PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PRIMO WATER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value information)

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 

 

PRIMO WATER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 

 

PRIMO WATER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 

 

PRIMO WATER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands)

 

 

 

PRIMO WATER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 

 

PRIMO WATER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and related notes thereto in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2017. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “seek,” “intend,” “plan,” “estimate,” “anticipate” or other comparable terms. These forward-looking statements are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” in this Item 2 and in “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2017. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

Overview

 

Primo Water Corporation (together with its consolidated subsidiaries, “Primo,” “we,” “our,” or “us”) is North America’s leading single source provider of multi-gallon purified bottled water, self-service refill drinking water and water dispensers sold through major retailers in the United States and Canada.  We believe the market for purified water continues to grow due to evolving taste preferences, perceived health benefits and concerns regarding the quality of municipal tap water. Our products provide an environmentally friendly, economical, convenient and healthy solution for consuming purified and filtered water.  We are a Delaware corporation that was incorporated in 2017 in connection with the creation of a holding company structure. Our predecessor was founded in Delaware in 2004.

 

Significant Transactions

 

On June 22, 2018, we entered into a new senior secured credit facility (the “SunTrust Credit Facility”) that provides for a $190 million senior term loan facility (the “Term Loan”) and a $30 million senior revolving loan facility (the “Revolving Facility”). The SunTrust Credit Facility matures on June 22, 2023. The Term Loan requires annual principal payments (payable in quarterly installments) equal to 5% per annum, or $9.5 million, with the remaining indebtedness due at maturity. The SunTrust Credit Facility is secured by a first priority security interest in and lien on substantially all of our assets. The SunTrust Credit Facility and related obligations are guaranteed by certain of our domestic subsidiaries. See “Note 3 – Debt and Capital Leases, net of Debt Issuance Costs” in the Notes to the condensed consolidated financial statements.

 

On May 22, 2018, we completed a follow-on offering of 5.3 million shares of our common stock at a price of $14.00 per share to the public, which included the exercise in full by the underwriters of their option to purchase 0.7 million additional shares of our common stock on the same terms and conditions. All of the shares were offered and sold by Primo. Net proceeds, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us of approximately $4.1 million, were approximately $70.8 million. We used the net proceeds from the offering to pay down existing indebtedness and on June 22, 2018, we refinanced our remaining outstanding indebtedness (see “Note 3 – Debt and Capital Leases, net of Debt Issuance Costs” in the Notes to the condensed consolidated financial statements).

 

On December 12, 2016, we completed the acquisition by merger (the “Acquisition”) of Glacier Water Services, Inc. (“Glacier”), the leading provider of high-quality filtered drinking water dispensed to consumers through self-service water machines located at over 20,000 locations, including supermarkets and other retail locations. The Acquisition was consummated pursuant to the terms of the Agreement and Plan of Merger, dated October 9, 2016. Aggregate consideration was approximately $200.2 million consisting of cash, Primo common stock and warrants, plus the assumption of approximately $78.8 million of debt, net of cash. The Acquisition diversified our retailer concentration and offered cross-selling opportunities, while creating operational and shared service synergies. We financed the transaction through a combination of cash-on-hand and borrowings under the $196.0 million Credit Agreement with Goldman Sachs Bank USA (the “Goldman Credit Facility”).

 

 

Business

 

Our business is designed to generate recurring demand for our purified bottled water or self-service refill drinking water through the sale of innovative water dispensers. This business strategy is commonly referred to as “razor-razorblade” because the initial sale of a product creates a base of users who frequently purchase complementary consumable products. Once our bottled water is consumed using a water dispenser, empty bottles are exchanged at our recycling center displays, which provide a recycling ticket that offers a discount toward the purchase of a new bottle of Primo purified water or they are refilled at a self-service refill drinking water location. Each of our multi-gallon Exchange water bottles can be sanitized and reused up to 40 times before being taken out of use, crushed and recycled, substantially reducing landfill waste compared to consumption of equivalent volumes of single-serve bottled water. As of June 30, 2018, our products were offered in the United States and in Canada at over 45,000 combined retail locations, including Lowe’s Home Improvement, Walmart, Sam’s Club, The Home Depot, Meijer, Kroger, Food Lion, H-E-B Grocery, Sobeys, Circle K, Family Dollar, Walgreens, Albertsons, Publix, and CVS. We believe the market for purified water continues to grow due to evolving taste preferences, perceived health benefits and concerns regarding the quality of municipal tap water. Our products provide an environmentally friendly, economical, convenient and healthy solution for consuming purified and refill drinking water.

 

We provide major retailers throughout the United States and Canada with a single-vendor solution for our three reporting segments, Primo Refill (“Refill”), Primo Exchange (“Exchange”), and Primo Dispensers (“Dispensers”), addressing a market demand that we believe was previously unmet. Our over 45,000 locations include approximately 25,000 Refill locations, 13,400 Exchange locations and 7,300 Dispenser locations. Our solutions are easy for retailers to implement, require minimal management supervision and store-based labor, and provide centralized billing and detailed performance reports. Exchange offers retailers attractive financial margins and the ability to optimize typically unused retail space with our displays.  Refill provides drinking water for consumer purchase through the installation of self-service vending displays at retail locations. The Refill business model eliminates the bottling and distribution infrastructure required to deliver traditional bottled water, thereby allowing us to provide refill drinking water at a value price as compared to alternatives in the marketplace. Additionally, due to the recurring nature of water consumption, retailers benefit from year-round customer traffic, highly predictable revenue and health and wellness focused consumers.

 

In a notice published on June 20, 2018, the Office of the United States Trade Representative (the “USTR”) issued a determination and request for public comment under Section 301 under the Trade Act of 1974 (the “Notices”) concerning the proposed imposition of an additional 25% tariff on specified products from China (the “Tariff”). The list of products set forth in the Notice included self-contained drinking water coolers, including our Dispensers, which we import from China. We have worked with our suppliers and secured a reduction in our cost as well as worked with our customers to increase our prices to include the incremental cost of the Tariff. We believe the cost reduction and increased pricing will offset the impact of the Tariff, however, if retailers increase prices to consumers, consumer demand may be reduced. In July 2018, we applied to the USTR for a Request for Exclusion from the Tariffs for our Dispensers (the “Request for Exclusion”). Our Request for Exclusion is currently pending with the USTR, and there can be no assurance that the USTR will grant our Request for Exclusion or otherwise modify the application of the Tariffs as applied to our Dispensers.

 

Business Segments

 

We have three operating and reportable segments, Refill, Exchange, and Dispensers.

 

Our Refill segment sales consists of the sale of filtered drinking water dispensed directly to consumers through technologically advanced, self-service machines located at major retailers throughout the United States and Canada.

 

Our Exchange segment sales consist of the sale of multi-gallon purified bottled water offered through retailers in the United States and Canada. Our Exchange products are offered through point of purchase display racks and recycling centers that are prominently located at major retailers in space that is often underutilized.

 

Our Dispensers segment sells water dispensers that are designed to dispense Primo and other dispenser-compatible bottled water. Our Dispensers sales are primarily generated through major retailers in the United States and Canada, where we recognize revenues for the sale of the water dispensers when the customer obtains control. We support retail sell-through with domestic inventory.

 

 

We evaluate the financial results of these segments focusing primarily on segment net sales and segment income (loss) from operations before depreciation and amortization (“segment income (loss) from operations”). We utilize segment net sales and segment income (loss) from operations because we believe they provide useful information for effectively allocating our resources between business segments, evaluating the health of our business segments based on metrics that management can actively influence and gauging our investments and our ability to service, incur or pay down debt.

 

Cost of sales for Refill consists primarily of costs associated with routine maintenance of reverse osmosis water filtration systems and filtered water displays, costs of our field service operations and commissions paid to retailers associated with revenues earned. Cost of sales for Exchange consists primarily of costs for bottling, distribution and bottles. Cost of sales for Dispensers consists of contract manufacturing, freight and duties.

 

Selling, general and administrative expenses for Refill, Exchange, and Dispensers consist primarily of personnel costs for operations support as well as other supporting costs for operating each segment.

 

Expenses not specifically related to operating segments are shown separately as Corporate. Corporate expenses are comprised mainly of compensation and other related expenses for corporate support, information systems and administration. Corporate expenses also include certain professional fees and expenses and compensation of our Board of Directors.

 

In this Management’s Discussion and Analysis of Financial Condition and Results of Operations, when we refer to “same-store unit growth”, we are comparing retail locations at which our products have been available for at least 12 months at the beginning of the relevant period. In addition, “gross margin percentage” is defined as net sales less cost of sales, as a percentage of net sales.

 

Results of Operations

 

The following table sets forth our results of operations (dollars in thousands):

 

		Three months ended June 30,								Six months ended June 30,
		2018				2017				2018				2017
Consolidated statements of operations data:
Net sales		$	75,802			$	74,817			$	149,461			$	135,554
Operating costs and expenses:
Cost of sales			52,729				54,079				106,150				96,892
Selling, general and administrative expenses			9,600				8,219				18,800				18,764
Non-recurring and acquisition-related costs			410				2,977				487				7,425
Depreciation and amortization			6,114				6,820				12,171				13,211
Loss (gain) on disposal of property and
equipment and other assets			111				(11	)			244				(18	)
Total operating costs and expenses			68,964				72,084				137,852				136,274
Income (loss) from operations			6,838				2,733				11,609				(720	)
Interest expense, net			11,158				5,022				16,444				10,024
Change in fair value of warrant liability			–				–				–				3,220
Loss before income taxes			(4,320	)			(2,289	)			(4,835	)			(13,964	)
Income tax (benefit) provision			(4,771	)			186				(6,496	)			373
Net income (loss)		$	451			$	(2,475	)		$	1,661			$	(14,337	)

 

 

The following table sets forth our results of operations expressed as a percentage of net sales: 

 

		Three months ended June 30,								Six months ended June 30,
		2018				2017				2018				2017
Consolidated statements of operations data:
Net sales			100.0	%			100.0	%			100.0	%			100.0	%
Operating costs and expenses:
Cost of sales			69.6				72.3				71.0				71.5
Selling, general and administrative expenses			12.7				11.0				12.6				13.8
Non-recurring and acquisition-related costs			0.5				4.0				0.3				5.5
Depreciation and amortization			8.1				9.1				8.1				9.7
Loss (gain) on disposal of property and equipment and other assets			0.1				–				0.2				–
Total operating costs and expenses			91.0				96.4				92.2				100.5
Income (loss) from operations			9.0				3.6				7.8				(0.5	)
Interest expense, net			14.7				6.7				11.0				7.4
Change in fair value of warrant liability			–				–				–				2.4
Loss before income taxes			(5.7	)			(3.1	)			(3.2	)			(10.3	)
Income tax (benefit) provision			(6.3	)			0.2				(4.3	)			0.3
Net income (loss)			0.6	%			(3.3	)%			1.1	%			(10.6	)%

 

 

The following table sets forth our segment net sales in dollars and as a percent of net sales and segment income (loss) from operations presented on a segment basis and reconciled to our consolidated income from operations (dollars in thousands):

 

		Three months ended June 30,
		2018								2017
						Percent								Percent
		Dollars				of Net Sales				Dollars				of Net Sales
Segment net sales:
Refill		$	44,736				59.0	%		$	44,163				59.0	%
Exchange			20,007				26.4	%			18,121				24.2	%
Dispensers			11,059				14.6	%			12,533				16.8	%
Total net sales		$	75,802				100.0	%		$	74,817				100.0	%
Segment income (loss) from operations:
Refill		$	13,894							$	11,497
Exchange			6,030								5,381
Dispensers			842								1,108
Corporate			(7,293	)							(5,467	)
Non-recurring and acquisition-related costs			(410	)							(2,977	)
Depreciation and amortization			(6,114	)							(6,820	)
(Loss) Gain on disposal of property and equipment and other assets			(111	)							11
		$	6,838							$	2,733

 

 

		Six months ended June 30,
		2018								2017
						Percent								Percent
		Dollars				of Net Sales				Dollars				of Net Sales
Segment net sales:
Refill		$	86,211				57.7	%		$	80,528				59.4	%
Exchange			38,265				25.6	%			34,866				25.7	%
Dispensers			24,985				16.7	%			20,160				14.9	%
Total net sales		$	149,461				100.0	%		$	135,554				100.0	%
Segment income (loss) from operations:
Refill		$	25,478							$	20,206
Exchange			11,293								10,533
Dispensers			1,986								1,686
Corporate			(14,246	)							(12,527	)
Non-recurring and acquisition-related costs			(487	)							(7,425	)
Depreciation and amortization			(12,171	)							(13,211	)
(Loss) Gain on disposal of property and equipment and other assets			(244	)							18
		$	11,609							$	(720	)

 

 

Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

 

Net Sales. Net sales increased 1.3%, or $1.0 million, to $75.8 million for the three months ended June 30, 2018 from $74.8 million for the three months ended June 30, 2017. The change was due to increases in sales for Refill and Exchange of $0.6 million and $1.9 million, respectively, partially offset by a decrease in Dispensers of $1.5 million.

 

Refill. Refill net sales increased 1.3% to $44.7 million for the three months ended June 30, 2018. The increase in Refill net sales was due to the Glacier Refill integration, in which the Primo locations with a retailer were moved under the Glacier contract in April 2017, and price increases implemented on certain outdoor coin-operated machines, partially offset by a 17.7% decline in five-gallon equivalent units to 23.6 million and a reduction in the number of installed locations. Under the Glacier contract terms, revenue is recognized as the gross amount charged to the end consumers. During part of the second quarter of 2017, revenue from this retailer was reported as the revenue net of the commission amount paid to the retailer. This resulted in an increase in revenue recognized of $0.5 million in the Refill segment for the three months ended June 30, 2018.

 

Exchange. Exchange net sales increased 10.4% to $20.0 million for the three months ended June 30, 2018. The Exchange sales were driven by U.S. same-store unit growth of approximately 9.7% for the three months ended June 30, 2018. In addition, five-gallon equivalent units for Exchange increased 11.0% to 4.1 million for the three months ended June 30, 2018 compared to 3.7 million in the same period of the prior year.        

 

Dispensers. Dispensers net sales decreased 11.8% to $11.1 million for the three months ended June 30, 2018. The decrease in Dispensers net sales was due to the timing of orders from major retailers compared to the prior year, as our dispenser unit sales to retailers decreased by 25.8% during the period. Despite the decrease in net sales, consumer demand, which we measure as the dispenser unit sales to end consumers, increased approximately 16.0% to a record 196,000 units for the three months ended June 30, 2018 from 169,000 units in the prior year quarter.

 

Gross Margin Percentage. The overall gross margin percentage was 30.4% for the three months ended June 30, 2018 compared to 27.7% for the same period of the prior year primarily due to synergies realized within our Refill segment.

 

Refill. Gross margin as a percentage of net sales for our Refill segment was 34.6% for the three months ended June 30, 2018 compared to 30.2% for the three months ended June 30, 2017. The increase in gross margin percentage is primarily due to a reduction in employee-related expenses attributable to synergies realized since the Acquisition, as well as improved operating cost resulting from the implementation of new routing technology during in the second quarter of 2018.

 

Exchange. Gross margin as a percentage of net sales for our Exchange segment was 32.5% for the three months ended June 30, 2018 compared to 32.3% for the three months ended June 30, 2017. The change was primarily due to changes in product and customer mix.

 

 

Dispensers. Gross margin as a percentage of net sales for our Dispensers segment decreased to 9.9% for the three months ended June 30, 2018 from 12.2% for the three months ended June 30, 2017. The decrease in gross margin percentage was primarily due to promotional activities as well as an unfavorable change in product and customer mix.

 

Selling, General and Administrative Expenses (“SG&A”). SG&A increased 16.8% to $9.6 million for the three months ended June 30, 2018 from $8.2 million for the three months ended June 30, 2017. As a percentage of net sales, SG&A increased to 12.7% for the three months ended June 30, 2018 from 11.0% for the three months ended June 30, 2017. The increase in SG&A expense was primarily due to a $1.1 million increase in marketing and advertising costs.

 

Non-recurring and acquisition-related costs. Non-recurring and acquisition-related costs were $0.4 million for the three months ended June 30, 2018 compared to $3.0 million for the same period in 2017. Non-recurring and acquisition-related costs for both periods include costs associated with the Acquisition, including $2.1 million for the three months ended June 30, 2017. Additionally, non-recurring and acquisition-related costs in the three months ended June 30, 2017 included $0.9 million related to the settlement with Prism Distribution (see “Note 6 – Commitments and Contingencies” in the Notes to the condensed consolidated financial statements).

 

Depreciation and Amortization. Depreciation and amortization decreased to $6.1 million for the three months ended June 30, 2018 from $6.8 million for the three months ended June 30, 2017 as certain assets became fully depreciated during the prior year.

 

Interest Expense, net. Interest expense increased to $11.2 million for the three months ended June 30, 2018 from $5.0 million for the three months ended June 30, 2017. The increase was primarily due to the refinancing of our remaining outstanding indebtedness, which resulted in $3.9 million of prepayment penalties and $3.0 million related to the non-cash write-off of deferred loan costs and debt discount related to the prior senior credit facility. This increase was partially offset by a gain of $0.5 million due to the accretion of the remaining fair value adjustment initially recorded at the time of the Acquisition resulting from the redemption of the Junior Subordinated Debentures. See “Note 3 - Debt and Capital Leases, net of Debt Issuance Costs” in the Notes to the condensed consolidated financial statements.

 

Income Tax (Benefit) Provision. We recorded an income tax benefit of $4.8 million for the three months ended June 30, 2018 compared to a provision of $0.2 million for the three months ended June 30, 2017. On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was signed into law. The 2017 Tax Act made broad and complex changes to the United States tax code that affected our income tax provision in 2018. During the three months ended June 30, 2018, we recorded a provisional estimate to reflect the treatment of certain performance-based compensation plans under the 2017 Tax Act.  Based on our preliminary analysis that certain plans provide fully-deductible compensation expense, we recorded an income tax benefit of $2.5 million for the three months ended June 30, 2018.  In the three months ended June 30, 2017, we recorded income tax expense of $0.2 million related to goodwill and certain intangible assets.

 

Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017

 

Net Sales. Net sales increased 10.3%, or $13.9 million, to $149.5 million for the six months ended June 30, 2018 from $135.6 million for the six months ended June 30, 2017. The change was due to increases in sales for Refill, Exchange, and Dispensers of $5.7 million, $3.4 million, and $4.8 million, respectively.

 

Refill. Refill net sales increased 7.1% to $86.2 million for the six months ended June 30, 2018. The increase in Refill net sales was primarily due to the Glacier Refill integration, in which the Primo locations with a retailer were moved under the Glacier contract in April 2017. Under the Glacier contract terms, revenue is recognized as the gross amount charged to the end consumers. During part of the first half of 2017, revenue from this retailer was reported as the revenue net of the commission amount paid to the retailer. This resulted in an increase in revenue recognized of $4.6 million in the Refill segment for the six months ended June 30, 2018. The remaining increase in net sales was due to price increases implemented on certain outdoor coin-operated machines, partially offset by a 9.1% decline in five-gallon equivalent units to 47.1 million.

 

Exchange. Exchange net sales increased 9.7% to $38.3 million for the six months ended June 30, 2018. The Exchange sales were driven by U.S. same-store unit growth of approximately 9.6% for the six months ended June 30, 2018. In addition, five-gallon equivalent units for Exchange increased 10.0% to 7.8 million for the six months ended June 30, 2018 compared to 7.1 million in the same period of the prior year.       

 

 

Dispensers. Dispensers net sales increased 23.9% to $25.0 million for the six months ended June 30, 2018. The increase in Dispensers net sales was primarily due to increased consumer demand and the timing of orders by major retail customers compared to the prior year. Consumer demand, which we measure as the dispenser unit sales to end consumers, increased approximately 22.0% to a record 380,000 units for the six months ended June 30, 2018 from 312,000 units in the prior year period.

 

Gross Margin Percentage. The overall gross margin percentage was 29.0% for the six months ended June 30, 2018 compared to 28.5% for the six months ended June 30, 2017 due primarily to synergies realized within our Refill segment.

 

Refill. Gross margin as a percentage of net sales for our Refill segment was 33.1% for the six months ended June 30, 2018 compared to 30.8% for the six months ended June 30, 2017. The increase in gross margin percentage is primarily due to a reduction in employee-related expenses attributable to synergies realized since the Acquisition.

 

Exchange. Gross margin as a percentage of net sales for our Exchange segment was 32.0% for the six months ended June 30, 2018, compared to 32.8% for the six months ended June 30, 2017. The decrease was primarily due to costs associated with certain promotional efforts as well as a change in product and customer mix compared to the prior year.

 

Dispensers. Gross margin as a percentage of net sales for our Dispensers segment decreased to 10.1% for the six months ended June 30, 2018 from 11.9% for the six months ended June 30, 2017. The decrease in gross margin percentage was primarily due to an increase in promotional activities as well as an unfavorable change in sales mix towards lower-margin products.

 

Selling, General and Administrative Expenses (“SG&A”). SG&A was unchanged at $18.8 million for the six months ended June 30, 2018, as an increase in marketing and advertising spending was offset by a decrease in non-cash stock-based compensation expense (see “Note 5 Stock –Based Compensation” in the Notes to the condensed consolidated financial statements). As a percentage of net sales, SG&A decreased to 12.6% for the six months ended June 30, 2018 from 13.8% for the six months ended June 30, 2017.

 

Non-Recurring Costs. Non-recurring costs were $0.5 million for the six months ended June 30, 2018 compared to $7.4 million for the same period in 2017. Non-recurring and acquisition-related costs for the six months ended June 30, 2018 primarily related to costs associated with the Acquisition. Non-recurring and acquisition-related costs for the six months ended June 30, 2017 include costs related to the settlement payments and legal expenses totaling $4.6 million associated with former Texas Regional Distributors and Prism Distribution, LLC, and costs associated with the Acquisition totaling $3.9 million. These costs were partially offset by a settlement reached with Omnifrio resulting in a $1.2 million gain (see “Note 6 – Commitments and Contingencies” in the Notes to the condensed consolidated financial statements).      

 

Depreciation and Amortization. Depreciation and amortization decreased to $12.2 million for the six months ended June 30, 2018 from $13.2 million for the six months ended June 30, 2017 as certain assets became fully depreciated during the prior year.

 

Interest Expense, net. Interest expense increased to $16.4 million for the six months ended June 30, 2018 from $10.0 million for the six months ended June 30, 2017. The increase was primarily due to the refinancing of our remaining outstanding indebtedness, which resulted in $3.9 million of prepayment penalties and $3.0 million related to the non-cash write-off of deferred loan costs and debt discount related to the prior senior credit facility. This increase was partially offset by a gain of $0.5 million due to the accretion of the remaining fair value adjustment initially recorded at the time of the Acquisition resulting from the redemption of the Junior Subordinated Debentures. See “Note 3 - Debt and Capital Leases, net of Debt Issuance Costs” in the Notes to the condensed consolidated financial statements.

 

Income Tax (Benefit) Provision. We recorded an income tax benefit of $6.5 million for the six months ended June 30, 2018 compared to a provision of $0.4 million for the six months ended June 30, 2017. For the six months ended June 30, 2018, we recorded an income tax benefit of $6.8 million primarily due to the 2017 Tax Act changes that went into effect on January 1, 2018 related to the federal net operating loss, which can be carried forward indefinitely. This income tax benefit was partially offset by income tax expense related to goodwill and certain intangible assets of $0.3 million. In the six months ended June 30, 2017, we recorded income tax expense of $0.4 million related to goodwill and certain intangible assets.

 

 

Liquidity and Capital Resources

 

Adequacy of Capital Resources

 

Since our inception, we have financed our operations primarily through the sale of stock, the issuance of debt, borrowings under credit facilities and cash provided by operations. On May 22, 2018, we completed a follow-on public offering of our common stock as described in Note 1 - Description of Business and Significant Accounting Policies in the Notes to the condensed consolidated financial statements. We used the net proceeds from the offering to pay down existing indebtedness and on June 22, 2018, we refinanced our remaining outstanding indebtedness upon entering into the SunTrust Credit Facility (see “Note 3 – Debt and Capital Leases, net of Debt Issuance Costs” in the Notes to the condensed consolidated financial statements).

 

We had capital expenditures of $9.3 million for the six months ended June 30, 2018 and we anticipate net capital expenditures to range between $10.0 million and $14.0 million for the remainder of 2018. Anticipated capital expenditures are related primarily to growth and maintenance in Refill and Exchange locations.

 

At June 30, 2018, our cash and cash equivalents totaled $6.2 million and we had $23.0 million in availability under our Revolving Facility. We anticipate using current cash, cash flow from operations and availability under our Revolving Facility to meet our current needs for working capital and capital expenditures in the ordinary course of business for the foreseeable future. If we do require additional debt financing, such debt financing may not be available to us on terms favorable to us, if at all.

 

Our future capital requirements may vary materially from those now anticipated and will depend on many factors including:  the number of growth initiatives that will drive same store sales and the rate of growth in new Refill and Exchange locations and related display, rack and reverse osmosis filtration system costs, cost to develop new Dispenser product lines, sales and marketing resources needed to further penetrate our markets, the expansion of our operations in the United States and Canada, the response of competitors to our solutions and products, as well as the completion of future acquisitions.  Historically, we have experienced increases in our capital expenditures consistent with the growth in our operations, and we anticipate that our expenditures will continue to increase as we grow our business.

 

Our ability to satisfy our obligations or to fund planned capital expenditures will depend on our future performance, which to a certain extent is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond our control.  We also believe that if we pursue any material acquisitions in the foreseeable future we will need to finance this activity through the issuance of equity or additional debt financing, and such financing may not be available to us on terms favorable to us, if at all.

 

Changes in Cash Flows

 

The following table shows the components of our cash flows for the periods presented (in millions):

 

		Six months ended June 30,
		2018				2017
Net cash provided by operating activities		$	10.2			$	5.0
Net cash used in investing activities		$	(5.5	)		$	(10.5	)
Net cash used in financing activities		$	(4.0	)		$	(5.6	)

 

Net Cash Flows from Operating Activities

 

Net cash provided by operating activities increased to $10.2 million for the six months ended June 30, 2018 from $5.0 million for the same period of the prior year. The increase was driven primarily by a $12.3 million increase in income from operations partially offset the negative impact of the changes in operating assets and liabilities. 

 

 

Net Cash Flows from Investing Activities

 

Net cash used in investing activities decreased to $5.5 million for the six months ended June 30, 2018, from $10.5 million for the same period of the prior year, primarily as a result of the proceeds received from the redemption of the Trust Preferred Securities issued by Glacier Water Trust I (see “Note 3 – Debt and Capital Leases, net of Debt Issuance Costs” in the Notes to the condensed consolidated financial statements) and a decrease in capital expenditures related to our Refill segment partially offset by an increase in capital expenditures in our Exchange segment.

 

Net Cash Flows from Financing Activities

 

Net cash used in financing activities was $4.0 million for the six months ended June 30, 2018 compared to $5.6 million for the same period of the prior year.

 

The proceeds upon entering into the SunTrust Credit Facility, together with the approximately $70.8 million in net proceeds from our recent follow-on equity offering, were used to pay off the Goldman Credit Facility and Junior Subordinated Debentures (see “Note 3 – Debt and Capital Leases, net of Debt Issuance Costs” in the Notes to the condensed consolidated financial statements). Additionally, for the six months ended June 30, 2018, the net cash used in financing activities included proceeds from warrant exercises, partially offset by an increase in shares purchased to pay taxes associated with certain incentive stock award payouts.

 

For the six months ended June 30, 2017, net cash used in financing activities resulted primarily from an increase in shares purchased to pay taxes associated with certain incentive stock award payouts, as well as debt service payments under the Goldman Credit Facility and capital lease payments.

 

Adjusted EBITDA U.S. GAAP Reconciliation

 

Adjusted EBITDA is a non-U.S. GAAP financial measure that is calculated as net income (loss) before depreciation and amortization; interest expense, net; income taxes; change in fair value of warrant liability; non-cash stock-based compensation expense; non-recurring and acquisition-related costs; and loss (gain) on disposal of property and equipment and other assets, and other. Our SunTrust Credit Facility contains financial covenants that use Adjusted EBITDA. We believe Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Adjusted EBITDA is used by management to compare our performance to that of prior periods for trend analyses and planning purposes and is presented to our Board of Directors.

 

Non-U.S. GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. Adjusted EBITDA excludes significant expenses that are required by U.S. GAAP to be recorded in our financial statements and is subject to inherent limitations. In addition, other companies in our industry may calculate this non-U.S. GAAP measure differently than we do or may not calculate it at all, limiting its usefulness as a comparative measure. The table below provides a reconciliation between net loss and Adjusted EBITDA.

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2018				2017				2018				2017
Net income (loss)		$	451			$	(2,475	)		$	1,661			$	(14,337	)
Depreciation and amortization			6,114				6,820				12,171				13,211
Interest expense, net			11,158				5,022				16,444				10,024
Income tax (benefit) provision			(4,771	)			186				(6,496	)			373
EBITDA			12,952				9,553				23,780				9,271
Change in fair value of warrant liability			–				–				–				3,220
Non-cash, stock-based compensation expense			1,387				1,342				2,679				3,678
Non-recurring and acquisition-related costs			410				2,977				487				7,425
Loss on disposal of property and equipment and other assets and other			216				92				400				149
Adjusted EBITDA		$	14,965			$	13,964			$	27,346			$	23,743

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or synthetic leases.

 

 

Inflation and Changing Prices

 

In the three most recent fiscal years, inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.

 

Seasonality; Fluctuations of Results

 

We have experienced and expect to continue to experience seasonal fluctuations in our sales and operating income. Our sales and operating income have been highest in the spring and summer and lowest in the fall and winter. Our Refill and Exchange segments, which generally enjoy higher margins than our Dispensers segment, experience higher sales and operating income in the spring and summer. We have historically experienced higher sales and operating income from our Dispensers segment in spring and summer; however, we believe the seasonality of dispenser sales are more dependent on retailer inventory management and purchasing cycles and not correlated to weather. Sustained periods of poor weather, particularly in the spring and summer, can negatively impact our sales in our higher margin Refill and Exchange segments. Accordingly, our results of operations in any quarter will not necessarily be indicative of the results that we may achieve for a fiscal year or any future quarter.

 

Critical Accounting Policies and Estimates

 

Other than the adoption of Topic 606 on January 1, 2018 as described in Note 2 to the condensed consolidated financial statements, there have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2017.

 

Cautionary Note Regarding Forward-Looking Statements

 

This document includes and other information we make public from time to time may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our estimates, expectations, projections, beliefs, intentions or strategies for the future, and the assumptions underlying such statements. We use the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “could,” “seek,” “plan,” and similar expressions to identify our forward-looking statements. These forward-looking statements are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known and unknown risks, including those factors set forth in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

Item 3. Quantitative and Qualitative Disclosure About Market Risk

 

There has been no material change in our exposure to market risk during the three or six months ended June 30, 2018. Please refer to "Quantitative and Qualitative Disclosures about Market Risk" contained in Part II, Item 7A of our Form 10-K for the year ended December 31, 2017 for a discussion of our exposure to market risk.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures 

 

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) pursuant to Rule 13a-15(b) of the Exchange Act. Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures are effective for the purpose of providing reasonable assurance that the information required to be disclosed in the reports we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

Not applicable.

 

Item 1A.  Risk Factors

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed under Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. Other than as set forth below, there have been no material changes to such risk factors.

 

Recently imposed tariffs and other potential changes in international trade relations implemented by the U.S. presidential administration could have a material adverse effect on our business, financial condition, cash flows and results of operation.

 

Currently, all of our Dispensers are assembled by independent manufacturers in, and imported from, China. These import operations are subject to international trade regulations, including import charges and other agreements among the United States and its trading partners, including China.

 

The U.S. government recently proposed, among other actions, imposing new or higher tariffs on specified imported products originating from China in response to what it characterizes as unfair trade practices, and China has responded by proposing new or higher tariffs on specified products imported from the United States. In a notice published on June 20, 2018, the Office of the United States Trade Representative (the “USTR”) issued a determination and request for public comment under Section 301 under the Trade Act of 1974 (the “Notices”) concerning the proposed imposition of an additional 25% tariff on specified products from China (the “Tariffs”). The list of products set forth in the Notice included self-contained drinking water coolers, including our Dispensers, which we import from China. We have worked with our suppliers and secured a reduction in the amount we pay for Dispensers and with our customers to increase our prices to include the remaining incremental cost associated with the Tariff as implemented in the Notice. We believe the cost reduction and increased pricing will offset the impact of the Tariff as implemented in the Notice, however, if retailers increase prices to consumers, consumer demand may be reduced, and any increases in the rate of the Tariff or any additional tariffs may adversely affect us in a manner where we cannot negotiate cost reductions or price increases to offset any potential impact. In July 2018, we applied to the USTR for a Request for Exclusion from the Tariffs for our Dispensers (the “Request for Exclusion”). Our Request for Exclusion is currently pending with the USTR, and there can be no assurance that the USTR will grant our Request for Exclusion or otherwise modify the application of the Tariffs as applied to our Dispensers.

 

These Tariffs, along with any additional tariffs or other trade actions that may be implemented, may further increase the cost of certain materials and/or products that we import from China, including our Dispensers, thereby adversely affecting our profitability. These actions could require us to raise our prices, which could decrease demand for our products or otherwise impact the marketability of our products to retailers and consumers. The Tariffs could also force us to seek alternative suppliers for our Dispensers and other materials we import from China or force our existing suppliers to establish new manufacturing operations in other countries, and the products produced by such manufacturers may be of inferior quality, cost more than the Dispensers we currently import from China, or otherwise be sourced from suppliers with unproven operations or reliability. As a result, these actions, including potential retaliatory measures by China, may adversely impact our business. Given the uncertainty regarding the scope and duration of these trade actions by the United States or other countries, as well as the potential for additional trade actions, the impact on our operations and results remains uncertain and could be significant. To the extent that our supply chain, costs, sales or profitability are negatively affected by the Tariffs or any other trade actions, our business, financial condition and results of operations may be materially adversely affected.

 

 

We operate in a highly competitive industry, face competition from companies with far greater resources than we have and could encounter significant competition from these companies both in Exchange and Refill. 

 

We primarily participate in the highly competitive bottled water segment of the non-alcoholic beverage industry. The industry is dominated by large and well-known international companies, and numerous smaller firms are also seeking to establish market niches. In Exchange, we offer three- and five-gallon bottled water and also provide consumers the ability to exchange their used containers. Competitive factors with respect to our business include pricing, taste, advertising, sales promotion programs, product innovation, increased efficiency in production and distribution techniques, the introduction of new packaging and brand and trademark development and protection.

 

Our primary competitors in our bottled water business include Nestlé, The Coca-Cola Company, PepsiCo, Dr. Pepper Snapple Group and Cott Corporation. While none of these companies currently offers a nationwide water bottle exchange at retail, Nestlé offers water bottle exchange on a regional basis. Many of these competitors are leading consumer products companies, have substantially greater financial and other resources than we do, have established a strong brand presence with consumers and have established relationships with retailers, manufacturers, bottlers and distributors necessary to start an exchange business at retail locations nationwide should they decide to do so. Competitors with greater financial resources may put pressure on the prices at which we offer our products which would have a negative impact on our margins. In addition to competition between companies within the bottled water industry, the industry itself faces significant competition from other non-alcoholic beverages, including carbonated and non-carbonated soft drinks and waters, juices, sport and energy drinks, coffees, teas and spring and tap water.

 

Refill also participates in the highly competitive purified water segment of the non-alcoholic beverage industry. While the non-alcoholic beverage industry is dominated by large and well-known international companies, numerous smaller firms are also seeking to establish market niches. Refill faces two levels of competition: (i) competition at the retail customer level to secure placement of its reverse osmosis water filtration systems in the store; and (ii) competition at an end-user level to convince consumers to purchase its water versus other options. Competitive factors with respect to our Refill business include pricing, taste, advertising, sales promotion programs, retail placement, introduction of new packaging and branding.

 

We also face competition from other methods of purified water consumption such as countertop filtration systems, faucet mounted filtration systems, in-line whole-house filtration systems, water filtration dispensing products such as pitchers and jugs, standard and advanced feature water coolers and refrigerator dispensed filtered and unfiltered water. We could face enhanced competition if such devices are improved to provide enhanced filtration or other competing services.

 

We also compete directly and indirectly in the water dispenser marketplace. There are many large consumer products companies with substantially greater financial and other resources, a larger brand presence with consumers and established relationships with retailers that could decide to enter the marketplace. Should any of these consumer products companies so decide to enter the water dispenser marketplace, sales of our water dispensers could be materially and adversely impacted, which, in turn, could materially and adversely affect our sales of bottled water.

 

If we lose key personnel or are unable to recruit qualified personnel, our ability to implement our business strategies could be delayed or hindered. In addition, we may not be able to attract and retain the highly skilled employees we need to support our planned growth. 

 

We are highly dependent upon the services of our senior management because of their experience, industry relationships and knowledge of the business. The loss of one or more of our key employees could seriously harm our business and we may not be able to attract and retain individuals with the same or similar level of experience or expertise. We face competition for qualified employees from numerous sources and there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms. Our ability to recruit and retain such personnel will depend upon a number of factors, such as our results of operations, prospects and the level of competition then prevailing in the market for qualified personnel. Failure to recruit and retain such personnel could materially adversely affect our business, financial condition and results of operations. While our employment agreements with members of our senior management include customary confidentiality, non-competition and non-solicitation covenants, there can be no assurance that such provisions will be enforceable or adequately protect us.

 

 

Adverse weather conditions could negatively impact our business. 

 

Unseasonable or unusual weather may negatively impact demand for our products. The sales of our products are influenced to some extent by weather conditions in the markets in which we operate. Unusually cool or rainy weather may reduce temporarily the demand for our products and contribute to lower sales, which would have an adverse effect on our results of operations for such periods.

 

Changes in taxation requirements could affect our financial results. 

 

We are subject to income tax in the numerous jurisdictions in which we generate net sales. In addition, our water dispensers we sell are subject to certain import duties and sales taxes in certain jurisdictions in which we operate. Increases in income and other tax rates could reduce our after-tax income from affected jurisdictions, while increases in indirect taxes could affect our products’ affordability and therefore reduce demand for our products.

 

Our ability to use our net operating loss carryforwards in the United States may be limited, and we may not be able to utilize our net operating loss carryforwards as a result of recent U.S. federal tax reform legislation.

 

As of December 31, 2017, we had net operating losses (“NOLs”) of approximately $248.3 million for federal income tax purposes, which expire at various dates through 2037. To the extent available and not otherwise utilized, we intend to use any NOL carryforwards to reduce the U.S. corporate income tax liability associated with our operations. However, our ability to realize our deferred tax assets is based on the extent to which we generate future taxable income and on prevailing corporate income tax rates, and we cannot provide any assurance as to when and to what extent we will generate sufficient future taxable income to realize our deferred tax assets, whether in whole or in part. Moreover, on December 22, 2017, the federal 2017 Tax Act was enacted into law. The Tax Act contains significant changes to corporate taxation and modifies several existing laws around federal NOLs, including a limitation on the deduction for NOLs to 80% of current year taxable income as well as an indefinite carryover period for federal NOLs. Both provisions are applicable for losses arising in tax years beginning after December 31, 2017. For these reasons, even if we are profitable, our ability to utilize our NOLs may be limited, potentially significantly so. Our deferred tax asset related to our NOLs will be reduced, due to the decrease in the federal corporate tax rate outlined in the 2017 Tax Act. To the extent our use of NOL carryforwards is significantly limited, our income could be subject to U.S. corporate income tax earlier and in amounts greater than it would if we were able to use net operating loss carryforwards, which could result in lower profits and reduced cash flows. In addition, the 2017 Tax Act places certain limitations on the deductibility of interest expense at a percentage of taxable income. If our interest expense increases beyond a specified percentage of taxable income, a portion of that interest expense may not be deductible for income tax purposes, which could adversely affect our financial condition, results of operations and cash flows.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Not applicable.

 

Item 3. Defaults Upon Senior Securities

 

Not applicable.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information

 

Our Board of Directors (the “Board”) is committed to transparency and continually improving our corporate governance practices and values stockholder input. As part of this commitment, the Board regularly engages with our stockholders to seek feedback on our governance and executive compensation practices and policies. Following recent discussions with our stockholders and certain stockholder advisory groups, the Board voted to hold its advisory vote on named executive officer compensation on an annual basis. While our executive officer compensation program is designed to align the interests of executive officers with those of our stockholders by linking short and long-term cash and stock incentives to the achievement of Primo and individual performance goals, we want to provide our stockholders with the opportunity to more regularly assess our executive compensation program.

 

After careful review and consideration of these discussions and other factors, including the preferences expressed by our stockholders as to the frequency of future say-on-pay votes at our 2017 Annual Meeting of Stockholders, the Board determined on August 6, 2018 that we would hold a non-binding, advisory vote on the compensation of our named executive officers annually, beginning at the 2019 Annual Meeting of Stockholders, until the next advisory vote regarding the frequency of such advisory votes on named executive officer compensation is submitted to stockholders.  The Board and Compensation Committee will continue to review and evaluate our executive compensation practices and policies in order to focus executive behavior on achievement of both our annual and long-term objectives and strategy as well as align the interests of management with those of our stockholders.

 

 

Item 6. Exhibits

 

EXHIBIT INDEX

Exhibit Number		Description
2.1		Agreement and Plan of Merger, dated May 18, 2017, by and among Primo Water Corporation, Primo Water Operations, Inc. and New PW Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on May 19, 2017)
3.1		Amended and Restated Certificate of Incorporation of Primo Water Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 19, 2017)
3.2		Certificate of Amendment to Amended and Restated Certificate of Incorporation of Primo Water Corporation (incorporated by reference to Exhibit 3.3 to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-3 (File No. 333-200016) filed on May 19, 2017)
3.3		Bylaws of Primo Water Corporation (incorporated by reference to Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q filed on August 9, 2017)
4.1		Specimen Certificate representing shares of common stock of Primo Water Corporation (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on May 19, 2017)
4.2		Amendment to Sixth Amended and Restated Certificate of Incorporation of Primo Water Operations, Inc. (contained in Certificate of Merger) (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on May 19, 2017)
10.1		Credit Agreement, by and among Primo Water Corporation, as the Borrower, the subsidiaries of the Company, each as a guarantor, the lenders from time to time party thereto, BMO Harris Bank N.A. and U.S. Bank, National Association, as Co-Syndication Agents, JP Morgan Chase Bank, N.A., HSBC Bank USA, National Association and Fifth Third Bank, as Co-Documentation Agents, and SunTrust Bank, as Administrative Agent, Swingline Lender and Issuing Bank, with BMO Capital Markets Corp., U.S. Bank, National Association, JPMorgan Chase Bank, N.A. and SunTrust Robinson Humphrey, Inc., as Joint Lead Arrangers and Bookrunners (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 25, 2018)
31.1		Certification of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2		Certification of Periodic Report by Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1		Certification of Periodic Report by Chief Executive Officer and Chief Financial Officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
101.INS		XBRL Instance Document (1)
101.SCH		XBRL Taxonomy Extension Schema Document (1)
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB		XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document (1)

 

 

(1)

Included herewith

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	PRIMO WATER CORPORATION
	(Registrant)
Date: August 8, 2018	By:	/s/ Matthew T. Sheehan
		Matthew T. Sheehan
		Chief Executive Officer
Date: August 8, 2018	By:	/s/ David J. Mills
		David J. Mills
		Chief Financial Officer

 

 

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