Attached files
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| EX-99.1 - PRESS RELEASE - Primo Water Corp /CN/ | dex991.htm |
| 8-K - FORM 8-K - Primo Water Corp /CN/ | d8k.htm |
 July 8, 2010
Business
Combination with
Cliffstar
Corporation
Transaction Summary
Exhibit 99.2 |
 2
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 Company’s anticipated second quarter 2010 volumes, revenues and operating income, the anticipated
timing of the transaction, the completion of the transaction on the terms proposed, the financing of
the transaction on terms currently anticipated, and the potential impact the acquisition will
have on the Company. The forward-looking statements are based on assumptions regarding the
timing of receipt of the necessary financing and approvals, 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 presentation
include, among others: (1) the ability to consummate the proposed transaction; (2) receipt of
regulatory approvals without unexpected delays or conditions; (3) changes in estimates of
future earnings and cash flows; (4) changes in expectations as to the closing of the transaction; (5) expected synergies and
cost savings are not achieved or achieved at a slower pace than expected; (6) integration problems,
delays or other related costs; (7) retention of customers and suppliers; (8) the cost of
capital necessary to finance the transaction; and (9) 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
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 press release issued on July 7, 2010, the Company’s Annual Report on Form 10-K for
the year ended January 2, 2010 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. |
 3
Non-GAAP Measures
Cott routinely supplements its reporting of earnings before interest, taxes,
depreciation & amortization in accordance with GAAP by excluding the
impact of certain items to separate the impact of these items from
underlying business results. Since the Company uses these adjusted financial
results 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
with
Cliffstar.
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.
This presentation, including the reconciliation of non-GAAP to GAAP measures,
will appear on our website at www.cott.com. |
 4
Transaction Overview
•
Combination creates #1 private label soft drink manufacturer with LTM 4/3/10 combined revenue of $2.3
billion and combined Adjusted EBITDA of $246 million (or $260 million including 2011
synergies) –
Cott
LTM
4/3/10
revenue
of
$1.6
billion,
net
income
of
$73.1
million
and
Adjusted
EBITDA
of
$166
million
–
Cliffstar
LTM
4/3/10
revenue
of
$654
million,
net
income
of
$82.7
million
and
Adjusted
EBITDA
of
$80
million
–
Combined North America LTM 4/3/10 revenue of $1.8 billion
•
Purchase price to include $500 million cash at close and up to $69 million in deferred / performance
related consideration:
–
Earn-out consideration of up to $55 million based on completing capital expansion plans and
achieving 2010
EBITDA
targets;
and
$14
million
deferred
consideration
paid
over
3
years
–
Attractive multiple of 7.1x LTM Adjusted EBITDA, or 4.9x inclusive of significant tax and
run-rate cost synergy benefits
–
Estimated to be accretive on a cash basis in 2011
•
Financing, including fees and expenses, at close expected to consist of:
–
New debt issuance of up to $375 million, issuance of up to $95 million of equity, and incremental
draw on existing asset based lending facility (will obtain amendment). Deferred
consideration and earn-out funded via future cash flow
–
Targeting pro forma net debt leverage of approximately 3.0x and pro forma interest coverage of
approximately 4.0x with priority on cash flow / net debt reduction post transaction
•
Target closing in Q3 2010 |
 5
Multiple Beneficial Aspects to Combination
•
Broader & more diversified beverage supplier with enhanced scale
•
Entry into more attractive category / competitive dynamics
•
Enhanced access to growth segments
•
Unique private label platform with strong geographic footprint and
logistics capabilities
•
Stronger and more stable cash flow
•
Attractive acquisition price with significant tax & synergy benefits
|
 6
Transaction Transforms Cott
into a Broader
& More Diversified Beverage Supplier
(a)
Pro
forma
Functional
/
New
Age
includes
Cliffstar’s
Thirst
Quenchers
and
Flavored
Water
products
and
Cott’s
RTD
Tea,
Sports,
and
Energy
products
(b)
Pro
forma
Juice
/
Juice
drinks
include
Cliffstar’s
Apple,
Cranberry,
Cranblends,
Grape
and
other
fruit
juices
and
Cott’s
juice
drinks
(UK)
Cott
standalone
product breakdown
Cliffstar
standalone
product breakdown
Pro forma
product breakdown
LTM 4/3/10 Revenue:
$1,593 million
LTM 4/3/10 Revenue:
$654 million
Pro forma revenue:
$2,246 million
CSDS
61%
Waters
20%
Energy
6%
Tea
1%
Sports
1%
Juice drinks
(UK only)
11%
CSDs
43%
Juice / Juice
drinks (b)
36%
Functional /
New Age (a)
7%
Waters
14%
Flavored
waters
1%
Other fruit
juices
24%
Thirst
quenchers
3%
Cranberry,
cranblends
&
grape
42%
Apple
30% |
 7
Private Label
10%
Other
90%
Others
93%
Private Label
7%
Private Label
9%
Others
91%
Private Label
13%
Other
87%
Provides Entry into Juice –
More Attractive
Category Dynamics
U.S. CSD value sales
U.S. Juice / Juice drink value sales
Source: Euromonitor, OC&C analysis
U.S. CSD volume sales
U.S. Juice / Juice drink volume sales
•
Juice category is fragmented
with 12 companies controlling
~70% of value sales
–
Significant role by co-ops
–
No player greater than
15%
•
Juice is a more attractive
category for PL penetration
–
Higher loyalty to brands in
CSDs
vs. Juices
–
Apple is 17.5% share
of juice with 42.5% PL
penetration
•
CSDs
are a challenging market
–
Top 2 players control
~70% of value sales
–
Top 3 players control
~85% of value sales
–
National brands have
disproportionate pricing
power
Total: $38.8 billion
Total: $15.7 billion
Total volume: 36.4 billion liters
Total volume: 8.7 billion liters
Note: Represents U.S. off-trade market data. |
 8
CSD
42%
Other 3%
Bottled water
20%
Functional
drinks 14%
RTD tea 4%
Juice 17%
Provides Enhanced Capability to Access
Higher Growth Beverage Segments
•
Juice
is
a
more
stable
category
than
CSDs
with
better
growth profile
–
Growth in low-sugar, functional and super fruit as
consumers switch from high sugar options
•
Cliffstar
offers growing position in higher growth beverage
segments
–
Complementary to core juice business
–
Proven ability for innovation in product mix, packaging,
etc.
–
Share growth within the category
•
Fortified drinks, enhanced water, RTD teas and sports
drinks to see increased buy-in for PL as category continues
to grow
–
Cliffstar
establishing leadership position in PL
Note: Category value size based on 2009 U.S. off-trade market
Source: Company Information, Euromonitor, Nielsen, Mintel, Beverage Digest,
OC&C analysis Total: $91.4 billion
Beverage category value sales |
 9
Attractive Financial Impact
CASH
GENERATION
•
Combined
entity
is
projected
to
generate
significant
cash
flow
•
Focused on using ongoing cash generation to reduce debt
SYNERGIES
•
Anticipated cost synergies of approximately $20 million with an associated cost of
up to $15 million over three years
•
Savings in overheads, procurement and opportunities to cross-sell to
customers •
Additional long-term synergies & cross-selling opportunities
possible EFFICIENT
STRUCTURE
•
Asset purchase structure allows for 338(h)(10) treatment and tax savings
–
Tax
deduction
for
15
years
with
present
value
of approximately $75 million
ATTRACTIVE
VALUATION
MULTIPLE
•
Adjusted EBITDA multiples attractive
–
Purchase multiple 7.1x Cliffstar’s
Adjusted EBITDA
–
Adjusted EBITDA multiple of 4.9x (inclusive of tax benefit and cost
synergies) –
Conservative adjustments made to Cliffstar
base EBITDA given 2009/10 margin improvement
VALUE CREATION
•
Strategic combination
–
Increases Cott’s
scale, relevance to retailers and balances portfolio mix
–
Expected to result in increases in top line and EBITDA sustainability
•
Estimated to be accretive on a cash basis in 2011 (excludes non cash
amortization) |
 10
Breakdown of Base Case SG&A and Procurement Savings of
$20 million Plus Potential Additional Cost Synergy and Cross-
sell Opportunities
Identified Synergies
Synergy
Anticipated
Phasing
Private Company Expenses
$7 million
Day 1
SG&A
$5 million
2011 – 2013
Procurement
$8 million
2011 – 2013
Total Identified Run-Rate Synergies
$20 million
Synergies Expected to be Achieved in 2011
$14 million
Potential Longer-Term Synergies
2013 – 2015
SGA and Procurement
Other Cost Savings/Operating Efficiencies
Cross-Selling
|
 11
Cliffstar: Leader in Retailer Brand Ambient
Juice
Business Description
•
Leading private manufacturer of shelf-stable juices in North America
–
Largest producer of apple juice in North America
–
Greater than 50% market share of retailer brand shelf-stable juice
•
National footprint with 11 manufacturing, storage and fruit processing facilities
(highly complementary to Cott’s existing 10 U.S. plants)
–
Approximately 1,200 non-unionized employees
–
Vertically integrated (fruit processing and production)
Headquartered: Dunkirk, NY / Founded: 1970
Leading market position in shelf-stable juice category
•
Strong customer relationships
•
#1 Apple juice
•
#1 Cranberry and Cranblend
•
#1 Grape juice
•
Leader in functional beverages
–
First to market in category; recognized innovator |
 12
Strong Combined Geographic Footprint in
the U.S.
•
State-of-the-art
manufacturing and
bottling/storage facilities
•
Cold and hot fill capacity
with proven ability to
innovate
•
Significant distribution
and logistics system in
place
Fontana
Fredonia
Greer
Joplin
Walla Walla
Warrens
East
Freetown
North East PA
Blairsville
Columbus
Concordville
San Antonio
Sikeston
St Louis
Tampa
Wilson
San Bernardino
Ft Worth
Cliffstar
Cott
Brocton
Dunkirk
Highlights
Note: Cliffstar
has both a production and fruit processing facility at Dunkirk
|
 13
Cott Q2 2010 Estimates
Cott provided the following estimates of key financial metrics regarding its
estimated consolidated Q2 2010 results on a stand-alone basis:
•
Filled beverage volume of 207 million cases (8oz equivalents)
•
Consolidated revenue of $426 million
•
Operating income of $37 million
Cott clarified that the foregoing Q2 estimates are preliminary and actual results
could vary by up to 2-3% in either direction for revenue and volume, and
up to $2-3 million in either direction for operating income.
|
 14
Non-GAAP Reconciliation
COTT CORPORATION PRO FORMA
EXHIBIT 1
NON-GAAP EARNINGS
BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION (EBITDA)
(in millions of U.S. dollars)
Unaudited
Cott
Cliffstar
For the 12 Months Ended
Corporation
Corporation
April 3, 2010
Net income (loss)
$73.1
$82.7
$155.8
Interest expense, net
28.3
3.5
31.8
Income tax (benefit)
(12.2)
0.0
(12.2)
Depreciation and amortization
65.1
13.9
79.0
Net income attributable to non-controlling interests
4.9
0.0
4.9
EBITDA
159
100
259
Adjustments to EBITDA
Restructuring
(0.2)
0.0
(0.2)
Asset Impairments
3.5
0.0
3.5
Other expense (loss on buyback of notes)
3.3
0.0
3.3
Inventory adjustments
0.0
(21.7)
(21.7)
Incentive adjustment
0.0
2.0
2.0
Adjusted EBITDA
$166
$80
$246 |