SodaStream Reports Fourth Quarter Results

Feb 26, 2014, 07:30 ET from SodaStream International Ltd.

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.



RELATED LINKS

http://www.sodastream.com