SODASTREAM INTERNATIONAL LTD AIRPORT CITY, Israel, Nov. 10, 2016 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), the world's leading manufacturer of home beverage carbonation systems, announced today its results for the three and nine month periods ended September 30, 2016.
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For the third quarter ended September 30, 2016, compared to adjusted third quarter 2015 results*:
-- Revenue increased 12.9% to $124.2 million compared to $110.0 million in
the third quarter 2015
-- EBITDA increased 140.6% to $23.3 million compared to $9.7 million
adjusted EBITDA in the third quarter 2015
-- Net income increased 217.4% to $14.9 million compared to $4.7 million in
the third quarter 2015
-- Diluted earnings per share increased to $0.69 compared to $0.22 in the
third quarter 2015
"We delivered very strong third quarter results highlighted by double digit revenue growth and record high operating income," commented Daniel Birnbaum, Chief Executive Officer of SodaStream. "Our top-line performance included a 23% increase in sparkling water maker unit sales to 788,000, our highest quarterly figure in nearly two years, underscoring the growing strength of our business. We believe that repositioning the SodaStream brand around sparkling water combined with effective marketing programs is setting the foundation for an acceleration in household penetration in each of our geographic regions. During the third quarter, our home carbonation system was used to produce and consume more sparkling water than any other brand worldwide, which resulted in an all-time quarterly record 7.7 million gas refills. Importantly, we are driving growth in a highly profitable manner and generating strong free cash flow following the recent consolidation of our manufacturing, logistics and distribution activities and expense optimization efforts. With significant growth opportunities ahead of us, we are very excited about the future of the business."
Third Quarter 2016 Financial Reviews
Geographical Revenue Breakdown
Three Months Ended
------------------
September 30, September 30, Increase Increase
2015 2016
---- ----
In Millions USD %
--------------- ---
Western Europe $68.5 $74.7 $6.2 9%
The Americas 26.2 29.8 3.6 14%
Asia-Pacific 9.0 12.9 3.9 43%
Central & Eastern Europe, Middle East, Africa 6.3 6.8 0.5 9%
--- --- --- ---
Total $110.0 $124.2 $14.2 13%
Product Segment Revenue Breakdown
Three Months Ended
------------------
September 30, September 30, Increase Increase
2015 2016
(decrease) (decrease)
--------- ---------
In millions USD %
--------------- ---
Sparkling Water Maker Starter Kits $34.2 $45.5 $11.3 33%
Consumables 73.9 76.9 3.0 4%
Other 1.9 1.8 (0.1) (4)%
--- --- ---- ---
Total $110.0 $124.2 $14.2 13%
* The comparable third quarter 2015 gross margin, operating and net income data, EBITDA and diluted earnings per share on pages 1-2 and 7-8 of this press release relate to Adjusted Non-IFRS measures. See "Non-IFRS Financial measures" on page 3. See also "IFRS to Non-IFRS
Bridge" in CFO's commentary for explanations of differences between the two periods and relevant adjustments.
Product Segment Unit Breakdown Three Months Ended
------------------------------ ------------------
September 30, September 30, Increase Increase
2015 2016
(decrease) (decrease)
--------- ---------
In thousands %
------------ ---
Sparkling Water Maker Starter Kits 639 788 149 23%
CO2 Refills 7,021 7,673 652 9%
Flavors 6,726 5,463 (1,263) (19)%
Revenue increased $14.2 million, or 12.9%, to $124.2 million compared to $110.0 million in the same period in 2015 driven by increased consumer demand for sparkling water makers and consumables mainly in Germany, Japan, Australia, the Nordics, the U.S. and Canada.
Gross margin* increased 340 basis points to 51.8% compared to 48.4% for the same period in 2015 mainly due production optimization in the Lehavim plant and price increases partially offset by a higher portion of sparkling water makers in the product mix.
Sales and marketing expenses were $34.9 million, or 28.1% of revenue, compared to $36.0 million, or 32.8% in the same period in 2015. Advertising and promotion expenses decreased by $0.6 million to $15.2 million, or 12.2% of revenue, compared to $15.8 million, or 14.3% of revenue, in the same period in 2015. Other selling expenses decreased by $0.5 million to $19.7 million, or 15.9% of revenue, compared to $20.3 million, or 18.4% of revenue, in the same period in 2015, primarily driven by ongoing expenses optimization activities.
General and administrative expenses decreased $0.9 million to $10.8 million, or 8.7% of revenue, compared to $11.8 million, or 10.7% of revenue in the same period in 2015.
Operating income* increased 243.0% to $18.6 million, or 14.9% of revenue, compared to $5.4 million, or 4.9% of revenue, in the third quarter 2015.
Currency exchange rates had no material impact in comparison with the same period in 2015.
Net financial expense was $0.2 million compared to net financial income of $0.1 million in the same period in 2015.
Tax expense was $3.4 million with an effective tax rate of 18.8%, compared to $0.8 million with an effective tax rate of 26.0% in the same period in 2015. The effective tax rate results from the earnings distribution between the taxable entities of the group.
Balance Sheet and Cash Flow Review
Cash and short-term deposits less bank debt at September 30, 2016 increased $46.2 million to a net cash position of $43.9 million compared to a net debt position of $2.3 million at December 31, 2015.
Net cash from operating activities minus capital expenditures was positive at $26.2 million in the third quarter 2016 compared to $1.2 million in the same period in 2015. Free cash flow for the nine months ended September 30, 2016 was positive at $45.3 million compared to a negative free cash flow of $12.9 million for the same period in 2015.
Working capital decreased 13.3% to $122.0 million compared to $140.7 million at December 31, 2015. Inventories decreased 9.4% to $102.3 million compared to $113.0 million at December 31, 2015.
Conference Call and Management Commentary
A detailed CFO commentary and a supplemental slide presentation have been furnished as exhibits to today's report of a foreign private issuer on a Form 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 (Thursday, November 10, 2016) 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 #1 sparkling water brand in volume in the world and the leading manufacturer and distributor of Sparkling Water Makers. We enable consumers to easily transform ordinary tap water into sparkling water and flavored sparkling water in seconds. By making ordinary water fun and exciting 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. 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 the following Non-IFRS measures: Adjusted revenue, Adjusted gross margin, Adjusted operating income, 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 and impairment of other intangible assets. Adjusted revenue, Adjusted gross margin, Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share eliminate the effect of restructuring costs.
The Company believes that the Adjusted revenue, Adjusted gross margin, Adjusted operating income, Adjusted net income, Adjusted EBITDA and Adjusted diluted EPS, as described above, should be considered in evaluating the Company's operations. Adjusted revenue, Adjusted gross margin, Adjusted operating income, Adjusted net income and Adjusted diluted EPS exclude restructuring costs and Adjusted EBITDA exclude restructuring costs and impairment of other intangible assets because most of this charge is a non-cash expense and does not reflect the performance of the Company's underlying business and operations. In addition, Adjusted EBITDA facilitates operating performance comparisons from period to period 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), the age and depreciation charges and amortization of fixed and intangible assets (affecting relative depreciation and amortization expense, respectively).
These measures should be considered in addition to results prepared in accordance with IFRS, and 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, see "IFRS to Non-IFRS Bridge" in CFO's commentary.
Forward Looking Statements
This press 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, 2015 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 nine months ended For the three months ended
------------------------- --------------------------
September 30, September 30,
------------- -------------
2015 2016 2015 2016
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Revenues $300,193 $344,265 $110,015 $124,228
Cost of revenues 155,455 168,285 59,255 59,889
------- ------- ------ ------
Gross profit 144,738 175,980 50,760 64,339
Operating expenses
Sales and marketing 103,610 105,636 36,031 34,943
General and administrative 34,869 32,383 11,772 10,833
Other expenses - 2,327 - -
--- ----- --- ---
Total operating expenses 138,479 140,346 47,803 45,776
------- ------- ------ ------
Operating income 6,259 35,634 2,957 18,563
Interest expense (income), net 64 369 (62) 115
Other financial expense (income), net (5,212) 945 (10) 95
------ --- --- ---
Total financial expense (income), net (5,148) 1,314 (72) 210
------ ----- --- ---
Income before income taxes 11,407 34,320 3,029 18,353
Income tax expense 2,158 5,502 787 3,443
----- ----- --- -----
Net income for the period $9,249 $28,818 $2,242 $14,910
====== ======= ====== =======
Net income per share
Basic $0.44 $1.36 $0.11 $0.70
===== ===== ===== =====
Diluted $0.44 $1.35 $0.11 $0.69
===== ===== ===== =====
Weighted average number of shares
Basic 21,030 21,145 21,041 21,198
====== ====== ====== ======
Diluted 21,111 21,297 21,118 21,701
====== ====== ====== ======
Consolidated Balance
Sheets as of
December 31, September 30,
------------ -------------
2015 2016
---- ----
(Audited) (Unaudited)
-------- ----------
(In thousands)
-------------
Assets
Cash and cash
equivalents $34,534 $53,857
Bank deposits - 7,000
Inventories 112,973 102,323
Trade receivables 76,566 74,042
Other receivables 29,099 25,767
Assets classified as
held for sale - 1,484
Derivative financial
instruments 631 1,048
--- -----
Total current assets 253,803 265,521
Property, plant and
equipment 155,294 167,042
Intangible assets 42,095 38,859
Deferred tax assets 1,106 4,016
Other receivables 431 2,930
--- -----
Total non-current
assets 198,926 212,847
Total assets 452,729 478,368
======= =======
Liabilities
Loans and borrowings 11,917 5,637
Trade payables 50,549 50,161
Income tax payable 7,505 9,036
Provisions 2,407 2,901
Other current
liabilities 18,118 20,599
------ ------
Total current
liabilities 90,496 88,334
Loans and borrowings 24,905 11,273
Employee benefits 2,152 2,420
Other non-current
liabilities 156 185
Deferred tax
liabilities 832 2,733
--- -----
Total non-current
liabilities 28,045 16,611
Total liabilities 118,541 104,945
Shareholders' equity
Share capital 3,414 3,438
Share premium 205,527 210,934
Translation reserve (29,993) (25,007)
Retained earnings 155,240 184,058
------- -------
Total shareholders'
equity 334,188 373,423
Total liabilities
and shareholders'
equity $452,729 $478,368
======== ========
Consolidated Statements of Cash Flows
For the nine months ended For the three months ended
------------------------- --------------------------
September 30, September 30,
------------- -------------
2015 2016 2015 2016
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Cash flows from operating activities
Net income for the period $9,249 $28,818 $2,242 $14,910
Adjustments:
Depreciation of property, plant and equipment 9,822 10,926 3,352 3,930
Amortization of intangible assets 2,765 2,596 907 775
Impairment of other intangible assets - 1,830 - -
Restructuring costs 6,536 - 2,003 -
Change in fair value of derivative financial instruments (3,040) 626 800 58
Exchange rate differences on Short-term loans and borrowing (1,386) - (46) -
Exchange rate differences on long-term loans and borrowing (2,870) 642 365 243
Share based payment 3,765 3,513 1,334 1,032
Interest expense (income), net 64 369 (62) 115
Income tax expense 2,158 5,502 787 3,443
----- ----- --- -----
27,063 54,822 11,682 24,506
Decrease in inventories 10,117 11,825 5,061 3,037
Decrease (increase) trade receivables and other receivables 17,373 2,615 (1,850) (1,159)
Increase (decrease) in trade payables and other liabilities (21,043) 1,267 1,556 3,214
Increase (decrease) in employee benefits (41) 215 74 39
Increase (decrease) in provisions 153 494 (84) 748
--- --- --- ---
33,622 71,238 16,439 30,385
Interest paid (182) (428) (17) (135)
Income tax received 549 207 283 162
Income tax paid (5,508) (5,225) (2,303) (413)
------ ------ ------ ----
Net cash from operating activities 28,481 65,792 14,402 29,999
Cash flows from investing activities
Interest received 118 60 79 21
Investment in bank deposits - (7,000) - (7,000)
Proceeds from investment grants 2,252 2,828 - 2,828
Proceeds from (payment for) derivative financial instruments, net 2,571 (1,043) 828 (168)
Acquisition of property, plant and equipment (40,793) (21,828) (12,208) (6,049)
Acquisition of intangible assets (2,825) (1,525) (974) (561)
------ ------ ---- ----
Net cash used in investing activities (38,677) (28,508) (12,275) (10,929)
Cash flows from financing activities
Proceeds from exercise of employee share options 153 1,918 - 1,199
Repayments of long-term loans and borrowings (14,026) (17,693) (1,674) (7,529)
Change in short-term debt 22,013 (2,861) 9,673 -
------ ------ ----- ---
Net cash from (used in) financing activities 8,140 (18,636) 7,999 (6,330)
Net increase (decrease) in cash and cash equivalents (2,056) 18,648 10,126 12,740
Cash and cash equivalents at the beginning of the period 46,880 34,534 33,418 40,943
Effect of exchange rates fluctuations on cash and cash equivalents (1,344) 675 (64) 174
------ --- --- ---
Cash and cash equivalents at the end of the period $43,480 $53,857 $43,480 $53,857
======= ======= ======= =======
Information about revenue in reportable segments
Western Europe The Americas Asia-Pacific Central & Total
Eastern Europe,
Middle East,
Africa
------
(In thousands)
-------------
Nine months ended:
September 30, 2015* (Unaudited) $188,238 72,098 27,040 15,637 $303,013
September 30, 2016 (Unaudited) 211,676 78,694 34,733 19,162 $344,265
Three months ended:
September 30, 2015 (Unaudited) $68,505 26,234 8,997 6,279 $110,015
September 30, 2016 (Unaudited) $74,675 29,831 12,893 6,829 $124,228
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,
------------- -------------
2015* 2016 2015 2016
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Revenue
-------
(in thousands)
-------------
Sparkling Water Maker starter kits $ **90,215 $114,090 $34,234 $45,463
(including exchange cylinders)
Consumables **204,584 223,014 73,882 76,938
Other **8,214 7,161 1,899 1,827
------- ----- ----- -----
Total $303,013 $344,265 $110,015 $124,228
======== ======== ======== ========
* The comparable revenue for the nine months ended September 30, 2015 relate to Adjusted Non-IFRS measures.
** Reclassified
Nine months ended Three months ended
September 30, September 30,
------------- -------------
2015 2016 2015 2016
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
---------- ---------- ----------
As a percentage of revenue
--------------------------
Sparkling Water Maker starter kits 29.8% 33.1% 31.1% 36.6%
(including exchange cylinders)
Consumables 67.5% 64.8% 67.2% 61.9%
Other 2.7% 2.1% 1.7% 1.5%
--- --- --- ---
Total 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
EBITDA
Nine months ended Three months ended
September 30, September 30,
------------- -------------
2015 2016 2015 2016
---- ---- ---- ----
(Unaudited)
(In thousands)
-------------
Reconciliation of Net
Income to EBITDA
Net income $9,249 $28,818 $2,242 $14,910
Financial income, net (5,148) 1,314 (72) 210
Income tax expense 2,158 5,502 787 3,443
Depreciation and
amortization 12,587 13,522 4,259 4,705
------ ------ ----- -----
EBITDA $18,846 $49,156 $7,216 $23,268
======= ======= ====== =======
Restructuring 7,347 - 2,455 -
Impairment of other
intangible asset - 1,830 - -
--- ----- --- ---
Adjusted EBITDA 26,193 50,986 9,671 23,268
====== ====== ===== ======
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SOURCE SodaStream International Ltd.
