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NASDAQSODA

 

SodaStream Reports Record Second Quarter Results

Second Quarter Revenue Increased 29% to $132.4 Million

Second Quarter Net Income Increased 36% to $12.9 Million

Second Quarter Diluted Earnings Per Share Increased 33% to $0.60

Second Quarter Adjusted Diluted Earnings Per Share Increased 42% to $0.74

Jul 31, 2013
7:30am

AIRPORT CITY, Israel, July 31, 2013 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems, announced today its results for the three and six month periods ended June 30, 2013.

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

For the second quarter ended June 30, 2013:

  • Revenue increased 28.5% to $132.4 million from $103.0 million in the second quarter 2012. 
  • EBITDA increased 47.6% to $18.0 million from $12.2 million, and Adjusted EBITDA increased 53.9% to $21.0 million from $13.6 million in the second quarter 2012.
  • Net income increased 36.1% to $12.9 million compared to $9.5 million in the second quarter 2012, and Adjusted net income was $15.8 million compared to $10.9 million in the second quarter 2012. 
  • Diluted earnings per share increased 33.3% to $0.60, compared to $0.45 in the second quarter 2012 and Adjusted diluted earnings per share were $0.74 compared to $0.52 in the second quarter 2012.

Daniel Birnbaum, Chief Executive Officer of SodaStream, commented, "Our business performed very well during the second quarter, with revenue up 29% year-over-year on top of very strong gains a year ago that were fueled by the launch at Wal-Mart. Importantly, operating income grew at a faster pace than revenue as we leveraged expenses to drive earnings per share ahead of expectations. With global first half unit sales of soda makers, gas refills and flavors up 18%, 30%, and 25% respectively, we are making great progress against our plan to grow our installed base and strengthen user loyalty. Our strong momentum in the Americas and Western Europe, combined with improving trends in Asia-Pacific, position us well to achieve our upwardly revised outlook for 2013."













Second Quarter 2013 Financial Review












Geographical Revenue Breakdown









Revenue

Three Months Ended






June 30, 2012


June 30, 2013


 Increase (decrease)


 Increase (decrease)


In Millions USD


%

The Americas

$

30.7


$

47.4


$

16.7


55%

Western Europe


54.0



68.1



14.1


26%

Asia-Pacific


9.9



10.8



0.9


9%

Central & Eastern Europe, Middle East, Africa


8.4



6.1



(2.3)


(27%)

Total

$

103.0


$

132.4


$

29.4


29%

 

Product Segment Revenue Breakdown









Revenue

Three Months Ended






June 30, 2012


June 30, 2013


 Increase

 Increase


In millions USD


%

Soda Maker Starter Kits

$

39.8


$

49.9


$

10.1


25%

Consumables


61.6



78.9



17.3


28%

Other


1.6



3.6



2.0


134%

Total

$

103.0


$

132.4


$

29.4


29%

 

Product Segment Unit Breakdown








Three Months Ended






June 30, 2012


June 30, 2013


 Increase


 Increase


In thousands


%

Soda Maker Starter Kits

764


935


171


22%

CO2 Refills

4,230


5,542


1,312


31%

Flavors

7,200


8,505


1,305


18%

 

Gross margin for the second quarter 2013 was 54.3% compared to 54.4% for the same period in 2012, with continued impact of the dependency on manufacturing by subcontractors. 

Sales and marketing expenses for the second quarter 2013 totaled $43.6 million, or 33.0% of revenue, compared to $37.1 million, or 36.0% of revenue for the comparable period in the prior year. The 300 basis point improvement in sales and marketing expenses as a percent of revenue is mainly attributable to lower advertising and promotion expense as a percent of revenue of 15.1% compared to 17.8% in the second quarter 2012 driven by higher revenue.

General and administrative expenses for the second quarter 2013 were $13.6 million, or 10.3% of revenue, compared to $9.2 million, or 9.0% of revenue in the comparable period of last year, mainly due to an increase of $1.6 million in share-based compensation expense to $3.0 million in the quarter, compared to $1.4 million in the second quarter 2012, additional expenses related to our Canadian distribution and additional infrastructure to support growth.

Operating income increased 50.8% to $14.7 million, or 11.1% of revenue, compared to $9.7 million, or 9.5% of revenue in the second quarter 2012.

Tax expense was $1.1 million representing a 7.9% effective tax rate compared to $134,000 or a 1.4% effective tax rate in the second quarter 2012. This increase in effective tax rate is primarily due to the release of past-years' tax provisions in the second quarter 2012 not recurring in the current period.

Balance Sheet Review

  • Cash and cash equivalents and bank deposits at June 30, 2013 were $35.2 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 $16.1 million of bank debt at June 30, 2013 mainly for financing the investments in the new production facility, compared to no bank debt at December 31, 2012.
  • Working capital at June 30, 2013 increased 55.5% to $148.0 million compared to $95.1 million at December 31, 2012. Inventories at June 30, 2013 increased 27.5% to $143.7 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 increased revenue.

Guidance

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


  • The Company now expects full year 2013 revenue to increase approximately 30% over 2012 revenue of $436.3 million, up from its previous guidance of 27%.
  • The Company now expects full year 2013 Adjusted EBITDA to increase approximately 38% over 2012 Adjusted EBITDA of $61.1 million, up from its previous guidance of 36%.
  • The Company now expects full year 2013 Adjusted net income, which excludes share-based compensation expense, to increase approximately 30% over the Adjusted net income of $50.0 million reported in 2012, up from its previous guidance of 27%.
  • The Company expects full year 2013 net income to increase approximately 23% over 2012 net income of $43.9 million, up from its previous guidance of 20%.

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, July 31, 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 six months ended


For the three months ended


June 30,


June 30,


2012


2013


2012


2013


(Unaudited)


(Unaudited)

Revenue

$

190,887


$

250,029


$

103,019


$

132,390

Cost of revenue


86,521



114,006



47,016



60,452













Gross profit


104,366



136,023



56,003



71,938













Operating expenses












Sales and marketing


64,351



82,498



37,083



43,639

General and administrative


18,866



25,226



9,225



13,617

Other income, net


(80)



-



(41)



-













Total operating expenses


83,137



107,724



46,267



57,256













Operating income


21,229



28,299



9,736



14,682













Interest expense, net


5



154



128



129

Other financial expense, net


154



792



24



582













Total financial expense, net


159



946



152



711













Income before income taxes


21,070



27,353



9,584



13,971













Income tax expense


1,509



2,406



134



1,108













Net income for the period

$

19,561


$

24,947


$

9,450


$

12,863













Net income per share












Basic

$

0.97


$

1.20


$

0.47


$

0.62

Diluted

$

0.94


$

1.17


$

0.45


$

0.60













Weighted average  number of shares












Basic


20,217



20,719



20,289



20,756

Diluted


20,913



21,318



20,932



21,416

 


Consolidated Balance Sheets as of













December 31,


June 30,


2012


2013


(Audited)


(Unaudited)


(In thousands)

Assets






Cash and cash equivalents

$

62,068


$

25,200

Bank deposits


-



10,000

Inventories


112,679



143,692

Trade receivables


86,650



93,346

Other receivables


28,021



25,794

Derivative financial instruments


803



1,622

Assets classified as available-for-sale


868



879

Total current assets


291,089



300,533







Property, plant and equipment


76,906



92,369

Intangible assets


41,978



45,410

Deferred tax assets


2,133



2,312

Other receivables


271



276

Total non-current assets


121,288



140,367







Total assets


412,377



440,900







Liabilities






Loans and borrowings


-



16,143

Derivative financial instruments


261



-

Trade payables


86,431



72,737

Income tax payable


8,866



10,215

Provisions


1,304



1,519

Other current liabilities


37,022



32,912

Total current liabilities


133,884



133,526







Employee benefits


1,939



2,005

Provisions


537



549

Deferred tax liabilities


1,527



2,350

Total non-current liabilities


4,003



4,904







Total liabilities


137,887



138,430







Shareholders' equity






Share capital


3,330



3,356

Share premium


178,338



185,654

Translation reserve


3,628



(681)

Retained earnings


89,194



114,141

Total shareholders' equity


274,490



302,470







Total liabilities and shareholders' equity

$

412,377


$

440,900







 


Consolidated Statements of Cash Flows














For the six months ended


For the three months ended


June 30,


June 30,


2012


2013


2012


2013


(Unaudited)


(Unaudited)



(In thousands)

Cash flows from operating  activities












Net income for the period

$

19,561


$

24,947


$

9,450


$

12,863













Adjustments:












Amortization of intangible assets


687



1,140



344



712

Change in fair value of  derivative financial instruments


504



(537)



(774)



(537)

Exchange rate differences on bank deposits


-



-



1,094



-

Depreciation of property, plant  and equipment


3,818



5,777



2,167



3,224

Share based payment


2,835



5,354



1,424



2,960

Interest expense, net


5



154



128



129

Income tax expense


1,509



2,406



134



1,108



28,919



39,241



13,967



20,459

Increase in inventories


(12,541)



(24,784)



(2,639)



(14,982)

Increase in trade and other receivables


(21,798)



(19,369)



(4,635)



(30,558)

Increase (decrease) in trade payables


12,464



(13,232)



11,921



6,001

Decrease in employee benefits


(13)



(1)



(33)



(15)

Increase (decrease) in provisions and other current liabilities


4,459



(5,238)



2,668



6,860



11,490



(23,383)



21,249



(12,235)

Interest paid


(237)



(179)



(123)



(125)

Income tax received


1,486



3,539



143



91

Income tax paid


(2,291)



(966)



(1,098)



(256)

Net cash from (used in) operating activities


10,448



(20,989)



20,171



(12,525)













Cash flows from investing  activities












Interest received


1,079



94



949



36

Investment in bank deposits


(10,000)



(10,000)



(10,000)



(10,000)

Proceeds from bank deposits


38,919



-



38,919



-

Proceeds from (payments for) derivative financial  instruments, net


(554)



(543)



(760)



562

Acquisition of subsidiary, net of cash acquired


(9,758)



(1,179)



-



(1,179)

Acquisition of property, plant  and equipment


(14,506)



(19,328)



(10,379)



(8,724)

Acquisition of intangible assets


(963)



(2,489)



(723)



(1,380)

Net cash from (used in) investing  activities


4,217



(33,445)



18,006



(20,685)













Cash flows from financing  activities












Proceeds from exercise of employee share options


1,274



1,832



686



681

Change in short-term debt


(3,873)



16,143



(2,951)



8,070

Net cash from (used in) financing activities


(2,599)



17,975



(2,265)



8,751













Net increase (decrease) in cash and cash equivalents


12,066



(36,459)



35,912



(24,459)

Cash and cash equivalents at the beginning of the period


34,769



62,068



11,090



49,888

Effect of exchange rates  fluctuations on cash and cash equivalents


(242)



(409)



(409)



(229)













Cash and cash equivalents  at the end of the period

$

46,593


$

25,200


$

46,593


$

25,200

 


Information about revenue in reportable segments
















The Americas


Western Europe

Asia-Pacific

Central and

Eastern

Europe,

Middle East, Africa


Total


(In thousands)

Six months ended:










June 30, 2012 (Unaudited)

$

56,283


99,725

19,868

15,011


$

190,887

June 30, 2013 (Unaudited)

$

95,712


121,385

20,151

12,781


$

250,029











Three months ended:










June 30, 2012 (Unaudited)

$

30,650


54,074

9,927

8,368


$

103,019

June 30, 2013 (Unaudited)

$

47,373


68,087

10,832

6,098


$

132,390

 


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




















Six months ended June 30,


2012


2013


Reported


Share based




Reported


Share based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands (other than per share amounts)

Revenue

$

190,887


$

-


$

190,887


$

250,029


$

-


$

250,029

Cost of revenue


86,521



-



86,521



114,006



-



114,006



















Gross profit


104,366



-



104,366



136,023



-



136,023



















Operating expenses


















Sales and marketing


64,351



-



64,351



82,498



-



82,498

General and administrative


18,866



(2,835)



16,031



25,226



(5,354)



19,872

Other income, net


(80)



-



(80)



-



-



-



















Total operating expenses


83,137



(2,835)



80,302



107,724



(5,354)



102,370



















Operating income


21,229



2,835



24,064



28,299



5,354



33,653



















Interest expense, net


5



-



5



154



-



154

Other financial expense, net


154



-



154



792



-



792



















Total financial expense, net


159



-



159



946



-



946



















Income before income taxes


21,070



2,835



23,905



27,353



5,354



32,707



















Income tax expense


1,509



-



1,509



2,406



-



2,406



















Net income for the period

$

19,561


$

2,835


$

22,396


$

24,947


$

5,354


$

30,301



















Net income per share


















Basic

$

0.97





$

1.11


$

1.20





$

1.46

Diluted

$

0.94





$

1.07


$

1.17





$

1.42



















Weighted average  number of shares


















Basic


20,217






20,217



20,719






20,719

Diluted


20,913






20,913



21,318






21,318

 


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




















Three months ended June 30,


2012


2013


Reported


Share based




Reported


Share based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands (other than per share amounts)

Revenue

$

103,019


$

-


$

103,019


$

132,390


$

-


$

132,390

Cost of revenue


47,016



-



47,016



60,452



-



60,452



















Gross profit


56,003



-



56,003



71,938



-



71,938



















Operating expenses


















Sales and marketing


37,083



-



37,083



43,639



-



43,639

General and administrative


9,225



(1,424)



7,801



13,617



(2,960)



10,657

Other income, net


(41)



-



(41)



-



-



-



















Total operating expenses


46,267



(1,424)



44,843



57,256



(2,960)



54,296



















Operating income


9,736



1,424



11,160



14,682



2,960



17,642



















Interest expense, net


128



-



128



129



-



129

Other financial expense, net


24



-



24



582



-



582



















Total financial expense, net


152



-



152



711



-



711



















Income before income taxes


9,584



1,424



11,008



13,971



2,960



16,931



















Income tax expense


134



-



134



1,108



-



1,108



















Net income for the period

$

9,450


$

1,424


$

10,874


$

12,863


$

2,960


$

15,823



















Net income per share


















Basic

$

0.47





$

0.54


$

0.62





$

0.76

Diluted

$

0.45





$

0.52


$

0.60





$

0.74



















Weighted average  number of shares













Basic


20,289






20,289



20,756






20,756

Diluted


20,932






20,932



21,416






21,416

 


EBITDA and Adjusted EBITDA













Six months ended


Three months ended


June 30,


June 30,


2012


2013


2012


2013


(Unaudited)


(In thousands)













Reconciliation of Net Income to EBITDA and Adjusted EBITDA












Net income

$

19,561


$

24,947


$

9,450


$

12,863

Interest expense, net


5



154



128



129

Income tax expense


1,509



2,406



134



1,108

Depreciation and amortization


4,505



6,917



2,511



3,936

EBITDA


25,580



34,424



12,223



18,036













Share based payment


2,835



5,354



1,424



2,960

Adjusted EBITDA

$

28,415


$

39,778


$

13,647


$

20,996

 

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:
































Six months ended


Three months ended


June 30,


June 30,


2012


2013


2012


2013


(Unaudited)


(Unaudited)


Revenue


(in thousands)













Soda maker starter kits (including exchange cylinders)

$

73,314


$

92,866


$

39,830


$

49,914

Consumables


114,050



150,893



61,631



78,831

Other


3,523



6,270



1,558



3,645

Total

$

190,887


$

250,029


$

103,019


$

132,390

 










Six months ended


Three months ended


June 30,


June 30,


2012


2013


2012


2013


(Unaudited)


(Unaudited)


As a percentage of revenue









Soda maker starter kits (including exchange cylinders)

38.4%


37.1%


38.7%


37.7%

Consumables

59.8%


60.4%


59.8%


59.5%

Other

1.8%


2.5%


1.5%


2.8%

Total

100.0%


100.0%


100.0%


100.0%


















 

SOURCE SodaStream International Ltd.


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