Cott Corporation (NYSE: COT) (TSX: BCB) today announced its results
for the first quarter ended March 30, 2013, the declaration of a
quarterly dividend of CAD$0.06 per common share, and the renewal of
its share repurchase program.
First Quarter 2013 Results
- Revenue of $505 million was lower by 4% (3% excluding the
impact of foreign exchange) compared to $524 million.
- Gross profit as a percentage of revenue was 11.2% compared to
12.1%.
- Selling, general and administrative ("SG&A") expenses of
$41 million were lower by 1% compared to $42 million.
- Net income was effectively zero compared to $6 million.
Earnings per diluted share were effectively $0.00 compared to
$0.06.
- EBITDA was $40 million compared to $45 million.
"During the first quarter, soft volumes alongside a general
market decline in the carbonated soft drink category resulted in
unfavorable fixed cost absorption and adversely impacted our gross
margin and overall profitability," commented Jerry Fowden, Cott's
Chief Executive Officer. "We remain firmly focused on being a low
cost, high service producer while following our 4 C's of Customer,
Cost, Capex and Cash. Meanwhile, we continue to implement our
capital deployment strategy which includes the payment of a
quarterly dividend, the renewal of our share repurchase program and
the reduction of debt and interest costs," continued Mr.
Fowden.
FIRST QUARTER 2013 PERFORMANCE SUMMARY
- Total filled beverage case volume (excluding concentrate sales)
was 193 million cases compared to 203 million cases. The volume
decline was due primarily to the residual effect of exiting low
gross margin business in North America last year, a general market
decline in the North American carbonated soft drink ("CSD")
category and loss of market share for the private label segment
within the overall CSD category in North America.
- Revenue was lower by 4% (3% excluding the impact of foreign
exchange) at $505 million. The revenue decline was due primarily to
lower global volumes slightly offset by an increase in average
price per case in North America.
- Gross profit as a percentage of revenue was 11.2% compared to
12.1%. The gross margin decline was due primarily to lower global
volumes which resulted in unfavorable fixed cost absorption.
- SG&A expenses were lower by 1% at $41 million compared to
$42 million. The decrease in SG&A was due primarily to reduced
costs associated with our information technology strategy.
- Income before income taxes was $2 million compared to $7
million.
- Income tax expense was essentially flat.
- EBITDA was $40 million compared to $45 million.
FIRST QUARTER 2013 REPORTING SEGMENT
HIGHLIGHTS
- North America filled beverage case volume was 148 million cases
compared to 156 million cases. Revenue was lower by 4% at $393
million due primarily to the residual effect of exiting low gross
margin business last year, a general market decline in the North
American CSD category and loss of market share for the private
label segment within the overall CSD category, slightly offset by
higher juice volumes and increased average price per case.
- U.K. filled beverage case volume was 40 million cases compared
to 41 million cases. Revenue was lower by 2% (1% excluding the
impact of foreign exchange) at $97 million due primarily to lower
volumes as a result of poor weather and the narrowing of price gaps
relative to national brands, particularly in the energy and sports
drinks categories.
- Mexico filled beverage case volume was 5 million cases compared
to 6 million cases. Revenue was lower by 19% (21% excluding the
impact of foreign exchange) at $7 million due primarily to the
continuing impact from the loss of a regional brand license at the
end of its term.
- RCI concentrate volume was 64 million cases compared to 71
million cases. Revenue was flat at $7 million due primarily to
lower shipments to Asia, offset by increased average price per
case.
Declaration of Dividend Cott has declared
a dividend of CAD$0.06 per common share, payable in cash on June
12, 2013 to shareowners of record at the close of business on May
30, 2013.
Cott intends to pay a regular quarterly dividend on its common
shares subject to, among other things, the best interests of its
shareowners, Cott's results of operations, cash balances and future
cash requirements, financial condition, statutory regulations and
covenants set forth in Cott's asset-based credit lending facility
and indentures governing the Senior Notes due in 2017 and Senior
Notes due in 2018, as well as other factors that the Board of
Directors may deem relevant from time to time.
Share Repurchase Program Cott's Board of
Directors has approved the renewal of its share repurchase program,
subject to compliance with the annual limits established by the
Toronto Stock Exchange ("TSX"), for up to 5% of Cott's outstanding
common shares over a 12-month period commencing upon the expiration
of Cott's currently effective share repurchase program on May 21,
2013. Cott's common shares may be purchased under the program in
open market transactions and privately negotiated repurchases
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 announce the renewal of our share repurchase
authorization, which we intend to manage opportunistically as an
integral part of our balanced capital deployment strategy, which
alongside our quarterly dividend, is designed to return
approximately 30% of our free cash flow to shareowners," continued
Mr. Fowden.
There can be no assurance as to the precise number of shares, if
any, 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.
First Quarter Results Conference Call Cott
Corporation will host a conference call today, May 1, 2013, 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.
About Cott Corporation Cott is one of the
world's largest producers of beverages on behalf of retailers,
brand owners and distributors. Cott produces multiple types of
beverages in a variety of packaging formats and sizes, including
carbonated soft drinks, 100% shelf stable juice and juice-based
products, clear, still and sparkling flavored waters, energy
products, sports products, new age beverages, and ready-to-drink
teas, as well as alcoholic beverages for brand owners. Cott's large
manufacturing footprint, substantial research and development
capability and high-level of quality and customer service enables
Cott to offer its customers a strong value-added proposition of low
cost, high quality products. With approximately 4,000 employees,
Cott operates manufacturing facilities in the United States,
Canada, the United Kingdom and Mexico. Cott also develops and
manufactures beverage concentrates, which it exports to 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. "Total filled beverage
case volume" means filled beverage 8-ounce equivalents. "EBITDA"
means GAAP earnings (loss) before interest, taxes, depreciation and
amortization. See the accompanying reconciliation of Cott's EBITDA
to its GAAP net income, as well as the "Non-GAAP Measures"
paragraph below.
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 currency exchange rate changes from Cott's results of
operations. Cott utilizes EBITDA to separate the impact of certain
items from the underlying business. Because Cott uses these
adjusted financial results in the management of its business,
management believes this supplemental information is useful to
investors for their independent evaluation and understanding of
Cott's underlying business performance and the performance of its
management. 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 declaration of
future dividends, 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 British 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; 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; and the volatility of Cott's stock price.
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 29,
2012 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 30, March 31,
2013 2012
------------ ------------
Revenue, net $ 505.4 $ 523.8
Cost of sales 449.0 460.4
------------ ------------
Gross profit 56.4 63.4
Selling, general and administrative expenses 41.3 41.8
Loss on disposal of property, plant & equipment - 0.6
------------ ------------
Operating income 15.1 21.0
Other expense (income), net 0.3 (0.2)
Interest expense, net 13.3 14.0
------------ ------------
Income before income taxes 1.5 7.2
Income tax expense 0.5 0.4
------------ ------------
Net income 1.0 6.8
Less: Net income attributable to non-
controlling interests 1.0 0.9
------------ ------------
Net income attributed to Cott Corporation $ - $ 5.9
============ ============
Net income per common share attributed to Cott
Corporation
Basic $ - $ 0.06
Diluted $ - $ 0.06
Weighted average outstanding shares (millions)
attributed to Cott Corporation
Basic 95.4 94.4
Diluted 95.8 95.7
Dividends declared per share $ 0.06 $ -
COTT CORPORATION EXHIBIT 2
CONSOLIDATED BALANCE SHEETS
(in millions of U.S. dollars, except share amounts, U.S. GAAP)
Unaudited
------------ ------------
March 30, December 29,
2013 2012
------------ ------------
ASSETS
Current assets
Cash & cash equivalents $ 93.0 $ 179.4
Accounts receivable, net of allowance of $6.1
($6.8 as of December 29, 2012) 223.3 199.4
Income taxes recoverable 1.0 1.2
Inventories 235.7 224.8
Prepaid expenses and other current assets 20.8 20.3
------------ ------------
Total current assets 573.8 625.1
Property, plant & equipment, net 486.8 490.9
Goodwill 129.7 130.3
Intangibles and other assets, net 305.6 315.4
Deferred income taxes 3.0 3.3
Other tax receivable 1.2 0.9
------------ ------------
Total assets $ 1,500.1 $ 1,565.9
============ ============
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt $ 2.0 $ 1.9
Accounts payable and accrued liabilities 238.4 287.7
------------ ------------
Total current liabilities 240.4 289.6
Long-term debt 601.4 601.8
Deferred income taxes 38.4 39.1
Other long-term liabilities 15.1 12.5
------------ ------------
Total liabilities 895.3 943.0
Equity
Capital stock, no par - 95,371,484 (December
29, 2012 - 95,371,484) shares issued 397.8 397.8
Additional paid-in-capital 41.1 40.4
Retained earnings 180.4 186.0
Accumulated other comprehensive loss (24.4) (12.4)
------------ ------------
Total Cott Corporation equity 594.9 611.8
Non-controlling interests 9.9 11.1
------------ ------------
Total equity 604.8 622.9
------------ ------------
Total liabilities and equity $ 1,500.1 $ 1,565.9
============ ============
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 30, March 31,
2013 2012
------------ ------------
Operating Activities
Net income $ 1.0 $ 6.8
Depreciation & amortization 24.7 23.8
Amortization of financing fees 0.7 1.2
Share-based compensation expense 0.7 0.8
Loss on disposal of property, plant &
equipment - 0.6
Other non-cash items 0.3 (0.4)
Change in operating assets and liabilities,
net of acquisition:
Accounts receivable (28.2) (20.5)
Inventories (13.2) (16.5)
Prepaid expenses and other current assets (0.6) (1.8)
Other assets (0.1) 1.0
Accounts payable and accrued liabilities (44.1) (38.4)
Income taxes recoverable 0.2 0.3
------------ ------------
Net cash used in operating activities (58.6) (43.1)
------------ ------------
Investing Activities
Acquisition - (5.0)
Additions to property, plant & equipment (19.9) (17.7)
Additions to intangibles and other assets (0.2) (2.7)
Proceeds from insurance recoveries 0.4 -
------------ ------------
Net cash used in investing activities (19.7) (25.4)
------------ ------------
Financing Activities
Payments of long-term debt (0.5) (1.2)
Borrowings under ABL - 7.0
Payments under ABL - (7.0)
Distributions to non-controlling interests (2.1) (1.1)
Common shares repurchased and cancelled (2.9) -
------------ ------------
Net cash used in financing activities (5.5) (2.3)
------------ ------------
Effect of exchange rate changes on cash (2.6) 1.5
------------ ------------
Net decrease in cash & cash equivalents (86.4) (69.3)
Cash & cash equivalents, beginning of period 179.4 100.9
------------ ------------
Cash & cash equivalents, end of period $ 93.0 $ 31.6
============ ============
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 30, March 31,
2013 2012
------------ ------------
Revenue
North America $ 393.2 $ 408.1
United Kingdom 97.4 99.2
Mexico 7.4 9.1
RCI 7.4 7.4
------------ ------------
$ 505.4 $ 523.8
============ ============
Operating income (loss)
North America $ 13.8 $ 17.3
United Kingdom - 3.2
Mexico (0.7) (1.3)
RCI 2.0 1.8
------------ ------------
$ 15.1 $ 21.0
============ ============
Volume - 8 oz equivalent cases - Total
Beverage (including concentrate)
North America 172.6 179.6
United Kingdom 44.5 44.9
Mexico 4.9 5.9
RCI 63.5 71.0
------------ ------------
285.5 301.4
============ ============
Volume - 8 oz equivalent cases - Filled
Beverage
North America 148.0 156.4
United Kingdom 40.1 40.9
Mexico 4.9 5.9
RCI 0.2 -
------------ ------------
193.2 203.2
============ ============
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 30, 2013
-----------------------------------------------------
North United
Cott(1) America Kingdom Mexico RCI
--------- --------- --------- --------- ---------
Change in revenue $ (18.4) $ (14.9) $ (1.8) $ (1.7) $ -
Impact of foreign
exchange(2) 0.6 0.1 0.7 (0.2) -
--------- --------- --------- --------- ---------
Change excluding
foreign exchange $ (17.8) $ (14.8) $ (1.1) $ (1.9) $ -
--------- --------- --------- --------- ---------
Percentage change in
revenue -3.5% -3.7% -1.8% -18.7% 0.0%
--------- --------- --------- --------- ---------
Percentage change in
revenue excluding
foreign exchange -3.4% -3.6% -1.1% -20.9% 0.0%
--------- --------- --------- --------- ---------
(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 30, March 31,
2013 2012
------------ ------------
Net income attributed to Cott
Corporation $ - $ 5.9
Interest expense, net 13.3 14.0
Income tax expense 0.5 0.4
Depreciation & amortization 24.7 23.8
Net income attributable to non-
controlling interests 1.0 0.9
------------ ------------
EBITDA $ 39.5 $ 45.0
============ ============
CONTACT: Michael C. Massi Investor Relations Tel: (813)
313-1786 Email Contact
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