- Revenue of $119.4 Million -
- Additional Quarter of Positive Cash Flow
From Operations of $10.0 Million -
- Strong Balance Sheet with Net Cash
Position of $97.7 Million -
- 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 second quarter ended June 30, 2024.
Yos Shiran, Caesarstone’s Chief Executive Officer commented,
“Our improved gross margin in the second quarter compared to last
year demonstrates the positive impact of our strategic
restructuring actions. Our efforts to optimize our production
footprint and strengthen relationships with our manufacturing
partners are yielding tangible benefits. We continue to make
progress on our strategic transformation, focusing on cost
efficiencies, strengthening our sales and marketing efforts, and
investing in R&D and innovation. Additionally, during July we
increased our stake in Lioli Ceramica to 81%, which underscores our
commitment to enhancing our porcelain business. Furthermore, our
agreement to sell the undeveloped land parcel at our Richmond Hill
Facility reflects our diligent efforts to monetize this asset. As
we navigate through the remainder of 2024, we remain focused on
improving the trajectory of our profitability while positioning
Caesarstone for long-term growth."
Second Quarter 2024 Results
Revenue in the second quarter of 2024 was $119.4 million,
compared to $143.7 million in the prior year quarter. On a constant
currency basis, second quarter revenue was down 16.3%
year-over-year 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 second quarter of 2024 improved to
22.9% compared to 8.3% in the prior year quarter. Adjusted gross
margin in the first quarter was 23.8% compared to 9.6% in the prior
year quarter. The increase in gross margin was mainly due to the
benefits of an improved production footprint, partially offset by
unfavorable product mix. Gross margin in second quarter of 2023
included a number of transitory factors that increased
manufacturing unit costs mainly associated with the Sdot-Yam
Facility closure and operational investments related to the
Australian market.
Operating expenses in the second quarter of 2024 were
$36.6 million, or 30.6% of revenue, compared to $58.8 million, or
40.9% of revenue in the prior year quarter. The lower percentage is
primarily attributable to the reduction in impairment and
restructuring related expenses recorded during the second quarter
2023 in connection with the Sdot-Yam Facility closure. Excluding
legal settlements and loss contingencies and restructuring
expenses, operating expenses were 28.2% of revenue, compared to
24.3% in the prior year quarter.
Operating loss in the second quarter of 2024 was $9.3
million compared to $46.9 million in the prior year quarter, with
the improvement primarily reflecting higher gross margin and the
impairment charges recorded in the second quarter of 2023.
Adjusted EBITDA in the second 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 $0.1 million, compared to a loss of $13.4 million in
the prior year quarter.
Finance income in the second quarter of 2024 was $1.8
million compared to $1.2 million in the prior year quarter. The
difference primarily reflects foreign currency exchange rate
fluctuations and higher income on bank deposits.
Net loss attributable to controlling interest for the
second quarter of 2024 was $9.2 million compared to net loss of
$52.5 million in the prior year quarter. Net loss per share for the
second quarter was $0.27 compared to net loss per share of $1.52 in
the prior year quarter. Adjusted diluted net loss per share for the
second quarter was $0.14 on 35.0 million shares, compared to
adjusted diluted net loss per share of $0.69 in the prior year
quarter on 34.6 million shares.
Balance Sheet & Liquidity
During the second quarter of 2024, the Company generated
positive cash flow from operations of $10.0 million mainly driven
by inventory reductions, compared to operating cash flow of $17.2
million in the second quarter of 2023. As of June 30, 2024, the
Company’s balance sheet included cash, cash equivalents and
short-term bank deposits of $103.6 million and total debt to
financial institutions of $5.9 million. The Company’s net cash
position as of June 30, 2024, was $97.7 million compared to $83.5
million as of December 31, 2023.
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 is expected to close in the third quarter
of 2024 and is subject to due diligence. The Company continues to
look for avenues to monetize the remainder of the property,
consisting of 51 acres of developed land and associated
structures.
Outlook
The Company reaffirms its expectation to deliver positive
operating cash flow for the full year 2024, primarily weighted
towards the first half of the year. The Company now expects full
year adjusted EBITDA to be a loss in the mid-single-digit
million-dollar range, mainly due to increased shipping and material
costs in the second half of 2024. 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,
August 7, 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
Second 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 10190386. The replay will be available beginning at
12:30 p.m. ET on Wednesday, August 7, 2024 and will last through
11:59 p.m. ET on Wednesday, August 14, 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 June 30,
2024 December 31, 2023 (Unaudited)
(Audited) ASSETS CURRENT ASSETS: Cash and cash
equivalents and short-term bank deposits
$
103,572
$
91,123
Trade receivables, net
62,671
66,888
Other accounts receivable and prepaid expenses (*)
70,123
25,489
Inventories
108,787
136,446
Total current assets
345,153
319,946
LONG-TERM ASSETS: Severance pay fund
1,553
1,994
Deferred tax assets, net
3,394
3,061
Long-term deposits and prepaid expenses
4,982
4,961
Operating lease right-of-use assets
113,216
120,156
Property, plant and equipment, net (*)
77,931
123,480
Intangible assets, net
4,853
6,257
Total long-term assets
205,929
259,909
Total assets
$
551,082
$
579,855
LIABILITIES AND EQUITY CURRENT LIABILITIES:
Short-term bank credit
$
5,000
$
5,118
Trade payables
37,016
42,848
Related parties
205
257
Short term legal settlements and loss contingencies
19,814
16,106
Accrued expenses and other liabilities
57,136
56,894
Total current liabilities
119,171
121,223
LONG-TERM LIABILITIES: Long-term bank and other loans
1,308
2,549
Legal settlements and loss contingencies long-term and other
liabilities
11,025
11,814
Deferred tax liabilities, net
2,870
3,006
Long-term lease liabilities
105,195
114,146
Accrued severance pay
2,944
3,065
Long-term warranty provision
1,118
1,204
Total long-term liabilities
124,460
135,784
REDEEMABLE NON-CONTROLLING INTEREST
7,804
7,789
EQUITY: Ordinary shares
371
371
Treasury shares - at cost
(39,430
)
(39,430
)
Additional paid-in capital
165,541
164,456
Capital fund related to non-controlling interest
(5,587
)
(5,587
)
Accumulated other comprehensive income (loss), net
(10,633
)
(8,402
)
Retained earnings
189,385
203,651
Total equity
299,647
315,059
Total liabilities and equity
$
551,082
$
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 June 30, Six months ended June
30, U.S. dollars in thousands (except per share data)
2024
2023
2024
2023
(Unaudited) (Unaudited) Revenues
$
119,432
$
143,679
$
237,724
$
294,312
Cost of revenues
92,098
131,811
181,403
252,842
Gross profit
27,334
11,868
56,321
41,470
Operating expenses: Research and development
1,100
1,549
2,312
2,595
Sales and Marketing
22,554
20,235
44,922
42,060
General and administrative
10,012
13,199
20,317
27,178
Restructuring and Impairment expenses related to long lived assets
(*)
90
23,573
90
23,573
Legal settlements and loss contingencies, net
2,831
243
3,536
(1,087
)
Total operating expenses
36,587
58,799
71,177
94,319
Operating loss
(9,253
)
(46,931
)
(14,856
)
(52,849
)
Finance income, net
(1,848
)
(1,188
)
(2,554
)
(3,524
)
Loss before taxes
(7,405
)
(45,743
)
(12,302
)
(49,325
)
Tax expenses, net
1,965
6,980
1,991
7,249
Net loss
$
(9,370
)
$
(52,723
)
$
(14,293
)
$
(56,574
)
Net loss (income) attributable to non-controlling interest
191
253
27
326
Net loss attributable to controlling interest
$
(9,179
)
$
(52,470
)
$
(14,266
)
$
(56,248
)
Basic net loss per ordinary share
$
(0.27
)
$
(1.52
)
$
(0.41
)
$
(1.64
)
Diluted net loss per ordinary share
$
(0.27
)
$
(1.52
)
$
(0.41
)
$
(1.64
)
Weighted average number of ordinary shares used in computing basic
loss per ordinary share
34,536,399
34,514,431
34,535,293
34,511,873
Weighted average number of ordinary shares used in computing
diluted loss per ordinary share
34,536,399
34,514,431
34,535,293
34,511,873
(*) Including long-lived assets impairment and restructuring
expenses related to plants closure.
Caesarstone Ltd. and its
subsidiaries
Selected Condensed
consolidated statements of cash flows
Six months ended June 30, U.S. dollars in
thousands
2024
2023
(Unaudited) (Unaudited) Cash
flows from operating activities: Net loss
$
(14,293
)
$
(56,574
)
Adjustments required to reconcile net income (loss) to net cash
provided by (used in) operating activities: Depreciation and
amortization
8,638
15,239
Share-based compensation expense
1,085
495
Accrued severance pay, net
321
(118
)
Changes in deferred tax, net
(478
)
2,617
Capital loss
535
83
Legal settlements and loss contingencies, net
3,536
(1,087
)
Decrease in trade receivables
3,365
4,546
Decrease (increase) in other accounts receivable and prepaid
expenses
(995
)
4,939
Decrease in inventories
26,650
65,439
Decrease in trade payables
(6,468
)
(26,062
)
Decrease in warranty provision
(138
)
(91
)
Changes in right of use assets
6,468
3,849
Changes in lease liabilities
(9,206
)
(6,676
)
Decrease in accrued expenses and other liabilities including
related parties
(410
)
(5,023
)
Restructuring expenses and Impairment related to long lived assets
90
23,573
Net cash provided by operating activities
18,700
25,149
Cash flows from investing
activities: Purchase of property, plant and equipment
(4,378
)
(4,460
)
Proceeds from sale of property, plant and equipment
42
10
Maturity of marketable securities
-
4,800
Increase in long term deposits
(75
)
(29
)
Net used in investing activities
(4,411
)
321
Cash flows from financing
activities: Changes in short-term bank credits and
long-term loans, including related parties
(1,363
)
(22,776
)
Net cash used in financing activities
(1,363
)
(22,776
)
Effect of exchange rate differences on cash and cash
equivalents
(477
)
219
Increase (decrease) in cash and cash equivalents and
short-term bank deposits
12,449
2,913
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
$
103,572
$
54,994
Non - cash investing:
Changes in trade payables balances related to purchase of fixed
assets
(369
)
18
Caesarstone Ltd. and its subsidiaries Three months
ended June 30, Six months ended June 30, U.S. dollars
in thousands
2024
2023
2024
2023
(Unaudited) (Unaudited) Reconciliation of Gross
profit to Adjusted Gross profit: Gross profit
$
27,334
$
11,868
$
56,321
$
41,470
Share-based compensation expense (a)
24
69
36
137
Amortization of assets related to acquisitions
71
72
142
144
Residual operating expenses related to closed plants after closing
612
1,784
612
1,784
Other non recurring items
345
-
193
-
Adjusted Gross profit (Non-GAAP)
$
28,386
$
13,793
$
57,304
$
43,535
(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 June 30, Six
months ended June 30, U.S. dollars in thousands
2024
2023
2024
2023
(Unaudited) (Unaudited) Reconciliation of Net Loss
to Adjusted EBITDA: Net loss
$
(9,370
)
$
(52,723
)
$
(14,293
)
$
(56,574
)
Finance income, net
(1,848
)
(1,188
)
(2,554
)
(3,524
)
Taxes on income
1,965
6,980
1,991
7,249
Depreciation and amortization
4,462
7,668
8,942
15,239
Legal settlements and loss contingencies, net (a)
2,831
243
3,536
(1,087
)
Contingent consideration adjustment related to acquisition
(106
)
87
(81
)
165
Share-based compensation expense (b)
500
179
1,085
495
Restructuring expenses and Impairment related to long lived assets
(c)
90
23,573
90
23,573
Residual operating expenses related to closed plants after closing
1,047
1,784
1,642
1,784
Other non recurring items
345
-
193
-
Adjusted EBITDA (Non-GAAP)
$
(84
)
$
(13,397
)
$
551
$
(12,680
)
(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.
Caesarstone
Ltd. and its subsidiaries Three months ended June
30, Six months ended June 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
$
(9,179
)
$
(52,470
)
$
(14,266
)
$
(56,248
)
Legal settlements and loss contingencies, net (a)
2,831
243
3,536
(1,087
)
Contingent consideration adjustment related to acquisition
(106
)
87
(81
)
165
Amortization of assets related to acquisitions, net of tax
534
491
1,069
1,026
Share-based compensation expense (b)
500
179
1,085
495
Non cash revaluation of lease liabilities (c)
(1,793
)
(1,297
)
(3,360
)
(3,002
)
Restructuring expenses and Impairment related to long lived assets
(d)
90
23,573
90
23,573.00
Residual operating expenses related to closed plants after closing
1,047
1,784
1,642
1,784.00
Other non recurring items
345
-
193
-
Total adjustments
3,448
25,060
4,174
22,954
Less tax on non-tax adjustments (e)
(672
)
(3,531
)
(675
)
(3,373
)
Total adjustments after tax
4,119
28,593
4,849
26,327
Adjusted net loss attributable to controlling interest
(Non-GAAP)
$
(5,060
)
$
(23,877
)
$
(9,417
)
$
(29,921
)
Adjusted loss per share (f)
$
(0.14
)
$
(0.69
)
$
(0.27
)
$
(0.87
)
(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.
(e)
Tax adjustments for the three
months ended June 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
June 30, Six months ended June 30, Three months ended
June 30, Six months ended June 30, U.S. dollars in
thousands
2024
2023
2024
2023
(Unaudited) (Unaudited) (Audited)
YoY % change
YoY % change CCB
YoY % change
YoY % change CCB
USA
$
59,819
$
69,411
$
120,818
$
145,481
-13.8
%
-13.8
%
-17.0
%
-17.0
%
Canada
16,880
20,432
33,436
38,756
-17.4
%
-15.9
%
-13.7
%
-13.1
%
Latin America
133
312
909
818
-57.4
%
-57.5
%
11.1
%
11.0
%
America's
76,832
90,155
155,163
185,055
-14.8
%
-14.5
%
-16.2
%
-16.0
%
Australia
20,929
26,817
41,075
52,213
-22.0
%
-20.8
%
-21.3
%
-19.2
%
Asia
5,917
6,323
9,825
13,322
-6.4
%
-5.1
%
-26.3
%
-26.0
%
APAC
26,846
33,140
50,900
65,535
-19.0
%
-17.8
%
-22.3
%
-20.6
%
EMEA
12,101
14,288
23,636
30,210
-15.3
%
-14.9
%
-21.8
%
-22.4
%
Israel
3,653
6,096
8,025
13,512
-40.1
%
-38.9
%
-40.6
%
-39.2
%
Total Revenues
$
119,432
$
143,679
$
237,724
$
294,312
-16.9
%
-16.3
%
-19.2
%
-18.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807163240/en/
Investor Relations:
ICR, Inc. - Rodny Nacier CSTE@icrinc.com +1 (646) 200-8870
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