SodaStream Reports Record Third Quarter Results Third Quarter Revenue Increased to $112.5 Million

Third Quarter Net Income Increased to $16.8 Million

Third Quarter Diluted Earnings Per Share Increased to $0.80

Third Quarter Adjusted Diluted Earnings Per Share Increased to $0.87

AIRPORT CITY, Israel, Nov. 7, 2012 /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, 2012.

(Logo: http://photos.prnewswire.com/prnh/20121107/NY07412LOGO )

For the third quarter ended September 30, 2012:

  • Total revenue increased 48.7% to $112.5 million from $75.7 million in the third quarter 2011. 
  • Net income increased 65.9% to $16.8 million compared to $10.1 million a year ago, and Adjusted net income was $18.2 million compared to $11.5 million last year.
  • Diluted earnings per share increased 66.7% to $0.80, compared to $0.48 in the third quarter 2011 and Adjusted diluted earnings per share were $0.87 compared to $0.55 a year ago.

"We had another very strong quarter highlighted by gains in all geographic regions and product categories with demand well ahead of our expectations" said Daniel Birnbaum, Chief Executive Officer of SodaStream. "Our growth strategies have yielded excellent financial results year-to-date and position the Company for continued expansion in 2013 and beyond. We enter the fourth quarter with strong momentum, especially in the U.S. where we've quickly built a powerful distribution network for our expanding portfolio of soda makers and consumables. Our newest flagship soda maker, the Source, is set to debut at select retailers worldwide. With its modern design and innovative functionality, we believe the Source is a transformational product that will broaden appeal of our entire system and help drive household penetration to a new level. To leverage our enhanced product portfolio and broad distribution, we are launching our first global branding campaign that highlights the revolutionary essence of SodaStream and challenges the traditional beverage industry. The progress we've made leading the growth of our category worldwide has put the Company on track to deliver significant value for our shareholders in the years ahead."

Third Quarter 2012 Financial Review


 

 

 

 

 

 

 

 

 

 

 

Geographical Revenue Breakdown


 

 

 

 

 

 

 

 

Revenue

Three Months Ended


 

 

 

 

 

September 30, 2012


 

September 30, 2011


 

 Increase


 

 Increase


 

In Millions USD


 

%

Western Europe

$

52.6


 

$

39.7


 

$

12.9


 

33%

The Americas


 

38.7


 

 

24.0


 

 

14.7


 

61%

Central & Eastern Europe, Middle

East, Africa


 

10.3


 

 

7.5


 

 

2.8


 

37%

Asia-Pacific


 

10.9


 

 

4.5


 

 

6.4


 

145%

Total

$

112.5


 

$

75.7


 

$

36.8


 

49%


 

 

 

 

 

 

 

 

 

 

 

Product Segment Revenue Breakdown


 

 

 

 

 

 

 

 

Revenue

Three Months Ended


 

 

 

 

 

September 30, 2012


 

September 30, 2011


 

 Increase


 

 Increase


 

In millions USD


 

%

Soda Maker Starter Kits

$

46.5


 

$

33.9


 

$

12.6


 

37%

Consumables


 

63.0


 

 

40.7


 

 

22.3


 

55%

Other


 

3.0


 

 

1.1


 

 

1.9


 

180%

Total

$

112.5


 

$

75.7


 

$

36.8


 

49%


 

 

 

 

 

 

 

 

 

 

 

Product Segment Unit Breakdown


 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended


 

 

 

 

 

 

September 30,

2012


 

September 30,

2011


 

 Increase


 

 Increase


 

In thousands


 

%

Soda Maker Starter Kits


 

941


 

 

717


 

 

224


 

31%

CO2 Refills


 

4,337


 

 

3,636


 

 

701


 

19%

Flavors


 

7,747


 

 

4,399


 

 

3,348


 

76%


 

Gross margin for the third quarter 2012 was 54.2%, compared to 53.5% for the same period in 2011. This increase was primarily due to the increase in direct distribution that accounted for 69% of total revenue in the quarter vs. 56% in the third quarter 2011. This increase is mainly due to growing share of U.S. revenue and the shift to self-distribution in the Nordics. Gross margin was also positively impacted from leveraging fixed production costs on higher revenue, partially offset by a higher percentage of subcontracted manufacturing.

Sales and marketing expenses for the third quarter 2012 totaled $35.8 million, or 31.8% of revenue compared to $23.1 million, or 30.6% of revenue for the comparable period last year. The increase is primarily due to higher advertising and promotion expense, which was in line with the plan to support the growing retail presence, especially in the U.S. This was partially offset by a decrease in other selling expenses as a percent of revenue, despite the aforementioned increase in self-distribution versus a year ago, driven by improved supply chain efficiency and expense leverage on higher revenue.   

General and administrative expenses for the third quarter 2012 were $8.7 million, or 7.8% of revenue, compared to $7.6 million, or 10.1% 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 2011 and the acquisition of the distribution activity in the Nordics in the first quarter 2012.

Operating income increased to $16.4 million, or 14.6% of revenue as compared to $9.8 million, or 13.0% of revenue in the third quarter 2011.

Tax benefit was $850,000 compared to a tax expense of $816,000 in the third quarter 2011. This is primarily attributable to an adjustment of tax provision following an agreement with the tax authorities in one of our jurisdictions. Excluding this adjustment the effective tax rate in the third quarter 2012 was approximately 8%, similar to the third quarter 2011.

Balance Sheet Review

  • On August 31, 2012, the Company acquired the SodaStream related assets from its Canadian distributor and started operating its products' distribution in Canada as a self-distribution unit. This had no material impact on the results of operations. The main asset acquired in the transaction was inventory of $5.9 million. The inventory and cash balance at September 30, 2012 reflect this transaction.
  • Cash and cash equivalents and bank deposits at September 30, 2012 were $50.7 million compared to $74.3 million on 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 September 30, 2012 compared to $4.0 million on December 31, 2011.
  • Working capital at September 30, 2012 increased 29.5% to $101.4 million compared to $78.3 million on December 31, 2011.
  • Inventories at September 30, 2012 increased 44.6% to $110.8 million compared to $76.6 million on December 31, 2011, primarily reflecting the additional inventory associated with the acquisition of the Nordics and Canadian inventory and the Company's business growth, primarily in the U.S. 

Change of 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.

Guidance

Based on third 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 46% over 2011 revenue of $289.0 million, up from its previous guidance of 40%.
  • The Company now expects 2012 net income to increase approximately 59% over 2011 net income of $27.5 million, up from its previous guidance of 55%. This guidance assumes full year gross margin of approximately 54.5% and includes a share-based expense of approximately $5.6 million.
  • Gross margin for the fourth quarter 2012 includes a higher mix of third party manufacturing and additional transportation expenses in order to meet the high demand for several new product launches scheduled for the holiday season.

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, November 7, 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 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 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
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 (net income per share amounts in units)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended


 

For the three months ended


 

September 30,


 

September 30,


 

2011


 

2012


 

2011


 

2012


 

(Unaudited)


 

(Unaudited)

Revenue

$

203,265


 

$

303,369


 

$

75,655


 

$

112,482

Cost of revenue


 

94,858


 

 

138,052


 

 

35,152


 

 

51,531


 

 

 

 

 

 

 

 

 

 

 

 

Gross profit


 

108,407


 

 

165,317


 

 

40,503


 

 

60,951


 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses


 

 

 

 

 

 

 

 

 

 

 

Sales and marketing


 

62,737


 

 

100,176


 

 

23,129


 

 

35,825

General and administrative


 

22,408


 

 

27,607


 

 

7,605


 

 

8,741

Other income, net


 

(121)


 

 

(134)


 

 

(40)


 

 

(54)


 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses


 

85,024


 

 

127,649


 

 

30,694


 

 

44,512


 

 

 

 

 

 

 

 

 

 

 

 

Operating income


 

23,383


 

 

37,668


 

 

9,809


 

 

16,439


 

 

 

 

 

 

 

 

 

 

 

 

Interest expense (income), net


 

(1,200)


 

 

40


 

 

(506)


 

 

35

Other financial expense (income), net


 

(647)


 

 

642


 

 

(609)


 

 

488


 

 

 

 

 

 

 

 

 

 

 

 

Total financial expense (income), net


 

(1,847)


 

 

682


 

 

(1,115)


 

 

523


 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes


 

25,230


 

 

36,986


 

 

10,924


 

 

15,916


 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (tax benefit)


 

3,067


 

 

659


 

 

816


 

 

(850)


 

 

 

 

 

 

 

 

 

 

 

 

Net income for the period

$

22,163


 

$

36,327


 

$

10,108


 

$

16,766


 

 

 

 

 

 

 

 

 

 

 

 

Net income per share


 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.14


 

$

1.79


 

$

0.51


 

$

0.82

Diluted

$

1.08


 

$

1.73


 

$

0.48


 

$

0.80


 

 

 

 

 

 

 

 

 

 

 

 

Weighted average  number of shares


 

 

 

 

 

 

 

 

 

 

 

Basic


 

19,376


 

 

20,281


 

 

20,006


 

 

20,410

Diluted


 

20,452


 

 

20,984


 

 

21,002


 

 

21,027


 

 

 

 

 

 

 

 

 

 

 

 


 

 

Consolidated Balance Sheets as of


 

 

 

 

 

 

 

 

 

 

 

 

December 31,


 

September 30,


 

2011


 

2012


 

(Audited)


 

(Unaudited)


 

(In thousands)

Assets


 

 

 

 

 

Cash and cash equivalents

$

34,769


 

$

30,676

Bank deposits


 

39,485


 

 

20,056

Inventories


 

76,625


 

 

110,806

Trade receivables


 

58,452


 

 

80,861

Other receivables


 

20,064


 

 

20,338

Derivative financial instruments


 

322


 

 

235

Assets classified as available-for-sale


 

837


 

 

815

Total current assets


 

230,554


 

 

263,787


 

 

 

 

 

 

Property, plant and equipment


 

46,434


 

 

72,845

Intangible assets


 

25,358


 

 

38,084

Deferred tax assets


 

1,168


 

 

1,774

Other receivables


 

224


 

 

269

Total non-current assets


 

73,184


 

 

112,972


 

 

 

 

 

 

Total assets


 

303,738


 

 

376,759


 

 

 

 

 

 

Liabilities


 

 

 

 

 

Loans and borrowings


 

4,006


 

 

-

Derivative financial instruments


 

-


 

 

424

Trade payables


 

47,383


 

 

72,236

Income tax payable


 

9,171


 

 

8,908

Provisions


 

397


 

 

1,515

Other current liabilities


 

21,071


 

 

28,592

Total current liabilities


 

82,028


 

 

111,675


 

 

 

 

 

 

Employee benefits


 

1,497


 

 

1,458

Provisions


 

514


 

 

531

Deferred tax liabilities


 

717


 

 

1,161

Total non-current liabilities


 

2,728


 

 

3,150


 

 

 

 

 

 

Total liabilities


 

84,756


 

 

114,825


 

 

 

 

 

 

Shareholders' equity


 

 

 

 

 

Share capital


 

3,238


 

 

3,292

Share premium


 

168,601


 

 

174,458

Translation reserve


 

1,471


 

 

2,185

Retained earnings


 

45,672


 

 

81,999

Total shareholders' equity


 

218,982


 

 

261,934


 

 

 

 

 

 

Total liabilities and shareholders' equity

$

303,738


 

$

376,759


 

 

 

 

 

 


 

 

Consolidated Statements of Cash Flows


 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended


 

For the three months ended


 

September 30,


 

September 30,


 

2011


 

2012


 

2011


 

2012