Q2 2025 Primo Brands Corp Earnings Call

2025 earnings conference call all.

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there'll 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 draw. Your question Press Star followed by two.

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

Welcome to Primo Brands Corporation's second quarter 2025 earnings conference call. 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, 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.

Welcome to premium brands Corporation's second quarter 2025 earnings conference call.

<unk> is being webcast live on <unk> website at IR Primo brands Dot com and will be available there for playback. This conference call contains forward looking statements regarding the companys future financial results and operational trends estimated synergies impacts from economic factors and other matters. These statements should be considered in.

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.

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.

A Reconciliation of any non-gaap Financial measures discussed during the call with the most comparable measures in accordance with gaap. When the data is capable of being estimated is included in the company's second quarter. Earnings announcement. Released earlier this morning or in the investor relations section of the company's website at IR, Primo. Brands.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.

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.

I am a company by Robert Reebok Primo, branch, chief executive officer and David has Chief Financial Officer.

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

To start their prepared remarks, Robert and David will discuss the second quarter performance of Primo Brands, as well as the outlook for the full year. 2025 with that. I will now turn the call over to Robert. Thank you, John and good morning everyone. Before I turn to the quarter, I want to share that our hearts, go out to everyone impacted by the devastating floods in Texas and New Mexico.

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

We recognize the deep and ongoing toll of a disaster like this and are committed to supporting local communities.

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

To start their prepared remarks, Robert and David will discuss the second quarter performance of Primo brands as well as the outlook for the full year 2025 with that I will now turn the call over to Robert.

Thank you John and good morning, everyone before I turn to the quarter I want to share that our hearts go out to everyone impacted by the devastating floods in Texas and New Mexico.

Aligned with our company's values, especially in times of critical need Primo. Brands has recently made a donation to The Community Foundation of Texas Hill Country and during the quarter. We provided more than 150,000 cases of water products to Emergency Response, organizations including Convoy of Hope an organization well known for being among the First Responders to provide vital relief supplies.

We recognize the deep and ongoing tool over disaster like this and are committed to supporting local communities.

Turning to second quarter performance, since closing the merger, last November we've been working quickly to integrate our operations with the goal of improving, efficiency and productivity.

Aligned with our company's values, especially in times of critical need Primo brands has recently made a donation to the community Foundation of Texas Hill country and during the quarter, we provided more than 150000 cases of water products to emergency response organizations, including convoy of hope.

The speed by which we closed facilities and reduce headcount led to disruptions in product Supply, delivery and service.

I'll discuss this in Greater detail shortly.

An organization well known for being among the first responders to provide vital relief supplies.

Turning to second quarter performance since closing the merger last November we have been working quickly to integrate our operations with the goal of improving efficiency and productivity.

That said, we are confident that we are now on the right trajectory. As we enter the second half of the Year importantly, we never compromise worker safety and product quality and remain on track to deliver on our 2025 and 2026 Synergy targets.

Speed by which we closed facilities and reduced head count led to disruptions in product supply delivery and service.

We believe that Primo Grands is well positioned as a leading branded beverage Growth Company in the cpg and beverage industry. We will continue to execute against our strategy and must win priorities while resolving our service issues.

I'll discuss this in greater detail shortly.

That said we are confident that we are now on the right trajectory as we enter the second half of the year importantly, we never compromised worker safety and product quality and remain on track to deliver on our 2025 and 2026 synergy targets.

During Q2, we expanded our total points of distribution across key market and channels ramped up our cross-selling, efforts in our home and Office, direct delivery business, and drove continued double-digit year-over-year. Net sales increases for our premium water brands, Saratoga and Mountain Valley as well as our exchange business.

We believe that premium brands as well positioned as a leading branded beverage growth company in the CPG and beverage industry, we will continue to execute against our strategy and must win priorities, while resulting our service issues.

A refill and filtration business is also grew net sales during the quarter.

Our business continues to benefit from consistent demand for our products and services across Primo Brands water channels.

During Q2, we expanded our total points of distribution across key markets and channels.

All American brands and continue to extend our leadership in US bottled water.

<unk> up our cross selling efforts in our home and office direct delivery business and drove continued double digit year over year net sales increases for our premium water brands, Saratoga and mountain Valley as well as our exchange business.

Our extensive distribution network of over 200,000 retail outlets and multiple consumption Solutions, including Direct Delivery to More Than 3 million customers and exchange and refill Services remains a significant competitive advantage.

Our refill and filtration businesses also grew net sales during the quarter.

Our business continues to benefit from consistent demand for our products and services across Primo brands water channels.

Notably we grew dollar share in retail bottled water. In the first half of the Year by 11 basis points, demonstrating the overall strength of the business and differentiation of our products.

We have an incredible portfolio of all American brands and continue to extend our leadership in U S bottled water.

Our extensive distribution network of over 200000 retail outlets and multiple consumption solutions, including direct delivery to more than 3 million customers in exchange and refill services.

I would now like to spend a little more time on the 2 keys that impacted our Top Line in the second quarter, 1 out of our control and 1 that we own responsibility, for both of which are largely resolved.

<unk> a significant competitive advantage.

Notably we grew dollar share in retail bottled water in the first half of the year by 11 basis points, demonstrating the overall strength of the business and differentiation of our products.

First as we reported on our first quarter, call the Hawkins Texas tornado in early April struck 1 of our facilities. Resulting in significant damage that disrupted production and operations for 7 weeks including a temporary shutdown.

I would now like to spend a little more time on the two key disruptions that impacted our topline in the second quarter, one out of our control and one that we own responsibility for both of which are largely resolved.

The facility primarily supports Ozarka retail products and to mitigate the impact on our customers. While we rebuild, we leveraged our other taxes, and Southeast region facilities to deliver Ozarka. And Pure Life bottled water to impacted areas which introduced additional operational complexities.

First as we reported on our first quarter call. The Hawkins, Texas tornado in early April struck one of our facilities, resulting in significant damage that disrupted production and operations for seven weeks, including a temporary shutdown.

Altogether. We estimate the impact related to the Hawkins tornado reduced. Our second quarter, net sales by approximately 26 million or 1.5%.

The facility, primarily supports Ozark retail products and to mitigate the impact on our customers. While we rebuilt we leveraged our other Texas and southeast region facilities to deliver Osaka, and pure life bottled water to impacted areas, which introduced additional.

While some repair work remains in progress, the facilities are now back online. We have made significant strides to rebuild our inventory levels of product supply to better serve our customers.

As David will discuss later Capital expenditures associated with building. Repairs are expected to be largely covered by insurance. We will also be submitting the business Interruption impact to our insurance provider

<unk> complexities.

Altogether, we estimate the impact related to the Hopkins tornado reduced our second quarter net sales by approximately $26 million or one 5%.

In the second quarter, we have significant disruptions in our Direct Delivery business resulting from the combining upgrading and rationalizing of our operations.

While some repair work remains in progress the facilities now back online and we've made significant strides to rebuild our inventory levels of product supply to better serve our customers.

During the quarter, we closed 40 facilities, bringing the total number of facilities closed. Since the merger to 48 facilities or 15% of our total Network.

As David will discuss later capital expenditures associated with building repairs are expected to be largely covered by insurance. We will also be submitting the business interruption impact to our insurance provider.

And we reduced headcount by 1,100 full-time equivalent roles in the quarter.

In the second quarter, we had significant disruptions in our direct delivery business, resulting from the combining upgrading and rationalizing of our operations.

in total since the merger, we have reduced headcount by more than 1600 rolls representing an 11% reduction across our organization

During the quarter, we closed 40 facilities, bringing the total number of facilities closed since the merger 248 facilities or 15% of our total network.

Additionally in the past few months, we have been integrating facilities, merging routes and rationalizing technology. Which included transitioning, our Legacy, Primo branches to sap and introducing new handheld devices to a large portion of our Workforce.

And we reduced head count by 1100 full.

Full time equivalent roles in the quarter.

In total since the merger, we have reduced head count by more than 1600 roles, representing an 11% reduction across our organization.

While the vast majority of our customers continued to receive the great service, they expect from us. In some markets, the high demand standardization initiatives and challenges from an accelerated integration. Collectively affected our inventory levels and fill rates.

Additionally, in the past few months, we have been integrating facilities emerging routes and rationalizing technology, which included transitioning our legacy <unk> branches to SAP.

We prioritize speed and cost reductions resulting in some customers experiencing rescheduled or cancelled deliveries on a recurring basis.

Product substitutions and extended customer service. Wait times.

And introducing new handheld devices to a large portion of our workforce.

While the vast majority of our customers continued to receive the great service. They expect from us in some markets the high demand standardization initiatives and challenges from an accelerated integration collectively affected our inventory levels and fill rates.

These disruptions began in late May, and we have been working tirelessly to address the underlying operational issues, stabilizing service levels and optimizing our Factory-to-Branch transport and delivery routes.

We prioritize speed and cost reductions, resulting in some customers experiencing rescheduled or canceled deliveries on a recurring basis.

Our manufacturing supply chain last mile delivery, call center, and it teams are working together to restore the service levels. Our customers expect

Substitutions and extended customer service wait times.

We are grateful for the hard work of our Frontline Associates as they continue to manage through this transformational period And Lead With agility and resilience.

These disruptions began in late May and we have been working tirelessly to address the underlying operational issues stabilizing service levels and optimizing our factory to branch transport and delivery routes.

And we are equally thankful for our loyal customers who have been patient and understanding through these service disruptions

Our manufacturing supply chain last mile delivery call Center and it teams are working together to restore the service levels our customers expect.

We are grateful for the hard work of our frontline associates as they continue to manage through this transformational period and lead with agility and resilience.

I also went on additional route rides in recent weeks and months to directly interact with customers and solicit feedback from Frontline Associates to ensure progress against critical service measures as being made.

And we are equally thankful for our loyal customers, who have been patient and understanding through these service disruptions.

We expect to be passed the majority of the challenges. Come the end of September.

Each quarter I spent time visiting our manufacturing facilities across different states and markets and this quarter I visited the Hopkins facility to see the restoration and recovery efforts firsthand and thank our associates on the ground.

Though, there will be some lingering supply side constraints that we expect to normalize in approximately 8 to 10 weeks.

Importantly are on the line business continues to show resilience and water remains an attractive category with structural Tailwinds, supporting its growth.

I also went on additional route rides in recent weeks and months to directly interact with customers and solicit feedback from frontline associates to ensure progress against critical service measures is being made.

As a backdrop, we continue to see significant consumer interests in water quality.

Driven by ongoing environmental concerns and infrastructure challenges across the United States.

We expect to be past the majority of the challenges come the end of September.

So there will be some lingering supply side constraints that we expect to normalize and approximately eight to 10 weeks.

Our diverse portfolio spanning multiple price points and channels, enables us to adapt to shifting consumer Dynamics, particularly given our products value proposition relative to Municipal Water options.

Importantly, our underlying business continues to show resilience and water remains an attractive category with structural tailwind supporting its growth.

While the macro consumer environment remains somewhat soft from any cpg companies, we continue to see robust demand for our products and services.

As a backdrop, we continue to see significant consumer interest in water quality, driven by ongoing environmental concerns and infrastructure challenges across the United States.

Our diverse portfolio spanning multiple price points and channels enables us to adapt to shifting consumer dynamics, particularly given our product's value proposition relative to municipal water options.

Demand remains strong in our retail business, where several weeks of colder and wetter than usual weather for mid-may to Mid June led to multiple weeks of category softness, especially impacting the northeast or Poland Springs Market.

however,

While the macro consumer environment remains somewhat soft for many CPG companies, we continue to see robust demand for our products and services.

Retail scans rebounded, as temperatures rose in late June and July, with our share outperforming category scans by approximately 100 to 70 basis points in the last week of June, with the momentum accelerating in July.

Demand remains strong in our retail business, where several weeks of colder and wetter than usual weather for mid may to mid June led to multiple weeks of category softness, especially impacting the northeast our Poland Springs markets.

Sirana shows we expanded retail dollar share by 48 basis points in July driving 5 weeks of consecutive share growth

Combining this with our first half retail dollar share growth of 11 basis points are year to date. Dollar share has expanded by 17 basis points.

However.

Retail scans rebounded as temperatures rose in late June and July with our share outperforming category scans by approximately 170 basis points in the last week of June with the momentum accelerating in July.

We achieved strong distribution gains during the second quarter with total retail points of distribution growing over 10%. We continue to work closely with Retail Partners to bring our improved scale and wider product portfolio to them and their shoppers.

Sir Canada shows we expanded retail dollar share by 48 basis points in July driving five weeks of consecutive share growth.

Combining this with our first half retail dollar share growth of 11 basis points, our year to date dollar share has expanded by 17 basis points.

week to week philosophies can vary in the initial post-launch stage as consumers, familiarize themselves with new items but the incremental placement in retail stores positions as to drive overall growth as demonstrated in July where we accelerate a dollar share growth,

We achieved strong distribution gains during the second quarter with total retail points of distribution growing over 10%. We continue to work closely with retail partners to bring our improved scale and wider product portfolio to them and their shoppers.

On the marketing front, our partnership with Major League, Baseball has expanded our branded presence to fans Across the Nation.

You may have noticed that Deer Park, the official water of the MLB sponsored the red carpet show at the All-Star game last month in Atlanta.

Turning to our Direct Delivery performance.

Week to week velocities can vary in the initial post launch stage as consumers familiarized themselves with new items, but the incremental placement and retail stores positions us to drive overall growth as demonstrated in July where we accelerated share growth.

Despite Direct Delivery disruptions in the second quarter, our commercial residential and exchange customers. Continue to show strong demand.

On the marketing front, our partnership with major League Baseball has expanded our branded presence to fans across the nation.

Early in the quarter, tariff related announcements. Drove retailer, uncertainty, including selling to our dispenser business, which saw a year-over-year, net sales decline.

Dispensers remain an important point of entry for our large format business.

You may have noticed the deer park the official water of the MLB sponsored the Red carpet show at the all Star game last month in Atlanta.

Turning to our direct delivery performance.

As we had previously, noted our exposure to tariffs is primarily concentrated in our dispenser business, which accounts for approximately 1% of our overall, net sales.

Despite direct delivery disruptions in the second quarter, our commercial residential and exchange customers continued to show strong demand.

Early in the quarter.

Tariff related announcements drove retailer uncertainty, including sell in to our dispenser business, which saw a year over year net sales decline.

Historically, because there is no us-based, dispenser, manufacturer that can meet our volume requirements. We have been able to claim relief for most tariffs and duties related to our dispenser purchases. It remains to be seen whether such relief will be granted going forward.

Dispensers remain an important point of entry for our large format business.

Primo Brands continues to maintain strong competitive positioning versus our peers, many of whom make and sell imported Water Products subject to tariffs.

As we have previously noted our exposure to tariffs is primarily concentrated in our dispenser business, which accounts for approximately 1% of our overall net sales.

With the exception of water dispensers. Our products are domestically sourced and locally, manufactured, and more than 98% of our sales are us-based.

Historically, because there is no use base dispenser manufacturer that can meet our volume requirements. We have been able to claim relief for most tariffs and duties related to our dispenser purchases. It remains to be seen whether such relief will be granted going forward.

Our customers continue to recognize our attractive value proposition. As we are seeing continued strong demand from both residential and Commercial customers.

Primo brands continues to maintain strong competitive positioning versus our peers, many of whom may can sell imported water products subject to tariffs.

We are now providing customers the option to choose between their usual purified, water brand, or a regional Spring Water brand, such as bone spring for a premium price.

With the exception of water dispensers are products are domestically sourced and locally manufactured and more than 98% of our sales are U S based.

Additionally, we've started offering delivery of branded case packs directly to customers homes.

Alongside our standard large format orders.

Our customers continue to recognize our attractive value proposition as we are seeing continued strong demand from both residential and commercial customers.

We expect continued sales contributions from these efforts as we increase penetration in the second half of the year.

I am, particularly pleased with our progress in cross selling and Upselling products from both legacy organizations in our home and office direct delivery channel.

Finally turning to an update on our Premium Water Channel, where our brand performance continues to shine with 44.2% net sales, year-over-year growth in the second quarter.

We are now providing customers the option to choose between their usual purified water brand or a regional spring water brands, such as Poland spring for a premium price. Additionally.

Additionally, we have started offering delivery of branded case packs directly to customers homes alongside their standard large format orders.

Like consumers key retail customers are excited about these Brands and our total points of distribution growth. In the second quarter was fueled by expanded Mountain Valley, and Saratoga pet offerings at Walmart.

We expect continued sales contributions from these efforts as we increase penetration in the second half of the year.

Additionally, this spring and summer, Mountain Valley in Saratoga received prominent placement with social media, influencers, athletes, professional sports teams, conferences, and award shows.

Finally, turning to an update on our premium water channel, where our brand performance continues to shine with 44, 2% net sales year over year growth in the second quarter.

for example, Mountain Valley was the official water of the Academy of Country Music Awards in May

Like consumers key retail customers are excited about these brands and our total points of distribution growth in the second quarter was fueled by expanded mountain Valley and Saratoga PDT offerings at Walmart.

Looking ahead. We are focused on addressing elevated demand for our premium products and ensuring their availability for all customers and consumers. Seeking our iconic green and blue bottles on their shelves and in their homes.

During the quarter, we broke ground on a new.

Additionally, this spring and summer Mountain Valley in Saratoga received prominent placement with social media Influencers athletes professional sports teams conferences and award shows.

Mountain Valley production facility in Hot Springs Arkansas, which we expect to be operational by mid 2026.

For example mountain Valley was the official water of the Academy of Country Music Awards in May.

This facility is expected to unlock our current Supply constraint so we can better meet demand and continue the Brand's growth trajectory.

Looking ahead, we are focused on addressing elevated demand for our premium products and ensuring their availability for all customers and consumers seeking our iconic green and blue bottles on their shelves and in their homes.

Before I turn the call over to David, I would like to talk more about our integration and Synergy capture plans.

As I mentioned earlier, our overall Synergy capture opportunity remains on track.

During the quarter, we broke ground on a new <unk>.

Mountain Valley production facility, and Hot Springs, Arkansas, which we expect to be operational by mid 2026.

And we expect to deliver approximately 200 million dollars in synergies in 2025, increasing to $300 million in total, Synergy capture by year end 2026.

This facility is expected to unlock our current supply constrained. So we can better meet demand and continued the brand's growth trajectory.

Before I turn the call over to David I would like to talk more about our integration and synergy capture plans.

Our integration teams are working to streamline processes, optimize our Network and enhance our long-term customer service capabilities, while these activities stress tested, our manufacturing supply chain and go to market capabilities during Q2.

As I mentioned earlier, our overall synergy capture opportunity remains on track and we expect to deliver approximately $200 million in synergies in 2025, increasing to $300 million in total synergy capture by year end 2026.

We've addressed the most constrained areas of our operations and are on the right track to return to strong service levels going forward.

Our integration teams are working to streamline processes optimize our network and enhance our long term customer service capabilities. While these activities stress tested our manufacturing supply chain and go to market capabilities during Q2.

Looking ahead, the combined manufacturing Transportation branch, and it infrastructure of Primo Brands is expected to deliver substantial long-term benefits once. Fully optimized, we remain confident in our ability to deliver on our Synergy opportunity targets and create sustainable value. For our stakeholders,

We've addressed the most constrained areas of our operations and are on the right track to return to strong service levels going forward.

Looking ahead, the combined manufacturing transportation branch and it infrastructure of Primo brands is expected to deliver substantial long term benefits once fully optimized we remain confident in our ability to deliver on our synergy opportunity targets and create sustainable value for our <unk>.

we have a resilient business model that is positioned to deliver our long-term growth algorithm with an attractive margin and earnings profile over time. Despite the disruptions we face in the second quarter, our comparable, adjusted ibida, margin increased, 80 basis points to 21.2%.

As we Shore up our service issues, expand our sales network, and restore our Topline growth, we expect strong operating leverage to drive improved earnings performance and cash flow generation.

Take holders.

We have a resilient business model that is positioned to deliver our long term growth algorithm with an attractive margin and earnings profile over time.

We believe we have learned from Q2. And as we enter the third quarter, We Believe Primo Brands is becoming a more cohesive and resilient organization.

Despite the disruptions we faced in the second quarter, our comparable adjusted EBITDA margin increased 80 basis points to 21, 2%.

Well, positioned to deliver growth improve margins and generate, strong free, cash flow as we go through the balance of the year.

With that, I would like to turn the call over to David to review the financials and guidance.

As we sure up our service issues expand our sales network and restore our topline growth. We expect strong operating leverage to drive improved earnings performance and cash flow generation.

Thank you, Robert. Let me walk through our financial performance for the first half of 2025, the second quarter, and details around our revised guidance.

We believe we have learned from Q2 and as we enter the third quarter. We believe premium brands is becoming a more cohesive and resilient organization.

Well positioned to deliver growth improve margins and generate strong free cash flow as we go through the balance of the year.

The Gap Financial comparisons in this, morning's press release, reflects the 2025 removal results of the new Premo Brands versus 2024 results of the Legacy blue Triton business. This is a typical Gap reporting outcome of a merger transaction which can lead to growth metrics that are not comparable.

With that I would like to turn the call over to David to review the financials and guidance.

Thank you Robert let me walk through our financial performance for the first half of 2025, the second quarter and details around our revised guidance.

The combination of both Legacy organizations while adjusting for the exited Eastern Canadian operations for both years. 2024 and 2025,

The GAAP financial comparisons in this morning's press release reflect the 2025 livable results of the new Primo brands versus 2024 results of the legacy <unk> business.

Comparable, net sales were essentially flat. When compared to the prior year at the halfway, mark in the year and included growth of 0.6%. When factoring in the leap day impact,

This is a typical GAAP reporting outcome of a merger transaction, which can lead to growth metrics that are not comparable.

The business had a strong start to 2025 with q1 2025 net sales Rising 3%.

To assist with more apples to apples comparisons we will be primarily discussing comparable results, which incorporate the combination of both legacy organizations.

Or 4.2% when adjusted for the leap day impact. Coupled with disruptions in the second quarter that I will discuss in a moment.

While adjusting for the exited eastern Canadian operations for both years 2024 and 2025.

As we mentioned during our earnings call in may, we started the second quarter with the impact of a tornado that struck 1 of our largest production facilities.

Comparable net sales were essentially flat when compared to the prior year at the halfway mark in the year and included growth of 0.6% when factoring in the leap day impact the.

Some additional headwinds began in late may as the cumulative effects of product supply issues led to missed, deliveries and created disruptions resulting from our integration initiatives. We will dive into those details in a moment.

The business had a strong start to 2025 with Q1 2025 net sales rising 3%.

Or four 2% when adjusted for the Leap day impact coupled with disruptions in the second quarter that I will discuss in a moment.

Momentum in our Premium. Water category continued, its strong start with first half 2025, net sales, growth of 46%, all coming from volume Gaines related to brand strength and increased points of distribution. Additionally, our exchange business grew 14%

As we mentioned during our earnings call in May we started the second quarter with the impact of the tornado that struck one of our largest production facilities. Some.

And our refill business grew approximately 8%.

Some additional headwinds began in late may as the cumulative effects of product supply issues led to missed deliveries and created disruptions, resulting from our integration initiatives, we will dive into those details in a moment.

Volume gains were made across our grocery Mass merchants, and the other channel, which is largely comprised of Home Improvement and natural food retailers.

At the comparable, adjusted ebida line, we were able to capture a 6.2% increase.

Momentum in our premium water category continued its strong start with first half 2025, net sales growth of 46% all coming from volume gains related to brand strength and increased points of distribution.

During the first half of 2025, well, ahead of our comparable, net sales growth while expanding comparable adjusted ibida margin by 120 basis points.

For the second quarter comparable, net sales declined 2.5%, when compared to the prior year.

Additionally, our exchange business grew 14%.

And our refill business grew approximately 8%.

Volume gains were made across our grocery mass merchant and the other channel, which is largely comprised of home improvement and natural food retailers.

At the comparable adjusted EBITDA line, we were able to capture a six 2% increase during the first half of 2025 <unk>.

The largest components of this decline include a proximately 26 million in lower sales from disruption related, to the Hawkins tornado, which primarily impacted our Ozarka brand and to a lesser degree, our Pure Life brand. Without this impact, the overall retail business would have posted year-over-year growth

Well ahead of our comparable net sales growth, while expanding comparable adjusted EBITDA margin by 120 basis points.

For the second quarter comparable net sales declined two 5% when compared to the prior year.

Approximately 10 million dollars in lower sales and our dispenser business related to Tara volatility, which created retailer indecision on sell-in orders and approximately 6 million dollars in our office, coffee service or OCS business. As we began to unwind and sell off various routes related to this dilutive non-core piece of our business.

The largest components of this decline include approximately $26 million and lower sales from disruption related to the Hawkins tornado, which primarily impacted our Ozark brand and to a lesser degree our pure life brand without this impact the overall retail business would have posted year over year growth.

The cumulative impact of these activities was approximately 42 million, which would have put the business flat versus the prior year within the quarter.

Approximately $10 million and lower sales in our dispenser business related to tariff volatility, which created retailer indecision on sell in orders.

Separately. We experienced some weakness in our retail business, unrelated to the tornado impact, as the category, navigated poor weather and core geographies leading to several weeks of softer than expected demand in the bottled. Water category, including our products.

And approximately $6 million in our office coffee service or Ocs business as we began to unwind and sell off various routes related to this dilutive noncore piece of our business.

We see signs of improvement based on our total points of distribution, gained versus the prior year and strong retailer scanner data to kick off the third quarter.

The cumulative impact of these activities was approximately $42 million.

Which would have put the business flat versus the prior year within the quarter.

shifting to the direct delivery business as Robert mentioned, we experienced some disruptions as the first waves of integration impacts caused product Supply and delivery service in late May and we were unable to fulfill

Lee we experienced some weakness in our retail business unrelated to the tornado impact as the category navigated poor weather in core geographies, leading to several weeks of softer than expected demand in the bottled water category, including our products.

strong demand from our customers.

These friction points in our integration were not anticipated, but we believe that as our product Supply stabilizes, this business will resume a creative performance to our long-term algorithm.

We see signs of improvement based on our total points of distribution gains versus the prior year and strong retailer scanner data to kick off the third quarter.

We believe this portion of the business will stabilize in late Q3 and will discuss more about how this impacts our revised financial guidance in a moment.

Shifting to the direct delivery business as Robert mentioned, we experienced some disruptions as the first wave of integration impacts caused product supply and delivery service in late May and we were unable to fulfill strong demand from our customers.

Integrations can be challenging particularly when merging 2 established leaders. But we have moved quickly, to address the product supply issues and expect to return to growth as we exit the year.

These friction points in our integration were not anticipated, but we believe that as our product supply stabilizes. This business will resume accretive performance to our long term algorithm.

The comparable net sales decrease for the quarter was driven by a 2.3% decrease from volume and a 0.2% decrease from price or mix. As a reminder, volume for Primo Brands is defined as case goods equivalents, which are measured at 12 liters.

We believe this portion of the business will stabilize in late Q3, and we will discuss more about how this impacts our revised financial guidance in a moment integrations.

Integrations can be challenging, particularly when merging two established leaders, but we have moved quickly to address the product supply issues and expect to return to growth as we exit the year.

The challenges in volume were directly related to the items pre previously discussed, including our temporary inability to fulfill some customer demand in our Direct Delivery business.

The comparable net sales decrease for the quarter was driven by a two 3% decrease from volume and a 0.2% decrease from price or mix as a reminder, volume for premium brands as defined as case goods equivalents, which are measured at 12 liters.

Q2, we are expanding capacity to meet the future growth trajectory of these brands.

The challenges in volume were directly related to the items previously discussed, including our temporary inability to fulfill some customer demand in our direct delivery business.

Comparable, adjusted ibida, increased 1.3% to 366.7 million with comparable adjusted ibida. Margins of 21.2%, an increase of 80 basis points versus the prior year.

We believe our shortfall was largely driven by correctable product supply issues.

Within These results are Synergy capture continued. Although we realized inefficiencies, as we look to stabilize our products Supply to meet the demand of our Direct Delivery customers,

A bright spot is that we continue to see growth in our premium branded portfolio with a net sales increase of 44, 2% in Q2.

We are expanding capacity to meet the future growth trajectory of these brands.

Comparable adjusted EBITDA increased one 3% to $366 $7 million with comparable adjusted EBITDA margins of 21, 2% an increase of 80 basis points versus the prior year.

The pursuit of our Factory closures across production and branches in addition to routing as part of the integration. Resulted in short-term disruption, to the Supply and service of our products to our Direct Delivery customers. We do not see signs of customer weakness, that could be related to the overall macroeconomic factors and thus believes that we can resume our long-term growth algorithm once we stabilize our service.

Within these results our synergy capture continued although we realized inefficiencies as we look to stabilize our product supply to meet the demand of our direct delivery customers.

Part of our revised guidance factors in the activities required to stabilize. The direct delivery business, including temporary product discounts, and win back campaigns for those customers who might have quit as a result of these integration related disruptions.

The pursuit of our factory closures across production and branches. In addition to routing as part of the integration resulted in short term disruption to the supply and service of our products to our direct delivery customers.

We do not see signs of customer weakness that could be related to the overall macroeconomic factors and thus believe that we can resume our long term growth algorithm once we stabilize our service.

We continued reducing long-term costs in the quarter by delivering another wave of integration activities. We actioned another 20 million of synergies within the quarter. We believe this puts us on Pace to achieve approximately dollars of in-ear, Synergy capture with the remaining 100 million dollars coming in 2026.

Part of our revised guidance factors in the activities required to stabilize the direct delivery business, including temporary product discounts and win back campaign for those customers who might have quit as a result of these integration related disruptions.

While we are pleased with the process of executing. Our integration plan, it has led to some disruptions in our business that is preventing us from fully realizing the benefits of the integration within the p&l.

This has also resulted in adjusting our financial guidance for the year, which will discuss in a few minutes.

We continued reducing long term cost in the quarter by delivering another wave of integration activities, we actions another $20 million of synergies within the quarter. We believe this puts us on pace to achieve approximately $200 million of in year synergy capture with the remaining $100 million coming.

Coming into 2026.

While we are pleased with the process of executing our integration plan and has led to some disruptions in our business that is preventing us from fully realizing the benefits of the integration within the P&L.

Progress included, a significant number of facility closures across infield production and branch operations. During the quarter. These reductions help Drive the incremental 20 million in Synergy capture during the quarter with approximately 60 million dollars of synergies realized year to date and 140 million dollars in estimated annualized cost savings based on the actions to date.

Offsetting some of the gains were actions taken to stabilize the business across product Supply, product distribution, and extra costs related to delivery and service to support customer activities, including retention.

This has also resulted in adjusting our financial guidance for the year, which we'll discuss in a few minutes.

Progress included a significant number of facility closures across Enfield production and branch operations during the quarter. These reductions helped drive the incremental $20 million synergy capture during the quarter with approximately $60 million of synergies realized year to date and $140 million in estimated annualized.

<unk> cost savings based on the actions to date.

Offsetting some of the gains were actions taken to stabilize the business across product supply product distribution and extra costs related to delivery and service to support customer activities, including retention.

Now, let's shift to our balance sheet and cash flows at the end of the first quarter, debt Capital, gross of deferred, financing costs and discounts totaled approximately 5.2 billion dollars. The credit agreement amended in February as part of a series of debt transactions includes a 750 million revolving credit facility. This facility remained undrawn at the end of the second quarter providing us with approximately 612 million of available liquidity after accounting for standby letters of credit totaling approximately 138 million.

Now, let's shift to our balance sheet and cash flows at the end of the first quarter that capital growth of deferred financing costs and discounts totaled approximately $5 2 billion.

The credit agreement amended in February as part of a series of debt transactions includes a $750 million revolving credit facility. This facility remained undrawn at the end of the second quarter, providing us with approximately $612 million of available liquidity after accounting for standby letters of credit total.

Our liquidity remains strong with approximately 412 million of unrestricted cash on the balance sheet when combined with the 612 million of availability under our revolving credit facility. This brings our total liquidity to approximately 1 billion dollars at the end of the second quarter, our net leverage ratio was 3.44 times.

Accordingly. Today, our board announced a 250 million share repurchase authorization the board. Recognizes the fundamental long-term value opportunity of purchasing our shares at current valuations.

<unk> approximately $138 million.

Our liquidity remains strong with approximately $412 million of unrestricted cash on the balance sheet when combined with the $612 million of availability under our revolving credit facility. This brings our total liquidity to approximately $1 billion.

Moving to cast generated from the business in the second quarter. Primo Brands, generated, 155 million of cash flow from operations.

At the end of the second quarter, our net leverage ratio was 344 times.

Accordingly.

Today, our board announced a $250 million share repurchase authorization. The board recognizes the fundamental long term value opportunity of purchasing our shares at current valuations.

When accounting for significant items including but not limited to our integration and merger activities. Our cash flow from operations would have totaled. 218 million. Additionally we invested 48 million in capital expenditures, excluding integration related capex which resulted in adjusted free cash flow of 170 million.

when compared to the prior year, on a combined basis, this resulted in adjusted free, cash flow, growth of 23 million

Moving to cash generated from the business in the second quarter Primo brands generated $155 million of cash flow from operations.

When accounting for significant items, including but not limited to our integration and merger activities, our cash flow from operations would have totaled $218 million.

A key metric. We tracked closely is our conversion of adjusted free cash flow to adjust the debit off on a trailing 12-month basis. Our adjusted free cash flow totaled. 718 million yielding a conversion ratio of 51.6%.

Additionally, we invested $48 million in capital expenditures, excluding integration related Capex, which resulted in adjusted free cash flow of $170 million.

When compared to the prior year on a combined basis. This resulted in adjusted free cash flow growth of $23 million.

Advertised reducing our debt and maintaining our investment grade credit profile and plan to take advantage of opportunities to repurchase shares with our newly authorized, share repurchase program.

A key metric we track closely as our conversion of adjusted free cash flow to adjusted EBITDA on a trailing 12 month basis, our adjusted free cash flow totaled $718 million, yielding a conversion ratio of 51, 6%.

Last week, our board of directors authorized another quarterly dividend of 10 cents per share of class, a common stock, which represents an 11% increase over last year's quarterly dividend rate at Primo water.

Looking ahead, we remain focused on disciplined capital allocation, while maintaining a strong balance sheet to support our ongoing integration and growth initiatives. We plan to continue to prioritize reducing our debt and maintaining our investment grade credit profile and plan to take advantage of opportunities to re.

Let me now provide our updated outlook for the remainder of 2025, which reflects our anticipated recovery initiatives to address our operational disruptions.

Given the temporary headwinds that we faced. In the second quarter, that slowed our growth trajectory versus our original guidance. We are revising our full year comparable, net sales, growth expectations to between flat and 1%.

<unk> shares with our newly authorized share repurchase program.

Last week, our board of directors authorized another quarterly dividend of <unk> 10 per share of class a common stock, which represents an 11% increase over last year's quarterly dividend rate at Primo water.

This adjustment accounts for disruptions in our business. In the second quarter of 2025 as well as recovery actions in the back half of 2025.

in total our revised guidance, net sales, midpoint equates to a 350 basis point reduction from the midpoint of our original guidance,

Let me now provide our updated outlook for the remainder of 2025, which reflects our anticipated recovery initiatives to address our operational disruptions.

Given the temporary headwinds that we faced in the second quarter that slowed our growth trajectory versus our original guidance. We are revising our full year comparable net sales growth expectations to between flat and 1%.

Approximately 69 million of the net sales guidance reduction or approximately 100 basis points is related to the headwinds from the 3 short-term items. We have discussed today, 1, the impacts of the Hawkins tornado realized in the first half results approximately 20,

This adjustment accounts for disruptions in our business in the second quarter of 2025 as well as recovery actions in the back half of 2025.

26 million 2, to Spencer tariffs, impacting sell-in, orders for the year. Approximately 16 million

In total our revised guidance.

Net sales midpoint equates to a 350 basis point reduction from the midpoint of our original guidance.

3, our office coffee services or OCS wind down approximately 27 million, the sum of these items remain largely 1-time in nature.

Approximately $69 million of the net sales guidance reduction or approximately 100 basis points is related to the headwinds from the three short term items. We have discussed today one the impact of the Hawkins tornado realized in the first half results.

Approximately $26 million to dispenser tariffs impacting sell in orders for the year approximately $16 million.

Specifically on the OCS business. We previously mentioned that we would assess Our Brands and services as we started to integrate the businesses like with our Eastern Canadian operations that we exited and sold the related property earlier. This year, the OCS business does not fit our long-term strategy. The OCS business includes the sale and Rental of coffee, brewing equipment, and various related, coffee accessories, and coffee products.

Three our office coffee services or Ocs wind down approximately $27 million.

We have experienced weakness in this business for the past few years and began selling off many of these routes during the first half of 2025.

The sum of these items remain largely onetime in nature.

Specifically on the Ocs business. We previously mentioned that we would assess our brands and services as we started to integrate the businesses.

While we understood, this was a possibility. When we laid out our fiscal 2025 guidance, we have been able to sell routes faster than expected.

With our eastern Canadian operations that we exited and sold the related property earlier this year, the ocs business does not fit our long term strategy.

Going forward. The OCS business is a non-core offering. We will remove from the business to reduce our complexity.

This business, previously contributed approximately 54 million annually with limited growth?

Ocs business includes the sale and rental of coffee brewing equipment, and various related coffee accessories and coffee products.

We have experienced weakness in this business for the past few years and began selling off many of these routes during the first half of 2025.

by year end 2025, we expect the business to contribute approximately 27 million in net sales and thus the 27 million decline in our guidance, as mentioned previously,

While we understood. This was a possibility when we laid out our fiscal 2025 guidance, we have been able to sell routes faster than expected.

Our goal is to exit or wind down this business without future Financial activity, as we head into 2026.

Going forward, the Ocs business as a non core offering we will remove from the business to reduce our complexity.

This business previously contributed approximately $54 million annually with limited growth by.

By year end 2025, we expect the business to contribute approximately $27 million in net sales and thus the $20 7 million.

Due to discontinued operations accounting rules, we are unable to exclude this business from our operating results. We are providing clarity for purposes of explaining our revised guidance, and we expect to address this again when providing our 2026 financial guidance. This business sits under "Other" within our net sales by water type and under Direct Delivery within our net sales by trade type disclosure tables listed in our earnings supplement.

Decline in our guidance as mentioned previously.

Our goal is to exit or wind down this business without future financial activity as we head into 2026.

Due to discontinued operations accounting rules, we are unable to exclude this business from our operating results and we are providing clarity for purposes of explaining our revised guidance and we expect to address this again when providing our 2026 financial guidance this business fits under other with.

Of the remaining 250 basis points in net sales. Guidance reduction, approximately 140 basis points is related to the previously mentioned disruptions in our Direct Delivery business and the remaining 110 basis points is related to softness in the retail category, due to the weather impacting key geographies, which was largely experienced in the first half of the year.

Our net sales by watertight and under direct delivery within our net sales by trade type disclosure tables listed in our earnings supplement.

Of the remaining 250 basis points and net sales guidance reduction approximately 140 basis points is related to the previously mentioned disruptions in our direct delivery business and the remaining 110 basis points is related to softness in the retail category due to the weather impact in key geographies.

While we remain a single segment reporting company. As we go to market, across our various water brands within channels of trade, in the second half of 2025, we believe our retail offerings or small format will experience strength with net sales, growth of approximately 2% at the midpoint and even stronger. If we were to perform at the higher end of our revised guidance, our Direct Delivery offering or large format is still on a pathway to recovery within the third quarter. And we believe will exit the fourth quarter resuming growth

Which was largely experience in the first half of the year.

While we remain a single segment reporting company as we go to market across our various water brands within channels of trade in the second half of 2025, we believe our retail offerings or small format will experience strength with net sales growth of approximately 2% at the midpoint and even stronger if we.

We remain optimistic about the customer demand generated and believe we will fulfill a larger portion of these orders as our products Supply and delivery actions stabilized with improved service.

To perform at the higher end of our revised guidance, our direct delivery offering or large format is still on a pathway to recovery within the third quarter and we believe we will exit the fourth quarter resuming growth.

We are also lowering our adjusted ibida guidance to approximately 1.5 billion with an implied adjusted ibida margin of 22.2% at the midpoint approximately 80 basis points below our original guidance.

We remain optimistic about the customer demand generated and believe we will fulfill a larger portion of these orders as our product supply and delivery actions stabilized with improved service.

The decrease in anticipated adjusted ibida and margin is largely related to our net sales guidance reset and partially tied to disruptions in the business, from the Hawkins tornado investments in our dispenser business, to support retail orders, due to the impact of tariffs and other anticipated recovery actions across the balance of 2025 and stabilizing, our Direct Delivery product Supply and service.

We are also lowering our adjusted EBITDA guidance to approximately $1 5 billion with an implied adjusted EBITDA margin of 22, 2% at the midpoint approximately 80 basis points below our original guidance.

We remain committed to achieving our in-year 2025 and overall synergy capture opportunity totals by the end of 2026.

The decrease in anticipated adjusted EBITDA and margin is largely related to our net sales guidance reset and partially tied to disruptions in the business from the Hawkins tornado investments in our dispenser business to support retail orders due to the impact of tariffs and other anticipated recovery actions across the balance of 'twenty.

With our Synergy capture opportunity intact. This leaves the base business, a bit behind schedule versus our original expectations. Largely, as we work to improve and stabilize our product Supply and deliveries

We believe that once things have improved, we will be able to fully retain the benefits of the synergies, and our business margins will be more in line with our original margin assumptions.

25, and stabilizing our direct delivery product supply and service.

We remain committed to achieving our in year 2025, and overall synergy capture opportunity totals by the end of 2026 with our synergy capture opportunity intact. This leaves the base business a bit behind schedule versus our original expectations largely as we work to improve and stabilize our product supply and deliveries we believe.

Moving on to Capital expenditures, we are maintaining a forecasted run rate growth and maintenance capex. Budget of approximately 4% of comparable. Net sales plus integration related capex across 2025 and 2026.

Separately we are working through the anticipated. Restoration costs that are Hawkins Texas facility though. Insurance proceeds are expected to largely offset these expenses.

One things have improved we will be able to fully retain the benefits of the synergies and our business margins will be more in line with our original margin assumptions move.

our base capex, spend included 115 million of spending in the first half of 2025 representing approximately 3.4% of our first half comparable, net sales,

Moving on to capital expenditures, we are maintaining a forecasted run rate growth and maintenance capex budget of approximately 4% of comparable net sales plus integration related capex across 2025 and 2026.

Additionally, our integration capex was a minimal 26 million in the first half of 2025.

We expect our integration related capex to ramp sequentially.

We are working through the anticipated restoration costs at our Hawkins, Texas facility, though insurance proceeds are expected to largely offset these expenses are.

Our base Capex spend included $115 million of spending in the first half of 2025, representing approximately three 4% of our first half comparable net sales.

As a result of the guidance adjustments. Previously mentioned we are revising our adjusted free cash flow projections to a range of 740 million to 760 million. This incorporates, the impact of operational, disruptions and integration related to achievements and retains approximately a 50% conversion rate of expected adjusted. Evida

Additionally, our integration Capex was a minimal $26 million in the first half of 2025.

Well, this represents a dollar reduction from our initial guidance. We expect cash flow generation could improve based on the timing of our capex spending integration recovery initiatives including working capital actions to drive improvements.

We expect our integration related capex to ramp sequentially.

As a result of the guidance adjustments previously mentioned, we are revising our adjusted free cash flow projections to a range of $740 million to $760 million. This incorporates the impact of operational disruptions and integration related achievements and retains approximately a 50% conversion rate of expected adjusted EBITDA.

As a reminder, this forecast assumes adding back acquisition and integration costs in-year, integration-only CapEx, and reimbursed repairs for the Hawkins facility impacted by the tornado, as well as the benefits of after-tax synergy capture.

While this represents a dollar reduction from our initial guidance, we expect cash flow generation could improve based on the timing of our capex spending integration recovery initiatives, including working capital actions to drive improvement.

While we fully acknowledge the near-term disruptions, we remain confident in our ability to execute our recovery plans that are well underway. The revised guidance delivers improved performance as we progress through the remainder of 2025, with our operations reaching optimized levels during the fourth quarter.

And resume our long-term guidance in 2026 and Beyond.

As a reminder, this forecast assumes adding back acquisition and integration costs in year integration, only capex and reimbursed repairs to the Hopkins facility impacted by the tornado as well as the benefit of after tax in your synergy capture.

With that, I will now turn the call back to Robert for any closing comments.

Let me conclude by addressing our path forward.

While we fully acknowledge the near term disruptions, we remain confident in our ability to execute our recovery plans that are well underway. The revised guidance delivers improved performance as we progress through the remainder of 2025 with our operations, reaching optimized levels during the fourth quarter.

Looking ahead, while we have adjusted our current Year's growth expectations. We are confident in our post 2025 long-term growth algorithm of 3 to 5% organic. Net sales

I also want to express my appreciation to our team of Primo Brands Associates for their hard work and dedication with that. I will turn the call back to John to take us through Q&A.

And resume our long term guidance and 2026 and beyond.

With that I will now turn the call back to Robert for any closing comments.

Thanks Robert to ensure we can address as many of your questions as possible. Please limit your inquiries to 1 question and 1 follow-up operator. Please open the line for questions.

Let me conclude by addressing our path forward looking.

Looking ahead, while we have adjusted our current year growth expectations. We are confident in our post 2025 long term growth algorithm of 3% to 5% organic net sales.

Thank you so much. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question please? Press star. Followed by 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue? Please. Press star. Followed by 2.

I also want to express my appreciation to our team of Primo brands associates for their hard work and dedication with that I will turn the call back to John to take us through Q&A.

If you're using a speaker-phone, please lift the handset, before pressing any Keys. Just a moment for your first question.

Thanks, Robert to ensure we can address as many of your questions as possible. Please limit your inquiries to one question and one follow up operator. Please open the line for questions.

And your first question comes from Nick, Modi with RBC Capital markets, please go ahead.

Yeah, thank you. Good morning everyone. Um

Thank you so much ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone you will hear prompt that Youre head has been raised should you wish to remove your hand from the queue. Please press star followed by two.

If you are using a speaker phone please lift the handset before pressing any key.

Just a moment for your first question.

More, would you have to do in the back half of the year in terms of Route, consolidation, maybe Warehouse consolidation? And what is it? Exactly mean by normal, you know, things getting back to normal by the end of September, any Clarity on, that would be helpful.

And your first question comes from Nik Modi with RBC capital markets. Please go ahead.

Okay. Yeah thanks. Thanks Nick. Um,

Yes, Thank you and good morning, everyone.

Maybe we can just start with I'm, sorry, a lot of focus on those questions.

Robert your confidence around integration pathway going forward.

How much was actually accomplished.

More would you have to do in the back half of the year some of those.

Route consolidation, maybe warehouse consolidation on one for example loan by normal things getting back to normal by the end of September any clarity on that would be helpful.

The, I'll I'll start high level and I'll get a bit more specific. But, you know, we started at about, uh, 310 facilities. And we're going down to 250 approximately, right? And so we've closed 48 to date. We've currently planned about 11 more to go for the balance of, of the integration, which is, um, there's 3 more phases. There's a phase in September 1 in February next year, 1 in March, most of those are technology, conversions.

Okay. Yeah. Thanks, Thanks, Nick.

So uh, so far we've streamlined routes we've closed 48 facilities.

That's a 48. Uh sorry, 15% reduction in the footprint.

I'll start high level, and they will get a bit more specific but.

We started at about three.

<unk> 310 facilities, and we're going down to 250, approximately right and so we've closed 48 to date. We've currently planned about 11 more to go for the balance of the integration, which is there's three more phases. There's a.

Phase in September one in February next year when in March.

And we've optimized headcount by now 1600 FTE. Um that's about 11%. We've also discontinued 5 Brands uh Brands like deeprock Crystal Rock Mountain Olympus and we've replaced those with our regional spring water brands. Now, you know we had extensive integration planning but due to the speed of integration, we we clearly prioritize. The speed, we did temporarily experience supply chain.

Those are technology conversions.

So far we've streamlined routes, we have closed 48 facilities.

That's a 48, sorry, 15% reduction in the footprint.

And we've optimized head count by 1600 Ftes.

About 11%, we've also discontinued five brands.

Shortages. But we've addressed that Nick by adding um modular racks thousands uh bottles. Um and worked with engineering to ensure that our production lines are now completely compatible with the existing Fleet of of racks and bottles of both companies. We've also converted handhelds in the majority of our, um, existing, um staff.

Brands like deep rock Crystal rock, Mount Olympus, and we've replaced those with our regional spring water brands now we had extensive integration planning, but due to the speed of integration. We clearly prioritize speed, we did temporarily experienced supply shortages, but we've addressed that nic by adding.

So, you know, that led to a bit of a disruption um in in the large format Network and that was exacerbated by high demand led to shortages and Mis deliveries. Um but we have largely uh resolved these uh delays across the network.

Modular racks thousands of bottles.

And worked with engineering to ensure that our production lines are now completely compatible with the existing fleet of Rexam bottles of both companies. We've also converted handhelds and the majority of our.

Existing staff.

No.

Led to a bit of a disruption.

And we've learned a lot. Um, we entered the third quarter, uh, far more cohesively, uh, as a company, uh, more resilient. We're now battle testing and well, positioned to restore growth, uh, improve margins and generate free cash flow in the second half. Um, if you, if you look at, um, what what does it mean? Um, it means that right now, uh, whilst our retail service is usually in the high 90s. Um, our uh, last mile delivery service rate dropped.

In the large format network and that was exacerbated by high demand led to shortages of missed deliveries.

But we have largely.

Resolved these delays across the network.

And we've learned a lot we entered the third quarter a far.

Far more cohesively as a company more resilient for now battle tested and well positioned to restore growth.

Improved margins and generate free cash flow in the second half.

If you if you look at.

What does it mean it means that right now.

Our retail service is usually in the high nineties.

Our.

Last mile delivery service rate drops.

But we're back at 92%.

I track. This every day that means daily service rate is back at 92% and we are working our way back to 95, plus which is where you would have seen us.

But Rebecca, 92%, I tracked this every day. That means daily service. Rate is back at 92% and we are working our way back to 95 plus which is where you would have seen us in in Pre in the pre merger status. Uh, so we expect to be passed most of those challenges come September. There will be some lingering Supply constraint that we expect to normalize in about 8 to 10 weeks. So we really learned from Q2 and we're working to ensure we have minimal disruptions um to end you know, to the end consumer in the next 3, waves of integration which as I said are mostly technology conversions and you know, approximately 10 more Branch closures between now and March of 2026 hopefully that that clarifies your question.

Yeah, it does I'll I'll pass it on and get back in the queue. Thanks.

In the pre merger status so.

Your next question comes from Peter, galbo with Bank of America, please go ahead.

So we expect to be passed most of those challenges come September there will be some lingering supply constraint that we expect to normalize in about eight to 10 weeks. So we've really learned from Q2 and we are working to ensure we have minimal disruptions.

To end to the end consumer in the next three waves of integration, which as I said are mostly technology conversions and approximately 10 more branch closures between now and March of 2026, hopefully that clarifies your question.

Hey guys, good morning. Uh, thanks. Thanks for the questions. Um, I I guess a couple of clarifications, um, David it was helpful to get the kind of breakout of revenues in in the quarter and and you outlined, I think it was something like 40 million dollars of of discrete items. Um, within that I think you had about 16 million that was related to, to the office and coffee and then the dispenser business, um, which would seemingly flow through

Yes.

So I'll get back in the queue. Thanks.

Your next question comes from Peter Galbo with Bank of America. Please go ahead.

Hey, guys. Good morning, thanks, Thanks for the questions.

I guess a couple of clarification.

David It was helpful to get the kind of breakout of revenues in the quarter and you outlined I think it was something like $40 million of discreet items.

You know, the Direct Delivery, um, Channel as you outlined it, you know that business again, based on our math was down about 20 million. So it it would seem to account for the large majority of it. And I guess, I guess what I'm getting at is it implies that? I don't know, there was less than a 5 million dollar hit on Direct Delivery specifically related to to integration hiccups in the quarter. So I just wanted to test that math with you. Make sure I understood it correctly because if that is the case it would seem that you know it it's maybe not as big of a hit as as we're all you know seeing in the stock today.

Within that I think you had about $16 million that was related to the office in coffee and then the dispenser business.

Which would seemingly flow through the.

The direct delivery channel as you outlined it that.

That business again based on our math was down about $20 million. So it would seem to account for the large majority of it and I guess, what I'm getting at is it implies it.

I don't know if there was less than a $5 million hit on direct delivery specifically related to integration hiccups in the quarter. So I just wanted to test that math that you can make sure I understood. It correctly, because if that is the case it would seem that.

It's maybe not as big of a hit as we're all seeing in the stock today.

Yes, so youre right in the office coffee and dispensers flows through direct delivery as wood things like exchange.

In the Q2 itself.

About 10 million of that, with office, coffee about 6. I think a lot of the numbers I was providing in the walk were to help clarify what we're expecting, you know, up against the 4%, original guide that left, excuse me, that left Direct Delivery, uh, at about 13 million in residual decline. Uh, excluding those already contributed parts that I, I broke out separately. So you're correct in that, um, you know, it wasn't a great quarter in terms of being responsive to customers. But there are opportunities for tremendous strength as our delivery service rate and success rate has uh, you know, kind of resumed its upward trajectory

Dispensers was about $10 million of that with office coffee about six.

Where we remain cautious is.

Thank a lot of the numbers I was providing in the walkway to help clarify what were expecting.

Up against the 4% original guide that left excuse me that left direct delivery.

At about $13 million in residual decline, excluding those already contributed parts that I broke out separately. So you are correct in that.

It wasn't a great quarter in terms of being responsive to customers, but there are opportunities for tremendous strength as our delivery service rate and success rate is.

Kind of resumed its upward trajectory.

We remain cautious is ensuring that product supply.

To the point of steady.

Ensuring that product Supply you know gets to the point of steady uh contribution and that our route service you know technicians are basically our our individuals in the field can be uh more successful with their daily completion. We are actually seeing units per route per day increase. We're seeing some efficiencies there, but it's not quite where we would want it to be, uh, at this time. So again, we do have some attribution to pieces of the business that remain sort of non-core. Um, and you know we remain very positive in the way we're approaching the recovery plans, it just ends up being a little bit of a time in math. Exercise, when you're talking to you here today, in August of how much time we have to rectify the issue with, you know, how we want to handle it.

The guy.

Contribution and that our route service.

Technicians are basically are individuals in the field can be more successful with their daily completion.

Okay, no, that's that's super helpful. Thank you. Uh, for that on the, the kind of the 13 million. Um, residual

I guess maybe just to

We are actually seeing units per route per day increase we're seeing some efficiencies there, but it's not quite where we would want it to be at this time so again.

We do have some attribution two pieces of the business that remains sort of noncore.

And we remain very positive and the way we're approaching the recovery plans. It just ends up being a little bit of a time in math exercise. When you are talking to you here today in August of how much time, we have to rectify the issue with how we wanted to handle the guide.

Be helpful. Just any puts and takes around, you know, the third quarter specifically as we're thinking about modeling, I know David you gave some kind of growth rate expectations for for the second half on on again, some of the different, you know, components or or mix channels. Um but but anything specifically to to 3 Q both on the top line and and from an EV time margin perspective, would be great. Thanks very much.

Okay. No. That's super helpful. Thank you for that on that kind of a $13 million.

Residual.

I guess, maybe just to follow up it would be helpful. Just any puts and takes around the third quarter, specifically as we're thinking about modeling I know David you gave some kind of growth rate expectations for the second half on again some of the different components or mix channel.

But anything specifically to <unk>, both on the top line and from an EBITDA margin perspective would be great. Thanks very much.

Yes, absolutely. So again, we'll kind of speak to the high level looking at the full year.

We fully anticipate the last mile or direct delivery business to begin its recovery as it has continue that into September that.

Yep. Absolutely. So again we we'll kind of speak to the high level uh looking at the full year. Um again we fully anticipate the last mile or direct delivery business to begin its recovery. As it has continued that into September, um, that still may put the business at a slight decline on a year-over-year basis, but sequentially, ideally improving. And that means that really, when you look at our small format pieces, in retail notably, in our premium Brands, you know that business coming out of the gate strong in, Q3 with July scan data already mentioned. So again, it'll be a balance there where, you know, on a on a sort of combined basis, we feel, uh, we'll start the right trajectory where we really feel confident is when we get to Q4 having largely the Direct Delivery disruptions behind us, you know, being able to start to exit 2025 with a nice exit, velocity that provides more linear confidence in how we start 2026. So,

Still may put the business at a slight decline on a year over year basis, but sequentially ideally improving and that means that really when you look at our small format pieces in retail, notably in our premium brands that business coming out of the gate strong in Q3 with July scan data already mentioned, so again it'll be a balance there.

Again won't get into the specifics on the quarter. As we're really trying to be patient attentive to our customer disruptions, uh, and really try to resolve this as we look at a full year perspective.

Great, thank you very much.

Thank you. Your next question comes from. Derek lassard. With TD Cowen, please go ahead.

On a on a combined basis, we feel we will start the right trajectory, where we really feel confident as when we get to Q4, having largely the direct delivery disruptions behind us being able to start to exit 2025 with a nice exit velocity that provides more linear confidence and how we start 2000.

Yeah, good morning, everybody. Uh, Robert, I just wanted to maybe follow up on your comments around the service levels. I was just curious where that service level actually fell to in the quarter.

<unk> six so again, we won't get into the specifics on the quarter as we're really trying to be patient attentive to our customer disruptions.

And really try to resolve this as we look at a full year perspective.

Yeah, I think we, uh, we temporarily dropped below 80% in the first weeks of May. So through April, uh, when we uh, started the conversion of the branches, roll out to new handhelds.

Great. Thank you very much.

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

Yes, good morning, everybody Robert I, just wanted to maybe follow up on your comments around the service levels I was just curious where.

That service level actually fell two in the quarter.

Yes, I think we.

We temporarily dropped below 80% in the first weeks of May So through April when we started the conversion of the branches rollouts of new handhelds.

Um, Consolidated branches. We saw a significant disruption there for for a short period. We then started adding modular racks and Bottles. We we had a compatibility issue. We um we were running the Legacy Primo bottles through the ready. Refresh Network and discovered that we had an issue, decapping and capping the bottles. Uh, we also learned about compatibility issue with the, with the racks, uh, where where we put in Optical eyes to, to be able to identify the racks. Um, I personally went to to a number of manufacturing facilities to see um, what the issues were and how to address it. We have address those we've added um

Consolidated branches, we saw a significant disruption therefore for a short period. We then started adding modular racks and bottles, we had a compatibility issue we.

We were running the legacy premium bottles to the already refresh network can discover that we had michele <unk> and capping the bottles.

We also learned about a compatibility issue with the with the racks, where we put in optical is too to be able to identify the Rex.

Personally went to a number of manufacturing facilities to see what the issues were and how to address it we have addressed those we've added.

Thousands and thousands of modular X each of those hold about 40 bottles and we've added millions of bottles to the extent that we've been adding about a half a million dollars a week over the last.

Two months and.

Bottles on hand. We we we also in the brand conversion, lost the number of bottles. So, you know, we've been steadily going back above 80 and we're over the last 3 weeks we've been well above 90, we were sitting at 90 and now we're 92. In fact, we're above 92 this week, um, we're working our way back to this, consistent steady pace of 95%, what we call Daily Service rates. So, the number of orders placed that we can, we can fill on the day itself. We've we also had

We have to ramp that up.

We discovered that because of the significantly reduced network the.

The distances between factories and branches were slightly elevated and we needed a lot more.

Bottles on hand, we also in the brand conversion last a number of bottles. So.

Temporarily something we refer to as multi-drug where um, a delivery gets delayed, uh, more than 1 day, we've addressed that decisively. And we're now back to normal delivery, schedules in the majority of the markets. Um, but again, you know, it'll take us about 8 to 10 weeks to fully fully recover.

We've been steadily going back above 80% over the last three weeks have been well above 90, we were sitting at 90 and now we're at 92 effects were above 92. This week.

We're working our way back to this consistent steady pace of 95%, what we call daily service rates with the number of orders placed that we can we can fill on the day itself.

Okay. That's uh, very helpful and great color and David. Maybe I missed this but, um, the year to date and where are you guys on the year to date? Synergy catcher for the 200 million and then maybe what are the sort of the big buckets of synergy capture for the, uh, the second half?

Yeah, excuse me.

We also had.

Temporarily something we refer to as multi drag there.

A delivery gets delayed more than one day, we've addressed that decisively and we're now back to normal delivery schedules and the majority of the markets, but again it'll take us about eight to 10 weeks to fully fully recover.

Okay, that's very helpful and great color and David maybe I missed this but.

So we are on Pace again to sort of achieve our in-ear and 2026 values. Um, that walk, at this point includes, you know, approximately 20 million, we captured in q1, a similar, second 20 million we captured in Q2, uh, in aggregate that puts us, you know, into the realization of about 60 million year to date. But when you extrapolate those decisions out,

The year to date.

Where are you guys on the year to date synergy capture for the $200 million and then maybe what are the sort of the big buckets of Sydney synergy capture for the second half.

Yeah excuse me. So we are on pace again to sort of achieve our in year end 2026 values.

That work at this point includes approximately $20 million, we captured in Q1.

Similar second $20 million, we captured in Q2 in.

In aggregate that puts us.

Into the realization of about $60 million year to date, but when you extrapolate those decisions out it puts you on pace.

For the.

About $140 million of annualized targeted actions as Robert mentioned, we have a few phases to go.

They put you on Pace, you know, for the uh about 140 million of annualized targeted actions as Robert mentioned, we have a few phases to go uh, with a large 1 coming up. Uh, and then the remaining facility and act, excuse me, the remaining activities and field will largely be technology transitions. So again, we're on Pace to really take action on the majority of what we need to, uh, and then it's really letting the residual impacts of those change management activities, you know, play out in the field. Uh, again, as we mentioned before, we'll resume 2026 with some internal sort of non-field related activities, uh, in the first quarter of 2026 and that will sort of help the Cadence deliver where we need to go for, uh, for the full year or excuse me for the, you know, total Synergy capture across 25 and 26.

With a large one coming up.

Sorry, Debbie you said 20 and 20 q1 and Q2 and 140 remaining.

And then the remaining facility in active or excuse me the remaining activities and feel will largely be technology transitions.

Again, we are on pace to really take action on the majority of what we need to and then it's really letting the residual impacts of those change management activities play out in the field.

No, 20 and 20 in q1 and Q2, and you annualize those out that get you about 140 million of actions on the, you know, on a comparable basis to what 200 would be.

Okay, thank you.

And as we mentioned before we will resume in 2026 with some internal sort of non field related activities in the first quarter of 2026 and that will sort of help the cadence deliver where we need to go for for the full year or excuse me for the total synergy capture across 25 and 26.

Your next question comes from Andrea Tischer with JP Morgan. Please go ahead.

Thank you for taking the question. So, um, can you, Robert, talk about the client retention at the HOD business?

Um, and how do you progress through the quarter?

Alright, David you said, 'twenty, and 'twenty, Q1, and Q2 and $1 40 remaining.

No 2020 in Q1 and Q2 when you annualize those out that gets you about $140 million of actions on the comparable basis to what 200 would be.

Okay. Thank you.

I mean, I understand the service levels have improved, which is good news, but, um, I think as you as you're trying to chase that, uh, the Synergy targets that David just mentioned, uh, you probably obviously had to, um, had some pains through, through the process. Right? So as you think about, like, what you're calling for inflection in Q4

Your next question comes from Andrea Teixeira with Jpmorgan. Please go ahead.

Thank you for taking the question. So can you Rob but can you talk about the client retention at the <unk> business.

And how you progressed through the quarter.

Understand the service levels have improved which is good news but.

I think as you as you were trying to change that the synergy targets that David just mentioned.

What are the assumptions by division by retail and by hod, um, I appreciate the 250 basis points impact that you called out in the hood. So perhaps, you know, that's the source of liking flexion that goes away in the fourth quarter, is that what you're assuming? And then, my follow-up is regarding, um, the share in proof file pack. Water retail seems that you tested some of the discounts, uh, in some key retailers. Um, so can you talk about the response and share Dynamics? Um, so far

Probably obviously you had to.

Had some pain through the process right. So as you think about like why are you calling for an inflection in Q4.

What are the assumptions by division by retail and by <unk>.

I appreciate that's 150 basis point impact that you called out <unk>. So perhaps that's the source of like inflection that goes away in the fourth quarter is that what you are assuming and then my follow up is regarding the share in five <unk> retail seems that you had tested some of the discounts.

Yeah. Hi Andrea Andrea. Thank thanks for the question. Very good question. You know, let me just start by saying that our um refill uh super premium exchange and retail business all grew in Q2 and the the issue was entirely concentrated in Last Mile, right? That's the big drag that that drivers down and on the retail side we're impacted by by the tournament.

Some key retailers.

So can you talk about the response and share dynamics so far.

NATO uh for about 26 million, but kind of the fundamentally uh the underlying business uh health is strong and what it really was is, there's so much demand out there. We couldn't fulfill because of internal uh Supply disruption that led to uh service issues.

Yes, Hi, Indra Andreas I think thanks for the question very good question.

Let me just start by saying that.

Our refill Super premium exchange and retail business all grew in Q2 and the issue was entirely concentrated in last mile right. That's the big drag that that drove us down and on the retail side, we are impacted by by the tornado for about $26 million, but.

Fundamentally the.

The lighting business.

Health is strong and what it really was so much demand out there, we couldnt fulfill because of internal supply disruption that led to service issues.

So we've been on that journey to restore the service level on last mile to now above 90%.

And.

Well on our way back to 95, and what I would say is we'll probably see.

A soft july's.

More stable August and September, we really should be sort of back to getting back to more normalized velocities and fill rates.

December. We really should be sort of back to getting back to more normalized velocities and the fill rates and, and, and sales on the, on the Last Mile with the fourth quarter, truly being representative of the, you know, of the potential of the business with, with regards to retail, you know, we we're very, um, uh, confident in retail. Um, we did see the first quarter, uh, much stronger than the second quarter, right? The second quarter, it was impacted by the cold and wet weather in the Northeast, but, um, the category retail volume year to date is, uh, is up 160 basis point for a year ago and that indicates continued strength and consumer demand.

And sales on the on the last mile with the fourth quarter truly being representative of the.

The potential of the business.

With regards to retail.

We're very.

Confidence in retail.

We did see the first quarter much stronger than the second quarter at the second quarter. It was impacted by the cold and wet weather in the northeast, but the category retail volume year to date is up 160 basis 0.1st year ago.

That indicates continued strength in consumer demand.

We also looked at battle data.

Bottled water continues to attract new buyers and trip growth is up as well. So <unk> shows is that year to date, new buyers are growing about 50 basis points and trips are up 170 basis points for share growth. So if you look at the first half our dollar scan growth of the category is up one 4% and if you.

We also looked at panel data um, bottled water continues to attract new buyers and and trip growth is up as well. So sirana shows us that year to date. New buyers are growing about 50 basis points. And trips are up 170 basis points for shergo. So if you look at the first half, our dollar scan growth of the category is up 1.4% and if you look at Primo Brands, we were up 2% in the first half in retail. So that's why we are a growing share in the first half by by 11 basis points. We are actually the only large and branded manufacturer to grow. Uh, both dollar scans and share in the first half in bottled water. Now, the the third quarter, we see, uh, strengthening, um, the category is up 1%.

That's higher than Q2. Our dollar scans in Q3 in retail are up 3.7% compared to a year ago. So that gives us a share growth of 48 basis points in the quarter to date, and volume shows similar trends.

At Primo brands, we were up 2% in the first half in retail. So that's why we are growing share in the first half by 11 basis points.

We're actually the only large and branded manufacturer to grow both dollar scans and share in the first half in bottled water.

The third quarter, we see strengthening that.

The category is up 1% that's higher than Q2, our dollar scans in Q3 in retail are up three 7% versus year ago. So that gives us that share growth of 48 basis points in the quarter to date and volume shows similar trends.

The category bottled water retail volume is up in the third quarter. That's the month of July by 40 basis points at our volume scans are up by 130 basis points and that drives that volume share growth that we're showing at 19 basis points in the third quarter. So <unk>, obviously, a very good indicator.

The category of bottled water, retail volume, is up in the third quarter, specifically in the month of July, by 40 basis points. In our volume scans, we are up by 130 basis points, and that drives the volume share growth that we're showing at 19 basis points in the third quarter. So, you know, case backs are obviously a very good indicator. Um, you know, Sirana data shows that case back volume sales are up 170 basis points, and our purified case back buyers, i.e.

<unk> data shows that.

Case back volume sales were up 170 basis points and our purified K spec buyers I E. That's again panel date are up 130 basis points. So these are all.

Pretty reassuring I.

I would say fundamentals and metrics that we continue to stay focused on so the underlying health of the category strong. The demand is there. It is really our ability to fill the demand boosted both in last mile and less so in retail where we have fully restored from the tornado.

Perhaps, you know, we don't, we don't see that. Super helpful, we don't see everything even though we have both tana and and Nielsen uh here but um but perhaps if you extrapolate so you're saying that even without um Mountain Valley and Saratoga which obviously you're growing um bits and Bounds and 44% or 45%, rounded up uh in the quarter you're saying that even despite that you exit the quarter with purified market shares up. Um so just just to make sure I I get the the date of full full um all all channels.

Perhaps.

We don't see that is super helpful. We don't see everything event that we have both the kind of and in Nielsen.

But perhaps if you extrapolate so youre, saying that even without <unk>.

Mountain Valley in San Antonio, which obviously you are growing.

<unk> bonds, and 44%, 45% rounded up in the quarter Youre, saying that even despite that you exited the quarter with purified market shares.

So just to make sure I got the data for.

I will come back to you on the, uh, specific market share for purified, but we we see that, uh, the the case pack, uh, business are the category levels of 170 basis points. Our users, our household penetration is up as well. And we, we're growing 130 basis points on user and our volume growth. Um, you know, so far year to date is about 360 basis points in in case back. So that that said, that's not the the super premium segment that is the sort of purified and Regional Springwater segment. So yeah, we feel good about that.

Thank you very much, Robert. I'll pass it on.

All channels.

I will come back to on the specific market share for purified, but we definitely see that.

Your next question comes from, John Baumgartner with mizuho Securities. Please go ahead.

Good morning. Thanks for the question.

Case pack business at <unk>.

<unk> levels up 170 basis points, our users our household penetration is up as well and we are growing a 130 basis points from user and our volume growth.

So far year to date is about 360 basis points.

In case back so that that's.

Maybe, um, first off, David, to clarify the integration issues, I think you mentioned, uh, customers who may have quit, I think was the term. I'm curious if you can elaborate on that. Is it possible to quantify the cancellation rate at this point? Are they elevated versus history? Could there be a lag in cancellations? Just your observations there, and then I have a follow-up.

That's not the Super premium segment that is the sort of purified and regional spring water segment. So yes, we feel good about that.

Sure.

Thank you very much Robert I'll pass it on.

Your next question comes from John Baumgartner with Mizuho Securities. Please go ahead.

So as you recall, you know, we came into this merger with a very strong customer base. Both customer base, that is known if we have a direct relationship with you and 2 pieces of our business that are unknown exchange and refill.

Good morning, Thanks for the question.

Maybe first off David to clarify the integration issues I think you mentioned customers, who may have quit I think was the term and I'm curious if you can elaborate on that is it possible to quantify cancellation rates at this point are they elevated versus history could there be a lag in cancellations just your observations there and then I have a follow up.

Has an implied customer base elevation.

Sure.

So as you recall, we came into this merger with a very strong customer base.

<unk> customer base that is known if we have a direct relationship with you and two pieces of our business that are unknown exchange and refill.

So when you look at refill, which is a machine and automated than the machine that has service technicians that has been untouched through its integration that business is performing incredibly well with high single digits, and thus has an implied customer base elevation.

And growth exchange is a you know another implied category where we're unaware of who you are, but we know you're shopping and unless your consumption pattern changes, we have to assume that largely the volume. Growth is a beneficiary of more dispensers in the market and more households. So, there again with the, you know, the strong growth, we experience in exchange, we have an implied household growth. Now you come into the Direct Delivery, which both, we on a historical basis and the ready refresh pieces of the business combined, their customer lists.

And growth exchange is a.

Another implied category, where we're aware of who you are but we know you're shopping and unless youre consumption pattern changes, we have to assume that largely the volume growth is a beneficiary of more dispensers in the market and more households.

There again with the strong growth we experienced in exchange we have an implied household growth now you come into the direct delivery, which both we on a historical basis and the ready refresh pieces of the business combine their customer lists.

We have seen some elevation and quits largely in the June and July period, but that is always a lagging indicator of service and so as service started to decline in April and May that led to some of the June departures and then add service persisted in June that led to some of the July departures, what we're incredibly enthusiastic about.

We have seen some elevation in quits largely in the June and July period but that is always a lagging indicator of service. And so as service started to decline in April and May that led to some of the June departures and then as service persisted in June that led to some of the July Departures. What we are incredibly enthusiastic about is what we thought was a benefit of merging is our digital acquisition opportunity. Whereas we consolidate websites and reduce the competing offers Legacy companies were throwing to their respective potential customers. We've been able to have digital ads that have really outperformed our expectations at this time, in some of those months where we've had some higher elevated departures, that's not been able to outpace that but we remain very confident that as service stabilizes that customer departure.

Is what we thought was a benefit of merging is our digital acquisition opportunity, whereas we consolidate websites.

And reduce the competing offers legacy companies were throwing to their respective potential customers. We've been able to have digital ads that have really outperformed our expectations at this time and some of those months, where we've had some higher elevated departures that has not been able to outpace that but we remain very confident that is.

Service stabilizes that customer departure rate the.

The digital ads plus our in field sales and other programs through club will allow us to sort of resume our net organic additions that we've been very proud of and believe is obviously, a very big beneficiary of the two direct delivery businesses coming together. So again temporarily we see that as an elevated level of the <unk>.

Rate, you know the digital ads, plus our infield sales and other programs through Club will allow us to sort of resume our net organic additions that, you know, we've been very proud of and believe is, you know, obviously a very big beneficiary of the 2 Direct Delivery businesses coming together. So again, temporarily, we see that as an elevated level of departure. You can see that whether it be in Google or trust pilot reviews, um, but we have seen those things stabilize, we have seen negative sentiment stabilizing the market and I think that is a completely correlated impact of of what Roberts mentioned, where our operating teams are doing an amazing job of stabilizing service, and improving that delivery success rate to our customers.

<unk> you can see that whether it would be in Google or trust pilot reviews.

But we have seen those things stabilize we have seen negative sentiment stabilized in the market and I think that is a completely correlated impact of what Robert mentioned, where our operating teams are doing an amazing job of stabilizing service and improving that delivery success rate to our customers.

Okay. And then on the expense side, the comments about reinvesting. The correct? These issues are these are these largely pricing concessions to mall, you know, some of these consumers or is there also a business reinvestment component. You mentioned the racks and the bottles. I'm curious about the split in reinvestment there and then, you know what, it's sort of implies about your Synergy targets as you're getting into it. Are you learning that maybe your current targets risk cutting too close to the Bone for this model. Thank you.

Okay, and then on the expense side the comments about reinvesting to correct. These issues or these are these largely pricing concessions to mollify. Some of these consumers or is there also a business reinvestment component you mentioned the racks in the bottles I am curious about the split and reinvestment there and then what it sort of implies about your synergy targets as youre getting into it.

Are you learning that maybe your current targets risk cutting too close to the bone for this model. Thank you.

Yes, absolutely. Good question. So again I think we have we feel we have a very good plan because really what you can't have are redundant locations on a long term basis, you can't have two production facilities in the same geography, where they are not at their efficiency points. So we believe that that.

Yeah, absolutely good question. So again, we I think felt we have, we feel we have a very good plan because really what you can't have are redundant locations on a long-term basis. You can't have 2 production facilities in the same geography where they are not at their efficiency points. So we believe that that plan was appropriate. Again, it comes back to the speed and pace of which we have executed that created some of the product Supply challenges when you look at the, the first part of the question around investment, they're they're largely areas where there's been a delivery error or there might be a billing item issue with the conversion. And in that case, we have tried to be very accommodative with regard to customer credits as opposed to a pricing concession, where we will entertain some activities around customer concession. Because when we are looking through the the customer departure group and and, you know, having Outreach and entertaining Outreach with those to sort of have a welcome

That plan was appropriate again it comes back to the speed and pace of which we have executed that created some of the product supply challenges. When you look at the first part of the question around investment there largely areas, where theres been a delivery error, where there might be one billing item issue with the conversion.

In that case, we have tried to be very accommodative with regard to customer credits as opposed to a pricing concession, where we will entertain some activities around customer concession is when we are looking through the customer departure group.

Them back sort of opportunity for them that might provide either discounted or subsidized product for a period of time. Um, but at this point it's not generally a price discount and I want to clarify also that in our Synergy capture which is largely been operational, focused we have not been executing pricing harmonization. We talked about that this whole time. It was our first priority to get the operational activities done before. We would look at any of those operational. Uh excuse me pricing harmonization.

Done with the consumer or customer base. So we still feel confident that when that service stabilizes, we'll have opportunities to sort of do that as we head into 26.

Having outreach and entertaining outreach with those to sort of have a welcome back sort of opportunity for them that might provide either discounted or subsidized product for a period of time.

Okay. Thanks. David.

Appreciate it. Your next question comes from Stanley, Eric SATA with Morgan Stanley. Please go ahead.

But at this point, it's not generally a price discount and I want to clarify also that in our synergy capture which has largely been operational focus we have not been executing pricing harmonization, we talked about that this whole time. It was our first priority to get the operational activity is done before we would look at any of those operational harmer excuse me pricing.

Harmonization is done with the consumer or customer base. So we still feel confident that when that service stabilizes, we'll have opportunities to sort of do that as we head into 'twenty six.

Thanks, David.

I appreciate it.

Your next question comes from Stanley, Eric Tarata with Morgan Stanley. Please go ahead.

Great. Thank you.

Eric <unk> from Morgan Stanley.

Wanted to talk about I guess, what's left for the integration for the second half.

Past cpg Tech transitions. Um, I know it's a large bucket. There have been uh, you know, they they've in the past caused operational issues for a number of companies, so I guess maybe. Can you give us a little bit more visibility as to what these uh, Tech transitions are, and why you don't expect them to have any operational issue on, you know, product Supply billing or order taking or anything like that?

You talked about the next few milestones being largely technology transitions.

I'll I'll um, give some perspective and then if David would like to add, I would welcome that as well.

But when you look pass.

When you look at past CPG Tech transitions.

Um, from an Enterprise software standpoint.

I know, it's a large bucket there have been.

Yes, they have in the past caused operational issues for a number of companies. So I guess, maybe can you give us a little bit more visibility as to what these are.

Both companies were running on different platforms or either company. So 1 on sap, the other 1 on Oracle.

Where migrating the company to sap.

Tech transitions are.

And why you don't expect them to have any operational issue on <unk>.

Product supply billing, our order, taking or anything like that.

That means that all of the, um, invoiced order billing shipping make move sell, as well as the handheld technology, um, is the one that's linked to SAP. So, what we decided to back, Primo Water, essentially into the ReadyRefresh infrastructure.

Yes.

I'll give some perspective and then if David would like to add I would welcome that as well.

From an enterprise software standpoint.

Both companies were running on different platforms are either company. So one on SAP PDL, one and Oracle.

As we did that we converted handhelds. We taught our teams in the last quarter, how to use the software, how to, um, work with the, the Geo routing system.

Migrating their company to SAP.

That means that.

All of the invoice order billings shipping make move cell as well as the handheld technology.

Is the the one that's linked to S&P, so what we decided to back primo water essentially into the ready refresh infrastructure as.

As we did that we converted handhelds, we talked our teams in the last quarter how to use the software.

How to.

Work with the Geo routing system.

And we've also integrated some upgrades to those systems that Primo water had already implemented. So there is a change management components. There is a hardware components and there is a software components to this changeover.

And we've also integrated some upgrades to those systems that Primo water had already. Um, implemented. So, there's a change management component. There is a hardware, uh, components. And there's a software component to this changeover. I feel very confident that we've identified uh, the, the challenges and already addressed them. So there's still a number of upgrades we're going to be making to the handheld technology and we may migrate eventually to the iPhone, um, over the next 2 years or so. Uh, from the current handle technology that we, um, leveraged, uh, because of the, you know, the the the fit for use

I feel very confident that we've identified.

The challenges in <unk>.

Already addressed them. So they are still a number of upgrades, we're going to be making to the handheld technology, but we may migrate eventually to the iPhone.

So, we're we're making, um, some Hardware changes, some software changes, largely identified, uh, the challenges and have already addressed those in the uh, in the go to market system, which is why we are now back at the 92%. Um, you know, DSR daily service rate on our way back to 95% and we've largely gone through change management. David, do you have any additional thoughts? Yeah, I think the only quick thing I'd add is that's allowed us to get a laundry list of whatever.

Over the next two years or so from the current handheld technology that we leverage because of the.

The fit for use.

So we're making some hardware changes some software changes largely identified the challenges and have already addressed those in the in the go to market system, which is why we are now back up to 92%.

DSR Daily service rate on our way back to 95% and we've largely gone through change management. David do you have any additional thoughts yes, I think the only quick thing I'd add is that's allowed us to get a laundry list of whatever change management or friction would have been created from prior branches and we've increased our <unk>.

Training significantly for an upcoming wave of integration and that training will allow those real time experiences from the field to be.

Change management or friction, would have been created from prior branches. And we've increased our training significantly For an upcoming wave, uh, of integration. And that training will allow those real-time experiences from the field to be, you know, used in the dynamic training that that, that heads to those next series of branches, uh, before it's just theoretical, hey, you're going to have a new device here, so you're going to work it. Now, we actually have real-time examples and behind the scenes from a tech platform. The team have been incredibly Nimble to be able to address any of those concerns. A lot of times you have to actually start delivering product and understanding what those issues are. Um, because just taking a customer table to another company's. Customer table doesn't expose everything until you start actually delivering. So again we feel confident. Um it's not to say there might not be a disruption but I don't think it would be anywhere uh close to obviously what we

Today.

Used in the dynamic training.

Heads to those next series of branches.

And Eric 1 1 additional points. So 1, 1 additional point on that the consumer interface,

Before it's just theoretical hey, youre going to have a new device, here's how you're going to work at now we actually have real time. Examples then behind the scenes from a tech platform. The team has been incredibly nimble to be able to address any of those concerns a lot of times you have to actually start delivering product and understanding what those issues are.

Both companies had an app. Both companies had websites. We were working hard to.

Because just taking a customer table to another company's customer table doesn't expose everything until you start actually delivering so again, we feel confident.

Upgrade those and to integrate those uh from a you know, ready? Refresh.com and water.com the Primo Legacy, my water Plus app, and the ready refresh app. Um, we've had some conversions there where consumers have to switch apps. Those are largely behind us.

That's not to say there might not be a disruption, but I don't think it would be anywhere close to obviously, what we've experienced.

And um we're we're going to work to fully integrate those and make them absolutely frictionless. Uh that's going to take a couple more months to to finalize as well.

And Eric one of the data points.

One additional point on that the consumer interface.

Both companies had a that both companies had websites.

We're working hard too right.

Upgrade those and to integrate those.

It already refreshed dot com and Waterdog column, the Primo legacy my water, plus app and they're already refresh up.

We've had some conversions there where consumers have to switch apps those are largely behind us and we.

We're going to work to fully integrate dose and make them absolutely frictionless.

That's going to take a couple more months to finalize as well.

Okay. That's helpful. And then just as a follow up I know you reiterated the synergy target and then you reiterated the.

Um, any change there? Just given the the lower Topline base.

Post 'twenty five.

Our long term growth algorithm at the 3% to 5%.

With the lower <unk>.

Revenue growth and lower revenue for 2025.

How are you feeling in terms of the.

One 1 billion dollar adjusted free cash flow number that you had out there from the Investor day.

Any change there just given the lower top line base.

No.

We really don't think so I think honestly the free cash flow opportunity still this year I think were being cautious as we've had to adjust our EBITDA. Our capex remains a little bit behind plan in terms of our spend just largely due to vendor and timing lead timing activities, but we really feel like with both the.

So I I I, we really don't think so. I think, you know, honestly, the free cash flow opportunity still this year. Uh, I think we're being cautious as we've had to adjust our ibida. Uh, our capex remains a little bit behind plan, in terms of our spend, just largely due to vendor and timing lead timing activities, but we really feel like with both the trend of interest rates, the trend of long-term capital deployment, uh, within, you know, certain capex initiatives, and then other efficiencies in the working capital side, which have not really been discovered because of friction created right now through integration. We still feel that's very addressable and this is before we even address. What we do with either our Term Loan product, or our Euro note, where we might have opportunities to sort of adjust interest rates paid, uh, in sort of our debt sack. So I think we, you know, again,

we remain very optimistic about where we can go this year and that doesn't put us too far off our original, uh, direction to allow us to sort of still Target that billion dollars.

Trend of interest rates the trend of long term capital deployment.

Great. Thanks so much. I'll pass it on.

Within certain Capex initiatives and then other efficiencies in the working capital side, which have not really been discovered because of friction created right now through integration, we still feel that's very addressable and this is before we've even address what we do with either our term loan product or our euro note, where we might have opportunities to sort of it.

Your next question comes from Daniel Moore with CJs Securities. Please go ahead.

Just interest rates paid.

<unk> sort of our debt stack. So I think again, we remain very optimistic about where we can go this year and that doesn't put us too far off our original direction to allow us to sort of still target that $1 billion.

Thank you, Robert. David, you covered a lot, but just in terms of the revised sales growth guidance of 0% to 1% for the full year, could you break that down into volume and price? I'm really interested in the cadence of volume growth you expect over the next two quarters and your confidence in getting back to a run rate of at least low single-digit positive volume growth as we exit the year and enter 2026.

Great. Thanks, so much I'll pass it on.

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

Thank you Robert David covered a lot, but just in terms of the revised sales growth guidance of <unk> to 1% for the full year, just break that down volume and price and really getting at the cadence of volume growth do you expect over the next two quarters and your confidence in getting back to a run rate of at least.

yep, thanks Dan. So you know, clearly Q2 demonstrated um a lack of volume growth and largely controlled because of 2 issues. Where you know you're taking about 26 million dollars of retail volume out of Market. Uh, just simply from the tornado before you even address. What would have been demand challenges uh in certain geographies and then you know, the Direct Delivery side.

Kind of low single digit positive volume growth as we exit the year and enter 2006.

Yeah. Thanks, Dan So clearly Q2 demonstrated a lack of volume growth and largely control because of two issues, where you are taking about $26 million of retail volume out of market.

You know in that entire demand um you know disruption is all a volume disruption at the same time. So you know with regard to the balance of the year we would expect T3 to probably have some additional volume um, areas in in Direct Delivery as we try to recuperate, sort of, you know, fulfilling a higher rate for those customers. Obviously at a, you know, nominal 50 basis points on a full year. Midpoint you know, its volume and price is not really uh, a significant relevance at that point. But we do feel, we could exit Q4

Simply from the tornado before you even address what would've been demand challenges in.

And heading into 2026 with a much, uh, more balanced.

In certain geographies and then the direct delivery side.

And that entire demand.

Disruption is all volume disruption at the same time, so with regard to the balance of the year. We would expect Q3 to probably have some additional volume.

Areas and direct delivery as we try to recuperate sort of fulfilling a higher rate for those customers obviously.

Kind of 50/50 approach. If you will, like we started the year at our 4% midpoint. Um, we do you know, again we're not fully quantifying at this point and we'll address that as we lay out, 26 guidance which would be in the spring of next year. You know, where some of the pricing harmonization actions will come into play and if in certain quarters that might skew somewhat price. But again, we still remain in our planning internally to have a very strong contribution from volume.

Nominal 50 basis points on a full year midpoint.

<unk> and price is not really a <unk>.

Significant relevance at that point, but we do feel we could exit Q4 and heading into 2026 with a much more balanced.

50, 50 approach if you will like we started the year in our 4% midpoint.

We do again, we're not fully quantifying at this point and we will address that as we lay out 26 guidance, which would be in the spring of next year, where some of the pricing harmonization actions will come into play and if in certain quarters that might skew somewhat price, but again, we still remain in our planning internally to have a very strong contribution from volume.

Very helpful and then maybe this has been asked, but are there any areas of future integration that you might pursue? Um, you know, a little bit more cautiously or or slowly given the experience in Q2. Um, you've obviously you just described some of the confidence that you have and kind of the next phases. But, you know, not thinking about the, the, of the synergies but just, uh, the Cadence and the timing. Thanks again.

Very helpful. And then maybe this has been asked but are there any areas of future integration that you might pursue.

A little bit more cautiously are slowly given the experience in Q2.

Obviously, we just describe some of the confidence that you have and kind of next phases, but not.

Yeah I'd say the easiest thing to answer there. We we discussed from Eric's prior question on change management. In the infield training, the easiest area for us is is having more time from today. Till when we do whatever the next wave is to build up days of, uh, days of inventory on hand. So, when I talked about a little bit of working capital inefficiency, really what we figured out is as we are cutting over production supply houses, we need to have days on hand, as the absorbing facility might not be able to run.

Thinking about the <unk>.

Due to the synergies, but just the cadence and the timing. Thanks again.

Yes, I'd say the easiest thing to answer there we discussed from Eric's. Prior question on change management infield training the easiest area for US is having more time from today till when we do whatever the next wave is to buildup days of days of inventory on hand, so when I talked about a little bit of working capital.

Inefficiency really what we figured out is as we are cutting over production supply houses, we need to have days on hand, as the absorbing facility might not be able to run at the right capacity or utilization immediately and so if you have and give yourself a date in the future where you know you're going to cut out.

The product Supply disruption.

All right, thank you again.

Over we have the opportunity.

Your next question comes from Lauren Liverman with Barclays. Please go ahead.

<unk> today and up until the point of cutover to buildup product supply and that's really where we started running into issues as Robert mentioned, we had different distances, we had different production to branch kind of marriages or connections and so at this point as we look in the.

Great. Thanks so much. Um, I just you know maybe as like a wrap-up type question, you've given so much detail and contacts on second half on the you know, the issues that challenge the quarter and so on but

Look ahead, we can build up that inventory and excess heading into the transition allow that receiving production facility to sort of grow into its production strength and that should largely helped us avoid the product supply disruption.

Alright, Thank you again.

Your next question comes from Lauren Lieberman with Barclays. Please go ahead.

I I just wanted to kind of say like at the 1.5 billion on EBA for this year degree of confidence, in hitting that number. Um, because I think, you know, earlier in the year like, you know, we we started to talk about some of the integration issues that you were facing. You kind of thought it would be taken care of by July. And now we're saying like through September. So just like confidence level that you've really got your arms around it, you really know the scope of the issues and that we can all say confidently. We've kind of de-risked from here.

Great. Thanks, so much.

Thank you.

And maybe as like wrap up question, you gave us so much detail and context.

You know the challenges are embedded in the Outlook um and then we can really again like start thinking about 26 as as let's call it, almost the starting point. Thanks.

Could have on that in addition to challenge a quarter and so on.

I just wanted to kind of say that at the <unk>.

$1 5 billion on EBITDA for this year degree of confidence in hitting that number.

As I think earlier in the year like we started to talk about some of the integration issues that you were facing kind of thought it would be taken care of by July and now are saying like through September.

Yeah, I mean, I think again, from our side that is our confidence in resetting, uh, we understand the Dynamics of what's hit to date, uh, that's why we've been more prudent in how we approach. The next waves going through excess training and making sure we have days on hand and inventory available. And, you know, again, we hope to use that as a reset Point, sort of

Just.

Confidence level that you really got your arms around it you really know the scope of the issues and that we can all think confidently with kind of derisked from here.

And the challenges are embedded in the outlook.

Uh, enter the last months of Q4 and then really be prepared to start 2026 with strength and allow more of the synergy capture to show in the physical results.

Then we can really start thinking about <unk>.

Okay, great. Thanks so much.

Let's call it the starting point.

Yes, I mean, I think again from our side that is our confidence in resetting.

Your next question comes from Steve Powers with Deutsche Bank, please go ahead.

Understand the dynamics of what's hit to date.

That's why we've been more prudent in how we approach the next waves going through excess training and making sure we have days on hand in inventory available.

And again, we hope to use that as a reset point sort of.

Enter the last months of Q4, and then really be prepared to start 2026 with strength and allow more of the synergy capture to show in the in the physical result.

Excuse me. Uh thank you and good morning. Um, you may have David already sort of implicitly answered this, in the answer to Eric's question on free cash flow. But just as I rounded out on the 27th targets, just your your confidence in the the, the 25% ibida margin objective as well. It sounds like that still stands but just wanted to hear it explicitly.

Okay, great. Thanks, so much.

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

Great excuse me, thank you and good morning.

You may have David already sort of implicitly asking this in the answer to Eric's question on free cash flow, but just as I round. It out on the 27 targets your confidence in the 25% EBITDA margin objective as well it sounds like that's still stand, but just wanted to hear it explicitly.

Yes, that would stand on, on a multi-year. Look, as we approach the, uh, year end 2027 again, you know, sort of the basis point departure here is just largely a function of Revenue Decline and then some of the cost support that we've had to put into the market, um, to sort of, stabilize the business. Um, but again, recall that we've really not taken any price harmonization between the businesses. We've really been absent of price and Retail outside of just natural premium mix. That's slowing through the large uh, small format pieces of business.

so, you know, to only have a

Yes that would stand on a multiyear look as we approach the.

Year end 2027, again sort of the basis point departure here is just largely a function of revenue decline and then some of the cost support that we've had to put into the market.

You know, 80 basis point compression and ibida margin to date with the implied new guide without really having any of the pricing, levers pulled. I feel pretty confident that that's um an an you know, an objective that remains on track.

Sort of stabilize the business.

But again recall that we've really not taken any price harmonization between the businesses, we've really been absent of price in retail outside of just natural premium mix thats flowing through the small format pieces of the business.

So the only have.

80 basis point compression in EBITDA margin to date with the implied new guide without really having any of the pricing levers pulled I feel pretty confident that thats.

And objective that remains on track.

Yes, okay.

And if I sort of draw a line between that answer, which I fully understand and kind of the comments so far it really seems like.

Okay.

You have confidence collectively as a team that.

Yep. Okay. Um, and you know, if I sort of draw a line between that answer, which fully understand and kind of the comments so far, it really seems like, um, you have confidence collectively as a team that the, that, the, um, Direct Delivery disruptions that we've seen so far and that we'll see through September are really going to be contained to this 3Q 4q period because we exited, you know, kind of net customer adds the value per customer, um, you know, Recruitment and Retention, uh, costs will all kind of, um, revert back to the trend that we, we were seeing, you know, kind of exiting last year without a, without any real additional kind of run rate costs. And uh, I want to play that back and see if that was correct. And then maybe just get you to to articulate a little bit more as to, as to why you have confidence that that we can kind of, you know, kind of snap back on Trend as we as we get to October and Beyond

But the direct delivery disruptions that we've seen so far and that we will see through September are really going to be contained to this <unk> period, because we exited kind of.

Net customer adds the value per customer.

Recruitment and retention costs will all kind of.

<unk> back to the trend, we were seeing kind of exiting last year without it without any real additional kind of run rate costs and I wanted to play that back and see if that was correct and then maybe just get you to articulate a little bit more as to as to why you have confidence that we can kind of kind of snapback on trend.

Sure. So when you just look at q1 on a leap adjusted basis. It's 4.2% and you had many parts of the company far accretive to that obviously premium which isn't really you know there's obviously premium product that flows through Direct Delivery. Um but you know you had an exchange business which really doesn't have a constraint from the consumers. Mind you have a refilled business that

As we get to October and beyond.

Sure. So when you just look at Q1 on a leap adjusted basis, It's four 2% and you had many parts of the company far accretive to that obviously premium which isn't really theres, obviously premium product that flows through direct delivery.

But.

You had an exchange business, which really doesn't have a constraint.

Actually seen an acceleration of our ability to acquire customers through digital.

From the consumers' mind, you have a retail business.

For its population of the economy is performing at more than double our sort of guide midpoint of our original 4%. So you have a lot of areas of the business that their par value remains accretive to our original midpoint.

And then you had customer additions that were outpacing or at a minimum we're on par with the quick levels in the direct delivery business.

So again a lot of that confidence remains that the demand is there. The customer acquisition profile is continuing its a matter of fulfilling the product on time and in full as they've requested it and that's really where we feel uh that the Snapback is is is there. And again that's before you really start to address anything on pricing or future tuck-in Acquisitions that we, you know, we will remain very uh, focused on

Okay, yeah, understood. Thank you for that; I appreciate it.

And since then as we've.

Harmonized, our digital properties, we've actually seen an acceleration of our ability to acquire customers through digital so again, a lot of that confidence remains debt.

Your next question comes from. Andrew strazik with beimo. Please go ahead.

The demand is there.

<unk> customer acquisition profile is continuing.

Matter of fulfilling the product on time and in full as they requested it and Thats really where we feel.

The snapback is there and again, that's before you really start to address anything on pricing or future tuck in acquisitions that we will remain very focused on.

Hey, good morning. Thanks for taking the question. Um, obviously a lot of ground has been covered, so just 1 quick 1 for me. Um, you, you talked about introducing the cross-selling in Direct Delivery so I was just curious. Um, how far along you are in that effort in terms of availability, what? The uptakes been so far and, and kind of your early read on on that opportunity as you roll forward.

Yeah. Very good. Uh, we we have uh, introduced Regional spring water case back.

Okay understood. Thank you for that I appreciate it.

Your next question comes from Andrew Charles with BMO. Please go ahead.

Hey, good morning, Thanks for taking the question.

Then the Nestle Legacy Brands the blue Titan Legacy brands on the Primo water trucks. We've also um expanded availability of Mountain Valley.

Obviously, a lot of ground has been covered so just one quick one for me.

You talked about introducing the cross selling indirect delivery. So I was just curious.

On the trucks as well more trucks but we have not yet launched 5 gallon. Uh Saratoga Water.

How far along you are in that effort in terms of availability what the uptake has been so far and kind of your early read on on that opportunity as you roll forward.

Uh we have not made Saratoga fully available yet to the Legacy Primo truck. So there's still um transitions happening and still editions happening to to branches

Yes, very good we have introduced a regional spring water case back.

And the next slate legacy brands, the Blue Trident legacy brands on the premium water trucks.

We've also.

Expanded availability of Mountain Valley.

On the trucks as well more trucks, but we have not yet launched five gallon.

Saratoga water.

We have not made saratoga fully available yet to the legacy Primo trucks. So there is still.

Part of that is also. Uh, reducing skew complexity at the branch level to really focus on fill rates on the core 5 gallon business and enabling the conversion of the Legacy. Primo spring Brands, such as Crystal Rock, Deep Rock, Crystal Springs Mount, Olympus to the much stronger portfolio of Brands Deer Park Poland, Spring Ozarka Zephyr Hills. So we're we're sort of halfway in that Journey, but we're seeing very encouraging results.

Great, thank you very much.

Transitions happening and still additions happening two branches.

And your next question comes from John Anderson with William Blair please go ahead.

Part of that is also.

Reducing SKU complexity at the branch level to really focus on fill rates on the core five gallon business.

Hi. Thank you. Um, 2 2, quick ones. Um,

And enabling the conversion.

The legacy Primo spring brands, such as Crystal Rock Deep Crystal Springs, Mount Olympus to the much stronger portfolio of brands Deer Park, Poland Spring Ozark set for Hill's.

I think you mentioned in the prepared comments that you've rationalized 5 Brands to date wondering. Um,

So we're sort of halfway in that journey, but we're seeing very encouraging results.

Great. Thank you very much.

And your next question comes from Jon Andersen with William Blair. Please go ahead.

Hi, Thank you.

Two quick ones.

I think you mentioned in the prepared comments that you've rationalized five brands to date I'm wondering.

How much more, uh, rationalization work? Do you have to do across the portfolio or a plan to do? And, um, how are you thinking about that in terms of a, a Topline drag and then, on the, um, super premium business. It sounds like, um, a good chunk of that growth has been driven by, um, expansion of, um, Mountain Valley. Saratoga Inn in pet at retail. I think specifically Walmart. Um, where what are you seeing in terms of early culture at Walmart and and then where is the white space as you see it in in that super premium business from here. Thank you.

Yeah.

How much more rationalization work do you have to do across the portfolio or plan to do.

And how are you thinking about that in terms of a top line drag and then on the Super premium business. It sounds like a good chunk of that growth has been driven by expansion of.

Thanks, uh, thanks, John. Um, with regards to the brand rationalization, this, um, the largest part of rationalization has been completed. We are, uh, refocusing certain regions.

As well. Uh, on core spring Brands, I'll give you an example. The sparkless brands will remain in California the West Coast.

Mountain Valley Saratoga in PT at retail I think specifically Walmart.

What are you seeing in terms of early sell through of Walmart and then Where's the white space as you see it in that Super premium business from here. Thank you.

Yes.

Thanks, Thanks, John.

Regards to the brand rationalization this.

The largest part of rationalization has been completed we are refocusing certain regions as.

As well on core spring brands I will give you. An example, the sparkling brands will remain in California, and the West Coast.

But Texas will largely convert to Osaka, so whilst we're rationalizing the sparkling brands in Texas. The actual brand will continue to.

But Texas will largely convert to Ozarka. So whilst we're rationalizing. The sparklett brands in Texas. The the actual brand will continue to, uh, exist in the portfolio. As an example, we really focus on the smaller Regional brands that drive a lot of complexity, uh, to simplify and streamline our operations. So we have fewer line changeovers in the Legacy, mostly Legacy Nestle Water factories that. Uh, we, um, we now have at our disposal to go from maybe 1 shift a day to 3 shifts a day 7 days a week. With fewer bigger stuck, keeping units, um, and bigger Brands, like Ozarka and Poland Spring,

Existing portfolio as an example.

We really focus on the smaller regional brands that drive a lot of complexity to.

To simplify and streamline our operations. So we have fewer line changeovers and the legacy mostly legacy necessarily water factories that.

We now have at our disposal to go from maybe one shift a day to three shifts a day seven days, a week with fewer bigger stock keeping units and bigger brands like Ozark and Poland spring.

With regards to premium.

Very exciting business, we grew 44, 2% in the quarter.

Um, you know, the brands are now available across the different channels and Mountain Valley in Saratoga. As I just said are now available, uh, for Direct Delivery customers as well. Although we have not yet launched Saratoga in the 5G format, we are working on that. Um, you know, the brands are getting great marketing from the Golden Globes in the Country Music Awards. Um, and we're really focusing on food service. So

That was all volume based mountain Valley grew.

23%.

Over $50 million in Q2 net sales in Saratoga grew 91, 5% with over.

$36 million in Q2 net sales, so we launched <unk> and Walmart.

The brands are now available across the different channels and mountain Valley in Saratoga as I, just said are now available.

For direct delivery customers as well, although we have not yet launched Saratoga and the five gallon format. We are working on that.

The brands are getting great marketing from the Golden Globe sort of country Music Awards.

we're seeing a lot of demand, um, emerging from restaurants hotels, especially in light of the, uh, the tariffs that are coming in on imported Brands, um, and we're actually adding a new production line to support Saratoga. Um, and we've broken ground on a new production facility for Mountain Valley in Arkansas, which will be operational by mid 2026, and that will really unlock our, uh, Supply constraints on Mountain Valley, so we can even better meet demand, uh, and continue with that really high growth trajectory for the brand.

Thanks John.

Great. Thank you.

And we're really focusing on foodservice so.

We're seeing a lot of demand.

Emerging from restaurants hotels, especially in light of the tariffs that are coming in on imported brands.

There are no further questions at this time. So I would like to turn the call back over to Robert Reep broke for a closing remarks.

And we're actually adding a new production line to support Saratoga.

And we've broken ground on our new production facility for Mountain Valley in Arkansas, which will be operational by mid 2026, and that will really unlock our supply constraints on mountain valley. So we can even better meet demand and continue that really high growth trajectory for the brand.

Thanks, Sean.

Yes. Well, thanks everyone. Um, I'm excited about the the potential of our company. Primo Brands underlying business Foundation is solid. And we are a leader in an attractive category with numerous growth opportunities. We believe we have multiple levers of value. Creation in front of us, including organic net sales, growth creative m&a, free cash, flow generation, and strategic Avenues of capital. Allocation, thank you for your participation and for your continued interest in Primo brands.

Great. Thank you.

There are no further questions at this time I would like to turn the call back over to Robert Greenberg for closing remarks.

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

Yes, well thanks, everyone I am excited about the potential of our company Primo brands underlying business Foundation is solid and we are a leader in an attractive category with numerous growth opportunities. We believe we have multiple levers of value creation in front of us, including organic net sales growth accretive Emma.

On a free cash flow generation and strategic avenues of capital allocation.

You for your participation and for your continued interest in Primo brands.

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