SodaStream Reports Third Quarter Fiscal 2016 Results

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.

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."

 

 

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  [email protected]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE SodaStream International Ltd.