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Press release from PR Newswire

SodaStream Reports Record First Quarter Results

Wednesday, May 09, 2012

SodaStream Reports Record First Quarter Results07:30 EDT Wednesday, May 09, 2012First Quarter Revenues Increased to $87.9 Million First Quarter Net Income Increased to $10.1 Million First Quarter Diluted Earnings Per Share Increased to $0.48 First Quarter Adjusted Diluted Earnings Per Share Increased to $0.55AIRPORT CITY, Israel, May 9, 2012 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems announced today its results for the three month period ended March 31, 2012.(Logo: http://photos.prnewswire.com/prnh/20100903/NY58941LOGO-b) Beginning with the first 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 first quarter ended March 31, 2012:Total revenues increased 50.2% to $87.9 million from $58.5 million in the first quarter of 2011.  Net income increased 84.3% to $10.1 million compared to $5.5 million a year ago, and Adjusted net income was $11.5 million compared to $6.9 million last year. Diluted earnings per share increased 71.4% to $0.48, compared to $0.28 in the first quarter of 2011 and Adjusted diluted earnings per share were $0.55 compared to $0.35 a year ago."We delivered a very strong start to the fiscal year," said Daniel Birnbaum, Chief Executive Officer of SodaStream.  "First quarter results validate our strategies to profitably expand our business on a global scale.  Going forward we'll increase our investment in brand building initiatives, new product development and capacity to support growing demand.  We are committed to maintaining financial discipline to generate greater earnings power and return increased value to our shareholders over the longer term." First Quarter 2012 Financial ReviewGeographical Revenue BreakdownThree Months Ended$ Increase% IncreaseRevenues (in millions)March 31, 2012March 31, 2011 (Decrease)(Decrease)Western Europe$45.7$30.5$15.250%The Americas25.613.312.393%Central & Eastern Europe, Middle East, Africa6.710.0(3.3)(33%)Asia-Pacific9.94.75.2110%Total$87.9$58.5$29.450%Product Segment Revenue BreakdownThree Months EndedRevenues (in millions)March 31, 2012March 31, 2011$ Increase% IncreaseSoda Maker Starter Kits$33.5$24.4$9.137%Consumables52.432.619.861%Other2.01.50.530%Total$87.9$58.5$29.450%Product Segment Unit BreakdownThree Months EndedUnit Sales (in thousands)March 31, 2012March 31, 2011Unit Increase% IncreaseSoda Maker Starter Kits*6835929115%CO2 Refills3,6682,85281629%Flavors5,7903,8081,98252%*As discussed on the Company's fourth quarter 2011 earnings call, the Czech Republic distributor purchased a disproportionate amount of soda makers during the first quarter of 2011.  Excluding sales to the Czech Republic from the first quarter of 2011 and 2012, soda maker starter kit unit sales increased 54% year over year.  Gross margin for the first quarter of 2012 was 55.0%, compared to 53.5% for the same period in 2011.  This increase was primarily due to the addition of higher margin revenues in the Nordics following the shift to self-distribution in this territory. Sales and marketing expenses for the first quarter of 2012 totaled $27.3 million, or 31.0% of revenues compared to $17.1 million, or 29.3% of revenues for the comparable period last year. The increase is primarily due to an increase in selling expense associated with higher revenues, the Nordics expenses, as well as some incremental A&P in select markets.  General and administrative expenses for the first quarter of 2012 were $9.6 million, or 11.0% of revenues, compared to $7.5 million, or 12.8% of revenues 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 $11.5 million, or 13.1% of revenues as compared to $6.7 million, or 11.4% of revenues in the first quarter of 2011. Balance Sheet ReviewCash and cash equivalents and bank deposits at March 31, 2012 were $52.0 million compared to $74.3 million on December 31, 2011. The decrease is primarily attributable to the acquisition of the Nordics distribution activity. Loans and borrowings at March 31, 2012 totaled $3.2 million compared to $4.0 million on December 31, 2011. Working capital at March 31, 2012 increased 16.9% to $91.5 million compared to $78.3 million on December 31, 2011. Inventory at March 31, 2012 increased 18.6% to $90.9 million compared to $76.6 million on December 31, 2011, primarily reflecting the additional inventory associated with the acquisition of the Nordics distribution activity.  GuidanceBased on first quarter results and current projections for the remainder of the year, the Company is raising its outlook. The Company now expects 2012 revenues to increase approximately 33% over 2011 revenues of $289.0 million, up from its previous guidance of 28%. The Company now expects 2012 net income to increase approximately 50% over 2011 net income of $27.5 million, up from its previous guidance of 42%. This guidance includes a share-based expense of approximately $5.5 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, May 9, 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 InternationalSodaStream 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 50,000 retail stores in 42 countries around the world.  For more information on SodaStream, please visit the Company's website: www.sodastream.com.Non-IFRS Financial MeasuresThis 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 StatementsThis 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 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.Company Contact: Yonah LloydExecutive Director, Corporate Development and CommunicationSodaStream International Ltd.Phone: +972-3-976-2462yonahl@sodastream.com Investor Contacts (US): Brendon Frey ICRPhone: + 1 203-682-8200brendon.frey@icrinc.com  Consolidated Statements of OperationsIn thousands (net income per share amounts in units)For the threeFor the threemonths endedmonths endedMar-31Mar-3120112012(Unaudited)(Unaudited)Revenues$58,506$87,868Cost of revenues27,21539,505Gross profit31,29148,363Operating expensesSales and marketing 17,13927,268General and administrative7,5139,641Other income, net(42)(39)Total operating expenses24,61036,870Operating income6,68111,493Interest income, net(182)(122)Other financial expense, net364129Total financial expense, net1827Income before income taxes6,49911,486Income taxes1,0121,375Net income for the period$5,487$10,111Net income per shareBasic$0.30$0.50Diluted$0.28$0.48Weighted average  number of shares Basic18,45720,144Diluted19,57920,955 Consolidated Balance Sheets as of In thousandsDec-31Mar-3120112012(Audited)(Unaudited)AssetsCash and cash equivalents$34,769$11,090Bank deposits39,48540,878Inventories76,62590,897Trade receivables(*)58,45263,637Other receivables(*)20,06421,297Derivative financial instruments322696Assets classified as available-for-sale837858Total current assets230,554229,353Property, plant and equipment46,43456,606Intangible assets 25,35837,846Deferred tax assets1,1681,486Other receivables224230Total non-current assets73,18496,168Total assets303,738325,521LiabilitiesLoans and borrowings4,0063,186Derivative financial instruments-1,858Trade payables47,38347,778Income tax payable9,17110,246Provisions397604Other current liabilities21,07125,382Total current liabilities82,02889,054Employee benefits1,4971,536Provisions514520Deferred tax liabilities7171,046Total non-current liabilities2,7283,102Total liabilities 84,75692,156Shareholders' equityShare capital3,2383,251Share premium168,601170,587Translation reserve1,4713,744Retained earnings 45,67255,783Total shareholders' equity218,982233,365Total liabilities and shareholders' equity $303,738$325,521(*) presented in comparative periods under one line item "trade and other receivables" Consolidated Statements of Cash FlowsIn thousandsFor the threeFor the threemonths endedmonths endedMar-31Mar-3120112012(Unaudited)(Unaudited)Cash flows from operating  activitiesNet income for the period$5,487$10,111Adjustments:Amortization of intangible assets48343Change in fair value of  derivative financial instruments4261,278Exchange rate differences on bank deposits-(1,094)Depreciation of property, plant  and equipment1,0661,651Share based payment1,3711,411Interest income, net(182)(122)Income tax expense1,0121,3759,22814,953Increase in inventories(4,739)(9,902)Decrease (increase) in trade and other receivables3,446(17,163)Increase (decrease) in trade payables(6,671)543Increase (decrease) in employee benefits(9)20Increase (decrease) in provisions and other current liabilities(3,197)1,791(1,942)(9,758)Interest paid(112)(115)Income tax received-1,343Income tax paid(621)(1,193)Net cash used in operating activities(2,675)(9,723)Cash flows from investing  activitiesInterest received293130Proceeds from derivative financial  instruments, net47206Acquisition of subsidiary, net of cash acquired-(9,758)Acquisition of property, plant  and equipment(2,517)(4,127)Acquisition of intangible assets(158)(240)Net cash used in investing  activities(2,335)(13,789)Cash flows from financing activitiesProceeds from exercise of employee share options36588Change in short-term debt(8,379)(922)Net cash used in financing activities(8,343)(334)Net decrease in cash and cash equivalents(13,353)(23,846)Cash and cash equivalents at the beginning of the period68,62734,769Effect of exchange rates fluctuations on cash and cash equivalents(102)167Cash and cash equivalents at the end of the period$55,172$11,090 Information about revenues in reportable segmentsIn thousandsCentral andEastern Europe,Middle East andWestern EuropeAfricaThe AmericasAsia-PacificTotalThree months endedMarch 31, 2012 (Unaudited)$45,6516,64325,6339,941$87,868March 31, 2011 (Unaudited)$30,5139,99313,2584,742$58,506 Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of OperationsIn thousands (net income per share amounts in units)Three months ended March 3120112012ReportedShare basedReportedShare based(Unadjusted)paymentAdjusted(Unadjusted)paymentAdjusted(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)Revenues$58,506$$58,506$87,868$$87,868Cost of revenues27,21527,21539,50539,505Gross profit31,29131,29148,36348,363Operating expensesSales and marketing 17,13917,13927,26827,268General and administrative7,513(1,371)6,1429,641(1,411)8,230Other income, net(42)(42)(39)(39)Total operating expenses24,610(1,371)23,23936,870(1,411)35,459Operating income6,6811,3718,05211,4931,41112,904Interest income, net(182)(182)(122)(122)Other financial expense, net364364129129Total financial expense, net18218277Income before income taxes6,4991,3717,87011,4861,41112,897Income taxes1,0121,0121,3751,375Net income for the period$5,487$1,371$6,858$10,111$1,411$11,522Net income per shareBasic$0.30$0.37$0.50$0.57Diluted$0.28$0.35$0.48$0.55Weighted average  number of shares Basic18,45718,45720,14420,144Diluted19,57919,57920,95520,955 EBITDA and Adjusted EBITDA In thousandsThree month endedMar-3120112012(Unaudited)(Unaudited)Reconciliation of Net Income to EBITDA and Adjusted EBITDANet income$5,487$10,111Interest income, net(182)(122)Income taxes1,0121,375Depreciation and amortization1,1141,994EBITDA7,43113,358Share based payment1,3711,411Adjusted EBITDA$8,802$14,769 The following tables present the Company's revenues, by product type for the periods presented, as well as such revenues by product type as a percentage of total revenues  (*): Three month endedMar-3120112012(Unaudited)(Unaudited)Revenues(in thousands)Soda maker starter kits (including exchange cylinders)$24,361$33,484Consumables32,63052,419Other1,5151,965Total$58,506$87,868 Three months endedMar-3120112012(Unaudited)(Unaudited)As a percentage of revenuesSoda maker starter kits (including exchange cylinders)41.6%38.1%Consumables55.8%59.7%Other2.6%2.2%Total100.0%100.0% (*)The Company reclassified prior periods' data such that revenues from spare cylinders, formerly presented under the "soda maker starter kits" category, are presented under the "consumables" category, as the purchase of a spare cylinder more closely resembles the purchase of other consumables than it does the initial purchase of a soda maker. The effect was an increase in revenues from consumables by $ 3,247 thousand for three month ended March 31, 2011 (increase in 560 basis points of total revenues of this period), and the same decrease in revenues from soda maker starter kits for the respective period (and the same decrease in basis points of total revenues of this period)   SOURCE SodaStream International Ltd.