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- Cott Profile
- Private Label Refocus Plan
- Performance Metrics
- Valuation Upside
- Q&A
Agenda
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Driving Fundamental Changes SinceQ2 2008
Sales increases on Fx-neutral basis over thepast six months(1)
EBITDA margins have nearly doubled(1)
Gross margins have increased 490 bps(1)
Cash flow and successful equity offering drivefurther debt reductions (net debt reduced from
over $400M to below $300MM by year end)
___________________________1. First half 2009 compared to first half 2008
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21
38
1,598
1,188
340
North
Amer ica
UK Mexico RCI & Other Total Cott
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#1 Private Label CSD Producer in the US, UK, Canada and Mexico
$1.6 billion in total sales (2008)
+/- 60% share of retail brand CSDs sold in North America & UK
Substantial R&D capability and vertical integration with own concentrate production
Concentrate sales to over 50 countries outside of core markets
Leading Producer of Retailer Brand CarbonatedSoft Drinks ( CSD )
Sales (1) EBITDA (1,2)
2Q09 LTM Sales and EBITDA Breakdown (USD $MM)
___________________________1. RCI & Other includes Asia business.2. Excludes restructuring charges, goodwill impairments and asset impairments.
26
110
133
(7)4
North
Amer ica
UK Mexico RCI & Other Total Cott
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With Global Scale, Vertical Integration andStrong Value-Add for Retailers
9 bottling facilities in the U.S.
5 bottling facilities in Canada
3 bottling facilities in the UK
2 bottling facilities in Mexico Vertically-integrated concentrate facility in
Columbus, GA
Offers customers dedicated, full-service,vertically-integrated, low-cost production
Private label enhances customer loyaltyand retailer profitability
High product quality & blind tastepreference scores
Proven high quality service and supply
chain
FortWorth
San Antonio
San Bernardino
Sikeston
St. Louis
ColumbusBlairsville
Concordville
Wilson
Tampa
Surrey, BC
Calgary, AB Mississauga, ON
Point-Claire, QC
Scoudouc, NB
North American Manufactur ing Network
Global Scale
Favorable Environment for Private Label
Current economic environment drawing
consumers to private label Retailers increasing their focus on private
label given current economic environment
Strategic Importance to Retailers
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- Cott Profile
- Private Label Refocus Plan
- Performance Metrics
- Valuation Upside
- Q&A
Agenda
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Our Efforts to Refocus on Private Label areProceeding Across Multiple Fronts
Implementingour 4 Cs
StrongerBalance Sheet
InternationalImprovements
FavorableEnvironment for
Private Label
Mission: To be the lowest cost,preferred supplier of a broad range ofhigh-value and innovative private labelsoft drinks to our retailer partners.
Focus: 4 Cs - strengthen
customerrelationships,reduce operating costs,
control capital expenditures,all to improve cash flow.
Enablers
North AmericaTurnaround
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We Remain Focused on the 4 Cs
Customer relationships and servicestandards are strongest in recent years (over
98% on-time, in full service levels)
Capex reduced to 2.5% of sales(1)
1H09 SG&A expense reduced to below 9% ofnet sales; top quartile of peers (1)
Cash management teams have reduced DSOsby 4 days and inventories by 2 days (2)
___________________________1. Operational key indicators YTD / full year forecast2. 2Q09 vs. 2Q08
Implementingour 4 Cs
StrongerBalance Sheet
International
Improvements
FavorableEnvironment forPrivate Label
North AmericaTurnaround
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Performance Has Improved MostSignificantly in North America
Implementingour 4 Cs
StrongerBalance Sheet
International
Improvements
FavorableEnvironment forPrivate Label
Stabilized customer relationships multipleretailers expanding product range
Over 600 bps gross margin improvement (2)
SG&A expense reduced approximately $14M(2)
Above 4% revenue growth on Fx-neutralbasis(1)
North AmericaTurnaround
___________________________1. See GAAP to Non-GAAP reconciliation posted on the Investors - Financial Reports section of
Cotts website at www.Cott.com2. First half 2009 compared to first half 2008
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Internationally, We Are Seeing Stabilization andEven Improving Trends In Some Markets
Progressively improving volume trends over
the past three quarters
In the UK, July private label share is athighest point in last 12 months; (2) product mix
improving
Mexico is trending towards local cash break-even; expanding with key customers
International gross margins up 200 bps(1)
Implementingour 4 Cs
StrongerBalance Sheet
International
Improvements
FavorableEnvironment forPrivate Label
North AmericaTurnaround
___________________________1. Q2 2009 vs. Q2 20082. July UK scanner data per Nielsen
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We Are Seeing Opportunities For Growth InPrivate Label In Some Channels
As customers shift to value, retailers are
putting more focus on private label
Retailer share of PL CSDs sold on promotionis up 20%(1) vs. prior year in Nielsen grocery
channel
Strong private label penetration enhancingoverall category profitability
Private label gains predicted to last well pasteconomic recovery
Implementingour 4 Cs
StrongerBalance Sheet
International
Improvements
FavorableEnvironment forPrivate Label
North AmericaTurnaround
___________________________1. Nielsen U.S. grocery channel, YTD 8/9/09
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Balance Sheet Is Much Stronger
Leverage reduced to 2.4X throughoperational cash generation and successful
secondary equity offering
Over-subscribed secondary equity offering,trading above offer price
Amended ABL provides additional flexibility
With free cash flow generation and proceedsfrom secondary equity offering, $120M debt
reduction since Q2 2008
Implementingour 4 Cs
StrongerBalance Sheet
International
Improvements
FavorableEnvironment forPrivate Label
North AmericaTurnaround
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- Cott Profile
- Private Label Refocus Plan
- Performance Metrics
- Valuation Upside
- Q&A
Agenda
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First Half 2009 Performance ConfirmsImprovements Are Now In Place
Summary P&L
(in USD MM)
June 27, 2009 June 28, 2008
Revenue, net 805.8$ 856.2$
Cost of sales 674.3 758.4
Gross profit 131.5 97.8% of Sales 16.3% 11.4%
S&A Expense 69.8 97.3% of Sales 8.7% 11.4%
Restructuring,
impairments & Other 5.1 7.2
Operating income
(reported) 56.6 (6.9)
For the Six Months Ended
$75MM Fx drag on top line;
otherwise stable
GM improvement onoperational savings
Permanent SG&A reductions;run-rate is new normal
Significant EBITDA & cashflow improvement used to
reduce debt
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More Benign Commodity Environment Coupledwith Forward Buying Program
Continuing with Forward Buying Programs on Key Commodities
With the majority of our 2009 aluminium and HFCS
With more than half of our 2010 aluminum(1)
79%
21%
Cott 2008 Fixed vs.Variable Costs (2)
`
Majority of variable costs arecommodities, including:
Aluminium HFCS
PET plastics
Commodity cost drivers:
underlying commodity costs(more volatile, market-driven)
tolling / conversion costs(less volatile, contract-driven)Variable
Costs
FixedCosts
___________________________1. As of end of Q2 20092. Measured as a percentage of Sales
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Significant Improvement in Leverage andCapital Structure
___________________________1. Based on LTM EBITDA of $133 million2. Actual June ABL Revolver balance of $66.6 million - $47.0 million of net equity proceeds3. Assumes 2Q09 ending balance of $300.9 + $47.0 million of additional equity
Capitalization AmountNet EBITDAMultiple (1)
Cash $13.2
ABL Revolver 19.6 0.1xOther Secured Debt 28.6 0.2x
Total Sr Secured Debt $48.2 0.3x
8% Senior Sub Notes 269.0 1.8x
Other Debt 2.9 0.0x
Total Debt (3) $320.1 2.4x
Minority Interest 17.2
Equity 348.9
Total Capitalization $685.4
PF Capitalization as of 6/27/2009
($ in millions)
(2)
(3)
Below Industry Average Leverage
Stronger Balance Sheet Creates Value for Equity Investors
Improved responsiveness to opportunities
Heightened customer confidence
Enhanced ability to manage uncertainties
Elimination of liquidity concerns
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- Cott Profile
- Private Label Refocus Plan
- Turnaround Drivers
- Valuation Upside
- Q&A
Agenda
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Compared To Our Peers, We See ValuationUpside
1-yr Forward EV / EBITDA Multiples
While modest multiple discount to branded peers is expected, current multiple does notreflect benefits of refocus plan or balance sheet improvements
Multiple discount vs. peer group has increased from 8% to 32% since 3Q07
Peer Group comprised of Coca Cola Enterprises, Coca-Cola Consolidated, National Beverage, Pepsi Bottling Group and Pepsi Americas,
8.4x7.6x
8.9x7.9x
7.6x
8.2x
6.4x
8.1x
5.8x
7.4x
6.5x6.6x
4.9x
7.0x
4.5x
6.7x
4.4x
6.6x
5.6x
7.6x
5.3x
7.8x
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 9/3/2009
Cott Peer Group
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Current Valuation Does Not Fully ReflectProgress Achieved
Top line growth
Vulnerability to national brand
promotions
Perceived uncertainty in ourcustomer base
Common Questions / FactorsAffecting Valuation
Margins are our current toppriority, while we lay foundations
for future growth
Our products are of increasing
importance to retailer CSDmargins / profitability
We are used to earning ourbusiness and we expect changes
wil l be manageable
Our View
Strength of balance sheet
Signif icant excess ABLavailability, over-subscribedsecondary equity offering,
improved cash flow
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We Remain Focused On Our Opportunities
Top Line
MarginsCash Generation
Further reductionsin SG&A &operational focus
Less adverse Fx
Opportunities tofurther improveproduct mix
20MM cases ofshort to medium-term opportunityidentified in North
America
Continuedinternationalimprovements
Easing of Fx dragon revenue
Ongoing focus onworking capital
Cash proceedsused to reduce debt
Reduced interest
cost on lower debtbalances vs. prioryear
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Summary
Private Label
Refocus &Operational
Improvements
AddressedShort-TermLiquidity
Strengthened
Balance Sheet,Focused on
Opportunities
AttractiveValue
A Refocused Cott With Strong Balance Sheet Represents An Attractive Value
Refocus plan and operational improvements have proceeded as indicated
Stronger balance sheet and liquidity de-risks the model and unlocks opportunities
Current valuation is not commensurate with progress or potential
Management team focused on execution and building future growth
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- Cott Profile
- Private Label Refocus Plan
- Performance Metrics
- Valuation Upside
- Q&A
Agenda
N G R ili ti f 2009
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Non-Gaap Reconciliation for 2009Barclays Back to School Conference
Cott Corporation
Back to School Presentation
EBITDA Calculation
LTM H1 H1 Full Year
FY 2008 Jun-09 Jun-08 FY 2008
Net Income (loss) (46.1) 53.6 (23.1) (122.8)
Income tax provision (benefit) (36.8) (11.6) 5.7 (19.5)
Interest expense 31.7 15.1 15.7 32.3
Depreciation and amortization 73.2 33.3 40.8 80.7
EBITDA 22.0 90.4 39.1 (29.3)
Restructuirng 1.6 1.6 6.7 6.7Asset impairments 40.1 3.5 0.4 37.0
Goodwill impairments 69.2 69.2
Adjusted EBITDA 132.9 95.5 46.2 83.6