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

30 Oct, 2013, 07:30 ET from SodaStream

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