Primo Water Shares Spike As Q2 Earnings Top Estimates, Boosts 2023 Guidance

Primo Water Corp PRMW shares jumped more than 11% on the heels of the company's second-quarter (Q2) earnings report, which showed revenue growth of 4% Y/Y to $593 million, beating the consensus of $586.8 million. 

Revenues benefited from the growth of 7% Y/Y in Water Direct / Water Exchange and 18% Y/Y in Water Refill / Water Filtration, partly negated by the exit from business in Russia and North America single-use bottled water retail.

Gross margin expanded 390 basis points Y/Y to 62.1% in the quarter.

Adjusted EBITDA increased 13% Y/Y to $122 million, with margins increasing 160 basis points Y/Y to 20.5%, led by favorable pricing initiatives, higher customer demand, and cost management.

Adjusted EPS of 24 cents surpassed the street view of 20 cents.

Operating cash flow stood at $76.8 million in Q2, higher than $66.7 million a year ago.

As of July 1, cash and cash equivalents stood at $86.8 million.

Repurchase: The Tampa, Florida-based company authorized a new $50 million share repurchase program, replacing the earlier program that expires on Aug. 14. 

Dividend: The company declared a dividend per share of $0.08 (+14% Y/Y), payable on September 7, 2023, to shareholders of record as on August 24, 2023.

Outlook: The company expects Q3 revenue of $612 million-$632 million vs. the consensus of $622.8 million and adjusted EBITDA of $129 million to $139 million.

The company raised the FY23 revenue outlook to $2.320 billion-$2.360 billion (from $2.30 billion-$2.35 billion) vs. $2.33 billion estimate and adjusted EBITDA to $460 million and $480 million from $450 million and $470 million.

The company reaffirmed the 2024 outlook for high single-digit organic revenue growth and adjusted EBITDA of $530 million. 

Price Action: PRMW shares are trading higher by 11.74% at $15.47 on the last check Thursday.