Q1 2024 Primo Water Corporation Earnings Call

Good morning.

My name is Joana and that will be your conference operator today at this time I would like to welcome everyone to the Primo Water Corporation first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session.

I'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.

If you would like to withdraw your question Press Star followed by Chip <unk>.

Thank you.

Turn the call over to John <unk>, Vice President Investor Relations. Please go ahead.

Joanna: My name is Joanna. And... Welcome to Primo Water Corporation's first quarter 2024 earnings conference call. All participants are currently in listen-only mode.

Welcome to Primo Water Corporation first quarter 2024 earnings Conference call. All participants are currently in listen only mode. The call is being webcast live I'm pretty more waters website at Primo water Corp, Dot com and will be available there for playback. This conference call contains forward looking statements including statements.

Joanna: The call is being webcast live on Primo Water's website at primowatercorp.com and will be available there for playback. This conference call includes forward-looking statements, including statements concerning the company's future financial and operational performance. These statements should be considered in connection with the cautionary statements and disclaimers contained in the Safe Harbor Statements in this morning's Earnings Press release and the company's annual report on Form 10-K and the quarterly reports on Form 10-Q and other filings with securities regulators. The company's actual performance could differ materially from these statements, and the company undertakes no duty to update these forward-looking statements, except as expressly required by applicable law.

Joanna: Concerning the company's future financial and operational performance. These statements should be considered in connection with the cautionary statements and disclaimers contained in the safe Harbor statements in this morning's earnings press release and the company's annual report on Form 10-K, and quarterly reports on Form 10-Q and other fee.

Joanna: Fillings with securities regulators.

Joanna: The company's actual performance could differ materially from these statements and the company undertakes no duty to update these forward looking statements, except as expressly required by applicable law.

Joanna: A reconciliation of any non-GAAP financial measures discussed during the call, with the most comparable measures in accordance with GAAP when the data is capable of being estimated, is included in the company's first quarter earnings announcement released earlier this morning or on the investor relations section of the company's website at primowatercorp.com. In addition to slides accompanying today's webcast to assist you throughout our discussion, we have included a copy of the presentation in a supplemental earnings deck on our website. I am accompanied by Robert Rietbroek, Primo Water's Chief Executive Officer, and David Hass, its Chief Financial Officer. With that, I will now turn the call over to Robert.

Joanna: A reconciliation of any non-GAAP financial measures discussed during the call with the most comparable measures in accordance with GAAP. When the data is capable of being estimated is included in the company's first quarter earnings announcement released earlier this morning or on the Investor Relations section of the company's website at Primo water Corp Dot com.

Joanna: In addition to slides accompanying today's webcast to assist you throughout our discussion. We have included a copy of the presentation and our supplemental earnings deck on our website.

Joanna: I am accompanied by Robert Rebroke, Primo waters, Chief Executive Officer, and David <unk>, Chief Financial Officer with that I will now turn the call over to Robert.

Robbert E. Rietbroek: Thank you, John, and good morning, everyone. I'm very pleased with our performance in the first quarter, where we showed strength across the business and organization with balanced and broad-based growth across all channels. Total revenue, $452 million, increased 9.6%, consisting of volume growth of 5.1% and pricing growth of 4.5%. Revenue gains were driven by organic growth of 8.3 percent, demonstrating the health of our consumer and category, as well as our leadership position across our portfolio. Adjusted EBITDA was $94 million, up 24% versus the prior year, and the resulting adjusted EBITDA margin was 20.8%, which gives us confidence in our full-year margin expense.

Robbert E. Rietbroek: Thank you John and good morning, everyone.

Robbert E. Rietbroek: I'm very pleased with our performance in the first quarter, where we showed strength across the business and organization with balanced and broad based growth across all channels.

Robbert E. Rietbroek: Total revenue $452 million increased nine 6%.

Robbert E. Rietbroek: Assisting a volume growth of five 1% and pricing growth of four 5%.

Robbert E. Rietbroek: Revenue gains were driven by organic growth of eight 3% demonstrating the health of our consumer and category as well as our leadership position across our portfolio.

Robbert E. Rietbroek: Adjusted EBITDA was $94 million up 24% versus the prior year and the resulting adjusted EBITDA margin was 28%, which gives us confidence in our full year margin expansion.

Robbert E. Rietbroek: Both revenue and adjusted EBITDA exceeded the high end of our guidance issued last quarter. David will discuss more of the details of the quarter in a moment, but the results are a direct reflection of our associates and their commitment to our customers. We remain frontline focused with a clear eye on growing the business profitably. I would like to publicly recognize and thank them for embracing our must-win priorities and for their dedication. From a macro perspective, consumer demand is strong. Persistent concerns of inflation and high interest rates have not slowed demand for our products.

Robbert E. Rietbroek: Both revenue and adjusted EBITDA.

Robbert E. Rietbroek: Exceeded the high end of our guidance issued last quarter.

Robbert E. Rietbroek: David will discuss more of the details of the quarter in a moment, but the results are a direct reflection of our associates and their commitment to our customers.

Robbert E. Rietbroek: We remain frontline focused with a clear eye to growing the business profitably.

Robbert E. Rietbroek: I would like to publicly recognize and thank them for embracing our must win priorities and for their dedication.

Robbert E. Rietbroek: From a macro perspective, our consumer demand is strong for us.

Robbert E. Rietbroek: <unk> concerns of inflation and high interest rates have not slowed demand for our products and we continue to see good growth potential as a pure play water company in the large highly fragmented and growing North America water category.

Robbert E. Rietbroek: And we continue to see the growth potential as a pure play water company in the large, highly fragmented, and growing North American water category. As consumers continue to prioritize healthier lifestyles, we offer high-quality drinking water solutions to meet the consumer wherever, whenever, and however they choose to hydrate. Our split between the residential and commercial customer base remains approximately 50-50, ensuring a healthy balance of revenue sources. When you look at the broader beverage category, we are pleased that we are growing revenue in both volume and price.

Robbert E. Rietbroek: As consumers continue to prioritize healthier lifestyles, we offer high quality drinking water solutions to meet the consumer wherever whenever and however, they choose the high grades.

Robbert E. Rietbroek: Our split between residential and commercial customer base remains approximately 50 50, ensuring a healthy balance of revenue sources.

Robbert E. Rietbroek: When you look at the broader beverage category. We are pleased that we are growing revenue in both volume and price.

Robbert E. Rietbroek: This contrasts with beverage companies where growth has been driven by pricing with moderate or declining volume. Recently, you may have been hearing more about external contaminants and their impact on the U.S. tap water supply, especially when sourced from surface water.

Robbert E. Rietbroek: This contrasts with beverage companies, where growth has been driven by pricing with moderate or declining volume.

Robbert E. Rietbroek: Recently, you may have been hearing more about external contaminants and their impact on the U S tap water supply.

Robbert E. Rietbroek: Especially when sourced from surface water.

Robbert E. Rietbroek: Given an expansive and sometimes aging water infrastructure, many municipal solutions are likely years away from meaningful change. Our large format bulk water products provide an immediate path to ensuring high-quality drinking water for consumers. The ongoing discussion about contaminants and the quality of the North American drinking water supply will likely make consumers more discerning in their hydration choices, presenting a clear opportunity for our water solution. With that in mind, let's discuss the specific progress of each of our must-win priorities that I identified last quarter.

Robbert E. Rietbroek: Given an expansive and sometimes aging water infrastructure. Many municipal solutions are likely years away for a meaningful change.

Robbert E. Rietbroek: Our large format bulk water products provide an immediate path to ensuring high quality drinking water for consumers.

Robbert E. Rietbroek: The ongoing discussion about contaminants and the quality of the North American drinking water supply.

Robbert E. Rietbroek: Make consumers more discerning in their hydration choices, presenting a clear opportunity for our water solutions.

Robbert E. Rietbroek: With that let's discuss the specific progress of each of our must win priorities today identified last quarter.

Robbert E. Rietbroek: The first must-win is to provide a superior customer experience with the goal to yield net organic growth and units, or gallons, consumed across our water portfolio. We are focused on acquiring and maintaining high-value customers and driving annual gallon growth. It starts with the sale of water dispensers at retail, which drives our portfolio of water solutions, including water direct, Exchange, Refill, and Filtration.

Robbert E. Rietbroek: The first must win is to provide a superior customer experience with the goal to yield net organic growth and units or gallons consumed across our water portfolio.

Robbert E. Rietbroek: We are focused on acquiring and maintaining high value customers and driving annual gallon growth.

Robbert E. Rietbroek: It starts with the sale of water dispensers at retail, which drives our portfolio of water solutions, including water direct.

Robbert E. Rietbroek: Change refill and filtration.

Robbert E. Rietbroek: We've begun enhancing many aspects of our consumer touchpoints in order to improve their experience. An important step is expanding our coverage in our customer experience center, where we are digitizing and empowering the center with a customer-centric approach. In Q1, we meaningfully increased the number of hours and days that we interacted with our valued customers through voice, social, and chat and focused on our quality of service and rapid request resolution. On our water.com website, we created more than 180 branch pages with unique content and descriptions for improved search engine optimization and customer review interactions. Our mobile version, called MyWaterPlus, has been upgraded with Spanish language capability, with plans for an updated user interface experience and several more upgrades to come in the balance of the year.

Robbert E. Rietbroek: We have begun enhancing many aspects of our consumer touch points in order to improve their experience.

Robbert E. Rietbroek: Gordon step is expanding our coverage in our customer experience center, where.

Robbert E. Rietbroek: So we are digitizing and empowering the center with a customer centric approach.

Robbert E. Rietbroek: In Q1, we meaningfully increase the number of hours and days that we interacted with our valued customers through voice, social and chats and focused on our quality of service and rapid request resolution.

Robbert E. Rietbroek: Within our water dotcom websites, we created more than 180 branch pages.

Robbert E. Rietbroek: With unique content and descriptions for improved search engine optimization and customer review interactions.

Robbert E. Rietbroek: Mobile version called my water plus has been upgraded with Spanish language capability with plans for an updated user interface experience and several more upgrades to come in the balance of the year.

Robbert E. Rietbroek: We take great pride in our brand portfolio, which includes 14 regional and national brands. These brands offer a variety of price tiers and water source types; whether it's sparklets on the West Coast, Crystal Springs in the east, or Mountain Valley and Primo throughout the country, our consumers can expect high quality and great tasting water sourced from one of our 70 domestic water sources.

Robbert E. Rietbroek: We take great pride in our brand portfolio.

Robbert E. Rietbroek: That includes 14 regional and national brands.

Robbert E. Rietbroek: These brands offer a variety of price tiers and water source types.

Robbert E. Rietbroek: Whether it's spark, let's on the West coast.

Robbert E. Rietbroek: Crystal Springs in the East our mountain Valley and pre mode. Throughout the country are consumers can expect high quality and great tasting water sourced from one of our 70 domestic water sources.

Robbert E. Rietbroek: Consumers can select our products from multiple price tiers, from a value price of $0.50 per gallon for water sold at a refill station all the way up to our super premium Mountain Valley spring water delivered in multi-format glass bottles direct to their door or sold at retail and at various on-premise locations. Our increased focus on Mountain Valley, which I spoke about last quarter, is delivering results. During the first quarter, we increased our Mountain Valley retail revenue by approximately 57% over the prior year by expanding our glass production capacity.

Robbert E. Rietbroek: Consumers can select our products from multiple price tiers from a value price of 50 cents per gallon water sold at a refill station.

Robbert E. Rietbroek: All the way up to our Super premium Mountain Valley Spring water delivered in multi format glass bottles direct to their door.

Robbert E. Rietbroek: So that retail and its various on premise locations.

Robbert E. Rietbroek: Our increased focus on mountain Valley, which I spoke about last quarter is delivering results.

Robbert E. Rietbroek: During the first quarter, we increased our mountain valley retail revenue by approximately 57% over the prior year by expanding our glass production capacity.

Robbert E. Rietbroek: We have launched a convenient 9-pack, single-serve aluminum bottle at Whole Foods stores throughout the country and will begin shipping this product to our Water Direct customers later this month. Mountain Valley is already the number one brand of spring water sold in the Natural Foods Channel and is now available in more than 12,000 stores in the U.S., including conventional retail stores.

Robbert E. Rietbroek: We have launched a convenient nine pack single serve aluminum bottle at whole foods stores throughout the country and will begin shipping this product to our water direct customers later this month.

Robbert E. Rietbroek: Mountain Valley is already the number one brand of spring water sold and the natural foods channel.

Robbert E. Rietbroek: It is now available in more than 12000 stores in the U S, including conventional retail stores.

Robbert E. Rietbroek: We continue to see high levels of demand for our five-gallon, two-and-a-half-gallon retail and on-premise, multi-serve, and single-user glass products. The second must win is to be the preferred water solutions partner. We meet the end consumer across numerous channels like direct-to-consumer delivery or through one of our retail partners with our exchange locations or refill stations. We have an offering to meet each of our customers' needs and budget for what we call Water Your Way.

Robbert E. Rietbroek: We continue to see high levels of demand for our five gallon two and a half gallon retail and on premise multi serve in single user glass products.

Robbert E. Rietbroek: The.

Robbert E. Rietbroek: <unk> must win is to be the preferred water solutions partner.

Robbert E. Rietbroek: We made the end consumer across numerous channels like direct to consumer delivery.

Robbert E. Rietbroek: Or through one of our retail partners with our exchange locations or refill stations.

Robbert E. Rietbroek: We have an offering to meet each of our customers needs and budget for what we call what are your way.

Robbert E. Rietbroek: The concept of partnership stretches across all aspects of our business, including associates, suppliers, customers, and current and potential shareholders. It starts with our associates. I am proud of the work they do, and their commitment shows in every aspect of their efforts. Providing a safe environment is job one and is necessary for our associates to thrive.

Robbert E. Rietbroek: The concept of partnering stretches across all aspects of our business, including associates suppliers customers and current and potential shareholders.

Robbert E. Rietbroek: Starts with our associates I am proud of the work they do and their commitment shows in every aspect of their efforts.

Robbert E. Rietbroek: Providing a safe environment is job, one and as necessary for our associates to thrive. Additionally.

Robbert E. Rietbroek: Additionally, we are investing in improvements that include work place upgrades and offices locker rooms break room areas parking lots and production and distribution areas.

Robbert E. Rietbroek: Additionally, we are investing in improvements that include workplace upgrades in offices, locker rooms, break room areas, parking lots, and production and distribution areas. Our associates live in the communities we serve and are passionate about the products and services we provide, and I want them to exhibit pride in their company as they represent us in the community. As we conduct periodic surveys of our associates, we are noticing a positive shift in the culture and engagement, culminating with an improvement in retention rates. Community involvement includes providing support in times of need, like we did during the recent Texas wildfire.

Robbert E. Rietbroek: Our associates live in the communities, we serve and are passionate about the products and services, we provide and that we want them to exhibit the pride in their company as they represent us in the community.

Robbert E. Rietbroek: As we conduct periodic surveys of our associates, we are noticing a positive shift in the culture and the engagement culminating.

Robbert E. Rietbroek: Culminating with an improvement in retention rates.

Robbert E. Rietbroek: Community involvement includes providing support in times of need like we did during the recent Texas wildfires.

Robbert E. Rietbroek: We embrace our partnerships and have been able to deepen our relationships as we span across all types of retail, including mass merchandisers, club stores, DIY, and e-commerce with top-tier retailers like Walmart, Costco, Home Depot, Lowe's, and other prominent grocery chains throughout North America. I've had the opportunity to meet with several of these world-class retailers in top-to-top meetings, and I've found a strong desire on their part to drive more traffic to their stores with our exchange and refill stations in Mountain Valley Springwater.

Robbert E. Rietbroek: We embrace our partnerships and have been able to deepen our relationships as we span across all types of retail, including mass Merchandisers club stores, DIY and e-commerce with top tier retailers like Walmart Costco home depot, Lowes and other prominent grocery chains throughout North America.

Robbert E. Rietbroek: I've had the opportunity to meet with several of these world class retailers in top to top meetings and I found a strong desire on their part to drive more traffic to their stores with our exchange and refill stations and Mountain Valley Spring water.

Robbert E. Rietbroek: During the first quarter, we were able to secure additional display racks within certain retail stores to support capacity in our exchange channel. Our focus on filling white space voids and increasing capacity in in-stocks is having a noticeable effect by driving double-digit revenue growth, as well as unit volume growth across the retail space. I have also been meeting with key members of our vendor community. As another area for growth, we've seen an opportunity to evolve our relationships with vendors, from transactional to strategic partnerships, and to help deliver innovation in our product offering. David and I had more than 50 interactions with investors and analysts in the first quarter. It has been enlightening and educational.

Robbert E. Rietbroek: During the first quarter, we were able to secure additional display racks within certain retail stores to support capacity and our exchange channel.

Robbert E. Rietbroek: Our focus on filling white space voids, and increasing capacity and in stocks is having a noticeable effect by driving double digit revenue growth as well as unit volume growth across the retail space.

Robbert E. Rietbroek: I have also been meeting with key members of our vendor community.

Robbert E. Rietbroek: As another area for growth, we've seen opportunity to evolve our relationships with vendors from transactional to strategic partnerships and to help deliver innovation in our product offering.

Robbert E. Rietbroek: David and I had more than 50 interactions with investors and analysts in the first quarter.

Robbert E. Rietbroek: It has been enlightening and educational.

Robbert E. Rietbroek: Key themes included positive feedback regarding our growth algorithm, the sale of our European assets, an appreciation for our strong balance sheet and low leverage, and how we plan to deploy capital in the coming quarters. I'd like to personally thank the investor base for the level of engagement, as sustaining, deepening, and enriching these partnerships means we can win for the long haul. The third must-win is operational excellence. Specifically, ensuring that we have an optimized organizational structure and operating systems to guarantee our associates' safety and well-being, delivering the highest quality products and services, and scale efficiently as we continue to grow organically and through acquisition. During the first quarter, we began implementing some six- and seven-day delivery schedules as we prepared to head into our traditionally busy period of the summer.

Robbert E. Rietbroek: Key themes included positive feedback regarding our growth algorithm the sale of our European assets and appreciation for our strong balance sheets and low leverage.

Robbert E. Rietbroek: And how we plan to deploy capital in the coming quarters.

Robbert E. Rietbroek: I'd like to personally thank the investor base for the level of engagement as sustaining deepening and enriching. These partnerships means we can win for the long haul.

Robbert E. Rietbroek: The third must win is operational excellence, specifically, ensuring that we have an optimized organizational structure and operating systems to guarantee our associate safety and wellbeing delivering the highest quality products and service and scale efficiently as we continue to.

Robbert E. Rietbroek: So organically and through acquisitions.

Robbert E. Rietbroek: During the first quarter, we began implementing some six and seven day delivery schedules as we prepare to add into our traditionally busy period of this summer.

Robbert E. Rietbroek: We were able to maintain our on-time in full rate of 93% in our water direct channel for the first quarter. A refill channel had machine uptime of 97%, ensuring product availability for our customers. Throughout our operations, we are driving integrated business processes.

Robbert E. Rietbroek: We were able to maintain our on time in full rate of 93% and our water direct channel for the first quarter.

Robbert E. Rietbroek: Our refill channel had machine uptime of 97% ensuring product availability for our customer base.

Robbert E. Rietbroek: Throughout our operations, we are driving integrated business processes.

Robbert E. Rietbroek: Successful implementation will provide technology-enabled solutions to increase customer satisfaction and reduce overall costs. The latest example of our technology upgrade is the current rollout of a new fleet transportation management system as part of what we call Automatic Route Optimization 2.0, which is driving even more efficiencies in water delivery and exchange. During the first quarter, we increased our revenue per route by 8% and units per route per day by 5%, an indication of improved asset utilization, route density, and volume and pricing improvement.

Robbert E. Rietbroek: Successful implementation will provide technology enabled solutions to increase customer satisfaction.

Robbert E. Rietbroek: And reduce overall costs.

Robbert E. Rietbroek: The latest example of our technology upgrade is the current rollout of a new fleet transportation management system as part of what we call automatic route optimization 2.0.

Robbert E. Rietbroek: Which is driving even more efficiencies and water direct and exchange.

Robbert E. Rietbroek: During the first quarter, we increased our revenue per outs by 8% and units per route per day by 5%.

Robbert E. Rietbroek: An indication of improved asset utilization.

Robbert E. Rietbroek: <unk> density.

Robbert E. Rietbroek: And volume and pricing improvements.

Robbert E. Rietbroek: The same principles are now being employed in the optimization of our refill route, enabling us to extract more value from our team of technicians and service providers. We are focused on strategic CapEx investments that deliver high returns. The installation of the new high-efficiency production lines continues, and we expect our Ephrata, Pennsylvania, production line to be complete in the second quarter and our Chicago facility later this year. The performances of the high-efficiency line installations are driving a reduction in water waste at the filler and can nearly double the output capacity of the bottling line.

Robbert E. Rietbroek: The same principles are now being employed in the optimization of our refill routes, enabling us to extract more value from our team of technicians and service providers.

Robbert E. Rietbroek: We are focused on strategic capex investments that deliver high returns.

Robbert E. Rietbroek: The installation of the new high efficiency production lines continues and we expect our Friday, Pennsylvania production lag to be complete in the second quarter in our Chicago facility later this year.

Robbert E. Rietbroek: The performances of the high efficiency line installations are driving a reduction of water waste at the filler and can nearly double the output capacity of the bottling line.

Robbert E. Rietbroek: Advancements in robotics can be utilized to assist some of the more strenuous aspects of our plant and distribution function, freeing up our associates to focus on the quality aspects of their roles, and quality remains at the forefront of what we do. The team remains focused on delivering the previously announced Business Optimization Program that will enhance not only our productivity but also lower our overall cost to serve, while continuing to offer customers an exceptional experience. We remain committed to delivering annual run rate savings of $20 million by year-end 2024. From a sustainability perspective, we treat the source and process responsibly to protect the planet we inhabit.

Robbert E. Rietbroek: Advancements in robotics can be utilized to assist some of the more strenuous aspects of our plants and distribution functions.

Robbert E. Rietbroek: Freeing up our associates to focus on the quality aspects of their roles.

Robbert E. Rietbroek: Quality remains at the forefront of what we do.

Robbert E. Rietbroek: The team remains focused on delivering the previously announced business optimization program.

Robbert E. Rietbroek: Will enhance not only our productivity, but also lower our overall cost to serve while continuing to offer customers an exceptional experience.

Robbert E. Rietbroek: We remain committed to delivering the annual run rate savings of $20 million by year end 2024.

Robbert E. Rietbroek: From a sustainability perspective, we strive to source and process responsibly to protect the planet we inhabit.

Robbert E. Rietbroek: We will continue to implement an environmental strategy that is focused on sourcing water responsibly, converting our fleets to more eco-friendly propane, reusing, refilling, and recycling of our plastic bottles, and increasing the use of glass and aluminum as part of our product offering. We offer high-quality, healthy hydration solutions whether you're at home, work, or on the go with water delivery, exchange, and refill in our large format, returnable, reusable, and refillable package that is 100% recyclable at the end of its life.

Robbert E. Rietbroek: We will continue to implement and environmental strategy that is focused on sourcing water responsibly.

Robbert E. Rietbroek: Converting our fleets to more eco friendly propane reusing refilling and recycling of our plastic bottles.

Robbert E. Rietbroek: And increasing the use of glass and aluminum as part of our product offering.

Robbert E. Rietbroek: We offer high quality healthy hydration solutions, whether you're at home work around the goal with water delivery.

Robbert E. Rietbroek: Change and refill in our large format returnable reusable and refillable package that is 100% recyclable at the end of its life.

Robbert E. Rietbroek: I intend for us to remain a leader in this space, and I am proud of the results and improvements that will be contained in our 2023 Sustainability Report, which is expected later this quarter. I hope you can understand why I'm excited about the growth potential in front of us. We have a clear plan to deliver success with a good balance of volume and price. Our unique combination of employees, assets, and resources is capable of delivering results that benefit all our stakeholders.

Robbert E. Rietbroek: I intend for us to remain a leader in this space and I am proud of the results and improvements that will be contained in our 2023 sustainability report, which is expected later this quarter.

Robbert E. Rietbroek: I hope you can understand why I'm excited about the growth potential in front of us.

Robbert E. Rietbroek: We have a clear plan to deliver success with a good balance of volume and pricing.

Robbert E. Rietbroek: Our unique combination of associates assets and resources are capable of delivering results that benefit all our stakeholders.

Robbert E. Rietbroek: Before I turn the call over to David to review our financial results in greater detail and provide our second quarter and full year 2024 outlook, I would like to once again thank all our Primo Water associates for their support and contribution to the excellent performance of the business. With that, I'll turn the call over to David.

Robbert E. Rietbroek: Before I turn the call over to David to review, our financial results in greater detail and provide our second quarter and full year 2020 for outlook.

David: I would like to once again, thank all our primo water associates for their support and contribution to the excellent performance of the business.

Robbert E. Rietbroek: With that I'll turn the call over to David.

David W. Hass: Thanks, Robert. As a reminder, at the end of the year, we disposed of the majority of our international assets, and thus, our financial results discussed today are for continuing operations only. At no point will we discuss discontinued operations unless otherwise noted.

David: Thanks, Robert as a reminder, at the end of the year, we disposed of the majority of our international assets and thus our financial results discussed today are for continuing operations only at no point will be covered discontinued operations unless otherwise noted.

David W. Hass: The first quarter results of our continuing operations included revenue increasing 9.6% to $452 million, adjusted EBITDA increasing 24% to $94 million, and adjusted EBITDA margins of 20.8%. All metrics exceeded the high end of our most recent guidance. Within the 9.6% revenue growth, approximately 8.3%, or approximately $34 million, came from organic activity, with the balance, 1.3%, or approximately $5.5 million, coming from inorganic or acquired sources. Primo Water's definition of inorganic contribution includes any tuck-in businesses that were closed less than 12 months ago.

David: The first quarter results of our continuing operations included revenue, increasing nine 6% to $452 million adjusted EBITDA, increasing 24% to $94 million with adjusted EBITDA margins of 28% all metrics exceeded the high.

David W. Hass: After 12 months, any acquired business becomes part of our normal contribution base. Separately, the 9.6% revenue growth, irrespective of organic or acquired means, can be split into approximately 5.1% related to volume activity and approximately 4.5% related to pricing activity. Volume contribution, in this case, comes from both new customer additions or additional gallons consumed from existing customers or retail locations in our exchange or refill businesses where actual customer counts are not directly known.

David W. Hass: <unk> of our most recent guidance.

David W. Hass: Within the nine 6% revenue growth approximately eight 3% or approximately $34 million came from organic activity with the balance one 3% or approximately $5 5 million coming from inorganic or acquired sources.

David W. Hass: Primo water's definition of inorganic contribution includes any tuck in businesses that were closed less than 12 months ago.

David W. Hass: After 12 months any acquired business becomes part of our normal contribution basis.

David W. Hass: Separately, the nine 6% revenue growth irrespective of organic or acquired means can be split into approximately five 1% related to volume activity and approximately four 5% related to pricing activity volume contribution in this case comes from.

David W. Hass: New customer additions or additional gallons consumed from existing customers or retail locations and our exchange or refill businesses, where actual customer accounts are not directly known.

David W. Hass: Volume activity in the quarter was strong across all of our water services, indicating strength in our bulk-oriented offering, as well as the complementary nature of our different price tiers. We believe that volume across our water services will continue to be a primary indicator of business health versus overall customer count. We have expanded our channel disclosure to break out the price and volume splits for each of the channels versus the prior year. A table of the results is included within our supplemental earnings deck.

David W. Hass: Volume activity in the quarter was strong across all of our water services, indicating strength and our bulk oriented offering as well as the complementary nature of our different price tiers, we believe that volume across our water services will continue to be a primary indicator of business health versus overall customer accounts.

David W. Hass: <unk>.

David W. Hass: We have expanded our channel disclosure to break out the price and volume splits for each of the channels versus prior year a table of the results is included within our supplemental earnings deck.

David W. Hass: You will notice that volume gains occurred across each of the channels and prices improved, except for the welcome price decline in water dispensers. Within our channels, we had strong revenue growth of 9% in Water Direct and Exchange and an 11% increase in our Water Refill and Filtration channel. The other water channel, which is primarily the retail and on-premise portion of Mountain Valley Premium Spring Water, was up 57%. The water dispenser business, representing the sell-in of our units to the retailer, grew 32 percent, driven by 57 percent from volume, offsetting expected lower wholesale prices as the tariff elimination works through our pricing architecture. Unit dispenser sell-in during the first quarter was highlighted by the performance of several of our largest retailers in the club, DIY, and mass merchandiser channels.

David W. Hass: You will notice that volume gains occurred across each of the channels and price improved.

David W. Hass: <unk> for the welcome price decline in water dispensers within our channels, we had strong revenue growth of 9% in water direct and exchange and an 11% increase in our water refill infiltration channel. The other water channel, which is primarily the retail and on premise portion of mountain Valley premiums spring water.

David W. Hass: Up 57%.

David W. Hass: The water dispenser business, representing the sell in of our units to the retailer grew 32% driven by 57% from volume offsetting expected lower wholesale prices as the tariff elimination works through our pricing architecture.

David W. Hass: Unit dispenser sell in during the first quarter was highlighted by the performance of several of our largest retailers in the club DIY and mass merchandiser channels. The excess inventory created during the supply chain challenges of a couple of years ago is now largely behind us the sell in was driven by pricing rollbacks returned to <unk>.

David W. Hass: The excess inventory created during the supply chain challenges of a couple years ago is now largely behind us. The sell-in was driven by price rollbacks, return-to-shelf of dispenser SKUs, and effective merchandising at the store level. Water dispenser sell-through was approximately 222,000 units in the quarter, up approximately 3%. As a reminder, our Razor and Razor Blade business model includes two ways of selling the Razor, the rental of water dispensers to residential and commercial customers in our water direct business, and the sale of water dispensers through retail partners and online.

David W. Hass: Shelf of dispenser, Skus and effective merchandising at the store level water dispenser sell through was approximately 222000 units in the quarter up approximately 3% as a reminder, our razor and razorblade business model includes two approaches of selling the razor the rental of water dispensers to residential.

David W. Hass: Commercial customers in our water direct businesses and the sale of water dispensers through retail partners and online.

David W. Hass: Both approaches enable growth in water solutions and contribute to our predictable and recurring revenue growth. We have been particularly focused on growth with our brick and mortar retail partners, where we have greater visibility into the connectivity to our water solutions and where the connectivity is higher than through e-commerce. As discussed in previous calls, our water dispenser category was previously under a 25% import tariff but was reclassified last year, and a refund process from the U.S. government was initiated. We have recorded the refunds in the same manner as the original transactions.

David W. Hass: This approach has enabled growth in water solutions and contribute to our predictable and recurring revenue growth.

David W. Hass: We have been particularly focused on growth with our brick and mortar retail partners, where we have greater visibility into the connectivity to our water solutions and where the connectivity is higher than through e-commerce.

David W. Hass: As discussed in previous calls our water dispenser category was previously under a 25% import tariff.

David W. Hass: It was reclassified last year and and a refund process from the U S government was initiated.

David W. Hass: We have recorded the refunds in the same manner as the original transactions for the first quarter, we received $2 $6 million approximately $214000 as reflected in year end adjusted EBITDA related to water dispensers sold to retail $2 $1 million is related to the water dispensers that.

David W. Hass: For the first quarter, we received $2.6 million. Additionally, approximately $214,000 is reflected in year-end adjusted EBITDA related to water dispensers sold to retail. $2.1 million is related to the water dispensers that we rent as CapEx with the residual value, and approximately $250,000 is related to interest income or tariff balance paid to Primo Water. When including last year's payment, cumulatively through the first quarter of 2024, we have received approximately $10.8 million. As we look further into the operational metrics, and as Robert mentioned earlier, our commitment to improving the customer experience continues to result in improved on-time, in-full, or OTIF rates.

David W. Hass: Rent is capex with the residual value and approximately $250000 related to interest income or tariff balance paid to primo water.

David W. Hass: When including last year's payment cumulatively through the first quarter of 2024, we have received approximately $10 $8 million as we look further into the operational metrics and as Robert mentioned earlier, our commitment to improving the customer experience continues to result in improved on time in full.

David W. Hass: The ability to serve our customers in the most efficient manner possible is a critical driver of both our short- and long-term profitability, and our Automated Route Optimization, ARO, tool continues to yield efficiencies. In North America, units per route per day increased approximately 5% compared to Q1 of 2023, and revenue per route increased more than 8% compared to Q1 of 2023. Our scale and leverage continue to improve as we service more customers with higher volume per route.

David W. Hass: <unk> or <unk> rates, the ability to serve our customers in the most efficient manner possible is a critical driver of both our short and long term profitability and our automated route optimization Arrow tool continues to yield efficiencies in North America units per route per day increased approximately five <unk>.

David W. Hass: <unk> compared to Q1 of 2023 and revenue per route increased more than 8% compared to Q1 of 2023.

David W. Hass: Our scale and leverage continues to improve as we service more customers with higher volume per route.

David W. Hass: Additionally, WaterDirect customer retention increased to approximately 85 percent, slightly higher than at the end of last year and versus the year-ago period. Shifting to our balance sheet and cash flows, our net leverage ratio at the end of the first quarter on a trailing 12-month basis stood at approximately 2.0 times our adjusted EBITDA for continuing operations.

David W. Hass: Additionally, water direct customer retention increased to approximately 85% slightly higher than at the end of last year and versus the year ago period.

David W. Hass: Shifting to our balance sheet and cash flows our net leverage ratio at the end of the first quarter on a trailing 12 month basis stood at approximately 2.0 times, our adjusted EBITDA for continuing operations.

David W. Hass: This is on par with our year-end figure. Similarly, our liquidity remained strong with approximately $498 million of cash on the balance sheet, approximately $525 million when taking into account the cash within our discontinued operations and a fully unused cash flow revolver. In the quarter, we generated approximately $4.7 million of interest income, slightly offset by cash paid for unused revolver fees and other expenses.

David W. Hass: This is on par with our year end figure.

David W. Hass: Similarly, our liquidity remains strong with approximately $498 million of cash on the balance sheet approximately $525 million when taking into account the cash within our discontinued operations and a fully unused cash flow revolver in the quarter, we generated approximately $4 7 million.

David W. Hass: Of interest income slightly offset by cash paid for unused revolver fees and other expenses on a full year basis, well, we will be a net interest expense payer. We are quite pleased with the low interest rate carried on our senior notes and our ability to generate interest income in today's yield environment.

David W. Hass: On a full year basis, while we'll be a net interest expense payer, we are quite pleased with both the low interest rate carried on our senior notes and our ability to generate interest income in today's yield environment. Our adjusted free cash flow results for the first quarter totaled $28.4 million, a year-over-year improvement of $39.4 million. The improvement was primarily driven by increased earnings from our continuing operations business, reduced net interest expense, improved working capital, lower capital expenditures, and the one-time gain of incremental tariff receipts in the quarter.

David W. Hass: Our adjusted free cash flow results for the first quarter told it totaled $28 4 million a year over year improvement of $39 4 million.

David W. Hass: The improvement was primarily driven by an increased earnings of our continuing operations business reduced net interest expense improved working capital lower capital expenditures.

David W. Hass: And the one time gain of incremental tariff receipts in the quarter once again as I transition into our 2024 outlook any forward guidance will be strictly for continuing operations discontinued operations will not be covered to help bridge, our 2024 guidance a table of 2020 Three's financial results.

David W. Hass: Once again, as I transition into our 2024 outlook, any forward guidance will be strictly for continuing operations; discontinued operations will not be covered. To help bridge our 2024 guidance, a table of 2023's financial results for continuing operations by quarter has been provided in the appendix of our supplemental earnings slide. We are forecasting second-quarter revenue guidance to be between $472 million and $482 million. We expect Q2 adjusted EBITDA to be between $103 million and $111 million, with an implied adjusted EBITDA margin of 22.4 percent.

David W. Hass: For continuing operations by quarter has been provided in the appendix of our supplemental earnings slides.

David W. Hass: We are forecasting second quarter revenue guidance to be between $472 million and $482 million. We expect Q2, adjusted EBITDA to be between $103 million and $111 million with an implied adjusted EBITDA margin of 22, 4%.

David W. Hass: The 22, 4% adjusted EBITDA margin represents a 60 basis point improvement from the year ago period.

David W. Hass: The 22.4% adjusted EBITDA margin represents a 60 basis point improvement from the year-ago period. For the full year 2024 forecast of continuing operations, we are increasing our revenue projection to be between $1.855 billion and $1.885 billion, with revenue growth at the midpoint of 5.5 percent. Similarly, we are increasing our full-year 2024 adjusted EBITDA to be between $410 million and $430 million with an implied adjusted EBITDA margin of 22.5% at the midpoint.

David W. Hass: For the full year 2024 forecast of continuing operations, we are increasing our revenue projection to be between $1 $85 5 billion and $1 88, 5 billion with revenue growth at the midpoint of five 5%.

David W. Hass: Similarly, we are increasing our full year 2024, adjusted EBITDA to be between $410 million and $430 million with an implied adjusted EBITDA margin of 22, 5% at the midpoint the.

David W. Hass: The increase in guidance contemplates both the benefit from the strong start in Q1, as well as some balance of year benefit from our business optimization program. The initial contribution from early cost reduction activities is approximately $2 million for the balance of year 2024 and approximately $4 million on a 2025 run rate basis. Neither guidance figure includes water direct tuck-in acquisitions that may occur across the balance of the year.

David W. Hass: The increase in guidance contemplates both the benefit from the strong start in Q1 as well as some balance of year benefit from our business optimization program. The initial contribution from early cost reduction activities is approximately $2 million balance of the year 2024 and.

David W. Hass: The $4 million on the 2025 run rate basis, neither guidance figure includes water direct tuck in acquisitions that may occur across the balance of the year.

David W. Hass: We are forecasting 2024 CapEx guidance of approximately 7% of our revenue guidance range, plus an incremental $22.5 million of strategic CapEx. We expect to return to our total CapEx spend of approximately 7% of revenue in 2025. The initiatives to be funded from our 2024 CapEx plan include installing high efficiency water production lines, reducing waste and increasing productivity, building a more environmentally friendly fleet and expanding our private fleet to improve the efficiency of our product distribution, driving organic growth through digitization, upgrading technology platforms, accelerating dispenser innovation, and continuing growth in refill and filtration with refreshed signage and branding of our existing units. Full year 2024 cash taxes are expected to be approximately $30 million to $40 million.

David W. Hass: We are forecasting 2020 for Capex guidance of approximately 7% of our revenue guidance range, plus an incremental $22 5 million of strategic Capex.

David W. Hass: We expect to return to our total capex spend of approximately 7% of revenue in 2025.

David W. Hass: Key initiatives to be funded from our 2020 for Capex plan include installing high efficiency water production lines, reducing waste and increasing productivity building, a more environmentally friendly fleet and expanding our private fleet to improve the efficiency of our product distribution.

David W. Hass: Driving organic growth through Digitization upgrading technology platforms, accelerating dispenser innovation and continuing growth in refill infiltration with refreshed signage and branding of our existing units.

David W. Hass: Full year 2020 for cash taxes are expected to be approximately 30 million to $40 million. This anticipates utilization of U S. Net operating losses or Nols of which we have approximately 46 million U S. Nols available for 2024, we expect the amount of Nols available.

David W. Hass: This anticipates utilization of U.S. Net Operating Losses, or NOLs, of which we have approximately 46 million U.S. NOLs available for 2024. We expect the amount of NOLs available to be approximately $16 million in 2025 and $10 million per year in 2026 through 2029. For the full year 2024, we expect net cash interest expense of approximately $30 million to $50 million. Our interest expense is tied to our two senior note debt facilities with very low interest rates of approximately 4.2%, with maturity dates of 2028 and 2029. We do not currently anticipate drawing on our cash flow revolver.

David W. Hass: To be approximately $16 million in 2025 and $10 million per year in 2026 through 2029.

David W. Hass: For the full year 2024, we expect net cash interest expense of approximately 30 million to $50 million. Our interest expense is tied to our two senior note debt facilities with very low interest rates of approximately four 2% with maturity dates of 2028 and 2029 we.

David W. Hass: Do not currently anticipate drawing on our cash flow revolver. Additionally, we will take steps to maximize the interest income yield throughout 2024, but could experience reduced income opportunities if market available rates decline related to any macro fed or bank rate environment decisions we saw.

David W. Hass: Additionally, we will take steps to maximize the interest income yield throughout 2024, but we could experience reduced income opportunities if market available rates decline related to any macro Fed or bank rate environment decisions. We still expect M&A tuck-ins to be toward the higher end of historical ranges during 2024. Combining all of these factors, along with the core health and cash generation capacity of our business model, we are forecasting adjusted free cash flow from continuing operations of between $175 million and $185 million in 2024.

David W. Hass: Still expect M&A tuck ins to be towards the higher end of historical ranges during 2024.

David W. Hass: Combining all of these factors along with the core health and cash generation capacity of our business model. We are forecasting adjusted free cash flow from continuing operations of between $175 million and $185 million in 2024.

David W. Hass: The $5 million increase at the midpoint can be attributed to the free cash flow conversion of our increased Adjusted EBITDA guidance along with the tariff amounts received during the quarter. This outlook continues to target our commitment to replace the adjusted free cash flow that was tied to the assets sold and those held for sale in our discontinued operation. The following three items have not been included in our 2024 guidance due to the uncertainty in timing of each discrete outcome.

David W. Hass: $5 million increase at the midpoint can be attributed to the free cash flow conversion of our increased adjusted EBITDA guidance, along with the tariff amounts received during the quarter.

David W. Hass: This outlook continues to target our commitment to replace the adjusted free cash flow that was tied to the assets sold and those held for sale in our discontinued operations.

David W. Hass: The following three items have not been included in our 2024 guidance due to the uncertainty and timing with each discrete outcome first for.

David W. Hass: For the remaining balance of the Business Optimization Program, we remain confident in achieving the $20 million improvement. Second, the remaining benefits from additional tariff refunds outside of the amounts mentioned and received during the quarter due to the uncertain timing of the government refund process. Third, the sale of discontinued operations, which includes AMIA Foods in the United Kingdom, our water business in Israel, and our water and coffee businesses in the United Kingdom and Portugal.

David W. Hass: For the remaining balance of the business optimization program, we remain confident in achieving the $20 million improvement second the remaining benefits from additional tariff refunds outside of the amounts mentioned and received during the quarter due to the uncertain timing of the government refund process.

David W. Hass: Third the sale of discontinued operations, which includes Amy of foods, and the United Kingdom, our water business in Israel, and our water and coffee businesses in the United Kingdom and Portugal.

David W. Hass: As previously communicated, these businesses will remain in discontinued operations until they are sold, they are being actively marketed, and have received interest from several parties. With respect to our share purchase program, we repurchased $9 million of common stock in the first quarter.

David W. Hass: As previously communicated these businesses will remain in discontinued operations until they are sold they are being actively marketed and have received interest from several parties.

David W. Hass: With respect to our share repurchase program, we repurchased $9 million of common stock in the first quarter.

David W. Hass: Yesterday, our Board of Directors authorized a quarterly dividend of $0.09 per common share, a 13% increase over last year, which continues our path to the multi-year dividend step-up with an increase in our quarterly dividend per share of $0.01 for the third consecutive year. In closing, our improved financial profile and flexibility, along with a compelling long-term growth outlook, are a strong foundation for continued success. With that, I will turn the call back over to Jon for Q&A. Thanks, David. During the Q&A, to ensure we can hear from as many of you as possible, we would ask for a limit of one question and one follow-up per person.

David W. Hass: Yesterday, our board of directors authorized a quarterly dividend of <unk> <unk> per common share a 13% increase over last year, which continues our path to the multiyear dividend step up with an increase in our quarterly dividend per share of <unk> for the third consecutive year.

Jon: In closing, our improved financial profile and flexibility along with a compelling long term growth outlook. Our strong foundation for continued success with that I will turn the call back over to John for Q&A.

Jon: Thanks, David during the Q&A to ensure we can hear from as many of you as possible. We would ask for a limit of one question and one follow up per person.

Jon: Thank you.

Speaker Change: Operator, please open the line for questions.

Jon: Thank you.

Joanna: Operator, please open the line for questions. Ladies and gentlemen, we will now begin the question and answer session. Yeah. Thank you. Good morning, everyone.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Joanna: Do you have a question. Please press the star followed by the one on your Touchtone phone you will hear with Friedhelm prompt acknowledging your request.

Speaker Change: Using a speaker phone please lift the handset before pressing editors.

Speaker Change: One moment. Please for your first question.

Joanna: Your first question comes from Nik Modi with RBC capital markets. Please go ahead.

Operator: And really appreciate all the perspective on the quarter itself. But Robert, I was hoping we could take a step back, you know, this being your first full quarter as part of the organization. And if you kind of take an outside, quote unquote, outsider's perspective in terms of, you know, how you think about the quarter, the evolution of what you've seen, and, you know, what you've really been able to accomplish now that you've been in the seat for, you know, several months now. Well, thanks, Nick.

Speaker Change: Yeah. Thank you good morning, everyone.

Operator: Really appreciate all the perspective on the quarter itself, but Robert I was hoping we could take a step back.

Robert: This being our first full quarter as part of the organization.

Operator: And are you kind of take them outside quote unquote outsider's perspective in terms of.

Operator: How do you think about the quarter the evolution of what you've seen.

Robert: And what you've really been able to accomplish now that you've been in the seat for several months now.

Robbert E. Rietbroek: Thanks for the question. Yeah, you know, the way that I view the quarter is that we had very balanced growth and broad-based growth, with strength across the portfolio, across pretty much all water channels. And we reflected progress, in both volume and price. And when I looked at the revenue we delivered, Nick, it was up, at 9.6%, and it was driven both by volume and pricing. As David said, volumes are up 5.1%, and prices are up 4.5%.

Robert: Well thanks, Nick Thanks for the question.

Robbert E. Rietbroek: The way that I view the quarter.

Robbert E. Rietbroek: Is that we had very balanced growth and we had broad based growth.

Robbert E. Rietbroek: We had strength across the portfolio.

Robbert E. Rietbroek: Across pretty much all water channels, and we reflected progress in both volume and pricing.

Robbert E. Rietbroek: And when I look at the revenue we delivered Nick It was it was up.

Robbert E. Rietbroek: At nine 6% and it was driven both by volume and pricing as David said volumes up five 1% price up four 5%, but importantly, we also had eight 3% organic growth which is a.

Robbert E. Rietbroek: But importantly, we also had 8.3% organic growth, which is something we're starting to report now. I looked at the gross margin, and I think it's very healthy. It's up 160 basis points, but now it's 64.4%.

Robbert E. Rietbroek: Something we're starting to report now.

Robbert E. Rietbroek: I look I looked at the gross margin and I think its very healthy its up 160 basis points without 64, 4% and the underlying drivers of that is really a combination of pricing.

Robbert E. Rietbroek: And the underlying drivers of that are really a combination of pricing, volume, throughput, and operating efficiency. So that was very reassuring and translated to a strong adjusted EBITDA as well, and margins of 20.8 percent, which are up 250 basis points, again driven by pricing, volume, but also a disciplined approach to our operating expenses and operating efficiency. So I'm very pleased with the quarter.

Robbert E. Rietbroek: <unk> throughput.

Robbert E. Rietbroek: <unk> operating efficiencies, so that was very reassuring and translated to a strong adjusted EBITDA as well.

Robbert E. Rietbroek: And margins at 28% with share up 250 basis points again, driven by pricing volume, but also a disciplined approach on our operating expenses and operating efficiencies. So I'm very pleased with the quarter.

Robbert E. Rietbroek: And if I look at the environment in which we're operating, we do obviously continue to see challenging macro environments. But the good news is that, unlike some of the other companies that have moderate or declining volume, we were able to deliver growth in volume and pricing. So I feel good about that.

Robbert E. Rietbroek: And if I look at it.

Robbert E. Rietbroek: The environment in which we're operating we do we do obviously continuing to see.

Robbert E. Rietbroek: <unk> macro environments, but the good news is that different from some of the other companies that have moderate or declining volume, we were able to deliver growth on volume and pricing. So I feel good about that and then with regards to.

Robbert E. Rietbroek: And then with regard to the efficiencies, there's still efficiencies remaining. We could remain committed to the business optimization program. You know, and with regard to the accomplishments, which was the last part of your question, I think we've made progress. The answer three must win priorities.

Robbert E. Rietbroek: The efficiencies there are still efficiencies remaining.

Robbert E. Rietbroek: We remain committed to the business optimization program.

Robbert E. Rietbroek: And with regards to the accomplishments, which was the last part of your question I think we've made progress against our three must win priorities and those are really the first one is.

Robbert E. Rietbroek: And those are really the first one is to deliver superior customer service. The second one is to remain and be seen as the water solutions partner of choice with vendors, communities, retail partners, investors, and associates, and the third one is really driving better operational excellence, and I feel like we've made progress in those areas. I could talk a bit more about that. But thanks for the question, Nick.

Robbert E. Rietbroek: To deliver superior customer service. The second one is to remain and be seen as the water solutions partner of choice with vendors communities retail partners investors and associates and the third is really driving better operational excellence and I feel like we've made progress in those areas I can talk a bit more about that.

Speaker Change: But thanks for the question.

Speaker Change: Excellent Thanks, I'll pass it on.

Nick: Thank you. The next question comes from Derek Lessard and Investor. Please go ahead.

Operator: Thank you. The next question comes from Derek Lessard, an investor. Yeah, thanks. Thanks, everyone.

Derek J. Lessard: And congratulations on another great quarter. I wanted to drill down a little bit more, Robert, maybe on the Mountain Valley performance. Maybe if you could just add some color around the supply and demand dynamic that you're seeing, maybe some of the performance metrics, and where do you really think that you can take this thing? Yeah, thank you very much for the question. The Mountain Valley brand, to remind everyone, is our most premium spring water brand, and it's bottled at the source in Hot Springs, Arkansas.

Derek J. Lessard: Yeah. Thanks, Thanks, everyone.

Derek J. Lessard: Congratulations on another great quarter.

Derek J. Lessard: I wanted to actually drill down a little bit more Robert maybe on the mountain Valley performance.

Robert: Maybe if you could just add some color around the supply and demand dynamic that youre seeing.

Robert: Some of the performance metrics and where do you really think that you can take this thing.

Speaker Change: Yes. Thank you very much for the question.

Robert: The Mountain Valley brand to remind everyone is our most premium spring water brand and it's bottled at the source and Hot Springs, Arkansas.

Derek J. Lessard:

Robbert E. Rietbroek: The business was very strong. David talked about the 57% growth in retail. We sell Mountain Valley both in direct water delivery as well as in retail.

Speaker Change: The business was very strong David talked about the 57%.

Robert: Growth in the quarter and retail we saw mountain valley, both indirect water delivery as well as in retail and we see on both sides that the demand in the market still outruns our supply.

Robbert E. Rietbroek: And we see on both sides that the demand in the market still outruns our supply. To address this, the team has been working hard to increase our spring water availability, which we've now quadrupled with the new spring source that is currently operational. And I personally went on a visit two weeks ago to look at the spring source, to look at the land, to look at how it all operates, and it is working really well, and the water quality is outstanding.

Robbert E. Rietbroek: To address this.

Robbert E. Rietbroek: The team has been working hard to increase our spring water availability, which we've now quadrupled with the new spring source that is currently operational and I personally went to visit two weeks ago to look at the spring source to look at the land to look at.

Robbert E. Rietbroek: How it all operates and it is it is working really well in the water quality is outstanding. We have also had to add and continue to add.

Robbert E. Rietbroek: We've also had to add and continue to add glass bottling capacity. This is a key driver of our ability to meet demand. And in addition to that, we're launching single-serve and multi-pack aluminum. And we've actually launched this already in Whole Foods, and it's in distribution now in over 12,000 locations. So, NET, this is a super premium product, it's priced to reflect that, and we expect continued growth for this brand into the future and the near future. Thanks for that.

Robbert E. Rietbroek: Glass bottling capacity.

Robbert E. Rietbroek: This is a key driver of our ability to meet demand.

Robbert E. Rietbroek: And in addition to that we're launching single serve and multi pack aluminum and we've actually launched this already into whole foods and it's in distribution now and over 12000 locations. So net this is a super premium product is priced to reflect that and we expect continued.

Robbert E. Rietbroek: Growth on this brand.

Robbert E. Rietbroek: The future in the near future.

Derek J. Lessard: And I was curious about do you have a target sort of revenue base for the business long term? But we don't give guidance specifically on that. The retail side of Mountain Valley, nor do we do it on direct because it's it's embedded in the direct water delivery exchange delivery business. But we do see this is an under-leveraged brand that has a lot of demand and can continue to grow into the near future and potentially in the long term as well.

Speaker Change: Thanks for that and then I was curious do you have a target sort of revenue base for the business long term.

Derek J. Lessard: But we don't give guidance specifically on.

Derek J. Lessard: The retail side of Mountain Valley, nor do we.

Derek J. Lessard: Due on direct because it's embedded in the direct water delivery exchange delivery business.

Derek J. Lessard: But we do see this as an under leveraged brand that has a lot of demand and can continue to grow.

Derek J. Lessard: Into the near future and potentially in the long term as well.

Derek J. Lessard: We have very high ambitions for this brand, and we will continue to work on capacity availability to meet the increased demand in the market to make sure we're not behind the order.

Derek J. Lessard: Very high ambitions for this brand and we will continue to work on capacity.

Derek J. Lessard: Availability to meet the increased demand in the markets to make sure we're not behind the orders.

Speaker Change: Awesome, Thanks for that Robert I'll re queue.

Robbert E. Rietbroek: I'll re- Thank you. The next question comes from Andrea Teixeira at J.P. Morgan. Please go ahead. Thank you. Good morning.

Derek J. Lessard: Thank you. The next question comes from Andrea Teixeira at J P. Morgan. Please go ahead.

Andrea Faria Teixeira: I was hoping you could talk a bit about how volumes trended through the quarter, if weather was by any means impactful on the exit, or how we should be thinking. As we look at the guidance raise, it seems like you're just flowing through Q1 and seeing like is there anything that we should be aware of in terms of deceleration into Q2 or maybe any mixed impacts that we should be aware of. And also, from a margin perspective, anything we should be aware of, like in terms of flowing through more business optimization, that the impact that you had on margins, anything that instructs you to be more conservative, and also, you were looking at things as they go and then adjusting the outlook as you see more visibility. Thank you. Thanks, Andrea; I can take the majority of that.

Andrea Faria Teixeira: Thank you good morning.

Andrea Faria Teixeira: Was hoping if you can talk a bit about how volumes trended through the quarter.

Andrea Faria Teixeira: Otherwise.

Speaker Change: By any means impactful for that.

Speaker Change: Exit or how we should be thinking.

Speaker Change: As we look at the guidance raise it.

Speaker Change: It seems like you're just flowing in Q1 and anything like is that anything that we should be aware of in terms of.

Andrea Faria Teixeira: Mission into Q2, or maybe any mix impact that you should we should be aware and also like from a margin perspective, any any anything we should be aware of like in terms of like flowing through more business optimization that the impact that you had the margin anything that instruct you to be more.

Speaker Change: A summary of how you were looking at things how they go and then adjusting the outlook.

Speaker Change: As you see more visibility thank you.

David W. Hass: With regard to volume, what we're most impressed with is that it was broad-based across all channels, specifically within the quarter, across our three periods there. The momentum essentially carried through from the end of 2023. When you start to look at our channels of WaterDirect and Exchange, there is significant health there, both on the direct side, as well as on the exchange side, where because of that demand and volume growth, as Robert mentioned, we've been adding racks and additional capacity to allow for our delivery frequencies to keep up with that demand.

Andrea: Thanks, Andrew I can take the majority of that with regard to volume what we're most impressed with.

David W. Hass: Is that it was broad based across all channels, specifically within the quarter.

David W. Hass: Across our three periods there.

David W. Hass: The momentum essentially carried through from the end of 2023.

David W. Hass: When you start to look at our channels of water direct and exchange Cigna.

David W. Hass: Significant health there both in the direct side as well as the exchange side, where because of that demand and volume growth as Robert mentioned, we've been adding racks and additional capacity to allow for our delivery frequencies to keep up with that demand.

David W. Hass: In the refill business, which is the lowest cost entry point for high-quality water, now that we're fully through the price increase that we've taken both in outdoor and indoor, the volume has rebounded, and, you know, the consumer remains incredibly healthy there, especially as they compare that entry price of water to sort of other prefilled formats. When you start to look at margin and pacing, you are correct. Obviously, the guidance was the flow-through of the beat.

David W. Hass: In the refill business, which is the lowest cost entry point for high quality water on now that we're fully through the price increase that we've taken both in outdoor and indoor the volume has rebound and the consumer remains incredibly healthy there, especially as they compare that entry price of water to sort of other pre filled formats.

David W. Hass: When you start to look at margin and pacing.

David W. Hass: You are correct, obviously the guidance was the flow through of the beat that's the approach we're continuing to take at this moment as we look at the macro economy as we look at our other peers be it beverages or services. It seems to be those that have the brand affinity or the service affinity.

David W. Hass: That's the approach we're continuing to take at this moment. As we look at the macro economy, as we look at our other peers, be it beverages or services, it seems to be, you know, those that have the brand affinity or the service affinity continue to outperform, but you can obviously see signs where there are challenges. We remain completely confident in our delivery of guidance.

David W. Hass: They continue to outperform but you can obviously see signs where there are challenges we remain completely confident in our delivery of guidance. We remain confident in delivery of our business optimization and again guidance, which now contemplates some of that savings would be that margin increase that you've asked about.

David W. Hass: We remain confident in the delivery of our business optimization. And again, guidance, which now contemplates some of that savings, would be that margin increase that you've asked about. So again, we remain measured, patient, and quite pleased, frankly, with the momentum and the team's contribution. And if I can, that's super helpful, if I can squeeze a little of attrition there, anything we can, as you said, like you also, I think, I believe, lapped the direct business in terms of pricing. Any commentary on attrition or household penetration, anything we should be cognizant of or should be happy for, if you will, in terms of, say, that attrition diminishing?

David W. Hass: So again, we remain measured patient and quite pleased frankly with the momentum and the team's contribution for the quarter.

David W. Hass: And if I can squeeze that super housekeeping, if I can squeeze a little off attrition there anything we can.

David W. Hass: It sounded like you you all I think I believe lapped on on the direct business in terms of pricing any any commentary on attrition or household penetration and anything we should be.

David W. Hass: Cognizant of or I should be happy for.

David W. Hass: If you will in terms of like that attrition diminishing.

David W. Hass: Yeah, so at this point, we have actually seen a small increase in our retention rate when measured at coolers or installed devices on a retention basis. I believe part of that is certainly attributable to the increased service levels by all route drivers, all experiences of better inventory, and a lot of the planning Robbert has talked about and how he wanted to orient the team this year. That is then complemented by the fact that the service available at customer service, both in person through the phone or digital means, is doing a better job of either solving the issue, not necessarily in first call resolution, but resolution, or simply providing access to sort of talk through, you know, how we can retain that business if there are challenges.

Speaker Change: Yes. So at this point we have seen.

David W. Hass: Actually a small increase in our retention rate when measured at coolers or install devices on a retention basis.

David W. Hass: I believe part of that is certainly attributable to the increased service levels by all route drivers.

David W. Hass: All experiences are better inventory and a lot of the planning Robert has talked about and how he wanted to Orient the team this year.

David W. Hass: That is then complemented with the fact that the service available at customer service both in person through phone or digital means is doing a better job of either.

David W. Hass: Solving the issue not necessarily in first call resolution, but resolution.

David W. Hass: Or simply providing access to sort of talk through how we can retain that business. If there are challenges so again.

David W. Hass: So, again, pricing, as we are lapping that taken last year, again, retention remains higher by a few basis points, and that's a great indicator for us, again, in light of everything you might hear from either the other companies you cover or just general macro. That's super helpful.

David W. Hass: Pricing as we are lapping that taken last year again retention remains higher by a few basis points and that's a great indicator for US again in light of everything you might hear from either of the other companies you cover or just general macro news.

Speaker Change: That's super helpful. Thank you.

Speaker Change: Thank you. The next question comes from Dan Moore CJS Securities. Please go ahead.

David W. Hass: Thank you. Thank you. The next question comes from Dan Moore at CJS Securities. Please go ahead. Thank you. Good morning.

Daniel Joseph Moore: Thanks for taking questions, Robert and David. Maybe he touched on this, I missed the first few minutes. Forgive me.

Daniel Joseph Moore: Thank you good morning, Thanks for taking my questions Robert David.

Daniel Joseph Moore: Maybe if you touched on this I missed the first few minutes forgive me.

David W. Hass: With a direct business, are you seeing any meaningful differences in terms of organic growth and retention rates between resi and commercial? And how do you see the relative attractiveness of the opportunity set, you know, in each over the long term? Are you allocating similar investment in service marketing to each? Sure. So, as Robert mentioned, you know, generically, our customers on a simple nominal value are about split evenly. Commercial customers would consume a little bit more than residential customers just because they might be a waiting room or a break room for a commercial place of business. However, we are not seeing any meaningful change in their retention or, said differently, any quit behavior different in the environment today.

Daniel Joseph Moore: The direct <unk> business are you seeing any meaningful differences in terms of organic growth and retention rates between resi and commercial.

David W. Hass: How do you see the relative attractiveness of the opportunity set in each over the long term are you allocating similar investment in service marketing each how do we think about that.

David W. Hass: Sure So as Robert mentioned generically our customers.

David W. Hass: On a on a simple nominal value are about split evenly.

David W. Hass: Commercial customers would consume a little bit more than our residential just because they might be a waiting room or a break room for a commercial place of business.

David W. Hass: We are not seeing any meaningful change in their retention or said differently and equip behavior different in the environment today.

David W. Hass: Again, our sales activities on the web are agnostic to who you are as a resident or a commercial customer, but our sort of associate base that targets direct selling on the street, we'll predominantly focus on commercial-oriented customers, and that's really small business. Again, remember, the U.S. business is not large office towers, which was the primary trait of our European operations. So, we're very pleased with that small business focus on driving customers.

David W. Hass: Again, our sales activities on the web are agnostic to who you are as a residence or a commercial customer.

David W. Hass: But our sort of associate base that targets direct selling.

David W. Hass: On the street.

David W. Hass: Predominantly focus on commercial oriented customers and Thats really small business again remember the U S business is not large office towers, which that was the primary trade of our European operations. So we're very pleased with that small business focus driving customers again remember also in 2024.

David W. Hass: Again, remember, also in 2024, we have 12-month access to the Costco booth program. The sales team continues to do a great job of converting customers when we have a show, as well as through the online equivalents of the Costco signups. So, again, across the board, strong health, no trends in AR, no trends in bad debt that really signal sort of challenges at this point. And again, because of the steps taken by Robert and the team with regard to the customer service and experience center, you know, if there are issues or payment challenges or things we need to talk about, we're more available now to talk through that, whereas previously, less availability could have created customer friction, confusion, or potentially It is really helpful.

David W. Hass: We have 12 months access to the Costco Booth program. The sales team continues to do a great job of converting customers. When we have a show as well as through the.

David W. Hass: Online equivalents of the Costco sign ups, so again across the board strong health no trends and no trends in bad debt really signal sort of challenges at this point and again because of the steps taken by Robert and the team with regard to the customer service and experience Center.

David W. Hass: There are issues or payment challenges are things, we need to talk about where more available now to talk through that whereas previously less availability could have created customer friction confusion or potentially higher quits.

David W. Hass: And a quick follow-up. Obviously, you've taken, you know, a significant amount of price over the last one to two years with, as you just described, little noticeable impact. [inaudible] Yeah, absolutely.

David W. Hass: Really helpful and a quick follow up obviously you've taken.

David W. Hass: A significant amount of price over the last one to two years with as you just described little noticeable impact on <unk>.

David W. Hass: <unk> retention rates remained really strong.

David W. Hass: I realize you expect price to be more modest contributor to growth going forward, but are there pockets are there learnings that you've had pockets of opportunity where you think it could go further over time without maybe scaring away or impacting.

Speaker Change: Those retention rates. Thanks again.

David W. Hass: So if you recall, our original guidance, Robert and I communicated in February would have been about 5% midpoint revenue growth, constituting three and a half, one and a half, three and a half prices, which is mostly carry through from essentially seasoning from last year, one and a half on volume. As we move to 5.5% at the midpoint, essentially, we have no different opinion on price. And, you know, volume is now stepping up from one and a half to two, getting us to that sort of five-and-a-half contribution.

David W. Hass: Yes, absolutely. So if you recall, our original guidance, Robert and I communicated in February would have been about 5% midpoint revenue growth.

David W. Hass: Constituting three and a half 153, and a half price, which is mostly carry through from.

David W. Hass: Essentially seasoning from last year, one and a half on volume.

David W. Hass: As we move to five 5% at the midpoint essentially we have no different opinion on pricing.

David W. Hass: And volume now is stepping up from one five to two getting us to that sort of five five contribution maybe back to Andrew's question certainly in the second half that does indicate a softer second half, but that's no different than our original guidance. So it's not like we're changing perception of anything thats, just the original sliding and pacing of that guide.

David W. Hass: You know, maybe back to Andrea's question, certainly in the second half, that does indicate a softer second half, but that's no different from our original guide. So, it's not like we're changing the perception of anything. That's just the original flighting and pacing of that guide.

David W. Hass:

David W. Hass: And so again, we remain pleased and balanced. I think some of the learnings we will have is as long as we're continuing to stimulate the category, i.e. the ability to sign up customers across multiple channels, and more importantly with regard to our razor and blade focus, if we're continuing to sell dispensers through from retail to homes and places of business, and you're seeing that reflection, That's a lesson that as long as we continue to stimulate that demand, the next newest customer doesn't know what the price used to be. They know what the price is today. And that's really our benefit of continuing to drive our multi-pronged approach of direct delivery and retail-oriented offering. Thank you again.

David W. Hass: So again, we remain pleased imbalance I think some of the learnings we would have as long as we're continuing to stimulate the category I E. The ability to sign up customers across multiple channels.

David W. Hass: And more importantly, with regard to our razor and blade focus if we're continuing to sell dispensers through from retail to homes and places of business and Youre seeing that reflection in volume and our water.

David W. Hass: That's a learning that as long as we continue to stimulate that demand. The next newest customer doesn't know what the price used to be they know what the prices today and thats really our benefit of continuing to drive our multi pronged approach of direct delivery and retail oriented offerings.

Speaker Change: Alright, Thank you again.

Operator: Thank you. The next question comes from John Zamparo at CIG. Thank you. Good morning.

David W. Hass: Thank you. The next question comes from Johnson <unk> at CIBC. Please go ahead.

John Zamparo: I wanted to ask about the digital side of the business. You provided some commentary in your prepared remarks, but anything you can share on the overall volume growth or customer growth that you're seeing that you can attribute to the digital side? And can you share any metrics about how this is impacting the customer experience, whether it's your complaints ratio or wait times? I know you've shared the retention rate overall, but I'm especially interested in the digital side of the business and the improvements you're making.

John Zamparo: Thank you good morning, I wanted to ask about the digital side of the business.

John Zamparo: Can you provide some commentary in your prepared remarks, but anything you can share on the the.

John Zamparo: The overall volume growth or customer growth that youre seeing that you can attribute to the digital side and can you share any metrics about how this is impacting the customer experience, whether it's your complaint ratio or our wait times I know you've shared the retention rate overall, but I'm, especially interested in the digital side of the business and the improvements you are making there.

John Zamparo: Yeah, John, that's a very good question. I'm glad you asked it because we're spending a disproportionate amount of time, and effort, and investment on the number one must-win priority, which is to deliver exceptional customer service. And that obviously begins with our delivery to the home with the, you know, on-time in full, which was at 93% against increased demand. We've also expanded from six to seven-day, sorry, from five to six and even seven-day deliveries.

Speaker Change: Yes, John.

Speaker Change: That's a very I'm glad you're asking the question because we are spending a disproportionate amount of time and effort and investments on the number one must win priority which is.

John Zamparo: To deliver exceptional customer service and that obviously begins.

John Zamparo: With our delivery to the home.

John Zamparo: The.

John Zamparo: The on time in full which was at 93% against the increased demand. We've also expanded from six to seven day for social five to six and even seven day deliveries, but then there is the interaction to your points with with our company, which is evolving from what was it.

John Zamparo: But then there's the interaction, to your point, with our company, which is evolving from what was historically mostly phone-based to more and more digital interactions. So, through the MyWaterPlus app, which is available in the App Store for both Apple and Android, we have just introduced the Spanish language as a new capability, and we're about to, by the end of Q2, significantly upgrade the aesthetics and the interactivity of that app.

John Zamparo: Historically, mostly phone based to more and more digital interactions so through.

John Zamparo: Through the my water plus App, which is available on the App store and both Apple and Android.

John Zamparo: We have just introduced Spanish language as a new capability and we're about to by the end of Q2 upgrade significantly these statics and the interactivity of that App.

Robbert E. Rietbroek: And later in the year, we intend to upgrade our water.com and agua.com websites content to learn about the category but also to shop our category; it will make it easier to order a dispenser online; it will be easier to be a water-only customer or sign up for a rental cooler. The combination of the improvements in our customer experience center, which is now available for more hours and more days of the week and able to handle not only voice but also chat and social.

John Zamparo: And later on the year, we intend to upgrade our water dot com and Agua dot com websites with significantly enhanced.

Robbert E. Rietbroek: Content to learn about the category, but also to shop our category.

Robbert E. Rietbroek: We'll make it easier to order dispenser online it will be easier to be a water only customer or set up for a rental cooler.

Robbert E. Rietbroek: The combination of the.

Robbert E. Rietbroek: Improvements in our customer experience center, which is now.

Robbert E. Rietbroek: <unk>.

Robbert E. Rietbroek: Available more hours in more days of the week and able to handle not only voice, but also chat and social so we're starting to see all of those metrics that you're referring to increased specifically the use of chat, which is a replacement of voice is up significantly.

Robbert E. Rietbroek: So we're starting to see all of those metrics that you're referring to increase. Specifically, the use of chat, which is a replacement for voice, is up significantly. The ability for us, the response time in social is much faster.

Robbert E. Rietbroek: The ability for us the response time and social is much faster.

Robbert E. Rietbroek: And the response time overall, which we then translate to what we call the save rate. So we track save rate every day. We have a specific tracker that shows us how many people sign up for the service, how many people we lose, usually through a move or maybe an experience that leads them to call our call center.

Robbert E. Rietbroek: And the response time overall, which we then translate to what we call safe rates. So we track save right. Every day, we have a specific tracker that shows us how many people sign up for the service how many people.

Robbert E. Rietbroek: We lost usually through a move or maybe.

Robbert E. Rietbroek: An experience set that leads them to call our call center. So working on all these fronts.

John Zamparo: So working on all these fronts, driving improved performance. We're not reporting out those metrics, but we're tracking those very, very actively with our management. Thank you for that.

John Zamparo: Driving improved performance.

John Zamparo: We're not reporting out to those metrics, but we're tracking those very very actively with our management team.

Speaker Change: Got it okay.

Speaker Change: Helpful. Thank you for that and then I wanted to move to the balance sheet any updated thoughts on long term capital allocation you've shared what your plans are for this year, but I'm more interested in the long term given increasing free cash flow conversion better expected EBITDA results. It sounds like youre still constructive on the ability to sell the discontinued operations I mean ulta.

David W. Hass: And then I wanted to move to the balance sheet. Any updated thoughts on long-term capital allocation? You've shared what your plans are for this year, but I'm more interested in the long term. Given increasing free cash flow conversion and better expected EBITDA results, it sounds like you're still constructive on the ability to sell the discontinued operations. I mean, ultimately, I'm trying to wonder what's the right level of cash you need or want to hold in this business over the long term.

David W. Hass: Im trying to wonder what's the right level of cash you need or want to hold in this business over the long term.

John Zamparo: Yeah, thanks, John. As with regard to the asset sales, we mentioned in the prepared remarks, we are very close to closing on two of them, likely this quarter and even potentially within this month of May. And we'll communicate that obviously openly and clearly on our next call, and we remain pleased with the monetization of those two pieces of the business in the market. The other two remain active, remain in continued dialogue with both data preparation and the buyer universe, representing, you know, those sort of interactions. So, can we remain on pace? We won't comment on value, as we talked about at the sale of the first portion of the European business that was to a strategic buyer that was, you know, a.

Speaker Change: Yeah, Thanks, John So.

David W. Hass: With regard to the asset sales.

John Zamparo: We mentioned in the prepared remarks, we are very close on two of them within likely this quarter and even potentially within this month of may.

John Zamparo: And we will communicate that obviously openly and clearly on our next call.

John Zamparo: And we remain pleased with the monetization of those two pieces of the business and the markets. The other to remain active.

John Zamparo: And continued dialogue with both data preparation buyer universe, representing those sort of interaction so and we remain on pace there wont comment on value as we've talked about at the sale of the first portion of the European business that was to a strategic that was.

John Zamparo: Okay continuous set of European countries that was highly valuable to that particular buyer.

David W. Hass: We remain committed to the right, [inaudible] You know, as we improve and work through things like the app and water.com, booth programs, which, you know, again, are traditional commissioned expenses. Those are all activities we're really proud of to drive organic growth. I think back there was a previous question with regard to Mountain Valley.

David W. Hass: And at outsized multiple at that time, so again, we're not commenting on specific value for the future. Our next set of assets, but obviously it would be unlikely to be at that level.

David W. Hass: With regard to long term use we remain committed to the right proportion of spending to drive the growth.

David W. Hass: Our guidance at this point contemplates five 5% at the midpoint.

David W. Hass: There are activities, we can stimulate there with regard to new customer acquisitions that are not capitalized.

David W. Hass: As we improve and work through things like the App and water Dot com Booth programs, which again are traditional commissioned expenses. Those are all activities. We're really proud of to drive the organic growth I think back there was a previous question with regard to mountain Valley. At this point, we don't know how high is high there and so we're really trying to assess the best outcome for that business.

David W. Hass: You know, at this point, we don't know how high it is there, and so we're really trying to assess the best outcome for that business as it's a very rapid grower that we're continuing to keep pace with. So those would be allocations to spend against. With regard to dividends and share of purchase, we remain committed to the values we've communicated to date. As far as the net leverage ratio is concerned, obviously, it ticked down a tenth to 2.0 times.

David W. Hass: <unk>.

David W. Hass: It's a very rapid grower that we're continuing to keep pace with so those would be allocations to spend against with regard to dividend share repurchase we remain committed to the values we've communicated to date.

David W. Hass: Far as the net leverage ratio, obviously, it ticked down a 10th to 2.0 times as the cash will grow either from.

David W. Hass: The cash will grow either from further international sales or other means that will continue to de-lever. And then we've talked about M&A on the purchasing or acquisition side. Again, we remain focused. We do not give guidance with acquisitions in it.

David W. Hass: Further international sales or other means that will continue to delever lower.

David W. Hass: And then we've talked about M&A on the purchasing our acquisition side again, we remain focused we do not give guide with acquisitions and you do not want us trying to buy something to hit our guide with with US particular tuck in in any given quarter. So we remain patient there we have a strong pipeline and expect to hear more activity as we progress through the year.

David W. Hass: You do not want us trying to buy something to hit a guide price on a particular token in any given quarter. So we remain patient there. We have a strong pipeline and expect to hear more activity as we progress through the year on some of that token behavior. All right, thank you very much. I'll pass it on.

David W. Hass: On some of that tuck in behavior.

Speaker Change: Alright, Thank you very much I'll pass it on.

Speaker Change: Thanks, John.

David W. Hass: Yes.

Operator: Thank you. The next question comes from Steve Powers at Deutsche Bank. Yes, hey, thanks for the question. I wanted to talk about the route optimization efforts that you've had underway for some time now, and the progress on the units per route per day metric as a symbolism of that has been pretty steady and impressive. I guess I'd love some perspective on what you think may be sort of the optimal level for that metric or a high water mark. We're kind of trying to understand where the ceiling may be in terms of how much more runway there is for further optimization. Yeah, that's, that's, I mean, that's obviously.

David W. Hass: Thank you. The next question comes from Steve Powers at Deutsche Bank. Please go ahead.

Stephen Robert R. Powers: Yes, hey, thanks for the question.

Operator: Right.

Operator: One I wanted to talk about the the.

Stephen Robert R. Powers: The route optimization efforts that you've had underway for some time now.

Operator: The progress on that.

Stephen Robert R. Powers: That units per rep per day metric.

Operator: As a symbolism of that has been pretty steady and impressive I guess would love some perspective on what you think maybe sort of the <unk>.

Operator: Optimal.

Stephen Robert R. Powers: Level for that metric or a high watermark, we're kind of trying to understand where the feeling maybe.

Operator: In terms of how much more runway there is further further optimization.

Operator: Yes.

Operator: Obviously.

Stephen Robert R. Powers: Core to our business is to continue to drive units and revenue per route per day, and we've obviously disclosed a 5% and 8% increase this quarter, and we're in the midst of the rollout of the Automatic Route Optimization Program 2.0. We're also combining that with new schedules. So we were traditionally a five-day-a-week route organization from Monday through Friday. We're currently implementing new schedules, summer four-day, and summer five-day schedules that could start on Tuesday or Wednesday and allow us to deliver on a Saturday or Sunday.

Operator: Core to our business is to continue to drive.

Stephen Robert R. Powers: <unk> and revenue per route per day than we obviously disclose the 5% to 8% increase this quarter.

Stephen Robert R. Powers: And we're in the midst of the rollout of the automatic route optimization program two point no.

Stephen Robert R. Powers: But we're also combining that with new schedules. So we were traditionally a five day week.

Stephen Robert R. Powers: That organization for Monday through Friday, we're currently implementing new schedules. Some are four days five days schedules that could start on Tuesday or Wednesday.

Stephen Robert R. Powers: Now as to deliver on a Saturday or Sunday.

Stephen Robert R. Powers:

Robbert E. Rietbroek: The technology that sits at the heart of this work is enabling us to more efficiently build the driver routes. And as you know, those include both residential and commercial routes but also our retail partners with the exchange rack. So there is a natural cap to that. You know, there's only so much capacity available on the truck, but we are continuing to drive not only utilization on a daily basis but on a weekly basis by expanding the use of our ranch assets, truck assets, and production assets to a seven-day-a-week schedule currently. Okay, thanks for that.

Stephen Robert R. Powers: The technology that sits at the heart of this work is enabling us to more efficiently build the driver routes.

Robbert E. Rietbroek: And as you know those include both residential.

Robbert E. Rietbroek: Commercial but also our retail partners with the exchange rates.

Robbert E. Rietbroek: So there is a natural cap to that.

Robbert E. Rietbroek: Only so much capacity available on the truck, but we are continuing to drive not only utilization on a daily basis, but on a weekly basis by expanding the use of our Reg assets and truck assets and production assets through a seven day a week schedule currently.

Robbert E. Rietbroek: Okay. Thanks for that.

Robbert E. Rietbroek: <unk>.

Stephen Robert R. Powers: I guess the second question, if I could, you know, the, um, Dispensers sell-through rates, you know, we've talked about this in the past, but they've been hovering around, you know, that kind of, a million units on a trillion 12 month basis for some time. And clearly, the retention rates are such that, you know, those, the incrementality of those of the sales are, are high. But I guess, as you think about the progression of that metric, you know, how, you know, at what point do you really need to start to see that metric start to grow again, that trillion 12 month metric grow again, in order to achieve your aspired growth rate?

Speaker Change: I guess the second question if I could.

Stephen Robert R. Powers: <unk>.

Stephen Robert R. Powers: Dispenser sell through rates.

Stephen Robert R. Powers: You talked about this in the past, but we've been hovering around that kind of.

Stephen Robert R. Powers: One 1.001 billion unit Mark on a trailing 12 month basis for some time and clearly the retention rates are such that.

Stephen Robert R. Powers: The incremental 80 of those sales are or are high but I guess is there a as you think about the progression of that metric.

Stephen Robert R. Powers: At what point do you really need to start to see that metric start to grow again.

Stephen Robert R. Powers: That's trailing 12 month metric grow again in order to achieve your aspire to growth rates.

Stephen Robert R. Powers: Yeah, we continue to see sales, strong; this quarter's sell-through was up 3%. And we're continuing to forecast around a million dispenser sales this year. And what I would say is that about 650,000 of those are usually new users, and 350,000 of those are replacements for existing users.

Speaker Change: Yes, we continue to see sales.

Stephen Robert R. Powers: Strong this quarter sell through was up 3%.

Stephen Robert R. Powers: And we're continuing to forecast around 1 million dispenser sales this year.

Stephen Robert R. Powers: And what I would say is that about 650000 of those usually are new users and 350000 of those are replacement with existing users. So every year as we sell approximately million.

Robbert E. Rietbroek: So every year, as we sell approximately a million units, and as I said, we're up 3% sell-through from retail to consumer this year to date. That, essentially, is a new installed base that we can continue to serve over the years that follow. So we feel good about the trend. Our sell-through from ourselves to retail is obviously significantly higher, but some of that is just replenishing the stock levels that we see a sell-through rate at the 3% level.

Robbert E. Rietbroek: Units and as I said were up 3% sell through.

Robbert E. Rietbroek: <unk> from retail to consumer this year to date.

Robbert E. Rietbroek: That essentially are that's a new installed base that we can continue to serve over over the years that follow so we feel good about the trends are sell through for ourselves to retail obviously significantly higher but some of that is just.

Robbert E. Rietbroek: Replenishing the stock levels that we see sell through rate at the 3% level.

Robbert E. Rietbroek: Yes.

Speaker Change: Okay very good thank you.

Operator: Okay, very good. Thank you. Thank you. The next question comes from Pavel Molchanov from Raymond James. Please go ahead.

Robbert E. Rietbroek: Thank you. The next question comes from Pavel <unk> from Raymond James. Please go ahead.

Pavel S. Molchanov: Thanks for taking the question. I'm getting back to the M&A topic that was discussed just a minute ago. As you look at the tuck-in opportunities, which parts of North America are the most relevant?

Pavel S. Molchanov: Thanks for taking the question.

Pavel S. Molchanov: Getting back to the M&A topic that was covered just a minute ago.

Pavel S. Molchanov: As you look at the <unk>.

Pavel S. Molchanov: <unk> opportunities.

Pavel S. Molchanov: Which parts of North America are the most relevant for you to either establish a presence or bolster an existing presence.

Pavel S. Molchanov: for you to either establish a presence or bolster an existing presence. Yeah, thanks, Pavel. This is David.

David W. Hass: On the M&A side, again, we have a pretty diverse and wide reach with regard to our branch network. As we look to deal, we would love to be that precise, but it tends much more to be the willingness or the succession planning of these generally entrepreneur or family-oriented operators.

Pavel S. Molchanov: Yes. Thanks Pavel this is David on the M&A side again, we have a pretty diverse and wide reach with regard to our branch network.

David W. Hass: As we look to deals.

David W. Hass: We would love to be that precise it tends to much more be the willingness or the succession planning of these generally entrepreneur family oriented.

David W. Hass: Operators.

David W. Hass: And so we definitely will look to geographies to see where there are relevant opportunities, but that has to obviously then match the willingness of a seller and the willingness of a seller at the right price. And so, you know, we do analytically look, you know, across the board. Our presence is pretty wide, though, and we're pretty pleased with that. But again, unfortunately or fortunately, it has to match willingness, sort of.

David W. Hass: So we definitely will look to geographies to see where there are relevant opportunities, but that has to obviously then match with the willingness of the seller and the willingness of the seller at the right price and so we do analytically look across the board.

David W. Hass: Our presence is pretty wide, though and we're pretty pleased with that.

David W. Hass: But again, unfortunately, or fortunately it has to match with willingness and sort of timing of patients.

David W. Hass: Okay.

Pavel S. Molchanov: Yep, understood. As you're kind of crafting the strategy, you know, beyond 2024, do you anticipate maintaining the progressive dividend policy that you've had for the last three years? Or should we assume that it levels off at the current rate? Yeah, at this time, the dividend policy reflects the board's view and investor feedback that we've received to date. Obviously, we will have a different constitution on our balance sheet heading into 2025.

Speaker Change: Yes understood.

David W. Hass: As you're kind of crafting the.

Pavel S. Molchanov: The strategy beyond 2024, do you anticipate maintaining the progressive dividend policy that you've had for the last three years or should we assume that it levels off at the current rate.

Pavel S. Molchanov: Yes at this time the dividend policy reflects the board's view in the Investor feedback that we've received to date.

Pavel S. Molchanov: Obviously, we will have a different constitution of our balance sheet heading into 2025, I will yield to sort of decisions and collective thoughts of the board as we head into 2025 planning allow that to be communicated at their direction, obviously, but we're quite pleased with the ability to return that money to shareowners over the last.

David W. Hass: I will yield to sort of decisions and collective thoughts of the board as we head into 2025 planning, and allow that to be communicated at their direction, obviously. But, you know, we're quite pleased with the ability to return that money to share owners over the last three years. And then, as our share repurchase program exists, that helps, obviously, reduce the share count, reducing the notional exposure of the dividend flow itself.

David W. Hass: Three years, and then as our share repurchase.

David W. Hass: Program exists that helps obviously reduced the share count.

David W. Hass: Reducing the notional exposure of the dividend flows itself. So again, we will yield to that as we head into 'twenty five but very proud of what we've been able to do with regard to returns for shareowners to date over the last three years.

David W. Hass: So, again, we'll have to yield to that as we head into 2025. But, you know, I'm very proud of what we've been able to do with regard to returns for share owners so far over the last three years. Thanks very much.

David W. Hass: Thanks very much.

Operator: Thank you, Pavel. Thank you. The next question is a follow-up from Derek Lessard, an investor. Yeah, thanks for taking my follow-up. Again, the question that pertains more is pointed to ARO 2.0.

Speaker Change: Thank you Pablo.

Operator: Thank you. The next question is a follow up from Derek Lessard and.

Derek J. Lessard: An investor. Please go ahead.

Derek J. Lessard: Yes, thanks for taking my follow up.

Derek J. Lessard: Again, the question pertains Morris pointed to the Arrow to point out just curious what the two point all entails and how much of that was driving the route efficiency gains now I think you did point to.

Derek J. Lessard: I'm just curious what the 2.0 entails, and how much of that was driving the route efficiency gains. Now, I think you did point to, you did talk about, allude to increased delivery days, but just curious what the upside is from that. Yeah, great question.

Derek J. Lessard: You did talk fell due to increased delivery days, but just curious what what the upside is from that from the two point, though.

David W. Hass: You know, essentially, a large part of it is associate feedback. So, we've now been out there for a period of time. Every day, you know, we're making hundreds of thousands of deliveries, and we're getting route feedback, no different than what a Tesla would do with regard to its optimization, meaning what's going wrong with the route directions, what's going wrong with boundaries, what's going wrong with pinning a customer location, why is it telling me to park here when the order needs to be delivered somewhere else?

Speaker Change: Yes, great question.

Derek J. Lessard: Essentially a large part of it is associate feedback. So we've now been out there for a period of time every day, we're making hundreds of thousands of deliveries and we're getting route feedback no different than what a Tesla would do with regard to its optimization, meaning what's going wrong with the route directions, let's.

David W. Hass: Going wrong with boundaries, what's going on with pinning our customer location why is that telling me to park here when the order needs to be delivered there. So it's a lot of feedback it's listening to associates, who are the ones doing the frontline work for us and for our Shareowners every day and so it's a lot more constitution around.

David W. Hass: So, there is a lot of feedback. It's listening to associates who are the ones doing the frontline work for us and for our shareholders every day. And so, there's a lot more constitution around, you know, involving that feedback. It's not some massive technological change. It's just associate feedback providing a better outcome. Again, the six- and seven-day factor into that, but that's not the technological side that causes us to call it 2.0, if you will.

David W. Hass: Involving that feedback.

David W. Hass: It's not some massive technological change.

David W. Hass: Associate feedback, providing a better outcome again, the six and seven day factors into that but thats not the technological side that causes us to call. It to point out if you will.

Derek J. Lessard: Okay, thanks for that. Thank you, Derek. Thank you. There are no further questions.

Speaker Change: Okay. Thanks for that.

Speaker Change: Thank you Darren.

Joanna: I will now turn the call back over to the speaker for closing comments. Thank you for attending today's call and for your continued interest in Primo Water. As I hope you can tell, our team is focused on driving sustainable growth. The path we have started is the right one to build on, and overall, we believe we have the tools to win. We have a lot of work ahead of us, and I, along with our team, are committed to taking Primo Water to the next level. Thank you, ladies and gentlemen. This concludes your conference call for today. We thank you for participating, and we ask that you please disconnect.

Speaker Change: Thank you Sir no further questions I will now turn the call back over.

Joanna: <unk> comments.

Joanna: Thank you for attending today's call and for your continued interest in Primo water as I Hope you can tell our team is focused on driving sustainable growth.

Joanna: Pat start is the right one to build on and overall, we believe we have the tools to win.

Joanna: We have a lot of work ahead of us and I along with our team are committed to taking primo water to the next level.

Joanna: Thank you ladies and gentlemen. This concludes your conference for today, we thank you for participating and we ask that you. Please disconnect your lines.