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SodaStream (SODA) Beats Q3 Earnings & Revenue Estimates

SODA BBBY M KSS

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SodaStream International Ltd. (SODA - Free Report) reported impressive results for the third quarter of 2016, beating the Zacks Consensus Estimate on both counts.

The company’s adjusted earnings of 69 cents per share crushed the Zacks Consensus Estimate of 24 cents by 187.5%. Earnings increased a robust 213.6% on a year-over-year basis as well.

Revenues

Total revenue of $124.2 million beat the Zacks Consensus Estimate of $117.7 million by 5.5%. Sales rose 12.9% year over year on increased demand for sparkling water makers and consumables mainly in Germany, Japan, Australia, the Nordics, the U.S. and Canada.

The top-line increase was supported by repositioning of the SodaStream brand around sparkling water coupled with effective marketing programs aimed at increasing household penetration. The company reported strong demand for sparkling water makers and consumables in Germany, Canada and Japan.

After reporting weak sales results for quite some time now due to low demand for its products, the company posted strong sales and margins in the first nine months of 2016. SodaStream’s products are primarily sold at major retail stores like Kohl’s, Corp. (KSS - Free Report) , Macy’s, Inc. (M - Free Report) and Bed Bath & Beyond, Inc. (BBBY - Free Report) .

Sales rose 9% in Western Europe, owing to double-digit growth in Germany. It was also fueled by solid gains in both unit sales and average selling price for sparkling water makers and gas refills.

SodaStream’s revenues from the Americas increased 14% on the back of strong growth in Canada and the U.S. In the U.S., sales were driven by strong sparkling water maker growth.

In the Asia Pacific, revenues increased 43% year over year on strong demand in Japan.

In Central & Eastern Europe, Middle East, Africa (CCEMA), sales rose 9% year over year.

Effective tax rate of 18.8% was less than 26% in the prior-year quarter. 
   
Margins

Gross margin rose 340 basis points (bps) year over year to 51.8% driven by production optimization in the company’s latest state-of-the-art facility in Lehavim and increase in price, partially offset by a higher portion of sparkling water makers in the product mix.

Adjusted EBITDA was $23.3 million, up 140% year over year.

Operating income was $18.6 million, up 243% year over year, driven by higher operating leverage and gross margin improvement.

Balance Sheet

The company has cash and cash equivalents of $53.8 million as of Sep 30, 2016, compared with $ 43.5 million in the prior-year quarter.

Net cash from operating activities excluding capital expenditures was $26.2 million in the third quarter of 2016 compared with $1.2 million in the same quarter last year.

Guidance

Revenues are expected to increase approximately 10% year over year in the fourth quarter. Gross margins are anticipated to grow 270 bps, while A&P, as a percentage of revenues, is expected to increase in the range of 17% to 18%.

Fourth-quarter operating income and net income are both expected to increase approximately 35% year over year.

For full-year 2016, revenues are anticipated to grow in the 12% to 13% band, year over year. Gross margins are likely to rise 300 bps in 2016.

SODASTREAM INTL Price, Consensus and EPS Surprise
 

SodaStream carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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