EXHIBIT 99.1
COTT CORPORATION ANNOUNCES SECOND QUARTER RESULTS
-------------------------------------------------
o SALES GROWTH OF 6.3%
o EPS OF $0.35
o 2005 GUIDANCE REDUCED
(ALL INFORMATION IN U.S. DOLLARS)
TORONTO, JULY 20, 2005 -- Cott Corporation (NYSE:COT; TSX:BCB) today announced
results for the second quarter ended July 2, 2005. Sales continued to grow, up
6.3% in the quarter to $492.7 million compared to $463.7 million in the second
quarter last year. Each of the Company's divisions reported sales growth in the
quarter and in the first half of the year, despite an increasingly competitive
environment in all markets. Excluding the impact of acquisitions and foreign
exchange, second quarter sales were up 3.5%. Earnings per diluted share were
$0.35, compared with $0.41 in the second quarter last year.
"Sales continued to grow this quarter despite an environment of general category
softness and aggressive national brand promotions," said John K. Sheppard,
Cott's president and chief executive officer. "Building upon the significant
sales gains in the second quarter last year, these results demonstrate the
ongoing commitment of our customers to their retailer brand soft drink
programs."
SECOND QUARTER
- --------------
Sales in the Company's U.S. business unit were up 4.1%, up 2.4% excluding the
impact of acquisitions. In the U.K./Europe division, sales rose 12.0%, 9.2%
excluding foreign exchange. In Canada, sales were up 8.7% as compared to the
previous year, down 0.5% excluding foreign exchange. Sales for the International
division were up 24.2% to $20.0 million, of which sales in Mexico amounted to
$14.6 million.
Gross margin for the quarter was 16.4% as compared to 18.4% in the second
quarter of last year. The year-over-year margin decline reflects the higher
fixed costs related to the Company's capacity action plan, including the
start-up of the Texas plant, and changes in product mix toward lower margin
water, particularly in the U.S. A benefit of $4.9 million relating to the
settlement of a lawsuit against suppliers of high fructose corn syrup was
recorded in cost of sales. Operating income of $45.2 million was down 12.9% from
last year's $51.9 million.
During the quarter, Cott announced that its new production facility in Fort
Worth, Texas had begun shipping to customers on schedule. With two of its three
lines now operating and the third scheduled to begin later in the summer, the
Company expects to produce six million cases from the facility in 2005, and over
time expects to grow to a full annual capacity of 40 million cases.
FIRST HALF 2005
- ---------------
Sales in the first six months were $888.2 million, up 6.4% versus prior year, an
increase of 5.1% excluding the impact of foreign exchange and up 3.4% excluding
both foreign exchange and acquisitions. The U.S. division saw sales grow by
5.7%, 3.6% excluding acquisitions. In the U.K./Europe division, sales were up
7.5% for the first half, up 4.7% excluding the impact of foreign exchange, while
in Canada sales rose by 6.4%, down 1.9% excluding foreign exchange. Sales in the
International division were up 15.9% to $35.7 million of which sales in Mexico
were $25.1 million, representing a 32.8% top-line growth in Cott's newest market
in the first half of the year.
Gross margin for the first half of the year was 15.4%, including the benefit of
the high fructose corn syrup settlement, compared to 18.7% last year. Operating
income was $64.5 million, down 22.8% from last year.
"Earnings for the first half of the year reflect the impact of increased
ingredient and packaging costs and the timing of pricing passed through to our
customers," added Sheppard. "These factors are being offset by increased plant
efficiencies. As we've
said before, we expect that our back-to-basics plan will deliver a positive
impact in the second half of the year."
2005 OUTLOOK
- ------------
In light of continuing category softness and the shift to lower margin water,
Cott is revising its full year guidance. Sales growth for the year is now
expected to be between 6% and 8% (down from previous guidance of between 8-10%).
EBITDA is now expected to be between $209 million and $214 million (down from
previous guidance of between $220 million and $230 million). Earnings per
diluted share are now expected to be between $1.06 and $1.11 (down from $1.14 to
$1.18). Capital expenditures for the year are projected to be $95 million.
SECOND QUARTER RESULTS CONFERENCE CALL
- --------------------------------------
Cott Corporation will host a conference call today, Wednesday, July 20 at
approximately 10 AM ET to discuss second quarter 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 Cott's second quarter conference call with analysts over the Internet,
please visit the Company's website at http://www.cott.com. Please log on 15
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 these events until August 3, 2005.
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 net income 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
attached and also 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, the Company's ability to
restore plant efficiencies and lower logistics costs, 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
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 2, 2005 JULY 3, 2004 JULY 2, 2005 JULY 3, 2004
------------- ------------- ------------- -------------
SALES $ 492.7 $ 463.7 $ 888.2 $ 834.6
Cost of sales 412.0 378.2 751.5 678.7
------------ ------------ ------------ ------------
GROSS PROFIT 80.7 85.5 136.7 155.9
Selling, general and administrative expenses 35.5 34.1 72.4 72.8
Unusual items - (0.5) (0.2) (0.5)
------------ ------------ ------------ ------------
OPERATING INCOME 45.2 51.9 64.5 83.6
Other expense, net (0.1) - (0.2) 0.3
Interest expense, net 6.6 6.6 13.1 13.2
Minority interest 1.4 1.2 2.3 2.2
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES AND EQUITY LOSS 37.3 44.1 49.3 67.9
Income taxes (12.3) (14.6) (16.0) (22.9)
Equity loss - (0.1) - (0.2)
------------ ------------ ------------ ------------
NET INCOME $ 25.0 $ 29.4 $ 33.3 $ 44.8
============ ============ ============ ============
VOLUME - 8 OZ EQUIVALENT CASES 326.0 328.6 598.3 598.7
NET INCOME PER COMMON SHARE
Basic $ 0.35 $ 0.41 $ 0.47 $ 0.63
Diluted $ 0.35 $ 0.41 $ 0.46 $ 0.62
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 2, 2005 JULY 3, 2004 JULY 2, 2005 JULY 3, 2004
------------ ------------ ------------ ------------
OPERATING ACTIVITIES
Net income $ 25.0 $ 29.4 $ 33.3 $ 44.8
Depreciation and amortization 15.9 15.0 32.7 30.0
Amortization of financing fees 0.3 0.1 0.3 0.3
Deferred income taxes 3.5 4.6 3.3 4.3
Minority interest 1.4 1.2 2.3 2.2
Equity loss - 0.1 - 0.2
Other non-cash items 0.8 0.3 0.5 0.6
Net change in non-cash working capital (12.7) (52.7) (16.9) (65.4)
----------- ----------- ----------- -----------
Cash provided by (used in) operating activities 34.2 (2.0) 55.5 17.0
----------- ----------- ----------- -----------
INVESTING ACTIVITIES
Additions to property, plant and equipment (26.7) (10.0) (54.8) (19.5)
Acquisitions - - - (17.7)
Other investing activities (1.6) 2.2 (2.1) 0.2
----------- ----------- ----------- -----------
Cash used in investing activities (28.3) (7.8) (56.9) (37.0)
----------- ----------- ----------- -----------
FINANCING ACTIVITIES
Payments of long-term debt (0.2) (0.3) (0.4) (2.5)
Short-term borrowings (0.6) 4.3 (5.5) 6.4
Distributions to subsidiary minority shareowner (0.8) (1.0) (1.9) (2.2)
Issue of common shares 0.9 7.7 1.8 9.9
Financing costs (0.5) - (2.6) -
Other financing activities (0.1) (0.1) (0.2) (0.2)
----------- ----------- ----------- -----------
Cash provided by (used in) financing activities (1.3) 10.6 (8.8) 11.4
----------- ----------- ----------- -----------
Effect of exchange rate changes on cash (0.1) (0.2) (0.5) (0.2)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 4.5 0.6 (10.7) (8.8)
CASH, BEGINNING OF PERIOD 11.4 9.0 26.6 18.4
----------- ----------- ----------- -----------
CASH, END OF PERIOD $ 15.9 $ 9.6 $ 15.9 $ 9.6
=========== =========== =========== ===========
EXHIBIT 3
COTT CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED AUDITED
JULY 2, 2005 JANUARY 1, 2005
------------ ---------------
ASSETS
CURRENT ASSETS
Cash $ 15.9 $ 26.6
Accounts receivable 226.3 184.3
Inventories 138.3 122.8
Prepaid and other expenses 12.4 9.7
---------- ----------
392.9 343.4
PROPERTY, PLANT AND EQUIPMENT 350.9 313.7
GOODWILL 88.4 88.8
INTANGIBLES AND OTHER ASSETS 259.7 276.1
---------- ----------
$ 1,091.9 $ 1,022.0
========== ==========
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 65.5 $ 71.4
Current maturities of long-term debt 0.8 0.8
Accounts payable and accrued liabilities 188.9 145.2
---------- ----------
255.2 217.4
LONG-TERM DEBT 272.4 272.5
DEFERRED INCOME TAXES 54.2 51.0
---------- ----------
581.8 540.9
MINORITY INTEREST 24.2 23.8
SHAREOWNERS' EQUITY
Capital stock 289.4 287.0
Retained earnings 194.9 161.6
Accumulated other comprehensive income 1.6 8.7
---------- ----------
485.9 457.3
---------- ----------
$ 1,091.9 $ 1,022.0
========== ==========
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 2, 2005 JULY 3, 2004 JULY 2, 2005 JULY 3, 2004
------------ ------------ ------------ ------------
SALES
USA $ 354.4 $ 340.4 $ 648.7 $ 613.5
Canada 59.7 54.9 100.8 94.7
UK & Europe 57.9 51.7 101.5 94.4
International 20.0 16.1 35.7 30.8
Corporate 0.7 0.6 1.5 1.2
----------- ----------- ----------- -----------
$ 492.7 $ 463.7 $ 888.2 $ 834.6
=========== =========== =========== ===========
OPERATING INCOME (LOSS)
USA $ 36.9 $ 39.9 $ 55.0 $ 71.0
Canada 5.5 6.3 5.9 6.7
UK & Europe 3.1 3.8 5.2 5.4
International 2.8 3.7 5.1 6.4
Corporate (3.1) (1.8) (6.7) (5.9)
----------- ----------- ----------- -----------
$ 45.2 $ 51.9 $ 64.5 $ 83.6
=========== =========== =========== ===========
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 2, 2005 JULY 3, 2004 JULY 2, 2005 JULY 3, 2004
------------ ------------ ------------ ------------
NET INCOME $ 25.0 $ 29.4 $ 33.3 $ 44.8
Depreciation and amortization 15.9 15.0 32.7 30.0
Interest expense, net 6.6 6.6 13.1 13.2
Income taxes 12.3 14.6 16.0 22.9
----------- ----------- ----------- -----------
EBITDA $ 59.8 $ 65.6 $ 95.1 $ 110.9
=========== =========== =========== ===========
FOR THE YEAR ENDED DECEMBER 31, 2005 -- GUIDANCE
NET INCOME $77 - $80
Depreciation and amortization $63
Interest expense, net $26
Income taxes and other $43 - $45
-----------
EBITDA $209 - $214
===========
NON-GAAP MEASURE
- ----------------
EBITDA is defined as net income 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, the Company's ability to restore plant efficiencies and lower
logistics costs, 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.