Cott Corp. (COT) Misses Q1 EPS by 11c, Revenues Beat; Offers Low-End Range of FY19 Revenue Outlook

Cott Corp. (NYSE: COT) reported Q1 EPS of ($0.14), $0.11 worse than the analyst estimate of ($0.03). Revenue for the quarter came in at $574.1 million versus the consensus estimate of $563.88 million.

• Excluding the soft drink concentrate production business and RC Cola International division ("Cott Beverages LLC"), which was sold on February 8, 2019, gross margin as a percentage of revenue was flat at 49.9%. The fixed cost leverage from revenue growth was offset by the negative impact of foreign exchange as well as incremental operating costs to support increased revenue growth.
• Excluding Cott Beverages LLC, SG&A as a percentage of revenue was 47.8% compared to 47.6%.
• Interest expense was $19 million compared to $21 million as the prior year's debt reduction benefited the full quarter of 2019 compared to only two months in the first quarter of 2018.
• Reported net loss and net loss per diluted share were $20 million and $0.14, respectively, compared to reported net income and net income per diluted share of $5 million and $0.03, respectively. Adjusted EBITDA was $63 million compared to $64 million as the growth in revenue was offset by the negative impact of approximately $2 million of foreign exchange and increased operating costs.
• Net cash provided by operating activities of $24 million, less $24 million of capital expenditures, resulted in nil free cash flow, or $4 million of adjusted free cash flow (adjusting for the items set forth on Exhibit 7), compared to adjusted free cash flow of $22 million in the prior year due to the timing of working capital as well as a benefit from other income recorded in the prior year.

"I am pleased with the revenue growth we realized in the first quarter with the continued strong growth in our Route Based Services business and the performance in our Coffee, Tea and Extract Solutions business," commented Tom Harrington, Cott's Chief Executive Officer. "With one quarter complete, we remain committed to our financial targets for 2019," continued Mr. Harrington.

GUIDANCE:

Cott Corp. sees FY2019 revenue of $2.4 billion, versus the consensus of $2.42 billion.

• Cott continues to target full year 2019 adjusted free cash flow of over $150 million (when excluding acquisition, integration and other one-time cash costs).
• The targets reflect the sale of Cott Beverages LLC which represented over $80 million in annual revenue, as well as expected foreign exchange headwinds of approximately 1% on full year revenue based on exchange rates as of the end of the first quarter.

For earnings history and earnings-related data on Cott Corp. (COT) click here.

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