Good morning. My name is Marissa, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Primo Brands Corporation Second Quarter 2025 Earnings Conference Call. I'll now turn the call over to Jon Kathol, Vice President, Investor Relations.

Welcome to Primo Brands Corporation's Second Quarter 2025 Earnings Conference Call. The call is being webcast live on Primo Brands' website at ir.primobrands.com and will be available there for playback. This conference call contains forward-looking statements regarding the company's future financial results and operational trends, estimated synergies, impacts from economic factors and other matters. These statements should be considered in connection with cautionary statements and disclaimers contained in the safe harbor statements in this morning's earnings press release and the company's quarterly report on Form 10-Q and other filings with the SEC. The company's actual performance could differ materially from these statements, and the company undertakes no duty to update these forward-looking statements, except as expressly required by applicable law. A reconciliation of any non-GAAP financial measures discussed during the call with the most comparable measures in accordance with GAAP, when the data is capable of being estimated, is included in the company's second quarter earnings announcement released earlier this morning or in the Investor Relations section of the company's website at ir.primobrands.com. In addition to slides accompanying today's webcast to assist you throughout our discussion, we have included a copy of the presentation in a supplemental earnings deck on our website. I am accompanied by Robbert Rietbroek, Primo Brands' Chief Executive Officer; and David Hass, Chief Financial Officer. To start their prepared remarks, Robbert and David will discuss the second quarter performance of Primo Brands as well as the outlook for the full year 2025. With that, I will now turn the call over to Robbert.

Thank you, Jon, and good morning, everyone. Before I turn to the quarter, I want to share that our hearts go out to everyone impacted by the devastating floods in Texas and New Mexico. We recognize the deep and ongoing toll of a disaster like this and are committed to supporting local communities. Aligned with our company's values, especially in times of critical need, Primo Brands has recently made a donation to the Community Foundation of Texas Hill Country. And during the quarter, we provided more than 150,000 cases of water products to emergency response organizations, including Convoy of Hope, an organization well known for being among the first responders to provide vital relief supplies. Turning to second quarter performance. Since closing the merger last November, we've been working quickly to integrate our operations, with the goal of improving efficiency and productivity. The speed by which we closed facilities and reduced headcount led to disruptions in product supply, delivery and service. I'll discuss this in greater detail shortly. That said, we are confident that we are now on the right trajectory as we enter the second half of the year. Importantly, we never compromise worker safety and product quality and remain on track to deliver on our 2025 and 2026 synergy targets. We believe that Primo Brands is well positioned as a leading branded beverage growth company in the CPG and beverage industry. We will continue to execute against our strategy and must-win priorities while resolving our service issues. During Q2, we expanded our total points of distribution across key markets and channels, ramped up our cross-selling efforts in our home and office direct delivery business and drove continued double-digit year-over-year net sales increases for our premium water brands, Saratoga and Mountain Valley, as well as our exchange business. Our refill and filtration businesses also grew net sales during the quarter. Our business continues to benefit from consistent demand for our products and services across Primo Brands water channels. We have an incredible portfolio of all-American brands and continue to extend our leadership in U.S. bottled water. Our extensive distribution network of over 200,000 retail outlets and multiple consumption solutions, including direct delivery to more than 3 million customers and exchange and refill services remains a significant competitive advantage. Notably, we grew dollar share in retail bottled water in the first half of the year by 11 basis points, demonstrating the overall strength of the business and differentiation of our products. I would now like to spend a little more time on the 2 key disruptions that impacted our top line in the second quarter, one out of our control and one that we own responsibility for, both of which are largely resolved. First, as we reported on our first quarter call, the Hawkins, Texas tornado in early April struck one of our facilities, resulting in significant damage that disrupted production and operations for 7 weeks, including a temporary shutdown. The facility primarily supports Ozarka retail products. And to mitigate the impact on our customers, while we rebuilt, we leveraged our other Texas and Southeast region facilities to deliver Ozarka and Pure Life bottled water to impacted areas, which introduced additional operational complexities. Altogether, we estimate the impact related to the Hawkins tornado reduced our second quarter net sales by approximately $26 million or 1.5%. While some repair work remains in progress, the facility is now back online, and we've made significant strides to rebuild our inventory levels of product supply to better serve our customers. As David will discuss later, capital expenditures associated with building repairs are expected to be largely covered by insurance. We will also be submitting the business interruption impact to our insurance provider. In the second quarter, we have significant disruptions in our direct delivery business, resulting from the combining, upgrading and rationalizing of our operations. During the quarter, we closed 40 facilities, bringing the total number of facilities closed since the merger to 48 facilities or 15% of our total network, and we reduced headcount by 1,100 full-time equivalent roles in the quarter. In total, since the merger, we have reduced headcount by more than 1,600 roles, representing an 11% reduction across our organization. Additionally, in the past few months, we have been integrating facilities, merging routes and rationalizing technology, which included transitioning our legacy Primo branches to SAP and introducing new handheld devices to a large portion of our workforce. While the vast majority of our customers continued to receive the great service they expect from us, in some markets, the high demand, standardization initiatives and challenges from an accelerated integration collectively affected our inventory levels and fill rates. We prioritized speed and cost reductions, resulting in some customers experiencing rescheduled or canceled deliveries on a recurring basis, product substitutions and extended customer service wait times. These disruptions began in late May, and we have been working tirelessly to address the underlying operational issues, stabilizing service levels and optimizing our factory-to-branch transport and delivery routes. Our manufacturing, supply chain, last-mile delivery, call center and IT teams are working together to restore the service levels our customers expect. We are grateful for the hard work of our frontline associates as they continue to manage through this transformational period and lead with agility and resilience. And we are equally thankful for our loyal customers who have been patient and understanding through these service disruptions. Each quarter, I spent time visiting our manufacturing facilities across different states and markets. And this quarter, I visited the Hawkins facility to see the restoration and recovery efforts firsthand and thanked our associates on the ground. I also went on additional route rides in recent weeks and months to directly interact with customers and solicit feedback from frontline associates to ensure progress against critical service measures that's being made. We expect to be past the majority of the challenges come the end of September, though there will be some lingering supply side constraints that we expect to normalize in approximately 8 to 10 weeks. Importantly, our underlying business continues to show resilience, and water remains an attractive category with structural tailwinds supporting its growth. As a backdrop, we continue to see significant consumer interest in water quality, driven by ongoing environmental concerns and infrastructure challenges across the United States. Our diverse portfolio spanning multiple price points in channels enables us to adapt to shifting consumer dynamics, particularly given our products' value proposition relative to municipal water options. While the macro consumer environment remains somewhat soft for many CPG companies, we continue to see robust demand for products and services. Demand remains strong in our retail business, where several weeks of colder and wetter than usual weather from mid-May to mid-June led to multiple weeks of category softness, especially impacting the Northeast, our Poland Springs market. However, retail scans rebounded as temperatures rose in late June and July, with our share outperforming category scans by approximately 170 basis points in the last week of June with the momentum accelerating in July. Circana shows we expanded retail dollar share by 48 basis points in July, driving 5 weeks of consecutive share growth. Combining this with our first half retail dollar share growth of 11 basis points, our year-to-date dollar share has expanded by 17 basis points. We achieved strong distribution gains during the second quarter, with total retail points of distribution growing over 10%. We continue to work closely with retail partners to bring our improved scale and wider product portfolio to them and their shoppers. Week-to-week velocities can vary in the initial postlaunch stage as consumers familiarize themselves with new items, but the incremental placement in retail stores positions us to drive overall growth as demonstrated in July, where we accelerated dollar share growth. On the marketing front, our partnership with Major League Baseball has expanded our branded presence to fans across the nation. You may have noticed that Deer Park, the official water of the MLB, sponsored the Red Carpet show at the All-Star Game last month in Atlanta. Turning to our direct delivery performance. Despite direct delivery disruptions in the second quarter, our commercial, residential and exchange customers continue to show strong demand. Early in the quarter, tariff-related announcements drove retailer uncertainty, including sell-in to our dispenser business, which saw a year-over-year net sales decline. Dispensers remain an important point of entry for our large format business. As we have previously noted, our exposure to tariffs is primarily concentrated in our dispenser business, which accounts for approximately 1% of our overall net sales. Historically, because there is no U.S.-based dispenser manufacturer that can meet our volume requirements, we have been able to claim relief for most tariffs and duties related to our dispenser purchases. It remains to be seen whether such relief will be granted going forward. Primo Brands continues to maintain a strong competitive positioning versus our peers, many of whom make and sell imported water products subject to tariffs. With the exception of water dispensers, our products are domestically sourced and locally manufactured, and more than 98% of our sales are U.S. based. Our customers continue to recognize our attractive value proposition as we are seeing continued strong demand from both residential and commercial customers. I am particularly pleased with our progress in cross-selling and upselling products from both legacy organizations in our home and office direct delivery channel. We are now providing customers the option to choose between their usual purified water brand or a regional spring water brand, such as Poland Spring, for a premium price. Additionally, we've started offering delivery of branded case packs directly to customers' homes alongside their standard large-format orders. We expect continued sales contributions from these efforts as we increase penetration in the second half of the year. Finally, turning to an update on our premium water channel, where our brand performance continues to shine with 44.2% net sales year-over-year growth in the second quarter. Like consumers, key retail customers are excited about these brands. And our total points of distribution growth in the second quarter was fueled by expanded Mountain Valley and Saratoga PET offerings at Walmart. Additionally, this spring and summer, Mountain Valley and Saratoga received prominent placement with social media influencers, athletes, professional sports teams, conferences and award shows. For example, Mountain Valley was the official water of the Academy of Country Music Awards in May. Looking ahead, we are focused on addressing elevated demand for our premium products and ensuring their availability for all customers and consumers seeking our iconic green and blue bottles on their shelves and in their homes. During the quarter, we broke ground on a new Mountain Valley production facility in Hot Springs, Arkansas, which we expect to be operational by mid-2026. This facility is expected to unlock our current supply constraint so we can better meet demand and continue the brand's growth trajectory. Before I turn the call over to David, I would like to talk more about our integration and synergy capture plans. As I mentioned earlier, our overall synergy capture opportunity remains on track, and we expect to deliver approximately $200 million in synergies in 2025, increasing to $300 million in total synergy capture by year-end 2026. Our integration teams are working to streamline processes, optimize our network and enhance our long-term customer service capabilities. While these activities stress tested our manufacturing, supply chain and go-to-market capabilities during Q2, we've addressed the most constrained areas of our operations and are on the right track to return to strong service levels going forward. Looking ahead, the combined manufacturing, transportation, branch and IT infrastructure of Primo Brands is expected to deliver substantial long-term benefits once fully optimized. We remain confident in our ability to deliver on our synergy opportunity targets and create sustainable value for our stakeholders. We have a resilient business model that is positioned to deliver our long-term growth algorithm, with an attractive margin and earnings profile over time. Despite the disruptions we faced in the second quarter, our comparable adjusted EBITDA margin increased 80 basis points to 21.2%. As we shore up our service issues, expand our sales network and restore our top line growth, we expect strong operating leverage to drive improved earnings performance and cash flow generation. We believe we have learned from Q2 and as we enter the third quarter, we believe Primo Brands is becoming a more cohesive and resilient organization, well positioned to deliver growth, improve margins and generate strong free cash flow as we go through the balance of the year. With that, I would like to turn the call over to David to review the financials and guidance.

Thank you, Robbert. Let me walk through our financial performance for the first half of 2025, the second quarter and details around our revised guidance. The GAAP financial comparisons in this morning's press release reflect the 2025 results of the new Primo Brands versus 2024 results of the legacy BlueTriton business. This is a typical GAAP reporting outcome of a merger transaction, which can lead to growth metrics that are not comparable. 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. Comparable net sales were essentially flat when compared to the prior year at the halfway mark in the year and included growth of 0.6% when factoring in the Leap Day impact. The business had a strong start to 2025 with Q1 2025 net sales rising 3% or 4.2% when adjusted for the Leap Day impact, coupled with disruptions in the second quarter that I will discuss in a moment. As we mentioned during our earnings call in May, we started the second quarter with the impact of a tornado that struck one of our largest production facilities. Some additional headwinds began in late May as the cumulative effects of product supply issues led to missed deliveries and created disruption resulting from our integration initiatives. We will dive into those details in a moment. Momentum in our premium water category continued its strong start, with first half 2025 net sales growth of 46%, all coming from volume gains related to brand strength and increased points of distribution. Additionally, our exchange business grew 14%, and our refill business grew approximately 8%. Volume gains were made across our grocery, mass merchant and the other channel, which is largely comprised of Home Improvement and Natural Food retailers. At the comparable adjusted EBITDA line, we were able to capture a 6.2% increase during the first half of 2025, well ahead of our comparable net sales growth, while expanding comparable adjusted EBITDA margin by 120 basis points. For the second quarter, comparable net sales declined 2.5% when compared to the prior year. The largest components of this decline include approximately $26 million in lower sales from disruption related to the Hawkins tornado, which primarily impacted our Ozarka brand and, to a lesser degree, our Pure Life brand. Without this impact, the overall retail business would have posted year-over-year growth. Approximately $10 million in lower sales in our dispenser business related to tariff volatility, which created retailer indecision on sell-in orders and approximately $6 million in our office coffee service or OCS business as we began to unwind and sell off various routes related to this dilutive, non-core piece of our business. The cumulative impact of these activities was approximately $42 million, which would have put the business flat versus the prior year within the quarter. Separately, we experienced some weakness in our retail business unrelated to the tornado impact as the category navigated poor weather in core geographies, leading to several weeks of softer-than-expected demand in the bottled water category, including our products. We see signs of improvement based on our total points of distribution gain versus the prior year and strong retailer scanner data to kick off the third quarter. Shifting to the direct delivery business. As Robbert mentioned, we experienced some disruptions as the first wave of integration impacts caused product supply and delivery service in late May, and we were unable to fulfill strong demand from our customers. These friction points in our integration were not anticipated, but we believe that as our product supply stabilizes, this business will resume accretive performance to our long-term algorithm. We believe this portion of business will stabilize in late Q3, and we'll discuss more about how this impacts our revised financial guidance in a moment. Integrations can be challenging, particularly when merging 2 established leaders, but we have moved quickly to address the product supply issues and expect to return to growth as we exit the year. The comparable net sales decrease for the quarter was driven by a 2.3% decrease from volume and a 0.2% decrease from price or mix. As a reminder, volume for Primo Brands is defined as case goods equivalents, which are measured as 12 liters. The challenges in volume were directly related to the items previously discussed including our temporary inability to fulfill strong customer demand in our direct delivery business. We believe our shortfall was largely driven by correctable product supply issues. A bright spot is that we continue to see growth in our premium branded portfolio, with a net sales increase of 44.2% in Q2. We are expanding capacity to meet the future growth trajectory of these brands. Comparable adjusted EBITDA increased 1.3% to $366.7 million, with comparable adjusted EBITDA margins of 21.2%, an increase of 80 basis points versus the prior year. Within these results, our synergy capture continued, although we realized inefficiencies as we look to stabilize our product supply to meet the demand of our direct delivery customers. The pursuit of our factory closures across production branches in addition to routing as part of the integration resulted in short-term disruption to the supply and service of our products to our direct delivery customers. We do not see signs of customer weakness that could be related to the overall macroeconomic factors and thus, believe that we can resume our long-term growth algorithm once we stabilize our service. Part of our revised guidance factors in the activities required to stabilize the direct delivery business, including temporary product discounts and win-back campaigns for those customers who might have quit as a result of these integration-related disruptions. We continued reducing long-term costs in the quarter by delivering another wave of integration activities. We actioned another $20 million of synergies within the quarter. We believe this puts us on pace to achieve approximately $200 million of in-year synergy capture, with the remaining $100 million coming in 2026. While we are pleased with the process of executing our integration plan, it has led to some disruptions in our business that is preventing us from fully realizing the benefits of the integration within the P&L. This has also resulted in adjusting our financial guidance for the year, which we'll discuss in a few minutes. Progress included a significant number of facility closures across infield production and branch operations during the quarter. These reductions help drive the incremental $20 million in synergy capture during the quarter, with approximately $60 million of synergies realized year-to-date and $140 million in estimated annualized cost savings based on the actions to date. Offsetting some of the gains were actions taken to stabilize the business across product supply, product distribution and extra costs related to delivery and service to support customer activities, including retention. Now let's shift to our balance sheet and cash flows. At the end of the first quarter, debt capital, gross of deferred financing costs and discounts totaled approximately $5.2 billion. The credit agreement amended in February as part of a series of debt transactions includes a $750 million revolving credit facility. This facility remained undrawn at the end of the second quarter, providing us with approximately $612 million of available liquidity after accounting for standby letters of credit totaling approximately $138 million. Our liquidity remains strong with approximately $412 million of unrestricted cash on the balance sheet. When combined with the $612 million of availability under our revolving credit facility, this brings our total liquidity to approximately $1 billion. At the end of the second quarter, our net leverage ratio was 3.44x. Accordingly, today, our board announced a $250 million share repurchase authorization. The Board recognizes the fundamental long-term value opportunity of purchasing our shares at current valuations. Moving to cash generated from the business. In the second quarter, Primo Brands generated $155 million of cash flow from operations. When accounting for significant items, including, but not limited to our integration and merger activities, our cash flow from operations would have totaled $218 million. Additionally, we invested $48 million in capital expenditures, excluding integration-related CapEx, which resulted in adjusted cash flow of $170 million. When compared to the prior year, on a combined basis, this resulted in adjusted free cash flow growth of $23 million. A key metric we track closely is our conversion of adjusted free cash flow to adjusted EBITDA. On a trailing 12-month basis, our adjusted free cash flow totaled $718 million, yielding a conversion ratio of 51.6%. Looking ahead, we remain focused on disciplined capital allocation while maintaining a strong balance sheet to support our ongoing integration and growth initiatives. We plan to continue to prioritize reducing our debt and maintaining our investment-grade credit profile and plan to take advantage of opportunities to repurchase shares with our newly authorized share repurchase program. Last week, our Board of Directors authorized another quarterly dividend of $0.10 per share of Class A common stock, which represents an 11% increase over last year's quarterly dividend rate at Primo Water. Let me now provide our updated outlook for the remainder of 2025, which reflects our anticipated recovery initiatives to address our operational disruptions. Given the temporary headwinds that we faced in the second quarter that slowed our growth trajectory versus our original guidance, we are revising our full year comparable net sales growth expectations to between flat and 1%. This adjustment accounts for disruptions in our business in the second quarter of 2025 as well as recovery actions in the back half of 2025. In total, our revised guidance, net sales midpoint equates to a 350-basis-point reduction from the midpoint of our original guidance. Approximately $69 million, the net sales guidance reduction or approximately 100 basis points is related to the headwinds from the 3 short-term items we have discussed today: one, the impact of the Hawkins tornado realized in the first half results, approximately $26 million; two, dispenser tariffs impacting sell-in orders for the year, approximately $16 million; three, our office coffee services or OCS wind-down, approximately $27 million. The sum of these items remain largely onetime in nature. Specifically on the OCS business, we previously mentioned that we would assess our brands and services as we started to integrate the businesses. Like with our Eastern Canadian operations that we exited and sold the related property earlier this year, the OCS business does not fit our long-term strategy. The OCS business includes the sale and rental of coffee brewing equipment and various related coffee accessories and coffee products. We have experienced weakness in this business for the past few years and began selling off many of these routes during the first half of 2025. While we understood this was a possibility when we laid out our fiscal 2025 guidance, we have been able to sell routes faster than expected. Going forward, the OCS business is a noncore offering we will remove from the business to reduce our complexity. This business previously contributed approximately $54 million annually with limited growth. By year-end 2025, we expect the business to contribute approximately $27 million in net sales and thus the $27 million decline in our guidance, as mentioned previously. Our goal is to exit or wind down this business without future financial activity as we head into 2026. Due to discontinued operations accounting rules, we are unable to exclude this business from our operating results, and we are providing clarity for purposes of explaining our revised guidance and we expect to address this again when providing our 2026 financial guidance. This business sits under other within our net sales by water type and under direct delivery within our net sales by trade type disclosure tables listed in our earnings supplement. Of the remaining 250 basis points in net sales guidance reduction, approximately 140 basis points is related to the previously mentioned disruptions in our direct delivery business, and the remaining 110 basis points is related to softness in the retail category due to the weather impacting key geographies, which was largely experienced in the first half of the year. While we remain a single segment reporting company as we go to market across our various water brands within channels of trade, in the second half of 2025, we believe our retail offerings or small format will experience strength, with net sales growth of approximately 2% at the midpoint and even stronger if we were to perform at the higher end of our revised guidance. Our direct delivery offering or large format is still on a pathway to recovery within the third quarter, and we believe we'll exit the fourth quarter resuming growth. We remain optimistic about the customer demand generated and believe we will fulfill a larger portion of these orders as our product supply and delivery actions stabilize with improved service. We are also lowering our adjusted EBITDA guidance to approximately $1.5 billion, with an implied adjusted EBITDA margin of 22.2% at the midpoint, approximately 80 basis points below our original guidance. The decrease in anticipated adjusted EBITDA and margin is largely related to our net sales guidance reset and partially tied to disruptions in the business from the Hawkins tornado, investments in our dispenser business to support retail orders due to the impact of tariffs and other anticipated recovery actions across the balance of 2025 and stabilizing our direct delivery product supply and service. We remain committed to achieving our in-year 2025 and overall synergy capture opportunity totals by the end of 2026. With our synergy capture opportunity intact, this leaves the base business a bit behind schedule versus our original expectations, largely as we work to improve and stabilize our product supply and deliveries. We believe once things have improved, we will be able to fully retain the benefits of the synergies, and our business margins will be more in line with our original margin assumptions. Moving on to capital expenditures. We are maintaining a forecasted run rate growth and maintenance CapEx budget of approximately 4% of comparable net sales plus integration-related CapEx across 2025 and 2026. Separately, we are working through the anticipated restoration costs at our Hawkins, Texas facility, though insurance proceeds are expected to largely offset these expenses. Our base CapEx spend included $115 million of spending in the first half of 2025, representing approximately 3.4% of our first half comparable net sales. Additionally, our integration CapEx was a minimum $26 million in the first half of 2025. We expect our integration-related CapEx to ramp sequentially. As a result of the guidance adjustments previously mentioned, we are revising our adjusted free cash flow projections to a range of $740 million to $760 million. This incorporates the impact of operational disruptions and integration-related achievements and retains approximately a 50% conversion rate of expected adjusted EBITDA. While this represents a dollar reduction from our initial guidance, we expect cash flow generation could improve based on the timing of our CapEx spending, integration recovery initiatives, including working capital actions to drive improvements. As a reminder, this forecast assumes adding back acquisition and integration costs, in-year integration-only CapEx and reimbursed repairs to the Hawkins facility impacted by the tornado as well as the benefit of after-tax in-year synergy capture. While we fully acknowledge the near-term disruptions we remain confident in our ability to execute our recovery plans that are well underway. The revised guidance delivers improved performance as we progress through the remainder of 2025, with our operations reaching optimized levels during the fourth quarter and resume our long-term guidance in 2026 and beyond. With that, I will now turn the call back to Robbert for any closing comments.

Let me conclude by addressing our path forward. Looking ahead, while we have adjusted our current year's growth expectations, we are confident in our post-2025 long-term growth algorithm of 3% to 5% organic net sales. I also want to express my appreciation to our team of Primo Brands associates for their hard work and dedication. With that, I will turn the call back to Jon to take us through Q&A.

Thanks, Robbert. To ensure we can address as many of your questions as possible, please limit your inquiries to one question and one follow-up. Operator, please open the line for questions.

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

Maybe we can start with your confidence regarding the integration pathway going forward. How much has actually been accomplished, and how much more do you need to do in the second half of the year regarding route and warehouse consolidation? Also, what does getting back to normal by the end of September really mean? Any clarification on that would be helpful.

Thank you, Nik. I’ll begin with a broad overview before getting more detailed. We initially had around 310 facilities and are reducing that to approximately 250. So far, we've closed 48 facilities and have plans to close about 11 more. The integration process has three remaining phases: one in September, another in February next year, and the last in March. Most of these phases involve technology conversions. To date, we've streamlined our routes and achieved a 15% reduction in our footprint, while optimizing our workforce by reducing 1,600 full-time employees, which accounts for about 11%. Additionally, we've discontinued five brands, such as Deep Rock, Crystal Rock, and Mount Olympus, and have replaced them with our regional spring water brands. We had thorough integration plans, but we prioritized speed. This led to temporary supply shortages, which we have addressed by adding modular racks, thousands of bottles, and working with engineering to ensure our production lines are compatible with the existing equipment. We also converted handheld devices for most of our staff, which caused some disruptions in the large-format network, further exacerbated by high demand, resulting in shortages and missed deliveries. However, we have largely resolved those delays and have gained valuable insights. We entered the third quarter as a more cohesive and resilient company, better prepared to restore growth, enhance margins, and generate free cash flow in the second half of the year. Currently, while our retail service is typically in the high 90s, our last-mile delivery service rate had temporarily dropped, but we are back to 92%. I monitor this daily, and we are working towards reaching over 95%, which is where we were prior to the merger. We expect to overcome most of these challenges by September, although some supply constraints may take about 8 to 10 weeks to normalize. We have learned from the second quarter and are committed to minimizing disruptions for the end consumer during the next three waves of integration, which mainly involve technology conversions and approximately 10 additional branch closures before March 2026. I hope that answers your question.

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

I guess a couple of clarifications. David, it was helpful to get the kind of breakout of revenues in the quarter, and you outlined, I think it was something like $40 million of discrete items. Within that, I think you had about $16 million that was related to the office and coffee and then the dispenser business, which would seemingly flow through the direct delivery channel, as you outlined it. That business, again, based on our math was down about $20 million. So it would seem to account for the large majority of it. And I guess what I'm getting at is it implies that, I don't know, there was less than a $5 million hit on direct delivery specifically related to integration hiccups in the quarter. So I just wanted to touch that math that you make sure I understood it correctly. If that is the case, it would seem that it's maybe not as big of a hit as we're all seeing in the stock today.

Yes. So you're right in that office coffee and dispensers flows through direct delivery as would things like exchange. In the Q2 itself, dispensers was about $10 million of that, with office coffee about $6 million. I think a lot of the numbers I was providing in the walk were to help clarify what we're expecting up against the 4% original guide. That left direct delivery at about $13 million in residual decline. Excluding those already contributed parts that I broke out separately. So you're correct in that. It wasn't a great quarter in terms of being responsive to customers, but there are opportunities for tremendous strength as our delivery service rate and success rate has kind of resumed its upward trajectory. Where we remain cautious is ensuring that product supply gets to the point of steady contribution and that our route service technicians or basically our individuals in the field can be more successful with their daily completion. We are actually seeing units per route per day increase. We're seeing some efficiencies there. But it's not quite where we would want it to be at this time. So again, we do have some attribution to pieces of the business that remains sort of noncore. And we remain very positive in the way we're approaching the recovery plans. It just ends up being a little bit of a time and math exercise when you're talking to you here today in August, of how much time we have to rectify the issue with how we wanted to handle the guide.

Thank you for the information regarding the $13 million residual. To follow up, could you provide some insights on the third quarter as we consider our modeling? David, you mentioned some growth rate expectations for the second half based on different components or mix channels. It would be beneficial to have specific details about Q3, particularly in terms of revenue and EBITDA margin.

Yes, absolutely. So again, we'll kind of speak to the high level, looking at the full year. Again, we fully anticipate the last-mile or direct delivery business to begin its recovery as it has continued that into September. That still may put the business at a slight decline on a year-over-year basis, but sequentially ideally improving. And that means that really, when you look at our small format pieces in retail, notably in our premium brands, that business is coming out of the gate strong in Q3, with July scan data already mentioned. So again, it will be a balance there where on a sort of combined basis, we feel we'll start the right trajectory. Where we really feel confident is when we get to Q4, having largely the direct delivery disruptions behind us, being able to start to exit 2025 with a nice exit velocity that provides more linear confidence in how we start 2026. So again, I won't get into the specifics on the quarter as we're really trying to be patient, attentive to our customer disruptions and really try to resolve this as we look at a full year perspective.

Your next question comes from Derek Lessard with TD Cowen.

Robbert, I just wanted to maybe follow up on your comments around the service levels. I was just curious where that service level actually fell to in the quarter?

We temporarily fell below 80% in the first weeks of May. Throughout April, as we began converting the branches, rolling out new handhelds, and consolidating branches, we experienced significant disruption for a brief period. We then started adding modular racks and bottles but encountered a compatibility issue with our legacy Primo bottles in the ReadyRefresh network, specifically with decapping and capping the bottles. We also found a compatibility issue with the racks due to optical eyes we installed to identify them. I visited several manufacturing facilities to understand and address these issues. We have resolved them and added thousands of modular racks, each capable of holding about 40 bottles, along with millions of additional bottles. Over the last two months, we have been adding around half a million bottles each week. We realized that, due to the much-reduced network, the distances between factories and branches increased, requiring us to keep more bottles available. Additionally, during the brand conversion, we lost some bottles. We have been steadily increasing our levels back above 80%, and for the past three weeks, we have been above 90%. Currently, we are at 92% and even higher this week. We are working towards a consistent daily service rate of 95%, which refers to the percentage of orders placed that we can fulfill on the same day. We also temporarily faced a situation called multi-drag, where deliveries were delayed for more than one day, but we have addressed that effectively and are back to regular delivery schedules in most markets. However, it will take about 8 to 10 weeks to fully recover.

That's very helpful and insightful. David, could you update us on the year-to-date synergy capture towards the $200 million goal? Also, what are the main areas of synergy capture expected for the second half?

We are on track to meet our in-year and 2026 targets. So far, we've captured around $20 million in Q1 and another $20 million in Q2, bringing our total year-to-date realization to approximately $60 million. Projecting these decisions forward, we are looking at about $140 million in annualized targeted actions. As Robbert pointed out, we still have several phases ahead, with a significant one approaching. The remaining activities will primarily involve technology transitions. We are well-positioned to take action on most of what we need, and we will then allow the effects of the change management activities to unfold in the field. Additionally, we plan to begin some internal, non-field-related activities in the first quarter of 2026, which will support our overall goals for synergy capture across 2025 and 2026.

Sorry, David, you said $20 million and $20 million, Q1 and Q2 and $140 million remaining?

No, $20 million and $20 million in Q1 and Q2 when you annualize those out, that gets you about $140 million of actions on a comparable basis to what $200 million would be.

Your next question comes from Andrea Teixeira with JPMorgan.

Can you talk about the client retention in the HOD business and how you progressed through the quarter? I understand the service levels have improved, which is positive. However, as you're working towards the synergy targets that David mentioned, there may have been some challenges along the way. As you consider what you're anticipating for inflection in Q4, what assumptions are you making by division, retail, and HOD? I appreciate the 250 basis points impact you noted in HOD, which could be the reason for the inflection expected in the fourth quarter. Is that your assumption? Additionally, regarding the share of purified pack water at retail, after testing some discounts in key retailers, what has been the response and share dynamics?

Yes, Andrea, thank you for the question. It’s a very good one. To start, our refill, super premium exchange, and retail business all experienced growth in Q2. The challenges we faced were mainly in the last mile, which significantly affected our performance. Additionally, we suffered a loss of about $26 million on the retail side due to a tornado. However, the overall health of the business remains strong. The key issue was that we encountered internal supply disruptions that prevented us from meeting the high demand. We are currently working to improve service levels in the last mile, which are now above 90%, and we are on track to reach 95%. For July, we expect softer performance, with a more stable August, and by September, we anticipate returning to more normal sales velocities and fill rates in the last mile, with the fourth quarter ideally showcasing the full potential of our business. Regarding retail, we are confident in that segment as well. The first quarter was significantly stronger than the second, which faced challenges due to cold and wet weather in the Northeast. Year-to-date, the retail volume in our category has grown by 160 basis points compared to last year, demonstrating strong consumer demand. Panel data indicates that bottled water continues to attract new customers, and trip frequency has increased. Data from Circana shows that new buyers are up approximately 50 basis points year-to-date, and trips are up 170 basis points compared to a year ago. In the first half, our dollar sales growth in the category rose by 1.4%, and for Primo Brands, we saw a 2% increase. This has allowed us to grow our share by 11 basis points in the first half, making us the only large branded manufacturer to increase both dollar sales and market share in bottled water during that period. In the third quarter, we expect improvements, with the category showing a 1% increase, which is better than Q2. Our dollar sales in retail for Q3 have risen by 3.7% compared to last year, leading to a share growth of 48 basis points so far this quarter. Volume trends are similarly positive. The bottled water retail volume for July is up by 40 basis points, and our volume sales are up by 130 basis points, contributing to a volume share growth of 19 basis points this quarter. Case packs are also a key indicator, with Circana data showing that case-pack sales have risen by 170 basis points, and the number of buyers for our purified case packs is up by 130 basis points. Overall, these are encouraging indicators, and we remain focused on them. The demand in the category is strong, and while we are capable of meeting this demand in the last mile, we have fully recovered from the tornado's impact on retail.

Perhaps we don't see everything, even though we have both Circana and Nielsen here. But if you extrapolate, you're saying that even without Mountain Valley and Saratoga, which you are growing significantly at about 44% or 45% for the quarter, you exited the quarter with increased purified market shares? I just want to confirm I have the data for all channels.

I will follow up with you about the specific market share for purified. However, we have observed an increase of 170 basis points in the case pack business at the category level. Our household penetration has also increased, with a growth of 130 basis points in users. Our year-to-date volume growth in case pack stands at about 360 basis points. This does not pertain to the super premium segment, but rather to the purified and regional spring water segment. So, we are feeling optimistic about the situation.

Your next question comes from John Baumgartner with Mizuho Securities.

Maybe first off, David, to clarify the integration issues. I think you mentioned customers who may have quit, I think, was the term. And I'm curious if you can elaborate on that. Is it possible to quantify cancellation rates at this point? Are they elevated versus history? Could there be a lag in cancellations? Just your observations there. And then I have a follow-up.

Sure. As you remember, we entered this merger with a robust customer base, including both known customers with direct relationships and two segments of our business where we had less visibility, specifically exchange and refill. Looking at refill, which involves automated vending machines and service technicians, that sector has remained unchanged during this integration and is performing exceptionally well with high single-digit growth, indicating an increase in our customer base. Exchange is another area where we have less visibility on customer identity but know that they are engaged in shopping. Provided their consumption patterns remain stable, we can assume that the volume growth is largely due to an increase in the number of dispensers and households in the market, suggesting we’ve also seen household growth in exchange. Regarding direct delivery, combining our historical customer bases and ReadyRefresh, we have noted an increase in customer departures primarily during June and July. This is typically a lagging indicator of service quality. The service decline in April and May contributed to the departures we experienced in June, and ongoing service issues in June affected July's departures. However, we are very optimistic about the benefits of merging, specifically in terms of our digital acquisition strategy. By consolidating websites and reducing competing offers from legacy companies, our digital ads have significantly exceeded expectations. During the months with higher customer departures, we haven’t managed to outpace those losses yet, but we remain confident that as service improves, the rate of customer departures will stabilize. Our digital ads, along with our in-field programs and the club initiatives, will enable us to regain our net organic additions, which we value highly and see as a significant advantage of merging the two direct delivery businesses. We view this elevated departure rate as a temporary issue, evident in feedback from platforms like Google and Trustpilot, but we have noticed these negative sentiments stabilizing. I believe this improvement directly relates to the great work our operating teams are doing to enhance service quality and delivery success rates for our customers.

Okay. And then on the expense side, the comments about reinvesting to correct these issues. Are these largely pricing concessions to modify some of these consumers? Or is there also a business reinvestment component? You mentioned the racks and the bottles. I'm curious about the split in reinvestment there. And then what it sort of implies about your synergy targets as you're getting into it. Are you learning that maybe your current targets risk cutting too close to the bone for this model?

Yes, that's a good question. We believe we have a solid plan because having redundant locations in the same area long-term is not viable. Two production facilities in the same geography operating below efficiency is not sustainable. We feel our plan is appropriate, but the speed of our execution has led to some product supply challenges. Regarding your question on investment, there have been issues like delivery errors or billing item problems during the transition. In such cases, we prefer to offer customer credits instead of pricing concessions. However, we may consider concessions when engaging with customers who might be leaving, offering them discounted or subsidized products for a limited time. It’s important to note that we are not generally providing price discounts at this moment. Additionally, in our synergy efforts, which have mainly focused on operations, we have not been adjusting prices. Our priority has been to complete operational activities before addressing any pricing harmonizations with our customers. We remain confident that once our service stabilizes, we will have opportunities for such adjustments as we move into 2026.

Your next question comes from Eric Serotta with Morgan Stanley.

Great. It's Eric Serotta from Morgan Stanley. I wanted to discuss the integration plans for the second half. You mentioned that the upcoming milestones are mainly related to technology transitions. However, beyond consumer packaged goods, these transitions have historically led to operational challenges for several companies. Could you provide more insight into what these technology transitions entail and why you believe they will not cause any operational issues regarding product supply, billing, or order processing?

Yes. I'll give some perspective. And then if David would like to add, I would welcome that as well. From an enterprise software standpoint, both companies were running on different platforms or either companies, so one on SAP, the other one on Oracle. We're migrating the company to SAP. That means that all of the invoice, order bill and shipping make move cell as well as the handheld technology is the one that's linked to SAP. So we decided to back Primo Water essentially into the ReadyRefresh infrastructure. As we did that, we converted handhelds. We taught our teams in the last quarter how to use the software, how to work with the georouting system, and we've also integrated some upgrades to those systems that Primo Water had already implemented. So there's a change management component. There is a hardware component, and there's a software component to this changeover. I feel very confident that we've identified the challenges and already address them. Now there's still a number of upgrades we're going to be making to the handheld technology, and we may migrate eventually to the iPhone over the next 2 years or so from the current handheld technology that we leveraged because of the fit for use. So we're making some hardware changes, some software changes, largely identified the challenges and have already addressed those in the go-to-market system, which is why we are back at 92% DSR, daily service rate, on our way back to 95%, and we've largely gone through change management. David, do you have any additional thoughts?

Yes. I think the only quick thing I'd add is that's allowed us to get a laundry list of whatever change management or friction would have been created from prior branches. And we've increased our training significantly for an upcoming wave of integration. And that training will allow those real-time experiences from the field to be used in the dynamic training that heads to those next series of branches. Before, it's just theoretical. Hey, you're going to have a new device. Here's how you're going to work it. Now we actually have real-time examples and behind the scenes from a tech platform. The team has been incredibly nimble to be able to address any of those concerns. A lot of times, you have to actually start delivering product and understanding what those issues are because just taking a customer table to another company's customer table doesn't expose everything until you start actually delivering. So again, we feel confident. It's not to say there might not be a disruption, but I don't think it would be anywhere close, obviously, what we've experienced here.

And Eric, I want to add one more point on that. Both companies have their apps and websites. We are making significant efforts to upgrade and integrate them from readyrefresh.com and water.com, as well as the Primo legacy, My Water+ app, and the ReadyRefresh app. We've already completed a number of app transitions for consumers. Most of those are behind us now, and we aim to fully integrate everything to ensure a seamless experience. This process will take a couple more months to complete.

Okay. That's helpful. And then just as a follow-up, I know you reiterated the synergy target. I mean you reiterated the post '25 long-term growth algorithm at the 3% to 5%. But with the lower revenue growth and lower revenue for 2025, how are you feeling in terms of the $1 billion adjusted free cash flow number that you had out there from the Investor Day? Any change there just given the lower top line base?

No, I really don't think so. Honestly, I believe the free cash flow opportunity still exists this year, but we are being cautious as we've had to adjust our EBITDA. Our CapEx is still a bit behind plan in terms of our spending, mainly due to vendor and lead timing activities. However, we feel confident that with the trends in interest rates, long-term capital deployment in specific CapEx initiatives, and efficiencies in working capital, which have yet to be fully realized because of current integration challenges, we have a manageable situation. This is even before we consider what we might do with our term loan product or our euro note, where there may be opportunities to adjust the interest rates we pay and our overall debt structure. Therefore, we remain optimistic about our prospects for this year, and we believe we can still aim for that $1 billion target.

Your next question comes from Daniel Moore with CJS Securities.

Covered a lot. But just in terms of the revised sales growth guidance, 0% to 1% for the full year. Just break that down volume and price and really getting at the cadence of volume growth you expect over the next 2 quarters and your confidence in getting back to a run rate of at least kind of low single-digit positive volume growth as we exit the year and enter '26?

Thank you, Dan. In Q2, we saw no growth in volume, mainly due to two issues. First, we lost about $26 million in retail volume from the tornado, even before we considered demand challenges in some areas. Additionally, the disruptions in direct delivery affected our overall volume. Looking ahead, we anticipate that Q3 may show some improvement in volume, particularly in direct delivery as we work on fulfilling higher demand for our customers. While a nominal increase of 50 basis points for the full year isn't substantially significant, we believe we could finish Q4 heading into 2026 with a more balanced approach, similar to the 50-50 split we started the year with at our 4% midpoint. We aren't fully quantifying these expectations yet but will provide more clarity in the spring when we outline guidance for 2026, including pricing harmonization actions that may affect pricing in certain quarters. Still, we expect to see a strong contribution from volume in our internal planning. Yes. I'd say the easiest thing to answer there, we discussed from Eric's prior question on change management in the infield training. The easiest area for us is having more time from today to when we do whatever the next wave is to build up days of inventory on hand. So when I talked about a little bit of working capital inefficiency, really what we figured out is as we are cutting over production supply houses, we need to have days on hand as the absorbing facility might not be able to run at the right capacity or utilization immediately. And so if you have and give yourself a date in the future where you know you're going to cutover, we have the opportunity today and up until the point of cutover to build up product supply. And that's really where we started running into issues. As Robbert mentioned, we had different distances. We had different production to branch kind of marriages or connections. And so at this point, as we look ahead, we can build up that inventory in excess heading into the transition, allow that receiving production facility to sort of grow into its production strength and that should largely help us avoid the product supply disruption.

Your next question comes from Lauren Lieberman with Barclays.

I have a wrap-up question. You've provided a lot of detail regarding the challenges faced in the last quarter. I'm curious about your confidence in achieving the $1.5 billion EBITDA target for this year. Earlier, you mentioned some integration issues that you expected to resolve by July, but now it seems those are extended through September. Can you share your level of confidence in managing these issues, and whether we can safely say that the challenges are now integrated into your projections? This would allow us to shift our focus toward 2026 as a starting point.

Yes. I mean I think, again, from our side, that is our confidence in resetting. We understand the dynamics of what's hit to date. That's why we've been more prudent in how we approach the next waves, going through excess training and making sure we have days on hand and inventory available. And again, we hope to use that as a reset point to sort of enter the last months of Q4 and then really be prepared to start 2026 with strength and allow more of the synergy capture to show in the physical results.

Your next question comes from Steve Powers, Deutsche Bank.

You may have, David, already sort of implicitly answered this in the answer to Eric's question on free cash flow. But just as I rounded out on the '27 targets, just your confidence in the 25% EBITDA margin objective as well. It sounds like that still stands, but just wanted to hear it explicitly.

Yes, that would stand on a multiyear look as we approach the year-end 2027. Again, sort of the basis point departure here is just largely a function of revenue decline. And then some of the cost support that we've had to put into the market to sort of stabilize the business. But again, recall that we've really not taken any price harmonization between the businesses. We've really been absent of price in retail outside of just natural premium mix that's flowing through the small format pieces of the business. So to only have 80 basis point compression in EBITDA margin to date with the implied new guide without really having any of the pricing levers pulled, I feel pretty confident that that's an objective that remains on track.

Yes. Okay. And if I just sort of draw a line between that answer, which I fully understand and kind of the comments so far, it really seems like you have confidence collectively as a team that the direct delivery disruptions that we've seen so far that we'll see through September are really going to be contained to the 3Q, 4Q periods thus we exited kind of net customer adds. The value per customer, recruitment and retention costs will all kind of revert back to the trend that we were seeing kind of exiting last year without any real additional kind of run rate cost. And I want to play that back and see if that was correct? And then maybe just get you to articulate a little bit more as to why you have confidence that we can kind of snap back on trend as we get to October and beyond?

When looking at Q1 on a leap-adjusted basis, it stands at 4.2%, with several parts of the company contributing positively to that figure. Notably, the premium product flows through direct delivery, and the exchange business does not face constraints in consumers' minds. The refill business is performing at more than double our original guidance midpoint of 4%. There are many areas within the business that continue to add value. Additionally, customer additions are keeping pace with or exceeding the quit levels in the direct delivery segment. Since harmonizing our digital properties, we’ve seen an acceleration in our ability to acquire customers digitally. This reinforces our confidence in ongoing demand and customer acquisition, with the main focus being on fulfilling product requests on time. We believe that an improvement is imminent, especially before addressing anything related to pricing or potential future acquisitions, which we will continue to prioritize.

Your next question comes from Andrew Strelzik with BMO.

Obviously, a lot of ground has been covered. So just one quick one for me. You talked about introducing the cross-selling in direct delivery. So I was just curious how far along you are in that effort in terms of availability, what the uptake has been so far and kind of your early read on that opportunity as you roll forward?

Yes, very good. We have introduced a regional spring water case pack, the Nestle legacy brands, the BlueTriton legacy brands on the Primo Water trucks. We've also expanded availability of Mountain Valley on the trucks as well, more trucks, but we have not yet launched the 5-gallon Saratoga water. We have not made Saratoga fully available yet to the legacy Primo truck. So there's still transitions happening and still additions happening to branches. Part of that is also reducing SKU complexity at the branch level to really focus on fill rates on the core 5-gallon business and enabling the conversion of the legacy Primo Spring brand, such as Crystal Rock, Deep Rock, Crystal Springs, Mount Olympus to the much stronger portfolio of brands, Deer Park, Poland Spring, Ozarka, Zephyrhills. So we're sort of halfway in that journey, but we're seeing very encouraging results.

Your next question comes from Jon Andersen with William Blair.

Two quick ones. I think you mentioned in the prepared comments that you've rationalized 5 brands to date. I'm wondering how much more rationalization work do you have to do across the portfolio or plan to do? And how are you thinking about that in terms of a top line drag? And then on the super premium business, it sounds like a good chunk of that growth has been driven by expansion of Mountain Valley, Saratoga in PET at retail, I think, specifically Walmart. What are you seeing in terms of really sell-through at Walmart? And then where is the white space you see it in that super premium business from here?

Yes, thank you, Jon. Regarding the brand rationalization, we have completed most of the major adjustments. We are also refocusing certain areas on our key spring brands. For example, the Sparkletts brand will continue in California and the West Coast, while Texas will primarily shift to Ozarka. Although we are rationalizing the Sparkletts brand in Texas, it will still exist in our portfolio. Our primary focus is on smaller regional brands that add complexity, which enables us to simplify and streamline operations. This allows for fewer line changeovers at the legacy Nestle water factories we currently operate, enabling us to increase production from one shift a day to three shifts a day, seven days a week, with fewer but larger stock-keeping units and bigger brands like Ozarka and Poland Spring. As for the premium segment, we are excited about our growth, which was 44.2% this quarter, entirely driven by volume. Mountain Valley saw a 23% growth, surpassing $50 million in net sales for Q2, while Saratoga grew by 91.5%, with $36 million in Q2 net sales. We have launched PET bottles in Walmart, and the brands are now available through various channels. Mountain Valley and Saratoga are also offered for direct delivery to customers. Although we have yet to launch Saratoga in a 5-gallon format, we are actively working on it. The brands are receiving strong marketing support from events like the Golden Globes and Country Music Awards, and we are concentrating on foodservice, with increased demand from restaurants and hotels, especially due to upcoming tariffs on imported brands. We are adding a new production line to support Saratoga, and we have begun construction on a new Mountain Valley production facility in Arkansas, which will be operational by mid-2026. This will alleviate our supply constraints for Mountain Valley, enabling us to better meet demand and maintain the brand's strong growth trajectory.

There are no further questions at this time. So I'd like to turn the call back over to Robbert Rietbroek for closing remarks.

Yes. Well, thanks, everyone. I'm excited about the potential of our company. Primo Brands' underlying business foundation is solid, and we are a leader in an attractive category with numerous growth opportunities. We believe we have multiple levers of value creation in front of us, including organic net sales growth, accretive M&A, free cash flow generation and strategic avenues of capital allocation. Thank you for your participation and for your continued interest in Primo Brands.

Ladies and gentlemen, this concludes today's conference call. Thank you so much for your participation. You may now disconnect.