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Edited Transcript of PRMW earnings conference call or presentation 8-Aug-17 8:30pm GMT

Thomson Reuters StreetEvents

Q2 2017 Primo Water Corp Earnings Call

WINSTON-SALEM Aug 12, 2017 (Thomson StreetEvents) -- Edited Transcript of Primo Water Corp earnings conference call or presentation Tuesday, August 8, 2017 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Katie M. Turner

ICR, LLC - MD

* Mark Castaneda

Primo Water Corporation - CFO and Assistant Treasurer

* Matthew T. Sheehan

Primo Water Corporation - President, CEO & Director

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Conference Call Participants

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* Amit Sharma

BMO Capital Markets Equity Research - Analyst

* Kara Lyn Anderson

B. Riley & Co., LLC, Research Division - Senior Analyst of Discovery Group

* Mark Nicholas Argento

Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets and Senior Research Analyst

* Michael John Grondahl

Northland Capital Markets, Research Division - Head of Equity Research and Senior Research Analyst

* Michael John Petusky

Barrington Research Associates, Inc., Research Division - MD & Senior Investment Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Primo Water's 2017 Second Quarter Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to your host for today's conference, Ms. Katie Turner. Ma'am, you may begin.

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Katie M. Turner, ICR, LLC - MD [2]

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Thank you. Good afternoon, and welcome to Primo Water Second Quarter 2017 Earnings Conference Call. On the call with me today are Matt Sheehan, Chief Executive Officer; and Mark Castaneda, Chief Financial Officer. By now, everyone should have access to the release that went out this afternoon at approximately 4:05 p.m. Eastern Time. If you've not received today's press release, it's available on the Investor Relations portion of Primo Water's website at www.primowater.com. This call is being webcast, and a replay will be available on the company's website.

Before we begin, we would like to remind everyone that prepared remarks contains forward-looking statements, including financial guidance, and management may make additional forward-looking statements in response to your questions. The forward-looking statements should be considered within the meaning of the applicable securities laws and regulations regarding such statements. Many factors could cause actual results to differ materially from those forward-looking statements, and we can give no assurance of their accuracy, and Primo Water assumes no obligation to update them. We encourage participants to carefully read the section on forward-looking statements included in the press release issued this afternoon and in all documents that Primo Water files with the SEC.

And now, I'd like to turn the call over to Primo Water's CEO, Matt Sheehan.

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Matthew T. Sheehan, Primo Water Corporation - President, CEO & Director [3]

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Thank you, Katie. Good afternoon, everyone, and thank you for joining us today to review our results for the second quarter of 2017. I'm pleased to report that results were at the top end of our guidance. Based on our solid operating results and integration efforts ahead of plan, we're increasing our full year guidance for revenue and adjusted EBITDA. Mark will provide more detail on our financial results in our updated guidance.

Today I'll discuss our purpose, the consumer beverage market, highlights of the quarter and finally, provide an update on the progress of our key strategies. First, however, I'd like to begin today by thanking our team of associates, retailers and partners for continuing their efforts in providing growth and achieving record results across all of our businesses and serving our end consumers with great tasting purified Bulk Water and Water Dispensers.

As a reminder, we are a purpose-driven company that is committed to inspiring healthier lives through better water. We will achieve our purpose by executing on our 5 core strategies. First, grow household penetration. Second, improve connectivity of our dispensers and our water. Third, increase retail outlets. Fourth, drive unit economics. And fifth, fostering highly engaged teams.

Consumer beverage trends continue to provide a tailwind and support our purpose as consumers continue to choose healthier beverages over sugary alternatives. Health and wellness trends have been the top driver for bottled water growth over the past several years and is expected to continue. More recently, concerns over tap water are driving consumers to look for long-term bottled water solutions. Each week, there are new stories about contaminants in drinking water systems that exceed government standards. In the past quarter alone, there are several examples, such as in the Central Valley of California, PCP, a cancer-causing chemical, continues to plague drinking water. In Eastern North Carolina, a chemical by-product, GenX, is making headlines for similar issues of chemical dumping and its potential effects on drinking water. And lastly, potential contamination issues were recently discovered in the groundwater near a coal-fired power plant in the Memphis, Tennessee area that may include arsenic and lead. While these issues may not be getting the national coverage and focus of Flint, Michigan, the impact on consumers can be significant. We believe that increased consumer awareness of these issues will continue to fuel growth in the Bulk Water category. We believe we have the best water solution for the home with over 46,000 locations offering convenient, purely amazing water at a fraction of the cost of most alternatives with no plastic waste. Now, a few highlights from the quarter. First, we are beginning to report 3 separate segments: Refill, Exchange and Dispensers. We split the Water segment as a result of how we manage and operate the business and to provide more transparency to investors. Our second quarter results for both sales and adjusted EBITDA were at the high end of our guidance. Sales and adjusted EBITDA more than doubled to $74.8 million and $14 million respectively. The acquisition of Glacier Water fueled most of the growth for our refill segment while our Exchange segment had 6.2% same-store unit growth, which represents our 21st consecutive quarter of same-store growth in excess of 6%. Additionally, our Dispenser segment revenue increased to 24% which was partially the result of timing of shipments to certain retailers being moved from the first quarter to the second quarter as we explained on last quarter's conference call. Our Dispenser business had record sell-through to end consumers of 169,000 units, which exceeded a very challenging comp in the prior year of 24%. Having discussed the market and the results, I'll now talk about our progress against certain key strategies, including an update on our integration activities related to the Glacier Water acquisition.

First, grow household penetration. During last quarter's call, we indicated there would be an increased dispenser promotional activity in the second quarter compared to the prior year. In the quarter, the promotional activity resulted in a record sell-through of dispensers, surpassing last year's record sell-through quarter. Working with retailers, we learned even finer details of how to promote most effectively. We will apply these learnings to drive future promotional initiatives.

Second, increased connectivity of our dispensers and our water. We have previously discussed that we are testing various marketing tactics which continue to be in different stages. Consumer segmentation and messaging. We believe it's important to have a more appealing message and tighter connectivity between all the different products of our solution. After doing some significant consumer research and getting a better idea of our consumers, we continue to test targeted messaging strategies in store for Refill and Exchange. Once those tests are complete, we will tweak and roll out. Here are a few of the tests we have ongoing. Refill consumer messaging, direct mail, digital and social, and partnerships. As these tests show promise, we will extend or expand them across our business appropriately. We believe that when a consumer understands the value of our solution as being a low cost, environmentally friendly way to purchase purified water, there's significant opportunity to grow water sales. Third, increase retail outlets. Overall, our total locations are about flat compared to last quarter, despite adding nearly 600 gross locations. Year-to-date, we have added about 1,100 gross locations, and over the past year, we have added approximately 1,700. We believe we have upgraded the quality of our retail footprint despite some retail closures, trading losses in chains like Kmart and Office Depot, the high-quality locations such as Walmart and others.

Fourth, drive unit economics. Our focus on unit economics is primarily on integration activities that bring best operational and technological processes online. First, we are very pleased with the integration activities and the progress and speed of the integration to-date. As a result, we are raising our total expected integration savings to $7 million to $8 million, up from $6 million to $7 million. These additional savings will come from applying operational best practices to gain further savings in our U.S. operations and accelerating our integration of the Canadian operations that will occur later this year as opposed to 2018.

This acceleration comes from a strong work and focus our team has put into the integration initiative. At the end of Q2, we completed the integration of our back office, finance, accounting, customer service, purchasing and human resource functions, all ahead of plan. Based on being ahead of schedule, we decided to accelerate an additional $800,000 in onetime costs related to severance and transition, which we didn't expect to do until next year. But this will result in recurring savings in excess of this onetime spend.

Moving from operational to revenue synergies, we have posted some small cross-selling wins to-date and are still on track to test refill pricing in the latter half of this year.

To wrap up, we are proud of what our team has accomplished across our company since closing the Glacier acquisition.

The culture fit of the 2 organizations was strong and now we are one company. We continue to believe that we have strong momentum going into the second half of the year to grow this business, increase EBITDA and use our free cash flow to delever and increase shareholder value. With that, I will turn the call over to Mark to cover our financial results.

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [4]

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Thanks, Matt. I will first review our financial results in more detail and discuss our outlook for the third quarter and full year of 2017. Then I'll turn the call back over to Matt for closing remarks.

To help investors understand our operating results, we do provide adjusted EBITDA and adjusted EPS, which are non-GAAP financial measures. A reconciliation of these can be found in today's earnings press release posted on our website. We are very pleased with our financial results of the second quarter which were at the top end of our guidance for both sales and adjusted EBITDA. As Matt mentioned, our second quarter top line more than doubled to $74.8 million, driven by growth in all segments. The Glacier acquisition contributed to most of the growth as our Refill segment sales increased over six-fold to $44.2 million. Additionally, our Exchange business generated 6.2% same-store unit growth, which is the 21st consecutive quarter of growth in excess of 6%. This growth is driven by continuing to add consumer households through the sale of Primo Water Dispensers. Dispenser segment sales increased 24% to a record $12.5 million from $10.1 million in the prior year. As a reminder, we recognize sales as dispensers are still into the channel which can change from year-to-year based on the timing of retailers' orders, promotions and store sets.

For the quarter, sell-through dispensers to end consumers was up to 169,000 units, which represents 26% growth over a 2-year comp basis.

Moving down the P&L. Total gross margin for the quarter was 27.7% compared to 30.3% in the prior year. The increased mix of lower margin dispenser and Glacier refill sales resulted in lower gross margin in the quarter.

Next, SG&A for the quarter increased to $8.2 million from $4.8 million in the prior year primarily from the acquisition. We continue to see leverage in the business model as SG&A decreased to 11% as a percent of sales from 13.9% in the prior year period. In addition, there were nonrecurring and acquisition-related costs totaling $3 million in the quarter. There are 2 components of these costs. $900,000 of settlement costs related to the final litigation of former distributors, clearing up the litigation related to the transition of our Exchange network that resulted in improved distribution cost and service improvements. And $2.1 million in costs related to the Glacier acquisition. We believe any additional cost in the future quarters will be more than offset by increased synergies expected to be achieved this year.

Moving now to P&L. Interest expense for the quarter was $5 million compared to $500,000 in the prior year. The increase in interest expense is a result of refinancing our credit facilities in connection with the acquisition of Glacier Water. Adjusted EBITDA for the quarter more than doubled to $14 million from $6.2 million in the prior year. On a GAAP, our net loss from continuing operations for the quarter was $2.5 million or $0.07 per share compared to net income of $2.3 million or $0.08 per diluted share in the prior year period. The loss in the current year period is primarily the result of onetime charges as described above.

On a comparable adjusted basis when adjusted for noncash stock compensation, nonrecurring and acquisition-related costs, net income from continuing operations was $2 million or $0.06 per diluted share compared to $3.2 million or $0.11 per diluted share in the prior year period.

Continuing on to our balance sheet. We ended the year -- we ended the quarter with $4.5 million in cash. Our accounts receivable DSO decreased to 21 days from 31 days as a result of improved collections as well as the addition of the Glacier business that carries lower receivables compared to revenue. Additionally, our inventories increased by $1.3 million and our accounts payable and accrued expenses increased $5.4 million due to seasonal needs.

Turning to our outlook. We increased our guidance for revenue and EBITDA for the full year based on solid operating performance and synergies ahead of plan. We now expect full year revenues of $283.5 million to $287.5 million from originally $280 million to $285 million, and adjusted EBITDA of $54 million to $55.5 million from $53 million to $55 million.

For the third quarter, we expect revenues of $76.3 million to $79.3 million and EBITDA of $16.7 million to $17.7 million.

In summary, our second quarter results were at the top end of our plan and we are confident raising our guidance to reflect the positive synergy and consumer trends. I will now turn the call over to Matt for closing remarks.

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Matthew T. Sheehan, Primo Water Corporation - President, CEO & Director [5]

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Thanks, Mark. We are very pleased with the efforts of our team to post solid results while making major changes to the service infrastructure of the business. We believe the macro and broader consumer trends will continue to fuel future growth in dispenser households and increased usage of Primo Water. Additionally, the combined businesses of Primo and Glacier have resulted in a stronger foundation for our business and significant opportunities for value creation. As we look to the future, we're operating from a position of strength and remain confident that our positive momentum will continue to build. As always, we appreciate the hard work and dedication of our associates, partners and retailers and remain committed to our purpose of inspiring healthier lives through better water.

With that, I'd like to open up the line for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Amit Sharma with BMO.

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Amit Sharma, BMO Capital Markets Equity Research - Analyst [2]

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This is Drew on for Amit. So just wanted to ask on the dispenser promotion in the quarter, obviously drew nice sell-through. Can you talk about basically where those promotions were, if it was in one chain of a large customer or if it was more widespread and how you kind of plan to roll that out going forward?

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Matthew T. Sheehan, Primo Water Corporation - President, CEO & Director [3]

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Yes, this is Matt. Thanks for the question. As mentioned before, what we had planned to do is concentrate some promotions in Q2, Q3 and Q4 of the year. So what you saw is some promotions across a couple of our major retailers in the quarter. And then obviously that grew the comp over, frankly, a very challenging comp last year of 24%. So we were very pleased with the production. And we're going to continue to promote in the peak season and future years, while we continue to learn about how to do it even more effectively.

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Unidentified Analyst, [4]

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And just cleaning up an item on the gross adds during the quarter, would you be able to quantify how many Walmarts were added?

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [5]

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Yes, this is Mark, Drew. It was a few hundred out of the 600 total.

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Unidentified Analyst, [6]

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And just last one from me. I guess, just a broader question. I think last quarter you mentioned that you were selling dispensers through Amazon. So just wanted to kind of get a feel for how developed the e-commerce channel is and what kind of connectivity you might see or know about on dispensers that are sold through e-commerce.

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Matthew T. Sheehan, Primo Water Corporation - President, CEO & Director [7]

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Drew, this is Matt. Great question. We've been working e-commerce with our core retail partners for a while and that's Walmart and Lowes, et cetera. Amazon is still fairly new for us. We did launch that over the last couple of quarters. And as it works with Amazon, you earn your way up to bigger volume. We're still in early stages with Amazon. We continue to push inventory and test some marketing tactics within Amazon. We do believe that's a good channel for us to grow.

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Operator [8]

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Our next question comes from the line of Mark Argento with Lake Street Capital Markets.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets and Senior Research Analyst [9]

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Just wanted to drill down a little bit more on if you guys made any progress in terms of introducing some Exchange into maybe some of the Glacier footprint or vice versa on the Refill. And wanted to drill down little more on the cost synergies. Sounds like you are realizing some of those synergies a little bit more quickly. Maybe you can just delve into where you see in those synergies kind of come about? And how did you drive that a little more quickly than anticipated?

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Matthew T. Sheehan, Primo Water Corporation - President, CEO & Director [10]

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Yes, Mark, thanks. I'll take them in order. So on a cross-selling side, still early innings on this one as well. As we've shared, this one will be a long, long growth path for us. We have seen, in the quarter, our team begin to cross-sell Exchange into some previous Glacier customers. As we've mentioned in the past, we've proven that Refill and Exchange can exist in the same-store. In fact, they feed and grow off each other. So we're going to continue to push that and proud that the team has not only introduced the combined business in the first quarter and now start to get some wins in the second quarter. But it's really early innings on that one and we continue to push that.

On the synergy side, again, real proud of the team with what they've done. A lot of it is we've seen some more synergy opportunity while we're raising. And that the team is really great against the time line. We're a fairly metric driven business. We measure everything. We measured our integration down to the last line item. And the team has been great about moving them all forward fairly well. And that's across everything. That's across customer service integration, finance integration, and certainly the team has done great on the operational side of it. So it's all gone really well. Hence, the acceleration and the increase.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets and Senior Research Analyst [11]

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Just one quick follow-up for Mark. Could you update us on where you sit right now in terms of your leverage relative to covenants. I think last quarter you guys provided us with a little bit visibility. I know the calc is a little nuanced with some add-backs, what have you. But where are you sitting right now relative to your covenants and do you remain comfortable with kind of your leverage paydown schedule?

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [12]

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Yes. So as far as cushion on covenants, we do have plenty of cushion as far as covenants go and that's really across all the covenants we have. And there's some details in the Q that we'll file tomorrow. But we have plenty of cushion. As far as the leverage ratio itself, didn't move much. This is a peak quarter where we are using some capital. The second half of the year is when we generate cash. So you'll see that come down more in second half of the year as far as leverage ratios.

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Operator [13]

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(Operator Instructions) Our next question comes from the line of Michael Petusky with Barrington Research.

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Michael John Petusky, Barrington Research Associates, Inc., Research Division - MD & Senior Investment Analyst [14]

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I guess, Mark, the question I have around gross margin and just how to think about it going forward. I mean, I heard what you said. Obviously, a little bit of a mix issue. But kind of -- I mean, how should we think about gross margins going forward. I mean is it more high 20s kind of going forward or will you get kind of back over 30 as maybe Dispensers more normalized? I mean how should we think about that?

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [15]

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Yes. So it will vary somewhat by quarter. So as you go into the peak seasons of Q2 and Q3, you'll see higher gross margins, just because you have more water in the mix. And when you think about the Refill business, you've got higher volume going through with relatively fixed cost basis. So you'll see nice margins in Q2 and Q3 on Refill. Those margins will tick down a little bit in Q4. And again, the dispenser mix makes a difference. So as you saw, our dispenser sales were up 24% versus last year. That did bring overall margin averages down. So the 28% to 31% gross margins going forward for the full year, again, a little bit closer, high 20s to low 30s.

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Michael John Petusky, Barrington Research Associates, Inc., Research Division - MD & Senior Investment Analyst [16]

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All right, great. And then I was just wondering if you guys would be willing to talk about the kind of the pricing tests that you're doing next year. I mean how limited -- kind of, how quickly are you going to kind of try to roll that out? Can you just try to flesh that out a little bit in terms of what the timing is and how -- I guess, how limited the test is and how you plan to proceed there?

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Matthew T. Sheehan, Primo Water Corporation - President, CEO & Director [17]

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Mike, this is Matt. Thanks for the question. Our plan remains consistent. We're going to do testing in the second half of this year. Frankly, we hesitate, we want to learn from that and pricing is sensitive. We want to make sure that customers walk with that pricing. So we'll be testing in the bottom half of this year. That could extend into next year. If we get early results that are fairly conclusive, we could expand those results. So it's hard to predict exactly how we will respond to that based on the results. But we will be testing the second half this year.

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Michael John Petusky, Barrington Research Associates, Inc., Research Division - MD & Senior Investment Analyst [18]

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Yes, is that very limited geographies or customers or could that actually move the needle in terms of numbers even in the back half?

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [19]

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It won't be 1 customer and it won't be 1 region. It will be broader than that. And we'll try to do some representative samples so, probably across a couple different regions, couple different clients and to get a good sense of what it might be certainly by region and across the country and working on those plans right now.

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [20]

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But Mike, we don't think it'll have an impact on the numbers for this year.

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Michael John Petusky, Barrington Research Associates, Inc., Research Division - MD & Senior Investment Analyst [21]

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Okay, all right. And then, lots of helpful information. And obviously I heard the few hundred Walmarts were added. Was it actually Kmarts and Office Depots that were kind of the attrition there or were there other stores?

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [22]

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Yes, that was a significant majority of those. And frankly, we do expect some of that attrition to continue with those chains. We're clearly seeing retailer consolidation. But we are very strong with the retailers that are strong in the market in terms of mass and home improvement. So we will continue to see that trade-off with more growth at Walmart and likely some of the other chains shedding some stores.

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Michael John Petusky, Barrington Research Associates, Inc., Research Division - MD & Senior Investment Analyst [23]

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If I could just add, how many more Walmarts, over the next couple of years is a reasonable target for you guys to get into? Are there many more that you think you have a real chance to kind of be able to sell into?

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Matthew T. Sheehan, Primo Water Corporation - President, CEO & Director [24]

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We think there's anywhere from 200 to 500 opportunities. And again, we want to make sure that there's enough room in the stores. Certainly, some of the older Walmart stores are smaller. But we think we're going to have a decent penetration in all of our businesses across Walmart. We will never be fully penetrated with any line of business at Walmart. But we'll say offhand there's probably 200 to 500 stores that we're not in or we could overlap the portfolio. So still a decent amount of growth at Walmart.

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Operator [25]

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Our next question comes from the line of Michael Grondahl with Northland Securities.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research and Senior Research Analyst [26]

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Matt, you mentioned that you are kind of working on the marketing, the messaging. You kind of talked about you did some research in refill, direct mail, social media partnerships. What did you learn there? And how is the message getting tighter? Can you kind of talk about that evolution?

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [27]

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Thanks for the question. So we've been doing research over a good 18 months and we're getting much more specific on who that customer profile is. I won't necessarily share that at this time, but much tighter as it relates to who's buying our product, who has bought our product and who would be a good fit for our products and the combination of our products. So we feel in better shape of targeting. And that's always a constant journey for us. What that is doing is that has fueled a host of tests that are in the market today in terms of messaging. I can share the couple of different mediums, right? One is, it's in-store signage. We have decent size billboards that we can use. We are starting some online work as well. So across the board, given those mediums, we can push things like tap water quality, drinking more water in the household and so forth. So we've learned a lot, testing a lot, as we speak, and we believe we're going to find some good clarity over the coming months and year on what that will look like and then I'll certainly lean into that heavier.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research and Senior Research Analyst [28]

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Got it. And overall, at a very high level, how would you handicap this success of your promotions so far in 2Q and maybe early 3Q? Are you happy with the 169. It's only a slight lift from last year. Just help us understand that a little bit.

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [29]

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Yes, I'd say we're real happy with it. We are a humble business and we always want to grow and learn more and get better. That said, last year was a monster year for us. And on a 24% comp year-over-year last year, to beat that, that's a pretty good quarter for us. That said, we certainly learn things in the quarter that, along us and the retailer, we could have done better and we're working on that with retailers. So we think there's room there, but yes, we frankly feel real good about being able to beat last year because that was a monster year for us.

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Operator [30]

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And our next question comes from the line of Kara Anderson with B. Riley.

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Kara Lyn Anderson, B. Riley & Co., LLC, Research Division - Senior Analyst of Discovery Group [31]

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I apologize if this is already asked, I missed the first part of Q&A. I got kicked off but I'm back. The lighter Exchange growth rate in the quarter relative to the same-store sort of unit sales in the 6% range, could you talk about the dynamics behind that?

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Mark Castaneda, Primo Water Corporation - CFO and Assistant Treasurer [32]

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Sure. There's a couple of things that are impacting the unit growth of the 6.2% versus a revenue growth rate, which was in the mid-3s. And the difference is really couple of things. One is, it's mix of our IP units versus our Exchange units. Our IP unit mix that was down and IPs are twice the price of an Exchange unit. So when that mix changes, it does have an impact on the revenue. Secondly, it's mix of customers. So we have some customers that are growing faster, that are larger customers that have more advantaged pricing. So as those customers' mix gets higher, that has an impact. And then finally, there's some of the locations that were lost, some of the locations came off. So that does impact the revenue growth. That's a much smaller extent though.

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Kara Lyn Anderson, B. Riley & Co., LLC, Research Division - Senior Analyst of Discovery Group [33]

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Okay. And just a housekeeping question. What was the gross margin for Water and for Exchange -- excuse me, Dispensers in the quarter?

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Matthew T. Sheehan, Primo Water Corporation - President, CEO & Director [34]

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The Water gross margins, the total Water gross margin was 30.9 and the Dispenser gross margins was just over 12.

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Operator [35]

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And I'm not showing any further questions. I'll now turn the call back over to Mr. Sheehan for closing remarks.

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Matthew T. Sheehan, Primo Water Corporation - President, CEO & Director [36]

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Thank you for your participation on today's call and interest in Primo Water. Have a good evening.

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Operator [37]

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Ladies and gentlemen, this does conclude the program and you may now disconnect.