Primo Water Corporation (NASDAQ:PRMW) Q2 2020 Earnings Conference Call - Final Transcript

Aug 06, 2020 • 10:00 am ET

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Primo Water Corporation (NASDAQ:PRMW) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Analyst
Operator

[Operator Instructions] Your first question comes from the line of Nik Modi.

Analyst
Nik Modi

Couple of questions. Tom, if you could just, or Jay, if you could just help us understand kind of what your underlying operating assumption is for the guidance that you gave for the third quarter, down, I think, 8% to 12%. Are you assuming reopenings happen at the current pace? Are you assuming rollback of reopenings? Just wanted to get kind of your understanding of how you're thinking about it given the fluidity of the situation? And then maybe even touch on international.

And then the second question, which hopefully would be a quick one is, can you help us understand what your customer acquisition costs look like today, given this current environment versus what they historically have been?

Executive
Tom Harrington

Nik, I'll take part of the first one, and Jay will handle the second part. In terms of our forecasting, we expect the residential at-home to continue at its current run rate. So we enjoyed Water Direct residential growth, we enjoyed exchange growth, we've had dispenser growth. So we've included that similar rates of growth in our Q3 assumptions.

In terms of the single biggest challenge that we faced is the commercial side of Water Direct, we have the decline slowing but as we've said in the past, it is a slow recovery country-by-country across Europe. So we're -- we haven't seen that big breakout. So it continues to get better a little bit every week, every week. So we've really reduced the decline as we think about Q3 in terms of those 2 components of the top-line.

Executive
Jay Wells

Yes. I mean, to give you a couple more numbers on that, Nik. I mean, you look at the quarter, our residential Water Direct business was up about 29%, exchange was up about 25%, and we're continuing to see those trends. And you look -- as we ended the quarter, commercial was down about 30% and thriving in the right direction. So you look at that that's where we get the average of the revenue.

You asked about the overall customer acquisition, right now, overall, our e-commerce, our website is the primary method that we are using to acquire customers, and it's honestly, one of our lower cost methods to acquire customers. So that continues to be a very good source of customer adds of residential customers are focusing much more on e-commerce and no contact delivery, which is our sweet spot, and we continue to upgrade our website. So that continues very well. Our RSRs are still providing great service and getting referrals and we're still getting very good customer adds to that and that's also a very low-cost customer add.

Executive
Tom Harrington

If you go to the part of your question about Europe, so we have reduced the rate of decline, as Jay referenced, but we also have introduced the ability for customers to sign up online. And they're small numbers. I actually just got an e-mail that we reached 1,000, right?