SodaStream Reports Second Quarter Results

                  SodaStream Reports Second Quarter Results  PR Newswire  AIRPORT CITY, Israel, July 30, 2014  AIRPORT CITY, Israel, July 30, 2014 /PRNewswire/ --SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems, announced today its results for the three and six month periods ended June 30, 2014.  SodaStream Logo.  For the second quarter ended June 30, 2014:    oRevenue was $141.2 million compared to $132.4 million in the second     quarter 2013   oEBITDA was $13.8 million compared to $18.0 million in the second quarter     2013   oNet income was $9.2 million compared to $12.9 million in the second     quarter 2013   oDiluted earnings per share were $0.43, compared to $0.60 in the second     quarter 2013  "The second quarter was highlighted by record gas refills including unit growth in all regions underscoring the global appeal and stickiness of our home carbonation system. Our total business in our Western Europe, Asia Pacific, and CEMEA regions all posted solid increases in the second quarter as our product and marketing strategies are leading to increased household penetration and user activity." said Daniel Birnbaum, Chief Executive Officer of SodaStream. "In the U.S., soda maker volumes remained under pressure as we struggled to drive consumer demand and retailers worked through excess inventory carried over from the holiday season. We are lowering our U.S. soda maker sales projections for the back half of the year while we reposition our brand behind health & wellness and refine our product line and marketing message to better promote this important consumer benefit. We are confident this strategy will have a positive long-term impact on our U.S. performance. Our revised plan for 2014 also includes operating expense reductions aimed at protecting profitability until growth trends improve."    Second Quarter 2014 Financial Review Geographical Revenue Breakdown Revenue                   Three Months Ended                           June 30, 2013  June 30, 2014  Increase   Increase                                                         (decrease)  (decrease)                           In Millions USD                           % The Americas              $    47.4      $    40.9      $   (6.5)   (14%) Western Europe                 68.1           77.7          9.6     14% Asia-Pacific                   10.8           12.2          1.4     13% Central & Eastern Europe,      6.1            10.4          4.3     71% Middle East, Africa Total                     $    132.4     $    141.2     $   8.8     6.6%    Product Segment Revenue Breakdown Revenue                 Three Months Ended                         June 30, 2013  June 30, 2014  Increase Increase                         In millions USD                            % Soda Maker Starter Kits $    49.9      $    45.8      $  (4.1)     (8%) Consumables                  78.9           90.8         11.9      15% Other                        3.6            4.6          1.0       27% Total                   $    132.4     $    141.2     $  8.8       6.6%    Product Segment Unit Breakdown                             Three Months Ended                             June 30, 2013  June 30, 2014  Increase  Increase                             In thousands                             % Soda Maker Starter Kits     935            785            (150)      (16%) CO2 Refills                 5,542          6,507          965        17% Flavors                     8,505          9,297          792        9%  Gross margin for the second quarter 2014 was 50.5% compared to 54.3% for the same period in 2013. The decline was primarily due to unfavorable changes in foreign currency exchange rates, increased penetration of lower margin soda makers in the sales mix and inventory write offs, which were partially offset by a higher share of CO2 refills in product mix.  Sales and marketing expenses for the second quarter 2014 totaled $46.9 million, or 33.3% of revenue, compared to $43.6 million, or 33.0% of revenue for the comparable period in the prior year. The 30 basis point change in sales and marketing expenses as a percent of revenue was mainly attributable to an increasing in selling expense as a result of expenses related to the newly acquired Italian and Japanese distribution channels. This was partially offset by a decrease in advertising and promotion expense as a percent of revenue to 14.9% from 15.1% in the second quarter 2013.  General and administrative expenses for the second quarter 2014 were $13.1 million, or 9.3% of revenue, compared to $13.6 million, or 10.3% of revenue in the comparable period of last year. The decrease was partially due to lower share-based compensation expenses which were mostly offset by additional expenses related to our newly acquired Italian and Japanesedistribution channels, as well as additional infrastructure (mainly information technology systems) to support future growth.  Operating income decreased to $11.2 million, or 8.0% of revenue, compared to $14.7 million, or 11.1% of revenue in the second quarter 2013.  Tax expenseremained the same at $1.1 million with an increase in effective tax rateto 10.6%, from7.9% in the second quarter 2013. The increase in the effective tax rate was primarily due to the geographical distribution ofincome before tax and the difference in local tax rates.  Balance Sheet Review    oCash and cash equivalents and bank deposits at June 30, 2014 were $36.2     million compared to $40.9 million at December 31, 2013. The decrease is     primarily due to the investment in our new production facility, the     acquisition ofour Japanesedistributor and an increase in working     capital.   oThe Company had $38.6 million of bank debt at June 30, 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 June 30, 2014 increased 15.4% to $179.4 million     compared to $155.4 million at December 31, 2013, mainly due toa decrease     in trade payables andan increase in inventoryfrom ournewly acquired     Japanese distribution channel. Inventories at June 30, 2014 increased 2.8%     to $144.7 million compared to $140.7 million at December 31, 2013.  Guidance Based on second quarter results and current projections for the remainder of the year, the Company is revising its outlook:    oThe Company now expects full year 2014 revenue to increase approximately     5% over 2013 revenue of $562.7 million.   oThe Company now expects full year 2014 EBITDA to increase approximately 5%     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 17% over 2013.   oThe Company now expects full year 2014 net income to decrease     approximately 5% over 2013 net income of $42.0 million  Conference Call and Management Commentary  Detailed CFO commentary and a supplemental slide presentation have been filedwith the Securities and Exchange Commission today under the cover of Form6-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, July 30, 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 with 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.  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 six months ended  For the three months ended                           June 30,                  June 30,                           2013          2014        2013           2014                           (Unaudited)               (Unaudited) Revenue                   $  250,029    $  259,343  $   132,390    $  141,171 Cost of revenue              114,006       126,240      60,452        69,914 Gross profit                 136,023       133,103      71,938        71,257 Operating expenses Sales and marketing          82,498        93,087       43,639        46,941 General and                  25,226        26,427       13,617        13,072 administrative Total operating expenses     107,724       119,514      57,256        60,013 Operating income             28,299        13,589       14,682        11,244 Interest expense, net        154           333          129           286 Other financial expense,     792           792          582           620 net Total financial expense,     946           1,125        711           906 net Income before income         27,353        12,464       13,971        10,338 taxes Income tax expense           2,406         1,443        1,108         1,095 Net income for the period $  24,947     $  11,021   $   12,863     $  9,243 Net income per share Basic                     $  1.20       $  0.53     $   0.62       $  0.44 Diluted                   $  1.17       $  0.52     $   0.60       $  0.43 Weighted average number of shares Basic                        20,719        20,933       20,756        20,958 Diluted                      21,318        21,274       21,416        21,271    Consolidated Balance Sheets as of                                            December 31,  June 30,                                            2013          2014                                            (Audited)     (Unaudited)                                            (In thousands) Assets Cash and cash equivalents                  $   40,885    $  36,244 Inventories                                    140,709      144,711 Trade receivables                              123,936      109,158 Other receivables                              22,208       27,753 Derivative financial instruments               538          1,419 Total current assets                           328,276      319,285 Property, plant and equipment                  107,132      124,397 Intangible assets                              48,104       49,121 Deferred tax assets                            1,089        1,217 Other receivables                              398          493 Total non-current assets                       156,723      175,228 Total assets                                   484,999      494,513 Liabilities Loans and borrowings                           15,452       38,619 Derivative financial instruments               103          - Trade payables                                 90,749       61,567 Income tax payable                             9,869        9,033 Provisions                                     1,614        2,033 Other current liabilities                      29,674       31,034 Total current liabilities                      147,461      142,286 Employee benefits                              2,221        2,232 Provisions                                     714          752 Deferred tax liabilities                       2,997        2,093 Total non-current liabilities                  5,932        5,077 Total liabilities                              153,393      147,363 Shareholders' equity Share capital                                  3,378        3,397 Share premium                                  193,649      198,908 Translation reserve                            3,394        2,639 Retained earnings                              131,185      142,206 Total shareholders' equity                     331,606      347,150 Total liabilities and shareholders' equity $   484,999   $  494,513    Consolidated Statements of Cash Flows                           For the six months ended  For the threemonths ended                           June 30,                  June 30,                           2013          2014        2013           2014                           (Unaudited)               (Unaudited)                              (In thousands) Cash flows from operating activities Net income for the period $  24,947     $ 11,021    $  12,863      $  9,243 Adjustments: Amortization of              1,140        1,261        712            749 intangible assets Change in fair value of derivative financial         (537)        264          (537)          (144) instruments Depreciation of property,    5,777        6,091        3,224          2,467 plant and equipment Share based payment          5,354        4,537        2,960          2,231 Interest expense, net        154          333          129            286 Income tax expense           2,406        1,443        1,108          1,095                              39,241       24,950       20,459         15,927 Increase in inventories      (24,784)     (3,945)      (14,982)       (1,477) Decrease (increase) in trade and other              (19,369)     13,853       (30,558)       (10,854) receivables Increase (decrease) in       (13,232)     (29,587)     6,001          (5,515) trade payables Increase (decrease) in       (1)          19           (15)           129 employee benefits Increase (decrease) in provisions and other         (5,238)      1,766        6,860          5,631 current liabilities                              (23,383)     7,056        (12,235)       3,841 Interest paid                (179)        (329)        (125)          (293) Income tax received          3,539        710          91             347 Income tax paid              (966)        (3,939)      (256)          (3,257) Net cash from (used          (20,989)     3,498        (12,525)       638 in)operating activities Cash flows from investing activities Interest received            94           27           36             22 Investment in bank           (10,000)     -            (10,000)       - deposits Proceeds from derivative financial instruments,      (543)        (1,248)      562            (588) net Acquisition of subsidiary, net of cash      (1,179)      -            (1,179)        - acquired Acquisition of property,     (19,328)     (28,211)     (8,724)        (12,527) plant and equipment Acquisition of intangible    (2,489)      (2,546)      (1,380)        (2,183) assets Net cash used in             (33,445)     (31,978)     (20,685)       (15,276) investing activities Cash flows from financing activities Proceeds from exercise of    1,832        741          681            288 employee share options Change in short-term debt    16,143       23,167       8,070          14,611 Net cash from financing      17,975       23,908       8,751          14,899 activities Net increase (decrease) in cash and cash             (36,459)     (4,572)      (24,459)       261 equivalents Cash and cash equivalents at the beginning of the      62,068       40,885       49,888         36,052 period Effect of exchange rates fluctuations on cash and     (409)        (69)         (229)          (69) cash equivalents Cash and cash equivalents at the end   $  25,200     $ 36,244    $  25,200      $  36,244 of the period    Information about revenue in reportable segments                                                        Central &                                   Western              Eastern                     The Americas  Europe  Asia-Pacific Europe,       Total                                                        Middle East,                                                        Africa                     (In thousands) Six months ended: June 30, 2013       $   95,712    121,385 20,151       12,781        $ 250,029 (Unaudited) June 30, 2014       $   75,637    140,216 24,131       19,359        $ 259,343 (Unaudited) Three months ended: June 30, 2013       $   47,373    68,087  10,832       6,098         $ 132,390 (Unaudited) June 30, 2014       $   40,879    77,666  12,225       10,401        $ 141,171 (Unaudited)    EBITDA                                        Six months ended    Three months ended                                        June 30,            June 30,                                        2013      2014      2013      2014                                        (Unaudited)                                        (In thousands) Reconciliation of Net Income to EBITDA Net income                             $ 24,947  $ 11,021  $ 12,863  $ 9,243 Interest expense, net                    154       333       129       286 Income tax expense (tax benefit)         2,406     1,443     1,108     1,095 Depreciation and amortization            6,917     7,352     3,936     3,216 EBITDA                                 $ 34,424  $ 20,149  $ 18,036  $ 13,840    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:                                     Six months ended      Three months ended                                     June 30,              June 30,                                     2013       2014       2013       2014                                     (Unaudited)           (Unaudited)                                     Revenue                                     (in thousands) Soda maker starter kits (including  $ 92,866   $ 78,070   $ 49,914   $ 45,846 exchange cylinders) Consumables                           150,893    173,623    78,831     90,699 Other                                 6,270      7,650      3,645      4,626 Total                               $ 250,029  $ 259,343  $ 132,390  $ 141,171                                        Six months ended        Three months ended                                     June 30,                June 30,                                     2013       2014         2013       2014                                     (Audited)  (Unaudited)  (Unaudited)                                     As a percentage of revenue Soda maker starter kits (including  37.1%      30.1%        37.7%      32.5% exchange cylinders) Consumables                         60.4%      66.9%        59.5%      64.2% Other                               2.5%       3.0%         2.8%       3.3% Total                               100.0%     100.0%       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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