Cott Reports Fourth Quarter and Fiscal Year 2016 Results and Declares Dividend
TORONTO and TAMPA, Florida, February 23, 2017 /PRNewswire/ --
(Unless stated otherwise, all fourth quarter 2016 comparisons are relative to the fourth quarter of 2015 and all fiscal year 2016 comparisons are relative to fiscal year 2015; all information is in U.S. dollars.)
Cott Corporation (NYSE:COT; TSX:BCB) today announced its results for the fiscal year and fourth quarter ended December 31, 2016.
FISCAL YEAR 2016 HIGHLIGHTS
- Cott revenue increased 10% (12% on a foreign exchange neutral basis) to $3,236 million compared to $2,944 million.
- Gross profit increased 20% to $1,074 million compared to $896 million and gross margin as a percentage of revenue increased to 33.2% compared to 30.4%.
- Net cash provided by operating activities of $270 million, less $140 million of capital expenditures resulted in reported free cash flow of $130 million and adjusted free cash flow of $150 million (adjusted for $20 million of acquisition, integration and other costs).
- Cott has targeted full year 2017 cash flow provided by operations of approximately $330 to $340 million and capital expenditures in the range of $165 to $175 million, resulting in adjusted free cash flow of $155 to $175 million (when excluding acquisition, integration, and debt transaction costs).
"I am pleased with the progress made in 2016 towards a more diversified, higher margin, cash generative business. Our adjusted free cash flow generation of $150 million despite almost $20 million of adverse foreign exchange impact demonstrates the progress made during the year," commented Jerry Fowden, Cott's Chief Executive Officer. "We believe our focus on free cash flow generation and the platform we are creating in home and office services for water, coffee and tea will provide strong annual growth in free cash flow over the coming years," continued Mr. Fowden.
FOURTH QUARTER 2016 GLOBAL PERFORMANCE
- Revenue was $887 million despite $24 million of foreign exchange headwinds and one less week of operations at DS Services that accounted for $13 million of revenue. Our reported revenue was higher by 27% (30% on a foreign exchange neutral basis). Key revenue drivers in the quarter are tabulated below:
Revenue Bridge
2015 Q4 Revenue $ 698.8
S&D 140.7
Eden 87.0
Aquaterra 13.2
Volume (1.8)
OCS/HOD PET/Retail (4.9)
Price/Mix (9.5)
One less week of operations (12.5)
Foreign exchange impact (23.6)
2016 Q4 Revenue $ 887.4
- Gross profit increased 36% to $302 million, with gross margin as a percentage of revenue increasing to 34.0% compared to 31.6%, driven primarily by the additions of Eden Springs ("Eden") and Aquaterra as well as cost and efficiency initiatives within our traditional business, offset in part by the negative impact of foreign exchange rates, increased operational costs at DS Services and the competitive environment in our traditional business.
- Income tax expense was $31 million compared to income tax benefit of $6 million as we recorded $44 million of tax expense associated with placing a valuation allowance against our existing U.S. net operating loss carryovers and other tax assets as a result of the S&D Coffee and Tea ("S&D") acquisition. Cash taxes during the period were minimal, with $0.4 million of cash taxes refunded during the period compared to $0.2 million of cash taxes paid in the comparable prior year period.
- Reported net loss and net loss per diluted share were $78 million and $0.56, respectively, compared to reported net loss and net loss per diluted share of $4 million and $0.04, respectively. Adjusted net income and adjusted net income per diluted share (including adjustments for acquisition, integration and other costs as well as a tax valuation allowance) were $2 million and $0.01, respectively, compared to adjusted net income and adjusted net income per diluted share of $3 million and $0.03, respectively.
- Reported EBITDA was $60 million compared to $69 million in the prior year as the company incurred increased integration and acquisition costs in the quarter as well as unrealized/noncash hedge losses. Adjusted EBITDA increased 7% to $87 million due primarily to the contributions from Eden and S&D, offset in part by $5 million of adverse foreign exchange, the competitive landscape in our traditional business, increased operational costs and reduced sales of case pack water, office coffee services and retail products at DS Services as well as $2 million from one less week of operations at DS Services.
- Net cash provided by operating activities of $109 million, less $38 million of capital expenditures resulted in free cash flow of $71 million or $75 million of adjusted free cash flow (adjusted for $4 million of acquisition, integration and other costs) despite the previously mentioned adverse foreign exchange impact and one less week of operations at DS Services.
FOURTH QUARTER 2016 REPORTING SEGMENT PERFORMANCE
Water and Coffee Solutions
- Revenue increased 89% to $483 million driven primarily by the additions of Eden and S&D alongside the other smaller items tabulated below. Gross profit increased to $252 million from $159 million due primarily to the additions of Eden, S&D and Aquaterra, offset in part by one less week of operations at DS Services.
Water & Coffee Solutions
Revenue Bridge
2015 Q4 Revenue $ 255.7
S&D 140.7
Eden 87.0
DS Services
Aquaterra 13.2
Returnable volume 1.9
Other 1.7
OCS/HOD PET/Retail (4.9)
One less week of operations (12.5)
2016 Q4 Revenue $ 482.8
- DS Services had full year net new customer additions of approximately 55,000 compared to 7,000 in the prior year. Consistent with prior years, the customer base declined in the seasonal fourth quarter, albeit at a much slower rate as organic customer additions continued during the first month of the quarter prior to reducing marketing activities for the holiday season. DS Services revenue was broadly flat at $255 million due primarily to the addition of Aquaterra which was offset by one less week of operations. DS Services gross profit was down 3% at $154 million (up 2% when excluding the additional week of operations in the prior year).
- In line with expectations, Eden and S&D contributed $87 million and $141 million of revenue, respectively.
Traditional Business
- Cott North America reporting segment volume increased 2% in actual cases (down 3% in serving equivalent cases) due primarily to 10% growth in value added and sparkling water products which offset general market declines in carbonated soft drinks and private label shelf stable juices. Revenue was lower by 2% at $299 million due primarily to ongoing product mix shifts within the business as well as the competitive environment.
Cott North America Revenue Bridge
2015 Q4 Revenue $ 304.7
Growth/Volume 4.5
Foreign exchange impact 0.3
Price/Mix (10.6)
2016 Q4 Revenue $ 298.9
- Gross profit was $34 million or 11.6% of revenue compared to $38 million or 12.5% of revenue due primarily to the competitive environment as well as increased manufacturing costs.
Cott U.K. Revenue Bridge
2015 Q4 Revenue $ 131.1
Price/Mix/Other 0.2
Volume (7.3)
Foreign exchange impact (23.2)
2016 Q4 Revenue $ 100.8
- Gross profit as a percentage of revenue was lower at 12.9% due primarily to the adverse foreign exchange impact on commodity costs.
FISCAL YEAR 2016 GLOBAL PERFORMANCE
- Revenue increased 10% (12% on a foreign exchange neutral basis) to $3,236 million primarily as a result of the additions of S&D, Eden and Aquaterra, offset in part by adverse foreign exchange, price and mix shifts within our traditional business and one less week of operations at DS Services.
Revenue Bridge
2015 Revenue $ 2,944.0
S&D 228.0
Eden 156.9
Aquaterra 61.2
Growth/Volume 10.3
OCS/HOD PET/Retail (11.6)
One less week of operations (12.5)
Foreign exchange impact (69.0)
Price/Mix/Other (71.4)
2016 Revenue $ 3,235.9
- Gross profit increased 20% to $1,074 million, with gross margin as a percentage of revenue increasing to 33.2% compared to 30.4%, driven primarily by the additions of Eden and Aquaterra as well as cost and efficiency initiatives within our traditional business, offset in part by the negative impact of foreign exchange rates, the competitive landscape within our traditional business and increased new customer costs driving increased operational costs at DS Services.
- Income tax expense was $26 million compared to income tax benefit of $23 million as we recorded $53 million of tax expense associated with placing a valuation allowance against our existing U.S. and Canadian net operating loss carryovers and other tax assets as a result of the Eden and S&D acquisitions.
- Reported net loss and net loss per diluted share were $78 million and $0.61, respectively, compared to reported net loss and net loss per diluted share of $3 million and $0.03, respectively. Adjusted net income and adjusted net income per diluted share (including adjustments for acquisition, integration and other costs as well as a tax valuation allowance) were $31 million and $0.24, respectively, compared to adjusted net income and adjusted net income per diluted share of $23 million and $0.22, respectively.
- Reported EBITDA was $317 million compared to $333 million in the prior year as we incurred increased integration, acquisition and other costs associated with our acquisitions in 2016. Adjusted EBITDA increased 5% to $373 million, due primarily to the partial year contributions from Eden and S&D as well as growth in volume at DS Services, offset in part by $18 million of adverse foreign exchange and other previously discussed costs associated with the accelerated customer growth in the DS Services customer base.
- Net cash provided by operating activities of $270 million, less $140 million of capital expenditures resulted in reported free cash flow of $130 million and adjusted free cash flow of $150 million which came in above the $135 to $145 guidance range.
2017 FULL YEAR FOREIGN EXCHANGE AND FREE CASH FLOW OUTLOOK
Based on current exchange rates and the 2017 forecasts of various major financial institutions, we expect the adverse impact on full year 2017 EBITDA to be $12 to $18 million.
Cott has targeted full year 2017 cash flow provided by operations of approximately $330 to $340 million and capital expenditures in the range of $165 to $175 million, resulting in adjusted free cash flow of $155 to $175 million (when excluding acquisition, integration and debt transaction costs).
DECLARATION OF DIVIDEND
Cott's Board of Directors has declared a dividend of $0.06 per share on common shares, payable in cash on March 29, 2017 to shareowners of record at the close of business on March 14, 2017.
FOURTH QUARTER AND FISCAL YEAR 2016 RESULTS CONFERENCE CALL
Cott Corporation will host a conference call today, February 23, 2017, at 10:00 a.m. ET, to discuss fourth quarter and full year results, which can be accessed as follows:
North America: (888)-231-8191
International: (647)-427-7450
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 CORPORATION
Cott is a diversified beverage company with a leading volume-based national presence in the North America and European home and office bottled water delivery industry, a leader in custom coffee roasting and blending of iced tea for the U.S. foodservice industry, and one of the world's largest producers of beverages on behalf of retailers, brand owners and distributors. Our platform reaches over 2.3 million customers or delivery points across North America and Europe supported by strategically located sales and distribution facilities and fleets, as well as wholesalers and distributors. This enables us to efficiently service residences, businesses, restaurant chains, hotels and motels, small and large retailers, and healthcare facilities.
Non-GAAP Measures
To supplement its reporting of financial measures determined in accordance with GAAP, Cott utilizes certain non-GAAP financial measures. Cott excludes from GAAP revenue the impact of foreign exchange to separate the impact of this factor from Cott's results of operations. Cott utilizes adjusted pre-tax income (loss), adjusted net income (loss), adjusted income (loss) per diluted share, and EBITDA and adjusted EBITDA (on a global, and in some cases, business unit, basis) to separate the impact of certain items from the underlying business. Because Cott uses these adjusted financial results in the management of its business, management believes this supplemental information is useful to investors for their independent evaluation and understanding of Cott's underlying business performance and the performance of its management. Additionally, Cott supplements its reporting of net cash provided by (used in) operating activities determined in accordance with GAAP by excluding additions to property, plant & 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 execution of our strategic priorities, future financial and operating trends and results (including the impact of foreign exchange on 2017 results and adjusted free cash flow) and related matters. The forward-looking statements are based on assumptions regarding management's current plans and estimates. Management believes these assumptions to be reasonable but there is no assurance that they will prove to be accurate.
Factors that could cause actual results to differ materially from those described in this press release include, among others: our ability to compete successfully in the markets in which we operate; 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 Walmart; consolidation of retail customers; fluctuations in commodity prices and our ability to pass on increased costs to our customers or hedge against such rising costs, and the impact of those increased prices on our volumes; our ability to manage our operations successfully; our ability to fully realize the potential benefit of acquisitions or other strategic opportunities that we pursue; our ability to realize the revenue and cost synergies of recent acquisitions because of integration difficulties and other challenges; the limited nature of our indemnification rights under the acquisition agreements for our recent acquisitions; the incurrence of substantial indebtedness to finance our recent acquisitions; significant one-time transaction costs in connection with our recent acquisitions; our exposure to intangible asset risk; currency fluctuations that adversely affect the exchange between the U.S. dollar and the British pound sterling, the Euro, the Canadian dollar, the Mexican peso and other currencies; our ability to maintain favorable arrangements and relationships with our suppliers; our substantial indebtedness and our ability to meet our obligations under our debt agreements, and risks of further increases to our indebtedness; our ability to maintain compliance with the covenants and conditions under our debt agreements; fluctuations in interest rates, which could increase our borrowing costs; credit rating changes; the impact of global financial events on our financial results; our ability to fully realize the expected cost savings and/or operating efficiencies from our restructuring activities; any disruption to production at our beverage concentrates or other manufacturing facilities; our ability to maintain access to our water sources; our ability to protect our intellectual property; compliance with product health and safety standards; liability for injury or illness caused by the consumption of contaminated products; liability and damage to our reputation as a result of litigation or legal proceedings; changes in the legal and regulatory environment in which we operate; the impact of proposed taxes on soda and other sugary drinks; enforcement of compliance with the Ontario Environmental Protection Act; the seasonal nature of our business and the effect of adverse weather conditions; the impact of national, regional and global events, including those of a political, economic, business and competitive nature; our ability to recruit, retain, and integrate new management; our ability to renew our collective bargaining agreements on satisfactory terms; disruptions in our information systems; our ability to securely maintain our customers' confidential or credit card information, or other private data relating to our employees or our company; our ability to maintain our quarterly dividend; our ability to adequately address the challenges and risks associated with our international operations and address difficulties in complying with laws and regulations including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act of 2010; and our ability to use net operating losses to offset future taxable income.
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: http://www.cott.com
COTT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions of U.S. dollars, except share and per share amounts, U.S. GAAP) EXHIBIT 1
Unaudited
For the Three Months Ended For the Year Ended
December 31, January 2, December 31, January 2,
2016 2016 2016 2016
Revenue,
net $ 887.4 $ 698.8 $ 3,235.9 $ 2,944.0
Cost of
sales 585.6 477.7 2,161.7 2,048.5
Gross
profit 301.8 221.1 1,074.2 895.5
Selling,
general and
administrat
ive
expenses 296.0 193.7 958.1 768.6
Loss on
disposal of
property,
plant &
equipment,
net 2.2 4.2 6.1 6.9
Acquisition
and
integration
expenses 7.3 5.2 27.8 20.6
Operating
(loss)
income (3.7) 18.0 82.2 99.4
Other
expense
(income),
net 6.3 (0.7) 3.9 (9.5)
Interest
expense,
net 35.0 28.0 124.2 111.0
Loss before
income
taxes (45.0) (9.3) (45.9) (2.1)
Income tax
expense
(benefit) 31.1 (6.4) 25.6 (22.7)
Net (loss)
income $ (76.1) $ (2.9) $ (71.5) $ 20.6
Less: Net
income
attributabl
e to
non-control
ling
interests 1.9 1.5 6.3 6.1
Less:
Accumulated
dividends
on
convertible
preferred
shares - - - 4.5
Less:
Accumulated
dividends
on
non-convert
ible
preferred
shares - - - 1.4
Less:
Foreign
exchange
impact on
redemption
of
preferred
shares - - - 12.0
Net loss
attributed
to Cott
Corporation $ (78.0) $ (4.4) $ (77.8) $ (3.4)
Net loss
per common
share
attributed
to Cott
Corporation
Basic $ (0.56) $ (0.04) $ (0.61) $ (0.03)
Diluted $ (0.56) $ (0.04) $ (0.61) $ (0.03)
Weighted
average
outstanding
shares
(millions)
Basic 138.4 109.7 128.3 103.0
Diluted 138.4 109.7 128.3 103.0
Dividends
declared
per common
share $ 0.06 $ 0.06 $ 0.24 $ 0.24
COTT CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions of U.S. dollars, except share amounts, U.S. GAAP)
Unaudited EXHIBIT 2
December 31, 2016 January 2, 2016
ASSETS
Current assets
Cash & cash
equivalents $ 118.1 $ 77.1
Accounts
receivable, net
of allowance 403.9 293.3
Inventories 301.4 249.4
Prepaid expenses
and other current
assets 29.8 18.8
Total current
assets 853.2 638.6
Property, plant &
equipment, net 929.9 769.8
Goodwill 1,175.4 759.6
Intangible
assets, net 939.7 684.1
Deferred tax
assets 0.2 7.6
Other long-term
assets, net 41.3 27.6
Total assets $ 3,939.7 $ 2,887.3
LIABILITIES AND
EQUITY
Current
liabilities
Short-term
borrowings $ 207.0 $ 122.0
Current
maturities of
long-term debt 5.7 3.4
Accounts payable
and accrued
liabilities 597.4 437.6
Total current
liabilities 810.1 563.0
Long-term debt 1,988.0 1,525.4
Deferred tax
liabilities 157.8 76.5
Other long-term
liabilities 110.0 76.5
Total liabilities 3,065.9 2,241.4
Equity
Common shares, no
par - 138,591,100
(January 2, 2016
- 109,695,435)
shares issued 909.3 534.7
Additional
paid-in-capital 54.2 51.2
Retained earnings 22.9 129.6
Accumulated other
comprehensive
loss (117.9) (76.2)
Total Cott
Corporation
equity 868.5 639.3
Non-controlling
interests 5.3 6.6
Total equity 873.8 645.9
Total liabilities
and equity $ 3,939.7 $ 2,887.3
COTT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of U.S. dollars)
Unaudited EXHIBIT 3
For the Three Months Ended For the Year Ended
December 31, January 2, December 31, January 2,
2016 2016 2016 2016
Operating Activities
Net (loss) income $ (76.1) $ (2.9) $ (71.5) $ 20.6
Depreciation & amortization 69.5 50.1 238.7 223.8
Amortization of financing fees 1.6 1.2 5.6 4.8
Amortization of senior notes
premium (1.5) (1.4) (5.9) (5.6)
Share-based compensation
expense 3.7 1.9 9.4 10.3
Provision (benefit) for
deferred income taxes 28.7 (8.8) 21.2 (30.4)
Unrealized commodity hedging
loss (gain), net 10.8 (0.2) 9.8 (1.2)
Loss on disposal of property,
plant & equipment 2.2 4.2 6.1 6.9
Other non-cash items 2.0 2.6 9.2 (8.2)
Change in operating assets and
liabilities, net of
acquisitions:
Accounts receivable 40.8 27.4 18.5 4.5
Inventories 10.6 0.9 22.6 6.5
Prepaid expenses and
other current assets 4.1 2.1 (3.1) 30.8
Other assets 3.8 (1.0) (0.5) (8.5)
Accounts payable and
accrued liabilities,
and other
liabilities 9.6 11.0 12.8 (3.3)
Income taxes
recoverable (0.5) 1.1 (3.1) 3.6
Net cash
provided
by
operating
activities 109.3 88.2 269.8 254.6
Investing Activities
Acquisitions, net of cash
received (0.7) (1.5) (959.4) (24.0)
Additions to property, plant &
equipment (38.4) (25.3) (139.8) (110.8)
Additions to intangible assets (3.1) (1.9) (8.1) (4.6)
Proceeds from sale of
property, plant & equipment
and sale-leaseback 4.3 - 8.8 40.9
Proceeds from insurance
recoveries 0.1 - 1.5 -
Other investing activities 0.4 (1.2) 0.4 (1.2)
Net cash used in
investing activities (37.4) (29.9) (1,096.6) (99.7)
Financing Activities
Payments of long-term debt (0.3) (0.8) (3.6) (3.7)
Issuance of long-term debt - - 498.7 -
Borrowings under ABL 967.6 193.2 2,403.2 994.5
Payments under ABL (1,023.7) (227.3) (2,320.3) (1,101.8)
Distributions to
non-controlling interests (1.7) (1.7) (7.7) (8.5)
Issuance of common shares 0.2 - 366.8 143.1
Financing fees (1.6) (0.3) (13.5) (0.6)
Preferred shares repurchased
and cancelled - - - (148.8)
Common shares repurchased and
cancelled (1.2) - (5.7) (0.8)
Dividends paid to common and
preferred shareholders (8.3) (6.5) (31.4) (31.0)
Payment of deferred
consideration for acquisitions - - (10.8) (2.5)
Net cash (used in)
provided by
financing activities (69.0) (43.4) 875.7 (160.1)
Effect of exchange rate changes on cash (3.7) (1.5) (7.9) (3.9)
Net (decrease) increase in cash & cash
equivalents (0.8) 13.4 41.0 (9.1)
Cash & cash equivalents, beginning of
period 118.9 63.7 77.1 86.2
Cash & cash equivalents, end of period $ 118.1 $ 77.1 $ 118.1 $ 77.1
COTT CORPORATION EXHIBIT 4
SEGMENT INFORMATION
(in millions of U.S. dollars)
Unaudited
For the Three Months Ended December 31, 2016
Cott
Water & Coffee North Cott All
(in millions of U.S. dollars) Solutions America U.K. Other Corporate Elimination Total
Revenue, net
Private label retail $ 18.8 $ 243.5 $ 44.1 $ 0.9 $ - $ (0.4) $ 306.9
Branded retail 18.1 23.3 29.5 1.0 - (0.4) 71.5
Contract packaging - 26.3 22.7 2.6 - (2.0) 49.6
Home and office bottled water delivery 224.3 - - - - - 224.3
Coffee and tea services 162.2 - 0.6 - - - 162.8
Concentrate and other 59.4 5.8 3.9 5.7 - (2.5) 72.3
Total $ 482.8 $ 298.9 $ 100.8 $ 10.2 $ - $ (5.3) $ 887.4
Gross Profit [1] $ 251.7 $ 34.0 $ 13.0 $ 3.1 $ - $ - $ 301.8
Gross Margin % [2] 52.1% 11.6% 12.9% 30.4% - - 34.0%
Operating income (loss) $ 1.9 $ 2.9 $ 0.9 $ 0.7 $ (10.1) $ - $ (3.7)
Depreciation and Amortization $ 46.7 $ 18.0 $ 4.7 $ 0.1 $ - $ - $ 69.5
For the Three Months Ended January 2, 2016
Cott
Water & Coffee North Cott All
(in millions of U.S. dollars) Solutions America U.K. Other Corporate Elimination Total
Revenue, net
Private label retail $ 15.6 $ 248.1 $ 64.0 $ 0.8 $ - $ - $ 328.5
Branded retail 20.9 27.0 38.1 0.8 - (0.3) 86.5
Contract packaging - 23.8 24.4 5.8 - (2.5) 51.5
Home and office bottled water delivery 163.6 - - - - - 163.6
Coffee and tea services 31.5 - 0.7 - - - 32.2
Concentrate and other 24.1 5.8 3.9 5.4 - (2.7) 36.5
Total $ 255.7 $ 304.7 $ 131.1 $ 12.8 $ - $ (5.5) $ 698.8
Gross Profit [1] $ 158.5 $ 37.5 $ 20.4 $ 4.7 $ - $ - $ 221.1
Gross Margin % [2] 62.0% 12.5% 15.6% 36.7% - - 31.6%
Operating income (loss) $ 13.3 $ 4.7 $ 2.5 $ 2.1 $ (4.6) $ - $ 18.0
Depreciation and Amortization $ 25.6 18.3 $ 5.9 $ 0.3 $ - $ - $ 50.1
For the Year Ended December 31, 2016
Cott
Water & Coffee North Cott All
(in millions of U.S. dollars) Solutions America U.K. Other Corporate Elimination Total
Revenue, net
Private label retail $ 78.0 $ 1,036.8 $ 202.3 $ 3.5 $ - $ (1.5) $ 1,319.1
Branded retail 86.6 100.3 140.7 3.5 - (1.4) 329.7
Contract packaging - 124.1 107.2 16.2 - (8.5) 239.0
Home and office bottled water delivery 799.4 - - - - - 799.4
Coffee and tea services 334.6 - 2.6 - - - 337.2
Concentrate and other 153.7 26.4 17.0 27.3 - (12.9) 211.5
Total $ 1,452.3 $ 1,287.6 $ 469.8 $ 50.5 $ - $ (24.3) $ 3,235.9
Gross Profit [1] $ 817.9 $ 164.7 $ 73.1 $ 18.5 $ - $ - $ 1,074.2
Gross Margin % [2] 56.3% 13.0% 15.6% 36.6% - - 33.2%
Operating income (loss) $ 46.5 $ 33.9 $ 27.8 $ 8.5 $ (34.5) $ - $ 82.2
Depreciation and Amortization $ 144.0 $ 73.3 $ 20.6 $ 0.8 $ - $ - $ 238.7
For the Year Ended January 2, 2016
Cott
Water & Coffee North Cott All
(in millions of U.S. dollars) Solutions America U.K. Other Corporate Elimination Total
Revenue, net
Private label retail $ 65.3 $1,075.9 $ 261.4 $ 4.5 $ - $ (1.6) $1,405.5
Branded retail 84.1 114.9 168.1 4.1 - (1.5) 369.7
Contract packaging - 111.8 114.0 22.2 - (6.5) 241.5
Home and office bottled water delivery 651.3 - - - - - 651.3
Coffee and tea services 121.3 - 3.1 - - - 124.4
Concentrate and other 99.1 28.3 10.4 26.8 - (13.0) 151.6
Total $ 1,021.1 $1,330.9 $ 557.0 $ 57.6 $ - $ (22.6) $2,944.0
Gross Profit [1] $ 618.3 $ 173.8 $ 81.5 $ 21.9 $ - $ - $ 895.5
Gross Margin % [2] 60.6% 13.3% 14.6% 38.0% - - 30.4%
Operating income (loss) $ 39.0 $ 38.5 $ 28.0 $ 10.5 $ (16.6) $ - $ 99.4
Depreciation and Amortization $ 119.9 $ 79.6 $ 22.7 $ 1.6 $ - $ - $ 223.8
[1] Gross profit from external revenues.
[2] Cott North America gross margin relative to external revenues.
COTT CORPORATION
SUPPLEMENTARY INFORMATION - NON-GAAP - Analysis of Revenue by Reporting Segment
Unaudited EXHIBIT 5
(in millions of U.S. dollars, except percentage amounts) For the Three Months Ended December 31, 2016
Water &
Coffee Cott North All
Solutions America Cott U.K. Other Elimination Cott[1]
Change in revenue $ 227.1 $ (5.8) $ (30.3) $ (2.6) $ 0.2 $ 188.6
Impact of foreign exchange[2] - (0.3) 23.2 0.7 - 23.6
Change excluding foreign exchange $ 227.1 $ (6.1) $ (7.1) $ (1.9) $ 0.2 $ 212.2
Percentage change in revenue 88.8% -1.9% -23.1% -20.3% -3.6% 27.0%
Percentage change in revenue excluding foreign exchange 88.8% -2.0% -5.4% -14.8% -3.6% 30.4%
Impact of four additional shipping days in 2015 12.5 - - - - 12.5
Change excluding foreign exchange and impact of four
additional shipping days in 2015 $ 239.6 $ (6.1) $ (7.1) $ (1.9) $ 0.2 $ 224.7
Percentage change in revenue excluding foreign exchange and
impact of four additional shipping days in 2015 98.5% -2.0% -5.4% -14.8% -3.6% 32.7%
(in millions of U.S. dollars, except percentage amounts) For the Year Ended December 31, 2016
Water &
Coffee Cott North All
Solutions America Cott U.K. Other Elimination Cott[1]
Change in revenue $ 431.2 $ (43.3) $ (87.2) $ (7.1) $ (1.7) $ 291.9
Impact of foreign exchange[2] - 5.4 60.2 3.4 - 69.0
Change excluding foreign exchange $ 431.2 $ (37.9) $ (27.0) $ (3.7) $ (1.7) $ 360.9
Percentage change in revenue 42.2% -3.3% -15.7% -12.3% 7.5% 9.9%
Percentage change in revenue excluding foreign exchange 42.2% -2.8% -4.8% -6.4% 7.5% 12.3%
Impact of four additional shipping days in 2015 12.5 - - - - 12.5
Change excluding foreign exchange and impact of four
additional
shipping days in 2015 $ 443.7 $ (37.9) $ (27.0) $ (3.7) $ (1.7) $ 373.4
Percentage change in revenue excluding foreign exchange and
impact of four additional shipping days in 2015 44.0% -2.8% -4.8% -6.4% 7.5% 12.7%
[1] Cott includes the following reporting segments: Water & Coffee Solutions, Cott North America, Cott U.K. and All Other.
[2] Impact of foreign exchange is the difference between the current year revenue translated utilizing the current year
average foreign exchange rates less the current year revenue translated utilizing the prior year average foreign
exchange rates.
COTT CORPORATION
SUPPLEMENTARY INFORMATION - NON-GAAP - EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION &
AMORTIZATION
(EBITDA)
(in millions of U.S. dollars)
Unaudited EXHIBIT 6
For the Three Months Ended For the Year Ended
December 31, 2016 January 2, 2016 December 31, 2016 January 2, 2016
Net loss
attributed
to Cott
Corporation $ (78.0) $ (4.4) $ (77.8) $ (3.4)
Interest
expense, net 35.0 28.0 124.2 111.0
Income tax
expense
(benefit) 31.1 (6.4) 25.6 (22.7)
Depreciation
&
amortization 69.5 50.1 238.7 223.8
Net income
attributable
to
non-controll
ing
interests 1.9 1.5 6.3 6.1
Accumulated
dividends on
preferred
shares - - - 5.9
Foreign
exchange
impact on
redemption
of preferred
shares - - - 12.0
EBITDA $ 59.5 $ 68.8 $ 317.0 $ 332.7
Acquisition
and
integration
costs 7.3 5.2 27.8 20.6
Inventory
step up and
other
purchase
accounting
adjustments 1.5 - 6.2 4.2
Unrealized
commodity
hedging loss
(gain), net 9.7 - 9.8 (1.2)
Foreign
exchange and
other losses
(gains), net 1.5 0.2 (0.3) (10.9)
Loss on
disposal of
property,
plant &
equipment,
net 2.2 4.1 6.1 6.9
Other
adjustments 4.8 2.2 6.5 4.7
Adjusted
EBITDA $ 86.5 $ 80.5 $ 373.1 $ 357.0
COTT CORPORATION
SUPPLEMENTARY INFORMATION - NON-GAAP - FREE CASH FLOW AND
ADJUSTED FREE CASH FLOW
(in millions of U.S. dollars)
Unaudited EXHIBIT 7
For the Three Months Ended
December 31, 2016 January 2, 2016
Net cash provided by
operating activities $ 109.3 $ 88.2
Less:
Additions to
property,
plant &
equipment (38.4) (25.3)
Free Cash Flow $ 70.9 $ 62.9
Plus:
DSS
integration
capital
expenditures - 3.5
Acquisition
and
integration
cash costs 2.6 5.2
Other
adjustments 1.2 -
Adjusted Free Cash Flow $ 74.7 $ 71.6
For the Year Ended
December 31, 2016 January 2, 2016
Net cash provided by
operating activities $ 269.8 $ 254.6
Less:
Additions to
property,
plant &
equipment (139.8) (110.8)
Free Cash Flow $ 130.0 $ 143.8
Plus:
DSS
integration
capital
expenditures - 5.3
Acquisition
and
integration
cash costs 18.6 13.9
Cash
collateral [1] - (29.4)
Other
adjustments 1.2 -
Adjusted Free Cash Flow $ 149.8 $ 133.6
[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 at January 3, 2015. After January 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
SUPPLEMENTARY INFORMATION - NON-GAAP - ADJUSTED NET INCOME
(in millions of U.S. dollars, except share and per share amounts)
Unaudited EXHIBIT 8
For the Three Months Ended For the Year Ended
December 31, 2016 January 2, 2016 December 31, 2016 January 2, 2016
Net loss
attributed to
Cott
Corporation $ (78.0) $ (4.4) $ (77.8) $ (3.4)
Acquisition
and
integration
costs 7.3 5.2 27.8 20.6
Inventory
step up and
other
purchase
accounting
adjustments 1.5 - 6.2 4.2
Unrealized
commodity
hedging loss
(gain), net 9.7 - 9.8 (1.2)
Foreign
exchange and
other losses
(gains), net 1.5 0.2 (0.3) (10.9)
Foreign
exchange
impact on
redemption of
preferred
shares - - - 12.0
Loss on
disposal of
property,
plant &
equipment,
net 2.2 4.1 6.1 6.9
Interest
payment on
2024 Notes
[1] - - 2.4 -
Tax valuation
allowance [2] 44.3 - 52.8 -
Other
adjustments 4.8 2.2 6.5 4.7
Adjustments
for tax
effect [3] 8.4 (4.3) (2.9) (9.9)
Adjusted net
income
attributed to
Cott
Corporation $ 1.7 $ 3.0 $ 30.6 $ 23.0
Adjusted net (loss) income per
common share attributed to Cott
Corporation
Basic $ 0.01 $ 0.03 $ 0.24 $ 0.22
Diluted $ 0.01 $ 0.03 $ 0.24 $ 0.22
Weighted
average
outstanding
shares
(millions)
Basic 138.4 109.7 128.3 103.0
Diluted 139.3 110.5 129.2 103.7
[1] Represents 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 Eden Acquisition.
[2] Tax valuation allowance inclusive of an $11.1 million income tax benefit in the
quarter ended December 31, 2016.
[3] Reflects tax effect of adjustments at the statutory tax rate within the applicable
tax jurisdiction.
CONTACT:
Jarrod Langhans
Investor Relations,
Tel: (813)-313-1732
E-mail: Investorrelations@cott.com
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