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Press release from PR Newswire

SodaStream Reports Record Fourth Quarter Results

Wednesday, February 20, 2013

SodaStream Reports Record Fourth Quarter Results07:30 EST Wednesday, February 20, 2013Fourth 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 MillionAIRPORT 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 ReviewGeographical Revenue Breakdown RevenueThree Months EndedDecember 31, 2011December 31, 2012 Increase IncreaseIn Millions USD%The Americas$32.0$62.8$30.896%Western Europe39.751.912.231%Asia-Pacific8.811.62.831%Central & Eastern Europe, Middle East, Africa5.26.61.428%Total$85.7$132.9$47.255% Product Segment Revenue Breakdown RevenueThree Months EndedDecember 31, 2011December 31, 2012 Increase (decrease) Increase   (decrease)In millions USD%Soda Maker Starter Kits$40.7$66.1$25.462%Consumables42.364.822.554%Other2.72.0(0.7)(28)%Total$85.7$132.9$47.255% Product Segment Unit Breakdown Three Months EndedDecember 31, 2011December 31, 2012 Increase IncreaseIn thousands%Soda Maker Starter Kits7671,11134445%CO2 Refills3,4144,30889426%Flavors4,5927,3622,77060% 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 ReviewCash 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 CurrencyBeginning 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 GuidanceThe 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 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 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 MeasuresThis 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 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 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 OperationsIn thousands (other than per share amounts)For the twelve months endedFor the three months endedDecember 31,December 31,2011201220112012(Audited)(Unaudited)(Unaudited)Revenue$288,953$436,316$85,688$132,947Cost of revenue131,405200,49136,54962,439Gross profit157,548235,82549,13970,508Operating expensesSales and marketing 99,170153,00936,43252,833General and administrative29,82937,7677,42210,160Other income, net(158)(484)(38)(350)Total operating expenses128,841190,29243,81662,643Operating income28,70745,5335,3237,865Interest expense (income), net(1,526)169(326)129Other financial expense (income), net(625)76722125Total financial expense (income), net(2,151)936(304)254Income before income taxes30,85844,5975,6277,611Income tax expense3,37373730678Net income for the period$27,485$43,860$5,321$7,533Net income per shareBasic$1.40$2.16$0.26$0.37Diluted$1.34$2.09$0.26$0.36Weighted average  number of shares Basic19,55320,34420,08120,530Diluted20,57220,96820,82621,047 Consolidated Balance Sheets as ofDecember 31,December 31,20112012(Audited)(Unaudited)(In thousands)AssetsCash and cash equivalents$34,769$62,068Bank deposits39,485-Inventories76,625112,679Trade receivables58,45286,650Other receivables20,06428,021Derivative financial instruments322803Assets classified as available-for-sale837868Total current assets230,554291,089Property, plant and equipment46,43476,906Intangible assets 25,35841,978Deferred tax assets1,1682,133Other receivables224271Total non-current assets73,184121,288Total assets303,738412,377LiabilitiesLoans and borrowings4,006-Derivative financial instruments-261Trade payables47,38386,431Income tax payable9,1718,866Provisions3971,304Other current liabilities21,07137,022Total current liabilities82,028133,884Employee benefits1,4971,939Provisions514537Deferred tax liabilities7171,527Total non-current liabilities2,7284,003Total liabilities 84,756137,887Shareholders' equityShare capital3,2383,330Share premium168,601178,338Translation reserve1,4713,628Retained earnings 45,67289,194Total shareholders' equity218,982274,490Total liabilities and shareholders' equity $303,738$412,377 Consolidated Statements of Cash FlowsFor the twelve months endedFor the three months endedDecember 31,December 31,2011201220112012(Audited)(Unaudited)(Unaudited)(In thousands)Cash flows from operating  activitiesNet income for the period$27,485$43,860$5,321$7,533Adjustments:Amortization of intangible assets9371,602459495Change in fair value of  derivative financial instruments392504(74)-Depreciation of property, plant  and equipment5,0138,5221,8852,493Gain on sales of property, plant and equipment-(766)-(766)Share based payment5,3896,1891,3491,896Interest expense (income), net(1,526)169(326)129Income tax expense3,3737373067841,06360,8178,92011,858Increase 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 payables4,29139,957(1,799)16,369Increase in employee benefits13191145119Increase (decrease) in provisions and other current liabilities(811)14,891(895)9,067(3,583)39,481(2,757)23,031Interest paid(422)(454)(149)(120)Income tax received-2,191-458Income tax paid(4,182)(4,041)(1,173)(994)Net cash from (used in) operating activities(8,187)37,177(4,079)22,375Cash flows from investing  activitiesInterest received1,2611,303258122Investment in bank deposits(90,811)(20,000)(38,919)-Proceeds from bank deposits51,89258,91951,89220,000Payments 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)7,0917,503Cash flows from financing  activitiesShare issuance42,929---Proceeds from exercise of employee share options1,1172,8902181,272Change in short-term debt(11,172)(3,873)(2,563)-Net cash from (used in) financing activities32,874(983)(2,345)1,272Net increase (decrease) in cash and cash equivalents(33,871)26,96666731,150Cash and cash equivalents at the beginning of the period68,62734,76933,93330,676Effect of exchange rates  fluctuations on cash and cash equivalents13333169242Cash and cash equivalents  at the end of the period$34,769$62,068$34,769$62,068 Information about revenue in reportable segmentsThe AmericasWestern EuropeAsia-PacificCentral and Eastern Europe, Middle East, AfricaTotal(In thousands)Twelve months ended:December 31, 2011 (Audited)$83,894153,17421,01030,875$288,953December 31, 2012 (Unaudited)$157,705204,33242,36731,912$436,316Three months ended:December 31, 2011 (Unaudited)$31,97639,7178,8445,151$85,688December 31, 2012 (Unaudited)$62,76251,99611,5916,598$132,947 Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of OperationsTwelve months ended December 31,20112012ReportedShare basedReportedShare based(Unadjusted)paymentAdjusted(Unadjusted)paymentAdjusted(Unaudited)In thousands (other than per share amounts)Revenue$288,953$-$288,953$436,316$-$436,316Cost of revenue131,405-131,405200,491-200,491Gross profit157,548-157,548235,825-235,825Operating expensesSales and marketing 99,170-99,170153,009-153,009General and administrative29,829(5,389)24,44037,767(6,189)31,578Other income, net(158)-(158)(484)-(484)Total operating expenses128,841(5,389)123,452190,292(6,189)184,103Operating income28,7075,38934,09645,5336,18951,722Interest expense (income), net(1,526)-(1,526)169-169Other financial expense (income), net(625)-(625)767-767Total financial expense (income), net(2,151)-(2,151)936-936Income before income taxes30,8585,38936,24744,5976,18950,786Income tax expense3,373-3,373737-737Net income for the period$27,485$5,389$32,874$43,860$6,189$50,049Net income per shareBasic$1.40$1.69$2.16$2.46Diluted$1.34$1.60$2.09$2.39Weighted average  number of shares Basic19,55319,55320,34420,344Diluted20,57220,57220,96820,968 Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of OperationsThree months ended December 31,20112012ReportedShare basedReportedShare based(Unadjusted)paymentAdjusted(Unadjusted)paymentAdjusted(Unaudited)In thousands (other than per share amounts)Revenue$85,688$-$85,688$132,947$-$132,947Cost of revenue36,549-36,54962,439-62,439Gross profit49,139-49,13970,508-70,508Operating expensesSales and marketing 36,432-36,43252,833-52,833General and administrative7,422(1,349)6,07310,160(1,896)8,264Other income, net(38)-(38)(350)-(350)Total operating expenses43,816(1,349)42,46762,643(1,896)60,747Operating income5,3231,3496,6727,8651,8969,761Interest expense (income), net(326)-(326)129-129Other financial expense, net22-22125-125Total financial expense (income), net(304)-(304)254-254Income before income taxes5,6271,3496,9767,6111,8969,507Income tax expense 306-30678-78Net income for the period$5,321$1,349$6,670$7,533$1,896$9,429Net income per shareBasic$0.26$0.34$0.37$0.46Diluted$0.26$0.32$0.36$0.45Weighted average  number of shares Basic20,08120,08120,53020,530Diluted20,82620,82621,04721,047 EBITDA and Adjusted EBITDA Twelve months endedThree months endedDecember 31,December 31,2011201220112012(Unaudited)(In thousands)Reconciliation of Net Income to EBITDA and Adjusted EBITDANet income$27,485$43,860$5,321$7,533Interest expense (income), net(1,526)169(326)129Income tax expense 3,37373730678Depreciation and amortization5,95010,1242,3442,988EBITDA35,28254,8907,64510,728Share based payment5,3896,1891,3491,896Adjusted 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 endedThree months endedDecember 31,December 31,2011201220112012(Audited)(Unaudited)(Unaudited)Revenue(in thousands)Soda maker starter kits (including exchange cylinders)$125,595$185,875$40,683$66,075Consumables156,959241,92242,27564,893Other6,3998,5192,7301,979Total$288,953$436,316$85,688$132,947 Twelve months endedThree months endedDecember 31,December 31,2011201220112012(Audited)(Unaudited)(Unaudited)As a percentage of revenueSoda maker starter kits (including exchange cylinders)43.5%42.6%47.5%49.7%Consumables54.3%55.4%49.3%48.8%Other2.2%2.0%3.2%1.5%Total100.0%100.0%100.0%100.0%  SOURCE SodaStream International Ltd.For further information: Yonah Lloyd, Chief Corporate Development and Communications Officer, SodaStream International Ltd., +972-3-976-2462, yonahl@sodastream.com; Investor Contacts (US): Brendon Frey, ICR, +1-203-682-8200, brendon.frey@icrinc.com