prmw-20230401

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: April 1, 2023


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to l

Commission File Number: 001-31410

PRIMO WATER CORPORATION

(Exact name of registrant as specified in its charter)


Ontario		98-0154711
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

1150 Assembly Dr.
Suite 800
Tampa,	Florida	33607
United States
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (813) 544-8515

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value per share	PRMW	New York Stock Exchange
		Toronto Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at May 1, 2023
Common Shares, no par value per share						159,134,534

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION			3
Item 1. Financial Statements (unaudited)			3
Consolidated Statements of Operations			3
Condensed Consolidated Statements of Comprehensive Loss			4
Consolidated Balance Sheets			5
Consolidated Statements of Cash Flows			6
Consolidated Statements of Equity			8
Notes to the Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3. Quantitative and Qualitative Disclosures about Market Risk			29
Item 4. Controls and Procedures			29
PART II. OTHER INFORMATION			30
Item 1. Legal Proceedings			30
Item 1A. Risk Factors			30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			30
Item 6. Exhibits			31
SIGNATURES			32

PART I – FINANCIAL INFORMATION


Item 1.			Financial Statements (unaudited)

Primo Water Corporation

Consolidated Statements of Operations

(in millions of U.S. dollars, except share and per share amounts)

Unaudited


	For the Three Months Ended
	April 1, 2023		April 2, 2022
Revenue, net	$	546.5	$	526.1
Cost of sales	218.2		226.5
Gross profit	328.3		299.6
Selling, general and administrative expenses	303.5		278.3
Loss on disposal of property, plant and equipment, net	1.3		1.7
Acquisition and integration expenses	2.0		4.3

Operating income	21.5		15.3
Other (income) expense, net	(6.3)		2.7
Interest expense, net	18.8		16.9
Income (loss) before income taxes	9.0		(4.3)
Income tax expense	3.2		2.4
Net income (loss)	$	5.8	$	(6.7)

Net income (loss) per common share
Basic	$	0.04	$	(0.04)
Diluted	$	0.04	$	(0.04)
Weighted average common shares outstanding (in thousands)
Basic	159,726		160,928
Diluted	160,781		160,928

The accompanying notes are an integral part of these consolidated financial statements.

Primo Water Corporation

Condensed Consolidated Statements of Comprehensive Loss

(in millions of U.S. dollars)

Unaudited


	For the Three Months Ended
	April 1, 2023		April 2, 2022
Net income (loss)	$	5.8	$	(6.7)
Other comprehensive loss:
Currency translation adjustment	(6.6)		(0.1)


Comprehensive loss	$	(0.8)	$	(6.8)

The accompanying notes are an integral part of these consolidated financial statements.

Primo Water Corporation

Consolidated Balance Sheets

(in millions of U.S. dollars, except share amounts)

Unaudited


	April 1, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	96.5	$	122.6
Accounts receivable, net of allowance of $21.1 ($20.6 as of December 31, 2022)	263.3		258.6
Inventories	104.3		112.1
Prepaid expenses and other current assets	52.1		44.7
Total current assets	516.2		538.0
Property, plant and equipment, net	723.4		714.4
Operating lease right-of-use-assets	194.0		198.6
Goodwill	1,297.8		1,293.0
Intangible assets, net	887.9		894.7

Other long-term assets, net	27.3		28.3
Total assets	$	3,646.6	$	3,667.0
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	245.9	$	212.3
Current maturities of long-term debt	16.8		17.5
Accounts payable and accrued liabilities	391.6		425.1
Current operating lease obligations	34.4		35.7
Total current liabilities	688.7		690.6
Long-term debt	1,292.2		1,283.8
Operating lease obligations	170.6		174.5
Deferred tax liabilities	171.5		170.0
Other long-term liabilities	67.1		65.2
Total liabilities	2,390.1		2,384.1
Shareholders' Equity
Common shares, no par value - 159,260,862 (December 31, 2022 - 159,752,299) shares issued	1,283.3		1,283.2
Additional paid-in-capital	86.2		91.3
Accumulated deficit	(24.2)		(9.4)
Accumulated other comprehensive loss	(88.8)		(82.2)
Total shareholders' equity	1,256.5		1,282.9
Total liabilities and shareholders' equity	$	3,646.6	$	3,667.0

The accompanying notes are an integral part of these consolidated financial statements.

Primo Water Corporation

Consolidated Statements of Cash Flows

(in millions of U.S. dollars)

Unaudited


	For the Three Months Ended
	April 1, 2023		April 2, 2022
Cash flows from operating activities:
Net income (loss)	$	5.8	$	(6.7)

Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization	62.4		61.2
Amortization of financing fees	0.8		0.9
Share-based compensation expense	2.3		3.3
Provision for deferred income taxes	0.8		1.6

Gain on sale of business	—		(0.4)

Loss on disposal of property, plant and equipment, net	1.3		1.7
Other non-cash items	(6.7)		2.1
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable	(2.9)		(11.9)
Inventories	2.1		(11.1)
Prepaid expenses and other current assets	(4.9)		(6.2)
Other assets	(0.1)		(0.7)
Accounts payable and accrued liabilities and other liabilities	(26.6)		(10.2)
Net cash provided by operating activities	34.3		23.6
Cash flows from investing activities:
Acquisitions, net of cash received	(7.5)		(0.3)
Additions to property, plant and equipment	(53.7)		(38.6)
Additions to intangible assets	(2.7)		(2.5)
Proceeds from sale of property, plant and equipment	0.2		0.4



Other investing activities	2.2		0.5
Net cash used in investing activities	(61.5)		(40.5)


Cash flows from financing activities:
Payments of long-term debt	(5.0)		(4.5)

Proceeds from short-term borrowings	61.0		—
Payments on short-term borrowings	(33.2)		—

Issuance of common shares	4.3		1.2
Common shares repurchased and canceled	(19.3)		(1.8)

Dividends paid to common shareholders	(12.8)		(11.3)
Payment of deferred consideration for acquisitions	(0.8)		(0.1)
Other financing activities	6.1		3.9
Net cash provided by (used in) financing activities	0.3		(12.6)
Effect of exchange rate changes on cash	0.8		(0.9)
Net decrease in cash, cash equivalents and restricted cash	(26.1)		(30.4)
Cash and cash equivalents and restricted cash, beginning of period	122.6		128.4
Cash and cash equivalents and restricted cash, end of period	$	96.5	$	98.0
Supplemental Non-cash Investing and Financing Activities:

Dividends payable issued through accounts payable and accrued liabilities	$	0.2	$	0.2
Additions to property, plant and equipment through accounts payable and accrued liabilities and other liabilities	20.7		24.2
Financing lease right-of-use assets obtained in exchange for lease obligations	1.6		2.7
Operating lease right-of-use assets obtained in exchange for lease obligations	5.6		5.5
Inventory transfer to property, plant and equipment	6.9		—
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	5.3	$	3.5
Cash paid for income taxes, net	1.2		1.0

The accompanying notes are an integral part of these consolidated financial statements.

Primo Water Corporation

Consolidated Statements of Equity

(in millions of U.S. dollars, except share and per share amounts)

Unaudited

SEC Form 10-Q filed by Primo Water Corporation