Primo Water Announces Results for the Third Quarter Ended September 30, 2013 and Strategic Alliance Agreement With DS Waters of

Primo Water Announces Results for the Third Quarter Ended September 30, 2013
and Strategic Alliance Agreement With DS Waters of America, Inc.

WINSTON-SALEM, N.C., Nov. 12, 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 third quarter ended September 30, 2013 and a
strategic alliance agreement with DS Waters of America, Inc.

Business Highlights:

  oWater segment net sales for Q3 increased 1.6% to $17.5 million driven by
    8.5% U.S. Exchange same-store unit growth
  oWater segment gross margin percentage improved to 33.7% for Q3 of 2013
    from 32.3% for Q3 2012
  oDispenser segment unit sell-thru to consumers increased 2.0% and 10.7% for
    Q3 and the first nine months of 2013, respectively, compared to 2012
  oAdjusted EBITDA for Q3 increased 61.6% to $3.0 million compared to $1.8
    million for Q3 of 2012
  oGenerated $9.1 million in cash flow from operations and $3.4 million in
    free cash flow during the first nine months of 2013 compared to $4.6
    million and $0.2 million for the first nine months of 2012
  oEntered into a strategic alliance agreement with DS Waters of America,
    Inc.

"We are pleased with the continued improvements in our overall operating
results," commented Billy D. Prim, Primo Water's Chief Executive Officer. "We
grew our adjusted EBITDA more than 61% over last year and generated strong
cash flow. Going forward, we remain confident in the strength of our business
model, the positive operational changes underway and our ability to generate
increased cash flow to support our long-term growth opportunities."

Third Quarter Results

Total net sales decreased 2.4% to $25.5 million compared to $26.2 million for
the third quarter of 2012 as a result of a $0.9 million decrease in Dispenser
sales partially offset by a $0.3 million increase in Water sales.

Water segment net sales increased 1.6% to $17.5 million for the third quarter
compared to $17.3 million in the third quarter of 2012. 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
increase in Water net sales was primarily due to a 4.6% increase in Exchange
sales driven by same-store unit growth of 8.5% for the Company's U.S. Exchange
services compared to the third quarter of 2012. The improvement in Exchange
sales was partially offset by a 2.1% decline in Refill sales.

Dispenser segment net sales for the third quarter of 2013 decreased 10.3% to
$8.0 million compared to $8.9 million in the third quarter of 2012. This
decrease is primarily a result of retailers managing inventory levels and
shipment timing. The Company believes these trends will continue into the
fourth quarter. Despite the 3.7% decline in dispenser unit sell-in to
retailers, the Company realized its fifteenth consecutive quarter of growth in
consumer purchases as Dispenser unit sales to end consumers increased 2.0% to
a 116,400 units for the third quarter of 2013 compared to the same period in
the prior year. The Company believes that increased water dispenser
penetration will lead to a continued increase in recurring Water sales.

Gross margin percentage increased to 25.8% for the third quarter from 24.0%
for the third quarter of 2012 driven by improvements in both Water and
Dispenser gross margins. 

Selling, general and administrative ("SG&A") expenses decreased 19.0% to $3.9
million for the third quarter of 2013 from $4.8 million for the third quarter
of 2012. In addition, as a percentage of net sales, SG&A decreased to 15.2%
for the third quarter of 2013 from 18.3% for the third quarter of 2012.

Adjusted EBITDA increased 61.6% to $3.0 million from $1.8 million in the third
quarter of 2012.The net loss from continuing operations for the third quarter
of 2013 was $(1.6) million or $(0.07) per share, compared to $(2.5) million or
$(0.10) per share for the third quarter of the prior year.

Cash flow from operations increased 95.9% to $9.1 million for the nine months
ended September 30, 2013 from $4.6 million for the prior year period.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 $3.4 million for the nine months ended September 30, 2013.

Strategic Alliance Agreement with DS Waters of America, Inc.

Primo also announced today that it has entered into a strategic alliance
agreement with DS Waters of America, Inc., one of the nation's leading
operators in the Home and Office Beverage Delivery market. Primo will assume
responsibility for DS Waters' current five-gallon retail exchange customers,
including account management, billing and collections.Over time DS Waters
will become the primary bottling and distribution partner in the U.S. for
Primo's Exchange services. It is anticipated that activities under the
strategic alliance agreement will be phased in on a region-by-region basis.

"We are combining the strengths of two great companies," stated Billy Prim.
"Primo has extensive knowledge of retail exchange while DS Waters has one of
the largest bottling and distribution systems in the industry.We believe the
strategic alliance will also allow us to add incremental revenue, reduce our
distribution costs and is expected to lead to improved gross margin over
time."

"We are excited to partner with Primo Water as we each leverage our core
business competencies to create a first-class alliance in the bottled water
industry," stated DS Waters CEO Tom Harrington. "We believe this strategic
alliance will help us gain increased bottling and distribution volume from
Primo's existing retail business as we continue to provide customers with
superior product quality and customer service."

Guidance

The Company expects full year net sales in the range of $90 to $92 million and
adjusted EBITDA in the range of $9.1 to $9.3 million or an increase of 68% to
71% over the prior year.The Company expects to incur one-time transition
costs related to the strategic alliance agreement with DS Waters.

Conference Call and Webcast

The Company will host a conference call to discuss these matters at 4:30 p.m.
ET today, November 12, 2013.Participants from the Company will be Billy D.
Prim, Chief Executive Officer, Mark Castaneda, Chief Financial Officer, and
Matt Sheehan, President and 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 November 26, 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.

About DS Waters of America, Inc.

DS Waters of America, Inc. (DS Waters) is a diversified beverage company
providing bottled drinking water, brewed beverages and water filtration
systems to homes and offices across the U.S. Headquartered in Atlanta,
Georgia, DS Waters serves over one million homes, offices, restaurants, food
service organizations, convenience stores, and retail locations.Its bottled
water products are sold under the brand names Alhambra®, Athena®, Belmont
Springs, Crystal Springs®, Deep Rock®, Hinckley Springs®, Kentwood Springs®,
Mount Olympus®, Nursery®Water, Sierra Springs®, and Sparkletts®. Several of
its bottled water brands have been satisfying consumers for more than 100
years. DS Waters offers brewed coffee and tea beverages, as well as office
break room supplies under the Standard®Coffee brand. DS Waters provides water
filtration systems, equipment and services under the Relyant®brand.DS Waters
supports the communities it serves and provides safe drinking water during
emergencies and natural disasters. Visit www.water.com, www.nurserywater.com,
www.coffeeservice.com, and www.myutapia.com for more information.

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 our expectations related to the incremental net sales and reduced
distribution costs associated with our strategic alliance agreement with DS
Waters.These statements 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 failure to achieve the
incremental net sales or reduced distribution costs associated with the
strategic alliance agreement with DS Waters, 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, adverse changes in the Company's
relationships with its independent bottlers, distributors and suppliers
(including as a result of the Company's entering into the strategic alliance
agreement with DS Waters), 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 goodwill impairment; debt
restructuring costs; 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 with 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
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
                                                               
                                 Three months ended    Nine months ended
                                  September 30,         September 30,
                                 2013       2012       2013       2012
                                                               
Net sales                         $25,519  $26,158  $71,696  $70,594
Operating costs and expenses:                                   
Cost of sales                     18,936    19,868    53,924    54,081
Selling, general and              3,873     4,783     11,722    13,657
administrative expenses
Non-recurring and                 96        170       190       565
acquisition-related costs
Depreciation and amortization     3,050     2,898     8,579     7,929
Goodwill impairment               --       --       --       11,488
Total operating costs and         25,955    27,719    74,415    87,720
expenses
Loss from operations              (436)     (1,561)   (2,719)   (17,126)
Interest expense and other, net   1,138     904       3,359     3,082
Loss from continuing operations   (1,574)   (2,465)   (6,078)   (20,208)
before income taxes
Income tax provision              –         –         –         (960)
Loss from continuing operations   (1,574)   (2,465)   (6,078)   (19,248)
Loss from discontinued operations (511)     (1,370)   (872)     (14,757)
Net loss                          $(2,085) $(3,835) $(6,950) $(34,005)
                                                               
Basic and diluted loss per common                               
share:
Loss from continuing operations   $(0.07)  $(0.10)  $(0.25)  $(0.81)
Loss from discontinued operations (0.02)    (0.06)    (0.04)    (0.62)
Net loss                          $(0.09)  $(0.16)  $(0.29)  $(1.43)
                                                               
Basic and diluted weighted        24,019    23,752    23,901    23,715
average common shares outstanding


Primo Water Corporation
Segment Information
(Unaudited; in thousands)
                                                               
                                  Three months ended   Nine months ended
                                   September 30,        September 30,
                                  2013      2012       2013       2012
Segment net sales                                               
Water                              $17,544   $17,264    $48,686    $47,624
Dispensers                         7,975    8,894     23,010    22,970
Total net sales                    $25,519 $26,158  $71,696  $70,594
                                                               
Segment income (loss) from                                      
operations
Water                              4,924    4,718     13,652    12,654
Dispensers                         447      (441)     701       (1,223)
Corporate                          (2,661)  (2,770)   (8,303)   (8,575)
Non-recurring and                  (96)     (170)     (190)     (565)
acquisition-related costs
Depreciation and amortization      (3,050)  (2,898)   (8,579)   (7,929)
Goodwill impairment                --      --       --       (11,488)
                                  $(436)  $(1,561) $(2,719) $(17,126)
                                                               

Primo Water Corporation
Pro forma fully taxed net loss from continuing operations
(Unaudited; in thousands, except per share amounts)
                                                               
                                 Three months ended    Nine months ended
                                  September 30,         September 30,
                                 2013       2012       2013       2012
                                                               
Loss from continuing operations   $(1,574) $(2,465) $(6,078) $(19,248)
Income tax benefit                –         –         –         (960)
Loss from continuing operations   (1,574)   (2,465)   (6,078)   (20,208)
before income taxes
Goodwill impairment               –         –         –         11,488
Debt restructuring costs          –         –         –         1,061
Amortization of intangible assets 351       353       1,060     1,020
Non-cash, stock-based             196       256       819       1,043
compensation expense
Non-recurring and                 96        170       190       565
acquisition-related costs
Pro forma effect of full income   354       641       1,523     1,912
tax
Non-GAAP net loss                 $(577)   $(1,045) $(2,486) $(3,119)
                                                               
Basic and diluted non-GAAP net    $(0.02)  $(0.04)  $(0.10)  $(0.13)
loss per share
                                                               
Basic and diluted shares used to
compute non-GAAP net loss per     24,019    23,752    23,901    23,715
share


Primo Water Corporation
Consolidated Balance Sheets
(in thousands, except par value data)
                                                                
                                                   September 30, December 31,
                                                    2013          2012
                                                   (unaudited)   
ASSETS                                                           
Current assets:                                                  
Cash                                                $308        $234
Accounts receivable, net                            7,887        9,894
Inventories                                         6,850        7,572
Prepaid expenses and other current assets           1,459        812
Current assets of disposal group held for sale      300          3,041
Total current assets                                16,804       21,553
                                                                
Bottles, net                                        4,002        3,838
Property and equipment, net                         39,401       41,947
Intangible assets, net                              11,341       12,477
Other assets                                        2,592        1,960
Total assets                                        $74,140     $81,775
                                                                
LIABILITIES AND STOCKHOLDERS' EQUITY                             
Current liabilities:                                             
Accounts payable                                    $15,043     $11,455
Accrued expenses and other current liabilities      2,709        4,305
Current portion of capital leases and notes payable 16           15
Current liabilities of disposal group held for sale 378          2,784
Total current liabilities                           18,146       18,559
                                                                
Long-term debt, capital leases and notes payable,   18,379       21,251
net of current portion
Other long-term liabilities                         317          352
Liabilities of disposal group held for sale, net of 2,000        –
current portion
Total liabilities                                   38,842       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, 24,036 and 23,772 shares issued and     24           24
outstandingat September 30, 2013 and December 31,
2012, respectively
Additional paid-in capital                          273,164      272,336
Common stock warrants                               8,420        8,420
Accumulated deficit                                 (246,081)    (239,131)
Accumulated other comprehensive loss                (229)        (36)
Total stockholders' equity                         35,298       41,613
Total liabilities and stockholders' equity          $74,140     $81,775


Primo Water Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
                                                             
                                              Nine months ended September 30,
                                              2013            2012
Cash flows from operating activities:                         
Net loss                                       $(6,950)      $(34,005)
Less: Loss from discontinued operations        (872)          (14,757)
Loss from continuing operations                (6,078)        (19,248)
Adjustments to reconcile net loss to net cash                 
provided by operating activities:
Depreciation and amortization                  8,579          7,929
Stock-based compensation expense               819            1,043
Non-cash interest expense                      882            1,708
Deferred income tax expense                    –              (960)
Bad debt expense                               5              161
Goodwill impairment                            –              11,488
Other                                          185            (133)
Changes in operating assets and liabilities:                  
Accounts receivable                            1,952          (1,031)
Inventories                                    715            369
Prepaid expenses and other assets              (211)          (597)
Accounts payable                               3,870          3,099
Accrued expenses and other liabilities         (1,641)        806
Net cash provided by operating activities      9,077          4,634
                                                             
Cash flows from investing activities:                         
Purchases of property and equipment            (3,745)        (3,121)
Purchases of bottles, net of disposals         (1,904)        (683)
Proceeds from the sale of property and         2              42
equipment
Additions to and acquisitions of intangible    (43)           (688)
assets
Net cash used in investing activities          (5,690)        (4,450)
                                                             
Cash flows from financing activities:                         
Borrowings under revolving credit facilities   68,062         24,496
Payments under revolving credit facilities     (73,899)       (32,426)
Borrowings under Comvest Term loans            3,000          15,150
Note payable and capital lease payments        (11)           (11)
Debt issuance costs                            (689)          (2,049)
Proceeds from sale of common stock, net of     –              (214)
issuance costs
Stock option and employee stock purchase       82             15
activity, net
Net cash (used in) provided by financing       (3,455)        4,961
activities
                                                             
Net (decrease) increase in cash                (68)           5,145
Cash, beginning of year                        234            751
Effect of exchange rate changes on cash        (47)           (16)
Cash provided by (used in) discontinued                       
operations from:
Operating activities                           189            (4,853)
Investing activities                           –              (395)
Cash provided by (used in) discontinued        189            (5,248)
operations
Cash, end of period                            $308          $632


Primo Water Corporation
Non-GAAP EBITDA and Adjusted EBITDA Reconciliation
(Unaudited; in thousands, except per share amounts)
                                                               
                                 Three months ended    Nine months ended
                                  September 30,         September 30,
                                 2013       2012       2013       2012
Loss from continuing operations   $(1,574) $(2,465) $(6,078) $(19,248)
Depreciation and amortization     3,050     2,898     8,579     7,929
Interest expense and other, net   1,138     904       3,359     3,082
Income tax benefit                –         –         –         (960)
EBITDA                            2,614     1,337     5,860     (9,197)
Goodwill impairment               --       --       --       11,488
Non-cash, stock-based             196       256       819       1,043
compensation expense
Non-recurring and                 96        170       190       565
acquisition-related costs
Loss on disposal of assets and    69        78        307       438
other
Adjusted EBITDA                   $2,975   $1,841   $7,176   $4,337

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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