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SodaStream Reports Record Third Quarter Results

Third Quarter Revenue Increased 29% to $144.6 Million

Third Quarter Diluted Earnings Per Share were $0.76

Third Quarter Adjusted Diluted Earnings Per Share were $0.90

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AIRPORT CITY, Israel, Oct. 30, 2013 /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, 2013.

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

For the third quarter ended September 30, 2013:

  • Revenue increased 28.5% to $144.6 million from $112.5 million in the third quarter 2012
  • EBITDA increased 18.0% to $21.9 million from $18.6 million, and Adjusted EBITDA increased 23.8% to $24.8 million from $20.0 million in the third quarter 2012
  • Net income was $16.4 million compared to $16.8 million in the third quarter 2012, and Adjusted net income was $19.3 million compared to $18.2 million in the third quarter 2012
  • Diluted earnings per share were $0.76, compared to $0.80 in the third quarter 2012 and Adjusted diluted earnings per share were $0.90 compared to $0.87 in the third quarter 2012

"We continued to execute against our primary objective of expanding our user base in our fastest growing markets during the third quarter," said Daniel Birnbaum, Chief Executive Officer of SodaStream, "Our progress is being fueled by positive consumer response to our demand creation efforts and innovative products. With unmatched leadership and capabilities in home carbonation, we believe we are on track to continue acquiring new users and deliver strong annual sales and earnings growth in the coming years."

 













Third Quarter 2013 Financial Review












Geographical Revenue Breakdown

Revenue

Three Months Ended September 30,






2012


2013


 Increase (decrease)


 Increase (decrease)


In Millions USD


%

The Americas

$

38.7


$

49.8


$

11.1


29%

Western Europe


52.6



75.5



22.9


43%

Asia-Pacific


10.9



8.6



(2.3)


(21%)

Central & Eastern Europe, Middle East, Africa


10.3



10.7



0.4


4%

Total

$

112.5


$

144.6


$

32.1


29%

 

Product Segment Revenue Breakdown

Revenue

Three Months Ended September 30,






2012


2013


 Increase


 Increase


In millions USD


%

Soda Maker Starter Kits

$

46.5


$

62.5


$

16


34%

Consumables


63.0



79.1



16.1


26%

Other


3.0



3.0



-


0%

Total

$

112.5


$

144.6


$

32.1


29%

 

Product Segment Unit Breakdown


Three Months Ended September 30,






2012


2013


 Increase


 Increase


In thousands


%

Soda Maker Starter Kits

940


1,196


256


27%

CO2 Refills

4,337


5,806


1,469


34%

Flavors

7,747


8,261


514


7%

 

Gross margin for the third quarter 2013 was 54.1% compared to 54.2% for the same period in 2012. The slight decline was primarily attributable to higher percentage of subcontracted manufacturing and the strengthening of the Israeli Shekel, partially offset by a higher portion of direct distribution.

Sales and marketing expenses for the third quarter 2013 totaled $47.5 million, or 32.9% of revenue, compared to $35.8 million, or 31.8% of revenue for the comparable period in the prior year. The 110 basis point change in sales and marketing expenses as a percent of revenue was mainly attributable to a planned increase in advertising and promotion expense as a percent of revenue to 15.5% from 14.1% in the third quarter 2012.

General and administrative expenses for the third quarter 2013 were $12.7 million, or 8.8% of revenue, compared to $8.7 million, or 7.8% of revenue in the comparable period of last year. The increase was mainly due to higher share-based compensation expense of $2.9 million in the quarter, compared to $1.5 million in the third quarter 2012, additional expenses related to our newly acquired Canadian and Italian distributors as well as additional infrastructure to support growth.

Operating income increased 9.6% to $18.0 million, or 12.5% of revenue, compared to $16.4 million, or 14.6% of revenue in the third quarter 2012.

Tax expense was $1.9 million representing a 10.5% effective tax rate compared to an income tax benefit of $850,000 in the third quarter 2012. The increase in effective tax rate was primarily due to the release of past-years' tax provisions in the third quarter 2012 not recurring in the current period.

Balance Sheet Review

  • Cash and cash equivalents and bank deposits at September 30, 2013 were $39.2 million compared to $62.1 million at December 31, 2012. The decrease is primarily attributable to the investment in our new production facility, an increase in working capital and the purchase of our Italian distributor's business.
  • The Company had $20.0 million of bank debt at September 30, 2013 mainly for financing the investment in its new production facility, compared to no bank debt at December 31, 2012.
  • Working capital at September 30, 2013 increased 75.6% to $167.0 million compared to $95.1 million at December 31, 2012. Inventories at September 30, 2013 increased 40.3% to $158.0 million compared to $112.7 million at December 31, 2012, mainly due to additional inventory from the acquisition of our Italian distributor's business and the overall growth of our business.

Guidance

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

  • The Company now expects full year 2013 revenue to increase approximately 30% over 2012 revenue of $436.3 million.
  • The Company now expects full year 2013 Adjusted EBITDA to increase approximately 38% over 2012 Adjusted EBITDA of $61.1 million.
  • The Company now expects full year 2013 Adjusted net income, which excludes share-based compensation expense, to increase approximately 30% over Adjusted net income of $50.0 million reported in 2012.
  • The Company expects full year 2013 net income to increase approximately 23% over 2012 net income of $43.9 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 Standard Time (U.S. time) today (Wednesday, October 30, 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.

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 other than per share amounts














For the nine months ended


For the three months ended


September 30,


September 30,


2012


2013


2012


2013


(Unaudited)


(Unaudited)

Revenue

$

303,369


$

394,613


$

112,482


$

144,584

Cost of revenue


138,052



180,372



51,531



66,366













Gross profit


165,317



214,241



60,951



78,218













Operating expenses












Sales and marketing


100,176



130,047



35,825



47,549

General and administrative


27,607



37,886



8,741



12,660

Other income, net


(134)



-



(54)



-













Total operating expenses


127,649



167,933



44,512



60,209













Operating income


37,668



46,308



16,439



18,009













Interest expense, net


40



295



35



141

Other financial expense (income), net


642



336



488



(456)













Total financial expense (income), net


682



631



523



(315)













Income before income taxes


36,986



45,677



15,916



18,324













Income tax expense (tax benefit)


659



4,331



(850)



1,925













Net income for the period

$

36,327


$

41,346


$

16,766


$

16,399













Net income per share












Basic

$

1.79


$

1.99


$

0.82


$

0.79

Diluted

$

1.73


$

1.93


$

0.80


$

0.76













Weighted average  number of shares












Basic


20,281



20,757



20,410



20,831

Diluted


20,984



21,383



21,027



21,532

 


Consolidated Balance Sheets








December 31,


September 30,


2012


2013


(Audited)


(Unaudited)


(In thousands)

Assets






Cash and cash equivalents

$

62,068


$

29,211

Bank deposits


-



10,000

Inventories


112,679



158,038

Trade receivables


86,650



112,893

Other receivables


28,021



24,925

Derivative financial instruments


803



759

Assets classified as available-for-sale


868



899

Total current assets


291,089



336,725







Property, plant and equipment


76,906



97,384

Intangible assets


41,978



46,876

Deferred tax assets


2,133



2,013

Other receivables


271



439

Total non-current assets


121,288



146,712







Total assets


412,377



483,437







Liabilities






Loans and borrowings


-



20,013

Derivative financial instruments


261



-

Trade payables


86,431



78,187

Income tax payable


8,866



11,347

Provisions


1,304



1,676

Other current liabilities


37,022



39,275

Total current liabilities


133,884



150,498







Employee benefits


1,939



2,091

Provisions


537



555

Deferred tax liabilities


1,527



2,322

Total non-current liabilities


4,003



4,968







Total liabilities


137,887



155,466







Shareholders' equity






Share capital


3,330



3,375

Share premium


178,338



190,698

Translation reserve


3,628



3,358

Retained earnings


89,194



130,540

Total shareholders' equity


274,490



327,971







Total liabilities and shareholders' equity

$

412,377


$

483,437







 


Consolidated Statements of Cash Flows














For the nine months ended


For the three months ended


September 30,


September 30,


2012


2013


2012


2013


(Unaudited)


(Unaudited)



(In thousands)

Cash flows from operating  activities












Net income for the period

$

36,327


$

41,346


$

16,766


$

16,399













Adjustments:












Amortization of intangible assets


1,107



1,769



420



629

Change in fair value of  derivative financial instruments


504



(267)



-



270

Depreciation of property, plant  and equipment


6,029



8,605



2,211



2,828

Share based payment


4,293



8,238



1,458



2,884

Interest expense, net


40



295



35



141

Income tax expense (tax benefit)


659



4,331



(850)



1,925



48,959



64,317



20,040



25,076

Increase in inventories


(23,909)



(37,591)



(11,368)



(12,807)

Increase in trade and other receivables


(37,984)



(35,792)



(16,186)



(16,423)

Increase (decrease) in trade payables


23,588



(8,765)



11,124



4,467

Increase (decrease) in employee benefits


(28)



24



(15)



25

Increase in provisions and other current liabilities


5,824



578



1,365



5,816



16,450



(17,229)



4,960



6,154

Interest paid


(334)



(289)



(97)



(110)

Income tax received


1,733



3,769



247



230

Income tax paid


(3,047)



(2,287)



(756)



(1,321)

Net cash from (used in) operating activities


14,802



(16,036)



4,354



4,953













Cash flows from investing  activities












Interest received


1,181



114



102



20

Investment in bank deposits


(20,000)



(10,000)



(10,000)



-

Proceeds from bank deposits


38,919



-



-



-

Proceeds from derivative financial  instruments, net


7



50



561



593

Acquisition of subsidiary, net of cash acquired


(10,954)



(1,179)



(1,196)



-

Acquisition of property, plant  and equipment


(23,759)



(26,296)



(9,253)



(6,968)

Acquisition of intangible assets


(2,125)



(3,543)



(1,162)



(1,054)

Net cash from (used in) investing  activities


(16,731)



(40,854)



(20,948)



(7,409)













Cash flows from financing  activities












Proceeds from exercise of employee share options


1,618



4,011



344



2,179

Change in short-term debt


(3,873)



20,013



-



3,870

Net cash from (used in) financing activities


(2,255)



24,024



344



6,049













Net increase (decrease) in cash and cash equivalents


(4,184)



(32,866)



(16,250)



3,593

Cash and cash equivalents at the beginning of the period


34,769



62,068



46,593



25,200

Effect of exchange rates  fluctuations on cash and cash equivalents


91



9



333



418













Cash and cash equivalents  at the end of the period

$

30,676


$

29,211


$

30,676


$

29,211

 


Information about revenue in reportable segments












The
Americas


Western
Europe

Asia-
Pacific

Central &
Eastern
Europe,
Middle East,
Africa


Total


(In thousands)

Nine months ended:










September 30, 2012 (Unaudited)

$

94,943


152,336

30,776

25,314


$

303,369

September 30, 2013 (Unaudited)

$

145,503


196,851

28,738

23,521


$

394,613











Three months ended:










September 30, 2012 (Unaudited)

$

38,660


52,611

10,908

10,303


$

112,482

September 30, 2013 (Unaudited)

$

49,791


75,466

8,587

10,740


$

144,584

 


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




















Nine months ended September 30,


2012


2013


Reported


Share
based




Reported


Share
based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands other than per share amounts

Revenue

$

303,369


$

-


$

303,369


$

394,613


$

-


$

394,613

Cost of revenue


138,052



-



138,052



180,372



-



180,372



















Gross profit


165,317



-



165,317



214,241



-



214,241



















Operating expenses


















Sales and marketing


100,176



-



100,176



130,047



-



130,047

General and administrative


27,607



(4,293)



23,314



37,886



(8,238)



29,648

Other income, net


(134)



-



(134)



-



-



-



















Total operating expenses


127,649



(4,293)



123,356



167,933



(8,238)



159,695



















Operating income


37,668



4,293



41,961



46,308



8,238



54,546



















Interest expense, net


40



-



40



295



-



295

Other financial expense, net


642



-



642



336



-



336



















Total financial expense, net


682



-



682



631



-



631



















Income before income taxes


36,986



4,293



41,279



45,677



8,238



53,915



















Income tax expense


659



-



659



4,331



-



4,331



















Net income for the period

$

36,327


$

4,293


$

40,620


$

41,346


$

8,238


$

49,584



















Net income per share


















Basic

$

1.79





$

2.00


$

1.99





$

2.39

Diluted

$

1.73





$

1.94


$

1.93





$

2.32



















Weighted average  number of shares


















Basic


20,281






20,281



20,757






20,757

Diluted


20,984






20,984



21,383






21,383

 


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




















Three months ended September 30,


2012


2013


Reported


Share
based




Reported


Share
based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands (other than per share amounts)

Revenue

$

112,482


$

-


$

112,482


$

144,584


$

-


$

144,584

Cost of revenue


51,531



-



51,531



66,366



-



66,366



















Gross profit


60,951



-



60,951



78,218



-



78,218



















Operating expenses


















Sales and marketing


35,825



-



35,825



47,549



-



47,549

General and administrative


8,741



(1,458)



7,283



12,660



(2,884)



9,776

Other income, net


(54)



-



(54)



-



-



-



















Total operating expenses


44,512



(1,458)



43,054



60,209



(2,884)



57,325



















Operating income


16,439



1,458



17,897



18,009



2,884



20,893



















Interest expense, net


35



-



35



141



-



141

Other financial expense (income), net


488



-



488



(456)



-



(456)



















Total financial expense (income), net


523



-



523



(315)



-



(315)



















Income before income taxes


15,916



1,458



17,374



18,324



2,884



21,208



















Income tax expense (tax benefit)


(850)



-



(850)



1,925



-



1,925



















Net income for the period

$

16,766


$

1,458


$

18,224


$

16,399


$

2,884


$

19,283



















Net income per share


















Basic

$

0.82





$

0.89


$

0.79





$

0.93

Diluted

$

0.80





$

0.87


$

0.76





$

0.90



















Weighted average  number of shares













Basic


20,410






20,410



20,831






20,831

Diluted


21,027






21,027



21,532






21,532

 


EBITDA and Adjusted EBITDA


Nine months ended


Three months ended


September 30,


September 30,


2012


2013


2012


2013


(Unaudited)


(In thousands)













Reconciliation of Net Income to EBITDA and Adjusted EBITDA












Net income

$

36,327


$

41,346


$

16,766


$

16,399

Interest expense, net


40



295



35



141

Income tax expense (tax benefit)


659



4,331



(850)



1,925

Depreciation and amortization


7,136



10,374



2,631



3,457

EBITDA


44,162



56,346



18,582



21,922













Share based payment


4,293



8,238



1,458



2,884

Adjusted EBITDA

$

48,455


$

64,584


$

20,040


$

24,806

 

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,


2012


2013


2012


2013


(Unaudited)


(Unaudited)


Revenue


(in thousands)













Soda maker starter kits (including exchange cylinders)

$

119,800


$

155,350


$

46,486


$

62,484

Consumables


177,029



229,969



62,979



79,076

Other


6,540



9,294



3,017



3,024

Total

$

303,369


$

394,613


$

112,482


$

144,584

 










Nine months ended


Three months ended


September 30,


September 30,


2012


2013


2012


2013


(Unaudited)


(Unaudited)


As a percentage of revenue









Soda maker starter kits (including exchange cylinders)

39.5%


39.4%


41.3%


43.2%

Consumables

58.4%


58.3%


56.0%


54.7%

Other

2.1%


2.3%


2.7%


2.1%

Total

100.0%


100.0%


100.0%


100.0%

















SOURCE SodaStream



RELATED LINKS
http://www.sodastream.com

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