SodaStream Reports Record Third Quarter Results

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.

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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."

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
[email protected]

Investor Contacts (US):
Brendon Frey
ICR
Phone: + 1 203-682-8200
[email protected]

SOURCE SodaStream