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SodaStream Reports First Quarter Fiscal 2016 Results

AIRPORT CITY, Israel, May 10, 2016 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), the world's leading manufacturer of home beverage carbonation systems, announced today its results for the three-month period ended March 31, 2016.

SODASTREAM LOGO

For the first quarter ended March 31, 2016:

  • Revenue increased 10.4% to $100.9 million compared to Adjusted revenue* of $91.3 million in the first quarter of 2015
  • EBITDA increased 61.7% to $12.3 million compared to Adjusted EBITDA* of $7.6 million in the first quarter of 2015
  • Net income was $6.1 million compared to Adjusted net income* of $8.4 million in the first quarter of 2015, which included a financial income of $5.7 million related to currency gains that were unusual in their magnitude.
  • Diluted earnings per share was $0.29 compared to Adjusted diluted earnings per share* of $0.40 in the first quarter of 2015

"Our first quarter results demonstrate that our growth plan, which centers on repositioning the SodaStream brand around sparkling water and building a stronger, more efficient organization, has started to take hold," commented Daniel Birnbaum, Chief Executive Officer of SodaStream. "Sales exceeded our expectations driven by strong gains in Europe as our new messaging fueled increased demand for sparkling water makers, gas refills and our enhanced flavor line in turnaround markets like France and the Nordics, while we experienced continued growth in our established countries of Germany, Austria and Switzerland. At the same time, our operating performance reflects the benefits from the consolidation of our manufacturing and logistics activities into our new state-of-the-art facility in Lehavim. We move forward focused on continuing to execute our growth plan including in the U.S. where our efforts are concentrated on developing the right marketing message and enhancing our in-store presence. We are confident that the work we are doing will lead to increased profitability and greater shareholder value over the long-term."

First Quarter 2016 Financial Review
(The financial review relates to the Non-IFRS Consolidated Statements of Operations)

Geographical Revenue Breakdown


Three Months Ended









March 31, 2015*



March 31, 2016



 Increase

(decrease)



Increase

(decrease)



In millions USD



%

Western Europe


$

54.6



$

62.6



$

8.0



15%

The Americas



22.8




22.9




0.1



1%

Asia-Pacific



9.0




8.8




(0.2)



(2%)

Central & Eastern Europe, Middle East, Africa



4.9




6.6




1.7



32%

Total


$

91.3



$

100.9



$

9.6



10%

 

 

Product Segment Revenue Breakdown


Three Months Ended










March 31, 2015*



March 31, 2016



 Increase



 Increase



In millions USD



%

Sparkling Water Maker Starter Kits


$

**26.2



$

29.6



$

3.4




13%

Consumables



**62.4




68.1




5.7




9%

Other



**2.7




3.2




0.5




22%

Total


$

91.3



$

100.9



$

9.6




10%

















*The comparable first quarter 2015 data relates to the Adjusted non-IFRS measures. See "Non IFRS Financial Measures" and related reconciliations included elsewhere in this press release.

**Reclassified.
















 

 

Product Segment Unit Breakdown















Three Months Ended










March 31, 2015



March 31, 2016



Increase



Increase



In thousands



%

Sparkling Water Maker Starter Kits



518




575




57




11%

CO2 Refills



6,046




6,781




735




12%

Flavors



4,922




5,288




366




7%

Revenue increased by $9.6 million, or 10.4% to $100.9 million from Adjusted revenue* of $91.3 million driven by solid gains mainly in Germany, France, and the Czech Republic partially offset by a negative foreign currency exchange impact mainly due to the weakening of the Euro/U.S. Dollar exchange rate, Australian Dollar/U.S. Dollar, and the Canadian Dollar/U.S. Dollar compared to the same period last year.

Gross margin decreased to 50.7% compared to Adjusted gross margin* of 52.3% for the same period in 2015 mainly due to changes in foreign currency exchange rates compared to the same period last year.

Sales and marketing expenses were $32.7 million, or 32.4% of revenue, compared to $32.5 million, or 35.5% of the Adjusted revenue* in the same period last year. The slight increase in sales and marketing expenses was mainly due to higher advertising and promotion expenses offset by decrease in other sales and distribution expenses.

General and administrative expenses for the first quarter 2016 were $10.6 million, or 10.5% of revenue, compared to $11.6 million, or 12.7% of Adjusted revenue* in the same period last year.

Operating income increased 116.3% to $7.9 million, or 7.9% of revenue, compared to Adjusted operating profit* of $3.7 million, or 4.0% of Adjusted revenue* in the same period last year.

The net negative impact of foreign currency exchange rate changes compared to the same period last year was approximately $2.8 million on revenue and $2.0 million on operating income.

Net financial expense was $0.9 million compared to financial income of $5.7 million in the same period in 2015, which relates to currency gains that were unusual in their magnitude

Tax expense was $0.9 million reflecting an effective tax rate of 13.1%, compared to $1.0 million, or an effective tax rate of 13.8% in the first quarter 2015.

Balance Sheet and Cash Flow
Cash and cash equivalents were $34.4 million, similar to their value as of December 31, 2015.

Cash flow from operating activities less cash flow for investment activities ("free cash flow"), was $4.6 million compared to negative free cash flow of $11.5 million in the same period last year. 

Bank debt decreased 11.7% to $32.5 million compared to $36.8 million as of December 31, 2015.

Working capital was $141.6 million similar to its value as of December 31, 2015. Inventories increased by 2.0% to $115.2 million compared to $112.9 million as of December 31, 2015.

Conference Call and Management Commentary

Detailed CFO commentary and a supplemental slide presentation have been furnished as Exhibits 99.2 and 99.3 to the Form 6-K furnished to the Securities and Exchange Commission and will be posted on the company's website, http://sodastream.investorroom.com.  

The company has scheduled a conference call for 8:30 a.m. Eastern Standard Time (U.S. time) today (Tuesday, May 10, 2016) 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. 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 is the world's leading manufacturer and distributor of Sparkling Water Makers, which enable consumers to easily transform ordinary tap water into sparkling water and flavored sparkling water in seconds. By making ordinary water more exciting and fun to drink, SodaStream helps consumers drink more water. Sparkling Water Makers offer a highly differentiated and innovative solution to consumers of bottled and canned carbonated soft drinks. The products promote health and wellness, are environmentally friendly, cost effective, and are customizable and fun to use. Products are available at more than 70,000 retail stores across 45 countries, including approximately 13,000 retail stores in the United States. To learn more about how SodaStream makes water exciting and follow SodaStream on Facebook, Twitter, Pinterest, Instagram and YouTube, visit http://www.sodastream.com.

Non-IFRS Financial Measures 

This press release contains certain non-IFRS measures, including Adjusted revenue, Adjusted gross margin, Adjusted operating income, Adjusted net income, Adjusted EBITDA, and Adjusted diluted earnings per share ("Adjusted diluted EPS").

Adjusted EBITDA represents earnings before financial expense (income), income tax, depreciation and amortization, and further eliminates the effect of restructuring costs. Adjusted revenue, Adjusted gross margin, Adjusted operating income, Adjusted net income and Adjusted diluted EPS eliminate the effect of restructuring costs.

The company believes that the Adjusted revenue, Adjusted gross margin, Adjusted operating income, Adjusted net income, Adjusted EBITDA and Adjusted diluted EPS, as described above, should be considered in evaluating the company's performance. Adjusted revenue, Adjusted operating income, Adjusted net income, Adjusted EBITDA and Adjusted diluted EPS exclude restructuring costs because most of this charge 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 financial expenses (income), net), tax positions (such as the impact of changes in effective tax rates) and the age and depreciation charges 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 and 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.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include information about possible or assumed future results of our business and financial condition, as well as the results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," or the negative of these terms or other similar expressions: 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 discussed under the heading "Risk Factors" in the Annual Report on the Form 20-F for the year ended December 31, 2015 and other documents filed with or furnished to the Securities and Exchange Commission. 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  
brendon.frey@icrinc.com

 

Consolidated Statements of Operations

In thousands (other than per share amounts)


For the three months ended March 31










2015



2016




(Unaudited)



(Unaudited)









Revenue


$

90,344



$

100,873


Cost of revenue



44,893




49,701











Gross profit



45,451




51,172











Operating expenses









Sales and marketing



32,461




32,671


General and administrative



11,641




10,581


Total operating expenses



44,102




43,252











Operating income



1,349




7,920











Interest expense, net



34




39


Other financial expense (income), net



(5,702)




871











Total financial expense (income), net



(5,668)




910











Income before income taxes



7,017




7,010











Income tax expense



970




917











Net income for the period



6,047




6,093











Net income per share









Basic



0.29




0.29


Diluted



0.29




0.29











Weighted average number of shares









Basic



21,017




21,100


Diluted



21,050




21,164


 

 

Consolidated Balance Sheets as of
















December 31,



March 31,




2015



2016




(Audited)



(Unaudited)




(In thousands)


Assets







Cash and cash equivalents


$

34,534



$

34,432


Inventories



112,973




115,189


Trade receivables



76,566




71,192


Other receivables



29,099




25,945


Derivative financial instruments



631




677


Total current assets



253,803




247,435











Property, plant and equipment



155,294




162,103


Intangible assets



42,095




42,248


Deferred tax assets



1,106




2,036


Other receivables



431




437


Total non-current assets



198,926




206,824











Total assets



452,729




454,259











Liabilities









Loans and borrowings



11,917




9,288


Trade payables



50,549




48,099


Income tax payable



7,505




5,364


Provisions



2,407




2,214


Other current liabilities



18,118




15,764


Total current liabilities



90,496




80,729











Loans and borrowings



24,905




23,221


Employee benefits



2,152




2,218


Provisions



156




171


Deferred tax liabilities



832




835


Total non-current liabilities



28,045




26,445











Total liabilities



118,541




107,174











Shareholders' equity









Share capital



3,414




3,418


Share premium



205,527




206,895


Translation reserve



(29,993)




(24,561)


Retained earnings



155,240




161,333


Total shareholders' equity



334,188




347,085











Total liabilities and shareholders' equity


$

452,729



$

454,259


 

 

Consolidated Statements of Cash Flows










For the three months ended




March 31,




2015



2016




(Unaudited)




(In thousands)


Cash flows from operating activities









Net income for the period


$

6,047



$

6,093











Adjustments:









Amortization of intangible assets



929




907


Change in fair value of derivative financial instruments



(3,806)




354


Exchange rate differences on short-term loans and borrowing



(957)




-


Exchange rate differences on long-term loans and borrowing



(3,900)




843


Depreciation of property, plant and equipment



3,014




3,469


Restructuring costs



2,313




-


Share based payment



1,133




1,362


Interest expense, net



34




39


Income tax expense



970




917





5,777




13,984


Decrease (increase) in inventories



1,484




(1,456)



Decrease in trade and other receivables



23,858




10,732



Decrease in trade payables and other liabilities



(28,932)




(5,845)



Increase in employee benefits



106




5



Decrease in provisions



(377)




(193)






1,916




17,227



Interest paid



(41)




(58)



Income tax received



250




2



Income tax paid



(2,056)




(4,134)



Net cash from operating activities



69




13,037













Cash flows from investing activities










Interest received



7




19



Proceeds from investment grants



2,252




-



Proceeds from (payment for) derivative financial instruments, net



909




(400)



Acquisition of property, plant and equipment



(13,741)




(7,568)



Acquisition of intangible assets



(990)




(532)



Net cash used in investing activities



(11,563)




(8,481)












Cash flows from financing activities









Proceeds from exercise of employee share options



10




10


Repayments of long-term loans and borrowings



(10,684)




(2,295)


Change in short-term debt



17,430




(2,861)


Net cash from financing activities



6,756




(5,146)











Net decrease in cash and cash equivalents



(4,738)




(590)


Cash and cash equivalents at the beginning of the period



46,880




34,534


Effect of exchange rates fluctuations on cash and cash equivalents



(1,579)




488











Cash and cash equivalents at the end of the period


$

40,563



$

34,432













 

 

Information about revenue in reportable segments

























 Western Europe



The Americas



Asia-Pacific



Central &
Eastern Europe,
Middle East,
Africa



Total




(In thousands)


Three months ended:
















March 31, 2015 (Unaudited) *


$

54,635




22,795




8,965




4,949



$

91,344



March 31, 2016 (Unaudited)



62,635




22,912




8,806




6,520




100,873



 

 

EBITDA









Three months ended




March 31,




2015*



2016




(Unaudited)




(In thousands)









Reconciliation of Net Income to EBITDA







Net income


$

6,047



$

6,093


Financial expenses (income), net



(5,668)




910


Income tax expense



970




917


Depreciation and amortization



3,943




4,376


EBITDA



5,292




12,296











Restructuring



2,313




-


 

EBITDA



7,605




12,296











*The comparable first quarter 2015 data relates to the Adjusted non-IFRS measures. See "Non IFRS Financial Measures" and related reconciliations included elsewhere in this press release.

 

 

 

The following tables present the Company's adjusted revenue, by

product type for the periods presented, as well as such revenue

by product type as a percentage of total revenue:







Three months ended




March 31,




2015*



2016




(Unaudited)




Revenue




(in thousands)









Sparkling Water Maker starter kits (including exchange cylinders)


$

**26,246



$

29,581


Consumables



**62,441




68,055


Other



**2,657




3,237


Total


$

91,344



$

100,873


 



Three months ended



March 31,



2015*


2016



(Unaudited)



As a percentage of
Revenue








Sparkling Water Maker starter kits (including exchange cylinders)



28.7%



29.3%

Consumables



68.4%



67.5%

Other



2.9%



3.2%

Total



100.0%



100.0%


*The comparable first quarter 2015 data relates to the Adjusted non-IFRS measures. See "Non IFRS Financial Measures" and related reconciliations included elsewhere in this press release.

**Reclassified.

 

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SOURCE SodaStream International Ltd.