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AIRPORT CITY, Israel, Nov. 7, 2012 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems, announced today its results for the three and nine month periods ended September 30, 2012.
Total revenue increased 48.7% to $112.5 million from $75.7 million in the third quarter 2011.
Net income increased 65.9% to $16.8 million compared to $10.1 million a year ago, and Adjusted net income was $18.2 million compared to $11.5 million last year.
Diluted earnings per share increased 66.7% to $0.80, compared to $0.48 in the third quarter 2011 and Adjusted diluted earnings per share were $0.87 compared to $0.55 a year ago.
"We had another very strong quarter highlighted by gains in all geographic regions and product categories with demand well ahead of our expectations" said Daniel Birnbaum, Chief Executive Officer of SodaStream. "Our growth strategies have yielded excellent financial results year-to-date and position the Company for continued expansion in 2013 and beyond. We enter the fourth quarter with strong momentum, especially in the U.S. where we've quickly built a powerful distribution network for our expanding portfolio of soda makers and consumables. Our newest flagship soda maker, the Source, is set to debut at select retailers worldwide. With its modern design and innovative functionality, we believe the Source is a transformational product that will broaden appeal of our entire system and help drive household penetration to a new level. To leverage our enhanced product portfolio and broad distribution, we are launching our first global branding campaign that highlights the revolutionary essence of SodaStream and challenges the traditional beverage industry. The progress we've made leading the growth of our category worldwide has put the Company on track to deliver significant value for our shareholders in the years ahead."
Third Quarter 2012 Financial Review
Geographical Revenue Breakdown
Revenue
Three Months Ended
September 30, 2012
September 30, 2011
Increase
Increase
In Millions USD
%
Western Europe
$
52.6
$
39.7
$
12.9
33%
The Americas
38.7
24.0
14.7
61%
Central & Eastern Europe, Middle
East, Africa
10.3
7.5
2.8
37%
Asia-Pacific
10.9
4.5
6.4
145%
Total
$
112.5
$
75.7
$
36.8
49%
Product Segment Revenue Breakdown
Revenue
Three Months Ended
September 30, 2012
September 30, 2011
Increase
Increase
In millions USD
%
Soda Maker Starter Kits
$
46.5
$
33.9
$
12.6
37%
Consumables
63.0
40.7
22.3
55%
Other
3.0
1.1
1.9
180%
Total
$
112.5
$
75.7
$
36.8
49%
Product Segment Unit Breakdown
Three Months Ended
September 30,
2012
September 30,
2011
Increase
Increase
In thousands
%
Soda Maker Starter Kits
941
717
224
31%
CO2 Refills
4,337
3,636
701
19%
Flavors
7,747
4,399
3,348
76%
Gross margin for the third quarter 2012 was 54.2%, compared to 53.5% for the same period in 2011. This increase was primarily due to the increase in direct distribution that accounted for 69% of total revenue in the quarter vs. 56% in the third quarter 2011. This increase is mainly due to growing share of U.S. revenue and the shift to self-distribution in the Nordics. Gross margin was also positively impacted from leveraging fixed production costs on higher revenue, partially offset by a higher percentage of subcontracted manufacturing.
Sales and marketing expenses for the third quarter 2012 totaled $35.8 million, or 31.8% of revenue compared to $23.1 million, or 30.6% of revenue for the comparable period last year. The increase is primarily due to higher advertising and promotion expense, which was in line with the plan to support the growing retail presence, especially in the U.S. This was partially offset by a decrease in other selling expenses as a percent of revenue, despite the aforementioned increase in self-distribution versus a year ago, driven by improved supply chain efficiency and expense leverage on higher revenue.
General and administrative expenses for the third quarter 2012 were $8.7 million, or 7.8% of revenue, compared to $7.6 million, or 10.1% 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 2011 and the acquisition of the distribution activity in the Nordics in the first quarter 2012.
Operating income increased to $16.4 million, or 14.6% of revenue as compared to $9.8 million, or 13.0% of revenue in the third quarter 2011.
Tax benefit was $850,000 compared to a tax expense of $816,000 in the third quarter 2011. This is primarily attributable to an adjustment of tax provision following an agreement with the tax authorities in one of our jurisdictions. Excluding this adjustment the effective tax rate in the third quarter 2012 was approximately 8%, similar to the third quarter 2011.
Balance Sheet Review
On August 31, 2012, the Company acquired the SodaStream related assets from its Canadian distributor and started operating its products' distribution in Canada as a self-distribution unit. This had no material impact on the results of operations. The main asset acquired in the transaction was inventory of $5.9 million. The inventory and cash balance at September 30, 2012 reflect this transaction.
Cash and cash equivalents and bank deposits at September 30, 2012 were $50.7 million compared to $74.3 million on 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 September 30, 2012 compared to $4.0 million on December 31, 2011.
Working capital at September 30, 2012 increased 29.5% to $101.4 million compared to $78.3 million on December 31, 2011.
Inventories at September 30, 2012 increased 44.6% to $110.8 million compared to $76.6 million on December 31, 2011, primarily reflecting the additional inventory associated with the acquisition of the Nordics and Canadian inventory and the Company's business growth, primarily in the U.S.
Change of 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.
Guidance
Based on third 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 46% over 2011 revenue of $289.0 million, up from its previous guidance of 40%.
The Company now expects 2012 net income to increase approximately 59% over 2011 net income of $27.5 million, up from its previous guidance of 55%. This guidance assumes full year gross margin of approximately 54.5% and includes a share-based expense of approximately $5.6 million.
Gross margin for the fourth quarter 2012 includes a higher mix of third party manufacturing and additional transportation expenses in order to meet the high demand for several new product launches scheduled for the holiday season.
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, November 7, 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 60,000 retail stores in 45 countries around the world. For more information on SodaStream, please visit the Company's website: www.sodastream.com.
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.
Company Contact: Yonah Lloyd Chief Corporate Development and Communications Officer SodaStream International Ltd. Phone: +972-3-976-2462 yonahl@sodastream.com
In thousands (net income per share amounts in units)
For the nine months ended
For the three months ended
September 30,
September 30,
2011
2012
2011
2012
(Unaudited)
(Unaudited)
Revenue
$
203,265
$
303,369
$
75,655
$
112,482
Cost of revenue
94,858
138,052
35,152
51,531
Gross profit
108,407
165,317
40,503
60,951
Operating expenses
Sales and marketing
62,737
100,176
23,129
35,825
General and administrative
22,408
27,607
7,605
8,741
Other income, net
(121)
(134)
(40)
(54)
Total operating expenses
85,024
127,649
30,694
44,512
Operating income
23,383
37,668
9,809
16,439
Interest expense (income), net
(1,200)
40
(506)
35
Other financial expense (income), net
(647)
642
(609)
488
Total financial expense (income), net
(1,847)
682
(1,115)
523
Income before income taxes
25,230
36,986
10,924
15,916
Income tax expense (tax benefit)
3,067
659
816
(850)
Net income for the period
$
22,163
$
36,327
$
10,108
$
16,766
Net income per share
Basic
$
1.14
$
1.79
$
0.51
$
0.82
Diluted
$
1.08
$
1.73
$
0.48
$
0.80
Weighted average number of shares
Basic
19,376
20,281
20,006
20,410
Diluted
20,452
20,984
21,002
21,027
Consolidated Balance Sheets as of
December 31,
September 30,
2011
2012
(Audited)
(Unaudited)
(In thousands)
Assets
Cash and cash equivalents
$
34,769
$
30,676
Bank deposits
39,485
20,056
Inventories
76,625
110,806
Trade receivables
58,452
80,861
Other receivables
20,064
20,338
Derivative financial instruments
322
235
Assets classified as available-for-sale
837
815
Total current assets
230,554
263,787
Property, plant and equipment
46,434
72,845
Intangible assets
25,358
38,084
Deferred tax assets
1,168
1,774
Other receivables
224
269
Total non-current assets
73,184
112,972
Total assets
303,738
376,759
Liabilities
Loans and borrowings
4,006
-
Derivative financial instruments
-
424
Trade payables
47,383
72,236
Income tax payable
9,171
8,908
Provisions
397
1,515
Other current liabilities
21,071
28,592
Total current liabilities
82,028
111,675
Employee benefits
1,497
1,458
Provisions
514
531
Deferred tax liabilities
717
1,161
Total non-current liabilities
2,728
3,150
Total liabilities
84,756
114,825
Shareholders' equity
Share capital
3,238
3,292
Share premium
168,601
174,458
Translation reserve
1,471
2,185
Retained earnings
45,672
81,999
Total shareholders' equity
218,982
261,934
Total liabilities and shareholders' equity
$
303,738
$
376,759
Consolidated Statements of Cash Flows
For the nine months ended
For the three months ended
September 30,
September 30,
2011
2012
2011
2012
(Unaudited)
(Unaudited)
(In thousands)
Cash flows from operating activities
Net income for the period
$
22,163
$
36,327
$
10,108
$
16,766
Adjustments:
Amortization of intangible assets
477
1,107
81
420
Change in fair value of derivative financial instruments
466
504
(79)
-
Depreciation of property, plant and equipment
3,128
6,029
973
2,211
Share based payment
4,040
4,293
1,348
1,458
Interest expense (income), net
(1,200)
40
(506)
35
Income tax expense (tax benefit)
3,067
659
816
(850)
32,141
48,959
12,741
20,040
Increase in inventories
(20,081)
(23,909)
(9,747)
(11,368)
Increase in trade and other receivables
(19,048)
(37,984)
(10,878)
(16,186)
Increase in trade payables
6,091
23,588
5,598
11,124
Decrease in employee benefits
(14)
(28)
(6)
(15)
Increase in provisions and other current liabilities
84
5,824
232
1,365
(827)
16,450
(2,060)
4,960
Interest paid
(272)
(334)
(79)
(97)
Income tax received
-
1,733
-
247
Income tax paid
(3,010)
(3,047)
(1,357)
(756)
Net cash from (used in) operating activities
(4,109)
14,802
(3,496)
4,354
Cash flows from investing activities
Interest received
1,003
1,181
221
102
Investment in bank deposits
(51,892)
(20,000)
(51,892)
(10,000)
Proceeds from bank deposits
-
38,919
-
-
Proceeds from (payments for) derivative financial instruments, net
(44)
7
(25)
561
Acquisition of subsidiary, net of cash acquired
-
(10,954)
-
(1,196)
Acquisition of property, plant and equipment
(14,067)
(23,759)
(7,770)
(9,253)
Acquisition of intangible assets
(650)
(2,125)
(398)
(1,162)
Net cash used in investing activities
(65,650)
(16,731)
(59,864)
(20,948)
Cash flows from financing activities
Share issuance
42,929
-
-
-
Proceeds from exercise of employee share options
899
1,618
82
344
Change in short-term debt
(8,609)
(3,873)
198
-
Net cash from (used in) financing activities
35,219
(2,255)
280
344
Net decrease in cash and cash equivalents
(34,540)
(4,184)
(63,080)
(16,250)
Cash and cash equivalents at the beginning of the period
68,627
34,769
96,980
46,593
Effect of exchange rates fluctuations on cash and cash equivalents
(154)
91
33
333
Cash and cash equivalents at the end of the period
$
33,933
$
30,676
$
33,933
$
30,676
Information about revenue in reportable segments
Western Europe
The Americas
Central and
Eastern
Europe, Middle
East, Africa
Asia-Pacific
Total
(In thousands)
Nine months ended:
September 30, 2012 (Unaudited)
$
152,336
94,943
25,314
30,776
$
303,369
September 30, 2011 (Unaudited)
$
113,457
51,918
25,724
12,166
$
203,265
Three months ended:
September 30, 2012 (Unaudited)
$
52,611
38,660
10,303
10,908
$
112,482
September 30, 2011 (Unaudited)
$
39,683
24,007
7,514
4,451
$
75,655
Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of Operations
Nine months ended September 30,
2011
2012
Reported
Share based
Reported
Share based
(Unadjusted)
payment
Adjusted
(Unadjusted)
payment
Adjusted
(Unaudited)
In thousands (net income per share amounts in units)
Revenue
$
203,265
$
-
$
203,265
$
303,369
$
-
$
303,369
Cost of revenue
94,858
-
94,858
138,052
-
138,052
Gross profit
108,407
-
108,407
165,317
-
165,317
Operating expenses
Sales and marketing
62,737
-
62,737
100,176
-
100,176
General and administrative
22,408
(4,040)
18,368
27,607
(4,293)
23,314
Other income, net
(121)
-
(121)
(134)
-
(134)
Total operating expenses
85,024
(4,040)
80,984
127,649
(4,293)
123,356
Operating income
23,383
4,040
27,423
37,668
4,293
41,961
Interest expense (income), net
(1,200)
-
(1,200)
40
-
40
Other financial expense (income), net
(647)
-
(647)
642
-
642
Total financial expense (income), net
(1,847)
-
(1,847)
682
-
682
Income before income taxes
25,230
4,040
29,270
36,986
4,293
41,279
Income tax expense
3,067
-
3,067
659
-
659
Net income for the period
$
22,163
$
4,040
$
26,203
$
36,327
$
4,293
$
40,620
Net income per share
Basic
$
1.14
$
1.35
$
1.79
$
2.00
Diluted
$
1.08
$
1.28
$
1.73
$
1.94
Weighted average number of shares
Basic
19,376
19,376
20,281
20,281
Diluted
20,452
20,452
20,984
20,984
Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of Operations
Three months ended September 30,
2011
2012
Reported
Share based
Reported
Share based
(Unadjusted)
payment
Adjusted
(Unadjusted)
payment
Adjusted
(Unaudited)
In thousands (net income per share amounts in units)
Revenue
$
75,655
$
-
$
75,655
$
112,482
$
-
$
112,482
Cost of revenue
35,152
-
35,152
51,531
-
51,531
Gross profit
40,503
-
40,503
60,951
-
60,951
Operating expenses
Sales and marketing
23,129
-
23,129
35,825
-
35,825
General and administrative
7,605
(1,348)
6,257
8,741
(1,458)
7,283
Other income, net
(40)
-
(40)
(54)
-
(54)
Total operating expenses
30,694
(1,348)
29,346
44,512
(1,458)
43,054
Operating income
9,809
1,348
11,157
16,439
1,458
17,897
Interest expense (income), net
(506)
-
(506)
35
-
35
Other financial expense (income), net
(609)
-
(609)
488
-
488
Total financial expense (income), net
(1,115)
-
(1,115)
523
-
523
Income before income taxes
10,924
1,348
12,272
15,916
1,458
17,374
Income tax expense (tax benefit)
816
-
816
(850)
-
(850)
Net income for the period
$
10,108
$
1,348
$
11,456
$
16,766
$
1,458
$
18,224
Net income per share
Basic
$
0.51
$
0.57
$
0.82
$
0.89
Diluted
$
0.48
$
0.55
$
0.80
$
0.87
Weighted average number of shares
Basic
20,006
20,006
20,410
20,410
Diluted
21,002
21,002
21,027
21,027
EBITDA and Adjusted EBITDA
Nine months ended
Three months ended
September 30,
September 30,
2011
2012
2011
2012
(Unaudited)
(In thousands)
Reconciliation of Net Income to EBITDA
and Adjusted EBITDA
Net income
$
22,163
$
36,327
$
10,108
$
16,766
Interest expense (income), net
(1,200)
40
(506)
35
Income tax expense (tax benefit)
3,067
659
816
(850)
Depreciation and amortization
3,605
7,136
1,054
2,631
EBITDA
27,635
44,162
11,472
18,582
Share based payment
4,040
4,293
1,348
1,458
Adjusted EBITDA
$
31,675
$
48,455
$
12,820
$
20,040
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 (*):
Nine months ended
Three months ended
September 30,
September 30,
2011
2012
2011
2012
(Unaudited)
Revenue
(in thousands)
Soda maker starter kits (including
exchange cylinders)
$
84,912
$
119,800
$
33,868
$
46,486
Consumables
114,684
177,029
40,710
62,979
Other
3,669
6,540
1,077
3,017
Total
$
203,265
$
303,369
$
75,655
$
112,482
Nine months ended
Three months ended
September 30,
September 30,
2011
2012
2011
2012
(Unaudited)
As a percentage of revenue
Soda maker starter kits (including exchange cylinders)
41.8%
39.5%
44.8%
41.3%
Consumables
56.4%
58.4%
53.8%
56.0%
Other
1.8%
2.1%
1.4%
2.7%
Total
100.0%
100.0%
100.0%
100.0%
(*)The Company reclassified prior periods' data such that revenue 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 revenue from consumables by $9,905 thousand and $ 3,932 thousand for nine months and three months ended September 30, 2011, respectively (increase in 480 basis points and 520 basis points of total revenue of these periods, respectively), and the same decrease in revenue from soda maker starter kits for the respective periods (and the same decrease in basis points of total revenue of those periods, respectively)
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Service Component Architecture (shortly referred as SCA) is a technology for creating services from components. SCA is a set of OASIS standards and part of it is developed with the collaboration of vendors from open source community, referred as “OSOA” Open SOA. SCA helps to buil...
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Complexity is the new reality of web and mobile applications with almost no new release going out without the addition of services and applications spread across many different companies. But the reality of this new interrelationship is still the same: If a third-party Internet o...
The saying “if it doesn’t exist on the Internet, it doesn’t exist”[1] is ringing truer every day. Nowadays, it is hard to imagine most businesses without an e-commerce platform, let alone without a web presence at all. Since e-commerce is becoming the new standard, e-commerce per...
Although I started with ColdFusion for application development, I did plenty brochureware sites with HTML. I believe the version was HTML 2.0 for IE 2.0. I lived in the browser world for years doing ColdFusion, ASP, and HTML sites. When winforms and Smart Client with web services...
Compuware Corporation has announced the convergence of dynaTrace PurePath® Technology and the Gomez Performance Network, creating a powerful User Experience Management (UEM) solution. Compuware now offers a APMaaS solution that provides a complete UEM offering, including real-use...
Service Component Architecture (shortly referred as SCA) is a technology for creating services from components. SCA is a set of OASIS standards and part of it is developed with the collaboration of vendors from open source community, referred as “OSOA” Open SOA. SCA helps to buil...
