2014

SodaStream Reports Fourth Quarter Results

AIRPORT CITY, Israel, Feb. 26, 2014 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems, announced today its results for the three and twelve month periods ended December 31, 2013.

For the fourth quarter ended December 31, 2013:

  • Revenue increased 26.4% to $168.1 million from $132.9 million in the fourth quarter 2012
  • EBITDA decreased 45.2% to $5.9 million from $10.7 million, and Adjusted EBITDA decreased 31.4% to $8.7 million from $12.6 million in the fourth quarter 2012
  • Net income was $0.7 million compared to $7.5 million in the fourth quarter 2012, and Adjusted net income was $3.5 million compared to $9.4 million in the fourth quarter 2012
  • Diluted earnings per share were $0.03, compared to $0.36 in the fourth quarter 2012 and Adjusted diluted earnings per share were $0.16 compared to $0.45 in the fourth quarter 2012

For the year ended December 31, 2013:

  • Revenue increased 29.0% to $562.7 million from $436.3 million in 2012
  • EBITDA increased 13.4% to $62.2 million from $54.9 million, and Adjusted EBITDA increased 19.9% to $73.2 million from $61.1 million in 2012
  • Net income decreased 4.2% to $42.0 million compared to $43.9 million in 2012, and Adjusted net income increased 6.0% to $53.0 million compared to $50.0 million in 2012
  • Diluted earnings per share were $1.96, compared to $2.09 in 2012 and Adjusted diluted earnings per share were $2.48 compared to $2.39 in 2012

"While the fourth quarter proved to be more challenging than we expected there were several highlights, along with important lessons from the past year that give us confidence about the future," said Daniel Birnbaum, Chief Executive Officer of SodaStream. "Our ability to grow revenue 29% to $563 million in 2013, including selling a record 4.4 million soda makers and increasing gas refill unit sales 30% to a record 21.5 million, underscores the high level of consumer interest and activity in home carbonation.  Our plan is to capitalize on our first mover advantage and leadership position by accelerating investments in brand building and demand creation in 2014 to capture a greater share of the global carbonated beverage market.  Importantly, we have moved quickly to implement measures and controls in order to restore gross margins to historical levels and prevent the issues that impacted fourth quarter profitability from recurring.  I'm confident we are on the right path towards achieving our primary goal of increasing household penetration."













Fourth Quarter 2013 Financial Review












Geographical Revenue Breakdown









Revenue

Three Months Ended






December 31,

2012


December 31,

2013


 Increase

(decrease)


 Increase

(decrease)


In Millions USD


%

The Americas

$

62.8


$

72.7


$

9.9


16%

Western Europe


51.9



71.6



19.7


38%

Asia-Pacific


11.6



14.8



3.2


28%

Central & Eastern Europe, Middle

East, Africa


6.6



9.0



2.4


36%

Total

$

132.9


$

168.1


$

35.2


26%

 

Product Segment Revenue Breakdown









Revenue

Three Months Ended






December 31,

2012


December 31,

2013


 Increase

 Increase


In millions USD


%

Soda Maker Starter Kits

$

66.1


$

77.8


$

11.7


18%

Consumables


64.8



87.8



23.0


35%

Other


2.0



2.5



0.5


26%

Total

$

132.9


$

168.1


$

35.2


26%

 

Product Segment Unit Breakdown









Three Months Ended






December 31,

2012


December 31,

2013


 Increase


 Increase


In thousands


%

Soda Maker Starter Kits

1,111


1,542


431


39%

CO2 Refills

4,308


5,375


1,067


25%

Flavors

7,362


9,751


2,389


32%

 

Gross margin for the fourth quarter  2013 was 42.4% compared to 53.0% for the same period in 2012. The decline was primarily attributable to lower average sell-in prices due largely to year end discounting and promotions, higher costs as the result of moving product between markets and channels combined with an increase in bundled promotional packs, a shift in product mix versus plan including lower CO2 refills and unfavorable changes in foreign currency exchange rates.

Sales and marketing expenses for the fourth quarter 2013 totaled $56.2 million, or 33.5% of revenue, compared to $52.8 million, or 39.7% of revenue for the comparable period in the prior year. The 620 basis point change in sales and marketing expenses as a percent of revenue was mainly attributable to a cost reduction in advertising and promotion expense as a percent of revenue to 16.8% from 22.7% in the fourth quarter 2012.

General and administrative expenses for the fourth quarter 2013 were $12.5 million, or 7.4% of revenue, compared to $10.2 million, or 7.6% of revenue in the comparable period of last year. The increase was mainly due to higher share-based compensation expense of $2.8 million in the quarter, compared to $1.9 million in the fourth quarter 2012, additional expenses related to our newly acquired Italian distributer as well as additional infrastructure to support growth, partially offset by a reduction in all other general and administrative expenses.

Operating income decreased 66.7% to $2.6 million, or 1.6% of revenue, compared to $7.9 million, or 5.9% of revenue in the fourth quarter 2012.

Tax expense was $0.3 million compared to tax expense of $0.1 million in the fourth quarter 2012. The increase in the tax expense was primarily due to geographic mix.

Balance Sheet Review

  • Cash and cash equivalents and bank deposits at December 31, 2013 were $40.9 million compared to $62.1 million at December 31, 2012. The decrease is primarily attributable to the investment in our new production facility, an increase in working capital and the purchase of our Italian distributor's business.
  • The Company had $15.5 million of bank debt at December 31, 2013 mainly for financing the investment in its new production facility, compared to no bank debt at December 31, 2012.
  • Working capital at December 31, 2013 increased 63.3% to $155.4 million compared to $95.1 million at December 31, 2012. Inventories at December 31, 2013 increased 24.9% to $140.7 million compared to $112.7 million at December 31, 2012, mainly due to the overall growth of our business.

Guidance

  • The Company expects full year 2014 revenue to increase approximately 15% over 2013 revenue of $562.7 million.
  • The Company expects full year 2014 EBITDA to increase approximately 11% over 2013 EBITDA of $62.2 million. Excluding changes in foreign currency exchange rates compared to 2013, the Company expects 2014 EBITDA to increase approximately 25% over 2013.
  • The Company expects full year 2014 net income to increase approximately 3% over 2013 net income of $42.0 million.

Conference Call and Management Commentary

Detailed CFO commentary and a supplemental slide presentation have been filed as part of today's 6-K and will be posted on the Company's website, http://sodastream.investorroom.com.

The Company has scheduled a conference call for 8:30 AM Eastern Standard Time (U.S. time) today (Wednesday, February 26, 2014) to review the Company's financial results. The conference call will be broadcast over the Internet as a "live" listen only Webcast. To listen, please go to: http://sodastream.investorroom.com.  Listeners are urged to login approximately 20 minutes before the conference call is scheduled to begin in order to register, as well as download and install any necessary audio software.  An archive of the Webcast will be available for 30 days after the call.

About SodaStream International

SodaStream manufactures beverage carbonation systems which enable consumers to easily transform ordinary tap water instantly into carbonated soft drinks and sparkling water. Soda makers offer a highly differentiated and innovative solution to consumers of bottled and canned carbonated soft drinks and sparkling water. Our products are environmentally friendly, cost effective, promote health and wellness, and are customizable and fun to use. In addition, our products offer convenience by eliminating the need to carry bottles home from the supermarket, to store bottles at home or to regularly dispose of empty bottles. Our products are available at more than 60,000 retail stores in 45 countries around the world.  For more information on SodaStream, please visit the Company's website: www.sodastream.com.

To download SodaStream's investor relations app, which offers access to SEC documents, press releases, videos, audiocasts and more, please visit http://itunes.apple.com/us/app/soda-ir/id524423001?mt=8 for your iPhone/iPad, or https://play.google.com/store/apps/details?id=com.theirapp.soda for your Android mobile device.

Non-IFRS Financial Measures

This press release contains certain non-IFRS measures, including Adjusted net income, Adjusted Earnings Before Interest, Income Tax, Depreciation and Amortization ("Adjusted EBITDA"), and Adjusted diluted earnings per share ("Adjusted diluted EPS").

Adjusted net income represents net income calculated in accordance with IFRS as adjusted for the impact of the share-based compensation expense. Adjusted EBITDA represents earnings before interest, income tax, depreciation and amortization, and further eliminates the effect of the share-based compensation expense. Adjusted diluted EPS represents earnings per share calculated in accordance with IFRS as adjusted for the impact of the share-based compensation expense.

The Company believes that the Adjusted net income, Adjusted EBITDA and Adjusted diluted EPS, which exclude share-based compensation expense, should be considered in evaluating the Company's operations. Adjusted net income and Adjusted diluted EPS exclude share-based compensation because it is a non-cash expense that does not reflect the performance of the Company's underlying business and operations.  Adjusted EBITDA facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structures (affecting interest expenses, net), tax positions (such as the impact on periods or companies of changes in effective tax rates) and the age and book depreciation and amortization of fixed and intangible assets, respectively (affecting relative depreciation and amortization expense, respectively).

These measures should be considered in addition to results prepared in accordance with IFRS, but should not be considered a substitute for the IFRS results. The non-IFRS measures included in this press release have been reconciled to the IFRS results in the tables below.

Forward Looking Statements

This release contains forward-looking statements, which express the current beliefs and expectations of management. Such statements are based on management's current beliefs and expectations and involve a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: our ability to expand into our target markets, including the United States; our ability to continue to develop or maintain our presence in retail networks; our ability to develop and implement production and operating infrastructure to effectively support our growth; the success of our marketing campaigns and media spending in terms of increased sales or increased product and brand name awareness; our ability to maintain our customer base in markets where we have an established presence; the risks associated with our reliance on exclusive arrangements for the distribution of our beverage carbonation systems and consumables in each of the markets in which we use third-party distributors; our ability to compete effectively with other companies which currently offer, or may offer in the future, competing products; potential product liability claims if any component of our beverage carbonation systems is misused; our ability to protect our intellectual property rights; our being found to have a dominant position in certain markets which may place limits on our ability to operate; risks associated with our being a multinational corporation, including fluctuations in currency exchange rates; our potential exposure to greater than anticipated tax liabilities; our products being subject to extensive governmental regulation in the markets in which we operate; adverse conditions in the global economy which could negatively impact our customers' demand for our products; and other factors detailed in documents we file from time to time with the United States Securities and Exchange Commission.  Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Company Contact:
Yonah Lloyd
Chief Corporate Development and Communications Officer
SodaStream International Ltd.
Phone: +972-3-976-2462
yonahl@sodastream.com

Investor Contacts (US):
Brendon Frey
ICR
Phone: + 1 203-682-8200
brendon.frey@icrinc.com



Consolidated Statements of Operations







In thousands (other than per share amounts)




















For the twelve months ended


For the three months ended


December 31,


December 31,


2012


2013


2012


2013


(Audited)


(Unaudited)


(Unaudited)

Revenue

$

436,316


$

562,723


$

132,947


$

168,110

Cost of revenue


200,491



277,153



62,439



96,781













Gross profit


235,825



285,570



70,508



71,329













Operating expenses












Sales and marketing


153,009



186,289



52,833



56,242

General and administrative


37,767



50,353



10,160



12,467

Other income, net


(484)



-



(350)



-













Total operating expenses


190,292



236,642



62,643



68,709













Operating income


45,533



48,928



7,865



2,620













Interest expense, net


169



551



129



256

Other financial expense, net


767



1,695



125



1,359













Total financial expense, net


936



2,246



254



1,615













Income before income taxes


44,597



46,682



7,611



1,005













Income tax expense


737



4,655



78



324













Net income for the period

$

43,860


$

42,027


$

7,533


$

681













Net income per share












Basic

$

2.16


$

2.02


$

0.37


$

0.03

Diluted

$

2.09


$

1.96


$

0.36


$

0.03













Weighted average number of shares












Basic


20,344



20,791



20,530



20,892

Diluted


20,968



21,428



21,047



21,474

 


Consolidated Balance Sheets as of













December 31,


December 31,


2012


2013


(Audited)


(Unaudited)


(In thousands)

Assets






Cash and cash equivalents

$

62,068


$

40,885

Inventories


112,679



140,709

Trade receivables


86,650



123,936

Other receivables


28,889



22,208

Derivative financial instruments


803



538

Total current assets


291,089



328,276







Property, plant and equipment


76,906



107,132

Intangible assets


41,978



48,104

Deferred tax assets


2,133



1,089

Other receivables


271



398

Total non-current assets


121,288



156,723







Total assets


412,377



484,999







Liabilities






Loans and borrowings


-



15,452

Derivative financial instruments


261



103

Trade payables


86,431



90,749

Income tax payable


8,866



9,869

Provisions


1,304



1,614

Other current liabilities


37,022



29,674

Total current liabilities


133,884



147,461







Employee benefits


1,939



2,221

Provisions


537



714

Deferred tax liabilities


1,527



2,997

Total non-current liabilities


4,003



5,932







Total liabilities


137,887



153,393







Shareholders' equity






Share capital


3,330



3,378

Share premium


178,338



193,649

Translation reserve


3,628



3,394

Retained earnings


89,194



131,185

Total shareholders' equity


274,490



331,606







Total liabilities and shareholders' equity

$

412,377


$

484,999







 


Consolidated Statements of Cash Flows














For the twelve months ended


For the three months ended


December 31,


December 31,


2012


2013


2012


2013


(audited)


(Unaudited)


(Unaudited)



(In thousands)

Cash flows from operating  activities












Net income for the period

$

43,860


$

42,027


$

7,533


$

681













Adjustments:












Amortization of intangible assets


1,602



2,253



495



484

Change in fair value of  derivative financial instruments


504



(310)



-



(43)

Depreciation of property, plant  and equipment


8,522



12,740



2,493



4,135

Gain on sales of property, plant and equipment


(766)



-



(766)



-

Share based payment


6,189



11,019



1,896



2,781

Interest expense, net


169



551



129



256

Income tax expense


737



4,655



78



324



60,817



72,935



11,858



8,618

Increase in inventories


(26,844)



(20,217)



(2,935)



17,374

Increase in trade and other receivables


(49,431)



(42,778)



(11,447)



(6,986)

Increase in trade payables


39,957



3,259



16,369



12,024

Increase in employee benefits


91



111



119



87

Increase (decrease) in provisions and other current

liabilities


14,891



(9,226)



9,067



(9,804)



39,481



4,084



23,031



21,313

Interest paid


(454)



(485)



(120)



(196)

Income tax received


2,191



3,769



458



-

Income tax paid


(4,041)



(2,960)



(994)



(673)

Net cash from operating activities


37,177



4,408



22,375



20,444













Cash flows from investing  activities












Interest received


1,303



91



122



(23)

Investment in bank deposits


(20,000)



(10,000)



-



-

Proceeds from bank deposits


58,919



10,000



20,000



10,000

Proceeds from derivative financial  instruments, net


(724)



417



(731)



367

Acquisition of subsidiary, net of cash acquired


(10,954)



(1,179)



-



-

Acquisition of property, plant  and equipment


(34,080)



(39,799)



(10,321)



(13,503)

Acquisition of intangible assets


(3,692)



(4,844)



(1,567)



(1,301)

Net cash from (used in) investing  activities


(9,228)



(45,314)



7,503



(4,460)













Cash flows from financing  activities












Proceeds from exercise of employee share options


2,890



4,184



1,272



173

Change in short-term debt


(3,873)



15,452



-



(4,561)

Net cash from (used in) financing activities


(983)



19,636



1,272



(4,388)













Net increase (decrease) in cash and cash

equivalents


26,966



(21,270)



31,150



11,596

Cash and cash equivalents at the beginning of the

period


34,769



62,068



30,676



29,211

Effect of exchange rates  fluctuations on cash and

cash equivalents


333



87



242



78













Cash and cash equivalents  at the end of the period

$

62,068


$

40,885


$

62,068


$

40,885

 


Information about revenue in reportable segments
















The Americas


Western

Europe

Asia-Pacific

Central &

Eastern

Europe,

Middle East,

Africa


Total


(In thousands)

Twelve months ended:










December 31, 2012 (Audited)

$

157,705


204,332

42,367

31,912


$

436,316

December 31, 2013 (Unaudited)

$

218,169


268,500

43,554

32,500


$

562,723











Three months ended:










December 31, 2012 (Unaudited)

$

62,762


51,996

11,591

6,598


$

132,947

December 31, 2013 (Unaudited)

$

72,666


71,649

14,816

8,979


$

168,110

 


Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of Operations




















Twelve months ended December 31,


2012


2013


Reported


Share based




Reported


Share based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands (other than per share amounts)

Revenue

$

436,316


$

-


$

436,316


$

562,723


$

-


$

562,723

Cost of revenue


200,491



-



200,491



277,153



-



277,153



















Gross profit


235,825



-



235,825



285,570



-



285,570



















Operating expenses


















Sales and marketing


153,009



-



153,009



186,289



-



186,289

General and administrative


37,767



(6,189)



31,578



50,353



(11,019)



39,334

Other income, net


(484)



-



(484)



-



-



-



















Total operating expenses


190,292



(6,189)



184,103



236,642



(11,019)



225,623



















Operating income


45,533



6,189



51,722



48,928



11,019



59,947



















Interest expense, net


169



-



169



551



-



551

Other financial expense, net


767



-



767



1,695



-



1,695



















Total financial expense, net


936



-



936



2,246



-



2,246



















Income before income

taxes


44,597



6,189



50,786



46,682



11,019



57,701



















Income tax expense


737



-



737



4,655



-



4,655



















Net income for the period

$

43,860


$

6,189


$

50,049


$

42,027


$

11,019


$

53,046



















Net income per share


















Basic

$

2.16





$

2.46


$

2.02





$

2.55

Diluted

$

2.09





$

2.39


$

1.96





$

2.48



















Weighted average  number

of shares


















Basic


20,344






20,344



20,791






20,791

Diluted


20,968






20,968



21,428






21,428

 


Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of Operations




















Three months ended December 31,


2012


2013


Reported


Share based




Reported


Share based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands (other than per share amounts)

Revenue

$

132,947


$

-


$

132,947


$

168,110


$

-


$

168,110

Cost of revenue


62,439



-



62,439



96,781



-



96,781



















Gross profit


70,508



-



70,508



71,329



-



71,329



















Operating expenses


















Sales and marketing


52,833



-



52,833



56,242



-



56,242

General and administrative


10,160



(1,896)



8,264



12,467



(2,781)



9,686

Other income, net


(350)



-



(350)



-



-



-



















Total operating expenses


62,643



(1,896)



60,747



68,709



(2,781)



65,928



















Operating income


7,865



1,896



9,761



2,620



2,781



5,401



















Interest expense, net


129



-



129



256



-



256

Other financial expense (income), net


125



-



125



1,359



-



1,359



















Total financial expense (income), net


254



-



254



1,615



-



1,615



















Income before income taxes


7,611



1,896



9,507



1,005



2,781



3,786



















Income tax expense (tax benefit)


78



-



78



324



-



324



















Net income for the period

$

7,533


$

1,896


$

9,429


$

681


$

2,781


$

3,462



















Net income per share


















Basic

$

0.37





$

0.46


$

0.03





$

0.17

Diluted

$

0.36





$

0.45


$

0.03





$

0.16



















Weighted average  number of shares













Basic


20,530






20,530



20,892






20,892

Diluted


21,047






21,047



21,474






21,474

 


EBITDA and Adjusted EBITDA













Twelve months ended


Three months ended


December 31,


December 31,


2012


2013


2012


2013


(Unaudited)


(In thousands)













Reconciliation of Net Income to EBITDA and

Adjusted EBITDA












Net income

$

43,860


$

42,027


$

7,533


$

681

Interest expense, net


169



551



129



256

Income tax expense (tax benefit)


737



4,655



78



324

Depreciation and amortization


10,124



14,993



2,988



4,619

EBITDA


54,890



62,226



10,728



5,880













Share based payment


6,189



11,019



1,896



2,781

Adjusted EBITDA

$

61,079


$

73,245


$

12,624


$

8,661

 

The following tables present the Company's revenue, by

product type for the periods presented, as well as such revenue

by product type as a percentage of total revenue:














Twelve months ended


Three months ended


December 31,


December 31,


2012


2013


2012


2013


(Audited)


(Unaudited)


(Unaudited)


Revenue


(in thousands)













Soda maker starter kits (including

exchange cylinders)

$

185,875


$

233,146


$

66,075


$

77,796

Consumables


241,922



317,798



64,893



87,829

Other


8,519



11,779



1,979



2,485

Total

$

436,316


$

562,723


$

132,947


$

168,110

 










Twelve months ended


Three months ended


December 31,


December 31,


2012


2013


2012


2013


(Audited)


(Unaudited)


(Unaudited)


As a percentage of revenue









Soda maker starter kits (including

exchange cylinders)

42.6%


41.4%


49.7%


46.3%

Consumables

55.4%


56.5%


48.8%


52.2%

Other

2.0%


2.1%


1.5%


1.5%

Total

100.0%


100.0%


100.0%


100.0%


















Logo: http://photos.prnewswire.com/prnh/20121107/NY07412LOGO

 

SOURCE SodaStream International Ltd.



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