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SodaStream Reports Record Second Quarter Results

Second Quarter Revenue Increased to $103.0 Million

Second Quarter Net Income Increased to $9.5 Million

Second Quarter Diluted Earnings Per Share Increased to $0.45

Second Quarter Adjusted Diluted Earnings Per Share Increased to $0.52

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AIRPORT CITY, Israel, Aug. 8, 2012 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems announced today its results for the three and six month periods ended June 30, 2012.

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

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.

For the second quarter ended June 30, 2012:

  • Total revenue increased 49.1% to $103.0 million from $69.1 million in the second quarter of 2011.
  • Net income increased 43.9% to $9.5 million compared to $6.6 million a year ago, and Adjusted net income was $10.9 million compared to $7.9 million last year.
  • Diluted earnings per share increased 40.6% to $0.45, compared to $0.32 in the second quarter of 2011 and Adjusted diluted earnings per share were $0.52 compared to $0.38 a year ago.

"We are very pleased to have generated our first $100 million revenue quarter ever," said Daniel Birnbaum, Chief Executive Officer of SodaStream. "The contributions to our top-line performance were broad-based in terms of product segments and geographies with the U.S. exhibiting particular strength. It's clear that our strategy of expanded distribution and increased marketing is leading to growing demand for our products in the U.S. and other newer markets. At the same time, many of our more established markets continued to post solid revenue gains. The successful execution of our growth strategy, combined with a strong pipeline of product innovation, gives us confidence in our ability to capture a greater share of the global beverage industry in the years ahead."

 

Second Quarter 2012 Financial Review












Geographical Revenue Breakdown









Revenue

Three Months Ended






June 30, 2012


June 30, 2011


 Increase


 Increase


In Millions USD


%

Western Europe

$

54.0


$

43.2


$

10.8


25%

The Americas


30.7



14.7



16.0


109%

Central & Eastern Europe, Middle East, Africa


8.4



8.2



0.2


2%

Asia-Pacific


9.9



3.0



6.9


234%

Total

$

103.0


$

69.1


$

33.9


49%

 

Product Segment Revenue Breakdown









Revenue

Three Months Ended






June 30, 2012


June 30, 2011


 Increase


 Increase


In millions USD


%

Soda Maker Starter Kits

$

39.8


$

26.7


$

13.1


49%

Consumables


61.6



41.3



20.3


49%

Other


1.6



1.1



0.5


45%

Total

$

103.0


$

69.1


$

33.9


49%

Product Segment Unit Breakdown









Three Months Ended






June 30, 2012


June 30, 2011


 Increase


 Increase


In thousands


%

Soda Maker Starter Kits

764


634


130


20%

CO2 Refills

4,230


3,391


839


25%

Flavors

7,200


6,060


1,140


19%

*As discussed on the Company's fourth quarter 2011 earnings call, the Czech Republic distributor purchased a disproportionate amount of soda makers during the second quarter of 2011.  Excluding sales to the Czech Republic from the second quarter of 2011 and 2012, soda maker starter kit unit sales increased 35% year over year. 

Gross margin for the second quarter of 2012 was 54.4%, compared to 53.0% for the same period in 2011. This increase was primarily due to the increase in direct distribution that accounted for 75% of total revenue in the quarter vs. 58% in the second quarter of 2011, which is mainly due to growing share of U.S. revenue and the shift to self-distribution in the Nordics.

Sales and marketing expenses for the second quarter of 2012 totaled $37.1 million, or 36.0% of revenue compared to $22.5 million, or 32.5% of revenue for the comparable period last year. The increase is primarily due to higher advertising and promotion expense in the U.S., and the addition of the Nordics expenses. 

General and administrative expenses for the second quarter of 2012 were $9.2 million, or 9.0% of revenue, compared to $7.3 million, or 10.5% of revenue in the comparable period of last year. This includes the additional expenses associated with the acquisition of CEM Industries in the fourth quarter of 2011 and the acquisition of the distribution activity in the Nordics in the first quarter of 2012.

Operating income increased to $9.7 million, or 9.5% of revenue as compared to $6.9 million, or 10.0% of revenue in the second quarter of 2011.

Tax expense was $134,000 compared to a tax expense of $1.2 million in the second quarter of 2011. The decrease in the effective tax rate to 1.4% from 15.9% is primarily attributable to the geographical taxable income distribution, the utilization of taxable losses and progress in some of the group-companies discussions with tax authorities that enabled partial release of past-years' tax provisions.

Balance Sheet Review

  • Cash and cash equivalents and bank deposits at June 30, 2012 were $56.6 million compared to $74.3 million on December 31, 2011. The decrease is primarily attributable to the acquisition of the Nordics distribution activity, debt repayment and an increase in working capital.
  • The Company had no outstanding loans and borrowings at June 30, 2012 compared to $4.0 million on December 31, 2011.
  • Working capital at June 30, 2012 increased 8.2% to $84.7 million compared to $78.3 million on December 31, 2011.
  • Inventories at June 30, 2012 increased 21.2% to $92.9 million compared to $76.6 million on December 31, 2011, primarily reflecting the additional inventory associated with the acquisition of the Nordics distribution activity. 

Guidance

Based on second quarter results and current projections for the remainder of the year, the Company is raising its outlook.

  • The Company now expects 2012 revenue to increase approximately 40% over 2011 revenue of $289.0 million, up from its previous guidance of 33%.
  • The Company now expects 2012 net income to increase approximately 55% over 2011 net income of $27.5 million, up from its previous guidance of 50%. This guidance includes a share-based expense of approximately $5.6 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 Daylight Time (U.S. time) today (Wednesday, August 8, 2012) 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 55,000 retail stores in 43 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 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 excludes the Share-Based Compensation Expense, 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 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.

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
ICR  
Phone: + 1 203-682-8200  
brendon.frey@icrinc.com

 

Consolidated Statements of Operations







In thousands (net income per share amounts in units)




















For the six months ended


For the three months ended


June 30,


June 30,


2011


2012


2011


2012


(Unaudited)


(Unaudited)

Revenue

$

127,610


$

190,887


$

69,104


$

103,019

Cost of revenue


59,706



86,521



32,491



47,016













Gross profit


67,904



104,366



36,613



56,003













Operating expenses












Sales and marketing


39,608



64,351



22,469



37,083

General and administrative


14,803



18,866



7,290



9,225

Other income, net


(81)



(80)



(39)



(41)













Total operating expenses


54,330



83,137



29,720



46,267













Operating income


13,574



21,229



6,893



9,736













Interest expense (income), net


(697)



5



(515)



128

Other financial expense (income), net


(35)



154



(399)



24













Total financial expense (income), net


(732)



159



(914)



152













Income before income taxes


14,306



21,070



7,807



9,584













Income taxes


2,251



1,509



1,239



134













Net income for the period

$

12,055


$

19,561


$

6,568


$

9,450













Net income per share












Basic

$

0.63


$

0.97


$

0.33


$

0.47

Diluted

$

0.60


$

0.94


$

0.32


$

0.45













Weighted average  number of shares












Basic


19,055



20,217



19,647



20,289

Diluted


20,122



20,913



20,772



20,932

 

Consolidated Balance Sheets as of













December 31,


June 30,


2011


2012


(Audited)


(Unaudited)


(In thousands)

Assets






Cash and cash equivalents

$

34,769


$

46,593

Bank deposits


39,485



10,003

Inventories


76,625



92,862

Trade receivables


58,452



70,110

Other receivables


20,064



18,098

Derivative financial instruments


322



415

Assets classified as available-for-sale


837



810

Total current assets


230,554



238,891







Property, plant and equipment


46,434



63,843

Intangible assets


25,358



35,879

Deferred tax assets


1,168



1,101

Other receivables


224



213

Total non-current assets


73,184



101,036







Total assets


303,738



339,927







Liabilities






Loans and borrowings


4,006



-

Derivative financial instruments


-



43

Trade payables


47,383



59,968

Income tax payable


9,171



9,045

Provisions


397



1,139

Other current liabilities


21,071



27,397

Total current liabilities


82,028



97,592







Employee benefits


1,497



1,454

Provisions


514



525

Deferred tax liabilities


717



1,034

Total non-current liabilities


2,728



3,013







Total liabilities


84,756



100,605







Shareholders' equity






Share capital


3,238



3,286

Share premium


168,601



172,662

Translation reserve


1,471



(1,859)

Retained earnings


45,672



65,233

Total shareholders' equity


218,982



239,322







Total liabilities and shareholders' equity

$

303,738


$

339,927







 

Consolidated Statements of Cash Flows














For the six months ended


For the three months ended


June 30,


June 30,


2011


2012


2011


2012


(Unaudited)


(Unaudited)



(In thousands)

Cash flows from operating  activities












Net income for the period

$

12,055


$

19,561


$

6,568


$

9,450













Adjustments:












Amortization of intangible assets


396



687



348



344

Change in fair value of  derivative financial instruments


545



504



119



(774)

Exchange rate differences on bank deposits


-



-



-



1,094

Depreciation of property, plant  and equipment


2,155



3,818



1,089



2,167

Share based payment


2,692



2,835



1,321



1,424

Interest expense (income), net


(697)



5



(515)



128

Income tax expense


2,251



1,509



1,239



134



19,397



28,919



10,169



13,967

Increase in inventories


(10,334)



(12,541)



(5,595)



(2,639)

Increase in trade and other receivables


(8,170)



(21,798)



(11,616)



(4,635)

Increase in trade payables


493



12,464



7,164



11,921

Increase (decrease) in employee benefits


(8)



(13)



1



(33)

Increase (decrease) in provisions and other current liabilities


(148)



4,459



3,049



2,668



1,230



11,490



3,172



21,249

Interest paid


(193)



(237)



(81)



(123)

Income tax received


-



1,486



-



143

Income tax paid


(1,653)



(2,291)



(1,032)



(1,098)

Net cash from (used in) operating activities


(616)



10,448



2,059



20,171













Cash flows from investing  activities












Interest received


782



1,079



489



949

Investment in bank deposits


-



(10,000)



-



(10,000)

Proceeds from bank deposits


-



38,919



-



38,919

Payments for derivative financial  instruments, net


(19)



(554)



(66)



(760)

Acquisition of subsidiary, net of cash acquired


-



(9,758)



-



-

Acquisition of property, plant  and equipment


(6,297)



(14,506)



(3,780)



(10,379)

Acquisition of intangible assets


(252)



(963)



(94)



(723)

Net cash from (used in) investing  activities


(5,786)



4,217



(3,451)



18,006













Cash flows from financing  activities












Share issuance


42,929



-



42,929



-

Proceeds from exercise of employee share options


817



1,274



781



686

Change in short-term debt


(8,807)



(3,873)



(428)



(2,951)

Net cash from (used in) financing activities


34,939



(2,599)



43,282



(2,265)













Net increase in cash and cash equivalents


28,537



12,066



41,890



35,912

Cash and cash equivalents at the beginning of the period


68,627



34,769



55,172



11,090

Effect of exchange rates  fluctuations on cash and cash equivalents


(184)



(242)



(82)



(409)













Cash and cash equivalents  at the end of the period

$

96,980


$

46,593


$

96,980


$

46,593


 

Information about revenue in reportable segments



















Western Europe


The Americas


Central and

Eastern

Europe, Middle

East, Africa


Asia-Pacific


Total


(In thousands)

Six months ended:












June 30, 2012 (Unaudited)

$

99,725


56,283


15,011


19,868


$

190,887

June 30, 2011 (Unaudited)

$

73,774


27,911


18,210


7,715


$

127,610













Three months ended:












June 30, 2012 (Unaudited)

$

54,074


30,650


8,368


9,927


$

103,019

June 30, 2011 (Unaudited)

$

43,261


14,653


8,217


2,973


$

69,104

 

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




















Six months ended June 30,


2011


2012


Reported


Share based




Reported


Share based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands (net income per share amounts in units)

Revenue

$

127,610


$

-


$

127,610


$

190,887


$

-


$

190,887

Cost of revenue


59,706



-



59,706



86,521



-



86,521



















Gross profit


67,904



-



67,904



104,366



-



104,366



















Operating expenses


















Sales and marketing


39,608



-



39,608



64,351



-



64,351

General and administrative


14,803



(2,692)



12,111



18,866



(2,835)



16,031

Other income, net


(81)



-



(81)



(80)



-



(80)



















Total operating expenses


54,330



(2,692)



51,638



83,137



(2,835)



80,302



















Operating income


13,574



2,692



16,266



21,229



2,835



24,064



















Interest expense (income), net


(697)



-



(697)



5



-



5

Other financial expense (income), net


(35)



-



(35)



154



-



154



















Total financial expense (income), net


(732)



-



(732)



159



-



159



















Income before income taxes


14,306



2,692



16,998



21,070



2,835



23,905



















Income taxes


2,251



-



2,251



1,509



-



1,509



















Net income for the period

$

12,055


$

2,692


$

14,747


$

19,561


$

2,835


$

22,396



















Net income per share


















Basic

$

0.63





$

0.77


$

0.97





$

1.11

Diluted

$

0.60





$

0.73


$

0.94





$

1.07



















Weighted average  number of shares


















Basic


19,055






19,055



20,217






20,217

Diluted


20,122






20,122



20,913






20,913

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




















Three months ended June 30,


2011


2012


Reported


Share based




Reported


Share based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands (net income per share amounts in units)

Revenue

$

69,104


$

-


$

69,104


$

103,019


$

-


$

103,019

Cost of revenue


32,491



-



32,491



47,016



-



47,016



















Gross profit


36,613



-



36,613



56,003



-



56,003



















Operating expenses


















Sales and marketing


22,469



-



22,469



37,083



-



37,083

General and administrative


7,290



(1,321)



5,969



9,225



(1,424)



7,801

Other income, net


(39)



-



(39)



(41)



-



(41)



















Total operating expenses


29,720



(1,321)



28,399



46,267



(1,424)



44,843



















Operating income


6,893



1,321



8,214



9,736



1,424



11,160



















Interest expense (income), net


(515)



-



(515)



128



-



128

Other financial expense (income), net


(399)



-



(399)



24



-



24



















Total financial expense (income), net


(914)



-



(914)



152



-



152



















Income before income taxes


7,807



1,321



9,128



9,584



1,424



11,008



















Income taxes


1,239



-



1,239



134



-



134



















Net income for the period

$

6,568


$

1,321


$

7,889


$

9,450


$

1,424


$

10,874



















Net income per share


















Basic

$

0.33





$

0.40


$

0.47





$

0.54

Diluted

$

0.32





$

0.38


$

0.45





$

0.52



















Weighted average  number of
shares













Basic


19,647






19,647



20,289






20,289

Diluted


20,772






20,772



20,932






20,932


 

EBITDA and Adjusted EBITDA













Six months ended


Three months ended


June 30,


June 30,


2011


2012


2011


2012


(Unaudited)


(In thousands)













Reconciliation of Net Income to EBITDA and Adjusted EBITDA












Net income

$

12,055


$

19,561


$

6,568


$

9,450

Interest expense (income), net


(697)



5



(515)



128

Income taxes


2,251



1,509



1,239



134

Depreciation and amortization


2,551



4,505



1,437



2,511

EBITDA


16,160



25,580



8,729



12,223













Share based payment


2,692



2,835



1,321



1,424

Adjusted EBITDA

$

18,852


$

28,415


$

10,050


$

13,647


 

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  (*):

















Six months ended


Three months ended



June 30,


June 30,



2011


2012


2011


2012



(Unaudited)



Revenue



(in thousands)















Soda maker starter kits (including exchange cylinders)

$

51,044


$

73,314


$

26,683


$

39,830


Consumables


73,974



114,050



41,344



61,631


Other


2,592



3,523



1,077



1,558


Total

$

127,610


$

190,887


$

69,104


$

103,019


 










Six months ended


Three months ended


June 30,


June 30,


2011


2012


2011


2012


(Unaudited)


As a percentage of revenue









Soda maker starter kits (including exchange cylinders)

40.0%


38.4%


38.6%


38.7%

Consumables

58.0%


59.8%


59.8%


59.8%

Other

2.0%


1.8%


1.6%


1.5%

Total

100.0%


100.0%


100.0%


100.0%









(*)The Company reclassified prior periods' data such that revenue from spare cylinders, formerly presented under the "soda maker starter kits" category, are presented under the "consumables" category, as the purchase of a spare cylinder more closely resembles the purchase of other consumables than it does the initial purchase of a soda maker. The effect was an increase in revenue from consumables by $5,973 thousand and $ 2,726 thousands for six months and three months ended June 30, 2011, respectively  (increase in 470 basis points and 400 basis points of total revenue of these periods, respectively), and the same decrease in revenue from soda maker starter kits for the respective periods (and the same decrease in basis points of total revenue of those periods, respectively)  

 

SOURCE SodaStream International Ltd.



RELATED LINKS
http://www.sodastream.com

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