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SodaStream Reports Record Fourth Quarter Results

 

Fourth Quarter Revenue Increased 55% to $132.9 Million

Full Year Revenue Increased 51% to $436.3 Million

Fourth Quarter Net Income Increased 42% to $7.5 Million

Full Year Net Income Increased 60% to $43.9 Million

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AIRPORT CITY, Israel, Feb. 20, 2013 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems, announced today its results for the three and twelve month periods ended December 31, 2012.

For the fourth quarter ended December 31, 2012:

  • Total revenue increased 55.2% to $132.9 million from $85.7 million in the fourth quarter 2011. 
  • Net income increased 41.6% to $7.5 million compared to $5.3 million a year ago, and Adjusted net income was $9.4 million compared to $6.7 million in the prior year.
  • Diluted earnings per share increased 38.5% to $0.36, compared to $0.26 in the fourth quarter 2011 and Adjusted diluted earnings per share were $0.45 compared to $0.32 in the prior year.

For the year ended December 31, 2012:

  • Total revenue increased 51.0% to $436.3 million from $289.0 million in 2011. 
  • Net income increased 59.6% to $43.9 million compared to $27.5 million a year ago, and Adjusted net income was $50.0 million compared to $32.9 million in the prior year.
  • Diluted earnings per share increased 56.0% to $2.09, compared to $1.34 in 2011 and Adjusted diluted earnings per share were $2.39 compared to $1.60 in the prior year.

"Our fourth quarter performance was marked by significant growth in all major areas of our business and represents a strong finish to another record year," said Daniel Birnbaum, Chief Executive Officer of SodaStream.  "Our efforts throughout 2012 to increase global awareness of our brand and category and expand our retail presence culminated in a very successful holiday season.  For the first time ever we exceeded 1 million soda makers sold in a quarter, resulting in approximately 3.5 million soda makers for the year. Notably, U.S. sell-through of soda makers and consumables exceeded expectations, continuing our growth trajectory in the world's biggest soda market.  We believe the growing strength of our brand equity driven by our new branding campaign, strategic partnerships and innovative product portfolio, including our newest soda maker, the Source, all set the stage for continued growth in 2013 and beyond."













Fourth Quarter 2012 Financial Review












Geographical Revenue Breakdown

 









Revenue

Three Months Ended






December 31, 2011


December 31, 2012


 Increase


 Increase


In Millions USD


%

The Americas

$

32.0


$

62.8


$

30.8


96%

Western Europe


39.7



51.9



12.2


31%

Asia-Pacific


8.8



11.6



2.8


31%

Central & Eastern Europe, Middle East, Africa


5.2



6.6



1.4


28%

Total

$

85.7


$

132.9


$

47.2


55%

 

Product Segment Revenue Breakdown

 









Revenue

Three Months Ended






December 31, 2011


December 31, 2012


 Increase (decrease)

 Increase   

(decrease)


In millions USD


%

Soda Maker Starter Kits

$

40.7


$

66.1


$

25.4


62%

Consumables


42.3



64.8



22.5


54%

Other


2.7



2.0



(0.7)


(28)%

Total

$

85.7


$

132.9


$

47.2


55%

 

Product Segment Unit Breakdown

 








Three Months Ended






December 31,

2011


December 31,

2012


 Increase


 Increase


In thousands


%

Soda Maker Starter Kits

767


1,111


344


45%

CO2 Refills

3,414


4,308


894


26%

Flavors

4,592


7,362


2,770


60%

 

Gross margin for the fourth quarter 2012 was 53.0%, compared to 57.3% for the same period in 2011. The decrease was in-line with guidance and primarily due to higher dependency on subcontractors and expedited shipments including air freight of raw materials and finished goods mainly to support the Source launch and to fulfill better than expected overall demand. This negative impact on the gross margin was partially offset by an increase in direct distribution that accounted for 82% of total revenue in the quarter compared to 75% in the fourth quarter 2011. The increase in direct distribution is mainly due to growth in U.S. revenue and the shift to self-distribution in the Nordics. 

Sales and marketing expenses for the fourth quarter 2012 totaled $52.8 million, or 39.7% of revenue, compared to $36.4 million, or 42.5% of revenue, for the comparable period in the prior year. The 280 basis point improvement is mainly attributable to a decrease in advertising and promotion expense as a percent of revenue to 22.7% compared to 25.1% in the fourth quarter 2011.

General and administrative expenses for the fourth quarter 2012 were $10.2 million, or 7.6% of revenue, compared to $7.4 million, or 8.7% of revenue in the comparable period of last year. The 110 basis point improvement was driven by leveraging fixed expenses on higher revenue, partially offset by additional expenses associated with the acquisition of the distribution channels in the Nordics in the first quarter 2012 and the acquisition of the Company's distribution channels in Canada in the third quarter 2012. The fourth quarter 2012 also included additional share-based compensation expense associated with the adoption of a new long-term incentive plan for the Company's Chief Executive Officer.

Operating income increased to $7.9 million, or 5.9% of revenue as compared to $5.3 million, or 6.2% of revenue in the fourth quarter 2011.

Tax expense was $78,000 representing a 1.0% effective tax rate compared to $306,000 or a 5.4% effective tax rate in the fourth quarter 2011. This reduction in effective tax rate is primarily attributable to additional utilization of taxable expenses in one of our jurisdictions following an agreement with the tax authority secured late in the quarter.

Balance Sheet Review

  • Cash and cash equivalents and bank deposits at December 31, 2012 were $62.1 million compared to $74.3 million at December 31, 2011. The decrease is primarily attributable to the acquisition of the Nordics and Canadian distribution activities, debt repayment and an increase in working capital.
  • The Company had no outstanding loans and borrowings at December 31, 2012 compared to $4.0 million at December 31, 2011.
  • Working capital at December 31, 2012 increased 21.5% to $95.1 million compared to $78.3 million at December 31, 2011.
  • Inventories at December 31, 2012 increased 47.1% to $112.7 million compared to $76.6 million at December 31, 2011, primarily reflecting the additional inventory associated with the acquisition of the Nordics and Canadian inventory and the Company's business growth. 

Change in Reporting Currency

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.

Full Year 2013 Guidance


  • The Company expects full year 2013 revenue to increase approximately 25% over 2012 revenue of $436.3 million.
  • The Company expects full year 2013 Adjusted EBITDA to increase approximately 34% over 2012 Adjusted EBITDA of $61.1 million.
  • The Company expects full year 2013 net income on an Adjusted basis, which excludes share-based compensation expense, to increase approximately 25% over the Adjusted net income of $50.0 million reported in 2012.
  • The Company expects full year 2013 net income to increase approximately 18% as compared with its net income of $43.9 million in 2012. 2013 guidance includes:
    • An effective tax rate of approximately 10% compared with an effective tax rate of 1.7% in 2012.
    • Share-based compensation expense of approximately $11.0 million compared to share-based compensation expense of $6.2 million in 2012. The increase is primarily related to the recent adoption of the Company's long-term incentive plan.

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 Standard Time (U.S. time) today (Wednesday, February 20, 2013) 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 60,000 retail stores in 45 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 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 exclude share-based compensation expense, should be considered in evaluating the Company's operations. Adjusted net income and Adjusted diluted EPS exclude share-based compensation because it 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 interest expenses, net), tax positions (such as the impact on periods or companies of changes in effective tax rates) and the age and book depreciation 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, 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.



Consolidated Statements of Operations







In thousands (other than per share amounts)




















For the twelve months ended


For the three months ended


December 31,


December 31,


2011


2012


2011


2012


(Audited)


(Unaudited)


(Unaudited)

Revenue

$

288,953


$

436,316


$

85,688


$

132,947

Cost of revenue


131,405



200,491



36,549



62,439













Gross profit


157,548



235,825



49,139



70,508













Operating expenses












Sales and marketing


99,170



153,009



36,432



52,833

General and administrative


29,829



37,767



7,422



10,160

Other income, net


(158)



(484)



(38)



(350)













Total operating expenses


128,841



190,292



43,816



62,643













Operating income


28,707



45,533



5,323



7,865













Interest expense (income), net


(1,526)



169



(326)



129

Other financial expense (income), net


(625)



767



22



125













Total financial expense (income), net


(2,151)



936



(304)



254













Income before income taxes


30,858



44,597



5,627



7,611













Income tax expense


3,373



737



306



78













Net income for the period

$

27,485


$

43,860


$

5,321


$

7,533













Net income per share












Basic

$

1.40


$

2.16


$

0.26


$

0.37

Diluted

$

1.34


$

2.09


$

0.26


$

0.36













Weighted average  number of shares












Basic


19,553



20,344



20,081



20,530

Diluted


20,572



20,968



20,826



21,047













 


Consolidated Balance Sheets as of













December 31,


December 31,


2011


2012


(Audited)


(Unaudited)


(In thousands)

Assets






Cash and cash equivalents

$

34,769


$

62,068

Bank deposits


39,485



-

Inventories


76,625



112,679

Trade receivables


58,452



86,650

Other receivables


20,064



28,021

Derivative financial instruments


322



803

Assets classified as available-for-sale


837



868

Total current assets


230,554



291,089







Property, plant and equipment


46,434



76,906

Intangible assets


25,358



41,978

Deferred tax assets


1,168



2,133

Other receivables


224



271

Total non-current assets


73,184



121,288







Total assets


303,738



412,377







Liabilities






Loans and borrowings


4,006



-

Derivative financial instruments


-



261

Trade payables


47,383



86,431

Income tax payable


9,171



8,866

Provisions


397



1,304

Other current liabilities


21,071



37,022

Total current liabilities


82,028



133,884







Employee benefits


1,497



1,939

Provisions


514



537

Deferred tax liabilities


717



1,527

Total non-current liabilities


2,728



4,003







Total liabilities


84,756



137,887







Shareholders' equity






Share capital


3,238



3,330

Share premium


168,601



178,338

Translation reserve


1,471



3,628

Retained earnings


45,672



89,194

Total shareholders' equity


218,982



274,490







Total liabilities and shareholders' equity

$

303,738


$

412,377







 


Consolidated Statements of Cash Flows














For the twelve months ended


For the three months ended


December 31,


December 31,


2011


2012


2011


2012


(Audited)


(Unaudited)


(Unaudited)



(In thousands)

Cash flows from operating  activities












Net income for the period

$

27,485


$

43,860


$

5,321


$

7,533













Adjustments:












Amortization of intangible assets


937



1,602



459



495

Change in fair value of  derivative financial instruments


392



504



(74)



-

Depreciation of property, plant  and equipment


5,013



8,522



1,885



2,493

Gain on sales of property, plant and equipment


-



(766)



-



(766)

Share based payment


5,389



6,189



1,349



1,896

Interest expense (income), net


(1,526)



169



(326)



129

Income tax expense


3,373



737



306



78



41,063



60,817



8,920



11,858

Increase in inventories


(25,552)



(26,844)



(5,471)



(2,935)

Increase in trade and other receivables


(22,705)



(49,431)



(3,657)



(11,447)

Increase (decrease) in trade payables


4,291



39,957



(1,799)



16,369

Increase in employee benefits


131



91



145



119

Increase (decrease) in provisions and other current liabilities


(811)



14,891



(895)



9,067



(3,583)



39,481



(2,757)



23,031

Interest paid


(422)



(454)



(149)



(120)

Income tax received


-



2,191



-



458

Income tax paid


(4,182)



(4,041)



(1,173)



(994)

Net cash from (used in) operating activities


(8,187)



37,177



(4,079)



22,375













Cash flows from investing  activities












Interest received


1,261



1,303



258



122

Investment in bank deposits


(90,811)



(20,000)



(38,919)



-

Proceeds from bank deposits


51,892



58,919



51,892



20,000

Payments for derivative financial  instruments, net


(156)



(724)



(112)



(731)

Acquisition of subsidiary, net of cash acquired


(1,025)



(10,954)



(1,025)



-

Acquisition of property, plant  and equipment


(18,690)



(34,080)



(4,624)



(10,321)

Acquisition of intangible assets


(1,029)



(3,692)



(379)



(1,567)

Net cash from (used in) investing  activities


(58,558)



(9,228)



7,091



7,503













Cash flows from financing  activities












Share issuance


42,929



-



-



-

Proceeds from exercise of employee share options


1,117



2,890



218



1,272

Change in short-term debt


(11,172)



(3,873)



(2,563)



-

Net cash from (used in) financing activities


32,874



(983)



(2,345)



1,272













Net increase (decrease) in cash and cash equivalents


(33,871)



26,966



667



31,150

Cash and cash equivalents at the beginning of the period


68,627



34,769



33,933



30,676

Effect of exchange rates  fluctuations on cash and cash equivalents


13



333



169



242













Cash and cash equivalents  at the end of the period

$

34,769


$

62,068


$

34,769


$

62,068

 


Information about revenue in reportable segments
















The Americas


Western Europe

Asia-Pacific

Central and Eastern

Europe,

Middle

East, Africa


Total


(In thousands)

Twelve months ended:










December 31, 2011 (Audited)

$

83,894


153,174

21,010

30,875


$

288,953

December 31, 2012 (Unaudited)

$

157,705


204,332

42,367

31,912


$

436,316











Three months ended:










December 31, 2011 (Unaudited)

$

31,976


39,717

8,844

5,151


$

85,688

December 31, 2012 (Unaudited)

$

62,762


51,996

11,591

6,598


$

132,947

 


Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of Operations




















Twelve months ended December 31,


2011


2012


Reported


Share based




Reported


Share based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands (other than per share amounts)

Revenue

$

288,953


$

-


$

288,953


$

436,316


$

-


$

436,316

Cost of revenue


131,405



-



131,405



200,491



-



200,491



















Gross profit


157,548



-



157,548



235,825



-



235,825



















Operating expenses


















Sales and marketing


99,170



-



99,170



153,009



-



153,009

General and administrative


29,829



(5,389)



24,440



37,767



(6,189)



31,578

Other income, net


(158)



-



(158)



(484)



-



(484)



















Total operating expenses


128,841



(5,389)



123,452



190,292



(6,189)



184,103



















Operating income


28,707



5,389



34,096



45,533



6,189



51,722



















Interest expense (income), net


(1,526)



-



(1,526)



169



-



169

Other financial expense (income), net


(625)



-



(625)



767



-



767



















Total financial expense (income), net


(2,151)



-



(2,151)



936



-



936



















Income before income taxes


30,858



5,389



36,247



44,597



6,189



50,786



















Income tax expense


3,373



-



3,373



737



-



737



















Net income for the period

$

27,485


$

5,389


$

32,874


$

43,860


$

6,189


$

50,049



















Net income per share


















Basic

$

1.40





$

1.69


$

2.16





$

2.46

Diluted

$

1.34





$

1.60


$

2.09





$

2.39



















Weighted average  number of shares


















Basic


19,553






19,553



20,344






20,344

Diluted


20,572






20,572



20,968






20,968

 


Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of Operations




















Three months ended December 31,


2011


2012


Reported


Share based




Reported


Share based




(Unadjusted)


payment


Adjusted


(Unadjusted)


payment


Adjusted


(Unaudited)


In thousands (other than per share amounts)

Revenue

$

85,688


$

-


$

85,688


$

132,947


$

-


$

132,947

Cost of revenue


36,549



-



36,549



62,439



-



62,439



















Gross profit


49,139



-



49,139



70,508



-



70,508



















Operating expenses


















Sales and marketing


36,432



-



36,432



52,833



-



52,833

General and administrative


7,422



(1,349)



6,073



10,160



(1,896)



8,264

Other income, net


(38)



-



(38)



(350)



-



(350)



















Total operating expenses


43,816



(1,349)



42,467



62,643



(1,896)



60,747



















Operating income


5,323



1,349



6,672



7,865



1,896



9,761



















Interest expense (income), net


(326)



-



(326)



129



-



129

Other financial expense, net


22



-



22



125



-



125



















Total financial expense (income), net


(304)



-



(304)



254



-



254



















Income before income taxes


5,627



1,349



6,976



7,611



1,896



9,507



















Income tax expense


306



-



306



78



-



78



















Net income for the period

$

5,321


$

1,349


$

6,670


$

7,533


$

1,896


$

9,429



















Net income per share


















Basic

$

0.26





$

0.34


$

0.37





$

0.46

Diluted

$

0.26





$

0.32


$

0.36





$

0.45



















Weighted average  number of shares













Basic


20,081






20,081



20,530






20,530

Diluted


20,826






20,826



21,047






21,047

 


EBITDA and Adjusted EBITDA













Twelve months ended


Three months ended


December 31,


December 31,


2011


2012


2011


2012


(Unaudited)


(In thousands)













Reconciliation of Net Income to EBITDA and Adjusted EBITDA












Net income

$

27,485


$

43,860


$

5,321


$

7,533

Interest expense (income), net


(1,526)



169



(326)



129

Income tax expense


3,373



737



306



78

Depreciation and amortization


5,950



10,124



2,344



2,988

EBITDA


35,282



54,890



7,645



10,728













Share based payment


5,389



6,189



1,349



1,896

Adjusted EBITDA

$

40,671


$

61,079


$

8,994


$

12,624

 

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:

















Twelve months ended


Three months ended



December 31,


December 31,



2011


2012


2011


2012



(Audited)


(Unaudited)


(Unaudited)



Revenue



(in thousands)















Soda maker starter kits (including exchange cylinders)

$

125,595


$

185,875


$

40,683


$

66,075


Consumables


156,959



241,922



42,275



64,893


Other


6,399



8,519



2,730



1,979


Total

$

288,953


$

436,316


$

85,688


$

132,947


 










Twelve months ended


Three months ended


December 31,


December 31,


2011


2012


2011


2012


(Audited)


(Unaudited)


(Unaudited)


As a percentage of revenue









Soda maker starter kits (including exchange cylinders)

43.5%


42.6%


47.5%


49.7%

Consumables

54.3%


55.4%


49.3%


48.8%

Other

2.2%


2.0%


3.2%


1.5%

Total

100.0%


100.0%


100.0%


100.0%


















 

 

SOURCE SodaStream International Ltd.



RELATED LINKS
http://sodastream.investorroom.com

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