Cott Corporation (NYSE: COT) (TSX: BCB) today announced its results
for the first quarter ended March 31, 2012, as well as its plans to
commence a share repurchase program for up to $35 million in common
shares over a 12 month period.
First Quarter 2012 Results
- Revenue of $524 million declined 1.9% (1.3% excluding the
impact of foreign exchange) compared to $534 million.
- Gross profit as a percentage of revenue was 12.1% compared to
9.4% in the fourth quarter of 2011 and 13.0% in the first quarter
of 2011.
- Net income and earnings per diluted share were $6 million and
$0.06, respectively, compared to $7 million and $0.07,
respectively.
- EBITDA was $45 million compared to $47 million. Adjusted EBITDA
increased 2.9% to $46 million compared to $45 million.
Jerry Fowden, Cott's Chief Executive Officer, commented, "I'm
pleased with the overall financial performance during the quarter,
despite continued commodity pressures. Gross margin in the first
quarter improved 270 basis points from the fourth quarter of 2011,
reflecting the implementation of our 2012 strategy of gradual gross
margin restoration by focusing on operational efficiencies and
adjusting the balance between volume and margin."
FIRST QUARTER 2012 PERFORMANCE SUMMARY
- Revenue decreased 1.9% (1.3% excluding the impact of foreign
exchange) to $524 million as a result of lower North America
volumes due primarily from exiting certain low margin case pack
water business and the continuing decline in the U.S. shelf-stable
juice market. The North America revenue performance was partially
offset by growth in the United Kingdom / Europe ("U.K.") and higher
average price per case across all business units.
- Gross profit as a percentage of revenue was 12.1% compared to
13.0% in the first quarter of 2011 and 9.4% in the fourth quarter
of 2011. The decline compared to the first quarter of 2011 was due
primarily to higher commodity costs, particularly fruit and fruit
concentrates, sweeteners and resin. The margin improvement versus
the fourth quarter of 2011 was due primarily to a combination of
operating efficiencies and an increase in the average price per
case implemented in the first quarter of 2012.
- Selling, general and administrative ("SG&A") expenses were
$42 million compared to $45 million. The decrease in SG&A
expenses was driven primarily by reduced costs associated with our
information technology strategy.
- Operating income was $21 million compared to $25 million.
- EBITDA was $45 million compared to $47 million. Adjusted EBITDA
increased 2.9% to $46 million compared to $45 million.
FIRST QUARTER 2012 REPORTING SEGMENT
HIGHLIGHTS
- North America filled beverage case volume decreased 8.3% to 156
million cases due primarily to exiting certain case pack water
business and the continuing decline in the U.S. shelf-stable juice
market. Revenue decreased 4.8% (4.7% excluding the impact of
foreign exchange) to $408 million.
- U.K. filled beverage case volume increased 4.6% to 41 million
cases. Revenue increased 14.9% (16.9% excluding the impact of
foreign exchange) to $99 million. Growth was driven by continued
double digit growth in the energy and sports drinks categories and
ongoing growth in the wholesale channel servicing the smaller
convenience stores.
- Mexico filled beverage case volume decreased 29.8% to 6 million
cases. Revenue decreased 20.2% (13.2% excluding the impact of
foreign exchange) to $9 million.
- RCI concentrate volume decreased 13.9% to 71 million. Revenue
decreased 2.6% to $7 million.
First Quarter Results Conference Call Cott
Corporation will host a conference call today, May 2, 2012, at
10:00 a.m. EDT, to discuss first quarter results, which can be
accessed as follows:
North America: (877) 407-8031 International: (201) 689-8031
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.
Share Repurchase Program Cott Corporation
announced its plans to commence, subject to compliance with the
annual limits established by the Toronto Stock Exchange ("TSX"), a
share repurchase program for up to $35 million in common shares
over a 12 month period. Cott's common shares may be purchased in
open market transactions and privately negotiated repurchases under
the program through either a 10b5-1 automatic trading plan or at
management's discretion in compliance with regulatory requirements,
and given market, cost and other considerations.
Subject to completion of appropriate filings with and approval
by the TSX, repurchases will be made through the facilities of the
TSX, the New York Stock Exchange ("NYSE"), or by such other means
as may be permitted by the TSX and/or the NYSE. The rules and
policies of the TSX contain restrictions on the number of shares
that can be repurchased over a 12-month period, and also contain
restrictions on the number of shares that can be purchased on any
given day, based on the average daily trading volumes of the common
shares on the TSX. Similarly, the safe harbor conditions of Rule
10b-18 impose certain limitations on the number of shares that can
be purchased on the NYSE per day.
"We are pleased to be able to announce this share repurchase
program as an excellent way to return value to our shareowners,"
continued Mr. Fowden.
There can be no assurance as to the precise number of shares
that will be repurchased under the share repurchase program, or the
aggregate dollar amount of the shares actually purchased. Cott may
discontinue purchases at any time, subject to compliance with
applicable regulatory requirements. Shares purchased pursuant to
the share repurchase program will be cancelled.
About Cott Corporation Cott is one of the
world's largest beverage companies focusing on private-label and
contract manufacturing. With approximately 4,000 employees, Cott
operates soft drink, juice, water and other beverage bottling
facilities in the United States, Canada, the U.K. and Mexico. Cott
markets beverage concentrates in over 50 countries around the
world.
Defined Terms Certain defined terms used
in this press release include the following. "GAAP" means U.S.
generally accepted accounting principles. "EBITDA" means GAAP
earnings (loss) before interest, taxes, depreciation and
amortization. "Adjusted EBITDA" means GAAP earnings (loss) before
interest, taxes, depreciation and amortization, excluding purchase
accounting adjustments, integration expenses, restructuring and
asset impairments. See the accompanying reconciliation of Cott's
EBITDA and Adjusted EBITDA to its GAAP net income, as well as the
"Non-GAAP Measures" paragraph below.
Non-GAAP Measures Cott supplements its
reporting of revenue determined in accordance with GAAP by
excluding the impact of foreign exchange to separate the impact of
currency exchange rate changes from Cott's results of operations
and, in some cases, by excluding the impact of the Cliffstar
acquisition. Cott supplements its reporting of earnings before
interest, taxes, depreciation and amortization by excluding
Cliffstar purchase accounting adjustments, integration expenses,
restructuring and asset impairments to separate the impact of these
items from the underlying business. Because Cott uses these
adjusted financial results in the management of its business and to
understand business performance independent of the Cliffstar
acquisition, 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. The non-GAAP financial measures
described above are in addition to, and not meant to be considered
superior to, or a substitute for, Cott's financial statements
prepared in accordance with GAAP. In addition, the non-GAAP
financial measures included in this earnings announcement reflect
management's judgment of particular items, and may be different
from, and therefore may not be comparable to, similarly titled
measures reported by other companies.
Safe Harbor Statements This press release
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 conveying management's expectations as to the
future based on plans, estimates and projections at the time Cott
makes the statements. Forward-looking statements involve inherent
risks and uncertainties and Cott cautions you that a number of
important factors could cause actual results to differ materially
from those contained in any such forward-looking statement. The
forward-looking statements contained in this press release include,
but are not limited to, statements related to the amount of shares
that may be repurchased under the share repurchase program, future
financial operating results and related matters. The
forward-looking statements are based on assumptions regarding
management's current plans and estimates. Management believes these
assumptions to be reasonable but there is no assurance that they
will prove to be accurate.
Factors that could cause actual results to differ materially
from those described in this press release include, among others:
Cott's ability to compete successfully; changes in consumer tastes
and preferences for existing products and Cott's ability to develop
and timely launch new products that appeal to such changing
consumer tastes and preferences; a loss of or reduction in business
with key customers, particularly Walmart; fluctuations in commodity
prices and Cott's ability to pass on increased costs to its
customers, and the impact of those increased prices on Cott's
volumes; Cott's ability to manage its operations successfully;
currency fluctuations that adversely affect the exchange between
the U.S. dollar and the pound sterling, the Euro, the Canadian
dollar, the Mexican peso and other currencies; Cott's ability to
maintain favorable arrangements and relationships with its
suppliers; Cott's ability to realize the expected benefits of the
Cliffstar acquisition because of integration difficulties and other
challenges; risks associated with the asset purchase agreement
entered into in connection with the Cliffstar acquisition; the
significant amount of Cott's outstanding debt and Cott's ability to
meet its obligations under its debt agreements; Cott's ability to
maintain compliance with the covenants and conditions under its
debt agreements; fluctuations in interest rates; credit rating
changes; the impact of global financial events on Cott's financial
results; Cott's ability to fully realize the expected cost savings
and/or operating efficiencies from its restructuring activities;
any disruption to production at Cott's beverage concentrates or
other manufacturing facilities; Cott's ability to protect its
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
Cott's reputation as a result of litigation or legal proceedings;
changes in the legal and regulatory environment in which Cott
operates; the impact of proposed taxes on soda and other sugary
drinks; enforcement of compliance with the Ontario Environmental
Protection Act; unseasonably cold or wet weather, which could
reduce the demand for Cott's beverages; the impact of national,
regional and global events, including those of a political,
economic, business and competitive nature; Cott's ability to
recruit, retain, and integrate new management and a new management
structure; Cott's exposure to intangible asset risk; Cott's ability
to renew its collective bargaining agreements on satisfactory
terms; disruptions in Cott's information systems; compliance with
product health and safety standards; the volatility of Cott's stock
price; and Cott's ability to maintain compliance with the listing
requirements of the New York Stock Exchange.
The foregoing list of factors is not exhaustive. Readers are
cautioned not to place undue reliance on these 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 for the fiscal year ended December 31,
2011 and its quarterly reports on Form 10-Q, as well as other
periodic reports filed with the securities commissions. Cott does
not undertake to update or revise any of these statements in light
of new information or future events, except as expressly required
by applicable law.
Website: www.cott.com
COTT CORPORATION EXHIBIT 1
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions of U.S. dollars, except share and per share
amounts, U.S. GAAP)
Unaudited
For the Three Months Ended
--------------------------
March 31, April 2,
2012 2011
------------ ------------
Revenue, net $ 523.8 $ 534.1
Cost of sales 460.4 464.5
------------ ------------
Gross profit 63.4 69.6
Selling, general and administrative expenses 41.8 45.1
Loss on disposal of property, plant & equipment 0.6 -
------------ ------------
Operating income 21.0 24.5
Other (income) expense, net (0.2) 0.8
Interest expense, net 14.0 14.4
------------ ------------
Income before income taxes 7.2 9.3
Income tax expense 0.4 1.6
------------ ------------
Net income $ 6.8 $ 7.7
Less: Net income attributable to non-controlling
interests 0.9 0.9
------------ ------------
Net income attributed to Cott Corporation $ 5.9 $ 6.8
============ ============
Net income per common share attributed to Cott
Corporation
Basic $ 0.06 $ 0.07
Diluted $ 0.06 $ 0.07
Weighted average outstanding shares (millions)
attributed to Cott Corporation
Basic 94.4 94.1
Diluted 95.7 95.3
COTT CORPORATION EXHIBIT 2
CONSOLIDATED BALANCE SHEETS
(in millions of U.S. dollars, except share amounts, U.S. GAAP)
Unaudited
------------ ------------
March 31, December 31,
2012 2011
------------ ------------
ASSETS
Current assets
Cash & cash equivalents $ 31.6 $ 100.9
Accounts receivable, net of allowance of $5.9
($5.7 as of December 31, 2011) 234.6 210.8
Income taxes recoverable 9.4 9.9
Inventories 228.5 210.0
Prepaid expenses and other current assets 21.1 19.3
------------ ------------
Total current assets 525.2 550.9
Property, plant & equipment 490.6 482.2
Goodwill 130.3 129.6
Intangibles and other assets 335.8 341.1
Deferred income taxes 5.0 4.1
Other tax receivable 1.1 1.0
------------ ------------
Total assets $ 1,488.0 $ 1,508.9
============ ============
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt $ 2.5 $ 3.4
Accounts payable and accrued liabilities 245.5 281.1
------------ ------------
Total current liabilities 248.0 284.5
Long-term debt 602.3 602.1
Deferred income taxes 35.1 34.1
Other long-term liabilities 20.5 20.0
------------ ------------
Total liabilities 905.9 940.7
Equity
Capital stock, no par - 95,101,230 (December 31,
2011 - 95,101,230) shares issued 395.9 395.9
Treasury stock (2.1) (2.1)
Additional paid-in-capital 43.4 42.6
Retained earnings 150.0 144.1
Accumulated other comprehensive loss (17.2) (24.7)
------------ ------------
Total Cott Corporation equity 570.0 555.8
Non-controlling interests 12.1 12.4
------------ ------------
Total equity 582.1 568.2
------------ ------------
Total liabilities and equity $ 1,488.0 $ 1,508.9
============ ============
COTT CORPORATION EXHIBIT 3
Consolidated Statements of Cash Flows
(in millions of U.S. dollars, U.S. GAAP)
Unaudited
For the Three Months Ended
--------------------------
March 31, April 2,
2012 2011
------------ ------------
Operating Activities
Net income $ 6.8 $ 7.7
Depreciation & amortization 23.8 23.6
Amortization of financing fees 1.2 0.9
Share-based compensation expense 0.8 1.1
Increase in deferred income taxes - 0.9
Loss on disposal of property, plant &
equipment 0.6 -
Other non-cash items (0.4) 0.2
Change in operating assets and liabilities,
net of acquisition:
Accounts receivable (20.5) (29.4)
Inventories (16.5) (6.1)
Prepaid expenses and other current assets (1.8) 0.3
Other assets 1.0 (0.1)
Accounts payable and accrued liabilities (38.4) (21.9)
Income taxes recoverable 0.3 (2.8)
------------ ------------
Net cash used in operating activities (43.1) (25.6)
------------ ------------
Investing Activities
Acquisition (5.0) -
Additions to property, plant & equipment (17.7) (12.5)
Additions to intangibles and other assets (2.7) -
Proceeds from sale of property, plant &
equipment - 0.1
------------ ------------
Net cash used in investing activities (25.4) (12.4)
------------ ------------
Financing Activities
Payments of long-term debt (1.2) (1.3)
Borrowings under ABL 7.0 99.8
Payments under ABL (7.0) (72.5)
Distributions to non-controlling interests (1.1) (1.6)
------------ ------------
Net cash (used in) provided by financing
activities (2.3) 24.4
------------ ------------
Effect of exchange rate changes on cash 1.5 1.2
------------ ------------
Net decrease in cash & cash equivalents (69.3) (12.4)
Cash & cash equivalents, beginning of period 100.9 48.2
------------ ------------
Cash & cash equivalents, end of period $ 31.6 $ 35.8
============ ============
COTT CORPORATION EXHIBIT 4
SEGMENT INFORMATION
(in millions of U.S. dollars or 8 oz equivalent cases, U.S. GAAP)
Unaudited
For the Three Months Ended
--------------------------
March 31, April 2,
2012 2011
------------ ------------
Revenue
North America $ 408.1 $ 428.8
United Kingdom 99.2 86.3
Mexico 9.1 11.4
RCI 7.4 7.6
------------ ------------
$ 523.8 $ 534.1
============ ============
Operating income (loss)
North America $ 17.3 $ 20.8
United Kingdom 3.2 3.0
Mexico (1.3) (1.5)
RCI 1.8 2.2
------------ ------------
$ 21.0 $ 24.5
============ ============
Volume - 8 oz equivalent cases - Total Beverage
(including concentrate)
North America 179.6 195.1
United Kingdom 44.9 43.5
Mexico 5.9 8.4
RCI 71.0 82.5
------------ ------------
301.4 329.5
============ ============
Volume - 8 oz equivalent cases - Filled Beverage
North America 156.4 170.6
United Kingdom 40.9 39.1
Mexico 5.9 8.4
RCI - -
------------ ------------
203.2 218.1
============ ============
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) March 31, 2012
-------------------------------------------------
North United
Cott(1) America Kingdom Mexico RCI
--------- --------- --------- -------- ------
Change in revenue $ (10.3) $ (20.7) $ 12.9 $ (2.3) $ (0.2)
Impact of foreign
exchange(2) 3.2 0.7 1.7 0.8 -
--------- --------- --------- -------- ------
Change excluding foreign
exchange $ (7.1) $ (20.0) $ 14.6 $ (1.5) $ (0.2)
--------- --------- --------- -------- ------
Percentage change in
revenue -1.9% -4.8% 14.9% -20.2% -2.6%
--------- --------- --------- -------- ------
Percentage change in
revenue excluding
foreign exchange -1.3% -4.7% 16.9% -13.2% -2.6%
--------- --------- --------- -------- ------
(1) Cott includes the following reporting segments: North America, United
Kingdom, Mexico and RCI.
(2) 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 6
SUPPLEMENTARY INFORMATION - NON-GAAP - EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION & AMORTIZATION
(EBITDA)
(in millions of U.S. dollars)
Unaudited
For the Three Months
Ended
-------------------------
March 31, April 2,
2012 2011
------------ ------------
Net income attributed to Cott Corporation $ 5.9 $ 6.8
Interest expense, net 14.0 14.4
Income tax expense 0.4 1.6
Depreciation & amortization 23.8 23.6
Net income attributable to non-controlling
interests 0.9 0.9
------------ ------------
EBITDA $ 45.0 $ 47.3
Acquisition adjustments
Inventory step-up (step-down) 0.1 (3.2)
Integration costs 1.0 0.7
------------ ------------
Adjusted EBITDA $ 46.1 $ 44.8
============ ============
CONTACT: Michael C. Massi Investor Relations Tel: (813)
313-1786 Email Contact
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