SodaStream InvestorRoom

SodaStream Reports First Quarter Fiscal 2017 Results
Revenue Increased 14% to $115.3 Million
Operating Income Increased 100% to $15.9 Million
Diluted EPS Increased 129% to $0.66
Company Finishes First Quarter with Cash & Bank Deposits of $94.4 Million and No Bank Debt

AIRPORT CITY, Israel, May 10, 2017 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), the leading manufacturer of home beverage carbonation systems, announced today its results for the quarterly period ended March 31, 2017.

SodaStream Logo. (PRNewsFoto/SodaStream International Ltd.)

For the quarter ended March 31, 2017:

  • Revenue increased 14.3% to $115.3 million compared to $100.9 million in the first quarter of 2016
  • EBITDA increased 62.9% to $20.0 million compared to EBITDA of $12.3 million in the first quarter of 2016
  • Net income increased 141.8% to $14.7 million compared to $6.1 million in the first quarter of 2016
  • Diluted earnings per share increased 129.3% to $0.66 compared to diluted earnings per share of $0.29 in the first quarter of 2016

"Our first quarter performance represents a very good start to 2017" commented Daniel Birnbaum, Chief Executive Officer of SodaStream. "Sales grew double digits in each of our four geographic regions as investments in marketing fueled strong demand for sparkling water makers. At the same time, gas refill units increased 12% year-over-year, the strongest quarterly gain in several years as a growing number of households are utilizing our home carbonation system to produce sparkling water. Equally important, we translated solid revenue growth into triple digit net income growth and generated our highest ever quarterly operating and free cash flow driven primarily by increased manufacturing efficiencies, meaningful expense leverage and continued working capital optimization. We are confident that we have the right strategies in place to profitably expand our global brand franchise and deliver increased value to our shareholders over the long-term."

First Quarter 2017 Financial Review

 

Geographical Revenue Breakdown


Three Months Ended










March 31, 2016



March 31, 2017



Increase



Increase




In millions USD



%


Western Europe


$

62.6



$

70.0



$

7.4




12

%

The Americas



22.9




25.6




2.7




12

%

Asia-Pacific



8.8




12.2




3.4




38

%

Central & Eastern Europe, Middle East, Africa



6.6




7.5




0.9




15

%

Total


$

100.9



$

115.3



$

14.4




14

%

 

Product Segment Revenue Breakdown


Three Months Ended










March 31, 2016



March 31, 2017



Increase

(Decrease)



Increase

(Decrease)




In millions USD



%


Sparkling Water Maker Starter Kits


$

29.6



$

40.6



$

11.0




37

%

Consumables



68.1




72.0




3.9




6

%

Other



3.2




2.7




(0.5)




(16)

%

Total


$

100.9



$

115.3



$

14.4




14

%

 

Product Segment Unit Breakdown















Three Months Ended










March 31, 2016



March 31, 2017



Increase

(Decrease)



Increase

(Decrease)




In thousands



%


Sparkling Water Maker Starter Kits



575




770




195




34

%

CO2 Refills



6,781




7,602




821




12

%

Flavors



5,288




5,203




(85)




(2)

%


 

Revenue increased by $14.4 million, or 14.3% to $115.3 million from $100.9 million for the same period in 2016. The increase was driven by growth in each of the Company's four geographic regions, partially offset by a negative foreign currency exchange impact mainly due to the weakening of the Euro/U.S. Dollar exchange rate compared to the same period in 2016.

Gross margin increased 200 basis points to 52.7% compared to 50.7% for the same period in 2016. The increase reflects our continued production optimization, the leveraging of our fixed infrastructure for increased production volume and the introduction of the higher margin "Fizzi" machine, partially offset by a higher portion of sparkling water makers in the product mix and changes in foreign currency exchange rates compared to the same period in 2016.

Sales and marketing expenses were $34.8 million, or 30.2% of revenue, compared to $32.7 million, or 32.4% of revenue, in the same period in 2016. The increase in sales and marketing expenses was mainly due to higher advertising and promotion expenses partially offset by decrease in other sales and distribution expenses.

General and administrative expenses were $10.0 million, or 8.7% of revenue, compared to $10.6 million, or 10.5% of revenue, in the same period in 2016. The decrease was mainly due to lower share-based payment expenses.

Operating income increased 100.3% to $15.9 million, or 13.8% of revenue, compared to $7.9 million, or 7.9% of revenue in the same period in 2016.

The net negative impact of foreign currency exchange rate changes, mainly due to the weakening of the Euro / U.S. Dollar rate and the weakening of the U.S. Dollar / Israeli Shekel rate compared to the same period in 2016, was approximately $1.7 million on revenue and $2.0 million on operating income.

Net financial income was $1.1 million compared to net financial expense of $0.9 million in the same period in 2016. The financial income was mainly due to gains from hedging transactions.

Tax expense was $2.2 million with an effective tax rate of 12.9%, compared to $0.9 million with an effective tax rate of 13.1% in the same period in 2016.

Balance Sheet and Cash Flow

At March 31, 2017, the company had cash and bank deposits totaling $94.4 million compared to $57.3 million at December 31, 2016.

Cash flow from operations less all investing activities excluding bank deposits was $29.3 million compared to $4.6 million in the same period in 2016. 

Working capital decreased 10.1% or $12.7 million, to $112.1 million, compared to $124.8 million at December 31, 2016. Inventories increased by 5.7% to $93.0 million compared to $88.0 million at December 31, 2016.

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 (Wednesday, May 10, 2017) 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 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. Our products promote health and wellness, are environmentally friendly, cost effective, customizable and fun to use. Our products are available at more than 80,000 individual 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 EBITDA which is a non-IFRS measure. EBITDA represents earnings before financial expense (income), income tax, depreciation and amortization. Non-IFRS measures should be considered in addition to results prepared in accordance with IFRS and should not be considered a substitute for the IFRS results. A reconciliation of EBITDA to Net income, the most closely comparable IFRS measure, is included at the end of this press release.

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, 2016 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










2016



2017




(Unaudited)



(Unaudited)









Revenue


$

100,873



$

115,292


Cost of revenue



49,701




54,575











Gross profit



51,172




60,717











Operating expenses









Sales and marketing



32,671




34,822


General and administrative



10,581




10,035


Total operating expenses



43,252




44,857











Operating income



7,920




15,860











Financial expense (income), net



910




(1,053)




















Income before income taxes



7,010




16,913











Income tax expense



917




2,179











Net income for the period



6,093




14,734











Net income per share









Basic



0.29




0.68


Diluted



0.29




0.66











Weighted average number of shares









Basic



21,100




21,550


Diluted



21,164




22,323


 









Consolidated Balance Sheets as of
















December 31,



March 31,




2016



2017




(Audited)



(Unaudited)




(In thousands)


Assets







Cash and cash equivalents


$

50,250



$

80,403


Bank deposits



7,000




14,000


Inventories



87,986




92,958


Trade receivables,net



87,430




75,769


Other receivables



20,613




20,441


Assets classified as held for sale



1,484




1,484


Derivative financial instruments



2,112




2,720


Total current assets



256,875




287,775











Property, plant and equipment



164,628




166,025


Intangible assets



37,582




37,678


Deferred tax assets



4,154




4,527


Other receivables



2,688




3,288


Total non-current assets



209,052




211,518











Total assets



465,927




499,293











Liabilities









Trade payables



41,643




49,019


Income tax payable



8,312




8,640


Provisions



2,646




2,663


Other current liabilities



22,262




20,912


Total current liabilities



74,863




81,234











Employee benefits



2,306




2,420


Other non-current liabilities



73




69


Deferred tax liabilities



5,166




5,225


Total non-current liabilities



7,545




7,714











Total liabilities



82,408




88,948











Shareholders' equity









Share capital



3,461




3,528


Share premium



214,609




222,525


Translation reserve



(34,161)




(30,052)


Retained earnings



199,610




214,344


Total shareholders' equity



383,519




410,345











Total liabilities and shareholders' equity


$

465,927



$

499,293


 



Consolidated Statements of Cash Flows










For the three months ended




March 31,




2016



2017




(Unaudited)




(In thousands)


Cash flows from operating activities









Net income for the period


$

6,093



$

14,734











Adjustments:









Amortization of intangible assets



907




782


Change in fair value of derivative financial instruments



354




(1,406)


Exchange rate differences on long-term loans and borrowing



843




-


Depreciation of property, plant and equipment



3,469




3,394


Share based payment



1,362




457


Interest expense (income), net



39




(53)


Income tax expense



917




2,179





13,984




20,087












Increase in inventories



(1,456)




(3,464)



Decrease in trade and other receivables



10,732




11,752



Increase (decrease) in trade payables and other liabilities



(5,845)




5,337



Increase in employee benefits



5




81



Increase (decrease) in provisions



(193)




17






17,227




33,810



Interest paid



(58)





(28)



Income tax received



2




100



Income tax paid



(4,134)




(2,350)



Net cash from operating activities



13,037




31,532













Cash flows from investing activities










Interest received



19




81



Investment in bank deposit, net



-




(7,000)



Proceeds from investment grants



-




2,726



Proceeds from (payment for) derivative financial instruments, net



(400)




798



Acquisition of property, plant and equipment



(7,568)




(5,215)



Acquisition of intangible assets



(532)




(591)



Net cash used in investing activities



(8,481)




(9,201)












Cash flows from financing activities









Proceeds from exercise of employee share options



10




7,526


Repayments of long-term loans and borrowings



(2,295)




-


Change in short-term debt



(2,861)




-


Net cash from (used in) financing activities



(5,146)




7,526











Net increase (decrease) in cash and cash equivalents



(590)




29,857


Cash and cash equivalents at the beginning of the period



34,534




50,250


Effect of exchange rates fluctuations on cash and cash equivalents



488




296











Cash and cash equivalents at the end of the period


$

34,432



$

80,403













 



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, 2016 (Unaudited)


$

62,635




22,912




8,806




6,520



$

100,873

March 31, 2017 (Unaudited)


$

70,022




25,567




12,173




7,530



$

115,292

 

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:



Three months ended




March 31,




2016



2017




(Unaudited)




Revenue




(in thousands)









Sparkling Water Maker starter kits (including exchange cylinders)


$

29,581



$

40,591


Consumables



68,055




71,969


Other



3,237




2,732


Total


$

100,873



$

115,292


 








Three months ended




March 31,




2016



2017




(Unaudited)




As a percentage of
Revenue









Sparkling Water Maker starter kits (including exchange cylinders)



29.3

%



35.2

%

Consumables



67.5

%



62.4

%

Other



3.2

%



2.4

%

Total



100.0

%



100.0

%

EBITDA













Three months ended




March 31,




2016



2017




(Unaudited)




(In thousands)









Reconciliation of Net Income to EBITDA







Net income


$

6,093



$

14,734


Financial expenses (income), net



910




(1,053)


Income tax expense



917




2,179


Depreciation and amortization



4,376




4,176


EBITDA



12,296




20,036


 

 

SOURCE SodaStream International

http://sodastream.investorroom.com/2017-05-10-SodaStream-Reports-First-Quarter-Fiscal-2017-Results?pagetemplate=printable