SodaStream Reports Record First Quarter Results Revenues Increased 50% to Euro 45.1 Million

Adjusted Net Income Increased 141% to Euro 5.3 Million

Net Income Increased 107% to Euro 4.2 Million

Adjusted Diluted EPS Increased 60% to Euro 0.27

Company Raises 2011 Full Year Outlook

AIRPORT CITY, Israel, May 18, 2011 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems, announced today its results for the three month period ended March 31, 2011.

(Logo:  http://photos.prnewswire.com/prnh/20100903/NY58941LOGO-b)

Our results for the first quarter of 2011, as compared to the first quarter of 2010, were as follows:

  • Revenues increased 50% to Euro 45.1 million
  • Americas revenues increased 153% to Euro 10.2 million
  • Adjusted diluted earnings per share was Euro 0.27 or $0.38*
  • Soda maker unit sales increased 99% to 592,000
  • Consumable sales increased 34% to Euro 22.6 million
  • Americas soda maker unit sales increased 271%
  • Americas consumable sales increased 216%

"We experienced strong growth in each of our geographic regions in the first quarter of 2011, led by the Americas where sales were up 153%," commented Daniel Birnbaum, Chief Executive Officer of SodaStream. "After a very successful holiday season in the U.S., we continued to see strong demand for our soda makers as well as strong sell-through of our consumables. These trends are positive indicators that our U.S. strategy to build brand awareness and consumer adoption is succeeding. In addition, we continue to extend our reach into new and established markets around the world. Our heightened outlook for the year reflects our optimism as we pursue global growth opportunities through 2011 and beyond."

Results for the Three Months Ended March 31, 2011:

Total revenues for the first quarter of 2011 were Euro 45.1 million, $64.0 million as per a convenience translation*, an increase of 50% compared to Euro 30.2 million reported in the first quarter of 2010.  Revenues increased in each geographical region, with revenues for Western Europe and the Americas increasing 23% and 153%, respectively, compared to the first quarter of 2010. (See table with geographic breakdown below)

During the first quarter of 2011, unit sales of soda makers increased 99% to 592,000, sales of CO2 refills increased 21% to 2.7 million, and flavor unit sales increased 26% to 3.9 million.

Gross margin for the first quarter of 2011 was 53.5%, compared to 53.9% in the comparable period in 2010. The slight decrease was mainly due to the growing portion of soda maker starter kit sales in the revenue mix, as part of management's strategy to increase market penetration.

Sales and marketing expenses for the first quarter of 2011 totaled Euro 13.2 million compared to Euro 9.8 million for the comparable period last year. The increase is primarily due to investments in the Company's sales and distribution platform and an increase in marketing spend to capitalize on new distribution opportunities, mainly in the United States. As a percentage of revenues, sales and marketing expenses decreased 320 basis points to 29.3% for the first quarter of 2011 compared to 32.5% for the first quarter of 2010.

General and administrative expenses for the first quarter of 2011 were Euro 5.8 million, compared to Euro 3.9 million in the comparable period of last year. General and administrative expenses for the three months ended March 31, 2011 include Euro 1.1 million of non-cash share-based compensation expense (the "Share-Based Compensation") while general and administrative expenses for the three months ended March 31, 2010 include Euro 43,000 of non-cash share-based compensation expense and Euro 114,000 related to a previous management fee that was cancelled effective as of November 2010.

Adjusted general and administrative expenses exclude the Shared-Based Compensation as well as the discontinued management fees. Such adjusted general and administrative expenses were Euro 4.7 million or 10.5% of revenues for the first quarter 2011, and Euro 3.7 million or 12.3% of revenues for the comparable period of 2010.

Net income for the three months ended March 31, 2011 was Euro 4.2 million, or 22 Euro cents, $0.31 per the convenience translation, per fully diluted share based on 19.6 million weighted average shares, compared to net income of Euro 2.0 million, or 16 Euro cents per fully diluted share based on 13.4 million weighted average shares, in the comparable period in 2010. Excluding the Shared-Based Compensation and the discontinued management fees, adjusted net income (as defined below) for the first quarter of 2011 was Euro 5.3 million, or 27 Euro cents, $0.38 per the convenience translation per fully diluted share, compared to adjusted net income of Euro 2.2 million, or 17 Euro cents per fully diluted share in the first quarter of 2010.

Adjusted EBITDA for the first quarter of 2011 totaled Euro 6.8 million, compared to Euro 3.2 million for the comparable period in 2010.  Adjusted EBITDA margin was 15.0% for the first quarter of 2011 as compared to 10.7% for the comparable period in 2010.

Cash flow used in operating activities during the first quarter of 2011 was Euro 2.1 million, compared to Euro 4.7 million during the comparable quarter of 2010.  The increase in operating cash flow was mainly due to an increase in net income for the period, while continuing investing in working capital, particularly with respect to inventory in the Americas and Western Europe, to support the Company's growth.

* As of March 31, 2011, the Euro to U.S. Dollar exchange rate was: Euro 1.00 equaled $1.4183.

Balance Sheet

As of March 31, 2011, cash and cash equivalents decreased to Euro 42.5 million from cash and cash equivalents of Euro 52.9 million as of December 31, 2010. The decrease is primarily attributable to the Euro 6.5 million repayment of debt during the first quarter of 2011. As of March 31, 2011, loans and borrowings totaled Euro 266,000, compared to Euro 6.8 million as of December 31, 2010. Working capital as of March 31, 2011 was Euro 33.4 million, an increase of approximately 23%, compared to Euro 27.2 million as of December 31, 2010, primarily due to an increase in inventory reflecting demand and revenues' growth and decrease in trade payables. On April 19th, 2011 we closed our secondary offering.  The Company sold 1.2 million shares at $43.50 per share and raised approximately $49.6 million or Euro 34.5 million.

Guidance

Based on first quarter results and current projections for the remainder of the year, the Company is raising its outlook. The Company now expects 2011 revenue to increase by approximately 30% as compared with 2010 revenue of Euro 160.7 million, up from its previous expectation of 25%. The Company now expects net income to increase by approximately 60% as compared with its net income of Euro 9.7 million reported in 2010, up from its previous expectation of 40%. This guidance includes a share-based payment expense of approximately Euro 3.7 million in 2011. On an adjusted basis, excluding the share-based payment expense, fiscal 2011 net income is expected to be approximately Euro 19 million.

Conference Call

The Company has scheduled a conference call for 8:30 AM Eastern Daylight Time (United States) today (Wednesday, May 18, 2011) 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 home 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 40,000 retail stores in 41 countries around the world.  For more information on SodaStream, please visit the Company's website: www.sodastream.com.

Non-IFRS Financial Measures

This press release contains certain non-IFRS measures, including Adjusted net income ("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 and for the impact of the discontinued management fees. Adjusted EBITDA represents earnings before interest, income tax, depreciation and amortization, and further eliminates the effect of the Share-Based Compensation and of the discontinued management fees.  Adjusted diluted EPS represents earnings per share calculated in accordance with IFRS as adjusted for the impact of the Share-Based Compensation and for the impact of the discontinued management fees.

The Company believes that the Adjusted net income, Adjusted EBITDA and Adjusted diluted EPS, which excludes the Share-Based Compensation and the discontinued management fees, should be considered in evaluating the Company's operations since they provide a clearer indication of the Company's operating results going forward.

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 home 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 home 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 operate; risks associated with our being subject to 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.

Company Contact:
Yonah Lloyd
Executive Director, Corporate Development and Communication
SodaStream International Ltd.
Phone: +972-3-976-2462
yonahl@sodastream.com

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

Consolidated Balance Sheets as of


In thousands









Convenience




translation into




U.S. Dollar


December 31

March 31

March 31


2010

2011

2011


(Audited)

(Unaudited)

(Unaudited)

Assets








Cash and cash equivalents

euro 52,900 

euro  42,528 

$  60,317

Inventories

38,523

41,243

58,495

Trade and other receivables

38,809

35,331

50,110

Derivative financial instruments

836

267

379

Assets classified as available-for-sale

629

602

854

Total current assets

131,697

119,971

170,155





Property, plant and equipment

21,548

22,504

31,917

Intangible assets

13,405

13,437

19,058

Deferred tax assets

1,248

1,239

1,757

Other receivables

167

138

196

Total non-current assets

36,368

37,318

52,928





Total assets

euro 168,065

euro 157,289

$ 223,083





Liabilities








Loans and borrowings

euro 6,753

euro 266

$        377

Derivative financial instruments

406

201

285

Trade payables

30,425

25,171

35,700

Income tax payable

6,376

6,819

9,671

Provisions

515

515

730

Other current liabilities

13,911

11,301

16,028

Total current liabilities

58,386

44,273

62,791





Employee benefits

768

759

1,076

Provisions

379

367

521

Deferred tax liabilities

410

394

559

Total non-current liabilities

1,557

1,520

2,156

Total liabilities

59,943

45,793

64,947





Shareholders' equity








Share capital

2,286

2,288

3,245

Share premium

91,870

92,955

131,838

Translation reserve

(53)

(1,997)

(2,831)

Retained earnings

14,019

18,250

25,884

Total shareholders' equity

108,122

111,496

158,136





Total liabilities and shareholders' equity

euro 168,065 

euro 157,289 

$ 223,083




Consolidated Statements of Operations


In thousands (net income per share amounts in units)





Convenience




Translation




into




U.S. Dollars


For the three

For the three

For the three


months ended

months ended

months ended


March 31

March 31

March 31


2010

2011

2011


(Unaudited)

(Unaudited)

(Unaudited)

Revenues

euro 30,159 

euro 45,099 

$ 63,964

Cost of revenues

13,894

20,978

29,753





Gross profit

16,265

24,121

34,211





Operating expenses




Sales and marketing

9,793

13,211

18,737

General and administrative

3,880

5,791

8,213

Other income, net

(23)

(32)

(45)





Total operating expenses

13,650

18,970

26,905





Operating income

2,615

5,151

7,306





Interest expense (income), net

294

(140)

(199)





Other financial expense (income), net

(4)

280

398





Total financial expenses, net

290

140

199





Income before income tax

2,325

5,011

7,107





Income tax

284

780

1,106





Net income for the period

euro 2,041

euro 4,231

$  6,001





Net income per share




Basic

euro 0.33 

euro 0.23 

$  0.33

Diluted

euro 0.16 

euro 0.22 

$ 0.31





Weighted average number of shares




Basic

6,259

18,457

18,457

Diluted

13,423

19,579

19,579




Consolidated Statements of Cash Flows

In thousands





Convenience




Translation




into




U.S. Dollars


For the three

For the three

For the three


months ended

months ended

months ended


March 31

March 31

March 31


2010

2011

2011


(Unaudited)

(Unaudited)

(Unaudited)

Cash flows from operating activities




Net income for the period

euro 2,041

euro 4,231

$   6,001

Adjustments:




Amortization of intangible assets

14

37

52

Change in fair value of derivative financial instruments

(224)

328

465

Depreciation of property, plant and equipment

424

822

1,166

Gain on sales of property, plant and equipment

(4)

-

-

Share based payment

43

1,057

1,499

Interest expense (income), net

294

(140)

(199)

Income tax expense

284

780

1,106


2,872

7,115

10,090





Increase in inventories

(5,129)

(3,653)

(5,181)

Decrease (increase) in trade and other receivables

(5,221)

2,656

3,767

Increase (decrease) in trade payables

2,454

(5,142)

(7,293)

Increase in employee benefits

(16)

(7)

(10)

Increase (decrease) in provisions and other current liabilities

2,139

(2,464)

(3,494)


(2,901)

(1,495)

(2,121)





Interest paid

(204)

(86)

(122)

Income tax paid

(1,591)

(479)

(679)

Net cash used in operating activities

(4,696)

(2,060)

(2,922)





Cash flows from investing activities




Interest received

7

226

321

Proceeds from sale of property, plant and equipment

63

-

-

Proceeds from derivative financial instruments, net

-

36

51

Acquisition of property, plant and equipment

(735)

(1,940)

(2,752)

Acquisition of intangible assets

(106)

(122)

(173)

Net cash used in investing activities

(771)

(1,800)

(2,553)





Cash flows from financing activities




Proceeds from exercise of employee share options       

-

28

40

Receipts of long-term loans and borrowings

3,936

-

-

Repayments of long-term loans and borrowings

(846)

-

-

Repayment of shareholders' loans

(144)

-

-

Change in short-term debt

6,389

(6,459)

(9,161)

Net cash from (used in) financing activities

9,335

(6,431)

(9,121)





Net increase (decrease) in cash and cash equivalents

3,868

(10,291)

(14,596)

Cash and cash equivalents at the beginning of the period

4,185

52,900

75,028

Effect of exchange rates fluctuations on cash and cash equivalents

122

(81)

(115)





Cash and cash equivalents at the end of the period

euro 8,175

euro 42,528

$  60,317





Information about revenue in reportable segments


In thousands



Central and






Eastern Europe,






Middle East and





Western Europe

Africa

The Americas

Asia-Pacific

Total







Three months ended






March 31, 2011 (Unaudited)

euro 23,520    

7,703

10,220

3,656

euro 45,099

March 31, 2010 (Unaudited)

euro 19,182    

4,533

4,045

2,399

euro 30,159





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


In thousands (net income per share amounts in units)


Three months ended March 31
















Convenience








Translation

into








U.S. Dollars


2010

2011

2011


Reported

Management

Share based


Reported

Management

Share based




(Unadjusted)

fee(*)

payment

Adjusted

(Unadjusted)

fee(*)

payment

Adjusted

Adjusted


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)



Revenues

euro 30,159 

euro

euro

euro 30,159

euro 45,099

euro

euro

euro 45,099 

$  63,964

Cost of revenues

13,894



13,894

20,978



20,978

29,753

Gross profit

16,265



16,265

24,121



24,121

34,211











Operating expenses










Sales and marketing

9,793



9,793

13,211



13,211

18,737

General and










administrative

3,880

(114)

(43)

3,723

5,791

-

(1,057)

4,734

6,714

Other income, net

(23)



(23)

(32)



(32)

(45)











Total operating










expenses

13,650

(114)

(43)

13,493

18,970

-

(1,057)

17,913

25,406











Operating income

2,615

114

43

2,772

5,151

-

1,057

6,208

8,805











Interest expense










(income), net

294



294

(140)



(140)

(199)

Other financial










expense (income),










 net

(4)



(4)

280



280

398











Total financial










expenses, net

290



290

140



140

199











Income before










income tax

2,325

114

43

2,482

5,011

-

1,057

6,068

8,606











Income tax

284



284

780



780

1,106











Net income for the










period

euro 2,041  

euro 114

euro 43

euro 2,198

euro 4,231

euro -

euro 1,057

euro 5,288

$  7,500

Net income per










share










Basic

euro 0.33



euro 0.35

euro 0.23



euro 0.29

$ 0.41

Diluted

euro 0.16



euro 0.17

euro 0.22



euro 0.27

$ 0.38











Weighted average










number of shares










Basic

6,259



6,259

18,457



18,457

18,457

Diluted

13,423



13,423

19,579



19,579

19,579


(*) Fortissimo Capital was entitled to receive management fee from the Company. The aforementioned entitlement was terminated as of the closing of the IPO (November 8, 2010).




EBITDA and Adjusted EBITDA

In thousands




Three months ended March 31


2010

2011

2011




Convenience

translation

into




U.S. Dollars


(Unaudited)

(Unaudited)

(Unaudited)

Reconciliation of Net Income to EBITDA and Adjusted EBITDA




Net income

euro 2,041

euro 4,231

$  6,001

Interest expense (income), net

294

(140)

(199)

Income tax

284

780

1,106

Depreciation and amortization

438

859

1,218

EBITDA

euro 3,057

euro 5,730

$  8,126





Management fee

114

-

-

Share based payment

43

1,057

1,499

Adjusted EBITDA

euro 3,214

euro 6,787

$  9,625




The following tables present the Company's revenues, by product type for the

periods presented, as well as such revenues by product type as a percentage

of total revenues:



Three months ended

March 31


2010


2011


(Unaudited)


(Unaudited)


Revenues


(in thousands)





Soda maker starter kits                          

euro 11,480


euro 21,282

Consumables

16,882


22,649

Other

1,797


1,168

Total

euro 30,159


euro 45,099






Three months ended

March 31


2010


2011


(Unaudited)


(Unaudited)


Revenues


As a percentage of revenues





Soda maker starter kits                                            

38.1%


47.2%

Consumables

56.0%


50.2%

Other

5.9%


2.6%

Total

100%


100%




SOURCE SodaStream International Ltd.



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