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    PRMB
    Earnings call· Jun 2026(Q2 FY26)

    Primo Brands Q2 FY26 earnings call PRMB

    Aug 5, 2026 Source

    Executive summary

    Primo Brands Q2 FY26 — Strong Retail Growth and Direct Delivery Recovery Drive Sales Beat

    Primo Brands delivered a strong second quarter, exceeding sales expectations driven by broad-based growth in its retail segment and a faster-than-anticipated recovery in direct delivery. The company is simplifying its leadership structure and investing in customer experience and productivity to sustain momentum, while navigating a dynamic cost environment. Management remains focused on balanced, sustainable growth and margin expansion.

    Highlights

    5

    • Comparable net sales increased 4.2% to $1.8 billion, exceeding expectations for a second consecutive quarter.

    • Adjusted EBITDA grew 5% to $385 million, with comparable adjusted EBITDA margin expanding 10 basis points to 21.4%.

    • Direct Delivery net sales returned to growth, up 0.4%, one quarter ahead of expectations.

    • Retail net sales growth was strong and broad-based, with premium brands up 30.5%, regional spring water up 4.1%, and purified water up 1.9%.

    • Net leverage improved to 3.43x at quarter end, down from 3.52x in the first quarter.

    Concerns

    2

    • Adjusted EBITDA guidance for FY26 was reaffirmed at $1.465 billion to $1.515 billion, implying a flat margin of 21.8% at the midpoint due to continued investment and a dynamic macro cost environment.

    • Higher transportation costs, primarily from a tighter freight market and higher spot rates, partially offset adjusted EBITDA growth.

    Guidance & targets

    8
    CategoryTargetConfidence
    Comparable Net Sales Growth
    2% to 4%
    high materiality
    High
    Adjusted EBITDA
    $1.465 billion to $1.515 billion
    high materiality
    High
    Adjusted Free Cash Flow
    $790 million to $810 million
    medium materiality
    High
    Annual Capital Expenditures
    Approximately 4% of net sales
    medium materiality
    High
    Integration Capital Expenditures
    Approximately $100 million total, $18 million remaining
    medium materiality
    High
    Net Leverage Target
    Below 3x
    high materiality
    Medium
    Quarterly Dividend
    $0.12 per share
    medium materiality
    High
    Share Repurchase Program Remaining Authorization
    $62.8 million
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Retail
    Growth across all channels (mass, grocery, away from home) and pack sizes. Premium sales growth exceeded overall 30.5% premium water increase, reflecting ongoing strength in retail channels while continuing to recover within the direct delivery channel.
    Regional spring water net sales increased 4.1%Purified water increased 1.9%Premium brands increased 30.5%Value and volume share gains in bottled water category
    		—Strong and broad-based growth——
    Direct Delivery
    Net sales growth driven by price and mix benefits despite lower volume resulting from a smaller customer base. This progress reinforces that recovery efforts are driving tangible improvements in service levels.
    340 basis point sequential improvement from Q1NPS scores and Trustpilot ratings increasedCustomer quits declinedContact center call volumes declined below pre-integration levelsOn-Time In-Full (OTIF) improved to mid-90s
    		—0.4%——

    Operational metrics

    15
    Comparable Net Sales
    $1.8 billionUp 4.2% YoY
    Q2 FY26

    Ahead of expectations and marking a second consecutive quarter of year-over-year growth.

    Adjusted EBITDA
    $385 millionUp 5% YoY
    Q2 FY26

    With margin expansion driven by improving productivity, stronger operating leverage and continued progress in direct delivery.

    Adjusted EBITDA Margin
    21.4%Up 10 bps YoY
    Q2 FY26

    Reflecting enhanced operating efficiency in a seasonally stronger quarter and productivity gains.

    Net Leverage
    3.43xImproved from 3.52x in Q1
    Q2 FY26

    Demonstrating a normal seasonal deleveraging pattern.

    Liquidity
    $953 million
    Q2 FY26

    Liquidity remained strong.

    Total Capital Expenditures
    $104.6 million
    Q2 FY26

    The majority supported growth initiatives and maintenance.

    Share Repurchase
    $15.5 million
    Q2 FY26

    Executed during the quarter.

    Comparable 2025 Net Sales Base
    $6.635 million
    FY25

    After cycling the exit of office coffee services business and Eastern Canadian operations.

    Office Coffee Services Business (Exited)
    $25.5 million
    FY25

    Accounted for in reported 2025 net sales.

    Eastern Canadian Operations (Exited)
    $3.6 million
    FY25

    Accounted for in reported 2025 net sales.

    Price/Mix Contribution to Comparable Net Sales
    4.3%
    Q2 FY26

    Driver of comparable net sales increase.

    Volume Contribution to Comparable Net Sales
    -0.1%
    Q2 FY26

    Modestly offset price/mix contribution.

    Retail Volume vs Price/Mix Split
    40% volume / 60% price/mix
    YTD

    Pretty balanced split.

    Club Channel Growth
    Mid-single-digit
    Q2 FY26 and YTD

    Continued growth in the channel.

    Away-From-Home Channel Growth
    High single-digit
    Q2 FY26

    Driven by build-out of distribution.

    Industry KPIs

    3
    MetricValueDetails
    Gross operating margin21.4%%
    Organic revenue growth4.2%%
    Unit case volume growth-0.1%%

    Risks & headwinds

    2
    Dynamic Macro Cost EnvironmentFY26

    Implies flat adjusted EBITDA margin of 21.8% at midpoint of guidance.

    Mitigation: Continued investment behind growth, disciplined actions to manage higher transportation and commodity costs, pricing actions, growth initiatives, ongoing supply chain cost initiatives, financial risk management program.

    Higher Transportation CostsQ2 FY26

    Partially offset adjusted EBITDA growth.

    Mitigation: Investment in private fleet (transitioning drivers, hiring drivers), hedging programs (diesel), ongoing RFP measures for supply chain elements.

    What to watch in Q3 FY26

    4

    Direct Delivery Net Adds

    Next quarter
    CurrentPositive month within Q2
    TargetContinued positive net adds

    Why it matters

    Sustained positive net adds are crucial for the long-term growth and stability of the direct delivery business.

    If you look at net, we did see a positive month within Q2.

    Q&A highlights

    5

    Can you discuss direct delivery customer counts, net adds, and the sustainability of retail growth, especially the cadence in July/August?

    Eric Foss noted improved direct delivery performance with stronger monthly results in May and June, call volumes back to pre-merger levels, improved customer quits, and a positive net adds month in Q2. He emphasized broad-based retail growth across channels and brands, with value and volume share gains, expressing confidence in continued recovery.

    “If you look at net, we did see a positive month within Q2. So I think the really encouraging thing is, as this business has now returned to growth we're seeing, again, NPS kind of customer satisfaction metrics improve dramatically versus where we've been.”

    asked by Andrea Teixeira · answered by Eric Foss

    2 min read6 chapters

    Detailed Narrative

    01

    Leadership Structure Simplification

    Primo Brands simplified its leadership structure by eliminating the Chief Operating Officer role and elevating critical functions like Chief Supply Chain Officer to report directly to the CEO. The company also added a highly experienced beverage industry professional as President of Customer Direct and Go-to-Market. These changes aim to improve customer service, accelerate key growth priorities, support faster decision-making, and create a more agile and accountable operating model.

    02

    Direct Delivery Business Recovery

    The Direct Delivery segment returned to growth, increasing 0.4% in the quarter, one quarter ahead of expectations. This progress reflects meaningful improvements in customer experience, including strong new customer additions with improved quality, reduced customer quits, and contact center call volumes below pre-integration levels. Key operational metrics like On-Time In-Full (OTIF) improved to the mid-90s, supported by initiatives like simpler invoices and expanded payment options.

    03

    Strong Retail Segment Performance

    The retail business delivered strong and broad-based growth across all channels, including mass, grocery, and away from home. Regional spring water net sales increased 4.1%, purified water 1.9%, and premium brands 30.5%. This performance drove continued value and volume share gains in the bottled water category, with premium brands like Saratoga and Mountain Valley showing strong growth and expanded distribution.

    04

    Growth Vectors and Strategic Focus

    The company sees multiple growth vectors, including continued brand building and innovation, improving in-store presence, and a more strategic approach to revenue growth management. Significant opportunities exist in cold and immediate consumption, where Primo Brands is currently underpenetrated. The premium portfolio is considered early in its growth journey, with new capacity and expanded distribution expected to drive further scale and margin expansion.

    05

    Financial Health and Capital Allocation

    Primo Brands improved its balance sheet health, with net leverage decreasing to 3.43x from 3.52x sequentially. The company maintains strong liquidity with $953 million of availability. Adjusted free cash flow increased $30.4 million year-over-year to $200.1 million. Capital allocation priorities include reinvesting in the business, returning cash to stockholders through a reaffirmed $0.12 quarterly dividend, and executing a share repurchase program, with $62.8 million remaining under authorization.

    06

    Cost Management and Productivity

    Despite a dynamic macro cost environment, particularly higher transportation and commodity costs, the company is managing profitability through disciplined actions. These include pricing actions, growth initiatives, ongoing supply chain cost initiatives, and a financial risk management program. Productivity is expected to improve in direct delivery following peak season as the cost structure is realigned under the enhanced operating model.

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