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NASDAQSODA

 
SodaStream Reports Second Quarter Fiscal 2017 Results
Revenue Increased 10% to $130.6 Million
Operating Income Increased 84% to $16.8 Million
Diluted EPS Increased 74% to $0.64
Company Finishes Second Quarter with Cash & Bank Deposits of $108.5 Million and No Bank Debt

AIRPORT CITY, Israel, Aug. 2, 2017 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), the leading manufacturer of home beverage carbonation systems, announced today its results for the quarterly period ended June 30, 2017.

SodaStream Logo.

For the quarter ended June 30, 2017:

  • Revenue increased approximately 10% to $130.6 million compared to $119.2 million in the second quarter of 2016
  • Net income increased approximately 84% to $14.4 million compared to $7.8 million in the second quarter of 2016
  • Diluted earnings per share increased to $0.64 compared to $0.37 in the second quarter of 2016

"The strong momentum that we've recently experienced building a global sparkling water franchise continued into the second quarter," commented Daniel Birnbaum, Chief Executive Officer of SodaStream. "Machine unit sales grew 35% year-over-year to 859,000 as the compelling benefits of our home carbonation system are resonating with an increasing number of consumers worldwide. At the same time, gas refill units were up 10% to an all-time record of 8.3 million, which is a great indication that our user base is active and growing. Financially, the significant improvement in profitability underscores the benefits of our enhanced manufacturing and expense structure and the power of our business model. We are confident that we are moving ahead with a balanced approach to increasing global household penetration and user retention, both generating greater shareholder value."

 

Second Quarter 2017 Financial Review

 

Geographical Revenue Breakdown


Three Months Ended










June 30, 2016



June 30, 2017



Increase



Increase




In Millions USD



%


Western Europe


$

74.4



$

81.6



$

7.2




9.7

%

The Americas



26.0




28.1




2.1




8.3

%

Asia-Pacific



13.0




13.0




0.0




0.0

%

Central & Eastern Europe, Middle East, Africa



5.8




7.9




2.1




36.8

%

Total


$

119.2



$

130.6



$

11.4




9.6

%

 

Product Segment Revenue Breakdown


Three Months Ended










June 30, 2016



June 30, 2017



Increase

(decrease)



Increase

(decrease)




In millions USD



%


Sparkling Water Maker Starter Kits


$

39.0



$

46.9



$

7.9




20.1

%

Consumables



78.1




81.7




3.6




4.7

%

Other



2.1




2.0




(0.1)




(4.0)

%

Total


$

119.2



$

130.6



$

11.4




9.6

%


 

Product Segment Unit Breakdown


Three Months Ended










June 30, 2016



June 30, 2017



Increase

(decrease)



Increase

(decrease)





In thousands



%


Sparkling Water Maker Starter Kits



637




859




222




34.9

%


CO2 Refills



7,541




8,282




741




9.8

%


Flavors



5,970




5,340




(630)




(10.6)

%


 

Revenue increased by $11.4 million, or 9.6%, to $130.6 million compared to $119.2 million in the same period in 2016. The increase was driven by growth in most of the Company's geographic regions, mainly Western Europe, 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 240 basis points to 53.1% compared to 50.7% for the same period in 2016. The increase reflects continued production optimization, the leveraging of fixed infrastructure costs on 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 $40.9 million, or 31.3% of revenue, compared to $38.0 million, or 31.9% of the revenue, in the same period in 2016. The increase in sales and marketing expenses was mainly due to higher advertising and promotion expenses.

General and administrative expenses increased by $0.6 million to $11.6 million, or 8.9% of revenue, compared to $11.0 million, or 9.2% of revenue in the same period in 2016.

Other expenses were $0.1 million compared to $2.3 million in the same period in 2016.

Operating income increased 83.6% to $16.8 million, or 12.9% of revenue, compared to $9.2 million, or 7.7% of revenue, in the second quarter of 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 $2.9 million on revenue and $3.2 million on operating income.

Net financial expense was $0.6 million compared to $0.2 million in the same period in 2016.

Tax expense was $1.8 million with an effective tax rate of 11.1%, compared to $1.1 million with an effective tax rate of 12.7% in the same period in 2016.

Balance Sheet Review

At June 30, 2017, the Company had cash and bank deposits totaling $108.5 million compared to $57.3 million at December 31, 2016.

Cash flow from operations less all investing activities was $10.8 million compared to $13.7 million in the same period in 2016. The decrease is due to working capital increase in the quarter, which reflects the increase in demand to the Company's products. 

Working capital decreased 1.6% to $122.8 million compared to $124.8 million at December 31, 2016. Inventories increased 11.9% to $98.4 million compared to $88.0 million at December 31, 2016.

Conference Call and Management Commentary

A detailed CFO commentary and a supplemental slide presentation have been furnished as part of today's report of a foreign private issuer on a Form 6-K and will be posted on the Company's website at http://sodastream.investorroom.com.

The Company has scheduled a conference call for 8:30 AM Eastern Standard Time (U.S. time) today (Wednesday, August 2, 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 and Adjusted EBITDA, which are non-IFRS measures.

EBITDA is a non-IFRS measure, which represents earnings before financial expense (income), income tax, depreciation and amortization. Adjusted EBITDA is a non-IFRS measure, which is calculated in the same way as EBITDA, and further eliminates the effect of impairment of other intangible assets. We believe that EBITDA and Adjusted EBITDA, as described above, should be considered in evaluating the Company's operations. Both measures facilitate 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 on periods or companies 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). Adjusted EBITDA is useful to an investor in evaluating our operating performance because it excludes unusual costs associated with non-recurring events and without regard to non-cash items.

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 and Adjusted EBITDA to Net income, the most closely comparable IFRS measure, is included at the end of this press release. In addition, EBITDA and Adjusted EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.

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 six months ended



For the three months ended




June 30,



June 30,




2016



2017



2016



2017




(Unaudited)



(Unaudited)


Revenue


$

220,037



$

245,929



$

119,164



$

130,637


Cost of revenue



108,396




115,793




58,695




61,218



















Gross profit



111,641




130,136




60,469




69,419



















Operating expenses

















Sales and marketing



70,693




75,677




38,022




40,855


General and administrative



21,550




21,652




10,969




11,617


Other expenses, net



2,327




142




2,327




142



















Total operating expenses



94,570




97,471




51,318




52,614



















Operating income



17,071




32,665




9,151




16,805



















Financial expense (income), net



1,104




(408)




194




645




































Income before income taxes



15,967




33,073




8,957




16,160



















Income tax expense



2,059




3,969




1,142




1,790




































Net income for the period



13,908




29,104




7,815




14,370




























Net income per share

 

















Basic


$

0.66



$

1.34



$

0.37



$

0.66


Diluted


$

0.66



$

1.30



$

0.37



$

0.64



















Weighted average number of shares

















Basic



21,118




21,673




21,137




21,794


Diluted



21,198




22,464




21,275




22,502




 









Consolidated Balance Sheets as of
















December 31,



June 30,




2016



2017




(Audited)



(Unaudited)




(In thousands)


Assets









Cash and cash equivalents


$

50,250



$

94,531


Bank deposits



7,000




14,000


Inventories



87,986




98,446


Trade receivables ,net



87,430




92,778


Other receivables



20,613




21,803


Assets classified as held for sale



1,484




-


Derivative financial instruments



2,112




1,426


Total current assets



256,875




322,984











Property, plant and equipment



164,628




167,525


Intangible assets



37,582




38,228


Deferred tax assets



4,154




5,477


Other receivables



2,688




3,820


Total non-current assets



209,052




215,050











Total assets



465,927




538,034











Liabilities









Derivative financial instruments



-




363


Trade payables



41,643




53,295


Income tax payable



8,312




11,486


Provisions



2,646




3,222


Other current liabilities



22,262




23,297


Total current liabilities



74,863




91,663











Employee benefits



2,306




2,170


Other non-current liabilities



73




75


Deferred tax liabilities



5,166




5,164


Total non-current liabilities



7,545




7,409











Total liabilities



82,408




99,072











Shareholders' equity









Share capital



3,461




3,544


Share premium



214,609




225,869


Translation reserve



(34,161)




(19,165)


Retained earnings



199,610




228,714


Total shareholders' equity



383,519




438,962











Total liabilities and shareholders' equity


$

465,927



$

538,034


 



Consolidated Statements of Cash Flows




























For the six months ended



For the three months ended




June 30,



June 30,




2016



2017



2016



2017




(Unaudited)



(Unaudited)


Cash flows from operating activities

















Net income for the period


$

13,908



$

29,104



$

7,815



$

14,370



















Adjustments:

















Depreciation of property, plant and equipment



6,996




8,327




3,527




4,933


Amortization of intangible assets



1,821




1,536




914




754


Impairment of other intangible assets



1,830




-




1,830




-


Change in fair value of derivative financial instruments



568




(330)




214




1,076


Other expenses, net



-




142








142


Exchange rate differences on long-term loans and borrowing



399




-




(444)




-


Share based payment



2,481




1,594




1,119




1,137


Interest expense (income), net



254




(161)




215




(108)


Income tax expense



2,059




3,969




1,142




1,790





30,316




44,181




16,332




24,094


Decrease (increase) in inventories



8,788




(6,997)




10,244




(3,533)


Decrease (increase) trade and other receivables



3,774




(3,765)




(6,958)




(15,517)


Increase (decrease) in trade payables and other liabilities



(1,947)




12,244




3,898




6,907


Increase in employee benefits



176




192




171




111


Increase (decrease) in provisions



(254)




576




(61)




559





40,853




46,431




23,626




12,621


Interest paid



(293)




(67)




(235)




(39)


Income tax received



45




115




43




15


Income tax paid



(4,812)




(2,438)




(678)




(88)


Net cash from operating activities



35,793




44,041




22,756




12,509



















Cash flows from investing activities

















Interest received



39




228




20




147


Investment in bank deposit, net



-




(7,000)




-




-


Proceeds from investment grants



-




3,903




-




1,177


Proceeds from sale of property, plant and equipment



-




1,563




-




1,563


Proceeds from (payment for) derivative financial instruments, net



(875)




1,379




(475)




581


Acquisition of property, plant and equipment



(15,779)




(9,885)




(8,211)




(4,670)


Acquisition of intangible assets



(964)




(1,095)




(432)




(504)


Net cash used in investing activities



(17,579)




(10,907)




(9,098)




(1,706)



















Cash flows from financing activities

















Proceeds from exercise of employee share options



719




9,749




709




2,223


Repayments of long-term loans and borrowings



(10,164)




-




(7,869)




-


Change in short-term debt



(2,861)




-




-




-


Net cash from (used in) financing activities



(12,306)




9,749




(7,160)




2,223



















Net increase in cash and cash equivalents



5,908




42,883




6,498




13,026


Cash and cash equivalents at the beginning of the period



34,534




50,250




34,432




80,403


Effect of exchange rates fluctuations on cash and cash equivalents



501




1,398




13




1,102



















Cash and cash equivalents at the end of the period


$

40,943



$

94,531



$

40,943



$

94,531


 

Information about revenue in reportable segments























Western Europe



The Americas



Asia-Pacific



Central &
Eastern Europe, Middle
East, Africa



Total



(In thousands)

Six months ended:















June 30, 2016 (Unaudited)


$

137,001




48,863




21,840




12,333



$

220,037

June 30, 2017 (Unaudited)


$

151,579




53,680




25,191




15,479



$

245,929





















Three months ended:




















June 30, 2016 (Unaudited)


$

74,365




25,952




13,034




5,813



$

119,164

June 30, 2017 (Unaudited)


$

81,556




28,113




13,018




7,950



$

130,637

 

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,




2016



2017



2016



2017




(Unaudited)



(Unaudited)




Revenue (in thousands)















Sparkling Water Maker starter kits (including
exchange cylinders)


$

68,627



$

87,499



$

39,046



$

46,908


Consumables



146,076




153,684




78,021




81,715


Other



5,334




4,746




2,097




2,014


Total


$

220,037



$

245,929



$

119,164



$

130,637


 



Six months ended



Three months ended




June 30,



June 30,




2016



2017



2016



2017




(Unaudited)



(Unaudited)




As a percentage of revenue















Sparkling Water Maker starter kits (including
exchange cylinders)



31.2

%



35.6

%



32.8

%



35.9

%

Consumables



66.4

%



62.5

%



65.5

%



62.6

%

Other



2.4

%



1.9

%



1.7

%



1.5

%

Total



100.0

%



100.0

%



100.0

%



100.0

%

 

Reconciliation of Net income to EBITDA and Adjusted
EBITDA














Six months ended



Three months ended



June 30,



June 30,



2016



2017



2016



2017



(Unaudited)



(In thousands)













Reconciliation of Net Income to EBITDA and Adjusted EBITDA












Net income


$

13,908



$

29,104



$

7,815



$

14,370

Financial expenses (income), net



1,104




(408)




194




645

Income tax expense



2,059




3,969




1,142




1,790

Depreciation and amortization



8,817




9,863




4,441




5,687

EBITDA


$

25,888



$

42,528



$

13,592



$

22,492

Impairment of other intangible assets



1,830




-




1,830




-

 

Adjusted EBITDA


$

27,718



$

42,528



$

15,422



$

22,492

 

SOURCE SodaStream International Ltd.


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