EXHIBIT 99.1
COTT REPORTS THIRD QUARTER RESULTS
----------------------------------
o SALES GROWTH OF 6.2%
o NORTH AMERICAN REALIGNMENT UNDERWAY
o $25.7 MILLION IN PRE-TAX CHARGES RECORDED
o LOSS PER SHARE OF $0.03 AFTER CHARGES OF $0.24 PER SHARE FOR UNUSUAL
ITEMS
o REVISED FULL-YEAR EPS GUIDANCE OF $0.32-$0.40 ASSUMING CHARGES FOR
UNUSUAL ITEMS OF $0.30-$0.35
(ALL INFORMATION IN U.S. DOLLARS)
TORONTO - OCTOBER 20, 2005 - Cott Corporation (NYSE:COT; TSX:BCB), today
announced results for the third quarter ended October 1, 2005. The Company's
sales for the quarter grew by 6.2% to $469.9 million, with sales growth coming
from the U.K./Europe, Canada and International business units. Excluding the
impact of foreign exchange, sales were up 5.1% from year ago, or 1.1% when
acquisitions are also excluded.
Asset impairment and restructuring charges of $25.7 million on a pre-tax basis
(or $0.24 per diluted share after taxes) were recorded in the quarter, resulting
in a net loss of $1.8 million or $0.03 per diluted share. This compared to net
income of $22.1 million or $0.31 per share in last year's third quarter. The
asset impairments of $23.7 million reflect adjustments of $20.0 million to the
carrying value of customer relationships as well as the write-down of certain
assets. Restructuring charges of $2.0 million for severance payments were
recorded as part of the Company's previously announced North American
realignment. Additional charges related to the realignment are expected through
2006 as Cott streamlines operations and rationalizes product offerings.
"Our top line benefited from the Macaw acquisition, as well as growth in our
Canadian and International businesses," said John K. Sheppard, Cott's president
and chief executive officer. "Our priority is to continue building stronger
customer relationships, while at the same time taking aggressive actions that
will help us to respond more quickly to changing business conditions and
opportunities. Optimizing our supply chain, improving plant efficiencies and
implementing pricing to offset cost increases are just a few of the initiatives
we intend to take to enable the Company to compete more effectively as we move
into 2006 and beyond."
1
THIRD QUARTER 2005
The Company's U.S. business unit reported a 1.6% decline in sales over the same
period last year, down 2.7% excluding the impact of acquisitions. Sales in
Canada increased 13.3%, up 3.5% excluding the impact of foreign exchange. The
U.K./Europe business unit reported sales growth of 44.4%, up 46.1% excluding the
impact of foreign exchange and up 18.5% excluding the impact of acquisitions and
foreign exchange. International sales were up 18.7% to $18.4 million, of which
sales in Mexico amounted to $12.4 million, up from $10.7 million in the prior
year.
The Company's third quarter gross margin as a percentage of sales was 13.9%
compared to 16% in the prior year. The decline resulted from lower volume in the
U.S., packaging and raw material cost increases, higher fixed costs related to
additional plants, and a product mix shift toward bottled water. Including asset
impairment and restructuring charges, operating income in the quarter was $5.5
million.
During the quarter, Cott announced the acquisition of Macaw (Soft Drinks) Ltd.
in the U.K. for $135.1 million including acquisition costs. Macaw was the
largest privately-owned manufacturer of retailer brand carbonated soft drinks in
the U.K. The acquisition adds six production lines, including production
capability for the fast-growing aseptic beverage segment, to Cott's U.K.
operations.
NINE MONTHS 2005
For the first three quarters of 2005, Cott's sales rose 6.4% to $1.4 billion, up
5.1% excluding the impact of foreign exchange, an increase of 2.6% when both
foreign exchange and acquisitions are excluded. The U.S. business unit reported
a 3.2% gain versus the same period last year, while the U.K./Europe sales were
up 20.5% for nine months, up 9.5% excluding the impact of foreign exchange and
acquisitions. In Canada, sales increased by 8.8%. When foreign exchange is
excluded, Canadian sales were flat for the first nine months compared to the
prior year. International sales were up 16.8% in the same period.
The Company's gross margin was 14.9% for the first nine months of the year
compared to 17.8% for the same period in 2004. Operating income declined to
$70.0 million for the period. Earnings per diluted share in the first nine
months of this year were $0.44 compared to $0.93 last year. Year-to-date
earnings include the impact of asset impairment and restructuring charges of
$0.23 per diluted share.
2
2005 OUTLOOK
In light of the factors outlined in this press release, Cott now expects
full-year earnings to be between $0.32 and $0.40 per diluted share, which
assumes charges for unusual items of between $0.30 and $0.35 per diluted share
in fiscal year 2005.
THIRD QUARTER RESULTS CONFERENCE CALL
Cott Corporation will host a conference call today, Thursday, October 20 at
approximately 3:30 PM ET to discuss third 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 third quarter conference call with analysts over the internet,
please visit the Company's website at 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 November 3, 2005.
ABOUT COTT CORPORATION
Cott Corporation is the world's largest retailer brand soft drink supplier. Our
core markets are 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,
3
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
4
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 NINE MONTHS ENDED
--------------------------------- ---------------------------------
OCTOBER 1, 2005 OCTOBER 2, 2004 OCTOBER 1, 2005 OCTOBER 2, 2004
--------------- --------------- --------------- ---------------
SALES $469.9 $442.4 $1,358.1 $1,277.0
Cost of sales 404.5 371.4 1,156.0 1,050.1
------ ------ -------- --------
GROSS PROFIT 65.4 71.0 202.1 226.9
Selling, general and administrative expenses 34.2 33.3 106.6 106.1
Unusual items
Restructuring 2.0 -- 2.0 --
Asset impairments 23.7 (0.2) 23.5 (0.7)
------ ------ -------- --------
OPERATING INCOME 5.5 37.9 70.0 121.5
Other expense (income), net (0.4) -- (0.6) 0.3
Interest expense, net 7.7 6.4 20.8 19.6
Minority interest 1.1 1.0 3.4 3.2
------ ------ -------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY LOSS (2.9) 30.5 46.4 98.4
Income taxes 1.1 (8.3) (14.9) (31.2)
Equity loss -- (0.1) -- (0.3)
------ ------ -------- --------
NET INCOME (LOSS) $ (1.8) $ 22.1 $ 31.5 $ 66.9
====== ====== ======== ========
VOLUME - 8 OZ EQUIVALENT CASES 329.3 302.0 927.6 900.7
NET INCOME (LOSS) PER COMMON SHARE
Basic $(0.03) $ 0.31 $ 0.44 $ 0.94
Diluted $(0.03) $ 0.31 $ 0.44 $ 0.93
EXHIBIT 2
COTT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
--------------------------------- ---------------------------------
OCTOBER 1, 2005 OCTOBER 2, 2004 OCTOBER 1, 2005 OCTOBER 2, 2004
--------------- --------------- --------------- ---------------
OPERATING ACTIVITIES
Net income (loss) $ (1.8) $ 22.1 $ 31.5 $ 66.9
Depreciation and amortization 18.3 14.7 51.0 44.7
Amortization of financing fees 0.2 0.2 0.5 0.5
Deferred income taxes -- 2.4 3.3 6.7
Minority interest 1.1 1.0 3.4 3.2
Equity loss -- 0.1 -- 0.3
Asset impairments 23.7 -- 24.1 --
Other non-cash items 0.3 0.2 0.4 0.8
Net change in non-cash working capital 13.9 17.5 (3.6) (47.9)
------- ------ ------- ------
Cash provided by operating activities 55.7 58.2 110.6 75.2
------- ------ ------- ------
INVESTING ACTIVITIES
Additions to property, plant and equipment (14.1) (19.3) (68.9) (38.7)
Acquisition of production capacity -- (3.8) -- (3.8)
Business acquisitions (135.1) -- (135.1) (17.7)
Proceeds from disposal of property, plant & equipment 0.2 -- 2.2 --
Other investing activities (2.2) (1.2) (6.3) (1.1)
------- ------ ------- ------
Cash used in investing activities (151.2) (24.3) (208.1) (61.3)
------- ------ ------- ------
FINANCING ACTIVITIES
Payments of long-term debt (0.3) (0.7) (0.7) (3.2)
Short-term borrowings 91.0 (22.9) 85.5 (16.5)
Distributions to subsidiary minority shareowner (2.0) (2.1) (3.9) (4.3)
Issue of common shares 1.1 2.9 3.5 12.8
Financing costs (1.2) -- (3.8) --
Other financing activities (0.1) (0.1) (0.3) (0.3)
------- ------ ------- ------
Cash provided by (used in) financing activities 88.5 (22.9) 80.3 (11.5)
------- ------ ------- ------
Effect of exchange rate changes on cash (0.1) 0.4 (0.6) 0.2
------- ------ ------- ------
NET INCREASE (DECREASE) IN CASH (7.1) 11.4 (17.8) 2.6
CASH, BEGINNING OF PERIOD 15.9 9.6 26.6 18.4
------- ------ ------- ------
CASH, END OF PERIOD $ 8.8 $ 21.0 $ 8.8 $ 21.0
======= ====== ======= ======
EXHIBIT 3
COTT CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED
OCTOBER 1, 2005 JANUARY 1, 2005
--------------- ---------------
ASSETS
CURRENT ASSETS
Cash $ 8.8 $ 26.6
Accounts receivable 222.1 184.3
Inventories 140.2 122.8
Prepaid and other expenses 13.2 9.7
-------- --------
384.3 343.4
PROPERTY, PLANT AND EQUIPMENT 401.2 313.7
GOODWILL 157.7 88.8
INTANGIBLES AND OTHER ASSETS 264.7 276.1
-------- --------
$1,207.9 $1,022.0
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 154.5 $ 71.4
Current maturities of long-term debt 0.8 0.8
Accounts payable and accrued liabilities 201.2 145.2
-------- --------
356.5 217.4
LONG-TERM DEBT 272.4 272.5
DEFERRED INCOME TAXES 65.0 51.0
-------- --------
693.9 540.9
MINORITY INTEREST 23.3 23.8
SHAREOWNERS' EQUITY
Capital stock 291.4 287.0
Retained earnings 193.1 161.6
Accumulated other comprehensive income 6.2 8.7
-------- --------
490.7 457.3
-------- --------
$1,207.9 $1,022.0
======== ========
EXHIBIT 4
COTT CORPORATION
SEGMENT INFORMATION
(IN MILLIONS OF US DOLLARS, US GAAP)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
--------------------------------- ---------------------------------
OCTOBER 1, 2005 OCTOBER 2, 2004 OCTOBER 1, 2005 OCTOBER 2, 2004
--------------- --------------- --------------- ---------------
SALES
USA $320.2 $325.3 $ 968.9 $ 938.8
Canada 56.4 49.8 157.2 144.5
UK & Europe 73.8 51.1 175.3 145.5
International 18.4 15.5 54.1 46.3
Corporate 1.1 0.7 2.6 1.9
------ ------ -------- --------
$469.9 $442.4 $1,358.1 $1,277.0
====== ====== ======== ========
OPERATING INCOME (LOSS)
USA $ 1.5 $ 29.8 $ 56.5 $ 100.8
Canada (0.4) 2.9 5.5 9.6
UK & Europe 4.5 4.4 9.7 9.8
International 2.4 1.9 7.5 8.4
Corporate (2.5) (1.1) (9.2) (7.1)
------ ------ -------- --------
$ 5.5 $ 37.9 $ 70.0 $ 121.5
====== ====== ======== ========
EXHIBIT 5
COTT CORPORATION
SUPPLEMENTARY INFORMATION - NON GAAP MEASURES
(IN MILLIONS OF US DOLLARS)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
--------------------------------- ---------------------------------
OCTOBER 1, 2005 OCTOBER 2, 2004 OCTOBER 1, 2005 OCTOBER 2, 2004
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $(1.8) $22.1 $ 31.5 $ 66.9
Depreciation and amortization 18.3 14.7 51.0 44.7
Interest expense, net 7.7 6.4 20.8 19.6
Income taxes (1.1) 8.3 14.9 31.2
----- ----- ------ ------
EBITDA $23.1 $51.5 $118.2 $162.4
===== ===== ====== ======
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.