New Cott Modeling Call Presentation

Transcription

1 New Cott Modeling Call Presentation September 25, 2017

2 Safe Harbor Statements 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 conveying management's expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve inherent risks and uncertainties and the Company cautions you that a number of 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 presentation include, but are not limited to, statements related to the use of proceeds, the anticipated timing of the recently announced sale of the Traditional Business (the Transaction ), the completion of the Transaction on the terms proposed, the potential impact the Transaction will have on Cott, expcted financial results following the closing of the Transaction, and the execution of our strategic priorities. The forward-looking statements are based on assumptions regarding management s current plans and estimates. Factors that could cause actual results to differ materially from those described in this presentation include, among others: the satisfaction of the conditions to the Transaction and other risks related to the completion of the Transaction and actions related thereto; Cott s and Refresco s ability to complete the Transaction on the anticipated terms and schedule, including the ability to obtain regulatory approvals; risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; the risk that disruptions from the Transaction will harm Cott s business; and the effect of economic, competitive, legal, governmental and technological factors on Cott s business. The foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on these 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 the Company's Annual Report in the Form 10-K for the year ended December 31, 2016 and its quarterly reports on Form 10-Q, as well as other periodic reports filed with the securities commissions. The Company does not, except as expressly required by applicable law, undertake to update or revise any of these statements in light of new information or future events. Non-GAAP Measures: The Company routinely supplements its reporting of GAAP measures by utilizing certain non-gaap measures to separate the impact of certain items from its underlying business results. Since the Company uses these non-gaap measures in the management of its business, management believes this supplemental information, including on a pro forma basis, is useful to investors for their independent evaluation and understanding of the Transaction. The non-gaap financial measures described above are in addition to, and not meant to be considered superior to, or a substitute for, the Company'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 copy of this presentation may be found on 1

3 Management Presenters Jay Wells Chief Financial Officer Jarrod Langhans Vice President, Investor Relations 2

4 The New Cott

5 The New Cott Reporting Segments Leading North American and European water, coffee, tea and filtration service provider within home and office delivery (HOD), foodservice, convenience and hospitality 2017E Pro Forma Sales: ~$2.2bn (1) 2017E Pro Forma Adjusted EBITDA: ~$285-$295mm (1) (including Corporate charges (4) ~$30-$35mm) Route Based Services (North America and Europe) Coffee, Tea & Extract Solutions (U.S.) All Other (U.K. and Int l) 2017E Pro Forma Sales 2017E Pro Forma Sales 2017E Sales ~68% ~27% ~5% 2017E Adj. EBITDA Margin 2017E Adj. EBITDA Margin 2017E Adj. EBITDA Margin ~17-18% Margin (2) ~7-8% Margin (2)(3) ~10-12% Margin (2)(5) Capex Capex Capex ~$90-$100mm/year ~$10-$20mm/year (6) <$5mm/year (1) Full year estimate of the retained business. (2) Excludes corporate allocations. (3) +9% by 2020 after synergies assuming constant coffee pricing. (4) Corporate costs include estimates for transition service agreements and corporate costs absorbed by the retained business. (5) Impact of concentrate agreement for the duration of the agreement is not yet finalized. (6) Potentially higher in 2018 as the strong growth in 2017 and expected customer wins in 2018 may result in accelerating the installation of our coffee roasting capacity. 4

6 The New Cott Key Financial Metrics FY 2017E (1) FY 2018P (1) FY 2019P (1) Net revenue growth ~$2.2bn ~2-3% Route-based 2%+ Coffee & Tea 3%+ ~2-3% Route-based 2%+ Coffee & Tea 3%+ Synergies, net ~$7mm ~$12mm ~$21mm Cash Taxes ~$10mm (4) ~$10mm (4) ~$10mm Capex ~$115-$120mm (3) ~$115-$120mm (3) ~$115-$120mm (3) Cash Interest (2) ~$70mm (1) ~$70mm Tuck-Ins Adj. Free cash flow ~$20-$30mm (3) purchase price ~$4-$6mm EBITDA (2) ~$20-$30mm (3) purchase price ~$4-$6mm EBITDA Cash from ops. ~$230-$235mm Capex ~$115-$120mm Adj. FCF ~$115 (2) ~$20-$30mm (3) purchase price ~$4-$6mm EBITDA Cash from ops. ~$265-$270mm Capex ~$115-$120mm Adj. FCF ~$150mm (1) Projections are for the retained Cott business and exclude the traditional beverage manufacturing business. Closing of sale of traditional business expected to occur by fiscal year end These projections assume closing of transaction and proceeds utilized for debt repayment prior to fiscal year end Timing of transaction could impact future expectations primarily in relation to debt redemption. (2) Data point excluded due to timing of closing of traditional business sale impacting final figures primarily interest payments and associated costs of redeeming the debt instruments. (3) Excludes the potential acceleration of additional growth capex or tuck-ins which will be included as a part of our ongoing capital deployment analysis post the sale of our traditional beverage manufacturing business. (4) Excludes any cash taxes associated with the sale of the traditional business. 5

7 Quarterly Business Seasonality - Reporting Segments Route Based Services (North America and Europe) Estimated Seasonality of Reporting Segments Coffee, Tea & Extract Solutions (U.S.) All Other (U.K. and Int l) Revenue 24% 26% 26% 24% 24% 24% 27% 26% 24% Adj. EBITDA 20% 28% 29% 23% 21% 21% 33% 27% 23% Source: Company information. 1. Quarterly seasonality was based on historical data from 2015 to 2017 and included financial information prepared by the businesses within the segments that existed prior to being acquired by Cott Corporation as well as financial data that was prepared subsequent to the acquisitions. As a result, the adjustments and accounting methodology may have varied from business to business and therefore if all financial figures were prepared in accordance with the Cott Corporation methodology, then seasonality could vary from quarter to quarter. 6

8 Free Cash Flow The New Cott can leverage its growing segments to maximize free cash flow Free Cash Flow Drivers 2019E Adjusted Free Cash Flow and Net Leverage (1) (2)(3) 2-3% revenue growth Margin expansion Adj. Free Cash Flow Cash from Ops: $265 - $270mm Capex: $115 - $120mm Leverage Goal of ~3.0x Highly synergistic acquisitions Interest savings Adj FCF: Post 2019 Adj. FCF CAGR: ~$150 mm 10% De-leveraging Dividends Capacity to Fund Scale M&A Source: Company information. 1. Adjusted free cash flow calculated as cash flow from operations (excluding acquisition, integration and transaction costs) less capital expenditures. 2. Adjusted free cash flow is based off of New Cott. 3. Estimates include projection of costs associated with transition agreements, operational costs of running stand-alone concentrate plant, and review of corporate costs associated with the retained business. 7

9 Statement of Operations What to Expect

10 Statement of Operations Overview (prior to closing the sale of our traditional manufacturing business) Net revenue Gross profit SG&A, Loss on Disposal of PP&E, A&I Expenses Operating income Other expense (income), net Interest expense (1) Income (loss) from continuing operations before income taxes Income tax expense (benefit) Continuing Operations Route Based Services Coffee, Tea & Extract Solutions All Other (2) Corporate costs Net income (loss) from continuing operations Net income (loss) from discontinued operations, net of income taxes Net income (loss) attributable to Cott Corporation (after NCI) EPS Cott North America, U.K., and Mexico traditional businesses Combined net income (loss) attributable to Cott Corporation Basic (3) Diluted (3) Continuing operations Discontinued operations Net income (loss) (1) Interest expense includes 10% 2021 Senior Notes, 5.5% 2024 Senior Notes, and 5.5% 2025 Senior Notes but excludes the 5.375% Senior Notes which will be included under discontinued operations. (2) All Other includes Aimia and the RCI global concentrate facility (3) Basic and diluted EPS will be presented for continuing operations, discontinued operations and combined net income (loss) attributable to Cott Corporation 9

11 Q&A