EXHIBIT 99.1
COTT REPORTS RESULTS FOR THIRD QUARTER
- - SALES UP 13.5% IN THIRD QUARTER
- - $0.31 EPS DOWN 14%
- - FULL YEAR EPS GUIDANCE REVISED
- - ANNOUNCES TWO NEW ACQUISITIONS
(All information in U.S. Dollars)
TORONTO - OCTOBER 20, 2004- Cott Corporation (NYSE:COT; TSX:BCB), today reported
record sales for the third quarter ended October 2, 2004. The retailer brand
soft drink manufacturer announced that sales for the quarter rose by 13.5% to
$442.4 million. Excluding the impact of foreign exchange sales were up 11% from
year ago, an increase of 7% when acquisitions are also excluded. Net income for
the quarter was $22.1 million, a decrease of 14% from last year and diluted
earnings per share were $0.31 vs. $0.36 last year, a decline of 14%.
"A strong top line in the US, driven by the continued growth of retailer brands
there, helped drive our third quarter sales to new highs." said John K.
Sheppard, Cott's president and chief executive officer. " However, as growth
continued to exceed our original expectations we saw higher than expected
logistical and manufacturing costs in the US again this quarter. Our number one
priority is in getting these costs back in line."
Cott also announced, that on an interim basis, Sheppard would be taking on
day-to-day responsibility for the US business unit, in addition to his CEO
duties, while a search is conducted for a president of the US business unit. In
a related move, Paul Richardson, previously responsible for the US business
unit, was named to the position of EVP, Global Sourcing, where he will continue
to make an important contribution.
"This is the right move for the US business and for our shareowners." said Frank
E. Weise, Cott's chairman. "John has a demonstrated track record of sustained
success in the US, which saw strong sales, earnings and market share growth
under his leadership."
The Company reported that sales for the first nine months of the year rose to
$1,277 million, up 19% from prior year, up 12% excluding the impact of foreign
exchange and acquisitions. Net income increased 10% to $66.9 million from $60.8
million in the same period last year. Earnings per diluted share rose 8% to
$0.93, as compared to $0.86 for last year's first nine months.
THIRD QUARTER 2004
Sales for the third quarter were $442.4 million, an increase of 13.5% from the
same period last year, up 11% excluding the impact of foreign exchange. The
Company's U.S. business unit reported a 19% increase over the same period last
year, an increase of 13% excluding acquisitions. Sales in the U.K./Europe
business unit rose by 7%, down 5% excluding the impact of foreign exchange,
while sales in Canada declined 10%, a decrease of 15% excluding the impact of
foreign exchange. Sales in Mexico were $10.8 million, up from $6.9 million in
the prior year.
4
Gross margin of 16.0% was below the prior year's 19.3%, principally due to
higher logistical and plant production costs, including additional co-pack fees,
inter-plant shipping costs and higher manufacturing costs. Operating income
decreased by 18% to $37.9 million. Income taxes for the third quarter of $8.3
million, were favorably impacted by a $2 million reduction in accrued tax
liability.
NINE MONTHS 2004
For the first three quarters of 2004 sales rose 19% to $1,277 million, up 16%
excluding the impact of foreign exchange, an increase of 12% when both foreign
exchange and acquisitions are excluded. The U.S. business unit reported a 21%
gain versus the same period last year, 14.5% excluding acquisitions, while in
the U.K./Europe sales were up 21% for nine months, up 7% excluding the impact of
foreign exchange. In Canada, sales increased by 1%, but decreased 5% after
foreign exchange is taken into account. Sales in Mexico were $29.6 million for
the nine months as compared to $16 million for the prior year. Earnings per
diluted share in the first nine months of this year grew by 8%, reaching $0.93
vs. $0.86 per diluted share last year.
Gross margin was 17.8% for the nine months compared to 19.4% for the same period
in 2003, impacted by manufacturing and logistics costs. Operating income
increased 5% to $121.5 million.
Operating cash flow for the first three quarters of 2004, including capital
expenditures was $31.6 million compared with $73.1 million for the same period
last year. The cash generated was primarily used to fund acquisitions.
ACQUISITIONS
Cott today announced that its U.S. subsidiary, Cott Beverages Inc., has acquired
certain of the assets of Metro Beverage Co., a soft drink manufacturer based in
Columbus, Ohio and of Elan Waters, Blairsville, Georgia. These acquisitions are
expected to add $15 million a year to Cott's sales. They will provide additional
production capacity to help the Company address US manufacturing requirements
and ensure sufficient capacity for 2005. These acquisitions increase the number
of bottling plants to 11 in the US and 21 worldwide.
2004 OUTLOOK
For the full year 2004, the company revised its earnings guidance. EPS is now
expected at $1.15-$1.19, down from the $1.23-$1.27 previously announced, and
EBITDA is anticipated to be between $210 and $215 million, down from prior
guidance of between $220 and $225 million. Sales growth is still expected to be
between 16% to 19%, and CAPEX will amount to $65 million for the year.
# # #
THIRD QUARTER RESULTS CONFERENCE CALL
Cott Corporation will host a conference call today, October 20th, 2004 at
approximately 2:00 PM ET to discuss these results.
5
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 November 3, 2004. Third 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 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. A reconciliation of the
Non-GAAP financial measures is available in the Investor Relations/Financial
Reports section of Cott's website.
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
6
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
COTT CORPORATION EXHIBIT 1
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS OF US DOLLARS EXCEPT PER SHARE AMOUNTS, US GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------------------- --------------------------------------
OCTOBER 2, 2004 SEPTEMBER 27, 2003 OCTOBER 2, 2004 SEPTEMBER 27, 2003
--------------- ------------------ --------------- ------------------
SALES $442.4 $389.8 $1,277.0 $1,073.2
Cost of sales 371.4 314.7 1,050.1 864.8
------ ------ -------- --------
GROSS PROFIT 71.0 75.1 226.9 208.4
Selling, general and
administrative expenses 33.3 29.1 106.1 93.2
Unusual items (0.2) - (0.7) (0.8)
------ ------ -------- --------
OPERATING INCOME 37.9 46.0 121.5 116.0
Other expense (income), net - (0.6) 0.3 0.8
Interest expense, net 6.4 6.8 19.6 21.1
Minority interest 1.0 0.8 3.2 2.1
------ ------ -------- --------
INCOME BEFORE INCOME TAXES AND EQUITY LOSS 30.5 39.0 98.4 92.0
Income taxes (8.3) (13.3) (31.2) (31.1)
Equity loss (0.1) - (0.3) (0.1)
------ ------ -------- --------
NET INCOME $ 22.1 $25.7 $ 66.9 $ 60.8
====== ====== ======== ========
VOLUME - 8 OZ EQUIVALENT CASES 302.0 293.0 900.7 768.4
NET INCOME PER COMMON SHARE
Basic $ 0.31 $ 0.37 $ 0.94 $ 0.88
Diluted $ 0.31 $ 0.36 $ 0.93 $ 0.86
COTT CORPORATION EXHIBIT 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
------------------------------------- -------------------------------------
OCTOBER 2, 2004 SEPTEMBER 27, 2003 OCTOBER 2, 2004 SEPTEMBER 27, 2003
--------------- ------------------ --------------- ------------------
OPERATING ACTIVITIES
Net income $ 22.1 $ 25.7 $ 66.9 $ 60.8
Depreciation and amortization 14.7 13.0 44.7 37.9
Amortization of financing fees 0.2 0.2 0.5 1.5
Deferred income taxes 2.4 3.6 6.7 10.1
Minority interest 1.0 0.8 3.2 2.1
Equity loss 0.1 - 0.3 0.1
Other non-cash items 0.2 0.4 0.8 -
Net change in non-cash working capital 17.5 15.3 (47.9) (4.5)
------ ------ ------ ------
Cash provided by operating activities 58.2 59.0 75.2 108.0
------ ------ ------ ------
INVESTING ACTIVITIES
Additions to property, plant and equipment (21.2) (7.0) (43.6) (34.9)
Acquisition of production capacity (3.8) - (3.8) -
Acquisitions and equity investments - 1.0 (17.7) 0.5
Notes receivable - (2.5) - (2.5)
Other investing activities 0.7 (0.3) 3.8 (0.2)
------ ------ ------ ------
Cash used in investing activities (24.3) (8.8) (61.3) (37.1)
------ ------ ------ ------
FINANCING ACTIVITIES
Payments of long-term debt (0.7) (38.5) (3.2) (88.2)
Short-term borrowings (22.9) (4.6) (16.5) 19.7
Distributions to subsidiary minority shareowner (2.1) (1.1) (4.3) (2.8)
Issue of common shares 2.9 1.0 12.8 6.7
Other financing activities (0.1) (0.1) (0.3) (0.3)
------ ------ ------ ------
Cash used in financing activities (22.9) (43.3) (11.5) (64.9)
------ ------ ------ ------
Effect of exchange rate changes on cash 0.4 0.2 0.2 0.1
------ ------ ------ ------
NET INCREASE IN CASH 11.4 7.1 2.6 6.1
CASH, BEGINNING OF PERIOD 9.6 2.3 18.4 3.3
------ ------ ------ ------
CASH, END OF PERIOD $ 21.0 $ 9.4 $ 21.0 $ 9.4
====== ====== ====== ======
COTT CORPORATION EXHIBIT 3
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED AUDITED
OCTOBER 2, 2004 JANUARY 3, 2004
--------------- ---------------
ASSETS
CURRENT ASSETS
Cash $ 21.0 $ 18.4
Accounts receivable 185.7 148.8
Inventories 127.1 94.4
Prepaid and other assets 10.3 5.5
------ ------
344.1 267.1
PROPERTY, PLANT AND EQUIPMENT 333.5 314.3
GOODWILL 82.1 81.6
INTANGIBLES AND OTHER ASSETS 237.8 245.8
------ ------
$997.5 $908.8
====== ======
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 61.7 $ 78.1
Current maturities of long-term debt 0.8 3.3
Accounts payable and accrued liabilities 158.8 140.5
------ ------
221.3 221.9
LONG-TERM DEBT 272.5 275.7
DEFERRED INCOME TAXES 46.7 40.5
------ ------
540.5 538.1
MINORITY INTEREST 24.5 25.6
SHAREOWNERS' EQUITY
Capital stock 285.5 267.9
Retained earnings 150.2 83.3
Accumulated other comprehensive income (3.2) (6.1)
------ ------
432.5 345.1
------ ------
$997.5 $908.8
====== ======
COTT CORPORATION EXHIBIT 4
SEGMENT INFORMATION
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------------------- --------------------------------------
OCTOBER 2, 2004 SEPTEMBER 27, 2003 OCTOBER 2, 2004 SEPTEMBER 27, 2003
--------------- ------------------ --------------- ------------------
SALES
USA $325.3 $274.4 $ 938.8 $ 779.0
Canada 49.8 55.3 144.5 142.8
UK & Europe 51.1 47.6 145.5 120.7
International 15.5 12.0 46.3 29.7
Corporate 0.7 0.5 1.9 1.0
------ ------ -------- --------
$442.4 $389.8 $1,277.0 $1,073.2
====== ====== ======== ========
OPERATING INCOME (LOSS)
USA $ 29.8 $ 34.6 $ 100.8 $ 95.8
Canada 2.9 6.2 9.6 13.1
UK & Europe 4.4 3.9 9.8 6.6
International 1.9 1.3 8.4 4.5
Corporate (1.1) - (7.1) (4.0)
------ ------ -------- --------
$ 37.9 $ 46.0 $ 121.5 $ 116.0
====== ====== ======== ========
COTT CORPORATION EXHIBIT 5
SUPPLEMENTARY INFORMATION - NON GAAP MEASURES
(IN MILLIONS OF US DOLLARS)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------------------- --------------------------------------
OCTOBER 2, 2004 SEPTEMBER 27, 2003 OCTOBER 2, 2004 SEPTEMBER 27, 2003
--------------- ------------------ --------------- ------------------
NET INCOME $22.1 $25.7 $ 66.9 60.8
Depreciation and amortization 14.7 13.0 44.7 37.9
Interest expense, net 6.4 6.8 19.6 21.1
Income taxes 8.3 13.3 31.2 31.1
----- ----- ------ ------
EBITDA $51.5 $58.8 $162.4 $150.9
===== ===== ====== ======
FOR THE YEAR ENDED JANUARY 1, 2005 -- GUIDANCE
NET INCOME $83 - $87
Depreciation and amortization $60
Interest expense, net $26
Income taxes $41 - $42
-----------
EBITDA $210 - $215
===========
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.