SodaStream Reports Record Third Quarter Results

               SodaStream Reports Record Third Quarter Results

Third Quarter Revenue Increased to $112.5 Million

Third Quarter Net Income Increased to $16.8 Million

Third Quarter Diluted Earnings Per Share Increased to $0.80

Third Quarter Adjusted Diluted Earnings Per Share Increased to $0.87

PR Newswire

AIRPORT CITY, Israel, Nov. 7, 2012

AIRPORT CITY, Israel, Nov. 7, 2012 /PRNewswire/ --SodaStream International
Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation
systems, announced today its results for the three and nine month periods
ended September 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20121107/NY07412LOGO )

For the third quarter ended September 30, 2012:

  oTotal revenue increased 48.7% to $112.5 million from $75.7 million in the
    third quarter 2011.
  oNet income increased 65.9% to $16.8 million compared to $10.1 million a
    year ago, and Adjusted net income was $18.2 million compared to $11.5
    million last year.
  oDiluted earnings per share increased 66.7% to $0.80, compared to $0.48 in
    the third quarter 2011 and Adjusted diluted earnings per share were $0.87
    compared to $0.55 a year ago.

"We had another very strong quarter highlighted by gains in all geographic
regions and product categories with demand well ahead of our expectations"
said Daniel Birnbaum, Chief Executive Officer of SodaStream. "Our growth
strategies have yielded excellent financial results year-to-date and position
the Company for continued expansion in 2013 and beyond. We enter the fourth
quarter with strong momentum, especially in the U.S. where we've quickly built
a powerful distribution network for our expanding portfolio of soda makers and
consumables. Our newest flagship soda maker, the Source, is set to debut at
select retailers worldwide. With its modern design and innovative
functionality, we believe the Source is a transformational product that will
broaden appeal of our entire system and help drive household penetration to a
new level. To leverage our enhanced product portfolio and broad distribution,
we are launching our first global branding campaign that highlights the
revolutionary essence of SodaStream and challenges the traditional beverage
industry. The progress we've made leading the growth of our category worldwide
has put the Company on track to deliver significant value for our shareholders
in the years ahead."

Third Quarter 2012 Financial Review
Geographical Revenue Breakdown
Revenue                     Three Months Ended
                            September 30,  September 30,  Increase  Increase
                            2012           2011
                            In Millions USD                          %
Western Europe              $    52.6      $    39.7      $  12.9    33%
The Americas                     38.7           24.0         14.7    61%
Central & Eastern Europe,
Middle                           10.3           7.5          2.8     37%

East, Africa
Asia-Pacific                     10.9           4.5          6.4     145%
Total                       $    112.5     $    75.7      $  36.8    49%
Product Segment Revenue Breakdown
Revenue                     Three Months Ended
                            September 30,  September 30,  Increase  Increase
                            2012           2011
                            In millions USD                          %
Soda Maker Starter Kits     $    46.5      $    33.9      $  12.6    37%
Consumables                      63.0           40.7         22.3    55%
Other                            3.0            1.1          1.9     180%
Total                       $    112.5     $    75.7      $  36.8    49%
Product Segment Unit
Breakdown
                            

                            Three Months Ended
                            September 30,  September 30,
                                                          Increase  Increase
                            2012           2011
                            In thousands                             %
Soda Maker Starter Kits          941            717          224     31%
CO2 Refills                      4,337          3,636        701     19%
Flavors                          7,747          4,399        3,348   76%

Gross margin for the third quarter 2012 was 54.2%, compared to 53.5% for the
same period in 2011. This increase was primarily due to the increase in direct
distribution that accounted for 69% of total revenue in the quarter vs. 56% in
the third quarter 2011. This increase is mainly due to growing share of U.S.
revenue and the shift to self-distribution in the Nordics. Gross margin was
also positively impacted from leveraging fixed production costs on higher
revenue, partially offset by a higher percentage of subcontracted
manufacturing.

Sales and marketing expenses for the third quarter 2012 totaled $35.8 million,
or 31.8% of revenue compared to $23.1 million, or 30.6% of revenue for the
comparable period last year. The increase is primarily due to higher
advertising and promotion expense, which was in line with the plan to support
the growing retail presence, especially in the U.S. This was partially offset
by a decrease in other selling expenses as a percent of revenue, despite the
aforementioned increase in self-distribution versus a year ago, driven by
improved supply chain efficiency and expense leverage on higher revenue. 

General and administrative expenses for the third quarter 2012 were $8.7
million, or 7.8% of revenue, compared to $7.6 million, or 10.1% of revenue in
the comparable period of last year. This includes the additional expenses
associated with the acquisition of CEM Industries in the fourth quarter 2011
and the acquisition of the distribution activity in the Nordics in the first
quarter 2012.

Operating income increased to $16.4 million, or 14.6% of revenue as compared
to $9.8 million, or 13.0% of revenue in the third quarter 2011.

Tax benefit was $850,000 compared to a tax expense of $816,000 in the third
quarter 2011. This is primarily attributable to an adjustment of tax provision
following an agreement with the tax authorities in one of our jurisdictions.
Excluding this adjustment the effective tax rate in the third quarter 2012 was
approximately 8%, similar to the third quarter 2011.

Balance Sheet Review

  oOn August 31, 2012, the Company acquired the SodaStream related assets
    from its Canadian distributor and started operating its products'
    distribution in Canada as a self-distribution unit. This had no material
    impact on the results of operations. The main asset acquired in the
    transaction was inventory of $5.9 million. The inventory and cash balance
    at September 30, 2012 reflect this transaction.
  oCash and cash equivalents and bank deposits at September 30, 2012 were
    $50.7 million compared to $74.3 million on December 31, 2011. The decrease
    is primarily attributable to the acquisition of the Nordics and Canadian
    distribution activities, debt repayment and an increase in working
    capital.
  oThe Company had no outstanding loans and borrowings at September 30, 2012
    compared to $4.0 million on December 31, 2011.
  oWorking capital at September 30, 2012 increased 29.5% to $101.4 million
    compared to $78.3 million on December 31, 2011.
  oInventories at September 30, 2012 increased 44.6% to $110.8 million
    compared to $76.6 million on December 31, 2011, primarily reflecting the
    additional inventory associated with the acquisition of the Nordics and
    Canadian inventory and the Company's business growth, primarily in the
    U.S.

Change of reporting currency

Beginning with the quarter ended March 31, 2012, the Company changed its
reporting currency to the U.S. dollar (USD). Previously, the Company
presented its annual and quarterly consolidated balance sheets and related
consolidated statements of operations and cash flows in Euro (EUR). In
accordance with IFRS, the financial statements for comparative periods were
translated into the new reporting currency using the EUR to USD exchange rate
at January 1, 2012 of EUR 1.00 = USD 1.2973.

Guidance

Based on third quarter results and current projections for the remainder of
the year, the Company is raising its outlook.

  oThe Company now expects 2012 revenue to increase approximately 46% over
    2011 revenue of $289.0 million, up from its previous guidance of 40%.
  oThe Company now expects 2012 net income to increase approximately 59% over
    2011 net income of $27.5 million, up from its previous guidance of 55%.
    This guidance assumes full year gross margin of approximately 54.5% and
    includes a share-based expense of approximately $5.6 million.
  oGross margin for the fourth quarter 2012 includes a higher mix of third
    party manufacturing and additional transportation expenses in order to
    meet the high demand for several new product launches scheduled for the
    holiday season.

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, November 7, 2012) 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 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 excludes the Share-Based Compensation Expense,
should be considered in evaluating the Company's operations since they provide
a clearer indication of the Company's operating results going forward.

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.

Company Contact:
Yonah Lloyd
Chief Corporate Development and Communications Officer
SodaStream International Ltd.
Phone: +972-3-976-2462
yonahl@sodastream.com

Investor Contacts (US):
Brendon Frey
ICR
Phone: + 1 203-682-8200
brendon.frey@icrinc.com



Consolidated Statements of Operations
In thousands (net income per share amounts in
units)
                         For the nine months ended  For the three months ended
                         September 30,              September 30,
                         2011          2012         2011           2012
                         (Unaudited)                (Unaudited)
Revenue                  $  203,265    $  303,369   $   75,655     $  112,482
Cost of revenue             94,858        138,052       35,152        51,531
Gross profit                108,407       165,317       40,503        60,951
Operating expenses
Sales and marketing         62,737        100,176       23,129        35,825
General and                 22,408        27,607        7,605         8,741
administrative
Other income, net           (121)         (134)         (40)          (54)
Total operating expenses    85,024        127,649       30,694        44,512
Operating income            23,383        37,668        9,809         16,439
Interest expense            (1,200)       40            (506)         35
(income), net
Other financial expense     (647)         642           (609)         488
(income), net
Total financial expense     (1,847)       682           (1,115)       523
(income), net
Income before income        25,230        36,986        10,924        15,916
taxes
Income tax expense (tax     3,067         659           816           (850)
benefit)
Net income for the       $  22,163     $  36,327    $   10,108     $  16,766
period
Net income per share
Basic                    $  1.14       $  1.79      $   0.51       $  0.82
Diluted                  $  1.08       $  1.73      $   0.48       $  0.80
Weighted average number
of shares
Basic                       19,376        20,281        20,006        20,410
Diluted                     20,452        20,984        21,002        21,027



Consolidated Balance Sheets as of
                                           December 31,  September 30,
                                           2011          2012
                                           (Audited)     (Unaudited)
                                           (In thousands)
Assets
Cash and cash equivalents                  $   34,769    $   30,676
Bank deposits                                  39,485        20,056
Inventories                                    76,625        110,806
Trade receivables                              58,452        80,861
Other receivables                              20,064        20,338
Derivative financial instruments               322           235
Assets classified as available-for-sale        837           815
Total current assets                           230,554       263,787
Property, plant and equipment                  46,434        72,845
Intangible assets                              25,358        38,084
Deferred tax assets                            1,168         1,774
Other receivables                              224           269
Total non-current assets                       73,184        112,972
Total assets                                   303,738       376,759
Liabilities
Loans and borrowings                           4,006         -
Derivative financial instruments               -             424
Trade payables                                 47,383        72,236
Income tax payable                             9,171         8,908
Provisions                                     397           1,515
Other current liabilities                      21,071        28,592
Total current liabilities                      82,028        111,675
Employee benefits                              1,497         1,458
Provisions                                     514           531
Deferred tax liabilities                       717           1,161
Total non-current liabilities                  2,728         3,150
Total liabilities                              84,756        114,825
Shareholders' equity
Share capital                                  3,238         3,292
Share premium                                  168,601       174,458
Translation reserve                            1,471         2,185
Retained earnings                              45,672        81,999
Total shareholders' equity                     218,982       261,934
Total liabilities and shareholders' equity $   303,738   $   376,759



Consolidated Statements of Cash Flows
                         For the nine months ended  For the threemonths ended
                         September 30,              September 30,
                         2011           2012        2011           2012
                         (Unaudited)                (Unaudited)
                            (In thousands)
Cash flows from
operating activities
Net income for the       $  22,163      $ 36,327    $  10,108      $  16,766
period
Adjustments:
Amortization of             477           1,107        81             420
intangible assets
Change in fair value of
derivative financial        466           504          (79)           -
instruments
Depreciation of
property, plant and        3,128         6,029        973            2,211
equipment
Share based payment         4,040         4,293        1,348          1,458
Interest expense            (1,200)       40           (506)          35
(income), net
Income tax expense (tax     3,067         659          816            (850)
benefit)
                            32,141        48,959       12,741         20,040
Increase in inventories     (20,081)      (23,909)     (9,747)        (11,368)
Increase in trade and       (19,048)      (37,984)     (10,878)       (16,186)
other receivables
Increase in trade           6,091         23,588       5,598          11,124
payables
Decrease in employee        (14)          (28)         (6)            (15)
benefits
Increase in provisions
and other current           84            5,824        232            1,365
liabilities
                            (827)         16,450       (2,060)        4,960
Interest paid               (272)         (334)        (79)           (97)
Income tax received         -             1,733        -              247
Income tax paid             (3,010)       (3,047)      (1,357)        (756)
Net cash from (used in)     (4,109)       14,802       (3,496)        4,354
operating activities
Cash flows from
investing activities
Interest received           1,003         1,181        221            102
Investment in bank          (51,892)      (20,000)     (51,892)       (10,000)
deposits
Proceeds from bank          -             38,919       -              -
deposits
Proceeds from (payments
for) derivative             (44)          7            (25)           561
financial instruments,
net
Acquisition of
subsidiary, net of cash     -             (10,954)     -              (1,196)
acquired
Acquisition of property,    (14,067)      (23,759)     (7,770)        (9,253)
plant and equipment
Acquisition of              (650)         (2,125)      (398)          (1,162)
intangible assets
Net cash used in            (65,650)      (16,731)     (59,864)       (20,948)
investing activities
Cash flows from
financing activities
Share issuance              42,929        -            -              -
Proceeds from exercise
of employee share           899           1,618        82             344
options
Change in short-term        (8,609)       (3,873)      198            -
debt
Net cash from (used in)     35,219        (2,255)      280            344
financing activities
Net decrease in cash and    (34,540)      (4,184)      (63,080)       (16,250)
cash equivalents
Cash and cash
equivalents at the          68,627        34,769       96,980         46,593
beginning of the period
Effect of exchange
rates fluctuations on      (154)         91           33             333
cash and cash
equivalents
Cash and cash
equivalents at the end  $  33,933      $ 30,676    $  33,933      $  30,676
of the period



Information about revenue in reportable segments
                                              Central
                                              and

                                              Eastern
                        Western      The               Asia-Pacific  Total
                        Europe       Americas Europe,
                                              Middle

                                              East,
                                              Africa
                        (In thousands)
Nine months ended:
September 30, 2012      $  152,336   94,943   25,314   30,776        $ 303,369
(Unaudited)
September 30, 2011      $  113,457   51,918   25,724   12,166        $ 203,265
(Unaudited)
Three months ended:
September 30, 2012      $  52,611    38,660   10,303   10,908        $ 112,482
(Unaudited)
September 30, 2011      $  39,683    24,007   7,514    4,451         $ 75,655
(Unaudited)



Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of
Operations
               Nine months ended September 30,
               2011                                2012
               Reported      Share                 Reported      Share
                             based                               based
               (Unadjusted)  payment    Adjusted   (Unadjusted)  payment    Adjusted
               (Unaudited)
               In thousands (net income per share amounts in units)
Revenue        $   203,265   $ -        $ 203,265  $   303,369   $ -        $ 303,369
Cost of            94,858      -          94,858       138,052     -          138,052
revenue
Gross profit       108,407     -          108,407      165,317     -          165,317
Operating
expenses
Sales and          62,737      -          62,737       100,176     -          100,176
marketing
General and        22,408      (4,040)    18,368       27,607      (4,293)    23,314
administrative
Other income,      (121)       -          (121)        (134)       -          (134)
net
Total
operating          85,024      (4,040)    80,984       127,649     (4,293)    123,356
expenses
Operating          23,383      4,040      27,423       37,668      4,293      41,961
income
Interest
expense            (1,200)     -          (1,200)      40          -          40
(income), net
Other
financial          (647)       -          (647)        642         -          642
expense
(income), net
Total
financial          (1,847)     -          (1,847)      682         -          682
expense
(income), net
Income before      25,230      4,040      29,270       36,986      4,293      41,279
income taxes
Income tax         3,067       -          3,067        659         -          659
expense
Net income for $   22,163    $ 4,040    $ 26,203   $   36,327    $ 4,293    $ 40,620
the period
Net income per
share
Basic          $   1.14                 $ 1.35     $   1.79                 $ 2.00
Diluted        $   1.08                 $ 1.28     $   1.73                 $ 1.94
Weighted
average
number of
shares
Basic              19,376                 19,376       20,281                 20,281
Diluted            20,452                 20,452       20,984                 20,984



Reported (IFRS) to Adjusted (non-IFRS) Reconciliation of Consolidated Statements of
Operations
               Three months ended September 30,
               2011                                2012
               Reported      Share                 Reported      Share
                             based                               based
               (Unadjusted)  payment    Adjusted   (Unadjusted)  payment    Adjusted
               (Unaudited)
               In thousands (net income per share amounts in units)
Revenue        $   75,655    $ -        $ 75,655   $   112,482   $ -        $ 112,482
Cost of            35,152      -          35,152       51,531      -          51,531
revenue
Gross profit       40,503      -          40,503       60,951      -          60,951
Operating
expenses
Sales and          23,129      -          23,129       35,825      -          35,825
marketing
General and        7,605       (1,348)    6,257        8,741       (1,458)    7,283
administrative
Other income,      (40)        -          (40)         (54)        -          (54)
net
Total
operating          30,694      (1,348)    29,346       44,512      (1,458)    43,054
expenses
Operating          9,809       1,348      11,157       16,439      1,458      17,897
income
Interest
expense            (506)       -          (506)        35          -          35
(income), net
Other
financial          (609)       -          (609)        488         -          488
expense
(income), net
Total
financial          (1,115)     -          (1,115)      523         -          523
expense
(income), net
Income before      10,924      1,348      12,272       15,916      1,458      17,374
income taxes
Income tax
expense (tax       816         -          816          (850)       -          (850)
benefit)
Net income for $   10,108    $ 1,348    $ 11,456   $   16,766    $ 1,458    $ 18,224
the period
Net income per
share
Basic          $   0.51                 $ 0.57     $   0.82                 $ 0.89
Diluted        $   0.48                 $ 0.55     $   0.80                 $ 0.87
Weighted average number of shares
Basic              20,006                 20,006       20,410                 20,410
Diluted            21,002                 21,002       21,027                 21,027



EBITDA and Adjusted EBITDA
                                       Nine months ended    Three months ended
                                       September 30,        September 30,
                                       2011       2012      2011      2012
                                       (Unaudited)
                                       (In thousands)
Reconciliation of Net Income to EBITDA

and Adjusted EBITDA
Net income                             $ 22,163   $ 36,327  $ 10,108  $ 16,766
Interest expense (income), net           (1,200)    40        (506)     35
Income tax expense (tax benefit)         3,067      659       816       (850)
Depreciation and amortization            3,605      7,136     1,054     2,631
EBITDA                                   27,635     44,162    11,472    18,582
Share based payment                      4,040      4,293     1,348     1,458
Adjusted EBITDA                        $ 31,675   $ 48,455  $ 12,820  $ 20,040



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,
                2011             2012             2011            2012
                (Unaudited)
                Revenue
                (in thousands)
Soda maker
starter kits
(including      $   84,912       $   119,800      $   33,868      $   46,486

exchange
cylinders)
Consumables         114,684          177,029          40,710          62,979
Other               3,669            6,540            1,077           3,017
Total           $   203,265      $   303,369      $   75,655      $   112,482
                Nine months ended                 Three months ended
                September 30,                     September 30,
                2011             2012             2011            2012
                (Unaudited)
                As a percentage of revenue
Soda maker
starter kits
(including          41.8%            39.5%            44.8%           41.3%
exchange
cylinders)
Consumables         56.4%            58.4%            53.8%           56.0%
Other               1.8%             2.1%             1.4%            2.7%
Total               100.0%           100.0%           100.0%          100.0%
(*)The Company reclassified prior periods' data such that revenue from spare
cylinders, formerly presented under the "soda maker starter kits" category,
are presented under the "consumables" category, as the purchase of a spare
cylinder more closely resembles the purchase of other consumables than it does
the initial purchase of a soda maker. The effect was an increase in revenue
from consumables by $9,905 thousand and $ 3,932 thousand for nine months and
three months ended September 30, 2011, respectively (increase in 480 basis
points and 520 basis points of total revenue of these periods, respectively),
and the same decrease in revenue from soda maker starter kits for the
respective periods (and the same decrease in basis points of total revenue of
those periods, respectively)





SOURCE SodaStream International Ltd.

Website: http://www.sodastream.com
 
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