UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 20, 2020

 

 

Cott Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Canada		001-31410		98-0154711
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
Corporate Center III 4221 W. Boy Scout Blvd., Suite 400 Tampa, Florida, United States				33607
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s telephone number, including area code:		(813) 313-1732

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☒	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common shares without nominal or par value		COT BCB		New York Stock Exchange Toronto Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

Item 2.02. Results of Operations and Financial Condition

On February 20, 2020, Cott Corporation (the “Company”) issued a press release reporting financial results for the fourth quarter and fiscal year ended December 28, 2019. A copy of the press release is furnished herewith under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as Exhibit 99.1 and is incorporated by reference into this Item 2.02 as if fully set forth herein. On the same day, the Company held a conference call to discuss its financial results for the quarter and year ended December 28, 2019. A copy of the slide presentation and transcript of the conference call are furnished herewith under the Exchange Act as Exhibit 99.2 and Exhibit 99.3, respectively.

Additional Information and Where to Find It

This communication relates to a pending business combination between Cott and Primo. Cott commenced an exchange offer for the outstanding shares of Primo on January 28, 2020. This communication is for informational purposes only and does not constitute an offer to purchase or a solicitation of an offer to sell shares, nor is it a substitute for any offer materials that the parties will file with the U.S. Securities and Exchange Commission (the “SEC”). At the time the exchange offer was commenced, Cott and its acquisition subsidiary filed an exchange offer statement on Schedule TO, Cott filed a registration statement on Form S-4 and Primo filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC with respect to the exchange offer. Each of Cott and Primo also plan to file other relevant documents with the SEC regarding the proposed transaction. THE EXCHANGE OFFER MATERIALS (INCLUDING THE OFFER TO EXCHANGE, THE RELATED LETTER OF ELECTION AND TRANSMITTAL AND CERTAIN OTHER EXCHANGE OFFER DOCUMENTS), THE SOLICITATION / RECOMMENDATION STATEMENT AND OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO ANY OF THE FOREGOING DOCUMENTS, CONTAIN IMPORTANT INFORMATION. PRIMO STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF PRIMO SECURITIES SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING EXCHANGING THEIR SECURITIES. The Solicitation/Recommendation Statement, the Offer to Exchange, the related Letter of Election and Transmittal and certain other exchange offer documents are available to all of Primo’s stockholders at no expense to them. The exchange offer materials and the Solicitation/Recommendation Statement are available for free on the SEC’s website at www.sec.gov. Copies of the documents filed with the SEC by Cott are available free of charge under the heading of the Investor Relations section of Cott’s website at www.cott.com/investor-relations/. Copies of the documents filed with the SEC by Primo are available free of charge under the SEC filings heading of the Investors section of Primo’s website at http://ir.primowater.com/.

Safe Harbor Statements

This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve inherent risks and uncertainties and you are cautioned that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement. These statements can otherwise be identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “would,” “will,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The forward-looking statements contained in this communication include, but are not limited to, statements related to Cott’s plans, objectives, expectations and intentions with respect to the proposed S&D transaction, the anticipated timing of the proposed S&D transaction, the proposed Primo transaction and the combined company, the anticipated timing of the proposed Primo transaction, and the potential impact the transactions will have on Cott and other matters related to either or both of them. The forward-looking statements are based on assumptions regarding current plans and estimates of management of Cott. Such management believes these assumptions to be reasonable, but there is no assurance that they will prove to be accurate.

Factors that could cause actual results to differ materially from those described in this communication include, among others: changes in expectations as to the closing of the transaction including timing and changes in the method of financing the transaction; the satisfaction of the conditions precedent to the consummation of the proposed transaction (including a sufficient number of Primo shares being validly tendered into the exchange offer

to meet the minimum condition), the risk of litigation and regulatory action related to the proposed transactions, expected synergies and cost savings are not achieved or achieved at a slower pace than expected; integration problems, delays or other related costs; retention of customers and suppliers; and unanticipated changes in laws, regulations, or other industry standards affecting the companies; and other risks and important factors contained and identified in Cott’s filings with the SEC, including its Quarterly Reports on Form 10-Q and Annual Report on Form 10-K.

The foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in Cott’s Annual Report on Form 10-K and its quarterly reports on Form 10-Q, as well as other filings with the SEC. Forward-looking statements reflect the analysis of management of Cott as of the date of this communication. Cott does not undertake to update or revise any of these statements in light of new information or future events, except as expressly required by applicable law.

Item 8.01. Other Events

On February 20, 2020, the Company announced that the Board of Directors declared a dividend of US$0.06 per common share, payable in cash on March 25, 2020 to shareowners of record at the close of business on March 10, 2020. A copy of the press release is furnished herewith as Exhibit 99.1 to this report.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.		Description
99.1		Press Release of Cott Corporation, dated February 20, 2020 (furnished herewith).
99.2		Presentation of Cott Corporation, dated February 20, 2020 (furnished herewith).
99.3		Transcript of the conference call of Cott Corporation, dated February 20, 2020 (furnished herewith).
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				Cott Corporation
				(Registrant)
February 20, 2020
		By:		/s/ Marni Morgan Poe
				Marni Morgan Poe
				Chief Legal Officer and Secretary

		Exhibit 99.1
Press Release

 

CONTACT:

Jarrod Langhans

Investor Relations

Tel: (813) 313-1732

Investorrelations@cott.com

Ryan Coleman

Alpha IR Group

Tel: (312) 445-2862

COT@alpha-ir.com

COTT REPORTS FOURTH QUARTER AND FISCAL YEAR 2019 RESULTS AND DECLARES DIVIDEND

Consolidated gross margin and operating leverage improvements in the fourth quarter drive strong adjusted EBITDA growth

(Unless stated otherwise, all fourth quarter 2019 comparisons are relative to the fourth quarter of 2018 and all fiscal year 2019 comparisons are relative to fiscal year 2018; all information is in U.S. dollars.)

TAMPA, FL – February 20, 2020 – Cott Corporation (NYSE:COT; TSX:BCB), a leading provider of home and office bottled water delivery and filtration services in North America and Europe, today announced its results for the fiscal year and fourth quarter ended December 28, 2019.

“We closed 2019 with a strong fourth quarter. Adjusted EBITDA increased over 20% led by our route-based services business, driven by organic growth in our HOD Water channel and improved operating leverage across both segments,” commented Tom Harrington, Cott’s Chief Executive Officer. “For the full year, we delivered adjusted revenue growth of 6%, adjusted EBITDA growth of 7% and delivered more than $150 million of adjusted free cash flow.”

Mr. Harrington continued, “We enter 2020 with strong momentum as we aggressively execute our transformation into a pure-play water solutions provider. We remain focused on successfully completing the acquisition of Primo Water while also smoothly transitioning the S&D business to Westrock Coffee Company. We are confident we will capture the previously identified $35 million in cost synergies, deliver margin expansion, and drive increased organic growth as a pure-play water solutions provider. We are truly excited about the opportunity to provide sustainable hydration solutions to a growing customer base and positioning the Company for continued growth, while also ensuring we deliver long-term shareholder value.”

 

1

Press Release

 

FOURTH QUARTER 2019 GLOBAL PERFORMANCE FROM CONTINUING OPERATIONS

 

•

Revenue was flat at $600 million (increased by 4% excluding the impact of foreign exchange, the divested Cott Beverages LLC business and the change in average cost of coffee), driven by organic growth within both the Route Based Services and the Coffee, Tea and Extract Solutions reporting segments, and the benefit of acquisitions. Revenue growth by segment in the quarter is tabulated below:

 

Consolidated Revenue Bridge						D%
2018 Q4 Revenue		$	599.2
Divested Cott Beverages LLC business			-20.4
2018 Q4 adjusted revenue		$	578.8
Route Based Services			+15.2
Coffee, Tea and Extract Solutions			+8.9
Change excluding adjustments			+24.1				4.2	%
Foreign exchange (a)			+0.1
Change in average green coffee commodity pass-through costs			-2.8
2019 Q4 Revenue		$	600.2

 

(a)	See Exhibit 5 for details by reporting segment

 

•

Gross profit increased 5% to $306 million (7% excluding the divested Cott Beverages LLC business). Gross margin as a percentage of revenue increased 250 basis points to 50.9% compared to 48.4%. Excluding Cott Beverages LLC, gross margin as a percentage of revenue increased 140 basis points to 50.9% compared to 49.5% driven primarily by improved operating leverage within our operations.

 

•

Income tax benefit was $2 million compared to $9 million due primarily to the benefit of the release of a $6 million valuation allowance in the prior year.

 

•

Reported net income and net income per diluted share were $7 million and $0.05, respectively, compared to reported net income and net income per diluted share of $4 million and $0.03, respectively, as the growth in operating income was partially offset by a reduction in income tax benefit. Adjusted EBITDA increased 22% to $85 million compared to $70 million driven primarily by growth in revenue and improved operating leverage.

 

•

Net cash provided by operating activities of $133 million, less $27 million of capital expenditures, resulted in $106 million of free cash flow, or $111 million of adjusted free cash flow (adjusting for the items set forth on Exhibit 7), compared to adjusted free cash flow of $65 million in the prior year driven by growth and working capital benefits.

 

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Press Release

 

FOURTH QUARTER 2019 REPORTING SEGMENT PERFORMANCE

Route Based Services

 

•

Revenue increased 4% to $440 million due to organic growth in Home & Office Delivery (“HOD Water”) bottled water driven by increased volume, customer growth and pricing as well as from the benefit of acquisitions. A detailed breakdown is tabulated below:

 

Route Based Services Revenue Bridge

D%

2018 Q4 Revenue

$

424.7

HOD Water related(a)

+17.2

Customer Growth/Volume

+11.8

Price/Mix

+5.4

Other

-2.0

Change excluding foreign exchange impact

+15.2

3.6

%

Foreign exchange impact

+0.1

2019 Q4 Revenue

$

440.0

3.6

%

 

(a)	See Exhibit 11 for organic growth details

 

•

Gross profit increased 6% to $260 million while gross profit as a percentage of revenue increased 120 basis points to 59.1%, driven by revenue growth and improved operating leverage.

 

•

SG&A expenses were $227 million compared to $229 million in the prior year. SG&A expenses as a percentage of revenue decreased 230 basis points to 51.6% (see Exhibit 4) as a result of improved leverage within the business segment.

 

•

Operating income was $26 million compared to $9 million while adjusted EBITDA increased 25% to $80 million compared to $64 million, as a result of revenue growth and improved operating leverage within the business segment.

Coffee, Tea and Extract Solutions

 

•

Revenue increased 4% (6% adjusting for the change in average cost of coffee) to $162 million driven primarily by 3% growth in coffee pounds sold and 66% volume growth in liquid coffee and extracts. A detailed breakdown is tabulated below.

 

3

Press Release

 

Coffee, Tea and Extract Solutions Revenue Bridge						D%
2018 Q4 Revenue		$	155.8
Coffee volume			+4.1
Coffee price/mix			+0.8
Liquid coffee and extracts			+5.4
Other			-1.7
Change excluding change in average green coffee commodity pass-through costs			+8.6				5.5	%
Change in average green coffee commodity pass-through costs			-2.8
2019 Q4 Revenue		$	161.6				3.7	%

 

•

Gross profit was $45 million compared to $41 million and gross margin as a percentage of revenue increased to 28.1% compared to 26.0% driven primarily by the improved margin profile generated by liquid coffee and extracts as well as through leveraging the volume growth generated during the quarter.

 

•

SG&A expenses were $39 million compared to $36 million driven primarily by higher selling and operating costs which supported the volume and revenue growth of the business segment.

 

•

Operating income was $6 million compared to $4 million while adjusted EBITDA increased 15% to $13 million, driven by growth in revenue and the resulting operating leverage, offset in part by the higher selling and operating costs associated with driving volume growth.

FISCAL YEAR 2019 GLOBAL PERFORMANCE FROM CONTINUING OPERATIONS

 

•

Revenue increased 1% to $2,395 million (increased 6% excluding the impact of foreign exchange, the divested Cott Beverages LLC business and the change in average cost of coffee) driven by organic growth within both the Route Based Services and Coffee, Tea and Extract Solutions reporting segments, as well as the benefit of acquisitions, including Mountain Valley. Revenue growth by segment in the quarter is tabulated below:

 

Consolidated Revenue Bridge						D%
2018 Revenue		$	2,372.9
Divested Cott Beverages LLC business			-80.7
2018 adjusted revenue		$	2,292.2
Route Based Services(a)			+100.0
Coffee, Tea and Extract Solutions			+32.8
Change excluding adjustments			+132.8				5.8	%
Foreign exchange(b)			-22.1
Change in average green coffee commodity pass-through costs							-15.6
Divested Cott Beverages LLC business							+7.2
2019 Revenue						$	2,394.5

 

(a)	See Exhibit 11 for HOD Water organic growth details

(b)	See Exhibit 5 for details by reporting segment

 

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Press Release

 

•

Gross profit increased 4% to $1,228 million (5% excluding the divested Cott Beverages LLC business). Gross margin as a percentage of revenue increased 180 basis points to 51.3% compared to 49.5%. Excluding Cott Beverages LLC, gross margin as a percentage of revenue increased 60 basis points to 51.4% compared to 50.8% driven primarily by improved operating leverage within our business segments.

 

•

Income tax expense was $10 million compared to a benefit of $5 million due primarily to increased income incurred in taxable jurisdictions in the current year and the benefit of the release of a $6 million valuation allowance in the prior year.

 

•

Reported net income and net income per diluted share were both nil, compared to reported net income and net income per diluted share of $29 million and $0.21, respectively, as growth in operating income was offset by a decrease in other income as the prior year benefited from non-recurring gains absent in the current year as well as higher income tax expense in the current year. Adjusted EBITDA was $329 million compared to $307 million driven primarily by growth in revenue and the resulting operating leverage, offset in part by the negative impact of foreign exchange.

 

•

Net cash provided by operating activities of $250 million less $115 million of capital expenditures resulted in reported free cash flow of $135 million and adjusted free cash flow of $153 million (adjusting for the items set forth on Exhibit 7).

2020 FULL YEAR REVENUE AND ADJUSTED EBITDA

The below targets exclude the S&D Coffee and Tea business whose sale was announced on January 31, 2020 and whose operations will be included in discontinued operations. The sale of S&D Coffee and Tea is expected to close in the first quarter of 2020. The targets do not include the Primo Water Corporation (“Primo”) acquisition which is expected to close during the first quarter of 2020. Upon closing the Primo transaction, a modeling call will be held in order to provide guidance around 2020 expectations inclusive of Primo. This call is currently scheduled for March 24, 2020 and we will issue additional information upon closing the transaction. Including tuck-in acquisitions, Cott is targeting full year 2020 revenue growth from continuing operations of 4% to 5%, adjusted EBITDA of $300 to $310 million and adjusted free cash flow of $115 to $125 million (See Exhibit 12).

 

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Press Release

 

DECLARATION OF DIVIDEND

Cott’s Board of Directors has declared a dividend of $0.06 per share on common shares, payable in cash on March 25, 2020 to shareowners of record at the close of business on March 10, 2020.

SHARE REPURCHASE PROGRAM    

On December 11, 2018, Cott’s Board of Directors approved a 12-month share repurchase program of up to $50 million of our outstanding common shares that commenced on December 14, 2018 and replaced the then-existing program, which was scheduled to expire on May 6, 2019. During 2019, Cott repurchased approximately 2 million shares at an average price of $13.88 totaling approximately $28 million. Cott utilized all funds available under or earmarked for this program. Shares purchased pursuant to the share repurchase program were subsequently cancelled.

On December 11, 2019, Cott’s Board of Directors approved a new 12-month share repurchase program of up to $50 million of our outstanding common shares that commenced on December 16, 2019. Cott made no repurchases of our common shares under the new repurchase plan during 2019.

In addition, 0.3 million shares totaling approximately $4 million were withheld during 2019 to satisfy employees’ tax obligations related to share-based awards.

FOURTH QUARTER AND FISCAL YEAR 2019 RESULTS CONFERENCE CALL

Cott Corporation will host a conference call today, February 20, 2020, at 10:00 a.m. ET, to discuss fourth quarter and full year results, which can be accessed as follows:

North America: (888) 231-8191

International: (647) 427-7450

Conference ID: 5984858

A slide presentation and live audio webcast will be available through Cott’s website at http://www.cott.com. The earnings conference call will be recorded and archived for playback on the investor relations section of the website for a period of two weeks following the event.

ABOUT COTT CORPORATION

Cott is a water and filtration service company with a leading volume-based national presence in the North American and European home and office delivery industry for bottled water. Our platform reaches over 2.5 million customers or delivery points across North America and Europe and is supported by strategically located sales and distribution facilities and fleets, as well as wholesalers and distributors. This enables us to efficiently service residences, businesses, and small and large retailers.

 

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Non-GAAP Measures

To supplement its reporting of financial measures determined in accordance with GAAP, Cott utilizes certain non-GAAP financial measures. Cott excludes from GAAP revenue the impact of foreign exchange, results of the divested Cott Beverages LLC business, and the change in average costs of coffee, as well as other items identified on the exhibits hereto, to separate the impact of these factors from Cott’s results of operations. Cott excludes from GAAP gross profit the results of the divested Cott Beverages LLC business to separate the impact of this divested business from Cott’s results of operations. Cott utilizes EBITDA and adjusted EBITDA on a global and segment basis to separate the impact of certain items from the underlying business. Because Cott uses these adjusted financial results in the management of its business, management believes this supplemental information is useful to investors for their independent evaluation and understanding of Cott’s underlying business performance and the performance of its management. Additionally, Cott supplements its reporting of net cash provided by (used in) operating activities from continuing operations determined in accordance with GAAP by excluding additions to property, plant and equipment to present free cash flow, and by excluding the items identified on the exhibits hereto to present adjusted free cash flow, which management believes provides useful information to investors in assessing our performance, comparing our performance to the performance of our peer group and assessing our ability to service debt and finance strategic opportunities, which include investing in our business, making strategic acquisitions, paying dividends, repurchasing common shares and strengthening the balance sheet. The non-GAAP financial measures described above are in addition to, and not meant to be considered superior to, or a substitute for, Cott’s financial statements prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this earnings announcement reflect management’s judgment of particular items, and may be different from, and therefore may not be comparable to, similarly titled measures reported by other companies.

Safe Harbor Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 conveying management’s expectations as to the future based on plans, estimates and projections at the time Cott makes the statements. Forward-looking statements involve inherent risks and uncertainties and Cott cautions you that several important factors could cause actual results to differ materially from those contained in any such forward-looking statement. The forward-looking statements contained in this press release include, but are not limited to, statements related to the completion of the Primo and S&D transactions on the terms proposed, the anticipated timing of these transactions, the potential impact these transactions will have on Cott, the execution of our strategic priorities, future financial and operating trends and results (including Cott’s outlook on 2020 adjusted revenue and adjusted free cash flow), potential uses for cash and related matters. The forward-looking statements are based on assumptions regarding management’s current plans and estimates. Management believes these assumptions to be reasonable, but there is no assurance that they will prove to be accurate.

Factors that could cause actual results to differ materially from those described in this press release include, among others: our ability to compete successfully in the markets in which we operate; fluctuations in commodity prices and our ability to pass on increased costs to our customers or hedge against such rising costs and the impact of those increased prices on our volumes; our ability to manage our operations successfully; our ability to fully realize the potential benefit of transactions (including the Primo and S&D

 

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Press Release

 

transactions) or other strategic opportunities that we pursue; potential liabilities associated with our recent divestitures; our ability to realize the revenue and cost synergies of our acquisitions due to integration difficulties and other challenges; our limited indemnification rights in connection with the Primo acquisition; our exposure to intangible asset risk; currency fluctuations that adversely affect the exchange between the U.S. dollar and the British pound sterling, the exchange between the Euro, the Canadian dollar and other currencies, and the exchange between the British pound sterling and the Euro; our ability to maintain favorable arrangements and relationships with our suppliers; our ability to meet our obligations under our debt agreements, and risks of further increases to our indebtedness; our ability to maintain compliance with the covenants and conditions under our debt agreements; fluctuations in interest rates, which could increase our borrowing costs; the incurrence of substantial indebtedness to finance our acquisitions; the impact on our financial results from uncertainty in the financial markets and other adverse changes in general economic conditions; any disruption to production at our manufacturing facilities; our ability to maintain access to our water sources; our ability to protect our intellectual property; compliance with product health and safety standards; liability for injury or illness caused by the consumption of contaminated products; liability and damage to our reputation as a result of litigation or legal proceedings; changes in the legal and regulatory environment in which we operate; the seasonal nature of our business and the effect of adverse weather conditions; the impact of national, regional and global events, including those of a political, economic, business and competitive nature; our ability to recruit, retain and integrate new management; our ability to renew our collective bargaining agreements on satisfactory terms; disruptions in our information systems; our ability to securely maintain our customers’ confidential or credit card information, or other private data relating to our employees or our company; our ability to maintain our quarterly dividend; our ability to adequately address the challenges and risks associated with our international operations and address difficulties in complying with laws and regulations including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act of 2010; increased tax liabilities in the various jurisdictions in which we operate; the impact of the 2017 Tax Cuts and Jobs Act on our tax obligations and effective tax rate; and credit rating changes.

The foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in Cott’s Annual Report on Form 10-K and its quarterly reports on Form 10-Q, as well as other filings with the securities commissions. Cott does not undertake to update or revise any of these statements considering new information or future events, except as expressly required by applicable law.

Website: www.cott.com

 

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COTT CORPORATION		EXHIBIT 1

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions of U.S. dollars, except share and per share amounts, U.S. GAAP)

Unaudited

 

		For the Three Months Ended								For the Year Ended
		December 28, 2019				December 29, 2018				December 28, 2019				December 29, 2018
Revenue, net		$	600.2			$	599.2			$	2,394.5			$	2,372.9
Cost of sales			294.6				309.0				1,166.7				1,197.3
Gross profit			305.6				290.2				1,227.8				1,175.6
Selling, general and administrative expenses			275.9				275.9				1,113.0				1,092.1
Loss on disposal of property, plant and equipment, net			2.9				5.6				7.5				9.4
Acquisition and integration expenses			6.7				4.5				16.9				15.3
Operating income			20.1				4.2				90.4				58.8
Other (income) expense, net			(4.1	)			(9.9	)			2.8				(42.9	)
Interest expense, net			19.6				19.3				78.2				77.6
Income (loss) from continuing operations before income taxes			4.6				(5.2	)			9.4				24.1
Income tax (benefit) expense			(2.0	)			(8.8	)			9.5				(4.8	)
Net income (loss) from continuing operations		$	6.6			$	3.6			$	(0.1	)		$	28.9
Net income (loss) from discontinued operations, net of income taxes			1.5				(2.9	)			3.0				354.6
Net income		$	8.1			$	0.7			$	2.9			$	383.5
Less: Net income attributable to non-controlling interests - discontinued operations			—				—				—				0.6
Net income attributable to Cott Corporation		$	8.1			$	0.7			$	2.9			$	382.9
Net income per common share attributable to Cott Corporation
Basic:
Continuing operations		$	0.05			$	0.03			$	—			$	0.21
Discontinued operations		$	0.01			$	(0.02	)		$	0.02			$	2.54
Net income		$	0.06			$	0.01			$	0.02			$	2.75
Diluted:
Continuing operations		$	0.05			$	0.03			$	—			$	0.21
Discontinued operations		$	0.01			$	(0.02	)		$	0.02			$	2.50
Net income		$	0.06			$	0.01			$	0.02			$	2.71
Weighted average common shares outstanding (in thousands)
Basic			134,714				137,879				135,224				139,097
Diluted			136,460				140,065				135,224				141,436

 

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COTT CORPORATION		EXHIBIT 2
CONSOLIDATED BALANCE SHEETS
(in millions of U.S. dollars, except share amounts, U.S. GAAP)
Unaudited

 

		December 28, 2019				December 29, 2018
ASSETS
Current assets
Cash and cash equivalents		$	205.5			$	170.8
Accounts receivable, net of allowance of $9.1 ($9.6 as of December 29, 2018)			279.3				308.3
Inventories			122.5				129.6
Prepaid expenses and other current assets			35.0				27.2
Total current assets			642.3				635.9
Property, plant and equipment, net			647.8				624.7
Operating lease right-of-use-assets			203.1				—
Goodwill			1,175.7				1,143.9
Intangible assets, net			701.4				739.2
Deferred tax assets			—				0.1
Other long-term assets, net			20.6				31.7
Total assets		$	3,390.9			$	3,175.5
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings			92.4				89.0
Current maturities of long-term debt			7.4				3.0
Accounts payable and accrued liabilities			466.1				469.0
Current operating lease obligations			41.7				—
Total current liabilities			607.6				561.0
Long-term debt			1,260.2				1,250.2
Operating lease obligations			167.8				—
Deferred tax liabilities			127.4				124.3
Other long-term liabilities			61.7				69.6
Total liabilities			2,224.7				2,005.1
Equity
Common shares, no par value - 134,803,211 shares issued (December 29, 2018 - 136,195,108 shares issued)			892.3				899.4
Additional paid-in-capital			77.4				73.9
Retained earnings			265.0				298.8
Accumulated other comprehensive loss			(68.5	)			(101.7	)
Total Cott Corporation equity			1,166.2				1,170.4
Total liabilities and equity		$	3,390.9			$	3,175.5

 

10

Press Release

 

COTT CORPORATION		EXHIBIT 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of U.S. dollars, U.S. GAAP)
Unaudited

 

		For the Three Months Ended								For the Year Ended
		December 28, 2019				December 29, 2018				December 28, 2019				December 29, 2018
Cash flows from operating activities of continuing operations:
Net income		$	8.1			$	0.7			$	2.9			$	383.5
Net income (loss) from discontinued operations, net of income taxes			1.5				(2.9	)			3.0				354.6
Net income (loss) from continuing operations		$	6.6			$	3.6			$	(0.1	)		$	28.9
Adjustments to reconcile net income (loss) from continuing operations to cash flows from operating activities:
Depreciation and amortization			50.7				48.9				192.8				194.6
Amortization of financing fees			0.9				0.9				3.5				3.5
Share-based compensation expense			3.9				2.7				12.4				17.3
Benefit for deferred income taxes			(2.9	)			(9.5	)			(2.1	)			(6.7	)
Gain on extinguishment of long-term debt			—				—				—				(7.1	)
Loss (gain) on sale of business			—				—				6.0				(6.0	)
Loss on disposal of property, plant and equipment, net			2.9				5.6				7.5				9.4
Other non-cash items			(2.4	)			(1.6	)			(2.2	)			(3.0	)
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable			36.1				30.2				15.1				(10.8	)
Inventories			4.7				8.9				(7.5	)			(0.5	)
Prepaid expenses and other current assets			4.7				3.4				2.6				(4.0	)
Other assets			0.2				(1.9	)			1.7				(0.5	)
Accounts payable and accrued liabilities and other liabilities			27.4				7.0				20.3				29.2
Net cash provided by operating activities from continuing operations			132.8				98.2				250.0				244.3
Cash flows from investing activities of continuing operations:
Acquisitions, net of cash received			(28.6	)			(97.0	)			(76.3	)			(164.0	)
Additions to property, plant and equipment			(27.1	)			(35.8	)			(114.6	)			(130.8	)
Additions to intangible assets			(3.3	)			(6.3	)			(10.9	)			(13.2	)
Proceeds from sale of property, plant and equipment			—				0.4				2.9				4.1
Proceeds from sale of business, net of cash sold			—				—				50.5				12.8
Proceeds from sale of equity securities			—				—				—				7.9
Other investing activities			—				0.1				0.6				0.5
Net cash used in investing activities from continuing operations			(59.0	)			(138.6	)			(147.8	)			(282.7	)
Cash flows from financing activities of continuing operations:
Payments of long-term debt			(1.1	)			(1.0	)			(5.6	)			(264.5	)
Issuance of long-term debt			—				2.7				—				2.7
Borrowings under ABL			11.0				97.0				75.1				98.4
Payments under ABL			(1.1	)			(16.0	)			(64.2	)			(17.4	)
Premiums and costs paid upon extinguishment of long-term debt			—				—				—				(12.5	)
Issuance of common shares			0.3				0.4				1.2				6.4
Common shares repurchased and canceled			(0.7	)			(28.8	)			(31.8	)			(74.9	)
Financing fees			—				—				—				(1.5	)
Dividends paid to common shareholders			(8.1	)			(8.3	)			(32.5	)			(33.4	)
Payment of contingent consideration for acquisitions			(0.1	)			—				(0.3	)			(2.8	)
Other financing activities			(13.3	)			(1.1	)			(7.9	)			2.9
Net cash (used in) provided by financing activities from continuing operations			(13.1	)			44.9				(66.0	)			(296.6	)
Cash flows from discontinued operations:
Operating activities of discontinued operations			—				(4.0	)			(3.2	)			(97.6	)
Investing activities of discontinued operations			—				(3.1	)			—				1,225.5
Financing activities of discontinued operations			—				—				—				(769.7	)
Net cash (used in) provided by discontinued operations			—				(7.1	)			(3.2	)			358.2
Effect of exchange rate changes on cash			1.2				(2.3	)			1.7				(10.3	)
Net increase (decrease) in cash, cash equivalents and restricted cash			61.9				(4.9	)			34.7				12.9
Cash and cash equivalents and restricted cash, beginning of year			143.6				175.7				170.8				157.9
Cash and cash equivalents and restricted cash from continuing operations, end of year		$	205.5			$	170.8			$	205.5			$	170.8

 

11

Press Release

 

COTT CORPORATION				EXHIBIT 4
SEGMENT INFORMATION
(in millions of U.S. dollars, U.S. GAAP)
Unaudited

 

For the Three Months Ended December 28, 2019
(in millions of U.S. dollars)		Route Based Services				Coffee, Tea and Extract Solutions				All Other				Eliminations				Total
Revenue, net
Home and office bottled water delivery		$	277.5			$	—			$	—			$	—			$	277.5
Coffee and tea services			45.5				128.0				—				(1.4	)			172.1
Retail			73.0				—				—				—				73.0
Other			44.0				33.6				—				—				77.6
Total		$	440.0			$	161.6			$	—			$	(1.4	)		$	600.2
Gross Profit		$	260.2			$	45.4			$	—			$	—			$	305.6
Gross Margin %			59.1	%			28.1	%			—				—				50.9	%
Selling, general and administrative expense		$	227.1			$	39.4			$	9.4			$	—			$	275.9
SG&A % of revenue			51.6	%			24.4	%			N/A				N/A				46.0	%
Operating income		$	26.0			$	5.7			$	(11.6	)		$	—			$	20.1
Depreciation and Amortization		$	44.2			$	6.4			$	0.1			$	—			$	50.7
For the Three Months Ended December 29, 2018
(in millions of U.S. dollars)		Route Based Services				Coffee, Tea and Extract Solutions				All Other				Eliminations				Total
Revenue, net
Home and office bottled water delivery (a)		$	260.8			$	—			$	—			$	—			$	260.8
Coffee and tea services			50.5				112.9				—				(1.8	)			161.6
Retail (a)			71.6				—				—				—				71.6
Other (a)			41.8				42.9				20.4				0.1				105.2
Total		$	424.7			$	155.8			$	20.4			$	(1.7	)		$	599.2
Gross Profit		$	246.0			$	40.5			$	3.7			$	—			$	290.2
Gross Margin %			57.9	%			26.0	%			18.1	%			—				48.4	%
Selling, general and administrative expense		$	229.1			$	35.9			$	10.9			$	—			$	275.9
SG&A % of revenue			53.9	%			23.0	%			53.4	%			—	%			46.0	%
Operating income		$	9.0			$	3.8			$	(8.6	)		$	—			$	4.2
Depreciation and Amortization		$	42.9			$	5.7			$	0.3			$	—			$	48.9
For the Year Ended December 28, 2019
(in millions of U.S. dollars)		Route Based Services				Coffee, Tea and Extract Solutions				All Other				Eliminations				Total
Revenue, net
Home and office bottled water delivery		$	1,136.0			$	—			$	—			$	—			$	1,136.0
Coffee and tea services			184.0				483.6				—				(5.9	)			661.7
Retail			297.6				—				—				—				297.6
Other			170.6				121.4				7.2				—				299.2
Total		$	1,788.2			$	605.0			$	7.2			$	(5.9	)		$	2,394.5
Gross Profit		$	1,060.9			$	166.6			$	0.3			$	—			$	1,227.8
Gross Margin %			59.3	%			27.5	%			4.2	%			—				51.3	%
Selling, general and administrative expense		$	926.2			$	150.8			$	36.0			$	—			$	1,113.0
SG&A % of revenue			51.8	%			24.9	%			N/A				N/A				46.5	%
Operating income		$	115.8			$	15.4			$	(40.8	)		$	—			$	90.4
Depreciation and Amortization		$	168.3			$	24.2			$	0.3			$	—			$	192.8
For the Year Ended December 29, 2018
(in millions of U.S. dollars)		Route Based Services				Coffee, Tea and Extract Solutions				All Other				Eliminations				Total
Revenue, net
Home and office bottled water delivery (a)		$	1,078.5			$	—			$	—			$	—			$	1,078.5
Coffee and tea services			192.8				461.9				—				(5.7	)			649.0
Retail (a)			286.0				—				—				—				286.0
Other (a)			153.0				125.7				80.7				—				359.4
Total		$	1,710.3			$	587.6			$	80.7			$	(5.7	)		$	2,372.9
Gross Profit (b)		$	1,011.6			$	152.0			$	12.0			$	—			$	1,175.6
Gross Margin %			59.1	%			25.9	%			14.9	%			—				49.5	%
Selling, general and administrative expense		$	902.3			$	137.1			$	52.7			$	—			$	1,092.1
SG&A % of revenue			52.8	%			23.3	%			N/A				N/A				46.0	%
Operating income		$	89.9			$	16.1			$	(47.2	)		$	—			$	58.8
Depreciation and Amortization		$	170.7			$	22.9			$	1.0			$	—			$	194.6

 

(a)

Revenues by channel of our Route Based Services reporting segment for the three months and year ended December 29, 2018 had $25.5 million and $83.7 million of revenue, respectively, reclassified from “other” and “retail” to “home and office bottled water delivery” as these activities are associated with the “home and office bottled water delivery” channel. In addition, for the three months and year ended December 29, 2018, we reclassified $6.5 million and $18.0 million of revenue, respectively, out of the “retail” channel and into the “other” channel in order to better align the activities of a recent acquisition with those of our U.S. Route Based Services business.

(b)	Includes related party concentrate sales to discontinued operations.

 

12

Press Release

 

COTT CORPORATION		EXHIBIT 5
SUPPLEMENTARY INFORMATION - NON-GAAP - ANALYSIS OF REVENUE BY REPORTING SEGMENT
Unaudited

 

(in millions of U.S. dollars, except percentage amounts)		For the Three Months Ended December 28, 2019
		Route Based Services				Coffee, Tea and Extract Solutions				All Other				Eliminations				Cott (a)
Change in revenue		$	15.3			$	5.8			$	(20.4	)		$	0.3			$	1.0
Impact of foreign exchange (b)		$	(0.1	)		$	—			$	—			$	—			$	(0.1	)
Change excluding foreign exchange		$	15.2			$	5.8			$	(20.4	)		$	0.3			$	0.9
Percentage change in revenue			3.6	%			3.7	%			(100.0	)%			17.6	%			0.2	%
Percentage change in revenue excluding foreign exchange			3.6	%			3.7	%			(100.0	)%			17.6	%			0.2	%
(in millions of U.S. dollars, except percentage amounts)		For the Year Ended December 28, 2019
		Route Based Services				Coffee, Tea and Extract Solutions				All Other				Eliminations				Cott (a)
Change in revenue		$	77.9			$	17.4			$	(73.5	)		$	(0.2	)		$	21.6
Impact of foreign exchange (b)		$	22.1			$	—			$	—			$	—			$	22.1
Change excluding foreign exchange		$	100.0			$	17.4			$	(73.5	)		$	(0.2	)		$	43.7
Percentage change in revenue			4.6	%			3.0	%			(91.1	)%			(3.5	)%			0.9	%
Percentage change in revenue excluding foreign exchange			5.8	%			3.0	%			(91.1	)%			(3.5	)%			1.8	%

 

(a)	Cott includes the following reporting segments: Route Based Services, Coffee, Tea and Extract Solutions and All Other.

(b)	Impact of foreign exchange is the difference between the current period revenue translated utilizing the current period average foreign exchange rates less the current period revenue translated utilizing the prior period average foreign exchange rates.

 

13