Cott Announces Acquisition of S&D Coffee and Tea, Reports Second Quarter 2016 Results and Declares Dividend
Aug 04, 2016
SECOND QUARTER 2016 HIGHLIGHTS
- DS Services achieved a 36% increase in organic new customer additions in
the United States .
Cott North America actual case volume increased by 4% due primarily to 10% growth in the sparkling water and mixer category and 15% growth in contract manufacturing, offset in part by declines in carbonated soft drinks and shelf stable juices.
- Gross profit increased to
$253 million and gross margin was 33.0% compared to gross profit of$241 million and gross margin of 30.9%.
- With the addition of
Eden Springs , and following the S&D transaction, fiscal 2019 operating cash flow is projected to be approximately$395 to$435 million and capital expenditures are expected to be in the range of$160 to$170 million , resulting in adjusted free cash flow of approximately$225 to$275 million .
“I am very pleased with another quarter of exceptional new customer additions across our entire
“The S&D acquisition is another great step in our stated strategy to enhance our existing home and office water delivery, coffee, tea and filtration businesses where we believe our platform, operating strength and synergies can be leveraged. The addition of S&D brings our Better for You beverage platform to over 65% of our adjusted EBITDA on a pro forma basis with carbonated soft drinks representing just 12% of adjusted EBITDA,” commented
“S&D was started in 1927 with a vision to produce quality coffee for the local area and has grown over the last 89 years to become a leading premier, national provider of quality coffee, tea and extracts for multiple channels,” said
S&D is a growing business with over
Compelling Strategic Rationale
The acquisition of S&D is in line with
- Provide a growing, leading position in coffee, tea and liquid extracts in
the United States ; - Continue
Cott’s shift to higher growth categories; - Provide approximately
$12 million of run-rate procurement cost, distribution and other synergies achieved over a four year period; - Serve as a platform for smaller accretive acquisitions;
- Improve Cott’s channel mix outside of large format retail and supermarket stores;
- Offer cross selling and vertical integration opportunities to leverage DS Services’ and
Cott’s products; and - Reduce customer concentration.
Transaction Highlights
The combination is expected to be accretive to cash flow from operations and in turn to adjusted free cash flow (excluding acquisition, integration and transaction costs) in the first full year. The transaction will be funded through a combination of incremental borrowings under
SECOND QUARTER 2016 GLOBAL PERFORMANCE
- Net cash provided by operating activities of
$87 million less$33 million of capital expenditures resulted in free cash flow of$54 million , representing an$8 million , or 19%, improvement over the prior year comparable period.
- Revenue of
$765 million was lower by 2% (broadly flat on a foreign exchange neutral basis) as a result of the mix shift from private label to contract manufacturing and the competitive landscape in our traditional business, offset by the growth of DS Services and the addition of the Aquaterra business.
Revenue Bridge ------------------------------------------------- 2015 Q2 Revenue $ 779.8 Aquaterra 16.8 Growth/Volume 3.9 Energy surcharge (1.6) Foreign exchange impact (12.6) Price/Mix (21.3) ----------------------- 2016 Q2 Revenue $ 765.0 =======================
- Gross profit increased 5% to
$253 million , with gross margin of 33.0% compared to 30.9%, driven primarily by the ongoing operational leverage at DS Services, the addition of the Aquaterra business, and cost and efficiency initiatives within our traditional business, offset in part by the negative impact of foreign exchange rates, increased operational costs and reducedU.K. volumes.
- Reported net income and net income per diluted share were
$7 million and$0.06 , respectively, compared to reported net income and net income per diluted share of$2 million and$0.02 , respectively. Adjusted net income and adjusted net income per diluted share were$19 million and$0.15 , respectively, compared to adjusted net income of$18 million and adjusted net income per diluted share of$0.18 .
- Adjusted EBITDA of
$105 million was lower by 3% (after investing$4 million behind home and office customer programs and$4 million of adverse foreign exchange impact) compared to$108 million . Reported EBITDA was$87 million compared to$103 million in the prior year driven primarily by financing and acquisition related costs associated with the acquisition ofEden Springs .
SECOND QUARTER 2016 REPORTING SEGMENT PERFORMANCE
- DS Services achieved a 36% increase in organic new customer additions in
the United States . Revenue increased 7% to$276 million due primarily to the addition of the Aquaterra business. Revenue on an energy surcharge neutral basis increased 8% (1% excluding Aquaterra as growth in home and office delivery water, single cup coffee delivery and retail sales was offset by reduced sales in traditional brew basket coffee). DS Services gross profit increased by 9% to$171 million while gross profit as a percentage of revenue increased to 62.0% from 60.7%. DS Services operating income increased to$18 million from$13 million . DS Services adjusted EBITDA increased to$50 million compared to$49 million , as DS Services growth and synergies were largely offset by$4 million of investment behind home and office customer programs.
DS Services Revenue Bridge ---------------------------------------------- 2015 Q2 Revenue$ 257.0 Aquaterra 16.8 Growth 3.5 Energy surcharge (1.6) -------------------- 2016 Q2 Revenue$ 275.7 ====================
Cott North America volume increased 4% in actual cases due primarily to 10% growth in the sparkling water and mixer category and 15% growth in contract manufacturing, offset in part by declines in carbonated soft drinks and shelf stable juices. Servings decreased by 1% with 5% growth in the sparkling water and mixer category and 10% growth in contract manufacturing, offset by declines in private label carbonated soft drinks and shelf stable juices. Revenue was lower by 3% (lower by 2% on a foreign exchange neutral basis) at$349 million due primarily to an overall product mix shift into contract manufacturing. Gross profit as a percentage of revenue increased to 15.1% compared to 14.8% due primarily to operational leverage associated with increased volumes offset in part by the negative impact of foreign exchange rates and increased manufacturing costs.
Cott North America Revenue Bridge ------------------------------------------------ 2015 Q2 Revenue $ 359.0 Growth/Volume 12.3 Foreign exchange impact (2.5) Price/Mix (19.6) ---------------------- 2016 Q2 Revenue $ 349.2 ======================
U.K. volume decreased 12% in actual cases and 8% in servings. Revenue decreased 14% (8% on a foreign exchange neutral basis) to$132 million due primarily to the competitive landscape and adverse foreign exchange impact. Gross profit as a percentage of revenue increased to 18.2% from 16.6% due primarily to lower inventory levels and tighter cost controls.
2016 FULL YEAR FREE CASH FLOW OUTLOOK
DECLARATION OF DIVIDEND
SECOND QUARTER RESULTS CONFERENCE CALL
International: (719) 325-4768
Passcode: 2383409
A live audio webcast will be available through
ACQUISITION MODELING CONFERENCE CALL
Financial Modeling Conference Call
International: (719) 325-2237
Passcode: 4121440
This is a live, listen-only dial-in telephone line.
Webcast
A live audio webcast will be available through the Company’s website at http://www.cott.com. The webcast will be recorded and archived for playback on the investor relations section of the website for two weeks following the event. A copy of the slide presentation that will be used on the call will be available through
ABOUT
With the acquisitions of
Non-GAAP Measures
To supplement its reporting of financial measures determined in accordance with GAAP,
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
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; changes in consumer tastes and preferences for existing products and our ability to develop and timely launch new products that appeal to such changing consumer tastes and preferences; a loss of or a reduction in business in our traditional business with key customers, particularly
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
Website: www.cott.com
COTT CORPORATION EXHIBIT 1 CONSOLIDATED STATEMENTS OF OPERATIONS (in millions ofU.S. dollars, except share and per share amounts,U.S. GAAP) Unaudited For the Three For the Six Months Months Ended Ended ------------------- -------------------- July 2, July 4, July 2, July 4, 2016 2015 2016 2015 --------- --------- --------- --------- Revenue, net$ 765.0 $ 779.8 $ 1,463.4 $ 1,489.6 Cost of sales 512.4 539.2 996.8 1,047.7 --------- --------- --------- --------- Gross profit 252.6 240.6 466.6 441.9 Selling, general and administrative expenses 202.1 190.2 399.1 378.7 Loss on disposal of property, plant & equipment, net 2.2 0.2 3.1 1.6 Acquisition and integration expenses 11.7 4.1 13.1 8.8 --------- --------- --------- --------- Operating income 36.6 46.1 51.3 52.8 Other expense (income), net 3.0 1.0 0.8 (9.4) Interest expense, net 27.0 27.9 54.8 55.6 --------- --------- --------- --------- Income (loss) before income taxes 6.6 17.2 (4.3) 6.6 Income tax benefit 2.3 1.1 11.3 10.5 --------- --------- --------- --------- Net income$ 8.9 $ 18.3 $ 7.0 $ 17.1 Less: Net income attributable to non-controlling interests 1.5 1.7 2.9 3.0 Less: Accumulated dividends on convertible preferred shares - 1.8 - 4.5 Less: Accumulated dividends on non-convertible preferred shares - 0.6 - 1.4 Less: Foreign exchange impact on redemption of preferred shares - 12.0 - 12.0 --------- --------- --------- --------- Net income (loss) attributed to Cott Corporation$ 7.4 $ 2.2 $ 4.1 $ (3.8) ========= ========= ========= ========= Net income (loss) per common share attributed toCott Corporation Basic$ 0.06 $ 0.02 $ 0.03 $ (0.04) Diluted$ 0.06 $ 0.02 $ 0.03 $ (0.04) Weighted average common shares outstanding (in millions) Basic 123.2 99.6 118.3 96.4 Diluted 124.2 100.2 119.0 96.4 Dividends declared per common share$ 0.06 $ 0.06 $ 0.12 $ 0.12 COTT CORPORATION EXHIBIT 2 CONSOLIDATED BALANCE SHEETS (in millions ofU.S. dollars, except share amounts,U.S. GAAP) Unaudited -------------------------------- July 2, 2016 January 2, 2016 --------------- --------------- ASSETS Current assets Cash & cash equivalents $ 249.5 $ 77.1 Restricted cash 503.1 - Accounts receivable, net of allowance 339.5 293.3 Income taxes recoverable 0.9 1.6 Inventories 247.1 249.4 Prepaid expenses and other current assets 24.1 17.2 --------------- --------------- Total current assets 1,364.2 638.6 Property, plant & equipment, net 770.2 769.8 Goodwill 777.4 759.6 Intangibles and other assets, net 690.4 711.7 Deferred tax assets 12.8 7.6 --------------- --------------- Total assets$ 3,615.0 $ 2,887.3 =============== =============== LIABILITIES AND EQUITY Current liabilities Short-term borrowings $ - $ 122.0 Current maturities of long-term debt 3.6 3.4 Accounts payable and accrued liabilities 468.0 437.6 --------------- --------------- Total current liabilities 471.6 563.0 Long-term debt 2,013.3 1,525.4 Deferred tax liabilities 63.7 76.5 Other long-term liabilities 72.5 76.5 --------------- --------------- Total liabilities 2,621.1 2,241.4 Equity Common shares, no par - 137,860,725 shares issued (January 2, 2016 - 109,695,435 shares issued) 904.9 534.7 Additional paid-in-capital 54.6 51.2 Retained earnings 119.0 129.6 Accumulated other comprehensive loss (90.8) (76.2) --------------- --------------- Total Cott Corporation equity 987.7 639.3 Non-controlling interests 6.2 6.6 --------------- --------------- Total equity 993.9 645.9 --------------- --------------- Total liabilities and equity$ 3,615.0 $ 2,887.3 =============== =============== COTT CORPORATION EXHIBIT 3 CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions ofU.S. dollars) Unaudited For the Three Months For the Six Months Ended Ended -------------------- -------------------- July 2, July 4, July 2, July 4, 2016 2015 2016 2015 --------- --------- --------- --------- Operating Activities Net income$ 8.9 $ 18.3 $ 7.0 $ 17.1 Depreciation & amortization 53.5 58.2 106.0 115.6 Amortization of financing fees 1.3 1.1 2.5 2.4 Amortization of senior notes premium (1.5) (1.4) (2.9) (2.9) Share-based compensation expense 3.8 3.7 6.2 6.1 Benefit for deferred income taxes (2.1) (5.2) (12.9) (16.9) Loss on disposal of property, plant & equipment, net 2.2 0.2 3.1 1.6 Other non-cash items 2.6 (6.3) 0.9 (16.5) Change in operating assets and liabilities, net of acquisitions: Accounts receivable (25.7) (19.4) (47.4) (60.7) Inventories 4.6 6.1 1.3 (4.9) Prepaid expenses and other current assets (3.4) (4.5) (7.8) 25.8 Other assets (1.2) (1.3) 1.2 (3.7) Accounts payable and accrued liabilities, and other liabilities 44.6 25.2 14.6 10.0 Income taxes recoverable - 1.0 (2.9) 1.6 --------- --------- --------- --------- Net cash provided by operating activities 87.6 75.7 68.9 74.6 --------- --------- --------- --------- Investing Activities Acquisitions, net of cash received (1.8) (0.5) (46.2) (0.5) Additions to property, plant & equipment (33.2) (29.9) (62.7) (57.2) Additions to intangibles and other assets (1.0) (0.1) (3.3) (2.2) Proceeds from sale of property, plant & equipment and sale- leaseback 0.2 40.1 2.9 40.5 Increase in restricted cash (2.8) - (2.8) - --------- --------- --------- --------- Net cash (used in) provided by investing activities (38.6) 9.6 (112.1) (19.4) --------- --------- --------- --------- Financing Activities Payments of long-term debt (0.4) (1.1) (1.5) (1.9) Borrowings under ABL 123.9 654.1 621.1 748.9 Payments under ABL (187.7) (674.4) (746.0) (777.2) Distributions to non- controlling interests (1.0) (1.6) (3.3) (3.6) Issuance of common shares 220.1 142.5 364.2 142.6 Financing fees - (0.2) - (0.2) Preferred shares repurchased and cancelled - (148.8) - (148.8) Common shares repurchased and cancelled - - (1.1) (0.7) Dividends to common and preferred shareholders (7.4) (9.0) (14.7) (18.0) Payment of deferred consideration for acquisitions - (2.5) - (2.5) --------- --------- --------- --------- Net cash provided by (used in) financing activities 147.5 (41.0) 218.7 (61.4) --------- --------- --------- --------- Effect of exchange rate changes on cash (2.1) 0.2 (3.1) (1.0) --------- --------- --------- --------- Net increase (decrease) in cash & cash equivalents 194.4 44.5 172.4 (7.2) Cash & cash equivalents, beginning of period 55.1 34.5 77.1 86.2 --------- --------- --------- --------- Cash & cash equivalents, end of period$ 249.5 $ 79.0 $ 249.5 $ 79.0 ========= ========= ========= ========= COTT CORPORATION EXHIBIT 4 SEGMENT INFORMATION (in millions ofU.S. dollars) Unaudited For the Three Months Ended July 2, 2016 ---------------------------------------------------------------------------- Cott (in millions of North Cott All U.S. dollars) DSS America U.K. Other Corporate Eliminations Total ------ --------- ------ ------ --------- ------------ ------ Revenue, net --------------- Private label retail$ 20.7 $ 280.9 $ 55.0 $ 1.1 $ -$ (0.3) $357.4 Branded retail 22.9 24.8 41.7 1.0 - (0.4) 90.0 Contract packaging - 35.7 31.0 5.0 - (2.5) 69.2 Home and office bottled water delivery 177.2 - - - - - 177.2 Office coffee services 30.0 - - - - - 30.0 Concentrate and other 24.9 7.8 4.6 7.7 - (3.8) 41.2 --------------- ------ --------- ------ ------ --------- ------------ ------ Total$275.7 $ 349.2 $132.3 $ 14.8 $ -$ (7.0) $765.0 =============== ====== ========= ====== ====== ========= ============ ====== Gross Profit (1)$170.8 $ 51.8 $ 24.1 $ 5.9 $ - $ -$252.6 =============== ====== ========= ====== ====== ========= ============ ====== Gross Margin % (2) 62.0% 15.1% 18.2% 39.9% - - 33.0% =============== ====== ========= ====== ====== ========= ============ ====== Operating income (loss)$ 17.8 $ 18.4 $ 11.7 $ 3.4 $ (14.7) $ -$ 36.6 =============== ====== ========= ====== ====== ========= ============ ====== For the Three Months Ended July 4, 2015 ---------------------------------------------------------------------------- Cott (in millions of North Cott All U.S. dollars) DSS America U.K. Other Corporate Eliminations Total ------ --------- ------ ------ --------- ------------ ------ Revenue, net --------------- Private label retail$ 17.2 $ 289.7 $ 71.8 $ 1.7 $ -$ (0.7) $379.7 Branded retail 20.6 30.8 48.5 1.3 - (0.5) 100.7 Contract packaging - 31.3 30.9 6.8 - (1.6) 67.4 Home and office bottled water delivery 164.8 - - - - - 164.8 Office coffee services 29.7 - - - - - 29.7 Concentrate and other 24.7 7.2 2.6 6.6 - (3.6) 37.5 --------------- ------ --------- ------ ------ --------- ------------ ------ Total$257.0 $ 359.0 $153.8 $ 16.4 $ -$ (6.4) $779.8 --------------- ====== ========= ====== ====== ========= ============ ====== Gross Profit (1)$156.1 $ 52.2 $ 25.6 $ 6.7 $ - $ -$240.6 =============== ====== ========= ====== ====== ========= ============ ====== Gross Margin % (2) 60.7% 14.8% 16.6% 40.9% - - 30.9% =============== ====== ========= ====== ====== ========= ============ ====== Operating income (loss)$ 13.2 $ 18.3 $ 14.6 $ 3.7 $ (3.7) $ -$ 46.1 =============== ====== ========= ====== ====== ========= ============ ====== For the Six Months Ended July 2, 2016 ---------------------------------------------------------------------------- Cott (in millions of North Cott All U.S. dollars) DSS America U.K. Other Corporate Eliminations Total ------ --------- ------ ------ --------- ------------ ------ Revenue, net --------------- Private label retail$ 37.6 $ 529.4 $106.0 $ 1.6 $ -$ (0.7) $673.9 Branded retail 47.2 51.6 78.3 1.8 - (0.7) 178.2 Contract packaging - 67.1 59.3 9.7 - (4.6) 131.5 Home and office bottled water delivery 339.2 - - - - - 339.2 Office coffee services 61.5 - - - - - 61.5 Concentrate and other 47.5 14.4 9.3 15.3 - (7.4) 79.1 --------------- ------ --------- ------ ------ --------- ------------ ------ Total 1,463$533.0 $ 662.5 $252.9 $ 28.4 $ -$ (13.4) $ .4 =============== ====== ========= ====== ====== --------- ============ ====== Gross Profit (1)$325.2 $ 86.7 $ 43.8 $ 10.9 $ - $ -$466.6 =============== ====== ========= ====== ====== ========= ============ ====== Gross Margin % (2) 61.0% 13.4% 17.3% 38.4% - - 31.9% =============== ====== ========= ====== ====== ========= ============ ====== Operating income (loss)$ 23.5 $ 19.0 $ 21.6 $ 5.9 $ (18.7) $ -$ 51.3 =============== ====== ========= ====== ====== ========= ============ ====== For the Six Months Ended July 4, 2015 ---------------------------------------------------------------------------- Cott (in millions of North Cott All U.S. dollars) DSS America U.K. Other Corporate Eliminations Total ------ --------- ------ ------ --------- ------------ ------ Revenue, net --------------- Private label retail$ 32.7 $ 557.4 $132.7 $ 2.8 $ -$ (1.2) $724.4 Branded retail 40.3 57.9 89.3 2.4 - (0.9) 189.0 Contract packaging - 56.9 59.3 10.7 - (1.6) 125.3 Home and office bottled water delivery 314.4 - - - - - 314.4 Office coffee services 61.7 - - - - - 61.7 Concentrate and other 48.2 15.5 4.7 13.5 - (7.1) 74.8 --------------- ------ --------- ------ ------ --------- ------------ ------ Total 1,489$497.3 $ 687.7 $286.0 $ 29.4 $ -$ (10.8) $ .6 --------------- ====== ========= ====== ====== ========= ============ ====== Gross Profit (1)$296.0 $ 93.7 $ 41.2 $ 11.0 $ - $ -$441.9 =============== ====== ========= ====== ====== ========= ============ ====== Gross Margin % (2) 59.5% 13.8% 14.4% 37.4% - - 29.7% =============== ====== ========= ====== ====== ========= ============ ====== Operating income (loss)$ 11.7 $ 25.5 $ 18.5 $ 5.3 $ (8.2) $ -$ 52.8 =============== ====== ========= ====== ====== ========= ============ ====== (1) Gross profit from external revenues. (2)Cott North America gross margin relative to external revenues. COTT CORPORATION EXHIBIT 5 SUPPLEMENTARY INFORMATION - NON-GAAP - Analysis of Revenue by Reporting Segment Unaudited For the Three Months Ended ---------------------------------------------------------------------------- (in millions of U.S. dollars, except percentage amounts) July 2, 2016 ---------------------------------------------------------------------------- Cott North DSS America Cott U.K. All Other Elimination Cott (1) ---------------------------------------------------------------------------- Change in revenue$ 18.7 $ (9.8) $ (21.5) $ (1.6) $ (0.6) $ (14.8) Impact of foreign exchange (2) - 2.5 9.1 1.0 - 12.6 -------------------------------------------------------------- Change excluding foreign exchange$ 18.7 $ (7.3) $ (12.4) $ (0.6) $ (0.6) $ (2.2) -------------------------------------------------------------- Percentage change in revenue 7.3% -2.7% -14.0% -9.8% 9.4% -1.9% -------------------------------------------------------------- Percentage change in revenue excluding foreign exchange 7.3% -2.0% -8.1% -3.7% 9.4% -0.3% ============================================================== For the Six Months Ended ---------------------------------------------------------------------------- (in millions of U.S. dollars, except percentage amounts) July 2, 2016 ---------------------------------------------------------------------------- Cott North DSS America Cott U.K. All Other Elimination Cott (1) ---------------------------------------------------------------------------- Change in revenue$ 35.7 $ (25.2) $ (33.1) $ (1.0) $ (2.6) $ (26.2) Impact of foreign exchange (2) - 5.8 16.0 2.0 - 23.8 -------------------------------------------------------------- Change excluding foreign exchange$ 35.7 $ (19.4) $ (17.1) $ 1.0 $ (2.6) $ (2.4) -------------------------------------------------------------- Percentage change in revenue 7.2% -3.7% -11.6% -3.4% 24.1% -1.8% -------------------------------------------------------------- Percentage change in revenue excluding foreign exchange 7.2% -2.8% -6.0% 3.4% 24.1% -0.2% ============================================================== (1)Cott includes the following reporting segments: DSS,Cott North America , CottU.K. and All Other. (2) 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. COTT CORPORATION EXHIBIT 6 SUPPLEMENTARY INFORMATION - NON-GAAP - EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION (EBITDA) (in millions ofU.S. dollars) Unaudited For the Three Months For the Six Months Ended Ended -------------------- -------------------- July 2, July 4, July 2, July 4, 2016 2015 2016 2015 --------- --------- --------- --------- Net income (loss) attributed to Cott Corporation$ 7.4 $ 2.2 $ 4.1 $ (3.8) Interest expense, net 27.0 27.9 54.8 55.6 Income tax benefit 2.3 1.1 11.3 10.5 Depreciation & amortization 53.5 58.2 106.0 115.6 Net income attributable to non- controlling interests 1.5 1.7 2.9 3.0 Accumulated dividends on preferred shares - 2.4 - 5.9 Foreign exchange impact on redemption of preferred shares - 12.0 - 12.0 --------- --------- --------- --------- EBITDA$ 87.1 $ 103.3 $ 156.5 $ 177.8 Acquisition and integration costs 11.7 4.1 13.1 8.8 Purchase accounting adjustments - - 0.5 4.2 Unrealized commodity hedging loss (gain), net 0.1 (0.9) 0.1 (1.2) Unrealized foreign exchange and other losses (gains), net 2.2 0.4 (0.4) (10.5) Loss on disposal of property, plant & equipment, net 2.2 0.2 3.1 1.7 Other adjustments 1.6 1.2 2.9 1.2 --------- --------- --------- --------- Adjusted EBITDA$ 104.9 $ 108.3 $ 175.8 $ 182.0 ========= ========= ========= ========= COTT CORPORATION EXHIBIT 7 SUPPLEMENTARY INFORMATION - NON-GAAP - FREE CASH FLOW AND ADJUSTED FREE CASH FLOW (in millions ofU.S. dollars) Unaudited For the Three Months Ended ------------------------------ July 2, 2016 July 4, 2015 -------------- -------------- Net cash provided by operating activities $ 87.6 $ 75.7 Less: Additions to property, plant & equipment (33.2) (29.9) -------------- -------------- Free Cash Flow $ 54.4 $ 45.8 ============== ============== -------------- -------------- Adjusted Free Cash Flow $ 54.4 $ 45.8 ============== ============== For the Six Months Ended ------------------------------ July 2, 2016 July 4, 2015 -------------- -------------- Net cash provided by operating activities $ 68.9 $ 74.6 Less: Additions to property, plant & equipment (62.7) (57.2) -------------- -------------- Free Cash Flow $ 6.2 $ 17.4 ============== ============== Less: Cash collateral (1) - (29.4) -------------- -------------- Adjusted Free Cash Flow $ 6.2$ (12.0) ============== ============== (1) In connection with the DSS Acquisition,$29.4 million of cash was required to collateralize certain DSS self-insurance programs. The$29.4 million was funded with borrowings under our ABL facility, and the cash collateral was included within prepaid and other current assets on our consolidated balance sheet atJanuary 3, 2015 . AfterJanuary 3, 2015 , additional letters of credit were issued from our available ABL facility capacity, and the cash collateral was returned to the Company and used to repay a portion of our outstanding ABL facility. COTT CORPORATION EXHIBIT 8 SUPPLEMENTARY INFORMATION - NON-GAAP - ADJUSTED NET INCOME (in millions ofU.S. dollars, except share and per share amounts) Unaudited For the Three Months Ended For the Six Months Ended ---------------------------- ---------------------------- July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015 ------------- ------------- ------------- ------------- Net income (loss) attributed to Cott Corporation $ 7.4 $ 2.2 $ 4.1$ (3.8) Acquisition and integration costs 11.7 4.1 13.1 8.8 Purchase accounting adjustments - - 0.5 4.2 Unrealized commodity hedging loss (gain), net 0.1 (0.9) 0.1 (1.2) Unrealized foreign exchange and other losses (gains), net 2.2 0.4 (0.4) (10.5) Foreign exchange impact on redemption of preferred shares - 12.0 - 12.0 Loss on disposal of property, plant & equipment, net 2.2 0.2 3.1 1.7 Other adjustments 1.6 1.2 2.9 1.2 Adjustments for tax effect (1) (6.4) (1.6) (7.1) (2.5) ------------- ------------- ------------- ------------- Adjusted net income attributed to Cott Corporation$ 18.8 $ 17.6 $ 16.3 $ 9.9 ============= ============= ============= ============= Adjusted net income per common share attributed to Cott Corporation Basic$ 0.15 $ 0.18 $ 0.14 $ 0.10 Diluted$ 0.15 $ 0.18 $ 0.14 $ 0.10 Weighted average common shares outstanding (in millions) Basic 123.2 99.6 118.3 96.4 Diluted 124.2 100.2 119.0 96.9 (1) Reflects tax effect of adjustments at the statutory tax rate within the applicable tax jurisdiction. DS SERVICES REPORTING SEGMENT EXHIBIT 9 SUPPLEMENTARY INFORMATION - NON-GAAP - ADJUSTED REVENUES (in millions ofU.S. dollars) Unaudited -------------- -------------- For the Three For the Three Months Ended Months Ended July 2, 2016 July 4, 2015 -------------- -------------- Revenue, net$ 275.7 $ 257.0 Energy surcharge adjustment (1) 1.6 Less: Aquaterra revenue, net (16.8) -------------- -------------- Adjusted Revenue excluding Aquaterra, net$ 260.5 $ 257.0 Net growth percentage 1.4% (1) Represents the impact of the energy surcharge on current period operations assuming prior period average rate. DS SERVICES REPORTING SEGMENT EXHIBIT 10 SUPPLEMENTARY INFORMATION - NON-GAAP - EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION (EBITDA) (in millions ofU.S. dollars) Unaudited For the Three Months For the Six Months Ended Ended -------------------- -------------------- July 2, July 4, July 2, July 4, 2016 2015 2016 2015 --------- --------- --------- --------- Operating income (loss)$ 17.8 $ 13.2 $ 23.5 $ 11.7 Other income (0.3) (0.2) (1.3) (0.4) --------- --------- --------- --------- EBIT - DS SERVICES$ 18.1 $ 13.4 $ 24.8 $ 12.1 Depreciation & amortization 29.3 31.8 57.7 62.0 --------- --------- --------- --------- EBITDA - DS SERVICES$ 47.4 $ 45.2 $ 82.5 $ 74.1 Acquisition and integration costs, net 1.0 3.1 2.1 6.1 Purchase accounting adjustments, net - - 0.5 4.2 Unrealized other gains, net (0.3) (0.2) (1.3) (0.4) Loss on disposal of property, plant & equipment 1.4 0.9 3.2 2.0 Other adjustments 0.2 - (0.9) - --------- --------- --------- --------- Adjusted EBITDA - DS SERVICES$ 49.7 $ 49.0 $ 86.1 $ 86.0 ========= ========= ========= ========= S&D COFFEE, INC. EXHIBIT 11 SUPPLEMENTARY INFORMATION - NON-GAAP - EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION (EBITDA) (in millions ofU.S. dollars) Unaudited Full Year Pro Forma 2016E ------------------- Operating income $ 16.3 Depreciation & amortization 16.8 ------------------- EBITDA $ 33.1 Shareholder expenses 4.7 Acquisition, integration and restructuring costs 0.4 Donations 0.5 ------------------- Adjusted EBITDA - S&D COFFEE, INC. $ 38.7 =================== Pro forma adjustments (1) 1.4 ------------------- Pro forma adjusted EBITDA - S&D COFFEE, INC. $ 40.1 =================== Expected synergies $ 12.0 Pro forma adjusted EBITDA 40.1 ------------------- Synergized pro forma adjusted EBITDA $ 52.1 Approximate purchase price 355.0 ------------------- Synergized pro forma adjusted EBITDA run rate multiple ~6.8x (1) Represents adjustments to compensation plan.
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CONTACT:Jarrod Langhans Investor Relations Tel: (813) 313-1732 Email Contact
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