Primo Brands Q2 Earnings Call Highlights

Primo Brands reported solid second-quarter momentum: Comparable net sales rose 4.2% to $1.8 billion, while adjusted EBITDA increased 5% to $385 million. Growth was broad-based across retail, premium brands and away-from-home channels. Direct delivery returned to growth ahead of schedule, with comparable sales up 0.4% as service levels, customer satisfaction and delivery performance improved following integration-related disruptions. The company raised its 2026 sales outlook to 2%–4% comparable growth from 1%–3%, while maintaining adjusted EBITDA guidance of $1.465 billion–$1.515 billion and free cash flow guidance of $790 million–$810 million.

Primo Brands NYSE: PRMB reported second-quarter comparable net sales growth of 4.2% to $1.8 billion, supported by broad-based retail gains and a faster-than-expected return to growth in its direct-delivery business. Adjusted EBITDA rose 5% from the prior year to $385 million, while comparable adjusted EBITDA margin increased 10 basis points to 21.4%. Chief Executive Officer Eric Foss said the company’s improving customer experience, stronger retail execution and operational productivity helped drive a second consecutive quarter of year-over-year growth.

“We’re encouraged with the accelerating momentum across the business in the second quarter,” Foss said, pointing to strengthening direct-delivery fundamentals and gains in bottled-water dollar and volume share within retail.

Comparable sales growth reflected a 4.3% contribution from price and mix, partially offset by a 0.1% volume decline, Chief Financial Officer David Hass said. On a year-to-date basis in retail, Foss said the company has seen an approximately 40/60 split between volume and price, respectively. Retail growth was broad-based across channels, including mass, grocery and away-from-home, according to Hass. Regional spring-water sales rose 4.1%, purified-water sales increased 1.9%, and premium brands grew 30.5%. Primo’s premium portfolio, including Saratoga and Mountain Valley, continued to gain category dollar and volume share. Foss said Saratoga grew faster than Mountain Valley during the quarter, as Mountain Valley experienced some product-supply disruption during the startup of a new production line. The company also cited growth in club and away-from-home channels. Foss said club sales increased by the mid-single digits during both the quarter and first half, while away-from-home sales grew at a high-single-digit rate, aided by expanded distribution and premium-brand performance.

Direct-delivery comparable net sales increased 0.4%, a 340-basis-point sequential improvement from the first quarter and slightly above the company’s breakeven expectation. The segment’s sales growth was driven by pricing and mix despite lower volume tied to a smaller customer base.

Foss said direct delivery returned to growth one quarter earlier than expected as the company improved service levels and addressed customer-experience issues following integration-related disruptions. New customer additions remained strong, while reduced historical incentives have improved new-customer quality and narrowed the revenue gap between newer and more tenured customers, he said. Customer quits and contact-center call volumes declined sequentially, with call volumes falling below pre-integration levels. On-time-and-full delivery performance improved month by month through June and reached the mid-90% range despite peak-season demand. Primo has also worked to simplify invoices, broaden payment choices, strengthen credit processes and improve invoice timing for many r...