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Primo Brands (PRMB) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Staples· May 7, 2026

Source: earnings call transcript

Executive summary

Primo Brands Q1 FY26 — Strong Top-Line Return to Growth, Raised Sales Guidance

Primo Brands delivered a strong Q1 FY26, returning to comparable net sales growth driven by broad-based performance and improved direct delivery service levels. The company raised its full-year organic net sales guidance while prudently widening its adjusted EBITDA range due to macro uncertainties. Strategic investments in customer experience and brand building are expected to drive sustained growth and margin expansion.

Highlights

5

  • Net sales were up 1.7% on a comparable basis versus prior year, marking a return to growth for Primo Brands.

  • Comparable organic net sales growth guidance for FY26 was raised to 1% to 3% from flat to 1% previously.

  • Saratoga and Mountain Valley combined net sales grew an impressive 43% in the first quarter.

  • Direct delivery customer net adds approached a net breakeven customer position in March, with on-time in full reaching over 90%.

  • Proactively refinanced a $3.1 billion term loan, extending maturity to 2031 from 2028.

Concerns

4

  • Comparable adjusted EBITDA decreased 10.4% to $306 million, driven by increased investments and higher freight/logistics costs.

  • Comparable adjusted EBITDA margin was down 260 basis points to 18.8% versus the prior year.

  • The low end of the adjusted EBITDA range was updated to $1.465 billion due to geopolitical events and the dynamic cost landscape.

  • Direct delivery net sales declined 3% in the quarter.

Guidance & targets

CategoryTargetConfidence
Comparable organic net sales growth
1% to 3%
high materiality
High
Adjusted EBITDA
$1.465 billion to $1.515 billion
high materiality
Medium
Adjusted EBITDA margin midpoint
22%
medium materiality
Medium
Direct delivery performance
closer to breakeven
medium materiality
High
Direct delivery performance
modest growth
medium materiality
High
Adjusted free cash flow
$790 million to $810 million
high materiality
High
Capital expenditures
approximately 4% of net sales
medium materiality
High
Integration capital expenditures
approximately $100 million
medium materiality
High
Quarterly dividend
$0.12 per share
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Retail
Strong performance in retail channels, particularly mass, club, and away-from-home, with significant growth from premium brands like Saratoga and Mountain Valley. The company expanded points of availability and improved display execution.
Expanded leadership position in branded bottled waterGained dollar and volume share in the categoryNet sales growth driven across multiple channels, particularly mass, club and away-from-homePack sizes driven by occasion and case packsBrands led by premiumSaratoga and Mountain Valley combined net sales up 43%
————
Direct Delivery
Net sales declined in the quarter due to lower volume and a tough prior-year comparison, but showed sequential improvement. Investments in service levels led to better customer retention and operational metrics, with net adds approaching breakeven.
Lower volume from a smaller customer baseSequential improvement each month within the quarterCustomer net adds approaching breakeven in MarchOn-time in full reached over 90% in MarchReflected lower volume from a smaller customer base and a tough comparison to prior year
—-3%——

PRMB operating KPIs by quarter

PRMB operating KPIs stated on its earnings calls, by fiscal quarter
KPIThis call Mar 2026 Q1 FY26 Jun 2026 Q2 FY26Change vs prior quarter
Capital expenditures Integration
$47.2M First quarter total capital expenditures were $118.1 million, while $47.2 million were related to integration capital expenditures, the majority supported growth initiatives and maintenance. Source: earnings call transcript
$35M Second quarter total capital expenditures were $104.6 million, while $35 million was related to integration capital expenditures, the majority supported growth initiatives and maintenance. Source: earnings call transcript
-25.8%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
Saratoga collectionlaunch
Pure Life bottle serieslaunch
Regional Spring Waters on Amazon Groceryexpansion

Deals & partnerships

Major League Baseball Successful partnership for regional Spring Waters, including a creative campaign.

Marks the first time the entire regional Spring Water portfolio is under one creative campaign. Includes a significant presence at the Philadelphia All-Star game in July.

Disney Multiyear partnership for a limited edition Pure Life bottle series. multiyear

Launching a limited edition Pure Life bottle series this summer featuring Toy Story 5.

Academy of Country Music Awards Sponsorship for Mountain Valley.

Mountain Valley is the proud sponsor of the Academy of Country Music Awards in May.

Capital programs

Saratoga capacity expansion in Texas operational

Benefit:Supports lower distribution costs, second production location.

Saratoga capacity in Texas became operational in May, adding a second production location to support lower distribution costs.

Mountain Valley new greenfield facility underway

Benefit:Drive continued momentum for the brand.

Expected to be completed by mid-summer to support the growth trajectory of Mountain Valley.

Warehouse management system implementation underway

Benefit:Support superior supply chain execution from product supply to in-branch inventory to help satisfy customer demand.

Being implemented to enhance supply chain efficiency and customer satisfaction.

Risks & headwinds

Geopolitical events and dynamic cost landscape FY26

Adjusted EBITDA range widened, updating low end to $1.465 billion.

Mitigation:Multiple levers including pricing actions, growth initiatives, ongoing supply chain cost initiatives, and financial risk management program.

Increased investments in direct delivery and service improvement Q1 FY26

Comparable adjusted EBITDA decreased $35.5 million (10.4%); comparable adjusted EBITDA margin down 260 bps to 18.8%.

Mitigation:Expected for costs to begin to normalize in the second half of the year as cost structure realigns under the improved operating model.

Winter storms and severe weather Q1 FY26

Incremental costs incurred attributable to winter storms; higher transportation costs in retail.

Mitigation:Managed by operating with a higher route count to navigate temporary disruptions.

Oil-related commodities inflation FY26

Likely result in some added headwinds.

Mitigation:Actively managing cost outlook, financial risk management program (hedging 12-24 months), pricing actions, productivity initiatives.

What to watch in Q2 FY26

Direct delivery growth trajectory

Q2 FY26
Current Down 3% in Q1 FY26
Target Closer to breakeven in Q2 FY26

Why it matters

Indicates successful turnaround of a key business segment and validates investments in customer experience.

We now expect direct delivery to transition from the down 3% in the first quarter to closer to breakeven in the second quarter and to modest growth in the second half of the year.

Find out whether PRMB delivers this. Inve re-checks your case every morning.

Q&A highlights

How locked is the hedging program for the year, and what is the updated H1/H2 EBITDA split?

The H1/H2 EBITDA split is now closer to 47-53 due to Q1 investments. Diesel hedges are strong, offering potential upside if oil prices drop. Resin contracts could provide a more advantageous negotiation posture if market conditions improve.

“we're probably a little bit more like 47-53. It'd be about maybe 1 point from those investments inside the quarter.”

asked by Peter Galbo · answered by David Hass

2 min read 6 chapters

Detailed narrative

Return to Growth & Direct Delivery Improvement

Primo Brands achieved a return to comparable net sales growth of 1.7% in Q1 FY26, driven by both price/mix and volume, exceeding expectations. The direct delivery segment showed significant sequential improvement, with customer quits declining and net adds approaching breakeven in March. Key operational metrics, such as on-time in full service levels, reached over 90%.

Strategic Investments & Operational Enhancements

The company is implementing a new warehouse management system to enhance supply chain execution, from product supply to in-branch inventory. Efforts are also underway to optimize the end-to-end customer journey for direct delivery, focusing on transparency, convenience, and trust through digital enhancements, win-back initiatives, and an efficient customer contact center redesign.

Retail Momentum & Premium Brand Strength

Retail performance was robust, with Primo Brands expanding its leadership in branded bottled water and gaining both dollar and volume share. Premium brands, including Saratoga and Mountain Valley, demonstrated impressive growth of 43% in Q1, supported by new distribution points and strategic capacity investments. The Saratoga Texas capacity became operational in May, and the Mountain Valley new greenfield facility is expected to be completed by mid-summer.

Brand Building & Innovation

Summer marketing plans include a creative campaign for regional Spring Waters in partnership with Major League Baseball and a limited edition Pure Life bottle series featuring Disney's Toy Story 5. Additionally, regional Spring Waters became available on Amazon Grocery in April, aiming to increase household penetration, accelerate brand awareness, and expand virtual shelf share.

Revenue Growth Management & Pricing Strategy

Primo Brands is developing a strategic and holistic revenue growth management approach across various price points, package types, and channels. Pricing decisions are consumer-centric, competitive, and designed to manage cost structure and margin goals. Pricing actions have already been taken on the immediate consumption portfolio, with potential for case pack pricing later in the year.

Commodity Exposure & Risk Management

The company provided an overview of its oil-related commodities exposure, including plastic resins, diesel, and propane, and its risk management program. This program utilizes fixed price and forward contracts, typically covering 12 to 24 months, to create predictability. Despite recent volatility, the strategy offers visibility and confidence, with multiple levers available to mitigate potential impacts.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.