SodaStream Earnings Pop and Fizzle

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SodaStream International Ltd. (NASDAQ: SODA) reported its first-quarter financial results Wednesday before the markets opened. The company had $0.40 in earnings per share (EPS) on $91.3 million in revenue. That compared to Thomson Reuters consensus estimates of $0.03 in EPS on revenue of $100.94 million. In the first quarter of the previous year, the company posted EPS of $0.08 on $118.17 million in revenue.

The company did not give guidance for the second quarter but the consensus estimates are $0.34 in EPS on $120.22 million in revenue.

Before the impact of restructuring costs in the first quarter, gross margin remained 52.3%, similar to the same period in 2014.

Sales and marketing expenses for the first quarter totaled $32.5 million, or 35.5% of revenue, compared to $46.1 million, or 39.0% for the comparable period in the prior year.

The net impact of foreign currency exchange rate changes on operating income in comparison with the same period in 2014 was negative at approximately $2.6 million.

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In terms of SodaStream’s regional performance, the company reported:

  • Western Europe had revenues of $54.6 million.
  • The Americas had revenues of $22.8 million.
  • Asia-Pacific had revenues of $9.0 million.
  • Central & Eastern Europe, Middle East, Africa had revenues of $4.9 million.

Daniel Birnbaum, CEO of SodaStream, commented on earnings:

We’ve made good progress preparing for the launch of a completely new portfolio of great tasting, better for you sparkling water flavors later this year that we believe will resonate strongly with our consumer audience. At the same time, the transformation of our manufacturing base and operating structure is creating a more efficient organization.

He continued:

As our restructuring and growth plan unfolds and gains traction, and we move past the challenging foreign currency exchange rate changes, we believe SodaStream will be well positioned to drive sustainable sales gains and greater earnings power in the years ahead.

Cash and cash equivalents at the end of the first quarter were $40.6 million, compared to $46.9 million at the end of the fourth quarter of 2014. The decrease is primarily attributable to the investment in the SodaStream’s new production facility.

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SodaStream shares closed Tuesday down 2.8% at $19.11. After earnings were released, shares were up initially over 3% but then settled to a decrease of about 6% at $18.00 in premarket trading. The stock has a consensus analyst price target of $21.17 and a 52-week trading range of $16.80 to $42.90.