SodaStream Reports First Quarter Fiscal 2018 Results

AIRPORT CITY, Israel, May 2, 2018 /PRNewswire/ -- SodaStream International Ltd. (NASDAQ: SODA), the leading manufacturer of home beverage carbonation systems, announced today its results for the quarterly period ended March 31, 2018.

For the quarter ended March 31, 2018:

• Revenue increased 24.6% to $143.6 million, compared to $115.3 million in the first quarter of 2017
• Operating income increased 34.4% to $21.3 million, compared to $15.9 million in the first quarter of 2017
• Net income increased 26.0% to $18.6 million, compared to $14.7 million in the first quarter of 2017
• Diluted earnings per share (EPS) increased 23.1% to $0.81 compared to $0.66 in the first quarter of 2017

"There were several positive takeaways from our start to the year," commented Daniel Birnbaum, Chief Executive Officer of SodaStream. "We delivered our ninth consecutive quarter of double-digit revenue growth, expanded gross margins by 250 basis points, and posted a significant increase in profitability. These strong year-over-year results were fueled by an acceleration in our Americas' business led by the U.S. and Canada, our 25th consecutive quarter of double-digit growth in Germany, continued meaningful progress in Asia-Pacific and changes in foreign currency exchange rates. The first quarter was also highlighted by the launch of our new distribution model in France, which we are confident will accelerate our household penetration in this large market going forward. The change in France created a difficult first quarter comparison for sparkling water maker sales as we transitioned the business from distributor to direct selling. Excluding France, global sparkling water units were up 9% year-over-year. Importantly, our global active user base continues to increase with gas refill units up 9% to 8.3 million -- also a first quarter record -- and flavor units returning to growth, increasing 4%. We are very excited by our current momentum and believe we are well positioned to capitalize on the many global growth opportunities that still lie ahead and continue creating value for our shareholders."

First Quarter 2018 Financial Review

 

                                                                                                                    

 

Revenue increased $28.3 million, or 24.6%, to $143.6 million compared to $115.3 million in the same period in 2017 driven by growth in most of the Company's geographic regions, primarily Germany, U.S., Canada and Australia. Changes in foreign currency exchange rates ("FX") positively impacted revenue by approximately $12.0 million, mainly driven by the strengthening of the Euro/U.S. Dollar exchange rate.

Gross margin increased 250 basis points to 55.2% compared to 52.7% for the same period in 2017. Gross margin was positively impacted by leveraging of our fixed infrastructure on higher revenue, the positive FX impact and changes in product mix, partially offset by an adverse impact on cost of revenue from the strengthening of the Israeli shekel against the U.S. Dollar. The net FX impact on gross profit was approximately $8.0 million.

Sales and marketing expenses were $43.3 million, or 30.2% of revenue, compared to $34.8 million, or 30.2% of revenue, in the same period in 2017, including the additional expenses associated with our new distribution model in France. Advertising and promotion expenses increased by $4.1 million to $20.5 million, or 14.2% of revenue, compared to $16.4 million, or 14.2% of revenue, in the same period in 2017. Sales team, distribution and logistics expenses were $22.8 million, or 15.9% of revenue, compared to $18.4 million, or 16.0% of revenue, in the same period in 2017.

General and administrative expenses increased $4.6 million to $14.6 million, or 10.2% of revenue, compared to $10.0 million, or 8.7% of revenue, in the same period in 2017. The increase was mainly due to higher share-based payment expense, additional expenses associated with the new French distribution model and the impact from FX.

Operating income increased 34.4% to $21.3 million, or 14.8% of revenue, compared to $15.9 million, or 13.8% of revenue, in the first quarter of 2017. The net positive FX impact on operating income was approximately $3.0 million.

Net financial expense was $0.5 million compared to net financial income of $1.1 million in the same period in 2017.

Tax expense was $2.3 million with an effective tax rate of 11.0%, compared to $2.2 million with an effective tax rate of 12.9% in the same period in 2017.

Net income was $18.6 million, or $0.81 per diluted share, based on 22.8 million weighted shares outstanding compared to net income of $14.7 million, or $0.66 per diluted share, based on 22.3 million weighted shares outstanding in the same period in 2017.

Balance Sheet Review

Cash and financial investments at March 31, 2018 decreased $7.0 million to $148.2 million from $155.2 million at December 31, 2017 mainly due to the acquisition of the French distributor for $21.9 million in February 2018.

Cash flow from operations less investing activities, excluding the acquisition of the Company's French distributor, financial investments and bank deposits, was $7.1 million compared to $29.3 million in the same period in 2017.

Working capital increased 21.5% to $160.6 million compared to $132.3 million at December 31, 2017. Inventories increased 22.4% to $118.8 million compared to $97.1 million at December 31, 2017, primarily reflecting additional inventory associated with the acquisition of the French distributor's inventory and the Company's strong top-line growth.

Guidance

For 2018, the Company currently expects full year revenue to increase approximately 15% over 2017 revenue, up from its previous guidance of approximately 12%.

Operating income for 2018 is expected to increase approximately 15% over 2017 operating income, compared to previous guidance of approximately 10%.

Diluted earnings per share is now expected to increase approximately 8% over 2017. This compares to the previous guidance for diluted earnings per share to increase approximately 5%.

This guidance currently projects an increase in share-based payment expense of approximately $12.0 million over 2017, up from previous guidance of approximately $9.0 million.

Conference Call and Management Commentary

A supplemental slide presentation has been furnished as part of today's report of a foreign private issuer on a Form 6-K and will be posted on the Company's website at http://sodastream.investorroom.com.

The Company has scheduled a conference call for 8:30 a.m. Eastern Standard Time (U.S. time) today (Wednesday, May 2, 2018) 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 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. Our products promote health and wellness, are environmentally friendly, cost effective, customizable and fun to use. Our products are available at more than 80,000 individual 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 Adjusted EBITDA which is a non-IFRS measure. Adjusted EBITDA represents earnings before interest, other components of financial expense (income), income tax, depreciation and amortization. Non-IFRS measures should be considered in addition to results prepared in accordance with IFRS and should not be considered a substitute for the IFRS results. A reconciliation of Adjusted EBITDA to net income, the most closely comparable IFRS measure, is included at the end of this press release.

We believe that Adjusted EBITDA, as described above, should be considered in evaluating the Company's operations. This measure 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). Non-IFRS measures should be considered in addition to results prepared in accordance with IFRS and should not be considered a substitute for the IFRS results. A reconciliation of Adjusted EBITDA to Net income, the most closely comparable IFRS measure, is included at the end of this press release. In addition, Adjusted EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.

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, 2017 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 FreyICRPhone: + 1 203-682-8200 [email protected]

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE SodaStream International, Ltd.