SodaStream Reports Record Fourth Quarter Results

Fourth Quarter Revenue Increased 55% to $132.9 Million

Full Year Revenue Increased 51% to $436.3 Million

Fourth Quarter Net Income Increased 42% to $7.5 Million

Full Year Net Income Increased 60% to $43.9 Million

Feb 20, 2013, 07:30 ET from SodaStream International Ltd.

AIRPORT CITY, Israel, Feb. 20, 2013 /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, 2012.

For the fourth quarter ended December 31, 2012:

  • Total revenue increased 55.2% to $132.9 million from $85.7 million in the fourth quarter 2011. 
  • Net income increased 41.6% to $7.5 million compared to $5.3 million a year ago, and Adjusted net income was $9.4 million compared to $6.7 million in the prior year.
  • Diluted earnings per share increased 38.5% to $0.36, compared to $0.26 in the fourth quarter 2011 and Adjusted diluted earnings per share were $0.45 compared to $0.32 in the prior year.

For the year ended December 31, 2012:

  • Total revenue increased 51.0% to $436.3 million from $289.0 million in 2011. 
  • Net income increased 59.6% to $43.9 million compared to $27.5 million a year ago, and Adjusted net income was $50.0 million compared to $32.9 million in the prior year.
  • Diluted earnings per share increased 56.0% to $2.09, compared to $1.34 in 2011 and Adjusted diluted earnings per share were $2.39 compared to $1.60 in the prior year.

"Our fourth quarter performance was marked by significant growth in all major areas of our business and represents a strong finish to another record year," said Daniel Birnbaum, Chief Executive Officer of SodaStream.  "Our efforts throughout 2012 to increase global awareness of our brand and category and expand our retail presence culminated in a very successful holiday season.  For the first time ever we exceeded 1 million soda makers sold in a quarter, resulting in approximately 3.5 million soda makers for the year. Notably, U.S. sell-through of soda makers and consumables exceeded expectations, continuing our growth trajectory in the world's biggest soda market.  We believe the growing strength of our brand equity driven by our new branding campaign, strategic partnerships and innovative product portfolio, including our newest soda maker, the Source, all set the stage for continued growth in 2013 and beyond."

Fourth Quarter 2012 Financial Review

Geographical Revenue Breakdown

 

Revenue

Three Months Ended

December 31, 2011

December 31, 2012

 Increase

 Increase

In Millions USD

%

The Americas

$

32.0

$

62.8

$

30.8

96%

Western Europe

39.7

51.9

12.2

31%

Asia-Pacific

8.8

11.6

2.8

31%

Central & Eastern Europe, Middle East, Africa

5.2

6.6

1.4

28%

Total

$

85.7

$

132.9

$

47.2

55%

 

Product Segment Revenue Breakdown

 

Revenue

Three Months Ended

December 31, 2011

December 31, 2012

 Increase (decrease)

 Increase   

(decrease)

In millions USD

%

Soda Maker Starter Kits

$

40.7

$

66.1

$

25.4

62%

Consumables

42.3

64.8

22.5

54%

Other

2.7

2.0

(0.7)

(28)%

Total

$

85.7

$

132.9

$

47.2

55%

 

Product Segment Unit Breakdown

 

Three Months Ended

December 31,

2011

December 31,

2012

 Increase

 Increase

In thousands

%

Soda Maker Starter Kits

767

1,111

344

45%

CO2 Refills

3,414

4,308

894

26%

Flavors

4,592

7,362

2,770

60%

 

Gross margin for the fourth quarter 2012 was 53.0%, compared to 57.3% for the same period in 2011. The decrease was in-line with guidance and primarily due to higher dependency on subcontractors and expedited shipments including air freight of raw materials and finished goods mainly to support the Source launch and to fulfill better than expected overall demand. This negative impact on the gross margin was partially offset by an increase in direct distribution that accounted for 82% of total revenue in the quarter compared to 75% in the fourth quarter 2011. The increase in direct distribution is mainly due to growth in U.S. revenue and the shift to self-distribution in the Nordics. 

Sales and marketing expenses for the fourth quarter 2012 totaled $52.8 million, or 39.7% of revenue, compared to $36.4 million, or 42.5% of revenue, for the comparable period in the prior year. The 280 basis point improvement is mainly attributable to a decrease in advertising and promotion expense as a percent of revenue to 22.7% compared to 25.1% in the fourth quarter 2011.

General and administrative expenses for the fourth quarter 2012 were $10.2 million, or 7.6% of revenue, compared to $7.4 million, or 8.7% of revenue in the comparable period of last year. The 110 basis point improvement was driven by leveraging fixed expenses on higher revenue, partially offset by additional expenses associated with the acquisition of the distribution channels in the Nordics in the first quarter 2012 and the acquisition of the Company's distribution channels in Canada in the third quarter 2012. The fourth quarter 2012 also included additional share-based compensation expense associated with the adoption of a new long-term incentive plan for the Company's Chief Executive Officer.

Operating income increased to $7.9 million, or 5.9% of revenue as compared to $5.3 million, or 6.2% of revenue in the fourth quarter 2011.

Tax expense was $78,000 representing a 1.0% effective tax rate compared to $306,000 or a 5.4% effective tax rate in the fourth quarter 2011. This reduction in effective tax rate is primarily attributable to additional utilization of taxable expenses in one of our jurisdictions following an agreement with the tax authority secured late in the quarter.

Balance Sheet Review

  • Cash and cash equivalents and bank deposits at December 31, 2012 were $62.1 million compared to $74.3 million at December 31, 2011. The decrease is primarily attributable to the acquisition of the Nordics and Canadian distribution activities, debt repayment and an increase in working capital.
  • The Company had no outstanding loans and borrowings at December 31, 2012 compared to $4.0 million at December 31, 2011.
  • Working capital at December 31, 2012 increased 21.5% to $95.1 million compared to $78.3 million at December 31, 2011.
  • Inventories at December 31, 2012 increased 47.1% to $112.7 million compared to $76.6 million at December 31, 2011, primarily reflecting the additional inventory associated with the acquisition of the Nordics and Canadian inventory and the Company's business growth. 

Change in Reporting Currency

Beginning with the quarter ended March 31, 2012, the Company changed its reporting currency to the U.S. dollar (USD).  Previously, the Company presented its annual and quarterly consolidated balance sheets and related consolidated statements of operations and cash flows in Euro (EUR).  In accordance with IFRS, the financial statements for comparative periods were translated into the new reporting currency using the EUR to USD exchange rate at January 1, 2012 of EUR 1.00 = USD 1.2973.

Full Year 2013 Guidance

  • The Company expects full year 2013 revenue to increase approximately 25% over 2012 revenue of $436.3 million.
  • The Company expects full year 2013 Adjusted EBITDA to increase approximately 34% over 2012 Adjusted EBITDA of $61.1 million.
  • The Company expects full year 2013 net income on an Adjusted basis, which excludes share-based compensation expense, to increase approximately 25% over the Adjusted net income of $50.0 million reported in 2012.
  • The Company expects full year 2013 net income to increase approximately 18% as compared with its net income of $43.9 million in 2012. 2013 guidance includes:
    • An effective tax rate of approximately 10% compared with an effective tax rate of 1.7% in 2012.
    • Share-based compensation expense of approximately $11.0 million compared to share-based compensation expense of $6.2 million in 2012. The increase is primarily related to the recent adoption of the Company's long-term incentive plan.

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 20, 2013) 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.

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,

2011

2012

2011

2012

(Audited)

(Unaudited)

(Unaudited)

Revenue

$

288,953

$

436,316

$

85,688

$

132,947

Cost of revenue

131,405

200,491

36,549

62,439

Gross profit

157,548

235,825

49,139

70,508

Operating expenses

Sales and marketing

99,170

153,009

36,432

52,833

General and administrative

29,829

37,767

7,422

10,160

Other income, net

(158)

(484)

(38)

(350)

Total operating expenses

128,841

190,292

43,816

62,643

Operating income

28,707

45,533

5,323

7,865

Interest expense (income), net

(1,526)

169

(326)

129

Other financial expense (income), net

(625)

767

22

125

Total financial expense (income), net

(2,151)

936

(304)

254

Income before income taxes

30,858

44,597

5,627

7,611

Income tax expense

3,373

737

306

78

Net income for the period

$

27,485

$

43,860

$

5,321

$

7,533

Net income per share

Basic

$

1.40

$

2.16

$

0.26

$

0.37

Diluted

$

1.34

$

2.09

$

0.26

$

0.36

Weighted average  number of shares

Basic

19,553

20,344

20,081

20,530

Diluted

20,572

20,968

20,826

21,047

 

Consolidated Balance Sheets as of

December 31,

December 31,

2011

2012

(Audited)

(Unaudited)

(In thousands)

Assets

Cash and cash equivalents

$

34,769

$

62,068

Bank deposits

39,485

-

Inventories

76,625

112,679

Trade receivables

58,452

86,650

Other receivables

20,064

28,021

Derivative financial instruments

322

803

Assets classified as available-for-sale

837

868

Total current assets

230,554

291,089

Property, plant and equipment

46,434

76,906

Intangible assets

25,358

41,978

Deferred tax assets

1,168

2,133

Other receivables

224

271

Total non-current assets

73,184

121,288

Total assets

303,738

412,377

Liabilities

Loans and borrowings

4,006

-

Derivative financial instruments

-

261

Trade payables

47,383

86,431

Income tax payable

9,171

8,866

Provisions

397

1,304

Other current liabilities

21,071

37,022

Total current liabilities

82,028

133,884

Employee benefits

1,497

1,939

Provisions

514

537

Deferred tax liabilities

717

1,527

Total non-current liabilities

2,728

4,003

Total liabilities

84,756

137,887

Shareholders' equity

Share capital

3,238

3,330

Share premium

168,601

178,338

Translation reserve

1,471

3,628

Retained earnings

45,672

89,194

Total shareholders' equity

218,982

274,490

Total liabilities and shareholders' equity

$

303,738

$

412,377

 

Consolidated Statements of Cash Flows

For the twelve months ended

For the three months ended

December 31,

December 31,

2011

2012

2011

2012

(Audited)

(Unaudited)

(Unaudited)

(In thousands)

Cash flows from operating  activities

Net income for the period

$

27,485

$

43,860

$

5,321

$

7,533

Adjustments:

Amortization of intangible assets

937

1,602

459

495

Change in fair value of  derivative financial instruments

392

504

(74)

-

Depreciation of property, plant  and equipment

5,013

8,522

1,885

2,493

Gain on sales of property, plant and equipment

-

(766)

-

(766)

Share based payment

5,389

6,189

1,349

1,896

Interest expense (income), net

(1,526)

169

(326)

129

Income tax expense

3,373

737

306

78

41,063

60,817

8,920

11,858

Increase in inventories

(25,552)

(26,844)

(5,471)

(2,935)

Increase in trade and other receivables

(22,705)

(49,431)

(3,657)

(11,447)

Increase (decrease) in trade payables

4,291

39,957

(1,799)

16,369

Increase in employee benefits

131

91

145

119

Increase (decrease) in provisions and other current liabilities

(811)

14,891

(895)

9,067

(3,583)

39,481

(2,757)

23,031

Interest paid

(422)

(454)

(149)

(120)

Income tax received

-

2,191

-

458

Income tax paid

(4,182)

(4,041)

(1,173)

(994)

Net cash from (used in) operating activities

(8,187)

37,177

(4,079)

22,375

Cash flows from investing  activities

Interest received

1,261

1,303

258

122

Investment in bank deposits

(90,811)

(20,000)

(38,919)

-

Proceeds from bank deposits

51,892

58,919

51,892

20,000

Payments for derivative financial  instruments, net

(156)

(724)

(112)

(731)

Acquisition of subsidiary, net of cash acquired

(1,025)

(10,954)

(1,025)

-

Acquisition of property, plant  and equipment

(18,690)

(34,080)

(4,624)

(10,321)

Acquisition of intangible assets

(1,029)

(3,692)

(379)

(1,567)

Net cash from (used in) investing  activities

(58,558)

(9,228)

7,091

7,503

Cash flows from financing  activities

Share issuance

42,929

-

-

-

Proceeds from exercise of employee share options

1,117

2,890

218

1,272

Change in short-term debt

(11,172)

(3,873)

(2,563)

-

Net cash from (used in) financing activities

32,874

(983)

(2,345)

1,272

Net increase (decrease) in cash and cash equivalents

(33,871)

26,966

667

31,150

Cash and cash equivalents at the beginning of the period

68,627

34,769

33,933

30,676

Effect of exchange rates  fluctuations on cash and cash equivalents

13

333

169

242

Cash and cash equivalents  at the end of the period

$

34,769

$

62,068

$

34,769

$

62,068

 

Information about revenue in reportable segments

The Americas

Western Europe

Asia-Pacific

Central and Eastern

Europe,

Middle

East, Africa

Total

(In thousands)

Twelve months ended:

December 31, 2011 (Audited)

$

83,894

153,174

21,010

30,875

$

288,953

December 31, 2012 (Unaudited)

$

157,705

204,332

42,367

31,912

$

436,316

Three months ended:

December 31, 2011 (Unaudited)

$

31,976

39,717

8,844

5,151

$

85,688

December 31, 2012 (Unaudited)

$

62,762

51,996

11,591

6,598

$

132,947

 

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

Twelve months ended December 31,

2011

2012

Reported

Share based

Reported

Share based

(Unadjusted)

payment

Adjusted

(Unadjusted)

payment

Adjusted

(Unaudited)

In thousands (other than per share amounts)

Revenue

$

288,953

$

-

$

288,953

$

436,316

$

-

$

436,316

Cost of revenue

131,405

-

131,405

200,491

-

200,491

Gross profit

157,548

-

157,548

235,825

-

235,825

Operating expenses

Sales and marketing

99,170

-

99,170

153,009

-

153,009

General and administrative

29,829

(5,389)

24,440

37,767

(6,189)

31,578

Other income, net

(158)

-

(158)

(484)

-

(484)

Total operating expenses

128,841

(5,389)

123,452

190,292

(6,189)

184,103

Operating income

28,707

5,389

34,096

45,533

6,189

51,722

Interest expense (income), net

(1,526)

-

(1,526)

169

-

169

Other financial expense (income), net

(625)

-

(625)

767

-

767

Total financial expense (income), net

(2,151)

-

(2,151)

936

-

936

Income before income taxes

30,858

5,389

36,247

44,597

6,189

50,786

Income tax expense

3,373

-

3,373

737

-

737

Net income for the period

$

27,485

$

5,389

$

32,874

$

43,860

$

6,189

$

50,049

Net income per share

Basic

$

1.40

$

1.69

$

2.16

$

2.46

Diluted

$

1.34

$

1.60

$

2.09

$

2.39

Weighted average  number of shares

Basic

19,553

19,553

20,344

20,344

Diluted

20,572

20,572

20,968

20,968

 

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

Three months ended December 31,

2011

2012

Reported

Share based

Reported

Share based

(Unadjusted)

payment

Adjusted

(Unadjusted)

payment

Adjusted

(Unaudited)

In thousands (other than per share amounts)

Revenue

$

85,688

$

-

$

85,688

$

132,947

$

-

$

132,947

Cost of revenue

36,549

-

36,549

62,439

-

62,439

Gross profit

49,139

-

49,139

70,508

-

70,508

Operating expenses

Sales and marketing

36,432

-

36,432

52,833

-

52,833

General and administrative

7,422

(1,349)

6,073

10,160

(1,896)

8,264

Other income, net

(38)

-

(38)

(350)

-

(350)

Total operating expenses

43,816

(1,349)

42,467

62,643

(1,896)

60,747

Operating income

5,323

1,349

6,672

7,865

1,896

9,761

Interest expense (income), net

(326)

-

(326)

129

-

129

Other financial expense, net

22

-

22

125

-

125

Total financial expense (income), net

(304)

-

(304)

254

-

254

Income before income taxes

5,627

1,349

6,976

7,611

1,896

9,507

Income tax expense

306

-

306

78

-

78

Net income for the period

$

5,321

$

1,349

$

6,670

$

7,533

$

1,896

$

9,429

Net income per share

Basic

$

0.26

$

0.34

$

0.37

$

0.46

Diluted

$

0.26

$

0.32

$

0.36

$

0.45

Weighted average  number of shares

Basic

20,081

20,081

20,530

20,530

Diluted

20,826

20,826

21,047

21,047

 

EBITDA and Adjusted EBITDA

Twelve months ended

Three months ended

December 31,

December 31,

2011

2012

2011

2012

(Unaudited)

(In thousands)

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Net income

$

27,485

$

43,860

$

5,321

$

7,533

Interest expense (income), net

(1,526)

169

(326)

129

Income tax expense

3,373

737

306

78

Depreciation and amortization

5,950

10,124

2,344

2,988

EBITDA

35,282

54,890

7,645

10,728

Share based payment

5,389

6,189

1,349

1,896

Adjusted EBITDA

$

40,671

$

61,079

$

8,994

$

12,624

 

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,

2011

2012

2011

2012

(Audited)

(Unaudited)

(Unaudited)

Revenue

(in thousands)

Soda maker starter kits (including exchange cylinders)

$

125,595

$

185,875

$

40,683

$

66,075

Consumables

156,959

241,922

42,275

64,893

Other

6,399

8,519

2,730

1,979

Total

$

288,953

$

436,316

$

85,688

$

132,947

 

Twelve months ended

Three months ended

December 31,

December 31,

2011

2012

2011

2012

(Audited)

(Unaudited)

(Unaudited)

As a percentage of revenue

Soda maker starter kits (including exchange cylinders)

43.5%

42.6%

47.5%

49.7%

Consumables

54.3%

55.4%

49.3%

48.8%

Other

2.2%

2.0%

3.2%

1.5%

Total

100.0%

100.0%

100.0%

100.0%

 

 

SOURCE SodaStream International Ltd.



RELATED LINKS

http://sodastream.investorroom.com