SodaStream International Ltd. a manufacturer of home beverage carbonation systems, announced its results for the three and nine month periods ended Sept. 30, 2012.
For the third quarter ended Sept. 30, 2012 the total revenue increased 48.7 percent to $112.5 million from $75.7 million in the third quarter 2011. The net income increased 65.9 percent to $16.8 million compared to $10.1 million a year ago, and Adjusted net income was $18.2 million compared to $11.5 million last year. Diluted earnings per share increased 66.7 percent to $0.80, compared to $0.48 in the third quarter 2011 and Adjusted diluted earnings per share were $0.87 compared to $0.55 a year ago.
"We had another very strong quarter highlighted by gains in all geographic regions and product categories with demand well ahead of our expectations" said Daniel Birnbaum, chief executive officer of SodaStream, in a prepared statement. "Our growth strategies have yielded excellent financial results year-to-date and position the Company for continued expansion in 2013 and beyond. We enter the fourth quarter with strong momentum, especially in the U.S. where we've quickly built a powerful distribution network for our expanding portfolio of soda makers and consumables. Our newest flagship soda maker, the Source, is set to debut at select retailers worldwide. With its modern design and innovative functionality, we believe the Source is a transformational product that will broaden appeal of our entire system and help drive household penetration to a new level. To leverage our enhanced product portfolio and broad distribution, we are launching our first global branding campaign that highlights the revolutionary essence of SodaStream and challenges the traditional beverage industry. The progress we've made leading the growth of our category worldwide has put the Company on track to deliver significant value for our shareholders in the years ahead."
Gross margin for the third quarter 2012 was 54.2 percent, compared to 53.5 percent for the same period in 2011. This increase was primarily due to the increase in direct distribution that accounted for 69 percent of total revenue in the quarter vs. 56 percent in the third quarter 2011. This increase is mainly due to growing share of U.S. revenue and the shift to self-distribution in the Nordics. Gross margin was also positively impacted from leveraging fixed production costs on higher revenue, partially offset by a higher percentage of subcontracted manufacturing.
Sales and marketing expenses for the third quarter 2012 totaled $35.8 million, or 31.8 percent of revenue compared to $23.1 million, or 30.6 percent of revenue for the comparable period last year. The increase is primarily due to higher advertising and promotion expense, which was in line with the plan to support the growing retail presence, especially in the U.S. This was partially offset by a decrease in other selling expenses as a percent of revenue, despite the aforementioned increase in self-distribution versus a year ago, driven by improved supply chain efficiency and expense leverage on higher revenue.
General and administrative expenses for the third quarter 2012 were $8.7 million, or 7.8 percent of revenue, compared to $7.6 million, or 10.1 percent of revenue in the comparable period of last year. This includes the additional expenses associated with the acquisition of CEM Industries in the fourth quarter 2011 and the acquisition of the distribution activity in the Nordics in the first quarter 2012.
Operating income increased to $16.4 million, or 14.6 percent of revenue as compared to $9.8 million, or 13.0 percent of revenue in the third quarter 2011.
Tax benefit was $850,000 compared to a tax expense of $816,000 in the third quarter 2011. This is primarily attributable to an adjustment of tax provision following an agreement with the tax authorities in one of our jurisdictions. Excluding this adjustment the effective tax rate in the third quarter 2012 was approximately 8 percent, similar to the third quarter 2011.