PRMW Jan 2016 Investor Presentation
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Transcript of PRMW Jan 2016 Investor Presentation
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ICR Conference
January 12, 2016
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INVESTOR HIGHLIGHTS
3
• Only Single Vendor Retail Solution
• Established Enviable Customer Base
• Well-Positioned for Industry & Consumer Trends
•Proven Executive Track Record
• Strong Growth Prospects w/ Operating Scale
• Strong Financial Trends
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ONLY SINGLE VENDOR RETAIL SOLUTION
4
DISPENSERS EXCHANGE REFILL
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RECURRING REVENUE BUSINESS
5
Sell 1 Appliance
Average of 35 Annual
Purchases
xchange
Refill Weekly Grocery Trips
RAZOR
Water Dispenser
RAZORBLADE
Water Exchange & Refill
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Home Centers
Membership
Warehouses
ass Merchants Grocery Stores Drug Stores Hardware Stores
Dispensers Exchange Refill
24,000+ Locations and Growing
ENVIABLE RETAIL CUSTOMER BASE
6
Source: Company Information
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“14%declinein(soda)volumesince2004”*
“ManyscientistsbelievethatsodascontainingHFCSareamajorcontributortoepidemicsofobesityanddiabetes.”*
“Thesciencebaselinkingtheconsumptionofsugar -sweetened
beveragestotheriskofchronicdiseaseisclear.”*
FAVORABLE HEALTH TRENDS – SODA DECLINE
Heightened
negative focus
on obesity &
sugar
consumption
*Forbes (May 2015) – WhySodasAre(Probably)theNextCigarettes
**BusinessInsider(Nov.2015)– There’sanewBigTobacco…
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Source: Beverage Marketing Corporation
o Bottled water has increased its share of the beverage market from 11.8% (‘03) to 17.8% in ‘04
o Sales of bottled water in 2014 grew to $13 billion, a 6.1% increase from the prior year
o By 2016, bottled water is expected to overtake carbonated soft drinks as the #1 packaged beverage in
the United States
FAVORABLE HEALTH TRENDS – W TER SURP SSING CSD’S
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FAVORABLE ENVIRONMENTAL TRENDS: TAP WATER & RECYCLING
CONCERNS
9
Source: International Bottled Water Association
• Municipal tap water quality concerns
o Municipal systems underinvested
•Taste preference; F
ilters ≠ Purified
Water
• Environmental & sustainability movements continue
o >70% of single serve bottles end up
landfills annually
o Continued challenges to reduce or even
ban single serve bottles gain
momentum
U S Geological Service identifies
“ mpaired Waters”
(definedasnotmeetingguidelinesforsustainablewaterquality)
in literally every state in the U S
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WATER NOW REPRESENTS 31.4% SHARE OF STOMACH
10
Source: Beverage Marketing Corporation: Multiple Beverage Marketplace in the U.S.
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PROVEN EXECUTIVE TRACK RECORD
Billy Prim
Founder, Chairman & Chief Executive
Officer
Matt Sheehan
President & Chief Operating Officer
Mark Castaneda
Chief Financial Officer
Rick Belmont
Senior Vice President and General
Manager of Dispensers & Innovation
Jamila Granger
Vice President, General Counsel
David Hass
Vice President, Strategy, Financial
Planning & Analysis
Bob Heer
Vice President, General Manager of
Refill
David Mills
Vice President, Finance
Bob Travatello
Vice President, MIS
11
EXECUTIVE POSITION RELEVANT WORK EXPERIENCE
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GROWTH STRATEGY
12
Grow Household Penetration of Dispensers
Improve Connectivity
Increase Retail Outlets
Drive Unit Economics
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• Room temperature, cold, and hot options
• Top and bottom load, plus stainless steel
GROW HOUSEHOLD PENETRATION IN DISPENSERS
13
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STRONG & CONSISTENT DISPENSER: SELL-THRU TRENDS
14
QUARTERLY DISPENSER SELL-THRU
Source: Company Information
•Q3 record sell-thru of 144,000 a 10% increase over 2014
• Average household consumes 35 five-gallon bottles per year
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IMPROVED CONNECTIVITY & MARKETING INVESTMENT
15
Improved Communications
and Water Coupons in
Dispensers
Improved in StoreCommunication
Expanded reach throughsocial and digital
On your first purchase of
Primo Exchange Water
Save$
5
VALID 1/1/2014-6/30/2015
RETAILER: Wewillreimburseyouthefacevalueofthiscouponplus8¢handling providedyouandthe consumerhavecomplied
withthetermsofthisoffer. Invoicesprovingpurchasesof
sufficient stockto coverpresentedcouponsmustbe shownonrequest.Anyother applicationmay constitutef raud.
Couponvoidwhere prohibited, taxedor restricted.
Consumermustpayany salestax. Cashvalue.001¢.
Reproductionof thiscouponis expresslyprohibited.Mailto: PrimoWater,InmarDept.#51199,
OneFawcett Drive,Del Rio,TX78840
Get
Started
TodayUsetheseredeemablecouponstotry Primo
Water.
PNR0832013-11-12
RETAILER: Wewillreimburseyou thefacevalue of thiscouponplus8¢hand lingprovidedyou andtheconsumer havecompliedwitht hetermsof thisoffer.Invoicesproving purchasesof sufficient stockto coverpresentedcouponsmust beshownonrequest. Anyotherapplicationmay constitutefraud.Couponvoidwhereprohibited,taxedorrestricted. Consumermust payanysalest ax.Cashvalue.001¢.Reproductionof thiscouponisexpresslyprohibited.Mailt o:PrimoWater,InmarDept.# 51199,OneFawcett Drive,DelRio,TX78840
5 GallonRefillof PrimoWater
$1 OFFVALID 1/1/2014-6/30/2015
RETAILER: Wewillreimburseyou thefacevalue of thiscouponplus8¢hand lingprovidedyou andtheconsumer havecompliedwiththe termsof thisoffer.Invoicesprovingpurchasesof sufficient stockto coverpresentedcouponsmust beshownonrequest. Anyotherapplicationmay constitutefraud.Couponvoidwhereprohibited,taxedorrestricted. Consumermust payanysales tax.Cashvalue.001¢.Reproductionof thiscouponisexpresslyprohibited.Mailt o:PrimoWater,InmarDept.# 51199,OneFawcett Drive,DelRio, TX78840
5 GallonRefillof PrimoWater
$1 OFFVALID 1/1/2014-6/30/2015
Tyler Ayers
Vice President, Marketing
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STRONG EXCHANGE SELL-THRU TRENDS
16
QUARTERLY U.S. EXCHANGE SELL-THRU
Source: Company Information
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5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
55 000
60 000
RUNWAY FOR RETAIL EXPANSION TO 50K LOCATIONS
17
Source: Company Information.
18,400Water Locations
Convenient
Availability
50k – 60k
Large Market Opportunity: 200,000+ Locations
in the U.S. and Canada
Remaining
Opportunity w/
Existing Relationships
New Channels
New Retailers
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IMPROVED UNIT ECONOMICS: GROSS MARGIN
18
Leverages Company Service
Technicians in dense markets
Improved service, brand presence andenhanced Gross Margins
Selective deployment remains in the
U.S. and Canada
R
L
Transition of a majority of the U.S. Bottling
and Distribution Services to one primarydistributor (DS Services)
Improved distribution costs, delivery
frequency and proximity to retail clients.
Reduced market completion
Improved Gross Margins through lower
bottle and material costs due to volumeincreases
Improved Gross Margins due to Distribution
cost decreases based on volume and
contract anniversaryE
H
N
G
E
DISTRIBUTION EFFICIENCIES
SERVICING AND SOURCING EFFICIENCIES
Improved empty bottle sourcing and
logistics to improve Gross Margins
Developed new equipment withimprovement in overall cost increasing
Return On Investment
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FINANCIAL RESULTS
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STRONG Q3 RESULTS
20
Source: Company SEC Filings. Adjusted SG&A and Adjusted EBITDA are non-GAAP measures.
Revenue growth of 28% to $33.9 million, exceeding
expectations
Sell-thru of dispensers increased 10%
Strong growth at retail with U.S. exchange same-store unit
growth of 11.6%
Sales growth and operating efficiency propelled adjusted
EBITDA growth of over 31% to $5.2 million, exceeding
expectations.
Raised outlook for the remainder of 2015
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STRONG YTD RESULTS
21
Source: Company SEC Filings. Adjusted SG&A and Adjusted EBITDA are non-GAAP measures and exclude primarily non-cash stock compensation expense.
Revenue was $95.5 million, an increase of 24.4% over 2014
Water segment net revenue increased 29.7% to $67.2 million
U.S. exchange same-store unit growth of 9.5%
Dispenser sell-thru of 394K, up 6.8% over 2014
Adjusted EBITDA increased 37.8% to $13.3 million
Earnings from continuing operations of $0.07 per diluted
share compared to a loss of $(0.41) in 2014
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FINANCIAL MOMENTUM & SCALE
22
NET REVENUE ADJ SG&A % of NET REVENUE
ADJUSTED EBITDA
(All 's in 000's)
Source: Company SEC Filings. Adjusted SG&A and Adjusted EBITDA are non-GAAP measures and exclude primarily non-cash stock compensation expense.
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• Total debt of $21.3 million down from $24.3 million at Dec 31, 2014
• Total debt to adjusted EBITDA improved to 1.29x in 2015 from 2.40x in
2014
• Operating cash flow of $10.0 million for the first nine months of 2015
• Free cash flow for the $4.5 million for the first nine months of 2015
Summary Balance Sheet September 30, 2015
Current assets $21,263 Current liabilities $17,561
Capital assets 36,260 Long-term liabilities 23,600
Other assets 9,155 Stockholders’ equity 25,517
Total assets $66,678 Total liabilities and equity $66,678
SOLID BALANCE SHEET AND CASH FLOW
Source: Company SEC Filings.
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SOLID LONG-TERM PERFORMANCE TARGETS
24
REVENUE GROWTH
ADJ. SG&A
% OF NET REVENUE
ADJ. EBITDA MARGIN
FINANCIAL METRIC 2014 5 YEAR TARGETS
GROSS MARGIN
% OF NET REVENUE
16.6% 7% - 15%
14.0% 10% - 12%
9.9% 15% - 20%
26.2% 25% - 35%
2013
(0.3%)
15.1%
25.0%
12.2%
Q315
28.4%
12.6%
28.1%
Source: Company SEC Filings. Adjusted SG&A and Adjusted EBITDA are non-GAAP measures and exclude primarily non-cash stock compensation expense.
15.5%
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INVESTOR SUMMARY
• Only Single Vendor Retail Solution
• Established Enviable Customer Base
• Well-Positioned for Industry & Consumer
Trends
•Proven Executive Track Record
• Strong Growth Prospects w/ Operating
Scale
•
Strong Financial Trends