Cott reports Q2 net earnings of US$18.1M, down 31.2% from year-ago period as revenue falls 9.9% to US$563.8M

Nevin Barich

TORONTO and TAMPA, Florida , August 1, 2013 (press release) – (Unless stated otherwise, all second quarter 2013 comparisons are relative to the second quarter of 2012; all information is in U.S. dollars. Certain terms used in this press release are defined below.)

Cott Corporation (NYSE: COT) (TSX: BCB) today announced its results for the second quarter ended June 29, 2013 and the declaration of a quarterly dividend of CAD$0.06 per common share.

Second Quarter 2013 Results

Company returned approximately $17 million to shareholders through dividends and share repurchases.

Revenue of $564 million was lower by 10% (9% excluding the impact of foreign exchange) compared to $626 million.

Gross profit as a percentage of revenue was 13.6% compared to 14.7%.

Selling, general and administrative ("SG&A") expenses of $42 million were lower by 15% compared to $49 million.

Adjusted net income and adjusted earnings per diluted share were $20 million and $0.20, respectively, compared to $26 million and $0.27 in the prior year, respectively. Reported net income and earnings per diluted share were $17 million and $0.17, respectively, compared to $25 million and $0.26 in the prior year, respectively.

Adjusted EBITDA was $61 million compared to $68 million. Reported EBITDA was $58 million compared to $67 million.

Free cash flow increased 6% to $20 million arising from $34 million of net cash provided by operating activities less $14 million of capital expenditures.

"Our second quarter results continued to reflect the same challenging market and operating trends that impacted our volume and revenue performance in the first quarter," commented Jerry Fowden, Cott's Chief Executive Officer. "During the quarter, we continued with our 4 C's approach and announced various SG&A reduction initiatives in line with our low cost philosophy. As part of our capital deployment strategy, we also repurchased approximately $6 million of outstanding shares and approved a quarterly dividend of CAD$0.06. As we look to the second half of the year, we currently expect our top and bottom line performance trends to improve compared to the first half," continued Mr. Fowden.

SECOND QUARTER 2013 PERFORMANCE SUMMARY

Total filled beverage case volume (excluding concentrate sales) was 212 million cases compared to 240 million cases. The volume decline was due primarily to lower case pack water sales in North America, the general market decline in the North American carbonated soft drink ("CSD") category, increased promotional activity from the national brands in North America, and poor weather in the United Kingdom and Canada.

Revenue was lower by 10% (9% excluding the impact of foreign exchange) at $564 million. The revenue decline was due primarily to lower global volumes slightly offset by an increase in average price per case on a global basis.

Gross profit as a percentage of revenue was 13.6% compared to 14.7%. The gross margin reduction was due primarily to lower global volumes which resulted in unfavorable fixed cost absorption.

SG&A expenses were lower by 15% at $42 million compared to $49 million. The decrease in SG&A was due primarily to lower employee-related costs compared to a higher annual incentive accrual in the prior year, lower legal expenses and reduced costs associated with our information technology strategy.

Income before income taxes was $20 million compared to $30 million.

Income tax expense was $2 million compared to $4 million.

Adjusted net income and adjusted earnings per diluted share were $20 million and $0.20, respectively, compared to $26 million and $0.27 in the prior year, respectively. Reported net income and earnings per diluted share were $17 million and $0.17, respectively, compared to $25 million and $0.26 in the prior year, respectively.

Adjusted EBITDA was $61 million compared to $68 million. Reported EBITDA was $58 million compared to $67 million.

Free cash flow increased 6% to $20 million arising from $34 million of net cash provided by operating activities less $14 million of capital expenditures.

SECOND QUARTER 2013 REPORTING SEGMENT HIGHLIGHTS

North America filled beverage case volume was 157 million cases compared to 182 million cases and revenue was lower by 12% at $418 million due primarily to lower case pack water sales, the general market decline in the North American CSD category, increased promotional activity from the national brands and poor weather during the quarter, particularly in Canada.

United Kingdom / Europe ("U.K.") filled beverage case volume was 50 million cases compared to 52 million cases. Revenue was lower by 3% (flat excluding the impact of foreign exchange) at $128 million. On a currency neutral basis, the U.K. had favorable product mix.

Mexico filled beverage case volume was 5 million cases compared to 7 million cases. Revenue was lower by 25% (30% excluding the impact of foreign exchange) at $8 million due primarily to the exiting of low gross margin business.

RCI concentrate volume was 67 million cases compared to 72 million cases. Revenue increased 20% to $10 million as a result of business wins and an increase in average price per case.

Share Repurchase Program

We repurchased approximately 700,000 shares at an average price of $7.99 totaling approximately $6 million during the second quarter in accordance with our share repurchase program.

Our share repurchase program is subject to compliance with the annual limits established by the Toronto Stock Exchange, for up to 5% of Cott's outstanding common shares over a 12-month period commencing on May 22, 2013. Cott's common shares may be purchased under the program in open market transactions and privately negotiated repurchases through either a 10b5-1 automatic trading plan or at management's discretion in compliance with regulatory requirements, and given market, cost and other considerations.

There can be no assurance as to the precise number of shares, if any, that will be repurchased under the share repurchase program, or the aggregate dollar amount of the shares actually purchased. Cott may discontinue purchases at any time, subject to compliance with applicable regulatory requirements. Shares purchased pursuant to the share repurchase program will be cancelled.

Declaration of Dividend

Cott has declared a dividend of CAD$0.06 per common share, payable in cash on September 11, 2013 to shareowners of record at the close of business on August 29, 2013.

Cott intends to pay a regular quarterly dividend on its common shares subject to, among other things, the best interests of its shareowners, Cott's results of operations, cash balances and future cash requirements, financial condition, statutory regulations and covenants set forth in Cott's asset-based credit lending facility and indentures governing the Senior Notes due in 2017 and Senior Notes due in 2018, as well as other factors that the Board of Directors may deem relevant from time to time.

Second Quarter Results Conference Call

Cott Corporation will host a conference call today, August 1, 2013, at 10:00 a.m. EDT, to discuss second quarter results, which can be accessed as follows:

North America: (877) 407-8031

International: (201) 689-8031

A live audio webcast will be available through Cott's website at http://www.cott.com. The earnings conference call will be recorded and archived for playback on the investor relations section of the website for a period of two weeks following the event.

About Cott Corporation

Cott is one of the world's largest producers of beverages on behalf of retailers, brand owners and distributors. Cott produces multiple types of beverages in a variety of packaging formats and sizes, including carbonated soft drinks, 100% shelf stable juice and juice-based products, clear, still and sparkling flavored waters, energy products, sports products, new age beverages, and ready-to-drink teas, as well as alcoholic beverages for brand owners. Cott's large manufacturing footprint, substantial research and development capability and high level of quality and customer service enables Cott to offer its customers a strong value-added proposition of low cost, high quality products. With approximately 4,000 employees, Cott operates manufacturing facilities in the United States, Canada, the United Kingdom and Mexico. Cott also develops and manufactures beverage concentrates, which it exports to over 50 countries around the world.

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