SodaStream reports significant revenue increase in past quarter

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SodaStream reports significant revenue increase in past quarter

Sodastream

Sodastream (Photo credit: Wikipedia)

AIRPORT CITY, Israel, Feb. 26, 2014 /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, 2013.

For the fourth quarter ended December 31, 2013:

  • Revenue increased 26.4% to $168.1 million from $132.9 million in the fourth quarter 2012
  • EBITDA decreased 45.2% to $5.9 million from $10.7 million, and Adjusted EBITDA decreased 31.4% to$8.7 million from $12.6 million in the fourth quarter 2012
  • Net income was $0.7 million compared to $7.5 million in the fourth quarter 2012, and Adjusted net income was $3.5 million compared to $9.4 million in the fourth quarter 2012
  • Diluted earnings per share were $0.03, compared to $0.36 in the fourth quarter 2012 and Adjusted diluted earnings per share were $0.16 compared to $0.45 in the fourth quarter 2012

For the year ended December 31, 2013:

  • Revenue increased 29.0% to $562.7 million from $436.3 million in 2012
  • EBITDA increased 13.4% to $62.2 million from $54.9 million, and Adjusted EBITDA increased 19.9% to$73.2 million from $61.1 million in 2012
  • Net income decreased 4.2% to $42.0 million compared to $43.9 million in 2012, and Adjusted net income increased 6.0% to $53.0 million compared to $50.0 million in 2012
  • Diluted earnings per share were $1.96, compared to $2.09 in 2012 and Adjusted diluted earnings per share were $2.48 compared to $2.39 in 2012

“While the fourth quarter proved to be more challenging than we expected there were several highlights, along with important lessons from the past year that give us confidence about the future,” said Daniel Birnbaum, Chief Executive Officer of SodaStream. “Our ability to grow revenue 29% to $563 million in 2013, including selling a record 4.4 million soda makers and increasing gas refill unit sales 30% to a record 21.5 million, underscores the high level of consumer interest and activity in home carbonation.  Our plan is to capitalize on our first mover advantage and leadership position by accelerating investments in brand building and demand creation in 2014 to capture a greater share of the global carbonated beverage market.  Importantly, we have moved quickly to implement measures and controls in order to restore gross margins to historical levels and prevent the issues that impacted fourth quarter profitability from recurring.  I’m confident we are on the right path towards achieving our primary goal of increasing household penetration.”

 

Fourth Quarter 2013 Financial Review
Geographical Revenue Breakdown
RevenueThree Months Ended
December 31,2012December 31,2013 Increase(decrease) Increase(decrease)
In Millions USD%
The Americas$62.8$72.7$9.916%
Western Europe51.971.619.738%
Asia-Pacific11.614.83.228%
Central & Eastern Europe, MiddleEast, Africa6.69.02.436%
Total$132.9$168.1$35.226%

 

Product Segment Revenue Breakdown
RevenueThree Months Ended
December 31,2012December 31,2013 Increase Increase
In millions USD%
Soda Maker Starter Kits$66.1$77.8$11.718%
Consumables64.887.823.035%
Other2.02.50.526%
Total$132.9$168.1$35.226%

 

Product Segment Unit Breakdown
Three Months Ended
December 31,2012December 31,2013 Increase Increase
In thousands%
Soda Maker Starter Kits1,1111,54243139%
CO2 Refills4,3085,3751,06725%
Flavors7,3629,7512,38932%

 

Gross margin for the fourth quarter  2013 was 42.4% compared to 53.0% for the same period in 2012. The decline was primarily attributable to lower average sell-in prices due largely to year end discounting and promotions, higher costs as the result of moving product between markets and channels combined with an increase in bundled promotional packs, a shift in product mix versus plan including lower CO2 refills and unfavorable changes in foreign currency exchange rates.

Sales and marketing expenses for the fourth quarter 2013 totaled $56.2 million, or 33.5% of revenue, compared to $52.8 million, or 39.7% of revenue for the comparable period in the prior year. The 620 basis point change in sales and marketing expenses as a percent of revenue was mainly attributable to a cost reduction in advertising and promotion expense as a percent of revenue to 16.8% from 22.7% in the fourth quarter 2012.

General and administrative expenses for the fourth quarter 2013 were $12.5 million, or 7.4% of revenue, compared to $10.2 million, or 7.6% of revenue in the comparable period of last year. The increase was mainly due to higher share-based compensation expense of $2.8 million in the quarter, compared to $1.9 million in the fourth quarter 2012, additional expenses related to our newly acquired Italian distributer as well as additional infrastructure to support growth, partially offset by a reduction in all other general and administrative expenses.

Operating income decreased 66.7% to $2.6 million, or 1.6% of revenue, compared to $7.9 million, or 5.9% of revenue in the fourth quarter 2012.

Tax expense was $0.3 million compared to tax expense of $0.1 million in the fourth quarter 2012. The increase in the tax expense was primarily due to geographic mix.

Balance Sheet Review

  • Cash and cash equivalents and bank deposits at December 31, 2013 were $40.9 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 $15.5 million of bank debt at December 31, 2013 mainly for financing the investment in its new production facility, compared to no bank debt at December 31, 2012.
  • Working capital at December 31, 2013 increased 63.3% to $155.4 million compared to $95.1 million atDecember 31, 2012. Inventories at December 31, 2013 increased 24.9% to $140.7 million compared to$112.7 million at December 31, 2012, mainly due to the overall growth of our business.

Guidance

  • The Company expects full year 2014 revenue to increase approximately 15% over 2013 revenue of$562.7 million.
  • The Company expects full year 2014 EBITDA to increase approximately 11% over 2013 EBITDA of$62.2 million. Excluding changes in foreign currency exchange rates compared to 2013, the Company expects 2014 EBITDA to increase approximately 25% over 2013.
  • The Company expects full year 2014 net income to increase approximately 3% over 2013 net income of$42.0 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 Standard Time (U.S. time) today (Wednesday, February 26, 2014) 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. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

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