Primo Water Corporation (“Primo” or the “Company”) (Nasdaq: PRMW)
today announces the following:
Exceeded December 31, 2018 Credit Card
Reader Goal and Begins Rollout to Remaining Locations
Earlier this year Primo accelerated the rollout
of cashless payment technology to its outdoor reverse-osmosis
refill machines, committing to installing 6,000 units by December
31, 2018. Primo exceeded this target by several hundred units and
is now entering phase II of the rollout to the remaining locations,
which is anticipated to be completed by June 30, 2019. This
technology not only brings more payment options to consumers but
also brings real-time telemetry alerting. The devices enable
consumers to choose from a variety of EMV-certified or chip-card
payment methods, including credit cards and mobile payment apps,
such as Apple Pay, Visa and MasterCard. The system capabilities
will also provide Primo the ability to remotely monitor its outdoor
refill machines and ensure the machines are in continuous
operation. The system will deliver tailored notifications based on
Primo’s defined thresholds when a refill machine experiences a
power outage or when there is a machine error based on their
specifications. This will allow field managers to send service
technicians to the refill machine, thus reducing downtime. Primo
anticipates that this capability will reduce lost revenue from
prolonged machine interruption and will increase end-consumer
satisfaction.
Water Dispensers Granted a Retroactive Exemption of the
Section 301 Tariff
The Office of the U.S. Trade Representative
recently granted product exemption from the Section 301 import
tariffs on certain products manufactured in China, including
Primo’s full-size water dispensers. The exemption is retroactive
back to the implementation date in July 2018 and will remain in
effect through December 2019. The exemption will allow Primo to
work with its retailers to reduce the future on-shelf
pricing. Primo believes the lower sales price can drive
consumer demand of its water dispensers and generate future water
households.
Primo Enters into an Agreement for Refill in
Mexico
Primo entered into an agreement with a Mexican
partner creating the framework for establishing a business in
Mexico to sell reverse-osmosis water through indoor and outdoor
self-service refill drinking water machines. Primo has been
working over the past 18 months to solidify the framework and best
approach to bring refill to Mexico.
Once the agreements are fully negotiated and
implemented, Primo will provide the expertise in refill through the
license of certain of its intellectual property and know-how for
the Mexico refill business and the supply of self-service refill
drinking water machines.
Primo will have the option to acquire the Mexico
refill business upon the attainment of either certain financial
milestones by the Mexico refill business or after six years.
Primo is working with an experienced partner
that has successfully introduced and grown multiple brands in
Mexico, including Under Armour and Oakley.
Board of Directors Appoints Susan Cates as Lead
Independent Director and Provides Corporate Governance
Update
The Company also announced today that the Board
appointed Susan Cates as its Lead Independent Director. In
this role, Ms. Cates will be responsible for helping to set agendas
for meetings of the Board, leading the Board’s review of management
performance and the succession planning process already underway,
and chairing executive sessions with non-management directors of
the Board. Ms. Cates has served on the Board since 2014 and
as Chair of the Audit Committee since her appointment to the Board
in 2014. She also brings to the role of Lead Independent Director
over 20 years of experience with public and private company
leadership and governance, domestic and international M&A
transactions, and finance.
In addition to elevating Ms. Cates into the Lead
Independent Director role, the Board also has put in place policies
to formalize its ongoing commitment to robust disclosures around
shareholder engagement and executive compensation, and to rotate
compensation committee leadership.
These board composition and corporate governance
enhancements highlight the latest efforts by the Company over the
past several years to incorporate valuable shareholder feedback and
careful consideration of proxy advisory firm recommendations.
During this time, the Company has also separated its chairman and
CEO roles as part of an ongoing succession planning process,
refreshed four out of eight board seats, adopted majority
resignation policies for directors in uncontested elections,
implemented stock ownership policies for non-management directors
and revamped its executive compensation program to further align
its interests with all shareholders.
About Primo Water Corporation
Primo Water Corporation (Nasdaq: PRMW) is an
environmentally and ethically responsible company with a purpose of
inspiring healthier lives through better water. Primo is North
America's leading single source provider of water dispensers,
multi-gallon purified bottled water, and self-service refill
drinking water. Primo’s Dispensers, Exchange and Refill
products are available in over 45,000 retail locations and online
throughout the United States and Canada. For more information and
to learn more about Primo Water, please visit our website at
www.primowater.com.
Forward-Looking Statements
Certain statements contained herein are not
based on historical fact and are "forward-looking statements"
within the meaning of the applicable securities laws and
regulations. These statements include those relating to our plans
with respect to the Mexico refill business; the exemption from the
Section 301 tariffs on our full-size water dispensers allowing us
to work with our retailers to reduce future on-shelf pricing and
our belief that lower sales prices can drive consumer demand of our
water dispensers and generate future water households; and the
capabilities and benefits of our cashless payment technology
relating to, among other things, remotely monitoring our outdoor
refill machines and ensuring that they are in continuous operation
and relating to these capabilities reducing lost revenue and
increasing end-consumer satisfaction. These statements can
otherwise be identified by the use of words such as "anticipate,"
"believe," "could," "estimate," "expect," "feel," "forecast,"
"intend," "may," "plan," "potential," “predict,” "project," “seek,”
"should," "would,” “will,” and similar expressions intended to
identify forward-looking statements, although not all
forward-looking statements contain these identifying words. Owing
to the uncertainties inherent in forward-looking statements, actual
results could differ materially from those stated herein. Factors
that could cause actual results to differ materially from those in
the forward-looking statements include, but are not limited to, the
loss of major retail customers of the Company or the reduction in
volume or change in timing of purchases by major retail customers;
the consolidation of retail customers and disruption of the retail
business model; lower than anticipated consumer and retailer
acceptance of and demand for the Company's products and services;
our inability to effectively move forward with a unified Primo
brand in our Refill segment, including difficulties bringing the
Primo brand to all Glacier Refill locations within our anticipated
timeline and recognizing the anticipated benefits and synergies of
the brand unification; the effectiveness of our marketing and brand
activation strategy, the risk that we will not realize all of the
anticipated benefits of such strategy (including increased sales
volume, revenue and customer loyalty) and the time and costs
associated with the development and implementation of new marketing
strategies in the event our current strategies do not achieve the
anticipated results; the highly competitive environment in which we
operate and the entry of a competitor with greater resources into
the marketplace; competition and other business conditions in the
water and water dispenser industries in general; adverse changes in
the Company's relationships with its independent bottlers,
distributors and suppliers in its Exchange business; the loss of
key Company personnel; risks associated with the Company’s
potential expansion into international markets, particularly Mexico
and China, that could be harmful to our business and operations;
the Company’s inability to finalize the agreements related to the
Mexico refill business, enter the Mexico market successfully or
otherwise receive benefits from the establishment of the Mexico
refill business; recently imposed tariffs that cover certain of our
products, the potential for increases in existing tariffs or new
tariffs, which may materially adversely affect our business, and
other potential changes in international trade relations
implemented by the U.S. presidential administration; repeal or
discontinuance of the exemption of the Section 301 tariffs on
certain of our water dispensers; the Company’s experiencing product
liability, product recall or higher than anticipated rates of sales
returns associated with product quality or safety issues;
dependence on key management information systems; the Company may
not be able to realize the benefits associated with the cashless
payment technology being implemented with respect to the refill
business; the Company's inability to efficiently expand operations
and capacity to meet growth; the Company's inability to develop,
introduce and produce new product offerings within the anticipated
timeframe or at all; general economic conditions; the possible
adverse effects that decreased discretionary consumer spending may
have on the Company’s business; the potential for activist
investors to cause us to incur substantial costs, divert
management’s attention and resources, and the related adverse
effects on our business, financial condition and results of
operation; changes in the regulatory framework governing the
Company's business; significant liabilities or costs associated
with litigation or other legal proceedings; the possibility that
our ability to use our net operating loss carryforwards in the
United States may be limited; the restrictions imposed upon our
business as a result of the restrictive covenants contained in our
credit agreements; the Company’s inability to comply with its
covenants in its credit facility; the possibility that we may fail
to generate sufficient cash flow to service our debt obligations;
the negative effects that global capital and credit market issues
may have on our liquidity; the costs of borrowing on our operations
as well as other risks described more fully in the Company's
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K filed on March 7, 2018 and its
subsequent filings under the Securities Exchange Act of 1934.
Forward-looking statements reflect management's analysis as of the
date of this press release. The Company does not undertake to
revise these statements to reflect subsequent developments, other
than in its regular, quarterly earnings releases or as otherwise
required by applicable securities laws.
Contact:Primo Water CorporationDavid Mills,
Chief Financial Officer(336) 331-4000
ICR Inc.Katie Turner(646) 277-1228
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