EXHIBIT 99.1
COTT REPORTS RECORD RESULTS IN SECOND QUARTER
-- SALES RISE 19% TO $464 MILLION;
-- DILUTED EARNINGS PER SHARE RISE 17% TO $0.41;
-- ANNOUNCES NEW PLANT IS TO BE BUILT IN DALLAS/FT WORTH
(All information in U.S. Dollars)
TORONTO - JULY 22, 2004 -- Cott Corporation (NYSE:COT; TSX:BCB), today announced
sharply higher sales and earnings for the second quarter ended July 3, 2004.
Sales rose to $463.7 million, an increase of 19% over the second quarter last
year. Excluding the impact of foreign exchange and acquisitions, sales were up
13%. Earnings per diluted share were $0.41, an increase of 17% from last year's
reported $0.35.
"As retailer brand soft drinks continued their strong growth and momentum in the
United States, we outpaced category growth in the second quarter", said Frank E.
Weise, Cott's chairman and chief executive officer. "The UK and International
business units also delivered strong performance in the quarter, and we worked
closely with our retail partners around the world to innovate and drive sales".
SECOND QUARTER 2004
Sales climbed 19% in the second quarter to $463.7 million, an increase of 17%
excluding the impact of foreign exchange and were up 13% excluding the impact of
both foreign exchange and acquisitions. The Company's U.S. business unit
reported a 22% improvement over last year, up 16% excluding the impact of
acquisitions, while sales in the U.K./Europe business unit rose by 19%, up 6%
excluding foreign exchange. Sales in Canada were down 1%, a decrease of 5%
excluding foreign exchange. Sales in the International business unit rose to
$16.1 million of which sales in Mexico amounted to $9.9 million.
Gross margin for the quarter of 18.4% was down from 19.8% last year. This
decrease was as a consequence of higher input costs, combined with the impact of
excess logistics costs resulting from higher than projected volume in the U.S.
These logistics costs included additional co-pack fees, inter-plant shipping
costs and customer freight. Operating income for the second quarter increased by
15% to $51.9 million.
4
"Significantly stronger than anticipated growth in the U.S. this quarter
resulted in higher logistics costs there", said John K. Sheppard, Cott's
president and chief operating officer. "We are focused on reducing these costs
for the balance of the year by increasing our system capacity as we integrate
the QBB and Cardinal Beverage acquisitions, and by increasing utilization of our
Canadian facilities to service our U.S. customers."
Commenting further on the second quarter results, Sheppard said, "At the end of
the quarter we implemented pricing to cover the recent increases in aluminum,
PET and energy costs."
FIRST HALF 2004
Sales in the first six months were up 22% to $834.6 million, an increase of 19%
excluding the impact of foreign exchange and up 15% excluding both foreign
exchange and acquisitions. This improvement was led by a 22% gain in the U.S. In
the U.K./Europe business unit, sales were up 29% for the first half, up 14%
excluding the impact of foreign exchange, while in Canada sales rose by 8%, up
1% excluding foreign exchange. Sales in the International business unit were
$30.8 million of which sales in Mexico were $18.9 million.
Gross margin was 18.7% for the first half of the year compared to 19.5% last
year, primarily reflecting second quarter cost increases. Operating income rose
19% to $83.6 million. In the first quarter of 2004, the Company created a
reserve against certain Canadian export receivables, resulting in a charge of
$2.3 million in the first quarter.
Following up on its June 11, 2004 press release, the Company announced that its
planned new U.S. beverage manufacturing facility will be located in Dallas/Fort
Worth, Texas. Construction is expected to start in the third quarter of 2004 and
it is anticipated that the plant will be in full production by the fourth
quarter of 2005.
During the quarter, the Company announced that it had been advised by Thomas H.
Lee Partners, L.P. (THL), that parties related to, or affiliated with them,
distributed approximately 12.7 million shares of Cott common stock to their
respective general and limited partners in two separate transactions that took
place on May 20, 2004 and on June 22, 2004. As a result of these distributions,
THL no longer has a significant shareholding in Cott Corporation. THL has
advised the Company that its three representatives on Cott's board of directors
would be resigning their positions effective July 23, 2004. Commenting on the
transaction, Frank Weise said: "On behalf of the board and the entire Cott team,
I would like to thank David Harkins, Hunter Boll and Tom Hagerty for their
support and contributions to our Company over the past six years." Weise also
said that Cott is in the process of recruiting additional board members.
5
2004 OUTLOOK
The Company also revised its sales guidance for the full year 2004. Sales are
now expected to increase 15 - 18% for the year. Earnings per diluted share are
anticipated between $1.23 and $1.27, and EBITDA is expected to be between $220
and $225 million, (see below for discussion of EBITDA). Capital spending is
expected to be approximately $65 million in 2004.
# # #
SECOND QUARTER RESULTS CONFERENCE CALL
Cott Corporation will host a conference call today (July 22, 2004) at
approximately 1:30 PM EDT to discuss these results.
For those who wish to listen to the presentation, there is a listen-only dial-in
telephone line, which can be accessed as follows:
North America: 800-814-4890
International: 416-640-1907
WEBCAST
To access the conference call today over the Internet, please visit Cott's
website at http://www.cott.com at least fifteen minutes early to register,
download, and install any necessary audio/video software. For those who are
unable to access the live broadcast, a replay will be available at Cott's
website following the conference call until July 29, 2004. Second quarter 2004
supplementary financial information for the conference call is available in
Investor Relations/Financial Reports section of Cott's website.
ABOUT COTT CORPORATION
Cott Corporation is the world's largest retailer brand soft drink supplier, with
the leading take home carbonated soft drink market shares in this segment in its
core markets of the United States, Canada and the United Kingdom.
NON-GAAP MEASURE
EBITDA is defined as earnings from continuing operations before interest, income
taxes, depreciation and amortization. Cott uses operating income as its primary
measure of performance and cash flow from operations as its primary measure of
liquidity. Nevertheless, Cott presents EBITDA in its filings for several
reasons. Cott uses multiples of EBITDA and discounted cash flows in determining
the value of its operations. In addition, Cott uses "cash return on assets", a
financial measure calculated by dividing Cott's annualized EBITDA by its
aggregate operating assets, for the purposes of calculating performance-related
bonus compensation for its management employees, because that measure reflects
the ability of
6
management to generate cash while preserving assets. Finally, Cott includes
EBITDA in its filings because it believes that its current and potential
investors use multiples of EBITDA to make investment decisions about Cott.
Investors should not consider EBITDA an alternative to net income, nor to cash
provided by operating activities, nor any other indicators of performance or
liquidity which have been determined in accordance with U.S. or Canadian GAAP.
Cott's method of calculating EBITDA may differ from the methods used by other
companies and, accordingly, Cott's EBITDA may not be comparable to similarly
titled measures used by other companies.
SAFE HARBOR STATEMENTS
This press release contains forward-looking statements reflecting management's
current expectations regarding future results of operations, economic
performance, financial condition and achievements of the Company.
Forward-looking statements, specifically those concerning future performance,
are subject to certain risks and uncertainties, and actual results may differ
materially. These risks and uncertainties are detailed from time to time in the
Company's filings with the appropriate securities commissions, and include,
without limitation, stability of procurement costs for raw and packaging
materials, adverse weather conditions, competitive activities by national,
regional and retailer brand beverage manufacturers, the Company's ability to
develop new products that appeal to consumer tastes, the Company's ability to
identify acquisition candidates, successfully consummate acquisitions and
integrate acquired businesses into its operations, fluctuations in currency
versus the U.S. dollar, the uncertainties of litigation, loss of key customers
and retailers' continued commitment to their retailer brand beverage programs.
The foregoing list of factors is not exhaustive. The Company undertakes no
obligation to publicly update or revise any forward-looking statements.
COTT CONTACTS
Edmund O'Keeffe Tel: (416) 203-5617
7
EXHIBIT 1
COTT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS OF US DOLLARS EXCEPT PER SHARE AMOUNTS, US GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
--------------------------- ---------------------------
JULY 3, 2004 JUNE 28, 2003 JULY 3, 2004 JUNE 28, 2003
------------ ------------- ------------ -------------
SALES $ 463.7 $ 388.1 $ 834.6 $ 683.4
Cost of sales 378.2 311.2 678.7 550.1
--------- --------- --------- ---------
GROSS PROFIT 85.5 76.9 155.9 133.3
Selling, general and
administrative expenses 34.1 32.5 72.8 64.1
Unusual items (0.5) (0.8) (0.5) (0.8)
--------- --------- --------- ---------
OPERATING INCOME 51.9 45.2 83.6 70.0
Other expense, net -- 0.9 0.3 1.4
Interest expense, net 6.6 6.6 13.2 14.3
Minority interest 1.2 0.7 2.2 1.3
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES AND
EQUITY LOSS 44.1 37.0 67.9 53.0
Income taxes (14.6) (12.4) (22.9) (17.8)
Equity loss (0.1) -- (0.2) (0.1)
--------- --------- --------- ---------
NET INCOME $ 29.4 $ 24.6 $ 44.8 $ 35.1
========= ========= ========= =========
VOLUME -- 8 OZ EQUIVALENT CASES 328.6 267.3 598.7 475.4
NET INCOME PER COMMON SHARE
Basic $ 0.41 $ 0.36 $ 0.63 $ 0.51
Diluted $ 0.41 $ 0.35 $ 0.62 $ 0.50
EXHIBIT 2
COTT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
--------------------------- -----------------------------
JULY 3, 2004 JUNE 28, 2003 JULY 3, 2004 JUNE 28, 2003
------------ ------------- ------------ -------------
OPERATING ACTIVITIES
Net income $ 29.4 $ 24.6 $ 44.8 $ 35.1
Depreciation and amortization 15.0 12.8 30.0 24.9
Amortization of financing fees 0.1 0.4 0.3 1.3
Deferred income taxes 4.6 4.4 4.3 6.5
Minority interest 1.2 0.7 2.2 1.3
Equity loss 0.1 -- 0.2 0.1
Other non-cash items 0.3 (0.7) 0.6 (0.4)
Net change in non-cash working capital (52.7) (18.1) (65.4) (19.8)
--------- --------- --------- ---------
Cash provided by (used in) operating
activities (2.0) 24.1 17.0 49.0
--------- --------- --------- ---------
INVESTING ACTIVITIES
Additions to property, plant and equipment (11.1) (17.8) (22.4) (27.9)
Acquisitions and equity investments -- (0.2) (17.7) (0.5)
Other investing activities 3.3 0.1 3.1 0.1
--------- --------- --------- ---------
Cash used in investing activities (7.8) (17.9) (37.0) (28.3)
--------- --------- --------- ---------
FINANCING ACTIVITIES
Payments of long-term debt (0.3) (15.4) (2.5) (53.4)
Issue of long-term debt -- 3.7 -- 3.7
Short-term borrowings 4.3 2.6 6.4 24.3
Distributions to subsidiary minority
shareowner (1.0) (0.5) (2.2) (1.7)
Issue of common shares 7.7 4.6 9.9 5.7
Other financing activities (0.1) (0.2) (0.2) (0.2)
--------- --------- --------- ---------
Cash provided by (used in) financing
activities 10.6 (5.2) 11.4 (21.6)
--------- --------- --------- ---------
Effect of exchange rate changes on cash (0.2) (0.1) (0.2) (0.1)
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH 0.6 0.9 (8.8) (1.0)
CASH, BEGINNING OF PERIOD 9.0 1.4 18.4 3.3
--------- --------- --------- ---------
CASH, END OF PERIOD $ 9.6 $ 2.3 $ 9.6 $ 2.3
========= ========= ========= =========
EXHIBIT 3
COTT CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED AUDITED
JULY 3, 2004 JANUARY 3, 2004
------------ ---------------
ASSETS
CURRENT ASSETS
Cash $ 9.6 $ 18.4
Accounts receivable 224.6 148.8
Inventories 129.3 94.4
Prepaid and other expenses 9.2 5.5
--------- ---------
372.7 267.1
PROPERTY, PLANT AND EQUIPMENT 323.8 314.3
GOODWILL 81.0 81.6
INTANGIBLES AND OTHER ASSETS 241.5 245.8
--------- ---------
$ 1,019.0 $ 908.8
========= =========
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 84.7 $ 78.1
Current maturities of long-term debt 1.5 3.3
Accounts payable and accrued liabilities 184.7 140.5
--------- ---------
270.9 221.9
LONG-TERM DEBT 275.4 275.7
DEFERRED INCOME TAXES 45.4 40.5
--------- ---------
591.7 538.1
MINORITY INTEREST 25.6 25.6
SHAREOWNERS' EQUITY
Capital stock 281.8 267.9
Retained earnings 128.1 83.3
Accumulated other comprehensive income (8.2) (6.1)
--------- ---------
401.7 345.1
--------- ---------
$ 1,019.0 $ 908.8
========= =========
EXHIBIT 4
COTT CORPORATION
SEGMENT INFORMATION
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
--------------------------- ---------------------------
JULY 3, 2004 JUNE 28, 2003 JULY 3, 2004 JUNE 28, 2003
------------ ------------- ------------ -------------
SALES
USA $ 340.4 $ 278.0 $ 613.5 $ 504.6
Canada 54.9 55.7 94.7 87.5
UK & Europe 51.7 43.6 94.4 73.1
International 16.1 10.5 30.8 17.7
Corporate 0.6 0.3 1.2 0.5
--------- --------- --------- ---------
$ 463.7 $ 388.1 $ 834.6 $ 683.4
========= ========= ========= =========
OPERATING INCOME (LOSS)
USA $ 39.9 $ 35.7 $ 71.0 $ 61.2
Canada 6.3 6.1 6.7 6.9
UK & Europe 3.8 3.0 5.4 2.7
International 3.7 1.9 6.4 3.2
Corporate (1.8) (1.5) (5.9) (4.0)
--------- --------- --------- ---------
$ 51.9 $ 45.2 $ 83.6 $ 70.0
========= ========= ========= =========
EXHIBIT 5
COTT CORPORATION
SUPPLEMENTARY INFORMATION - NON GAAP MEASURES
(IN MILLIONS OF US DOLLARS)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
--------------------------- ---------------------------
JULY 3, 2004 JUNE 28, 2003 JULY 3, 2004 JUNE 28, 2003
------------ ------------- ------------ -------------
NET INCOME $ 29.4 $ 24.6 $ 44.8 $ 35.1
Depreciation and amortization 15.0 12.8 30.0 24.9
Interest expense, net 6.6 6.6 13.2 14.3
Income taxes 14.6 12.4 22.9 17.8
--------- --------- --------- ---------
EBITDA $ 65.6 $ 56.4 $ 110.9 $ 92.1
========= ========= ========= =========
FOR THE YEAR ENDED JANUARY 1, 2005 -- GUIDANCE
INCOME FROM CONTINUING OPERATIONS $87 - $91
Depreciation and amortization $60
Interest expense, net $28
Income taxes $45 - $46
-----------
EBITDA $220 - $225
===========
EBITDA is defined as earnings from continuing operations before interest, income
taxes, depreciation and amortization. Cott uses operating income as its primary
measure of performance and cash flow from operations as its primary measure of
liquidity. Nevertheless, Cott presents EBITDA in its filings for several
reasons. Cott uses multiples of EBITDA and discounted cash flows in determining
the value of its operations. In addition, Cott uses "cash return on assets," a
financial measure calculated by dividing Cott's annualized EBITDA by its
aggregate operating assets, for the purposes of calculating performance-related
bonus compensation for its management employees, because that measure reflects
the ability of management to generate cash while preserving assets. Finally,
Cott includes EBITDA in its filings because it believes that its current and
potential investors use multiples of EBITDA to make investment decisions about
Cott. Investors should not consider EBITDA an alternative to net income, nor to
cash provided by operating activities, nor any other indicators of performance
or liquidity which have been determined in accordance with U.S. or Canadian
GAAP. Cott's method of calculating EBITDA may differ from the methods used by
other companies and, accordingly, Cott's EBITDA may not be comparable to
similarly titled measures used by other companies.
SAFE HARBOR STATEMENTS
This document contains forward-looking statements reflecting management's
current expectations regarding future results of operations, economic
performance, financial condition and achievements of the Company.
Forward-looking statements, specifically those concerning future performance,
are subject to certain risks and uncertainties, and actual results may differ
materially. These risks and uncertainties are detailed from time to time in the
Company's filings with the appropriate securities commissions, and include,
without limitation, stability of procurement costs for raw and packaging
materials, adverse weather conditions, competitive activities by national,
regional and retailer brand beverage manufacturers, the Company's ability to
develop new products that appeal to consumer tastes, the Company's ability to
identify acquisition candidates, successfully consummate acquisitions and
integrate acquired businesses into its operations, fluctuations in currency
versus the U.S. dollar, the uncertainties of litigation, loss of key customers
and retailers' continued commitment to their retailer brand beverage programs.
The foregoing list of factors is not exhaustive. The Company undertakes no
obligation to publicly update or revise any forward-looking statements.