Primo water

Primo Water Corp. purchased Glacier Water Services Inc., of Vista, Calif., in 2016.

Walt Unks/Journal

Primo Water Corp. reached a record $4.9 million in net income during the third quarter as the company benefited from hurricane-related surges in demand for multi-gallon bottles of water and water refills.

The Winston-Salem company reported Tuesday that its sales more than doubled to a record $82.2 million, primarily gaining revenue from Glacier Water Services. Inc., which it bought for $273 million in December.

The deal expanded Primo’s reach in the self-service refill marketplace, gaining 46,000 retail sites in the United States and Canada. Primo has 142 employees, 90 of whom are based locally.

The company also announced that Mark Castaneda, its chief financial officer since 2008, will retire in January. He is being succeeded by David Mills, the vice president of finance and treasurer since 2011. Michael Cauthen will be promoted to Mills’ duties.

The change in Primo’s No. 2 executive post comes after Billy Prim shifted May 31 from being chief executive and chairman to serving as executive chairman. Matt Sheehan replaced Prim as chief executive.

Diluted earnings in the quarter were 14 cents a share. Primo took charges worth 5 cents a share, primarily related to stock-based compensation expenses for executives and Glacier acquisition and integration costs.

The average earnings forecast was 10 cents according to analysts surveyed by Zacks Equity Research.

When applying earnings before interest, taxes, depreciation and amortization — known as EBITDA — the company had adjusted EBITDA of $18 million in the third quarter compared with $6.7 million a year ago.

Many analysts put their financial focus on EBITDA when evaluating the performance of a company that has yet to make a profit or is newly profitable.

“These results reflect our entire organization’s strong execution, particularly in the regions impacted by the hurricanes where we benefited from being a trusted water and dispenser solution for consumers,” Sheehan said in a statement.

“Our financial results demonstrate the strength of our recurring revenue and leverage model and our team’s ability to deliver on our core strategies.”

Water refill sales jumped from $7.3 million to $51.3 million, while exchange sales were up 8.5 percent to $20.4 million and dispenser sales increased 12.4 percent to $10.5 million.

However, cost of sales climbed from $24.4 million to $57.3 million, while overall costs and expenses rose from $32.5 million to $71.6 million.

Barrington Research analyst Michael Petusky said Primo’s record revenue performance appears sustainable even after the effects of hurricane recovery efforts diminish.

“We are maintaining our outperform investment rating and are increasing our price target (by $2) to $19,” Petusky said.

Primo again raised its fiscal 2017 guidance.

Primo has adjusted its net sales range this year from $282 million to $284.5 million on the low end and from $287 million to $288.5 million on the high end.

It said adjusted EBITDA would increase from an initial range of $53 million to $55 million to a range of $54.5 million to $55.8 million.

Get the daily newsletter in your inbox each morning with today's top stories.

rcraver@wsjournal.com 336-727-7376 @rcraverWSJ