AIRPORT CITY, Israel, Oct. 29, 2014 /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, 2014.
For the third quarter ended September 30, 2014:
- Revenue was $125.9 million compared to $144.6 million in the third quarter 2013
- EBITDA was $15.7 million compared to $21.9 million in the third quarter 2013
- Net income was $9.5 million compared to $16.4 million in the third quarter 2013
- Diluted earnings per share were $0.45, compared to $0.76 in the third quarter 2013
"As we previously announced, our third quarter performance was pressured by challenging selling conditions for soda makers and flavors primarily in the U.S.," said Daniel Birnbaum, Chief Executive Officer of SodaStream. "Our performance outside the U.S. was mixed during the third quarter with strength in company operated markets such as Germany, Australia, Canada and Switzerland, partially offset by declines in distributor markets, namely France and the Czech Republic. Today, we are introducing a comprehensive growth plan that will serve as our blueprint for returning SodaStream to profitable growth. We are fully committed to getting the company back on track and leverage the unique opportunity we have to fulfill our role in the transformation underway in the beverage industry."
The company has posted a copy of its growth plan on the investor relations section of its corporate website at http://sodastream.investorroom.com/
Third Quarter 2014 Financial Review |
||||||||||
Geographical Revenue Breakdown |
||||||||||
Revenue |
Three Months Ended |
|||||||||
September 30, 2013 |
September 30, 2014 |
Increase (Decrease) |
Increase (Decrease) |
|||||||
In Millions USD |
% |
|||||||||
The Americas |
$ |
49.8 |
$ |
29.5 |
$ |
(20.3) |
(41%) |
|||
Western Europe |
75.5 |
74.6 |
(0.9) |
(1%) |
||||||
Asia-Pacific |
8.6 |
13.3 |
4.7 |
54% |
||||||
Central & Eastern Europe, Middle East, Africa |
10.7 |
8.5 |
(2.2) |
(20%) |
||||||
Total |
$ |
144.6 |
$ |
125.9 |
$ |
(18.7) |
(12.9%) |
Product Segment Revenue Breakdown |
||||||||||
Revenue |
Three Months Ended |
|||||||||
September 30, 2013 |
September 30, 2014 |
Increase (Decrease) |
Increase (Decrease) |
|||||||
In millions USD |
% |
|||||||||
Soda Maker Starter Kits |
$ |
62.5 |
$ |
41.5 |
$ |
(21.0) |
(34%) |
|||
Consumables |
79.1 |
81.2 |
2.1 |
3% |
||||||
Other |
3.0 |
3.2 |
0.2 |
7% |
||||||
Total |
$ |
144.6 |
$ |
125.9 |
$ |
(18.7) |
(12.9%) |
Product Segment Unit Breakdown |
|||||||
Three Months Ended |
|||||||
September 30, 2013 |
September 30, 2014 |
Increase (Decrease) |
Increase (Decrease) |
||||
In thousands |
% |
||||||
Soda Maker Starter Kits |
1,196 |
818 |
(378) |
(32%) |
|||
CO2 Refills |
5,806 |
6,396 |
590 |
10% |
|||
Flavors |
8,261 |
7,607 |
(654) |
(8%) |
Gross margin for the third quarter 2014 was 51.2% compared to 54.1% for the same period in 2013. The decline was primarily due to deleveraging of fixed costs on lower sales, higher share of lower margin soda makers in the sales mix and inventory write offs, which were partially offset by a higher share of CO2 refills.
Sales and marketing expenses for the third quarter 2014 totaled $41.6 million, or 33.1% of revenue, compared to $47.5 million, or 32.9% of revenue for the comparable period in the prior year. The $5.9 million decline in sales and marketing expenses was attributable to lower advertising and promotion expenses which decreased to 12.5% of revenue from 15.5% of revenue in the third quarter of 2013. This was partially offset by an increase in selling expenses, including the additional costs of our newly acquired Japanese distribution channel.
General and administrative expenses for the third quarter 2014 were $13.9 million, or 11.1% of revenue, compared to $12.7 million, or 8.8% of revenue in the comparable period of last year. The increase was due to additional expenses related to our newly acquired Japanese distribution channel, as well as additional infrastructure (mainly information technology systems) to support future growth and operational efficiency. This was partially offset by lower share-based compensation expenses.
Operating income decreased to $8.9 million, or 7.1% of revenue, compared to $18.0 million, or 12.5% of revenue in the third quarter of 2013.
Financial income increased to $1.8 million compared to $315,000 in the third quarter of 2013 mainly due to derivative financial instruments gain following the Euro/U.S. dollar devaluation and reduction of liabilities in Israeli Shekel following its devaluation against the U.S. Dollar.
Tax expense decreased to $1.2 million compared to $1.9 million in the third quarter of 2013 due to lower income before tax. Effective tax rate increased to 11.5% compared to 10.5% in the third quarter of 2013 due to changes in the distribution of profit before tax among different jurisdictions.
Balance Sheet Review
- Cash and cash equivalents and bank deposits at September 30, 2014 were $39.9 million compared to $40.9 million at December 31, 2013. The slight decrease is primarily due to the investment in our new production facility and the acquisition of our Japanese distributor, offset by cash generated from operating activities and an increase in bank debt.
- The Company had $35.8 million of bank debt at September 30, 2014, mainly for financing the investment in its new production facility, compared to $15.5 million of bank debt at December 31, 2013.
- Working capital at September 30, 2014 increased 11.6% to $173.4 million compared to $155.4 million at December 31, 2013, mainly due to a decrease in trade payables and an increase in inventory from our newly acquired Japanese distribution channel. Inventories at September 30, 2014 increased 8.2% to $152.2 million compared to $140.7 million at December 31, 2013.
- Operating cash flow for the quarter increased to $22.7 million compared to $5.0 million in third quarter 2013 mainly due to decrease in working capital.
Guidance
Based on third quarter results and current projections for the remainder of the year, the Company is revising its outlook:
- The Company now expects full year 2014 revenue to decrease approximately 9% over 2013 revenue of $562.7 million.
- The Company now expects full year 2014 EBITDA to decrease approximately 26% over 2013 EBITDA of $62.2 million.
- The Company now expects full year 2014 net income to decrease approximately 42% over 2013 net income of $42.0 million.
Conference Call and Management Commentary
Detailed CFO commentary and a supplemental slide presentation have been filed with the Securities and Exchange Commission today under the cover of Form 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 29, 2014) 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 approximately 70,000 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.
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 maintain or expand sales in our target markets, including the United States; our ability to maintain or continue to develop 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; our ability to maintain margins due to decline in product selling price and\or rising costs; 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. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Contact:
Brendon Frey
ICR
Phone: + 1 203-682-8200
[email protected]
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, |
||||||||||
2013 |
2014 |
2013 |
2014 |
||||||||
(Unaudited) |
(Unaudited) |
||||||||||
Revenue |
$ |
394,613 |
$ |
385,248 |
$ |
144,584 |
$ |
125,905 |
|||
Cost of revenue |
180,372 |
187,668 |
66,366 |
61,428 |
|||||||
Gross profit |
214,241 |
197,580 |
78,218 |
64,477 |
|||||||
Operating expenses |
|||||||||||
Sales and marketing |
130,047 |
134,723 |
47,549 |
41,636 |
|||||||
General and administrative |
37,886 |
40,358 |
12,660 |
13,931 |
|||||||
Total operating expenses |
167,933 |
175,081 |
60,209 |
55,567 |
|||||||
Operating income |
46,308 |
22,499 |
18,009 |
8,910 |
|||||||
Interest expense, net |
295 |
552 |
141 |
219 |
|||||||
Other financial expense, net |
336 |
(1,210) |
(456) |
(2,002) |
|||||||
Total financial expense, net |
631 |
(658) |
(315) |
(1,783) |
|||||||
Income before income taxes |
45,677 |
23,157 |
18,324 |
10,693 |
|||||||
Income tax expense |
4,331 |
2,672 |
1,925 |
1,229 |
|||||||
Net income for the period |
$ |
41,346 |
$ |
20,485 |
$ |
16,399 |
$ |
9,464 |
|||
Net income per share |
|||||||||||
Basic |
$ |
1.99 |
$ |
0.98 |
$ |
0.79 |
$ |
0.45 |
|||
Diluted |
$ |
1.93 |
$ |
0.96 |
$ |
0.76 |
$ |
0.45 |
|||
Weighted average number of shares |
|||||||||||
Basic |
20,757 |
20,956 |
20,831 |
21,000 |
|||||||
Diluted |
21,383 |
21,243 |
21,532 |
21,193 |
Consolidated Balance Sheets as of |
|||||
December 31, |
September 30, |
||||
2013 |
2014 |
||||
(Audited) |
(Unaudited) |
||||
(In thousands) |
|||||
Assets |
|||||
Cash and cash equivalents |
$ |
40,885 |
$ |
39,901 |
|
Inventories |
140,709 |
152,196 |
|||
Trade receivables |
123,936 |
95,275 |
|||
Other receivables |
22,208 |
35,405 |
|||
Derivative financial instruments |
538 |
2,286 |
|||
Total current assets |
328,276 |
325,063 |
|||
Property, plant and equipment |
107,132 |
125,792 |
|||
Intangible assets |
48,104 |
48,015 |
|||
Deferred tax assets |
1,089 |
1,337 |
|||
Other receivables |
398 |
464 |
|||
Total non-current assets |
156,723 |
175,608 |
|||
Total assets |
484,999 |
500,671 |
|||
Liabilities |
|||||
Loans and borrowings |
15,452 |
12,458 |
|||
Derivative financial instruments |
103 |
- |
|||
Trade payables |
90,749 |
68,496 |
|||
Income tax payable |
9,869 |
9,675 |
|||
Provisions |
1,614 |
2,007 |
|||
Other current liabilities |
29,674 |
31,615 |
|||
Total current liabilities |
147,461 |
124,251 |
|||
Loans and borrowings |
- |
23,344 |
|||
Employee benefits |
2,221 |
2,015 |
|||
Provisions |
714 |
699 |
|||
Deferred tax liabilities |
2,997 |
2,059 |
|||
Total non-current liabilities |
5,932 |
28,117 |
|||
Total liabilities |
153,393 |
152,368 |
|||
Shareholders' equity |
|||||
Share capital |
3,378 |
3,399 |
|||
Share premium |
193,649 |
201,180 |
|||
Translation reserve |
3,394 |
(7,946) |
|||
Retained earnings |
131,185 |
151,670 |
|||
Total shareholders' equity |
331,606 |
348,303 |
|||
Total liabilities and shareholders' equity |
$ |
484,999 |
$ |
500,671 |
|
Consolidated Statements of Cash Flows |
|||||||||||
For the nine months ended |
For the three months ended |
||||||||||
September 30, |
September 30, |
||||||||||
2013 |
2014 |
2013 |
2014 |
||||||||
(Unaudited) |
(Unaudited) |
||||||||||
(In thousands) |
|||||||||||
Cash flows from operating activities |
|||||||||||
Net income for the period |
$ |
41,346 |
$ |
20,485 |
$ |
16,399 |
$ |
9,464 |
|||
Adjustments: |
|||||||||||
Amortization of intangible assets |
1,769 |
2,042 |
629 |
781 |
|||||||
Change in fair value of derivative financial instruments |
(267) |
(1,324) |
270 |
(1,588) |
|||||||
Exchange rate differences on long-term loans and borrowing |
- |
(1,030) |
- |
(1,030) |
|||||||
Depreciation of property, plant and equipment |
8,605 |
10,085 |
2,828 |
3,994 |
|||||||
Share based payment |
8,238 |
6,732 |
2,884 |
2,195 |
|||||||
Interest expense, net |
295 |
552 |
141 |
219 |
|||||||
Income tax expense |
4,331 |
2,672 |
1,925 |
1,229 |
|||||||
64,317 |
40,214 |
25,076 |
15,264 |
||||||||
Increase in inventories |
(37,591) |
(15,604) |
(12,807) |
(11,659) |
|||||||
Decrease (increase) in trade and other receivables |
(35,792) |
23,425 |
(16,423) |
9,572 |
|||||||
Increase (decrease) in trade payables |
(8,765) |
(21,488) |
4,467 |
8,099 |
|||||||
Increase (decrease) in employee benefits |
24 |
(70) |
25 |
(89) |
|||||||
Increase in provisions and other current liabilities |
578 |
3,933 |
5,816 |
2,167 |
|||||||
(17,229) |
30,410 |
6,154 |
23,354 |
||||||||
Interest paid |
(289) |
(549) |
(110) |
(220) |
|||||||
Income tax received |
3,769 |
715 |
230 |
5 |
|||||||
Income tax paid |
(2,287) |
(4,361) |
(1,321) |
(422) |
|||||||
Net cash from (used in) operating activities |
(16,036) |
26,215 |
4,953 |
22,717 |
|||||||
Cash flows from investing activities |
|||||||||||
Interest received |
114 |
42 |
20 |
15 |
|||||||
Investment in bank deposits |
(10,000) |
- |
- |
- |
|||||||
Proceeds from (payments for) derivative financial instruments, net |
50 |
(527) |
593 |
721 |
|||||||
Acquisition of subsidiary, net of cash acquired |
(1,179) |
- |
- |
- |
|||||||
Acquisition of property, plant and equipment |
(26,296) |
(43,710) |
(6,968) |
(15,499) |
|||||||
Acquisition of intangible assets |
(3,543) |
(4,054) |
(1,054) |
(1,508) |
|||||||
Net cash used in investing activities |
(40,854) |
(48,249) |
(7,409) |
(16,271) |
|||||||
Cash flows from financing activities |
|||||||||||
Proceeds from exercise of employee share options |
4,011 |
820 |
2,179 |
79 |
|||||||
Receipts of long-term loans and borrowings |
- |
30,210 |
- |
30,210 |
|||||||
Change in short-term debt |
20,013 |
(8,830) |
3,870 |
(31,997) |
|||||||
Net cash from (used in) financing activities |
24,024 |
22,200 |
6,049 |
(1,708) |
|||||||
Net increase (decrease) in cash and cash equivalents |
(32,866) |
166 |
3,593 |
4,738 |
|||||||
Cash and cash equivalents at the beginning of the period |
62,068 |
40,885 |
25,200 |
36,244 |
|||||||
Effect of exchange rates fluctuations on cash and cash equivalents |
9 |
(1,150) |
418 |
(1,081) |
|||||||
Cash and cash equivalents at the end of the period |
$ |
29,211 |
$ |
39,901 |
$ |
29,211 |
$ |
39,901 |
Information about revenue in reportable segments |
|||||||||
The Americas |
Western Europe |
Asia-Pacific |
Central & |
Total |
|||||
(In thousands) |
|||||||||
Nine months ended: |
|||||||||
September 30, 2013 (Unaudited) |
$ |
145,503 |
196,851 |
28,738 |
23,521 |
$ |
394,613 |
||
September 30, 2014 (Unaudited) |
$ |
105,141 |
214,805 |
37,396 |
27,906 |
$ |
385,248 |
||
Three months ended: |
|||||||||
September 30, 2013 (Unaudited) |
$ |
49,791 |
75,466 |
8,587 |
10,740 |
$ |
144,584 |
||
September 30, 2014 (Unaudited) |
$ |
29,504 |
74,589 |
13,265 |
8,547 |
$ |
125,905 |
EBITDA |
|||||||||||
Nine months ended |
Three months ended |
||||||||||
September 30, |
September 30, |
||||||||||
2013 |
2014 |
2013 |
2014 |
||||||||
(Unaudited) |
|||||||||||
(In thousands) |
|||||||||||
Reconciliation of Net Income to EBITDA |
|||||||||||
Net income |
$ |
41,346 |
$ |
20,485 |
$ |
16,399 |
$ |
9,464 |
|||
Interest expense, net |
295 |
552 |
141 |
219 |
|||||||
Income tax expense (tax benefit) |
4,331 |
2,672 |
1,925 |
1,229 |
|||||||
Depreciation and amortization |
10,374 |
12,127 |
3,457 |
4,775 |
|||||||
EBITDA |
$ |
56,346 |
$ |
35,836 |
$ |
21,922 |
$ |
15,687 |
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, |
||||||||||
2013 |
2014 |
2013 |
2014 |
||||||||
(Unaudited) |
(Unaudited) |
||||||||||
Revenue |
|||||||||||
(in thousands) |
|||||||||||
Soda maker starter kits (including exchange cylinders) |
$ |
155,350 |
$ |
119,534 |
$ |
62,484 |
$ |
41,464 |
|||
Consumables |
229,969 |
254,835 |
79,076 |
81,212 |
|||||||
Other |
9,294 |
10,879 |
3,024 |
3,229 |
|||||||
Total |
$ |
394,613 |
$ |
385,248 |
$ |
144,584 |
$ |
125,905 |
Nine months ended |
Three months ended |
||||||
September 30, |
September 30, |
||||||
2013 |
2014 |
2013 |
2014 |
||||
(Audited) |
(Unaudited) |
(Unaudited) |
|||||
As a percentage of revenue |
|||||||
Soda maker starter kits (including exchange cylinders) |
39.4% |
31.0% |
43.2% |
32.9% |
|||
Consumables |
58.3% |
66.1% |
54.7% |
64.5% |
|||
Other |
2.3% |
2.9% |
2.1% |
2.6% |
|||
Total |
100.0% |
100.0% |
100.0% |
100.0% |
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SOURCE SodaStream International Ltd.
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