Primo Brands Q2 2026 earnings: Retail growth lifts sales and adjusted EBITDA

Primo Brands (NYSE: PRMB) reported Q2 2026 net sales of $1.796 billion, up 3.8% from $1.730 billion, while diluted EPS from continuing operations rose to $0.19 from $0.08. Regional spring water and premium brands led sales growth, Direct Delivery returned to growth earlier than expected, and lower SG&A expenses helped offset an 80-basis-point decline in gross margin. Operating cash flow also increased, while the company raised its full-year comparable sales growth outlook but maintained its adjusted EBITDA and adjusted free cash flow ranges.

Core financial results

Revenue growth was primarily driven by premium brands and regional spring water, partially offset by the absence of sales from the exited U.S. Office Coffee Services business. Gross profit increased only modestly as higher transportation-related costs and depreciation and amortization reduced gross margin to 30.5%.

GAAP operating income improved more substantially because SG&A expenses fell by $33.1 million and acquisition, integration and restructuring expenses declined to $10.0 million from $49.7 million. The following figures cover the three months ended June 30 and are in U.S. dollars.

Business and product performance

Retail channels drove the quarter, led by regional spring water and premium brands. Premium water was the fastest-growing reported category, while purified water posted a smaller increase and the remaining categories declined. Management also reported that Direct Delivery returned to growth earlier than anticipated, although it did not provide a separate revenue figure for that channel.

Regional spring water remained the largest category, accounting for slightly more than half of quarterly sales. Together, its growth and the $26.7 million increase in premium water sales provided most of the product-level expansion.

Lower SG&A lifted GAAP profit despite gross-margin pressure

Higher transportation costs and depreciation and amortization caused gross margin to fall from 31.3% to 30.5%. However, SG&A expenses declined 8.7% to $345.5 million, mainly because of lower marketing costs and the absence of certain definite-lived intangible amortization recorded in the prior-year quarter. Acquisition, integration and restructuring expenses also fell by $39.7 million.

As a result, operating margin increased to approximately 10.0% from 6.5%, and GAAP income from continuing operations more than doubled. The improvement was less pronounced on an adjusted basis: adjusted EBITDA rose 5.0%, while adjusted net income declined approximately 2.1% to $134.2 million. Adjusted EPS still increased by $0.01 as diluted weighted-average shares declined by approximately 3.0%.

Cash flow and balance sheet

Operating cash flow from continuing operations increased by $72.9 million to $227.9 million. Capital expenditures and intangible-asset additions totaled $104.6 million, up from $71.6 million, but free cash flow still rose to $123.3 million from $83.4 million. Adjusted free cash flow increased 17.9% to $200.1 million after adjustments that included acquisition, integration and restructuring cash costs and integration capital expenditures.

Primo Brands ended the quarter with $366.5 million of unrestricted cash and $5.25 billion of debt excluding unamortized costs and discounts. Net debt was $4.88 billion, producing a net leverage ratio of 3.42 times trailing adjusted EBITDA. During the quarter, the company paid $43.5 million in dividends and spent $15.5 million on share repurchases.

Full-year guidance

Primo Brands raised its 2026 comparable net sales growth range for the second consecutive quarter. The adjusted EBITDA and adjusted free cash flow ranges were unchanged, reflecting management’s decision to continue growth investments while managing inflationary pressure.

Comparable sales exclude the exited Eastern Canadian operations and U.S. Office Coffee Services business. The combination of higher sales guidance and unchanged adjusted EBITDA guidance indicates that the company is not yet assuming that the additional revenue will produce higher full-year adjusted profit.

Risks investors should monitor

• Transportation and inflation pressure: Higher transportation-related costs contributed to the 80-basis-point gross-margin decline. Continued cost pressure could limit the benefits of higher sales.
• Uneven product growth: Premium and regional spring water drove the quarter, while other water and other sales declined and purified water grew only modestly.
• Revenue-to-profit conversion: The company raised comparable sales growth guidance without increasing its adjusted EBITDA range, citing growth investments and inflationary pressures.
• Leverage and interest burden: Net debt remained $4.88 billion, leverage was 3.42 times, and quarterly interest and financing expense totaled $81.3 million.
• Adjusted versus reported cash flow: Adjusted free cash flow exceeded reported free cash flow by $76.8 million because of integration, restructuring and other adjustments. The size and persistence of these cash costs remain important to monitor.

Summary

Primo Brands’ Q2 2026 results showed improving sales momentum in retail, regional spring water, premium brands and Direct Delivery. Lower SG&A and integration-related expenses drove a sharp increase in GAAP operating profit, even as transportation and depreciation costs compressed gross margin. The main questions for coming quarters are whether stronger sales can translate into higher adjusted earnings, whether gross-margin pressure eases, and how quickly integration-related cash requirements decline.