Company: PRMB
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0002042694-25-000003
Chunk: 75

Company: Primo Brands Corp
Filing Date: 2025-02-27
Form: 10-K
Item: Item 7A
Chunk 75
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ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

Overview

Our business and financial results are affected by fluctuations in world financial markets, including currency exchange rate risk, interest rates, commodity price risk and credit risk. We may utilize fixed price or volume contracts that may extend over one year and derivative financial instruments (including interest rate swap arrangements), among other methods, to hedge some of these exposures. We do not use derivative financial instruments for speculative or trading purposes.

Currency Exchange Rate Risk

We are exposed to changes in foreign currency exchange rates. Operations outside of the United States are primarily concentrated in Canada and accounted for 2.6% of Revenue, net for the years ended December 31, 2024 and December 31, 2023, respectively. We translate the revenues and expenses of our foreign operations using average exchange rates prevailing during the period. The effect of a 10% change in the average foreign currency exchange rates among the U.S. dollar versus the Canadian dollar for the year ended December 31, 2024 would result in changes to our Net sales and Gross profit of approximately $14 million and $2 million, respectively. This change would not be material to our cash flows and our results of operations.

Debt Obligations and Interest Rate Risk

We regularly review the structure of our indebtedness and consider changes to the proportion of variable versus fixed rate debt through refinancing, interest rate swaps or other measures in response to the changing economic environment. Historically, we have not used derivative instruments to manage interest rate risk. If we use and fail to manage these derivative instruments successfully, or if we are unable to refinance our indebtedness or otherwise increase our debt capacity 

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in response to changes in the marketplace, the expense associated with debt service could increase. This would negatively affect our financial condition and profitability.

We are subject to interest rate market risk in connection with our floating rate debt. Our principal interest rate exposure relates to outstanding amounts under our Term Loans and New Revolving Credit Facility, which bear interest at a variable rate. If there is a rise in interest rates, our debt service obligations on the borrowings under these facilities would increase even though the amount borrowed remained the same, which would affect our results of operations, financial condition and liquidity. 

As of December 31, 2024, the balances outstanding under the Term Loans were $3,098.6 million and there were no borrowings outstanding under the ABL Credit Facility and Revolving Credit Facilities.