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Press release from PR Newswire

SodaStream Reports Record Second Quarter Results

Wednesday, July 31, 2013

SodaStream Reports Record Second Quarter Results

07:30 EDT Wednesday, July 31, 2013

Second Quarter Revenue Increased 29% to $132.4 Million
Second Quarter Net Income Increased 36% to $12.9 Million
Second Quarter Diluted Earnings Per Share Increased 33% to $0.60
Second Quarter Adjusted Diluted Earnings Per Share Increased 42% to $0.74

AIRPORT CITY, Israel, July 31, 2013 /PRNewswire/ -- 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, 2013.

(Logo: http://photos.prnewswire.com/prnh/20121107/NY07412LOGO )

For the second quarter ended June 30, 2013:

  • Revenue increased 28.5% to $132.4 million from $103.0 million in the second quarter 2012. 
  • EBITDA increased 47.6% to $18.0 million from $12.2 million, and Adjusted EBITDA increased 53.9% to $21.0 million from $13.6 million in the second quarter 2012.
  • Net income increased 36.1% to $12.9 million compared to $9.5 million in the second quarter 2012, and Adjusted net income was $15.8 million compared to $10.9 million in the second quarter 2012. 
  • Diluted earnings per share increased 33.3% to $0.60, compared to $0.45 in the second quarter 2012 and Adjusted diluted earnings per share were $0.74 compared to $0.52 in the second quarter 2012.

Daniel Birnbaum, Chief Executive Officer of SodaStream, commented, "Our business performed very well during the second quarter, with revenue up 29% year-over-year on top of very strong gains a year ago that were fueled by the launch at Wal-Mart. Importantly, operating income grew at a faster pace than revenue as we leveraged expenses to drive earnings per share ahead of expectations. With global first half unit sales of soda makers, gas refills and flavors up 18%, 30%, and 25% respectively, we are making great progress against our plan to grow our installed base and strengthen user loyalty. Our strong momentum in the Americas and Western Europe, combined with improving trends in Asia-Pacific, position us well to achieve our upwardly revised outlook for 2013."

Second Quarter 2013 Financial Review

Geographical Revenue Breakdown

Revenue

Three Months Ended

June 30, 2012

June 30, 2013

 Increase (decrease)

 Increase (decrease)

In Millions USD

%

The Americas

$

30.7

$

47.4

$

16.7

55%

Western Europe

54.0

68.1

14.1

26%

Asia-Pacific

9.9

10.8

0.9

9%

Central & Eastern Europe, Middle East, Africa

8.4

6.1

(2.3)

(27%)

Total

$

103.0

$

132.4

$

29.4

29%

 

Product Segment Revenue Breakdown

Revenue

Three Months Ended

June 30, 2012

June 30, 2013

 Increase

 Increase

In millions USD

%

Soda Maker Starter Kits

$

39.8

$

49.9

$

10.1

25%

Consumables

61.6

78.9

17.3

28%

Other

1.6

3.6

2.0

134%

Total

$

103.0

$

132.4

$

29.4

29%

 

Product Segment Unit Breakdown

Three Months Ended

June 30, 2012

June 30, 2013

 Increase

 Increase

In thousands

%

Soda Maker Starter Kits

764

935

171

22%

CO2 Refills

4,230

5,542

1,312

31%

Flavors

7,200

8,505

1,305

18%

 

Gross margin for the second quarter 2013 was 54.3% compared to 54.4% for the same period in 2012, with continued impact of the dependency on manufacturing by subcontractors. 

Sales and marketing expenses for the second quarter 2013 totaled $43.6 million, or 33.0% of revenue, compared to $37.1 million, or 36.0% of revenue for the comparable period in the prior year. The 300 basis point improvement in sales and marketing expenses as a percent of revenue is mainly attributable to lower advertising and promotion expense as a percent of revenue of 15.1% compared to 17.8% in the second quarter 2012 driven by higher revenue.

General and administrative expenses for the second quarter 2013 were $13.6 million, or 10.3% of revenue, compared to $9.2 million, or 9.0% of revenue in the comparable period of last year, mainly due to an increase of $1.6 million in share-based compensation expense to $3.0 million in the quarter, compared to $1.4 million in the second quarter 2012, additional expenses related to our Canadian distribution and additional infrastructure to support growth.

Operating income increased 50.8% to $14.7 million, or 11.1% of revenue, compared to $9.7 million, or 9.5% of revenue in the second quarter 2012.

Tax expense was $1.1 million representing a 7.9% effective tax rate compared to $134,000 or a 1.4% effective tax rate in the second quarter 2012. This increase in effective tax rate is primarily due to the release of past-years' tax provisions in the second quarter 2012 not recurring in the current period.

Balance Sheet Review

  • Cash and cash equivalents and bank deposits at June 30, 2013 were $35.2 million compared to $62.1 million at December 31, 2012. The decrease is primarily attributable to the investment in our new production facility, an increase in working capital and the purchase of our Italian distributor's business.
  • The Company had $16.1 million of bank debt at June 30, 2013 mainly for financing the investments in the new production facility, compared to no bank debt at December 31, 2012.
  • Working capital at June 30, 2013 increased 55.5% to $148.0 million compared to $95.1 million at December 31, 2012. Inventories at June 30, 2013 increased 27.5% to $143.7 million compared to $112.7 million at December 31, 2012, mainly due to additional inventory from the acquisition of our Italian distributor's business and the increased revenue.

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 full year 2013 revenue to increase approximately 30% over 2012 revenue of $436.3 million, up from its previous guidance of 27%.
  • The Company now expects full year 2013 Adjusted EBITDA to increase approximately 38% over 2012 Adjusted EBITDA of $61.1 million, up from its previous guidance of 36%.
  • The Company now expects full year 2013 Adjusted net income, which excludes share-based compensation expense, to increase approximately 30% over the Adjusted net income of $50.0 million reported in 2012, up from its previous guidance of 27%.
  • The Company expects full year 2013 net income to increase approximately 23% over 2012 net income of $43.9 million, up from its previous guidance of 20%.

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, July 31, 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 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.

Company Contact: Yonah LloydChief Corporate Development and Communications OfficerSodaStream 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 Operations

In thousands (other than per share amounts)

For the six months ended

For the three months ended

June 30,

June 30,

2012

2013

2012

2013

(Unaudited)

(Unaudited)

Revenue

$

190,887

$

250,029

$

103,019

$

132,390

Cost of revenue

86,521

114,006

47,016

60,452

Gross profit

104,366

136,023

56,003

71,938

Operating expenses

Sales and marketing

64,351

82,498

37,083

43,639

General and administrative

18,866

25,226

9,225

13,617

Other income, net

(80)

-

(41)

-

Total operating expenses

83,137

107,724

46,267

57,256

Operating income

21,229

28,299

9,736

14,682

Interest expense, net

5

154

128

129

Other financial expense, net

154

792

24

582

Total financial expense, net

159

946

152

711

Income before income taxes

21,070

27,353

9,584

13,971

Income tax expense

1,509

2,406

134

1,108

Net income for the period

$

19,561

$

24,947

$

9,450

$

12,863

Net income per share

Basic

$

0.97

$

1.20

$

0.47

$

0.62

Diluted

$

0.94

$

1.17

$

0.45

$

0.60

Weighted average  number of shares

Basic

20,217

20,719

20,289

20,756

Diluted

20,913

21,318

20,932

21,416

 

Consolidated Balance Sheets as of

December 31,

June 30,

2012

2013

(Audited)

(Unaudited)

(In thousands)

Assets

Cash and cash equivalents

$

62,068

$

25,200

Bank deposits

-

10,000

Inventories

112,679

143,692

Trade receivables

86,650

93,346

Other receivables

28,021

25,794

Derivative financial instruments

803

1,622

Assets classified as available-for-sale

868

879

Total current assets

291,089

300,533

Property, plant and equipment

76,906

92,369

Intangible assets

41,978

45,410

Deferred tax assets

2,133

2,312

Other receivables

271

276

Total non-current assets

121,288

140,367

Total assets

412,377

440,900

Liabilities

Loans and borrowings

-

16,143

Derivative financial instruments

261

-

Trade payables

86,431

72,737

Income tax payable

8,866

10,215

Provisions

1,304

1,519

Other current liabilities

37,022

32,912

Total current liabilities

133,884

133,526

Employee benefits

1,939

2,005

Provisions

537

549

Deferred tax liabilities

1,527

2,350

Total non-current liabilities

4,003

4,904

Total liabilities

137,887

138,430

Shareholders' equity

Share capital

3,330

3,356

Share premium

178,338

185,654

Translation reserve

3,628

(681)

Retained earnings

89,194

114,141

Total shareholders' equity

274,490

302,470

Total liabilities and shareholders' equity

$

412,377

$

440,900

 

Consolidated Statements of Cash Flows

For the six months ended

For the three months ended

June 30,

June 30,

2012

2013

2012

2013

(Unaudited)

(Unaudited)

(In thousands)

Cash flows from operating  activities

Net income for the period

$

19,561

$

24,947

$

9,450

$

12,863

Adjustments:

Amortization of intangible assets

687

1,140

344

712

Change in fair value of  derivative financial instruments

504

(537)

(774)

(537)

Exchange rate differences on bank deposits

-

-

1,094

-

Depreciation of property, plant  and equipment

3,818

5,777

2,167

3,224

Share based payment

2,835

5,354

1,424

2,960

Interest expense, net

5

154

128

129

Income tax expense

1,509

2,406

134

1,108

28,919

39,241

13,967

20,459

Increase in inventories

(12,541)

(24,784)

(2,639)

(14,982)

Increase in trade and other receivables

(21,798)

(19,369)

(4,635)

(30,558)

Increase (decrease) in trade payables

12,464

(13,232)

11,921

6,001

Decrease in employee benefits

(13)

(1)

(33)

(15)

Increase (decrease) in provisions and other current liabilities

4,459

(5,238)

2,668

6,860

11,490

(23,383)

21,249

(12,235)

Interest paid

(237)

(179)

(123)

(125)

Income tax received

1,486

3,539

143

91

Income tax paid

(2,291)

(966)

(1,098)

(256)

Net cash from (used in) operating activities

10,448

(20,989)

20,171

(12,525)

Cash flows from investing  activities

Interest received

1,079

94

949

36

Investment in bank deposits

(10,000)

(10,000)

(10,000)

(10,000)

Proceeds from bank deposits

38,919

-

38,919

-

Proceeds from (payments for) derivative financial  instruments, net

(554)

(543)

(760)

562

Acquisition of subsidiary, net of cash acquired

(9,758)

(1,179)

-

(1,179)

Acquisition of property, plant  and equipment

(14,506)

(19,328)

(10,379)

(8,724)

Acquisition of intangible assets

(963)

(2,489)

(723)

(1,380)

Net cash from (used in) investing  activities

4,217

(33,445)

18,006

(20,685)

Cash flows from financing  activities

Proceeds from exercise of employee share options

1,274

1,832

686

681

Change in short-term debt

(3,873)

16,143

(2,951)

8,070

Net cash from (used in) financing activities

(2,599)

17,975

(2,265)

8,751

Net increase (decrease) in cash and cash equivalents

12,066

(36,459)

35,912

(24,459)

Cash and cash equivalents at the beginning of the period

34,769

62,068

11,090

49,888

Effect of exchange rates  fluctuations on cash and cash equivalents

(242)

(409)

(409)

(229)

Cash and cash equivalents  at the end of the period

$

46,593

$

25,200

$

46,593

$

25,200

 

Information about revenue in reportable segments

The Americas

Western Europe

Asia-Pacific

Central and

Eastern

Europe,

Middle East, Africa

Total

(In thousands)

Six months ended:

June 30, 2012 (Unaudited)

$

56,283

99,725

19,868

15,011

$

190,887

June 30, 2013 (Unaudited)

$

95,712

121,385

20,151

12,781

$

250,029

Three months ended:

June 30, 2012 (Unaudited)

$

30,650

54,074

9,927

8,368

$

103,019

June 30, 2013 (Unaudited)

$

47,373

68,087

10,832

6,098

$

132,390

 

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

Six months ended June 30,

2012

2013

Reported

Share based

Reported

Share based

(Unadjusted)

payment

Adjusted

(Unadjusted)

payment

Adjusted

(Unaudited)

In thousands (other than per share amounts)

Revenue

$

190,887

$

-

$

190,887

$

250,029

$

-

$

250,029

Cost of revenue

86,521

-

86,521

114,006

-

114,006

Gross profit

104,366

-

104,366

136,023

-

136,023

Operating expenses

Sales and marketing

64,351

-

64,351

82,498

-

82,498

General and administrative

18,866

(2,835)

16,031

25,226

(5,354)

19,872

Other income, net

(80)

-

(80)

-

-

-

Total operating expenses

83,137

(2,835)

80,302

107,724

(5,354)

102,370

Operating income

21,229

2,835

24,064

28,299

5,354

33,653

Interest expense, net

5

-

5

154

-

154

Other financial expense, net

154

-

154

792

-

792

Total financial expense, net

159

-

159

946

-

946

Income before income taxes

21,070

2,835

23,905

27,353

5,354

32,707

Income tax expense

1,509

-

1,509

2,406

-

2,406

Net income for the period

$

19,561

$

2,835

$

22,396

$

24,947

$

5,354

$

30,301

Net income per share

Basic

$

0.97

$

1.11

$

1.20

$

1.46

Diluted

$

0.94

$

1.07

$

1.17

$

1.42

Weighted average  number of shares

Basic

20,217

20,217

20,719

20,719

Diluted

20,913

20,913

21,318

21,318

 

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

Three months ended June 30,

2012

2013

Reported

Share based

Reported

Share based

(Unadjusted)

payment

Adjusted

(Unadjusted)

payment

Adjusted

(Unaudited)

In thousands (other than per share amounts)

Revenue

$

103,019

$

-

$

103,019

$

132,390

$

-

$

132,390

Cost of revenue

47,016

-

47,016

60,452

-

60,452

Gross profit

56,003

-

56,003

71,938

-

71,938

Operating expenses

Sales and marketing

37,083

-

37,083

43,639

-

43,639

General and administrative

9,225

(1,424)

7,801

13,617

(2,960)

10,657

Other income, net

(41)

-

(41)

-

-

-

Total operating expenses

46,267

(1,424)

44,843

57,256

(2,960)

54,296

Operating income

9,736

1,424

11,160

14,682

2,960

17,642

Interest expense, net

128

-

128

129

-

129

Other financial expense, net

24

-

24

582

-

582

Total financial expense, net

152

-

152

711

-

711

Income before income taxes

9,584

1,424

11,008

13,971

2,960

16,931

Income tax expense

134

-

134

1,108

-

1,108

Net income for the period

$

9,450

$

1,424

$

10,874

$

12,863

$

2,960

$

15,823

Net income per share

Basic

$

0.47

$

0.54

$

0.62

$

0.76

Diluted

$

0.45

$

0.52

$

0.60

$

0.74

Weighted average  number of shares

Basic

20,289

20,289

20,756

20,756

Diluted

20,932

20,932

21,416

21,416

 

EBITDA and Adjusted EBITDA

Six months ended

Three months ended

June 30,

June 30,

2012

2013

2012

2013

(Unaudited)

(In thousands)

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Net income

$

19,561

$

24,947

$

9,450

$

12,863

Interest expense, net

5

154

128

129

Income tax expense

1,509

2,406

134

1,108

Depreciation and amortization

4,505

6,917

2,511

3,936

EBITDA

25,580

34,424

12,223

18,036

Share based payment

2,835

5,354

1,424

2,960

Adjusted EBITDA

$

28,415

$

39,778

$

13,647

$

20,996

 

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,

2012

2013

2012

2013

(Unaudited)

(Unaudited)

Revenue

(in thousands)

Soda maker starter kits (including exchange cylinders)

$

73,314

$

92,866

$

39,830

$

49,914

Consumables

114,050

150,893

61,631

78,831

Other

3,523

6,270

1,558

3,645

Total

$

190,887

$

250,029

$

103,019

$

132,390

 

Six months ended

Three months ended

June 30,

June 30,

2012

2013

2012

2013

(Unaudited)

(Unaudited)

As a percentage of revenue

Soda maker starter kits (including exchange cylinders)

38.4%

37.1%

38.7%

37.7%

Consumables

59.8%

60.4%

59.8%

59.5%

Other

1.8%

2.5%

1.5%

2.8%

Total

100.0%

100.0%

100.0%

100.0%

 

SOURCE SodaStream International Ltd.

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