EXHIBIT 99.1
COTT CORPORATION ANNOUNCES Q4 AND FULL YEAR RESULTS
- - REVENUE GROWS FOR 6TH YEAR; 2004 UP 16% TO $1.65 BILLION
- - EARNINGS PER SHARE $1.09
- - COMPANY CONFIRMS 2005 GUIDANCE WITH A "BACK-TO-BASICS" FOCUS
(All information in U.S. dollars)
TORONTO - JANUARY 28, 2005 - Cott Corporation (NYSE:COT; TSX:BCB) today reported
results for the fourth quarter and full year ending January 1, 2005. The
retailer brand soft drink manufacturer posted revenues for the full fiscal year
2004 of $1.65 billion, up 16% from 2003, with sales growth coming from the U.S.,
U.K. and Mexican business units. Net income was $78 million, up slightly from
$77 million in the prior year. Earnings per diluted share for the year were
$1.09, about the same as last year despite profit pressure from higher packaging
and supply chain costs in the U.S. Fiscal year 2003 results reflected an
additional week in the fourth quarter, which added $21 million in sales last
year and $0.01 in diluted earnings per share. When the extra week is excluded,
fiscal 2004 sales rose by 18%, up 13% without acquisitions and up 11% excluding
foreign exchange as well.
"We continue to see strong long term sales and profit growth for Cott, despite
weaker than expected profits in 2004," said John K. Sheppard, president and
chief executive officer. "Our customers are growing, the demand for retailer
brands is growing and we believe we now have the right plans in place to
translate these continued top-line gains into shareowner value in 2005."
For the fourth quarter, the Company's sales totaled a record $369 million, 7%
better than for the same period last year, up 14% excluding 2003's 53rd week, up
9% without acquisitions and up 6% excluding foreign exchange.
YEAR 2004
For the year ended January 1, 2005, sales reached $1.65 billion, up from $1.42
billion in the prior year. Cott's U.S. business unit led the Company's sales
growth with an 18% improvement over prior year, up 20% excluding 2003's 53rd
week and up 13% when acquisitions are also excluded. The U.K./Europe business
unit was up 17%, 4% better excluding foreign exchange. International sales were
up 45%, up 49% excluding foreign exchange, principally as a result of strong
performance in Mexico where annual sales reached $41 million. In Canada, sales
were down 1%, down 7% when foreign exchange is also excluded.
Gross margin for the year was 17.2% compared to 19.5% in prior year. Higher
plant costs and increased freight and packaging costs contributed to this
decline.
Operating income was $145 million, down 2.8% from prior year, down 1.6%
excluding 2003's 53rd week. In the U.S., the Company's business unit reported a
3% decline in 2004 operating income and the Canadian unit was down 43%. The
UK/Europe business unit had a 65% increase in operating income to $13 million,
while International almost doubled from $5.7 million to $10.4 million.
Net income for the year was $78 million, up 1.2 % over prior year and up 2.1%
when the 53rd week is also excluded. Earnings per diluted share were $1.09, flat
with last year, up 1% excluding last year's extra week.
FOURTH QUARTER
Sales for the fourth quarter were $369 million up from $345 million last year.
The Company's U.S. business unit led fourth quarter sales growth with an
increase of 10%, up 17% excluding the 53rd week and up 10% excluding
acquisitions as well. Sales in the U.K./Europe unit were up 6%, up 11% excluding
the prior year's 53rd week, up 1% when foreign exchange is also excluded.
International sales rose 20% to $15 million, of which sales in Mexico amounted
to $11 million. The Canadian unit saw a 7% decline in sales, down 1 % excluding
2003's additional week, down 9% excluding foreign exchange also.
Gross margin of 15.4% compares to 19.8% for the fourth quarter last year. Higher
plant costs as a result of lower manufacturing efficiencies in the U.S.,
together with packaging cost increases, were responsible for this
decline.
Operating income for the fourth quarter was $23 million, compared to $33 million
in the prior year, $31 million excluding 2003's extra week. Net income for the
quarter was $11 million compared to $17 million in prior year, $16 million when
the extra week in 2003 is excluded. Earnings per diluted share were $0.16 versus
$0.23 for the same period last year, $0.22 excluding the extra week. Supplier
rebates, partially offset by packaging price increases and the write down of the
Company's investment in Iroquois Water, had a favourable impact $0.02 per
diluted share in the quarter.
MANAGEMENT COMMENTS
Commenting further on the year ahead, Sheppard repeated the Company's previously
announced guidance for 2005. Sales growth of 8 to 10% is anticipated, with
EBITDA expected to be between $230 and $240 million (see below for discussion of
EBITDA). Earnings per diluted share are expected to be in the range of $1.21 to
$1.25 and capital spending is expected to be approximately $95 million.
The Company has already passed additional price increases through to customers
in 2005 to help offset increased packaging and other commodity costs. At the
same time, Cott has taken steps to reduce logistics expenses and improve
efficiencies, including last year's acquisition of three new bottling facilities
and installation of two new bottling lines. In addition, the Company continues
to build management strength with the hiring of industry veteran Bob Flaherty,
who took over as president of the U.S. business unit earlier this month.
"With a $229 million increase in sales this year, we struggled to meet the surge
in demand from our customers," said Sheppard. "However, we remain committed to
meeting and exceeding customers' expectations in 2005 as we focus on the same
back-to-basics approach that has contributed to our significant growth over the
past six years."
***
CONFERENCE CALL
Cott Corporation will host a conference call for investors and analysts today,
Friday, January 28th 2005, at approximately 10 a.m. ET to discuss fourth quarter
and year-end financial 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: 800-796-7558
International: 416-640-1907
WEBCAST
To access the conference call over the Internet, investors, analysts and the
public in general are invited to 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 broadcasts, a
replay will be available at Cott's website following the Conference Call through
12:00 noon ET on Thursday February 5, 2005. Fourth quarter and year-end 2004
supplementary financial information for the conference call is available in the
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 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:
Media Relations
Kerry Morgan Tel: (416) 203-5613
Investor Relations
Edmund O'Keeffe Tel: (416) 203-5617
COTT CORPORATION EXHIBIT 1
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS, U.S. GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE YEARS ENDED
-------------------------- -------------------
JANUARY 1, 2005 JANUARY 3, 2004 JANUARY 1, 2005 JANUARY 3, 2004
--------------- --------------- --------------- ---------------
SALES $ 369.3 $ 344.6 $ 1,646.3 $ 1,417.8
Cost of sales 312.5 276.2 1,362.6 1,141.0
--------- --------- ----------- -----------
GROSS PROFIT 56.8 68.4 283.7 276.8
Selling, general and
administrative expenses 32.0 32.9 138.1 126.1
Unusual items 1.6 2.6 0.9 1.8
--------- --------- ----------- -----------
OPERATING INCOME 23.2 32.9 144.7 148.9
Other expense (income), net (0.4) (0.3) (0.1) 0.5
Interest expense, net 6.4 6.4 26.0 27.5
Minority interest 0.8 1.1 4.0 3.2
--------- --------- ----------- -----------
INCOME BEFORE INCOME TAXES AND EQUITY LOSS 16.4 25.7 114.8 117.7
Income taxes (4.6) (9.0) (35.8) (40.1)
Equity loss (0.4) (0.1) (0.7) (0.2)
--------- --------- ----------- -----------
NET INCOME $ 11.4 $ 16.6 $ 78.3 $ 77.4
========= ========= =========== ===========
VOLUME - 8 OZ EQUIVALENT CASES 247.1 244.1 1,147.8 1,012.5
NET INCOME PER COMMON SHARE
Basic $ 0.16 $ 0.24 $ 1.10 $ 1.12
Diluted $ 0.16 $ 0.23 $ 1.09 $ 1.09
COTT CORPORATION EXHIBIT 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS OF U.S. DOLLARS, U.S. GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE YEARS ENDED
-------------------------- -------------------
JANUARY 1, 2005 JANUARY 3, 2004 JANUARY 1, 2005 JANUARY 3, 2004
--------------- --------------- --------------- ---------------
OPERATING ACTIVITIES
Net income $ 11.4 $ 16.6 $ 78.3 $ 77.4
Depreciation and amortization 15.3 13.1 60.0 51.0
Amortization of financing fees 0.2 0.2 0.7 1.7
Deferred income taxes 2.4 (0.5) 9.1 9.6
Minority interest 0.8 1.1 4.0 3.2
Equity loss 0.4 0.1 0.7 0.2
Non-cash unusual items 1.5 2.0 1.5 1.8
Other non-cash items - 1.2 0.8 1.6
Net change in non-cash working capital (4.5) 0.7 (52.4) (3.8)
------- ------- -------- --------
Cash provided by operating activities 27.5 34.5 102.7 142.7
------- ------- -------- --------
INVESTING ACTIVITIES
Additions to property, plant and equipment (13.1) (14.2) (56.7) (49.1)
Acquisition of production capacity - - (3.8) -
Acquisitions and equity investments (16.9) (50.3) (34.6) (49.8)
Notes receivable - - - (2.5)
Other investing activities (2.1) - 1.7 (0.4)
------- ------- -------- --------
Cash used in investing activities (32.1) (64.5) (93.4) (101.8)
------- ------- -------- --------
FINANCING ACTIVITIES
Payments of long-term debt (0.3) (2.0) (3.5) (90.2)
Short-term borrowings 9.5 36.1 (7.0) 55.8
Distributions to subsidiary minority shareowner (1.6) (1.3) (5.9) (4.1)
Issue of common shares 1.5 5.6 14.3 12.3
Other financing activities (0.1) (0.1) (0.4) (0.4)
------- ------- -------- --------
Cash provided by (used in) financing activities 9.0 38.3 (2.5) (26.6)
------- ------- -------- --------
Effect of exchange rate changes on cash 1.2 0.7 1.4 0.8
------- ------- -------- --------
NET INCREASE IN CASH 5.6 9.0 8.2 15.1
CASH, BEGINNING OF PERIOD 21.0 9.4 18.4 3.3
------- ------- -------- --------
CASH, END OF PERIOD $ 26.6 $ 18.4 $ 26.6 $ 18.4
======= ======= ======== ========
COTT CORPORATION EXHIBIT 3
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS OF U.S. DOLLARS, U.S. GAAP)
UNAUDITED AUDITED
JANUARY 1, 2005 JANUARY 3, 2004
--------------- ---------------
ASSETS
CURRENT ASSETS
Cash $ 26.6 $ 18.4
Accounts receivable 184.3 148.8
Inventories 122.8 94.4
Prepaid and other assets 9.7 5.5
---------- --------
343.4 267.1
PROPERTY, PLANT AND EQUIPMENT 335.7 314.3
GOODWILL 88.8 81.6
INTANGIBLES AND OTHER ASSETS 254.1 245.8
---------- --------
$ 1,022.0 $ 908.8
========== ========
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 71.4 $ 78.1
Current maturities of long-term debt 0.8 3.3
Accounts payable and accrued liabilities 145.2 140.5
---------- --------
217.4 221.9
LONG-TERM DEBT 272.5 275.7
DEFERRED INCOME TAXES 51.0 40.5
---------- --------
540.9 538.1
MINORITY INTEREST 23.8 25.6
SHAREOWNERS' EQUITY
Capital stock 287.0 267.9
Retained earnings 161.6 83.3
Accumulated other comprehensive income 8.7 (6.1)
---------- --------
457.3 345.1
---------- --------
$ 1,022.0 $ 908.8
========== ========
COTT CORPORATION EXHIBIT 4
SEGMENT INFORMATION
(IN MILLIONS OF U.S. DOLLARS, U.S. GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE YEARS ENDED
-------------------------- -------------------
JANUARY 1, 2005 JANUARY 3, 2004 JANUARY 1, 2005 JANUARY 3, 2004
--------------- --------------- --------------- ---------------
SALES
USA $ 260.2 $ 237.6 $ 1,199.0 $ 1,016.6
Canada 45.0 48.2 189.5 191.0
UK & Europe 48.8 45.9 194.3 166.6
International 14.9 12.4 61.2 42.1
Corporate 0.4 0.5 2.3 1.5
-------- ---------- ---------- ----------
$ 369.3 $ 344.6 $ 1,646.3 $ 1,417.8
======== ========== ========== ==========
OPERATING INCOME (LOSS)
USA $ 19.7 $ 29.0 $ 120.5 $ 124.8
Canada 0.5 4.7 10.1 17.8
UK & Europe 2.9 1.1 12.7 7.7
International 2.0 1.2 10.4 5.7
Corporate (1.9) (3.1) (9.0) (7.1)
-------- ---------- ---------- ----------
$ 23.2 $ 32.9 $ 144.7 $ 148.9
======== ========== ========== ==========
COTT CORPORATION EXHIBIT 5
SUPPLEMENTARY INFORMATION - NON GAAP MEASURES
(IN MILLIONS OF U.S. DOLLARS)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE YEARS ENDED
-------------------------- -------------------
JANUARY 1, 2005 JANUARY 3, 2004 JANUARY 1, 2005 JANUARY 3, 2004
--------------- --------------- --------------- ---------------
NET INCOME $ 11.4 $ 16.6 $ 78.3 $ 77.4
Depreciation and amortization 15.3 13.1 60.0 51.0
Interest expense, net 6.4 6.4 26.0 27.5
Income taxes 4.6 9.0 35.8 40.1
------- ------- -------- --------
EBITDA $ 37.7 $ 45.1 $ 200.1 $ 196.0
======= ======= ======== ========
FOR THE YEAR ENDED DECEMBER 31, 2005 -- GUIDANCE
NET INCOME $88 - $91
Depreciation and amortization $69
Interest expense, net $30
Income taxes $43 - $50
-----------
EBITDA $230 - $240
===========
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.