our mission -...
TRANSCRIPT
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Our mission
SodaStream seeks to revolutionize the beverageindustry by providing a better alternative andenvironmentally friendly way for consumers toenjoy their own refreshing carbonated drinks.
1
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Experienced, entrepreneurial management
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Vast global market opportunity
3
Source: Datamonitor (2009)1 Defined as off-premise beverage consumption
Sparkling water$34 billion1
Carbonatedsoft drinks
$216 billion1
Carbonatedbeverages$250 billion
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Flavors:Full range of regularand diet soft drinkflavors, mixers andenergy drinksLess sugar and carbsthan leading brands;no high-fructose cornsyrupHealthy & “functional”
CO2 cylinders:Up to 130 literscarbonated waterper refillConsumersexchange emptycylinders for fullones at retaillocations or homedelivery viainternet/phone
Carbonating bottles:Transparent,high-pressureresistantReusableHermetically-sealing capBPA-freeGlass or plasticvarieties
Soda makers:Large variety ofdesigns and pricepointsDurable and easyto use
A complete carbonation system
+ + +
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Compelling consumer benefits
ConvenientNo heavy bottles to carry from the store; saves space; no return of “empties”
Cost effectiveSaves up to 70% for sparkling water and up to 30% for carbonated soft drinks; “fizz-preserving” cap means less wasted flat soda
Promotes health and wellnessFlavors contain no high-fructose corn syrup, fewer carbohydrates, fewer calories andless caffeine compared to popular soft drink brands; diet flavors contain Splenda®;All-Natural flavors; promotes greater water consumption
CustomizablePrepare beverages the way you like them
Environmentally friendlyAvoids the pollution caused by the production, packaging and transport of bottledbeverages; 1 SodaStream bottle replaces thousands of conventional ones
Fun and easy to use
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730877
1,057
1,922
297592
0
500
1,000
1,500
2,000
2007 2008 2009 2010 Q1-10 Q1-11
Razor/razor blade business model
6
Soda makers sold (in thousands)
% growth 20.1% 20.5%
Illustrative annual consumable purchases
81.9%
Market development case study:France unit sales volume
Market development case study:US unit sales volume
1 Based on average estimated consumable purchases per active user99.2%
4 units3 units 1 unit
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Consumables generate sustainable,long-term revenue for SodaStream
7
Soda maker
Attractive business model driven by recurringpurchases of high-margin consumables
$50 $76 $16
$139
Consumables Revenue (4 years)
$47
+ + =
Note: Based on average estimated 4-year value from consumer; assumes USD/EUR exchange rate of 1.4183 as of 03/31/11
ExchangeableCO2 cylinders
Carbonationbottles Flavors
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Product mix drives profitability
8
Market comparison: From start-up to established market (sales € volume by product)
2010 sales (€ volume) by product
Starter Kits64%
Consumables36%
Starter Kits20%Consumables
80%
United States (2010) – Early Stages Switzerland (2010) – More Developed
Soda makersales
Highermargins
Increaseinstalled base
Increasedconsumables
Highlights
Soda maker sales are profitable
Product mix shift to consumablestranslates into higher-margin financialprofile as markets mature
Starter Kits46%Consumables
50%
Other4%
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Strategy
9
Accessibility of consumables
Reaching mass market & multi-channel coverage
Loyalty marketingReferrals, membership programs &incentives, user ambassadors
Innovative product offeringsContinual introduction of new andon-trend flavors andnatural CO2
Upgrade programs & products
Product development
Enhanced features anddesigns
Consumer awareness & demand
Brand-building activities –PR, advertising, in-storedemonstrations
Expand market
Focus on U.S. opportunity
Add new countries
Penetrate new channels
Grow installed base Cultivate users for life
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Growth via product development
10
Natural CO2; Glass, limited edition bottles, dishwasher safe
Natural, functional & local flavors, MyWater Essence
Fizz ChipTM, Penguin, ECO, Karim Rashid & others
Soda Makers
CO2 &Bottles
Flavors
Office, Under-Sink, SodaStream Inside, Aluminum Bottle
FutureProducts
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Growth via consumer demand and brand heat
11
Build brand awareness & “heat”
Celebrity endorsement
Controlled distribution
Internet & affiliates
Drive trial in-store
In-store demonstrations, POS video
Increased distribution, flavor variety
Feature & Display
Brand Education
PR & social media
Word of mouth
Referral programs
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Brand Education: Point of sale in-store video
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Brand Education: Support from key retailers
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Holiday circular cover E-mail blast
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Brand Education“The Cage” – Belgium, Summer 2010
”Bottle-Saving” Calculatorfor bloggers and websites
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Finland
Brand Education: Social Marketing
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Brand Education – IHA, March 2011
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Brand Education"The Cage" unveiled by Susan Sarandon at IHA
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30 RockBrand Heat: Television placements
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Big Bang TheoryBrand Heat: Television placements
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Brand Heat: Television placements
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How I Met Your Mother
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Brand Heat: Television placements
21
Desperate Housewives
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Represents most significant marketopportunity
Historically strong market with growthaccelerated by recent acquisition
Highly popular in 1970s and 1980s withstrong brand equity and recent relaunch
High household penetration rates (~20%)with greater proportion of high-marginconsumables
Distributor markets with substantialopportunity
Fastest growing market in CEMEA, withincreasing sales from consumables
Growth via market expansion
SodaStream products sold in 41 countries, including 26entered since 2007
22
Direct subsidiary (12)Distributor, pre-2007 (3)Distributor market entered since 2007 (26)
Western Europe: 62%1
+34% Y/YCEMEA: 12%1
+42% Y/Y
Americas: 20%1
+189% Y/Y
Asia-Pacific: 6%1
+67% Y/Y
1Percentage of 2010 sales
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Germany
23
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Sweden
24
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Sweden
25
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Denmark
26
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Finland
27
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Italy
28
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Australia
29
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Belgium
30
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NEW ZEALAND
31Marc, Andrew
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Taiwan
32
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United States
33
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Strong momentum in U.S. rollout
Select U.S. retail relationships 2010 -2011 Retail rollout – number of doors
Q1 Q2 Q3 Q4 Q1-11 Q2-11CO2refill
Bed, Bath andBeyond — — 30 950 950 950
Macy's 125 230 450 450 450 635Sears — — — 415 415 415Kohl’s 300 300 300 300 1100 1110JCPenney — — — — — 625Williams-Sonoma 260 270 270 270 270 270 KitchenCollection 20 20 170 225 225 215
Shopko — — 135 135 135 135
Crate and Barrel 85 85 85 85 85 80 Le GourmetChef 80 80 80 80 80 60
BonTon — — — — — 260
Sur La Table 80 80 80 80 80 80
Bloomingdale’s 30 30 30 30 30 30Bartell's — — — — — 55
Independents 275 375 450 500 550 575
Other 100 255 390 505 280 425
Total Doors 1,355 1,725 2,470 4,200 4,650 5,920
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2008
2009
2010
2011
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U.S. retail presence (as of May 25, 2011)
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Update on infrastructural investments
Unique operating model
Proprietary manufacturing expertise &componentry
Experience and know-how in HAZMAT
Regulatory certifications
Ability to manage reverse logistics
38
Unique capabilities
Current annual soda maker capacity1
adequate to support near-term growth
New capacity to support future growth
Developing new primary site (85k m2)
Short-term expansion of existing facilities;subcontractors and acquired facility
Building for growth
Location Israel - Negev
Israel –NorthernGalilee
Israel –SouthernGalilee
Mainactivities
Main futuresite:
plastics, metal,syrups
Plastics - 25plastic injection
machines
Plasticpainting,assembly
Est. cost ofinvestment €30.0mm €4.0mm €2.0mm
Expectedexecutiondate
2013/2014 Q3 2011 Q2 2011
1 Includes existing manufacturing facility and subcontractors
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Historical financial summary
39
2007 2008 2009 2010 (€) 2010 ($) 1 Q1-2010 Q1-2011Reven u es 86.0 99.9 105.0 160.7 227.9 30.2 45.1
% g row th 8.5% 16.2% 5.1% 53.0% 40.4% 49.5%
Gro ss Pro f i t 46.2 54.7 58.4 86.6 122.8 16.3 24.1
% m arg in 53.8% 54.8% 55.6% 53.9% 53.9% 53.5%
Ad ju s tedEB ITDA 2 3.0 11.0 13.2 18.8 26.7 3.2 6.8
% m arg in 3.5% 11.0% 12.6% 11.7% 10.7% 15.0%Ad ju s ted NetPro f i t 2 (1.4) 1.2 7.7 13.0 18.5 2.2 5.3
% m arg in (1.6%) 1.2% 7.3% 8.1% 7.3% 11.7%
Select income statement items (€ mm)
Key 2010 growth driversRetailer and consumer buy-in of the category, the system and the SodaStream brand
Highly efficient and low-cost marketing activity, primarily in U.S., driving consumer demand
Leveraging fixed expense infrastructure to increase profitability
1 Assumes currency translation rate of €1=$1.4183 (as of March 31, 2011)2 Adjusted for management fees & share-based payments
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2010 / 2011 financial review
40
Revenue (€ mm) Adjusted EBITDA1 (€ mm)
€2. 3
€1. 3
€3. 7
€5. 9
€13
. 2
€3. 2
€3. 7 €5
. 7
€6. 2
€18
. 8
€6. 8
€0.0
€2.0
€4.0
€6.0
€8.0
€10.0
€12.0
€14.0
€16.0
€18.0
€20.0
Q1 Q2 Q3 Q4 FY
2009 2010 2011€2
1. 5
€24
. 3
€27
. 7
€31
. 5
€10
5. 0
€30
. 2
€38
. 5
€42
. 0
€50
. 0
€16
0. 7
€45
. 1
€0.0
€20.0
€40.0
€60.0
€80.0
€100.0
€120.0
€140.0
€160.0
€180.0
Q1 Q2 Q3 Q4 FY
2009 2010 2011
Note: December 31 fiscal year end1 Adjusted for management fees & share-based payments
42.0%40.4% 58.3%
ConsolidatedGrowth: 51.7% 58.5% 53.0%
49.5%
99.5% 116.4%AmericasGrowth: 245.4% 238.0% 188.9%152.6%
Growth: 180.6% 52.8% 4.4% 42.3%111.2%
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Operating expenses
41
2007 2008 2009 2010 Q1-2010 Q1-2011
Sales & marketing
Advertising and promotion 11.2 9.6 10.5 21.5 3.3 4.3
% of revenue 13.0% 9.6% 10.0% 13.4% 11.0% 9.6%
Other sales & marketing 20.2 22.6 24.2 35.6 6.5 8.9
% of revenue 23.5% 22.6% 23.1% 22.2% 21.5% 19.7%
Total sales and marketing 31.4 32.2 34.7 57.1 9.8 13.2
% of revenue 36.6% 32.2% 33.0% 35.5% 32.5% 29.3%
Adjusted G&A and other 1 13.5 11.9 12.4 15.0 3.7 4.7
% of revenue 15.7% 11.9% 11.8% 9.4% 12.3% 10.4%
Total adjusted operating expenses 1 44.9 44.1 47.1 72.1 13.5 17.9
% of revenue 52.3% 44.1% 44.9% 44.9% 44.7% 39.7%
% of revenue (Exc. A&P) 39.2% 34.5% 34.9% 31.5% 33.8% 30.2%
2007-2010 Adjusted operating expenses (€ mm)
Note: December 31 fiscal year end1 Adjusted for management fees & share-based payments
Investing to support growth while leveraging fixedcosts to drive margin improvement
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Long-term financial drivers & growthtargets
Continue rapid U.S. expansion
Doubled revenue Q1’2010 / Q1’2011
Further expansion into other recentlylaunched markets
France, Italy, Czech Republic
Growing demand for consumables over time,which increases margins
Target operating margin of 25%+ inestablished markets
Leverage fixed costs while continuing toinvest in marketing
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Drivers
Long-term annualtargets:
Revenue growth of 20%+
EPS growth of 25%+
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A leader in manufacturing and distribution of home carbonation systems;~4.5 million users with products sold at over 40,000 retail stores in 41countries
Capitalizes on key consumer mega-trends: environment, wellness, value
Attractive razor/razor blade business model
Distinct operational capabilities and barriers to entry
Experienced and entrepreneurial management team
2010/2011: 53% revenue growth / 69% adjusted net income growth
Summary of highlights
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Appendix
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Non-IFRS reconciliations
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2007 2008 2009 2010 (€) 2010 ($)1
Net income (1.6) 0.5 7.1 9.7 13.8
Interest expense, net 2.2 2.7 2.0 1.5 2.1
Income tax 0.3 5.0 1.8 1.8 2.5
D&A 1.8 2.0 1.6 2.5 3.6
EBITDA2 2.7 10.2 12.6 15.5 22.0
Management fee 0.3 0.5 0.5 2.3 3.2
Share-based payments 0.0 0.2 0.2 1.0 1.4
Adjusted EBITDA3 3.0 11.0 13.2 18.8 26.7
Reconciliation of net income to EBITDA and to adjusted EBITDA (€ mm)
1 Assumes currency translation rate of €1=$1.4183 (as of March 31, 2011)2 EBITDA is a non-IFRS measure and is defined as earnings before interest expense, taxes, depreciation and amortization; EBITDA should not be considered in isolation or as asubstitute for operating income or other statement of operations items prepared in accordance with IFRS as a measure of our performance; EBITDA does not take into account ourdebt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionaryuses; EBITDA, as presented herein, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures arecalculated3 Adjusted EBITDA is a non-IFRS measure and is defined as earnings before interest, income tax, depreciation and amortization, and further eliminates the effect of the non-cashshare-based compensation expense and for the impact of a discontinued management fee expense paid to Fortissimo Capital; we use adjusted EBITDA as a measure of operatingperformance because it assists us in comparing performance on a consistent basis, as it removes from our operating results the impact of one-time costs associated withnonrecurring events and non-cash items such as share-based compensation expense, which can vary depending upon accounting methods
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Non-IFRS reconciliations (cont'd)
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2007 2008 2009 2010 (€) 2010 ($)1
Net income (1.6) 0.5 7.1 9.7 13.8
Management fee 0.3 0.5 0.5 2.3 3.2
Share-based payments 0.0 0.2 0.2 1.0 1.4
Income tax effect of theforegoing (0.0) (0.1) (0.1) — —
Adjusted netincome2 (1.4) 1.2 7.7 13.0 18.5
Reconciliation of net income to adjusted net income (€ mm)
1 Assumes currency translation rate of €1=$1.4183 (as of March 31, 2011)2 Adjusted net income is a non-IFRS measure and is defined as net income calculated in accordance with IFRS as adjusted for the impact of Share-BasedCompensation and for the impact of the Fortissimo Payments; we use adjusted net income as a measure of operating performance because it assists us incomparing performance on a consistent basis, as it removes from our operating results the impact of one-time costs associated with nonrecurring events andnon-cash items such as share-based compensation expense, which can vary depending upon accounting methods