Packaging

Cott Reports Fourth Quarter and Fiscal Year 2010 Results

Monday 07. March 2011 - -- Filled beverage case volume increased 20% (4% excluding Cliffstar, which was acquired on August 17, 2010, and the additional week in fiscal 2009).

Fourth Quarter 2010
— Filled beverage case volume increased 20% (4% excluding Cliffstar,
which was acquired on August 17, 2010, and the additional week in
fiscal 2009).
— Revenue was $529 million, an increase of 37%, including $152 million of
revenue from Cliffstar. Excluding Cliffstar, the impact of foreign
exchange and the $20 million contributed by the additional week in
2009, revenue increased 3%.
— Gross profit as a percentage of sales was 13.0% compared to 14.1%.
Excluding Cliffstar transaction related purchase accounting
adjustments, gross profit as a percentage of sales was 13.8%.
— Income before income taxes includes $20 million related to a reduction
in the fair value of the Cliffstar contingent consideration “earn-out”
accrual, which is payable in July of 2011.
— Net income and earnings per diluted share were $15 million and $0.16,
respectively. Adjusted net income increased to $8 million and adjusted
net income per diluted share increased to $0.08.
— Cash from operations was $73 million and capital expenditures were
$15 million.
Fiscal Year 2010
— Filled beverage case volume increased 7% (1% excluding Cliffstar and
the additional week in 2009).
— Revenue was $1.8 billion, an increase of 13%, including $232 million of
revenue from Cliffstar. Excluding Cliffstar, the impact of foreign
exchange and the $20 million contributed by the additional week in
2009, revenue declined 1%.
— Net income and earnings per diluted share were $55 million and $0.63,
respectively. Adjusted net income and adjusted net income per diluted
share were $58 million and $0.68, respectively, compared to $45 million
and $0.60, respectively.
— Cash from operations was $178 million and capital expenditures were
$44 million.
(See accompanying reconciliation of non-GAAP financial measures to the nearest comparable GAAP measures.)
(All information in U.S. dollars; all fourth quarter 2010 comparisons are relative to the fourth quarter of 2009; all fiscal 2010 comparisons are relative to fiscal 2009.)
Cott Corporation (NYSE: COT) (TSX: BCB) today announced its results for the fourth quarter and fiscal year ended January 1, 2011. Fourth quarter 2010 revenue was $529 million, compared to $386 million. Operating income was $15 million, compared to $14 million. Adjusted operating income was $26 million. Net income and earnings per diluted share were $15 million and $0.16, respectively, compared with $14 million and $0.17. Adjusted net income and adjusted net income per diluted share were $8 million and $0.08, respectively. Fourth quarter and fiscal year 2009 included an additional week of sales relative to 2010 that is estimated to have contributed $20 million of additional revenue.
“I’m pleased with the top-line volume growth and strong cash generation achieved during the fourth quarter,” commented Cott’s Chief Executive Officer, Jerry Fowden. “While we did feel the impact of increased national brand promotions in the juice category during the quarter, we feel comfortable with the underlying 2010 performance in our juice business and continue to progress towards a smooth integration. We remain confident in our ability to deliver our previously announced synergy targets for 2011,” added Fowden.
FOURTH QUARTER 2010 PERFORMANCE SUMMARY
— Filled beverage case volume increased 20% (4% excluding Cliffstar and
the additional week in 2009), as volumes excluding the additional week
in 2009 were higher in North America, the United Kingdom / Europe
(“U.K.”), and Royal Crown International (“RCI”).
— Revenue increased 37% (3% excluding Cliffstar, the impact of foreign
exchange, and the $20 million contributed by the additional week in
2009), as higher volumes in North America, the U.K. and RCI excluding
the additional week in 2009 more than offset the impact of lower
average net selling prices in North America, Mexico and the U.K.
— Gross profit as a percentage of sales was 13.0% compared to 14.1%.
Excluding Cliffstar transaction related purchase accounting
adjustments, gross profit as a percentage of sales was 13.8%.
— Selling, general and administrative (“SG&A”) expenses were $53 million
compared to $40 million. The increase in SG&A expense was due to higher
SG&A from Cliffstar and integration related expenses. Core Cott SG&A
was $37 million.
— Operating income was $15 million, compared to $14 million. Adjusted
operating income was $26 million, compared to $14 million.
— Income before income taxes includes $20 million related to a reduction
in the fair value of the Cliffstar contingent consideration earn-out
accrual, which is payable in July of 2011. The reduction is due to
lower than projected income. The amount of the contingent
consideration is not directly correlated to the decline in actual
income.
— The Company’s income tax expense was $5 million, compared to an income
tax benefit of $12 million.
FOURTH QUARTER 2010 OPERATING SEGMENT HIGHLIGHTS
— North America filled beverage case volume increased 29% (5% excluding
Cliffstar and the additional week in 2009) and revenue increased 54%
(3% excluding Cliffstar, the impact of foreign exchange and the
$16 million contributed by the additional week in 2009), driven by
volume growth in soft drinks.
— U.K. filled beverage volume decreased 1% (increased 4% excluding the
additional week in 2009) and revenue declined 5% (increased 2%
excluding the impact of foreign exchange and the $4 million contributed
by the additional week in 2009), driven by ongoing volume growth in
energy and sport isotonic beverages.
— Mexico filled beverage case volume declined 13% (8% excluding the
additional week in 2009) and revenue declined 2% (7% excluding foreign
exchange), primarily due to the timing of new customer volumes in the
fourth quarter of 2009.
— RCI concentrate volumes increased 5% and revenue increased 16% (27%
excluding the $1 million contributed by the additional week in 2009),
primarily as a result of increased sales to existing customers during
the quarter.
FISCAL YEAR 2010 PERFORMANCE SUMMARY
— Filled beverage case volume increased 7% (1% excluding Cliffstar and
the additional week in 2009), as a 36% increase in RCI concentrate
sales volume drove total beverage volume in 8 oz. equivalents
(including concentrate sales) up 13%. The growth in filled beverage
case volume was driven by higher volumes in Mexico and the U.K., offset
by lower volumes in North America excluding Cliffstar.
— Revenue increased 13% (declined 1% excluding Cliffstar, the impact of
foreign exchange and the $20 million contributed by the additional week
in 2009), due to the inclusion of Cliffstar revenue. Lower revenue
excluding Cliffstar was due to lower volumes in North America and lower
average selling prices in North America and Mexico.
— Gross profit was $266 million or 14.8% of sales, compared to
$250 million or 15.6% of sales. Gross profit included $11 million of
Cliffstar related purchase accounting adjustments. Excluding these
adjustments, gross profit was $277 million or 15.4% of sales.
— SG&A expenses were $167 million compared to $147 million. The increase
related to Cliffstar’s SG&A and transaction and integration related
expenses partially offset by lower information technology, professional
fees and certain employee costs.
— Operating income was $99 million compared to $97 million. Adjusted
operating income was $124 million compared to $103 million.
— The Company’s 2010 income tax expense was $19 million, compared to an
income tax benefit of $23 million.
— The Company’s fiscal 2010 results include a revision to its interim
financial statements arising from a failure to record a $3.7 million
charge against revenue from pricing discounts. The effect of the error
was to reduce third quarter revenue and income before income taxes by
$3.7 million and third quarter earnings per diluted share by $0.02.
Accordingly, the interim financial statements for the three months
ended October 2, 2010, included in the Company’s Annual Report on Form
10-K for fiscal 2010, will be revised to correct for this immaterial
pricing error.
FISCAL YEAR 2010 OPERATING SEGMENT HIGHLIGHTS
— North America filled beverage case volume increased 8% (declined 2%
excluding Cliffstar and the additional week in 2009) and revenue
increased 16% (declined 4% excluding Cliffstar and the $16 million
contributed by the additional week in 2009). Revenue and volume
declines in the first half of 2010 were due to national brand
promotional activity. Revenue and volume increased in the second half
of 2010 due to improved existing operations and Cliffstar.
— U.K. filled beverage case volume increased 2% (3% excluding the
additional week in 2009), and revenue increased 2% (5% excluding
foreign exchange and the $4 million contributed by the additional week
in 2009), driven by volume growth in the energy and sport isotonic
drink category.
— Mexico filled beverage case volume increased 32% and revenue increased
17% (11% excluding foreign exchange), due to new business wins and
product introductions. A significant portion of the increased volume
was from new co-pack business which resulted in lower average net
selling prices.
— RCI concentrate volumes increased 36% and revenue increased 38%,
primarily as a result of increased sales to existing customers.