Primo Brands Corporation Q1 FY2026 earnings call

First, 2026 first quarter net sales up 1.7% on comparable basis, broad-based top-line performance. Comparable adjusted EBITDA down due to investments in service and direct delivery, winter storms and freight costs. Raised 2026 comparable organic net sales growth guidance. Key near-term priorities are improving direct delivery customer experience and returning to balanced growth. In direct delivery, achieved improvement in key leading indicators and financial performance, customer quits decline, customer nets improve. In retail, strong performance, plan to build on momentum through multiple growth vectors like brand building, improving in-store presence, leveraging premium brands. Summer brand building plans include partnership with MLB, Disney limited edition bottle series. Prioritize premium brands, Saratoga and Mountain Valley growing strongly, future plans to expand awareness. Develop strategic revenue growth management approach, pricing strategy consumer-centric.

First quarter net sales of $1.63 billion were up 1.7% on a comparable basis versus prior year. Comparable adjusted EBITDA was $306 million, down 10.4%. We're raising our 2026 comparable organic net sales growth guidance to 1% to 3% from flat to 1% previously. Updating the low end of adjusted EBITDA to $1.465 billion, while maintaining the high end at $1.515 billion. In retail, net sales growth was driven across multiple channels, particularly mass, club, and away from home, pack sizes driven by occasion and case packs, and brands led by premium. Saratoga and Mountain Valley combined net sales were up 43% in the quarter. While direct delivery net sales declined in the quarter, customer net ads trend continued to improve approaching break-even.

Raise 2026 comparable organic net sales growth guidance to 1%-3% from flat to 1% previously. Widen adjusted EBITDA range to low end $1.465 billion, high end $1.515 billion, revised adjusted EBITDA margin midpoint 22%. Reaffirm adjusted free cash flow range $790 million to $810 million. Expect free cash flow ad backs to decline in Q2, cash flow profile to align with operational performance as integration matures. Board authorized 12-cent quarterly dividend, continue share repurchase program.

Geopolitical events and dynamic cost landscape pose risks, including oil-related commodities inflation. Costs increased due to winter storms and incremental freight and logistics costs.

Q: Peter Galbo asked about how locked are you for the year on hedging and EBITDA split.

A: David said about 47-53 split for EBITDA, far hedged on diesel with opportunity for benefit balance of year if resolution occurs.

Q: Nick Modi asked about scenarios between low end and high end of revenue and EBITDA and pricing actions.

A: Eric said growth was durable and broad-based, pricing actions start and end with consumer, consider competitiveness and P&L, focus on immediate consumption now with potential case pack pricing later.

Q: Daniel Moore asked about other growth opportunities and volume vs price.

A: Eric said balanced growth with price mix and volume, opportunities in category tailwinds, leadership position, direct delivery business and retail execution.

Q: Andrea Teixeira asked about pass-through options on direct delivery fee and customer stickiness.

A: Eric said near-term focus on productivity and pricing, not seeing changes on delivery fee or fuel surcharge soon.

Q: Derek Lessard asked about retail side growth and share gains.

A: Eric said continued expansion of points of availability on premium side, improved execution around displays, market share gains in water and LRB.

Q: David Shacknell asked about Q2 trends and private label competition.

A: David said Q1 performance strong on challenged comp, retail execution continues well, private label has price-only shoppers but brand loyalty exists, Pure Life grew mid single digit.