Primo Brands — Third Quarter 2026 Earnings Summary

Financial Performance

• Net sales increased 3.1% year-over-year to $1,821.0 million for the three months ended September 30, 2026, compared to $1,766.1 million in the prior year period.
• Net income from continuing operations rose to $124.5 million from $40.5 million in the prior year quarter.
• Net income per diluted share from continuing operations was $0.34, up from $0.11 in the prior year.
• Adjusted net income was $157.1 million, an increase of $2.1 million from $155.0 million in the prior year.
• Adjusted net income per diluted share was $0.43, compared to $0.41 in the prior year.
• Adjusted EBITDA increased 1.6% to $411.0 million from $404.5 million in the prior year.
• Adjusted EBITDA margin decreased 30 basis points to 22.6% from 22.9% in the prior year.
• Gross margin was 30.4%, up from 29.9% in the prior year, driven by revenue growth and lower non-recurring integration costs, partially offset by higher transportation costs.
• SG&A expenses decreased to $316.3 million from $343.0 million in the prior year, driven by lower marketing costs and reduced amortization of definite-lived intangibles.
• Net cash provided by operating activities from continuing operations was $293.6 million, compared to $283.4 million in the prior year.
• Free cash flow was $210.6 million, calculated as operating cash flow less $83.0 million in capital expenditures and additions to intangible assets.
• Adjusted Free Cash Flow was $274.2 million, down from $311.1 million in the prior year.

Guidance and Future Outlook

• For the full year 2026, the company expects Net Sales to be at the midpoint of the previous guidance range (2% to 4% growth).
• For the full year 2026, the company expects Adjusted EBITDA to be at the lower end of the previous guidance range ($1,465 million to $1,515 million).
• Base CAPEX guidance remains unchanged at 4% of Net Sales.
• Adjusted Free Cash Flow guidance for 2026 remains unchanged at $790 million to $810 million.
• Management anticipates delivering long-term profitable growth, generating strong cash flow, and reducing net leverage.

Business Segments and Product Lines

• Net sales growth was primarily driven by an increase in sales attributable to premium brands and regional spring water.
• The company reported Direct Delivery growth ahead of expectations.
• Retail sales showed broad-based growth.
• The company achieved category dollar share gains.
• The company operates a portfolio including billion-dollar brands (Poland Spring, Pure Life), premium brands (Saratoga, The Mountain Valley), and regional spring water offerings (Arrowhead, Deer Park, Ice Mountain, Ozarka, Zephyrhills).

Market and Competitive Landscape

• The company describes itself as a leader in the growing and resilient water category.
• The company benefits from a strong brand portfolio and differentiated route-to-market capabilities.
• The company operates a vertically integrated coast-to-coast network distributing to more than 200,000 retail outlets.
• The company manages over 80 springs and conserves over 28,000 acres of land across the U.S. and Canada.

Risks and Challenges

• The company faces a dynamic cost environment and macro-cost pressures, including increased transportation-related costs.
• Risks include significant competition, dependence on water sources, packaging supply price increases, and rising freight and fuel costs.
• Risks also include the ability to integrate acquisitions, consumer trend responsiveness, and potential litigation related to plastics pollution and product safety.
• The company notes risks related to its substantial indebtedness and the interests of affiliates of One Rock Capital Partners, LLC.

Management Commentary and Tone

• Eric Foss, Chairman and CEO, stated that third-quarter results demonstrate "solid top-line momentum and improving execution."
• Management expressed confidence in the ability to deliver long-term profitable growth and create shareholder value.
• Management emphasized a focus on factors within their control to mitigate macro-cost pressures while continuing to invest for long-term growth.

Other Key Points

• The Board of Directors declared a cash dividend of $0.12 per share on Class A common stock, payable on December 4, 2026, to holders of record as of November 24, 2026.
• The Board authorized a new share repurchase program of up to $300 million, replacing the existing program which had approximately $41 million of unused capacity as of September 30, 2026.
• Share repurchases during the quarter totaled $22.1 million.
• Cash dividends paid during the quarter were $43.5 million.
• Total debt, excluding unamortized debt costs and discounts, was $5.2 billion as of September 30, 2026.
• Unrestricted cash and cash equivalents totaled $477.2 million, resulting in net debt of $4.8 billion and a net leverage ratio of 3.32x.
• The company exited Eastern Canadian operations and the US Office Coffee Services business, which are excluded from comparable results.