Transcript: Primo Brands Q2 2026 Earnings Conference Call

Primo Brands (NYSE: PRMB ) reported second-quarter financial results on Wednesday. The transcript from the company's second-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Full Transcript OPERATOR Good morning. Welcome to the Primo Brands 2026 Second Quarter Earnings Conference Call. At this time, all lines are in listen-only mode, and following the presentation we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

This call is being recorded on Thursday, August 5, 2026. I would now like to turn the conference call over to Traci Mangini, Vice President, Investor Relations. Please go ahead. Traci Mangini, IRC — Vice President, Investor Relations Thank you, operator, and hello everyone.

With me on the call today are Eric Voss, Chairman and Chief Executive Officer, and David Haas, Chief Financial Officer. S. federal securities laws, which are subject to risks and uncertainties that may cause actual results to differ materially. For more information, please refer to our forward-looking statements disclosure in our earnings release.

S. GAAP financial measures are included in our earnings release and supplemental earnings slides, which were made available earlier today on the Investor Relations section of our website. With that, I'll pass it to you. Eric Voss, Chairman and Chief Executive Officer Eric, thanks Tracy.

Good morning, and thank you for joining us today. I'll review our second quarter performance and how we're positioning the company to be fit to win by continuing to improve on the direct delivery customer experience, advancing our key growth priorities, and simplifying our leadership structure. David will then cover our financial results and 2026 guidance. We're encouraged with the accelerating momentum across the business in the second quarter, with strengthening fundamentals driven by ongoing improvements in the customer experience in direct delivery and strong dollar and volume share gains in the bottled water category.

2% on a comparable basis versus prior year, ahead of our expectations and marking a second consecutive quarter of year-over-year growth. Growth was broad-based, reflecting continued strength across our brands in retail and a faster-than-expected return to growth in direct delivery. Adjusted EBITDA increased 5% to $385 million, with margin expansion driven by improving productivity and stronger operating leverage and continued progress in direct delivery. With top-line growth again exceeding our expectations and momentum broadening across both retail and direct delivery, we're raising our 2026 comparable net sales growth guidance for a second consecutive quarter.

We now expect growth of 2% to 4%, up from the previously guided 1% to 3%. 515 billion, as we intend to continue to invest behind growth and as we manage the current dynamic macro cost environment. Our business fundamentals continue to improve, and we remain well positioned in an attractive, growing category. Our differentiated portfolio of leading brands spanning the value spectrum, an advantaged route to market, and disciplined execution gives us confidence we have the right foundation to drive long-term growth.

Building on this, last month we took an important step forward by simplifying our leadership structure. This included eliminating the Chief Operating Officer role, enhancing leadership capacity with the addition of a highly experienced beverage industry professional in the role of President of Customer Direct and Go-to-Market, and elevating certain critical roles like Chief Supply Chain Officer to report directly to me. These changes are designed to improve our ability to serve our customers and accelerate key growth priorities, and support faster decision-making, and to create a more agile and accountable operating model.

We believe these actions further strengthen our position and enhance our ability to capitalize on the growth opportunities ahead. Let's review our near-term priorities, which we have discussed in the last few quarters. First was to improve the customer experience in direct delivery, and second was to return the company to balanced growth. We've now delivered on both of these priorities for a second consecutive quarter.

4% in the quarter. This return to growth was one quarter ahead of our expectations and marked a significant milestone, reflecting meaningful progress in stabilizing the business and improving the customer experience. At a high level, direct delivery growth is driven by several key levers: adding new customers, improving revenue retention, disciplined pricing, and tuck-in M&A. In the second quarter, performance improved across several of these areas.

New customer additions remained strong, and with the reduction in the historical incentives, we're improving new customer quality and narrowing the average revenue gap to more tenured customers on a sequential quarterly basis. Customer quits and the contact center call volumes also declined, with call volumes below pre-integration levels. We also saw improvement in key operational metrics. On time in full, or OTIF, improved month over month through June, reaching the mid-90s despite elevated peak season demand.

We also continue to make the customer billing experience easier and more clear through simpler invoices, expanded payment options, stronger credit processes, and improving invoice timing for many residential customers. Our Solve by Sundown initiative has also been supporting faster resolution of customer concerns. We're encouraged with our progress, but there is more work ahead as we continue to stabilize the business and lay the foundation for optimization to accelerate profitable growth.

Supported by our simplified leadership structure, we're taking targeted actions to improve execution, productivity, and the customer experience, creating a flywheel that we believe will enhance operational performance and accelerate growth. Our second priority was returning the total business to growth, which we achieved for a second consecutive quarter. Our retail business delivered strong and broad-based growth. 5%.

We also expanded our retail presence through new points of distribution. This performance drove continued value and volume share gains in the bottled water category. Going forward, we see multiple growth vectors: continuing to brand build and innovate, improving our in-store presence, and a more strategic and holistic approach to revenue growth management. We also see meaningful opportunity in cold and immediate consumption, where we're underpenetrated in a high-growth, high-margin segment.

Another growth vector is premium. Saratoga and Mountain Valley continue to be among the strongest growth assets in the portfolio, again growing dollar and volume share of category in the quarter driven by expanded distribution. With strong brand equity and growing distribution along with new capacity, we believe they are still early in their growth journey and see meaningful opportunities for both scale and mix, driving operating leverage and margin expansion over time. Our final growth priority is developing a more strategic and holistic revenue growth management approach across price points, packages, and channels.

In the first half of the year, we took strategic and disciplined actions across select areas of our portfolio using our approach that begins and ends with the consumer, while factoring in competitive dynamics, our cost structure, and the economics of our retail partners. We continue to believe we are well positioned to manage through the current dynamic macro and geopolitical conditions. Our portfolio serves consumers across price points, packages, channels, and occasions, and we have a number of levers, including productivity and pricing, that we believe can help mitigate inflationary pressures while supporting long-term growth and margin expansion potential.

In closing, we're encouraged by our first half progress, which reflects an enhanced customer experience, improving execution, and building momentum across the business. In short, we believe the business is fundamentally stronger than it was six months ago. As one team Primo, our customer-first culture fuels our passion to serve our customers and consumers with excellence each and every day. Our near-term focus is to continue to execute with purpose and pace to drive sustainable, balanced growth, and as that growth scales, we expect productivity and operating leverage to support margin expansion, increased cash flow generation, and long-term value creation.

With that, let me turn the call over to David. David W. Hass — Chief Financial Officer Thank you, Eric. For 2026, reported financials include Primo Brands results for both 2026 and 2025 as we're now past the anniversary of the merged companies.

To enhance comparability of continuing operations, we focus on comparable results, which exclude the Eastern Canadian operations exited in the first quarter of 2025 and the Office Coffee Services business exited during 2025. Reconciliations are available in our earnings presentation available on our website. 1% contribution from volume. In retail, net sales growth was driven across all channels, led by mass, grocery, and away-from-home; across pack sizes, driven by occasion and case packs; and brands, led by premium and regional spring waters.

5% premium water increase, reflecting ongoing strength in retail channels while continuing to recover within the direct delivery channel. Direct delivery net sales growth was driven by price and mix benefits despite lower volume resulting from a smaller customer base. 4%, slightly ahead of our breakeven expectations and a 340 basis point sequential improvement from the first quarter. This progress reinforces that our recovery efforts are driving tangible improvements in service levels, which is also reflected in continued increases in our NPS scores and Trustpilot ratings.

4% versus the prior year. On a quarterly sequential basis, comparable adjusted EBITDA margin improved 260 basis points, reflecting enhanced operating efficiency in a seasonally stronger quarter and productivity gains enabled by more stable operations within direct delivery. Our continued investments in routes, service, and customer experience drove a more consistent net sales performance at the enterprise level. Adjusted EBITDA growth versus prior year was partially offset by higher transportation costs, primarily related to a tighter freight market and higher spot rates.

We also continued to make strategic investments across the business to support long-term growth and productivity. Turning to our balance sheet and cash flows, we are encouraged by the improved health of our balance sheet and the quality of our cash flow. 52x in the first quarter, demonstrating a normal seasonal deleveraging pattern as we move closer to our near-term target of below three times. As cash flow and EBITDA continue to strengthen, our liquidity remains strong with $953 million of availability between our cash balance and our unused line of credit.

As expected, the level of EBITDA and free cash flow adjustments declined significantly, which is a positive step toward a cleaner cash flow profile and better alignment between reported results and the underlying performance of the business. 9 million of cash flow from operations for the quarter. 4 million. 4 million improvement versus prior year.

Our strong financial flexibility allows us to reinvest in the business while returning cash to stockholders. 6 million, while $35 million was related to integration capital expenditures. The majority supported growth initiatives and maintenance. We also continued to execute our share repurchase program.

5 million, or 708,000 shares, under our $300 million authorized program. 635 billion. We are raising our comparable 2026 net sales growth guidance for a second consecutive quarter. We now expect growth in the range of 2% to 4%, from our previous 1% to 3% guidance.

This reflects our second quarter outperformance versus our expectations and the broadening of momentum across retail and direct delivery. 515 billion. 8%, which is flat compared to the prior year, as we invest behind growth and manage a dynamic cost environment. This entails taking disciplined actions to manage higher transportation and commodity cost while continuing to invest in service capabilities and overall customer experience to support long-term growth.

We believe we have multiple levers to help mitigate commodity impacts, including pricing action, growth initiatives, ongoing supply chain cost initiatives, and our financial risk management program. These actions are expected to support near-term cost mitigation and long-term margin expansion potential in direct delivery. We expect productivity to improve following peak season as we realign the cost structure under our enhanced operating model, while making disciplined investments in key initiatives such as the customer contact center and a warehouse management system that strengthen the customer experience and position the business for future growth.

Adjusted free cash flow guidance remains $790 million to $810 million, supported by the strength of our cash generation. We expect free cash flow quality to improve sequentially through the balance of the year, driven by lower adjusted EBITDA add-backs and the typical timing lag between expense recognition and cash payment. Our strong free cash flow profile supports our capital allocation priorities. We continue to expect annual capital expenditures of approximately 4% of net sales, in addition to approximately $100 million of 2026 integration capital expenditures, of which approximately $18 million remained at the end of the second quarter.

Finally, we remain committed to returning cash to stockholders. 8 million remaining under the program authorization as of the end of the second quarter. With that, I'll turn the call back to Traci. Traci Mangini, IRC — Vice President, Investor Relations Thanks, David.

To ensure we can address as many of your questions as possible, please limit yourself to one question and if we have time remaining, we will repoll for additional ones. Operator, please open the line for questions. OPERATOR Thank you. Ladies and gentlemen, we'll now begin the question-and-answer session.

Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys.

One moment please for your first question. P. Morgan. Please go ahead.

P. Morgan Hi, good morning. Thank you for taking the question. So I was wondering if you can talk about customer counts into the second half.

We obviously have seen an improvement. You talked about the service levels but also kind of net adds and that's something that investors have been watching as you go. And I know the inflection was an important landmark for Primo Brands. So if you look at like the cadence also when you think about like the 47, 53% that you highlighted before and how we should be thinking about it after these results.

And lastly, just a clarification on the sequencing of the retail business. Like what are you seeing in terms of like the growth in volumes as we go through the balance of the summer? I know there was probably some pull forward potentially for a number of different reasons. You had also an easy comparison.

So if you can just kind of take us through the balances and for both businesses, that would be appreciated. Thank you.