Primo Water Announces Results for the Fourth Quarter and Fiscal Year Ended December 31, 2013

Primo Water Announces Results for the Fourth Quarter and Fiscal Year Ended
December 31, 2013

WINSTON-SALEM, N.C., March 11, 2014 (GLOBE NEWSWIRE) -- Primo Water
Corporation (Nasdaq:PRMW), a leading provider of multi-gallon purified bottled
water, self-service refill water and water dispensers, today announced
financial results for the fourth quarter and fiscal year ended December 31,
2013.

Business Highlights:

  oAdjusted EBITDA for the year increased 66.3% to $9.1 million and increased
    69.7% to $1.9 million for Q4 of 2013

  oGross margin percentage for the year increased to 25.0% compared to 23.4%
    for the prior year and increased to 26.0% for Q4 compared to 23.4% for Q4
    of 2012 driven by improvements in both Water and Dispenser gross margins

  oSelling, general and administrative ("SG&A") expenses for the year
    decreased 14.4% to $15.2 million and decreased 15.4% to $3.4 million for
    Q4 compared to the prior year

  oDispenser segment unit sell-thru to consumers for the year increased 11.1%
    to 442,900 and increased 12.5% to 103,350 units for Q4 of 2013

  oGenerated $6.6 million in cash flow from operations for the year compared
    to $5.9 million for the prior year

"We are pleased with our fourth quarter results including gross margin
expansion of 260 basis points as we continued to generate operational
improvements in our business," commented Billy D. Prim, Primo Water's Chief
Executive Officer. "This performance enabled us to grow our full year adjusted
EBITDA more than 66% and experience improved operating cash flow versus the
prior year. Going forward, we believe we will have top line growth in both
Dispensers and Water led by the Exchange business as well as further gross
margin improvements."

Fourth Quarter Results

Water segment net sales increased to $15.1 million and Dispenser segment net
sales decreased 25.2% to $4.4 million. Sales in the Water segment consist of
sales of multi-gallon purified bottled water ("Exchange") and self-service
refill units ("Refill"). The decrease in Dispenser segment net sales is
primarily a result of retailers managing inventory levels and shipment timing.
Despite the decline in dispenser unit sell-in to retailers, dispenser unit
sell-thru to end consumers increased 12.5% to 103,350 units for the fourth
quarter of 2013 compared to the same period in the prior year. Overall, net
sales for the fourth quarter of 2013 were $19.5 million compared to $20.9
million for the fourth quarter of 2012.

Gross margin percentage increased to 26.0% for the fourth quarter from 23.4%
for the fourth quarter of 2012 driven by improvements in both Water and
Dispenser segment gross margins. The improvement in Dispenser segment gross
margin was driven by a shift in sales mix towards higher margin dispensers.

Selling, general and administrative ("SG&A") expenses decreased 15.4% to $3.4
million for the fourth quarter of 2013 from $4.1 million for the fourth
quarter of 2012. As a percentage of net sales, SG&A decreased to 17.6% for
the fourth quarter of 2013 from 19.4% for the fourth quarter of 2012.

Adjusted EBITDA increased 69.7% to $1.9 million from $1.1 million for the
fourth quarter of 2012.The U.S. GAAP net loss from continuing operations for
the fourth quarter of 2013 was ($2.8) million or ($0.12) per share, compared
to ($74.0) million or ($3.11) per share for the fourth quarter of the prior
year.The fourth quarter of the prior year was significantly impacted by
non-cash goodwill and other impairments charges of $70.5 million.

Fiscal Year 2013 Results

Water segment net sales increased 1.9% to $63.8 million while Dispenser
segment net sales decreased 5.0% to $27.4 million. The decrease in Dispenser
segment net sales is primarily due to additional sales in 2012 related to the
rollout of new dispenser retail locations for a major retailer and the tighter
management of inventory levels by retailers during 2013. Despite the 6.2%
decrease in water dispenser unit sell-in to retailers, dispenser unit
sell-thru to consumers increased 11.1% for 2013 compared to 2012.Overall, net
sales for fiscal year 2013 were $91.2million compared to $91.5million for
the prior year.

Gross margin percentage increased to 25.0% for 2013 from 23.4% for 2012 due to
improvements in both Water and Dispensers segment gross margins.

SG&A expenses decreased 14.4% to $15.2 million for the year ended December 31,
2013 from $17.7 million for the prior year.As a percentage of net sales, SG&A
decreased to 16.6% for 2013 from 19.4% for 2012.

Fiscal year 2013 adjusted EBITDA increased 66.3% to $9.1 million from $5.5
million for 2012.Cash flow from operations increased 13.2% to $6.6 million
for the year ended December 31, 2013 from $5.9 million for the prior year.

The U.S. GAAP net loss from continuing operations for 2013 was ($8.8) million
or ($0.37) per share, compared to ($93.3) million or ($3.93) per share for the
prior year. The prior year was significantly impacted by non-cash goodwill and
other impairments of $82.0 million.

Update on Strategic Alliance Agreement with DS Waters of America, Inc.

As announced in November 2013, Primo has entered into a Strategic Alliance
Agreement (the "DS Agreement") with DS Waters of America, Inc. ("DS Waters"),
one of the nation's leading operators in the Home and Office Beverage Delivery
market. Under the DS Agreement, the responsibility for DS Waters' current
five-gallon retail exchange customers, including account management, billing
and collections will transition to Primo. Over time DS Waters will become the
primary bottling and distribution partner in the U.S. for Primo's Exchange
services. Activities under the DS Agreement will be phased in on a
region-by-region basis.

The transition of bottling and distribution responsibilities to DS Waters
began on January 1, 2014, for certain regions and is currently progressing on
plan. The Company expects to convert DS Waters' retail customers to Primo over
the next two years.

Guidance

The Company expects total fiscal 2014 net sales of $98.0 to $102.0 million and
fiscal 2014 adjusted EBITDA of $10.6 to $11.1 million.

The Company expects total first quarter 2014 net sales of $22.0 to $22.3
million and first quarter 2014 adjusted EBITDA of $2.0 to $2.3 million.

The Company expects to incur non-recurring, transition costs of $2.0 to $2.5
million related to the transition of its U.S. Exchange distribution network
during 2014.

Conference Call and Webcast

The Company will host a conference call to discuss these matters at 4:30 p.m.
ET today, March 11, 2014.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
March 25, 2014.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-service refill water and water dispensers sold
through major retailers throughout the United States and Canada. Learn more
about Primo Water at www.primowater.com.

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 operating performance and our expectations related to the DS
Agreement and the transition of our bottling and distribution responsibilities
to DS Waters and the conversion of the DS Waters' retail customers to
Primo.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 DS
Agreement, 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 or as otherwise required by applicable securities laws.

Use of Non-U.S. GAAP Financial Measures

To supplement its financial statements, the Company provides investors with
information related to adjusted EBITDA, which is not a financial measure
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 benefit; goodwill and other impairments;
non-cash, stock-based compensation expense; non-recurring costs; and loss on
disposal of assets and other.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.

                          FINANCIAL TABLES TO FOLLOW


Primo Water Corporation
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
                                                              
                              Three months ended    Year ended
                              December 31,           December 31,
                              2013       2012        2013        2012
                                                              
Net sales                      $19,512  $20,886   $91,209   $91,479
Operating costs and expenses:                                  
Cost of sales                  14,443    16,000     68,367     70,081
Selling, general and           3,429     4,051      15,151     17,708
administrative expenses
Non-recurring costs            587       178        777        743
Depreciation and amortization  2,754     3,173      11,333     11,102
Goodwill and other impairments –         70,525     –          82,013
Total operating costs and      21,213    93,927     95,628     181,647
expenses
Loss from operations           (1,701)   (73,041)   (4,419)    (90,168)
Interest expense and other,    1,065     961        4,425      4,043
net
Loss from continuing           (2,766)   (74,002)   (8,844)    (94,211)
operations before income taxes
Income tax provision           –         –          –          (961)
Loss from continuing           (2,766)   (74,002)   (8,844)    (93,250)
operations
Loss from discontinued         (990)     (3,022)    (1,862)    (17,779)
operations
Net loss                       $(3,756) $(77,024) $(10,706) $(111,029)
                                                              
Basic and diluted loss per                                     
common share:
Loss from continuing           $(0.12)  $(3.11)   $(0.37)   $(3.93)
operations
Loss from discontinued         (0.04)    (0.13)     (0.08)     (0.75)
operations
Net loss                       $(0.16)  $(3.24)   $(0.45)   $(4.68)
                                                              
Basic and diluted weighted
average common shares          24,036    23,752     23,935     23,725
outstanding
                                                              
                                                              
                                                              
Primo Water Corporation
Segment Information
(Unaudited; in thousands)
                                                              
                              Three months ended    Year ended
                              December 31,           December 31,
                              2013       2012        2013        2012
Segment net sales                                              
Water                          $15,142    $15,044     $63,828     $62,667
Dispensers                     4,370     5,842      27,381     28,812
Total net sales                $19,512  $20,886   $91,209   $91,479
                                                              
Segment income (loss) from                                     
operations
Water                          3,938     3,823      17,591     16,477
Dispensers                     126       (95)       827        (1,319)
Corporate                      (2,424)   (2,893)    (10,727)   (11,468)
Non-recurring costs            (587)     (178)      (777)      (743)
Depreciation and amortization  (2,754)   (3,173)    (11,333)   (11,102)
Goodwill and other impairments –         (70,525)   –          (82,013)
                              $(1,701) $(73,041) $(4,419)  $(90,168)


Primo Water Corporation
Consolidated Balance Sheets
(in thousands, except par value data)
                                                                
                                                    December 31, December 31,
                                                    2013         2012
                                                                
ASSETS                                                           
Current assets:                                                  
Cash                                                 $394       $234
Accounts receivable, net                             7,614       9,894
Inventories                                          6,346       7,572
Prepaid expenses and other current assets            1,274       812
Current assets of disposal group held for sale       225         3,041
Total current assets                                 15,853      21,553
                                                                
Bottles, net                                         4,104       3,838
Property and equipment, net                          38,634      41,947
Intangible assets, net                               10,872      12,477
Other assets                                         1,508       1,960
Total assets                                         $70,971    $81,775
                                                                
LIABILITIES AND STOCKHOLDERS' EQUITY                             
Current liabilities:                                             
Accounts payable                                     $10,943    $11,455
Accrued expenses and other current liabilities       3,380       4,305
Current portion of capital leases and notes payable  16          15
Current liabilities of disposal group held for sale  92          2,784
Total current liabilities                            14,431      18,559
                                                                
Long-term debt, capital leases and notes payable,    22,654      21,251
net of current portion
Other long-term liabilities                          330         352
Liabilities of disposal group held for sale, net of  2,000       –
current portion
Total liabilities                                    39,415      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, 24,076 and 23,772 shares issued and      24          24
outstanding at December 31, 2013 and 2012,
respectively
Additional paid-in capital                           273,379     272,336
Common stock warrants                                8,420       8,420
Accumulated deficit                                  (249,837)   (239,131)
Accumulated other comprehensive loss                 (430)       (36)
Total stockholders' equity                          31,556      41,613
Total liabilities and stockholders' equity           $70,971    $81,775


Primo Water Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
                                                                
                                                     Year Ended December 31,
                                                     2013        2012
Cash flows from operating activities:                            
Net loss                                              $(10,706) $(111,029)
Less: Loss from discontinued operations               (1,862)    (17,779)
Loss from continuing operations                       (8,844)    (93,250)
Adjustments to reconcile net loss to net cash                    
provided by operating activities:
Depreciation and amortization                         11,333     11,102
Stock-based compensation expense                      1,034      1,252
Non-cash interest expense                             1,162      2,002
Deferred income tax expense                           –          (961)
Goodwill impairment                                   –          82,013
Other                                                 (6)        263
Changes in operating assets and liabilities:                     
Accounts receivable                                   2,464      2,253
Inventories                                           1,205      (1,257)
Prepaid expenses and other assets                     (308)      (100)
Accounts payable                                      (437)      943
Accrued expenses and other liabilities                (970)      1,602
Net cash provided by operating activities             6,633      5,862
                                                                
Cash flows from investing activities:                            
Purchases of property and equipment                   (4,793)    (4,038)
Purchases of bottles, net of disposals                (2,507)    (1,291)
Proceeds from the sale of property and equipment      38         81
Additions to and acquisitions of intangible assets    (45)       (663)
Net cash used in investing activities                 (7,307)    (5,911)
                                                                
Cash flows from financing activities:                            
Borrowings under revolving credit facilities          91,135     46,194
Payments under revolving credit facilities            (95,067)   (53,617)
Borrowings under Comvest Term loans                   5,500      15,150
Note payable and capital lease payments               (15)       (14)
Debt issuance costs                                   (797)      (2,203)
Proceeds from sale of common stock, net of issuance   (4)        (491)
costs
Stock option and employee stock purchase activity,    130        39
net
Net cash provided by financing activities             882        5,058
                                                                
Net increase in cash                                  208        5,009
Cash, beginning of year                               234        751
Effect of exchange rate changes on cash               (104)      9
Cash provided by (used in) discontinued operations               
from:
Operating activities                                  56         (5,226)
Investing activities                                  –          (309)
Cash provided by (used in) discontinued operations    56         (5,535)
Cash, end of period                                   $394      $234


Primo Water Corporation
Non-GAAP EBITDA and Adjusted EBITDA Reconciliation
(Unaudited; in thousands, except per share amounts)
                                                               
                                Three months ended     Years ended
                                December 31,           December 31,
                                2013       2012        2013       2012
Loss from continuing operations  $(2,766) $(74,002) $(8,844) $(93,250)
Depreciation and amortization    2,754     3,173      11,333    11,102
Interest expense and other, net  1,065     961        4,425     4,043
Income tax benefit               –         –          –         (961)
EBITDA                           1,053     (69,868)   6,914     (79,066)
Goodwill and other impairments   –         70,525     –         82,013
Non-cash, stock-based            214       208        1,034     1,252
compensation expense
Non-recurring costs              587       178        777       743
Loss on disposal of assets and   37        70         342       509
other
Adjusted EBITDA                  $1,891   $1,113    $9,067   $5,451

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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