# EDGAR Filing Document

**Accession Number:** 0000884713
**File Stem:** 0001140361-23-015461
**Filing Date:** 2023-3
**Character Count:** 52998
**Document Hash:** 680d2a32206bd318d0410a9b9e5bb86d
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001140361-23-015461.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001140361-23-015461

**CONFORMED SUBMISSION TYPE**: ARS

**PUBLIC DOCUMENT COUNT**: 1

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**EFFECTIVENESS DATE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Primo Water Corp /CN/
- **CENTRAL INDEX KEY:** 0000884713
- **STANDARD INDUSTRIAL CLASSIFICATION:** BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086]
- **IRS NUMBER:** 980154711
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** ARS
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-31410
- **FILM NUMBER:** 23789294

**BUSINESS ADDRESS:**
- **STREET 1:** 1150 ASSEMBLY DR.
- **STREET 2:** SUITE 800
- **CITY:** TAMPA
- **STATE:** FL
- **ZIP:** 33607
- **BUSINESS PHONE:** 813-313-1732

**MAIL ADDRESS:**
- **STREET 1:** 1150 ASSEMBLY DR.
- **STREET 2:** SUITE 800
- **CITY:** TAMPA
- **STATE:** FL
- **ZIP:** 33607

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** COTT CORP /CN/
- **DATE OF NAME CHANGE:** 19941017

### Attached PDF Documents

**Attachment 1:** `ny20007163x9_ars.pdf`

![img-0.jpeg](img-0.jpeg)

## 2022 Annual Report

![img-1.jpeg](img-1.jpeg)

![img-2.jpeg](img-2.jpeg)

![img-3.jpeg](img-3.jpeg)

![img-4.jpeg](img-4.jpeg)

*Inspiring Healthier Lives With Water Your Way*

![img-5.jpeg](img-5.jpeg)

# WATER
YOUR WAY=

Water Solutions Whenever,
Wherever, and However
Customers Want Them

- Refill & Exchange at Retail
- Direct to Home
- Direct to Business
- Filtration Solutions

![img-6.jpeg](img-6.jpeg)

# 2022 FINANCIAL HIGHLIGHTS

## Financial Summary

(in millions of U.S. dollars, except per share data)

|  | 2022 | 2021 |
| --- | --- | --- |
| Operating Results from Continuing Operations |  |  |
| Revenue, net | $2,215.1 | $2,073.3 |
| Net Income (Loss) | $29.6 | $(3.2) |
| Diluted EPS | $0.18 | $(0.02) |
| Adjusted EBITDA (1) | $420.1 | $380.0 |
| Adjusted EBITDA as % of Revenue | 19.0% | 18.3% |
| Adjusted Net Income (2) | $108.2 | $90.9 |
| Adjusted Diluted EPS (2) | $0.67 | $0.56 |
| Financial Position |  |  |
| Total Assets | $3,667.0 | $3,723.4 |
| Total Liabilities | $2,384.1 | $2,403.3 |
| Shareowners' Equity | $1,282.9 | $1,320.1 |
| Cash Flows from Continuing Operations |  |  |
| Cash Provided by Operating Activities | $281.6 | $258.7 |
| Adjusted Free Cash Flow (2) | $85.0 | $123.7 |

### 2022 Revenue by Segment

![img-7.jpeg](img-7.jpeg)

### 2022 Revenue by Channel

![img-8.jpeg](img-8.jpeg)

### Revenue (in millions)

![img-9.jpeg](img-9.jpeg)

### Adjusted EBITDA (in millions)

![img-10.jpeg](img-10.jpeg)

(1) Adjusted EBITDA is a non-GAAP financial measure. For more information and a reconciliation to net income, the most directly comparable GAAP financial measure, please see 'Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations' in our Form 10-K for the fiscal year ended December 31, 2022, included with this Annual Report.

(2) These items represent non-GAAP financial measures. Please refer to supplementary information on non-GAAP measures beginning on page 63 of this Annual Report for definitions and reconciliations to GAAP.

LIFE NEEDS WATER. MAKE IT PRIMO.

1

2022 ANNUAL REPORT

## Dear Fellow Shareowners,

Our purpose - Inspiring Healthier Lives with Water Your Way - addresses the importance of clean drinking water for everyday life. We provide water in recyclable, multi-use containers and leverage our global scale, logistical expertise, and digital and technological capabilities to deliver this commitment as efficiently as possible while minimizing our environmental impact.

We made great progress toward this purpose in 2022 and I am incredibly proud of how our team performed.

![img-11.jpeg](img-11.jpeg)

Tom Harrington, Chief Executive Officer

In the face of macroeconomic uncertainty, our associates rose to the occasion to deliver high-quality water to millions of customers and consumers worldwide. In 2022, we helped hydrate more than 2.2 million global water direct customers in 21 countries and did so while being carbon neutral and responsible stewards of our water resources.

### We delivered strong results for our shareowners last year, including:

- Foreign exchange-neutral revenue growth of 10%.
- Adjusted EBITDA growth of 11%.
- Adjusted Free Cash Flow of $85 million, in spite of persistent levels of inflation.
- Increased Adjusted EBITDA margin by 70 basis points to 19%.
- Returned an annualized dividend of $0.28 per share; and
- Repurchased approximately $24 million of common stock through our opportunistic share repurchase program.

We achieved this performance despite the numerous and complex challenges that tested us during the year. We navigated inflationary pressures, tight labor markets, supply chain constraints, and geopolitical conflicts. Our deliberate actions, some swiftly implemented, and others maintained as part of our longstanding strategies, helped us succeed even in the face of this unprecedented environment. These actions include:

- **Making Our Business More Efficient:** We took a major step forward in 2022 improving our production, route systems and support functions. We successfully instituted a predictive staffing model which allowed us to maintain staffing levels of more than 98% during the year. We responded to increased demand for our products by optimizing routes, further increasing productivity and efficiency. We achieved record levels of route density and units per route per day - key metrics that measure our ability to serve more customers more efficiency and support higher margins.

2

LIFE NEEDS WATER. MAKE IT PRIMO.

2022 ANNUAL REPORT

- **Enhancing Our Digital Presence:** We continue to enhance the customer experience through improved customer facing digital tools and comprehensive e-commerce solutions. Our recently refreshed North American mobile app offers new features that provide increased functionality and easy access to customer support, including a popular live chat function.
- **Extending Our Lead:** We made several tuck-in acquisitions in North America and Europe to expand our scale, in-fill geographical areas to increase our total customer base and decrease our reliance on third-party sources of water. We have completed numerous acquisitions since 2014 and have proven our proficiency in capturing both economic and organizational synergies when integrating these companies into our operations. These transactions have enabled us to further leverage scale, increase revenue and expand margins through vertical supply chain integration and increased route density.

Though macroeconomic conditions continue to evolve, our priorities remain the same. As we move forward into 2023, we are focused on meeting customer commitments and executing on our multiyear strategy of becoming a global, customer-focused and environmentally responsible organization with a strategic portfolio that supports our purpose.

## Our Strategy to Serve Our Stakeholders

The expansion of Primo Waters products and services has transformed our company into a global leader in water solutions. As a result, we are able to reach a broad spectrum of customers who all share the same need: better quality water with a low environmental impact. Our solutions range from an extremely convenient and personalized solution with our Water Direct service, to more value-driven solutions from our Exchange, Refill and Filtration options.

In our dispenser business, we continue to optimize a “razor-razorblade” business strategy, in which the rental or sale of our water dispensers (our “razors”) helps generate high-margin recurring revenue through the sale of our water solutions (our “razorblades”). In 2022, our e-commerce sites and retail customers sold approximately one million of these water dispensers - and we believe that this number can grow in 2023. Water dispenser sell-through is a leading indicator of future consumers of our water solutions. Research shows that approximately 60% of these water dispensers are sold to new consumers. We believe we are in the early innings of our household and business penetration, and we are excited about the future growth opportunities for this business.

LIFE NEEDS WATER. MAKE IT PRIMO.

3

2022 ANNUAL REPORT

We are mindful that our customers and shareowners expect us to be good stewards of the environment, and we therefore have embraced ESG as a core pillar of our strategy.

In December 2021, we attained carbon neutrality across all of our global operations, achieving one of our important long-term strategic goals. Last year, we completed our exit from the North American single-use retail bottled water category, eliminating approximately 400 million plastic bottles from our production ecosystem and avoiding over 50,000 metric tons of CO2e associated with the production and transportation of these bottles. Other initiatives, like automated route optimization, help ensure we can serve more customers with fewer resources, which both minimizes our environmental footprint and supports margin expansion and long-term, profitable growth. In 2022, we replaced an additional 70 diesel vehicles in our delivery fleet with propane-powered vehicles, leading to 13% of our North American fleet having a lower carbon alternative power source.

Also in 2022, we exited from our business in Russia and provided disaster relief support to the people of Ukraine. We also donated our products to areas in need, including Jackson, Mississippi during its water crisis and Florida in the wake of Hurricane Ian.

We continued to strengthen our executive team last May with the addition of a newly formed position of Vice President of ESG to provide further leadership over these critical efforts. We look forward to making substantial progress on this front in the near future and to sharing more about our ESG efforts in our newest sustainability report, which we expect to release in a few months.

## Looking Ahead

Our strategy and the actions we took in 2022 have advanced our ability to deliver long-term, sustainable growth as a global leader across our footprint. The macroeconomic uncertainty requires us to remain focused in our approach and ready to adapt quickly to a changing environment. We will continue to make the important investments in our associates and our infrastructure to build a better business for our customers, our associates, our shareowners, and the communities we serve.

I am proud of what we have accomplished in 2022 and I am confident in our ability to continue providing high-quality drinking water to retain our customers for life.

Our long-term financial targets reflect our confidence in our business model and our ability to execute on our strategy. Our 2024 targets include:

- High single-digit organic revenue growth.
- Adjusted EBITDA approaching $530 million.
- Adjusted EBITDA margins of approximately 21%.
- Net leverage of less than 2.5x.
- Return on invested capital of at least 12%.
- Return an annualized dividend of $0.36 per share.

4

LIFE NEEDS WATER. MAKE IT PRIMO.

2022 ANNUAL REPORT

I want to thank you for your support and investment in Primo Water as we continue to create value on your behalf and for our customers, associates and other stakeholders. I am excited about the future and remain confident in our ability to continue providing high-quality drinking Water Your Way.

Sincerely,

**Tom Harrington**  
Chief Executive Officer

![img-12.jpeg](img-12.jpeg)

LIFE NEEDS WATER. MAKE IT PRIMO.

5

2022 ANNUAL REPORT

## North America

*Leading Pure-Play Water Solutions Provider in the United States and Canada*

![img-13.jpeg](img-13.jpeg)

Our North America reporting segment provides bottled water solutions, water filtration and coffee services to customers in North America. Products included in our North America reporting segment consist primarily of water dispensers, purified bottled water, self-service refill drinking water, premium spring, sparkling and flavored essence water, filtration equipment and coffee.

| Revenue |  |
| --- | --- |
| $1.69 billion FY2022 | $1.56 billion FY2021 |

### 2022 Revenue by Channel

![img-14.jpeg](img-14.jpeg)

*In bottled water, we offer a portfolio of well-known brands with longstanding heritages such as:*

![img-15.jpeg](img-15.jpeg)

6

LIFE NEEDS WATER. MAKE IT PRIMO.

2022 ANNUAL REPORT

## Europe

Leading Pure-Play Water Solutions Provider in Europe

![img-16.jpeg](img-16.jpeg)

Our Europe reporting segment provides consumers access to purified, spring and mineral water, delivering sustainable hydration solutions direct to the customer's door, whether at home or to commercial businesses across Europe.

2022 Revenue by Channel

![img-17.jpeg](img-17.jpeg)

In bottled water, we offer a portfolio of well-known brands with longstanding heritages such as:

![img-18.jpeg](img-18.jpeg)

![img-19.jpeg](img-19.jpeg)

LIFE NEEDS WATER. MAKE IT PRIMO.

7

![img-20.jpeg](img-20.jpeg)

PRIMO
WATERTM

OUR PURPOSE

# Inspiring healthier lives
with water
your way

OUR VISION

To become the leading brand in the pure-play water category
with a unique portfolio of sustainable drinking water solutions

OUR STRATEGIC PILLARS

Water Your Way

Water Solutions Whenever,
Wherever, and However
Customers Want Them

Category Leading Innovation

Develop Leading Edge
Solutions for Increased
Water Consumption

Customer for Life Promise

Position the Customer at the
Center of Everything We Do

Operational Excellence

Unlock and Increase Efficiencies
Through Our Global Scale and
Product Offering

ESG Leadership

Leaving a Positive Impact on
Our Environment, Our Associates
and our Communities

Inspiring Associates

Purpose-Driven Culture Enhancing
the Associate Experience

OUR BEHAVIORS

Inclusive / Innovate / Empower / Curious / Teamwork

OUR VALUES

Healthy Living

We believe in creating healthier
lives, healthier communities, and
a healthier planet.

With a Standard of Excellence

We deliver excellence consistently
and reward associates for high
performance.

Respect for All

We respect and recognize our
differences, promoting inclusion.
We are committed to reflect the
communities we serve.

And a Commitment to do
the Right Thing -Always

We value how we work as much as
what we achieve. We hold ourselves
to the highest standards - and when
we make mistakes, we own, fix, learn
and grow from them.

8

**UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**
**WASHINGTON, D.C. 20549**

# **Form 10-K**

☑ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2022
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ______ to ______
Commission file number 001-31410

# **PRIMO WATER CORPORATION**

(Exact name of registrant as specified in its charter)

Ontario
(State or Other Jurisdiction of Incorporation or Organization)

98-0154711
(IRS Employer Identification No.)

1150 Assembly Dr.
Suite 800
Tampa, Florida
United States
(Address of principal executive offices)

33607
(Zip Code)

Registrant's telephone number, including area code: (813) 544-8515
Securities registered pursuant to Section 12(b) of the Act:

| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Common Shares, no par value per share | PRMW | New York Stock Exchange Toronto Stock Exchange |

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

| Large accelerated filer | ☑ | Accelerated filer | ☐ |
| --- | --- | --- | --- |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
|  |  | Emerging growth company | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☑ No ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

The aggregate market value of the common equity held by non-affiliates of the registrant as of July 02, 2022 (based on the closing sale price of $13.57 for the registrant’s common shares as reported on the New York Stock Exchange on July 01, 2022) was $2,120.2 million.

(Reference is made to Part II, Item 5 for a statement of assumptions upon which the calculation is made).

The number of the registrant’s outstanding common shares as of February 22, 2023 was 159,940,055.

# **Documents incorporated by reference**

Portions of our definitive proxy statement for the 2023 Annual and Special Meeting of Shareowners, to be filed within 120 days of December 31, 2022, are incorporated by reference in Part III. Such proxy statement, except for the parts therein which have been specifically incorporated by reference, shall not be deemed “filed” for the purposes of this Annual Report on Form 10-K.

[THIS PAGE INTENTIONALLY LEFT BLANK]

# TABLE OF CONTENTS

| ITEM 1. BUSINESS | 3 |
| --- | --- |
| ITEM 1A. RISK FACTORS | 12 |
| ITEM 1B. UNRESOLVED STAFF COMMENTS | 25 |
| ITEM 2. PROPERTIES | 25 |
| ITEM 3. LEGAL PROCEEDINGS | 25 |
| ITEM 4. MINE SAFETY DISCLOSURES | 25 |
| SUPPLEMENTAL ITEM PART I. EXECUTIVE OFFICERS OF THE REGISTRANT | 26 |
| PART II | 28 |
| ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED SHAREOWNER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 28 |
| ITEM 6. [Reserved] | 30 |
| ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 31 |
| ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 54 |
| ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 56 |
| ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 56 |
| ITEM 9A. CONTROLS AND PROCEDURES | 56 |
| ITEM 9B. OTHER INFORMATION | 56 |
| ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 56 |
| PART III | 57 |
| ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 57 |
| ITEM 11. EXECUTIVE COMPENSATION | 57 |
| ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREOWNER MATTERS | 57 |
| ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 57 |
| ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES | 57 |
| PART IV | 58 |
| ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 58 |
| ITEM 16. FORM 10-K SUMMARY | 61 |
| INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | F-1 |
| SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | F-50 |

1

Our consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”) in U.S. dollars. Unless otherwise indicated, all amounts in this Annual Report on Form 10-K are in U.S. dollars and U.S. GAAP.

Any reference to 2022, 2021 and 2020 corresponds to our fiscal years ended December 31, 2022, January 1, 2022, and January 2, 2021, respectively.

### **Forward-looking statements**

In addition to historical information, this Annual Report on Form 10-K, and the reports and documents incorporated by reference in this Annual Report on Form 10-K, may contain statements relating to future events and future results. These statements are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation and involve known and unknown risks, uncertainties, future expectations and other factors that may cause actual results, performance or achievements of Primo Water Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such statements include, but are not limited to, statements that relate to projections of sales, cash flows, capital expenditures or other financial items, statements regarding our intentions to pay regular quarterly dividends on our common shares, and discussions of estimated future revenue enhancements and cost savings. These statements also relate to our business strategy, goals and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources. Generally, words such as “anticipate,” “believe,” “continue,” “could,” “endeavor,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “predict,” “project,” “should” and similar terms and phrases are used to identify forward-looking statements in this Annual Report on Form 10-K and in the documents incorporated in this Annual Report on Form 10-K by reference. These forward-looking statements reflect current expectations regarding future events and operating performance and are made only as of the date of this Annual Report on Form 10-K.

The forward-looking statements are not guarantees of future performance or events and, by their nature, are based on certain estimates and assumptions regarding interest and foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities and effective income tax rates, which are subject to inherent risks and uncertainties. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in forward-looking statements may include, but are not limited to, assumptions regarding management’s current plans and estimates. Although we believe the assumptions underlying these forward-looking statements are reasonable, any of these assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions could prove to be incorrect. Our operations involve risks and uncertainties, many of which are outside of our control, and any one or any combination of these risks and uncertainties could also affect whether the forward-looking statements ultimately prove to be correct. These risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. “Risk Factors” and elsewhere in this Annual Report on Form 10-K and those described from time to time in our future reports filed with the Securities and Exchange Commission and Canadian securities regulatory authorities.

We undertake no obligation to update any information contained in this Annual Report on Form 10-K or to publicly release the results of any revisions to forward-looking statements to reflect events or circumstances of which we may become aware of after the date of this Annual Report on Form 10-K. Undue reliance should not be placed on forward-looking statements.

All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing.

2

# PART I

## ITEM 1. BUSINESS

### Our Company

When used in this report, the terms “Primo,” “the Company,” “our Company,” “Primo Water Corporation,” “we,” “us,” or “our” refers to Primo Water Corporation, together with its consolidated subsidiaries.

We originally incorporated in 1955 and, following the July 2021 continuance to the jurisdiction of the Province of Ontario, are governed by the Business Corporations Act (Ontario). Our principal executive office is located at 1150 Assembly Dr. Suite 800, Tampa, Florida, United States 33607.

Primo is a leading pure-play water solutions provider in North America and Europe and generates approximately $2.2 billion in annual revenue. Primo operates largely under a recurring revenue model in the large format water category (defined as 3 gallons or greater). This business strategy is commonly referred to as “razor-razorblade” because the initial sale of a product creates a base of users who frequently purchase complementary consumable products. The razor in Primo’s revenue model is its industry leading line-up of innovative water dispensers, which are sold through approximately 10,000 retail locations and online at various price points. The dispensers help increase household and business penetration which drives recurring purchases of Primo’s razorblade offering or water solutions. Primo’s razorblade offering is comprised of Water Direct, Water Exchange, and Water Refill. Through its Water Direct business, Primo delivers sustainable hydration solutions across its 21-country footprint direct to customers, whether at home or to businesses. Through its Water Exchange business, customers visit retail locations and purchase a pre-filled bottle of water. Once consumed, empty bottles are exchanged at our recycling center displays, which provide a ticket that offers a discount toward the purchase of a new bottle. Water Exchange is available in approximately 17,500 retail locations. Through its Water Refill business, customers refill empty bottles at approximately 23,500 self-service refill drinking water machines. Primo also offers water filtration units across its 21-country footprint.

Primo’s water solutions expand consumer access to purified, spring and mineral water to promote a healthier, more sustainable lifestyle while simultaneously reducing plastic waste and pollution. Primo is committed to its water stewardship standards and is proud to partner with the International Bottled Water Association in North America as well as with Watercoolers Europe, which ensure strict adherence to safety, quality, sanitation and regulatory standards for the benefit of consumer protection. Environmental stewardship is a part of who we are, and we have worked to progressively achieve carbon neutrality throughout our organization. Our European operations have maintained carbon neutrality for more than eleven years, and our U.S. operations achieved carbon neutral certification in 2020 under the CarbonNeutral Protocol, an international standard administered by Climate Impact Partners. In 2021, the Company achieved carbon neutrality on a global basis. In late 2021, Primo announced its planned exit from the North American small-format retail water business. This business was relatively small and used predominantly single-use plastic bottles. The exit from this category is estimated to reduce single-use retail water bottles from our production environment by more than 400 million, annually, while also improving overall margins. The exit was completed during the second quarter of 2022.

During the second quarter of 2022, our Board of Directors approved the exit from our business in Russia. Accordingly, we recorded an impairment charge of $11.2 million during the second quarter to reduce the carrying value of the assets to the estimated fair value less costs to sell. Separately, we reviewed and realigned our reporting segments, as further described in “Our Operations” below. The decision to exit our business in Russia and the realignment of segments resulted in a triggering event for goodwill and intangible assets with indefinite lives requiring quantitative assessments for the combined Eden business (which, prior to realignment, included the Eden Europe and Eden Israel businesses) immediately before the realignment of segments and for the Eden Europe and Israel businesses upon realignment of segments. These assessments resulted in recording a goodwill impairment charge of $11.2 million due to a decrease in cash flows associated with the exit from our business in Russia and recording a trademark impairment charge of $6.7 million due primarily to a decrease in the royalty rate used in the quantitative analysis. These impairment charges, along with the impairment charge of $11.2 million to reduce the carrying value of the Russia business to its estimated fair value less costs to sell, resulted in total impairment charges of $29.1 million which are included within impairment charges on the Consolidated Statements of Operations for the twelve months ended December 31, 2022. All impairment charges

3

are included in the Europe reporting segment. The exit of our business in Russia was completed on July 19, 2022 and there was no material change to the charges recorded during the second quarter upon sale.

## Our Operations

During the second quarter of 2022, we reviewed and realigned our reporting segments to reflect how the business will be managed and results will be evaluated by the Chief Executive Officer, who is the Company’s chief operating decision maker. Following such review, certain of our businesses previously included in the Rest of World segment (now renamed “Europe”) were realigned between the Europe reporting segment and the Other category. Our two reporting segments are as follows: North America (which includes our DS Services of America, Inc. (“DSS”), Aquaterra Corporation (“Aquaterra”), Mountain Valley Spring Company (“Mountain Valley”) and Legacy Primo businesses) and Europe (which includes the European business of Eden Springs Netherlands B.V. (“Eden Europe”), and our Decantae Mineral Water Limited (“Decantae”) and Fonthill Waters Ltd (“Fonthill”) businesses). The Other category includes the Israel business of Eden (“Eden Israel”), and our Aimia Foods Limited (“Aimia”) and John Farrer & Company Limited (“Farrers”) businesses, as well as our corporate oversight function and other miscellaneous expenses. Segment reporting results have been recast to reflect these changes for all periods presented.

### North America

Our North America reporting segment provides bottled water solutions, water filtration and coffee services to customers in North America. Products included in our North America reporting segment consist primarily of bottled water, water dispensers, purified bottled water, self-service refill drinking water, premium spring, sparkling and flavored essence water, filtration equipment and coffee.

### Europe

Our Europe segment provides bottled water, water filtration and coffee services to customers in Europe. Products included in our Europe reporting segment consist primarily of bottled water, purified bottled water, premium spring, sparkling and flavored essence water, mineral water, filtration equipment and coffee.

### Other

The Other category includes our Eden Israel, Aimia and Farrers businesses, as well as our corporate oversight function and other miscellaneous expenses.

## Competitive Strengths

The combination of our scale and density of our routes in key markets, our industry-leading infrastructure, and our emphasis on superior customer service is intended to create significant competitive strengths. We continually invest in our delivery, exchange and refill service infrastructure, call centers and service capabilities to earn our position as an industry leader. We believe these investments have positioned us to benefit from a number of positive industry dynamics and new growth opportunities. First, we intend to capture new customers as we benefit from favorable consumer trends across our addressable markets, including increased focus on health and wellness, and concerns about deteriorating municipal water quality. Second, we believe our ability to offer complementary water and filtration products and services represents a significant untapped opportunity. Third, the highly fragmented market in which we operate affords us ample opportunity to make the most of our scale, systems and customer density to execute synergistic tuck-in acquisitions across all of our service areas. We believe these strengths, along with the strengths outlined below, will allow us to maximize growth opportunities to drive sustainable and profitable growth.

### Leading Position in Multiple Service Platforms

We have a leading volume-based national presence in the North American and European bottled water industry. We offer a portfolio of well-known brands with longstanding heritages, such as Primo®, Crystal Springs®, Mountain Valley®, Crystal Rock®, Vermont Pure®, Sparkletts®, Hinckley Springs®, Kentwood Springs®, Canadian Springs®, Labrador Source® and Eden Springs®, which have contributed to our leadership position in the bottled water industry. In water filtration, we offer a complete range of products including carbon filtration and reverse osmosis filtration.

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We are one of the leading direct-to-consumer providers that can offer comprehensive services to residential customers and small and medium-sized businesses, as well as large regional and national corporations and retailers. Our broad direct-to-consumer network creates an advantage in marketing and customer reach, while our extensive range of products and capabilities allows us to offer customers a convenient, single solution for high quality drinking water. We believe our position is strengthened by our presence in the exchange and refill channels and will be further strengthened through our ongoing efforts to enhance and promote our full-service water solutions offering to new and existing customers.

We also believe opportunities exist to increase sales of our products in our core markets by optimizing existing customer relationships, capitalizing on up-selling opportunities, obtaining new customers, exploring new channels of distribution and introducing new products through our broad reaching distribution network.

### ***International Water Delivery, Water Filtration or Point of Use and Office Coffee Service Platforms***

We believe having one of the leading North American and European water delivery production and distribution networks in the industry gives us the ability to reduce our purchasing, manufacturing and delivery costs relative to our competitors as well as drive customer density within the markets we serve. We have an extensive water delivery, water filtration and office coffee services distribution network with a unique ability to service customers, along with numerous locations through which we provide our exchange and refill offerings. We believe our footprint infrastructure and attention to customer service uniquely enable us to support local, regional and national accounts, which differentiates us in the industry. Our network has allowed us to secure strategic relationships, which have been successful in attracting new customers and leveraging our production and delivery infrastructure. We are able to provide multiple products to our water delivery, water filtration and office coffee services customers at minimal additional cost and generate additional profits on those incremental sales.

### ***High Levels of Customer Service and Strong Customer Integration***

Customer service and customer retention are key indicators of our success. Our goal is to increase the customer lifetime value through increased customer retention. Route Sales Representatives (“RSRs”), who comprise the customer-facing part of the business, are an important part of the customer relationship and not only drive customer service, but also generate new organic customer growth. We provide reliable delivery schedules and closely track call center and customer service metrics to continually improve customer satisfaction.

### **Business Strategy**

Our business strategy is aligned around a common purpose and vision and operates largely under a recurring revenue model in the large format water category (defined as 3 gallons or greater). Our purpose defines and identifies who we are and what sets us apart. We aim to *Inspire Healthier Lives With Water Your Way*. In order to achieve our purpose, our vision guides our decisions and future investments to help differentiate us from our competitors. We aim to become the leading brand in the pure-play water category with a unique portfolio of sustainable drinking water solutions. To achieve this vision, we have aligned around a common set of global strategic pillars. These strategic pillars are integrated across our global business to help drive a differentiated offering for our customers while at the same time providing an engaged and purpose-driven culture for our associates. Through our strategies, we believe we can drive an enhanced customer experience while at the same time leverage our global scale to generate enhanced efficiencies. We also empower and motivate our associate base to help deliver for our customers and their needs. When our associate experience is aligned and operating in tandem with that of our customers, we have the best ability to deliver growth for all stakeholders. Our transition to a pure-play water company was the first step on our journey to enhancing value and we believe our business strategy will enable long-term measurable success in support of our vision and purpose.

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Our strategic pillars and goals include:

- **Water Your Way** - we provide a diverse set of water solutions and products for residential, small and medium-sized businesses and retail customers. We believe this allows our customers access to on-trend and high-quality drinking water whenever, wherever and however customers want it. Our goal is to establish Primo as the preferred water brand in the spaces we compete by increasing customer penetration of our water solutions while also diversifying our customer base. Our financial model is strengthened by the recurring-revenue nature of our business model. Our offering is further enhanced through digital channels allowing customers to manage their delivery and order preferences or purchase products on owned and third-party online sites of our retail partners.
- **Category Leading Innovation** - we focus on new product innovation to drive customer penetration and increased water consumption. We focus on selling-in dispensers to retail locations and online and then work to promote the sell-through of these products to customers. We also provide dispensers for rent to Water Direct customers. We have expanded our dispenser offering with a variety of options that include hot, cold and technology to brew coffee, tea and other beverages in numerous price ranges that are suitable for our retail customer needs. We have also enhanced our lineup with color and style options that are on trend for residential and business settings. Dispenser innovation and enhancements also enable us to improve our service efficiency and reduce service costs.
- **Customer for Life Promise** - we position the customer at the center of everything we do. Our goal is to increase the customer lifetime value through increased customer retention. We seek to understand customer needs and listen to their feedback across our product offerings. By providing trusted high-quality products and equipment and responding to their service needs, we believe we can enhance the value of the relationship. We continue to build out interactive digital touch-points to improve the customer experience.
- **Operational Excellence** - we believe we can unlock and increase efficiencies through our global scale and product offering. With our pure-play water focus we have begun streamlining and centralizing support functions in all geographies. Additionally, we have enhanced our staff with a global procurement team to help drive valuable supplier partnerships and harmonize our best practices. In conjunction with our other strategies, as we increase our customer base and customer diversity, we believe it will improve our route density and network optimization.
- **Environmental, Social and Corporate Governance (“ESG”) Leadership** - we strive to provide a positive impact on the environment, our associates and the communities where we live, work and service. We maintain sustainable water resources, have achieved carbon neutrality throughout our organization, aim to reduce our carbon footprint further and energy usage, and seek to increase the use of recycled packaging. In the social channel, we promote associate health and safety initiatives, as well as diversity, equity and inclusion training for all management. Additionally, we aim to ensure our supplier community complies with all federal, state and local human relations laws and regulations, and each supplier is required to comply with our Global Supplier Code of Conduct. In the governance channel, our Code of Business Conduct and Ethics drives compliance with all relevant rules and regulations.
- **Associate Experience** - we are developing a purpose-driven culture that will drive an enhanced associate experience. Our goal is to attract and retain highly-engaged associates who will live our purpose in their interactions with our customers, as well as in their communities. We seek to implement an effective talent strategy that focuses on the entire associate lifecycle - onboarding to exit.

We ultimately believe that our connected strategies will help drive increased customer growth and greater customer retention due to our innovation and on-trend water solution offerings, all while leveraging our operating scale. Our associates will be highly-engaged in driving our purpose and engaging in our ESG leadership.

***Focus on Water Direct, Water Exchange, Water Refill and Water Filtration Solutions Growth***

Using our strategic pillars, our goals are to grow profitably as consumers move to healthier beverage options and to sell across multiple channels. This drives our customer density and consumption, reducing costs to serve.

We will remain focused on expanding our residential and small and medium-sized business customer base, a market segment that we believe remains underpenetrated, by continuing to capitalize on our strong

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direct-to-consumer distribution network, international sales and marketing efforts as well as our strategic partnerships. Additionally, the sale of our water dispensers through retail and digital channels helps us expand our customer base through which we can offer a diverse set of water solutions both direct and through retail stores.

We intend to utilize our e-commerce capabilities to employ data-driven customer acquisition, increase penetration, expand our customer base and provide a seamless strategy for improved customer experience, retention and long-term growth. Our e-commerce capabilities utilize common platforms while engaging and serving potential and current customers in the most optimized manner.

We believe our ability to offer complementary water and filtration products and services represents a significant untapped opportunity as nearly all of our existing and target customers consume multiple products. We believe we are well-positioned to capitalize on this opportunity utilizing our strong relationships and frequent face-to-face interactions with our large installed customer base. RSRs are trained to sell across our product set and are highly incentivized through our commission structure to promote new products to existing customers, which increases sales and average revenue per customer.

We intend to proactively pursue accretive acquisitions to complement our organic growth. The highly fragmented market in which we operate affords us ample opportunities to execute synergistic water delivery and filtration tuck-in acquisitions. Our acquisition strategy is consistent with our objective to continually build customer density and reduce the overall cost of servicing our existing customer base. We have a proven track record of achieving significant synergies and integrating companies onto our platform, and we believe that our acquisition strategy will continue to improve our profitability.

We have managed to pursue this acquisition strategy while reducing leverage levels by employing a combination of disciplined purchasing, successful integration and synergy realization, and divestiture of assets that are no longer instrumental to our purpose, vision or strategy. In the second quarter of 2022, Primo exited from the North American small-format retail water business. This business was relatively small and used predominantly single-use plastic bottles. The exit from this category is estimated to reduce single-use retail water bottles from our production environment by more than 400 million, annually, while also improving overall margins.

### ***Evaluate Acquisition Opportunities***

We will continue to evaluate additional opportunities to expand our positions in the water delivery and filtration service categories, as well as other higher margin or growth-oriented water categories where we believe our platform, operating strength and synergies can be leveraged. Additionally, we may use acquisitions to enter new geographies where we believe the customer demand aligns with our product offering.

### **Financial Information about Segments**

For financial information about reporting segments and geographic areas, see Note 11 to the Consolidated Financial Statements contained in this Annual Report on Form 10-K.

### **Ingredient and Packaging Supplies**

In addition to water, the principal raw materials required to produce our products are polyethylene terephthalate (“PET”) resin, high-density polyethylene (“HDPE”) and polycarbonate bottles, caps and preforms, labels and cartons and trays. The cost of these raw materials can fluctuate substantially over time. We have implemented a number of risk mitigation programs in order to reduce the risk of commodity fluctuations in key areas such as energy surcharges tied to certain energy indexes within North America and throughout our European footprint. Our core product of bottled water utilizes a reusable bottle that allows for the overall cost to service to be spread out over a number of recurring trips to our customer base. We utilize a refill, reuse and recycle concept with our three gallon (“3G”) and five gallon (“5G”) bottled water packaging. Where we have not established a risk mitigation program, it is often necessary to recover the increased cost of materials through price increases, which we have historically had success in implementing in order to reduce our overall exposure to rising ingredient and packaging costs.

Under many of our supply arrangements for these raw materials, the price we pay fluctuates along with certain changes in underlying commodity costs, such as resin in the case of PET, and HDPE. We believe that we

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will be able to either renegotiate contracts with these suppliers when they expire or find alternative sources for supply. We also believe there is adequate supply of the ingredient and packaging materials used to produce and package our products.

Generally, we bear the risk of increases in the costs of the ingredient and packaging materials used to produce our products, including the underlying costs of the commodities used to manufacture them and, to some extent, the costs of converting those commodities into the materials we purchase.

Resin for PET, HDPE and fuel are examples of underlying commodities for which we bear the risk of increases in costs. In addition, the contracts for certain of our ingredient and packaging materials permit our suppliers to increase the costs they charge us based on increases in their cost of converting the underlying commodities into the materials we purchase. In certain cases, those increases are subject to negotiated limits. Changes in the prices we pay for ingredient and packaging materials occur at times that vary by product and supplier, and take place on a monthly, quarterly or annual basis.

### **Trade Secrets, Copyrights, Trademarks and Licenses**

We sell a majority of our 3G and 5G bottled water under our own brands while our office coffee services business sells both our branded products as well as products under which we have a distribution license. We own registrations for various trademarks that are important to our worldwide business, including Primo®, Alhambra®, Crystal Rock®, Mountain Valley®, Deep Rock®, Hinckley Springs®, Crystal Springs®, Kentwood Springs®, Mount Olympus®, Pureflo®, Sierra Springs®, Sparkletts®, and Renü® in the United States, Canadian Springs®, Labrador Source® and Amazon Springs® in Canada, and Decantae®, Eden®, Eden Springs®, Chateaud'eau®, and Mey Eden® in Europe and Israel. We have filed certain trademark registration applications and intend to develop additional trademarks and seek registrations for such trademarks and to develop other intellectual property. The licenses to which we are a party are of varying terms, including some that are perpetual. Trademark ownership is generally of indefinite duration when marks are properly maintained in commercial use.

Our success depends in part on our intellectual property, which includes trademarks for the names of the beverages we sell. To protect this intellectual property, we rely principally on registration of trademarks, contractual responsibilities and restrictions in agreements (such as indemnification, nondisclosure and confidentiality agreements) with employees, consultants and customers, and on the common law and/or statutory protections afforded to trademarks, copyrights, trade secrets and proprietary 'know-how.' We also closely monitor the use of our trademarks and, when necessary, vigorously pursue any party that infringes on our trademarks, using all available legal remedies.

### **Customers**

We have limited customer concentration as no customer accounts for more than 10% of our net revenues.

### **Competition**

Our principal competitors are local, regional and national bottled water businesses as well as providers of various types of water filtration units and services. We face significant competition in our business as distribution methods for bottled water products continue to change and evolve. Our business also faces increased competition from filtration units. In addition, consumers may choose to drink from municipal water sources instead of purchasing bottled water or using a filtration unit.

We seek to differentiate ourselves from our competitors by offering our customers high-quality products, category management strategies, packaging and marketing strategies, efficient distribution methods, and superior service.

### **Government Regulation and Environmental Matters**

The production, distribution and sale in the United States of many of our products are subject to the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Lanham Act, state consumer protection laws, federal, state and local workplace health and safety laws, various federal, state and local environmental protection laws and various other federal, state and local statutes and regulations applicable to the production, transportation, import, sale, safety, advertising, labeling and ingredients of such products. Outside the United States, the production, distribution and sale of our many products and related operations are also subject to numerous similar and other statutes and regulations.

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