Q4 2024 Primo Brands Corp Earnings Call

February 20, 2025

Operator: To the Primo Brands Corporation Q4 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, press star 2. Thank you. I'll now turn the call over to Jon Kathol, Vice President, Investor Relations.

After the Speakers' remarks, there will be a question and answer session. If you would 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 two.

I'll now turn the call over to John <unk>, Vice President Investor Relations.

Speaker Change: Welcome to <unk> Corporation's fourth quarter 2024 earnings Conference call. All participants are currently in listen only mode. The call is being webcast live on premium brands website at IR Dot Primo brand dot com and will be available there for playback.

Jon Kathol: Welcome to Primo Brands Corporation's Q4 2024 Earnings Conference Call. All participants are currently in listen-only mode. The call is being webcast live on Primo Brands' website at ir.primobrands.com and will be available there for playback. This conference call contains forward-looking statements regarding the company's future financial results and operational trends, estimated synergies, impacts from economic factors, our recent refinancing efforts, and other matters. These statements should be considered in connection with cautionary statements and disclaimers contained in the safe harbor statements in this morning's earnings press release and the company's quarterly report on Form 10-Q and other filings with the SEC. 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.

Speaker Change: This conference call contains forward looking statements regarding the company's future financial results and operational trends estimated synergies impacts from economic factors, our recent refinancing efforts and other matters.

Speaker Change: These statements should be considered in connection with cautionary statements and disclaimers contained in the safe Harbor statements in this morning's earnings press release, and the company's quarterly report on Form 10-Q, and other filings with the SEC.

Speaker Change: 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.

Speaker Change: Reconciliations 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 fourth quarter earnings announcement released earlier this morning or on the Investor Relations section of the company's website at IR Primo.

Jon Kathol: 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 Q4 earnings announcement released earlier this morning or on the investor relations section of the company's website at ir.primobrands.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'm accompanied by Robbert Rietbroek, Primo Brands Chief Executive Officer, and David Hass, Chief Financial Officer. To start their prepared remarks, Robbert and David will discuss the Q4 and full year performance of Primo Brands, as well as outlook for the full year 2025. With that, I will now turn the call over to Robbert.

Speaker Change: Brands Dot com and.

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.

Robert Rebroke: I am accompanied by Robert Rebroke, Primo brands, Chief Executive Officer, and David <unk>, Chief Financial Officer.

Robert Rebroke: Start their prepared remarks, Robert and David will discuss the Q4 and full year performance of Primo brands as well as outlook for the full year 2025.

Robert Rebroke: With that I will now turn the call over to Robert.

Robert Rebroke: Thank you John and good morning, everyone.

Robert Rebroke: Before I begin I want to take a moment to extend my sympathies to those impacted by the recent wildfires in California, and the loss of life and property.

Robbert Rietbroek: Thank you, Jon, and good morning, everyone. Before I begin, I want to take a moment to extend my sympathies to those impacted by the recent wildfires in California and the loss of life and property. First and foremost, our thoughts are with those still displaced, and we hope for a speedy recovery for those affected. Once again, the efforts of our associates to deliver high-quality drinking water to people in these hard-hit areas was admirable, and I want to personally thank them. We are working with local relief organizations to supply water and have so far been able to provide hundreds of thousands of bottles of water to those across the affected area. Our beverage solutions, directly and through retail locations, serve a critical need during natural disasters like these wildfires, as well as floods, and hurricanes.

Robert Rebroke: First and foremost our thoughts are with those still this place and we hope for a speedy recovery for those affected.

Robert Rebroke: Once again, the efforts of our associates to deliver high quality drinking water to people in these hard hit areas was admirable, but I want to personally thank them.

Robert Rebroke: We are working with local relief organizations to supply water and have so far been able to provide hundreds of thousands of bottles of water to those across the affected area.

Robert Rebroke: Our beverage solutions directly and through retail locations serve a critical need during natural disasters like these wildfires as well as floods and hurricanes the resilience of the communities and associates in these affected communities is remarkable and we are proud to support.

Robert Rebroke: Them.

Robbert Rietbroek: The resilience of the communities and associates in these affected communities is remarkable, and we are proud to support them. Although we have production, distribution, and customers in the greater LA area, our activities were largely unaffected, and any financial impact was not significant. Before I cover our Q4 results, I would first like to quickly reflect on the past year. Just a year ago, Primo Water was updating investors on the sale of a significant portion of our international businesses. This was a catalyst to drive improved free cash flow and enhance the margin profile of the business. It also helped set the stage to renew the focus on the North American market, where we identified a significant runway for growth.

Although we have production distribution and customers in the greater la area. Our activities were largely unaffected in any financial impact was not significant.

Robert Rebroke: Before I cover our fourth quarter results I would first like to quickly reflect on the past year.

Just a year ago Primo water was updating investors on the sale of a significant portion of our international businesses.

Robert Rebroke: This was a catalyst to drive improved free cash flow and enhance the margin profile of the business.

Robert Rebroke: It also helped set the stage to renew the focus on the North American market, where we identified a significant runway for growth.

Speaker Change: At the same time Blue Triton brands had completed its third year of strong performance. After the turnaround of the former Nestle waters business led by one of our capital and Metropolis and company.

Robbert Rietbroek: At the same time, BlueTriton Brands had completed its third year of strong performance after the turnaround of the former Nestlé Waters business, led by One Rock Capital and Metropoulos & Co. Their investments in improving BlueTriton's assets, talents, and distribution systems continued to drive strong financial results. In June, the legacy organizations entered an agreement to combine the two companies. Both legacy companies entered the transaction from a position of strength, and their respective boards recognized the substantial growth and synergy opportunities with the vision to combine these two great companies. We are excited to have completed the transaction on 8 November and moved quickly to start integrating these two great companies. A tremendous thank you to all parties involved during this evolving journey, including our customers, associates, directors, advisors, and stockholders. Now, let me take you through the details of Primo Brands' Q4.

Speaker Change: They are investments in improving <unk> assets talents and distribution systems continued to drive strong financial results.

Speaker Change: Then in June the legacy organizations entered an agreement to combine the two companies.

Speaker Change: With legacy companies entered the transaction from a position of strength and their respective boards recognize the substantial growth and synergy opportunities with the vision to combine these two great companies.

Speaker Change: We are excited to have completed the transaction on November eight and moved quickly to start integrating these two great companies.

Speaker Change: A tremendous thank you to all parties involved during this evolving journey, including our customers Associates directors advisors and stockholders.

Speaker Change: Now let me take you through the details of Primo Brands' fourth quarter. The GAAP results of our inaugural reporting period are complex because Q4 and full year 2024 results include the legacy <unk> business for the entire reporting period as well as the legacy Primo water results.

Robbert Rietbroek: The GAAP results of our inaugural reporting period are complex because Q4 and full year 2024 results include the legacy BlueTriton business for the entire reporting period, as well as the legacy Primo Water results only from the closing date, 8 November through 31 December. All prior year GAAP comparisons are made against the standalone legacy financial results of BlueTriton. To assist with comparable go-forward results, in addition to this GAAP requirement, we have included combined results in our supplemental earnings deck. This helps demonstrate the standalone results of both legacy companies, as well as the combined results for the full period, and compare them to the prior year on an apples-to-apples basis. I will touch briefly on the high-level financial results on a comparable combined basis, and I will let David walk you through the more granular financial details of the quarter and full year in his remarks later.

Speaker Change: Only from the closing date November eight through December 31.

Speaker Change: All prior year GAAP comparisons are made against the Standalone legacy financial results of <unk>.

Speaker Change: To assist with comparable go forward results. In addition to this GAAP requirements. We have included combined results in our supplemental earnings deck.

Speaker Change: This helps demonstrate the standalone results of both legacy companies as well as the combined results for the full period and compare them to the prior year on an apples to apples basis.

Speaker Change: I will touch briefly on the high level financial results on a comparable combined basis and I will let David walk you through the more granular financial details of the quarter and full year in his remarks later.

Speaker Change: A review of the combined results will demonstrate that both companies finished the year with exceptional strength.

Speaker Change: The fourth quarter was marked by robust balanced growth across the portfolio and highlighted the resilience of our team and our focus on customer service during the beginning of our integration process.

Robbert Rietbroek: A review of the combined results will demonstrate that both companies finished the year with exceptional strength. Q4 was marked by robust, balanced growth across the portfolio and highlighted the resilience of our team and our focus on customer service during the beginning of our integration process. For the full year 2024, combined net sales were $6.81 billion, an increase of 5.4%, consisting of volume growth of 3.4% and pricing or mix of 2%. Combined net sales gains were driven by organic growth of 5% and inorganic growth of 0.4%, demonstrating the strength across our beverage solutions offerings and the health of our consumer and category. I'm pleased that we continue to grow combined net sales with both volume and price.

Speaker Change: For the full year 2024, combined net sales were 681 billion.

Speaker Change: An increase of five 4% consisting of volume growth of three 4% and pricing or mix of 2%.

Speaker Change: <unk> net sales gains were driven by organic growth of 5% and inorganic growth of 0.4% demonstrating the strength across our beverage solutions offerings.

Speaker Change: And the health of our consumer and category.

Speaker Change: I am pleased that we continue to grow combined net sales with both volume and price.

Speaker Change: Combined adjusted EBITDA for the full year 2024 was 135 3 billion up 19, 5% versus the prior year and increased faster than the rate of combined net sales growth.

Robbert Rietbroek: Combined adjusted EBITDA for the full year 2024 was $1.353 billion, up 19.5% versus the prior year and increased faster than the rate of combined net sales growth. The resulting combined adjusted EBITDA margin was 19.9%, a 240 basis points growth increase over last year's margin of 17.5%. Our performance is a direct reflection of the multiple tailwinds in our business. Consumer demand remains strong and resilient. Our beverage offerings are well-diversified across price points and balanced between various channels like retail, residential, commercial, and away from home. We are seeing positive consumer trends, including healthier lifestyle choices which align with the health and wellness attributes of our products. We believe the increasing concern of water contaminants in tap water is driving consumers to seek high-quality beverage solutions.

Speaker Change: The resulting combined adjusted EBITDA margin was 19, 9%, a 240 basis points growth increase over last year's margin of 17, 5%.

Speaker Change: Our performance is a direct reflection of the multiple <unk> wins in our business.

Speaker Change: Sumer demand remains strong resilience.

Speaker Change: Our beverage offerings are well diversified across price points and balanced between various channels like retail residential commercial and away from home.

Speaker Change: We are seeing positive consumer trends, including healthier lifestyle choices, which align with our health and wellness attributes of our products.

Speaker Change: We believe the increasing concern of water contaminants in tap water is driving consumers to seek high quality beverage solutions.

Speaker Change: Consumers are increasingly aware of the need for a backup supply of emergency drinking water.

Speaker Change: Our diversified product offering allows us to fulfill the consumer's desire for high quality water from our product portfolio with.

Robbert Rietbroek: Consumers are increasingly aware of the need for a backup supply of emergency drinking water. Our diversified product offering allows us to fulfill the consumer's desire for high-quality water from our product portfolio. We plan to compete in the high-growth areas of the functional, flavored, and premium segments within the branded beverages category, either through innovation or acquisition. We intend to apply best practices from both legacy companies and use machine learning and analytics to optimize our demand forecast, production planning, network, and route design, all while enhancing the customer experience. The results are a direct reflection of the efforts of our associates and their commitment to our customers and our must-win priorities. As part of the evolution of our company and the completion of the transaction, we have expanded and built upon our must-win priorities as we enter 2025.

Speaker Change: We plan to compete in the high growth areas of the functional flavored and premium segments within the branded beverages category either through innovation or acquisition.

Speaker Change: We intend to apply best practices from both legacy companies and use machine learning and analytics to optimize our demand forecast.

Speaker Change: <unk> planning network and route design.

Speaker Change: All while enhancing the customer experience.

Speaker Change: The results are a direct reflection of the efforts of our associates and their commitments to our customers and our must win priorities.

Speaker Change: As part of the evolution of our company and the completion of the transaction, we have expanded and built upon our must win priorities as we enter 2025.

Speaker Change: Let me take a moment and discuss the specific details of each of our must win priorities for Primo grants.

Speaker Change: So first must win is brand leadership.

Robbert Rietbroek: Let me take a moment and discuss the specific details of each of our must-win priorities for Primo Brands. The first must win is brand leadership. To empower our brands to be the number one choice of consumers by setting the standard for quality, innovation, and customer experience in the market. Primo Brands has an iconic portfolio of brands, including two established billion-dollar brands, Pure Life and Poland Spring, and is well-positioned to be the leading player in the US bottled water category. We also have leading regional brands such as Arrowhead, Deer Park, Ice Mountain, Ozarka, and Zephyrhills, and other purified brands like Primo Water and Sparkletts. Circana data indicates that Primo Brands was the largest branded player to grow market share in 2024. These results are a testament to the strength of our branded portfolio.

Speaker Change: To empower our brands to be the number one choice of consumers by setting the standard for quality innovation and customer experience in the markets Primo brands has an iconic portfolio of brands, including two established billion dollar brands pure life, and Poland spring and is well positioned to be.

Speaker Change: The leading player in the U S bottled water category.

Speaker Change: We also have leading regional brands, such as Arrowhead Deer Park Ice Mountain, Osaka, and Zephyr Hills, and other purified brands like Primo water and sparkling.

Speaker Change: They're kind of data indicates that premium brands was the largest branded player to grow market share in 2024.

Speaker Change: These results are testament to the strength of our branded portfolio.

Speaker Change: This move is reflective of an ongoing consumer trend away from sugary soft drinks towards high quality drinking water.

Robbert Rietbroek: This move is reflective of an ongoing consumer trend away from sugary soft drinks towards high-quality drinking water. We believe the bifurcation in performance between Primo Brands and others will position Primo Brands as a must-own asset within investors' consumer staples portfolios. The evolution of our premium brands continues to be remarkable. Last month, you may have noticed the beautiful blue bottles of Saratoga Spring and Sparkling water across multiple high-profile events like the presidential inauguration, the Golden Globes, or at meetings of heads of state, where attendees were enjoying the superior quality and taste. In addition, last December, Pantone officially introduced the color Saratoga Signature Blue into its palette, memorializing the beautiful, iconic blue of the Saratoga bottle into their expertly curated collection.

Speaker Change: We believe the bifurcation in performance between Primo brands, and others, well positioned premium brands as a must own assets within investors consumer staples portfolios.

Speaker Change: The evolution of our premium brands continues to be remarkable.

Speaker Change: Last month, you may have noticed the beautiful blue bottles of Saratoga spring and sparkling water across multiple high profile events like.

Like the presidential inauguration, the Golden globes or at meetings of heads of state where attendees were enjoying the superior quality and taste.

Speaker Change: In addition, <unk>.

Speaker Change: December Pantone officially introduced the color there.

Speaker Change: Saratoga signature Blue Intuit's pallets memorializing, the beautiful iconic blue of the Saratoga bottle into their expertly curated collection.

Speaker Change: Mountain Valley is also increasing in popularity with celebrities musicians Influencers and professional athletes being seen consuming the brand from its iconic green glass bottles and its more recently launched aluminum bottles.

Robbert Rietbroek: Mountain Valley is also increasing in popularity, with celebrities, musicians, influencers, and professional athletes being seen consuming the brand from its iconic green glass bottles and its more recently launched aluminum bottles. Our premium water offerings are in the early stages of expansion as we are preparing for a shift into mass merchandisers. My background in brand building will be particularly useful as we evolve into a modern branded portfolio and with a relentless focus on distribution, household penetration, and channel opportunities. Meanwhile, Pure Life is reaching families nationwide through a partnership with Disney's Mufasa, encouraging parents to keep their kids hydrated. The second must-win is net organic growth to grow our customer and consumer base in-store, in-home, and through omni-channel with offerings that allow consumers to hydrate whenever, wherever, and however they want. We seek to grow and retain direct delivery, exchange, and refill customers and locations.

Speaker Change: Our premium water offerings are in the early stages of expansion as we are preparing for a shift into mass merchandisers.

Speaker Change: My background in brand building will be particularly useful as we evolve into a modern branded portfolio and with a relentless focus on distribution household penetration and channel opportunities.

Speaker Change: Meanwhile, pure life is reaching families nationwide through a partnership with Disney's mufasa encouraging parents to keep their kids hydrated.

Speaker Change: The second must win is net organic growth to grow our customer and consumer base in store in home and through Omnichannel with offerings that allow consumers to hydrate whenever wherever and however, they want we.

Speaker Change: We seek to grow and retain Derek delivery exchange and refill customers and locations.

Speaker Change: The strength of our combined organic net sales growth was on full display last year with growth of 5% versus prior year.

Robbert Rietbroek: The strength of our combined organic net sales growth was on full display last year with growth of 5% versus prior year. In addition, four of our six regional spring water brands launched an aluminum bottle offering in 2024 to meet our consumers' preferred formats for every usage occasion. As announced last year, for Mountain Valley, we are still on track to launch a PET six-pack offering with Walmart next quarter, as well as offering aluminum and glass formats in certain geographies. To complement our smaller format offerings, we are also offering a refreshed lineup of five-gallon dispensers and accessories to Walmart shoppers that meets consumer needs through upgrades like programmable auto-fill settings and a dispensing cavity that easily accommodates larger vessels like cooking pans or Stanley cups. The third must win is to deliver a superior customer service experience.

Speaker Change: In addition, four of our six regional spring water brands launched in aluminum bottle offering in 2024 to meet our consumers' preferred formats for every usage occasion.

Speaker Change: As announced last year for Mountain Valley, we are still on track to launch a PT six pack offering with Walmart next quarter.

Speaker Change: As well as offering aluminum and glass formats in certain geographies to.

Speaker Change: <unk> complements our smaller format offerings. We are also offering a refresh lineup of five gallon dispensers and accessories to Walmart shoppers that meets consumer needs through upgrades like programmable auto fill settings, and a dispensing cavity that easily accommodates larger vessels like cookie.

Speaker Change: Tens or Stanley Cups.

Speaker Change: The third must win is to deliver a superior customer service experience, we aim to delight our customers by delivering a consistent experience at every product service and support touch points that leaves a lasting positive impact.

Robbert Rietbroek: We aim to delight our customers by delivering a consistent experience at every product, service, and support touch point that leaves a lasting positive impact. By measuring our service impact with metrics like net promoter score, Trustpilot, Google ratings, and app ratings, we have consistent feedback on our performance and can quickly course correct if necessary. We also relaunched our water.com site at the end of last year to create a seamless experience for customers with enhanced user experience design and streamlined navigation features. Our digital presence continues to evolve with integrated and streamlined enhancements on our websites and the Primo Water and ReadyRefresh apps. As of January, our Costco customers that sign up for our direct delivery service now have access to an expanded brand portfolio, gaining the abilities to select a spring water five-gallon offering from one of our regional spring water brands.

Speaker Change: By measuring our service impacts with metrics like net promoter score trust pilots, Google ratings and App ratings, we have consistent feedback on our performance and can quickly course, correct if necessary.

Speaker Change: We also relaunched our water dot com sites at the end of last year to create a seamless experience for customers with enhanced user experience design and streamlined navigation features.

Speaker Change: Our digital presence continues to evolve with integrated and streamlined enhancements on our websites and the primo water and ready refresh apps.

Speaker Change: As of January our Costco customers that sign up for our direct delivery service now have access to an expanded brand portfolio.

Speaker Change: Gaining the ability to select a spring water five gallon offering from one of our regional spring water brands.

Speaker Change: In addition to our previously offered purified five gallon primo water offering.

Speaker Change: The fourth must win is operational excellence, where we enhanced our ability to consistently deliver value to customers and performance through efficiency improvements strategic sourcing and improved returns on invested capital.

Robbert Rietbroek: In addition to our previously offered purified five-gallon Primo Water offering. The fourth must win is operational excellence, where we enhance our ability to consistently deliver value to customers and performance through efficiency improvements, strategic sourcing, and improved returns on invested capital. Our teams have improved our demand forecast tools, methodologies, and outcomes, resulting in improved efficiencies and lower costs per unit. We remain focused on optimizing our structure and setting ourselves up for future success, enabling the immediate implementation of product availability across each legacy company's branch network. In January, we began manufacturing five-gallon bottles in-house for our Primo Water and Sparkletts brands, deploying over 50,000 new bottles into the production network, leveraging our vertically integrated supply chain to ensure product supply at a lower cost per unit.

Speaker Change: Our teams have improved our demand forecast tools methodologies and outcomes, resulting in improved efficiencies and lower costs per units.

Speaker Change: We remain focused on optimizing our structure and setting ourselves up for future success, enabling the immediate implementation of product availability across each legacy companies branch network.

Speaker Change: In January we began manufacturing five gallon bottles in house for our premium water and sparkling brands deploying over 50000, new bottles into the production network leveraging our vertically integrated supply chain to ensure product supply at a lower cost per units.

Speaker Change: The fifth must win is to be the first choice for stakeholders.

Speaker Change: Earn our position as a first choice organization with our associates communities retailers vendors and investors through a relentless commitment to a quality associate experience sustainability community engagement and stakeholder partnership.

Robbert Rietbroek: The fifth must win is to be the first choice for stakeholders, where we earn our position as a first-choice organization with our associates, communities, retailers, vendors, and investors through a relentless commitment to a quality associate experience, sustainability, community engagement, and stakeholder partnership. We embrace our partnerships with top-tier retailers and other prominent grocery chains throughout North America. These relationships present an opportunity through joint business planning to increase our presence, grow market share, as well as increase household penetration and resulting volume, all creating meaningful connectivity across our portfolio. Sustaining and enriching these partnerships means we can win for the long haul. Simply said, if our retail partners win, we win. Our resilient business model has a differentiated combination of associates, assets, and resources that are capable of delivering results that benefit all our stakeholders, including associates, suppliers, customers, and current and potential stockholders.

Speaker Change: We embrace our partnerships with top tier retailers and other prominent grocery chains throughout North America.

Speaker Change: These relationships present, an opportunity through joint business planning to increase our presence grow market share as well as increased household penetration and resulting volume all creating meaningful connectivity across our portfolio.

Speaker Change: Sustaining and enriching these partnerships means we can win for the long haul.

Speaker Change: Simply said, if our retail partners when we win.

Speaker Change: Our resilient business model has a differentiated combination of associates assets and resources that are capable of delivering results that benefit all our stakeholders, including associates suppliers customers and current and potential stockholders.

Speaker Change: The safety of our associates and communities is always our priority. We are committed to equipping our associates with the best tools and support to ensure their safety.

Robbert Rietbroek: The safety of our associates and communities is always our priority. We are committed to equipping our associates with the best tools and support to ensure their safety. In support of this, we are currently piloting an advanced blind spot detection and hazard monitoring system in our delivery vehicles. At Primo Brands, we're committed to making healthy hydration more sustainable, responsible, and accessible for everyone, everywhere, through four pillars. Actively managing our water resources and helping conserve our over 28,000 acres of land, circular packaging, greenhouse gas reduction, and community support and disaster relief, as evidenced recently during the wildfires in California. We believe all aspects of our business are aligning for flawless integration execution, where we build the foundation for long-term growth by unifying the people, processes, policies, and platforms to maximize timely cost synergy capture, as well as to capture revenue synergies.

Speaker Change: In support of this we are currently piloting an advanced blind spot detection and hazard monitoring system in our delivery vehicles.

Speaker Change: At Primo brands, we're committed to making healthy hydration more sustainable responsible and accessible for everyone everywhere through four pillars.

Speaker Change: Actively managing our water resources and helping conserve our over 28000 acres of land.

Speaker Change: Circular packaging greenhouse gas reduction and community support and disaster relief as evidenced recently during the wildfires in California.

Speaker Change: We believe all aspects of our business are aligning for flawless integration execution.

Speaker Change: We build the foundation for long term growth by unifying the people processes policies and platforms to maximize timely cost synergy capture as well as to capture revenue synergies.

Speaker Change: Together, we will go to market as one of the largest branded beverage companies in North America.

Speaker Change: Our plan to deliver growth and profitability is clear with a good balance of volume and pricing.

Robbert Rietbroek: Together, we will go to market as one of the largest branded beverage companies in North America. Our plan to deliver growth and profitability is clear, with a good balance of volume and pricing. We believe the execution and delivery of these must-wins will enable achievement of our 2025 financial guidance, which includes the capture of $200 million of cost synergy opportunities. Total cost synergy opportunities are now estimated to be $300 million by year-end 2026. This is $100 million higher and one year sooner than previous forecasts provided at the time of the deal announcement. Before I turn the call over to David, I would like to once again thank all of our Primo Brands associates for their support and contribution to the excellent performance of the business.

Speaker Change: We believe the execution and delivery of these must wins will enable achievement of our 2025 financial guidance, which includes the capture of $200 million of cost synergy opportunities.

Speaker Change: Total cost synergy opportunities are now estimated to be $300 million by year end 2026.

Speaker Change: This is a $100 million higher.

Speaker Change: And one year sooner than previous forecast provided at the time of the deal announcements.

Speaker Change: Before I turn the call over to David I would like to once again, thank all of our premium brands associates for their support and contribution to the excellent performance of the business there.

Speaker Change: Their dedication reflects the culture. We are building that are centered on customer service, a relentless focus on distribution and.

Speaker Change: And a commitment to operational excellence.

Robbert Rietbroek: Their dedication reflects the culture we are building that is centered on customer service, a relentless focus on distribution, and a commitment to operational excellence. With that, I will now turn the call over to David.

David: With that I will now turn the call over to David.

David: Thanks, Robert before I cover our results for 2024 and guidance for 2025, let me first thank the amazing teams across Primo brand that helped us navigate a transformative 2024.

David Hass: Thanks, Robbert. Before I cover our results for 2024 and guidance for 2025, let me first thank the amazing teams across Primo Brands that helped us navigate a transformative 2024. From the divestiture of Primo Water's European business to the diligence and successful merger completion of Primo Brands, teams have worked tirelessly to enhance return for stockholders and serve our customers. Today's results represent the Q4 and full year 2024 results for Primo Brands. As BlueTriton Brands was the accounting acquirer of record, the company's financial results have a few different iterations presented and discussed in today's earnings call. First, all references to GAAP results reflect BlueTriton's financial results, plus the addition of Legacy Primo Water beginning on 8 November 2024, the closing date of the merger.

David: From the divestiture of Primo waters European business to the diligence and successful merger completion of Primo brand teams have worked tirelessly to enhance return for stockholders and serve our customers.

David: Today's results represent the fourth quarter and full year 2024 results for Primo brands.

David: As Blue Trident brand was the accounting acquirer of record the company's financial results have a few different iterations presented and discussed in today's earnings call.

David: All references to GAAP results reflect blue Triton financial results plus. The addition of legacy Primo water beginning on November eight 2024, the closing date of the merger.

David: There are other references combined results, which include the combination of our legacy Primo water with Blue Triton for the full calendar year. In addition to other conforming accounting adjustments to follow our go forward accounting policies.

David Hass: Second, there are other references to combined results, which include the combination of Legacy Primo Water with BlueTriton for the full calendar year, in addition to other conforming accounting adjustments to follow our go-forward accounting policies. This is to assist with the true outline of the merged financials into Primo Brands. Last, during Q4, Legacy BlueTriton made the important decision to sell real estate affiliated with its Eastern Canadian operations and exit the activity of this particular geography that were dilutive to the overall business. With that decision, the company received approximately $45 million when the deal closed on 31 January 2025. Due to the exit of these business operations, we will provide a supplemental schedule highlighting the comparable net sales and adjusted EBITDA by quarter and full year 2024 so that guidance and financial results across 2025 remain clear.

David: This is to assist with the true outline of the merged financials in the Primo brand.

David: Lastly, during the fourth quarter legacy Blue Triton made the important decision to sell real estate affiliated with its eastern Canadian operations and exit the activity of this particular geography that were dilutive to the overall business.

David: With that decision the company received approximately $45 million when the deal closed on January 31 2025.

David: Due to the exit of these business operations, we will provide a supplemental schedule highlighting the comparable net sales and adjusted EBITDA by quarter and full year 2024, so that guidance and financial results across 2025 remain clear.

David: In total this portion of the company delivered approximately $84 million in full year, net sales and approximately $6 million and adjusted EBITDA.

David Hass: In total, this portion of the company delivered approximately $84 million in full year net sales and approximately $6 million in adjusted EBITDA. For your convenience, we have also included a number of support schedules in the appendix section of the supplemental earnings deck located on our website at ir.primobrands.com. Turning to our Q4 results, the combined Primo Brands included combined net sales increasing 5.5% to $1.609 billion, combined adjusted EBITDA increasing 3.7% to $301 million with combined adjusted EBITDA margins of 18.7%. Within the combined 5.5% net sales growth, approximately 5.1% or approximately $78 million came from organic growth activity with the balance 0.4% or approximately $6 million coming from inorganic or acquired sources.

David: For your convenience. We have also included a number of support schedules in the appendix section of the supplemental earnings deck located on our website at IR Dot Primo brand Dot com.

David: Turning to our fourth quarter results. The combined Primo brand included combined net sales, increasing five 5% to $1 $609 billion.

David: Combined adjusted EBITDA, increasing three 7% to $301 million with combined adjusted EBITDA margin of 18, 7%.

David: Within the combined five 5% net sales growth approximately five 1% or approximately $78 million came from organic growth activity with the balance, 0.4% or approximately $6 million coming from inorganic or acquired sources.

David: This organic activity took place within legacy Primo water's water direct business.

David: Here to the merger and is not related to the merger of Primo water and Blue Triton.

David Hass: This inorganic activity took place within Legacy Primo Water's Water Direct business prior to the merger and is not related to the merger of Primo Water and BlueTriton. As a reminder, Primo Brands' definition of inorganic contribution includes any acquired businesses that were closed less than 12 months ago. After 12 months, any acquired business becomes part of normal contribution base. Separately, the combined net sales increase for the quarter was driven by 4.4% increase in volume and 1.1% increase in price or mix. Volume for Primo Brands is now defined as case goods equivalents, which are measured as 12 liters. The strength of the quarter was driven by strong performance across all water categories. Growth was driven primarily by volume and, to a lesser degree, price.

David: As a reminder, Primo brand definition of inorganic contribution include any acquired businesses that were closed less than 12 months ago.

David: After 12 months and the acquired business becomes part of normal contribution basis.

David: Separately the combined net sales increase for the quarter was driven by four 4% increase in volume and one 1% increase in price or mix.

David: Volume for Primo brands is now defined as case goods equivalents, which are measured at 12 leaders.

David: The strength of the quarter was driven by strong performance across all water categories growth was driven primarily by volume and to a lesser degree.

For the full year 2020 for result of the combined Primo brands combined net sales increased five 4% to 6810 $1 billion.

David Hass: For the full year 2024 results of the combined Primo Brands, combined net sales increased 5.4% to $6.810 billion. Combined adjusted EBITDA increased 19.5% to $1.353 billion with combined adjusted EBITDA margins of 19.9%, a 240 basis point increase versus the prior year. The year-over-year combined net sales growth increased 5.4% or $347 million, with 5.0% coming from organic growth activity and 0.4% coming from inorganic or acquired sources. The combined net sales growth was driven by volume of 3.4% or $220 million and price mix of 2.0% or $127 million.

David: Combined adjusted EBITDA increased 19, 5%, a 1.353 billion with combined adjusted EBITDA margins of 19, 9%, a 240 basis point increase versus the prior year.

David: The year over year combined net sales growth increased five 4% or $347 million with five zero percent coming from organic growth activity and 0.4% coming from inorganic or acquired sources.

David: The combined net sales growth was driven by volume of three 4% or $220 million and price mix of 2.0% or $127 million.

David: Volume improvement and a series of wins across brand offering increased points of distribution channels of trade and product mix we.

David Hass: Volume improvements span a series of wins across brand offerings, increased points of distribution, channels of trade, and product mix. We believe we remain a strong beneficiary of current health and wellness trends, and our product price point diversity continues to deliver strong volume. Now let's shift to our balance sheet and cash flows. As a reminder, Primo Brands combination was structurally set up to leave the pre-merger capital structures in place, with debt capital totaling approximately $5.1 billion at the end of 2024. Since the closing of the merger, the company has been busy simplifying the debt capital structure, which we believe will strengthen our financial position and enhance shareholder value. First, we successfully repriced the $3.1 billion term loan B from a weighted average of SOFR plus 335 to SOFR plus 225, reducing go-forward interest expense.

David: We believe we remain a strong beneficiary of current health and wellness trends and our product price point diversity continues to deliver strong volume.

David: Now, let's shift to our balance sheet and cash flows as a reminder, primo brands combination with structurally setup to leave the pre merger capital structures in place with that capital totaling approximately $5 1 billion at the end of 2024.

David: Since the closing of the merger the company has been busy simplifying the debt capital structure, which we believe will strengthen our financial position and enhance shareholder value.

David: First we successfully repriced the $3 $1 billion term loan b from a weighted average of sofa plus $3 35 to <unk> plus 225, reducing go forward interest expense.

David: Second we consolidated our revolving facilities into a single unified new $750 million cash flow revolver.

David Hass: Second, we consolidated our revolving facilities into a single unified new $750 million cash flow revolver. This simplifies our financing arrangements, reduces administrative overhead, and provides us with greater flexibility and access to capital. The new revolver provides us with approximately $633 million of available liquidity after accounting for standby letters of credit totaling approximately $117 million at the end of 2024. Finally, we executed an exchange offer for the three outstanding series of our senior notes. These activities demonstrate our proactive approach to capital management, committed to actively managing our cost of capital and prioritization of deleveraging activities. At the end of Q4 for the combined Primo Brands, our net leverage ratio stood at approximately 3.3x combined adjusted EBITDA.

David: This simplifies our financing arrangements reduces administrative overhead and provides us with greater flexibility and access to capital.

David: The new revolver provides us with approximately $633 million of available liquidity after accounting for standby letters of credit totaling approximately $117 million at the end of 2024.

David: Finally, we executed an exchange offer for the three outstanding series of our senior notes.

These activities demonstrate our proactive approach to capital management committed to actively managing our cost of capital and prioritization of deleveraging activities.

David: At the end of the fourth quarter for the combined Primo brand our net leverage ratio stood at approximately three three times combined adjusted EBITDA.

David: Our liquidity remains strong with approximately $614 million of cash on the balance sheet.

David: <unk> hundred $21 million when considering the cash within our discontinued operations.

David Hass: Our liquidity remains strong with approximately $614 million of cash on the balance sheet, $621 million when considering the cash within our discontinued operations, and $633 million of cash flow availability, as mentioned earlier, bringing total liquidity to $1.2 billion. Additional non-operational liquidity is forthcoming in the first half of 2025 as the final legacy international businesses are set to close in coming months. We reached a definitive agreement for the sale of our Israel business, which is going through closing procedures. We are close to finalizing the sale of our UK business. Proceeds will further strengthen our overall cash and liquidity position. As mentioned earlier, we also sold the real estate affiliated with our exited Eastern Canadian operations for approximately $45 million just last month.

David: And $633 million of cash flow availability as mentioned earlier, bringing total liquidity to $1 2 billion.

David: Additional non operational liquidity is forthcoming in the first half of 2025 as the final legacy International businesses are set to close in coming months.

David: We reached a definitive agreement for the sale of our Israel business, which is going through closing procedures and are close to finalizing the sale of our UK business proceeds will further strengthen our overall cash and liquidity position.

David: As mentioned earlier, we also sold the real estate affiliated with our exited eastern Canadian operations for approximately $45 million. Just last month. These proceeds will be reflected in our cash balance when we report first quarter earnings in May.

David: Moving to cash generated from the business Primo brands on our combined full year basis generated $756 2 million of cash flow from operations and invested $324 6 million in capital expenditures.

David Hass: These proceeds will be reflected in our cash balance when we report Q1 earnings in May. Moving to cash generated from the business. Primo Brands, on a combined full year basis, generated $756.2 million of cash flow from operations and invested $324.6 million in capital expenditures, resulting in free cash flow before adjustments of $431.6 million. After accounting for additional items unrelated to or to our ordinary operations, our combined adjusted free cash flow totaled $644.9 million in 2024. A key metric we track closely is our conversion of adjusted EBITDA to adjusted free cash flow.

David: Resulting in free cash flow before adjustments of $431 6 million.

David: After accounting for additional items unrelated to or to our ordinary operation our combined adjusted free cash flow totaled $644 9 million in 2024.

David: Key metric, we track closely as our conversion of adjusted EBITDA to adjusted free cash flow.

David: This year, our conversion ratio was 47, 7% compared to 26, 1% in the prior year, representing $349 2 million of combined adjusted free cash flow growth.

David Hass: This year, our conversion ratio was 47.7% compared to 26.1% in the prior year, representing $349.2 million of combined adjusted free cash flow growth. This improvement was driven by business performance, lower levels of CapEx investments, as well as improved working capital efficiencies, driving a one-time benefit to cash collections. The strong combined adjusted free cash flow results highlighted our focus on maximizing the cash generated from our earnings. Moving on to 2025 full year guidance. Going forward, Primo Brands plans to continue providing annual full year guidance while also maintaining our disclosures each quarter across organic and inorganic contributions to net sales as well as volume and price or mix outcomes. Finally, select sales channel disclosures.

David: This improvement was driven by business performance lower levels of Capex investments as well as improved working capital efficiencies driving a one time benefit to cash collection.

David: Our strong combined adjusted free cash flow results highlighted our focus on maximizing the cash generated from our earnings.

David: Moving on to 2025 full year guidance.

David: Going forward Primo brand.

David: And to continue providing annual full year guidance, while also maintaining our disclosures each quarter across organic and inorganic contribution to net sales as well as volume and price or mix outcome and finally select sales channel disclosures as mentioned earlier with the exit of.

David: The eastern Canadian operations at the end of 2024.

David: Our 2025 guidance will exclude these results in order to provide a comparable financial baseline for 2024 to assist with year over year comparison.

David Hass: As mentioned earlier, with the exit of the Eastern Canadian operations at the end of 2024, our 2025 guidance will exclude these results in order to provide a comparable financial baseline for 2024 to assist with year-over-year comparison. For full year 2025, we anticipate comparable organic net sales growth of between 3% and 5%, with net sales reaching $7 billion at the midpoint. We anticipate the 4% net sales midpoint growth to be balanced between volume and price or mix. While water consumption across our offerings is a year-round activity, legacy Primo Water and BlueTriton had similar net sales pacing across the year, with first and second half annual contribution essentially 50/50. Additionally, the middle two quarters remain the peak consumption months with about 53% of annual net sales.

For full year 2025, we anticipate comparable organic net sales growth of between 3% and 5% with net sales, reaching $7 billion at the midpoint.

David: We anticipate the 4% net sales midpoint growth to be balanced between volume and price or mix.

David: While water consumption across our offerings as a year round activity legacy Primo water and Blue Triton had similar net sales pacing across the year.

David: With first and second half annual contribution essentially 50 50. Additionally, the middle two quarters remain the peak consumption month with about 53% of annual net sales.

David: We expect full year 2025 comparable adjusted EBITDA to be between $1 6 billion and $1 $62 8 billion with an implied adjusted EBITDA margin of approximately 23, 1% at the midpoint.

David Hass: We expect full year 2025 comparable adjusted EBITDA to be between $1.6 billion and $1.628 billion, with an implied adjusted EBITDA margin of approximately 23.1% at the midpoint. Our adjusted EBITDA guidance includes the capture of approximately $200 million cost synergy opportunity. With more time and focus on our integration activities, we are pleased to announce that our previously estimated $200 million cost synergy opportunity is expected to be captured within 2025, and we are raising our anticipated total synergy capture to approximately $300 million. We believe the total estimated $300 million cost synergy opportunity will be captured by year-end 2026, providing the run rate benefit of our integration activities in 2027. We are decreasing our estimate of anticipated costs necessary to achieve these synergies to approximately $100 million.

David: Our adjusted EBITDA guidance includes the capture of approximately 200 million cost synergy opportunity.

David: With more time and focus on our integration activities. We are pleased to announce that our previously estimated $200 million cost synergy opportunity is expected to be captured within 2025.

David: And we are raising our anticipated total synergy capture to approximately $300 million.

David: We believe the total estimated $300 million cost synergy opportunity will be captured by year end 2026, providing the run rate benefit of our integration activities in 2027.

David: We are decreasing our estimate of anticipated costs necessary to achieve these synergies to approximately $100 million.

David: This figure was previously $115 million at the time of our merger announcement.

David: One time costs associated with the achievement of our synergy opportunities include things like facility closures decommissioning or early lease buyout costs within our production and branch network as well as severance and other vendor and contract break fees to access savings.

David Hass: This figure was previously $115 million at the time of our merger announcement. One-time costs associated with the achievement of our synergy opportunities include things like facility closures, decommissioning, or early lease buyout costs within our production and branch network, as well as severance, and other vendor and contract break fees to access savings. These one-time costs exclude any real estate proceeds that may occur as our network consolidates. The most notable being the sale of our Eastern Canadian real estate for approximately $45 million that occurred recently in January. Moving on to capital expenditures. We are forecasting a run rate growth and maintenance CapEx budget of approximately 4% of net sales. We are revising the annual capital spend profile to a more efficient 4% of net sales from the previous 4 to 5% communicated at the time of the merger.

David: These onetime costs.

David: Excluded any real estate proceeds that may occur as our network consolidate.

David: The most notable being the sale of our eastern Canadian real estate for approximately $45 million that occurred recently in January.

David: Moving on to capital expenditures, we are forecasting a run rate growth and maintenance capex budget of approximately 4% of net sales.

David: We are revising the annual capital spend profile to a more efficient 4% of net sales from the previous.

David: 4% to 5% communicated at the time of the merger.

David: We believe we are in a good position with our asset base once we execute our base capex alongside some integration related capex that will total approximately $250 million in onetime spend across 2025 and 2026.

David Hass: We believe we are in a good position with our asset base once we execute our base CapEx alongside some integration-related CapEx that will total approximately $250 million in one-time spend across 2025 and 2026. Integration CapEx is expected to be approximately $200 million in 2025 and $50 million in 2026. Due to the strength at BlueTriton across our enterprise reporting platform, production, and vertically integrated large format bottle production, we are able to integrate these aspects of legacy Primo Water business into the asset base. The significant integration and volume shifts of the business into a single network and operating system will require some spend in key categories.

David: Integration Capex is expected to be approximately $200 million in 2025 and $50 million in 2026.

David: Due to the strength at Blue Triton across our enterprise reporting platform production and vertically integrated large format bottle production, we are able to integrate these aspects of legacy Primo water business into the asset base.

David: Significant integration and volume shifts of the business into a single network and operating system will require some spend in key categories.

David: These include onetime integration capex within it.

David: To assist the transition of Primo water ERP into the legacy Blue Triton system water production and capacity expansion.

David Hass: These include one-time integration CapEx within IT to assist the transition of Primo Water ERP into the legacy BlueTriton systems, water production and capacity expansion, geographic location of our equipment, additional large format blow molding equipment, as well as other fleet and cooler asset standardization. We believe this will also allow future year growth to efficiently move through our vertically integrated and scaled production and distribution system. Combining these factors, along with the core health and cash generation capacity of our business model, we are forecasting adjusted free cash flow of between $790 million and $810 million for 2025. This forecast assumes adding back acquisition and integration costs, in-year integration only CapEx, as well as benefit of after-tax in-year synergy capture.

David: Geographic location of our equipment additional large format blow molding equipment as well as other fleet and cooler asset standardization.

David: We believe this will also allow future year growth to efficiently move through our vertically integrated and scaled production and distribution system.

Combining these factors along with our core health and cash generation capacity of our business model. We are forecasting adjusted free cash flow of between $790 million and $810 million for 2025.

David: This forecast assumes adding back acquisition and integration costs in year integration only capex as well as <unk>.

David: Benefit of after tax in your synergy capture.

David: Yesterday, our board of directors authorized a quarterly dividend of <unk> 10 per common share, which represents an 11% increase over last year's quarterly dividend rate.

David Hass: Yesterday, our board of directors authorized a quarterly dividend of $0.10 per common share, which represents an 11% increase over last year's quarterly dividend rate. No shares were repurchased in the latest quarter. In closing, we believe our financial profile, including robust cash generation, strong liquidity availability, and an improving net debt profile, along with a compelling long-term growth outlook, are creating a solid foundation for the future success of Primo Brands. We look forward to discussing this and other items at our upcoming Investor Day next week. With that, I will turn the call back over to Robert for any final thoughts.

David: No shares were repurchased in the latest quarter.

David: In closing, we believe our financial profile, including robust cash generation strong liquidity availability and an improving net debt profile.

David: Along with a compelling long term growth outlook are creating a solid foundation for the future success of premium brands.

David: We look forward to discussing this and other items at our upcoming Investor Day next week with that I will turn the call back over to Robert for any final thoughts.

Robert Rebroke: Thanks, David we will share more detailed and fulsome information at our upcoming Investor Day next Thursday February 27 at one eastern standard time.

Robbert Rietbroek: Thanks, David. We will share more detailed and fulsome information at our upcoming Investor Day next Thursday, 27 February, at 1:00 PM Eastern Standard Time. The event will be webcast live on our website at ir.primobrands.com. A replay will be available after the event at the same time for your convenience. Specific topics expected to be covered at the upcoming Investor Day include Primo Brands' positioning as a leading branded beverage company, our comprehensive portfolio designed to serve all usage occasions, a deeper look into our advantaged route to market, and a review of our significant synergy opportunities. We will talk about our exciting growth story and powerful financial profile with attractive algorithm, followed by a question-and-answer session. Looking ahead, we're focused on capitalizing on the opportunities presented by our business combination and driving growth across our portfolio.

Robert Rebroke: The event will be webcast live on our website at IR Dot Primo brands Dot com.

Robert Rebroke: A replay will be available after the event at the same time for your convenience.

Robert Rebroke: Specific topics expected to be covered at the upcoming Investor day include.

Robert Rebroke: Primo brand positioning as the leading branded beverage company.

Robert Rebroke: Our comprehensive portfolio designed to serve all usage occasions.

A deeper look into our advantaged route to markets.

Robert Rebroke: A review of our significant synergy opportunities.

Robert Rebroke: We will talk about.

Robert Rebroke: Our exciting growth story.

Robert Rebroke: And powerful financial profile with attractive algorithm.

Robert Rebroke: Followed by a question and answer session.

Robert Rebroke: Looking ahead, we're focused on capitalizing on the opportunities presented by our business combination and driving growth across our portfolio.

Robert Rebroke: Am confidence in our ability to deliver value for our stockholders and remain excited about the future of Primo brands Corporation.

Robbert Rietbroek: I am confident in our ability to deliver value for our stockholders and remain excited about the future of Primo Brands Corporation. I intend for us to move decisively with speed, agility, and a focus on results while maintaining high levels of customer service. With that, I will turn the call back to Jon Kathol to take us through Q&A.

Robert Rebroke: I intend for us to move decisively with speed agility and a focus on results, while maintaining high levels of customer service with that I will turn the call back to John to take us through Q&A.

John: Thanks, Robert in order to address as many of your questions as possible. We would ask for a limit of one question and one follow up if you would like to ask additional questions. You are encouraged to rejoin the queue and we will address as many questions as time allows operator. Please open the line for questions.

Jon Kathol: Thanks, Robbert. In order to address as many of your questions as possible, we would ask for a limit of one question and one follow-up. If you would like to ask additional questions, you are encouraged to rejoin the queue, and we will address as many questions as time allows. Operator, please open the line for questions.

Speaker Change: Thank you. Your first question comes from Nik Modi with RBC capital markets. Please go ahead.

Nik Modi: Yes, thanks, good morning, everyone.

Operator: Thank you. Your first question comes from Nik Modi with RBC Capital Markets. Please go ahead.

Nik Modi: I guess, just given the exit rate and the strength of the business.

Nik Modi: Just wanted to get some <unk>.

Nik Modi: Yeah, thanks. Good morning, everyone. I guess, you know, just given the exit rate and, you know, the strength of the business, just wanted to get some, you know, qualifiers around the 3% to 5% guidance for 2025. Getting a lot of questions around that. I mean, is there something you're seeing in the business that would suggest a slowdown? Or is this just, hey, you know, let's put out some targets given the current environment that are very achievable and maybe beatable? Any context you can give us around that would be helpful. Just wanted to get some clarity on the upside to the synergy target and kind of what was driving that. That would be helpful. Thank you.

Nik Modi: Qualifiers around the 3% to 5% guidance for 2025 being a lot of questions around that I mean is there something youre seeing in the business that would suggest a slowdown or is this just hey, let's put out some targets given the current environment that are very achievable, maybe beatable, but any context, you can give us around that would be helpful.

Nik Modi: And then just wanted to just get some clarity on the upsize to the synergy target and kind of what was driving that that would be helpful. Thank you.

Nik Modi: Yes, hi, Nick Great too great to hear you.

Nik Modi: Well be.

Nik Modi: Before I talk about the 3% to 5% let me just quickly mention that we had a really strong finish to 2004.

Robbert Rietbroek: Yeah. Hey, Nick. Great to hear you. Well, you know, before I talk about the 3 to 5%, let me just quickly mention that we had a really strong finish to 2024. It was based on the strength of our brands, our market share gains, and our outstanding customer service with our world-class team. You know, looking at the rest of the market, our results and our momentum compare favorably within the liquid refreshment beverage category versus the other players that are losing market share. Water is one of two categories that are gaining share within beverages. We've shown volume momentum on large formats, so the five-gallon business as well as our market share in retail is increasing.

Nik Modi: It was based on the strength of our brands our market share gains and our outstanding.

Nik Modi: Outstanding customer service with our World class team.

Nik Modi: And Youll look looking at the rest of the markets our results and our momentum compare favorably within the liquid refreshment beverage category versus the other players that are losing market share.

Nik Modi: And water is one of two categories that are gaining share within beverages and we've.

Nik Modi: We've shown volume momentum on large format. So the five gallon business as well as our market share in retail is increasing now.

Nik Modi: Now as you talk about 25 to your question.

Nik Modi: How to qualify to 3% to 5% what.

Nik Modi: Here's what I would say that our tail wins are very strong.

Robbert Rietbroek: Now, as you talk about 2025, to your question, you know, the how to qualify the 3% to 5%, you know, well, here's what I would say. You know, our tailwinds are very strong in 2025 heading into the year. There's health and wellness, you know, awareness, concerns around aging water infrastructure, and an increasing consumer demand for healthier beverages. We are off to a positive start in 2025 with very strong consumer demand for healthy hydration. You know, our integration planning is on track as well. We do plan to grow volume and capture synergies. We do plan to leverage scale and expand points of distribution. We are well positioned for top-line growth, and there is a good balance of volume and price mix contributions.

Nik Modi: In 25 heading into the year.

Nik Modi: There's health and wellness.

Nik Modi: Awareness concerns around aging water infrastructure, and an increasing consumer demand for healthier beverages. So we are off to a positive start in 'twenty five with very strong consumer demand for healthy hydration.

Nik Modi: Our integration planning is on track as well and we do plan to grow volume and capture synergies. We do we do plan to leverage scale and expand points of distribution. So we are well positioned for topline growth and there is a good balance of volume and price mix contributions.

What we're communicating and guiding on today is three three to five.

Nik Modi: Payable net sales growth, which is a midpoint of $7 billion and that is balanced between volume and price mix.

Robbert Rietbroek: What we're communicating and guiding on today is 3 to 5 comparable net sales growth, which is a midpoint of $7 billion, and that is balanced between volume and price mix. We'll continue to drive growth. We'll leverage the health-conscious shift in consumer trends. We'll leverage our scale, our vertically integrated network, all the way from, you know, the source of the water to sipping the water. We have a great portfolio of iconic brands and very strong retailer relationships. Net, what I would say is the guidance is 3 to 5, and we intend to grow accretively. Thanks, Nick.

Nik Modi: So we will continue to drive growth will leverage the health conscious shift in consumer trends will leverage our scale, our vertically integrated network all the way from the source of the water to shipping the water.

Nik Modi: We have a great portfolio of iconic brands and very strong retailer relationships. So net what I would say is the guidance is three to five and we intend to grow accretively.

Nik Modi: Yeah.

Speaker Change: Thanks, Nick Great and then and then on just the synergy question Robert Yes. So on the on the synergy let me pass it on to David Mann, we found opportunities in several areas, but I'll, let David talk to the details yeah. Thanks, Nick So.

Nik Modi: Great. On just the synergy question, Robert.

Robbert Rietbroek: Yeah. On the synergy, let me pass it on to David. I mean, we found opportunities in several areas, but I'll let David talk to the details.

David Mann: I think the true benefit here as we went from an announcement in June.

Speaker Change: Continued progress into the close.

David Hass: Yeah. Thanks, Nick. You know, I think the true benefit here is we went from an announcement in June, continued progress into the close, and thankfully, because we were able to close in 2024, no team on either side of the legacy businesses had to stand down. With that, we were able to find additional opportunities as we started to reengineer our route network and look through additional opportunities in the depot and production arenas. That's really the bigger bucket that was the initial value in the $200, and then that's now allowed that to sort of be pulled forward, if you will, into 2025 as we've had more time to sequence and engineer those activities.

Speaker Change: And thankfully because we were able to close in 24 no team on either side of the legacy businesses had to stand down and.

Speaker Change: And with that we were able to find additional opportunities as we started to reengineer our route network.

Speaker Change: And look through additional opportunities in the depot and production arenas.

Speaker Change: And Thats really the bigger bucket that was the initial value and the 200 and then that's now allowed that to sort of be pulled forward. If you will into 2025 as we've had more time to sequence and engineer those activities.

Speaker Change: Additionally, as you recall legacy Primo water had had built an extensive private fleet network, where we were unsure if that could have been used with all of the distribution points or through the product volume and we've been able to find ways to optimize that and reduce and replace high cost.

David Hass: Additionally, as you recall, Legacy Primo Water had built an extensive private fleet network where we were unsure if that could have been used with all of the distribution points or through the product volume. We've been able to find ways to optimize that and reduce and replace high costs and create shorter leg movements between the business. All in, we feel very secure and confident in that delivery. That's the larger, you know, contributions to the upside. In areas like procurement, that was complementary to those data points as that team really couldn't get into the sensitive data until close. We feel very excited about the ability to raise that, both the size of it and the speed of capture.

Speaker Change: And create shorter leg movements between the business.

Speaker Change: So again, all in we feel very secure and confident in that delivery that's the larger contributions.

Speaker Change: Contributions to the upside and again in areas like procurement.

Speaker Change: That was complementary to those data points as that team really couldnt get into the sensitive data until close. So again, we feel very excited about the ability to raise that both the size of it and the speed of capture.

Speaker Change: Super helpful. Thanks, guys.

Speaker Change: Thanks, Nick.

Speaker Change: Your next question comes from Daniel Moore with CJS Securities. Please go ahead.

Nik Modi: Super helpful. Thanks, guys.

David Hass: Thanks, Nick.

Speaker Change: Yes.

Daniel Moore: And thanks for taking the questions again.

Operator: Your next question comes from Daniel Moore with CJS Securities. Please go ahead.

Daniel Moore: In terms of offensive or revenue synergies, obviously, a big part of the rationale for the combination what can you tell us about what you're seeing regarding those opportunities now that you've had the businesses under one roof for nearly.

Daniel Moore: Yes, good morning, and thanks for taking the questions again. In terms of offensive or revenue synergies, obviously a big part of the rationale for the combination, what can you tell us about what you're seeing regarding those opportunities now that you've had the businesses under one roof for about, you know, nearly three months? And is that something you might look to quantify, either at your upcoming Investor Day or at some point down the line?

Daniel Moore: Nearly three months is that something you might look to quantify either at your upcoming investor day or at some point down the line.

Daniel Moore: Yes.

Dan: Dan Great Great question.

Dan: We have spent a lot of time on revenue synergies in the past few months.

Robbert Rietbroek: Yeah, look, Dan, great question. We have spent a lot of time on revenue synergies in the past few months. You know, we had initial take on those, and we continue to believe that there are a lot of those synergies going forward, specifically the following. The first one would be the expansion of our super premium brands, Mountain Valley and Saratoga, into more channels as well, you know, food service, the mass channel, the grocery channel in new formats, such as, you know, half liter shrink or larger and smaller formats and different glass, aluminum, and PET executions. The second one is the expansion of our regional spring water brands, particularly into our Primo distribution network, as well as into channels that we're currently under-serving, such as DIY.

<unk>.

Dan: We had initial take on those and we continue to believe that there are a lot of those.

Dan: Those synergies going forward specifically.

Dan: The following the first one would be the expansion of our Super premium brands Mountain Valley, and Saratoga into more channels as well foodservice mass channel the grocery channel in new formats, such as half leader shrink or or a lot.

Dan: <unk> and smaller formats different glass aluminum in PT executions. The second one is the expansion of our regional spring water brands.

Dan: Particularly.

Dan: Into our Primo distribution network as well as into channels that were currently under serving such as DIY.

Dan: Then there are a whole host of distribution opportunities, which we will pursue.

Dan: On the back of our existing retail distribution. We are currently about 200000 retail outlets on our consumer offerings.

Robbert Rietbroek: There are a whole host of distribution opportunities which we will pursue, you know, on the back of our existing retail distribution. We are currently about 200,000 retail outlets on our consumer offerings. We have about 26,500 exchange racks, and we have about 23,500 refill locations. We fully intend to further leverage that infrastructure to drive new innovation on brands like Splash, Arrowhead, various other items that are going to be launched this year. You know, we have started to quantify those opportunities. We'll be sharing more, you know, information around our marketing and sales programs in the investor meeting next week. We'll hope you're there. We feel very confident that we'll be able to give more perspective on that.

Dan: We have about 26 5000 exchange racks, and we have about 23 five <unk>.

Dan: We fill locations. So we fully intend to further leverage that infrastructure to drive new innovation on brands like Splash Arrowhead.

Dan: Other items that are going to be launched this year, but.

We have started to quantify those opportunities we'll be sharing more.

Dan: Information around our marketing and sales programs in the Investor meeting next week will help you there and we feel very confident that that will be able to give more perspective on that.

Dan: Very helpful look forward to it if I could just clarify the 800 million free cash flow adjusted free cash flow guidance.

Dan: Yes.

Dan: Does that include the divestments and from an actual cash generating perspective, if we take the $800 million back out the onetime cost of $2 70 that leaves over 500 million for dividends M&A debt reduction is that the right way to think about it or am I missing anything there. Thank you again.

Daniel Moore: Very helpful. Look forward to it. If I could just clarify the $800 million free cash flow, adjusted free cash flow guidance, does that include the divestments? From an actual cash-generating perspective, if we take the $800 million, back out the one-time cost of $270 million, that leaves, you know, over $500 million for dividends, M&A, and debt reduction. Is that the right way to think about it, or am I missing anything there? Thank you again.

Speaker Change: Yeah, Thanks, Tim So again.

Speaker Change: Sort of outlined for the year takes into account benefits from obviously interest savings.

David Hass: Yeah. No. Thanks, Dan. Again, the sort of outline for the year takes into account benefits from obviously interest savings with regard to some of the capital structure items I talked about, as well as, you know, benefits over time. We do not have the closed proceeds from the last two international divestitures sort of in the bank account to sort of begin earning interest. The primary contributors to that are the after-tax synergy capture of the $200 million we've outlined, plus the base, you know, EBITDA generation of the combined business. When you think about capital priorities, first and foremost, whether it comes through commercial synergies or base business performance, our number one capital allocation priority will always be to help enhance and grow the top line.

Speaker Change: With regard to some of the capital structure items I talked about.

Speaker Change: As well as benefits over time, but we do not have.

Speaker Change: The closed proceeds from the last two international divestitures sort of in the bank account to sort of begin earning interest. So the primary contributors to that are there.

Speaker Change: The after tax synergy capture of the $200 million, we've outlined plus the base.

Speaker Change: EBITDA generation of the combined business.

Speaker Change: And when you think about capital priorities first and foremost whether it comes through commercial synergies or base business performance. Our number one capital allocation priority will always be to help enhance and grow the top line.

Speaker Change: After that we obviously made a decision as a management team and board to increase the dividend by a penny per quarter. This year were an approximately 11% raise.

David Hass: After that, we obviously made a decision as a management team and board to increase the dividend by $0.01 per quarter this year or an approximately 11% raise. Then obviously, we'll continue to look at share repurchases as an opportunistic, you know, across the year, but at this point have not communicated around that. Again, Dan, just, one last closing point. All of that would be on an organic basis. Again, there are not assumed inorganic activities in the guide, but as you know, the company will pursue, you know, tuck-ins and other related activities that are relevant, accretive, and, you know, when we can factor in the timing.

Speaker Change: Then obviously, we will continue to look at share repurchases as an opportunistic.

Speaker Change: Across the year.

Speaker Change: But at this point have not communicated around that.

Speaker Change: Okay.

Speaker Change: And again, Dan just the one last closing point all of that would be on an organic basis. So again, there are not assumed inorganic activities in the guide, but as you know the company will pursue.

Speaker Change: Tuck ins and other related activities that are irrelevant accretive and when we can factor in the timing.

Speaker Change: Understood. Thank you.

David Mann: Your next question comes from David <unk> with William Blair. Please go ahead.

Daniel Moore: Very good. Understood. Thank you.

David Mann: Hi, Good morning, just a question on tariffs.

Operator: Your next question comes from David Schackner with William Blair. Please go ahead.

Operator: Your next question comes from David Shakno with William Blair. Please go ahead.

David Mann: I assume some of this impact has been mitigated because of eastern Canada Eastern Canada business could you just provide some color on any potential tariff impact we should be thinking about.

David Schackner: Hi, good morning. Just a question on tariffs. I assume some of this impact has been mitigated because of Eastern Canada, the Eastern Canada business. Could you just provide some color on any potential tariff impact we should be thinking about?

David Shakno: Hi, good morning. Just a question on tariffs. I assume some of this impact has been mitigated because of Eastern Canada, the Eastern Canada business. Could you just provide some color on any potential tariff impact we should be thinking about?

Speaker Change: Sure. David This is David with regard to tariffs at this point.

David Mann: The only impact we have on the business.

David Mann: As you recall the dispenser category has gone through tariffs multiple times in its past.

David Hass: Sure, David. This is David. With regard to tariffs at this point, the only impact we have on the business, as you recall, the dispenser category has gone through tariffs, multiple times in its past. It was currently under a 2.7 ad valorem tax, of which the recent activities with China increased that to 12.7 or an incremental 10. At this point, we have seen no disruptions in the business. Dispenser sell-through for the full year was approximately 980,000, approximately flat to 2023. We remain very optimistic based on both innovation, design, points of distribution expansion, and then retail relationship growth that we have the opportunity with from the legacy BlueTriton relationships. Again, we've navigated this multiple times. We have seen no demand interruption and no supply chain interruptions.

David Mann: It is currently was currently under a $2 seven AD valorem tax of which the recent.

David Mann: Activities with China increased that to $12 seven or an incremental 10.

David Mann: At this point, we have seen no disruptions in the business dispenser sell through for the full year was approximately 980000 approximately flat to 2023, we remain very optimistic based on both innovation design points of distribution expansion and then retail relationship grow.

David Mann: <unk> that we have the opportunity with from the legacy Triton relationships.

David Mann: And again, we've navigated this multiple times, we have seen no demand interruption and no supply chain interruptions at that point, the dispenser business on a wholesale revenue basis for the company is about 1% of all total net sales. So it's not an impactful area and we believe again, we can continue to mitigate navigate.

David Hass: At that point, the dispenser business on a wholesale revenue basis for the company is about 1% of all total net sales. It's not an impactful area. We believe, again, we can continue to mitigate and navigate that, but we remain obviously, as everyone else does, fully aware of the news cycle and understanding if that's a permanent tariff or more of a temporary activity.

David Mann: But we remain obviously as everyone else does.

David Mann: Fully aware of the new cycle and understanding if thats a permanent tariff for more of a temporary activity.

Great. Thank you that's helpful and then one follow up.

David Mann: You talked in the prepared remarks about the Super premium portion with Saratoga and Mountain Valley with.

David Schackner: Great. Thank you. That's helpful. One follow-up. I know you talked in the prepared remarks about the super premium portion with Saratoga and Mountain Valley with, you know, the various partnerships and events. Just wanted to get a sense of how they're actually performing both brands, especially as you now have probably a better view of Saratoga post-merger.

David Shakno: Great. Thank you. That's helpful. One follow-up. I know you talked in the prepared remarks about the super premium portion with Saratoga and Mountain Valley with, you know, the various partnerships and events. Just wanted to get a sense of how they're actually performing both brands, especially as you now have probably a better view of Saratoga post-merger.

David Mann: The various partnerships and events.

David Mann: Just wanted to get a sense of how they are actually performing both brands, especially as you know.

David Mann: Probably a better view of Saratoga post merger.

David Mann: Yes.

David Mann: Both both brands R. R.

David Mann: Doing extremely well.

David Mann: They are the fastest growing part of our portfolio.

Robbert Rietbroek: Yeah. Both brands are doing extremely well. They are the fastest-growing part of our portfolio. You know, Saratoga and Mountain Valley are looking to expand distribution in the year 2025. Most recently, we with Saratoga had a very strong presence at the Golden Globes. We launched the new color as a Pantone color, the Saratoga blue. We have strong celebrity and athlete endorsement for the brand, and even have appeared in many of the big events that have been televised over the last couple of months. The brand is really gaining momentum, which should be enabled by further distribution across various channels. We talked about food service, you know, the mass channel, grocery channel, and we're also looking to manufacture the brand in multiple locations.

David Mann: Saratoga Mountain Valley are looking to expand distribution in the year 2025.

David Mann: Most recently, we with Saratoga had a very strong presence at the Golden Globes, we launched the new color as the Pantone color. The Saratoga Blue we have strong celebrity athlete endorsement for the brand.

David Mann: Even have appear to many of the big events that have been televised over the last couple of months. So the brand is is really gaining momentum.

David Mann: Which should be.

David Mann: Enabled by further distribution across various channels, we talked about foodservice, we talked about.

David Mann: The mass channel grocery channel.

David Mann: We're also looking to manufacture brand in multiple locations Mountain Valley, we talked a lot about last year.

David Mann: Adding capacity sprint capacity.

David Mann: Class bottling capacity in launching our single serve aluminum and we're seeing very strong demand both for retail and on premise.

Robbert Rietbroek: Mountain Valley, we talked a lot about last year, adding capacity, spring capacity, glass bottling capacity, and launching our single-serve aluminum. We're seeing very strong demand both through retail and on-premise. It's also available for our direct customers. That's actually a bigger brand than Saratoga, but both brands are doing well and expansion plans are coming. I'll pass to David for some further financials on the business.

David Mann: And it's also available for our direct customers. So that's actually a bigger brand than Saratoga, but both brands are doing well in expansion plans are coming.

David Mann: Now I'll pass to David for some further financials on the business.

David Mann: So David we plan on releasing our K next week. Obviously this has some noise in the quarter because the legacy Primo water business joined on a GAAP basis as of November eight, but when you step back and look at net sales disaggregation across our water mix the premium category of what's you're asking.

David Hass: Yeah. David, we plan on releasing our 10-K next week. Obviously, this has some noise in the quarter because the legacy Primo Water business joined on a GAAP basis as of 8 November. When you step back and look at net sales disaggregation across our water mix, the premium category of what you're asking and how Robbert was talking through the data points regarding Mountain Valley and Saratoga, if you put that together on a comparable basis, the premium water space grew about 47% on a full year 2024 against a full year 2023. Again, that will be one of our primary sales disclosure channels where we look across purified, premium, regional spring, and other activities in the business.

David Mann: And how Robert was talking through the data points regarding mountain Valley in Saratoga, If you put that together on a comparable basis.

David Mann: The premium water space grew about 47% on a full year of 2024 against the full year 2023, and again that will be one of our primary.

David Mann: Sales disclosure channels, where we look across the purified premium regional spring and other activities in the business. So no step back whatsoever in this environment, both the health and wellness trend category growth and the points of distribution expansion as Robert and the team are working toward its a great bright spot in the portfolio.

David Hass: no step back whatsoever in this environment, both the health and wellness trends, the category growth, and the points of distribution expansion as Robert and the team are, you know, working toward. It's a great bright spot in the portfolio and part of the brand strength that we talk about when we brought these two companies together.

David Mann: So and part of the brand strength that we talk about when we when we brought these two companies together.

David Mann: Great. Thank you that's all very helpful. I appreciate it I'll pass it along.

Speaker Change: And your next question comes from Andrew <unk> with BMO. Please go ahead.

David Schackner: Great. Thank you. That's all very helpful. I appreciate it. I'll pass it along.

David Shakno: Great. Thank you. That's all very helpful. I appreciate it. I'll pass it along.

Andrew: Hey, good morning, Thanks for taking the questions.

Operator: Your next question comes from Andrew Strelzik with BMO. Please go ahead.

Andrew: I appreciate obviously that synergies are going to be a big margin driver in 2025 and beyond but I am curious how to think about the base margins for the business ex the synergies.

Andrew Strelzik: Hey, good morning. Thanks for taking the questions. You know, I appreciate obviously that synergies are gonna be a big margin driver in 2025 and beyond, but I'm curious, you know, how to think about the base margins for the business ex the synergies. Obviously in 2024 you had very nice margin expansion. The guidance though implies, you know, kind of flattish base margins. I know you have volume growth and some mix opportunities. I'm wondering if there are offsets, if that's maybe a kind of a conservative starting point, just how we should think about that. My follow-up is just on the synergies. You gave some nice context to the top-line cadence. I'm curious if you can give some synergy cadence for 2025 as well. Thanks.

Andrew: Obviously in 2040, <unk> had very nice margin expansion guidance, though implies kind of flattish based margins I know you have volume growth and some mix opportunities. So I'm wondering if there are offsets if that's maybe a kind of a conservative starting point just how we should think about that and then my follow up is just on the synergies you gave us.

Andrew: Nice context to the.

Andrew: To the top line cadence I'm curious if you could give us some some synergy cadence for 25 as well thanks.

David: Sure Andrew David here. So your question.

Andrew: On the base EBITDA margins.

Andrew: On an ex eastern Canadian business side would have been approximately two zero percent, where we would be walking sort of the base pre synergy up about 20 basis points.

David Hass: Sure. Andrew, David here. Your question, you know, on the base EBITDA margins, you know, on an ex Eastern Canadian business side would have been approximately 20%, where we would be walking sort of the base pre-synergy up about 20 basis points. Really why that is you have two companies essentially operating in silos until the synergies start to compress and start to bring the business activities together. The real basis point expansion is going to come from the synergies in 2025. Thereafter, however, as volume continues to move through the system, either through the cost of goods side or through the operating expenses, that's where you'll start to see after 2025, you know, more authentic margin expansion, either at gross or at the EBITDA level.

Andrew: And really why that is is you have two companies essentially operating in silos until the synergies start to compress and start to bring the business activities together.

Andrew: So the real basis point expansion is going to come from the synergies in 'twenty. Five thereafter, however, as volume continues to move through the system either through the cost of goods side or through the operating expenses, that's where you'll start to see after 25 more authentic margin expansion.

Andrew: Gross or at the EBITDA level. So again, it's not that there's anything in either part of the legacy business Thats, a challenge or a headwind, we feel and remain incredibly confident and excited about the layout of 25 guidance. It's you need to start to actually bring the networks together.

David Hass: Again, it's not that there's anything in either part of the legacy business that's a challenge or a headwind. We feel and remain incredibly confident and excited about the layout of 2025 guidance. It's you need to start to actually bring the networks together, and let that volume go through the reduced facility and branch setup. Then that really starts to sort of release the velocity, if you will, of the margin profile.

Andrew: And that volume go through the reduced facility and branch.

Andrew: Setup, and then that really starts to sort of released the velocity. If you will of the margin profile.

Speaker Change: Thank you. Your next question comes from Andrea Teixeira with Jpmorgan. Please go ahead.

Speaker Change: Drew Levine on for Andrea and thanks for taking our questions. So David I think you referenced a bit on.

Operator: Thank you. Your next question comes from Andrea Teixeira with JPMorgan. Please go ahead.

Speaker Change: The premium retail growth.

Drew Levine: Drew Levine on for Andrea. Thanks for taking our questions. So David, I think you referenced a bit on the premium retail growth, and you know, hopefully get some more disclosure in the K and going forward. If you could comment on Q4, the 5.5% combined revenue growth, maybe any more clarity on how retail and HOD performed within the quarter and then on the 3 to 5% outlook, appreciate the balance of volume and price mix, but any more color on you know, how you're thinking about growth by business line would be helpful.

Hopefully get some more disclosure in the K.

And going forward, but.

Speaker Change: If you could comment on the fourth quarter, the five 5% combined revenue growth.

Speaker Change: Any more clarity on how retail and <unk> performed within the quarter and then on the 3% to 5% outlook I appreciate the balances.

And price mix by.

Speaker Change: Any more color on how youre thinking about growth by business line would be helpful.

Speaker Change: Hey, drew I'll step in for a second this Robert Thanks for the question before we talk a bit more about the quarter four results and how that was built.

Robbert Rietbroek: Hey, Drew. I'll step in for a second. This is Robert. Thanks for the question. Before we talk a bit more about the Q4 results and how that was built, I wanted to make the comment that we're really looking at the business as one go-to-market system now. We have, as you know, one network, coast-to-coast network, vertically integrated, that serves both commercial and residential customers as well as retail customers and food service customers, as well as small format. So the strength of this unique go-to-market system is that unique distribution model that we can fully leverage. It gives us scale and allows us to grow accretively as one end-to-end business model. I'll pass it to David to talk about Q4.

Speaker Change: I wanted to make the comment that we are really looking at the businesses. One go to market system now.

Speaker Change: We have as you know.

Speaker Change: We have one network coast to coast network vertically integrated.

Speaker Change: Serves both commercial and residential customers as well as our retail customers and foodservice customers as well as small formats. So the strength of this unique go to market system is that unique distribution model that we can fully leverage gives us scale and allows us to grow accrue.

Speaker Change: <unk> is one end to end business model, but I'll pass it to David to talk about Q4.

David: Yes drew again.

Speaker Change: We came through the quarter with strong volume with.

With both volume and organic being the primary contributors to the growth algorithm, where we're incredibly excited when you move into 'twenty five guidance I'll talk about both the top as well as the synergy capture and this will sort of.

David Hass: Yes. Drew, again, we came through the quarter with strong volume, with both volume and organic being the primary contributors to the growth algorithm, where we're incredibly excited. When you move into 25 guidance, I'll talk about both the top as well as the synergy capture, and this will sort of combine with a little bit of what Andrew was asking in that prior question. Within the 3 to 5% organic net sales growth, we're starting with a balance of approximately 50/50 on price mix and volume. Really where that looks is how the businesses are exiting 2024 and how we believe the mix of products across both what they are as a water type, again, premium, regional spring water, purified or other, as well as how they're distributed, whether it's directly distributed or through various channels of trade.

Speaker Change: Combined with a little bit of what Andrew was asking in that prior question. So within the 3% to 5% organic net sales growth were starting with a balance of approximately 50 50 on price mix and volume.

Speaker Change: And really where that looks at how the businesses are exiting 2024, and how we believe the mix of products across both what they are is a watertight again premium regional spring water purified or other as well as how they are distributed whether it's directly distributed or through various channels of trade.

Speaker Change: We remain very confident and excited about how that volume and mix.

Speaker Change: With price is sort of sort of articulated across the guide profile. When you look at the synergy capture and timing, there, which was kind of a little bit more back to Andrew's question. Obviously is 25 began we beginning finalizing details around the synergy capture Q.

David Hass: We remain very confident and excited about how that volume and mix with price is sort of articulated across the guide profile. When you look at the synergy capture and timing there, which was kind of a little bit more back to Andrew's question, obviously, as 25 began, we began finalizing details around the synergy capture. Q1 is a little bit muted in that capture. And then really from Q2 through Q4, it ramps up to a nice run rate. When you think about the $100 million in capture in 2026, approximately 50% of it is a flop or a rollover effect of 2025 synergy value, and then $50 million organic new synergy capture that begins pretty much at the beginning of the year of 2026. When you think about those factors, that allows the network to consolidate.

Speaker Change: Q1 is a little bit muted in that capture and then really from Q2 through Q4, it ramped up to a nice run rate. So when you think about the $100 million and capture in 2026, approximately 50% of it is a flop or a rollover effect of 2025 synergy value and then $50 million.

Speaker Change: Ganic, new synergy capture that begins pretty much at the beginning of the year of 26. So when you think about those factors that allows the network to consolidate it addresses Andrew's question around basis point expansion, that's really captured through the synergy lift and then when you get the K and you hear from US next week, we'll start to talk and really address.

David Hass: It addresses Andrew's question around basis point expansion that's really captured through the synergy lift. Then when you get the K and you hear from us next week, we'll start to talk and really address a lot of the disclosures around how we go to market. Take, for example, that Walmart released, you know, earnings this morning. Walmart's a great contributor to our business. Our company is thriving at Walmart. We have an amazing partnership with Walmart. Again, when you think of how the mass channel has brought in higher income households, has a very strong distribution of our company-wide portfolio, that's why we really look at going to market as a single segment, but is traded across different retail channels, different product pack sizes, and others. Again, we remain very confident in where and how 25 has been outlined.

Speaker Change: A lot of the disclosures around how we go to market. So take for example that Walmart released earnings. This morning, Walmart's, a great contributor to our business. Our company is arriving at Walmart, we have an amazing partnership with Walmart.

Speaker Change: So again when you think of how the mass channel has brought in higher income household.

Speaker Change: <unk> strong distribution of our company wide portfolio. That's why we really look at going to market as a single.

Speaker Change: Single segment, but it is traded across different retail channels differ product pack sizes, and others, but again, we remain very confident in where and how 25 has been outlined.

Speaker Change: Okay. Thanks for that perspective.

Speaker Change: And then just.

Speaker Change: And I guess related to the synergies and maybe.

Speaker Change: Some perspective on for months.

Drew Levine: Thanks for that perspective. Just, you know, I guess, related to the synergies and maybe, you know, some perspective on four months in, you know, you've uncovered incremental $100 million, but, you know, thinking about as time goes on, you know, if these are sort of more low-hanging fruit, sort of opportunities, if this is more, going through the fine-tooth comb, you know, sort of how you're thinking about, you know, potential opportunity beyond $300 million, if that's possible. You know, how you're planning to update investors on synergy capture. Are you gonna update sort of quarterly or on an annual basis? Any perspective there would be helpful.

Speaker Change: Uncovered incremental $100 million.

Speaker Change: But thinking about as time goes on.

Speaker Change: Can you just sort of more low hanging fruit.

Speaker Change: We have opportunities.

Speaker Change: This is more going through the fine tooth comb.

Speaker Change: How youre thinking about.

Speaker Change: Essential opportunity beyond the $300 million if that's if that's possible and then how you are planning to update it.

Speaker Change: Passengers on synergy capture as you're going to update quarterly or on an annual basis any perspective, there would be helpful.

Drew Levine: Yes drew.

Speaker Change: The.

Speaker Change: The current guidance, obviously is $100 million above what we were previously guiding.

Robbert Rietbroek: Yeah, Drew. The current, you know, guidance obviously is $100 million above what we were previously guiding. At the merger, we identified $200 million. We now are telling the market that we will deliver all of that in year one and increment that with another $100 million in year two, therefore accelerating the total program to a two-year program. We, you know, we're looking at the operations, we're looking at procurement, we're looking at IT and, you know, enterprise software. Our call center is a big driver of savings, and SG&A is the fifth bucket.

Speaker Change: At the merger, we identified $200 million, we now are telling the market that we will deliver all of that in year one.

Speaker Change: And increment that with another $100 million in year, two therefore accelerating the total program to a two year program.

Speaker Change: We're looking at.

Speaker Change: Operations were looking at procurement.

Speaker Change: Looking at <unk>.

Speaker Change: <unk>.

Speaker Change: Enterprise software our call Center is a big driver of savings in SG&A is the fifth bucket.

Speaker Change: Obviously, David and I will continue to look at with the with the transformation office.

Robbert Rietbroek: Obviously, David and I will continue to look at with the transformation office, you know, managing our costs and creating a lean and very efficient company where we, you know, leverage the scale of the business as well as our go-to market, our unique market system. At this time, we wanna continue to give guidance at $300, and if there's any future updates, we'll keep you informed.

Speaker Change: Managing our cost.

Speaker Change: And creating a lean and very efficient company, where we.

Speaker Change: Leverage the scale of the business as well as our go to market our unique market to market system.

Speaker Change: At this time, we want to continue to give guidance at 300, and if theres any future updates, we'll keep you informed.

Speaker Change: Thank you. Your next question comes from Derek Lessard TD Cowen. Please go ahead.

Derek Lessard: Yes, good morning, everybody and congrats on getting over the finish line.

Operator: Thank you. Your next question comes from Derek Lessard with TD Cowen. Please go ahead.

Derek Lessard: Just maybe wanted to touch again, probably last question on the.

Derek Lessard: Topline guide curious how you how we should be thinking about and maybe you touched on it in your opening remarks, but around M&A, whether it's on the retail branded side or even within the VA <unk> distribution business.

Derek Lessard: Yeah, good morning, everybody, and congrats on getting over the finish line. I just maybe wanted to touch again, probably last question on the top-line guide. Curious how we should be thinking about, and maybe you touched on it in your opening remarks, but around M&A, whether it's on the retail branded side or even within the HOD distribution business.

Derek Lessard: Yes Derrick.

Derek Lessard: On the HOA business.

Derek Lessard: Commercial residential we will continue to look at.

Robbert Rietbroek: Yeah, Derek, on the HOD business, commercial, residential, we will continue to look at tuck-ins as we have in the past and we will going forward. There's no difference at all in identifying the right businesses to acquire and then tucking them into our business. With regards to retail brands, consumer brands, our year one focus is to execute the merger and deliver synergies. Beyond that, we'll have to evaluate opportunities as they come our way. Maybe I'll just pass it on to David to talk a bit about our capital allocation strategy.

Derek Lessard: Tuck ins as we have in the past and we will going forward. So there is no difference at all.

Derek Lessard: And identifying the right businesses to acquire and then tucking them into our business with regards to retail brands consumer brands. Our year, one focus is to execute the merger and deliver synergies be.

Derek Lessard: Beyond that we will have to evaluate opportunities as they come our way.

Derek Lessard: And maybe I'll just pass it on to David to talk a bit about our capital allocation strategy, Yes, Derrick clarifying point there is always the company always provides an organic net sales growth.

Derek Lessard: So that we can take the appropriate time to look at tuck in acquisitions in that regard and make sure that they fit our system they fit within the right timing in quarter that we feel is important for the business.

David Hass: Yeah, Derek, the clarifying point there as always is the company always provides an organic net sales growth, so that we can take the appropriate time to look at tuck-in acquisitions in that regard and make sure that they fit our system, they fit within the right timing and quarter that we feel is important for the business to not only digest the synergy capture, but also onboard potentially, you know, a new branch, a new region, a new brand, convert the brand, et cetera. Again, within capital allocation, our number one priority will be to invest behind the top line piece of the business. We will experience natural deleveraging as the EBITDA grows. We obviously allocated additional funds to increase the dividend as announced today and remain opportunistic with regard to our share repurchase.

Derek Lessard: Not only digest the synergy capture but also onboard potentially a new branch or new region or new brand convert the brand et cetera.

Derek Lessard: Again with within capital allocation, our number one priority will be to invest behind the top line piece of the business.

Derek Lessard: We will experience natural deleveraging as the EBITDA grows we obviously allocated additional funds to increase the dividend as announced today and remain opportunistic with regard to our share repurchase.

Speaker Change: Yes, thanks for that and to be clear so that that three to five years doesn't doesn't include M&A.

Speaker Change: That's correct. It will not then we will not stop looking for them. It's a question of time when what size.

Derek Lessard: Yeah, thanks for that. To be clear, that 3 to 5 doesn't include M&A?

Speaker Change: But obviously, we will update and you'd see it in the statement of cash flows.

David Hass: That's correct. It will not. We will not stop looking for them. It's a question of time, when, what size, but obviously we'll update and you'd see it in the statement of cash flows.

Speaker Change: Awesome. Thanks.

Speaker Change: Just one last one on the route after on route optimization, just curious how much overlap do you think you could eliminate.

Derek Lessard: Awesome. Thanks. Maybe just one last one on route optimization. Just curious there how much overlap do you think you could eliminate over time and any color on, I guess, additional efficiencies there?

Speaker Change: Over time and any any color on.

Speaker Change: I guess additional efficiencies there.

Speaker Change: Yes, so again from a legacy premium standpoint.

Speaker Change: You were covering analysts and others might be familiar we would've typically communicated activity and data around that obviously legacy Primo joining the blue trading system with on a GAAP basis creates a little bit of noise. There. It is the top priority. The large synergy capture we have and one of the reasons, we were able to elevate that.

David Hass: Yeah. Again, you know, from a legacy Primo standpoint, of which you are a covering analyst and others might be familiar, we would have typically communicated activity and data around that. Obviously, legacy Primo joining the BlueTriton system, on a GAAP basis, creates a little bit of noise there. It is the top priority. The large synergy capture we have and one of the reasons we were able to elevate that dollar value today, as I mentioned earlier, was just getting into more of the route engineering, more of the branch consolidation. Both cultures wake up every day with a productivity mindset and an efficiency mindset. We'll begin to, you know, release more data across Q1, which is the full quarter of our control from a management perspective. Again, we'll begin communicating further on those key KPIs that really drive efficiencies.

Speaker Change: Dollar value today as I mentioned earlier was just getting into more of the route engineering more of the branch consolidation both cultures wake up every day with our productivity mindset and an efficiency mindset and we will begin to.

Speaker Change: Release more data across Q1, which is the full quarter of our control from a management perspective.

Speaker Change: Again, we will begin communicating further on those key kpis that really drive efficiencies, but just just know top of mind for for both sets of <unk>.

Speaker Change: Cultures and teams as they come together, where unit productivity is the core of taking the cost out of the business. It's running less routes is putting more bottles and velocity through the production system and then between branch in Interbranch transfer as I mentioned, we were able to extract benefit from our private fleet investments. These are all areas where again productivity.

David Hass: Just know top of mind for both sets of cultures and teams as they come together, where unit productivity is the core of taking the cost out of the business. It's running less routes, it's putting more bottles and velocity through the production system, and then between branch and inter-branch transfer, as I mentioned, we were able to extract benefit from our private fleet investments. These are all areas where, again, productivity is top of mind.

Speaker Change: Is top of mind.

Speaker Change: Okay. Thanks for that and look forward to seeing you guys next week.

Speaker Change: Thanks, Mark Thanks, Eric.

Steve Powers: And your next question comes from Steve Powers with Deutsche Bank. Please go ahead.

Derek Lessard: Okay, thanks for that, and look forward to seeing you guys next week.

David Hass: Thanks, Derek.

Hey, guys. Good morning, Thank you.

Robbert Rietbroek: Thanks, Derek.

Speaker Change: A question.

Operator: Your next question comes from Steve Powers with Deutsche Bank. Please go ahead.

Speaker Change: On I guess, the service levels and service quality I guess as you've.

Steve Powers: Hey, guys. Good morning. Thank you. A question on, I guess, service levels and service quality. I guess as you've got a better handle on both legacy operations, can you give any perspective on how service level metrics, service quality metrics benchmark legacy Primo versus legacy BlueTriton across comparable businesses? And do you see opportunities to leverage best practices, you know, across legacy businesses to benefit the business going forward in ways that may not show up directly in revenue or synergy numbers in the near term?

Speaker Change: We've got a better handle on.

Speaker Change: Both legacy operations can you give any perspective on how service level.

Speaker Change: Matrix service quality metrics benchmark legacy Primo versus legacy Triton across comparable businesses.

Speaker Change: Do you see opportunities to leverage best practices.

Speaker Change: Across our legacy businesses to the.

Speaker Change: The benefit the business going forward in ways that may not show up directly in.

Speaker Change: In revenue our synergy numbers in the near term.

Yes, Thanks, Steve that's a very good question in fact Thats a question we spend a lot of time on us as a company.

Speaker Change: We have three.

Robbert Rietbroek: Yeah. Thanks, Steve. That's a very good question. In fact, that's a question we spend a lot of time on as a company. You know, we have three focus areas for the organization in our culture. One of them is customer service. The second one is being a performance-oriented business. You know, with the focus on distribution, which is the third one. Customer service, distribution, and performance. Now with regards to customer service, I would say that the ReadyRefresh legacy business and the Primo Water legacy business were very similar in terms of on time, in full substitution.

Speaker Change: Focus areas for the organization and our culture.

Speaker Change: One of them is customer service.

Speaker Change: The second one as being a performance oriented business.

Speaker Change: And with the.

Speaker Change: With a focus on distribution, which is the third one so customer service distribution and performance with regards to customer service I would say that the ready refresh legacy business and the Primo water legacy business.

Speaker Change: We're very similar in terms of on time in full substitution.

And we are absolutely looking at best practices as we integrate the two distribution models get more density in our routes get more proximity to the finished to the final customer.

Robbert Rietbroek: We are absolutely looking at best practices as we integrate the two distribution models, get more density in our routes, get more proximity to the final customer. We are absolutely working through that right now. We're making some of the legacy BlueTriton brands available in the Primo Water system. Think about launching Zephyrhills in Florida. Think about Poland Spring in the Northeast, initially in case packs, and then they'll be available in the 5-gallon format as well. When it comes to our retail on-time, in-full delivery, we are really up there, best in class in the industry at the high 90s level.

Speaker Change: And so we are absolutely working through that right now we are making some of the legacy <unk> brands available in the premium water system. So think about launching Zephyr Hills, and Florida think about bone spring in the northeast.

Speaker Change: Initially in case packs and then there'll be available in the five gallon format as well and when it comes to our retail.

Speaker Change: On time in full delivery, we are really up there and best in class in the industry at the high <unk> level.

Speaker Change: We take this very seriously and we continue to make progress as we have an even better I would say manufacturing supply network coast to coast vertically integrated.

Robbert Rietbroek: We take this very seriously, and we continue to make progress as we have an even better, I would say, manufacturing supply network, coast to coast, vertically integrated. The focus on customer service also extends into our call center. You know, I would say ReadyRefresh had some very, I would say, very good best practices around retention that we're now implementing in Primo Water. Both companies have been really focused on reducing consumers trying to end the service with great deal of success, and retention levels are going up as a result. We also invested in our internet domains like water.com, and we're starting to see conversion rates improving there. We really look at customer service across commercial, residential, as well as retail.

Speaker Change: The focus on customer service also extends into our call center. So I would say ready refresh had some very.

Speaker Change: Yes, I would say very good best practices around retention that we're now implementing in primo water and.

Speaker Change: And both companies have been really focused on.

Reducing.

Speaker Change: Consumers trying to end the service.

Speaker Change: With great deal of success in retention levels are going up as a result.

Speaker Change: We also invested in our internet domains like water Dot com.

Speaker Change: Turning to see conversion rates improving there. So we really look at customer service across commercial residential as well as retail and.

Speaker Change: It is a core component of our culture.

Speaker Change: Okay.

Speaker Change: Alright. Thank you. Thank you very much I'll leave it there.

Robbert Rietbroek: It is a core component of our culture.

Speaker Change: See you next week. Thank you.

Robbert Rietbroek: It is a core component of our culture.

Speaker Change: Ladies and gentlemen, there are no further questions at this time I would like to turn the call.

Steve Powers: Great. Thank you. Thank you very much. I'll leave it there. See you next week.

Robert Rebroke: Call back over to CEO Robert.

Robbert Rietbroek: Thank you.

Robert Rebroke: Please go ahead alright.

Operator: Ladies and gentlemen, there are no further questions at this time. I'd like to turn the call back over to CEO Robbert Rietbroek. Please go ahead.

Robert Rebroke: Thank you. Thank you for attending today's call and for your continued interest in our company I'm pleased with the tremendous progress we've made in shaping the future of premium brands, we have been working intensely across our combined organization through identify opportunities to build and optimize structure and to unlock since.

Robbert Rietbroek: All right. Well, thank you. Thank you for attending today's call and for your continued interest in our company. I'm pleased with the tremendous progress we've made in shaping the future of Primo Brands. We have been working intensely across our combined organization to identify opportunities to build an optimized structure and to unlock synergies throughout the business. Thank you for your interest. Thanks for joining us on the next step of our transformation.

Robert Rebroke: <unk> throughout the business. Thank you for your interest thanks for joining us on the next step of our transformation.

Robert Rebroke: Ladies and gentlemen. This concludes today's conference call. You may now disconnect. Thank you for your participation.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you for your participation.

Q4 2024 Primo Brands Corp Earnings Call

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