Wednesday November 13th, 2013 - 10:06AM
Primo Water Corporation, a provider of multi-gallon purified bottled water, self-serve filtered drinking water and water dispensers, has announced financial results for the third quarter ended September 30, 2013 and a strategic alliance agreement with DS Waters of America, Inc.
Total net sales decreased 2.4% to $25.5 million compared to $26.2 million for the third quarter of 2012 as a result of a $0.9 million decrease in dispenser sales partially offset by a $0.3 million increase in water sales, Primo noted.
Water segment net sales increased 1.6% to $17.5 million for the third quarter compared to $17.3 million in the third quarter of 2012. Sales in the water segment consist of sales of multi-gallon purified bottled water ("Exchange") and self-serve filtered drinking water vending services ("Refill"). The increase in water net sales was primarily due to a 4.6% increase in exchange sales driven by same-store unit growth of 8.5% for the company's U.S. exchange services compared to the third quarter of 2012. The improvement in exchange sales was partially offset by a 2.1% decline in refill sales.
Dispenser segment net sales for the third quarter of 2013 decreased 10.3% to $8 million compared to $8.9 million in the third quarter of 2012. Despite the 3.7% decline in dispenser unit sell-in to retailers, the company realized its 15th consecutive quarter of growth in consumer purchases as dispenser unit sales to end consumers increased 2% to a 116,400 units for the third quarter of 2013 compared to the same period in the prior year.
Adjusted EBITDA increased 61.6% to $3 million from $1.8 million in the third quarter of 2012. The net loss from continuing operations for the third quarter of 2013 was $1.6 million, compared to $2.5 million for the third quarter of the prior year.
Strategic Alliance Agreement With DS Waters of America
Primo has entered into a strategic alliance agreement with DS Waters of America, Inc., an operator in the home and office beverage delivery market. Primo will assume responsibility for DS Waters' current five-gallon retail exchange customers, including account management, billing and collections. Over time DS Waters will become the primary bottling and distribution partner in the U.S. for Primo's exchange services. It is anticipated that activities under the strategic alliance agreement will be phased in on a region-by-region basis.
"We are combining the strengths of two great companies," stated Billy Prim, Primo Water's CEO. “Primo has extensive knowledge of retail exchange while DS Waters has one of the largest bottling and distribution systems in the industry. We believe the strategic alliance will also allow us to add incremental revenue, reduce our distribution costs and is expected to lead to improved gross margin over time."
"We are excited to partner with Primo Water as we each leverage our core business competencies to create a first-class alliance in the bottled water industry," stated DS Waters CEO Tom Harrington. "We believe this strategic alliance will help us gain increased bottling and distribution volume from Primo's existing retail business as we continue to provide customers with superior product quality and customer service."
DS Waters of America, Inc. is a diversified beverage company providing bottled drinking water, brewed beverages and water filtration systems to homes and offices across the U.S., and headquartered in Atlanta.