Sunday, June 28, 2009

Reflecting on Cott Corporation

Cott Corporation is a publicly traded company who is the largest retailer brand soft drink provider in the world that operates in 60 countries across the globe. However, the company has experienced some sales growth within the last couple of months due to the state of the economy. Private label soft drink sales are rising. The company cannot compete with other leading soft drink names such as Pepsi and Coca-Cola. The board of directors and management have had some recent changes and need some time for some adjustment.

The stock price closed on the first day of class, May 27th: $5.53
The stock price closed on the last day of class, June 26th: $5.31

The stock price steadily declined over the month. However, there were days when the price was up from the previous day.

Cott would be a good company to work for because of their values and commitment to their employees. However, the state of the company does not look prosperous with the large soft drink companies taking up most of the market share. It doesn't look good for the future of Cott, therefore there is a possibility of losing your job if you started working here. So right now I would not take the chance to work for Cott even though it does seem to have a more family like environment than most corporations.

I would not recommend investing in Cott Corporation. The stock is at a fairly low price. The stock is just not earning money and as stated previously is steadily dropping in price. The company is losing money more than ever before and is not showing hope for the future. Their profitability ratios are all negative due to the loss the company incurred last year. I also think the company is experiencing too many changes in management and it will take a while for the company to get situated. The company may have a future but right now I would not risk investing in a company that might not make it too many more years.

Saturday, June 20, 2009

Wrapping it up with Cott Corpoartion

Over the past month we have looked at the company's financials, board of directors, management team, and their mission statement. As you can see from the posts Cott is struggling to keep up with the dominant players in the industry Coca-Cola and PepsiCo. Their financial position from the previous year (2007) has only worsened, showing yet again another larger net loss in 2008. The board of directors and management have shown changes and made adjustments in hopes that this will help the company in the upcoming year.

As mentioned at the Barclay conference Cott has high hopes for their private label soft drinks to increase in sales due to the economic downtown. In the first couple months of this year they have seen positive numbers.

Hopefully, Cott will remain a player in the soft drink industry because I don't know if I could give up my RC Cola just yet even after hearing about all the health risks over soft drinks.

Within Minutes...

Here is a link to a video talking about what soft drinks do to your body within minutes....it is kind of depressing especially when you love soft drink!



http://www.youtube.com/watch?v=4HxK0RjKNhk

Contract with Wal-Mart

In January 2009 Wal-Mart decided to end its contract with Cott Corporation. The phase out plan is suppose to happen over a period of three years. Wal-Mart has decided that they might need the additional space to market their own private label brands in the future. However, this phase out plan will not completely terminate Cott as a Wal-Mart supplier.

Here is a link to an article: http://www.istockanalyst.com/article/viewiStockNews/articleid/2985086

According to Cott's 2009 Annual Report sales at Wal-Mart stores have already rapidly decreased. I wonder what this decision will mean for Cott's financials over the next three years.

Financial Strength Ratios

Company Industry S&P 500
Quick Ratio (MRQ)

0.76 1.40 1.24
Current Ratio (MRQ)
1.20 1.85 1.50
LT Debt to Equity (MRQ)
119.10 23.35 91.60

The quick ratio indicates that the company is slightly relying on its inventory to pay its bills on time, however the current ratio is above 1 and not as high as the industry average but fairly close to the S&P 500 average. The company appears to be highly leveraged but the S&P 500 average is high as well.

Top 10 Reasons to NOT Drink Soft Drinks

So we have all heard the buzz about how bad soft drinks are for your health. So here are the top 10 reasons why the drinks are so bad for you:

1.Soft drinks steal water from the body.

2. Soft Drinks never quench your thirst, certainly not your body's need for water.

3. The elevated levels of phosphates in soft drinks leach vital minerals from your body.

4. Soft Drinks can remove rust from a car bumper or other metal surfaces.

5. The high amounts of sugar in Soft Drinks causes your pancreas to produce an abundance of insulin, which leads to a "sugar crash".

6. Soft Drinks severely interfere with digestion.

7. Diet soft drinks contain Aspartame, which has been linked to depression, insomnia, neurological disease and a plethora of other illness.

8. Soft Drinks are EXTREMELY acidic, so much so that they can eat through the liner of an aluminum can and leach aluminum from the can if it sits on the shelf too long.

9. Soft Drinks are EXTREMELY acidic

10. Soft Drinks are the WORST THING you can possibly put in your body.

The link to the complete article: http://www.watershed.net/top10sd.aspx

I believe soft drinks are not all terrible. Of course anything that you take advantage of is eventually going to catch up with you. But soft drinks in moderation I don't think are going to kill you...hopefully!

Friday, June 19, 2009

Cott's Stock Price Over the Last Six Months



This is a six month view of Cott's stock price. As you can see the company has had its ups and downs however, the stock price looks to be coming back steadily. But still the company has no comparison to what Coca-Cola and PepsiCo. stock's are trading for.

Cott's stock up from previous day

Cott's stock price closed 6/18/2009 at $5.25 which is up $.21 cents from the previous day.

Thursday, June 18, 2009

First Quarter Results 2009

Here are the results for key figures for the first quarter for Cott Corporation:

Net profit margin
5.42%

Operating margin
6.08%

Return on average assets
9.22%

Return on average equity
33.63%

Employees
2,803

These numbers are in the positive, and as Cott mentioned at the Barclays Conference the company is expecting these numbers to stay positive since the private label soft drink business is growing due to the economic downtown our country is currently facing.

It will be interesting to see the company's results after the summer season.

Tuesday, June 16, 2009

Barclays Capital Leveraged Finance Consumer Conference

Here's is the link to the webcast of the Cott's presentation: http://cc.talkpoint.com/barc002/061609a_rb/default.asp?entity=5_RWS74W1

You may have to login to listen to the webcast. However, you do not need a password. I just put in my name, Murray State University as my company, and my e-mail.

Jerry Fowden talked about understanding the corporation, their risks and how the private label soft drink are benefiting from the economic conditions.

Cott does make its own concentrate, and the company shows strong growth in North America.

The presentation evaluated their current mission: "To be the lowest cost, preferred supplier of a brand range of attractive and innovative private label soft drinks to aligned retailers."

I believe Mr. Fowden does a good job of explaining their current strategy to improve their position in the soft drink industry. Their presentation examines pertinent details that need to be addressed for the upcoming year. The company looks as if they are improving on areas that were in dire need of attention.

The charts in the presentation show that Cott's private label brand is showing improvements in sales within the United States compared to the previous year, 2008.

Fowden explains that they have had problems in the company, however, they are currently being addressed with tighter controls.

It will be interesting to see how the upcoming July 4th holiday will affect Cott. As we all know this holiday is a pretty big event for both Coca-Cola and PepsiCo's products.

Monday, June 15, 2009

Tax on Soft Drinks

Cott's Stock Price closed at $5.44 on June 12, 2009.

Down $.30 from the previous day and down only $.11 from the first day of class, May 27, 2009.

Will a potential tax on soft drinks hurt the Cott Corporation?

The tax will help pay for the proposed universal health care plan. Many health advocates are hoping that the tax will also help fight obesity across the United States.

Here is a link to an article that believes the tax will be helpful to many Americans: http://www.cbpp.org/cms/index.cfm?fa=view&id=2830

Here is a link to an article for those that are opposed to the tax:
http://www.komonews.com/news/business/46821527.html

As this above article indicates the soft drink companies and the American Beverage Association do not want the tax.

I believe the tax will probably hit the poor families the most up front, however, they will be the ones that will benefit since it will be going to a health care program that many poor families need. The tax too will raise an immense amount of money for this health care program. I also believe that it will help combat the overwhelming rise of obesity in our country.

Sunday, June 14, 2009

Management's Effectiveness

Company Industry S&P 500
Return on Assets (TTM) -8.17 3.59 6.95

Return on Investment (TTM) -12.12 5.02 9.70

Return on Equity (TTM) -24.91 7.02 19.73

From the look of these ratio it doesn't look like management is doing a very good job for Cott. The negative ratio numbers are because the company experienced another net loss this year. But this could be a good indicator why Cott is not an industry soft drink leader.

Friday, June 12, 2009

Cott's Facilities

Approximately 95% of Cott's beverages are produced in North America. The beverages are manufactured in facilities that either Cott or a third-party manufacturers that they only have long-term agreements with. Cott does manufacture almost all of their United Kingdom and Mexican beverages in facilities that they either own or lease. Cott does not have their own production facilities in areas such as, Continental Europe, therefore they rely on third parties to produce and distribute their products in this area.

Cott's products are then are either picked up by their customers at the facilities or delivered by Cott, a common carrier, or third-party distributors to our customer’s distribution centers or to retail locations.

Cott's current financial situation puts them at a risk since they do not own all of their properties. The third parties that they have contracts with could decide not to renew for the upcoming year which would put them in a vulnerable position to find another party which in the mean time could drastically cut production and sales.

Wal-Mart terminated their contract early this year without cause which is suppose to be phased out over a period of three years. Cott's sales have already drastically declined due to the cut in space at Wal-Mart stores.

It will be interesting to see how hard this hits Cott. The company had a net loss of $122,800,000 for 2008. The net loss for 2007 was $71,400,000. The increase in the net loss probably is due to increase competitive nature, lower gross margins, and rising costs.

Thursday, June 11, 2009

Barclays Capital 2009 Leveraged Finance Consumer Conference

The company announced yesterday, June 10 that they would be presenting at the Barclays Capital 2009 Leveraged Finance Consumer Conference. The conference will be held in New York City on June 16, 2009 starting at 10:50 a.m (EDT).

Cott will air the conference through their website on a webcast I will post the link to the conference when it becomes available.

It will be interesting to hear what the corporation will present during the conference. Several other companies are also presenting at the conference.

Wednesday, June 10, 2009

Cott's Management Team

Cott's Management
Jerry Fowden - Chief Executive Officer
Age: 53
Salary: 808,000

Juan Figuereo - Chief Financial Officer
Age: 53
Salary: 377,000

Matthew A. Kane Jr. - Vice President, General Counsel and Secretary
Age: 53
Salary: 313,000

Bill Reis - Chief Procurement Officer
Age: 51
Salary: 296,000

How does Cott's management team's age and compensation compare to that of its competitors?

Coca-Cola Company's Management
Muhtar Kent - Chairman, Chief Executive Officer, President and Member of Executive Committee
Age: 58
Salary: $ 5,600,000

Gary P. Fayard - Chief Financial Officer and Executive VP
Age: 56
Salary: $ 1,830,000

Alexander B. Cummings Jr. - Chief Administrative Officer, Executive VP, President of Africa Group and Chief Operating Officer of Africa Group
Age: 52
Salary: $ 1,590,000

José Octavio Reyes - President of Latin America and Chief Operating Officer of Latin America
Age: 56
Salary: $ 1,860,000

Irial Finan - Executive VP and President of Bottling Investments & Supply Chain
Age: 51
Salary: $ 2,130,000

Dr. Pepper Snapple Group, Inc. Management
Larry D. Young - Chief Executive Officer, President
Age: 54
Salary: $ 2,510,000

John O. Stewart - Chief Financial Officer and Executive VP
Age: 51
Salary: $ 1,380,000

Rodger L. Collins - President of Packaged Beverages
Age: 51
Salary: $ 1,110,000

James J. Johnston Jr. - President of Concentrate Sales
Age: 52
Salary: $ 968,000

Lawrence N. Solomon - Executive VP of HR
Age: 54
Salary: $ 1,010,000

PepsiCo, Inc.'s Management
Indra K. Nooyi - Chairman, Chief Executive Officer and President
Age: 53
Salary: $ 3,900,000

Michael D. White - Vice Chairman, Chief Executive Officer of PepsiCo International of PepsiCo International
Age: 57
Salary: $ 3,290,000

Richard Goodman - Chief Financial Officer
Age: 60
Salary: $ 1,470,000

John C. Compton - Chief Executive Officer of PepsiCo Americas Foods and Member of Liquid Refreshment Beverage Oversight Council
Age: 46
Salary: $ 2,130,000

Albert P. Carey - Chief Executive Officer of Frito-Lay - North America and Pres of Frito-Lay North America division
Age: 57
Salary: $ 2,140,000


As you see most of Cott's competitors management teams are similar age. However, because the size of Cott compared to the other major players in the industry the management's salary is considerably lower than the other companies.

Tuesday, June 9, 2009

Decline in Stock Price

Cott's stock price dropped two more cents.

Closed 6/8/2009 at $6.05.

Monday, June 8, 2009

Cott's stock price closed June 5, 2009 at $6.07, down six cents from the previous day.

Cott's key competitors include the following companies: The Coca-Cola Company, Dr. Pepper Snapple Group, and Pepisco. Cott is a much smaller corporation when compared to these big name companies that we have all heard of. Here is a link to show the comparisons of Cott's competitors to their financial situation: http://finance.yahoo.com/q/co?s=COT

As you can see Cott ranks in the bottom almost every time when compared to the other companies.

Thursday, June 4, 2009

Board of Directors

Since we talked about BOD last night I thought I would introduce you to Cott's.

Mark Benadiba (Corporate Director)
George A. Burnett (CEO, Alta Collegues, Inc.)
David T. Gibbons (Chairman)
Stephen H. Halperin (Partner, Goodmans, LLP)
Betty Jane Hess (Corporate Director)
Jerry Fowden (CEO of Cott)
Gregory Monahan (Managing Director, Crescendo Partners, LP)
Mario Pilozzi (Corporate Director)
Andrew Prozes (Global CEO, LexisNexis Group)
Eric Rosenfeld (President and CEO, Crescendo Partners, LP)
Graham Savage (Chairman, Callisto Capital LP)

The board has eleven members with only one female director. Four new directors were elected in June 2008 (Eric Rosenfeld, Greg Monahan, Mark Benadiba and Mario Pilozzi). Three members that recently served on the board resigned (Frank Weise, Don Watt, and Serge Gouin). Cott is currently trying to focus its efforts on private label business.

Ticker symbol for Toronto Stock Exchange (TSX): BCB
SIC Code: 2086
NAICS: 312111

Stock Price, closed 6/3/2009: $5.90

Wednesday, June 3, 2009

RC Cola "It's Right for You"

Here is the link to a 1970s Australian RC Cola commercial. It gives new meaning to crack! Maybe more people would drink RC Cola if they had commercials like these.

http://www.youtube.com/watch?v=ZebNc5ncr1w

And I wondered why I had never seen an RC Cola commercial. However, it's better than some of the commercials that are on television today.

Tuesday, June 2, 2009

Cott's Mission

At Cott, we believe that success is achieved by maintaining a disciplined focus on just a few critical things.



To realize our vision of being the global leader in value beverages, we continue the refocus on our private label business customers, while concentrating on controlling the 4 C’s:
1. Customers 2. Cost 3. Capex 4. Cash flow

Cott employees worldwide are united by a single, unifying core value – to think and act as owners. We think and act as if Cott's resources and reputation were our own. This guides our decision-making and our relationships with customers, consumers, suppliers and the communities in which we operate.

Cott Priorities:

Low Cost Producer – always look for opportunities to control the “Four C’s”
Customer Focused – focus on providing exceptional customer service to our internal and external customers
Drive Innovation – drive new ideas, improvements and focus on finding solutions
Win As A Team – Support and work well with others. Take ownership for team results.


By following these principles and guidelines, Cott will continue to build and grow its foundation of a winning, high performance company.

Friday, May 29, 2009

First Posting for Cott

I chose Cott Corporation to use as my journal for this class since it relates to the industry my team chose for the industry analysis project. Cott Corporation is one of the globe's biggest non-alcoholic beverage companies. Cott has presence in several countries, however their main markets consist of the following: the United States, Canada, the United Kingdom, and Mexico. Cott includes my ultimate all time favorite soft drink in their product line, RC Cola. My grandaddy drank RC Cola with me as a child and has sentimental value to me. The company's product line also includes flavored waters, juices, smoothies, and energy drinks just to name a few.

Interesting fact -- Cott was the first company to introduce a diet soda.

Cott's stock closed at $5.60 on May 28th, 2009. The company's ticker symbol is COT.