Cott Corporation. Annual and Special Meeting of Shareowners. May 6, 2014 Toronto, ON, Canada

Transcription

1 Cott Corporation Annual and Special Meeting of Shareowners May 6, 2014 Toronto, ON, Canada 1

2 Welcome to Cott s 2014 Annual and Special Meeting of Shareowners David Gibbons, Chairman 2

3 Agenda Chairman Welcome Formal Business Resolutions for Consideration CFO Financial Review CEO Remarks Q&A 3

4 Board of Directors David Gibbons Eric Rosenfeld George Burnett Mark Benadiba Stephen Halperin Betty Jane Hess Gregory Monahan Mario Pilozzi Andrew Prozes Graham Savage Jerry Fowden 4

5 Formal Business Marni Poe, Vice President General Counsel and Secretary 5

6 Safe Harbor Statement Forward Looking Statements: This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and applicable Canadian securities laws reflecting management s current expectations regarding future results of operations, economic performance and financial condition. Such statements include, but are not limited to, statements reflecting the company's business strategy and includes statements related to the company's capital deployment strategy; the refinancing of our 2018 Senior Notes; the payment of future dividends; share repurchases under our share repurchase program; the reduction of interest expense; and the investment in organic and bolt-on opportunities, future revenue enhancements and cost savings; and goals and expectations concerning our market position, future operations, product mix and estimated capital expenditures. Forward-looking statements are subject to certain risks and uncertainties which could cause actual results to materially differ from current expectations. These risks and uncertainties are detailed from time to time in the Company's securities filings. The information set forth herein should be considered in light of such risks and uncertainties. Certain material factors or assumptions were applied in drawing conclusions or making forecasts or projections reflected in the forward-looking information. Additional information about the material factors or assumptions applied in drawing conclusions or making forecasts or projections reflected in the forward-looking information is available in the Company s annual report on Form 10-K for the year ended December 28, 2013, its quarterly reports on Form 10-Q, as well as other periodic reports filed with the securities commission. The company does not, except as expressly required by applicable 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 with GAAP, Cott utilizes certain non-gaap financial measures. Cott utilizes EBITDA and Adjusted EBITDA 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 operating activities determined in accordance with GAAP by excluding capital expenditures, which management believes provides useful information to investors about the amount of cash generated by the business that, after the acquisition of property and equipment, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, 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 presentation 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. A reconciliation of these non-gaap measures may be found on as well as on the Appendix of this presentation. 6

7 Order of Business Notice of Meeting Quorum Formalities Minutes of Last Meeting of Shareowners Annual Report and Auditor s Report Introduction of Resolutions Election of Directors Appointment of Auditors Advisory Vote on Executive Compensation Approval of Amendment to Cott s Second Amended and Restated By-Laws CFO & CEO Comments 7

8 Order of Business Notice of Meeting Quorum Formalities Minutes of Last Meeting of Shareowners Annual Report and Auditor s Report Introduction of Resolutions Election of Directors Appointment of Auditors Advisory Vote on Executive Compensation Approval of Amendment to Cott s Second Amended and Restated By-Laws CFO & CEO Comments 8

9 Order of Business Notice of Meeting Quorum Formalities Minutes of Last Meeting of Shareowners Annual Report and Auditor s Report Introduction of Resolutions Election of Directors Appointment of Auditors Advisory Vote on Executive Compensation Approval of Amendment to Cott s Second Amended and Restated By-Laws CFO & CEO Comments 9

10 Order of Business Notice of Meeting Quorum Formalities Minutes of Last Meeting of Shareowners Annual Report and Auditor s Report Introduction of Resolutions Election of Directors Appointment of Auditors Advisory Vote on Executive Compensation Approval of Amendment to Cott s Second Amended and Restated By-Laws CFO & CEO Comments 10

11 Order of Business Notice of Meeting Quorum Formalities Minutes of Last Meeting of Shareowners Annual Report and Auditor s Report Introduction of Resolutions Election of Directors Appointment of Auditors Advisory Vote on Executive Compensation Approval of Amendment to Cott s Second Amended and Restated By-Laws CFO & CEO Comments 11

12 Order of Business Notice of Meeting Quorum Formalities Minutes of Last Meeting of Shareowners Annual Report and Auditor s Report Introduction of Resolutions Election of Directors Appointment of Auditors Advisory Vote on Executive Compensation Approval of Amendment to Cott s Second Amended and Restated By-Laws CFO & CEO Comments 12

13 Financial Results Jay Wells Chief Financial Officer 13

14 Our Mission Build shareholder value by managing our core business to maximize cash generation while diversifying product, package and channel offerings to provide growth. 14

15 Business Model Follow the 4 C s to Drive Operating Performance Improve Growth Prospects through Diversification Build shareholder value by managing our core business to maximize cash generation while diversifying product, package and channel offerings to provide growth. Deliver Strong Free Cash Flow Utilize Free Cash Flow to Reduce Debt & Return Funds to Shareowners 15

16 2013 Financial Overview Full Year Comparisons 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 130 Full Year 2013 Performance Summary 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 *See accompanying non-gaap reconciliation 16

17 Strong Free Cash Generation Leads to Improved Balance Sheet Debt Reduction Net Leverage Net Debt / Adjusted EBITDA 4x 3x 2x 1x Redeemed $200M of our 2017 Senior Notes in 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 Final $15mm of our 2017 Senior Notes redeemed in February 2014 Increased Interest Coverage 3.8x in 2013 from 2.6x in 2008 (Adjusted EBITDA to Interest Expense) Strong Cash Generation 0x PF Post-Cliffstar 2013 PF Post-Note Redemption $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 17

18 Strong Cash Generation Has Supported Diversifying Acquisition Calypso Soft Drinks Located in Wrexham, United Kingdom New Products & Packages Combi cartons (tetra) Single serve cups & cuplets Two freezable formats & brands New Channel Introduction Foodservice & Education Small convenience stores Financials ~$50 million in annual revenues EPS & EBITDA accretive Supports diversification of Product, Package & Channel to complement Cott s existing business mix. 18

19 CEO Remarks Jerry Fowden Chief Executive Officer 19

20 Operating focus to Support Cott s Mission Follow our generation of customers, low cost, tight capital control and focus on cash Undertake organic diversification of our products, packages, and channels of business Reduce our debt and interest charge Invest in diversifying acquisitions Return ~30% of free cash flow to shareholders Cott Corporation 2014 Annual and Special Meeting of Shareholders 20

21 Many Strong & Positive Cott Attributes Cott Specific Attributes High asset turn, sales per employee and quality Best in class SG&A leverage Strong balance sheet with net debt targets achieved during 2013 Attractive corporate tax structure Strong cash generation and cash yield Sixty percent business concentration in the mature CSD and SSJ segments Invest to shift our business mix in order to support and accelerate cash generation Cott Corporation 2014 Annual and Special Meeting of Shareholders 21

22 Key Facts and Trends from Recent Strategic Review Macro Market Dynamics / Factors North American Carbonated Soft Drinks (CSD) and Shelf Stable Juice (SSJ) markets are mature Excess industry capacity pressuring margins National Brand promotion and pricing activity in pursuit of volume is reducing the price gap to private label Continued large format retail consolidation and growth in smaller discount formats Attractive financing markets at the present time Cott Corporation 2014 Annual and Special Meeting of Shareholders 22

23 Five Strategic Priorities As We Look Forward Continuation of our generation approach including tight operating controls and a focus on cash 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 quarterly 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. Cott Corporation 2014 Annual and Special Meeting of Shareholders 23

24 CEO Remarks Jerry Fowden Chief Executive Officer 24

25 Q&A 25

26 APPENDIX 26

27 Adjusted Net Income COTT CORPORATION SUPPLEMENTARY INFORMATION - NON-GAAP - ADJUSTED NET INCOME (in millions of U.S. dollars, except share and per share amounts) Unaudited For the Year Ended December 28, 2013 December 29, 2012 December 31, 2011 Net income attributed to Cott Corporation $ 17.0 $ 47.8 $ 37.6 Restructuring and asset impairments, net of tax Bond redemption costs, net of tax Tax reorganization and regulatory costs, net of tax Acquisition and integration, net of tax Adjusted net income attributed to Cott Corporation $ 36.3 $ 51.9 $

28 Adjusted EBITDA COTT CORPORATION SUPPLEMENTARY INFORMATION - NON-GAAP - EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION (EBITDA) (in millions of U.S. dollars) Unaudited For the Year Ended December 28, 2013 December 29, 2012 December 31, 2011 Net income attributed to Cott Corporation $ 17.0 $ 47.8 $ 37.6 Interest expense, net Income tax expense (benefit) (0.7) Depreciation & amortization Net income attributable to non-controlling interests EBITDA $ $ $ Restructuring and asset impairments Bond redemption costs Tax reorganization and regulatory costs Acquisition and integration Adjusted EBITDA $ $ $

29 Free Cash Flow COTT CORPORATION SUPPLEMENTARY INFORMATION - NON-GAAP - FREE CASH FLOW (in millions of U.S. dollars) Unaudited For the Year Ended December 28, 2013 December 29, 2012 December 31, 2011 Net cash provided by operating activities $ $ $ Less: Capital expenditures (55.6) (69.7) (48.8) Free Cash Flow $ 99.6 $ $

30 Interest Coverage COTT CORPORATION SUPPLEMENTARY INFORMATION - NON-GAAP - INTEREST COVERAGE (in millions of U.S. dollars) 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 Income tax expense (benefit) 2.2 (19.5) Depreciation & amortization Net income attributable to non-controlling interests EBITDA $ $ (27.6) Restructuring, asset and goodwill impairments Bond redemption costs Tax reorganization and regulatory costs Acquisition and integration Adjusted EBITDA $ $ 85.3 For the Year Ended December 28, 2013 December 27, 2008 ` Adjusted EBITDA $ $ 85.3 Divided by: Interest Expense Interest Coverage

31 Net Leverage COTT CORPORATION SUPPLEMENTARY INFORMATION - NON-GAAP - NET LEVERAGE (in millions of U.S. dollars) Unaudited For the Year Ended December 28, 2013 January 1, 2011 Net income attributed to Cott Corporation $ 17.0 $ 54.7 Interest expense, net Income tax expense Depreciation & amortization Net income attributable to non-controlling interests EBITDA $ $ Restructuring, asset and goodwill impairments 2.0 (0.5) Bond redemption costs Tax reorganization and regulatory costs Acquisition and integration Adjusted EBITDA $ $ For the Year Ended December 28, 2013 January 1, 2011 Total Debt $ $ Less: Cash (47.2) (48.2) Net Debt For the Year Ended December 28, 2013 January 1, 2011 Net Debt $ $ Divided by: Adjusted EBITDA Net Leverage