cott corporation · accordance with gaap. in addition, the non-gaap financial measures included in...

1

Cott Corporation

Barclays High Yield Bond

and Syndicated Loan Conference

May 13, 2014

Jay Wells, CFO

2

Safe Harbor Statement

Forward Looking Statements: This presentation contains forward-looking statements within themeaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of1934 and applicable Canadian securities laws reflecting management’s current expectations regardingfuture results of operations, economic performance and financial condition. Forward-looking statementsare subject to certain risks and uncertainties which could cause actual results to materially differ fromcurrent expectations. These risks and uncertainties are detailed from time to time in the Company'ssecurities filings. The information set forth herein should be considered in light of such risks anduncertainties. Certain material factors or assumptions were applied in drawing conclusions or makingforecasts or projections reflected in the forward-looking information. Additional information about thematerial factors or assumptions applied in drawing conclusions or making forecasts or projectionsreflected in the forward-looking information is available in the Company’s annual report on Form 10-Kfor the year ended December 28, 2013, its quarterly reports on Form 10-Q, as well as other periodicreports filed with the securities commission. The company does not, except as expressly required byapplicable law, assume any obligation to update the information contained in this presentation.

NON-GAAP Measurers: To supplement its reporting of financial measures determined in accordance withGAAP, Cott utilizes certain non-GAAP financial measures. Cott utilizes EBITDA and Adjusted EBITDA toseparate the impact of certain items from the underlying business. Because Cott uses these adjustedfinancial results in the management of its business, management believes this supplemental informationis useful to investors for their independent evaluation and understanding of Cott’s underlying businessperformance and the performance of its management. Additionally, Cott supplements its reporting ofnet cash provided by operating activities determined in accordance with GAAP by excluding capitalexpenditures, which management believes provides useful information to investors about the amount ofcash generated by the business that, after the acquisition of property and equipment, can be used forstrategic opportunities, including investing in our business, making strategic acquisitions, andstrengthening 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 inaccordance with GAAP. In addition, the non-GAAP financial measures included in this presentationreflect management’s judgment of particular items, and may be different from, and therefore may notbe comparable to, similarly titled measures reported by other companies. A reconciliation of these non-GAAP measures may be found on www.cott.com, as well as on the Appendix of this presentation.

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Agenda

• Company Overview

• Business Mission and Priorities

• Financial and Debt Summary

• Question & Answer

4

Cott Company Overview

High quality facilities (SQF / BRC certified) with

multiple product and package capabilities

3 Diversified product offering beyond traditional

CSDs

Low cost philosophy concentrating on Customers,

Costs, Capex and Cash

6 Highly cash generative with annual FCF of ~$100+

million and a solid balance sheet

Leader in private label beverages across Juice,

Drinks, Energy, CSD, New Age and others with

customer relationships at over 500 retailers

globally

1 Revenues in excess of $2 billion provides

procurement and scale leverage

Strong private label beverage manufacturing footprint

in US, Canada and UK2

High service level (98%+)(1) and low freight costs

Substantial competitive advantage to service

national and super-regional accounts

Efficient and highly utilized facilities5 Industry leading asset turnover of 1.5x with low

capex demands (2–3% of revenues)

Strong ROIC and cash flow yield

(1) Service level refers to in full, on-time delivery of all SKUs at appropriate quality.

Ownership of Royal Crown Cola International

(“RCCI” or “RC Brand”) outside North America and

a fully integrated concentrate facility with strong

R&D capabilities

4 High quality concentrates (blind taste tests) and

formulas used for own operations and exported to

approximately 50 countries

5

Private label83%

Value / Control Brand

9%

Co-Pack6%

RCCI2%

Private label65%

Equiv.Volume From

Concentrates 23%

Value / Control Brand

7%

Co-Pack5%

% revenue

Beverage LeaderCott is one of the world’s largest manufacturers of beverages on behalf of

retailers, brand owners and distributors

Business overview

• Industry-leading beverage manufacturer and

distributor focused on private label and contract

manufacturing

− Clear leadership in shelf stable juices and CSD

− Growing positions in attractive segments

(sparkling waters, energy, ready-to-drink alcohol

and sports drinks)

• Substantial R&D capabilities and vertical integration

within a high service, low-cost production model

• High product quality with consistency in products

and category innovation

• Customer relationship with over 500 leading

retailers in the grocery, mass-merchandise and drug

store channels

• Revenues in excess of $2 billion provides

procurement and scale leverage

2013 Geographic mix

2013 Channel mix

US64%

UK24%

Canada9%

RCCI2%

Mexico1%

Source: Management.

Note: Volume in cases of 8oz equivalent units.

(1) Ready-to-drink 8oz volume equivalents of 257mm cases made from RCCI shipped concentrate.

US53%

RCCI22%

UK18%

Canada5%

Mexico2%

% volume

% revenue % volume

Revenue: $2.1bn Volume: 1.1bn

Revenue: $2.1bn Volume: 1.1bn

(1)

(1)

6

Strong Beverage Manufacturing FootprintExtensive, high-quality manufacturing footprint and product facilities drive high

service and low-cost freight lanes

34 Strategically Located Beverage / Concentrate Manufacturing and Fruit Processing Facilities

Fontana, CA

Puebla

Surrey, BC Calgary, AB

Walla Walla, WA

San Bernardino, CA

San Antonio, TX

Ft. Worth, TX

MEXICO

UNITED KINGDOM

Joplin, MO Sikeston, MO

St. Louis, MO

Warrens, WI

Toronto, ON

Dunkirk, NY

North East, PA

Fredonia, NY

E. Freetown, MA

Concordville, PA

Wilson, NC

Greer, SC

Blairsville, GA

Tampa, FL

Pointe Claire, QB

Scoudouc, NB

Sangs (McDuff)

Nelson

Bondgate

Kegworth

Elmhurst

Wrexham

Cold Fill

Hot Fill

Columbus, GA

Springville, UT

UNITED STATES

CANADA

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High Quality Facilities with Diversified Capabilities Product offering beyond traditional shelf stable juices and CSDs

Source: Management.

• Carbonated soft drinks (natural and preserved)

• 100% shelf stable juices and juice-based products

• Clear, still and sparkling flavored waters

• Energy products, shots and liquid enhancers

• Sports products

• New age beverages

• Ready-to-drink teas

• Ready-to-drink alcohol beverages

• Dilute-to-Taste (DTT)

CSD36%

CSD Concentrates

2% Fruit drinks / Juices25%

Sparkling water13%

Energy8%

All other 5%

Sports / fitness3%

Water2%

Flavored water2%

Alcohol-based1%

DTT2%

Tea1%

Product diversity (2013 revenue)Diversified manufacturing capabilities

8

Jubblies &

Freezables

Source: Management.

Solutions in every major beverage segment

Package sizes and capabilities

PET AluminumSoda

Stream

Lunchbox

carton

CSD Waters Energy Liquid

enhancers

Teas Sports

drinks

Juices,

cocktails

& drinks

Smoothies RTD

Alcohol

High Quality Facilities with Diversified Capabilities Broad capabilities across packaging and flavors

8oz 128oz 8oz

Sports cap

24oz

EnhancersShots &

Overwraps Pouch

9Source: Management.

(1) Geographic mix data represents % of revenue.

Royal Crown Cola International (RCCI)

• Ship concentrate to approximately 50 countries

• Meaningful brand penetration in the Philippines and

Israel with strong concentrate position in multiple

markets

− Ready-to-drink 8oz volume equivalents of 257mm

cases made from RCCI shipped concentrate

Ownership of RC Brand Outside North America-Supply of

Concentrates to Approximately 50 Countries

Selected products

Latin America / Caribbean

27%

Western Europe

1%

Eastern Europe8%

Middle East / Africa11%

Asia / Pacific53%

Global customer base Geographic mix(1)

10Source: Wall Street research as of 12/28/2013.

Note: International bottlers: CCE, Femsa, Amatil, Hellenic and Arca Continental; Value foods / private label: TreeHouse, ConAgra, Pinnacle Foods, Diamond Foods and Brand owners: Dr Pepper Snapple Group, Coca Cola, Pepsico, Monster Beverage, Green Mountain

Coffee.

(1) Asset turnover calculated as total revenue / total assets.

(2) 2013 capex excludes additional ~$13 million for vertical integration of bottle blowing (including this amount, capex represents 2.7% of 2013 revenue).

2013 Asset turnover(1)

1.5x

1.0x 0.9x

0.7x

Brand owners Internationalbottlers

Value foods /private label

Efficient and highly utilized facilities produce Industry leading

asset turnover with low capex requirements

2013 Capex as a % of revenue

6.2%

4.1%

2.8% 2.0%

Internationalbottlers

Brand owners Value foods /private label

(2)

Efficient and Highly Utilized Facilities - Well Invested in

Facilities with Low Capital Demand and High Asset Turnover

11Source: Management.

(1) Cash flow yield calculated as (Adjusted EBITDA – capex) / equity market capitalization as of 12/28/13.

Cott follows its company-wide

• Strengthen customer relationships

− Understand our customers’ needs

− Build new channel relationships

− High service standards

− One-stop shop philosophy

• Continue to lower operating costs

− Manage the commodity cycles

− Control SG&A costs (best in class)

− Improve operating efficiencies

• Control capital expenditures

− Capex $30–$50 million below depreciation

− Capex focus on cost / efficiency

− Manage projects tightly

• Deliver significant free cash flow

− Rigorously manage working capital

− Assist rapid de-leveraging and interest

benefit

• High quality supply chain and customer collaboration

• Winner of Walmart Supply Chain

Collaboration Award 2011

− Best of 4,000 suppliers

• Private label soft drink supplier

of the year (2012/2011) – Grocer Award

• SG&A at 7–8% of revenue is top decile performance

amongst industry peers

• Zero-based budget philosophy

• High quality plants all QSF Level 3 and BRC

• Focus on efficiency

• Cost reduction drives capex at 2–3% of revenue

• Approximately $100+ million in annual FCF

generation

− 2013 free cash flow yield(1) of 18.6%

Low Cost Philosophy concentrating on Customers, Costs,

Capex and Cash (4 Cs) - Low Cost and Highly Cash Generative

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Low Cost Philosophy Concentrating on Customers, Costs,

Capex and Cash (4 Cs)Strong cash flow and ROIC vs. private label / sector peers

Private label

beverage scale

>$2 billion

revenue

Strong

manufacturing

footprint &

advantaged

freight lanes

High quality

plants that are

QSF / BRC

certified with

multiple

capabilities

Own R&D,

vertically

integrated

concentrate

plant &

ownership of

RC Brand

Efficient &

highly utilized

plants with top

tier industry

asset turnover

Top tier 2013 cash flow yield(1) vs. top 5 peers

18.6%

12.8% 12.6% 11.9%

9.6% 9.4%

Top tier LTM ROIC(2) vs. top 5 peers

Source: Wall Street research as of 12/28/2013.

(1) Cash flow yield calculated as (Adjusted EBITDA – capex) / equity market capitalization as of 12/28/2013.

(2) ROIC calculated as (Adjusted EBITDA less taxes) / (book capitalization – deferred tax assets – cash and cash equivalents). Balance sheet data as of latest SEC filing.

16.0% 14.4%

10.4% 9.4% 9.2%

6.8%

Low Cost

Philosophy

and the 4 C’s

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Agenda





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Our Mission

Build shareholder value by managing our core

business to maximize cash generation while

diversifying product, package and channel

offerings to provide growth.

15

Key Facts and Trends from Recent Strategic Review

Macro Market Dynamics / Factors

• Declining North American Carbonated Soft Drinks

(CSD) and Shelf Stable Juice (SSJ) markets

• Excess industry capacity pressuring margins

• Aggressive National Brand promotion and pricing

activity in pursuit of volume is reducing price gap to

private label

• Continued large format retail consolidation and

growth in smaller discount formats

• Attractive financing markets at the present time

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Cott’s Situation and Attributes

Cott Specific Factors

• High asset turn, sales per employee and quality


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• Best in class SG&A leverage

Industry Non-strategic SG&A/sales


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• Best in class SG&A leverage

• Strong cash generation and cash yield

• Strong balance sheet with net debt targets achieved during 2013

• Attractive corporate tax structure

• Sixty percent business concentration in the declining CSD and SSJ segments

Invest to shift our business mix

in order to support and accelerate

cash generation

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Five Strategic Priorities As We Look Forward

• Continuation of our approach including tight operating controls and a focus on cash generation

• Increased allocation of dedicated commercial and other resources against contract manufacturing which has been showing good growth

• Refinancing of our 2018 Senior Notes, expansion of our debt capacity, and reduction of our interest rate

• Over the next twelve months, increase our return of funds to shareholders up to 50% of our free cash flow via an increase in our opportunistic stock repurchase program and the continuance of our dividend

• Acceleration of acquisition based diversification outside of Carbonated Soft Drinks (CSDs) and Shelf Stable Juices (SSJs)

Acquisition to center on beverages and beverage adjacencies with a focus

on further channel diversification.

20

Agenda





21

2013 Financial Overview

• Difficult trading environment with declines in CSD / SSJ markets pressuring volume and revenue

• Continued strong SG&A control with SG&A 8% of revenue

• Reduction of debt by redemption of $200mm of our 2017 Senior Notes

• Strong cash generation – fifth consecutive year of >$100mm

• Returned $32 million to Shareowners

Full Year Comparisons

Full Year 2013 Performance Summary

130

*See accompanying non-GAAP reconciliation

2011 2012 2013

Volume (8oz - millions) 1,314 1,247 1,143

Revenue $2,335M $2,251M $2,094M

Gross Margins 11.8% 12.9% 12.0%

SG&A - % of Revenue 7.4% 7.9% 7.7%

Adj. Net Income* $44M $52M $36M

Adj. EBITDA* $199M $213M $197M

Free Cash Flow* $115M $103M $100M

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Strong Free Cash Generation Leads to

Improved Balance Sheet

• Debt Reduction

− Redeemed $200M of our 2017 Senior Notes in

2013. This was accomplished by utilizing cash on

hand and our ABL, with a net reduction to gross

debt of $163M

− Reduces interest expense by $15mm

• Increased Interest Coverage

− 3.8x in 2013 from 2.6x in 2008 (Adjusted EBITDA

to Interest Expense)

• Strong Cash Generation

− $100mm of free cash flow from operations

− $108mm of adjusted free cash flow after $8mm

cash cost of reducing 2017 Notes

• Opportunity to refinance our 2018 Senior

Notes imminent

Net Leverage

1x

0x

Net Debt / Adjusted EBITDA

2010 PF

Post-Cliffstar

2013 PF

Post-Note

Redemption

4x

3x

0

1

2

3

4

2x

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Summary Debt Structure

Issuer: Cott Beverages, Inc. (the "issuer")

Description: Senior Notes (the "Notes")

Principal Amount: $375 million

Guarantees:

Fully and unconditionally guaranteed, jointly and severally, on a senior basis by Cott Corporation, substantially all of its domestic subsidiaries, and its subsidiaries that make up its business in the United Kingdom

Ranking:

Notes are generally unsecured obligations, pari passu with any existing and future senior indebtedness

Security: None

Maturity: 8 years (September 2018)

Optional Redemption:Non-callable for four (4) years; thereafter, at premiums declining to par

Coventants:

Restricted Payments, Incurrence of Indebtedness, Sale of Assets, Mergers, Guarantees

Terms & Conditions

Facility: $300 million ABL Revolver, with $50 million accordion

Tenor: 5 years (October 22, 2018)

Pricing Grid:

LIBOR / CDOR ABR / CDN Prime

Availability Spread Spread

>$150mm 1.75% 0.25%≤$150mm>$75mm 2.00% 0.50%

≤$75mm 2.25% 0.75%

Financial Covenants: Fixed Charge coverage (FCC) test of 1.1x if excess availability is less than 10% of the commitment amount

Cash Dominion:Springing when excess availability is less than 12.5% of the commitment amount

Summary of 8.125% Senior Notes Due 2018 Asset Based Lending Facility (ABL)

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Historical Corporate Ratings

Ba2

Ba3

B1

B2

Caa1

B3stable stable stable positive stable*

0

1

2

3

4

5

6

2009 2010 2011 2012 2013

Moody's

*Current Ratings:S&P: ‘B+’ at Corporate level (credit watch pending completion of strategic

review) and ‘B+’ on 8.125% 2018 notes

Moody’s: ‘B2’ at Corporate level (stable outlook) and ‘B3’ on 8.125% 2018 notes

stable stable stable

stable stable*

0

1

2

3

4

5

6

2009 2010 2011 2012 2013

S&PBB

B-

BB-

B

B+

CCC+

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Cott Corporation

Question & Answer

Jay Wells, CFO

26

APPENDIX

27

Asset Turnover

COTT CORPORATION

SUPPLEMENTARY INFORMATION - NON-GAAP -

ASSET TURNOVER

(in millions of U.S. dollars)

Unaudited

For the Year Ended

December 28, 2013

Total Revenue $ 2,094.0

Divided by: Total Assets 1,426.1

Asset Turnover 1.5

28

Capex

COTT CORPORATIONSUPPLEMENTARY INFORMATION - NON-GAAP - CAPEX DEMANDS


Unaudited

For the Year Ended

December 28, 2013

Capex $ 55.6

Divided by: Total Revenues 2,094.0

Percentage of Revenue 2.7%

29

Free Cash Flow

COTT CORPORATIONSUPPLEMENTARY INFORMATION - NON-GAAP - FREE CASH FLOW


Unaudited

For the Year Ended

December 28, 2013 December 29, 2012 December 31, 2011

Net cash used in operating activities $ 155.2 $ 173.0 $ 163.5

Less: Capital expenditures (55.6) (69.7) (48.8)

Free Cash Flow $ 99.6 $ 103.3 $ 114.7

30

Cash Flow Yield

COTT CORPORATION

SUPPLEMENTARY INFORMATION - NON-GAAP - CASH FLOW YIELD

(in millions of U.S. dollars excluding stock price)

Unaudited

December 28, 2013

Stock Price $ 8.06

Total Shares 94.2

Equity Market Capitalization $ 759.6

For the Year Ended

December 28, 2013

Net income attributed to Cott Corporation $ 17.0

Interest expense, net 51.6

Income tax expense (benefit) 2.2

Depreciation & amortization 100.8

Net income attributable to non-controlling interests 5.0

EBITDA $ 176.6

Restructuring and asset impairments 2.0

Bond redemption costs 12.7

Tax reorganization and regulatory costs 1.4

Acquisition and integration 4.1

Adjusted EBITDA $ 196.8

Adjusted EBITDA $ 196.8

Less: Capex (55.6)

Total 141.2

Divided by: equity market capitalization 759.6

Cash Flow Yield 18.6%

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Adjusted Net Income

COTT CORPORATION

SUPPLEMENTARY INFORMATION - NON-GAAP - ADJUSTED NET INCOME


Unaudited

For the Year Ended


Net income attributed to Cott Corporation $ 17.0 $ 47.8 $ 37.6

Restructuring and asset impairments, net of tax 1.8 - 2.0

Bond redemption costs, net of tax 12.7 - -

Tax reorganization and regulatory costs, net of tax 1.4 - -

Acquisition and integration, net of tax 3.4 4.1 4.1

Adjusted net income attributed to Cott Corporation $ 36.3 $ 51.9 $ 43.7

32

Adjusted EBITDA

COTT CORPORATION

SUPPLEMENTARY INFORMATION - NON-GAAP - EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION

& AMORTIZATION

(EBITDA)


Unaudited

For the Year Ended


Net income attributed to Cott Corporation $ 17.0 $ 47.8 $ 37.6

Interest expense, net 51.6 54.2 57.1

Income tax expense (benefit) 2.2 4.6 (0.7)

Depreciation & amortization 100.8 97.7 95.3

Net income attributable to non-controlling interests 5.0 4.5 3.6

EBITDA $ 176.6 $ 208.8 $ 192.9

Restructuring and asset impairments 2.0 - 2.0

Bond redemption costs 12.7 -

Tax reorganization and regulatory costs 1.4 -

Acquisition and integration 4.1 4.1 4.1

Adjusted EBITDA $ 196.8 $ 212.9 $ 199.0

33

Interest Coverage

COTT CORPORATION

SUPPLEMENTARY INFORMATION - NON-GAAP - INTEREST COVERAGE


Unaudited

For the Year Ended

December 28, 2013 December 27, 2008

Net income (loss) attributed to Cott Corporation $ 17.0 $ (122.8)

Interest expense, net 51.6 32.3

Income tax expense (benefit) 2.2 (19.5)

Depreciation & amortization 100.8 80.7

Net income attributable to non-controlling interests 5.0 1.7

EBITDA $ 176.6 $ (27.6)

Restructuring, asset and goodwill impairments 2.0 112.9



Acquisition and integration 4.1 -

Adjusted EBITDA $ 196.8 $ 85.3

For the Year Ended

December 28, 2013 December 27, 2008


Divided by: Interest Expense 51.6 32.3

Interest Coverage 3.8 2.6

34

Net Leverage

COTT CORPORATION

SUPPLEMENTARY INFORMATION - NON-GAAP - NET LEVERAGE


Unaudited

For the Year Ended

December 28, 2013 January 1, 2011

Net income attributed to Cott Corporation $ 17.0 $ 54.7

Interest expense, net 51.6 36.9

Income tax expense 2.2 18.6

Depreciation & amortization 100.8 74.0

Net income attributable to non-controlling interests 5.0 5.1

EBITDA $ 176.6 $ 189.3

Restructuring, asset and goodwill impairments 2.0 (0.5)



Acquisition and integration 4.1 0.2


For the Year Ended


Total Debt $ 458.3 $ 622.2

Less: Cash (47.2) (48.2)

Net Debt 411.1 574.0

For the Year Ended


Net Debt $ 411.1 $ 574.0

Divided by: Adjusted EBITDA 196.8 189.0

Net Leverage 2.1 3.0

35

Free Cash Flow Excluding Note Redemption Costs

COTT CORPORATION

SUPPLEMENTARY INFORMATION - NON-GAAP - FREE CASH FLOW EXCLUDING NOTE REDEMPTION COSTS


Unaudited

For the Year Ended

December 28, 2013

Net cash used in operating activities $ 155.2

Less: Capital expenditures (55.6)

Free Cash Flow 99.6

*Note Redemption Costs 8.0

Free Cash Flow Excluding Redemption Costs $ 108

* Costs associated with redeeming our 2017 Notes.

cott corporation · accordance with gaap. in addition, the non-gaap financial measures included in...

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