Jarrod Langhans - Director, Investor Relations Jerry Fowden - Chief Executive Officer Jay Wells - Chief Financial Officer

Bill Marshall - Barclays Perry Caicco - CIBC World Markets Bill Schmidt - Deutsche Bank David Hartley - Credit Suisse Mark Swartzberg - Stifel Nicolaus

Good morning and thank you for joining our call. Today, I am here with Jerry Fowden, our Chief Executive Officer and Jay Wells, our Chief Financial Officer.

Jerry will start this morning’s call with some of his observations on the steps that we are taking as we continue to build shareholder value and deliver consistent cash flow growth before turning the call over to Jay for discussion of our third quarter 2015 consolidated financial performance. Jay will then turn the call back to Jerry, who will complete the call with his perspective on our third quarter 2015 performance, including an overview of our larger business units, as well as expectations for the remainder of the year and some comments on our outlook for 2016.

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

Thank you, Jarrod and good morning everyone. First, let me say that I'm pleased with our 2015 as a whole has gone so far.

We continue to track in line with our internal expectations, and quarter three was a good example of how we as a more diversified business with the broader portfolio were able to capitalize on volume growth in categories such as bottled water, sparkling or flavored water, hot chocolate, instant coffee, and freezables as well as leverage new routes to market such as home office delivery, contract manufacturing and vending in order to offset the ongoing volume decline in other more mature categories such as carbonated soft drinks and shelfstable juices. The net result of our greater diversification has allowed us to deliver stable North American volumes, DS Services revenue growth, EBITDA growth, significant improvement in gross margins and meaningfully higher free cash flow.

These results were delivered despite a number of headwinds that we have previously discussed such as $3 million for an exit impact and a challenging UK and European market then retail environment. In addition we increased bonus approvals this quarter by $2 million compared to quarter three last year as Cott North America is performing ahead of bonus targets.

Now, before passing over to Jay, to discuss the specifics of our Q3 performance I wanted to cover our vision, Cott's vision of a longer-term. While every quarter is important and we fully understand the need to continue to run our business tightly, follow our policies and deliver strong free cash flow for growth, we are working towards a longer-term goal, one continues to strengthen Cott; move Cott from volume stability to revenue growth, to create a business with higher margins and lower customer concentration and hence lower risk.

This future business profile of its greater earnings predictability alongside lower volatility and should receive a higher valuation more in line with our peers. I know we have come a long way over the past two years as we have diversified and repositioned our business.

But I believe we have multiple building blocks to continue our growth. I'll do my best to layout these building blocks in a clear and simple manner.

First, we aim to hold our traditional business stable. Although I'm sure there will be some bumps in the road.

And keep our factories full and efficient in order to play their part in supporting our plant, meet a high teen free cash flow over the next three years which we can utilize to pay our staple dividend deleverage our balance sheet and continue our diversification. Second, to drive 3% to 4% organic revenue growth within DS Services, from customer growth, consumption growth and price improvements and also benefit from the corresponding organic EBITDA growth.

Third, to deliver around $10 million of incremental synergies [indiscernible] such that we have delivered our expected $30 million of DS synergies by the end of 2017. Both to strengthen DS Services market position through synergistic home office water delivery and office coffee services acquisitions of around $10 million to $20 million per annum.

This should drive and incremental $3 million to $6 million EBITDA per year based on an average post synergy multiple of around three times and finally fit to continue to evaluate further scale opportunities to consolidate our position in home office water delivery and office coffee services as well as other higher-margin growth oriented categories where our platform operating strength and synergies can be leveraged. So, on that note, back to our progress and performance in the third quarter.

Quarter three continued to demonstrate good gross margin progression from a combination of the more stable Cott North American business volumes, tight operating and cost controls, plus DS Services operational leverage and synergies coming through. Overall Q3 2015 gross margins were 30.8%, up from last year's 13% or up 110 basis points or 14.1% if we look at our traditional business standalone.

This good gross margin performance was reflected in EBITDA consolidated adjusted EBITDA of $95 million, $98 million on an FX neutral basis. Or to put it another way, a 12.5% adjusted EBITDA margin compared to just 8.8% last year.

In addition, adjusted free cash flow for the quarter increased 29% to $70 million versus last year's adjusted free cash flow of $54 million. This strong free cash flow performance puts us in a good position as we move into our high cash generative fourth quarter and provides a great base for our expected mid to high teen adjusted free cash flow growth from 2016 to 2018.

Now let me pass over to Jay to provide more details on our financial performance and the key financial drivers.

Thank you, Jerry and good morning everyone. In the quarter, revenue increased by 41% to $756 million, $776 million if we exclude the impact of foreign exchange.

This $20 million unfavorable foreign exchange impact on revenue was generally split between our UK, Europe and Cott North America business units. With our UK European operations accounting for $11 million off the [indiscernible] and the remaining impact was largely generated within our Cott North America business unit, and particular Canada.

With respect to mix shifts, our Cott North America business unit accounted for around $7 million of product mix shift and our UK European operations accounted for another $10 million of unfavorable mix. Consistent with the commentary from our UK peers, our UK European operations saw some topline headwinds in the quarter and remains under pressure on the back of a challenging retail and competitive environment, soft underlying market dynamics and poor weather in the UK.

However, we continue to believe that revenue is not currently the best leading indicator for our business due to a combination of certain macro factors plus a significant shift in our business and customer mix as we alter the shape of our entire business. While these macro and market factors exists and the transition offer traditional business is under way, we believe the best leading indicator for cost performance our overall buying stability, low cost [indiscernible] plants, DS Services consumption and customer growth alongside increased pricing and integration and synergy capture which should drive improved gross margins, EBITDA growth and strong cash generation.

Gross margin for the quarter was 30.8% compared to 13%. Excluding DS Services, gross margin increased to 14.1% from 13% driven by stable volumes in our Cott North America business unit and cost and efficiency savings.

We made good progress on our cost and efficiency savings program, our war on waste in our Cott North American business unit, and our goal of reducing production cost by $30 million over three years. Just under $6 million of cost savings realized to date and the anticipation of $7 million to $8 million of savings realized by the end of the year.

Please remember, that a portion of these savings are shared with our customers who are integral to the implementation of many of these projects. We are also in the process of implementing a number of significant cost down programs within our UK European operations in order to offset some of the headwinds that we foresee that our UK Europe business unit experiencing over the next few years.

These programs which will run over the next two years to three years will cover such areas as SG&A, production line consolidation and efficiency program, as well as freight shuttle and warehousing projects. We have previously noted that stable volume and our cost savings program should provide 100 basis points improvement in the gross margin of our traditional business in 2015.

We continue to believe that we can achieve this 100 basis point gross margin improvement in 2015, we can hold our margins stable within our traditional business in 2016. Turning to income tax, we continued to project a tax benefit of just under $20 million for the full year, but the exact outcome would be dependent on our fourth quarter results.

As discussed during our first quarter earnings call, we are calculating the quarterly income tax provision on a discrete basis rather than using the estimated annual effective rate for the year resulting in an income tax benefit of $6 million in the quarter. Cash taxes continue to be minimal with less than $1 million of cash taxes paid in the quarter.

Adjusted net income and adjusted net income per diluted share were $10 million and $0.09 respectively compared to adjusted net income of $8 million and adjusted net income per diluted share of $0.08. The additional amortization and depreciation associated with the purchase accounting from the DS Services acquisition was just over $3 million for the quarter.

Adjusted EBITDA increased over 100% to $95 million with the addition of DS Services alongside stability within our Cott North American and despite the impact of $3 million plus of unfavorable foreign exchange rates and competitive market pressures in our UK European operations. With respect to 2015 foreign exchange we now anticipate that the adverse effects will impact our consolidated topline or revenue by around 3%.

This is entirely in our traditional business where the impact is around 4% of our traditional business revenues. With regards to how we see foreign exchange affecting our full year 2015 EBITDA, we had previously mentioned that FX would likely provide a headwind of $10 million to $12 million in 2015.

As we are now entering the fourth quarter we would estimate the full year EBITDA impact at or just above the high end of that range. Turning to our first strategic priority, that being the four C's and focusing on cash by controlling CapEx, managing projects tightly and rigorously managing working capital, we saw adjusted free cash improved by $60 million or 29% during the quarter.

With respect to expectations for free cash flow for the full year, I have previously stated that we expected free cash flow for 2015 to be in the range of $94 million to $114 million. And with a strong free cash flow performance that we have seen over the first three quarters of 2015 we would expect to end the year at the higher end of that range.

With additional cost savings and cash generating projects in the pipeline, as well as strong cash flow generation from our business operations we believe that will be in a good position moving to forward as it relates to deleverage in our balance sheet and we continue to expect adjusted free cash flow to grow at an overall CAGR in the mid to high teens from 2016 through 2018. I will now turn the call back to Jerry.

Thanks Jay. I'll now review the performance of our larger reporting business units during the quarter.

Let's start with our Cott North American business unit. Our third quarter 2015 volumes were broadly flat in both the actual cases and serving driven by a strong ongoing growth in contract manufacturing which grew around 50% or five million serving equipment cases as well as 9% growth in sparkling waters and mixers.

These strong performances fully offset declines in both the general CSD market and private label CSDs as well as within shelf-stable juices. Our North American revenues as previously explained trailed volume of $339 million, down just 2% on an FX neutral basis due to our mix shift inter-mall contract manufacturing and other categories and away from private label CSDs and shelf-stable juices.

As noted in the past these growth areas have lower revenue by case as the brand owner normally provides the ingredients on packaging. But the profit dollars per case are fairly consistent.

With stable volumes, and our continued war on waste and efficiency programs our North American gross margins increased 130 basis points to 12.8%. Now with regard to national brand promotional and pricing environment in CSD's we saw frequent and continued activity in big bucks retail on $1 2 liter PET promotions and $3 12 pack, 12 ounce can promotions although the activity was no more intense than the prior quarter.

Our iData continues to show that national brand players have remained more price aggressive in large format retailer then they are having in any other channels where they have pushed higher pricing and more favorable price pack and makes action product. As we've mentioned in the past our goal is to hold our North American volumes broadly stable with growth in contract manufacturing and other beverage categories offsetting the ongoing market and private label, CSD and shelf-stable juice decline.

And I am pleased that we've managed to achieve this every quarter this year. All in all, I believe our North American business unit is in a more stable position.

Now turning to the U.K. Our U.K.

and European operating segment excluding Aimia represents under 15% of our consolidated revenues and EBITDA, and as you know has been the top performer for much of the past three to five years. That said, we have seen this year and have been signaling for some time that we see the environment over the next few years for our U.K.

and European operations as challenging for a number of reasons including the adverse effect of the foreign exchange not just on the translation of earnings and U.S. dollar based input costs, but also through an increase in low cost him imports from a devalued euro into the south of the U.K.

If you add these FX headwinds to a competitive marketplace, and narrowing of energy drink price tags, poor summer weather and significant disruption in the multiple grocer retail landscape as they wrestle with how to adjust their business proposition, to compete with the dramatic rise of small format hard discounters, you have a number of challenges, many of which we see lasting for some time to come. The cumulative effect of these factors is evident in the top line volume and profit performance of our U.K.

and European business. As a result revenues in local currency were lower by 12% and volume was down by 6% although we were successful in holding gross margins flat.

Against this backdrop we will continue to run our U.K. operations tightly focused on customer service and believe the more diverse mix and capabilities of our U.K.

business, better positions us today to limit these impacts versus where we would have been just a few years ago. As Jay noted, we're also in the process of implementing a number of significant cost down programs within our U.K.

based business, which will run over the next two to three years covering SG&A, production line consolidation and efficiency programs plus a freight Shuffle and warehousing projects. In addition to these base business cost reduction program we will continue to invest in the growth of Aimia foods which showed 8% local currency topline growth in quarter three, and signed a significant new multi-year contract worth over 8% Aimia foods revenue per year.

All these actions will create a stronger more productive UK and European business unit is like to come online. However, we believe it will be a two to three year process.

Thus in the short term we expect topline and bottom-line pressure in our UK and European business in 2016, which we would then anticipate slowly recovering as the benefits of the various cost reduction and revenue programs coming across 2017 and 2018. Despite the UK market challenges and absence of short term growth our service is excellent.

We won the Grocer Gold Private Label Beverage Supply of the Year award again and rest assured we will manage the situation tightly, control our costs and focus on free cash flow. So the Cott UK and Europe continues to play its part in Cott's deleveraging.

Now turning to DS Services, overall revenues were up 3.2% to $268 million during the quarter with growth of just under 4% in the largest segment of home and office water delivery, growth of around 16% in single cup of coffee, and 10% in retail sales; partly offset by reduced energy and fuel surcharge and lower sales in traditional brew basket coffee. Overall DS Services revenue on a energy surcharge neutral basis or like for like revenue increased 4%; within the home office water delivery or HOD, the revenue growth of just under 4% was driven by an increase in average returnable five gallon and three gallon consumption excluding premo of 1.6% per customer location.

An increase of 0.3% percent in total customer numbers not including the customers from the tuck-in acquisitions and 3.4% increase in average non-retail returnable bottle prices. DS Services gross margin continued to perform well with adjusted gross margins of 61.4%, up 170 basis points on a pro forma like the like basis, which was supported by the operational gearing benefit of incremental customers within HOD as well as the capture of synergy benefits.

With regards to DS Services synergy an integration quarter three was a busy quarter. We saw the opening of the new DS Services national customer service call center in Lakeland Florida in August, with the employment and training of over 350 new staff, 450 planned by early 2016and double running of this center alongside two other existing facilities for a couple of months to ensure a smooth transition.

Those other two facilities have now been closed and we will retain one other small backup facility for a few more months as the additional staff and systems of the new national call center in Lakeland come home straight. The staff-up costs of this new center and double running costs are shown in the synergy and integration cost adjustment and once fully up and running the new center should not only provide improved customer service and technology, but deliver some $2 million to $3 million of cost savings per year by 2017.

Overall we continue to my good progress on DS Service synergies and integration with benefits of $2 plus million in the quarter and $6 million year-to-date. Thus we are on track for our $10 million dollars 2015 target.

While not strictly a Q3 item, it's also worth remembering the recent redemption of the preferred shares issued at the time of the transaction which resulted in the removal of a number of associated restricted covenants that effectively precluded any DS Services follow on acquisitions. This early redemption of the preferred shares has allowed us to evaluate and progress a number of synergistic and highly value creative tuck-in HOD and OCS acquisitions.

As noted in our press release this morning we closed on the two asset purchase agreements announced in our second quarter earnings release during the latter part of quarter three, with the larger of the two acquisitions that represented $7 million of annual revenue closing on the last day of the quarter. In addition, I'm also pleased to highlight that we have recently signed an additional three small purchase agreements that represent just over $1 million of the combined revenue which are expected to close before the end of the first quarter 2016.

As we look forward we see an attractive pipeline of home office water delivery acquisition opportunities and would look to continue to build our home office delivery scale. So to summarize the third quarter, and look out to the future, with regards to DS we will continue to progress synergistic acquisition, staying focused on DS Services integration and synergy capture, and we expect DS Services to continue to deliver 3% to 4% revenue growth via an increasing water customer numbers, consumption and increased pricing.

In addition, in our Cott North American business unit, we look for continued volume stability from contract manufacturing wins and other growth categories, broadly offsetting carbonated soft drink and shelf-stable juice category and private label decline. This in turn should allow our pumps to stay well utilized and efficient and result in stable gross margins and EBITDA demonstrating Cott North America's essential role in Cott's wider cash generation, diversification and deleveraging.

As mentioned earlier, we see the UK and European landscape as challenging for a number of macro and micro reasons and that this environment will exist for the next two to three years. Against this backdrop we will run the business tightly focused on cost efficiencies and free cash flow while still supporting the strong performance of Aimia foods.

While talking about cash, our full season approach remains central to everything we do. And we will continue to focus on free cash flow generation which will see us continuing to manage 2015 and 2016 capital expenditures tightly at around $120 million;; split $50 million for our traditional business and $65 to $70 million dollars for DS Services, plus the onetime 2015 $5 million of DS Services integration capital expenditure previously communicated.

As it relates to cash taxes, we still expect our cash taxes to be minimal, in 2015 at $3 million to $6 million. On commodities, little is changed since last quarter, and it's pleasing to see 2015 as a year when commodities net off pricing of foreign exchange continue to be fairly benign.

With regards to 2016 commodities, it's a little early to be precise or specific, but with the exception of high proctos -- we see the overall commodity landscape as flattish. In closing we're pleased with the progress made against our strategy through the first three quarters of 2015 with a stable to stable plus traditional business, DS Services delivering on its acquisition model and we intend to stick with the plan outlined designed to create a stronger and more growth oriented business over time.

With lower customer concentration on risk, this should result in higher valuation. We believe free cash flow which is by far and away the best measure for cut as it cuts through all the purchasing accounting adjustments, is going well and our performance year-to-date provides a great start to our mid to high teen compound annual growth rate in free cash flow between 2016 and 2018 which should support our rapid deleveraging, transfer of value from debt to equity holders, provide strategic optionality going forward, as we look to undertake further value creative acquisitions and strengthen our overall business position and our home office delivery water and office coffee services platform.

So on that note I'd now like to turn the call back to Jared to open up our question-and-answer session. Jarrod Langhans Thank you Jay and Jerry.

During the Q&A, so that we can hear from as many of you as possible, we would ask for a limit of one question and one follow up per person. Thank you for your time.

Operator, please open up the line for question.

I actually wanted to start on one of those last ones that you made, Jerry, as far as your cash flow and your debt pay down and deleveraging, and if I look at what you have reported, looks like you're making some progress on the debt pay down side, and Jerry, now it looks like you're running at the high end of your free cash flow target. Can you just remind us on the pacing of this deleveraging and is there any opportunity if you would maybe pull it forward a little bit now?

If you look at our free cash flow projections we're delivering well this year and we've discussing that. You know '16 through '18 we should see a mid to high teens CAGR, so really delivering the cash we had planned as part of the DS transaction.

And when you look at our debt, it really is our ABL that is our one debt pay down opportunity right now and that's what we're going to be focusing on paying down through the end of 2016. The next tranch of notes that you would look at is the $350 million of DS notes that we rolled over as part of the transaction with the 10% coupon.

But if you look at the make whole payment if we would try and do anything today, it's still at or right around the $70 million make whole payment. So still the make whole is too significant for us to do anything with those notes at that point in time.

But we have the ABL to focus on now. As we get to 2017, we can look to call those notes in September, at a much more reasonable price than the $70 million make whole they're at right now.

But for all that between paying down the ABL, and then refinancing paying off a portion of our DS notes we see that by the end of 2018 and we should be down to below three times EBITDA at our leverage.

Perfect, fair enough, sounds great. And then just kind of housekeeping, I want to make sure I'm understanding correctly; so on the contract manufacturing, I think if I'm doing it right you guys are running close to the 45 million incremental cases, 44 million incremental cases off of that 50 to 80 target.

I imagine we're still targeting the high end of that if I'm reading those numbers correctly?

Yes Bill, I mean it's been another good quarter on contract manufacturing, about a 5 million items equivalent case growth or 50% in the quarter. I think your math is spot on that, puts us between 44 and 45million cases growth so far.

And of course we still have the balance of this year and next year to go on that 50 to 80 million target. So still pretty much feel of heading towards the upper end of that target.

Curious, sounds like the UK business is in kind of a bit of a race between your ability to cut costs in your business, and the market getting much tougher, and so I guess one of the questions is sort of how low could your operating profit go before the impact of your cost cutting and your efficiency efforts really begin to kick in? I'm not sure you can answer that but maybe you can give us some guidance.

Let's look at the building blocks of what's going on in the UK, because I think Perry you have hit on the one area in our overall results where I think we've got work to do. Although much of that work reflects a market dynamic in DS, Cott North America and the rest of our business I think everything's pretty much tracking to plan.

So the building blocks behind this -- obviously you have got the foreign exchange impact on the translation of their earnings, you've got some foreign exchange impact on U.S. dollar based input costs or things like the aluminum in cans, and the significant devaluation of the euro actually means there are some private label products coming into the south of the UK out of continental Europe.

Because in effect that had the benefit of a 20% to 25% drop in that cost of local labor, almost counter products. So that's one set of factors.

Then you've got the whole disarray that's going on in the multiple grocer channel within the UK and our business was really built to serve those four large multiple grocery retailers. I don’t think there's one of them yet that hasn’t changed their CEO in the last couple of years and that shows the scale of the disruption that's going on.

And most of those large big box retailers are going backwards in revenue that are around about 3% to 3+%. And we supply all of them with a large chunk of their private label programs or value beverage programs.

With the challenge they face, really being the rapid growth of the hard discounters, I'll be in little one growing compound just under 20%, the other one growing compound in the low teens, and while we do supply some products to both of those retailers our scale of penetration or share of what we supply to those two is lower than the big box retailers. So you have that challenge.

But it's been a bit of a squeeze in energy price gaps, about a 30% reduction in that price gap which has been an additional challenge for our business. I mean it could be fair, this is not off the overall market at the moment, for soft drinks in the UK have been pretty challenging.

I only saw last week the September stats for the overall market in the UK and I think September carbonated soft drinks total market, nothing to do with not so private labels, including all of that total market CSDs was down nine and total market juices were down 11. So that's the backdrop.

Against that I think most people will give us credit for running businesses tightly when it's a challenging environment. And we've been working on for a number of programs.

Some can be implemented more quickly. SG&A cost reduction programs, and we are already in discussion and have been with our employees for the past three to four months on changes to benefit programs, on departmental and headcount restructurings and we would imagine all of that being in place for the start of next year.

There are some additional works on changing our warehousing footprint. That does require external government agencies to be involved with regards to planning permission and zoning.

Those requests are already in. It can always be a bit of a lottery as to how long that takes, and once we get that planning permission, that's a 12 to 18 month build period.

But that will meaningfully reduce our cost of freight and shuttle and warehousing compared to our current setup which requires much more offsite storage and therefore all the freight and shuttle associated with it. So SG&A savings come in next year, warehousing probably more geared towards 2017.

And then we're going to adjust our line composition, decommission a couple of our slow alliance, make some minor modifications to other lines such that we can produce more of our products on a higher speed more efficient lines and that coupled with some other wide reduction programs on bottles will go in place phased through 2016. Overall if I was to give a scale, but there are a lot of moving pieces, Perry, I'd say that 2016 impact in our UK operations, probably something in the in the low single-digit, in terms of millions of dollars of EBITDA may be to mid single-digit.

So not something in the grand scheme of things that derails the overall cost proposition. And it is something that we're taking seriously and will tighten up on all those costs we've discussed.

So I don't know if that helps, Perry. I'm happy to try expand or go on a different direction if it would help you more.

That helps a lot, and even with the sort of EBITDA erosion, is there a possibility that you could not bleed cash during that time period or would that not reduce the cash flow during the time period.

I mean whether that could be a small impact on cash flow, I don't know if the timing of some of these things impacts on that but I'm pretty confident we'll continue to live a good free cash flows out of the UK operations. And the approach we're taking to the warehousing side of that is one of which we're working with an outside third warehousing party so that the capital expenditure of that project would not be ours.

And the next savings from all the different shuttle and freight activities, more than pay for the rent of that new warehouse and we are still cash positive on that overall transactions. So we're being very mindful of the free cash flow in the way we're setting out these programs, Perry.

Can we just broaden the retailer conversation -- I mean talk about some of U.S. guys as well.

So I don't know if you've already had price discussions with your largest retailer yet. May be an update on kind of how that's trending for the year especially since they obviously are going through pretty dramatic change.

And then how you intend to lap the last Tesco stuff, I think that's the first quarter of 2016. So there's anything planned in the UK and how much of that UK softness is related strictly to Tesco?

And then it sounds like both in Europe and maybe at some point the U.S. like you need to find a solution for the hard discounters because they're the ones who are clearly taking the share and they're going to be the big one in the marketplace.

So anything along those lines, and how much of this restructuring, I'll call it, and the UK is going to enable you to profitably service some of those hard discounters. And then lastly, in fact the long winded question but is there anything you could do structurally in Europe, maybe exit the business?

I don't know how much trended overhead it would cost you or partner or somebody else, because it seems like there's still a ton of capacity and most of your competitors are making some of the private label stuff, in similar challenges as you guys do.

Are you sure you want that in the corner of our recent strategic plan discussion, we have the label; very good question. Let's try and see if I can remember them in the right order.

In the U.S., I think customer relations with our largest customer are in a very-very good place indeed. We have had and completed all the kind of discussions that you might be hinting to Wolves.

And we believe our customer relationships as a result of agreeing the approach we're going to take on that, stronger than ever. So I feel very comfortable about that side of the equation.

And I think everything that they are trying to do in that business is good for their business and good for us. The everyday low pricing approach and keeping shelves full, and providing better in-stock availability are things that should, on average play beneficially for our business.

So I think that's the first one and I would try to answer clearly and positively. With regards to Tesco in the UK, we have already won business that would replace 40% of that lost volume.

The volume impact would be from about the end of February next year; so 40% of it excluding, that has nothing to do with Aimia win that we see. Those are completely separate and that's part of Aimia.

We have 40% replacement of that Tesco business in our traditional base business. We've also got that significant Aimia win which is about 8% of their total revenues in a multi-year contract for next year.

And we have a couple of our pieces of work in the pipeline that I think by the time we get to the end of February next year we will have increased the proportion of that Tesco business that we will replace and then the cost and efficiency and other programs designed to address the rest such that we keep the overall impact down into this low possibly mid kind of a single-digit EBITDA type impact. And we keep up tight control on cash.

With regards to the discounters we have traded with [LD] a little, consistently on various products for more than the last decade. And we do believe that the programs we will be putting in place in the UK over the next three years which is a combination of improving our production line efficiencies, significantly improving our warehousing footprint where we burn up quite a bit of cost in freight shuttle and product movements, the SG&A reductions and a couple of other projects that we're working on internally from a number of detailed discussions we have had with those customers would put us in the position that -- is it end of 2017, is it 2018 -- we are pretty comfortable.

We will be by far and away the most efficient, least cost, best positioned service supplier to meet those retailers needs. Now the only thing that I can't factor in there is whether $1.34 or $1.38 euro to the pound moves to $1.68 or $1.70.

But I think we've probably seen the worst of the devaluation euro versus pound behind us. So that picks up on healthy and little.

And then structurally, I mean we are a well positioned business in the UK. It's been a top performer for the last three to five years.

It's kind of a -- it was very valuable on supported coffee enormously as we had challenges in North America. Now we're in the position that the far larger business unit, North America is performing better.

And I do think the structural changes will be present in the UK for the next two to three years. It's a business unit we're still highly supportive of.

It's cash generative. It’s recognized as the supplier of choice.

And on the service league tables I think with certainly three, not all four of those large multiple grocers. We have been on the top of their service score boards, many of which they keep in their entrance holes to their operations, so every visitor can see consistently throughout the summer period.

So I feel that will come through this in the UK and that will actually have a stronger business than ever that's well positioned to take them all meaningful stake of business in those fast growing hard discounters.

Okay and there is one really quick follow up for Jay. When you talk about the mid to high teens free cash flow growth, being a CAGR, is that going to be that rate every year, in that range every year or is it front half or back half loaded?

I'd say CAGR, with purchase still, you look throughout I think the best way is to look at when we have the synergies coming in which are going to be at the earlier half of that range, and then when we have the benefit from refinancing the DS notes that are at the later end of that range, so it would be a little bit bumpy throughout. But the best way I can tell you is looking at a CAGR from 16 to 18 but really just track where our synergies are coming in and where the benefit of the refinancing of the DS notes are coming in and that's the best way to spread it up.

So just with regard, the savings with the customer, you talked about sharing some of those savings, I mean we're talking about 10 million a year. So I can imagine it's that much.

But I mean, is that a different message that what you've given before, could you remind me?

No I don't think it is and let me give you a specific example that I did check through on one call. One of the projects behind this war on waste or efficiency program, and I think Steve Kitching our President of Cott North America highlighted this on an analyst call almost three to five months ago, is we're in the process of moving towards tray list shrink for our 2 liter PET.

Today you get eight bottles of two liter that put in a cardboard tray, shrink wrap is put over that tray. That particular configuration of eight in a tray does not cube out on a pallet very well.

So you don’t maximize the utilization of a pallet. And those pallets because they are maximized, don’t actually cube out a truck as well.

So you add more [indiscernible] bottle material in the truck to stop slippage of movement. If we move to tray list, so we saved the cost of the tray.

Six bottles shrink so we tube out better on a pallet, get more cases on the truck and put less damage wasted money in the truck, overall there is saving. And because that require retailers to accept the new packaging, just their warehousing and D.C.

operations, we will share some of those savings with our customers as we implement that change which will do in a phased manner as we adjust and change certain end of line packaging machines throughout our CST operation. So it's not a different tone David, we've always been talking about that and that’s a specific example but would always laid out to try and help people understand what and why we mean by that.

That’s helpful. Just another thing to clarify.

Jay, I think on the cash taxes, you provided a number earlier in the call for 2015, could you reiterate that for me?

Actually I think Jerry mentioned, for ’15 we're looking similar to about 3 million to 6 million of cash taxes for the entire year in 2015 and looking at our NOLs and tax planning, we continue to see minimal cash taxes, pretty much through the end of 2020.

Minimal cash taxes to the end of 2020.

And then in the quarter, cash taxes were minimal just less than a million dollars. And it really is a combination of the NOLs that we have and the overall tax structuring we are able to do as a Canadian parent company.

Okay, that’s fantastic and the stability of gross margins you're expecting in 2016, what’s the assumption there for commodities, flat commodities as what we have today or…

Yes, as I mentioned briefly on the call, for it will be early to be precise of specific David but if you put high fructose corn syrup to one side, at the moment as we look at the basket of all the rest of our commodities, fruits, aluminum conversion costs cans, the other sweeteners, the PETN resin, we see that collection excluding high fructose corn syrup as being stable, there might be a bit of an increase in line a decrease in the other but that basket being stable. It pushed, may be my modest small increase but stables what we would say.

If you take high fructose corn syrup, we are being very clear that we see that there will be some increases in high fructose corn syrup and we see that much more being on the conversion side of the equation than anything else because there has been a significant tightening in the amount of mill on conversion capacity within the U.S.

Okay, that's helpful and last question, I think you talk a little or someone is trying to get out some of your strategic discussions you're having at the board level, have you concluded a new round of discussions here at the board level with regard to M&A whether it would be coffee water in the U.S. or decision as what you might do in the UK?

Yes, as we said on the call David, we've tried to lay out five clear building blocks to our strategy over the next few years. First one is stable base business, full plants, generate a lot of cash flow.

Second one, 3% to 4% organic growth in DS, we believe that business is well positioned in that regard from its footprint, its customers, its growth in customer's consumption, the broader environment of the economy, 3% to 4% organic growth in DS. While in synergies of $10 million a year, ’15, ’16, and ’17 and on top of that allowing 10 million to 20 million tuck-in acquisitions that should drive $3 million to $6 million of EBITDA and then we've said, on top of that we do believe we're well positioned to continue to look at acquisitions to continue to A: strengthen our position in the home office delivery water and office coffee services and within that we would include filtration on all the periphery areas around those businesses that DS services in today or rather acquisitions in areas where we really feel, we can leverage our operating strength platform and synergies but looking to continue our rollup in that HOD water and office coffee services and we believe that it’s appropriate and that is that a fifth element of the building blocks in our strategic plan.

Okay and just last sneaking question here, just a follow up on that, so given your focus on your ABO [ph] and you can really look at the other day until ’17 does that mean immediately now you could think about these kind of acquisitions or other initiatives that are large scale perhaps?

Yes, I mean I think David you have known us for a long time and we run a pretty extensive strategic planning process, we do it every year. Despite the computer age, I am a way surprised how it felts a couple of thoughts every year when we do based on the amount to put it alone on paper and presentations so that it used up and one part of that strategic plan, always reviews, all of the potential acquisition opportunities in the areas that we see being of strategic relevance to our business.

So you have a traditional type business, office coffee services, home office water in the peripheries around there including filtration. We have studied from small, medium to large in each of all those sectors.

With regards to can and will anything be done, that's going to be a combination of right price, right timing, good due-diligence, strategic fit, a real marrying of the minds but it is part of our strategic planning analysis and process and it is something that is approved as that fifth element, that fifth building block of our strategic plan as we look forward.

That’s great. I will turn it over to the next caller.

Thank you.

Thanks, good morning guys. How are you?

Very good Mark. And we are keeping, hunting for that cash to make sure that we meet your expectations.

Yes, and very good to see the third quarter for the cash flow as high it was and glad to hear that. And also DS putting up that plus for, it is doing well.

So I can see why that's a focus for investment in the future. On that I want to, this is really just continuing some of the dialogue here on the UK, one thing is not that you're selling the UK business but if you were to try to sell it, how would you, could you comment on what do you think so the market for that business?

How sellable if you will it is?

I mean my personal view but I'm a Brit so I could be biased, it is highly sellable. When you are, is it six years, or seven years or eight years in the row the winner of the best private label beverage business in the UK and in one of those years, the winner of the best private label business of business in the UK and I think and external consulting study I saw 18 months ago, one of the top three most profitable, relative to sales, private label businesses that exists in the UK I think it would be something that anyone would aspire if they have any interest whatsoever in private label to have in their portfolio.

The trouble is it's a bloody good business but I think it has been a great performer for us over the last three to five years and while we will always look at everything that drives best value for our shareholders because it's what we hear for, I think when exchange rates are working against you, when some of your big customers are in a little bit of a turmoil and you've just had a miserable summer weather when we sell freezable these days but grow at 100% when it sunny and no wants to it when it’s kind of cold and rainy, accounting of a worst time to consider that kind of thing. Mark?

Okay, that’s great, last point. And some materials out there about one obvious potential buyer but if you were to try to create an auction situation, putting aside the timing and the current dynamics but do you think you could create an auction situation where you would be able to capitalize so to speak on the service records and so forth?

Yes, I am sure there would be lots of interest because I wasn't that being tongue in cheek, it is a bit of a crown jewel of private label in the UK.

Yes, that's great and very technical here but your comment about low to mid single digits on EBITDAs is better than what I was thinking, it might be the case but assuming current exchange rates just hold, are you saying kind of a mid to high 40s, EBITDA number 45, $48 million EBITDA where you think it shakes out a year from now or what do you think?

In meaning allowed to mid single digit, EBITDA kind of pressure, it really gives you [indiscernible] $5 million or $6 million impact on the potential UK EBITDA, too early to tell we still as I said got a couple of times, iron in the fire that could be further recuperating of that Tesco business loss, we've been a leader in service and supply on the Tesco service bowled all through the summer. Now the relationships are good, therefore in that sense, there is always times and occasions when you win some bits of business and lose some bits of business.

It's normally something that reflects what kind of price or precious someone else’s and rather our doing. When we transitioned into SAP and called fall last year in the UK, we did have some service splits, as Mark we consider best in class service something that's very important to us in caught.

And that is something we've clearly corrected on we're now best in class again on service in the UK and to be honest that has cost us a little bit this year. You have seen some of it in the year to date in terms of increasing the amount of finished stock we hold and some of the freight and shuffle costs and that's why we're going to put a better way housing operation such that we can both hold some inventory and handle it cost effectively as we go forward.

So if that balance with the question or not but….

Great and I can take this up with Jarrod but I am using 48 million in ’14 as an EBITDA number, in the UK, so I'm taking 5% of that that is how you're thinking but I can take it up with Jarrod.

Okay.

And it’s last one for you if I could if we assume now, you continue to deliver, you have some, you are investing more capital in this HOD business, the transaction so far comparatively small but do you think there's opportunities out there to do tens of millions even one hundred million dollar plus type acquisition in HOD here in the U.S.?

Certainly we find the strategic attractiveness, the financial attractiveness and the availability of target such that we could do more than this $10 million to $20 million of HOD additions. What we need to do, which I think if I try and put a bit of operational color around it, you will understand Mark is being the position that an individual customer in an individual geography is not kind of changing their repo, RSR three times in a year because we have done three acquisitions in that same geography because that really undermine service, part of the incredible strength of the DS services is the relationship built between the RSR and the local small business or home, they get to know that individual, he becomes part of their life, you he may top bottles in the special hiding place, he might take it inside and put it on the cooler for them when I was out with a route truck driver on the truck, he noticed the owner have gone out left the key in the front door, he phoned up their daughter and told around asked what to do with her mother's key.

And if you change that too often because you've done three acquisitions that require rerouting in the same geography, that's no good. So there's plenty of pipeline with comfortable with a 10 to 20.

We will do more if we can. But I need to be paced both geographically and in time such that we can do it without too much disruption to both the organization and the customer.

That's great. Thank you, Jerry.

Thanks Jeff.

Thank you all for joining us with the call today.