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SodaStream Reports Third Quarter Fiscal 2016 Results
Revenue Increased 13% to $124.2 Million
Operating Income Increased 243% to an All-Time Record $18.6 Million
Diluted EPS Increased 209% to $0.69

AIRPORT CITY, Israel, Nov. 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 and nine month periods ended September 30, 2016.

SodaStream Logo

For the third quarter ended September 30, 2016, compared to adjusted third quarter 2015 results*:

  • Revenue increased 12.9% to $124.2 million compared to $110.0 million in the third quarter 2015
  • EBITDA increased 140.6% to $23.3 million compared to $9.7 million adjusted EBITDA in the third quarter 2015
  • Net income increased 217.4% to $14.9 million compared to $4.7 million in the third quarter 2015
  • Diluted earnings per share increased to $0.69 compared to $0.22 in the third quarter 2015

"We delivered very strong third quarter results highlighted by double digit revenue growth and record high operating income," commented Daniel Birnbaum, Chief Executive Officer of SodaStream. "Our top-line performance included a 23% increase in sparkling water maker unit sales to 788,000, our highest quarterly figure in nearly two years, underscoring the growing strength of our business. We believe that repositioning the SodaStream brand around sparkling water combined with effective marketing programs is setting the foundation for an acceleration in household penetration in each of our geographic regions. During the third quarter, our home carbonation system was used to produce and consume more sparkling water than any other brand worldwide, which resulted in an all-time quarterly record 7.7 million gas refills. Importantly, we are driving growth in a highly profitable manner and generating strong free cash flow following the recent consolidation of our manufacturing, logistics and distribution activities and expense optimization efforts. With significant growth opportunities ahead of us, we are very excited about the future of the business."

Third Quarter 2016 Financial Reviews


Geographical Revenue Breakdown












Three Months Ended










September 30,
2015



September 30,
2016



Increase



Increase




In Millions USD



%


Western Europe


$

68.5



$

74.7



$

6.2




9

%

The Americas



26.2




29.8




3.6




14

%

Asia-Pacific



9.0




12.9




3.9




43

%

Central & Eastern Europe, Middle East, Africa



6.3




6.8




0.5




9

%

Total


$

110.0



$

124.2



$

14.2




13

%

 

Product Segment Revenue Breakdown
















Three Months Ended










September 30,
2015



September 30,
2016



Increase

(decrease)



Increase

(decrease)




In millions USD



%


Sparkling Water Maker Starter Kits


$

34.2



$

45.5



$

11.3




33

%

Consumables



73.9




76.9




3.0




4

%

Other



1.9




1.8




(0.1)




(4)

%

Total


$

110.0



$

124.2



$

14.2




13

%


* The comparable third quarter 2015 gross margin, operating and net income data, EBITDA and diluted earnings per share on pages 1-2 and 7-8 of this press release relate to Adjusted Non-IFRS measures. See "Non-IFRS Financial measures" on page 3. See also "IFRS to Non-IFRS Bridge" in CFO's commentary for explanations of differences between the two periods and relevant adjustments.

 

Product Segment Unit Breakdown


Three Months Ended










September 30,
2015



September 30,
2016



Increase

(decrease)



Increase

(decrease)




In thousands



%


Sparkling Water Maker Starter Kits



639




788




149




23

%

CO2 Refills



7,021




7,673




652




9

%

Flavors



6,726




5,463




(1,263)




(19)

%

Revenue increased $14.2 million, or 12.9%, to $124.2 million compared to $110.0 million in the same period in 2015 driven by increased consumer demand for sparkling water makers and consumables mainly in Germany, Japan, Australia, the Nordics, the U.S. and Canada.

Gross margin* increased 340 basis points to 51.8% compared to 48.4% for the same period in 2015 mainly due production optimization in the Lehavim plant and price increases partially offset by a higher portion of sparkling water makers in the product mix.

Sales and marketing expenses were $34.9 million, or 28.1% of revenue, compared to $36.0 million, or 32.8% in the same period in 2015. Advertising and promotion expenses decreased by $0.6 million to $15.2 million, or 12.2% of revenue, compared to $15.8 million, or 14.3% of revenue, in the same period in 2015. Other selling expenses decreased by $0.5 million to $19.7 million, or 15.9% of revenue, compared to $20.3 million, or 18.4% of revenue, in the same period in 2015, primarily driven by ongoing expenses optimization activities.

General and administrative expenses decreased $0.9 million to $10.8 million, or 8.7% of revenue, compared to $11.8 million, or 10.7% of revenue in the same period in 2015.

Operating income* increased 243.0% to $18.6 million, or 14.9% of revenue, compared to $5.4 million, or 4.9% of revenue, in the third quarter 2015.

Currency exchange rates had no material impact in comparison with the same period in 2015. 

Net financial expense was $0.2 million compared to net financial income of $0.1 million in the same period in 2015.

Tax expense was $3.4 million with an effective tax rate of 18.8%, compared to $0.8 million with an effective tax rate of 26.0% in the same period in 2015. The effective tax rate results from the earnings distribution between the taxable entities of the group.

Balance Sheet and Cash Flow Review

Cash and short-term deposits less bank debt at September 30, 2016 increased $46.2 million to a net cash position of $43.9 million compared to a net debt position of $2.3 million at December 31, 2015.

Net cash from operating activities minus capital expenditures was positive at $26.2 million in the third quarter 2016 compared to $1.2 million in the same period in 2015. Free cash flow for the nine months ended September 30, 2016 was positive at $45.3 million compared to a negative free cash flow of $12.9 million for the same period in 2015.

Working capital decreased 13.3% to $122.0 million compared to $140.7 million at December 31, 2015. Inventories decreased 9.4% to $102.3 million compared to $113.0 million at December 31, 2015.

Conference Call and Management Commentary

A detailed CFO commentary and a supplemental slide presentation have been furnished as exhibits to today's report of a foreign private issuer on a 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 (Thursday, November 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. 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 #1 sparkling water brand in volume in the world and the leading manufacturer and distributor of Sparkling Water Makers. We enable consumers to easily transform ordinary tap water into sparkling water and flavored sparkling water in seconds. By making ordinary water fun and exciting 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. 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 the following Non-IFRS measures: 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 and impairment of other intangible assets. Adjusted revenue, Adjusted gross margin, Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share 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 operations. Adjusted revenue, Adjusted gross margin, Adjusted operating income, Adjusted net income and Adjusted diluted EPS exclude restructuring costs and Adjusted EBITDA exclude restructuring costs and impairment of other intangible assets because most of this charge is a non-cash expense and does not reflect the performance of the Company's underlying business and operations. In addition, Adjusted EBITDA facilitates operating performance comparisons from period to period by backing out potential differences caused by variations in capital structures (affecting financial expenses (income), net), tax positions (such as the impact on periods or companies of changes in effective tax rates), the age and depreciation charges and amortization of fixed and intangible assets (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, see "IFRS to Non-IFRS Bridge" in CFO's commentary.

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 nine months ended



For the three months ended




September 30,



September 30,




2015



2016



2015



2016




(Unaudited)



(Unaudited)


Revenues


$

300,193



$

344,265



$

110,015



$

124,228


Cost of revenues



155,455




168,285




59,255




59,889



















Gross profit



144,738




175,980




50,760




64,339



















Operating expenses

















Sales and marketing



103,610




105,636




36,031




34,943


General and administrative



34,869




32,383




11,772




10,833


Other expenses



-




2,327




-




-



















Total operating expenses



138,479




140,346




47,803




45,776



















Operating income



6,259




35,634




2,957




18,563



















Interest expense (income), net



64




369




(62)




115


Other financial expense (income), net



(5,212)




945




(10)




95



















Total financial expense (income), net



(5,148)




1,314




(72)




210



















Income before income taxes



11,407




34,320




3,029




18,353



















Income tax expense



2,158




5,502




787




3,443



















Net income for the period


$

9,249



$

28,818



$

2,242



$

14,910



















Net income per share

















Basic


$

0.44



$

1.36



$

0.11



$

0.70


Diluted


$

0.44



$

1.35



$

0.11



$

0.69



















Weighted average number of shares

















Basic



21,030




21,145




21,041




21,198


Diluted



21,111




21,297




21,118




21,701


 

 


Consolidated Balance Sheets as of
















December 31,



September 30,




2015



2016




(Audited)



(Unaudited)




(In thousands)


Assets







Cash and cash equivalents


$

34,534



$

53,857


Bank deposits



-




7,000


Inventories



112,973




102,323


Trade receivables



76,566




74,042


Other receivables



29,099




25,767


Assets classified as held for sale



-




1,484


Derivative financial instruments



631




1,048


Total current assets



253,803




265,521











Property, plant and equipment



155,294




167,042


Intangible assets



42,095




38,859


Deferred tax assets



1,106




4,016


Other receivables



431




2,930


Total non-current assets



198,926




212,847











Total assets



452,729




478,368











Liabilities









Loans and borrowings



11,917




5,637


Trade payables



50,549




50,161


Income tax payable



7,505




9,036


Provisions



2,407




2,901


Other current liabilities



18,118




20,599


Total current liabilities



90,496




88,334











Loans and borrowings



24,905




11,273


Employee benefits



2,152




2,420


Other non-current liabilities



156




185


Deferred tax liabilities



832




2,733


Total non-current liabilities



28,045




16,611











Total liabilities



118,541




104,945











Shareholders' equity









Share capital



3,414




3,438


Share premium



205,527




210,934


Translation reserve



(29,993)




(25,007)


Retained earnings



155,240




184,058


Total shareholders' equity



334,188




373,423











Total liabilities and shareholders' equity


$

452,729



$

478,368


 

 


Consolidated Statements of Cash Flows

















For the nine months ended



For the three months ended




September 30,



September 30,




2015



2016



2015



2016




(Unaudited)



(Unaudited)


Cash flows from operating  activities

















Net income for the period


$

9,249



$

28,818



$

2,242



$

14,910



















Adjustments:

















Depreciation of property, plant and equipment



9,822




10,926




3,352




3,930


Amortization of intangible assets



2,765




2,596




907




775


Impairment of other intangible assets



-




1,830




-




-


Restructuring costs



6,536




-




2,003




-


Change in fair value of  derivative financial instruments



(3,040)




626




800




58


Exchange rate differences on Short-term loans and borrowing



(1,386)




-




(46)




-


Exchange rate differences on long-term loans and borrowing



(2,870)




642




365




243


Share based payment



3,765




3,513




1,334




1,032


Interest expense (income), net



64




369




(62)




115


Income tax expense



2,158




5,502




787




3,443





27,063




54,822




11,682




24,506


Decrease in inventories



10,117




11,825




5,061




3,037


Decrease (increase) trade receivables and other receivables



17,373




2,615




(1,850)




(1,159)


Increase (decrease) in trade payables and other liabilities



(21,043)




1,267




1,556




3,214


Increase (decrease) in employee benefits



(41)




215




74




39


Increase (decrease) in provisions



153




494




(84)




748





33,622




71,238




16,439




30,385


Interest paid



(182)




(428)




(17)




(135)


Income tax received



549




207




283




162


Income tax paid



(5,508)




(5,225)




(2,303)




(413)


Net cash from operating activities



28,481




65,792




14,402




29,999



















Cash flows from investing  activities

















Interest received



118




60




79




21


Investment in bank deposits



-




(7,000)




-




(7,000)


Proceeds from investment grants



2,252




2,828




-




2,828


Proceeds from (payment for) derivative financial  instruments, net



2,571




(1,043)




828




(168)


Acquisition of property, plant  and equipment



(40,793)




(21,828)




(12,208)




(6,049)


Acquisition of intangible assets



(2,825)




(1,525)




(974)




(561)


Net cash used in investing  activities



(38,677)




(28,508)




(12,275)




(10,929)



















Cash flows from financing  activities

















Proceeds from exercise of employee share options



153




1,918




-




1,199


Repayments of long-term loans and borrowings



(14,026)




(17,693)




(1,674)




(7,529)


Change in short-term debt



22,013




(2,861)




9,673




-


Net cash from (used in) financing activities



8,140




(18,636)




7,999




(6,330)



















Net increase (decrease) in cash and cash equivalents



(2,056)




18,648




10,126




12,740


Cash and cash equivalents at the beginning of the period



46,880




34,534




33,418




40,943


Effect of exchange rates  fluctuations on cash and cash equivalents



(1,344)




675




(64)




174



















Cash and cash equivalents  at the end of the period


$

43,480



$

53,857



$

43,480



$

53,857


 

 

Information about revenue in reportable segments


















Western Europe



The Americas



Asia-Pacific



Central &
Eastern Europe,
Middle East,
Africa



Total



(In thousands)

Nine months ended:















September 30, 2015* (Unaudited)


$

188,238




72,098




27,040




15,637



$

303,013

September 30, 2016 (Unaudited)



211,676




78,694




34,733




19,162



$

344,265





















Three months ended:




















September 30, 2015 (Unaudited)


$

68,505




26,234




8,997




6,279



$

110,015

September 30, 2016 (Unaudited)


$

74,675




29,831




12,893




6,829



$

124,228


























 

 


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,




2015*



2016



2015



2016




(Unaudited)



(Unaudited)




Revenue




(in thousands)















Sparkling Water Maker starter kits
(including exchange cylinders)


$

**90,215



$

114,090



$

34,234



$

45,463


Consumables



**204,584




223,014




73,882




76,938


Other



**8,214




7,161




1,899




1,827


Total


$

303,013



$

344,265



$

110,015



$

124,228




* The comparable revenue for the nine months ended September 30, 2015 relate to Adjusted Non-IFRS measures.

** Reclassified 


 

 



Nine months ended



Three months ended




September 30,



September 30,




2015



2016



2015



2016




(Unaudited)



(Unaudited)



(Unaudited)




As a percentage of revenue















Sparkling Water Maker starter kits
(including exchange cylinders)



29.8

%



33.1

%



31.1

%



36.6

%

Consumables



67.5

%



64.8

%



67.2

%



61.9

%

Other



2.7

%



2.1

%



1.7

%



1.5

%

Total



100.0

%



100.0

%



100.0

%



100.0

%

 

 

EBITDA















Nine months ended



Three months ended




September 30,



September 30,




2015



2016



2015



2016




(Unaudited)




(In thousands)















Reconciliation of Net Income to EBITDA

















Net income


$

9,249



$

28,818



$

2,242



$

14,910


Financial income, net



(5,148)




1,314




(72)




210


Income tax expense



2,158




5,502




787




3,443


Depreciation and amortization



12,587




13,522




4,259




4,705


EBITDA


$

18,846



$

49,156



$

7,216



$

23,268


Restructuring



7,347




-




2,455




-


Impairment of other intangible asset



-




1,830




-




-


Adjusted EBITDA



26,193




50,986




9,671




23,268


 

Logo - http://photos.prnewswire.com/prnh/20121107/NY07412LOGO

SOURCE SodaStream International Ltd.