                                      1,440     693
Non-cash, stock-based compensation expense  325       411
Non-recurring and acquisition-related costs 13        26
Loss on disposal of assets and other        115       69
Adjusted EBITDA                             $1,893   $1,199

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

Primo Water Corporation Logo
 
Press spacebar to pause and continue. Press esc to stop.