SodaStream Reports Record Third Quarter Results
Revenues Increased 39% to Euro 58.3 Million
Adjusted Net Income Increased 108% to Euro 8.8 Million
Net Income Increased 276% to Euro 7.8 Million
Adjusted Diluted EPS Increased 31% to Euro 0.42 or $0.56*
Soda Maker Units Increased 60% to 717,000
Company Raises Fiscal 2011 Outlook
AIRPORT CITY, Israel, Nov. 9, 2011 /PRNewswire/ -- SodaStream International Ltd. (Nasdaq: SODA), a leading manufacturer of home beverage carbonation systems announced today its results for the three and nine month periods ended September 30, 2011.
Third Quarter 2011 Highlights (comparisons show third quarter 2011 as compared to third quarter 2010)
- Revenues increased 39% to Euro 58.3 million
- Americas revenues increased 124% to Euro 18.5 million
- Adjusted diluted earnings per share was Euro 0.42 or $0.56*
- Revenue from soda makers increased 54% to Euro 29.1million
- Revenue from consumables increased 26% to Euro 28.3 million
- Flavor units increased 8% to 4.4 million
- CO2 refill units increased 22% to 3.2 million
- Americas soda maker units increased 155%
- Americas consumables revenue increased 117%
"Our third quarter operating performance was the highest ever in the history of the Company for sales and profitability. This was led by exceptional growth in the Americas, where we sold 267,000 soda makers, growing our installed base through an expanding network of retail partners," commented Daniel Birnbaum, Chief Executive Officer of SodaStream. Mr. Birnbaum continued, "We also saw strong year-over-year growth in France, Italy and the U.K., markets in which we increased our focus, leading to accelerated demand for our product portfolio. As we approach the holiday season in the U.S. we will leverage our increased distribution, along with heightened brand awareness, allocating greater resources to penetrate additional households and capitalize on this large market opportunity."
Results for the Three Months Ended September 30, 2011:
Total revenues for the third quarter of 2011 were Euro 58.3 million, $78.4 million as per a convenience translation*, an increase of 39% compared to Euro 42.0 million reported in the third quarter of 2010. Revenues increased in each geographical region, with revenues for Western Europe and the Americas increasing 10% and 124%, respectively, compared to the third quarter of 2010. (See table with geographic breakdown below)
During the third quarter of 2011, revenues of soda makers increased 54% to Euro 29.1 million and revenues of consumables increased 26% to Euro 28.4 million. On a unit basis, soda makers increased 60% to 717,000, CO2 refills increased 22% to 3.2 million, and flavors increased 8% to 4.4 million.
Gross margin for the third quarter of 2011 was 53.5%, compared to 56.3% for the same period in 2010.
This 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 third quarter of 2011 totaled Euro 17.8 million compared to Euro 14.2 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 spending 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 30.6% for the third quarter of 2011 compared to 33.8% for the third quarter of 2010.
General and administrative expenses for the third quarter of 2011 were Euro 5.9 million, compared to Euro 6.1 million in the comparable period of last year. General and administrative expenses for the three months ended September 30, 2011 include Euro 1.0 million of non-cash share-based compensation expense (the "Share-Based Compensation Expense") while general and administrative expenses for the three months ended September 30, 2010 include Euro 0.2 million of the Share-Based Compensation Expense and Euro 2.0 related to a previous management fee that was cancelled effective as of November 2010.
Adjusted general and administrative expenses exclude the Shared-Based Compensation Expense as well as the discontinued management fees. Such adjusted general and administrative expenses were Euro 4.8 million or 8.3% of revenues for the third quarter of 2011, and Euro 3.9 million or 9.3% of revenues for the comparable period of 2010.
Net income for the three months ended September 30, 2011 was Euro 7.8 million, or Euro 0.37 ($0.50 per the convenience translation) per fully diluted share based on 21.0 million weighted average shares, compared to net income of Euro 2.1 million, or Euro 0.16 per fully diluted share based on 13.5 million weighted average shares, in the comparable period in 2010. Excluding the Shared-Based Compensation Expense and the discontinued management fees, adjusted net income (as defined below) for the third quarter of 2011 was Euro 8.8 million, or Euro 0.42 ($0.56 per the convenience translation) per fully diluted share, compared to adjusted net income of Euro 4.2 million, or Euro 0.32 per fully diluted share in the third quarter of 2010.
Adjusted EBITDA (as defined below) for the third quarter of 2011 totaled Euro 9.9 million, compared to Euro 5.7 million for the comparable period in 2010. Adjusted EBITDA margin was 16.9% for the third quarter of 2011 as compared to 13.6% for the comparable period in 2010.
Cash flow used in operating activities during the third quarter of 2011 was Euro 2.7 million, compared to Euro 3.0 million during the comparable quarter of 2010.
As of September 30, 2011, cash and cash equivalents and bank deposits increased to Euro 66.4 million from Euro 52.9 million as of December 31, 2010. The increase is attributable mainly to the Euro 33.1 million raised from the secondary offering that closed on April 19, 2011. As of September 30, 2011, loans and borrowings were Euro 0.2 million, compared to Euro 6.8 million as of December 31, 2010. Working capital as of September 30, 2011 was Euro 49.9 million, an increase of 83.8%, compared to Euro 27.2 million as of December 31, 2010, primarily due to an increase in inventory and accounts receivable.
Based on third 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 36% as compared with 2010 revenue of Euro 160.7 million, up from its previous expectation of 30%. The Company now expects net income to increase by approximately 100% as compared with its net income of Euro 9.7 million reported in 2010, up from its previous expectation of 60%. This guidance includes a share-based payment expense of approximately Euro 4.0 million in 2011. On an adjusted basis, excluding the share-based payment expense, fiscal 2011 net income is now expected to be approximately Euro 24 million, up from its previous expectation of approximately Euro 20 million.
For the fourth quarter, the Company expects revenue to increase by approximately 24% as compared with fourth quarter 2010 revenue of Euro 50.0 million. Net income on an adjusted basis for the fourth quarter of 2011 is expected to be in line with the fourth quarter 2010 Adjusted net income of Euro 4.3 million, reflecting an increase in advertising and promotional expenses to support the rollout of new distribution in the United States during the upcoming holiday season.
The Company has scheduled a conference call for 8:30 AM Eastern Standard Time (United States) today (Wednesday, November 9, 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 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 50,000 retail stores in 42 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 Expense 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 Expense 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 Expense 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 Expense 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 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 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.
*As of September 30, 2011, the Euro to U.S. Dollar exchange rate was: Euro 1.00 equaled $1.3449
Executive Director, Corporate Development and Communication
SodaStream International Ltd.
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