Company: PRMB
Filing Date: 2025-02-07
Form Type: S-1/A
Source: 0001193125-25-022806
Chunk: 281

Company: Primo Brands Corp
Filing Date: 2025-02-07
Form: S-1/A
Chunk 281
---
 control of promised goods (the obligation), which may be upon shipment of goods or upon delivery to the
customer as defined in the customer contract or purchase order. Revenue is recognized at an amount that reflects the consideration the Company expects to receive in exchange for those goods. Amounts collected from customers for sales taxes are
excluded from the transaction price. The Company measures revenue based on the consideration specified in the customer arrangement, and revenue is recognized when the performance obligations in the customer arrangement are satisfied. A performance
obligation is a contractual promise to transfer a distinct good to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when the customer receives the benefit of the
performance obligation (the Company has only one obligation).

The nature of the Company’s contracts give rise to variable consideration including
volume-based rebates, growth incentives, point of sale promotions, and other trade promotional discounts (sales incentives). For certain sales incentives, the accrual recorded by the Company for the rebate or discount that will be granted to the

F-20

customer requires significant estimation. The critical assumptions used in estimating the sales incentive accrual include the Company’s estimate of expected levels of performance and
redemption rates, which requires judgment. These assumptions are developed based upon the historical performance of the customer’s participation with similar types of promotions adjusted for current trends. These estimated sales incentives are
included in the transaction price of the Company’s contracts with customers as a reduction within net sales and are included as either a reduction in accounts receivable if the customer is entitled to take a deduction on their payment, or as
accrued sales incentives in accruals and other current liabilities if the Company anticipates needing to pay the customer. Estimated discounts reflected in trade receivables, net of credit losses were $84.6 million and $97.7 million at
December 31, 2023 and 2022, respectively. Accrued sales incentive obligations, recorded in accruals and other current liabilities, were $45.5 million and $63.5 million at December 31, 2023 and 2022, respectively.

Shipping and Warehousing Costs

Shipping and
handling costs billed to customers are recorded as revenue. Shipping expenses related to costs incurred to deliver products and warehousing costs are recognized within cost of sales.

Marketing, including Advertising Costs

Marketing,
including advertising costs, are expensed as incurred and are recognized as a component of selling, general and administrative expenses. Marketing, including advertising