SodaStream Reports First Quarter Results PR Newswire AIRPORT CITY, Israel, May 14, 2014 AIRPORT CITY, Israel, May 14, 2014 /PRNewswire/ --SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems, announced today its results for thethree month period ended March 31, 2014. SodaStream Logo For the first quarter ended March 31, 2014: oRevenue was $118.2 million compared to $117.6 million in the first quarter 2013 oEBITDA was $6.3 million compared to $16.4 million in the first quarter 2013 oNet income was $1.8 million compared to $12.1 million in the first quarter 2013. oDiluted earnings per share were $0.08, compared to $0.57 in the first quarter 2013. "Our first quarter results were generally in-line with our expectations and reflect strong growth outside the U.S. offset by the negative impact on soda maker sell-in in the U.S. from the challenging holiday season," said Daniel Birnbaum, Chief Executive Officer of SodaStream. "Our global base of SodaStream users inclusive of the U.S. remains very active evidenced by strong consumable sales growth, giving us added conviction in the attractiveness of our home carbonation system. We are in the process of adjusting our marketing and selling strategies in order to reaccelerate soda maker demand and further increase household penetration. We are confident that our long history leading the evolution of home carbonation continues to provide uswith strong competitive advantages and compelling growth opportunities across the globe." First Quarter 2014 Financial Review Geographical Revenue Breakdown Revenue Three Months Ended Increase Increase March 31, 2013 March 31, 2014 (decrease) (decrease) In Millions USD % The Americas $ 48.3 $ 34.8 $ (13.5) (28%) Western Europe 53.3 62.5 9.2 17% Asia-Pacific 9.3 11.9 2.6 28% Central & Eastern Europe, Middle East, 6.7 9.0 2.3 34% Africa Total $ 117.6 $ 118.2 $ 0.6 0.5% Product Segment Revenue Breakdown Revenue Three Months Ended March 31, 2013 March 31, 2014 Increase Increase In millions USD % Soda Maker Starter Kits $ 43.0 $ 32.2 $ (10.8) (25%) Consumables 72.0 83.0 11.0 15% Other 2.6 3.0 0.4 15% Total $ 117.6 $ 118.2 $ 0.6 0.5% Product Segment Unit Breakdown Three Months Ended March 31, 2013 March 31, 2014 Increase Increase In thousands % Soda Maker Starter Kits 776 604 (172) (22%) CO2 Refills 4,756 5,820 1,064 22% Flavors 7,735 8,405 670 9% Gross margin for the first quarter 2014 was 52.3% compared to 54.5% for the same period in 2013. The decline was primarily due to unfavorable changes in foreign currency exchange rates and increased share of higher-cost soda makers in the sales mix, which was partially offset by a higher share of CO2 refills in product mix. Sales and marketing expenses for the first quarter 2014 totaled $46.1 million, or 39.0% of revenue, compared to $38.9 million, or 33.0% of revenue for the comparable period in the prior year. The 600 basis point change in sales and marketing expenses as a percent of revenue was mainly attributable to an increase in advertising and promotion expense as a percent of revenue to 18.1% from 13.5% in the first quarter 2013. This resulted primarily fromthe first quarter's marketing campaign in the U.S. and to a lesser extentfrom marketing campaigns in Europe that did not take place in the first quarter of2013. General and administrative expenses for the first quarter 2014 were $13.4 million, or 11.3% of revenue, compared to $11.6 million, or 9.9% of revenue in the comparable period of last year. The increase was mainly due to additional expenses related to our newly acquired Italian distributer as well as additional infrastructure (mainly information technology systems) to support future growth. Operating income decreased 82.8% to $2.3 million, or 2.0% of revenue, compared to $13.6 million, or 11.6% of revenue, in the first quarter 2013. Tax expensewas $348,000 million with effective tax rate of 16.4%, compared to $1.3 million with effective tax rate of 9.7% in the first quarter 2013. The increase in the effective tax rate was primarily due to the geographical income before tax distribution and the difference in local tax rates. Balance Sheet Review oCash and cash equivalents and bank deposits at March 31, 2014 were $36.1 million compared to $40.9 million at December 31, 2013. The decrease is primarily attributable to the investment in our new production facility and anincrease in working capital. oThe Company had $24.0 million of bank debt at March 31, 2014 mainly for financing the investment in its new production facility, compared to $15.5 million of bank debt at December 31, 2013. oWorking capital at March 31, 2014 increased 3.2% to $160.4 million compared to $155.4 million at December 31, 2013. Inventories at March 31, 2014 increased 1.7% to $143.1 million compared to $140.7 million at December 31, 2013. Guidance Based on first quarter results and current projections for the remainder of the year, the Company is maintaining its outlook: oThe Company still expects full year 2014 revenue to increase approximately 15% over 2013 revenue of $562.7 million. oThe Company still expects full year 2014 EBITDA to increase approximately 11% over 2013 EBITDA of $62.2 million. Excluding changes in foreign currency exchange rates compared to 2013, the Company expects 2014 EBITDA to increase approximately 25% over 2013. oThe Company still expects full year 2014 net income to increase approximately 3% over 2013 net income of $42.0 million 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 Daylight Time (U.S. time) today (Wednesday, May 14, 2014) 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 Beginning this press release the company will no longer provide certain non-IFRS measures that were provided in past quarterly press releases, including Adjusted Net Income, Adjusted Earnings Before Interest, Income Tax, Depreciation and Amortization ("Adjusted EBITDA"), and Adjusted diluted earnings per share ("Adjusted diluted EPS"). The Company believes that these measures no longer provide material additional information that should be considered in evaluating the Company's operations. 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; 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 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. 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. Company Contact: Yonah Lloyd Chief Corporate Development and Communications Officer SodaStream International Ltd. Phone: +972-3-976-2462 email@example.com Investor Contacts (US): Brendon Frey ICR Phone: + 1 203-682-8200 firstname.lastname@example.org Consolidated Statements of Operations In thousands (other than per share amounts) For the three months ended March 31, 2013 2014 (Unaudited) Revenue $ 117,639 $ 118,172 Cost of revenue 53,554 56,326 Gross profit 64,085 61,846 Operating expenses Sales and marketing 38,859 46,146 General and administrative 11,609 13,355 Total operating expenses 50,468 59,501 Operating income 13,617 2,345 Interest expense, net 25 47 Other financial expense, net 210 172 Total financial expense, net 235 219 Income before income taxes 13,382 2,126 Income tax expense 1,298 348 Net income for the period $ 12,084 $ 1,778 Net income per share Basic $ 0.58 $ 0.09 Diluted $ 0.57 $ 0.08 Weighted average number of shares Basic 20,682 20,908 Diluted 21,211 21,289 Consolidated Balance Sheets as of December 31, March 31, 2013 2014 (Audited) (Unaudited) (In thousands) Assets Cash and cash equivalents $ 40,885 $ 36,052 Inventories 140,709 143,089 Trade receivables 123,936 98,851 Other receivables 22,208 22,674 Derivative financial instruments 538 755 Total current assets 328,276 301,421 Property, plant and equipment 107,132 119,358 Intangible assets 48,104 48,022 Deferred tax assets 1,089 1,561 Other receivables 398 443 Total non-current assets 156,723 169,384 Total assets 484,999 470,805 Liabilities Loans and borrowings 15,452 24,008 Derivative financial instruments 103 68 Trade payables 90,749 66,858 Income tax payable 9,869 10,549 Provisions 1,614 1,511 Other current liabilities 29,674 26,012 Total current liabilities 147,461 129,006 Employee benefits 2,221 2,113 Provisions 714 704 Deferred tax liabilities 2,997 2,906 Total non-current liabilities 5,932 5,723 Total liabilities 153,393 134,729 Shareholders' equity Share capital 3,378 3,382 Share premium 193,649 196,404 Translation reserve 3,394 3,327 Retained earnings 131,185 132,963 Total shareholders' equity 331,606 336,076 Total liabilities and shareholders' equity $ 484,999 $ 470,805 Consolidated Statements of Cash Flows For the threemonths ended March 31, 2013 2014 (Unaudited) (In thousands) Cash flows from operating activities Net income for the period $ 12,084 $ 1,778 Adjustments: Amortization of intangible assets 428 512 Change in fair value of derivative financial - 408 instruments Depreciation of property, plant and 2,553 3,624 equipment Share based payment 2,394 2,306 Interest expense, net 25 47 Income tax expense 1,298 348 18,782 9,023 Increase in inventories (9,802) (2,468) Decrease in trade and other receivables 11,189 24,707 Decrease in trade payables (19,233) (24,072) Increase (decrease) in employee benefits 14 (110) Decrease in provisions and other current (12,098) (3,865) liabilities (11,148) 3,215 Interest paid (54) (36) Income tax received 3,448 363 Income tax paid (710) (682) Net cash from operating activities (8,464) 2,860 Cash flows from investing activities Interest received 58 5 Proceeds from derivative financial (1,105) (660) instruments, net Acquisition of property, plant and equipment (10,604) (15,684) Acquisition of intangible assets (1,109) (363) Net cash from (used in) investing activities (12,760) (16,702) Cash flows from financing activities Proceeds from exercise of employee share 1,151 453 options Change in short-term debt 8,073 8,556 Net cash from (used in) financing activities 9,224 9,009 Net increase (decrease) in cash and cash (12,000) (4,833) equivalents Cash and cash equivalents at the beginning of 62,068 40,885 the period Effect of exchange rates fluctuations on (180) - cash and cash equivalents Cash and cash equivalents at the end of the $ 49,888 $ 36,052 period Information about revenue in reportable segments Central & Eastern Western The Americas Asia-Pacific Europe, Total Europe Middle East, Africa (In thousands) Three months ended: March 31, 2013 $ 48,339 53,298 9,319 6,683 $ 117,639 (Unaudited) March 31, 2014 $ 34,758 62,550 11,906 8,958 $ 118,172 (Unaudited) EBITDA Three months ended March 31, 2013 2014 (Unaudited) (In thousands) Reconciliation of Net Income to EBITDA Net income $ 12,084 $ 1,778 Interest expense, net 25 47 Income tax expense (tax 1,298 348 benefit) Depreciation and 2,981 4,136 amortization EBITDA 16,388 6,309 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: Three months ended March 31, 2013 2014 (Unaudited) Revenue (in thousands) Soda maker starter kits (including $ 42,952 $ 32,224 exchange cylinders) Consumables 72,062 82,924 Other 2,625 3,024 Total $ 117,639 118,172 $ Three months ended March 31, 2013 2014 (Unaudited) As a percentage of revenue Soda maker starter kits (including 36.5% 27.3% exchange cylinders) Consumables 61.3% 70.2% Other 2.2% 2.5% Total 100.0% 100.0% Logo - http://photos.prnewswire.com/prnh/20121107/NY07412LOGO SOURCE SodaStream International Ltd. Website: http://www.sodastream.com
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SodaStream Reports First Quarter Results
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