Cott Reports Second Quarter 2018 Results, Declares Dividend and Announces Senior Leadership Changes
Aug 02, 2018
(Unless stated otherwise, all second quarter 2018 comparisons are relative to the second quarter of 2017; all information is in
SECOND QUARTER 2018 HIGHLIGHTS – CONTINUING OPERATIONS
- Revenue increased 4% (4% excluding the impact of foreign exchange and adjusting for the change in average cost of coffee) to
$604 million compared to$581 million .
- Reiterated targeted full year 2018 consolidated revenue of over
$2.35 billion and full year 2018 cash flow provided by operations of approximately$235 million with capital expenditures in the range of$115 to$120 million , resulting in adjusted free cash flow of$115 to$120 million (when excluding acquisition, integration, tariffs and other working capital adjustments).
- Reported net income and net income per diluted share were
$12 million and$0.09 , respectively, compared to reported net loss and net loss per diluted share of$5 million and$0.03 , respectively. Adjusted EBITDA increased 2% to$83 million .
- Returned approximately
$24 million to shareowners through$8 million in quarterly dividends and$16 million of share repurchases.
“I am especially pleased with the performance of our Route Based Services segment during the quarter as we continued to see top and bottom line growth even with inflation in areas such as freight and other general SG&A costs. To counter expected inflation, management will be implementing pricing initiatives that are specifically designed to offset these cost increases within our Route Based Services segment,” commented
SENIOR LEADERSHIP CHANGES
Cott today announced the following senior leadership changes which are the culmination of the Board’s thorough leadership succession plan that capitalized on the strength of the
David Gibbons will retire from his position as director and Chairman of the Company’s Board of Directors (the “Board”), effective as of the last day of fiscal 2018.
- Effective as of the beginning of fiscal 2019,
Jerry Fowden will transition from his role as Chief Executive Officer to the newly created position of Executive Chairman of the Board.
Thomas J. Harrington will be promoted to serve as the Company’s Chief Executive Officer and will be appointed to serve on the Board, effective as of the beginning of fiscal 2019.
Commenting on his appointment to Chief Executive Officer,
SECOND QUARTER 2018 GLOBAL PERFORMANCE FROM CONTINUING OPERATIONS
- Revenue increased 4% to
$604 million (4% excluding the impact of foreign exchange and adjusting for the change in average cost of coffee) as the continued growth within the Route Based Services segment was offset in part by the previously communicated reduction in revenues of the Coffee, Tea and Extract Solutions segment which was driven by passing through the reduced green coffee commodity cost as well as the lapping of the outsized volume growth from the second quarter of last year as we increased market share and on-boarded new customers. Revenue drivers in the quarter are tabulated below:
Continuing Operations | ||
| ||
2017 Q2 Revenue |
$ 580.6 | |
Route Based Services |
+22.3 | |
Coffee, Tea and Extract Solutions |
-8.0 | |
Foreign exchange (a) |
+5.9 | |
Other |
+2.8 | |
2018 Q2 Revenue |
$ 603.6 | |
(a) See Exhibit 5 for details by reporting segment |
- Gross profit increased 5% to
$301 million , driven primarily by revenue growth, offset in part by market inflation such as increases in previously disclosed freight costs within our Route Based Services segment alongside the lapping of a large pipeline fill for new customers in the prior year within our Coffee, Tea and Extract Solutions segment. Management will be implementing pricing initiatives during the third quarter of 2018 that are specifically designed to mitigate the freight and general inflation increases within the Route Based Services segment.
- Interest expense was
$19 million compared to$24 million .
- Reported net income and net income per diluted share were
$12 million and$0.09 , respectively, compared to reported net loss and net loss per diluted share of$5 million and$0.03 , respectively.
- Reported EBITDA was
$82 million compared to$66 million in the prior year. Adjusted EBITDA increased 2% to$83 million driven primarily by revenue growth, offset in part by market inflation.
- Net cash provided by operating activities of
$35 million less$29 million of capital expenditures resulted in reported free cash flow of$6 million and adjusted free cash flow of$12 million (adjusted for acquisition, integration, and other working capital adjustments) compared to adjusted free cash flow of$37 million in the prior year. In addition to the timing of working capital activities which are expected to moderate by the end of fiscal 2018, interest payments were made on both of the senior notes in the second quarter of 2018 which accounted for over$19 million of additional cash usage relative to the prior year.
SECOND QUARTER 2018 REPORTING SEGMENT PERFORMANCE
Route Based Services
- Revenue increased 7% (6% excluding the impact of foreign exchange) to
$413 million . A detailed breakdown is tabulated below.
Route Based Services | ||
| ||
2017 Q2 Revenue |
$ 385.3 | |
|
+13.4 | |
HOD Water related |
+6.7 | |
Retail |
+3.1 | |
OCS |
-0.6 | |
Other |
-0.3 | |
Foreign exchange impact |
+5.0 | |
2018 Q2 Revenue |
$ 412.6 | |
(a) Net of revenues generated by PolyCycle which was sold in the quarter. |
- Gross profit increased 7% to
$258 million , driven primarily by increased revenue, offset in part by general market inflation including freight costs.
- Operating income increased 21% to
$28 million , due primarily to an increase in gross profit, offset in part by increased headcount associated with expanding ourU.S. based commercial customer growth initiatives as well as general inflation including freight costs. Management is implementing pricing initiatives during the third quarter that are specifically designed to mitigate the freight and general inflation increases within the Route Based Services operating segment.
Coffee, Tea and Extract Solutions
- Revenue decreased 5% (3% adjusting for the change in average cost of coffee) driven by the pass-through of the reduction in green coffee commodity costs, change in customer mix and the lapping of the outsized volume growth from the second quarter of last year as we increased our market share and saw one-time benefits from new customer pipeline fills, offset in part by growth in liquid coffee extracts and tea.
Coffee, Tea and Extract Solutions | ||
| ||
2017 Q2 Revenue |
$ 153.5 | |
Coffee volume |
-4.7 | |
Change in average green coffee commodity pass-through costs |
-4.1 | |
Coffee price/mix |
-1.6 | |
Liquid coffee and extracts |
+1.7 | |
Other |
+0.7 | |
2018 Q2 Revenue |
$ 145.5 |
- Gross profit was
$37 million compared to$39 million and operating income was$3 million compared to$4 million as the segment was lapping a large pipeline fill for new customers in the prior year.
2018 FULL YEAR REVENUE, FREE CASH FLOW, COFFEE COMMODITY COSTS AND FOREIGN EXCHANGE OUTLOOK FROM CONTINUING OPERATIONS
Cott reiterated its targeted full year 2018 consolidated revenue of over
Green coffee commodity market costs have been declining since the end of 2016. At current rates, in conjunction with the timing of various pricing agreements, management would expect to see an approximately 1% lowering of consolidated revenues with a corresponding reduction to cost of goods sold in each of the third and fourth quarters of 2018. In addition, with the strengthening of the
DECLARATION OF DIVIDEND
Cott’s Board of Directors has declared a dividend of
SHARE REPURCHASE PROGRAM
Cott repurchased approximately 1 million shares at an average price of
The repurchase program is capped at
There can be no assurance as to the precise number of shares, if any, that will be repurchased under the share repurchase program in the future, or the aggregate dollar amount of the shares to be purchased in future periods. Cott may discontinue purchases at any time, subject to compliance with applicable regulatory requirements. Shares purchased pursuant to the share repurchase program were cancelled.
SECOND QUARTER 2018 RESULTS CONFERENCE CALL
International: (647) 427-7450
Conference ID: 6475508
A live audio webcast will be available through Cott’s website at http://www.cott.com. The earnings conference call will be recorded and archived for playback on the investor relations section of the website for a period of two weeks following the event.
ABOUT
Cott is a water, coffee, tea, extracts and filtration service company with a leading volume-based national presence in the North American and European home and office delivery industry for bottled water and a leader in custom coffee roasting, blending of iced tea, and extract solutions for the
Non-GAAP Measures
To supplement its reporting of financial measures determined in accordance with GAAP, Cott utilizes certain non-GAAP financial measures. Cott excludes from GAAP revenue the impact of foreign exchange, change in average costs of coffee and the impact of additional trading days in the prior period to separate the impact of these factors from Cott’s results of operations. Cott utilizes EBITDA and adjusted EBITDA on a global basis to separate the impact of certain items from the underlying business. Because Cott uses these adjusted financial results in the management of its business, management believes this supplemental information is useful to investors for their independent evaluation and understanding of Cott’s underlying business performance and the performance of its management. Additionally, Cott supplements its reporting of net cash provided by (used in) operating activities from continuing operations determined in accordance with GAAP by excluding additions to property, plant and equipment to present free cash flow, and by excluding acquisition and integration cash costs as well as a working capital adjustment related to the Concentrate Supply Agreement with Refresco to present adjusted free cash flow, which management believes provides useful information to investors about the amount of cash generated by the business that, after the acquisition of property and equipment, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, paying dividends, repurchasing common shares, and strengthening the balance sheet. The non-GAAP financial measures described above are in addition to, and not meant to be considered superior to, or a substitute for, Cott’s financial statements prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this earnings announcement reflect management’s judgment of particular items, and may be different from, and therefore may not be comparable to, similarly titled measures reported by other companies.
Safe Harbor Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 conveying management’s expectations as to the future based on plans, estimates and projections at the time Cott makes the statements. Forward-looking statements involve inherent risks and uncertainties and Cott cautions you that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement. The forward-looking statements contained in this press release include, but are not limited to, statements related to the amount of shares that may be repurchased under the share repurchase program, the execution of our strategic priorities, future financial and operating trends and results (including Cott’s outlook on 2018 revenue and free cash flow) and related matters. The forward-looking statements are based on assumptions regarding management’s current plans and estimates. Management believes these assumptions to be reasonable but there is no assurance that they will prove to be accurate.
Factors that could cause actual results to differ materially from those described in this press release include, among others: our ability to compete successfully in the markets in which we operate; fluctuations in commodity prices and our ability to pass on increased costs to our customers or hedge against such rising costs and the impact of those increased prices on our volumes; our ability to manage our operations successfully; our ability to fully realize the potential benefit of acquisitions or other strategic opportunities that we pursue; potential liabilities associated with the Refresco transaction; our ability to realize the revenue and cost synergies of recent acquisitions because of integration difficulties and other challenges; the limited nature of our indemnification rights under our recent acquisition agreements; our exposure to intangible asset risk; currency fluctuations that adversely affect the exchange between the
The foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in Cott’s Annual Report on Form 10-K and its quarterly reports on Form 10-Q, as well as other filings with the securities commissions. Cott does not undertake to update or revise any of these statements in light of new information or future events, except as expressly required by applicable law.
Website: www.cott.com
|
EXHIBIT 1 | |||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||
(in millions of |
||||||||||||
Unaudited |
||||||||||||
For the Three Months Ended |
For the Six Months Ended | |||||||||||
|
|
|
| |||||||||
Revenue, net |
$ |
603.6 |
$ |
580.6 |
$ |
1,164.4 |
$ |
1,117.5 | ||||
Cost of sales |
302.2 |
293.5 |
589.5 |
561.6 | ||||||||
Gross profit |
301.4 |
287.1 |
574.9 |
555.9 | ||||||||
Selling, general and administrative expenses |
275.2 |
260.0 |
536.3 |
515.0 | ||||||||
Loss on disposal of property, plant and equipment, net |
1.3 |
3.9 |
2.6 |
5.2 | ||||||||
Acquisition and integration expenses |
4.2 |
6.7 |
9.2 |
14.0 | ||||||||
Operating income |
20.7 |
16.5 |
26.8 |
21.7 | ||||||||
Other income, net |
(12.2) |
(1.0) |
(32.4) |
(2.6) | ||||||||
Interest expense, net |
18.6 |
23.6 |
39.4 |
38.9 | ||||||||
Income (loss) from continuing operations before income taxes |
14.3 |
(6.1) |
19.8 |
(14.6) | ||||||||
Income tax expense (benefit) |
2.1 |
(1.6) |
3.0 |
0.1 | ||||||||
Net income (loss) from continuing operations |
$ |
12.2 |
$ |
(4.5) |
$ |
16.8 |
$ |
(14.7) | ||||
Net (loss) income from discontinued operations, net of income taxes |
(1.4) |
(17.8) |
356.0 |
(42.0) | ||||||||
Net income (loss) |
$ |
10.8 |
$ |
(22.3) |
$ |
372.8 |
$ |
(56.7) | ||||
Less: Net income attributable to non-controlling interests – discontinued operations |
– |
2.3 |
0.6 |
4.3 | ||||||||
Net income (loss) attributable to |
$ |
10.8 |
$ |
(24.6) |
$ |
372.2 |
$ |
(61.0) | ||||
Net income (loss) per common share attributable to |
||||||||||||
Basic: |
||||||||||||
Continuing operations |
$ |
0.09 |
$ |
(0.03) |
$ |
0.12 |
$ |
(0.11) | ||||
Discontinued operations |
$ |
(0.01) |
$ |
(0.15) |
$ |
2.54 |
$ |
(0.33) | ||||
Net income (loss) |
$ |
0.08 |
$ |
(0.18) |
$ |
2.66 |
$ |
(0.44) | ||||
Diluted: |
||||||||||||
Continuing operations |
$ |
0.09 |
$ |
(0.03) |
$ |
0.12 |
$ |
(0.11) | ||||
Discontinued operations |
$ |
(0.01) |
$ |
(0.15) |
$ |
2.50 |
$ |
(0.33) | ||||
Net income (loss) |
$ |
0.08 |
$ |
(0.18) |
$ |
2.62 |
$ |
(0.44) | ||||
Weighted average common shares outstanding (in thousands) |
||||||||||||
Basic |
139,768 |
139,000 |
139,860 |
138,867 | ||||||||
Diluted |
141,661 |
139,000 |
142,120 |
138,867 | ||||||||
Dividends declared per common share |
$ |
0.06 |
$ |
0.06 |
$ |
0.12 |
$ |
0.12 |
|
EXHIBIT 2 | ||||
CONSOLIDATED BALANCE SHEETS |
|||||
(in millions of |
|||||
Unaudited |
|||||
|
| ||||
ASSETS |
|||||
Current assets |
|||||
Cash and cash equivalents |
$ |
162.4 |
$ |
91.9 | |
Accounts receivable, net of allowance of |
309.9 |
285.0 | |||
Inventories |
141.0 |
127.6 | |||
Prepaid expenses and other current assets |
27.5 |
20.7 | |||
Current assets of discontinued operations |
– |
408.7 | |||
Total current assets |
640.8 |
933.9 | |||
Property, plant and equipment, net |
583.8 |
584.2 | |||
|
1,125.5 |
1,104.7 | |||
Intangible assets, net |
744.7 |
751.1 | |||
Deferred tax assets |
1.4 |
2.3 | |||
Other long-term assets, net |
39.0 |
39.4 | |||
Long-term assets of discontinued operations |
– |
677.5 | |||
Total assets |
$ |
3,135.2 |
$ |
4,093.1 | |
LIABILITIES AND EQUITY |
|||||
Current liabilities |
|||||
Short-term borrowings |
6.9 |
– | |||
Short-term borrowings required to be repaid or extinguished as part of divestiture |
– |
220.3 | |||
Current maturities of long-term debt |
1.8 |
5.1 | |||
Accounts payable and accrued liabilities |
421.5 |
412.9 | |||
Current liabilities of discontinued operations |
– |
295.1 | |||
Total current liabilities |
430.2 |
933.4 | |||
Long-term debt |
1,255.5 |
1,542.6 | |||
Debt required to be repaid or extinguished as part of divestiture |
– |
519.0 | |||
Deferred tax liabilities |
134.3 |
98.4 | |||
Other long-term liabilities |
76.3 |
68.2 | |||
Long-term liabilities of discontinued operations |
– |
45.8 | |||
Total liabilities |
1,896.3 |
3,207.4 | |||
Equity |
|||||
Common shares, no par – 139,434,706 ( |
918.4 |
917.1 | |||
Additional paid-in-capital |
67.3 |
69.1 | |||
Retained earnings (accumulated deficit) |
333.4 |
(12.2) | |||
Accumulated other comprehensive loss |
(80.2) |
(94.4) | |||
|
1,238.9 |
879.6 | |||
Non-controlling interests |
– |
6.1 | |||
Total equity |
1,238.9 |
885.7 | |||
Total liabilities and equity |
$ |
3,135.2 |
$ |
4,093.1 |
COTT CORPORATION |
EXHIBIT 3 | |||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||||
(in millions of |
||||||||||||||
Unaudited |
||||||||||||||
For the Three Months Ended |
For the Six Months Ended | |||||||||||||
|
|
|
| |||||||||||
Cash flows from operating activities of continuing operations: |
||||||||||||||
Net income (loss) |
$ |
10.8 |
$ |
(22.3) |
$ |
372.8 |
$ |
(56.7) | ||||||
Net (loss) income from discontinued operations, net of income taxes |
(1.4) |
(17.8) |
356.0 |
(42.0) | ||||||||||
Net income (loss) from continuing operations |
$ |
12.2 |
$ |
(4.5) |
$ |
16.8 |
$ |
(14.7) | ||||||
Adjustments to reconcile net income (loss) from continuing operations to cash flows from operating activities: |
||||||||||||||
Depreciation and amortization |
48.7 |
48.8 |
96.1 |
92.4 | ||||||||||
Amortization of financing fees |
0.8 |
0.5 |
1.7 |
0.8 | ||||||||||
Amortization of senior notes premium |
– |
(1.2) |
(0.4) |
(2.8) | ||||||||||
Share-based compensation expense |
4.4 |
5.0 |
7.8 |
9.0 | ||||||||||
Provision for deferred income taxes |
2.9 |
2.7 |
2.7 |
4.5 | ||||||||||
Commodity hedging loss (gain), net |
– |
0.4 |
0.3 |
(1.5) | ||||||||||
Gain on sale of business |
(6.0) |
– |
(6.0) |
– | ||||||||||
Gain on extinguishment of debt |
– |
(1.5) |
(7.1) |
(1.5) | ||||||||||
Loss on disposal of property, plant and equipment, net |
1.3 |
3.9 |
2.6 |
5.2 | ||||||||||
Other non-cash items |
(2.2) |
(3.0) |
(2.1) |
(4.8) | ||||||||||
Change in operating assets and liabilities, net of acquisitions: |
||||||||||||||
Accounts receivable |
(6.5) |
(20.4) |
(19.2) |
(20.3) | ||||||||||
Inventories |
(4.6) |
(1.2) |
(13.7) |
(9.6) | ||||||||||
Prepaid expenses and other current assets |
(2.3) |
3.7 |
(6.6) |
(2.8) | ||||||||||
Other assets |
0.2 |
4.2 |
1.2 |
4.1 | ||||||||||
Accounts payable and accrued liabilities and other liabilities |
(13.9) |
24.0 |
(16.5) |
34.5 | ||||||||||
Net cash provided by operating activities from continuing operations |
35.0 |
61.4 |
57.6 |
92.5 | ||||||||||
Cash flows from investing activities of continuing operations: |
||||||||||||||
Acquisitions, net of cash received |
(38.8) |
(25.0) |
(66.6) |
(30.0) | ||||||||||
Additions to property, plant and equipment |
(28.9) |
(30.7) |
(58.7) |
(58.9) | ||||||||||
Additions to intangible assets |
(2.0) |
(1.6) |
(4.2) |
(2.6) | ||||||||||
Proceeds from sale of property, plant and equipment |
1.0 |
(1.2) |
2.9 |
2.9 | ||||||||||
Proceeds from sale of business, net of cash sold |
12.8 |
– |
12.8 |
– | ||||||||||
Other investing activities |
0.1 |
0.2 |
0.3 |
0.4 | ||||||||||
Net cash used in investing activities from continuing operations |
(55.8) |
(58.3) |
(113.5) |
(88.2) | ||||||||||
Cash flows from financing activities of continuing operations: |
||||||||||||||
Payments of long-term debt |
(0.6) |
(101.2) |
(263.3) |
(101.6) | ||||||||||
Issuance of long-term debt |
– |
– |
– |
750.0 | ||||||||||
Borrowings under ABL |
0.4 |
– |
1.0 |
– | ||||||||||
Payments under ABL |
(0.4) |
– |
(1.0) |
– | ||||||||||
Premiums and costs paid upon extinguishment of long-term debt |
– |
(7.7) |
(12.5) |
(7.7) | ||||||||||
Issuance of common shares |
2.4 |
0.3 |
4.2 |
0.8 | ||||||||||
Common shares repurchased and cancelled |
(16.1) |
– |
(21.7) |
(1.8) | ||||||||||
Financing fees |
– |
(1.7) |
(1.5) |
(11.1) | ||||||||||
Dividends paid to common shareholders |
(8.4) |
(8.3) |
(16.8) |
(16.7) | ||||||||||
Payment of deferred consideration for acquisitions |
(2.8) |
– |
(2.8) |
– | ||||||||||
Other financing activities |
3.4 |
1.5 |
2.1 |
0.5 | ||||||||||
Net cash (used in) provided by financing activities from continuing operations |
(22.1) |
(117.1) |
(312.3) |
612.4 | ||||||||||
Cash flows from discontinued operations: |
||||||||||||||
Operating activities of discontinued operations |
(3.3) |
43.5 |
(77.7) |
8.7 | ||||||||||
Investing activities of discontinued operations |
– |
(9.2) |
1,228.6 |
(23.4) | ||||||||||
Financing activities of discontinued operations |
– |
(330.5) |
(769.7) |
(601.3) | ||||||||||
Net cash (used in) provided by discontinued operations |
(3.3) |
(296.2) |
381.2 |
(616.0) | ||||||||||
Effect of exchange rate changes on cash |
(3.7) |
2.9 |
(8.5) |
4.4 | ||||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash |
(49.9) |
(407.3) |
4.5 |
5.1 | ||||||||||
Cash and cash equivalents and restricted cash, beginning of period |
212.3 |
530.5 |
157.9 |
118.1 | ||||||||||
Cash and cash equivalents and restricted cash, end of period |
162.4 |
123.2 |
162.4 |
123.2 | ||||||||||
Cash and cash equivalents and restricted cash of discontinued operations, end of period |
– |
55.0 |
– |
55.0 | ||||||||||
Cash and cash equivalents and restricted cash from continuing operations, end of period |
$ |
162.4 |
$ |
68.2 |
$ |
162.4 |
$ |
68.2 |
|
EXHIBIT 4 | ||||||||||||||
SEGMENT INFORMATION |
|||||||||||||||
(in millions of |
|||||||||||||||
Unaudited |
|||||||||||||||
For the Three Months Ended | |||||||||||||||
(in millions of |
Route Based Services |
Coffee, Tea and Extract Solutions |
All Other |
Eliminations |
Total | ||||||||||
Revenue, net |
|||||||||||||||
Home and office bottled water delivery |
$ |
259.5 |
$ |
– |
$ |
– |
$ |
– |
$ |
259.5 | |||||
Coffee and tea services |
48.1 |
118.8 |
0.9 |
(1.5) |
166.3 | ||||||||||
Retail |
61.1 |
– |
16.8 |
– |
77.9 | ||||||||||
Other |
43.9 |
26.7 |
29.3 |
– |
99.9 | ||||||||||
Total |
$ |
412.6 |
$ |
145.5 |
$ |
47.0 |
$ |
(1.5) |
$ |
603.6 | |||||
Gross Profit |
$ |
257.6 |
$ |
37.4 |
$ |
6.4 |
$ |
– |
$ |
301.4 | |||||
Gross Margin % |
62.4% |
25.7% |
13.6% |
– |
49.9% | ||||||||||
Operating income (loss) |
$ |
27.7 |
$ |
3.2 |
$ |
(10.2) |
$ |
– |
$ |
20.7 | |||||
Depreciation and Amortization |
$ |
41.1 |
$ |
5.7 |
$ |
1.9 |
$ |
– |
$ |
48.7 | |||||
For the Three Months Ended | |||||||||||||||
(in millions of |
Route Based Services |
Coffee, Tea and Extract Solutions |
All Other |
Eliminations |
Total | ||||||||||
Revenue, net |
|||||||||||||||
Home and office bottled water delivery |
$ |
244.6 |
$ |
– |
$ |
– |
$ |
– |
$ |
244.6 | |||||
Coffee and tea services |
44.8 |
129.0 |
0.7 |
– |
174.5 | ||||||||||
Retail |
55.7 |
– |
10.5 |
– |
66.2 | ||||||||||
Other |
40.2 |
24.5 |
30.6 |
– |
95.3 | ||||||||||
Total |
$ |
385.3 |
$ |
153.5 |
$ |
41.8 |
$ |
– |
$ |
580.6 | |||||
Gross Profit (a) |
$ |
241.1 |
$ |
39.3 |
$ |
6.7 |
$ |
– |
$ |
287.1 | |||||
Gross Margin % |
62.6% |
25.6% |
16.0% |
– |
49.4% | ||||||||||
Operating income (loss) |
$ |
22.9 |
$ |
4.0 |
$ |
(10.4) |
$ |
– |
$ |
16.5 | |||||
Depreciation and Amortization |
$ |
41.4 |
$ |
5.7 |
$ |
1.7 |
$ |
– |
$ |
48.8 | |||||
For the Six Months Ended | |||||||||||||||
(in millions of |
Route Based Services |
Coffee, Tea and Extract Solutions |
All Other |
Eliminations |
Total | ||||||||||
Revenue, net |
|||||||||||||||
Home and office bottled water delivery |
$ |
488.4 |
$ |
– |
$ |
– |
$ |
– |
$ |
488.4 | |||||
Coffee and tea services |
94.4 |
236.0 |
1.6 |
(2.5) |
329.5 | ||||||||||
Retail |
115.8 |
– |
32.2 |
– |
148.0 | ||||||||||
Other |
85.1 |
55.6 |
57.9 |
(0.1) |
198.5 | ||||||||||
Total |
$ |
783.7 |
$ |
291.6 |
$ |
91.7 |
$ |
(2.6) |
$ |
1,164.4 | |||||
Gross Profit (a) |
$ |
485.4 |
$ |
76.1 |
$ |
13.4 |
$ |
– |
$ |
574.9 | |||||
Gross Margin % |
61.9% |
26.1% |
14.6% |
– |
49.4% | ||||||||||
Operating income (loss) |
$ |
40.1 |
$ |
7.3 |
$ |
(20.6) |
$ |
– |
$ |
26.8 | |||||
Depreciation and Amortization |
$ |
80.9 |
$ |
11.4 |
$ |
3.8 |
$ |
– |
$ |
96.1 | |||||
For the Six Months Ended | |||||||||||||||
(in millions of |
Route Based Services |
Coffee, Tea and Extract Solutions |
All Other |
Eliminations |
Total | ||||||||||
Revenue, net |
|||||||||||||||
Home and office bottled water delivery |
$ |
462.6 |
$ |
– |
$ |
– |
$ |
– |
$ |
462.6 | |||||
Coffee and tea services |
90.7 |
248.7 |
1.3 |
– |
340.7 | ||||||||||
Retail |
107.5 |
– |
22.2 |
– |
129.7 | ||||||||||
Other |
76.8 |
48.1 |
59.6 |
– |
184.5 | ||||||||||
Total |
$ |
737.6 |
$ |
296.8 |
$ |
83.1 |
$ |
– |
$ |
1,117.5 | |||||
Gross Profit (a) |
$ |
461.7 |
$ |
81.1 |
$ |
13.1 |
$ |
– |
$ |
555.9 | |||||
Gross Margin % |
62.6% |
27.3% |
15.8% |
– |
49.7% | ||||||||||
Operating income (loss) |
$ |
32.3 |
$ |
9.6 |
$ |
(20.2) |
$ |
– |
$ |
21.7 | |||||
Depreciation and Amortization |
$ |
77.4 |
$ |
11.2 |
$ |
3.8 |
$ |
– |
$ |
92.4 | |||||
(a) Includes related party concentrate sales to discontinued operations. |
|
EXHIBIT 5 | |||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – ANALYSIS OF REVENUE BY REPORTING SEGMENT | ||||||||||
Unaudited |
||||||||||
(in millions of |
For the Three Months Ended | |||||||||
Route Based Services |
Coffee, Tea and Extract Solutions |
All Other |
Eliminations |
Cott (a) | ||||||
Change in revenue |
$ |
27.3 |
$ |
(8.0) |
$ |
5.2 |
$ |
(1.5) |
$ |
23.0 |
Impact of foreign exchange (b) |
$ |
(5.0) |
$ |
– |
$ |
(0.9) |
$ |
– |
$ |
(5.9) |
Change excluding foreign exchange |
$ |
22.3 |
$ |
(8.0) |
$ |
4.3 |
$ |
(1.5) |
$ |
17.1 |
Percentage change in revenue |
7.1% |
-5.2% |
12.4% |
100.0% |
4.0% | |||||
Percentage change in revenue excluding foreign exchange |
5.8% |
-5.2% |
10.3% |
100.0% |
2.9% | |||||
(a) Cott includes the following reporting segments: Route Based Services, Coffee, Tea and Extract Solutions and All Other. | ||||||||||
(b) Impact of foreign exchange is the difference between the current period revenue translated utilizing the current period average foreign exchange rates less the current period revenue translated utilizing the prior period average foreign exchange rates. |
|
EXHIBIT 6 | ||||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION | |||||||||||
(EBITDA) |
|||||||||||
(in millions of |
|||||||||||
Unaudited |
|||||||||||
For the Three Months Ended |
For the Six Months Ended | ||||||||||
|
|
|
| ||||||||
Net income (loss) from continuing operations |
$ |
12.2 |
$ |
(4.5) |
$ |
16.8 |
$ |
(14.7) | |||
Interest expense, net |
18.6 |
23.6 |
39.4 |
38.9 | |||||||
Income tax expense (benefit) |
2.1 |
(1.6) |
3.0 |
0.1 | |||||||
Depreciation and amortization |
48.7 |
48.8 |
96.1 |
92.4 | |||||||
EBITDA |
$ |
81.6 |
$ |
66.3 |
$ |
155.3 |
$ |
116.7 | |||
Acquisition and integration costs (a), (b) |
4.2 |
6.7 |
9.2 |
14.0 | |||||||
Share-based compensation costs (c) |
3.6 |
4.1 |
6.0 |
6.8 | |||||||
Commodity hedging loss (gain), net (d) |
– |
0.4 |
0.3 |
(1.5) | |||||||
Foreign exchange and other (gains) losses, net (e) |
(3.0) |
0.4 |
(11.2) |
(0.9) | |||||||
Loss on disposal of property, plant and equipment, net (f) |
1.3 |
4.0 |
2.6 |
5.7 | |||||||
Gain on extinguishment of long-term debt (g) |
– |
(1.5) |
(7.1) |
(1.5) | |||||||
Gain on sale (h) |
(6.0) |
– |
(6.0) |
– | |||||||
Other adjustments, net (i) |
1.1 |
1.0 |
(1.8) |
2.0 | |||||||
Adjusted EBITDA |
$ |
82.8 |
$ |
81.4 |
$ |
147.3 |
$ |
141.3 | |||
(a) Includes |
For the Three Months Ended |
For the Six Months Ended | ||||||||||||
Location in Consolidated Statements of Operations |
|
|
|
| |||||||||
(Unaudited) |
(Unaudited) | ||||||||||||
(b) Acquisition and integration costs |
Acquisition and integration expenses |
$ |
4.2 |
$ |
6.7 |
$ |
9.2 |
$ |
14.0 | ||||
(c) Share-based compensation costs |
Selling, general and administrative expenses |
3.6 |
4.1 |
6.0 |
6.8 | ||||||||
(d) Commodity hedging loss (gain), net |
Cost of sales |
– |
0.4 |
0.3 |
(1.5) | ||||||||
(e) Foreign exchange and other (gains) losses, net |
Other income, net |
(3.0) |
0.4 |
(11.2) |
(0.9) | ||||||||
(f) Loss on disposal of property, plant and equipment, net |
Loss on disposal of property, plant and equipment, net |
1.3 |
4.0 |
2.6 |
5.7 | ||||||||
(g) Gain on extinguishment of long-term debt |
Other income, net |
– |
(1.5) |
(7.1) |
(1.5) | ||||||||
(h) Gain on sale |
Other income, net |
(6.0) |
– |
(6.0) |
– | ||||||||
(i) Other adjustments, net |
Other income, net |
(2.7) |
– |
(6.6) |
– | ||||||||
Selling, general and administrative expenses |
2.6 |
1.0 |
3.6 |
2.0 | |||||||||
Cost of sales |
1.2 |
– |
1.2 |
– |
|
EXHIBIT 7 | |||||
SUPPLEMENTARY INFORMATION – NON-GAAP – FREE CASH FLOW AND ADJUSTED FREE CASH FLOW |
||||||
(in millions of |
||||||
Unaudited |
||||||
For the Three Months Ended | ||||||
|
| |||||
Net cash provided by operating activities from continuing operations |
$ |
35.0 |
$ |
61.4 | ||
Less: Additions to property, plant, and equipment |
(28.9) |
(30.7) | ||||
Free Cash Flow |
|
$ |
30.7 | |||
Plus: |
||||||
Acquisition and integration cash costs |
3.8 |
6.6 | ||||
Working capital adjustment – Refresco concentrate supply agreement (a) |
2.2 |
– | ||||
Adjusted Free Cash Flow |
$ |
12.1 |
$ |
37.3 | ||
For the Six Months Ended | ||||||
|
| |||||
Net cash provided by operating activities from continuing operations |
$ |
57.6 |
$ |
92.5 | ||
Less: Additions to property, plant, and equipment |
(58.7) |
(58.9) | ||||
Free Cash Flow |
$ |
(1.1) |
$ |
33.6 | ||
Plus: |
||||||
Acquisition and integration cash costs |
9.4 |
12.3 | ||||
Working capital adjustment – Refresco concentrate supply agreement (a) |
11.1 |
– | ||||
Adjusted Free Cash Flow |
$ |
19.4 |
$ |
45.9 | ||
(a) Increase in working capital related to the Concentrate Supply Agreement with Refresco in connection with the Transaction. |
COTT CORPORATION AND COFFEE, TEA, AND EXTRACT SOLUTIONS REPORTING SEGMENT |
EXHIBIT 8 | ||||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – ANALYSIS OF REVENUE |
|||||||||||
(in millions of |
|||||||||||
Unaudited |
|||||||||||
Cott (a) |
Coffee, Tea and Extract Solutions | ||||||||||
For the Three Months Ended |
For the Three Months Ended | ||||||||||
|
|
|
| ||||||||
Revenue, net |
$ |
603.6 |
$ |
580.6 |
$ |
145.5 |
$ |
153.5 | |||
Change in revenue |
$ |
23.0 |
$ |
(8.0) |
|||||||
Percentage change in revenue |
4.0% |
-5.2% |
|||||||||
Impact of foreign exchange (b) |
$ |
(5.9) |
$ |
– |
|||||||
Impact of change in average cost of green coffee (c) |
$ |
4.1 |
$ |
4.1 |
|||||||
Change excluding foreign exchange and impact of change in average cost of green coffee |
$ |
21.2 |
$ |
(3.9) |
|||||||
Percentage change in revenue excluding foreign exchange and impact of change in average cost of green coffee |
3.7% |
-2.5% |
|||||||||
(a) Cott includes the following reporting segments: Route Based Services, Coffee, Tea and Extract Solutions and All Other. | |||||||||||
(b) Impact of foreign exchange is the difference between the current period revenue translated utilizing the current period average foreign exchange rates less the current period revenue translated utilizing the prior period average foreign exchange rates. | |||||||||||
(c) Impact of change in average cost of green coffee represents the difference between the average cost per pound of green coffee in the current period compared to the average cost per pound of green coffee in the prior period multiplied by the pounds of coffee sold in the current period. |
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