Primo Water Corp., a provider of water dispensers, environmentally responsible bulk bottled water and premier sparkling beverage appliances, today announced financial results for the quarter and fiscal year ended Dec. 31, 2011.
Total net sales increased 73.2 percent to $22.0 million from $12.7 million in the fourth quarter of 2010. This increase was due to significant growth in both water and dispenser sales.
Water sales for the fourth quarter of 2011 increased approximately 46.0 percent to $13.9 million compared to $9.5 million in the fourth quarter of 2010. Sales of water consist of sales of multi-gallon purified bottled water and self-serve filtered drinking water vending services. The sales improvement was primarily due to the acquisition of the refill business in November 2010 and a 24.7 percent increase in sales of exchange services.
The company's dispenser sales for the fourth quarter of 2011 increased approximately 102.4 percent to $6.4 million compared to $3.2 million in the fourth quarter of 2010. The increase was due primarily to the addition of 700 locations that offer dispensers as well as sell-thru growth at existing locations.
"We are pleased to report fourth quarter financial results that were in-line with our expectations, and we continue to be extremely encouraged by our significant sales growth," commented Billy D. Prim, Primo Water's president and chief executive officer in a prepared statement. "2011 was a transformational year, with our efforts focused on integrating acquisitions, developing new technologies and executing large customer rollouts in our exchange business. Additionally, we are excited about our strategic partnership with Sparkling Drink Systems, which should provide us with a strong platform to greatly expand our capabilities in the home carbonation market and enhance our consumer value proposition. We remain committed to our goal of increasing household adoption of our products and consumables and generating long-term sales and profitable growth."
During the fourth quarter of 2011, the company continued its retail rollout strategy by adding 1,000 total locations. Primo added 700 new appliance locations and 300 net new water locations during the quarter. The company believes that expanded points of distribution for its dispensers will lead to an increase in new users of its water. The company considers any location that offers its dispensers, exchange or refill services as a unique selling location; as a result, there is overlap for existing locations that offer multiple Primo products and/or services.
The GAAP net loss for the fourth quarter of 2011 was ($7.0) million or ($0.30) per share, compared to ($10.7) million or ($0.96) per share in the same period in the prior year. In addition, for the fourth quarter of 2011, non-GAAP pro forma fully-taxed net loss was ($2.5) million or ($0.10) per share. There were approximately $0.9 million in non-recurring and acquisition-related charges during the quarter. The company does not expect to pay U.S. income taxes in the near future as it has sufficient net operating loss carryforwards to offset taxable income.
Fiscal year 2011 total net sales increased 88.2 percent to $84.0 million from $44.6 million 2010. This increase was due to significant growth in both water and dispenser sales. Water sales for 2011 increased approximately 96.3 percent to $58.7 million compared to $29.9 million in 2010. The company's dispenser sales for 2011 increased approximately 60.5 percent to $23.6 million compared to $14.7 million in 2010.
The GAAP net loss for 2011 was ($14.4) million or ($0.66) per share, compared to ($22.7) million or ($5.81) per share in the prior year. In addition, for 2011, non-GAAP pro forma fully-taxed net loss was ($3.7) million or ($0.17) per share compared to a loss of ($5.8) million or ($1.47) per share. There were approximately $2.1 million and $2.5 million in acquisition-related charges during 2011 and 2010, respectively.
During the fourth quarter of 2011, the company launched a single Flavorstation appliance and a range of flavors and accessories in over 500 Lowes Home Improvement locations, a direct selling campaign and a new website that includes an online store to educate consumers and create awareness of the company's appliance and consumables offering.
The company previously announced a strategic alliance with Sparkling Drink Systems, or (SDS), an international marketing and manufacturing company specializing in home beverage carbonation products. With the SDS partnership, Primo has access to a complete line of carbonation technologies and over 70 appliances. Additionally, SDS has its own manufacturing facilities in China. The strategic alliance will include joint R&D, marketing, manufacturing and distribution of Primo Flavorstation's expanded line of appliances that will retail from $39.99 to $299.99.
Retailer reaction to Primo's expanded appliance lineup and flavor profile has been very positive and the company is working with several major retailers on Flavorstation store planning. The company also announced the continued rollout of its existing Flavorstation appliance in additional Lowe's Home Improvement locations early in the second quarter of 2012. The company expects to announce additional retail partnerships and international distribution relationships in the coming months.
"There has been tremendous momentum in the new innovative Flavorstation lineup as a result of the partnership with SDS. We believe this extension of our overall razor/razorblade strategy will result in the sale of numerous high margin 'razorblades' such as flavors, CO2 cylinders, and accessories that will accompany initial 'razor' or appliance sales. We expect that these appliances and consumable products will positively impact our long-term growth prospects," added Prim.
