Primo Water Earnings: International Unit Sale Sharpens Focus on U.S. and Improves Efficiencies 

No-moat Primo Water’s share price popped 10% today after the firm announced a planned sale of the bulk of its struggling international operations for $575 million in cash (scheduled to close by the end of 2023), with plans to dispose the remainder in 2024. We view this as a prudent move allowing management to sharpen its focus on the healthy North America business, reduce leverage (to its stated long-term target of 2.5 times net debt to EBITDA), diversify into water adjacencies via acquisitions, and return cash to shareholders through buybacks. Revenue will likely fall in the near term as a result, but we expect the impact will be mitigated on the bottom line by cost savings from a smaller operational footprint.