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Primo Water to exit single-use retail business, boosts Q3 2021 revenue

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November 5, 2021

Primo Water Corp. will exit the North American single-use retail bottled water business as part of a strategy to increase profitability and further reduce its carbon footprint, the company announced in a Q3 2021 earnings report. The single-use retail business primarily includes 1-gallon, 2.5-gallon and case-pack water, but does not affect its exchange, refill and dispenser business or its Mountain Valley brand.

The company's revenue increased 6% from $518 million to $550.8 million in the third quarter ending Oct. 2, 2021 due to increased demand.

Net income declined 4.2% from $22.3 million to $18.1 million, while net income per diluted share fell from 14 cents to 11 cents, and adjusted net income per share fell from 24 cents to 22 cents.

The $550.8 million in quarterly revenue missed analyst expectations by $1.77 million, according to Seeking Alpha, while the non-GAAP EPS of 22 cents missed expectations by one cent and the GAAP EPS of 11 cents missed by 7 cents.

Shares traded at $18.80 today against a 52-week range of $13.91-$18.95.

"Our pure-play water model continues to drive higher demand for our products and services," CEO Tom Harrington said in the press release. "Third quarter operating results were negatively affected by the increase in the number of associates impacted by COVID resulting in route inefficiencies and higher overtime and temporary worker wages. This was partially offset by higher revenue and fixed cost leverage as our North America water direct business experienced a substantial increase in demand."

North America revenue increased 5% to $413 million compared to $393 million in the comparative Q3 quarters, driven by increased pricing and demand from residential and B2B customers partially offset by lower revenue from water refill and water dispenser sales.

Revenue for the rest of the world increased 11% to $138 million compared to $124 million driven by improved volume and pricing in all channels.