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    PRMB
    Earnings call· Mar 2026(Q1 FY26)

    Primo Brands Q1 FY26 earnings call PRMB

    May 7, 2026 Source

    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

    9
    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

    2
    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%——

    Operational metrics

    16
    Comparable adjusted EBITDA
    $306 milliondown 10.4%
    Q1 FY26

    Driven by increased investments in the business, incremental costs from winter storms, and higher freight and logistics costs.

    Comparable adjusted EBITDA margin
    18.8%down 260 bps
    Q1 FY26

    Margins affected by operating with a higher route count to strengthen direct delivery service levels.

    Price/mix contribution to sales growth
    1.3%increase
    Q1 FY26

    Part of the 1.7% comparable net sales increase.

    Volume contribution to sales growth
    0.4%increase
    Q1 FY26

    Part of the 1.7% comparable net sales increase, driven by retail channels, partially offset by direct delivery decline.

    Net leverage ratio
    3.52x
    Q1 FY26

    Reflecting expected seasonal working capital dynamics in the first quarter.

    Total capital expenditures
    $118.1 million
    Q1 FY26

    Includes integration capital expenditures.

    Integration capital expenditures
    $47.2 million
    Q1 FY26

    Majority supported growth initiatives and maintenance.

    Share repurchase program executed
    $29 million
    Q1 FY26

    Under the $300 million program announced last November.

    Share repurchase program authorization remaining
    $78.3 million
    Q1 FY26

    As of the end of the first quarter.

    Office Coffee Services business 2025 net sales
    $25.5 million
    FY25

    Accounted for in reported 2025 net sales, exited in 2026.

    Comparable 2025 net sales
    $6.635 billion
    FY25

    Base for full year 2026 guidance and growth rate, after cycling the exit of Office Coffee Services.

    Adjusted EBITDA margin midpoint (revised)
    22.0%down 50 bps compared to previous guidance
    FY26

    Continues to imply margin expansion for the year despite being lower than previous guidance.

    Term loan refinanced
    $3.1 billion
    March 31, 2026

    Proactively refinanced, extending the largest and nearest maturity in the debt stack.

    Liquidity
    $874 million
    Q1 FY26

    Strong liquidity position.

    EBITDA split H1/H2
    47-53vs 48-52 previously
    FY26

    Slight shift from previous expectation due to Q1 investments.

    Pure Life growth
    mid-single digit
    Q1 FY26

    Brand that tends to compete most against private label.

    Industry KPIs

    7
    MetricValueDetails
    Category brand sharegaineddollar and volume share
    Gross operating margin18.8%%
    Organic revenue growth1.7%%
    Unit case volume growth0.4%%
    Freight logistics cost pressurehigher
    Pack architecture pricing actionstaken
    Cold drink equipment distribution reachexpanded

    Product announcements

    3
    ProductTypeDetails
    Saratoga collectionlaunch
    Pure Life bottle serieslaunch
    Regional Spring Waters on Amazon Groceryexpansion

    Deals & partnerships

    3
    Major League BaseballSuccessful 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.

    DisneyMultiyear 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 AwardsSponsorship for Mountain Valley.

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

    Capital programs

    3
    Saratoga capacity expansion in Texasoperational

    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 facilityunderway

    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 implementationunderway

    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

    4
    Geopolitical events and dynamic cost landscapeFY26

    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 improvementQ1 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 weatherQ1 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 inflationFY26

    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

    5

    Direct delivery growth trajectory

    Q2 FY26
    CurrentDown 3% in Q1 FY26
    TargetCloser 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.

    Q&A highlights

    7

    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 read6 chapters

    Detailed Narrative

    01

    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%.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.