SodaStream Reports Fourth Quarter And Fiscal 2017 Results

February 14, 2018 | By forimmediaterele | Filed in: Press Releases.

Travel & Tourism Industry release:

AIRPORT CITY, Israel, Feb. 14, 2018 /PRNewswire/ — SodaStream International Ltd. (NASDAQ: SODA), the leading manufacturer of home beverage carbonation systems, announced today its results for the quarter and year ended December 31, 2017.

For the fourth quarter ended December 31, 2017:

  • Revenue increased 19.6% to $157.7 million, compared to $131.8 million in the fourth quarter of 2016
  • Operating income increased 36.4% to $25.7 million, compared to $18.8 million in the fourth quarter of 2016
  • Net income increased 63.2% to an all-time record of $25.5 million, compared to $15.6 million in the fourth quarter of 2016
  • Diluted earnings per share (EPS) increased 58.1% to $1.13 compared to $0.71 in the fourth quarter of 2016

For the year ended December 31, 2017, compared to full year 2016 results:

  • Revenue increased 14.1% to $543.4 million compared to $476.1 million in 2016
  • Operating income increased 49.4% to an all-time record of $81.4 million, compared to $54.5 million in 2016
  • Net income increased 67.3% to an all-time record $74.4 million, compared to $44.5 million in 2016
  • Diluted EPS increased 59.4% to $3.29 compared to $2.07 in 2016

“Our fourth quarter performance represents a terrific finish to an outstanding year for SodaStream,” commented Daniel Birnbaum, Chief Executive Officer of SodaStream. “Throughout 2017 we successfully executed our growth plan aimed at expanding household penetration and increasing usage of our home carbonation system which translated into mid-teens revenue growth, record net income, and strong cash generation. These results underscore the strength of our brand and product offering and showcase the power of our business model. The work we’ve done bolstering our organization, improving our systems and processes, and enhancing our manufacturing capabilities has provided us with a much stronger foundation to capitalize on the many growth opportunities that still lie ahead and continue creating value for our shareholders.”

Fourth Quarter 2017 Financial Review

Geographical Revenue Breakdown

Three Months Ended

December 31,
2016

December 31,
2017

Increase
(decrease)

Increase

(decrease)

In millions USD

%

Western Europe

$

74.8

$

89.0

$

14.2

18.9

%

The Americas

36.1

43.5

7.4

20.7

%

Asia-Pacific

14.9

19.4

4.5

30.6

%

Central & Eastern Europe, Middle East, Africa

6.0

5.8

(0.2)

(4.6)

%

Total

$

131.8

$

157.7

$

25.9

19.6

%

Product Segment Revenue Breakdown

Three Months Ended

December 31,
2016

December 31,
2017

Increase

Increase

In millions USD

%

Sparkling Water Maker Starter Kits

$

56.7

$

71.5

$

14.8

26.1

%

Consumables

74.0

84.7

10.7

14.4

%

Other

1.1

1.5

0.4

38.2

%

Total

$

131.8

$

157.7

$

25.9

19.6

%

 

Product Segment Unit Breakdown

Three Months Ended

December 31,
2016

December 31,
2017

Increase

(decrease)

Increase

(decrease)

In thousands

%

Sparkling Water Maker Starter Kits

941

1,181

240

25.5

%

CO2 Refills

7,413

8,248

835

11.3

%

Flavors

5,235

4,651

(584)

(11.2)

%

Revenue increased $25.9 million, or 19.6%, to $157.7 million compared to $131.8 million in the same period in 2016 driven by growth in most of the Company’s geographic regions, primarily Germany, Canada, Australia and the U.S. Changes in foreign currency exchange rates (“FX”) positively impacted revenue by approximately $8.0 million, mainly driven by the strengthening of the Euro/U.S. Dollar exchange rate.

Gross margin increased 140 basis points to 53.8% compared to 52.4% for the same period in 2016. The increase reflects continued production optimization, the leveraging of fixed infrastructure costs on increased production volume, the introduction of higher margin sparkling water makers, partially offset by a higher portion of sparkling water makers in the product mix. The positive FX impact on revenue was partially offset by an adverse impact of the weakening of the U.S. Dollar/Israeli Shekel exchange rate compared to the same period in 2016. The net positive FX impact on gross profit was approximately $3.9 million.

Sales and marketing expenses were $44.7 million, or 28.3% of revenue, compared to $39.0 million, or 29.6% of revenue, in the same period in 2016. Advertising and promotion expenses increased by $4.6 million to $22.6 million, or 14.3% of revenue, compared to $18.0 million, or 13.7% of revenue, in the same period in 2016. Sales team, distribution and logistics expenses were $22.1 million, or 14.0% of revenue, compared to $21.0 million, or 15.9% of revenue, in the same period in 2016.

General and administrative expenses increased $3.4 million to $14.5 million, or 9.2% of revenue, compared to $11.1 million, or 8.5% of revenue, in the same period in 2016.

Operating income increased 36.4% to $25.7 million, or 16.3% of revenue, compared to $18.8 million, or 14.3% of revenue, in the fourth quarter of 2016. Changes in FX positively impacted operating income by approximately $1.3 million. The positive FX impact on gross profit compared to the same period in 2016 was mainly offset by an adverse impact on operating expenses from the strengthening of the Euro/U.S. Dollar exchange rate.

Net financial income was $1.4 million compared to net financial expense of $0.8 million in the same period in 2016.

Tax expense was $1.5 million with an effective tax rate of 5.7%, compared to $2.4 million with an effective tax rate of 13.2% in the same period in 2016. The decrease in the effective tax rate is mainly due to agreements with tax authorities in certain jurisdictions. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act which had an immaterial impact on the Company’s tax results.

Net income was $25.5 million, or $1.13 per diluted share, based on 22.7 million weighted shares outstanding compared to net income of $15.6 million, or $0.71 per diluted share, based on 22.0 million weighted shares outstanding in the same period in 2016.

Balance Sheet Review

At December 31, 2017, the Company had cash and financial investments totaling $155.2 million compared to $57.3 million at December 31, 2016.

Cash flow from operations less investing activities, excluding financial investments, was $14.3 million compared to $11.6 million in the same period in 2016. During the fourth quarter of 2017, the Company invested $50.0 million in short-term investments.

Working capital increased 6.0% to $132.3 million compared to $124.8 million at December 31, 2016. Inventories increased 10.3% to $97.1 million compared to $88.0 million at December 31, 2016.

Full year 2017 financial review

Geographical Revenue Breakdown

Year Ended

December 31,
2016

December 31,
2017

Increase

Increase

In millions USD

%

Western Europe

$

286.5

$

325.3

$

38.8

13.5

%

The Americas

114.8

127.4

12.6

11.0

%

Asia-Pacific

49.6

61.9

12.3

24.8

%

Central & Eastern Europe, Middle East, Africa

25.2

28.8

3.6

14.3

%

Total

$

476.1

$

543.4

$

67.3

14.1

%

Product Segment Revenue Breakdown

Year Ended

December 31,
2016

December 31,
2017

Increase
(decrease)

Increase
(decrease)

In millions USD

%

Sparkling Water Maker Starter Kits

$

170.8

$

212.3

$

41.5

24.3

%

Consumables

297.0

323.5

26.5

8.9

%

Other

8.3

7.6

(0.7)

(7.7)

%

Total

$

476.1

$

543.4

$

67.3

14.1

%

Product Segment Unit Breakdown

Year Ended

December 31,
2016

December 31,
2017

Increase

(decrease)

Increase

(decrease)

In thousands

%

Sparkling Water Maker Starter Kits

2,941

3,657

716

24.3

%

CO2 Refills

29,407

32,518

3,111

10.6

%

Flavors

21,957

20,289

(1,668)

(7.6)

%

Revenue increased 14.1% to $543.4 million from $476.1 million in the same period in 2016. The increase was driven by growth in all geographical regions, primarily Germany, Canada, Australia and Japan. Changes in foreign currency exchange rates (“FX”) positively impacted revenue by approximately $7.6 million, mainly driven by the strengthening of the Euro/U.S. Dollar exchange rate.

Gross margin increased 180 basis points to 53.3% compared to 51.5% in the same period in the prior year. The increase reflects continued production optimization, the leveraging of fixed infrastructure costs on increased production volume and the introduction of higher margin sparkling water makers, partially offset by a higher portion of sparkling water makers in the product mix and changes in FX compared to the same period in 2016.

Changes in FX negatively impacted gross profit by $1.2 million, mainly driven by the strengthening of the Israeli Shekel against the U.S. Dollar compared to the same period in 2016.

Sales and marketing expenses were $159.2 million, or 29.3% of revenue, compared to $144.7 million, or 30.4% of revenue, in the same period in 2016. The increase in sales and marketing expenses was mainly due to higher advertising and promotion expenses. Advertising and promotion expenses increased by $11.8 million to $76.7 million, or 14.1% of revenue, compared to $64.9 million, or 13.6% of revenue, in the same period in 2016. Sales team, distribution and logistics expenses were $82.5 million, or 15.2% of revenue, compared to $79.8 million and 16.8% of revenue, in the same period in 2016.

General and administrative expenses were $49.1 million, or 9.0% of revenue, compared to $43.5 million, or 9.1% of revenue in 2016.

Operating income increased 49.4% to $81.4 million, or 15.0% of revenue, compared to $54.5 million, or 11.4% of revenue in the same period in 2016. Changes in FX negatively impacted operating income by approximately $4.0 million. In addition to the net negative FX impact on gross profit in the amount of $1.2 million, there was a negative impact due to the strengthening of the Euro/U.S. Dollar rate and its effect on operating expenses compared to the same period in 2016.

Net financial income was $1.4 million compared to net financial expense of $2.1 million in the same period in 2016.

Tax expense was $8.3 million, reflecting an effective tax rate of 10.1%, compared to $7.9 million, or an effective tax rate of 15.1%, in the same period in 2016.

Net income was $74.4 million, or $3.29 per diluted share, based on 22.6 million weighted shares outstanding, compared to net income of $44.5 million, or $2.07 per diluted share, based on 21.5 million weighted shares outstanding in the same period in 2016.

Guidance

For 2018, the Company currently expects full year revenue to increase approximately 12% over 2017 revenue of $543.4 million, of which approximately 2% is expected to result from the acquisition of the Company’s French distributor.

Operating income for 2018 is currently expected to increase approximately 10% over 2017 operating income of $81.4 million, or approximately 20% excluding the increase in share-based payment expense in 2018 compared to 2017.

Diluted earnings per share is currently expected to increase approximately 5% over 2017 diluted earnings per share of $3.29, or approximately 15%, excluding the increase in share-based payment expense in 2018 compared to 2017.

For 2018, the Company currently projects share-based payment expense to increase approximately $9 million over 2017 due to new employee options and restricted stock units expected to be granted by the Company during the first half of 2018. The increase is being driven by the number of new grants and the higher average share price compared with the previous year. Based on IFRS guidelines, close to 60% of the cost associated with new grants of options and restricted stock units is required to be expensed in the first year following the grant date.

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 AM Eastern Standard Time (U.S. time) today (Wednesday, February 14, 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 EBITDA and Adjusted EBITDA, which are non-IFRS measures, see page 10 below.

EBITDA is a non-IFRS measure, which represents earnings before financial expense (income), income tax, depreciation and amortization. Adjusted EBITDA is a non-IFRS measure, which is calculated in the same way as EBITDA, and further eliminates the effect of impairment of other intangible assets. We believe that EBITDA and Adjusted EBITDA, as described above, should be considered in evaluating the Company’s operations. Both measures facilitate 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). Adjusted EBITDA is useful to an investor in evaluating our operating performance because it excludes unusual costs associated with non-recurring events and without regard to non-cash items.

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 EBITDA and Adjusted EBITDA to Net income, the most closely comparable IFRS measure, is included at the end of this press release. In addition, EBITDA and 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, 2016 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
brendon.frey@icrinc.com

Consolidated Statements of Operations

In thousands (other than per share amounts)

For the year ended

For the three months ended

December 31,

December 31,

2016

2017

2016

2017

(Audited)

(Unaudited)

(Unaudited)

Revenue

$

476,065

$

543,371

$

131,800

$

157,659

Cost of revenue

231,087

253,512

62,802

72,784

Gross profit

244,978

289,859

68,998

84,875

Operating expenses

Sales and marketing

144,657

159,225

39,021

44,692

General and administrative

43,522

49,117

11,139

14,484

Other expenses, net

2,327

142

Total operating expenses

190,506

208,484

50,160

59,176

Operating income

54,472

81,375

18,838

25,699

Financial expense (income), net

2,120

(1,354)

806

(1,376)

Income before income tax

52,352

82,729

18,032

27,075

Income tax expense

7,886

8,340

2,384

1,545

Net income for the period

44,466

74,389

15,648

25,530

Net income per share

 

Basic

$

2.10

$

3.41

$

0.73

$

1.16

Diluted

$

2.07

$

3.29

$

0.71

$

1.13

Weighted average number of shares

Basic

21,183

21,808

21,297

22,012

Diluted

21,516

22,577

21,978

22,676

Consolidated Balance Sheets as of

December 31,

December 31,

2016

2017

(Audited)

(Unaudited)

(In thousands)

Assets

Cash and cash equivalents

$

50,250

$

85,168

Financial investments

7,000

70,000

Inventories

87,986

97,088

Trade receivables ,net

87,430

124,352

Other receivables

20,613

19,250

Assets classified as held for sale

1,484

Derivative financial instruments

2,112

404

Total current assets

256,875

396,262

Property, plant and equipment

164,628

171,543

Intangible assets

37,582

38,365

Deferred tax assets

4,154

6,435

Other receivables

2,688

4,260

Total non-current assets

209,052

220,603

Total assets

465,927

616,865

Liabilities

Derivative financial instruments

215

Trade payables

41,643

61,215

Income tax payable

8,312

14,350

Provisions

2,646

2,602

Other current liabilities

22,262

30,461

Total current liabilities

74,863

108,843

Employee benefits

2,306

2,403

Other non-current liabilities

73

164

Deferred tax liabilities

5,166

4,279

Total non-current liabilities

7,545

6,846

Total liabilities

82,408

115,689

Shareholders’ equity

Share capital

3,461

3,599

Share premium

214,609

234,406

Translation reserve

(34,161)

(10,738)

Retained earnings

199,610

273,909

Total shareholders’ equity

383,519

501,176

Total liabilities and shareholders’ equity

$

465,927

$

616,865

Consolidated Statements of Cash Flows

For the year ended

For the three months ended

December 31,

December 31,

2016

2017

2016

2017

(Audited)

(Unaudited)

(Unaudited)

Cash flows from operating activities

Net income for the period

$

44,466

$

74,389

$

15,648

$

25,530

Adjustments:

Depreciation of property, plant and equipment

16,012

19,336

5,086

4,338

Amortization of intangible assets

3,439

2,952

843

737

Impairment of other intangible assets

1,830

Change in fair value of derivative financial instruments

(448)

1,629

(1,074)

182

Other expenses, net

142

Exchange rate differences on long-term loans and
borrowing

287

(355)

Share based payment

4,801

5,225

1,288

1,768

Interest expense (income), net

523

(421)

154

(186)

Income tax expense

7,886

8,340

2,384

1,545

78,796

111,592

23,974

33,914

Decrease (increase) in inventories

22,352

(6,644)

10,527

5,764

Increase in trade and other receivables

(9,375)

(30,845)

(11,990)

(26,592)

Increase (decrease) in trade payables and other liabilities

(3,970)

26,466

(5,237)

8,821

Increase (decrease) in employee benefits

123

287

(92)

72

Increase (decrease) in provisions

239

(44)

(255)

281

88,165

100,812

16,927

22,260

Interest paid

(616)

(135)

(188)

(41)

Income tax received

348

101

141

23

Income tax paid

(5,965)

(5,962)

(740)

(2,726)

Net cash from operating activities

81,932

94,816

16,140

19,516

Cash flows from investing activities

Interest received

93

556

33

228

Proceeds from (investment in) bank deposits

(7,000)

7,000

Investment in financial Investments

(70,000)

(50,000)

Proceeds from investment grants

2,828

6,227

2,324

Proceeds from sale of property, plant and equipment

2,281

691

Proceeds from (payment for) derivative
financial instruments, net

(1,033)

294

10

(800)

Acquisition of property, plant and equipment

(25,987)

(21,165)

(4,159)

(7,062)

Acquisition of intangible assets

(1,982)

(2,260)

(457)

(629)

Net cash used in investing activities

(33,081)

(77,067)

(4,573)

(55,248)

Cash flows from financing activities

Proceeds from exercise of employee share options

4,328

14,710

2,410

3,960

Repayments of long-term loans and borrowings

(34,248)

(16,555)

Change in short-term debt

(2,861)

Net cash from (used in) financing activities

(32,781)

14,710

(14,145)

3,960

Net increase (decrease) in cash and cash equivalents

16,070

32,459

(2,578)

(31,772)

Cash and cash equivalents at the beginning of the period

34,534

50,250

53,857

116,629

Effect of exchange rates fluctuations on cash and cash equivalents

(354)

2,459

(1,029)

311

Cash and cash equivalents at the end of the period

$

50,250

$

85,168

$

50,250

$

85,168

The following tables present the Company’s revenue, by

region and product type for the periods presented, as well as such revenue

by region and product type as a percentage of total revenue:

Year Ended

Three Months Ended

December 31,

December 31,

2016

2017

2016

2017

(Audited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue (in thousands)

Western Europe

$

286,512

$

325,315

$

74,837

$

88,977

The Americas

114,747

127,370

36,053

43,503

Asia-Pacific

49,614

61,902

14,880

19,428

Central & Eastern Europe, Middle East & Africa

25,192

28,784

6,030

5,751

Total

$

476,065

$

543,371

$

131,800

$

157,659

Year Ended

Three Months Ended

December 31,

December 31,

2016

2017

2016

2017

(Audited)

(Unaudited)

(Unaudited)

(Unaudited)

As a percentage of revenue

Western Europe

60.2

%

59.9

%

56.8

%

56.4

%

The Americas

24.1

%

23.4

%

27.4

%

27.6

%

Asia-Pacific

10.4

%

11.4

%

11.3

%

12.3

%

Central & Eastern Europe, Middle East & Africa

5.3

%

5.3

%

4.5

%

3.7

%

Total

100.0

%

100.0

%

100.0

%

100.0

%

Year Ended

Three Months Ended

December 31,

December 31,

2016

2017

2016

2017

(Audited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue (in thousands)

Sparkling Water Maker starter kits (including exchange
cylinders)

$

170,790

$

212,293

$

56,700

$

71,502

Consumables

297,011

323,449

73,997

84,633

Other

8,264

7,629

1,103

1,524

Total

$

476,065

$

543,371

$

131,800

$

157,659

Year Ended

Three Months Ended

December 31,

December 31,

2016

2017

2016

2017

(Audited)

(Unaudited)

(Unaudited)

(Unaudited)

As a percentage of revenue

Sparkling Water Maker starter kits (including exchange
cylinders)

35.9

%

39.1

%

43.0

%

45.3

%

Consumables

62.4

%

59.5

%

56.2

%

53.7

%

Other

1.7

%

1.4

%

0.8

%

1.0

%

Total

100.0

%

100.0

%

100.0

%

100.0

%

Reconciliation of Net income to EBITDA and Adjusted
EBITDA

Year Ended

Three Months Ended

December 31,

December 31,

2016

2017

2016

2017

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(In thousands)

Reconciliation of Net Income to EBITDA and Adjusted
EBITDA

Net income

$

44,466

$

74,389

$

15,648

$

25,530

Financial expense (income), net

2,120

(1,354)

806

(1,376)

Income tax expense

7,886

8,340

2,384

1,545

Depreciation and amortization

19,451

22,288

5,929

5,075

EBITDA

$

73,923

$

103,663

$

24,767

$

30,774

Impairment of other intangible assets

1,830

 

Adjusted EBITDA

$

75,753

$

103,663

$

24,767

$

30,774

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/sodastream-reports-fourth-quarter-and-fiscal-2017-results-300598598.html

SOURCE SodaStream International Ltd.

Related Links

http://www.sodastream.com

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