Primo Brands (PRMB) risk factors, FY2024 10-K

Risks Related to Our Business, Operations, and Growth Strategies

1. 01Our future results may suffer if we do not effectively manage our expanded operations following the Transaction
2. 02We have no operating or financial history as a combined company and the unaudited supplemental pro forma information elsewhere in this Annual Report is presented for illustrative purposes only and may not be an indication of our financial condition or results of operations following the Transaction
3. 03We participate in the highly competitive beverage and bottled water category of the non-alcoholic beverage industry. We face significant competition in the markets in which we operate: the bottled water and beverage retail business and direct-to-consumer offerings
4. 04Our success depends, in part, on our intellectual property, which we may be unable to maintain and protect
5. 05Insurance and claims expenses associated with our operations could have a material adverse effect on us
6. 06We may not be able to consummate acquisitions, or acquisitions may be difficult to integrate, and we may not realize the expected revenue and cost synergies related to each such acquisition
7. 07Our business is dependent on our ability to maintain access to our water sources. Water scarcity, government regulation of water access, loss of water rights, and poor quality could negatively affect our long-term financial performance
8. 08adequate water sources, the methods we employ to do so, including acquisitions of additional water sources, may have a negative impact on our public reputation and therefore our competitive position, especially in jurisdictions encountering drought or where water is considered a limited resource
9. 09Our business is seasonal, and adverse weather conditions, including severe weather resulting from climate change, and legal or regulatory responses, could negatively affect our business, financial condition, and results of operations
10. 10We may face opposition to the operation and expansion of our facilities from various individuals and groups
11. 11Changes in future business conditions could cause business investments and/or recorded goodwill, indefinite-life intangible assets or other intangible assets to become impaired, resulting in substantial losses and write- downs that would negatively affect our results of operations

Risks Related to Our Customers, Suppliers, and Associates

1. 12We may not be able to respond successfully to consumer trends related to our products
2. 13The loss or reduction in sales to any significant customer could negatively affect our financial condition and results of operations
3. 14If we face labor shortages or increased labor costs, our results of operations and our growth could be adversely affected
4. 15Our packaging supplies and other costs are subject to price increases, and we may be unable to effectively pass rising costs on to our customers, or effectively hedge against such rising costs
5. 16The changes in the prices we pay for materials occur at times that vary by product and supplier, and take place on a monthly, quarterly, or annual basis
6. 17Changes in the retail landscape, such as continued or increased development and use of private-label brands, may negatively affect our results of operations and financial condition
7. 18one category and our results of operations will suffer if our vendor relationships with significant customers are discontinued. In the event of consolidation involving our current retailers, we may lose key business if the surviving entities do not continue to purchase products or services from us
8. 19We rely on our management team and other key personnel, and we may be unable to hire or retain key personnel or a highly skilled workforce
9. 20If we are unable to maintain relationships with our raw material suppliers, we may incur higher supply costs or be unable to deliver products to our customers at reasonable costs or at all
10. 21The legacy Primo Water and BlueTriton business relationships that we have inherited may be subject to disruption due to uncertainty associated with the Transaction, which could have an adverse effect on the Company’s results of operations, cash flows, and financial position
11. 22We may not be able to renew collective bargaining agreements on satisfactory terms, or we could experience strikes

Risks Related to Our Technology and Cybersecurity

1. 23Our reliance on third-party service providers and key information systems could have an adverse effect on our business
2. 24Disruptions of or compromises to our information technology systems, including as a result of unauthorized computer intrusions, could have a material adverse effect on our business, financial condition, and results of operations, and on our reputation

Risks Related to Our Class A Common Stock

1. 25The market price of our Class A common stock may be volatile, and holders of our Class A common stock may be unable to resell their Class A common stock at or above their purchase price or at all
2. 26If securities analysts publish inaccurate or unfavorable research or reports about our business, or if they downgrade our stock or our sector, our stock price and trading volume could decline
3. 27We may issue additional shares of Class A common stock through future offerings, in satisfaction of certain required payments in connection with future acquisitions and due to future issuances pursuant to the Primo Brands Equity Incentive Plan and employee stock purchase program for shares of Class A common stock
4. 28Future sales, or the perception of future sales, by our stockholders in the public market could cause the market price for our Class A common stock to decline
5. 29Pursuant to the Stockholders Agreement, the Sponsor Stockholders may request that we conduct a registered offering of their shares of Class A common stock
6. 30Sponsor Stockholders own a significant amount of the voting power of the Company, and their interests may conflict with or differ from the interests of other stockholders
7. 31Based on the current ownership of Class A common stock owned by the ORCP Group, we are considered a “controlled company” for the purposes of the NYSE listing requirements. As such, we qualify for exemptions from certain corporate governance requirements
8. 32We may not issue a quarterly dividend in the future and stockholders may never obtain a return on their investment

Legal, Regulatory and Tax Risks

1. 33In covering these initiatives, local and national media have reported on the growth of the bottled water industry and on the pros and cons of consuming bottled water as it relates to solid waste disposal as well as conserving the supply of water available to the public
2. 34Sustainability matters may adversely impact our business and reputation
3. 35We may incur costs to comply with developing laws and regulations, including those surrounding the production and use of plastics, as well as related litigation relating to plastics pollution
4. 36Our products may not meet health and safety standards or could become contaminated, and we could be liable for injury, illness, or death caused by consumption of our products
5. 37Litigation or legal proceedings could expose us to significant liabilities, restrict our access to water sources, and damage our reputation
6. 38We could be exposed to increased litigation, and other liabilities as a result of the Transaction, which could have an adverse effect on our business and operations
7. 39The legal and regulatory environment in the jurisdictions in which we operate, changes thereto and our ability to comply with the same could negatively affect our results of operations, adversely affect demand for our products and services or result in litigation
8. 40Uncertainties in the interpretation and application of existing, new, and proposed tax laws and regulations could materially affect our tax obligations and effective tax rate
9. 41Our ability to use certain tax attributes may be or become subject to limitation
10. 42Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States
11. 43Significant demands have been placed on our financial controls and reporting systems as a result of the Transaction
12. 44If our estimates or judgments relating to our critical accounting policies and estimates prove to be incorrect, our results of operations could be adversely affected

Risks Related to Our Indebtedness

1. 45Our substantial indebtedness could adversely affect our financial condition, limit our ability to raise additional capital to fund our operations, and prevent us from fulfilling our obligations under our indebtedness
2. 46Our indebtedness may expose us to substantial risks
3. 47Disruption in the financial markets could affect our ability to refinance or restructure existing indebtedness obligations on favorable terms, or at all
4. 48Our credit ratings are subject to ongoing evaluation
5. 49Primo Water and/or BlueTriton may have liabilities that are not known at this time
6. 50We do not expect to be able to generate sufficient cash flows from operations to repay all of our indebtedness at maturity and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful
7. 51Despite our level of indebtedness, we and our subsidiaries may still incur substantially more debt. This could further exacerbate the risks to our financial condition described above and impair our ability to operate our business
8. 52We are a holding company with no operations and may not have access to sufficient cash to meet our financial obligations
9. 53make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions
10. 54Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly
11. 55Global or regional catastrophic events could affect our business, financial condition, and results of operations
12. 56Our results of operations may be negatively affected by uncertainty in the financial markets, general macroeconomic conditions and global financial events
13. 57If economic conditions deteriorate, our industry, business, and results of operations could be materially and adversely affected