- Revenue of $118.3 Million -
- Gross Margin of 24.5% Improved
Significantly Compared to 19.7% in the Prior Year Quarter -
- Strong Balance Sheet with Net Cash
Position of $89.4 Million -
- Reaffirms Outlook to Deliver Positive
Adjusted EBITDA and Operating Cash Flow in 2024 -
Caesarstone Ltd. (NASDAQ: CSTE), a leading developer and
manufacturer of high-quality engineered surfaces, today reported
financial results for its first quarter ended March 31, 2024.
Yos Shiran, Caesarstone’s Chief Executive Officer commented,
“Our team has demonstrated resilience and adaptability to start off
2024 while facing persistent global economic headwinds, regulatory
changes in Australia and the ongoing conflict in Israel. Despite
our quarterly revenues falling short of our expectations, we are
beginning to see the benefits of our strategic restructuring
actions after aligning our production footprint and network of
production business partners, especially in improving our gross
margin in this quarter. In addition, we have separated our U.S. and
Canadian leadership teams to allow each team to better focus on the
opportunities in their respective markets. As we move through 2024,
our goal is to continue investing in our strategic transformation
to increase our profitability and cash generation.”
First Quarter 2024 Results
Revenue in the first quarter of 2024 was $118.3 million,
compared to $150.6 million in the prior year quarter. On a constant
currency basis, first quarter revenue was down 21.0% year-over-year
due to lower volumes and price pressures. Volumes were primarily
impacted by global economic headwinds, particularly in renovation
and remodeling channels, across the Company’s main regions
resulting in lower demand accompanied by greater competitive
pressures.
Gross margin in the first quarter of 2024 improved to
24.5% compared to 19.7% in the prior year quarter. Adjusted gross
margin in the first quarter was 24.4% compared to 19.7% in the
prior year quarter. The increase in gross margin was mainly due to
the benefits of an improved production footprint and lower raw
material and shipping costs, partially offset by unfavorable
product mix.
Operating expenses in the first quarter of 2024 were
$34.6 million, or 29.2% of revenue, compared to $35.5 million, or
23.6% of revenue in the prior year quarter. The higher percentage
is primarily attributable to lower revenues. Excluding legal
settlements and loss contingencies, operating expenses were 28.6%
of revenue, compared to 24.5% in the prior year quarter with the
higher percentage mainly reflecting lower revenues.
Operating loss in the first quarter of 2024 was $5.6
million compared to $5.9 million in the prior year quarter, with
the improvement primarily reflecting higher gross margin.
Adjusted EBITDA in the first quarter of 2024, which
excludes expenses for non-cash share-based compensation, legal
settlements and loss contingencies, and other non-recurring items,
was $0.6 million, compared to $0.7 million in the prior year
quarter.
Finance income in the first quarter of 2024 was $0.7
million compared to $2.3 million in the prior year quarter. The
difference primarily reflects foreign currency exchange rate
fluctuations.
Net loss attributable to controlling interest for the
first quarter of 2024 was $5.1 million compared to net loss of $3.8
million in the prior year quarter. Net loss per share for the first
quarter was $0.15 compared to net loss per share of $0.11 in the
prior year quarter. Adjusted diluted net loss per share for the
first quarter was $0.13 on 34.6 million shares, compared to
adjusted diluted net loss per share of $0.17 in the prior year
quarter on a similar share count.
Balance Sheet & Liquidity
During the first quarter of 2024, the Company generated positive
cash flow from operations of $8.7 million mainly driven by
inventory reductions, compared to operating cash flow of $7.9
million in the first quarter of 2023. As of March 31, 2024, the
Company’s balance sheet included cash, cash equivalents and
short-term bank deposits of $96.2 million and total debt to
financial institutions of $6.8 million. The Company’s net cash
position as of March 31, 2024, was $89.4 million compared to $83.5
million as of December 31, 2023.
Outlook
The Company reaffirms its expectation to deliver positive
adjusted EBITDA for full year 2024 along with another full year of
positive operating cash flow. The Company also reiterates its
expectation to realize restructuring-related cost savings of
approximately $20.0 million in full year 2024 and $30.0 million
thereafter compared to full year 2023.
Webcast and Conference Call Details
The Company will host a webcast and conference call today, May
8, 2024, at 8:30 a.m. ET to discuss the results, followed by a
question and answer session for the investment community. The live
webcast can be accessed through the Investor Relations section of
the Company’s website at ir.caesarstone.com. For those unable to
access the webcast, the conference call will be accessible
domestically or internationally, by dialing 1-844-825-9789 and
1-412-317-5180, respectively. The toll-free Israeli number is 1 80
921 3284. Upon dialing in, please request to join the Caesarstone
First Quarter 2024 Earnings Conference Call.
To listen to a telephonic replay of the conference call, dial
toll-free 1-844-512-2921 or +1-412-317-6671 (international) and
enter pass code 10187886. The replay will be available beginning at
12:30 p.m. ET on Wednesday, May 8, 2024 and will last through 11:59
p.m. ET on Wednesday, May 15, 2024.
About Caesarstone
Caesarstone is a global leader of premium surfaces, specializing
in countertops that create dynamic spaces of inspiration in the
heart of the home. Established in 1987, its multi-material
portfolio of over 100 colors combines the company’s innovative
technology with its powerful design passion. Spearheading
high-quality, sustainable surfaces, Caesarstone delivers functional
resilience with timeless beauty, for a vast range of applications,
including kitchen countertops, bathroom vanities, and more, for
indoor and outdoor spaces.
Since it pioneered quartz countertops over thirty years ago, the
brand has expanded into porcelain and natural stone and is on the
ground in more than 50 countries worldwide while enhancing customer
experience through the expansion of groundbreaking digital
platforms & services. More information on Caesarstone:
caesarstoneus.com, Facebook, Twitter, YouTube, Pinterest, and
Instagram
The Company has filed its annual report on Form 20-F for the
year ended December 31, 2023 with the U.S. securities and exchange
commission (“SEC”) and can be accessed on its website.
Non-GAAP Financial Measures
The non-GAAP measures presented by the Company should be
considered in addition to, and not as a substitute for, comparable
GAAP measures. Reconciliations of GAAP gross profit to adjusted
gross profit, GAAP net income (loss) to adjusted net income (loss)
and net income (loss) to adjusted EBITDA are provided in the
schedules to this release. To calculate revenues growth rates that
exclude the impact of changes in foreign currency exchange rates,
the Company converts actual reported results from local currency to
U.S. dollars using constant foreign currency exchange rates in the
current and comparable period. The Company provides these non-GAAP
financial measures because it believes that they present a better
measure of the Company's core business and management uses the
non-GAAP measures internally to evaluate the Company's ongoing
performance. Accordingly, the Company believes that they are useful
to investors in enhancing an understanding of the Company's
operating performance.
Forward-Looking Statements
Information provided in this press release may contain
statements relating to current expectations, estimates, forecasts
and projections about future events that are "forward-looking
statements" within the meaning of the “safe harbor” provisions of
the United States Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by the use of words
such as “goals," “intend,” “seek,” “anticipate,” “believe,”
“could,” “continue,” “expect,” “estimate,” “may,” “plan,”
“outlook,” “future” and “project” and other similar expressions
that predict, project or indicate future events or trends or that
are not statements of historical matters. Such forward-looking
statements include statements regarding the Company’s goals and
plans, intentions, expectations, assumptions, goals and beliefs
regarding the Company’s business. Actual results may differ
materially from those projections and estimates due to various
risks and uncertainties, both known or unknown. These factors
include, but are not limited to: the effects of global and regional
economy and geo-politics on the Company’s business and operations
including the length, duration and impact of the war in Israel, the
Houthi’s disruption to the movement of goods in the Red Sea and
trade disruptions such as Turkey’s decision not to trade with
Israel; the outcome of silicosis and other bodily injury claims,
and the availability relevant insurance; regulatory changes and
requirements relating to the manufacturing and fabrication of our
products; the outcome of our restructuring efforts, of the closure
of the Sdot Yam and Richmond Hill Facilities, the estimated closure
costs and the estimated potential savings relating to said
closures, the ability to sell or sublease all or part of these
facilities; our ability to effectively collaborate with production
business partners; our R&D and product introduction efforts,
managing constraints in the global supply chain and effectively
procuring raw materials and goods as well as fluctuations in their
price; our ability to protect our brand, technology and
intellectual property, as well as our freedom to operate;
competitive pressures; disruptions to our information technology
systems, fluctuations in currency exchange rates against the U.S.
dollar; our ability to successfully integrate our acquisitions; our
ability to meet ESG goals and targets; and other risks and
uncertainties discussed under the sections "Risk Factors" and
“Special Note Regarding Forward-Looking Statements and Risk Factor
Summary” in our most recent annual report on Form 20-F filed with
the Securities and Exchange Commission (the “SEC”) on March 6,
2024, and in other documents filed by Caesarstone with the SEC,
which are available free of charge at www.sec.gov. These
forward-looking statements are made only as of the date hereof, and
the Company undertakes no obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise.
Caesarstone Ltd. and its
subsidiaries
Condensed consolidated balance
sheets
As of U.S. dollars in thousands March 31,
2024 December 31, 2023 (Unaudited)
(Audited) ASSETS CURRENT ASSETS: Cash and cash
equivalents and short-term bank deposits
$
96,152
$
91,123
Trade receivables, net
65,293
66,888
Other accounts receivable and prepaid expenses
20,014
25,489
Inventories
119,423
136,446
Total current assets
300,882
319,946
LONG-TERM ASSETS: Severance pay fund
1,773
1,994
Deferred tax assets, net
2,836
3,061
Long-term deposits and prepaid expenses
4,975
4,961
Operating lease right-of-use assets
114,840
120,156
Property, plant and equipment, net
122,057
123,480
Intangible assets, net
5,505
6,257
Total long-term assets
251,986
259,909
Total assets
$
552,868
$
579,855
LIABILITIES AND EQUITY CURRENT LIABILITIES:
Short-term bank credit
$
5,324
$
5,118
Trade payables
34,741
42,848
Related parties
175
257
Short term legal settlements and loss contingencies
15,852
16,106
Accrued expenses and other liabilities
51,809
56,894
Total current liabilities
107,901
121,223
LONG-TERM LIABILITIES: Long-term bank and other loans
1,935
2,549
Legal settlements and loss contingencies long-term and other
liabilities
11,557
11,814
Deferred tax liabilities, net
2,926
3,006
Long-term lease liabilities
108,027
114,146
Accrued severance pay
3,087
3,065
Long-term warranty provision
1,213
1,204
Total long-term liabilities
128,745
135,784
REDEEMABLE NON-CONTROLLING INTEREST
7,995
7,789
EQUITY: Ordinary shares
371
371
Treasury shares - at cost
(39,430
)
(39,430
)
Additional paid-in capital
165,041
164,456
Capital fund related to non-controlling interest
(5,587
)
(5,587
)
Accumulated other comprehensive income (loss), net
(10,732
)
(8,402
)
Retained earnings
198,564
203,651
Total equity
308,227
315,059
Total liabilities and equity
$
552,868
$
579,855
Caesarstone Ltd. and its
subsidiaries
Condensed consolidated
statements of income (loss)
Three months ended March 31, U.S. dollars in
thousands (except per share data)
2024
2023
(Unaudited) Revenues
$
118,292
$
150,633
Cost of revenues
89,305
121,031
Gross profit
28,987
29,602
Operating expenses: Research and development
1,212
1,046
Sales and Marketing
22,368
21,825
General and administrative
10,305
13,979
Legal settlements and loss contingencies, net
705
(1,330
)
Total operating expenses
34,590
35,520
Operating loss
(5,603
)
(5,918
)
Finance income, net
(706
)
(2,336
)
Loss before taxes
(4,897
)
(3,582
)
Tax expenses, net
26
269
Net loss
$
(4,923
)
$
(3,851
)
Net loss (income) attributable to non-controlling interest
(164
)
73
Net loss attributable to controlling interest
$
(5,087
)
$
(3,778
)
Basic net loss per ordinary share (*)
$
(0.15
)
$
(0.11
)
Diluted net loss per ordinary share (*)
$
(0.15
)
$
(0.11
)
Weighted average number of ordinary shares used in computing basic
loss per ordinary share
34,534,185
34,513,374
Weighted average number of ordinary shares used in computing
diluted loss per ordinary share
34,534,185
34,513,374
(*) The numerator for the calculation of net loss per share for the
three months ended March 31, 2024 and 2023, has been decreased by
approximately $0.0 and $0.1 million, respectively, to reflect the
adjustment to redemption value associated with the redeemable
non-controlling interest.
Caesarstone Ltd. and its
subsidiaries
Selected Condensed
consolidated statements of cash flows
Three months ended March 31, U.S. dollars in
thousands
2024
2023
(Unaudited) (Unaudited) Cash
flows from operating activities: Net loss
$
(4,923
)
$
(3,851
)
Adjustments required to reconcile net income (loss) to net cash
provided by (used in) operating activities: Depreciation and
amortization
4,328
7,571
Share-based compensation expense
585
316
Accrued severance pay, net
247
(107
)
Changes in deferred tax, net
360
(1,553
)
Capital loss
15
61
Legal settlements and loss contingencies, net
705
(1,330
)
Decrease (increase) in trade receivables
627
(3,714
)
Decrease in other accounts receivable and prepaid expenses
5,314
3,180
Decrease in inventories
15,944
26,750
Decrease in trade payables
(8,049
)
(18,159
)
Decrease in warranty provision
(235
)
(17
)
Changes in right of use assets
4,795
5,495
Changes in lease liabilities
(6,044
)
(7,058
)
Increase (decrease) in accrued expenses and other liabilities
including related parties
(4,926
)
353
Net cash provided by operating activities
8,743
7,937
Cash flows from investing
activities: Purchase of property, plant and equipment
(2,797
)
(2,935
)
Proceeds from sale of property, plant and equipment
31
5
Maturity of marketable securities
-
1,400
Decrease (increase) in long term deposits
(92
)
78
Net used in investing activities
(2,858
)
(1,452
)
Cash flows from financing
activities: Changes in short-term bank credits and
long-term loans, including related parties
(407
)
(12,620
)
Net cash used in financing activities
(407
)
(12,620
)
Effect of exchange rate differences on cash and cash
equivalents
(449
)
41
Increase (decrease) in cash and cash equivalents and
short-term bank deposits
5,029
(6,094
)
Cash and cash equivalents and short-term bank deposits at beginning
of the period
91,123
52,081
Cash and cash equivalents and short-term bank deposits at
end of the period
$
96,152
$
45,987
Non - cash investing:
Changes in trade payables balances related to purchase of fixed
assets
(213
)
308
Caesarstone Ltd. and its
subsidiaries
Three months ended March 31, U.S. dollars in
thousands
2024
2023
(Unaudited) Reconciliation of Gross profit to Adjusted
Gross profit: Gross profit
$
28,987
$
29,602
Share-based compensation expense (a)
12
67
Amortization of assets related to acquisitions
71
72
Other non recurring items
(152
)
-
Adjusted Gross profit (Non-GAAP)
$
28,918
$
29,741
(a)
Share-based compensation includes expenses related to stock options
and restricted stock units granted to employees and directors of
the Company.
Caesarstone Ltd. and its
subsidiaries
Three months ended March 31, U.S. dollars in
thousands
2024
2023
(Unaudited) Reconciliation of Net Loss to Adjusted
EBITDA: Net loss
$
(4,923
)
$
(3,851
)
Finance income, net
(706
)
(2,336
)
Taxes on income
26
269
Depreciation and amortization
4,480
7,571
Legal settlements and loss contingencies, net (a)
705
(1,330
)
Contingent consideration adjustment related to acquisition
25
78
Share-based compensation expense (b)
585
316
Residual operating expenses related to closed plants after closing
595
-
Other non recurring items
(152
)
-
Adjusted EBITDA (Non-GAAP)
$
635
$
717
(a)
Consists primarily of legal settlements expenses and loss
contingencies, net, related to product liability claims.
(b)
Share-based compensation includes expenses related to stock options
and restricted stock units granted to employees and directors of
the Company.
Caesarstone Ltd. and its
subsidiaries
Three months ended March 31,
U.S. dollars in thousands (except per share data)
2024
2023
(Unaudited) Reconciliation of net loss attributable to
controlling interest to adjusted net loss attributable to
controlling interest: Net loss attributable to controlling
interest
$
(5,087
)
$
(3,778
)
Legal settlements and loss contingencies, net (a)
705
(1,330
)
Contingent consideration adjustment related to acquisition
25
78
Amortization of assets related to acquisitions, net of tax
535
535
Share-based compensation expense (b)
585
316
Non cash revaluation of lease liabilities (c)
(1,567
)
(1,705
)
Residual operating expenses related to closed plants after closing
595
-
Other non recurring items
(152
)
-
Total adjustments
726
(2,106
)
Less tax on non-tax adjustments (e)
(4
)
160
Total adjustments after tax
730
(2,264
)
Adjusted net loss attributable to controlling interest
(Non-GAAP)
$
(4,357
)
$
(6,042
)
Adjusted loss per share (f)
$
(0.13
)
$
(0.17
)
(a)
Consists primarily of legal settlements expenses and loss
contingencies, net, related to product liability claims.
(b)
Share-based compensation includes expenses related to stock
options and restricted stock units granted to employees and
directors of the Company.
(c)
Exchange rate differences deriving from revaluation of lease
contracts in accordance with FASB ASC 842.
(e)
Tax adjustments for the three months ended March 31, 2024
and 2023, based on the effective tax rates.
(f)
In calculating adjusted (Non-GAAP) loss per share, the
diluted weighted average number of shares outstanding excludes the
effects of share-based compensation expense in accordance with
FASB ASC 718.
Caesarstone Ltd. and its
subsidiaries
Geographic breakdown of
revenues by region
Three months ended March
31, Three months ended March 31,
U.S. dollars in thousands
2024
2023
(Unaudited)
YoY % change
YoY % change CCB
USA
$
60,999
$
76,070
-19.8
%
-19.8
%
Canada
16,556
18,324
-9.6
%
-9.9
%
Latin America
776
506
53.3
%
53.3
%
America's
78,331
94,900
-17.5
%
-17.5
%
Australia
20,145
25,396
-20.7
%
-17.5
%
Asia
3,908
6,999
-44.2
%
-43.7
%
APAC
24,054
32,395
-25.7
%
-23.2
%
EMEA
11,535
15,922
-27.6
%
-29.0
%
Israel
4,372
7,416
-41.0
%
-39.3
%
Total Revenues
$
118,292
$
150,633
-21.5
%
-21.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508163990/en/
Investor Relations: ICR, Inc. - Rodny Nacier
CSTE@icrinc.com +1 (646) 200-8870
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