UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2014
Commission File Number: 001-34929
SodaStream International Ltd.
(Translation of Registrant’s Name
into English)
Gilboa Street, Airport City
Ben Gurion Airport 70100, Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F: Form 20-F x
Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Yes ¨
No x
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): Yes ¨
No x
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934: Yes ¨
No x
If “Yes” is marked, indicate below the file number
assigned to the registrant in connection with Rule 12g3-2(b): 82-_______________.
EXPLANATORY NOTE
On October 29, 2014, SodaStream International
Ltd. (the “Company”) issued a press release announcing its third quarter results for the period ending September 30,
2014. A copy of the press release is attached to this Form 6-K as Exhibit 99.1 and is incorporated herein by reference.
In conjunction with the conference call
being held on October 29, 2014, the Company also is releasing commentary from its Chief Financial Officer (attached to this Form
6-K as Exhibit 99.2 and incorporated herein by reference), a PowerPoint presentation with additional information (attached to this
Form 6-K as Exhibit 99.3 and incorporated herein by reference) and another PowerPoint presentation setting forth the Company's
Growth Plan (attached to this Form 6-K as Exhibit 99.4 and incorporated herein by reference).
The information in this Form 6-K (including
in Exhibits 99.1, 99.2, 99.3 and 99.4) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933 or the Exchange Act.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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SODASTREAM INTERNATIONAL LTD.
(Registrant) |
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Date: October 29, 2014 |
By: |
/s/ Eyal
Shohat |
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Eyal Shohat |
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Chief Legal Officer |
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EXHIBIT INDEX
The following exhibits are filed as part of this Form 6-K:
Exhibit |
Description |
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99.1 |
Press release dated October 29, 2014. |
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|
99.2 |
Commentary from the Chief Financial Officer of the Registrant. |
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99.3
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PowerPoint presentation with additional information.
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99.4 |
PowerPoint presentation: Growth Plan |
Exhibit 99.1
Press Release - SodaStream
SODASTREAM REPORTS THIRD QUARTER RESULTS
AIRPORT CITY, Israel – October
29, 2014 – SodaStream International Ltd. (NASDAQ: SODA), a leading manufacturer of home beverage carbonation systems,
announced today its results for the three and nine month periods ended September 30, 2014.
For the third quarter ended September 30,
2014:
| • | Revenue was $125.9 million compared to $144.6 million in the third quarter 2013 |
| • | EBITDA was $15.7 million compared to $21.9 million in the third quarter 2013 |
| • | Net income was $9.5 million compared to $16.4 million in the third quarter 2013 |
| • | Diluted earnings per share were $0.45, compared to $0.76 in the third quarter 2013 |
“As we previously announced, our third quarter performance
was pressured by challenging selling conditions for soda makers and flavors primarily in the U.S.,” said Daniel Birnbaum,
Chief Executive Officer of SodaStream. “Our performance outside the U.S. was mixed during the third quarter with strength
in company operated markets such as Germany, Australia, Canada and Switzerland, partially offset by declines in distributor markets,
namely France and the Czech Republic. Today, we are introducing a comprehensive growth plan that will serve as our blueprint for
returning SodaStream to profitable growth. We are fully committed to getting the company back on track and leverage the unique
opportunity we have to fulfill our role in the transformation underway in the beverage industry.”
The company has posted a copy of its growth plan on the investor
relations section of its corporate website at http://sodastream.investorroom.com/
Third Quarter 2014 Financial Review
Geographical Revenue Breakdown
Revenue | |
Three Months Ended | | |
| | |
| |
| |
September 30, 2013 | | |
September 30, 2014 | | |
Increase (Decrease) | | |
Increase (Decrease) | |
| |
In Millions USD | | |
% | |
The Americas | |
$ | 49.8 | | |
$ | 29.5 | | |
$ | (20.3 | ) | |
| (41 | %) |
Western Europe | |
| 75.5 | | |
| 74.6 | | |
| (0.9 | ) | |
| (1 | %) |
Asia-Pacific | |
| 8.6 | | |
| 13.3 | | |
| 4.7 | | |
| 54 | % |
Central & Eastern Europe, Middle East, Africa | |
| 10.7 | | |
| 8.5 | | |
| (2.2 | ) | |
| (20 | %) |
Total | |
$ | 144.6 | | |
$ | 125.9 | | |
$ | (18.7 | ) | |
| (12.9 | %) |
Press Release - SodaStream |
Product Segment Revenue Breakdown
Revenue | |
Three Months Ended | | |
| | |
| |
| |
September 30, 2013 | | |
September 30, 2014 | | |
Increase (Decrease) | | |
Increase (Decrease) | |
| |
In millions USD | | |
% | |
Soda Maker Starter Kits | |
$ | 62.5 | | |
$ | 41.5 | | |
$ | (21.0 | ) | |
| (34 | %) |
Consumables | |
| 79.1 | | |
| 81.2 | | |
| 2.1 | | |
| 3 | % |
Other | |
| 3.0 | | |
| 3.2 | | |
| 0.2 | | |
| 7 | % |
Total | |
$ | 144.6 | | |
$ | 125.9 | | |
$ | (18.7 | ) | |
| (12.9 | %) |
Product Segment Unit Breakdown
| |
Three Months Ended | | |
| | |
| |
| |
September 30, 2013 | | |
September 30, 2014 | | |
Increase (Decrease) | | |
Increase (Decrease) | |
| |
In thousands | | |
% | |
Soda Maker Starter Kits | |
| 1,196 | | |
| 818 | | |
| (378 | ) | |
| (32 | %) |
CO2 Refills | |
| 5,806 | | |
| 6,396 | | |
| 590 | | |
| 10 | % |
Flavors | |
| 8,261 | | |
| 7,607 | | |
| (654 | ) | |
| (8 | %) |
Gross margin for the third quarter 2014
was 51.2% compared to 54.1% for the same period in 2013. The decline was primarily due to deleveraging of fixed costs on lower
sales, higher share of lower margin soda makers in the sales mix and inventory write offs, which were partially offset by a higher
share of CO2 refills.
Sales and marketing expenses for the third
quarter 2014 totaled $41.6 million, or 33.1% of revenue, compared to $47.5 million, or 32.9% of revenue for the comparable period
in the prior year. The $5.9 million decline in sales and marketing expenses was attributable to lower advertising and promotion
expenses which decreased to 12.5% of revenue from 15.5% of revenue in the third quarter of 2013. This was partially offset by an
increase in selling expenses, including the additional costs of our newly acquired Japanese distribution channel.
General and administrative expenses for
the third quarter 2014 were $13.9 million, or 11.1% of revenue, compared to $12.7 million, or 8.8% of revenue in the comparable
period of last year. The increase was due to additional expenses related to our newly acquired Japanese distribution channel, as
well as additional infrastructure (mainly information technology systems) to support future growth and operational efficiency.
This was partially offset by lower share-based compensation expenses.
Operating income decreased to $8.9 million,
or 7.1% of revenue, compared to $18.0 million, or 12.5% of revenue in the third quarter of 2013.
Financial income increased to $1.8 million
compared to $315,000 in the third quarter of 2013 mainly due to derivative financial instruments gain following the Euro/U.S. dollar
devaluation and reduction of liabilities in Israeli Shekel following its devaluation against the U.S. Dollar.
Tax expense decreased to $1.2 million compared
to $1.9 million in the third quarter of 2013 due to lower income before tax. Effective tax rate increased to 11.5% compared to
10.5% in the third quarter of 2013 due to changes in the distribution of profit before tax among different jurisdictions.
Balance Sheet Review
| • | Cash and cash equivalents and bank deposits at September 30, 2014 were $39.9 million compared to
$40.9 million at December 31, 2013. The slight decrease is primarily due to the investment in our new production facility and the
acquisition of our Japanese distributor, offset by cash generated from operating activities and an increase in bank debt. |
| • | The Company had $35.8 million of bank debt at September 30, 2014, mainly for financing the investment
in its new production facility, compared to $15.5 million of bank debt at December 31, 2013. |
| • | Working capital at September 30, 2014 increased 11.6% to $173.4 million compared to $155.4 million
at December 31, 2013, mainly due to a decrease in trade payables and an increase in inventory from our newly acquired Japanese
distribution channel. Inventories at September 30, 2014 increased 8.2% to $152.2 million compared to $140.7 million at December
31, 2013. |
| • | Operating cash flow for the quarter increased to $22.7 million compared to $5.0 million in third
quarter 2013 mainly due to decrease in working capital. |
Press Release - SodaStream |
Guidance
Based on third quarter results and current
projections for the remainder of the year, the Company is revising its outlook:
| • | The Company now expects full year 2014 revenue to decrease approximately 9% over 2013 revenue of
$562.7 million. |
| • | The Company now expects full year 2014 EBITDA to decrease approximately 26% over 2013 EBITDA of
$62.2 million. |
| • | The Company now expects full year 2014 net income to decrease approximately 42% over 2013 net income
of $42.0 million. |
Conference Call and Management Commentary
Detailed CFO commentary and a supplemental
slide presentation have been filed with the Securities and Exchange Commission today under the cover of Form 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 Standard Time (U.S. time) today (Wednesday, October 29, 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 approximately 70,000 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.
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 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 andor 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
Press Release - SodaStream |
Consolidated Statements of Operations
In thousands (other than per share amounts)
| |
For the nine months ended | | |
For the three months ended | |
| |
September 30, | | |
September 30, | |
| |
2013 | | |
2014 | | |
2013 | | |
2014 | |
| |
(Unaudited) | | |
(Unaudited) | |
Revenue | |
$ | 394,613 | | |
$ | 385,248 | | |
$ | 144,584 | | |
$ | 125,905 | |
Cost of revenue | |
| 180,372 | | |
| 187,668 | | |
| 66,366 | | |
| 61,428 | |
| |
| | | |
| | | |
| | | |
| | |
Gross profit | |
| 214,241 | | |
| 197,580 | | |
| 78,218 | | |
| 64,477 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Sales and marketing | |
| 130,047 | | |
| 134,723 | | |
| 47,549 | | |
| 41,636 | |
General and administrative | |
| 37,886 | | |
| 40,358 | | |
| 12,660 | | |
| 13,931 | |
| |
| | | |
| | | |
| | | |
| | |
Total operating expenses | |
| 167,933 | | |
| 175,081 | | |
| 60,209 | | |
| 55,567 | |
| |
| | | |
| | | |
| | | |
| | |
Operating income | |
| 46,308 | | |
| 22,499 | | |
| 18,009 | | |
| 8,910 | |
| |
| | | |
| | | |
| | | |
| | |
Interest expense, net | |
| 295 | | |
| 552 | | |
| 141 | | |
| 219 | |
Other financial expense, net | |
| 336 | | |
| (1,210 | ) | |
| (456 | ) | |
| (2,002 | ) |
| |
| | | |
| | | |
| | | |
| | |
Total financial expense, net | |
| 631 | | |
| (658 | ) | |
| (315 | ) | |
| (1,783 | ) |
| |
| | | |
| | | |
| | | |
| | |
Income before income taxes | |
| 45,677 | | |
| 23,157 | | |
| 18,324 | | |
| 10,693 | |
| |
| | | |
| | | |
| | | |
| | |
Income tax expense | |
| 4,331 | | |
| 2,672 | | |
| 1,925 | | |
| 1,229 | |
| |
| | | |
| | | |
| | | |
| | |
Net income for the period | |
$ | 41,346 | | |
$ | 20,485 | | |
$ | 16,399 | | |
$ | 9,464 | |
| |
| | | |
| | | |
| | | |
| | |
Net income per share | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 1.99 | | |
$ | 0.98 | | |
$ | 0.79 | | |
$ | 0.45 | |
Diluted | |
$ | 1.93 | | |
$ | 0.96 | | |
$ | 0.76 | | |
$ | 0.45 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of shares | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 20,757 | | |
| 20,956 | | |
| 20,831 | | |
| 21,000 | |
Diluted | |
| 21,383 | | |
| 21,243 | | |
| 21,532 | | |
| 21,193 | |
Press Release - SodaStream |
Consolidated Balance Sheets as of
| |
December 31, | | |
September 30, | |
| |
2013 | | |
2014 | |
| |
(Audited) | | |
(Unaudited) | |
| |
(In thousands) | |
Assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 40,885 | | |
$ | 39,901 | |
Inventories | |
| 140,709 | | |
| 152,196 | |
Trade receivables | |
| 123,936 | | |
| 95,275 | |
Other receivables | |
| 22,208 | | |
| 35,405 | |
Derivative financial instruments | |
| 538 | | |
| 2,286 | |
Total current assets | |
| 328,276 | | |
| 325,063 | |
| |
| | | |
| | |
Property, plant and equipment | |
| 107,132 | | |
| 125,792 | |
Intangible assets | |
| 48,104 | | |
| 48,015 | |
Deferred tax assets | |
| 1,089 | | |
| 1,337 | |
Other receivables | |
| 398 | | |
| 464 | |
Total non-current assets | |
| 156,723 | | |
| 175,608 | |
| |
| | | |
| | |
Total assets | |
| 484,999 | | |
| 500,671 | |
| |
| | | |
| | |
Liabilities | |
| | | |
| | |
Loans and borrowings | |
| 15,452 | | |
| 12,458 | |
Derivative financial instruments | |
| 103 | | |
| - | |
Trade payables | |
| 90,749 | | |
| 68,496 | |
Income tax payable | |
| 9,869 | | |
| 9,675 | |
Provisions | |
| 1,614 | | |
| 2,007 | |
Other current liabilities | |
| 29,674 | | |
| 31,615 | |
Total current liabilities | |
| 147,461 | | |
| 124,251 | |
| |
| | | |
| | |
Loans and borrowings | |
| - | | |
| 23,344 | |
Employee benefits | |
| 2,221 | | |
| 2,015 | |
Provisions | |
| 714 | | |
| 699 | |
Deferred tax liabilities | |
| 2,997 | | |
| 2,059 | |
Total non-current liabilities | |
| 5,932 | | |
| 28,117 | |
| |
| | | |
| | |
Total liabilities | |
| 153,393 | | |
| 152,368 | |
| |
| | | |
| | |
Shareholders’ equity | |
| | | |
| | |
Share capital | |
| 3,378 | | |
| 3,399 | |
Share premium | |
| 193,649 | | |
| 201,180 | |
Translation reserve | |
| 3,394 | | |
| (7,946 | ) |
Retained earnings | |
| 131,185 | | |
| 151,670 | |
Total shareholders’ equity | |
| 331,606 | | |
| 348,303 | |
| |
| | | |
| | |
Total liabilities and shareholders’ equity | |
$ | 484,999 | | |
$ | 500,671 | |
| |
| | | |
| | |
Press Release - SodaStream |
Consolidated Statements of Cash Flows
| |
For the nine months ended | | |
For the three months ended | |
| |
September 30, | | |
September 30, | |
| |
2013 | | |
2014 | | |
2013 | | |
2014 | |
| |
(Unaudited) | | |
(Unaudited) | |
| |
(In thousands) | |
Cash flows from operating activities | |
| | | |
| | | |
| | | |
| | |
Net income for the period | |
$ | 41,346 | | |
$ | 20,485 | | |
$ | 16,399 | | |
$ | 9,464 | |
| |
| | | |
| | | |
| | | |
| | |
Adjustments: | |
| | | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 1,769 | | |
| 2,042 | | |
| 629 | | |
| 781 | |
Change in fair value of derivative financial instruments | |
| (267 | ) | |
| (1,324 | ) | |
| 270 | | |
| (1,588 | ) |
Exchange rate differences on long-term loans and borrowing | |
| - | | |
| (1,030 | ) | |
| - | | |
| (1,030 | ) |
Depreciation of property, plant and equipment | |
| 8,605 | | |
| 10,085 | | |
| 2,828 | | |
| 3,994 | |
Share based payment | |
| 8,238 | | |
| 6,732 | | |
| 2,884 | | |
| 2,195 | |
Interest expense, net | |
| 295 | | |
| 552 | | |
| 141 | | |
| 219 | |
Income tax expense | |
| 4,331 | | |
| 2,672 | | |
| 1,925 | | |
| 1,229 | |
| |
| 64,317 | | |
| 40,214 | | |
| 25,076 | | |
| 15,264 | |
Increase in inventories | |
| (37,591 | ) | |
| (15,604 | ) | |
| (12,807 | ) | |
| (11,659 | ) |
Decrease (increase) in trade and other receivables | |
| (35,792 | ) | |
| 23,425 | | |
| (16,423 | ) | |
| 9,572 | |
Increase (decrease) in trade payables | |
| (8,765 | ) | |
| (21,488 | ) | |
| 4,467 | | |
| 8,099 | |
Increase (decrease) in employee benefits | |
| 24 | | |
| (70 | ) | |
| 25 | | |
| (89 | ) |
Increase in provisions and other current liabilities | |
| 578 | | |
| 3,933 | | |
| 5,816 | | |
| 2,167 | |
| |
| (17,229 | ) | |
| 30,410 | | |
| 6,154 | | |
| 23,354 | |
Interest paid | |
| (289 | ) | |
| (549 | ) | |
| (110 | ) | |
| (220 | ) |
Income tax received | |
| 3,769 | | |
| 715 | | |
| 230 | | |
| 5 | |
Income tax paid | |
| (2,287 | ) | |
| (4,361 | ) | |
| (1,321 | ) | |
| (422 | ) |
Net cash from (used in) operating activities | |
| (16,036 | ) | |
| 26,215 | | |
| 4,953 | | |
| 22,717 | |
| |
| | | |
| | | |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | | |
| | | |
| | |
Interest received | |
| 114 | | |
| 42 | | |
| 20 | | |
| 15 | |
Investment in bank deposits | |
| (10,000 | ) | |
| - | | |
| - | | |
| - | |
Proceeds from (payments for) derivative financial instruments, net | |
| 50 | | |
| (527 | ) | |
| 593 | | |
| 721 | |
Acquisition of subsidiary, net of cash acquired | |
| (1,179 | ) | |
| - | | |
| - | | |
| - | |
Acquisition of property, plant and equipment | |
| (26,296 | ) | |
| (43,710 | ) | |
| (6,968 | ) | |
| (15,499 | ) |
Acquisition of intangible assets | |
| (3,543 | ) | |
| (4,054 | ) | |
| (1,054 | ) | |
| (1,508 | ) |
Net cash used in investing activities | |
| (40,854 | ) | |
| (48,249 | ) | |
| (7,409 | ) | |
| (16,271 | ) |
| |
| | | |
| | | |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | | |
| | | |
| | |
Proceeds from exercise of employee share options | |
| 4,011 | | |
| 820 | | |
| 2,179 | | |
| 79 | |
Receipts of long-term loans and borrowings | |
| - | | |
| 30,210 | | |
| - | | |
| 30,210 | |
Change in short-term debt | |
| 20,013 | | |
| (8,830 | ) | |
| 3,870 | | |
| (31,997 | ) |
Net cash from (used in) financing activities | |
| 24,024 | | |
| 22,200 | | |
| 6,049 | | |
| (1,708 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
| (32,866 | ) | |
| 166 | | |
| 3,593 | | |
| 4,738 | |
Cash and cash equivalents at the beginning of the period | |
| 62,068 | | |
| 40,885 | | |
| 25,200 | | |
| 36,244 | |
Effect of exchange rates fluctuations on cash and cash equivalents | |
| 9 | | |
| (1,150 | ) | |
| 418 | | |
| (1,081 | ) |
| |
| | | |
| | | |
| | | |
| | |
Cash and cash equivalents at the end of the period | |
$ | 29,211 | | |
$ | 39,901 | | |
$ | 29,211 | | |
$ | 39,901 | |
Press Release - SodaStream |
Information about revenue in reportable segments
| |
The Americas | | |
Western Europe | | |
Asia-Pacific | | |
Central &
Eastern Europe,
Middle East, Africa | | |
Total | |
| |
(In thousands) | |
Nine months ended: | |
| | | |
| | | |
| | | |
| | | |
| | |
September 30, 2013 (Unaudited) | |
$ | 145,503 | | |
| 196,851 | | |
| 28,738 | | |
| 23,521 | | |
$ | 394,613 | |
September 30, 2014 (Unaudited) | |
$ | 105,141 | | |
| 214,805 | | |
| 37,396 | | |
| 27,906 | | |
$ | 385,248 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Three months ended: | |
| | | |
| | | |
| | | |
| | | |
| | |
September 30, 2013 (Unaudited) | |
$ | 49,791 | | |
| 75,466 | | |
| 8,587 | | |
| 10,740 | | |
$ | 144,584 | |
September 30, 2014 (Unaudited) | |
$ | 29,504 | | |
| 74,589 | | |
| 13,265 | | |
| 8,547 | | |
$ | 125,905 | |
Press Release - SodaStream |
EBITDA
| |
Nine months ended | | |
Three months ended | |
| |
September 30, | | |
September 30, | |
| |
2013 | | |
2014 | | |
2013 | | |
2014 | |
| |
(Unaudited) | |
| |
(In thousands) | |
| |
| | |
| | |
| | |
| |
Reconciliation of Net Income to EBITDA | |
| | | |
| | | |
| | | |
| | |
Net income | |
$ | 41,346 | | |
$ | 20,485 | | |
$ | 16,399 | | |
$ | 9,464 | |
Interest expense, net | |
| 295 | | |
| 552 | | |
| 141 | | |
| 219 | |
Income tax expense (tax benefit) | |
| 4,331 | | |
| 2,672 | | |
| 1,925 | | |
| 1,229 | |
Depreciation and amortization | |
| 10,374 | | |
| 12,127 | | |
| 3,457 | | |
| 4,775 | |
EBITDA | |
$ | 56,346 | | |
$ | 35,836 | | |
$ | 21,922 | | |
$ | 15,687 | |
Press Release - SodaStream |
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:
| |
Nine months ended | | |
Three months ended | |
| |
September 30, | | |
September 30, | |
| |
2013 | | |
2014 | | |
2013 | | |
2014 | |
| |
(Unaudited) | | |
(Unaudited) | |
| |
Revenue | |
| |
(in thousands) | |
| |
| | |
| | |
| | |
| |
Soda maker starter kits (including exchange cylinders) | |
$ | 155,350 | | |
$ | 119,534 | | |
$ | 62,484 | | |
$ | 41,464 | |
Consumables | |
| 229,969 | | |
| 254,835 | | |
| 79,076 | | |
| 81,212 | |
Other | |
| 9,294 | | |
| 10,879 | | |
| 3,024 | | |
| 3,229 | |
Total | |
$ | 394,613 | | |
$ | 385,248 | | |
$ | 144,584 | | |
$ | 125,905 | |
| |
| | |
| | |
| | |
| |
| |
Nine months ended | | |
Three months ended | |
| |
September 30, | | |
September 30, | |
| |
2013 | | |
2014 | | |
2013 | | |
2014 | |
| |
(Audited) | | |
(Unaudited) | | |
(Unaudited) | |
| |
As a percentage of revenue | |
| |
| | |
| | |
| | |
| |
Soda maker starter kits (including exchange cylinders) | |
| 39.4 | % | |
| 31.0 | % | |
| 43.2 | % | |
| 32.9 | % |
Consumables | |
| 58.3 | % | |
| 66.1 | % | |
| 54.7 | % | |
| 64.5 | % |
Other | |
| 2.3 | % | |
| 2.9 | % | |
| 2.1 | % | |
| 2.6 | % |
Total | |
| 100.0 | % | |
| 100.0 | % | |
| 100.0 | % | |
| 100.0 | % |
Exhibit 99.2
SodaStream International Ltd.
Chief Financial Officer’s Commentary
Third Quarter 2014
Revenue
Revenue was $125.9 million compared to
$144.6 million in the third quarter 2013.
Americas’ revenue decreased 40.7%
to $29.5 million from $49.8 million; Western Europe revenue decreased 1.2% to $74.6 million from $75.5 million; Asia-Pacific revenue
increased 54.5% to $13.3 million from $8.6 million and CEMEA revenue decreased 20.4% to $8.5 million from $10.7 million in the
third quarter 2013.
The following table sets forth each region’s
contribution to total revenue and a comparison with the third quarter 2013 (by percentage):
Region |
Portion of the revenue in three months ended |
Revenue increase
(decrease) between periods |
|
September 30, 2013 |
September 30, 2014 |
|
The Americas |
34.4% |
23.4% |
(40.7%) |
Western Europe |
52.3% |
59.3% |
(1.2%) |
Asia-Pacific |
5.9% |
10.5% |
54.5% |
Central & Eastern Europe, Middle East & Africa |
7.4% |
6.8% |
(20.4%) |
Total |
100.0% |
100.0% |
12.9% |
The Americas revenue was mainly impacted
by a decrease in soda maker sales in the U.S. due to reduced demand and sell-through at retail. The slight decrease in Western
Europe revenue was due to lower sell-in in France and Nordics partially offset by increased sales in Germany, Switzerland and Austria.
Asia-Pacific revenue increase was attributable to Australia and new acquired Japanese distribution. CEMEA revenue decrease was
partially due to a one-time sales event in Israel a year ago that wasn’t repeated.
Soda maker unit sales decreased 31.6% to
818,000 from 1.2 million in the third quarter of 2014 mainly due to the U.S. CO2 refill unit sales increased 10.2% to 6.4 million
and flavor unit sales decreased 7.9% to 7.6 million.
Gross Margin
Gross margin for the third quarter 2014
was 51.2% compared to 54.1% for the same period in 2013. The decline was primarily due to deleveraging of fixed costs on lower
sales, higher share of lower margin soda makers in the sales mix and inventory write offs, which were partially offset by a higher
share of CO2 refills.
Sales & Marketing
Sales and marketing expenses totaled $41.6
million, or 33.1% of revenue, compared to $47.5 million, or 32.9% of revenue for the third quarter 2013.
The $5.9 million decrease was due to lower advertising and promotion expenses, which decreased $6.7 million to $15.7 million, or
12.5% of revenue in the quarter, compared to $22.4 million or 15.5% of revenue in the third quarter 2013. The decrease was mainly
in the U.S.
Selling expenses excluding advertising
and promotion amounted to $26.0 million, or 20.6% of revenue, compared to $25.1 million or 17.4% of revenue in the third quarter
2013. The increase was primarily due to expenses of our newly acquired Japanese distribution channel.
General & Administrative
General and administrative expenses for the third quarter 2014
were $13.9 million, or 11.1% of revenue, compared to $12.7 million, or 8.8% of revenue, in the comparable period of last year.
The increase was due to additional expenses related to our newly acquired Japanese distribution channel, as well as additional
infrastructure (mainly information technology systems) to support future growth and operational efficiency which were partially
offset by lower share-based compensation expenses
Operating Income
Operating income decreased to $8.9 million,
or 7.1% of revenue, compared to $18.0 million, or 12.5% of revenue in the third quarter 2013, due to the revenue and gross margin
decrease, partially offset by operating expenses reduction.
Financial income
Financial income increased $1.5 million
to $1.8 million from $315,000 in the third quarter 2013 mainly due to derivative financial instruments gain following the Euro/U.S.
dollar devaluation during the quarter and the erosion of liabilities denominated in Israeli Shekels following the Shekel’s
devaluation against the U.S. Dollar during the quarter.
Tax Expense
Tax expense decreased to $1.2 million compared
to $1.9 million in the third quarter 2013. Effective tax increased to 11.5% compared to 10.5% in the third quarter 2013 due to
changes in the distribution of profit before tax between territories.
Net Income
Third quarter 2014 net income was $9.5
million, or $0.45 per diluted share, based on 21.2 million weighted shares outstanding compared to net income of $16.4 million,
or $0.76 per diluted share, based on 21.5 million weighted shares outstanding in the third quarter 2013.
Foreign Currency Impact
Changes in foreign exchange rates had no material impact on
revenue and operating income in the quarter compared to the third quarter of 2013 as the average rates of the Euro and the Israeli
Shekel against that of the U.S. dollar were not materially different from the third quarter 2013.
Nine months 2014
Revenue
Nine months revenue was $385.2 million
compared to $394.6 million in first nine months of 2013.
Americas’ revenue decreased 27.7%
to $105.1 million from $145.5 million; Western Europe revenue increased 9.1% to $214.8 million from $196.9 million; Asia-Pacific
revenue increased 30.1% to $37.4 million from $28.7 million and CEMEA revenue increased 18.6% to $27.9 million from $23.5 million.
The following table sets forth each region’s
contribution to total revenue and a comparison with 2013 (by percentage):
Region |
Portion of the revenue in nine months ended |
Revenue increase
between periods |
|
September 30, 2013 |
September 30, 2014 |
|
The Americas |
36.9% |
27.3% |
(27.7%) |
Western Europe |
49.8% |
55.8% |
9.1% |
Asia-Pacific |
7.3% |
9.7% |
30.1% |
Central & Eastern Europe, Middle East & Africa |
6.0% |
7.2% |
18.6% |
Total |
100.0% |
100.0% |
2.4% |
The Americas revenue was impacted, similar
to the quarter, mainly by a decrease in soda maker sales in the U.S. due to reduced demand and excess inventory in retail coming
out of the fourth quarter of 2013. The increase in Western Europe revenues was attributable, similar to the quarter, mainly to
Germany, Austria and Switzerland, partially offset by a decrease in France. The increase in Asia-Pacific revenue was mainly attributable
to Australia and our newly acquired Japanese distribution. The increase in CEMEA revenue was mainly due to the Czech Republic in
the first half partially offset by the exceptional sales activity in Israel of the third quarter of 2013.
Soda maker unit sales decreased 24.1% to
2.2 million from 2.9 million in the first nine months of 2013 mainly due to the U.S decrease. CO2 refill unit sales increased 16.3%
to a record 18.7 million and flavor unit sales increased 3.3% to 25.3 million.
Gross Margin
Nine months gross margin was 51.3% this
year compared to 54.3% in the prior year. The decline was primarily due to deleveraging of fixed costs on lower sales, unfavorable
changes in foreign currency, higher share of lower margin soda makers in the sales mix and inventory write offs, which were partially
offset by a higher share of CO2 refills.
Sales & Marketing
Sales and marketing expenses totaled $134.7
million, or 35.0% of revenue, compared to $130.0 million, or 33.0% of revenue, in the first nine months of 2013. The $4.7 million
increase was primarily due to an increase in selling expenses excluding advertising and promotion, which increased $4.8 million
to $76.6 million, or 19.9% of revenue, compared to $71.8 million or 18.2% of revenue in the nine months of 2013 . The increase
was also due to expenses of our newly acquired Italian and Japanese distribution channels.
Advertising and promotion expenses were
$58.1 million, or 15.1% of revenue, in the nine months of 2014, similar to $58.2 million, or 14.8% of revenue, in the nine months
of 2013.
General & Administrative
General and administrative expenses for
the nine months of 2014 were $40.4 million, or 10.5% of revenue, compared to $37.9 million, or 9.6% of revenue, in the first nine
months of 2013. The increase was due to additional expenses related to our newly acquired Italian and Japanese distribution channels,
as well as additional infrastructure to support future growth and operational efficiency, which were partially offset by lower
share-based compensation expenses.
Operating Income
Operating income decreased to $22.5 million,
or 5.8% of revenue compared to $46.3 million or 11.7% of revenue in the nine months of 2013.
Financial income
Financial income increased $1.5 million
to $1.2 million from a financial expense of $336,000 in the first nine months of 2013 mainly due to the third quarter derivative
financial instruments gain following the Euro/U.S. dollar devaluation during the period and the erosion of Shekel- and Euro- denominated
liabilities following the Shekel’s and Euro’s devaluation against the U.S. Dollar during the period.
Tax Expense
Tax expense was $2.7 representing an 11.5% effective tax rate
compared to $4.3 million or a 9.5% effective tax rate in the nine months of 2013. The increase in the effective tax rate was primarily
due to the geographical distribution of income before tax and the difference in local tax rates.
Net Income
2014 net income was $20.5 million, or $0.96
per diluted share, based on 21.2 million weighted shares outstanding, compared to net income of $41.3 million, or $1.93 per diluted
share, based on 21.4 million weighted shares outstanding in the nine months of 2013.
Foreign Currency Impact
Changes in foreign exchange rates ("FX") had a positive
impact on revenue in compared to the nine months 2013 due primarily to the strengthening of the average rate of the Euro against
that of the U.S. dollar compared to the nine months 2013, partially offset by devaluation of other currencies, mainly the Australian
dollar, the Canadian dollar and the South African Rand. Approximately 65% of costs and expenses were in currencies other than the
U.S. dollar, mainly the Israeli Shekel, which strengthened 4% and the Euro which strengthened 3% against the average rate of the
U.S. dollar in the nine months of 2013. As a result, FX had a negative impact of $3.3 million on operating income
Balance Sheet
As of September 30, 2014, the Company had
cash and cash equivalents of $39.9 million compared to $40.9 million at December 31, 2013. The slight decrease is primarily due
to the investment in our new production facility, the acquisition of our Japanese distributor, offset by cash generated from operating
activities and increase in bank debt. As of September 30, 2014, the Company had $35.8 million of bank debt mainly for financing
the investment in our new production facility, compared to $15.5 million of bank debt as of December 31, 2013.
As of September 30, 2014, working capital
increased by $18.0 million to $173.4 million from $155.4 million as of December 31, 2013. Inventories increased by $11.5 million
to $152.2 million as of September 30, 2014 from $140.7 million as of December 31, 2013.
Compared to June 30, 2014, working capital decreased by $6.0
million to $173.4 million from $179.4 million. Inventories increased by $7.5 million to $152.2 million from $144.7 million.
Exhibit 99.3
Q3 2014 % Change Y/Y Total Revenues $125.9 million - 13% Soda Maker Units 818,000 - 32% Flavor Units 7.6 million - 8% CO 2 Refill Units 6.4 million +10% Net Income $9.5 million - 42% EPS* $0.45 - 41% Financial Highlights Q3 2014 *Based on 21.2 million weighted shares outstanding in Q 3 2014 and 21.5 million weighted shares outstanding in Q 3 2013
Quarterly Revenue 2009 - 2014 (in $ Million) Quarterly Revenue Change 27.9 31.6 35.9 40.9 39.1 50.0 54.5 64.9 58.5 69.1 75.7 85.7 87.9 103.0 112.5 132.9 117.6 132.4 144.6 168.1 118.2 141.2 125.9 - 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014
Quarterly Soda Maker Unit Sales 2009 - 2014 (in thousands ) Quarterly Soda Maker Units Change 184 203 285 385 297 463 449 712 592 634 717 767 683 764 940 1 , 111 776 935 1 , 196 1 , 542 604 785 818 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014
Quarterly Refill Unit Sales 2009 - 2014 (in millions) Quarterly CO 2 Refill Units Change 1.9 2.1 2.2 2.3 2.3 2.5 2.8 2.7 2.9 3.4 3.6 3.4 3.7 4.2 4.3 4.3 4.8 5.5 5.8 5.4 5.8 6.5 6.4 - 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014
Quarterly Flavor Unit Sales 2009 - 2014 (in millions) Quarterly Flavor Units Change 1.4 1.7 2.0 2.2 3.0 3.1 4.1 3.7 3.8 6.1 4.4 4.6 5.8 7.2 7.7 7.4 7.7 8.5 8.3 9.8 8.4 9.3 7.6 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014
Fiscal 2014 Guidance Update Based on third quarter results and current projections for the remainder of the year, the Company is revising its outlook: • The Company now expects full year 2014 revenue to decrease approximately 9% over 2013 revenue of $562.7 million . • The Company now expects full year 2014 EBITDA to decrease approximately 26% over 2013 EBITDA of $62.2 million . • The Company now expects full year 2014 net income to decrease approximately 42% over 2013 net income of $42.0 million .
Consolidated Statements of Operations Q 3 - 2014 vs. Q 3 - 2013 Consolidated Statements of Operations In thousands (other than per share amounts) For the nine months ended For the three months ended September 30, September 30, 2013 2014 2013 2014 (Unaudited) (Unaudited) Revenue $ 394,613 $ 385,248 $ 144,584 $ 125,905 Cost of revenue 180,372 187,668 66,366 61,428 Gross profit 214,241 197,580 78,218 64,477 Operating expenses Sales and marketing 130,047 134,723 47,549 41,636 General and administrative 37,886 40,358 12,660 13,931 Total operating expenses 167,933 175,081 60,209 55,567 Operating income 46,308 22,499 18,009 8,910 Interest expense, net 295 552 141 219 Other financial expense, net 336 (1,210) (456) (2,002) Total financial expense, net 631 (658) (315) (1,783) Income before income taxes 45,677 23,157 18,324 10,693 Income tax expense 4,331 2,672 1,925 1,229 Net income for the period $ 41,346 $ 20,485 $ 16,399 $ 9,464 Net income per share Basic $ 1.99 $ 0.98 $ 0.79 $ 0.45 Diluted $ 1.93 $ 0.96 $ 0.76 $ 0.45 Weighted average number of shares Basic 20,757 20,956 20,831 21,000 Diluted 21,383 21,243 21,532 21,193
Exhibit 99.4
Growth Plan October 29 , 2014
1 Safe Harbour Statement This presentation 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 materially from the results, performance or achievements expressed or implied by such forward - looking statements . Important factors that could cause or contribute to such differences are detailed in documents we file from time to time with the United States Securities and Exchange Commission . Forward - looking statements in this presentation are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 . These statements include descriptions regarding the Company’s plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs and other information that is not historical information . These statements can be recognized by the use of words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” potential” or “continue,” the negative of these terms and other comparable terminology . Such forward - looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, including those described under “Risk Factors” in the Company’s Form 20 - F, that may cause the Company’s actual results, performance or achievements to differ materially from those set forth in the forward - looking statements as a result of various factors and assumptions . The Company has no obligation and does not undertake to revise forward - looking statements to reflect future events or circumstances . The trademarks included herein are the property of the owners thereof and are used for reference purposes only . Such use should not be construed as an endorsement of the products or services of SodaStream or of those other companies .
2 Content Current Situation The opportunity Our challenges The plan – resume profitable growth Financial impact
3 SodaStream at an inflection point ▪ Following 7 years of consecutive double - digit revenue growth, the trend stopped ▪ We outgrew our internal capacity and expanded our product range resulting in operational complexity and erosion of our profit margins ▪ We invested in buying back distributor markets and in capacity expansion ▪ In the US market, our acquisition rate of new users has dramatically slowed down but usage rates continue to be strong ▪ Outside the US, we continue to enjoy growth, though at lower rates than in previous years CURRENT SITUATION
4 SodaStream Revenue 2009 – 2014 136.2 208.4 289.0 436.3 562.7 513.2 2009 2010 2011 2012 2013 2014 Forcast CAGR : 43 % $ Million CURRENT SITUATION
5 SodaStream USA Revenue 2009 – 2014 12.1 39.0 79.6 143.0 197.7 2009 2010 2011 2012 2013 2014 Forcast $ Million CURRENT SITUATION CAGR : 101 %
6 SodaStream ROW Revenue 2009 – 2014 124.1 169.4 209.4 293.3 365 2009 2010 2011 2012 2013 2014 Forcast $ Million CURRENT SITUATION CAGR : 31 %
7 Content The opportunity Our challenges The plan – resume profitable growth Financial impact The opportunity Current Situation
8 CSD category in rapid transformation ▪ The $ 200 + Billion Carbonated Soft Drink category is transforming, led by the US ▪ Landslide shift towards Health & Wellness ▪ Consumers abandon “classic” CSDs in favor of “Water+” beverages ▪ Incumbent players under significant pressure THE OPPORTUNITY
9 Rapid Transformation of the Beverage Industry SOURCE: Beverage Digest and Mintel Transformation of the beverage industry Category decline behind health concerns ( - 3 % in US) Decline of diet behind aspartame health concerns ( - 6.8 % in US)* Brand proliferation shift toward Personalization Radical shift toward health & wellness Growth of sparkling water + 33 % in US flavored sparkling water + 62 %* Shift toward natural ingredients Shift toward reduced calories THE OPPORTUNITY
10 SodaStream is uniquely positioned to take full advantage of this transformation Highly experienced management team Strong infrastructure to support sustainable growth Strong financial track record Healthy margins, defensible recurring business model Significant market opportunity Retail market opportunity of over $ 200 billion World leader in home carbonation Global presence and first mover advantage 8.5 million active households Strong tradition of innovation Solid product pipeline Important strategic partnerships Wide range of partnerships to strengthen product offering Solid network of retail presence Best in class retail presence with premium real estate THE OPPORTUNITY – CORE COMPETENCES
11 Our Mission SodaStream is revolutionizing the beverage industry by empowering people and partners with a platform that offers a simple, fun and sustainable way to enjoy healthier beverages by making water exciting SodaStream. Water Made Exciting! THE OPPORTUNITY
12 Plan Objective Sharpen our business focus around long - term strategic goals to seize the opportunity to have a meaningful role in the transformation of the beverage industry, delivering robust profitable growth and shareholder value THE OPPORTUNITY
13 Content The opportunity Our challenges The plan – resume profitable growth Financial impact Current Situation Our challenges The opportunity
14 Our Key Challenges ▪ Singular Benefit Need to define one clear consumer benefit for the SodaStream brand and align brand positioning with consumer trends ▪ Product Line - up Need both a great tasting product (not “me too” flavors) and a healthier product; need easy to operate beverage makers ▪ Product Transition Manage transition from old generation to new generation of beverage makers and flavors ▪ Distribution Better product segmentation and channel management; better availability of consumables ▪ Operations Regain operational efficiency ▪ Execute with excellence OUR CHALLENGES
15 Content The opportunity Our challenges Financial impact Current Situation Our challenges The opportunity The plan – resume profitable growth
16 5 GROWTH PILLARS Organization Marketing Product & Innovation Distribution Operations 1 2 3 4 5 THE PLAN
17 Invest in Human Capital ▪ Bring new talent to key positions in the leadership team and expand the BOD ▪ Establish a new centralized commercial leadership team that will lead global commercial execution including the transition to new generation products, new distribution, e - commerce expansion, and drive incremental sales ▪ Restructure the market teams into regional clusters that will leverage the experience and success of our top performing GMs and support consistency and efficiency of our market execution ▪ Establish a new global procurement unit to reduce costs and working capital and improve supply efficiencies ▪ Consolidate operational structure for simplicity and efficiency and reduce headcount where appropriate THE PLAN: ORGANIZATION 1
18 Health & Wellness ▪ Reposition the brand around Health & Wellness “Water Made Exciting” ▪ Provide unique better - for - you “Water Plus ” beverage products. Become the world’s leading sparkling water company ▪ Reinforce the important benefits of using SodaStream and revive our brand heat ▪ Redirect the marketing investment toward the consumer and away from trade and promotional activities ▪ Build an active community of evangelist users and opinion leaders through activation of social networking and public relations 2 THE PLAN: MARKETING
19 SOURCE: Source SodaStream Water Made Exciting!
20 Marketing: New Positioning in Action 2 THE PLAN: MARKETING
21 From ... ... to “Soda” “Stream” “Water Made Exciting” “Set the Bubbles Free ” Marketing: New Positioning in Action 2 THE PLAN: MARKETING
22 From ... ... to “home soda maker” “sparkling water maker” Marketing: New Positioning in Action 2 Water, not soda Source primary, SodaStream secondary Sparkling Water Maker Water, not Cola THE PLAN: MARKETING
23 From ... ... to “Play” “Splash” Marketing: New Positioning in Action 2 THE PLAN: MARKETING
24 Superior User Experience: Flavors THE PLAN: PRODUCT AND INNOVATION 3 Introduce new delicious and exciting sparkling water flavors that are "Better for You" with natural ingredients, low sugar and with no artificial sweeteners Taste and Health Delist or re - brand syrups that do not fit with our new strategy SKU Rationalization Introduce a new flavor bottle, expand Caps and launch on - demand beverage systems Dosing
25 Superior User Experience: Beverage Makers New generation Upgrade the Company's product offering to the new generation of beverage makers behind the new design equity and easy snap - lock functionality; Roll out Source, Play and Power Focus Discontinue other models of beverage makers The future Introduce new innovative technology platforms: multi - drink carbonation and on - demand single - serve beverage system 3 THE PLAN: PRODUCT AND INNOVATION
26 Innovation: new positioning in action From ... ... to “Detergent” bottle Beverage bottle 3 THE PLAN: PRODUCT AND INNOVATION New Concentrate Bottle
27 Innovation: New Positioning in Action New “Water - Plus” Flavor Categories 3 THE PLAN: PRODUCT AND INNOVATION
28 Innovation: New Positioning in Action From ... ... to “ SodaStream SodaMix ” “Fountain Style” 3 THE PLAN: PRODUCT AND INNOVATION New Classics Brand: “Fountain Style”
29 Introducing SodaStream “Power”: New Automatic Sparkling Water Maker Fall 2014 Innovation: The ultimate user experience 3 THE PLAN: PRODUCT AND INNOVATION
30 “Splash”: Rolling out Globally Fall 2014 THE PLAN: PRODUCT AND INNOVATION Innovation: Enhanced user experience at entry level 3
31 Innovation: New Positioning in Action From ... ... to Old and inconsistent design Modern, consistent design language State - of - the - art experience: Snap - lock Silent valves Automation Feedback Clunky user experience 3 THE PLAN: PRODUCT AND INNOVATION Transforming to New Design Architecture
32 Focus on the right distribution 32 1 3 4 5 2 Focus on existing geographies Regain growth with existing retailers via trade segmentation, shelf management, in - store demos and trade activations Expand distribution into new strategic accounts including supermarkets and convenience stores Significantly increase e - commerce activity Expand gas availability and convenience of exchange; Introduce one - way CO 2 carbonator THE PLAN: DISTRIBUTION 4
33 Operational excellence and efficiency Consolidate manufacturing in the new Lehavim state - of - the - art plant to improve operational efficiencies ▪ Lehavim operational since May 2014 (currently ~ 300 employees) ▪ Relocate Alon Tavor and Mishor Adumim facilities in stages by late 2015 ▪ Significantly decrease dependency on sub - contractors and eliminate in - country transportation ▪ Government grant approved ▪ SKU rationalization ▪ Significantly improve S&OP processes, demand planning, production and inventory efficiencies including the assimilation of a new Oracle ERP system ▪ Engineering cost reduction initiatives and automation THE PLAN: OPERATIONS 5
34 Lehavim Facility May 2013
35 Lehavim Facility October 2014
36 Lehavim Facility Production Halls
37 Content The opportunity Our challenges Financial impact Current Situation The opportunity Financial impact Our challenges The plan – resume profitable growth
38 Financial impact Shutdown of Mishor and Alon Tavor facilities and discontinuation of certain beverage makers and flavors will result in an exceptional cost of approximately $ 20 million , divided into: Approximately 90 % of the cost will be non - cash Approximately 60 % in Q 4 2014 , the rest during 2015 (mostly H 1 ) Manufacturing consolidation expected to drive 200 basis points of gross margin improvement starting in 2016 Approximately $ 9 million Mishor and Alon Tavor shutdown cost, including fixed assets write off and employees compensation Approximately $ 11 million inventory write off due to the SKU rationalization
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