2Safe Harbor Statements 4/11/2017 7:27 AMSafe Harbor StatementsForward 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 the Company's expected 2014 results, expected future operating results of Cott, DS Services and the combined company, and the potential impact the acquisition will have on the Company. 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 and cash flows; (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; (4) retention of customers and suppliers; (5) the cost of capital necessary to finance the transaction; and (6) 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 on Form 10-K for the year ended December 28, 2013 and its quarterly reports on Form 10-Q, as well as other periodic reports filed with the securities commissions. 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: Cott routinely supplements its reporting of GAAP measured by utilizing certain non-GAAP measures to separate the impact of certain items from its underlying business 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 transaction with DS Services. The non-GAAP financial measures described above 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 reflect 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 these non-GAAP measures may be found on The inability to access information with respect to DSS Group makes a reconciliation of 2014 expected DSS Group and pro forma EBITDA (and measures utilizing 2014 expected DSS Group and pro forma EBITDA) impracticable, and as a result, reconciliations for such items have not been provided.Color Scheme2
3Management Presenters 4/11/2017 7:27 AMManagement PresentersJerry FowdenChief Executive OfficerColor SchemeJay WellsChief Financial OfficerJerry introduce himself and the team, mention tenure at the firm3
44/11/2017 7:27 AMAgendaThe New Diversified Cott – Balanced Business Model for Superior Cash Flow GenerationColor SchemeLegacy Cott Business – One of the World’s Largest Producers of Beverages on Behalf of Retailers, Brand Owners and DistributorsDS Services – Largest National Presence in Home and Office Delivery of Bottled Water and Office Coffee ServicesFinancial Highlights of the New Balanced Business ModelAppendix4
5Color SchemeThe New Diversified Cott – Balanced Business Model for Superior Cash Flow Generation
6The New Diversified Cott 4/11/2017 7:27 AMThe New Diversified CottNew platform provides a balanced business model for superior cash flow generationHighlightsPro Forma FinancialsLess exposure to large format retailers with largest customer exposure reducing to below 18% of salesCarbonated soft drink (“CSD”) concentration drops below 20% and overall Private Label concentration drops below 50%Introduces significant presence in growing “Good‐for‐You” beverage categoriesSubstantial cash flow generationStrong focus on rapidly deleveragingContinuation of staple dividendColor Scheme~~~~Diversified Beverage PlatformRetail Private LabelOwn BrandsContract ManufacturingDirect-to-ConsumerLeading private label CSD and juice manufacturerLong-standing relationships with top retailersExtensive manufacturing facilitiesHigher margins through leveraged fixed costsBenefits of foodservice contractsHigher price point for value brandsMarket leading water brandsSignificant growth opportunitiesCapitalize on outsourcing trendsIncrease existing asset utilizationReduces exposure to commodity volatilityRequires lower working capital investmentsLeading player in Home Office Delivery (“HOD”) WaterLeading player in Office Coffee Services (“OCS”)Growing Filtration businessOne of the largest national production and distribution networks in North AmericaAbility to add volume onto existing operations with minimum incremental costsSource: Wall Street research.Adjustments to EBITDA for Cott include: Restructuring and asset impairments, bond redemption and other financing costs, tax reorganization and regulatory costs, acquisition and integration costs, and Aimia EBITDA. Adjustments to EBITDA for DSS include: other expense (income), stock option compensation expense, acquisition adjustments, transaction and refinance expense, other adjustments, adjusted ESC fee, adjusted business exit costs and management fee to sponsor.
7Color SchemeLegacy Cott Business – One of the World’s Largest Producers of Beverages on Behalf of Retailers, Brand Owners and Distributors
8Leading Beverage Platform –Extensive Manufacturing Footprint for Private Label, Contract Manufacturing and Own BrandsBusiness OverviewDiversified Manufacturing CapabilitiesIndustry-leading beverage manufacturer and distributor focused on private label, contract manufacturing and own brands with revenues in excess of $2 billion which provides procurement and scale leverageLeader in private label shelf stable juices and CSD in North America with a rapidly growing contract manufacturing business for top tier brand owners and growing positions in attractive segments (sparkling waters, energy, ready-to-drink alcohol and sports drinks)Ownership of Royal Crown Cola International (“RCCI” or “RC Brand”) outside North AmericaFully integrated concentrate facility with strong R&D capabilities and vertical integration with high service, low-cost production model supplying high quality concentrates (blind taste tests) and exports to approximately 50 countriesCustomer relationship with over 500 leading retailers in the grocery, mass-merchandise and drug store channelsLow cost philosophy concentrating on Customers, Costs, Capex and Cash resulting in a highly cash generative business with annual FCF of +/-$100 million and a solid balance sheetHighly recognized award-winning services (service awards from Walmart, Publix, and Walgreens in North America, as well as Grocer Gold Award in UK)MEXICOUNITED KINGDOMUNITED STATESCANADAHot FillCold FillOtherPueblaColor SchemeIndustry-leading Manufacturer with Global FootprintStrong beverage manufacturing footprint in US, Canada and UK with 34 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 CSDsEfficient and highly utilized facilities producing industry leading asset turnover of 1.5x with low capex demands (2–3% of revenues)Source: Cott management8
9High Quality Facilities with Diversified Capabilities Product offering beyond traditional shelf stable juices and CSDsDiversified manufacturing capabilitiesCarbonated soft drinks (natural and preserved)100% shelf stable juices and juice-based productsClear, still and sparkling flavored waters and new age beveragesEnergy products, shots and liquid enhancersSports productsDilute-to-Taste (DTT) and beverage concentratesReady-to-drink teasReady-to-drink alcohol beveragesFreezablesPowdered hot chocolate and coffeeCreamers/whiteners malt drinksCerealsSolutions in every major beverage segmentCSDWatersEnergyLiquidenhancersTeasSportsdrinksJuices,cocktails& drinksSmoothiesRTD AlcoholJerry Fowden:Another way of looking at this diversification of product, package and channel is to look at the diverse range of packaging options we are able to manufacture.Here you can see large 24oz cans of tea, liquid enhancers and shots,freezable and pouches all of which are new capabilities introduced or acquired over the last 36 months.Now while not all these differing packages can be made in every palnt our aim is to steadily and progressivly over time diversify our offering such that we become less depandant on 2 liter PET and 12 oz canned soda as well as family size hot fill fruit juice.Our goal is to run those areas of our business tightly and generate or extract cash such that part of this cash can be put to use over time further diversifying our product, package and channel mix.Package sizes and capabilitiesShots &SodaStreamJubblies &FreezablesLunchboxcartonPETAluminumEnhancersOverwrapsSports capPouch8oz8oz128oz24oz9
10Royal Crown Cola International (RCCI) Ownership of RC Brand Outside North America-Supply of Concentrates to Approximately 50 CountriesRoyal Crown Cola International (RCCI)Selected productsShip concentrate to approximately 50 countriesMeaningful brand penetration in the Philippines and Israel with strong concentrate position in multiple marketsHigh gross margins of ~40%Ready-to-drink 8oz volume equivalents of 257mm cases made from RCCI shipped concentrateJerry Fowden:Now earlier we mentioned our ownership of the RC Brand outside North America, this small business know as RCCI or Royal Crown Company International sells concentrate to over 50 countries generating revenues of $37 million with a 40% gross margin thus delivering $9 million of EBITDA with almost no capital demand hence its almost all free cash flow.RCCI’s business is mainly in the emerging markets as shown on the map & pie chart and additionally it has demonstrated good growth over the past 3-4 years.Global customer baseGeographic mix(1)(1) Geographic mix data represents % of 2013 revenue.10
11Concentrating on customers, costs, capital expenditure and cash flow 4/11/2017 7:27 AMCott Follows Its Low Cost Philosophy1Strong customer relationships2Low cost operatorHigh service levels and customer recognition2014 Own-Label Supplier of the Year – Grocer Award, U.K.Recognized for service in 2014 by both Publix and Walgreens2014 Walmart Top 10 Private Brand Supplier2011 Supplier of Year Collaboration Award - Walmart USABest-in-Class SG&A Leverage 2013 – Non-Strategic SG&A / Revenue (Legacy Cott)Color Scheme3Stringent capital controls4Focus on free cash flowLegacy Capex as a % of revenue (Capital Expenditures of $50-$55 million per year)Top tier 2013 cash flow yield(1) vs. top 4 peers(2) (Legacy Cott)International BottlersBrand OwnersValue Foods /Private LabelConcentrating on customers, costs, capital expenditure and cash flowSource: Cott management.(1) Cash flow yield calculated as (Adjusted EBITDA – capex) / equity market capitalization as of 12/28/13.(2) Peer A: ConAgra Foods; Peer B: Pinnacle Foods; Peer C: TreeHouse Foods; Peer D: B&G Foods.
12Significant Growth Potential in Contract Pack Limited commodity exposure drives stable margin contributionProvides gross margins that are consistent with Cott’s historical ratesLower working capital requirements and improves line efficiency ratesCapitalize on outsourcing trends by brand ownersIncrease asset utilizationCo-Pack AdvantagesExpanded North America co-pack cases from ~18 million to ~34 million from the first nine months of 2013 to the first nine months of with two additional significant contracts signed for 13 – 18 million 8oz equivalent cases with shipments to begin at the end of Q and beginning of QRecent customer winsReady-to-drink TeasHot Fill DrinksShelf-stable JuiceReady-to-drink Alcohol CanEnergy DrinksCSD Food ServiceColor SchemeRecent WinsPerformance* Excludes volume from Aimia acquisition for which contract manufacturing represents 35% of sales as projected volume is based on organic growth only.(1) Management has established a three year goal ( ) of growing our contract manufacturing business by million 8oz equivalent cases. This chart depicts the actual volume recorded in 2013 as well as the projected total contract manufacturing volumes over the next three years as this incremental growth is incorporated into our business.OpportunitiesCott’s Current Share of Co-Pack Market Within Cott’s CapabilitiesCott’s Share of Co-Pack MarketWithin Cott’s Capabilities by 2016Targeting million in 8oz equivalent cases in contract packaging volume over next three years12Note: Opportunities section is the result of Cott Management’s estimates based upon Cott’s manufacturing capabilities as of the end of 2013 as well as the markets in which Cott operating in.
13Color SchemeDS Services – Largest National Presence in Home and Office Delivery of Bottled Water and Office Coffee ServicesDS Services Overview
14DS Services Overview – A Leading Direct-to-Consumer Services Provider Water Delivery ServicesOffice Coffee ServicesColor SchemeRevenue $966 million LTM as of 9/30/14LTM 2014 Revenue: $665mm (69%)LTM 2014 Revenue: $145mm (15%)RetailFiltration ServicesLTM 2014 Revenue: $132mm (14%)LTM 2014 Revenue: $24mm (2%)Source: DSS management.Note: LTM revenue as of 9/30/2014.
154/11/2017 7:27 AMDS Services is a Scale Business in Expanding Categories and Improves Cott’s Overall Growth ProfileExpanding categoriesHOD Water IndustryHOD Water Volume (gallons in millions)CAGR: 2.0%Total bottled water volumes show consistent growth:HOD accounted for 12.1% of bottled water volumeIncreased consumption driven by focus on health and water safetyPer capita bottled water consumption reached a historical high of more than 32 gallons in 2013Growing at 4.0+% since 2010Color SchemeCAGR: 3.3%U.S. Office Coffee Services (“OCS”) IndustryNet Revenues ($ in billions)Office coffee services growth driven by:An increase in the number of workplaces offering beverage programsAn increase in the number of employees at these workplacesStrong demand for single-cup among consumersThe premiumization of offeringsCAGR: 5.1%Source: Beverage Marketing Corporation, The Automatic Merchandiser.
16DS Services – Leadership Position in Attractive Growth Categories 4/11/2017 7:27 AMDS Services – Leadership Position in Attractive Growth CategoriesMarket Leader in Growing Water and Coffee Services CategoriesAEstablished National Direct-to-Consumer Distribution Network – Diverse Customer Base and Service FocusBMarket Leader in Brands with Strong Regional HeritageCColor SchemeAttractive Growing Financial ProfileDAMarket Leader in Growing Water and Coffee Services IndustriesBEstablished National Direct-to-Consumer Distribution Network90% coverage of the US populationCustomer density enables low cost operationsGrowing HOD water, OCS and water filtration marketsUnrivaled infrastructure consisting of ~2,100 routes stemming from ~180 depots and 28 manufacturing facilitiesHighly diversified customer baseVolume(1) CAGR 2010 – 2013Water, Coffee and Filtration LocationsCoffee and Filtration LocationsProduction FacilitiesCo-PackerWater, Coffee and Filtration CoverageCoffee and Filtration Coverage~5%~2%~10%CAGRSource: Beverage Marketing, Packaged Facts, Zenith International, Management estimates, Ernst & Young.(1) Volume indexed to 2010.16
174/11/2017 7:27 AMDS Services – Leadership Position in Attractive Growth Categories (cont’d)Market Leader in Growing Water and Coffee Services CategoriesAEstablished National Direct-to-Consumer Distribution Network – Diverse Customer Base and Service FocusBMarket Leader in Brands with Strong Regional HeritageCColor SchemeAttractive Growing Financial ProfileDCMarket Leader in Brands with Strong Regional HeritageDAttractive Growing FinancialProfileNet Revenue($ in millions)Adj. EBITDA($ in millions)Source: DSS management.(1) LTM as of 9/30/2014.17
18Market Leader in Growing Water and Coffee Services Categories 4/11/2017 7:27 AMAMarket Leader in Growing Water and Coffee Services CategoriesDS has the largest HOD water national presence with ~90% coverage of the US population and ~30% market shareRemaining ~40% of the market is made up of roughly 3,000 regional playersOn-trend category with health & wellness, and environmental focus2013 Category Size: $2.3bn(1)Category Growth: ~2%Market Share: ~30%DS is a top 5 player, with top five making up only 20% of the marketRemaining market is highly fragmentedStable commercial customer base with significant growth potential from single-cup expansion2013 Category Size: $4.3bn(2)Category Growth: ~5%Market Share: ~4%Water Delivery ServicesOffice Coffee ServicesColor SchemeSource: Beverage Marketing, Packaged Facts, Zenith International, Management estimates, Ernst & Young.(1) Includes 1, 2.5 and 5 gallon jugs, bulk and PET product sold off truck.(2) ‘Coffee sales rise, so do costs: State of the Coffee Service Industry’, Automatic Merchandiser, September 2014.18
194/11/2017 7:27 AMBEstablished National Direct-to-Consumer Distribution Network– Diverse Customer Base and Service FocusDirect Route-to-Market OverviewDiverse Customer Base – Top Water Delivery Services CustomersExtremely diversified customer base with top 20 HOD Water customers accounting for only 4.0% of total revenueRoute Service RepresentativesLargest national presence in the HOD bottled water with a footprint that covers ~90% of U.S. householdsLeading market positions in most major citiesProvide customers with regular personalized point of contact~1.5 million customers~45 million deliveries per year% of Water Delivery Services Revenue% of Total RevenueColor SchemeProprietary Routing TechnologyDiverse Customer Base – Top Brewed Beverages CustomersAdditional 15+% of route truck cube space available for portfolio expansionRoute optimization softwareOperates ~2,100 routes stemming from ~200 depots and 28 manufacturing facilitiesTracks key performance metrics at the route level% of Brewed Beverages Revenue% of Total RevenueDSS’ extensive and diverse customer base with opportunity to expand and grow combined water and coffee platformSource: DSS management 2013.19
20Proven Acquisition Track Record Improved Customer Retention(2) 4/11/2017 7:27 AMBEstablished National Direct-to-Consumer Distribution Network– Diverse Customer Base and Service Focus - ContinuedStrong customer retentionSmall acquisitions since 2007 deliver an average synergy-adjusted multiple of approximately 3.0x(1)M&A is an alternative route for customer acquisition (high retention for acquired customers)Color SchemeProven Acquisition Track RecordImproved Customer Retention(2)Post Synergy EBITDA Multiples for AcquisitionsAdjusted Cooler RetentionRetention Over TimeAvg Tenure per Water Delivery Services Customer in yearsSource: DSS management.Assumes revenues associated with acquired entity in each transaction were applied to DS Services cost model for that period.Adjusted year-over-year cooler retention rates exclude the impact of customers that quit in the same year they started the service.20
21Market Leader in Brands with Strong Regional Heritage 4/11/2017 7:27 AMCMarket Leader in Brands with Strong Regional HeritageHighly-recognized brands with long lived heritages in both HOD Water and OCSLargest or second-largest HOD Water provider in 39 of 43 largest citiesOffers customers products under other leading brands, which include:Ferrarelle and Fiji waterStarbucks Coffee, Caribou Coffee, Peet’s Coffee & Tea and Mars AlterraColor SchemeLeadership in Regional BrandsRegional Brands & HeritageBelmont1876Hinckley1888Deep Rock1896Mount Olympus1898Alhambra1902Crystal Springs1921Sparkletts1925Sierra1950Kentwood1965#1#3#2National Brands & HeritageStandard Coffee1919Nursery1948Athena Water2003Relyant2009Source: DSS management.21
22Attractive, Predictable and Dependable Financial Profile 4/11/2017 7:27 AMDAttractive, Predictable and Dependable Financial ProfileFinancial ProfileGrowth across all drivers of revenueCustomer base has grown both organically and via acquisitionImproved pricing through shift to higher revenue products (e.g. OCS) and best-in-class customer serviceBusiness model primarily subscription style / recurring monthly revenue model.Improved EBITDA margin structureReformulated energy surcharge in 2012 to pass through ~90% of future volatility in energy costsRoute Service Representatives (“RSRs”) paid on commission linked to retention, revenue and new customersCostco agreement based on variable commission structureMarket leading route network and capacity enables additional volume onto existing routesPredictable maintenance capital expenditures; growth capital expenditures directly linked to net customer growthProven ability to grow platform through highly synergistic acquisitionsAcquisition of Standard Coffee in 2012 increased exposure to OCS market=Adjusted EBITDA & Margin($ in millions)Color Scheme(1)Net Revenue($ in millions)$ 928$ 966$ 894$ 765Forward Model2014LTM to 2018 Revenue ~4.5-5% CAGR Driven ByPrice – 0.5%Customer Growth – 1.5%Consumption – 1.5% - 2%Primo Lift 2015Capital Expenditures of approximately $65-$70 million per year(1)Source: DSS management.(1) As of 9/30/2014.22
23Financial Highlights of the New Business Model Color SchemeFinancial Highlights of the New Business ModelThe Expected Results of the New Business Model
24Financial Highlights of the New Diversified Business Model 4/11/2017 7:27 AMFinancial Highlights of the New Diversified Business ModelSignificantly Diversified Overall Business1Color SchemeCost and Revenue Synergies2Scale Business With An Enhanced Growth Profile3Accretive to Adjusted Free Cash Flow Per Share Enabling Rapid Deleveraging4
25Significantly Diversified Overall Business 14/11/2017 7:27 AMSignificantly Diversified Overall BusinessLess exposure to large format retailersCSD concentration drops below 20%Private Label concentration drops below 50%Introduces significant presence in growing “Good-for-You” beverage categoriesColor Scheme2014E Products2014E ChannelSource: Cott and DSS management.Note: Based on 2014E revenue and post synergy management estimates as of November 2014.25
26Cost and Revenue Synergies 2Cost and Revenue Synergies4/11/2017 7:27 AMProcurement (~$3.5 million)Leverage Cott’s scaleFreight savings (~$1.5 million)Combined efficienciesSG&A (~$5 million)Back office efficienciesCost Actions (~$5 million)Implement Cott’s philosophyCost Actions (~$2.5 million)Integrated systemsCost Synergies – $18 millionRevenue Synergies – $7 millionSparkling watersIncrease the DSS product offerings to sparklingwaters manufactured by CottRange substitutionTransfer the production of certain DSS third-partyproducts to Cott’s manufacturing plantsFlavored Sparking WaterLaunch Flavored Sparking Water range distributedvia DSSVertical integration and supplyColor SchemeEstimated run rate synergies of $25 million per year phased-in over three yearsEstimatedCost to Achieve:$4 – 8 million$4 – 8 millionSource: Cott management.26
27Scale Business With An Enhanced Growth Profile 34/11/2017 7:27 AMScale Business With An Enhanced Growth Profile($ in millions)CAGR3%~RevenueColor SchemeCAGR4%EBITDA~(1)Acquisition of DSS enhances growth profile and creates balance in business modelSource: Cott and DSS management.Note: Revenue and EBITDA figures illustrative; Pro forma EBITDA figures include synergies of ~$6 million in 2015 and $25 million in 2018.LTM as of 9/30/2014.(1) LTM 2014 EBITDA includes adjustments.27
284C’s Philosophy Drives High Cash Generation Accretive to Adjusted Free Cash Flow Per Share Enabling Rapid Deleveraging4/11/2017 7:27 AM4C’s Philosophy Drives High Cash GenerationStrengthen customer relationshipsContinue to lower operating costsControl capital expendituresDeliver significant free cash flowUnderstand our customers’ needsBuild new channel relationshipsHigh service standardsOne-stop shop philosophyManage the commodity cyclesControl SG&A costs (best in class)Improve operating efficienciesManage projects tightly with a focus on cost / efficiencyHigh quality plants for all SQF Level 3 and BRCFocus on efficiency with industry leading asset turnover of 1.5xCost reduction minimizes capex spendRigorously manage working capitalAssist rapid de-leveraging and interest benefitPro forma 2014E unlevered FCF generation over $200mm(2)Color SchemeAdjusted Free Cash Flow Per Share(1) (2) (2014E – 2018E Cott and DSS)Pro Forma Net Debt to EBITDA (2) (2014E – 2018E)Adjusted free cash flow per share(1) accretive beginning inDelever in excess of $4.00 per share by the end of 2018Continuation of dividend policySuspension of share repurchase programCAGR~18%Source: Cott and DSS management.Inclusive of the preferred shares on an unconverted basis.Based on estimates as of November 2014.28
30The State of U.S. Bottled Water U.S. BOTTLED WATER MARKETPer Capita Consumption and Annual ChangeGallons per CapitaPercent Change % % % % (1.8%) (3.2%) % % % %Source: Beverage Marketing Corporation
31Total U.S. Bottled Water Volume Growth vs. Revenue U.S. Bottled Water Category Performance – Q3 2014Total Bottled Water CategoryTotal U.S. Bottled Water Volume Growth vs. Revenue2011201220132014Total U.S. bottled water volume and revenue continue to post strong year-over-year growthSource: Beverage Marketing Corporation31
32PET Bottled Water Volume Growth vs. Revenue U.S. Bottled Water Category Performance – Q3 2014PET Bottled Water SegmentPET Bottled Water Volume Growth vs. Revenue2011201220132014Volume growth continues to outpace revenue growthSource: Beverage Marketing Corporation32
33Bulk Water Volume Growth vs. Revenue U.S. Bottled Water Category Performance – Q3 2014Bulk Water SegmentBulk Water Volume Growth vs. Revenue2011201220132014Retail Bulk has recorded 13 consecutive quarters where revenue change has surpassed volume change vs. prior yearSource: Beverage Marketing Corporation33
34HOD Bottled Water Volume Growth vs. Revenue U.S. Bottled Water Category Performance – Q3 2014HOD Bottled Water SegmentHOD Bottled Water Volume Growth vs. Revenue2011201220132014Please note these 2014 HOD numbers only include route sales and were adjusted to exclude 3 and 5 gallon jugs sold at retail locationsHOD bottled water category volume grew +3.1% in Q with revenues up +4.5%This marks the 11th consecutive quarter that HOD revenues grew faster than HOD volume and the 13th consecutive quarter of HOD category revenue growth.Source: Beverage Marketing Corporation34
35DS Services Key Growth Drivers 4/11/2017 7:27 AMDS Services Key Growth DriversCott ownershipPrior ownershipGeneral2014E (3)2015E (3)2016E+ (3)Market growthWater delivery: ~2% in volume (69% of DSS net revenue)OCS: ~5% in dollars (15% of DSS net revenue)Filtration: ~10% (2% of DSS net revenue)Net revenuegrowthTotal net revenue: ~6– 7%Water delivery (w/ Primo): ~5 – 6%Water delivery (ex-Primo): ~3 – 4%OCS: ~(1 – 2)%Filtration: ~10%Total net revenue: ~5 – 6%OCS: ~2 – 3%Filtration: ~7 – 8%Total net revenue: ~3 – 4%Water delivery: ~2 – 4%OCS: ~3 – 5%Color SchemeCommission and freight costs other than plants to DS branches excluded from COGSGross margin~66 – 67% of net revenue~65 – 66% of net revenue~$3 million additional rent expense22% fixed and 78% variableCrestview transaction added amortization of ~$36 million per yearIncremental amortization from Cott transactionSG&A~59 – 61% of net revenue~61 – 63% of net revenue~$3 million Cott LTIPIncremental amortization(1) of ~$28 million~60 – 63% of net revenueIncremental amortization(1) of ~$23million in 2016, stepping down to ~$10 million by 2018Run rate synergies of $25 million by 2017~$10 million of cost to achieveSynergies &integration costsN/ASynergies of $6.25 millionIntegration expenses of ~$4 – 8 millionSynergies of $18.75 million in 2016 and $25 million in 2017Integration expenses of $4 – 8 million in 2016TaxesAdvantaged Cott Canadian ownership structureSignificant US NOLs at Cott and DSSNew Cott not expected to be US corporate tax payer for near termStatutory tax rate of 38.4%Leveraged capital structureSignificant NOLsGAAP tax benefit of ~$20 – 25 millionGAAP tax benefit of ~$10 – 15 million in 2016, stepping down to ~zero by 2017Capex~6 – 8% of revenue~$69 – 74 millionHigher capex in 2014 due to increased investment in new plantOngoing capex $65 – 70 million per yearAdditional integration capex of $5millionUnlevered free cash flow(2)~$95 – 125 million annually~$80 – 90 million~$95 – 105 million~$115 – 120 million per yearSource: Cott & DSS management and company filings.Most of incremental amortization expected to be included in SG&A.Unlevered free cash flow calculated as cash flow from operations – capex + interest.Based on estimates as of November 2014.
36DS Services COGS and SG&A Prior to Transaction 4/11/2017 7:27 AMDS Services COGS and SG&A Prior to TransactionCOGS breakdown (2013)SG&A breakdown (2013)Color Scheme
37DS Services Capital Expenditures 4/11/2017 7:27 AMDS Services Capital ExpendituresCapital expenditures are generally predictableFleet: average life of years, expenditure is predictable and relatively discretionary in any given yearCustomer Equipment, Bottles & Racks: includes Coolers and Brewers that are tied to new customer wins and replacement of older equipmentInvestment in coolers / customer equipment elevated in past several years due to dispenser model upgradeAdditional integration capex of $5 million in 2015Color SchemeCapital expenditures (3)(1)(2)(1) 2013 includes Predecessor and Successor financials, reflecting the Crestview acquisition.Other includes IT, machinery and equipment, call center buildout and facilities.Based on estimates as of November 2014.
38DS Services Adjusted Unlevered Free Cash Flow 4/11/2017 7:27 AMDS Services Adjusted Unlevered Free Cash Flow(1)Color SchemeSource: DSS filings and Ernst & Young.(1) 2013 Financials are the combination of DSS's Predecessor and Successor periods, while excluding certain costs specific to DSS's acquisition by Crestview Capital in Q
39Capital structure rank 4/11/2017 7:27 AMPreferred Equity Overview (Preferred Convertible shares cannot convert to common shares until 3 years after issuance)SizeCapital structure rankRanks senior to all common shares and other capital stockPari passu with non-convertible preferred equityPari passu with convertible preferred equityDividendCumulative quarterly dividend at annual rate of 9.0%, with rate increasing 1.0% per year for first five years:2015 – 9.0%2016 – 10.0%2017 – 11.0%2018 – 12.0%2019 – 13.0%Cumulative quarterly dividend at annual rate of 10.0%, with rate increasing 1.0% per year for first five years:2015 – 10.0%2016 – 11.0%2017 – 12.0%2018 – 13.0%2019 – 14.0%Payable in cash or in-kindConversionOnly convertible beginning three years after issuanceConverts 1:1 into common shares at the option of the holdersRedemption notice is subject to right of conversion (after 3 years)Conversion rate is and is subject to adjustment based on certain events.Upon conversion, right to designate Board members as follows:If 10% or more of common shares, 2 directorsIf greater than 6% but less than 10% of common shares, 1 directorIf less than 6% of common shares, 0 directorsN/ARedemptionRedeemable at any time or any amount at par and at choice of CottRight to require the Company to redeem shares in change of controlCould be redeemed at par at the option of the CompanyRight to require the Company to redeem shares in nine years or upon change of controlConvertible preferred equityNo voting rights in the first 18 months:Between 18 and 36 months after issuance, can vote alongside common shares on as-converted basis (except on the election of directors)After 36 months, can vote alongside common shares on as-converted basis with no restrictionsVotingNo voting rightsLimited to 19.9% of current Cott market capitalizationConvertible preferred equityNon-convertible preferred equityColor Scheme
40Sources and Uses and Pro Forma Capitalization 4/11/2017 7:27 AMSources and Uses and Pro Forma CapitalizationSources and Uses($ in millions)SourcesUsesABL Draw$Purchase Equity$New Senior Debt625Refinanced DSS Debt317Rollover DSS Notes350Convertible Preferred116Fees and Expenses54Non-Convertible Preferred33Cash50Total Sources$ ,354Total Uses$ 1,354Color SchemeFinancing Overview$625 million senior unsecured debt with 5 year maturity at 6.75%.Amended and upsized Cott ABL facility from $300 million to $400 millionRolled over of existing DSS 10.00% Senior Unsecured Notes (with consent)$116 million convertible preferred security issued to the sellers (19.9% as converted)$33 million non-convertible preferred security issued to the sellersSource: Cott and DS management, FactSet.