Cott Posts Profit in Q4, Earnings Gained with Help from DS Service Coffee and Water Business

By Staff Writer

Feb 19, 2016 08:15 AM EST

The soda maker Cott Corp announced its earnings results for the fourth quarter ended January 2, 2016. The company posted fourth-quarter adjusted net income of US$3 million, boosted by the growth in the DS Services coffee and water home delivery business.

On a per share basis, adjusted earnings declined to US$0.03 from US$0.37 in the same period last year. The company reported a GAAP net loss attributed to Cott of US$4.4 million for the fourth quarter, compared to income of US$18.7 million in the year ago period.

Quarterly net loss amounted to US$2.9 million, compared to income of US$21.0 million in the prior year period. GAAP loss per share was US$0.04, compared to income of US$0.19 in the previous year period. Pre-tax loss narrowed to US$9.3 million from US$44.2 million in the earlier year period.

Cott posted operating income of US$18 million in the fourth quarter, compared to a loss of US$33.6 million in the prior year period. Gross profit during the period increased to US$221.1 million from US$71.8 million in the corresponding period last year. Revenues, net totalled to US$698.8 million, an increase of 29% from US$543.5 million in the previous year quarter.

Free cash flow, on an adjusted basis, for the quarter amounted to US$72 million and GAAP free cash flow totalled US$63 million. Quarterly non-GAAP EBITDA rose 89% to US$81 million as a result of steady volumes in the company's North American sector and opening of the DS Service unit.

For the year ended January 2, 2016, the soda maker earned non-GAAP net income of US$23 million, down from US$57 million previous year. Non-GAAP earnings per share dropped to US$0.22 from US$0.60 last year.

GAAP net loss was US$3 million, compared to a net profit of US$10 million in the year ended January 3, 2015. Annual GAAP loss per share amounted to US$0.03, compared to a profit of US$0.10 last year. Pre-tax loss narrowed to US$2.1 million from US$45.0 million in the previous year.

Operating income increased to US$99.4 million from US$15.7 million in the previous year. Gross profit for the year amounted to US$895.5 million, up from US$276.5 million last year. Annual revenues, net increased 40% to US$2.94 billion from US$2.10 billion last year.

Bloomberg quoted an analyst at CIBC World Market Inc, Perry Caicco, who said that the company is moving its "business to a model", which concentrates highly on contract beverages making for other firms. Regardless of the lower revenues, this approach will boost the company's gross margin growth rate, Caicco added.

Shares of Cott was at C$14.64, up 7.3% in the Toronto Stock Exchange. The DS Services coffee and water home delivery business boosted the company's earnings in the fourth quarter. The company's board announced a dividend of $0.06 per common share, which is payable on March 24, 2016.

Analysts at Deutsche Bank gave the shares of Cott a "buy" rating on November 22, according to Financial Market News. Financial experts at Zacks Investment Research set a goal price of $12.00 on the company's stock and lifted its shares to "buy" rating from a "hold" rating on January 4.

The company's quarterly result was profited from the growth in DS Service coffee and water business, which was acquired in fiscal 2015. The company remains hopeful regarding the future of its balance sheet.

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