TORONTO, ON and TAMPA, FL--(Marketwired - Aug 11, 2016) - Cott Corporation (
The acquisition of S&D is in line with Cott's strategy of focusing on acquiring cash accretive businesses with higher growth while continuing Cott's beverage diversification outside of carbonated soft drinks, shelf stable juices and large format retail. S&D is a growing business with over $550 million in estimated 2016 revenues. The acquisition broadens the distribution platform of Cott's existing DS Services coffee business in the United States by adding a leading scale platform with in-house roasting, grinding and blending capabilities alongside a national distribution system. Consistent with Cott's strategy, the acquisition is expected to be accretive to cash flow from operations and adjusted free cash flow (excluding acquisition, integration and transaction costs) in its first full year and provide a cash-on-cash IRR above its cost of equity.
"The S&D acquisition is another great step in our stated strategy to enhance our existing home and office water delivery, coffee, tea and filtration businesses where we believe our platform, operating strength and synergies can be leveraged," commented Jerry Fowden, Cott's Chief Executive Officer.
Tom Harrington, DS Services' Chief Executive Officer, will continue in that capacity at DS Services, and will also oversee S&D, which will assist in fully leveraging best practices, procurement scale, back office processes and synergies. Ron Hinson, S&D's Chief Executive, Officer and his experienced team will continue to lead the S&D business.
Mr. Harrington commented, "We believe the acquisition of S&D will provide meaningful benefits from combined procurement efficiencies, vertical integration and distribution networks, as well as management expertise to create an even stronger, cash generative, growth oriented service platform throughout North America."
Mr. Hinson commented, "In order to take the next step in S&D's journey we wanted to find the right partner to support our continued growth. In sharing our values and desire to further expand our category leadership in coffee, tea and liquid extracts, we found Cott to be the ideal partner and we very much look forward to joining Cott."
The purchase price represents a high 6x post synergy adjusted EBITDA multiple (including estimated run-rate synergies of approximately $12 million). Cott financed the transaction through a combination of cash on hand and borrowings under its asset-based lending facility of approximately $270 million.
ACQUISITION MODELING CONFERENCE CALL
Cott will host a conference call to provide financial modeling information regarding the Eden Springs and S&D acquisitions on Wednesday, August 17, 2016 at 10:00 a.m. Eastern Time. The call will end no later than 12:00 p.m. Eastern Time. Participating in the conference call will be Jerry Fowden, Cott's Chief Executive Officer, Jay Wells, Cott's Chief Financial Officer, and Tom Harrington, DS Services' Chief Executive Officer.
Financial Modeling Conference Call North America: (888) 461-2011 International: (719) 325-2237 Passcode: 4121440
Webcast A live audio webcast will be available through the Company's website at http://www.cott.com . The webcast will be recorded and archived for playback on the investor relations section of the website for two weeks following the event. A copy of the slide presentation that will be used on the call will be available through Cott's website prior to the call on August 17, 2016.
ABOUT COTT CORPORATION
With DS Services, Aquaterra, Eden Springs and S&D Coffee & Tea, Cott is a leading provider in the direct-to-consumer beverage services industry. Cott has leadership positions in 20 countries across home and office water delivery, office coffee services and filtration services as well as a leading position in the United States custom coffee roasting and tea blending foodservice industry. In addition, Cott is one of the world's largest producers of beverages on behalf of retailers, brand owners and distributors, producing products such as sparkling waters, mixers, carbonated soft drinks, juice and energy drinks. Cott reaches over two million customers via direct delivery through its own depots and distribution routes in addition to supplying the distribution centers of numerous multinational retailers and brand owners. Cott's broad portfolio allows it to offer, on a direct-to-consumer basis, a variety of bottled water, coffee, brewed tea, water dispensers, coffee and tea brewers and filtration equipment. Cott believes it has the broadest distribution network in the direct-to-consumer beverage services industry in North America and Europe, which enables it to efficiently service residences and small to medium size businesses, as well as national corporations, universities and government agencies.
Non-GAAP Measures
To supplement its reporting of financial measures determined in accordance with GAAP, Cott utilizes certain non-GAAP financial measures, including 2016 estimated S&D adjusted pro forma EBITDA, to separate the impact of certain items from the underlying S&D business. Management believes this supplemental information is useful to investors for their independent evaluation and understanding of the transaction with S&D.
Additionally, Cott supplements its reporting of net cash provided by (used in) operating activities determined in accordance with GAAP by excluding capital expenditures and acquisition, integration and transaction costs to present adjusted free cash flow (on a stand-alone and pro forma basis), 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, paying dividends, and strengthening the balance sheet. With respect to our expectations of performance of S&D as it is being integrated, reconciliations of adjusted free cash flow accretion are not available, as we are unable to quantify certain amounts that would be required to be included in the relevant GAAP measures without unreasonable effort. We expect that the unavailable reconciling items, which primarily include foreign exchange impact and phasing of capex, could significantly affect our financial results. These items depend on highly variable factors and any such reconciliations would imply a degree of precision that would be confusing or misleading to investors. We expect the variability of these factors to have a significant, and potentially unpredictable, impact on our future GAAP financial results.
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 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 press release include, but are not limited to, statements related to S&D expected revenues, expected synergies and contribution to Cott's performance, and the potential impact the acquisition will have on Cott and related matters. The forward-looking statements are based on assumptions regarding the time necessary to satisfy the conditions to the closing of the transaction and 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: changes in estimates of future earnings and cash flows; 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.
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 in light of new information or future events, except as expressly required by applicable law.
Website: www.cott.com
CONTACT: Jarrod Langhans Investor Relations Tel: (813) 313-1732 Email Contact
