Cott Reports Second Quarter 2015 Results and Announces Agreement to Acquire Two Home and Office Water Delivery Companies
Jul 30, 2015
SECOND QUARTER 2015 HIGHLIGHTS
- Revenue of
$780 million was higher by 42% compared to$549 million as a result of the acquisition of DS Services, offset in part by the impact of foreign exchange and a product mix shift towards contract manufacturing and across other private label categories in our traditional business.
- Gross profit was
$241 million compared to$79 million , which resulted in gross profit as a percentage of revenue of 30.9% compared to 14.4%.
- Adjusted EBITDA increased 93% to
$108 million compared to$56 million . Reported EBITDA was$103 million compared to$32 million .
- With continued focus on
Cott’s strategic priorities designed to build long-term shareowner value:
- DS Services revenue increased 2.2% (3.1% on an adjusted basis). Synergy capture and integration of DS Services continued to make good progress with
$2 million of synergies realized during the second quarter for a total of over$3 million of synergies realized to date.
- Two agreements have been signed for the acquisition of home and office delivery (“HOD”) water businesses which together generate approximately
$9 million in annual revenues. The acquisitions, which are subject to customary closing conditions, are expected to close in the third quarter of 2015.
- The
North America business unit continued to expand its contract manufacturing business, which grew by approximately 7 million serving equivalent cases. For theNorth America business unit, gross margin increased 165 basis points to 14.5%.
- Convertible and non-convertible preferred shares of
$149 million were fully redeemed onJune 11, 2015 with proceeds from our oversubscribed equity offering and cash on hand.
- DS Services revenue increased 2.2% (3.1% on an adjusted basis). Synergy capture and integration of DS Services continued to make good progress with
“I am pleased with the continued volume stability within our traditional business and the increased gross margins, EBITDA, and cash flow for the entire business,” commented
SECOND QUARTER 2015 GLOBAL PERFORMANCE
- Revenue of
$780 million was higher by 42%. Excluding the impact of foreign exchange and DS Services, revenue was lower by 1% primarily as a result of a product mix shift in our traditional business.
- Gross profit increased 204% to
$241 million , with gross margin of 30.9% compared to 14.4%. Excluding DS Services, gross margin increased by 170 basis points to 16.1% from 14.4% driven primarily by the addition of the higher marginAimia Foods business and cost and efficiency savings, offset in part by the impact of foreign exchange and the competitive environment in ourU.K. /Europe operations.
- Selling, general and administrative (“SG&A”) expenses were
$190 million compared to$51 million . The increase in SG&A expenses was due to$139 million in expenses associated with the addition of the DS Services business. Excluding DS Services, SG&A expenses were flat at$51 million .
- Interest expense increased to
$28 million due primarily to the additional debt incurred in connection with the DS Services acquisition.
- Other expense was
$1 million compared to$20 million due primarily to a net loss on foreign currency in the current quarter versus$19 million in expense related to the purchase of a majority of our 8.125% senior notes due in 2018 (“2018 Notes”) in a cash tender offer in the prior year.
- Income tax benefit was
$1 million compared to expense of$3 million .
- Redemption of the preferred shares resulted in a non-cash income statement charge of
$12 million despite issuing the shares in U.S. dollars as well as redeeming the shares in U.S. dollars. Due to our Canadian incorporation we were required to record the issuance of the preferred shares in Canadian currency and to record a non-cash charge to the income statement as a result of the change in the Canadian exchange rate from the date of issuance to the date of redemption.
- Adjusted net income and adjusted net income per diluted share were
$18 million and$0.18 , respectively, compared to adjusted net income of$17 million and adjusted net income per diluted share of$0.18 . Reported net income and net income per diluted share were$2.2 million and$0.02 , respectively, compared to reported net loss and loss per diluted share of$6 million and$0.06 , respectively.
- Adjusted EBITDA increased 93% to
$108 million due primarily to the addition of the DS Services business as well as volume stabilization and cost savings programs, offset in part by the competitive environment in ourU.K. /Europe operations and a$4 million impact of unfavorable foreign exchange rates.
- Free cash flow increased by 159% to
$46 million , reflecting$76 million of net cash provided by operating activities less$30 million of capital expenditures. Adjusted free cash flow increased 34%.
SECOND QUARTER 2015 REPORTING SEGMENT PERFORMANCE
North America volume was lower by 1% in actual cases and 2% in servings driven by a general market decline in CSDs and private label shelf stable juice, offset largely by increases in contract manufacturing and other growth areas such as sparkling waters and mixers. Revenue was lower by 5% (lower by 4% excluding the impact of foreign exchange) at$359 million due primarily to an overall product mix shift into contract manufacturing and across other private label categories. Gross margin increased 165 basis points to 14.5%, operating income increased 20% to$18 million , and EBITDA increased 9% to$39 million due primarily to stable volumes and tighter cost controls.
- DS Services revenue increased 2.2% to
$257 million due primarily to growth in HOD water, single cup coffee delivery, and retail sales, offset in part by a declining energy surcharge as a result of lower diesel fuel prices and reduced sales in traditional brew basket coffee. Revenue on an adjusted basis increased 3.1%. HOD average returnable five gallon and three gallon consumption increased 0.4% (excluding the impact of the Primo partnership) and the HOD customer base increased 0.7%. DS Services adjusted EBITDA increased by$3 million , or 7%, to$49 million compared to$46 million while operating income excluding the$3 million of acquisition and integration costs increased 9% to$16 million .
U.K. volume increased 10% in servings due primarily to the addition of theAimia Foods business. Revenue decreased 3% (increased 7% excluding the impact of foreign exchange) to$154 million due primarily to the impact of foreign exchange rates and the competitive environment, offset in part by the addition of theAimia Foods business.
- All Other revenue was
$16 million compared to$18 million due to product mix shifts withinRoyal Crown International andMexico . Gross profit increased to$7 million from$6 million .
SECOND QUARTER RESULTS CONFERENCE CALL
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ABOUT
With over 9,000 employees,
Non-GAAP Measures
To supplement its reporting of financial measures determined in accordance with GAAP,
Safe Harbor Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 conveying management’s expectations as to the future based on plans, estimates and projections at the time
Factors that could cause actual results to differ materially from those described in this press release include, among others: our ability to compete successfully in a highly competitive beverage category; changes in consumer tastes and preferences for existing products and our ability to develop and timely launch new products that appeal to such changing consumer tastes and preferences; a loss of or a reduction in business in our legacy
The foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in
Website: www.cott.com
COTT CORPORATION EXHIBIT 1 CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF NON-GAAP TO GAAP RESULTS (in millions of U.S. dollars, except share and per share amounts) Unaudited For the Three Months Ended July 4, 2015 ------------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP -------- ------------ ------------ ----------- -------- Revenue, net$ 779.8 $ -$ 2.3 $ -$ 782.1 Cost of sales 539.2 - - 0.9 540.1 -------- ------------ ------------ ----------- -------- Gross profit 240.6 - 2.3 (0.9) 242.0 Selling, general and administrative expenses 190.2 - 1.7 - 191.9 Loss (gain) on disposal of property, plant & equipment 0.2 - 1.0 (1.2) - Restructuring - - - - - Asset impairments - - - - - Acquisition and integration expenses 4.1 (4.1) - - - -------- ------------ ------------ ----------- -------- Operating income 46.1 4.1 (0.4) 0.3 50.1 Other expense (income), net 1.0 - - (1.0) - Interest expense, net 27.9 - - - 27.9 -------- ------------ ------------ ----------- -------- Income (loss) before income taxes - EBT 17.2 4.1 (0.4) 1.3 22.2 Income tax (benefit) expense (1.1) 1.4 (0.2) 0.4 0.5 -------- ------------ ------------ ----------- -------- Net income (loss)$ 18.3 $ 2.7 $ (0.2) $ 0.9 $ 21.7 Less: Net income attributable to non-controlling interests 1.7 - - - 1.7 Less: Accumulated dividends on convertible preferred shares 1.8 - - - 1.8 Less: Accumulated dividends on non- convertible preferred shares 0.6 - - - 0.6 Less: Foreign exchange impact on redemption of preferred shares 12.0 - (12.0) - - -------- ------------ ------------ ----------- -------- Net income (loss) attributed to Cott Corporation$ 2.2 $ 2.7 $ 11.8 $ 0.9 $ 17.6 ======== ============ ============ =========== ======== Net income (loss) per common share attributed to Cott Corporation Basic$ 0.02 $ 0.18 Diluted$ 0.02 $ 0.18 Weighted average outstanding shares (millions) attributed to Cott Corporation Basic 99.6 99.6 Diluted 100.2 100.2 Dividends declared per common share$ 0.06 EBT$ 17.2 $ 22.2 Interest expense, net 27.9 27.9 Depreciation & Amortization 58.2 58.2 -------- -------- EBITDA$ 103.3 $ 108.3 ======== ======== For the Three Months Ended June 28, 2014 --------------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash Non- GAAP Expenses Adjustments expenses GAAP ---------- ------------ ------------ ----------- -------- Revenue, net$ 549.2 $ - $ - $ -$ 549.2 Cost of sales 470.2 (1.2) - - 469.0 ---------- ------------ ------------ ----------- -------- Gross profit 79.0 1.2 - - 80.2 Selling, general and administrative expenses 50.7 - (0.2) - 50.5 Loss (gain) on disposal of property, plant & equipment (0.1) - - - (0.1) Restructuring 0.1 - (0.1) - - Asset impairments 0.3 - (0.3) - - Acquisition and integration expenses 1.8 (1.8) - - - ---------- ------------ ------------ ----------- -------- Operating income 26.2 3.0 0.6 - 29.8 Other expense (income), net 19.8 - (19.6) (0.7) (0.5) Interest expense, net 8.4 - - - 8.4 ---------- ------------ ------------ ----------- -------- Income (loss) before income taxes - EBT (2.0) 3.0 20.2 0.7 21.9 Income tax (benefit) expense 2.5 0.6 0.1 0.1 3.3 ---------- ------------ ------------ ----------- -------- Net income (loss)$ (4.5) $ 2.4 $ 20.1 $ 0.6 $ 18.6 Less: Net income attributable to non-controlling interests 1.4 - - - 1.4 Less: Accumulated dividends on convertible preferred shares - - - - - Less: Accumulated dividends on non- convertible preferred shares - - - - - Less: Foreign exchange impact on redemption of preferred shares - - - - - ---------- ------------ ------------ ----------- -------- Net income (loss) attributed to Cott Corporation$ (5.9) $ 2.4 $ 20.1 $ 0.6 $ 17.2 ========== ============ ============ =========== ======== Net income (loss) per common share attributed to Cott Corporation Basic$ (0.06) $ 0.18 Diluted$ (0.06) $ 0.18 Weighted average outstanding shares (millions) attributed to Cott Corporation Basic 94.2 94.2 Diluted 94.2 94.6 Dividends declared per common share$ 0.06 EBT$ (2.0) $ 21.9 Interest expense, net 8.4 8.4 Depreciation & Amortization 25.8 25.8 ---------- -------- EBITDA$ 32.2 $ 56.1 ========== ======== COTT CORPORATION EXHIBIT 2 CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF NON-GAAP TO GAAP RESULTS (in millions of U.S. dollars, except share and per share amounts) Unaudited For the Six Months Ended July 4, 2015 ------------------------------------------------------------ Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP --------- ------------- ------------- ------------ --------- Revenue, net$1,489.6 $ 0.9 $ 3.4 $ -$1,493.9 Cost of sales 1,047.7 (3.3) - 1.2 1,045.6 --------- ------------- ------------- ------------ --------- Gross profit 441.9 4.2 3.4 (1.2) 448.3 Selling, general and administrativ e expenses 378.7 - 2.8 - 381.5 Loss (gain) on disposal of property, plant & equipment 1.6 - 1.0 (2.7) (0.1) Restructuring - - - - - Asset impairments - - - - - Acquisition and integration expenses 8.8 (8.8) - - - --------- ------------- ------------- ------------ --------- Operating income 52.8 13.0 (0.4) 1.5 66.9 Other (income) expense, net (9.4) - - 9.9 0.5 Interest expense, net 55.6 - - - 55.6 --------- ------------- ------------- ------------ --------- Income (loss) before income taxes - EBT 6.6 13.0 (0.4) (8.4) 10.8 Income tax (benefit) expense (10.5) 4.7 (0.2) (2.0) (8.0) --------- ------------- ------------- ------------ --------- Net income (loss)$ 17.1 $ 8.3 $ (0.2) $ (6.4) $ 18.8 Less: Net income attributable to non- controlling interests 3.0 - - - 3.0 Less: Accumulated dividends on convertible preferred shares 4.5 - - - 4.5 Less: Accumulated dividends on non- convertible preferred shares 1.4 - - - 1.4 Less: Foreign exchange impact on redemption of preferred shares 12.0 - (12.0) - - --------- ------------- ------------- ------------ --------- Net (loss) income attributed to Cott Corporation$ (3.8) $ 8.3 $ 11.8 $ (6.4) $ 9.9 ========= ============= ============= ============ ========= Net (loss) income per common share attributed to Cott Corporation Basic$ (0.04) $ 0.10 Diluted$ (0.04) $ 0.10 Weighted average outstanding shares (millions) attributed to Cott Corporation Basic 96.4 96.4 Diluted 96.4 96.9 Dividends declared per common share$ 0.12 EBT$ 6.6 $ 10.8 Interest expense, net 55.6 55.6 Depreciation & Amortization 115.6 115.6 --------- --------- EBITDA$ 177.8 $ 182.0 ========= ========= For the Six Months Ended June 28, 2014 ------------------------------------------------------------ Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP --------- ------------- ------------- ------------ --------- Revenue, net$1,024.3 $ - $ - $ -$1,024.3 Cost of sales 889.1 (1.2) - - 887.9 --------- ------------- ------------- ------------ --------- Gross profit 135.2 1.2 - - 136.4 Selling, general and administrativ e expenses 97.6 - (0.3) - 97.3 Loss (gain) on disposal of property, plant & equipment - - - (0.1) (0.1) Restructuring 2.3 - (2.3) - - Asset impairments 1.9 - (1.9) - - Acquisition and integration expenses 2.9 (2.9) - - - --------- ------------- ------------- ------------ --------- Operating income 30.5 4.1 4.5 0.1 39.2 Other (income) expense, net 17.5 3.5 (20.5) (1.3) (0.8) Interest expense, net 18.2 - - - 18.2 --------- ------------- ------------- ------------ --------- Income (loss) before income taxes - EBT (5.2) 0.6 25.0 1.4 21.8 Income tax (benefit) expense 2.0 0.7 1.0 0.3 4.0 --------- ------------- ------------- ------------ --------- Net income (loss)$ (7.2) $ (0.1) $ 24.0 $ 1.1 $ 17.8 Less: Net income attributable to non- controlling interests 2.8 - - - 2.8 Less: Accumulated dividends on convertible preferred shares - - - - - Less: Accumulated dividends on non- convertible preferred shares - - - - - Less: Foreign exchange impact on redemption of preferred shares - - - - - --------- ------------- ------------- ------------ --------- Net (loss) income attributed to Cott Corporation$ (10.0) $ (0.1) $ 24.0 $ 1.1 $ 15.0 ========= ============= ============= ============ ========= Net (loss) income per common share attributed to Cott Corporation Basic$ (0.11) $ 0.16 Diluted$ (0.11) $ 0.16 Weighted average outstanding shares (millions) attributed to Cott Corporation Basic 94.3 94.3 Diluted 94.3 94.9 Dividends declared per common share$ 0.12 EBT$ (5.2) $ 21.8 Interest expense, net 18.2 18.2 Depreciation & Amortization 50.9 50.9 --------- --------- EBITDA$ 63.9 $ 90.9 ========= ========= COTT CORPORATION EXHIBIT 3 CONSOLIDATED BALANCE SHEETS (in millions of U.S. dollars, except share amounts, U.S. GAAP) Unaudited -------------- --------------- July 4, 2015 January 3, 2015 -------------- --------------- ASSETS Current assets Cash & cash equivalents $ 79.0 $ 86.2 Accounts receivable, net of allowance 366.6 305.7 Income taxes recoverable 1.3 1.6 Inventories 266.7 262.4 Prepaid expenses and other current assets 39.5 59.3 -------------- --------------- Total current assets 753.1 715.2 Property, plant & equipment, net 820.2 864.5 Goodwill 748.9 743.6 Intangibles and other assets, net 749.9 781.7 Deferred income taxes 1.3 2.5 Other tax receivable 0.1 0.2 -------------- --------------- Total assets$ 3,073.5 $ 3,107.7 ============== =============== LIABILITIES, PREFERRED SHARES AND EQUITY Current liabilities Short-term borrowings$ 198.2 $ 229.0 Current maturities of long-term debt 3.9 4.0 Accounts payable and accrued liabilities 453.9 420.3 -------------- --------------- Total current liabilities 656.0 653.3 Long-term debt 1,550.2 1,565.0 Deferred income taxes 101.8 119.9 Other long-term liabilities 88.5 71.8 -------------- --------------- Total liabilities 2,396.5 2,410.0 Convertible preferred shares,$1,000 stated value, no shares issued (January 3, 2015 - 116,054 shares issued) - 116.1 Non-convertible preferred shares,$1,000 stated value, no shares issued (January 3, 2015 - 32,711 shares issued) - 32.7 Equity Capital stock, no par - 109,585,142 shares issued (January 3, 2015 - 93,072,850 shares issued) 532.1 388.3 Additional paid-in-capital 50.9 46.6 Retained earnings 142.2 158.1 Accumulated other comprehensive loss (54.6) (51.0) -------------- --------------- Total Cott Corporation equity 670.6 542.0 Non-controlling interests 6.4 6.9 -------------- --------------- Total equity 677.0 548.9 -------------- --------------- Total liabilities, preferred shares and equity$ 3,073.5 $ 3,107.7 ============== ===============
COTT CORPORATION EXHIBIT 4 CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions of U.S. dollars) Unaudited For the Three Months Ended For the Six Months Ended ---------------------------- ---------------------------- July 4, 2015 June 28, 2014 July 4, 2015 June 28, 2014 ------------- -------------- ------------- -------------- Operating Activities Net income (loss)$ 18.3 $ (4.5) $ 17.1 $ (7.2) Depreciation & amortization 58.2 25.8 115.6 50.9 Amortization of financing fees 1.1 0.6 2.4 1.2 Amortization of senior notes premium (1.4) - (2.9) - Share-based compensation expense 3.7 2.1 6.1 3.4 (Decrease) increase in deferred income taxes (5.2) 2.6 (16.9) 1.9 Write-off of financing fees and discount - 3.0 - 3.3 Loss (gain) on disposal of property, plant & equipment 0.2 (0.1) 1.6 - Asset impairments - 0.3 - 1.9 Other non-cash items (6.3) (0.5) (16.5) (0.7) Change in operating assets and liabilities, net of acquisitions: Accounts receivable (19.4) (33.0) (60.7) (66.3) Inventories 6.1 8.9 (4.9) (7.6) Prepaid expenses and other current assets (4.5) (1.2) 25.8 (1.0) Other assets (1.3) (0.4) (3.7) (0.2) Accounts payable and accrued liabilities, and other liabilities 25.2 26.3 10.0 (2.2) Income taxes recoverable 1.0 (0.4) 1.6 (0.4) ------------- -------------- ------------- -------------- Net cash provided by (used in) operating activities 75.7 29.5 74.6 (23.0) ------------- -------------- ------------- -------------- Investing Activities Acquisitions, net of cash received (0.5) (80.8) (0.5) (80.8) Additions to property, plant & equipment (29.9) (11.8) (57.2) (20.6) Additions to intangibles and other assets (0.1) (1.3) (2.2) (2.8) Proceeds from sale of property, plant & equipment and sale-leaseback 40.1 - 40.5 - ------------- -------------- ------------- -------------- Net cash provided by (used in) investing activities 9.6 (93.9) (19.4) (104.2) ------------- -------------- ------------- -------------- Financing Activities Payments of long- term debt (1.1) (296.5) (1.9) (312.5) Issuance of long- term debt - 525.0 - 525.0 Borrowings under ABL 654.1 188.2 748.9 283.2 Payments under ABL (674.4) (284.3) (777.2) (299.4) Distributions to non-controlling interests (1.6) (2.5) (3.6) (4.8) Issuance of common shares 142.5 - 142.6 - Financing fees (0.2) (7.9) (0.2) (7.9) Preferred shares repurchased and cancelled (148.8) - (148.8) - Common shares repurchased and cancelled - (2.7) (0.7) (3.1) Dividends to common and preferred shareholders (9.0) (5.7) (18.0) (10.8) Payment of deferred consideration for acquisitions (2.5) - (2.5) - ------------- -------------- ------------- -------------- Net cash (used in) provided by financing activities (41.0) 113.6 (61.4) 169.7 ------------- -------------- ------------- -------------- Effect of exchange rate changes on cash 0.2 1.1 (1.0) 1.2 ------------- -------------- ------------- -------------- Net increase (decrease) in cash & cash equivalents 44.5 50.3 (7.2) 43.7 Cash & cash equivalents, beginning of period 34.5 40.6 86.2 47.2 ------------- -------------- ------------- -------------- Cash & cash equivalents, end of period$ 79.0 $ 90.9 $ 79.0 $ 90.9 ============= ============== ============= ============== COTT CORPORATION EXHIBIT 5 SEGMENT INFORMATION - NON-GAAP (in millions of U.S. dollars) Unaudited For the Three Months Ended July 4, 2015 ---------------------------------------------------------------------------- (in millions of U.S. dollars) North America DSS U.K. All Other ----------------------- --------------- ----------- ----------- ----------- Revenue ----------------------- Private label retail $ 289.7$ 17.2 $ 71.8 $ 1.7 Branded retail 30.8 20.6 48.5 1.3 Contract packaging 31.3 - 30.9 6.8 Home and office bottled water delivery - 164.8 - - Office coffee services - 29.7 - - Other 7.2 24.7 2.6 6.6 ----------------------- --------------- ----------- ----------- ----------- Total $ 359.0$ 257.0 $ 153.8 $ 16.4 ======================= =============== =========== =========== =========== Operating income (loss) $ 18.3$ 13.2 $ 14.6 $ 3.7 ======================= =============== =========== =========== =========== For the Three Months Ended June 28, 2014 ---------------------------------------------------------------------------- (in millions of U.S. dollars) North America DSS U.K. All Other ----------------------- --------------- ----------- ----------- ----------- Revenue ----------------------- Private label retail $ 313.9 $ -$ 79.0 $ 1.8 Branded retail 27.9 - 48.3 1.1 Contract packaging 28.4 - 29.3 7.7 Home and office bottled water delivery - - - - Office coffee services - - - - Other 9.1 - 1.1 7.7 ----------------------- --------------- ----------- ----------- ----------- Total $ 379.3 $ -$ 157.7 $ 18.3 ----------------------- =============== =========== =========== =========== Operating income (loss) $ 15.3 $ -$ 10.7 $ 3.1 ======================= =============== =========== =========== =========== For the Six Months Ended July 4, 2015 ---------------------------------------------------------------------------- (in millions of U.S. dollars) North America DSS U.K. All Other ----------------------- --------------- ----------- ----------- ----------- Revenue ----------------------- Private label retail $ 557.4$ 32.7 $ 132.7 $ 2.8 Branded retail 57.9 40.3 89.3 2.4 Contract packaging 56.9 - 59.3 10.7 Home and office bottled water delivery - 314.4 - - Office coffee services - 61.7 - - Other 15.5 48.2 4.7 13.5 ----------------------- --------------- ----------- ----------- ----------- Total $ 687.7$ 497.3 $ 286.0 $ 29.4 ======================= =============== =========== =========== =========== Operating income (loss) $ 25.5$ 11.7 $ 18.5 $ 5.3 ======================= =============== =========== =========== =========== For the Six Months Ended June 28, 2014 ---------------------------------------------------------------------------- (in millions of U.S. dollars) North America DSS U.K. All Other ----------------------- --------------- ----------- ----------- ----------- Revenue ----------------------- Private label retail $ 613.6 $ -$ 142.5 $ 2.7 Branded retail 53.0 - 79.7 2.3 Contract packaging 48.3 - 49.4 14.5 Home and office bottled water delivery - - - - Office coffee services - - - - Other 15.2 - 1.7 13.6 ----------------------- --------------- ----------- ----------- ----------- Total $ 730.1 $ -$ 273.3 $ 33.1 ----------------------- =============== =========== =========== =========== Operating income (loss) $ 17.8 $ -$ 12.9 $ 5.6 ======================= =============== =========== =========== =========== For the Three Months Ended July 4, 2015 --------------------------------------------------------------------------- (in millions of U.S. dollars) Corporate Elimination Total --------------------------------------- ---------------- ---------------- Revenue ----------------------- Private label retail $ - $ (0.7) $ 379.7 Branded retail - (0.5) 100.7 Contract packaging - (1.6) 67.4 Home and office bottled water delivery - - 164.8 Office coffee services - - 29.7 Other - (3.6) 37.5 --------------------------------------- ---------------- ---------------- Total $ - $ (6.4) $ 779.8 =======================---------------- ================ ================ Operating income (loss)$ (3.7) $ - $ 46.1 ======================================= ================ ================ For the Three Months Ended June 28, 2014 --------------------------------------------------------------------------- (in millions of U.S. dollars) Corporate Elimination Total --------------------------------------- ---------------- ---------------- Revenue ----------------------- Private label retail $ - $ (0.3) $ 394.4 Branded retail - (0.5) 76.8 Contract packaging - (1.9) 63.5 Home and office bottled water delivery - - - Office coffee services - - - Other - (3.4) 14.5 --------------------------------------- ---------------- ---------------- Total $ - $ (6.1) $ 549.2 -----------------------================ ================ ================ Operating income (loss)$ (2.9) $ - $ 26.2 ======================================= ================ ================ For the Six Months Ended July 4, 2015 --------------------------------------------------------------------------- (in millions of U.S. dollars) Corporate Elimination Total --------------------------------------- ---------------- ---------------- Revenue ----------------------- Private label retail $ - $ (1.2) $ 724.4 Branded retail - (0.9) 189.0 Contract packaging - (1.6) 125.3 Home and office bottled water delivery - - 314.4 Office coffee services - - 61.7 Other - (7.1) 74.8 --------------------------------------- ---------------- ---------------- Total $ - $ (10.8)$ 1,489.6 =======================---------------- ================ ================ Operating income (loss)$ (8.2) $ - $ 52.8 ======================================= ================ ================ For the Six Months Ended June 28, 2014 --------------------------------------------------------------------------- (in millions of U.S. dollars) Corporate Elimination Total --------------------------------------- ---------------- ---------------- Revenue ----------------------- Private label retail $ - $ (0.4) $ 758.4 Branded retail - (0.9) 134.1 Contract packaging - (4.8) 107.4 Home and office bottled water delivery - - - Office coffee services - - - Other - (6.1) 24.4 --------------------------------------- ---------------- ---------------- Total $ - $ (12.2)$ 1,024.3 -----------------------================ ================ ================ Operating income (loss)$ (5.8) $ - $ 30.5 ======================================= ================ ================ TRADITIONAL COTT EXHIBIT 6 SUPPLEMENTARY INFORMATION RECONCILIATION OF NON-GAAP TO GAAP RESULTS (in millions of U.S. dollars) Unaudited For the Three Months Ended July 4, 2015 ---------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP -------- ----------- ----------- ---------- -------- Revenue, net$ 522.8 $ - $ - $ -$ 522.8 Cost of sales 438.4 - - 0.9 439.3 -------- ----------- ----------- ---------- -------- Gross profit 84.4 - - (0.9) 83.5 Selling, general and administrative expenses 51.2 - (0.6) - 50.6 (Gain) loss on disposal of property, plant & equipment (0.7) - 1.0 (0.3) - Restructuring - - - - - Asset impairments - - - - - Acquisition and integration expenses 1.0 (1.0) - - - -------- ----------- ----------- ---------- -------- Operating income 32.9 1.0 (0.4) (0.6) 32.9 Other expense (income), net 1.2 - - (1.2) - -------- ----------- ----------- ---------- -------- Income before interest expense and income taxes - EBIT 31.7 1.0 (0.4) 0.6 32.9 Depreciation & Amortization 26.4 26.4 -------- -------- EBITDA - TRADITIONAL COTT$ 58.1 $ 59.3 ======== ======== For the Six Months Ended July 4, 2015 ---------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP -------- ----------- ----------- ---------- -------- Revenue, net$ 992.3 $ - $ - $ -$ 992.3 Cost of sales 846.5 - - 1.2 847.7 -------- ----------- ----------- ---------- -------- Gross profit 145.8 - - (1.2) 144.6 Selling, general and administrative expenses 102.4 - (0.6) - 101.8 (Gain) loss on disposal of property, plant & equipment (0.4) - 1.0 (0.7) (0.1) Restructuring - - - - - Asset impairments - - - - - Acquisition and integration expenses 2.7 (2.7) - - - -------- ----------- ----------- ---------- -------- Operating income 41.1 2.7 (0.4) (0.5) 42.9 Other (income) expense, net (9.0) - - 9.5 0.5 -------- ----------- ----------- ---------- -------- Income before interest expense and income taxes - EBIT 50.1 2.7 (0.4) (10.0) 42.4 Depreciation & Amortization 53.6 53.6 -------- -------- EBITDA - TRADITIONAL COTT$ 103.7 $ 96.0 ======== ======== For the Three Months Ended June 28, 2014 ---------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP -------- ----------- ----------- ---------- -------- Revenue, net$ 549.2 $ - $ - $ -$ 549.2 Cost of sales 470.2 (1.2) - - 469.0 -------- ----------- ----------- ---------- -------- Gross profit 79.0 1.2 - - 80.2 Selling, general and administrative expenses 50.7 - (0.2) - 50.5 (Gain) loss on disposal of property, plant & equipment (0.1) - - - (0.1) Restructuring 0.1 - (0.1) - - Asset impairments 0.3 - (0.3) - - Acquisition and integration expenses 1.8 (1.8) - - - -------- ----------- ----------- ---------- -------- Operating income 26.2 3.0 0.6 - 29.8 Other expense (income), net 19.8 - (19.6) (0.7) (0.5) -------- ----------- ----------- ---------- -------- Income before interest expense and income taxes - EBIT 6.4 3.0 20.2 0.7 30.3 Depreciation & Amortization 25.8 25.8 -------- -------- EBITDA - TRADITIONAL COTT$ 32.2 $ 56.1 ======== ======== For the Six Months Ended June 28, 2014 ---------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP -------- ----------- ----------- ---------- -------- Revenue, net$1,024.3 $ - $ - $ -$1,024.3 Cost of sales 889.1 (1.2) - - 887.9 -------- ----------- ----------- ---------- -------- Gross profit 135.2 1.2 - - 136.4 Selling, general and administrative expenses 97.6 - (0.3) - 97.3 (Gain) loss on disposal of property, plant & equipment - - - (0.1) (0.1) Restructuring 2.3 - (2.3) - - Asset impairments 1.9 - (1.9) - - Acquisition and integration expenses 2.9 (2.9) - - - -------- ----------- ----------- ---------- -------- Operating income 30.5 4.1 4.5 0.1 39.2 Other (income) expense, net 17.5 3.5 (20.5) (1.3) (0.8) -------- ----------- ----------- ---------- -------- Income before interest expense and income taxes - EBIT 13.0 0.6 25.0 1.4 40.0 Depreciation & Amortization 50.9 50.9 -------- -------- EBITDA - TRADITIONAL COTT$ 63.9 $ 90.9 ======== ======== DS SERVICES EXHIBIT 7 SUPPLEMENTARY INFORMATION RECONCILIATION OF NON-GAAP TO GAAP RESULTS (in millions of U.S. dollars) Unaudited For the Three Months Ended July 4, 2015 ------------------------------------------------------ Acquisition Unrealized and Other and other Integration Adjustments non-cash GAAP Expenses (1) expenses Non-GAAP -------- ----------- ------------ ---------- --------- Revenue, net$ 257.0 $ -$ 2.3 $ -$ 259.3 Cost of sales 100.8 - - - 100.8 -------- ----------- ------------ ---------- --------- Gross profit 156.2 - 2.3 - 158.5 Selling, general and administrative expenses 139.0 - 2.3 - 141.3 Loss on disposal of property, plant & equipment 0.9 - - (0.9) - Acquisition and integration expenses 3.1 (3.1) - - - -------- ----------- ------------ ---------- --------- Operating income 13.2 3.1 - 0.9 17.2 Other income, net (0.2) - - 0.2 - -------- ----------- ------------ ---------- --------- Income before interest expense and income taxes - EBIT 13.4 3.1 - 0.7 17.2 Depreciation & Amortization 31.8 31.8 -------- --------- EBITDA - DS SERVICES$ 45.2 $ 49.0 ======== ========= For the Six Months Ended July 4, 2015 ------------------------------------------------------ Acquisition Unrealized and Other and other Integration Adjustments non-cash GAAP Expenses (1) expenses Non-GAAP -------- ----------- ------------ ---------- --------- Revenue, net$ 497.3 $ 0.9 $ 3.4 $ -$ 501.6 Cost of sales 201.2 (3.3) - - 197.9 -------- ----------- ------------ ---------- --------- Gross profit 296.1 4.2 3.4 - 303.7 Selling, general and administrative expenses 276.3 - 3.4 - 279.7 Loss on disposal of property, plant & equipment 2.0 - - (2.0) - Acquisition and integration expenses 6.1 (6.1) - - - -------- ----------- ------------ ---------- --------- Operating income 11.7 10.3 - 2.0 24.0 Other income, net (0.4) - - 0.4 - -------- ----------- ------------ ---------- --------- Income before interest expense and income taxes - EBIT 12.1 10.3 - 1.6 24.0 Depreciation & Amortization 62.0 62.0 -------- --------- EBITDA - DS SERVICES$ 74.1 $ 86.0 ======== ========= Proforma ----------------------------------------------------- For the Three Months Ended June 28, 2014 ----------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP -------- ----------- ----------- ---------- -------- Revenue, net$ 251.4 $ - $ - $ -$ 251.4 Cost of sales 101.9 - - - 101.9 -------- ----------- ----------- ---------- -------- Gross profit 149.5 - - - 149.5 Selling, general and administrative expenses 134.5 (0.7) (0.3) (0.7) 132.8 Loss on disposal of property, plant & equipment - - - - - Acquisition and integration expenses - - - - - -------- ----------- ----------- ---------- -------- Operating income 15.0 0.7 0.3 0.7 16.7 Other income, net (0.2) - - - (0.2) -------- ----------- ----------- ---------- -------- Income before interest expense and income taxes - EBIT 15.2 0.7 0.3 0.7 16.9 Depreciation & Amortization 28.7 28.7 -------- -------- EBITDA - DS SERVICES$ 43.9 $ 45.6 ======== ======== Proforma ----------------------------------------------------- For the Six Months Ended June 28, 2014 ----------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP -------- ----------- ----------- ---------- -------- Revenue, net$ 481.9 $ - $ - $ -$ 481.9 Cost of sales 197.1 - - - 197.1 -------- ----------- ----------- ---------- -------- Gross profit 284.8 - - - 284.8 Selling, general and administrative expenses 269.4 (2.1) (2.8) (1.3) 263.2 Loss on disposal of property, plant & equipment - - - - - Acquisition and integration expenses - - - - - -------- ----------- ----------- ---------- -------- Operating income 15.4 2.1 2.8 1.3 21.6 Other income, net (0.5) - - - (0.5) -------- ----------- ----------- ---------- -------- Income before interest expense and income taxes - EBIT 15.9 2.1 2.8 1.3 22.1 Depreciation & Amortization 56.2 56.2 -------- -------- EBITDA - DS SERVICES$ 72.1 $ 78.3 ======== ======== (1) Represents the impact of energy fuel surchage rate on current year operations assuming prior year average rate. (1) Represents the impact of energy fuel surchage rate on current year operations assuming prior year average rate. NORTH AMERICA EXHIBIT 8 SUPPLEMENTARY INFORMATION RECONCILIATION OF NON-GAAP TO GAAP RESULTS (in millions of U.S. dollars) Unaudited For the Three Months Ended July 4, 2015 ----------------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP --------- ----------- ----------- ----------- --------- Revenue, net$ 352.6 $ - $ - $ -$ 352.6 Intercompany sales 6.4 - - - 6.4 --------- ----------- ----------- ----------- --------- BU Revenue, net 359.0 - - - 359.0 Cost of sales 306.9 - - 1.0 307.9 --------- ----------- ----------- ----------- --------- Gross profit 52.1 - - (1.0) 51.1 Selling, general and administrative expenses 34.0 - (0.5) - 33.5 (Gain) loss on disposal of property, plant & equipment (0.7) - 1.0 (0.3) - Restructuring - - - - - Asset impairments - - - - - Acquisition and integration expenses 0.5 (0.5) - - - --------- ----------- ----------- ----------- --------- Operating income 18.3 0.5 (0.5) (0.7) 17.6 Other expense (income), net 0.3 - - (0.3) - --------- ----------- ----------- ----------- --------- Income before interest expense and income taxes - EBIT 18.0 0.5 (0.5) (0.4) 17.6 Depreciation & Amortization 20.5 20.5 --------- --------- EBITDA - NORTH AMERICA$ 38.5 $ 38.1 ========= ========= For the Three Months Ended June 28, 2014 ----------------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP --------- ----------- ----------- ----------- --------- Revenue, net$ 373.2 $ - $ - $ -$ 373.2 Intercompany sales 6.1 - - - 6.1 --------- ----------- ----------- ----------- --------- BU Revenue, net 379.3 - - - 379.3 Cost of sales 330.5 - - - 330.5 --------- ----------- ----------- ----------- --------- Gross profit 48.8 - - - 48.8 Selling, general and administrative expenses 33.4 - (0.2) - 33.2 (Gain) loss on disposal of property, plant & equipment (0.1) - - - (0.1) Restructuring 0.1 - (0.1) - - Asset impairments - - - - - Acquisition and integration expenses 0.1 (0.1) - - - --------- ----------- ----------- ----------- --------- Operating income 15.3 0.1 0.3 - 15.7 Other expense (income), net 0.6 - - (0.6) - --------- ----------- ----------- ----------- --------- Income before interest expense and income taxes - EBIT 14.7 0.1 0.3 0.6 15.7 Depreciation & Amortization 20.5 20.5 --------- --------- EBITDA - NORTH AMERICA$ 35.2 $ 36.2 ========= ========= For the Six Months Ended July 4, 2015 ----------------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP --------- ----------- ----------- ----------- --------- Revenue, net$ 676.9 $ - $ - $ -$ 676.9 Intercompany sales 10.8 - - - 10.8 --------- ----------- ----------- ----------- --------- BU Revenue, net 687.7 - - - 687.7 Cost of sales 594.0 - - 1.0 595.0 --------- ----------- ----------- ----------- --------- Gross profit 93.7 - - (1.0) 92.7 Selling, general and administrative expenses 66.6 - (0.5) - 66.1 (Gain) loss on disposal of property, plant & equipment (0.4) - 1.0 (0.6) - Restructuring - - - - - Asset impairments - - - - - Acquisition and integration expenses 2.0 (2.0) - - - --------- ----------- ----------- ----------- --------- Operating income 25.5 2.0 (0.5) (0.4) 26.6 Other expense (income), net 0.5 - - (0.5) - --------- ----------- ----------- ----------- --------- Income before interest expense and income taxes - EBIT 25.0 2.0 (0.5) 0.1 26.6 Depreciation & Amortization 41.9 41.9 --------- --------- EBITDA - NORTH AMERICA$ 66.9 $ 68.5 ========= ========= For the Six Months Ended June 28, 2014 ----------------------------------------------------------- Acquisition Unrealized and and other Integration Other non-cash GAAP Expenses Adjustments expenses Non-GAAP --------- ----------- ----------- ----------- --------- Revenue, net$ 717.9 $ - $ - $ -$ 717.9 Intercompany sales 12.2 - - - 12.2 --------- ----------- ----------- ----------- --------- BU Revenue, net 730.1 - - - 730.1 Cost of sales 643.3 - - - 643.3 --------- ----------- ----------- ----------- --------- Gross profit 86.8 - - - 86.8 Selling, general and administrative expenses 65.1 - (0.2) - 64.9 (Gain) loss on disposal of property, plant & equipment (0.1) - - - (0.1) Restructuring 2.2 - (2.2) - - Asset impairments 0.9 - (0.9) - - Acquisition and integration expenses 0.9 (0.9) - - - --------- ----------- ----------- ----------- --------- Operating income 17.8 0.9 3.3 - 22.0 Other expense (income), net 0.7 - - (0.8) (0.1) --------- ----------- ----------- ----------- --------- Income before interest expense and income taxes - EBIT 17.1 0.9 3.3 0.8 22.1 Depreciation & Amortization 41.1 41.1 --------- --------- EBITDA - NORTH AMERICA$ 58.2 $ 63.2 ========= ========= COTT CORPORATION EXHIBIT 9 SUPPLEMENTARY INFORMATION - NON-GAAP - Analysis of Revenue by Reporting Segment Unaudited --------------- ------------------------------------------------------------ (in millions of U.S. dollars, except percentage amounts) For the Three Months Ended July 4, 2015 --------------- ----------------------------------------------------------- North All America DSS U.K. Other Elimination Total --------------- -------- -------- ----- -------- ----------- --------- Change in revenue$ (20.3) $ 257.0 $(3.9) $ (1.9) $ (0.3) $ 230.6 Impact of foreign exchange(1) 5.2 - 14.8 1.3 - 21.3 -------- -------- ----- -------- ----------- --------- Change excluding foreign exchange$ (15.1) $ 257.0 $10.9 $ (0.6) $ (0.3) $ 251.9 -------- -------- ----- -------- ----------- --------- Percentage change in revenue -5.4% - -2.5% -10.4% 4.9% 42.0% -------- -------- ----- -------- ----------- --------- Percentage change in revenue excluding foreign exchange -4.0% - 6.9% -3.3% 4.9% 45.9% -------- -------- ----- -------- ----------- --------- Impact of DSS Acquisition$ (1.6) $ (257.0) $ - $ -$ 1.6 $ (257.0) -------- -------- ----- -------- ----------- --------- Change excluding foreign exchange and DSS Acquisition$ (16.7) $ -$10.9 $ (0.6) $ 1.3 $ (5.1) -------- -------- ----- -------- ----------- --------- Percentage change in revenue excluding foreign exchange and DSS Acquisition -4.4% - 6.9% -3.3% -21.3% -0.9% -------- -------- ----- -------- ----------- --------- --------------- ----------------------------------------------------------- (in millions of U.S. dollars, except percentage amounts) For the Six Months Ended July 4, 2015 --------------- ----------------------------------------------------------- North All America DSS U.K. Other Elimination Total --------------- -------- -------- ----- ------- ----------- --------- Change in revenue$ (42.4) $ 497.3 $12.7 $ (3.7) $ 1.4 $ 465.3 Impact of foreign exchange(1) 8.6 - 27.0 2.0 - 37.6 -------- -------- ----- ------- ----------- --------- Change excluding foreign exchange$ (33.8) $ 497.3 $39.7 $ (1.7) $ 1.4 $ 502.9 -------- -------- ----- ------- ----------- --------- Percentage change in revenue -5.8% - 4.6% -11.2% -11.5% 45.4% -------- -------- ----- ------- ----------- --------- Percentage change in revenue excluding foreign exchange -4.6% - 14.5% -5.1% -11.5% 49.1% -------- -------- ----- ------- ----------- --------- Impact of DSS Acquisition$ (1.6) $ (497.3) $ - $ -$ 1.6 $ (497.3) -------- -------- ----- ------- ----------- --------- Change excluding foreign exchange and DSS Acquisition$ (35.4) $ -$39.7 $ (1.7) $ 3.0 $ 5.6 -------- -------- ----- ------- ----------- --------- Percentage change in revenue excluding foreign exchange and DSS Acquisition -4.8% - 14.5% -5.1% -24.6% 0.5% -------- -------- ----- ------- ----------- --------- (1) Impact of foreign exchange is the difference between the current year's revenue translated utilizing the current year's average foreign exchange rates less the current year's revenue translated utilizing the prior year's average foreign exchange rates.
COTT CORPORATION EXHIBIT 10 SUPPLEMENTARY INFORMATION - NON-GAAP - FREE CASH FLOW AND ADJUSTED FREE CASH FLOW (in millions of U.S. dollars) Unaudited For the Three Months Ended ---------------------------- July 4, 2015 June 28, 2014 ------------- ------------- Net cash provided by operating activities$ 75.7 $ 29.5 Less: Capital expenditures (29.9) (11.8) ------------- ------------- Free Cash Flow$ 45.8 $ 17.7 ============= ============= Plus: Bond redemption cash costs - 16.4 ------------- ------------- Adjusted Free Cash Flow$ 45.8 $ 34.1 ============= ============= For the Six Months Ended ---------------------------- June 28, July 4, 2015 2014 ------------- ------------- Net cash provided by (used in) operating activities$ 74.6 $ (23.0) Less: Capital expenditures (57.2) (20.6) ------------- ------------- Free Cash Flow$ 17.4 $ (43.6) ============= ============= Plus: Bond redemption cash costs - 17.0 Less: Cash collateral (1) (29.4) - ------------- ------------- Adjusted Free Cash Flow$ (12.0) $ (26.6) ============= ============= (1) In connection with the DSS Acquisition,$29.4 million was required to cash collateralize certain DSS self-insurance programs. The$29.4 million was funded with borrowings against our ABL facility, and the cash collateral was included within prepaid and other current assets on our Consolidated Balance Sheet atJanuary 3, 2015 . Subsequent toJanuary 3, 2015 additional letters of credit were issued from our available ABL facility capacity, and the cash collateral was returned to the Company, which was used to repay a portion of our outstanding ABL facility.
CONTACT:Jarrod Langhans Investor Relations Tel: (813) 313-1732 Email Contact
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