- Maintaining Operational Discipline and
Strategic Focus Amid Significant Market Headwinds -
- Revenue of $107.6 Million -
- Net Cash Position Improves to $108.9
Million, Reinforcing Strong Balance Sheet -
- Reaffirms Full Year Outlook to Deliver
Positive Operating Cash Flow and Moderates Adjusted EBITDA
Expectations -
Caesarstone Ltd. (NASDAQ: CSTE), a leading developer and
manufacturer of high-quality engineered surfaces, today reported
financial results for its third quarter ended September 30,
2024.
Yos Shiran, Caesarstone’s Chief Executive Officer commented,
“Our third quarter results reflect revenue pressure across all our
regional markets, putting weight on our business. The entire
Caesarstone team’s unwavering commitment to our success remains
evident with our transformation initiatives and optimized
manufacturing footprint helping to drive a higher gross margin
year-over-year. Our team is making progress in a difficult
environment and maintaining tight control of operating expenses.
That operational discipline and working capital management
generated positive cash flow this quarter, keeping us on track for
another full year of positive operating cash flow. With meaningful
savings realized from our ongoing restructuring actions, we
continue to make targeted investments in innovative products, brand
development and marketing programs to help stimulate demand. We are
confident in the direction of the Company and will continue to take
decisive actions to restore profitable growth.”
Third Quarter 2024 Results
Revenue in the third quarter of 2024 was $107.6 million,
compared to $142.4 million in the prior year quarter. On a constant
currency basis, third quarter revenue was down 24.8% year-over-year
primarily due to lower volumes. 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 third quarter of 2024 improved to
19.9% compared to 19.1% in the prior year quarter. Adjusted gross
margin in the third quarter was 19.8%, stable with the prior year
quarter. Gross margin was stable on lower revenues mainly due to
the benefits of an improved production footprint, partially offset
by unfavorable product mix and increased shipping and material
costs.
Operating expenses in the third quarter of 2024 were
$25.4 million, or 23.6% of revenue, compared to $29.2 million, or
20.5% of revenue in the prior year quarter. The higher percentage
is primarily due to lower revenues. Restructuring expenses during
the quarter included a capital gain of $6.9 million from the sale
of undeveloped land at the Company’s Richmond Hill Facility.
Excluding legal settlements and loss contingencies and
restructuring expenses, operating expenses were 28.1% of revenue,
compared to 23.7% in the prior year quarter.
Operating loss in the third quarter of 2024 was $4.1
million compared to $2.0 million in the prior year quarter, with
the difference primarily reflecting lower gross profit.
Adjusted EBITDA in the third quarter of 2024, which
excludes expenses for non-cash share-based compensation, legal
settlements and loss contingencies, and other non-recurring items,
was a loss of $4.1 million, compared to a gain of $1.9 million in
the prior year quarter.
Finance income in the third quarter of 2024 was $0.3
million compared to $1.3 million in the prior year quarter. The
difference primarily reflects foreign currency exchange rate
fluctuations.
Net loss attributable to controlling interest for the
third quarter of 2024 was $4.2 million compared to net loss of $0.9
million in the prior year quarter. Net loss per share for the third
quarter was $0.12 compared to net loss per share of $0.03 in the
prior year quarter. Adjusted diluted net loss per share for the
third quarter was $0.24 on 34.8 million shares, compared to
Adjusted diluted net loss per share of $0.20 in the prior year
quarter on 34.6 million shares.
Balance Sheet & Liquidity
On June 26, 2024, Caesarstone entered into an agreement for the
sale of 69 acres of undeveloped land associated with its Richmond
Hill Facility located in Bryan County for approximately $10.0
million. The transaction closed in the third quarter of 2024. The
Company continues to look for avenues to monetize the remainder of
the property, consisting of 51 acres of developed land and
associated structures.
During the third quarter of 2024, the Company generated positive
cash flow from operations of $16.3 million, mainly attributable to
the land sale and working capital improvements, compared to
operating cash flow of $28.2 million in the third quarter of 2023.
As of September 30, 2024, the Company’s balance sheet included
cash, cash equivalents and short-term bank deposits of $114.1
million and total debt to financial institutions of $5.2 million.
The Company’s net cash position as of September 30, 2024, was
$108.9 million compared to $83.5 million as of December 31,
2023.
US Legal Proceedings Update
The Company is one of several defendants named in 79 pending
lawsuits in the United States alleging injury associated with
exposure of fabricators and their employees to respirable
crystalline silica dust. On August 8, 2024, the Company filed a
Form 6-K in connection with a single claim in the U.S. following a
jury decision against the Company. Adequate provisions and
insurance receivables related to this decision were recorded by the
Company during the third quarter. While this single decision will
not have a material adverse effect on the Company, the Company
cannot provide assurance as to the outcome of other pending
litigation or that such litigation will not have a material adverse
impact on its business, financial position, results of operations
or cash flows.
Outlook
The Company reaffirms its expectation to deliver positive
operating cash flow for the full year 2024, with cash generated in
the first nine months more than offsetting a modest decline in the
fourth quarter. The Company reiterates its expectation to realize
restructuring-related cost savings of approximately $20.0 million
in full year 2024 and $35.0 million thereafter compared to full
year 2023. Given persistent macroeconomic pressures across the
Company’s global footprint and increased shipping and material
costs in the second half of 2024, Caesarstone now expects its full
year Adjusted EBITDA loss to be in the range of $10 to $11
million.
Webcast and Conference Call Details
The Company will host a webcast and conference call today,
November 13, 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 1-833-816-1463 and
1-412-542-4167, respectively. The toll-free Israeli number is 1 80
921 3284. Upon dialing in, please request to join the Caesarstone
Third 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 10192828. The replay will be available beginning at
12:30 p.m. ET on Wednesday, November 13, 2024 and will last through
11:59 p.m. ET on Wednesday, November 20, 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, LinkedIn 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
September 30, 2024
December 31, 2023
(Unaudited)
(Audited)
ASSETS CURRENT ASSETS: Cash and cash equivalents and
short-term bank deposits
$
114,077
$
91,123
Trade receivables, net
57,825
66,888
Other accounts receivable and prepaid expenses (*)
79,828
25,489
Inventories
111,487
136,446
Total current assets
363,217
319,946
LONG-TERM ASSETS: Severance pay fund
1,632
1,994
Deferred tax assets, net
3,538
3,061
Long-term deposits and prepaid expenses
5,258
4,961
Operating lease right-of-use assets
119,349
120,156
Property, plant and equipment, net (*)
78,091
123,480
Intangible assets, net
4,268
6,257
Total long-term assets
212,136
259,909
Total assets
$
575,353
$
579,855
LIABILITIES AND EQUITY CURRENT LIABILITIES:
Short-term bank credit
$
5,025
$
5,118
Trade payables
45,452
42,848
Related parties
225
257
Short term legal settlements and loss contingencies
34,545
16,106
Accrued expenses and other liabilities
57,346
56,894
Total current liabilities
142,593
121,223
LONG-TERM LIABILITIES: Long-term bank and other loans
635
2,549
Legal settlements and loss contingencies long-term and other
liabilities
10,831
11,814
Deferred tax liabilities, net
2,810
3,006
Long-term lease liabilities
110,132
114,146
Accrued severance pay
3,039
3,065
Long-term warranty provision
965
1,204
Total long-term liabilities
128,412
135,784
REDEEMABLE NON-CONTROLLING INTEREST
3,751
7,789
EQUITY: Ordinary shares
371
371
Treasury shares - at cost
(39,430)
(39,430)
Additional paid-in capital
166,066
164,456
Capital fund related to non-controlling interest
(5,587)
(5,587)
Accumulated other comprehensive income (loss), net
(5,986)
(8,402)
Retained earnings
185,163
203,651
Total equity
300,597
315,059
Total liabilities and equity
$
575,353
$
579,855
(*) In Q2'24 we reclassified $ 41.3M from fixed assets to
held for sale assets in accordance with ASC360.
Caesarstone Ltd. and its
subsidiaries
Condensed consolidated
statements of income (loss)
Three months ended September
30,
Nine months ended September
30,
U.S. dollars in thousands (except per share data)
2024
2023
2024
2023
(Unaudited)
(Unaudited)
Revenues
$
107,634
$
142,394
$
345,358
$
436,706
Cost of revenues
86,268
115,205
267,671
368,047
Gross profit
21,366
27,189
77,687
68,659
Operating expenses: Research and development
1,192
1,242
3,504
3,837
Sales and Marketing
21,126
20,398
66,048
62,458
General and administrative
7,891
12,144
28,208
39,322
Restructuring and Impairment expenses (income) related to long
lived assets (*)
(6,846)
(3,349)
(6,756)
20,224
Legal settlements and loss contingencies, net
2,077
(1,259)
5,613
(2,346)
Total operating expenses
25,440
29,176
96,617
123,495
Operating loss
(4,074)
(1,987)
(18,930)
(54,836)
Finance income, net
(297)
(1,292)
(2,851)
(4,816)
Loss before taxes
(3,777)
(695)
(16,079)
(50,020)
Tax expenses, net
451
83
2,442
7,332
Net loss
$
(4,228)
$
(778)
$
(18,521)
$
(57,352)
Net loss (income) attributable to non-controlling interest
6
(109)
33
217
Net loss attributable to controlling interest
$
(4,222)
$
(887)
$
(18,488)
$
(57,135)
Basic net loss per ordinary share (**)
$
(0.12)
$
(0.03)
$
(0.54)
$
(1.67)
Diluted net loss per ordinary share (**)
$
(0.12)
$
(0.03)
$
(0.54)
$
(1.67)
Weighted average number of ordinary shares used in computing basic
loss per ordinary share
34,539,160
34,522,015
34,536,601
34,515,291
Weighted average number of ordinary shares used in computing
diluted loss per ordinary share
34,539,160
34,522,015
34,536,601
34,515,291
(*) Including long-lived assets impairment and restructuring
expenses related to plants closure. Q3'24 mainly includes capital
gain related to sale of undeveloped land in the Richmond Hill
plant. (**) The numerator for the calculation of net loss per share
for the three and nine months ended September 30, 2023, has been
decreased by approximately $0.1 and $0.4 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
Nine months ended
September 30,
U.S. dollars in thousands
2024
2023
(Unaudited)
(Unaudited)
Cash flows from operating activities:
Net loss
$
(18,521)
$
(57,352)
Adjustments required to reconcile net income (loss) to net cash
provided by (used in) operating activities: Depreciation and
amortization
12,923
22,711
Share-based compensation expense
1,610
556
Accrued severance pay, net
334
(290)
Changes in deferred tax, net
(545)
2,878
Capital loss
44
83
Legal settlements and loss contingencies, net
5,613
(2,346)
Decrease in trade receivables
9,037
2,725
Decrease in other accounts receivable and prepaid expenses
2,504
8,359
Decrease in inventories
25,975
91,329
Increase (decrease) in trade payables
1,487
(25,775)
Decrease in warranty provision
(431)
(72)
Changes in right of use assets
1,312
(1,206)
Changes in lease liabilities
(3,611)
(8,134)
Increase (decrease) in accrued expenses and other liabilities
including related parties
4,010
(354)
Restructuring expenses (income) and Impairment related to long
lived assets
(6,756)
20,224
Net cash provided by operating activities
34,985
53,336
Cash flows from investing
activities: Net cash paid for acquisitions
(2,055)
(511)
Purchase of property, plant and equipment
(8,243)
(8,718)
Proceeds from sale of property, plant and equipment
65
16
Maturity of marketable securities
-
6,103
Increase in long term deposits
(226)
(108)
Net used in investing activities
(10,459)
(3,218)
Cash flows from financing
activities: Changes in short-term bank credits and
long-term loans, including related parties
(1,973)
(24,063)
Net cash used in financing activities
(1,973)
(24,063)
Effect of exchange rate differences on cash and cash
equivalents
401
(50)
Increase (decrease) in cash and cash equivalents and
short-term bank deposits
22,954
26,005
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
$
114,077
$
78,086
Non - cash investing:
Changes in trade payables balances related to purchase of fixed
assets
(311)
(104)
Caesarstone Ltd. and its
subsidiaries
Three months ended
September 30,
Nine months ended
September 30,
U.S. dollars in thousands
2024
2023
2024
2023
(Unaudited)
(Unaudited)
Reconciliation of Gross profit to Adjusted Gross profit:
Gross profit
$
21,366
$
27,189
$
77,687
$
68,659
Share-based compensation expense (a)
42
16
78
153
Amortization of assets related to acquisitions
70
71
212
215
Residual operating expenses (income) related to closed plants after
closing
(36)
1,011
576
2,795
Other non recurring items
(152)
(152)
41
(152)
Adjusted Gross profit (Non-GAAP)
$
21,290
$
28,135
$
78,594
$
71,670
(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
September 30,
Nine months ended
September 30,
U.S. dollars in
thousands
2024
2023
2024
2023
(Unaudited)
(Unaudited)
Reconciliation of Net Loss to
Adjusted EBITDA:
Net loss
$
(4,228)
$
(778)
$
(18,521)
$
(57,352)
Finance income, net
(297)
(1,292)
(2,851)
(4,816)
Taxes on income
451
83
2,442
7,332
Depreciation and amortization
4,437
7,472
13,379
22,711
Legal settlements and loss
contingencies, net (a)
2,077
(1,259)
5,613
(2,346)
Contingent consideration
adjustment related to acquisition
28
75
(53)
240
Share-based compensation expense
(b)
525
61
1,610
556
Restructuring expenses (income)
and Impairment related to long lived assets (c)
(6,911)
(3,349)
(6,821)
20,224
Residual operating expenses
(income) related to closed plants after closing
(36)
1,011
1,606
2,795
Other non recurring items
(152)
(152)
41
(152)
Adjusted EBITDA (Non-GAAP)
$
(4,106)
$
1,872
$
(3,555)
$
(10,808)
(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) Including long-lived assets
impairment and restructuring expenses related to plants closure.
Q3'24 also includes capital gain related to sale of undeveloped
land in the Richmond Hill plant.
Caesarstone Ltd. and its
subsidiaries
Three months ended
September 30,
Nine months ended
September 30,
U.S. dollars in thousands (except per share data)
2024
2023
2024
2023
(Unaudited)
(Unaudited)
Reconciliation of net loss attributable to controlling interest
to adjusted net loss attributable to controlling interest: Net
loss attributable to controlling interest
$
(4,222)
$
(887)
$
(18,488)
$
(57,135)
Legal settlements and loss contingencies, net (a)
2,077
(1,259)
5,613
(2,346)
Contingent consideration adjustment related to acquisition
28
75
(53)
240
Amortization of assets related to acquisitions, net of tax
534
582
1,603
1,608
Share-based compensation expense (b)
525
61
1,610
556
Acquisition and integration related expenses
-
-
-
-
Non cash revaluation of lease liabilities (c)
344
(2,092)
(3,016)
(5,094)
Restructuring expenses (income) and Impairment related to long
lived assets (d)
(6,911)
(3,349)
(6,821)
20,224.00
Residual operating expenses (income) related to closed plants after
closing
(36)
1,011
1,606
2,795
Other non recurring items
(152)
(152)
41
(152)
Total adjustments
(3,591)
(5,123)
583
17,831
Less tax on non-tax adjustments (e)
587
760
(88)
(2,614)
Total adjustments after tax
(4,178)
(5,883)
671
20,445
Adjusted net loss attributable to controlling interest
(Non-GAAP)
$
(8,400)
$
(6,770)
$
(17,817)
$
(36,690)
Adjusted loss per share (f)
$
(0.24)
$
(0.20)
$
(0.51)
$
(1.06)
(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.
(d)
Including long-lived assets
impairment and restructuring expenses related to plants closure.
Q3'24 also includes capital gain related to sale of undeveloped
land in the Richmond Hill plant.
(e)
Tax adjustments for the three and
nine months ended September 30, 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
September 30,
Nine months ended
September 30,
Three months ended September
30,
Nine months ended September
30,
U.S. dollars in thousands
2024
2023
2024
2023
(Unaudited)
(Unaudited)
(Audited)
YoY % change
YoY % change CCB
YoY % change
YoY % change CCB
USA
$
52,388
$
65,880
$
173,206
$
211,361
-20.5%
-20.5%
-18.1%
-18.1%
Canada
14,207
18,956
47,643
57,712
-25.1%
-23.8%
-17.4%
-16.6%
Latin America
239
1,650
1,148
2,468
-85.5%
-85.5%
-53.5%
-53.5%
America's
66,834
86,486
221,997
271,541
-22.7%
-22.9%
-18.2%
-18.1%
Australia
17,443
27,326
58,518
79,539
-36.2%
-37.7%
-26.4%
-25.7%
Asia
6,435
6,747
16,260
20,069
-4.6%
6.1%
-19.0%
-19.2%
APAC
23,878
34,073
74,778
99,608
-29.9%
-29.0%
-24.9%
-24.4%
EMEA
11,627
15,185
35,263
45,395
-23.4%
-26.0%
-22.3%
-23.3%
Israel
5,295
6,650
13,320
20,162
-20.4%
-24.5%
-33.9%
-33.1%
Total Revenues
$
107,634
$
142,394
$
345,358
$
436,706
-24.4%
-24.8%
-20.9%
-20.7%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241113229422/en/
Investor Relations:
ICR, Inc. - Rodny Nacier CSTE@icrinc.com +1 (646) 200-8870
Caesarstone (NASDAQ:CSTE)
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Von Nov 2024 bis Dez 2024
Caesarstone (NASDAQ:CSTE)
Historical Stock Chart
Von Dez 2023 bis Dez 2024
