Jarrod Langhans – Director, IR Jerry Fowden – CEO Jay Wells – CFO

Perry Caicco – CIBC World Market Bill Schmitz – Deutsche Bank Mark Swartzberg – Stifel Amit Sharma – BMO Capitals Kevin Grundy – Jefferies Nik Modi – RBC Capital

Good morning and thank you for joining our call. Today I’m accompanied by Jerry Fowden, our Chief Executive Officer; and Jay Wells, our Chief Financial Officer.

Jerry will start this morning’s call with some introductory remarks before turning the call over to Jay for a discussion on our third quarter 2014 financial performance. Jay will then turn the call back to Jerry who will complete the call with his perspective on our third quarter 2014 performance including an overview of our business units, a discussion of business drivers and expectations for the future.

Following our prepared remarks, we will open the call up for question. With that, let me now turn the call over Jerry.

Thank you, Jarrod. Good morning everyone.

Before Jay reviews our financial results, I wanted to comment on our third quarter’s performance and update you all on the continued progress that we’ve made in executing against our five point strategy which focuses on growing our contract manufacturing business and channel penetration as well as on accelerating in pace and scale our acquisition-based diversification in order to improve cost growth and margin profile. During the quarter, our global volume and margins continue to stabilize with the total volume including concentrate being flat and gross margins coming in only 10 basis points down from the prior year at 11.9% compared to 12%.

Overall gross profit was $64 million compared to $65 million last year showing our continued stabilization since the implementation of our strategic priorities. As a reminder we began reporting volume in servings during the second quarter to provide better insight into our volume performance as we continue to diversify our business.

In addition, we have now incorporated the majority of the volumes associated with Aimia Foods into our third quarter data. But Jay will say more on this later.

Now returning to the quarter, while our volume trend continue to improve and we made good progress in a number of strategically important areas, the North American CSD landscape remained competitive as predicated. However, it's worth pointing out that we saw a slightly less aggressive large format retail national brand promotional environment with some later in the promotional pricing on two liter CSDs at the end of August, when the price gap expanded for just a few weeks, albeit not to the historically normal gap of 35% to 40%.

The short period of more rational large-format retail national brand CSD pricing led to an improvement in our CSD volume trend during this period. [On points table] it’s an opportunity if pricing were to normalize in 2015.

With that said, it was only a few weeks and it’s difficult to tell if it’s a permanent sign of things to come. When we get to the first quarter of 2015, we will start to let the additional 12 pack 12 ounce can national brand $3 promotional pricing that started in the first quarter of this year and we would hope to see a similar shift by the national brands to some more rational even if it’s occasional 12 pack can pricing which would additionally assist our CSD volume performance.

We believe with more normal or historic CSD pricing a 3% to 5% CSD volume decline on an annual basis is more in line with consumer's appetite for carbonated soft drinks. At this level of CSD decline, we believe organic growth in other categories including juice and drinks in conjunction with contract manufacturing growth and the growth from our diversification moves will be able to offset this level of CSD market decline.

As previously mentioned, these particular 2 liter and 12 pack can formats as well as the large format retail store segment represent a very significant proportion of our CSD business and as such the narrow price gaps in these packs and stalls adversely affect our North American performance and hence our focus on diversification not just away from CSDs but also to a wider and broader channel and customer strategy. Alongside these challenging but perhaps slightly improving carbonated soft drink landscape, we continue to see positive trends in our North American sparkling waters, mixes, juice and drinks categories all of which showed modest volume growth, alongside our continued progress in contract manufacturing which grew over 80% during the quarter.

So now let’s turn to a fuller update on the strategic priorities we announced during our first quarter’s earnings call, which were designed to enhance long-term shareholder value and create more sustainable growth oriented business overtime. I'm happy to report that we have made additional progress in executing against the strategy during the quarter.

First, we have continued with our foresees approach of running the business tightly focusing on customers, costs, CapEx and of course cash flow. This quarter we continued our ongoing three-year $30 million cost reduction plan which incorporates a focus on reducing production costs by improving procurement practices, increasing operational efficiency, eliminating waste and reducing packaging cost.

This $30 million program is expected to run until the first half of 2017 and will deliver estimated cost savings of some $6 million this year. We also remain dedicated to customer service and we were delighted in September to be awarded the top performing supplier by large suppliers with regard to order accuracy by publics in North America.

And in October to be awarded by Walgreens, own brand Supplier of the Year Award. Within the competitive convenience department based on the quality of cost products, service, retailer profitability, innovation and the quality of our work with the Walgreens own brand team.

We also maintained tight control of our capital expenditure in the quarter with CapEx of $11 million. This CapEx included cost and efficiency initiatives of approximately $5 million to $6 million which we expect to support our low-cost philosophy going forward.

These actions along with others assisted our third quarter adjusted free cash flow of $54 million which excludes the $4 million in cash costs associated with the purchase of the final $79 million dollars of our eight and one eight senior notes. This quarter’s cash flow brings our year-to-date adjusted free cash flow to $27 million up $9 million dollars or 50% compared to the $18 million in the prior year.

We continue to be focused on cash flow generation. As an update on our progress in contract manufacturing and channel diversification, we saw our third quarter North American contract manufacturing business grow by $5 million equivalent serving cases.

From around 6.5 million cases to 11.5 million cases or by over 80%. This means over the first nine months of 2014, we have increased our North American contract manufacturing business by 18.5 million equivalent serving cases.

And I would like to congratulate our North American business unit at this point in time for achieving our first year’s goal of 15 million to 18 million equivalent serving cases of contract manufacturing growth, even though we still have one quarter to go. As a remainder, while our 2014 goal for contract manufacturing growth was 15 million to 18 million equivalent serving cases, this was just the first year in our three-year plan to achieve growth of some 50 million to 80 million equivalent serving cases and it is good to see we are on track signaling some early success of channel diversification.

During the quarter, we also completed the redemption of our eight and one-eight senior notes during 2018 and as noted in prior quarters, the refinancing of the 2018 notes and the issuance of our 2022 notes resulted in a further approximate $2.3 million reduction in interest expense per annum. With regard to return (inaudible) shareholders about 50% of our free-cash flow while an increase in our opportunistic share repurchase plan and the continuance of our quarterly dividend.

We returned over $10 million to shareholders during the quarter through a combination of our dividend and the repurchase of approximately 640,000 shares. Now on to our fifth strategic priority that of accelerating our pace and scale of acquisition based diversification outside of CSDs and shelf stable juices with a focus on other beverage categories and beverage agencies as well as on driving our channel mix beyond large format retail and supermarket stores.

The integration of our Aimia Foods acquisition so far has been a success and we continue to believe in the attractive growth opportunities the Aimia Foods outlined in earlier presentations. Aimia’s third quarter sales were up over 7% on a like for like constant currency basis and it demonstrated double digit EBITDA growth.

With the Aimia Foods acquisition up to a great start, we continue to actively evaluate other businesses consistent with our strategy of diversifying our product, package and channel mix and improving Cott’s access to growing higher margin categories. Overall, we’ll stay focused on and continue to make progress in executing against these strategic priorities and I believe we have made some good further progress during the quarter and positioned ourselves well for 2015, even though we know we still have a long way to go.

On this note, let me hand the call over to Jay to cover our third quarter financial results.

Thank you, Jerry. As Jerry noted, we continue to diversify the company and expand our product, package and channel mix and have moved to a common servings measurement to reflect our increasing variety of products on a consolidated volume basis.

We have converted each of our business unit, physical volume and the US Food and Drug Administration guidelines for single serving sizes. But some more approach is used by other diversified companies and we are now reporting the volume percentage changes and servings of our products in our earnings release.

As Jerry noted, we have included a majority of Aimia’s volume and our consolidated volume but have excluded some non-beverage volumes predominately related to jams, fillings and toppings that made up approximately 15% of Aimia’s revenue and we continue to evaluate the appropriate reporting metrics for these products. With that said total volume was flat in servings, excluding concentrate volume was lower by 2%.

We saw sequential improvement in volume trends as a result of additional contract manufacturing volumes, the addition of Aimia Foods volume and modest growth in our North American sparkling bottles in juice and drink categories, alongside a slightly less aggressive North American large format retail national brand promotional environment this was offset by the impact of the decline in North American carbonated soft drinks volume as well as a general UK market decline in the quarter resulting from a colder summer season when compared to the heat wave that occurred in the prior year. Revenue was lower by 1%, 4% excluding the impact of foreign exchange at $535 million.

The revenue decline was due primarily to the competitive pricing environments. A continued product mix shift into contract manufacturing where the revenue per case associated with contract manufacturing is lower as the revenue associated with contract manufacturing does not normally include a charge for ingredients and packaging.

And a general UK market decline in the quarter resulting from a colder summer season when compared to the heat wave that occurred in the prior year. This was offset to a large degree by the growth in our contract manufacturing business.

The addition of Aimia Foods and growth in North American sparkling waters and juice and drinks categories. Gross profit was $64 million compared to $65 million, as percentage of revenue gross profit was 11.9% compared to 12%.

As noted in the prior quarter gross margin began to stabilize as it remained focused on the operations at each of our business units and have implemented a number of initiatives to improve gross margin. With that said, we continue to believe that our full year gross margin for 2014 will be approximately flat relative to the prior year.

We also continue to believe that over the next three years, we will be able to grow our margins as a result of a number factors including but not limited to the additional volume and fixed cost absorption associated with the growth in sparkling waters, mixers and juice and drinks ,wins in contracts manufacturing and further channel diversification. Progress on our ongoing focus to reduce production cost by $30 million over the next three years by improving procurement practices, increase in operational efficiencies, eliminating waste and reducing packaging costs.

The acquisition of diversifying higher growth, higher margin businesses as part of our five-point strategy towards building long term shareholder value as well as capturing synergies associated with these acquisitions and the easing up North American CSD volume declines as and when the national brands move to a more normal or historic promotional level will also support margin restoration. Turning to SG&A, SG&A expenses were higher by $7 million at $45 million compared to $38 million, this increase in SG&A expenses was due primarily to the additional SG&A expenses associated with the Aimia Foods business, lower employer related and set up costs and the reversal and the reversal of certain long-term incentive accruals in the prior year, and increase third party fees associated with the acquisition activity and information technology implementations.

This was below our expected SG&A expense of $49 million for the quarter as a result of foreign-exchange differences, timing of marketing and promotional spent, and a level of employee incentive accruals. We still expect Q4 SG&A expenses to be approximately $49 million.

Interest expense for the third quarter was lower at $9 million compared to 13 million. The $4 million reduction in interest expense was due primarily to redemption of cost 8.38 senior notes that were due in 2017.

We continue to expect full-year 2014 interest costs to be approximately $36 million in 2015’s interest expense to be approximately $34 million. Other expense was $5 million in the third quarter compared to other income of $1 million, predominantly due to $5 million of cost associated with the redemption of $79 million of our 2018 senior notes during the quarter.

Income tax expense was $1 million in the quarter, in the third quarter compared to nil. The increase in income tax expense was primarily due to pre-tax income and certain jurisdictions that was not offset pre-tax losses and other jurisdictions for valuation allowances offset those losses.

Adjusted net income and adjusted earnings per diluted share were $6 million and $0.07 respectively, compared to adjust the net income of $14 million and adjusted earning per diluted share of $0.14 in the prior year. Adjusted EBITDA was $46 million compared to $54 million.

The decrease in adjusted EBITDA was primarily driven by the increase in SG&A expenses previously discussed. The adjustments to EBITDA include previously mentioned debt redemption and other financing cost of $5 million, plus tax reorganization and regulatory cost of $0.8 million and acquisition and integration cost of $0.5 million.

Adjusted free cash flow during the quarter which excludes debt redemption cash cost of $4 million dollars was $54 million dollars, compared to $77 million. Adjusted free cash flow was $27 million through the first nine months of the fiscal year compared to $18 million in the prior year.

Turning to our balance sheet, cash on hand at the end of the quarter was $47 million after the payment of $33 million in the third compensation in the quarter related to the Aimia acquisition. Net debt was $562 million dollars and our access availability was $189 million.

Turning to our strategic priorities which drive for the accelerated investment behind diversification and based on our current view of the operating environment returned up to 50% of our free cash flow to shareholders. We continue to believe that the most effective means of returning funds to shareholders is to maintain a quarterly dividend supplemented prior discretionary opportunistic share repurchase program.

During the quarter, we paid a dividend of $0.06 per share for an aggregate payment of $5.6 million and we repurchased approximately 640,000 shares for $4.6 million, for a total of $10.2 million return to shareholders in the quarter. In addition, our Board of Directors has approved a quarterly dividend of $0.06 per share payable on December 11, 2014 to shareholders of record on December 01, 2014.

And we have repurchased approximately 375,000 shares for $2.5 million in the first four weeks of our fourth-quarter. For a total of 1.4 million shares repurchased for approximately $9.7 million thus far during the year.

With that, I will now turn the call back to Jerry.

Thanks, Jay. I will now review the performance in each of our reporting segments.

In North America, overall volume decreased by 3% in total serving and 4% excluding concentrates. However, we saw modest increases in the airs of sparkling waters, mixes, juices and drinks as well as an 80% increase in contract manufacturing which increased from 6.5 million to an 11.5 million equivalent serving cases.

These strong performances were offset by lowest CSD volumes, even though the trend is improving. As a result of the continued 2.5% CSD market decline, as well as the ongoing national brand promotional activity on [Keypacs] but continued to narrow the price gaps between national brands and private label.

Revenue in North America was lower by 9% on a constant currency basis due primarily to the continued competitive pricing environment and an overall product mix shift into contract manufacturing, whereas Jay said, the revenue associated with contract manufacturing, typically does not include a charge for ingredients and packaging cost as the customer provides these commodities, and offset the risk of commodity cost movements. At this point, I would like to recognize the tremendous achievement of our North American team for winning the top performing supplier for large suppliers with publics, as well as the Walgreens own brand supplier of the year award within the competitive, convenient segment.

It was just last quarter that I was congratulating our UK team on their winning of the gross of gold – own label supplier of the year award for all 19 foods and beverage categories in the UK. It's nice to see but despite the challenging times and competitive national brand promotional and pricing activity, Cott’s commitment to customer service has not been diminished and in fact is being recognized by many of our customers.

As mentioned on our last quarter’s call, we signed two new contract manufacturing agreements. For some 13 to 16 million additional equivalence serving cases, per annum that we expect to start to phase in, at the end of quarter four this year and the end of quarter one 2015.

In addition, we continue to work with existing contract manufacturing customers to qualify additional [cost] production plants and expand our production footprint forward. Turning to the UK, revenue increased 20%, 11% excluding the impact of foreign exchange and total volume increased 2% in servings.

Excluding concentrate volumes were also up 2%. The quarter reflected across the board growth in Aimia Foods with volume, revenue and EBITDA, all up on our like-for-like constant currency basis.

As we sit here today, we are pleased with the initial performance of Aimia Foods which adds a new complementary hot beverage business to our UK operation and now they are working on a number of business initiatives that will continue to propel their growth going forward. With that said, we also continue to be pleased with Calypso Soft drinks which is met or exceeded its acquisition expectations and we believe further demonstrates the benefit from our ongoing diversification of products, packages and channels.

The overall third quarter UK revenue and volume increases were due primarily to the additional revenues from Aimia Foods and a positive product mix shift in the core UK business, offset in part by the generally soft UK market in the quarter resulting from the colder summer season when compared to last year's heat wave. …s In addition to innovation in volume, our UK business also posted improved gross margins.

Not just in the recent acquisition but also in our core UK business from tight cost and operating control. As we look to the balance of 2014, we continue to expect improved financial performance in the UK, from a combination of the Calypso and Aimia acquisition and their synergies as well as from ongoing cost control and other operating efficiencies, in our base business.

Turning to our all other reporting segment, as a reminder this segment includes our Mexico operations, Royal Crown International and other miscellaneous expenses. Revenue was flat at $17 million and while this category continues to be small relative to our consolidated business it generates incremental profits for the company and the gain posted increases in both gross margin and EBITDA during the quarter.

As we summarize the third quarter and look to the end of 2014 as a whole, we will continue to focus on making our plants and operations more efficient and growing our North American Sparkling Water, mixes, as well as juice and drinks volume, alongside the expansion of our contract manufacturing business to offset, the declining North American CSD landscape. We will also continue with our drive to diversify the business and win additional contracts, in parallel with our diversifying acquisition strategy.

In order to put the company in not just a stronger and more sustainable position but also a position that to able to access growth in revenue and margins, as we go forward. With regards to cash flow, we will maintain our tight capital control, with 2014 CapEx, in the $50 million to $55 million range.

Minimal 2014 cash taxes, and as Jay mentioned interest cost up around $36 million this year. As a short update on commodities, aluminum in combination with the Midwest premium, continues to trade at higher prices, PET resin following oil price softness has trended down slightly but it's a bit early to tell if those slightly lower prices are sustainable.

On corn, current crop indications are good and are reflected in somewhat lower commodity prices which are counterbalanced by higher conversion cost at the mills. On fruit, very little has changed since last quarter with the higher prices and occasional shortages persisting on certain smaller fruits such as lemon, lime raspberry and prune.

Thus all-in-all, the environment for North American CSDs remains difficult but the level of national brand promotional pricing started to show a little moderation during the quarter which is a good indication for the future. We continue to be pleased with the progress being made in contract manufacturing and see more gains to come and are pleased with the momentum we are seeing for North American Sparkling Water, mixes, juice and drinks volume growth as well as the strong overall performances of both our UK business and its acquisitions.

All these factors together have assisted the stabilization of our top-line which along with the new contract manufacturing wins phasing in at the end of the fourth quarter this year and the first quarter of next year, alongside the integration and growth of Aimia Foods should put Cott in a stronger and more robust position for 2015. As always, we will continue to run the business tightly, focus on cash generation and on being a low-cost, high service business while executing against our strategic priorities designed to accelerate our organic growth and the pace and scale of our acquisition based diversification while returning funds to our shareholders.

With that, back to Jarrod.

Thank you, Jay and Jerry. Doing the Q&As, so that we can hear from as many of you as possible, we would ask for limit of one question and one follow-up per person.

Thank you for your time. Operator, please open up the line for questions.

Yes, thanks.

Hi, Perry.

Good morning. I just want to explore the contract manufacturing business which is in pretty high growth.

I was just wondering, how competitive is to get these contracts, what's the typical sort of contract length and are you able to direct the contract towards plants where you have availability or do you have to adhere to kind of dictates of your customers?

It's not so much how competitive, Perry. It's more what does the freight line and opportunity look like for our customers.

So, what we are not trying to do in contract manufacturing is go out and undercut existing suppliers. We are really trying to do one or two things; find out where our major branded player needs some additional capacity whether it's because of their own geographic footprint or new product launches they have planned where they don't have the packaging capability and match that need up with our manufacturing footprint such that we could often be in a position our pricing will be exactly the same as someone else but there would be a freight line saving from our extensive manufacturing footprint compared to an existing supplier or our service and quality which is now often recognized by our customers is seen as an advantage versus perhaps say less financially stable smaller independent operator.

So it's less about price and it's more about freight lane, supply chain, efficiencies and our customer service versus alternatives. Typical contract length, three years by contract albeit they would tend to be rolling after then because really Perry, we are becoming a permanent path of a major brand owners supply chain but there would be a typical length which give some visibility over the volumes and the time you will get and the capacity allocation within our footprint.

If you think what plants, what we try and do is very much use this as an opportunity to fill up existing spare capacity that we already have within the manufacturing network. We don't really see this as something whereby on two frequent occasions we would lay down brand new capacity to do it.

It's mainly about leveraging the spare capacity we have within our existing infrastructure.

Okay. That’s good for me.

Thank you.

Thanks Perry.

Hi. Good morning guys.

Good morning, Bill.

Just on the gross margin modeling, I think we got away wrong and the street got away wrong. So is there anything to sort of, I mean you gave commodity build and it looks like some of were up and some were down but it's still sort of hard to figure out what the real impact of the contract manufacturing is.

So is it possible to kind of give us a bridge for the quarter and maybe, some like sweeping outlook on how do kind of model going forward?

Yes, I mean I think what we have said last quarter is we saw gross margins as flattish for the year. That easily means that it could maybe up 10 or 20 bits or down 10 or 20 bits but flattish was the prognosis for the full year that we were laying out, contract manufacturing is something that in percentage terms deliveries are at slightly better margin than our traditional business but in sense of dollar per case, given the revenue is lower because you are not charging for ingredients and packaging is a lower cash contribution per case and I think we have given examples in the past in terms of cash per case, it maybe some $0.20 - $0.30 less in cash per case but in percentage terms, higher than our traditional private label business.

Commodities overall pretty much of wash bill because what we did say in the one area where there were some meaningful commodity advantages that are juices, we would be passing those on this year to reflect them in price after two or three years of significant commodity cost inflation in certain juices and that what we wanted to do was get in a position that we rebuilt the base volume of that category rather than try to hold on to the commodity cost advantages. So commodities within juices, we have parked that back to the customers and we have overall this year when you look at our juice and drinks category performed much better than the market, even though this quarter was a bit softer actually private label juice and drink this quarter was down about 6% and we had some marginal growth.

So we continue to see an outperformance of the market there but...

I mean Jerry kind of hit all the main points but one thing he didn’t hit on is freight has spiked up a little bit for us as we are bringing on some new big contract manufacturing let’s say one of our plants might come online quicker than another and we are doing a bit more shuttling of freight in a plant because of it which probably cost us between a million and two million of additional freight in the quarter but as we get our plants up and running, next year, we should start lapping that additional freight.

But for totally flattish, Bill for full year.

Perfect. And then is there a way to kind of break out the impact of Aimia on the sales in the quarter, this may be I just missed in the press release but is it possible to go to get like a pure organic number?

It's about $25 million for Aimia in the quarter.

Okay. Got it, $25 million in sales, did you say in profit impact was, was that too much information?

About $3.5 million in EBITDA.

Okay. That's great.

That's all for me. Thank you guys.

Good Bill.

Yes thanks. Good morning guys.

Good morning, Mark.

Follow-up to Bill's question, so you take what you said about gross margin for ’14 and I hear you on long term why you expect it to improve but how are you thinking about it from ’15 perspective and then I had a question on the fourth quarter.

As you know we don't really give details forward guidance Mark just because we do find this business that can be quite volatile and things can change quickly. I guess what I would like to say on 2015 overall is we do think we are existing this year and positioning ourselves for 2015 in a bit of a better light and let me just give you a few of the drivers for that.

We all know that the carbonated soft drink landscape for 2014 has been extremely challenging for us. Consider it quarter-over-quarter, we saw about three quarters ago a 15% CSD decline in quarter two that was 15% CSD decline.

In quarter three that was an 8% CSD decline. So we are seeing a much better trend albeit some very challenging figures within CSD.

When you add that to the fact that Aimia clicking business with synergies to come and the winter seasonal business obviously the Aimia contribution in quarter four and quarter one are going to be much more meaningful as it’s a hot beverage business that thrives in the winter and with its growth in synergies coming through, it will be more meaningful contribution in 2015. And then you add the known new contract manufacturing wins that we have signed up, they are all kind of qualified and in good shape.

We will start the production against the first one of those. So it should start flowing an impacting our business positively at the end of quarter four this year and the second one should certainly be up and running by the end of quarter one next year.

So if we continue to see that improving trend in the core CSDs we layer over the benefit of Aimia and its growth and we have new contract manufacturing wins that down would pressure we have had on fix cost recovery in over the past four to six quarters should be something that we get behind us.

Got it. So bit of an expansion not ready to give a number but a bit of an expansion next year?

Yes.

And if I could follow up just, I know you don't normally speak too specifically about the given quarter but I will ask the question nonetheless, I mean EBITDA has been down high single, double-digits for the last three quarters you are talking about higher SG&A in the current quarter than in the third quarter so I presume you expect EBITDA to be down. Can you speak to magnitude and of course you have got months behind you in the quarter so can you just speak to what’s your view there?

I think overall the trends that we are seeing on stabilization of the top line is something that with the month behind us we feel comfortable as continuing to progress into the fourth quarter so that's positive, the main reason EBITDA is down when you look back the quarters is the lapping of the SG&A last year. Last year as you know Mark we took out significant multi-year SG&A cost for incentive programs, many business units did not achieve a short term bonus last year.

Total SG&A last year was capped or reduced by $16 million and we are lapping that this year. And if you look quarter three just finished as the gross margin line we were only of $1 million and $7 million of the impact on EBITDA was SG&A.

So as we move in into 2015 that really adverse SG&A lapping effect will be out of the numbers and if we continue to see that more stable or positive top-line with SG&A that's more comparable even if not identical I think that will make a material difference on the EBITDA performance. So $7 million or the $8 million of EBITDA in quarter three with this SG&A comparison to a very-very low year last year.

And if you look at last year Q4 SG&A was to low adjusted and I think was about $40 million $41 million for this quarter I think it was closer to $38 million. So we are still lapping some low SG&A that is going to pressurize our EBITDA in the fourth quarter but as Jerry said once we get into the next year that will be gone.

And Mark coming just to help in your modeling about $2 million of this current EBITDA is from acquisition, kind of amortization of intangible in there so it's a kind of norm cash increase in SG&A.

Fair enough and from a GP perspective in the fourth quarter, you had fractionally down GP in the third quarter had the benefit of Aimia fourth quarter you get a bit of seasonality benefit from Aimia I mean do you think GP is flattish to up in terms of dollars in the first quarter, just help us think about that.

I mean what I have said in my prepared remarks is as a percentage of revenue, we believe 2014 overall will be flat compared to ’13 so if you look at the prior quarters, I don't have the exactly what it means as a percentage will be up a bit but that's what I would use for your modeling.

GM percent full year, fair enough. Okay.

Thank you guys.

Thank you, Mark.

Hi good morning everyone.

Hi, Amit.

Just a quick modeling question do you -- you said you were slightly, the low yieldable level right, is that fair? Low single digit decline in North America?

In North America, no it was...

It was up slightly.

0.4.

Yes half a percent up, and that was in a private level juice and drinks category that was down about 6%.

Yes, globally we were down the percent but that was because of the UK and just lapping a very good quarter last quarter.

So we are still passing through lower commodity cost but (inaudible) last quarter certainly.

We are passing through lot of commodity cost on those big juices that have some commodity favorability this year. We are actually passing on commodity cost increases on those smaller juices that have gone up, lemon, lime, raspberry, and prune.

Within apple, within North America we were up close to double digit and really it was a strong apple performance offset by kind of weaker cranberry and great performance but lead to overall U.S. up about half a percent in the U.S.

private label short stable juice and drinks market that was down just over 6%. So still kind of nudging forward on our share within that segment, Amit.

Alright. And one more on the UK, if I heard it correctly, Jay I think you have said gross margin in UK was up but your operating margins were down 70 basis points, can you help us understand that?

I will ask Jay to dig into the second bit on the kind of gross margins not only that benefit from Aimia which has higher gross margin but even on our core business within the UK striping out Aimia and Calypso our core business gross margins were up. The biggest challenge in the UK in the quarter just to expand on this and get give Jay a chance to look up some numbers with the total UK market was very sluggish in the quarter but the data we have is a total UK market that was down 5.5% and our UK soft drink business excluding the acquisitions down about 5% so we held the increase by just a little bit, our market share in the UK and the market was mainly down due to this significant weather comparison versus last year heat wave but Jay...

I will go Gross margin to operating income and we got to keep in mind is SG&A expense and we are lapping UK bonus that was zero last year and we are reinstating the full accrual so you are really seeing much more hit to the UK for the lower incentive comp last year in proportion to the overall change. That is probably what is your biggest difference is.

And we should see that impact for things three quarters at least?

Well certainly for next quarter and then obviously bonus is that the short term bonus which is annual calendar year, Amit, so there would be much less of an impact 2015 versus 2014.

And then one more final one for me is you talked about the CSD sequentially getting better, right?

Yes.

But if you look at the large, branded companies, they have been fairly consistent saying that we are being really priced rational. So what's the outlook for your business in ’15?

Should we -- should we assume that sequentially get better? And what you are looking at today based on that, is it reasonable that we might be able to get flattish revenues in North America next year or is it still being too optimistic?

Yes, let’s come and look at the building blocks of that, yes I would say that the commentary from the national brands is for more rational and I believe directionally overall that is a positive. When we peel back the layers of the onion on national brand pricing, you really do have to look at it by channel and by type of business.

They have their concentrate pricing, they have a convenience and gas pricing, they have the pricing by the new smaller pack they have introduced but in what is our everyday bread and butter business Amit, two liters of CSD and 12 packs cans of CSDs in large format retailers we have still seeing for something like nine odds weeks out of the 12 to 13 week quarter very aggressive $1 two liter and $3 12 pack can pricing. For around about three weeks towards the end of August, that pricing was less aggressive and we did see a noticeable lift in our performance during that time period and that does led us to the trend being minus 8 this quarter versus the minus 15 last quarter and the minus 17 the quarter before.

So the pricing has still been very competitive in large format retail on those big packs but just not as wholesome every week as the quarters before. I believe we are likely to see a continuation of that slow move back towards more normalized pricing based on the commentary we are hearing from national brands but it's not going to jump back there instantly and it might never get to exactly where it was before but certainly we would anticipate it's on the improving trend.

So if that's all the background, does that mean growth in we contract manufacturing a continuation of that trend within CSDs that we could be looking at a flattish volumes in the UK 2015 I don't believe that's an unreasonable outlook Amit.

And I agree the volume now your question was on revenue. Keep in mind within what Jerry said on volume of mix shift between private label to Cott which you will get a little pressure on your revenue line even though volume might be flat so keep that in mind.

If we are selling a contract pack case of juices and the cost of the liquid inside that ten buck cases, six buck liquid which is being provided free of charge by the brand owner, then your revenue is vastly different even if the margin on that is pretty similar.

Right, and then -- and I can go back and look at the details. But is that a 60/40 split?

Or is it even more than that?

It really depends on the product Amit and while the vast majority of customers supply their ingredients and packaging, some customers supply their ingredients and not the packaging. A very few customers ask us to supply all, so it really is contract specific Amit.

Okay. I appreciate the color.

Thank you very much.

Thank you.

Hi, good morning, guys.

Hi, Kevin.

Quick question for you, Jay, and I apologize if I missed this on the call. But just what changed with respect to SG&A, if I'm not mistaken earlier in September?

Your thinking at that point in time that SG&A was going to come in around $49 million and it came in around $45 million for the quarter. So that would seem to be something that had pretty good visibility on, and I was just curious as to what happened there.

We talked little bit on the call but I mean the few things that you saw one the since Barclays conferences where I mentioned the pounds did weakened significantly so we did have some FX movement that drove it down. We did pull down some of our incentive accruals for this year which reduced the amount of expense and lastly we did have some timing of marking expense that ended up not getting spent in this quarter and got pushed to Q4.

Okay. That's helpful.

On go forward basis, should we be thinking more towards the 45 end of the range or still to 49?

Yes what I said for the Q4 you should still plan for 49 and with the addition of Aimia, as Jerry said we have about 2 million of additional non-cash amortization related to the Aimia and the Calypso transaction going through SG&A and I would say we are probably going to be closer to 48-49 per quarter on quarter basis.

Okay that's helpful and just one more for me. Jerry, can you comment, so you've been pretty consistent in your outlook for carbonated soft drinks, can you sort of connect the dots here, I guess?

In terms of your view of rationalization of your manufacturing footprint going forward? Because if a 3% to 5% decline does indeed play out, this would sort of set up for further rationalization for Cott, whether this is four years from now, five years from now, and kind of on a consistent basis.

And then the second part of that is any of that? And I think the answer is no, in the $30 million number that you guys were targeting for cost savings.

Thank you.

Good question Kevin. As you might recall we have a process of reviewing our manufacturing footprint on an annual basis.

We tend to start that review backend the quarter four and it runs through quarter one. We did that review last year and the outcome of that was the closure of two plants which were both closed by the end of quarter two this year and we will undertake that exercise each year.

As we currently look at volumes the last two quarters that they have been pretty much flattish and obviously with new contract manufacturing wins to come and if this more positive trend on CSDs continues we would expect flattish or a bit better as we look forward that outcome when you put contract manufacturing together with CSDs is one in which it would not particularly increase the pressure on further rationalization. When we did our last review there was one plant that was boarder-line and it was a plant where we had a lease in place for an additional approximately three years then and we said that the time that we would keep close eye on that plant and it maybe a plant towards the end of that lease that we would exist on the basis that if we exist it sooner we felt we carry on paying all those lease cost and it would not be financially attractive.

So we will do our review every year. Currently volumes are stable with a more positive outlook with the additional contract manufacturing growth to come that predominately goes on the same plants, the same lines but there was one plant that was borderline before but as we get closer to lease renewal is something that we will keep a very close eye on whether we rationalize that as well.

Does that kind of help, in the $30 million, no that's not assuming plant rationalization. If there was plant rationalization that would be an overlay on top of that.

Okay, very good. Thanks for the color, it's helpful.

Thank you.

Thanks. Good morning, everyone.

Hi Nik.

Just a quick question, Jerry. You indicated that the price gaps have widened a bit with the national players for the last three weeks.

I'm just curious in September and October, have you seen a continuation of that trend? Has that step back up and then could you provide any context around that and then just a quick question on the manufacturing footprint.

It seems like the trend today is more packed configuration, pack clauses. And I just was curious, can Cott keep up with that kind of package innovation with your current capacity?

Thanks.

Good questions and really on the first one as I said on the question a minute ago, certainly as we look at the first month of this quarter we have seen that more positive North American trend continue with specific regard to pricing we had these kind of three better weeks at the end of August and I have to be honest and say September then went back to the straightforward $1 two liter everywhere and $3 12 packs but the volume position as we look at it continues to be one where we see a continuation of that slightly more positive trend. I think what we will see is a bit more lumpy-bumpy pricing as we look forward with some competitive period and some slightly less competitive periods rather than what used to be more like a full 12 weeks of those promotional prices.

So that would be an outlook on the volume side and the second part of the question was...

Talking about the capacity and your ability to (inaudible)

Yes, we have the ability to produce a significant variety of package formats so there is nothing in the manufacturing capability that stops us from echoing all those more diverse packaging formats whether it's 8 packs instead of 12 packs, whether it's smaller slip cans instead of standard 12 ounce cans et cetera. However, what we are focused on is making our plants more efficient, reducing the number of bums or build of material it’s called to try and streamline our plants rationalizing out some of the smaller SKUs, the contract manufacturing business that’s coming in is often insignificantly larger runs anywhere from 10,000 cases up to an excess of 100,000 cases where as many private level runs can be 2,000, 3,000, 4,000, 5,000 cases per CSDs and less than 1000 cases for juices.

So our focus is on making our plants more efficient, more streamlined but there is nothing that technically if any of those new package formats became a great success and upscale that would stop us having that offering.

Fair enough. Thank you.

Thank you.

Thank you all very much for joining our call today. This will conclude Cott Corporation's Third Quarter 2014 Call.

Thanks for attending.