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SodaStream International: Sodastream Reports Third Quarter Fiscal 2015 Results

The following excerpt is from the company's SEC filing.

- SodaStream International Ltd. (NASDAQ: SODA), the leading manufacturer of home beverage carbonation systems, announced today its results for the three and nine month periods ended September 30, 2015.

For the third quarter ended September 30, 2015, on an adjusted basis*

Revenue was $110.0 million compared to $125.9 million in the third quarter 2014; Revenue on a constant currency basis was $126.0 million

Adjusted operating income was $5.4 million compared to $8.9 million in the third quarter 2014; Adjusted operating income on a constant currency basis was $10.5 million.

Adjusted EBITDA was $9.7 million compared to $13.7 million in the third quarter 2014; Adjusted EBITDA on a constant currency basis was $14.8 million.

Adjusted net income was $4.7 million compared to $9.5 million in the third quarter 2014

Adjusted diluted earnings per share were $0.22 compared to $0.45 in the third quarter 2014

CO2 refills reached an all-time quarterly record of 7.0 million

*Adjusted revenue, Adjusted operating income, Adjusted net income and Adjusted diluted earnings per share are non-IFRS financial measures that eliminate the effect of restructuring costs, which include $2.5 million of pre-tax charges incurred as part of the Company’s restructuring and growth plan announced on October 29, 2014. The charges were related to activities associated with discontinued products, which decreased inventory and fixed assets by $1.9 million and increased cost of revenue by $1.9 million. An additional expense of $0.6 million was associated with the transition to the new Lehavim plant in Southern Israel which increased cost of revenue. Adjusted EBITDA represents earnings before financial income, income tax, depreciation and amortization, and further eliminates the effect of restructuring costs. Reconciliations of the non-IFRS measures included in this press release to the IFRS results are included at the end of this press release.

“Our operating results were similar to the year ago period on a constant currency basis as the growth plan we announced a year ago continues to gain traction. Our recent performance included a number of highlights that underscore the strength of our brand and business model” said Daniel Birnbaum, Chief Executive Officer of SodaStream. “Third quarter CO2 refills increased 10% to an all-time record 7 million, a great indication that our global user base is increasing consumption. We believe usage rates will continue to grow as existing and new consumers embrace our repositioning as a healthy “water brand” provided by our enhanced better-for-you product portfolio, which we recently launched in the U.S. and other select countries. As we accelerate production in our new, state-of-the-art plant in Lehavim, and continue the launch of our new Waters line and strategic repositioning, we believe we are poised to start delivering improved financial results and greater shareholder value beginning in 2016.”

Third Quarter 2015 Financial Reviews

(The financial review relates to the Non-IFRS Consolidated Statements of Operations. All USD values are in accordance with IFRS unless stated otherwise.)

Geographical Revenue Breakdown

Three Months Ended

(Decrease)

In Millions USD

Western Europe

The Americas

Asia-Pacific

Central & Eastern Europe, Middle East, Africa

Product Segment Revenue Breakdown

(decrease)

In millions USD

Sparkling Water Maker Starter Kits

Consumables

Product Segment Unit Breakdown

Increase

In thousands

CO2 Refills

Flavors

The decrease in revenue year-over-year was mainly due to changes in foreign currency exchange rates which reduced revenue by $16.0 million. Since the same period a year ago, several foreign currencies have weakened versus the U.S. dollar, including the Euro by 17%, the Australian Dollar by 22% and the Swedish Krona by 18%.

Gross margin for the third quarter 2015 (before the impact of restructuring costs) was 48.4% compared to 51.2% for the same period in 2014. Third quarter 2015 gross margin was negatively impacted by changes in foreign currency exchange rates versus the same period last year, partially offset by higher share of CO2 refills in the product mix.

Sales and marketing expenses for the third quarter 2015 totaled $36.0 million, or 32.8% of revenue, compared to $41.6 million, or 33.1% for the comparable period last year. The decrease was primarily attributable to lower distribution costs driven by lower sales volume. Sales and marketing expenses also decreased versus the same period last year due to changes in foreign currency rates, mainly the weakening of the Euro and the Australian dollar.

General and administrative expenses for the third quarter 2015 were $11.8 million, or 10.7% of revenue, compared to $13.9 million, or 11.1% of revenue in the comparable period of last year. The decrease was mainly due to a decrease in share-based payment expenses.

Operating income (before the impact of restructuring costs) was $5.4 million, or 4.9% of revenue, compared to $8.9 million, or 7.1% of revenue, in the third quarter 2014. The decrease in operating income was driven primarily by negative impact on revenue from changes in foreign currency exchange rates, offset by lower operating expenses, mainly a reduction in sales and marketing expenses.

The net negative impact on operating income from changes in foreign currency exchange rates in comparison with the same period in 2014 was approximately $5.1 million.

Net financial income was $0.1 million compared to net financial income of $1.8 million in the same period in 2014. Financial income in the third quarter 2015 was mainly due to a reduction of...


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