Welcome to the Primo Brands 2025 Fourth Quarter and Full Year Earnings Conference Call. I will now turn the call over to Traci Mangini, Vice President, Investor Relations.

Thank you, operator, and hello, everyone. With me on the call today are Eric Foss, Chairman and Chief Executive Officer; and David Hass, Chief Financial Officer. Our discussion today includes forward-looking statements within the meaning of U.S. securities laws, which are subject to risks and uncertainties that may cause actual results to differ materially. For more information, please refer to the forward-looking statements disclosure in our earnings release. In addition, the definitions of and applicable reconciliations for any non-U.S. GAAP measures are included in our earnings release and supplemental earnings slides, which were made available today on the Investor Relations section of our website. With that, I'll pass it over to you, Eric.

Thanks, Traci. Good morning, and thank you all for joining us today. To set the framework for today's discussion, I'll start with a high-level review of our fourth quarter and 2025 results, take you through our progress on our direct delivery customer experience and our 2026 growth and capital allocation priorities, and David will then take you through the details of our quarterly and annual performance as well as our 2026 guidance. We're encouraged by our performance as we finish the year and how that positions us into 2026. In the fourth quarter, we delivered net sales of $1.554 billion, a decrease of 2.5% on a comparable basis from prior year, which included an improved pace of recovery for our direct delivery business. At the same time, we built on the strength of our well-known brands at retail, further expanding our leadership position through dollar and volume share growth in the category for the quarter. For the full year 2025, we delivered comparable net sales of $6.660 billion, down 1% from the prior year. These results demonstrate the strength and resilience of our business model and indicate early signs that our initiatives are resulting in an improved trajectory for the business positioning us for continued operational and financial improvement as we move forward. Our fourth quarter comparable adjusted EBITDA was $334.1 million, up 11%, with related margin of 21.5%, up 260 basis points versus a year ago. Our annual comparable adjusted EBITDA was $1.447 billion, up 7.4% with a related margin of 21.7%, up 170 basis points from prior year. As we set our sights on 2026, our top priority is to get the business back to growth while also expanding margins that leads to generating consistent growth in free cash flow. In 2026, excluding our office coffee service business,…

Thank you, Eric. As you've just heard, we are making progress. Our fourth quarter top line results were achieved due to improving service levels, which supported volume recovery in our direct delivery business. We believe this indicates early signs that our initiatives are resulting in an improved trajectory for the business into 2026. Now before we get into the details on the financial results, recall that the GAAP financial comparisons in this morning's press release reflect the 2025 results of the new Primo brands versus 2024 results that are primarily of the base legacy Blue Triton plus the combined company after the merger date. This is a typical GAAP reporting outcome of a merger transaction. To assist with more apples-to-apples comparisons, we will be primarily discussing comparable results, which incorporate the combination of both legacy organizations while adjusting for the exited Eastern Canadian operations for both years 2024 and 2025. Also recall, volume for Primo Brands is defined as case goods equivalents, which are measured in 12 liters. For the fourth quarter, comparable net sales declined 2.5% versus the prior year, driven by a 2.9% volume decrease, partially offset by a 0.4% increase from price or mix. The volume decline was driven by both retail and direct delivery. In retail, we cycled higher hurricane purchase activity in 2024, but finished the year largely in line with our expectations. Direct delivery declines were driven by a lower customer base. However, as Eric mentioned, while the customer net adds were negative, we saw month-to-month improvement throughout the quarter. Our premium brands helped to offset this volume decline and contributed to the favorable price/mix in the quarter. Saratoga and Mountain Valley net sales were up 39% in the quarter, continuing the strong momentum behind these highly accretive and consumer-coveted brands. Sequentially, the business…

Thanks, David. To ensure we can address as many of your questions as as possible, please limit yourself to 1 question only. And if we have time remaining, we will repoll for additional questions. Operator, please open the line for questions.

[Operator Instructions] And your first question comes from Derek Lessard with TD Cowen.

Just wanted to hit on some of your key KPIs in the quarter, more specifically on the direct delivery side. I think the silver lining view is that the volume decline wasn't as bad as expected. So I was curious, like how did some of those KPIs, tips and what have you, how did they perform exiting the quarter? And then maybe as a follow-up, how should we be thinking about the guide in terms of when you expect to get back to your historical financial algorithm? And maybe said another way, should we view your 0% to 1% sales guide as conservative?

Derek, it's Eric. And thanks for joining us. So I think as it applies to customer direct, yes, I've used the word encouraged relative to how the quarter progressed. I think you're well aware that we had some work to do on the business process side. We had and still have some work to do on the technology and tools side, including the capability side, some work with the call center. But I think as I look at the business, as simply as I can state it, what's really, really important to us around the supply chain is to really make sure we get an accurate forecast. We get product produced to schedule. We eliminate the warehouse out of stocks, and we get trucks loaded as scheduled. And if you look at those KPIs, each and every one of them improved dramatically, and most of those are, I would say, north of the high, high 90s from where they were when we really were experiencing some pretty significant challenges. Where I think we still have some work to do is on OTIF. And while we saw, again, sequential improvement each and every month as the quarter progressed, we're still not where we need to be. We need to get OTIF back north of 90%. And so there's still some work to do on that side. I would tell you some other positive indicators from my perspective are we saw our customer calls reduce to kind of pre-merger levels as we exited the quarter. And we also saw a very important indicator, our customer quits were lowered and our customer nets increased as we exited the year. So again, all in all, encouraged with more work to do. Relative to your second question around the guide, I guess the way I would describe it is when I walked into the job about 3 months ago, there were 2 issues that were really front and center for me. The first was to fix the overall customer experience on our customer direct business. We just talked about that. And the second was to get the business growing. And we delivered a down 1% in 2025, not at all where we want this business to perform. There's more work to do on the direct delivery front. But our focus right now is to make sure we get the company growing and we deliver against our financial commitments. As you think about the year, we've got more difficult comps certainly in the first half of the year. But again, once we get the business growing again, I think we can better assess the upside potential. But ultimate -- our ultimate goal is to reach obviously the full potential of this business, and I've got a very high degree of conviction and confidence in our ability to do that. So we remain very optimistic. We've got multiple growth vectors for this business, and our intent is to capture that to drive sustainable, profitable growth.

Your next question comes from Nik Modi with RBC Capital Markets.

I was hoping you could just provide a little bit more color and maybe some details on the top line guidance drivers across channels, volumes and just kind of thinking about the pricing strategy. I know there was an expectation that you'll be able to harmonize pricing in the delivery business in '25, but obviously, that got thrown off track with some of the integration issues. So any color you can provide just to give a sense of kind of how you're thinking about the details in the divisions on your top line guide?

Sure, Nik. I think first, from a sequencing perspective, if you think about the full year, I touched a little bit on this in Derek's question, but there's no doubt the growth will be more second half weighted. We would expect trend improvement pretty much quarter in, quarter out as the year unfolds. And importantly, we expect to not only stabilize the direct delivery business, but to see that business return to growth. So I guess one of the ways I would characterize it as we think about the growth algorithm going forward, we would expect it to be balanced, meaning both volume and price and within price, both rate and mix. We've got a really big opportunity, I think, Nik, on the immediate consumption business, in particular, in our cold drink business. We're far less developed on that area of the business than we are in the future consumption business. And so over time, the profit pools available in the industry around immediate consumption and cold drink are a big, big mix opportunity for us. Continuing to play the leadership role we played in premium, obviously, also plays to a mix advantage for us. And then I think in addition to the customer direct business, which we spent most of our time focused on and talking about with investors, I'm a big, big believer that not only more strategic revenue management across all the business, but importantly, I think continuing to really dial up our executional efforts at retail to be a much more complete executor across the key causal indicators of feature activity, display inventory, shelf space are real, real opportunities for us from a selling strategy standpoint. So we would expect to see the top line growth progress. And again, even over time, I think you'll see it be very broad-based across channels, brands, packages.

Your next question comes from Andrea Teixeira with JPMorgan Asset Management.

This is Drew Levine on for Andrea. So Eric, just hoping to dig in a little bit more just following up on Nik's question. Maybe you could just provide some context on what's embedded in the guidance from a retail perspective. Obviously, category has gotten off to a good start here in 2026 with some pantry loading benefit. You mentioned lapping the Hawkins issue, lapping some poor weather into the spring. So more context there would be helpful. And then related to that? Maybe on the other side, if you want to call anything out from a phasing perspective, maybe from direct delivery side, if there's been any impact from the severe winter weather here in the Northeast where you have disproportionate share?

Sure. Thanks for your question. I'll start, and I'll let David jump in as well. I think let me take your second question first. I think weather hasn't been our friend as we started the year, but I think the teams have done a really good job. The good news is kind of the first wave of weather that hit us, I think we were able to proactively get out ahead of it. And so I think all in, it's probably going to be a little bit of a headwind, but not overly significant in terms of our ability to both show agility to respond to it as we think about how the quarter will play out. I think -- relative to our retail business, again, we've started the year in a very, very strong position, not just within the water category, but across the broader liquid refreshment beverage category, had a very strong share month during the month of January. We would expect that to continue. And again, as I said earlier, I think the way we're approaching this is we want to get balanced and broad-based growth across the enterprise. So we want to return the customer direct business to growth. We certainly want to continue the momentum we've seen on our retail business. We want that to be both volume-driven as well as some price as we get a little more strategic on the revenue management and price pack channel architecture. So I would say our intent and the way we've built the plan is to have balanced and broad-based growth across channels, across brands, packages and certainly geographies. David, do you want to add anything on the sequencing?

Yes. Thanks, Drew. So I think as Eric just mentioned, our goal within that implied 0.5 is obviously a tougher start to the year with volume as we have some of those volume headwinds coming in the customer direct business based on obvious disruptions and things that occurred in 2025. We do expect that to balance out with volumetric growth in the second half of the year and notably in direct itself in the latter quarter, partial Q3, but largely Q4. So we do expect that to be balanced. Obviously, it's retail and as the premium areas like Saratoga and Mountain Valley volumes from our investments come online, there's obviously potential for those to continue to perform strongly. So again, we view this as a tale of 2 halves with that second half really getting us back into more of a normalized and balanced volume and price sort of contribution.

Your next question comes from Lauren Lieberman with Barclays.

Free cash flow guidance came in better than we were thinking and implies growth ahead of the EBITDA growth. So we're just kind of curious about that piece and kind of specific opportunities there that you'll be pursuing.

Lauren, this is David. So thanks for the question. Areas there that we have are year 1 was really not focused on working capital enhancements. We were bringing together payable teams, bringing together procurement arrangements. And then obviously, as the direct delivery business ran into some obstacles from the integration, that concluded with some collection and some other AR timing complexities. So we believe that on a more normalized operating platform, we can begin to work through some of the benefits of the merger, both with turns, days against our procurement spend as well as a smoother collection process with our direct delivery customers exhibiting less disruption from their service. When there's less disruption from service, there's a lot better payable from the customer to us. So our AR is smoother. There's not a lot of disputing activities that go on within that. And then over time, our credits, so things that we would have issued that could have been a detriment to our sales should stabilize and go back to more normal course patterns, and that should also help. Obviously, on the CapEx on the base investment, that remains consistent. The integration CapEx and the Hawkins repairs, we're adding back. So that's not really a contributing factor. But it's largely around our working capital benefit and sort of working through that.

Your next question comes from Daniel Moore with CJS Securities.

Appreciate all the color. In terms of pricing, how much of an impact do you expect discounting promotions to win back new customers will impact pricing in '26? And when should we think about lapping or anniversarying those initiatives? And then just secondarily, when do you expect to inflect a positive month-over-month growth in net customer adds?

Yes. Daniel, I think a couple of things. I think relative to the reinvestments, if you think about 2025, obviously, given the disruption, we had reinvestments that centered around route labor, call center labor, additional routes that we ran on weekends and absorption of overtime. And then we had the investment, probably more specific to your question around the customer winback initiative. We're continuing to invest in that initiative. And I think as we go forward, we would continue to see reinvestments broadly around the business of marketing and brand building. Certainly, we're looking at making sure we're wired to win and we've got the right selling resources in place across not just customer direct, but our entire business. And then in the area of technology and capability, continued reinvestments on those. So I think we would want to see those investments drive sustainable profitable growth. And I think as we think about that on the specific return to growth on the customer -- direct customer net, hopefully, I would anticipate that maybe sometime in the second quarter that we might see that development.

Your next question comes from Peter Galbo with Bank of America. Your next question comes from Steve Powers with Deutsche Bank.

Eric, following up on that net add conversation, I guess, is there a way to frame, I guess, what I define as kind of the active customer base in the direct business, kind of where you are now relative to where you were pre-disruption? That would help. And then secondarily, related to recruitment and getting those net adds trending more positive. Is there a way to kind of frame aggregate incremental investment in '26 versus '25? And are those efforts first half loaded as you try to kind of kickstart the recruitment effort?

Yes. I think the answer is yes, they'd be first half loaded as we continue our recovery. So I think more first half than second half to answer your second part of your question. I think the way I would frame it, and obviously, we're not going to give a lot of specific numbers for a lot of different reasons on the competitive front. But the way I would think about it is -- the great news is that the top of the funnel never really has been disrupted. So if you look at our customer adds really throughout the year other than a little bit of kind of typical seasonality, if you will, the top of the funnel remains strong throughout the year. And the real trough was what we experienced during second -- starting in the second quarter, continuing in third quarter. And then as I mentioned earlier, a pretty nice rebound on the quick side and therefore, the net side as we exited the year. So I think, as I mentioned on the earlier question, we would expect customer nets to kind of return to positive sometime in the second quarter. Obviously, the initiatives we put in place are focused to do that as soon as we can. And I just think that, again, whether you look at our direct delivery business or the exchange and refill business, I mean, the beauty of this is there is just a ton of opportunity for us to take advantage of. And again, most of the efforts that we're recovering from are ones that are well in our control. And so we feel confident about the initiatives returning that business to the kind of growth trajectory we expected when we put the deal together.

Your next question comes from Peter Galbo with Bank of America.

Sorry about that technical issues this morning. Eric, Dave, thanks for all the detail. I was hoping to get a little bit more color just on cadence actually of EBITDA for the year of kind of the $1.5 billion. I know you gave some color around the sales cadence, but just any help on kind of the phasing on EBITDA, particularly as we think about the first half would be helpful.

Thanks, Peter. We will expect that to sort of be a little bit different than sort of our, what I'll call, 50-50 setup, if you will, from the top line. And largely, that would be a little bit more, call it, like 48, 52 kind of setup. So not terribly off, but what that really means is a first half kind of lean in on some of these continued investments. So what would that look like? That would look like higher route counts to stabilize service and return the business to the appropriate levels of OTIF and other things that customers expect. And then over time, that can phase back out. That's just one example, but that would be why you have a little bit different of a seasonal pattern sort of first half, second half within the business specifically. Now I will say that if those RGM and other capabilities come online and we have greater permission both with our retail customer as well as our direct delivery customer base, that could change, but that's sort of the initial landscape view of how we've laid out EBITDA, the margin progression that we talked to in the guide. And again, we'll comment on that further as the year progresses.

[Operator Instructions] Your next question comes from Andrea Teixeira with JPMorgan.

Just one, David, maybe you could just update us on what the synergy capture was in the quarter? And then what's left to capture in '26 from the remaining 2 rounds of integration?

Sure. So again, we substantially covered off the synergy capture required inside the calendar year of '25. How we look at 2026 starts with 2 integration waves that we have left. One was a few last weekend actually. And so far, that seems to have gone well. Again, we can see things pretty quickly in that regard now that we've had a little bit more space between the prior integration waves and the ones we're executing this year. The team deployed significant training on-site sort of teach-ins and things, and that seems to have gone quite well. And obviously, the way we were able to navigate the recent storms, again, performed very smoothly through that. The last wave is a little bit closer towards the end of the quarter in which, again, we experienced and expect that training and sort of teach-in activity to sort of help that occur. From there, what will happen is some additional consolidation through teams where systems or other things that were prevented from being captured due to those last waves being incomplete will start to occur. So again, I think we remain very confident in our ability to sort of execute against that. Obviously, we have placed some investments in the business either to win back the customers or to sort of increase our service attention, and those should be able to be sort of looked at and reviewed as we get closer to midyear and understand sort of our glide path into year-end 2026 and potentially again, set us up for a 2027 period that looks and feels a little bit more different and normalize to how we want to attack and execute against the business.

Your next question comes from Steve Powers at Deutsche Bank.

David, actually, a follow-up on Lauren's question on free cash flow. I agree the underlying guidance for free cash flow came in a bit ahead of our expectations as well. I'm just curious if you have any estimate of any -- I guess, of free cash flow net of any integration synergy capture or restructuring cash costs. Just trying to get a sense for where you think the actual free cash flow will land for the year if you've got that visibility.

Yes. I mean, again, outside of the integration CapEx add-back that we sort of go through, we really don't have any sort of curveballs that are occurring in the business. So again, we feel pretty confident that the flow-through, we'll be able to produce an increase in our cash flow from operations. Our CapEx will remain in line with where our sales are going. Obviously, the One, Big, Beautiful Bill has provided some tax benefit where some of that occurred in '25. We'll get some additional deployment and execution of that in '26. And then it really comes down to focusing in our working capital improvements to sort of go from there. But again, we can follow up with any sort of activities you need there. But again, we feel pretty confident in our ability to sort of step through the year and sort of deliver that value.

That concludes our Q&A. I would now like to turn the call back over to Eric Foss for closing remarks.

Thank you. Well, in closing, again, I'm more energized and excited today than I was when I stepped in this role a few months ago. We continue to see encouraging trends as we close the year and look to returning to growth and achieving our financial commitments. So I want to thank everybody for joining us and appreciate your interest, and everybody, have a great day.

This concludes today's conference call. We thank you so much for your participation. You may now disconnect.