Cott Reports Third Quarter 2017 Results
Nov 09, 2017
(Unless stated otherwise, all third quarter 2017 comparisons are relative to the third quarter of 2016; all information is in
Upon announcing the sale of Cott’s traditional
THIRD QUARTER 2017 HIGHLIGHTS
- Revenue from continuing operations increased 22% to
$581 million compared to$477 million .
- Gross profit from continuing operations increased 18% to
$293 million compared to$248 million .
- Operating income from continuing operations increased 100% to
$27 million compared to$14 million .
- For comparative purposes, total company revenue including discontinued operations was
$995 million compared to$885 million while reported net income and net income per diluted share were$43 million and$0.30 , respectively, compared to reported net loss and net loss per diluted share of$3 million and$0.02 , respectively.
- The sale of Cott’s traditional business is on track to close near the end of 2017 with Refresco Group N.V. (“Refresco”) shareholder approval and
U.S. andCanada regulatory approval received. The request forU.K. regulatory approval is on schedule with a draft of the Merger Notice submitted to theU.K. Regulatory Authority in August, the subsequent customary period of pre-notification engagement with theUK Regulatory Authority completed, and the final Merger Notice submitted. We are now in the process of the Authority’s 40 business day formal review period.
“I was pleased to see the solid top and bottom line performance across our key business platforms during the quarter. Comparable revenue growth of over 3% in our Route Based Services segment and 7% in our Coffee, Tea and Extract Solutions segment illustrates the shape and potential of new Cott,” commented
THIRD QUARTER 2017 CONTINUING OPERATIONS GLOBAL PERFORMANCE
- Revenue increased 22% to
$581 million (increased 4% on a pro forma basis, treatingEden Springs (“Eden”) and S&D Coffee and Tea (“S&D”) as if they had been acquired at the beginning of the third quarter of 2016), driven primarily by the additions of S&D and Eden as well as growth at DS Services. Cott remains on track to deliver at or above$2.2 billion of revenue from its continuing operations in 2017 driven by the strong coffee volume growth within the Coffee, Tea and Extract Solutions segment as well as growth within the Route Based Services segment driven by growth in consumption and customers and increased pricing.
Continuing Operations | |||||
| |||||
2016 Q3 Revenue |
$ |
476.7 | |||
Route Based Services |
48.7 | ||||
|
56.1 | ||||
Foreign exchange impact |
(0.6) | ||||
2017 Q3 Revenue |
$ |
580.9 |
- Gross profit increased 18% to
$293 million , driven primarily by the addition of Eden and S&D and growth at DS Services. Gross margin as a percentage of revenue was 50.4% compared to 52.0% as a full quarter of S&D operations affected the mix of our gross margin.
- Income tax expense was
$1 million compared to income tax expense of$3 million .
- Reported net income and net income per diluted share were
$2 million and$0.01 , respectively, compared to reported net loss and net loss per diluted share of$4 million and$0.03 , respectively. Adjusted net income and adjusted net income per diluted share (including adjustments for acquisition, integration, debt redemption and other costs) were$9 million and$0.06 , respectively, compared to adjusted net income and adjusted net income per diluted share of$5 million and$0.04 , respectively.
- Reported EBITDA was
$75 million compared to$55 million . Adjusted EBITDA increased 22% to$84 million due to the ongoing success of Cott’s profitability improvement plan at DS Services as well as a full quarter of operations from the Eden and S&D businesses. (For comparative purposes, total company EBITDA and Adjusted EBITDA including discontinued operations were$117 million and$126 million , respectively compared to$101 million and$111 million .)
- Net cash provided by operating activities of
$46 million less$38 million of capital expenditures resulted in free cash flow of$8 million and adjusted free cash flow of$13 million (adjusted for acquisition, integration, and other cash costs). Free cash flow in the quarter included higher growth related capex as well as$13 million of interest associated with the 10% secured notes that are going to be redeemed with the proceeds from the sale of our traditional business.
THIRD QUARTER 2017 CONTINUING OPERATIONS REPORTING SEGMENT PERFORMANCE
Following the announcement of the sale of its traditional business to Refresco, Cott reorganized the reporting segments of its continuing operations into three reporting segments: Route Based Services (which includes the DS Services, Aquaterra and Eden businesses), Coffee, Tea and Extract Solutions (which includes the S&D business), and All Other (which includes the
Route Based Services
- Revenue increased 14% to
$397 million (3% on a pro forma basis, treating Eden as if it had been acquired at the beginning of the third quarter of 2016) driven by a full quarter of operations from Eden alongside continued revenue growth at DS Services. A detailed breakdown is tabulated below.
Route Based Services | ||||||
| ||||||
2016 Q3 Revenue |
$ |
349.2 | ||||
Eden – |
38.7 | |||||
DS Services |
||||||
Price/Mix |
6.7 | |||||
Returnable volume |
1.4 | |||||
Other |
2.7 | |||||
Aquaterra |
0.5 | |||||
OCS |
(1.3) | |||||
Foreign exchange impact |
(0.6) | |||||
2017 Q3 Revenue |
$ |
397.3 |
U.S. revenue increased 4% and Cott remains on track to meet its profitability growth targets for fiscal year 2017. Key drivers of revenue and profitability growth during the quarter were:
- HOD water 5 gallon volume growth driven by growth in customers;
- Pricing as a part of DS Services profitability improvement plan; and
- Growth within DS Services filtration division.
- Revenue in Cott’s European operations, including
Israel , increased 55% to$109 million (3% on a pro forma basis, treating Eden as if it had been acquired at the beginning of the third quarter of 2016) during the quarter in line with its acquisition model. Integration and synergy capture accelerated and continues to track ahead of plan.
- Gross profit increased 15% to
$249 million due primarily to the addition of Eden and the operational leverage associated with the topline growth at DS Services during the quarter.
Coffee, Tea and Extract Solutions
- Revenue increased 64% to
$143 million (7% on a pro forma basis, treating S&D as if it had been acquired at the beginning of the third quarter of 2016) as S&D had a full quarter of operations alongside continued organic revenue growth. S&D integration continues to track in line with plan while revenues and volume continue to track ahead of plan with 9% growth in coffee and tea pounds sold. In addition to general market growth seen within its customer base, key drivers of revenue and profitability growth for S&D through the first three quarters include:
- Increased SKUs and production within a large existing quick serve restaurant (“QSR”) client;
- Growth and new production within convenience retail; and
- Winning a new QSR contract at the end of 2016.
DISCONTINUED OPERATIONS
On
As required by generally accepted accounting principles, Cott has presented the traditional business as discontinued operations beginning in the third quarter of 2017. The Company has reclassified the financial results of the traditional business to net income (loss) from discontinued operations, net of income taxes in the consolidated statement of operations for all periods presented. Cott also reclassified the related assets and liabilities as current and non-current assets and liabilities of discontinued operations on the accompanying consolidated balance sheets as of
Revenue within Cott’s discontinued operations increased approximately 2% predominantly driven by continued strong contract manufacturing and value added and sparkling water beverage volume growth in the
On
The sale of Cott’s traditional business is on track to close at the end of 2017 with
“With the Refresco shareholder vote strongly in favor of our transaction and Canadian and
2019 REVENUE AND FREE CASH FLOW OUTLOOK
Assuming that the sale of the traditional business closes near the end of 2017 as expected, Cott is targeting full year 2019 revenues in excess of
THIRD QUARTER 2017 RESULTS CONFERENCE CALL
International: (647) 427-7450
Conference ID: 95875301
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 diversified beverage company with a leading volume-based national presence in the
Non-GAAP Measures
To supplement its reporting of financial measures determined in accordance with GAAP, Cott utilizes certain non-GAAP financial measures. Cott utilizes adjusted net income (loss), adjusted income (loss) per diluted share, and EBITDA and adjusted EBITDA 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 operating activities determined in accordance with GAAP by excluding additions to property, plant and equipment to present free cash flow, and by excluding acquisition, integration, and other cash costs 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, 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 use of proceeds in the sale of our traditional business to Refresco, the completion of the transaction on the terms proposed, the anticipated timing of the transaction, the potential impact the acquisition will have on Cott and related matters, the execution of our strategic priorities, future financial and operating trends and results 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: Cott’s and Refresco’s ability to complete the transaction on the anticipated terms and schedule, including the ability to obtain regulatory approval in 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 Nine Months Ended | ||||||||||||
|
|
|
| ||||||||||
Revenue, net |
$ |
580.9 |
$ |
476.7 |
$ |
1,698.4 |
$ |
1,102.0 | |||||
Cost of sales |
288.1 |
229.0 |
849.7 |
510.4 | |||||||||
Gross profit |
292.8 |
247.7 |
848.7 |
591.6 | |||||||||
Selling, general and administrative expenses |
262.8 |
225.3 |
777.8 |
547.7 | |||||||||
(Gain) loss on disposal of property, plant & equipment, net |
(0.4) |
1.4 |
4.8 |
4.6 | |||||||||
Acquisition and integration expenses |
3.2 |
7.4 |
17.2 |
20.5 | |||||||||
Operating income |
27.2 |
13.6 |
48.9 |
18.8 | |||||||||
Other expense (income), net |
1.5 |
0.2 |
(1.1) |
– | |||||||||
Interest expense, net |
23.2 |
14.5 |
62.1 |
29.2 | |||||||||
Income (loss) from continuing operations before income taxes |
2.5 |
(1.1) |
(12.1) |
(10.4) | |||||||||
Income tax expense (benefit) |
0.9 |
2.9 |
1.0 |
(4.8) | |||||||||
Net income (loss) from continuing operations |
$ |
1.6 |
$ |
(4.0) |
$ |
(13.1) |
$ |
(5.6) | |||||
Net income from discontinued operations, net of income taxes |
43.0 |
2.9 |
1.0 |
12.0 | |||||||||
Net income (loss) |
$ |
44.6 |
$ |
(1.1) |
$ |
(12.1) |
$ |
6.4 | |||||
Less: Net income attributable to non-controlling interests – |
|||||||||||||
discontinued operations |
2.1 |
1.5 |
6.4 |
4.4 | |||||||||
Net income (loss) attributable to |
$ |
42.5 |
$ |
(2.6) |
$ |
(18.5) |
$ |
2.0 | |||||
Net income (loss) per common share attributable to |
|||||||||||||
Basic: |
|||||||||||||
Continuing operations |
$ |
0.01 |
$ |
(0.03) |
$ |
(0.09) |
$ |
(0.04) | |||||
Discontinued operations |
$ |
0.29 |
$ |
0.01 |
$ |
(0.04) |
$ |
0.06 | |||||
Net income (loss) |
$ |
0.30 |
$ |
(0.02) |
$ |
(0.13) |
$ |
0.02 | |||||
Diluted: |
|||||||||||||
Continuing operations |
$ |
0.01 |
$ |
(0.03) |
$ |
(0.09) |
$ |
(0.04) | |||||
Discontinued operations |
$ |
0.29 |
$ |
0.01 |
$ |
(0.04) |
$ |
0.06 | |||||
Net income (loss) |
$ |
0.30 |
$ |
(0.02) |
$ |
(0.13) |
$ |
0.02 | |||||
Weighted average common shares outstanding (in thousands) |
|||||||||||||
Basic |
139,205 |
138,195 |
138,980 |
124,900 | |||||||||
Diluted |
141,003 |
138,195 |
138,980 |
124,900 | |||||||||
Dividends declared per common share |
$ |
0.06 |
$ |
0.06 |
$ |
0.18 |
$ |
0.18 |
|
EXHIBIT 2 | ||||
CONSOLIDATED BALANCE SHEETS |
|||||
(in millions of |
|||||
Unaudited |
|||||
|
| ||||
ASSETS |
|||||
Current assets |
|||||
Cash & cash equivalents |
$ |
82.0 |
$ |
78.1 | |
Accounts receivable, net of allowance |
311.6 |
276.7 | |||
Inventories |
142.3 |
124.6 | |||
Prepaid expenses and other current assets |
22.2 |
22.1 | |||
Current assets of discontinued operations |
426.5 |
351.7 | |||
Total current assets |
984.6 |
853.2 | |||
Property, plant & equipment, net |
590.4 |
581.8 | |||
|
1,097.0 |
1,048.3 | |||
Intangible assets, net |
763.9 |
759.0 | |||
Deferred tax assets |
2.2 |
– | |||
Other long-term assets, net |
36.8 |
24.0 | |||
Long-term assets of discontinued operations |
673.6 |
673.4 | |||
Total assets |
$ |
4,148.5 |
$ |
3,939.7 | |
LIABILITIES AND EQUITY |
|||||
Current liabilities |
|||||
Current maturities of long-term debt |
2.6 |
2.9 | |||
Accounts payable and accrued liabilities |
453.1 |
368.0 | |||
Current liabilities of discontinued operations |
519.1 |
439.2 | |||
Total current liabilities |
974.8 |
810.1 | |||
Long-term debt |
1,534.0 |
851.4 | |||
Deferred tax liabilities |
131.9 |
155.0 | |||
Other long-term liabilities |
67.5 |
75.4 | |||
Long-term liabilities of discontinued operations |
566.5 |
1,174.0 | |||
Total liabilities |
3,274.7 |
3,065.9 | |||
Equity |
|||||
Common shares, no par – 139,268,878 ( |
915.5 |
909.3 | |||
Additional paid-in-capital |
63.3 |
54.2 | |||
(Accumulated deficit) retained earnings |
(20.7) |
22.9 | |||
Accumulated other comprehensive loss |
(92.7) |
(117.9) | |||
|
865.4 |
868.5 | |||
Non-controlling interests |
8.4 |
5.3 | |||
Total equity |
873.8 |
873.8 | |||
Total liabilities and equity |
$ |
4,148.5 |
$ |
3,939.7 |
COTT CORPORATION |
EXHIBIT 3 | |||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||||
(in millions of |
||||||||||||||
Unaudited |
||||||||||||||
For the Three Months Ended |
For the Nine Months Ended | |||||||||||||
|
|
|
| |||||||||||
Cash flows from operating activities of continuing operations: |
||||||||||||||
Net income (loss) |
$ |
44.6 |
$ |
(1.1) |
$ |
(12.1) |
$ |
6.4 | ||||||
Net income from discontinued operations, net of income taxes |
43.0 |
2.9 |
1.0 |
12.0 | ||||||||||
Net income (loss) from continuing operations |
1.6 |
(4.0) |
(13.1) |
(5.6) | ||||||||||
Adjustments to reconcile net income (loss) from continuing |
||||||||||||||
operations to cash flows from operating activities: |
||||||||||||||
Depreciation & amortization |
49.4 |
41.2 |
141.8 |
102.6 | ||||||||||
Amortization of financing fees |
0.6 |
0.3 |
1.4 |
0.3 | ||||||||||
Amortization of senior notes premium |
(1.1) |
(1.5) |
(3.9) |
(4.4) | ||||||||||
Share-based compensation expense |
2.1 |
(0.9) |
11.1 |
4.0 | ||||||||||
Benefit for deferred income taxes |
(3.1) |
1.3 |
1.4 |
(11.3) | ||||||||||
Unrealized commodity hedging gain, net |
(0.4) |
(1.0) |
(1.9) |
(0.8) | ||||||||||
Gain on extinguishment of debt, net |
– |
– |
(1.5) |
– | ||||||||||
(Gain) loss on disposal of property, plant & equipment, net |
(0.4) |
1.4 |
4.8 |
4.6 | ||||||||||
Other non-cash items |
(8.4) |
8.5 |
(13.2) |
7.7 | ||||||||||
Change in operating assets and liabilities, net of acquisitions: |
||||||||||||||
Accounts receivable |
(16.4) |
4.6 |
(36.7) |
(18.5) | ||||||||||
Inventories |
(4.9) |
7.4 |
(14.5) |
10.6 | ||||||||||
Prepaid expenses and other current assets |
2.5 |
1.6 |
(0.3) |
(3.5) | ||||||||||
Other assets |
0.7 |
(1.0) |
4.8 |
0.6 | ||||||||||
Accounts payable and accrued liabilities and other liabilities |
24.0 |
(6.8) |
58.5 |
(14.4) | ||||||||||
Net cash provided by operating activities from continuing |
||||||||||||||
operations |
46.2 |
51.1 |
138.7 |
71.9 | ||||||||||
Cash flows from investing activities of continuing operations: |
||||||||||||||
Acquisitions, net of cash received |
(3.4) |
(912.5) |
(33.4) |
(958.7) | ||||||||||
Additions to property, plant & equipment |
(38.2) |
(32.4) |
(97.1) |
(69.3) | ||||||||||
Additions to intangible assets |
(3.4) |
(1.2) |
(6.0) |
(2.3) | ||||||||||
Proceeds from sale of property, plant & equipment |
3.1 |
1.3 |
6.0 |
1.5 | ||||||||||
Other investing activities |
0.5 |
– |
0.9 |
– | ||||||||||
Net cash used in investing activities from continuing |
||||||||||||||
operations |
(41.4) |
(944.8) |
(129.6) |
(1,028.8) | ||||||||||
Cash flows from financing activities of continuing operations: |
||||||||||||||
Payments of long-term debt |
(0.3) |
(0.8) |
(101.9) |
(0.9) | ||||||||||
Issuance of long-term debt |
– |
– |
750.0 |
498.7 | ||||||||||
Premiums and costs paid upon extinguishment of long-term debt |
– |
– |
(7.7) |
– | ||||||||||
Issuance of common shares |
2.1 |
2.4 |
2.9 |
366.6 | ||||||||||
Common shares repurchased and cancelled |
(0.1) |
(3.4) |
(1.9) |
(4.5) | ||||||||||
Financing fees |
– |
(9.6) |
(11.1) |
(9.6) | ||||||||||
Dividends paid to common shareholders |
(8.4) |
(8.4) |
(25.1) |
(23.1) | ||||||||||
Payment of contingent consideration for acquisitions |
– |
(10.8) |
– |
(10.8) | ||||||||||
Other financing activities |
– |
– |
0.5 |
– | ||||||||||
Net cash (used in) provided by financing activities from |
||||||||||||||
continuing operations |
(6.7) |
(30.6) |
605.7 |
816.4 | ||||||||||
Cash flows from discontinued operations: |
||||||||||||||
Operating activities of discontinued operations |
47.4 |
44.9 |
56.1 |
87.5 | ||||||||||
Investing activities of discontinued operations |
(13.3) |
(8.2) |
(36.7) |
(29.3) | ||||||||||
Financing activities of discontinued operations |
(9.2) |
257.9 |
(610.5) |
128.3 | ||||||||||
Net cash provided by (used in) discontinued operations |
24.9 |
294.6 |
(591.1) |
186.5 | ||||||||||
Effect of exchange rate changes on cash |
2.0 |
(4.0) |
6.4 |
(4.2) | ||||||||||
Net increase (decrease) in cash, cash equivalents and |
||||||||||||||
restricted cash |
25.0 |
(633.7) |
30.1 |
41.8 | ||||||||||
Cash, cash equivalents and restricted cash, beginning of period |
123.2 |
752.6 |
118.1 |
77.1 | ||||||||||
Cash & cash equivalents, end of period |
148.2 |
118.9 |
148.2 |
118.9 | ||||||||||
Cash & cash equivalents of |
||||||||||||||
discontinued operations, end of period |
66.2 |
27.5 |
66.2 |
27.5 | ||||||||||
Cash & cash equivalents from |
||||||||||||||
continuing operations, end of period |
$ |
82.0 |
$ |
91.4 |
$ |
82.0 |
$ |
91.4 |
|
EXHIBIT 4 | ||||||||||||||
SEGMENT INFORMATION |
|||||||||||||||
(in millions of |
|||||||||||||||
Unaudited |
|||||||||||||||
For the Three Months Ended | |||||||||||||||
(in millions of |
Route Based |
Coffee, Tea |
All Other |
Corporate |
Total | ||||||||||
Revenue, net |
|||||||||||||||
Home and office bottled water delivery |
$ |
268.0 |
$ |
– |
$ |
– |
$ |
– |
$ |
268.0 | |||||
Coffee and tea services |
44.2 |
120.9 |
0.7 |
– |
165.8 | ||||||||||
Retail |
43.5 |
– |
11.7 |
– |
55.2 | ||||||||||
Other |
41.6 |
22.5 |
27.8 |
– |
91.9 | ||||||||||
Total 1 |
$ |
397.3 |
$ |
143.4 |
$ |
40.2 |
$ |
– |
$ |
580.9 | |||||
Gross Profit 2 |
$ |
249.2 |
$ |
36.8 |
$ |
6.8 |
$ |
– |
$ |
292.8 | |||||
Gross Margin % |
62.7% |
25.7% |
16.9% |
– |
50.4% | ||||||||||
Operating income (loss) |
$ |
34.6 |
$ |
3.7 |
$ |
4.7 |
$ |
(15.8) |
$ |
27.2 | |||||
Depreciation and Amortization |
$ |
41.7 |
$ |
6.0 |
$ |
1.7 |
$ |
– |
$ |
49.4 | |||||
For the Three Months Ended | |||||||||||||||
(in millions of |
Route Based |
Coffee, Tea |
All Other |
Corporate |
Total | ||||||||||
Revenue, net |
|||||||||||||||
Home and office bottled water delivery |
$ |
235.9 |
$ |
– |
$ |
– |
$ |
– |
$ |
235.9 | |||||
Coffee and tea services |
38.9 |
72.0 |
2.0 |
– |
112.9 | ||||||||||
Retail |
42.9 |
– |
10.0 |
– |
52.9 | ||||||||||
Other |
31.5 |
15.3 |
28.2 |
– |
75.0 | ||||||||||
Total 1 |
$ |
349.2 |
$ |
87.3 |
$ |
40.2 |
$ |
– |
$ |
476.7 | |||||
Gross Profit 2 |
$ |
216.5 |
$ |
24.5 |
$ |
6.7 |
$ |
– |
$ |
247.7 | |||||
Gross Margin % |
62.0% |
28.1% |
16.7% |
– |
52.0% | ||||||||||
Operating income (loss) |
$ |
21.2 |
$ |
(0.1) |
$ |
0.7 |
$ |
(8.2) |
$ |
13.6 | |||||
Depreciation and Amortization |
$ |
36.9 |
$ |
2.8 |
$ |
1.5 |
$ |
– |
$ |
41.2 | |||||
For the Nine Months Ended | |||||||||||||||
(in millions of |
Route Based |
Coffee, Tea |
All Other |
Corporate |
Total | ||||||||||
Revenue, net |
|||||||||||||||
Home and office bottled water delivery |
$ |
753.7 |
$ |
– |
$ |
– |
$ |
– |
$ |
753.7 | |||||
Coffee and tea services |
134.9 |
369.6 |
2.0 |
– |
506.5 | ||||||||||
Retail |
127.8 |
– |
33.9 |
– |
161.7 | ||||||||||
Other |
118.5 |
70.6 |
87.4 |
– |
276.5 | ||||||||||
Total 1 |
$ |
1,134.9 |
$ |
440.2 |
$ |
123.3 |
$ |
– |
$ |
1,698.4 | |||||
Gross Profit 2 |
$ |
710.9 |
$ |
117.9 |
$ |
19.9 |
$ |
– |
$ |
848.7 | |||||
Gross Margin % |
62.6% |
26.8% |
16.1% |
– |
50.0% | ||||||||||
Operating income (loss) |
$ |
66.3 |
$ |
13.3 |
$ |
6.9 |
$ |
(37.6) |
$ |
48.9 | |||||
Depreciation and Amortization |
$ |
119.1 |
$ |
17.2 |
$ |
5.5 |
$ |
– |
$ |
141.8 | |||||
For the Nine Months Ended | |||||||||||||||
(in millions of |
Route Based |
Coffee, Tea |
All Other |
Corporate |
Total | ||||||||||
Revenue, net |
|||||||||||||||
Home and office bottled water delivery |
$ |
575.1 |
$ |
– |
$ |
– |
$ |
– |
$ |
575.1 | |||||
Coffee and tea services |
100.4 |
72.0 |
2.0 |
– |
174.4 | ||||||||||
Retail |
127.7 |
– |
37.8 |
– |
165.5 | ||||||||||
Other |
79.1 |
15.3 |
92.6 |
– |
187.0 | ||||||||||
Total 1 |
$ |
882.3 |
$ |
87.3 |
$ |
132.4 |
$ |
– |
$ |
1,102.0 | |||||
Gross Profit 2 |
$ |
541.7 |
$ |
24.5 |
$ |
25.4 |
$ |
– |
$ |
591.6 | |||||
Gross Margin % |
61.4% |
28.1% |
19.2% |
– |
53.7% | ||||||||||
Operating income (loss) |
$ |
44.7 |
$ |
(0.1) |
$ |
7.5 |
$ |
(33.3) |
$ |
18.8 | |||||
Depreciation and Amortization |
$ |
94.6 |
$ |
2.8 |
$ |
5.2 |
$ |
– |
$ |
102.6 |
1 Includes related party concentrate sales to discontinued operations. |
2 Gross profit from external and related party revenues. |
|
EXHIBIT 5 | |||||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION | ||||||||||||
(EBITDA) |
||||||||||||
(in millions of |
||||||||||||
Unaudited |
||||||||||||
For the Three Months Ended |
For the Nine Months Ended | |||||||||||
|
|
|
| |||||||||
Net income (loss) from continuing operations |
$ |
1.6 |
$ |
(4.0) |
$ |
(13.1) |
$ |
(5.6) | ||||
Interest expense, net |
23.2 |
14.5 |
62.1 |
29.2 | ||||||||
Income tax expense (benefit) |
0.9 |
2.9 |
1.0 |
(4.8) | ||||||||
Depreciation & amortization |
49.4 |
41.2 |
141.8 |
102.6 | ||||||||
EBITDA |
$ |
75.1 |
$ |
54.6 |
$ |
191.8 |
$ |
121.4 | ||||
Acquisition and integration costs 1, 3 |
3.2 |
7.4 |
17.2 |
20.5 | ||||||||
Share-based compensation costs 2, 4 |
1.9 |
0.2 |
8.7 |
4.4 | ||||||||
Inventory step-up 5 |
– |
4.2 |
– |
4.7 | ||||||||
Unrealized commodity hedging gain, net 6 |
(0.4) |
(1.0) |
(1.9) |
(0.8) | ||||||||
Foreign exchange and other (gains) losses, net 7 |
(0.2) |
0.8 |
(1.1) |
(0.5) | ||||||||
Loss on disposal of property, plant & equipment, net 8 |
– |
1.4 |
5.7 |
4.6 | ||||||||
Gain on extinguishment of long-term debt, net 9 |
– |
– |
(1.5) |
– | ||||||||
Other adjustments 10 |
4.3 |
0.9 |
6.3 |
1.8 | ||||||||
Adjusted EBITDA |
$ |
83.9 |
$ |
68.5 |
$ |
225.2 |
$ |
156.1 |
11. Includes |
2Effective |
Location in Consolidated |
For the Three Months Ended |
For the Nine Months Ended | ||||||||||||
Statements of Operations |
|
|
|
| ||||||||||
(Unaudited) |
(Unaudited) | |||||||||||||
3Acquisition and integration costs |
Acquisition and integration expenses |
$ |
3.2 |
$ |
7.4 |
$ |
17.2 |
$ |
20.5 | |||||
4Share-based compensation costs |
Selling, general and administrative expenses |
1.9 |
0.2 |
8.7 |
4.4 | |||||||||
5Inventory step-up |
Cost of sales |
– |
4.2 |
– |
4.7 | |||||||||
6Unrealized commodity hedging gain, net |
Cost of sales |
(0.4) |
(1.0) |
(1.9) |
(0.8) | |||||||||
7Foreign exchange and other (gains) losses, net |
Other expense (income), net |
(0.2) |
0.8 |
(1.1) |
(0.5) | |||||||||
8Loss on disposal of property, plant & equipment, net |
Loss on disposal of property, |
|||||||||||||
plant & equipment, net |
– |
1.4 |
5.7 |
4.6 | ||||||||||
9Gain on extinguishment of long-term debt, net |
Other expense (income), net |
– |
– |
(1.5) |
– | |||||||||
10Other adjustments |
Selling, general and administrative expenses |
2.7 |
0.5 |
4.8 |
1.4 | |||||||||
Other expense (income), net |
1.6 |
0.4 |
1.5 |
0.4 |
|
EXHIBIT 6 | ||||||||
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 |
$ |
46.2 |
$ |
51.1 | |||||
Less: Additions to property, plant, and equipment |
(38.2) |
(32.4) | |||||||
Free Cash Flow |
$ |
8.0 |
$ |
18.7 | |||||
Plus: |
|||||||||
Acquisition and integration cash costs |
4.6 |
14.1 | |||||||
Adjusted Free Cash Flow |
$ |
12.6 |
$ |
32.8 | |||||
For the Nine Months Ended | |||||||||
|
| ||||||||
Net cash provided by operating activities |
|||||||||
continuing operations |
$ |
138.7 |
$ |
71.9 | |||||
Less: Additions to property, plant, and equipment |
$ |
(97.1) |
(69.3) | ||||||
Free Cash Flow |
$ |
41.6 |
$ |
2.6 | |||||
Plus: |
|||||||||
Acquisition and integration cash costs |
16.9 |
16.0 | |||||||
Adjusted Free Cash Flow |
$ |
58.5 |
$ |
18.6 |
|
EXHIBIT 7 | ||||||||||||
SUPPLEMENTARY INFORMATION – NON-GAAP – ADJUSTED NET LOSS |
|||||||||||||
(in millions of |
|||||||||||||
Unaudited |
|||||||||||||
For the Three Months Ended |
For the Nine Months Ended | ||||||||||||
|
|
|
| ||||||||||
Net income (loss) from continuing operations |
$ |
1.6 |
$ |
(4.0) |
$ |
(13.1) |
$ |
(5.6) | |||||
Acquisition and integration costs |
3.2 |
7.4 |
17.2 |
20.5 | |||||||||
Inventory step-up |
– |
4.2 |
– |
4.7 | |||||||||
Unrealized commodity hedging gain, net |
(0.4) |
(1.0) |
(1.9) |
(0.8) | |||||||||
Foreign exchange and other (gains) losses, net |
(0.2) |
0.8 |
(1.1) |
(0.5) | |||||||||
Loss on disposal of property, plant & equipment, net |
– |
1.4 |
5.7 |
4.6 | |||||||||
Interest payment on 2024 Notes1 |
– |
2.4 |
– |
2.4 | |||||||||
Interest expense on 2020 Notes2 |
– |
(10.7) |
(9.5) |
(31.9) | |||||||||
Tax valuation allowance |
– |
8.5 |
– |
8.5 | |||||||||
Gain on extinguishment of long-term debt, net |
– |
– |
(1.5) |
– | |||||||||
Other adjustments |
4.3 |
0.9 |
6.3 |
1.8 | |||||||||
Adjustments for tax effect 3 |
0.1 |
(4.5) |
(1.4) |
(10.7) | |||||||||
Adjusted net income (loss) from continuing operations |
$ |
8.6 |
$ |
5.4 |
$ |
0.7 |
$ |
(7.0) | |||||
Adjusted net income (loss) per common share from |
|||||||||||||
continuing operations |
|||||||||||||
Basic |
$ |
0.06 |
$ |
0.04 |
$ |
0.01 |
$ |
(0.06) | |||||
Diluted |
$ |
0.06 |
$ |
0.04 |
$ |
0.01 |
$ |
(0.06) | |||||
Weighted average common shares outstanding (millions) |
|||||||||||||
Basic |
139.2 |
138.2 |
139.0 |
124.9 | |||||||||
Diluted |
141.0 |
139.3 |
140.2 |
124.9 |
1Represents the interest paid on the 2024 Notes while the proceeds were held in escrow prior to funding a portion of the purchase price for the acquisition of our Eden business. |
2Represents the interest expense incurred on the 2020 Notes which are recorded within discontinued operations. In |
3Reflects tax effect of adjustments at the statutory tax rate within the applicable tax jurisdiction. |
|
EXHIBIT 8 | ||||||||||||||||
SUPPLEMENTARY INFORMATION – TOTAL REVENUES (CONTINUING AND DISCONTINUED OPERATIONS) |
|||||||||||||||||
(in millions of |
|||||||||||||||||
For the Three Months Ended |
For the Three Months Ended | ||||||||||||||||
Continuing |
Discontinued |
Intercompany |
Total |
Continuing |
Discontinued |
Intercompany |
Total | ||||||||||
Revenue, net |
$ |
580.9 |
$ |
425.6 |
$ |
(11.8) |
$ |
994.7 |
$ |
476.7 |
$ |
419.3 |
$ |
(10.9) |
$ |
885.1 |
|
EXHIBIT 9 | |||||
SUPPLEMENTARY INFORMATION – NON-GAAP – EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & | ||||||
AMORTIZATION – TOTAL COMPANY (CONTINUING OPERATIONS AND DISCONTINUED OPERATIONS. | ||||||
(EBITDA) |
||||||
(in millions of |
||||||
Unaudited |
||||||
For the Three Months Ended | ||||||
|
| |||||
Net income (loss) attributed to |
$ |
42.5 |
$ |
(2.6) | ||
Interest expense, net |
31.7 |
34.4 | ||||
Income tax (benefit) expense |
(30.0) |
4.5 | ||||
Depreciation & amortization |
70.7 |
63.2 | ||||
Net income attributable to non-controlling interests |
2.1 |
1.5 | ||||
EBITDA |
$ |
117.0 |
$ |
101.0 | ||
Acquisition and integration costs |
7.7 |
7.8 | ||||
Share-based compensation expense |
2.7 |
– | ||||
Inventory step-up |
– |
4.2 | ||||
Unrealized commodity hedging gain, net |
(0.4) |
(1.0) | ||||
Foreign exchange and other gains, net |
(6.9) |
(1.4) | ||||
Loss on disposal of property, plant & equipment, net |
– |
0.8 | ||||
Other adjustments |
6.5 |
(0.6) | ||||
Adjusted EBITDA |
$ |
126.6 |
$ |
110.8 |
CONTINUING OPERATIONS – ROUTE BASED SERVICES AND COFFEE, TEA AND EXTRACT SOLUTIONS |
EXHIBIT 10 | ||||||||||||||||||||
SUPPLEMENTARY INFORMATION – PRO FORMA REVENUE |
|||||||||||||||||||||
(in millions of |
|||||||||||||||||||||
Unaudited |
|||||||||||||||||||||
DS Services |
Total |
Eden |
Route Based |
S&D |
|||||||||||||||||
|
|
DS Services |
Springs |
Services |
Coffee and Tea |
Total | |||||||||||||||
For the Three Months Ended |
$ |
271.9 |
$ |
16.8 |
$ |
288.7 |
$ |
108.6 |
$ |
397.3 |
$ |
143.4 |
$ |
540.7 | |||||||
Pro Forma For the Three Months Ended |
$ |
262.3 |
$ |
16.9 |
$ |
279.2 |
$ |
105.7 |
$ |
384.9 |
$ |
133.5 |
$ |
518.4 | |||||||
Percentage Change |
3.7% |
-0.6% |
3.4% |
2.7% |
3.2% |
7.4% |
4.3% |
SOURCE