SodaStream: All pop, no fizz

Scott Kitun/The Medillian

Scott Kitun/The Medillian

SodaStream International Ltd., producer of the Revolution automatic home soda maker, saw a huge increase in fourth-quarter earnings as sales in the Americas nearly doubled. The showing beat Wall Street estimates but the company’s stock fell more than 6 percent.

The Israeli-based soda maker posted forth-quarter net income of $7.5 million, or 36 cents per share, up 42 percent from $5.3 million, or $0.26 cents per share, a year ago. On an adjusted basis, the company earned 45 cents per shares, outperforming the 39-cent estimate of analysts surveyed by Thomson Reuters.

Revenue grew 55 percent to $132.9 million from $85.7 million last year. The Americas accounted for $62.8 million of that, up 96 percent from $32 million last year.

The carbonation system developed by SodaStream relies on fruit-flavored concentrates and diet concentrates sweetened by Splenda to allow customers to create their own carbonated soft drink. Many people use SodaStreams to carbonate tap water to create an less expensive version of Pellegrino or La Croix,

Kraft Foods Group Inc. agreed to partner with SodaStream in May, allowing the soda maker to develop Country Time, Crystal Light and Kool-Aid flavors. Since the partnership, SodaStream has experienced record sales, especially in the U.S. where more than 2,900 Walmart stores carry the homemade soda product line.

“Our efforts throughout 2012 to increase global awareness of our brand and retail presence culminated in a very successful holiday season,” Daniel Birnbaum, CEO of SodaStream, said. “For the first time ever we exceeded 1 million soda makers sold in a quarter.”

If there were any negatives in SodaStream’s results, they were shrinking gross margins and rising operational expenses. Gross margin fell from 57 percent to 53 percent, while operational expenses rose 38 percent to $10.2 million in the forth quarter.

For the full year, SodaStream posted a profit of $43.8 million, or $2.09 per diluted share of $2.39, up 60 percent from $27.5 million, or $1.34 per share, in 2011. Revenue rose 51 percent to $436.3 million from $289.0 million.

The company said it expects more revenue growth in 2013. “U.S. sell-through of soda makers and consumables exceeded expectations, continuing our growth trajectory in the world’s biggest soda market,” SodaStream Chief Financial Officer Daniel Erdreich said in a conference call with analysts.

According to Erdreich, the firm expects full-year 2013 revenue to increase approximately 25 percent., excluding share-based compensation expenses. Additionally, the company expects net income to rise about 18 percent in 2013.

Last year, company executives issued guidance calling for 25 percent sales growth with an additional 3 percent boost from the acquisition of the Nordic and Baltic distribution business of its distributor, Empire AB.

“In 2012 the firm’s guidance for sales growth was 28 percent and they did 51 percent,” Oppenheimer analyst Joe Altobello said in a conference call.

The company’s guidance was low because it did not yet reflect the Kraft Foods partnership and the retail performance at Wal-Mart Stores Inc. “Our efforts throughout 2012 to increase global awareness of our brand and retail presence culminated in a very successful holiday season,” Birnbaum said.

SodaStream shares closed down $3.34 to $49.10 Wednesday.

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