SodaStream International Ltd.
) shares jumped almost 12% after its second-quarter 2013 results
outperformed expectations and the company raised its financial
outlook for the full year for the second time this year.
The maker of home beverage carbonation systems once again
soared past the Zacks Consensus Estimate for both revenues and
earnings in the quarter. Margins also rebounded from the weakness
seen in the first quarter.
Second-quarter earnings (including share-based payments) of 60
cents per share outpaced the Zacks Consensus Estimate of 57 cents
by 5.3%. Better-than-expected top line and solid operating
expense leverage drove earnings 30% higher the year-ago earnings
of 45 cents.
Revenues and Margins
Revenues of $132.4 million increased 28.5% year over year on
the back of continued strong demand for its products in the
Americas and Western Europe and improving trends in Asia Pacific.
Total revenue also beat the Zacks Consensus Estimate of $130
million. The top-line growth came despite very strong gains in
the U.S. in last year's second quarter. The strong growth last
year was fuelled by the launch of its soda making machines at the
Wal-Mart Stores Inc.
Among the products categories, soda maker sales increased 25%,
consumables (like gas refills and flavors) increased 28% and
other product sales increased 134% buoyed by strong demand.
Geographically, revenues increased 55% in the Americas, 26% in
Western Europe and 9% in Asia/Pacific but declined 27% in Central
and Eastern Europe, Middle East and Africa (CEEMEA).
In the Americas, U.S. sales grew a strong 42% despite the
difficult year-ago comparisons. Excluding the Wal-Mart gains,
U.S. revenues were up 90% driven by the increased demand for both
soda makers and consumables. Robust increase in brand awareness
resulting from expanded retail presence, increased customer
loyalty and solid product innovation drove sales growth in the
In Western Europe, regions like France, Germany and Italy were
strong. Asia Pacific returned to positive growth in the second
quarter driven by strong gains in Australia and New Zealand while
Japan showed some improving trends from the declines witnessed in
the first quarter. Revenues declined in CEEMEA due to challenging
Gross margins declined 10 basis points (bps) to 54.3% due to a
higher dependence on manufacturing subcontractors. Adjusted
operating margin, however, improved 160 bps year over year to
11.1% due to solid operating expense leverage. The sales and
marketing (S&M) expense ratio improved 300 bps in the quarter
as promotional and advertising expense increased at a lower pace
than revenue growth.
2013 Outlook Upped
Following the solid first-half results, SodaStream upped its
outlook for the full year 2013; for the second quarter in a
For 2013, SodaStream expects revenues to increase 30% from
$436.3 million in 2012, up from prior expectation of 27% growth.
Net income is expected to go up by 23% from $43.9 million in
2012, up from its previous guidance of 20%. Effective tax rate is
still projected to be approximately 10%.
Management aims to achieve its targets in 2013 through planned
marketing support, product innovation and expanded retail
presence with both existing accounts and new channels.
Based in Israel, SodaStream commands a global leadership
position in home beverage carbonation market. These soda making
systems, sold mainly under the SodaStream brand name, offer a
healthier way to enjoy carbonated beverages at home. SodaStream's
products are primarily sold at huge retail stores like
) and Bed Bath & Beyond, Inc.
SodaStream carries a Zacks Rank #2 Rank (Buy). Solid demand,
expanding strategic partnerships, enhanced marketing activities,
regular product innovations, accretive acquisitions and
successful strategic investments will drive the stock. We believe
the company is well on track to achieve its long-term target to
achieve $1 billion in revenues and net income margin between 15%
and 18% by 2016.
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