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

07 Nov, 2012, 07:30 ET from SodaStream International Ltd.

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

(Unaudited)

(Unaudited)

(In thousands)

Cash flows from operating activities

Net income for the period

$

22,163

$

36,327

$

10,108

$

16,766

Adjustments:

Amortization of intangible assets

477

1,107

81

420

Change in fair value of derivative financial instruments

466

504

(79)

-

Depreciation of property, plant and equipment

3,128

6,029

973

2,211

Share based payment

4,040

4,293

1,348

1,458

Interest expense (income), net

(1,200)

40

(506)

35

Income tax expense (tax benefit)

3,067

659

816

(850)

32,141

48,959

12,741

20,040

Increase in inventories

(20,081)

(23,909)

(9,747)

(11,368)

Increase in trade and other receivables

(19,048)

(37,984)

(10,878)

(16,186)

Increase in trade payables

6,091

23,588

5,598

11,124

Decrease in employee benefits

(14)

(28)

(6)

(15)

Increase in provisions and other current liabilities

84

5,824

232

1,365

(827)

16,450

(2,060)

4,960

Interest paid

(272)

(334)

(79)

(97)

Income tax received

-

1,733

-

247

Income tax paid

(3,010)

(3,047)

(1,357)

(756)

Net cash from (used in) operating activities

(4,109)

14,802

(3,496)

4,354

Cash flows from investing activities

Interest received

1,003

1,181

221

102

Investment in bank deposits

(51,892)

(20,000)

(51,892)

(10,000)

Proceeds from bank deposits

-

38,919

-

-

Proceeds from (payments for) derivative financial instruments, net

(44)

7

(25)

561

Acquisition of subsidiary, net of cash acquired

-

(10,954)

-

(1,196)

Acquisition of property, plant and equipment

(14,067)

(23,759)

(7,770)

(9,253)

Acquisition of intangible assets

(650)

(2,125)

(398)

(1,162)

Net cash used in investing activities

(65,650)

(16,731)

(59,864)

(20,948)

Cash flows from financing activities

Share issuance

42,929

-

-

-

Proceeds from exercise of employee share options

899

1,618

82

344

Change in short-term debt

(8,609)

(3,873)

198

-

Net cash from (used in) financing activities

35,219

(2,255)

280

344

Net decrease in cash and cash equivalents

(34,540)

(4,184)

(63,080)

(16,250)

Cash and cash equivalents at the beginning of the period

68,627

34,769

96,980

46,593

Effect of exchange rates fluctuations on cash and cash equivalents

(154)

91

33

333

Cash and cash equivalents at the end of the period

$

33,933

$

30,676

$

33,933

$

30,676

Information about revenue in reportable segments

Western Europe

The Americas

Central and

Eastern

Europe, Middle

East, Africa

Asia-Pacific

Total

(In thousands)

Nine months ended:

September 30, 2012 (Unaudited)

$

152,336

94,943

25,314

30,776

$

303,369

September 30, 2011 (Unaudited)

$

113,457

51,918

25,724

12,166

$

203,265

Three months ended:

September 30, 2012 (Unaudited)

$

52,611

38,660

10,303

10,908

$

112,482

September 30, 2011 (Unaudited)

$

39,683

24,007

7,514

4,451

$

75,655

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

Nine months ended September 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

$

203,265

$

-

$

203,265

$

303,369

$

-

$

303,369

Cost of revenue

94,858

-

94,858

138,052

-

138,052

Gross profit

108,407

-

108,407

165,317

-

165,317

Operating expenses

Sales and marketing

62,737

-

62,737

100,176

-

100,176

General and administrative

22,408

(4,040)

18,368

27,607

(4,293)

23,314

Other income, net

(121)

-

(121)

(134)

-

(134)

Total operating expenses

85,024

(4,040)

80,984

127,649

(4,293)

123,356

Operating income

23,383

4,040

27,423

37,668

4,293

41,961

Interest expense (income), net

(1,200)

-

(1,200)

40

-

40

Other financial expense (income), net

(647)

-

(647)

642

-

642

Total financial expense (income), net

(1,847)

-

(1,847)

682

-

682

Income before income taxes

25,230

4,040

29,270

36,986

4,293

41,279

Income tax expense

3,067

-

3,067

659

-

659

Net income for the period

$

22,163

$

4,040

$

26,203

$

36,327

$

4,293

$

40,620

Net income per share

Basic

$

1.14

$

1.35

$

1.79

$

2.00

Diluted

$

1.08

$

1.28

$

1.73

$

1.94

Weighted average number of shares

Basic

19,376

19,376

20,281

20,281

Diluted

20,452

20,452

20,984

20,984

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

Three months ended September 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

$

75,655

$

-

$

75,655

$

112,482

$

-

$

112,482

Cost of revenue

35,152

-

35,152

51,531

-

51,531

Gross profit

40,503

-

40,503

60,951

-

60,951

Operating expenses

Sales and marketing

23,129

-

23,129

35,825

-

35,825

General and administrative

7,605

(1,348)

6,257

8,741

(1,458)

7,283

Other income, net

(40)

-

(40)

(54)

-

(54)

Total operating expenses

30,694

(1,348)

29,346

44,512

(1,458)

43,054

Operating income

9,809

1,348

11,157

16,439

1,458

17,897

Interest expense (income), net

(506)

-

(506)

35

-

35

Other financial expense (income), net

(609)

-

(609)

488

-

488

Total financial expense (income), net

(1,115)

-

(1,115)

523

-

523

Income before income taxes

10,924

1,348

12,272

15,916

1,458

17,374

Income tax expense (tax benefit)

816

-

816

(850)

-

(850)

Net income for the period

$

10,108

$

1,348

$

11,456

$

16,766

$

1,458

$

18,224

Net income per share

Basic

$

0.51

$

0.57

$

0.82

$

0.89

Diluted

$

0.48

$

0.55

$

0.80

$

0.87

Weighted average number of shares

Basic

20,006

20,006

20,410

20,410

Diluted

21,002

21,002

21,027

21,027

EBITDA and Adjusted EBITDA

Nine months ended

Three months ended

September 30,

September 30,

2011

2012

2011

2012

(Unaudited)

(In thousands)

Reconciliation of Net Income to EBITDA

and Adjusted EBITDA

Net income

$

22,163

$

36,327

$

10,108

$

16,766

Interest expense (income), net

(1,200)

40

(506)

35

Income tax expense (tax benefit)

3,067

659

816

(850)

Depreciation and amortization

3,605

7,136

1,054

2,631

EBITDA

27,635

44,162

11,472

18,582

Share based payment

4,040

4,293

1,348

1,458

Adjusted EBITDA

$

31,675

$

48,455

$

12,820

$

20,040

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 (*):

Nine months ended

Three months ended

September 30,

September 30,

2011

2012

2011

2012

(Unaudited)

Revenue

(in thousands)

Soda maker starter kits (including

exchange cylinders)

$

84,912

$

119,800

$

33,868

$

46,486

Consumables

114,684

177,029

40,710

62,979

Other

3,669

6,540

1,077

3,017

Total

$

203,265

$

303,369

$

75,655

$

112,482

Nine months ended

Three months ended

September 30,

September 30,

2011

2012

2011

2012

(Unaudited)

As a percentage of revenue

Soda maker starter kits (including exchange cylinders)

41.8%

39.5%

44.8%

41.3%

Consumables

56.4%

58.4%

53.8%

56.0%

Other

1.8%

2.1%

1.4%

2.7%

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 $9,905 thousand and $ 3,932 thousand for nine months and three months ended September 30, 2011, respectively (increase in 480 basis points and 520 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