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SodaStream Reports Record Second Quarter Results

Image: 
Date: 
8 August, 2012
Subtitle: 
Second Quarter Revenue Increased to $103.0 Million; Second Quarter Net Income Increased to $9.5 Million; Second Quarter Diluted Earnings Per Share Increased to $0.45; Second Quarter Adjusted Diluted Earnings Per Share Increased to $0.52
Abstract: 

AIRPORT CITY, Israel – 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, 2012.

To view the full press release including financial tables click here

AIRPORT CITY, Israel – 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, 2012.

Beginning with the quarter ended March 31, 2012, the Company changed its reporting currency to the U.S. dollar (USD).  Previously, the Company presented its annual and quarterly consolidated balance sheets and related consolidated statements of operations and cash flows in Euro (EUR).  In accordance with IFRS, the financial statements for comparative periods were translated into the new reporting currency using the EUR to USD exchange rate at January 1, 2012 of EUR 1.00 = USD 1.2973.

For the second quarter ended June 30, 2012:

  • Total revenue increased 49.1% to $103.0 million from $69.1 million in the second quarter of 2011.
  • Net income increased 43.9% to $9.5 million compared to $6.6 million a year ago, and Adjusted net income was $10.9 million compared to $7.9 million last year.
  • Diluted earnings per share increased 40.6% to $0.45, compared to $0.32 in the second quarter of 2011 and Adjusted diluted earnings per share were $0.52 compared to $0.38 a year ago.

“We are very pleased to have generated our first $100 million revenue quarter ever,” said Daniel Birnbaum, Chief Executive Officer of SodaStream. “The contributions to our top-line performance were broad-based in terms of product segments and geographies with the U.S. exhibiting particular strength.  It’s clear that our strategy of expanded distribution and increased marketing is leading to growing demand for our products in the U.S. and other newer markets. At the same time, many of our more established markets continued to post solid revenue gains.  The successful execution of our growth strategy, combined with a strong pipeline of product innovation, gives us confidence in our ability to capture a greater share of the global beverage industry in the years ahead.”

To view the full press release including financial tables click here

Second Quarter 2012 Financial Review

 

 

 

 

 

 

 

 

 

 

 

Geographical Revenue Breakdown

 

 

 

 

 

 

 

 

Revenue

Three Months Ended

 

 

 

 

 

June 30, 2012

 

June 30, 2011

 

 Increase

 

 Increase

 

In Millions USD

 

%

Western Europe

$

54.0 

 

$

43.2 

 

$

10.8 

 

25%

The Americas

 

30.7 

 

 

14.7 

 

 

16.0 

 

109%

Central & Eastern Europe, Middle East, Africa

 

8.4 

 

 

8.2 

 

 

0.2 

 

2%

Asia-Pacific

 

9.9 

 

 

3.0 

 

 

6.9 

 

234%

Total

$

103.0 

 

$

69.1 

 

$

33.9 

 

49%

Product Segment Revenue Breakdown

 

 

 

 

 

 

 

 

Revenue

Three Months Ended

 

 

 

 

 

June 30, 2012

 

June 30, 2011

 

 Increase

 

 Increase

 

In millions USD

 

%

Soda Maker Starter Kits

$

39.8 

 

$

26.7 

 

$

13.1 

 

49%

Consumables

 

61.6 

 

 

41.3 

 

 

20.3 

 

49%

Other

 

1.6 

 

 

1.1 

 

 

0.5 

 

45%

Total

$

103.0 

 

$

69.1 

 

$

33.9 

 

49%

 

Product Segment Unit Breakdown

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

June 30, 2012

 

June 30, 2011

 

 Increase

 

 Increase

 

In thousands

 

%

Soda Maker Starter Kits

764 

 

634 

 

130 

 

20%

CO2 Refills

4,230 

 

3,391 

 

839 

 

25%

Flavors

7,200 

 

6,060 

 

1,140 

 

19%

*As discussed on the Company’s fourth quarter 2011 earnings call, the Czech Republic distributor purchased a disproportionate amount of soda makers during the second quarter of 2011.  Excluding sales to the Czech Republic from the second quarter of 2011 and 2012, soda maker starter kit unit sales increased 35% year over year. 

Gross margin for the second quarter of 2012 was 54.4%, compared to 53.0% for the same period in 2011. This increase was primarily due to the increase in direct distribution that accounted for 75% of total revenue in the quarter vs. 58% in the second quarter of 2011, which is mainly due to growing share of U.S. revenue and the shift to self-distribution in the Nordics.

Sales and marketing expenses for the second quarter of 2012 totaled $37.1 million, or 36.0% of revenue compared to $22.5 million, or 32.5% of revenue for the comparable period last year. The increase is primarily due to higher advertising and promotion expense in the U.S., and the addition of the Nordics expenses. 

General and administrative expenses for the second quarter of 2012 were $9.2 million, or 9.0% of revenue, compared to $7.3 million, or 10.5% of revenue in the comparable period of last year. This includes the additional expenses associated with the acquisition of CEM Industries in the fourth quarter of 2011 and the acquisition of the distribution activity in the Nordics in the first quarter of 2012.

Operating income increased to $9.7 million, or 9.5% of revenue as compared to $6.9 million, or 10.0% of revenue in the second quarter of 2011.

Tax expense was $134,000 compared to a tax expense of $1.2 million in the second quarter of 2011. The decrease in the effective tax rate to 1.4% from 15.9% is primarily attributable to the geographical taxable income distribution, the utilization of taxable losses and progress in some of the group-companies discussions with tax authorities that enabled partial release of past-years’ tax provisions.

Balance Sheet Review

  • Cash and cash equivalents and bank deposits at June 30, 2012 were $56.6 million compared to $74.3 million on December 31, 2011. The decrease is primarily attributable to the acquisition of the Nordics distribution activity, debt repayment and an increase in working capital.
  • The Company had no outstanding loans and borrowings at June 30, 2012 compared to $4.0 million on December 31, 2011.
  • Working capital at June 30, 2012 increased 8.2% to $84.7 million compared to $78.3 million on December 31, 2011.
  • Inventories at June 30, 2012 increased 21.2% to $92.9 million compared to $76.6 million on December 31, 2011, primarily reflecting the additional inventory associated with the acquisition of the Nordics distribution activity.  

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 2012 revenue to increase approximately 40% over 2011 revenue of $289.0 million, up from its previous guidance of 33%.
  • The Company now expects 2012 net income to increase approximately 55% over 2011 net income of $27.5 million, up from its previous guidance of 50%. This guidance includes a share-based expense of approximately $5.6 million.

 

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 Daylight Time (U.S. time) today (Wednesday, August 8, 2012) 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 55,000 retail stores in 43 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 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 excludes the Share-Based Compensation Expense, should be considered in evaluating the Company’s operations since they provide a clearer indication of the Company’s operating results going forward.

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.

To view the full press release including financial tables click here