SODASTREAM INTERNATIONAL LTD AIRPORT CITY, Israel, Aug. 5, 2015 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), the leading manufacturer of home beverage carbonation systems, announced today its results for the three and six month periods ended June 30, 2015.
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For the second quarter ended June 30, 2015, on an adjusted basis*
-- Adjusted revenue was $101.7 million compared to $141.2 million in the
second quarter 2014; Adjusted revenue on a constant currency basis was
$118.6 million
-- Adjusted operating income was $4.5 million compared to $11.2 million in
the second quarter 2014; Adjusted operating income on a constant
currency bases was $9.0 million.
-- Adjusted EBITDA was $8.9 million compared to $14.5 million in the second
quarter 2014
-- Adjusted net income was $3.5 million compared to $9.2 million in the
second quarter 2014
-- Adjusted diluted earnings per share were $0.17 compared to $0.43 in the
second quarter 2014
-- CO2 refills reached an all-time quarterly record of 6.9 million
*Adjusted revenue, Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-IFRS financial measures that eliminate the effect of restructuring costs, which include $2.6 million of pre-tax charges incurred as part of the Company's restructuring and growth plan announced on October 29, 2014. The charges were related to activities associated with discontinued products, which decreased revenue by $1.8 million and increased cost of revenue by $0.3 million. An additional expense of $0.5 million was associated with the transition to the new plant in Southern Israel which increased cost of revenue. Adjusted EBITDA represents earnings before financial income, income tax, depreciation and amortization, and further eliminates the effect of restructuring costs.
"Our second quarter performance was in-line with our expectations. As we previously discussed, the first half of 2015 would be a challenging period due to implementation of our global restructuring and growth plan combined with changes in foreign currency exchange rates. That said, we are proud to have achieved an all-time record of CO2 refills, which is a testimony of our consumers' loyalty and our overall Q2 performance masks the ongoing strength of our business in key markets led by Germany, Switzerland and Austria" said Daniel Birnbaum, Chief Executive Officer of SodaStream. "We are making tremendous progress toward repositioning as a "water brand" behind a health and wellness positioning. Our new portfolio of better-for-you sparkling water flavors is currently rolling out to retailers around the world and we are testing a new marketing campaign "Sparkling Waters - Made by You", including TV in several cities in the United States. At the same time the consolidation of our production activities into our new state-of-the-art plant in Lehavim continues ahead of schedule. We are confident that our new strategic direction supported by a terrific and unique product portfolio and marketing plan, will fuel increased household penetration and user activity and deliver sustainable growth and increased profitability in the years ahead."
Second Quarter 2015 Financial Review
(The financial review relates to the Non-IFRS Consolidated Statements of Operations. All USD values are in accordance with IFRS unless stated otherwise.)
Geographical Revenue Breakdown
Adjusted Revenue Three Months Ended
---------------- ------------------
June 30, 2014 June 30, 2015 (Decrease) (Decrease)
------------- ------------- --------- ---------
In Millions USD %
--------------- ---
Western Europe $77.7 $65.1 $(12.6) (16)%
The Americas 40.9 23.1 (17.8) (44)%
Asia-Pacific 12.2 9.1 (3.1) (26)%
Central & Eastern Europe, Middle East, Africa 10.4 4.4 (6.0) (58)%
---- --- ---- ----
Total $141.2 $101.7 $(39.5) (28)%
Product Segment Revenue Breakdown
Adjusted Revenue Three Months Ended
---------------- ------------------
June 30, 2014 June 30, 2015 (decrease) (decrease)
------------- ------------- --------- ---------
In millions USD %
--------------- ---
Sparkling Water Maker Starter Kits $45.8 $29.7 $(16.1) (35)%
Consumables 90.8 68.3 (22.5) (25)%
Other 4.6 3.7 (0.9) (21)%
--- --- ---- ----
Total $141.2 $101.7 $(39.5) (28)%
Product Segment Unit Breakdown Three Months Ended
------------------------------ ------------------
June 30, 2014 June 30, 2015 Increase Increase
(decrease) (decrease)
--------- ---------
In thousands %
------------ ---
Sparkling Water Maker Starter Kits 785 491 (294) (37)%
CO2 Refills 6,507 6,939 432 7%
Flavors 9,297 5,075 (4,222) (45)%
The decrease in Adjusted revenue compared to the second quarter 2014 was mainly due to changes in foreign currency exchange rates which reduced revenue by $16.9 million. Since the same period a year ago, several foreign currencies have weakened versus the U.S. dollar including the Euro by 19%, the Australian Dollar by 17% and the Swedish Krona by 22%. Second quarter 2015 results also reflect lower demand for sparkling water makers and flavors mainly in the U.S. and France.
Gross margin for the second quarter 2015 (before the impact of restructuring costs) was 50.3% compared to 50.5% for the same period in 2014. Second quarter 2015 gross margin benefitted from higher share of CO2 refills in product mix, offset by the negative impact from changes in foreign currency exchange rates versus the same period last year.
Sales and marketing expenses for the second quarter 2015 totaled $35.1 million, or 34.5% of Adjusted revenue, compared to $46.9 million, or 33.3% for the comparable period in the prior year. The decrease was primarily attributable to lower advertising and promotion expenses, which decreased $7.5 million to 13.3% of Adjusted revenue from 14.9% of revenue in the same period in 2014, and lower distribution costs due to the lower sales volume. Selling and marketing expenses also decreased versus the same period last year due to the changes in foreign currency rates, mainly the weakening of the Euro/U.S. Dollar average exchange rate by 19% and the Israeli Shekel/U.S. Dollar average exchange rate by 11% versus the same period last year.
General and administrative expenses for the second quarter 2015 were $11.5 million, or 11.3% of Adjusted revenue, compared to $13.1 million, or 9.3% of revenue in the comparable period of last year. The decrease was mainly due to a decrease in share-based payment expenses.
Operating income (before the impact of restructuring costs) decreased to $4.5 million, or 4.5% of Adjusted revenue, compared to $11.2 million, or 8.0% of revenue, in the second quarter 2014. The decrease in operating income was driven primarily by the decrease in revenue and the negative impact from changes in foreign currency exchange rates, offset by lower operating expenses, mainly a reduction in advertising and promotion expenses.
The net negative impact on operating income from changes in foreign currency exchange rates in comparison with the same period in 2014 was approximately $4.5 million.
Net financial expense was $0.6 million compared to net financial expense of $0.9 million in the same period in 2014. Financial expense in the second quarter 2015 was derived mainly from an increase in the value of Euro denominated bank loans.
Tax expense was $0.4 million with an effective tax rate of 29.5%, compared to $1.1 million with an effective tax rate of 10.6% in the second quarter 2014.
Balance Sheet Review
Cash and cash equivalents at June 30, 2015 were $33.4 million compared to $46.9 million at December 31, 2014. The decrease is primarily attributable to the investment in the Company's new production facility.
The Company had $39.3 million of bank debt at June 30, 2015 mainly for financing the investment in its new production facility, compared to $43.9 million of bank debt at December 31, 2014.
Working capital at June 30, 2015, after the impact of the restructuring, decreased by 7.9% to $146.2 million compared to $158.8 million at December 31, 2014. Inventories at June 30, 2015 decreased by 7.0% to $128.8 million compared to $138.4 million at December 31, 2014.
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, August 5, 2015) 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 is the world's leading manufacturer and distributor of Sparkling Water Makers, which enable consumers to easily transform ordinary tap water into sparkling water and flavored sparkling water in seconds. By making ordinary water more exciting and fun to drink, SodaStream helps consumers drink more water. Sparkling Water Makers offer a highly differentiated and innovative solution to consumers of bottled and canned carbonated soft drinks. The products promote health and wellness, are environmentally friendly, cost effective, and are customizable and fun to use. Products are available at more than 70,000 retail stores across 45 countries, including approximately 13,000 retail stores in the United States. To learn more about how SodaStream makes water exciting and follow SodaStream on Facebook, Twitter, Pinterest, Instagram and YouTube, visit http://www.sodastream.com.
Non-IFRS Financial Measures
This press release contains certain non-IFRS measures, including Adjusted revenue, Adjusted net income, Adjusted EBITDA, and Adjusted diluted earnings per share ("Adjusted diluted EPS").
Adjusted EBITDA represents earnings before financial expense (income), income tax, depreciation and amortization, and further eliminates the effect of restructuring costs. Adjusted revenue, Adjusted net income and Adjusted diluted earnings per share eliminate the effect of restructuring costs.
The Company believes that the Adjusted revenue, Adjusted net income, Adjusted EBITDA and Adjusted diluted EPS, as described above, should be considered in evaluating the Company's operations. Adjusted revenue, Adjusted net income, Adjusted EBITDA and Adjusted diluted EPS exclude restructuring costs because most of this charge 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 financial expenses (income), net), tax positions (such as the impact on periods or companies of changes in effective tax rates) and the age and depreciation charges 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.
Forward Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include information about possible or assumed future results of our business and financial condition, as well as the results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," or the negative of these terms or other similar expressions: 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 maintain or expand sales in our target markets, including the United States; our ability to maintain or continue to develop 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; our ability to maintain margins due to decline in product selling price and/or rising costs; 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 discussed under the heading "Risk Factors" in the Annual Report on the Form 20-F for the year ended December 31, 2014 and other documents filed with or furnished to the Securities and Exchange Commission. 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.
Investor Contact:
Brendon Frey
ICR
Phone: + 1 203-682-8200
brendon.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,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Revenues $259,343 $190,178 $141,171 $99,834
Cost of revenues 126,240 96,200 69,914 51,307
------- ------ ------ ------
Gross profit 133,103 93,978 71,257 48,527
Operating expenses
Sales and marketing 93,087 67,579 46,941 35,118
General and administrative 26,427 23,097 13,072 11,456
------ ------ ------ ------
Total operating expenses 119,514 90,676 60,013 46,574
------- ------ ------ ------
Operating income 13,589 3,302 11,244 1,953
Interest expense, net 333 126 286 92
Other financial expense (income), net 792 (5,202) 620 500
--- ------ --- ---
Total financial expense (income), net 1,125 (5,076) 906 592
----- ------ --- ---
Income before income taxes 12,464 8,378 10,338 1,361
Income tax expense 1,443 1,371 1,095 401
----- ----- ----- ---
Net income for the period $11,021 $7,007 $9,243 $960
======= ====== ====== ====
Net income per share
Basic $0.53 $0.33 $0.44 $0.05
===== ===== ===== =====
Diluted $0.52 $0.33 $0.43 $0.05
===== ===== ===== =====
Weighted average number of shares
Basic 20,933 21,025 20,958 21,032
====== ====== ====== ======
Diluted 21,274 21,095 21,271 21,138
====== ====== ====== ======
Consolidated
Balance
Sheets as
of
December 31, June 30,
------------ --------
2014 2015
---- ----
(Audited) (Unaudited)
-------- ----------
(In thousands)
-------------
Assets
Cash and
cash
equivalents $46,880 $33,418
Inventories 138,392 128,756
Trade
receivables 94,217 69,361
Other
receivables 34,789 30,098
Derivative
financial
instruments 1,035 2,641
----- -----
Total
current
assets 315,313 264,274
Property,
plant and
equipment 124,817 144,416
Intangible
assets 44,389 43,240
Deferred
tax
assets 2,506 3,872
Other
receivables 273 442
--- ---
Total non-
current
assets 171,985 191,970
Total
assets 487,298 456,244
======= =======
Liabilities
Loans and
borrowings 9,239 17,658
Derivative
financial
instruments 491 -
Trade
payables 67,011 39,278
Income tax
payable 11,740 11,801
Provisions 2,469 2,706
Other
current
liabilities 27,882 30,835
------ ------
Total
current
liabilities 118,832 102,278
Loans and
borrowings 34,645 21,639
Employee
benefits 2,174 1,965
Other non-
current
liabilities 122 161
Deferred
tax
liabilities 750 718
--- ---
Total non-
current
liabilities 37,691 24,483
Total
liabilities 156,523 126,761
Shareholders'
equity
Share
capital 3,400 3,405
Share
premium 198,918 201,497
Translation
reserve (14,908) (25,791)
Retained
earnings 143,365 150,372
------- -------
Total
shareholders'
equity 330,775 329,483
Total
liabilities
and
shareholders'
equity $487,298 $456,244
======== ========
Consolidated Statements of Cash Flows
For the six months ended For the three months ended
------------------------ --------------------------
June 30, June 30,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Cash flows from operating activities
Net income for the period $11,021 $7,007 $9,243 $960
Adjustments:
Amortization of intangible assets 1,261 1,858 749 929
Change in fair value of derivative financial instruments 264 (3,840) (144) (34)
Exchange rate differences on Short-term loans and borrowing - (1,340) - (383)
Exchange rate differences on long-term loans and borrowing - (3,235) - 665
Depreciation of property, plant and equipment 6,091 6,470 2,467 3,456
Restructuring costs - 4,533 - 2,220
Share based payment 4,537 2,431 2,231 1,298
Interest expense, net 333 126 286 92
Income tax expense 1,443 1,371 1,095 401
----- ----- ----- ---
24,950 15,381 15,927 9,604
Decrease (increase) in inventories (3,945) 5,056 (1,477) 3,572
Decrease (increase) trade and other receivables 13,853 19,223 (10,854) (4,635)
Increase (decrease) in trade payables (29,587) (26,818) (5,515) 3,147
Increase (decrease) in employee benefits 19 (115) 129 (221)
Increase in provisions and other liabilities 1,766 4,456 5,631 3,800
----- ----- ----- -----
7,056 17,183 3,841 15,267
Interest paid (329) (165) (293) (124)
Income tax received 710 266 347 16
Income tax paid (3,939) (3,205) (3,257) (1,149)
------ ------ ------ ------
Net cash from operating activities 3,498 14,079 638 14,010
Cash flows from investing activities
Interest received 27 39 22 32
Proceeds from investment grants - 2,252 - -
Proceeds from (payment for) derivative financial instruments, net (1,248) 1,743 (588) 834
Acquisition of property, plant and equipment (28,211) (28,585) (12,527) (14,844)
Acquisition of intangible assets (2,546) (1,851) (2,183) (861)
------ ------ ------ ----
Net cash used in investing activities (31,978) (26,402) (15,276) (14,839)
Cash flows from financing activities
Proceeds from exercise of employee share options 741 153 288 143
Repayments of long-term loans and borrowings - (12,352) - (1,668)
Change in short-term debt 23,167 12,340 14,611 (5,090)
------ ------ ------ ------
Net cash from (used in) financing activities 23,908 141 14,899 (6,615)
Net decrease in cash and cash equivalents (4,572) (12,182) 261 (7,444)
Cash and cash equivalents at the beginning of the period 40,885 46,880 36,052 40,563
Effect of exchange rates fluctuations on cash and cash equivalents (69) (1,280) (69) 299
--- ------ --- ---
Cash and cash equivalents at the end of the period $36,244 $33,418 $36,244 $33,418
======= ======= ======= =======
Information about Adjusted revenue in reportable segments
Western
Europe The Americas Asia-Pacific Central & Total
Eastern Europe,
Middle East,
Africa
------
(In thousands)
-------------
Six months ended:
June 30, 2014 (Unaudited) $140,216 75,637 24,131 19,359 $259,343
June 30, 2015 (Unaudited) 119,733 45,864 18,043 9,358 $192,998
Three months ended:
June 30, 2014 (Unaudited) $77,666 40,879 12,225 10,401 $141,171
June 30, 2015 (Unaudited) $65,098 23,069 9,078 4,409 $101,654
The following tables present the Company's Adjusted 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,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Adjusted revenue
----------------
(in thousands)
-------------
Sparkling Water Maker starter kits (including exchange cylinders) $78,070 $57,265 $45,846 $29,735
Consumables 173,623 131,251 90,699 68,261
Other 7,650 4,482 4,626 3,658
----- ----- ----- -----
Total $259,343 $192,998 $141,171 $101,654
======== ======== ======== ========
Six months ended Three months ended
June 30, June 30,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
---------- ---------- ----------
As a percentage of adjusted revenue
-----------------------------------
Sparkling Water Maker starter kits (including exchange cylinders) 30.1% 29.7% 32.5% 29.3%
Consumables 66.9% 68.0% 64.2% 67.2%
Other 3.0% 2.3% 3.3% 3.5%
--- --- --- ---
Total 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
The following table provides a reconciliation of Non-IFRS to IFRS
financial data for the three months ended June 30, 2015:
Non-IFRS Restructuring IFRS
-------- ------------- ----
In Thousands USD
----------------
Revenue $101,654 $(1,820) $99,834
Cost of
revenue 50,548 759 51,307
------ --- ------
Gross
profit 51,106 (2,579) 48,527
Operating
income 4,532 (2,579) 1,953
Net income
for the
period $3,539 $(2,579) $960
Net income
per share
Basic and
diluted
(in USD) 0.17 (0.12) 0.05
EBITDA
Six months ended Three months ended
June 30, June 30,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
(Unaudited)
(In thousands)
-------------
Reconciliation of Net Income to EBITDA
Net income $11,021 $7,007 $9,243 $960
Financial expenses (income), net (*) 1,125 (5,076) 906 592
Income tax expense (tax benefit) 1,443 1,371 1,095 401
Depreciation and amortization 7,352 8,328 3,216 4,385
----- ----- ----- -----
EBITDA $20,941 $11,630 $14,460 $6,338
======= ======= ======= ======
Restructuring - 4,892 - 2,579
--- ----- --- -----
20,941 16,522 14,460 8,917
Adjusted EBITDA
(*) Starting in Q1 2015, the Company presents EBITDA excluding total financial expense (income), net, as opposed to 2014 in which EBITDA was presented excluding only interest expense. Three months ended June 30, 2014 and six months ended June 30, 2014 EBITDA were also adjusted to exclude total financial expense.
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SOURCE SodaStream International Ltd.
