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CANACCORD Genuity Growth ConferenceAugust 10 - 11, 2016
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 expected future operating results of the Company, anticipated market trends, and the execution of the Company’s strategy. The forward-looking statements are based on assumptions regarding 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) changes in estimates of future earnings; (2) expected synergies and cost savings are not achieved or achieved at a slower pace than expected; (3) integration problems, delays or other related costs; and (4) 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 Annual Report in the Form 10-K for the year ended January 2, 2016. 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.
Non-GAAP Measures: The Company routinely supplements its reporting of GAAP measures by utilizing certain non-GAAP measures to separate the impact of certain items from its underlying business results. In this presentation, we use non-GAAP measures such as EBITDA, adjusted EBITDA and adjusted free cash flow and certain ratios using these measures. With respect to our expectations of performance of S&D and Eden as they are being integrated, reconciliations of first year free cash flow accretion and 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 transaction and integration costs, phasing of capital expenditures and date of closing, 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. Since the Company uses these non-GAAP measures 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 business. Any non-GAAP financial measures used by the Company 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 reflects 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. A reconciliation of this non-GAAP measure may be found on www.cott.com.
Safe Harbor Statements
1
Management Attendees
2
Jerry FowdenChief Executive Officer
Jarrod LanghansHead of Investor Relations
Private Label Retail28%
Branded Retail10%
HOD Water35%
Foodservice5%
Convenience Retailing
2%
Distribution1%
Other19%
Total Cott Pro Forma Adjusted EBITDA (1)
(Inclusive of DS Services, Aquaterra, Eden Springs and S&D Coffee and Tea)
3
Cott is a Diversified Beverage Company with a Strong Better For You, Product Mix and Broad Channel Penetration
CSD12%
Juice / Juice Drinks
8%
Sparkling Waters
8%
HOD Water35%
Water7%
Coffee & Tea16%
Other14%
Cott is a leading provider in the direct-to-consumer beverage services industry
The Company operates through two major business segments:
Better For You Beverage Platform: provides direct-to consumer bottled water, coffee, tea and water filtration services to customers across 20 countries. Includes DS Services, Aquaterra, Eden Springs and S&D.
Scale platforms in home and office water delivery, coffee, tea and filtration services
Steady and dependable Home and Office Delivery “HOD” Water category revenue growth
Growing coffee manufacturing, distribution and services channels
Growing water filtration businesses
Fragmented diversified customer base with good retention rates
Traditional Cott: one of the largest producer of beverages on behalf of retailers, brand owners and distributors
Sparkling water and mixer product category growth in the high single digits
Growing contract manufacturing channel with double digit growth
Customer base includes world’s leading brand owners and retailers in the grocery, mass-merchandise and drug store channels
Carbonated Soft Drinks “CSDs” and Shelf Stable Juices “SSJs” continue in decline
Prod
ucts
Chan
nels
___________________________Note: Financials based on FY 2015. Assumes S&D acquisition is completed. Source: Company information, Management estimatesTerms: Home and Office Delivery (“HOD”), Office Coffee Services (“OCS”) and Carbonated Soft Drinks (“CSD”).Other product category includes concentrates, Eden Springs’s filtration services and other. Sparkling waters includes mixers. Other channels include contract packaging, OCS and other(1) 2015 Adjusted EBITDA allocated based upon pro-rata revenues by product category and channel between DS Services (HOD Water, OCS, Water and Other), Traditional Cott (CSD, Juice/Juice Drinks, Sparkling Waters and Other), Eden (HOD Water, OCS, Water and Other) and S&D (Coffee & Tea).
Private Label Retail36%
Branded Retail10%
HOD Water23%
Foodservice8%
Convenience Retailing
4%
Distribution2%
Other17%
Private Label Retail48%
Branded Retail13%
HOD Water22%
Other17%
Private Label Retail70%
Branded Retail15%
Contract Packaging
12%
Other3%
4
CSD16%
Juice / Juice Drinks11%
Sparkling Waters / Mixers10%
HOD Water23%
Water5%
Coffee & Tea20%
Other15%
CSD21%
Juice / Juice Drinks15%
Sparkling Waters / Mixers14%
HOD Water22%
Water5%
OCS4%
Other19%
CSD33%
Juice / Juice Drinks22%
Sparkling Waters
21%
Other24%
Chan
nels
Bett
er F
or Y
ou
Traditional Cott Revenue Cott + DSS Revenue
___________________________Note: Financials based on FY 2015. Assumes S&D acquisition is completed.Other product category includes concentrates, Eden Springs’s filtration services and other. Sparkling water includes mixers Other channels include contract packaging, office coffee services and otherBetter For You platform includes HOD Water, Water, Coffee & Tea and Sparkling Waters / MixersSource: Company information, Management estimates
Cott + DSS + Eden + S&D Pro Forma Revenue
Prod
ucts
CSD + Juices = 55% CSD + Juices = 36% CSD + Juices = 27%Traditional Cott = 100% Traditional Cott = 65% Traditional Cott = 49%
Significant Revenue Diversification Across Products and Channels.
Better For You55%
Other45%
Better For You45%Other
55%
Better For You21%
Other79%
Private Label Retail28%
Branded Retail10%
HOD Water35%
Foodservice5%
Convenience Retailing
2%
Distribution1%
Other19%
Private Label Retail37%
Branded Retail11%
HOD Water33%
Other19%
Private Label Retail70%
Branded Retail15%
Contract Packaging
12%
Other3%
Traditional Cott Adjusted EBITDA Cott + DSS Adjusted EBITDA Cott + DSS + Eden + S&D Pro Forma Adjusted EBITDA
5
___________________________Note: Financials based on FY 2015. Assumes S&D acquisition is completed.Other product category includes concentrates, Eden Springs’s filtration services and other. Sparkling water includes mixers Other channels include contract packaging, office coffee services and otherBetter For You platform includes HOD Water, Water, Coffee & Tea and Sparkling Waters / MixersSource: Company information, Management estimates
CSD16%
Juice / Juice Drinks11%
Sparkling Waters
10%
HOD Water33%
Water8%
OCS6%
Other16%CSD
33%
Juice / Juice Drinks22%
Sparkling Waters
21%
Other24%
Chan
nels
Bett
er F
or Y
ouPr
oduc
ts
CSD + Juices = 55% CSD + Juices = 26% CSD + Juices = 20%Traditional Cott = 100% Traditional Cott = 48% Traditional Cott = 37%
Significant EBITDA Diversification Across Products and Channels.
CSD12%
Juice / Juice Drinks
8%
Sparkling Waters
8%
HOD Water35%
Water7%
Coffee & Tea16%
Other14%
Better For You66%
Other34%
Better For You57%
Other43%
Better For You21%
Other79%
Key Business Performance Metric to Drive Compound Growth in Free Cash Flow
HOD water, coffee, tea and filtration platform top line growth is expected to generate incremental EBITDA and free cash flow
Additional synergy capture across HOD/Services platform.
Traditional business continuing to provide good free cash flow from well invested business and asset base
Beneficial corporate structure (low cash taxes annually 2015 to 2020)
Small overlapping tuck-in acquisitions with the goal of generating incremental EBITDARefinancing of DS Notes in September 2017 is expected to generate significant interest savings ($350 million Notes at 10% creating ~$10 to $20 million of annual interest savings)
6
2016E 2017E 2018E 2019E
Free Cash Flow Drivers
Adjusted Free Cash Flow (2016E – 2019E)
Adjusted Free Cash Flow (1,3)
2016E 2017E 2018E 2019E
Adjusted Free Cash Flow Per Share (2,3)
$135 – $145
$225 - $275 $1.63 – $2.00
$0.98 – $1.05
Source: S&D and Eden Springs materials(1) Adjusted free cash flow calculated as cash flow from operations less capital expenditures, excluding transaction costs(2) Adjusted free cash flow per share calculated as (adjusted cash flow from operations less capital expenditures)/138 million shares(3) 2016E excludes Eden Springs and S&D
($ in millions, except per share data)
We focus on free cash flow generation and anticipate a strong CAGR in growth from 2016 to 2019.Delivered $8 million improvement in adjusted free cash flows Q2 2016 vs. Q2 2015
Stable, strong cash generation from traditional business through 4Cs and growth in contract manufacturing and Value Added Water offsetting PL CSD and SSJ declines
Acquisition Synergy Capture
Traditional Business
Compound Free Cash Flow Growth and Rapid Deleveraging
Shareholder Value Creation
A more diversified higher margin and/or growth-oriented company with annual EBITDA and free cash flow expansion to
drive increased multiple/stock valuation.
7
Better For You Beverage Platform
Growth
• HOD Water, Coffee and Tea Service Businesses of Scale.
• Continue to generate top line organic growth
• Small HOD/OCS tuck-in acquisitions in North America and Europe
Synergy capture and integration across water, coffee, tea and filtration platforms
Free Cash Flow and Rapid
Deleveraging
Cott’s Strategic Vision – A More Diversified Higher Margin and/or Growth Company With Strong Free Cash Flow
Industry-leading beverage manufacturer and distributor focused on private label, contract manufacturing and own brands with revenues of approximately $1.9 billion which provides procurement and scale leverage
Leader in private label shelf stable juices and CSDs in North America with a rapidly growing contract manufacturing business for top tier brand owners and growing positions in attractive segments (sparkling waters and mixers)
Ownership of RC Cola Brand outside North America
Fully integrated concentrate facility with strong R&D capabilities and vertical integration with high service, low-cost production model supplying quality concentrates and exports to customers outside of North America
Customer relationships with over 500 leading retailers in the grocery, mass-merchandise and drug store channels
Low cost philosophy concentrating on Customers, Costs, Capex and Cash resulting in a highly cash generative business
Highly recognized award-winning services (manufacturing excellence, on time in full service, supply chain partner, Grocer Gold)
Traditional Business – Leading Beverage Platform with Extensive Manufacturing Footprint for Private Label, Contract Manufacturing and Own Brands
Strong beverage manufacturing footprint in US, Canada and UK with strategically located beverage manufacturing and fruit processing facilities providing a substantial competitive advantage to service national and super-regional accounts, with high service levels (98%+)and low freight costs.
High quality facilities (SQF / BRC certified) with multiple product and package capabilities offering a diversified product portfolio beyond traditional CSDs and shelf stable juices
Leader in R&D capability in the development and production of value added sparkling waters and mixers
Efficient and highly utilized facilities producing industry leading asset turnover with low capex demands (~2% of revenues)
WrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexhamWrexham
NelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelsonNelson
Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)Sangs (McDuff)
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MEXICO UNITED KINGDOM
UNITED STATES
CANADA
Hot FillCold Fill
Other
PueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPueblaPuebla
MEXICO
Traditional Business Overview Diversified Manufacturing Capabilities
Industry-leading Manufacturer with Global Footprint
___________________________Source: Management
8
Traditional Business - Cash Flow Stability through 4Cs, Contract Manufacturing and Value Added Water Growth
Control capital expenditures
Deliver significant free cash flow
Strengthen customer relationships
Continue to lower operating costs
4C’s Philosophy Drives High Cash Generation
In the second half of 2014, the Cott North America Business Unit initiated a cost savings program “War on Waste” to take costs out of the business.
UK/Europe –Cost Action and Operational Efficiency Program
Phase One – SG&A / Cost Actions
• Head count and benefit reductions
• Manufacturing and operational costs
Phase Two – Warehouse Program
• Third Party Warehouse Investment
• Shunt and shuttle cost savings
Cott North America “War on Waste”
$6 $6 $6 $6
$9 $9 $9
$- $5
$10 $15 $20 $25 $30 $35
2014 2015 2016 2017
$30
Cott North America Contract Manufacturing Volume
21
45
68
70+
0
20
40
60
80
100
120
2013 2014 2015 2016E
Serving equivalent cases (in millions)
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
50+ million case
growth
Value Added Water Opportunity
Capitalize on consumer movement to healthier products such as sparkling and flavored water as well as ice type beverages which are generating high single digit to low double digit growth annually
Resources have been allocated to this beverage category which have retailer support and where the private label segment controls a larger percentage of the market relative to other categories such as CSDs
Target high single to low double digit compound annual volume growth in value added water
Over 25% of North American revenues are generated from the value added water category.
Building Value Through Cost Down Initiatives – Traditional Business
In the second half of 2015, the Cott UK/Europe Business Unit initiated a cost savings program to take costs out of the business and drive operational efficiencies.
2015 Revenue: $724mm (71%)
Water Delivery Services(1) Office Coffee Services (“OCS”)
2015 Revenue: $121mm (12%)
Filtration Services
2015 Revenue: $149mm (15%)
Retail
2015 Revenue: $27mm (2%)
2015 Revenue(2):$1,021mm
DS Services - A Leading North American Direct-to-Consumer Services Provider Across HOD Water, Office Coffee and Filtration Services
10
Water Delivery Services
71%
Retail15%
OCS12%
Filtration2%
___________________________1. Other revenue included in Water Delivery Services revenue2. Excludes Aquaterra revenueSource: Company information
30.4% 30.9%
32.0%
32.1%
0.5%
2012 2013 2014 2015
32.6%
Highly-recognized brands with long lived heritages in both HOD water and OCS
Largest or second-largest HOD water provider in 39 of 43 largest cities
Offers customers products under other leading brands, which include:
Ferrarelle and Voss water, Starbucks Coffee, Keurig Green Mountain, Caribou Coffee, Peet’s Coffee & Tea and Mars Alterra
Customer growth combined with improved consumption and strong pricing driving HOD volume/revenue growth
#1
#1
#1
#1#1
#1
#1#3
#1 #2
#1
#1 #2
#1
#2
#1#3
#2
#2
#1
(1)
Leadership in Regional BrandsDSS HOD Revenue share(HOD Bottled Water Revenue Only)
53rd week impact
29.2% 29.5%
30.6%
30.7%
0.4%
2012 2013 2014 2015
31.1%
DSS HOD Volume share
(HOD Bottled Water Volume Only)
53rd week impact
___________________________Source: BMC and Cott management
11
DS Services - Share Growth from Market Leading Brands with Strong Regional Heritage
DS Services – Strong Organic New Customer Growth 2016 YTD
• Significant Q2 2016 incremental growth in DS Services organic new customer sign-ups
• Increased investment in growth of about $4 million in Q2 2016 behind new DS customers
• High level of NET new DS Services organic customer sign up’s +30,000 in Q2 and +50,000 year-to-date
• Increase conversion and sign up rates seen across all sources – Marketing Sales, RSR’s, Internet and In Store Retail Booths
• Cost per new customer approximately $150 to $200 (varies by marketing channel/season)
• Average customer life per new residential HOD water customer of ≈ 4.1 years
Source: Cott Management
0
5
10
15
20
25
30
35
2015 2016
Q2 Organic Customer Nets(adds less quits)
2015 2016
Q2 Organic New Customer Additions
(water coolers, brewers & filtration)
+36% vs. Q2 2015
In thousands
~78
~107
~7
~30
In thousands
13
Aquaterra – Acquisition in January 2016 of Canada’s Oldest and Largest Home and Office Water Delivery Business
First year objective to implement all DS Services systems and processes
Synergies planned to be phased in 2017-2019
Expansion of DS Services revenue program into Aquaterra phased over 2017/2018
Retail Booth Program
New Customer Acquisition Program
AquaCafe (R) Rollout
Potential Synergistic Tuck-ins Acquisitions from 2017
Integration going to plan and tracking in line with acquisition model. 2016 First Half revenues of C$41 million
Eden Springs – Acquisition in August 2016 of Europe’s Leading Direct-to-Consumer (Home and Office) Water and Office Coffee Services Provider
2015 Revenue: €238mm ($266mm)
Water Services Office Coffee Services
2015 Revenue: €70mm ($77mm)
Filtration
2015 Revenue: €22mm ($24mm)
Retail
2015 Revenue: €37mm ($41mm) ___________________________Note: Figures converted at EUR:USD rate of 1.11 Source: Company information
14
2015 Revenue:
€367mm ($408mm)
Water Services
65%
Office Coffee
Services19%
Retail10%
Filtration6%
Eden Springs - Expands Direct Route-to-Market Business –With High-Quality and Loyal Customer Base and Low Customer Concentration
15
Key Highlights
Manages relationships with >600k offices and >200k homes
Client retention reached a record level of 87%
Average length of customer relationship is over 7.5 years
Top-10 clients aggregate to less than 5% of total sales
Installed base of ~1 million water coolers and coffee machines
Highly Diversified Customer Base
EBITDA By Geography(1)(2)
___________________________(1) Excludes corporate allocations. Adjustments to EBITDA include acquisition integration cost, restructuring charges, business development and establishment costs (2) Includes Baltics, Portugal and SpainNote: Figures converted as EUR:USD rate of 1.11. Source: Zenith International 2015, Euromonitor
Water Services Office Coffee Services Filtration
Fragmented market presents multiple potential tuck-in acquisition opportunities
Highly fragmented market provides tuck-in acquisition and cross sell into water customer opportunities
Small, but growing market with only 1 other large market participant
On-trend category with health & wellness and environmental focus
Consumers increasingly expecting high-quality, premium brand coffee at work
Strong growth and creating highly synergistic opportunity
European Category Size: ~$1.1bn European Category Size: ~$1.8bn European Category Size: ~$280mm
United Kingdom
18%
Israel17%
France15%
Russia9%
Switzerland8%
Germany7%
Poland6%
Nordics6%
Netherlands5%
Other(2)
9%
'13A '14A '15A '16E '13A '14A '15A '16E
16
State-of-the-Art Production Capabilities
Direct Route & Third-Party DistributionThird-Party Distribution
Distribution Platform
Coffee Production Differentiators
Tea Production Differentiators
Hyper-Efficient Thermal Transfer
Custom Coffee Engineering
Cupping & Q Graders
Superior Sourcing
Tea Blending Systems
Dedicated Laboratory
3rd Party Distribution sales accounted for ~80% of total
2015 revenue
Direct route sales accounted for ~20% of
2015 revenue
___________________________Source: Company information
Complementary supply chain with distinct coffee and tea manufacturing capabilities and direct-to-consumer delivery infrastructure
S&D Segment Growth
TeaCoffee
Four production facilities: two dedicated coffee facilities, one tea facility and one extract and ingredient facility
Production capacity: 130-150 million pounds of coffee and 40-50 million pounds of tea per year
Maintains stringent quality standards and is only ISO 9001:2008 certified roaster in U.S.
Attractive Synergy and Distribution Opportunity with DS Services OCS Business
S&D Coffee and Tea – Signed Purchase Agreement with Expected August 2016 Closing
Industry / Channel Growth
Foodservice Coffee (1) Tea (1)
S&D has approximately 20% share of the continuously growing foodservice channel
S&D is the largest supplier of fresh-brewed iced tea to the U.S. foodservice industry with forecasted tea sales growth of ~5%
outpacing that of the broader tea industry
S&D Coffee and Tea - Attractive End-Markets with Positive Growth Outlook
17___________________________Source: Company information, Euromonitor International, Mintel Group Ltd.(1) Foodservice coffee annual volume growth; tea sales annual growth
Adds a leading custom coffee roaster and services company (expanding existing Office Coffee Operations) serving foodservice, convenience retail, gas, hospitality, distribution and office coffee services customers
Diversified customer base across a variety of end-markets (multi channel)
Longstanding customer relationships (10+ years for top ten customers)
Good channel mix (top 5 customers include distributors, restaurants and convenience retailers)
Over $550 million of estimated 2016 revenues
3.5%
3.8% 3.8%
3.5%
3.4%
2016E 2017E 2018E 2019E 2020E
3.9% 3.9%
3.6%
3.5%
3.4%
2016E 2017E 2018E 2019E 2020E
18
Eden geographic presence
BWC water position(3)
Eden4%
Other89%
Eden20%
Company A
3%Company
B3%
Next 513%
Other61%
Company A6%
DS Services
~31%
Nestle~30%
Smaller Competitors
~39%
DS Services~3%
Remainder of Top 5~17%
Smaller Competitors
~80%
DS Services – U.S. Market Leader
HOD Water(1) OCS(2)
Eden Springs – European Market Leader
HOD Water OCS
S&D has approximately 20% share of the continuously growing foodservice channel and is the largest supplier of fresh-brewed iced tea to the U.S. foodservice industry with four production facilities (two coffee, one tea, and one extract and ingredient) serving the U.S. with national and regional route distribution
S&D Coffee and Tea – U.S. Leader Aquaterra – Canadian Market Leader
Aquaterra is Canada’s oldest and largest HOD Water business with a leading position, over 70,000 customers and over C$70 million in annual revenues.
___________________________Note: 2015 market shares based on management estimates.(1) Source: Beverage Marketing Corporation. Category size of $1.7 billion reflects only bottled water and excludes items such as cooler rent, cups, etc.(2) Source: ‘Coffee sales rise, so do costs: State of the Coffee Service Industry’, Automatic Merchandiser, September 2015.Source: Company information, Management estimates(3) BWC represents total bottled water coolers but is not a market in and of itself as the HOD water business consists of coolers, bottled water as well as other products such as case pack water and single serve products
Cott’s Extensive Better For You Beverage Services Platform - Cott is a Leading HOD Water, Coffee, Tea and Filtration Services Provider Across 20 Countries
DS Services Has Been Fully Integrated
Consolidated back-office to drive cost efficiencies
Combined procurement operations and leveraged increase scale
Vertically integrated with Cott’s North American business
Improved customer service and call center response time
Retained the key leaders of DS Services’ management team
Re-initiated bolt-on acquisition strategy
19
Integration and Synergies to Drive Value Creation Across Services Platform
Integration Philosophy
Focus on integrating critical control functions while maintaining management autonomy
Maintain experienced management team Continuity and focus
Market knowledge
Reduced discontinuity risk
Focused 3 year incentive plan
Leverage SG&A/Scale across business Service supplies and indirect procurement
IT platforms, systems and back office processes
Common / best practices
Synergy capture of hard costs and cross sell Vertical supply of coffee and tea
Overlapping depot distribution
Procurement synergies
Eden and S&D significant synergies, estimated at $22 million to be realized over 3 - 4 years
4.8x
Low 3x
Cott PF 2017E 2018E 2019E2016 Cott 2019PF
20
___________________________Source: Company information(1) Adjusted free cash flow calculated as cash flow from operations (excluding acquisition, integration and transaction costs) less capital expenditures. Calculations incorporate S&D transaction which is expected to close August 2016.(2) Expected debt balance at closing of S&D Coffee and Tea projected for August 2016 less expected cash balance divided by combined 2015 adjusted EBITDA.
Proven track-record of quickly deleveraging after acquisitions
Significant free cash flow conversion allows for accelerated deleveraging
Estimated 2019 adjusted free cash flow of $225 million to $275 million
Anticipated leverage of low 3x by 2019 leaves ample debt capacity to execute tuck-in acquisitions
($ in millions)
Adjusted Free Cash Flow (1) Pro Forma Net Debt to Adj. EBITDA (2) (2016E – 2019E)
$135 - $145
$225 - $275
Cott Corporation - Strong Adjusted Free Cash Flow and Rapid Deleveraging