Primo Brands (PRMB) Q4 2023 earnings summary

Executive summary

• FY2023 combined revenue was $2,346.8M, up 6% YoY; Adjusted EBITDA was $476.7M, up 13%, with a 20.3% margin.

• FY2023 continuing-operations revenue was $1,771.8M, up 5%; Adjusted EBITDA rose 11% to $380.7M, with a 21.5% margin.

• Combined Adjusted Free Cash Flow was $183.7M; continuing operations generated $157.8M.

• FY2023 results exceeded the midpoint of guidance for revenue, Adjusted EBITDA and Adjusted Free Cash Flow across continuing and discontinued operations.

Financial highlights

• Q4 combined revenue was $585.0M, up 10% YoY; Adjusted EBITDA was $119.3M, up 11%, with a 20.4% margin.

• Q4 continuing-operations revenue was $438.7M versus $405.1M; Adjusted EBITDA was $94.9M versus $88.6M, with a 21.6% margin versus 21.9%.

• Q4 reported net income from continuing operations declined to $13.3M from $34.8M; Adjusted net income was $18.6M versus $20.6M.

• FY2023 gross profit rose 12% to $1.137B, and gross margin expanded 400 bps to 64.2%; Q4 gross margin rose 330 bps to 64.7%.

• FY2023 continuing-operations net income was $63.8M, or $0.40 diluted EPS; Adjusted net income was $99.8M, or $0.62 per diluted share.

Outlook and guidance

• FY2024 continuing-operations guidance: revenue $1,840M–$1,880M, Adjusted EBITDA $402M–$422M and Adjusted Free Cash Flow $170M–$180M.

• Q1 2024 continuing-operations guidance: revenue $435M–$445M and Adjusted EBITDA $85M–$91M.

• FY2024 outlook reflects the sale of a significant portion of international businesses; plans call for selling the remaining international businesses during 2024.

• FY2024 cash-tax guidance is $30M–$40M and cash-interest guidance is $30M–$50M; capex is ~7% of revenue plus $22.5M of strategic investment.

• Guidance excludes optimization-program benefits targeting $20M of run-rate improvement by end-2024, additional tariff refunds and effects of the discontinued-operations sale; non-GAAP guidance could not be reconciled to GAAP without unreasonable effort.