Primo Water reports net revenue growth despite Covid challenges

Primo Water Corporation has reported a 6% increase in its third-quarter net revenue to $551 million as the firm’s pure-play water model “continues to drive higher demand” for its products and services, despite Covid-19 challenges.

According to Primo Water, the revenue growth is due to pricing initiatives, increased demand from residential and B2B customers, and the impact of foreign exchange, partly offset by lower revenue from water refill and dispenser sales.

Despite this increase, the company also recorded a 4% decrease in adjusted EBITDA to $106 million, compared to $111 million in September last year. 

In North America, water refill/water filtration declined by 4% and water dispenser sales fell by 44% in Q3. Meanwhile, water refill/water filtration sales in the rest of the world increased by 6%.

Primo Water expects around 6% organic revenue growth in 2021.

Tom Harrington, Primo Water’s CEO, said: “Our pure-play water model continues to drive higher demand for our products and services. Third-quarter operating results were negatively affected by the increase in the number of associates impacted by Covid resulting in route inefficiencies and higher overtime and temporary worker wages.”

“This was partially offset by higher revenue and fixed cost leverage as our North America Water Direct business experienced a substantial increase in demand. We have seen operational improvement at the end of Q3 and continuing into October, supporting our belief this has been a short-term impact of the virus.”

He continued: “As we continue to the next phase of our transformation as a pure-play water company and leader in ESG, we are planning to exit the single-use plastic retail bottled water business in North America. Although it is a relatively small part of our overall business, exiting this category will result in a higher margin and more sustainable business. The increasing effect of one-way, single-use plastic bottles in our landfills and waterways has driven us to focus on our more environmentally friendly 3-gallon and 5-gallon returnable bottle business.”