Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Caesarstone Reports Third Quarter 2021 Financial Results By: Caesarstone Ltd. via Business Wire November 03, 2021 at 07:00 AM EDT – Record Third Quarter Revenue of $163.3 Million, Up 31.8% Over Prior Year Quarter – – Net Income of $5.9 Million, or $0.17 Per Share – – Adjusted Net Income of $6.8 Million, or $0.20 Per Share – – Adjusted EBITDA of $17.7 Million – – Strong Cash Position(*) of $91.5 Million at Quarter End – – Declares Dividend of $0.10 per share – – Published Inaugural Global ESG Report in October – – Reiterates Outlook for 2021 Revenue and Adjusted EBITDA Growth – 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, 2021. Yuval Dagim, Caesarstone’s Chief Executive Officer commented, “I am encouraged to report third quarter results that were in-line with our expectations as we further executed towards the goals set out in our Global Growth Acceleration Plan. To that extent, we were very pleased to rollout our innovative digital CS Connect platform nationally across the U.S., which has received positive feedback and represents a critical milestone in our efforts to transform the way we communicate with our customers and consumers. Additionally, the integrations of our Omicron and Lioli acquisitions continue to drive positive momentum in our results, helping us to achieve record third quarter revenue of $163.3 million. We were also excited to publish our inaugural ESG report in October, which provides Caesarstone with a prudent framework to help create a more sustainable future for all. Overall, we are happy with the progress in our business as we continue to address the cost environment with additional announced price increases and execute on our previously communicated initiatives to drive long-term value for all of our stakeholders.” (*) Cash position is defined as cash and cash equivalents and short-term bank deposits and long and short-term investment in marketable securities less debt from financial institutions. Third Quarter 2021 Results Revenue in the third quarter of 2021 grew 31.8% to a third quarter record of $163.3 million compared to $123.9 million in the prior year quarter. On a constant currency basis, third quarter revenue was higher by 29.2% year-over-year. Sales growth was primarily driven by improved demand across the majority of our global footprint in addition to the contribution of our recent acquisitions. Gross margin in the third quarter declined to 26.2% compared to 31.4% in the prior year quarter. Adjusted gross margin in the third quarter was 26.3% compared to 31.4% in the prior year quarter. The year-over-year difference in gross margin mainly reflects higher raw material prices, particularly polyester, and shipping price increases which were partially offset by favorable product mix, selling price increases and more favorable exchange rates. Operating expenses in the third quarter were $33.9 million, or 20.7% of revenue, compared to $23.8 million, or 19.2% of revenue in the prior year quarter. Excluding legal settlements and loss contingencies, operating expenses were 21.0% of revenue, compared to 18.8% in the prior year quarter, mainly due to a return to normalized levels of marketing and selling expenses and investments related to initiatives under the Company’s Global Growth Acceleration Plan. Operating income was $8.9 million compared to operating income of $15.0 million in the prior year quarter. The year-over-year decline mainly reflects higher operating expenses. Adjusted EBITDA, which excludes expenses for non-cash share-based compensation, legal settlements and loss contingencies and for non-recurring items, was $17.7 million in the third quarter, representing a margin of 10.8%. This compares to adjusted EBITDA of $23.7 million, representing a margin of 19.1%, in the prior year quarter. The year-over-year margin decline primarily reflects the lower operating income. Finance expense in the third quarter was $2.4 million compared to finance income of $0.1 million in the prior year quarter. The increase was mainly related to exchange rate fluctuations, higher credit card fees due to higher volume as well as interest related to bank loan. Net Income attributable to controlling interest for the third quarter was $5.9 million compared to net income of $12.8 million in the prior year quarter. Net income per share for the third quarter was $0.17 compared to net income per share of $0.37 in the prior year quarter. Adjusted diluted net income per share for the third quarter was $0.20 on 34.6 million shares, compared to adjusted diluted net income per share of $0.41 in the prior year quarter on 34.5 million shares. Balance Sheet & Liquidity As of September 30, 2021, the Company’s balance sheet remained strong, including cash, cash equivalents and short-term bank deposits and short and long-term marketable securities of $104.7 million and total debt to financial institutions of $13.2 million. Dividend The Company’s dividend policy provides for a quarterly cash dividend of up to 50% of reported net income on a year-to-date basis, less any amount already paid as dividend for the respective period (the “calculated dividend”), subject in each case to approval by the Company’s board of directors. No dividend is paid if it would be less than $0.10 per share. In accordance with the Company’s dividend policy, the board of directors declared a cash dividend of $0.10 per share for the third quarter and the nine months ended September 30, 2021. The dividend will be paid on November 30, 2021 to shareholders of record as of November 17, 2021. The dividend payment is subject to withholding tax of 20%. Outlook Based on year-to-date progress, the Company reiterates its expectation for 2021 revenue and Adjusted EBITDA to be higher year-over-year. The Company anticipates revenue to grow faster than EBITDA in 2021 mainly due to higher raw material and shipping costs, coupled with a return to more normalized levels of sales and marketing expenses and other investments to support growth initiatives. The Company’s outlook includes the investment costs associated with its Global Growth Acceleration Plan. Webcast and Conference Call Details The Company will host a live webcast and conference call today at 8:30 a.m. ET to discuss the results, followed by a question and answer session for the investment community. The live webcast of the call can be accessed at ir.caesarstone.com. For those unable to access the webcast, the conference call will be accessible by dialing 1-877-407-4018 (domestic) or +1-201-689-8471 (international). The toll-free Israeli number is 1 80 940 6247. Upon dialing in, please request to join the Caesarstone Third Quarter Earnings Call. To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 (domestic) or +1-412-317-6671 (international) and enter pass code 13724274. The replay will be available beginning at 11:30 a.m. ET on Wednesday, November 3, 2021 and will last through 11:59 p.m. ET on Wednesday, November 10, 2021. About Caesarstone Caesarstone is a concept and lifestyle-driven company with a customer-centered approach to designing, developing, and producing high-end engineered stone countertops, used in residential and commercial buildings. Our products offer superior aesthetic appeal and perfected functionality through a distinct variety of colors, styles, textures, and finishes used in diverse countertop applications, marked by inherent longevity. Strong commitment to service has fostered growing customer loyalty in over 50 countries where the Caesarstone product collections are available: Classico, Supernatural, Metropolitan and Outdoor. For more information please visit our website: www.caesarstone.com. 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 sustainability goals and plans, intentions, expectations, assumptions, goals and beliefs regarding the Company’s business and sustainability vision. These forward-looking statements also may relate to the Company's plans, objectives and expectations for future operations, including estimations relating to the impact of the COVID-19 pandemic and mitigation measures in connection thereto, and expectations of the results of the Company’s business optimization initiatives. These forward-looking statements are based upon management's current estimates and projections of future results or trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties, both known or unknown. These factors include, but are not limited to: the impact of the COVID-19 pandemic on end-consumers, the global economy and the Company’s business and results of operations; raw material shortages and prices and effects of challenges in global shipping; the ability of the company to realign aspects of its business based on the business optimization initiatives, the strength of the home renovation and construction sectors; intense competitive pressures; the extent of the Company’s ability to meet its ESG goals and targets, including the extent of the Company’s ability to maintain a healthy and safe environment for the Company’s employees; management of GHG and silica emissions; the degree of the Company’s ability to develop, produce and deliver high quality and safe products; the Company’s ability to effectively manage changes in its production and supply chain; the extent of the Company’s ability to build-out and expand into certain markets; the Company’s ability to effective manage its relationship with suppliers; the outcome of silicosis and other bodily injury claims; regulatory requirements relating to hazards associated with exposure to silica dust; efficiently manufacturing our products and managing changes in production and supply chain; economic conditions within any of our key existing markets; changes in raw material prices; fluctuations in currency exchange rates; the success of our expansion efforts in the United States; the unpredictability of seasonal fluctuations in revenues; disturbances to the Company’s operations or the operations of its suppliers, distributors, customers or other third parties and other factors, 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 22, 2021, 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 subsidiariesCondensed consolidated balance sheets As of U.S. dollars in thousands September 30, 2021 December 31, 2020 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash and cash equivalents and short-term bank deposits $ 85,050 $ 114,248 Short-term available for sale marketable securities 12,811 8,112 Trade receivables, net 84,639 84,822 Other accounts receivable and prepaid expenses 39,325 26,481 Inventories 175,400 152,073 Total current assets 397,225 385,736 LONG-TERM ASSETS: Severance pay fund 4,060 4,007 Long-term deposits 3,852 3,837 Deferred tax assets, net 8,428 8,359 Other long-term receivables 428 1,675 Operating lease right-of-use assets 141,935 123,928 Long-term available for sale marketable securities 6,811 10,926 Property, plant and equipment, net 223,286 222,883 Goodwill and intangible assets, net 56,420 59,570 Total long-term assets 445,220 435,185 Total assets $ 842,445 $ 820,921 LIABILITIES AND EQUITY CURRENT LIABILITIES: Short-term bank credit $ 13,197 $ 13,122 Trade payables 68,360 55,063 Related parties and other loans 2,255 2,221 Short term legal settlements and loss contingencies 21,003 31,039 Accrued expenses and other liabilities 57,939 55,570 Total current liabilities 162,754 157,015 LONG-TERM LIABILITIES: Long-term bank and other loans and financing liability of land from a related party 6,341 20,706 Legal settlements and loss contingencies long-term 23,122 21,910 Deferred tax liabilities, net 5,752 6,943 Long-term lease liabilities 129,788 112,719 Accrued severance pay 5,418 5,303 Long-term warranty provision 1,266 1,274 Total long-term liabilities 171,687 168,855 REDEEMABLE NON-CONTROLLING INTEREST 7,106 7,701 EQUITY: Ordinary shares 371 371 Treasury shares - at cost (39,430 ) (39,430 ) Additional paid-in capital 161,471 160,083 Capital fund related to non-controlling interest (5,587 ) (5,587 ) Accumulated other comprehensive loss (1,046 ) 1,083 Retained earnings 385,119 370,830 Total equity 500,898 487,350 Total liabilities and equity $ 842,445 $ 820,921 Caesarstone Ltd. and its subsidiariesCondensed consolidated statements of income Three months endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands (except per share data) 2021 2020 2021 2020 (Unaudited) (Unaudited) Revenues $ 163,341 $ 123,922 $ 472,835 $ 349,516 Cost of revenues 120,607 85,068 341,015 254,089 Gross profit 42,734 38,854 131,820 95,427 Operating expenses: Research and development 820 930 3,039 2,473 Marketing and selling 21,261 14,231 63,131 44,295 General and administrative 12,162 8,194 37,099 29,302 Legal settlements and loss contingencies, net (385 ) 452 4,464 4,927 Total operating expenses 33,858 23,807 107,733 80,997 Operating income 8,876 15,047 24,087 14,430 Finance expenses (income), net 2,403 (52 ) 165 1,586 Income before taxes 6,473 15,099 23,922 12,844 Taxes on income 603 2,292 2,730 3,241 Net income $ 5,870 $ 12,807 $ 21,192 $ 9,603 Net loss attributable to non-controlling interest 78 - 651 - Net income attributable to controlling interest $ 5,948 $ 12,807 $ 21,843 $ 9,603 Basic net income per ordinary share (*) $ 0.17 $ 0.37 $ 0.62 $ 0.28 Diluted net income per ordinary share (*) $ 0.17 $ 0.37 $ 0.62 $ 0.28 Weighted average number of ordinary shares used in computing basic income per ordinary share 34,463,460 34,422,128 34,472,016 34,411,480 Weighted average number of ordinary shares used in computing diluted income per ordinary share 34,529,130 34,453,647 34,558,509 34,455,129 (*) The numerator for the calculation of net income per share for the three and nine months ended September 30, 2021 has been decreased by approximately $0.1 and $0.3 million, respectively, to reflect the adjustment to redemption value associated with the redeemable non-controlling interest. Caesarstone Ltd. and its subsidiariesSelected Condensed consolidated statements of cash flows Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 (Unaudited) Cash flows from operating activities: Net income $ 21,192 $ 9,603 Adjustments required to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 26,491 21,160 Share-based compensation expense 1,387 2,335 Accrued severance pay, net 70 16 Changes in deferred tax, net (1,587 ) (46 ) Capital (gain) loss (3 ) 342 Legal settlements and loss contingencies, net 4,464 4,927 Decrease (increase) in trade receivables (1,139 ) 9,155 Decrease (increase) in other accounts receivable and prepaid expenses (12,349 ) 3,740 Increase in inventories (24,880 ) (4,375 ) Increase (decrease) in trade payables 13,843 (15,263 ) Increase (decrease) in warranty provision 8 (342 ) Changes in right of use assets (18,863 ) (5,245 ) Changes in lease liabilities 19,128 5,761 Amortization of premium and accretion of discount on marketable securities, net 304 69 Changes in Accrued interest related to Marketable Securities 25 (87 ) Increase (decrease) in accrued expenses and other liabilities including related parties (6,646 ) 1,535 Net cash provided by operating activities 21,445 33,285 Cash flows from investing activities: Repayment of assumed shareholders loan related to acquisition (1,966 ) - Repayment of contingent consideration related to acquisition (1,780 ) - Purchase of property, plant and equipment (26,024 ) (15,544 ) Proceeds from sale of property, plant and equipment 7 7 Investment in marketable securities, net (927 ) (19,728 ) Increase in long term deposits (150 ) (407 ) Net cash used in investing activities (30,840 ) (35,672 ) Cash flows from financing activities: Dividend paid (7,234 ) - Changes in short-term bank credits and long-term loans (11,096 ) (459 ) Repayment of a financing leaseback related to Bar-Lev transaction (981 ) (924 ) Net cash used in financing activities (19,311 ) (1,383 ) Effect of exchange rate differences on cash and cash equivalents (492 ) 373 Decrease in cash and cash equivalents and short-term bank deposits (29,198 ) (3,397 ) Cash and cash equivalents and short-term bank deposits at beginning of the period 114,248 139,372 Cash and cash equivalents and short-term bank deposits at end of the period $ 85,050 $ 135,975 Non - cash investing: Changes in trade payables balances related to purchase of fixed assets (737 ) (438 ) Caesarstone Ltd. and its subsidiaries Three months endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 2021 2020 (Unaudited) (Unaudited) Reconciliation of Gross profit to Adjusted Gross profit: Gross profit $ 42,734 $ 38,854 $ 131,820 $ 95,427 Share-based compensation expense (a) 72 100 214 353 Amortization of assets related to acquisitions 79 - 773 - Adjusted Gross profit (Non-GAAP) $ 42,885 $ 38,954 $ 132,807 $ 95,780 (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 endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 2021 2020 (Unaudited) (Unaudited) Reconciliation of Net Income to Adjusted EBITDA: Net income $ 5,870 $ 12,807 $ 21,192 $ 9,603 Finance expenses (income), net 2,403 (52 ) 165 1,586 Taxes on income 603 2,292 2,730 3,241 Depreciation and amortization related to acquisitions 8,802 7,058 26,491 21,160 Legal settlements and loss contingencies, net (a) (385 ) 452 4,464 4,927 Contingent consideration adjustment related to acquisition - - 284 - Acquisition and integration related expenses - 477 - 477 Share-based compensation expense (b) 391 628 1,387 2,335 Adjusted EBITDA (Non-GAAP) $ 17,684 $ 23,662 $ 56,713 $ 43,329 (a) Consists of legal settlements expenses and loss contingencies, net, related to product liability claims and other adjustments to on-going legal claims, including related legal fees. (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 endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands (except per share data) 2021 2020 2021 2020 (Unaudited) (Unaudited) Reconciliation of net income attributable to controlling interest to adjusted net income attributable to controlling interest: Net income attributable to controlling interest $ 5,948 $ 12,807 $ 21,843 $ 9,603 Legal settlements and loss contingencies, net (a) (385 ) 452 4,464 4,927 Contingent consideration adjustment related to acquisition - - 284 - Amortization of assets related to acquisitions, net of tax 502 - 1,889 - M&A related expenses - 477 - 477 Share-based compensation expense (b) 391 628 1,387 2,335 Non cash revaluation of lease liabilities (c) 430 227 (543 ) 12 Total adjustments 938 1,784 7,481 7,751 Less tax on non-tax adjustments (d) 56 481 854 2,090 Total adjustments after tax 882 1,303 6,628 5,661 Adjusted net income attributable to controlling interest (Non-GAAP) $ 6,830 $ 14,110 $ 28,471 $ 15,264 Adjusted diluted EPS (e) $ 0.20 $ 0.41 $ 0.82 $ 0.44 (a) Consists of legal settlements expenses and loss contingencies, net, related to product liability claims and other adjustments to on-going legal claims, including related legal fees. (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) Tax adjustments for the nine months ended September 30, 2021 and 2020, based on the effective tax rates. (e) In calculating adjusted diluted (Non-GAAP) EPS for the three and nine months ended September 30, 2021 and 2020, 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 subsidiariesGeographic breakdown of revenues by region Three months endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 2021 2020 (Unaudited) (Unaudited) USA $ 79,065 $ 52,097 $ 227,740 $ 153,878 Canada 22,479 19,174 62,204 52,167 Latin America 1,485 124 3,084 762 America's 103,029 71,395 293,028 206,807 Australia 29,215 27,746 87,984 73,634 Asia 7,232 2,881 22,379 7,444 APAC 36,447 30,627 110,363 81,078 EMEA 14,106 11,422 42,676 30,793 Israel 9,759 10,478 26,768 30,838 Total Revenues $ 163,341 $ 123,922 $ 472,835 $ 349,516 Caesarstone Ltd. and its subsidiariesGeographic breakdown of revenues by region - Supplemental data Three months ended U.S. dollars in thousands 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 (Unaudited) USA $ 79,065 $ 77,844 $ 70,831 $ 53,618 $ 52,097 $ 41,726 $ 60,055 $ 64,659 $ 64,805 $ 64,590 Canada 22,479 21,946 17,779 20,325 19,174 14,435 18,558 20,575 21,881 23,341 Latin America 1,485 741 858 1,387 124 132 506 735 1,434 1,351 America's 103,029 100,531 89,468 75,330 71,395 56,293 79,119 85,969 88,120 89,282 Australia 29,215 31,597 27,172 29,953 27,746 23,534 22,354 26,000 28,642 28,294 Asia 7,232 7,370 7,777 7,122 2,881 1,732 2,831 3,932 3,675 3,311 APAC 36,447 38,967 34,949 37,075 30,627 25,266 25,185 29,932 32,317 31,605 EMEA 14,106 15,852 12,718 14,408 11,422 8,031 11,340 9,464 11,719 11,418 Israel 9,759 8,112 8,897 10,083 10,478 9,447 10,913 8,502 10,683 8,766 Total Revenues $ 163,341 $ 163,462 $ 146,032 $ 136,896 $ 123,922 $ 99,037 $ 126,557 $ 133,867 $ 142,839 $ 141,071 Year-over-year % change 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 (Unaudited) USA 51.8% 86.6% 17.9% -17.1% -19.6% -35.4% Canada 17.2% 52.0% -4.2% -1.2% -12.4% -38.2% Latin America 1097.6% 461.4% 69.6% 88.8% -91.4% -90.2% America's 44.3% 78.6% 13.1% -12.4% -19.0% -36.9% Australia 5.3% 34.3% 21.6% 15.2% -3.1% -16.8% Asia 151.0% 325.5% 174.7% 81.1% -21.6% -47.7% APAC 19.0% 54.2% 38.8% 23.9% -5.2% -20.1% EMEA 23.5% 97.4% 12.2% 52.2% -2.5% -29.7% Israel -6.9% -14.1% -18.5% 18.6% -1.9% 7.8% Total Revenues 31.8% 65.1% 15.4% 2.3% -13.2% -29.8% Year-over-year % change in constant currency (*) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 (Unaudited) USA 51.8% 86.6% 17.9% -17.1% -19.6% -35.4% Canada 11.0% 35.1% -9.6% -2.4% -11.7% -36.0% Latin America 1097.3% 460.5% 69.8% 88.7% -91.3% -90.2% America's 42.6% 74.2% 11.8% -12.7% -18.8% -36.4% Australia 2.5% 14.6% 2.8% 7.9% -7.1% -11.5% Asia 148.9% 312.8% 169.5% 80.7% -21.2% -45.9% APAC 16.3% 35.1% 21.5% 17.5% -8.7% -15.1% EMEA 18.2% 77.6% 3.3% 45.8% -5.9% -26.9% Israel -12.2% -20.5% -24.6% 9.4% -4.5% 4.5% Total Revenues 29.2% 55.5% 9.8% -0.4% -14.4% -28.3% (*) Change in revenues at constant currency is calculated so that revenues can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of business performance. Change in revenues adjusted for currency are calculated by translating current period activity in local currency using the comparable prior-year period’s currency conversion rate. Exchange rates used, are the representative exchange rate published by the Bank of Israel for the relevant periods. View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005461/en/Contacts Investor Relations: ICR, Inc. - Rodny Nacier CSTE@icrinc.com +1 (646) 200-8870 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Caesarstone Reports Third Quarter 2021 Financial Results By: Caesarstone Ltd. via Business Wire November 03, 2021 at 07:00 AM EDT – Record Third Quarter Revenue of $163.3 Million, Up 31.8% Over Prior Year Quarter – – Net Income of $5.9 Million, or $0.17 Per Share – – Adjusted Net Income of $6.8 Million, or $0.20 Per Share – – Adjusted EBITDA of $17.7 Million – – Strong Cash Position(*) of $91.5 Million at Quarter End – – Declares Dividend of $0.10 per share – – Published Inaugural Global ESG Report in October – – Reiterates Outlook for 2021 Revenue and Adjusted EBITDA Growth – 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, 2021. Yuval Dagim, Caesarstone’s Chief Executive Officer commented, “I am encouraged to report third quarter results that were in-line with our expectations as we further executed towards the goals set out in our Global Growth Acceleration Plan. To that extent, we were very pleased to rollout our innovative digital CS Connect platform nationally across the U.S., which has received positive feedback and represents a critical milestone in our efforts to transform the way we communicate with our customers and consumers. Additionally, the integrations of our Omicron and Lioli acquisitions continue to drive positive momentum in our results, helping us to achieve record third quarter revenue of $163.3 million. We were also excited to publish our inaugural ESG report in October, which provides Caesarstone with a prudent framework to help create a more sustainable future for all. Overall, we are happy with the progress in our business as we continue to address the cost environment with additional announced price increases and execute on our previously communicated initiatives to drive long-term value for all of our stakeholders.” (*) Cash position is defined as cash and cash equivalents and short-term bank deposits and long and short-term investment in marketable securities less debt from financial institutions. Third Quarter 2021 Results Revenue in the third quarter of 2021 grew 31.8% to a third quarter record of $163.3 million compared to $123.9 million in the prior year quarter. On a constant currency basis, third quarter revenue was higher by 29.2% year-over-year. Sales growth was primarily driven by improved demand across the majority of our global footprint in addition to the contribution of our recent acquisitions. Gross margin in the third quarter declined to 26.2% compared to 31.4% in the prior year quarter. Adjusted gross margin in the third quarter was 26.3% compared to 31.4% in the prior year quarter. The year-over-year difference in gross margin mainly reflects higher raw material prices, particularly polyester, and shipping price increases which were partially offset by favorable product mix, selling price increases and more favorable exchange rates. Operating expenses in the third quarter were $33.9 million, or 20.7% of revenue, compared to $23.8 million, or 19.2% of revenue in the prior year quarter. Excluding legal settlements and loss contingencies, operating expenses were 21.0% of revenue, compared to 18.8% in the prior year quarter, mainly due to a return to normalized levels of marketing and selling expenses and investments related to initiatives under the Company’s Global Growth Acceleration Plan. Operating income was $8.9 million compared to operating income of $15.0 million in the prior year quarter. The year-over-year decline mainly reflects higher operating expenses. Adjusted EBITDA, which excludes expenses for non-cash share-based compensation, legal settlements and loss contingencies and for non-recurring items, was $17.7 million in the third quarter, representing a margin of 10.8%. This compares to adjusted EBITDA of $23.7 million, representing a margin of 19.1%, in the prior year quarter. The year-over-year margin decline primarily reflects the lower operating income. Finance expense in the third quarter was $2.4 million compared to finance income of $0.1 million in the prior year quarter. The increase was mainly related to exchange rate fluctuations, higher credit card fees due to higher volume as well as interest related to bank loan. Net Income attributable to controlling interest for the third quarter was $5.9 million compared to net income of $12.8 million in the prior year quarter. Net income per share for the third quarter was $0.17 compared to net income per share of $0.37 in the prior year quarter. Adjusted diluted net income per share for the third quarter was $0.20 on 34.6 million shares, compared to adjusted diluted net income per share of $0.41 in the prior year quarter on 34.5 million shares. Balance Sheet & Liquidity As of September 30, 2021, the Company’s balance sheet remained strong, including cash, cash equivalents and short-term bank deposits and short and long-term marketable securities of $104.7 million and total debt to financial institutions of $13.2 million. Dividend The Company’s dividend policy provides for a quarterly cash dividend of up to 50% of reported net income on a year-to-date basis, less any amount already paid as dividend for the respective period (the “calculated dividend”), subject in each case to approval by the Company’s board of directors. No dividend is paid if it would be less than $0.10 per share. In accordance with the Company’s dividend policy, the board of directors declared a cash dividend of $0.10 per share for the third quarter and the nine months ended September 30, 2021. The dividend will be paid on November 30, 2021 to shareholders of record as of November 17, 2021. The dividend payment is subject to withholding tax of 20%. Outlook Based on year-to-date progress, the Company reiterates its expectation for 2021 revenue and Adjusted EBITDA to be higher year-over-year. The Company anticipates revenue to grow faster than EBITDA in 2021 mainly due to higher raw material and shipping costs, coupled with a return to more normalized levels of sales and marketing expenses and other investments to support growth initiatives. The Company’s outlook includes the investment costs associated with its Global Growth Acceleration Plan. Webcast and Conference Call Details The Company will host a live webcast and conference call today at 8:30 a.m. ET to discuss the results, followed by a question and answer session for the investment community. The live webcast of the call can be accessed at ir.caesarstone.com. For those unable to access the webcast, the conference call will be accessible by dialing 1-877-407-4018 (domestic) or +1-201-689-8471 (international). The toll-free Israeli number is 1 80 940 6247. Upon dialing in, please request to join the Caesarstone Third Quarter Earnings Call. To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 (domestic) or +1-412-317-6671 (international) and enter pass code 13724274. The replay will be available beginning at 11:30 a.m. ET on Wednesday, November 3, 2021 and will last through 11:59 p.m. ET on Wednesday, November 10, 2021. About Caesarstone Caesarstone is a concept and lifestyle-driven company with a customer-centered approach to designing, developing, and producing high-end engineered stone countertops, used in residential and commercial buildings. Our products offer superior aesthetic appeal and perfected functionality through a distinct variety of colors, styles, textures, and finishes used in diverse countertop applications, marked by inherent longevity. Strong commitment to service has fostered growing customer loyalty in over 50 countries where the Caesarstone product collections are available: Classico, Supernatural, Metropolitan and Outdoor. For more information please visit our website: www.caesarstone.com. 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 sustainability goals and plans, intentions, expectations, assumptions, goals and beliefs regarding the Company’s business and sustainability vision. These forward-looking statements also may relate to the Company's plans, objectives and expectations for future operations, including estimations relating to the impact of the COVID-19 pandemic and mitigation measures in connection thereto, and expectations of the results of the Company’s business optimization initiatives. These forward-looking statements are based upon management's current estimates and projections of future results or trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties, both known or unknown. These factors include, but are not limited to: the impact of the COVID-19 pandemic on end-consumers, the global economy and the Company’s business and results of operations; raw material shortages and prices and effects of challenges in global shipping; the ability of the company to realign aspects of its business based on the business optimization initiatives, the strength of the home renovation and construction sectors; intense competitive pressures; the extent of the Company’s ability to meet its ESG goals and targets, including the extent of the Company’s ability to maintain a healthy and safe environment for the Company’s employees; management of GHG and silica emissions; the degree of the Company’s ability to develop, produce and deliver high quality and safe products; the Company’s ability to effectively manage changes in its production and supply chain; the extent of the Company’s ability to build-out and expand into certain markets; the Company’s ability to effective manage its relationship with suppliers; the outcome of silicosis and other bodily injury claims; regulatory requirements relating to hazards associated with exposure to silica dust; efficiently manufacturing our products and managing changes in production and supply chain; economic conditions within any of our key existing markets; changes in raw material prices; fluctuations in currency exchange rates; the success of our expansion efforts in the United States; the unpredictability of seasonal fluctuations in revenues; disturbances to the Company’s operations or the operations of its suppliers, distributors, customers or other third parties and other factors, 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 22, 2021, 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 subsidiariesCondensed consolidated balance sheets As of U.S. dollars in thousands September 30, 2021 December 31, 2020 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash and cash equivalents and short-term bank deposits $ 85,050 $ 114,248 Short-term available for sale marketable securities 12,811 8,112 Trade receivables, net 84,639 84,822 Other accounts receivable and prepaid expenses 39,325 26,481 Inventories 175,400 152,073 Total current assets 397,225 385,736 LONG-TERM ASSETS: Severance pay fund 4,060 4,007 Long-term deposits 3,852 3,837 Deferred tax assets, net 8,428 8,359 Other long-term receivables 428 1,675 Operating lease right-of-use assets 141,935 123,928 Long-term available for sale marketable securities 6,811 10,926 Property, plant and equipment, net 223,286 222,883 Goodwill and intangible assets, net 56,420 59,570 Total long-term assets 445,220 435,185 Total assets $ 842,445 $ 820,921 LIABILITIES AND EQUITY CURRENT LIABILITIES: Short-term bank credit $ 13,197 $ 13,122 Trade payables 68,360 55,063 Related parties and other loans 2,255 2,221 Short term legal settlements and loss contingencies 21,003 31,039 Accrued expenses and other liabilities 57,939 55,570 Total current liabilities 162,754 157,015 LONG-TERM LIABILITIES: Long-term bank and other loans and financing liability of land from a related party 6,341 20,706 Legal settlements and loss contingencies long-term 23,122 21,910 Deferred tax liabilities, net 5,752 6,943 Long-term lease liabilities 129,788 112,719 Accrued severance pay 5,418 5,303 Long-term warranty provision 1,266 1,274 Total long-term liabilities 171,687 168,855 REDEEMABLE NON-CONTROLLING INTEREST 7,106 7,701 EQUITY: Ordinary shares 371 371 Treasury shares - at cost (39,430 ) (39,430 ) Additional paid-in capital 161,471 160,083 Capital fund related to non-controlling interest (5,587 ) (5,587 ) Accumulated other comprehensive loss (1,046 ) 1,083 Retained earnings 385,119 370,830 Total equity 500,898 487,350 Total liabilities and equity $ 842,445 $ 820,921 Caesarstone Ltd. and its subsidiariesCondensed consolidated statements of income Three months endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands (except per share data) 2021 2020 2021 2020 (Unaudited) (Unaudited) Revenues $ 163,341 $ 123,922 $ 472,835 $ 349,516 Cost of revenues 120,607 85,068 341,015 254,089 Gross profit 42,734 38,854 131,820 95,427 Operating expenses: Research and development 820 930 3,039 2,473 Marketing and selling 21,261 14,231 63,131 44,295 General and administrative 12,162 8,194 37,099 29,302 Legal settlements and loss contingencies, net (385 ) 452 4,464 4,927 Total operating expenses 33,858 23,807 107,733 80,997 Operating income 8,876 15,047 24,087 14,430 Finance expenses (income), net 2,403 (52 ) 165 1,586 Income before taxes 6,473 15,099 23,922 12,844 Taxes on income 603 2,292 2,730 3,241 Net income $ 5,870 $ 12,807 $ 21,192 $ 9,603 Net loss attributable to non-controlling interest 78 - 651 - Net income attributable to controlling interest $ 5,948 $ 12,807 $ 21,843 $ 9,603 Basic net income per ordinary share (*) $ 0.17 $ 0.37 $ 0.62 $ 0.28 Diluted net income per ordinary share (*) $ 0.17 $ 0.37 $ 0.62 $ 0.28 Weighted average number of ordinary shares used in computing basic income per ordinary share 34,463,460 34,422,128 34,472,016 34,411,480 Weighted average number of ordinary shares used in computing diluted income per ordinary share 34,529,130 34,453,647 34,558,509 34,455,129 (*) The numerator for the calculation of net income per share for the three and nine months ended September 30, 2021 has been decreased by approximately $0.1 and $0.3 million, respectively, to reflect the adjustment to redemption value associated with the redeemable non-controlling interest. Caesarstone Ltd. and its subsidiariesSelected Condensed consolidated statements of cash flows Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 (Unaudited) Cash flows from operating activities: Net income $ 21,192 $ 9,603 Adjustments required to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 26,491 21,160 Share-based compensation expense 1,387 2,335 Accrued severance pay, net 70 16 Changes in deferred tax, net (1,587 ) (46 ) Capital (gain) loss (3 ) 342 Legal settlements and loss contingencies, net 4,464 4,927 Decrease (increase) in trade receivables (1,139 ) 9,155 Decrease (increase) in other accounts receivable and prepaid expenses (12,349 ) 3,740 Increase in inventories (24,880 ) (4,375 ) Increase (decrease) in trade payables 13,843 (15,263 ) Increase (decrease) in warranty provision 8 (342 ) Changes in right of use assets (18,863 ) (5,245 ) Changes in lease liabilities 19,128 5,761 Amortization of premium and accretion of discount on marketable securities, net 304 69 Changes in Accrued interest related to Marketable Securities 25 (87 ) Increase (decrease) in accrued expenses and other liabilities including related parties (6,646 ) 1,535 Net cash provided by operating activities 21,445 33,285 Cash flows from investing activities: Repayment of assumed shareholders loan related to acquisition (1,966 ) - Repayment of contingent consideration related to acquisition (1,780 ) - Purchase of property, plant and equipment (26,024 ) (15,544 ) Proceeds from sale of property, plant and equipment 7 7 Investment in marketable securities, net (927 ) (19,728 ) Increase in long term deposits (150 ) (407 ) Net cash used in investing activities (30,840 ) (35,672 ) Cash flows from financing activities: Dividend paid (7,234 ) - Changes in short-term bank credits and long-term loans (11,096 ) (459 ) Repayment of a financing leaseback related to Bar-Lev transaction (981 ) (924 ) Net cash used in financing activities (19,311 ) (1,383 ) Effect of exchange rate differences on cash and cash equivalents (492 ) 373 Decrease in cash and cash equivalents and short-term bank deposits (29,198 ) (3,397 ) Cash and cash equivalents and short-term bank deposits at beginning of the period 114,248 139,372 Cash and cash equivalents and short-term bank deposits at end of the period $ 85,050 $ 135,975 Non - cash investing: Changes in trade payables balances related to purchase of fixed assets (737 ) (438 ) Caesarstone Ltd. and its subsidiaries Three months endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 2021 2020 (Unaudited) (Unaudited) Reconciliation of Gross profit to Adjusted Gross profit: Gross profit $ 42,734 $ 38,854 $ 131,820 $ 95,427 Share-based compensation expense (a) 72 100 214 353 Amortization of assets related to acquisitions 79 - 773 - Adjusted Gross profit (Non-GAAP) $ 42,885 $ 38,954 $ 132,807 $ 95,780 (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 endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 2021 2020 (Unaudited) (Unaudited) Reconciliation of Net Income to Adjusted EBITDA: Net income $ 5,870 $ 12,807 $ 21,192 $ 9,603 Finance expenses (income), net 2,403 (52 ) 165 1,586 Taxes on income 603 2,292 2,730 3,241 Depreciation and amortization related to acquisitions 8,802 7,058 26,491 21,160 Legal settlements and loss contingencies, net (a) (385 ) 452 4,464 4,927 Contingent consideration adjustment related to acquisition - - 284 - Acquisition and integration related expenses - 477 - 477 Share-based compensation expense (b) 391 628 1,387 2,335 Adjusted EBITDA (Non-GAAP) $ 17,684 $ 23,662 $ 56,713 $ 43,329 (a) Consists of legal settlements expenses and loss contingencies, net, related to product liability claims and other adjustments to on-going legal claims, including related legal fees. (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 endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands (except per share data) 2021 2020 2021 2020 (Unaudited) (Unaudited) Reconciliation of net income attributable to controlling interest to adjusted net income attributable to controlling interest: Net income attributable to controlling interest $ 5,948 $ 12,807 $ 21,843 $ 9,603 Legal settlements and loss contingencies, net (a) (385 ) 452 4,464 4,927 Contingent consideration adjustment related to acquisition - - 284 - Amortization of assets related to acquisitions, net of tax 502 - 1,889 - M&A related expenses - 477 - 477 Share-based compensation expense (b) 391 628 1,387 2,335 Non cash revaluation of lease liabilities (c) 430 227 (543 ) 12 Total adjustments 938 1,784 7,481 7,751 Less tax on non-tax adjustments (d) 56 481 854 2,090 Total adjustments after tax 882 1,303 6,628 5,661 Adjusted net income attributable to controlling interest (Non-GAAP) $ 6,830 $ 14,110 $ 28,471 $ 15,264 Adjusted diluted EPS (e) $ 0.20 $ 0.41 $ 0.82 $ 0.44 (a) Consists of legal settlements expenses and loss contingencies, net, related to product liability claims and other adjustments to on-going legal claims, including related legal fees. (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) Tax adjustments for the nine months ended September 30, 2021 and 2020, based on the effective tax rates. (e) In calculating adjusted diluted (Non-GAAP) EPS for the three and nine months ended September 30, 2021 and 2020, 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 subsidiariesGeographic breakdown of revenues by region Three months endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 2021 2020 (Unaudited) (Unaudited) USA $ 79,065 $ 52,097 $ 227,740 $ 153,878 Canada 22,479 19,174 62,204 52,167 Latin America 1,485 124 3,084 762 America's 103,029 71,395 293,028 206,807 Australia 29,215 27,746 87,984 73,634 Asia 7,232 2,881 22,379 7,444 APAC 36,447 30,627 110,363 81,078 EMEA 14,106 11,422 42,676 30,793 Israel 9,759 10,478 26,768 30,838 Total Revenues $ 163,341 $ 123,922 $ 472,835 $ 349,516 Caesarstone Ltd. and its subsidiariesGeographic breakdown of revenues by region - Supplemental data Three months ended U.S. dollars in thousands 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 (Unaudited) USA $ 79,065 $ 77,844 $ 70,831 $ 53,618 $ 52,097 $ 41,726 $ 60,055 $ 64,659 $ 64,805 $ 64,590 Canada 22,479 21,946 17,779 20,325 19,174 14,435 18,558 20,575 21,881 23,341 Latin America 1,485 741 858 1,387 124 132 506 735 1,434 1,351 America's 103,029 100,531 89,468 75,330 71,395 56,293 79,119 85,969 88,120 89,282 Australia 29,215 31,597 27,172 29,953 27,746 23,534 22,354 26,000 28,642 28,294 Asia 7,232 7,370 7,777 7,122 2,881 1,732 2,831 3,932 3,675 3,311 APAC 36,447 38,967 34,949 37,075 30,627 25,266 25,185 29,932 32,317 31,605 EMEA 14,106 15,852 12,718 14,408 11,422 8,031 11,340 9,464 11,719 11,418 Israel 9,759 8,112 8,897 10,083 10,478 9,447 10,913 8,502 10,683 8,766 Total Revenues $ 163,341 $ 163,462 $ 146,032 $ 136,896 $ 123,922 $ 99,037 $ 126,557 $ 133,867 $ 142,839 $ 141,071 Year-over-year % change 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 (Unaudited) USA 51.8% 86.6% 17.9% -17.1% -19.6% -35.4% Canada 17.2% 52.0% -4.2% -1.2% -12.4% -38.2% Latin America 1097.6% 461.4% 69.6% 88.8% -91.4% -90.2% America's 44.3% 78.6% 13.1% -12.4% -19.0% -36.9% Australia 5.3% 34.3% 21.6% 15.2% -3.1% -16.8% Asia 151.0% 325.5% 174.7% 81.1% -21.6% -47.7% APAC 19.0% 54.2% 38.8% 23.9% -5.2% -20.1% EMEA 23.5% 97.4% 12.2% 52.2% -2.5% -29.7% Israel -6.9% -14.1% -18.5% 18.6% -1.9% 7.8% Total Revenues 31.8% 65.1% 15.4% 2.3% -13.2% -29.8% Year-over-year % change in constant currency (*) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 (Unaudited) USA 51.8% 86.6% 17.9% -17.1% -19.6% -35.4% Canada 11.0% 35.1% -9.6% -2.4% -11.7% -36.0% Latin America 1097.3% 460.5% 69.8% 88.7% -91.3% -90.2% America's 42.6% 74.2% 11.8% -12.7% -18.8% -36.4% Australia 2.5% 14.6% 2.8% 7.9% -7.1% -11.5% Asia 148.9% 312.8% 169.5% 80.7% -21.2% -45.9% APAC 16.3% 35.1% 21.5% 17.5% -8.7% -15.1% EMEA 18.2% 77.6% 3.3% 45.8% -5.9% -26.9% Israel -12.2% -20.5% -24.6% 9.4% -4.5% 4.5% Total Revenues 29.2% 55.5% 9.8% -0.4% -14.4% -28.3% (*) Change in revenues at constant currency is calculated so that revenues can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of business performance. Change in revenues adjusted for currency are calculated by translating current period activity in local currency using the comparable prior-year period’s currency conversion rate. Exchange rates used, are the representative exchange rate published by the Bank of Israel for the relevant periods. View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005461/en/Contacts Investor Relations: ICR, Inc. - Rodny Nacier CSTE@icrinc.com +1 (646) 200-8870
– Record Third Quarter Revenue of $163.3 Million, Up 31.8% Over Prior Year Quarter – – Net Income of $5.9 Million, or $0.17 Per Share – – Adjusted Net Income of $6.8 Million, or $0.20 Per Share – – Adjusted EBITDA of $17.7 Million – – Strong Cash Position(*) of $91.5 Million at Quarter End – – Declares Dividend of $0.10 per share – – Published Inaugural Global ESG Report in October – – Reiterates Outlook for 2021 Revenue and Adjusted EBITDA Growth –
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, 2021. Yuval Dagim, Caesarstone’s Chief Executive Officer commented, “I am encouraged to report third quarter results that were in-line with our expectations as we further executed towards the goals set out in our Global Growth Acceleration Plan. To that extent, we were very pleased to rollout our innovative digital CS Connect platform nationally across the U.S., which has received positive feedback and represents a critical milestone in our efforts to transform the way we communicate with our customers and consumers. Additionally, the integrations of our Omicron and Lioli acquisitions continue to drive positive momentum in our results, helping us to achieve record third quarter revenue of $163.3 million. We were also excited to publish our inaugural ESG report in October, which provides Caesarstone with a prudent framework to help create a more sustainable future for all. Overall, we are happy with the progress in our business as we continue to address the cost environment with additional announced price increases and execute on our previously communicated initiatives to drive long-term value for all of our stakeholders.” (*) Cash position is defined as cash and cash equivalents and short-term bank deposits and long and short-term investment in marketable securities less debt from financial institutions. Third Quarter 2021 Results Revenue in the third quarter of 2021 grew 31.8% to a third quarter record of $163.3 million compared to $123.9 million in the prior year quarter. On a constant currency basis, third quarter revenue was higher by 29.2% year-over-year. Sales growth was primarily driven by improved demand across the majority of our global footprint in addition to the contribution of our recent acquisitions. Gross margin in the third quarter declined to 26.2% compared to 31.4% in the prior year quarter. Adjusted gross margin in the third quarter was 26.3% compared to 31.4% in the prior year quarter. The year-over-year difference in gross margin mainly reflects higher raw material prices, particularly polyester, and shipping price increases which were partially offset by favorable product mix, selling price increases and more favorable exchange rates. Operating expenses in the third quarter were $33.9 million, or 20.7% of revenue, compared to $23.8 million, or 19.2% of revenue in the prior year quarter. Excluding legal settlements and loss contingencies, operating expenses were 21.0% of revenue, compared to 18.8% in the prior year quarter, mainly due to a return to normalized levels of marketing and selling expenses and investments related to initiatives under the Company’s Global Growth Acceleration Plan. Operating income was $8.9 million compared to operating income of $15.0 million in the prior year quarter. The year-over-year decline mainly reflects higher operating expenses. Adjusted EBITDA, which excludes expenses for non-cash share-based compensation, legal settlements and loss contingencies and for non-recurring items, was $17.7 million in the third quarter, representing a margin of 10.8%. This compares to adjusted EBITDA of $23.7 million, representing a margin of 19.1%, in the prior year quarter. The year-over-year margin decline primarily reflects the lower operating income. Finance expense in the third quarter was $2.4 million compared to finance income of $0.1 million in the prior year quarter. The increase was mainly related to exchange rate fluctuations, higher credit card fees due to higher volume as well as interest related to bank loan. Net Income attributable to controlling interest for the third quarter was $5.9 million compared to net income of $12.8 million in the prior year quarter. Net income per share for the third quarter was $0.17 compared to net income per share of $0.37 in the prior year quarter. Adjusted diluted net income per share for the third quarter was $0.20 on 34.6 million shares, compared to adjusted diluted net income per share of $0.41 in the prior year quarter on 34.5 million shares. Balance Sheet & Liquidity As of September 30, 2021, the Company’s balance sheet remained strong, including cash, cash equivalents and short-term bank deposits and short and long-term marketable securities of $104.7 million and total debt to financial institutions of $13.2 million. Dividend The Company’s dividend policy provides for a quarterly cash dividend of up to 50% of reported net income on a year-to-date basis, less any amount already paid as dividend for the respective period (the “calculated dividend”), subject in each case to approval by the Company’s board of directors. No dividend is paid if it would be less than $0.10 per share. In accordance with the Company’s dividend policy, the board of directors declared a cash dividend of $0.10 per share for the third quarter and the nine months ended September 30, 2021. The dividend will be paid on November 30, 2021 to shareholders of record as of November 17, 2021. The dividend payment is subject to withholding tax of 20%. Outlook Based on year-to-date progress, the Company reiterates its expectation for 2021 revenue and Adjusted EBITDA to be higher year-over-year. The Company anticipates revenue to grow faster than EBITDA in 2021 mainly due to higher raw material and shipping costs, coupled with a return to more normalized levels of sales and marketing expenses and other investments to support growth initiatives. The Company’s outlook includes the investment costs associated with its Global Growth Acceleration Plan. Webcast and Conference Call Details The Company will host a live webcast and conference call today at 8:30 a.m. ET to discuss the results, followed by a question and answer session for the investment community. The live webcast of the call can be accessed at ir.caesarstone.com. For those unable to access the webcast, the conference call will be accessible by dialing 1-877-407-4018 (domestic) or +1-201-689-8471 (international). The toll-free Israeli number is 1 80 940 6247. Upon dialing in, please request to join the Caesarstone Third Quarter Earnings Call. To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 (domestic) or +1-412-317-6671 (international) and enter pass code 13724274. The replay will be available beginning at 11:30 a.m. ET on Wednesday, November 3, 2021 and will last through 11:59 p.m. ET on Wednesday, November 10, 2021. About Caesarstone Caesarstone is a concept and lifestyle-driven company with a customer-centered approach to designing, developing, and producing high-end engineered stone countertops, used in residential and commercial buildings. Our products offer superior aesthetic appeal and perfected functionality through a distinct variety of colors, styles, textures, and finishes used in diverse countertop applications, marked by inherent longevity. Strong commitment to service has fostered growing customer loyalty in over 50 countries where the Caesarstone product collections are available: Classico, Supernatural, Metropolitan and Outdoor. For more information please visit our website: www.caesarstone.com. 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 sustainability goals and plans, intentions, expectations, assumptions, goals and beliefs regarding the Company’s business and sustainability vision. These forward-looking statements also may relate to the Company's plans, objectives and expectations for future operations, including estimations relating to the impact of the COVID-19 pandemic and mitigation measures in connection thereto, and expectations of the results of the Company’s business optimization initiatives. These forward-looking statements are based upon management's current estimates and projections of future results or trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties, both known or unknown. These factors include, but are not limited to: the impact of the COVID-19 pandemic on end-consumers, the global economy and the Company’s business and results of operations; raw material shortages and prices and effects of challenges in global shipping; the ability of the company to realign aspects of its business based on the business optimization initiatives, the strength of the home renovation and construction sectors; intense competitive pressures; the extent of the Company’s ability to meet its ESG goals and targets, including the extent of the Company’s ability to maintain a healthy and safe environment for the Company’s employees; management of GHG and silica emissions; the degree of the Company’s ability to develop, produce and deliver high quality and safe products; the Company’s ability to effectively manage changes in its production and supply chain; the extent of the Company’s ability to build-out and expand into certain markets; the Company’s ability to effective manage its relationship with suppliers; the outcome of silicosis and other bodily injury claims; regulatory requirements relating to hazards associated with exposure to silica dust; efficiently manufacturing our products and managing changes in production and supply chain; economic conditions within any of our key existing markets; changes in raw material prices; fluctuations in currency exchange rates; the success of our expansion efforts in the United States; the unpredictability of seasonal fluctuations in revenues; disturbances to the Company’s operations or the operations of its suppliers, distributors, customers or other third parties and other factors, 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 22, 2021, 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 subsidiariesCondensed consolidated balance sheets As of U.S. dollars in thousands September 30, 2021 December 31, 2020 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash and cash equivalents and short-term bank deposits $ 85,050 $ 114,248 Short-term available for sale marketable securities 12,811 8,112 Trade receivables, net 84,639 84,822 Other accounts receivable and prepaid expenses 39,325 26,481 Inventories 175,400 152,073 Total current assets 397,225 385,736 LONG-TERM ASSETS: Severance pay fund 4,060 4,007 Long-term deposits 3,852 3,837 Deferred tax assets, net 8,428 8,359 Other long-term receivables 428 1,675 Operating lease right-of-use assets 141,935 123,928 Long-term available for sale marketable securities 6,811 10,926 Property, plant and equipment, net 223,286 222,883 Goodwill and intangible assets, net 56,420 59,570 Total long-term assets 445,220 435,185 Total assets $ 842,445 $ 820,921 LIABILITIES AND EQUITY CURRENT LIABILITIES: Short-term bank credit $ 13,197 $ 13,122 Trade payables 68,360 55,063 Related parties and other loans 2,255 2,221 Short term legal settlements and loss contingencies 21,003 31,039 Accrued expenses and other liabilities 57,939 55,570 Total current liabilities 162,754 157,015 LONG-TERM LIABILITIES: Long-term bank and other loans and financing liability of land from a related party 6,341 20,706 Legal settlements and loss contingencies long-term 23,122 21,910 Deferred tax liabilities, net 5,752 6,943 Long-term lease liabilities 129,788 112,719 Accrued severance pay 5,418 5,303 Long-term warranty provision 1,266 1,274 Total long-term liabilities 171,687 168,855 REDEEMABLE NON-CONTROLLING INTEREST 7,106 7,701 EQUITY: Ordinary shares 371 371 Treasury shares - at cost (39,430 ) (39,430 ) Additional paid-in capital 161,471 160,083 Capital fund related to non-controlling interest (5,587 ) (5,587 ) Accumulated other comprehensive loss (1,046 ) 1,083 Retained earnings 385,119 370,830 Total equity 500,898 487,350 Total liabilities and equity $ 842,445 $ 820,921 Caesarstone Ltd. and its subsidiariesCondensed consolidated statements of income Three months endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands (except per share data) 2021 2020 2021 2020 (Unaudited) (Unaudited) Revenues $ 163,341 $ 123,922 $ 472,835 $ 349,516 Cost of revenues 120,607 85,068 341,015 254,089 Gross profit 42,734 38,854 131,820 95,427 Operating expenses: Research and development 820 930 3,039 2,473 Marketing and selling 21,261 14,231 63,131 44,295 General and administrative 12,162 8,194 37,099 29,302 Legal settlements and loss contingencies, net (385 ) 452 4,464 4,927 Total operating expenses 33,858 23,807 107,733 80,997 Operating income 8,876 15,047 24,087 14,430 Finance expenses (income), net 2,403 (52 ) 165 1,586 Income before taxes 6,473 15,099 23,922 12,844 Taxes on income 603 2,292 2,730 3,241 Net income $ 5,870 $ 12,807 $ 21,192 $ 9,603 Net loss attributable to non-controlling interest 78 - 651 - Net income attributable to controlling interest $ 5,948 $ 12,807 $ 21,843 $ 9,603 Basic net income per ordinary share (*) $ 0.17 $ 0.37 $ 0.62 $ 0.28 Diluted net income per ordinary share (*) $ 0.17 $ 0.37 $ 0.62 $ 0.28 Weighted average number of ordinary shares used in computing basic income per ordinary share 34,463,460 34,422,128 34,472,016 34,411,480 Weighted average number of ordinary shares used in computing diluted income per ordinary share 34,529,130 34,453,647 34,558,509 34,455,129 (*) The numerator for the calculation of net income per share for the three and nine months ended September 30, 2021 has been decreased by approximately $0.1 and $0.3 million, respectively, to reflect the adjustment to redemption value associated with the redeemable non-controlling interest. Caesarstone Ltd. and its subsidiariesSelected Condensed consolidated statements of cash flows Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 (Unaudited) Cash flows from operating activities: Net income $ 21,192 $ 9,603 Adjustments required to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 26,491 21,160 Share-based compensation expense 1,387 2,335 Accrued severance pay, net 70 16 Changes in deferred tax, net (1,587 ) (46 ) Capital (gain) loss (3 ) 342 Legal settlements and loss contingencies, net 4,464 4,927 Decrease (increase) in trade receivables (1,139 ) 9,155 Decrease (increase) in other accounts receivable and prepaid expenses (12,349 ) 3,740 Increase in inventories (24,880 ) (4,375 ) Increase (decrease) in trade payables 13,843 (15,263 ) Increase (decrease) in warranty provision 8 (342 ) Changes in right of use assets (18,863 ) (5,245 ) Changes in lease liabilities 19,128 5,761 Amortization of premium and accretion of discount on marketable securities, net 304 69 Changes in Accrued interest related to Marketable Securities 25 (87 ) Increase (decrease) in accrued expenses and other liabilities including related parties (6,646 ) 1,535 Net cash provided by operating activities 21,445 33,285 Cash flows from investing activities: Repayment of assumed shareholders loan related to acquisition (1,966 ) - Repayment of contingent consideration related to acquisition (1,780 ) - Purchase of property, plant and equipment (26,024 ) (15,544 ) Proceeds from sale of property, plant and equipment 7 7 Investment in marketable securities, net (927 ) (19,728 ) Increase in long term deposits (150 ) (407 ) Net cash used in investing activities (30,840 ) (35,672 ) Cash flows from financing activities: Dividend paid (7,234 ) - Changes in short-term bank credits and long-term loans (11,096 ) (459 ) Repayment of a financing leaseback related to Bar-Lev transaction (981 ) (924 ) Net cash used in financing activities (19,311 ) (1,383 ) Effect of exchange rate differences on cash and cash equivalents (492 ) 373 Decrease in cash and cash equivalents and short-term bank deposits (29,198 ) (3,397 ) Cash and cash equivalents and short-term bank deposits at beginning of the period 114,248 139,372 Cash and cash equivalents and short-term bank deposits at end of the period $ 85,050 $ 135,975 Non - cash investing: Changes in trade payables balances related to purchase of fixed assets (737 ) (438 ) Caesarstone Ltd. and its subsidiaries Three months endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 2021 2020 (Unaudited) (Unaudited) Reconciliation of Gross profit to Adjusted Gross profit: Gross profit $ 42,734 $ 38,854 $ 131,820 $ 95,427 Share-based compensation expense (a) 72 100 214 353 Amortization of assets related to acquisitions 79 - 773 - Adjusted Gross profit (Non-GAAP) $ 42,885 $ 38,954 $ 132,807 $ 95,780 (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 endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 2021 2020 (Unaudited) (Unaudited) Reconciliation of Net Income to Adjusted EBITDA: Net income $ 5,870 $ 12,807 $ 21,192 $ 9,603 Finance expenses (income), net 2,403 (52 ) 165 1,586 Taxes on income 603 2,292 2,730 3,241 Depreciation and amortization related to acquisitions 8,802 7,058 26,491 21,160 Legal settlements and loss contingencies, net (a) (385 ) 452 4,464 4,927 Contingent consideration adjustment related to acquisition - - 284 - Acquisition and integration related expenses - 477 - 477 Share-based compensation expense (b) 391 628 1,387 2,335 Adjusted EBITDA (Non-GAAP) $ 17,684 $ 23,662 $ 56,713 $ 43,329 (a) Consists of legal settlements expenses and loss contingencies, net, related to product liability claims and other adjustments to on-going legal claims, including related legal fees. (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 endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands (except per share data) 2021 2020 2021 2020 (Unaudited) (Unaudited) Reconciliation of net income attributable to controlling interest to adjusted net income attributable to controlling interest: Net income attributable to controlling interest $ 5,948 $ 12,807 $ 21,843 $ 9,603 Legal settlements and loss contingencies, net (a) (385 ) 452 4,464 4,927 Contingent consideration adjustment related to acquisition - - 284 - Amortization of assets related to acquisitions, net of tax 502 - 1,889 - M&A related expenses - 477 - 477 Share-based compensation expense (b) 391 628 1,387 2,335 Non cash revaluation of lease liabilities (c) 430 227 (543 ) 12 Total adjustments 938 1,784 7,481 7,751 Less tax on non-tax adjustments (d) 56 481 854 2,090 Total adjustments after tax 882 1,303 6,628 5,661 Adjusted net income attributable to controlling interest (Non-GAAP) $ 6,830 $ 14,110 $ 28,471 $ 15,264 Adjusted diluted EPS (e) $ 0.20 $ 0.41 $ 0.82 $ 0.44 (a) Consists of legal settlements expenses and loss contingencies, net, related to product liability claims and other adjustments to on-going legal claims, including related legal fees. (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) Tax adjustments for the nine months ended September 30, 2021 and 2020, based on the effective tax rates. (e) In calculating adjusted diluted (Non-GAAP) EPS for the three and nine months ended September 30, 2021 and 2020, 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 subsidiariesGeographic breakdown of revenues by region Three months endedSeptember 30, Nine months endedSeptember 30, U.S. dollars in thousands 2021 2020 2021 2020 (Unaudited) (Unaudited) USA $ 79,065 $ 52,097 $ 227,740 $ 153,878 Canada 22,479 19,174 62,204 52,167 Latin America 1,485 124 3,084 762 America's 103,029 71,395 293,028 206,807 Australia 29,215 27,746 87,984 73,634 Asia 7,232 2,881 22,379 7,444 APAC 36,447 30,627 110,363 81,078 EMEA 14,106 11,422 42,676 30,793 Israel 9,759 10,478 26,768 30,838 Total Revenues $ 163,341 $ 123,922 $ 472,835 $ 349,516 Caesarstone Ltd. and its subsidiariesGeographic breakdown of revenues by region - Supplemental data Three months ended U.S. dollars in thousands 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 (Unaudited) USA $ 79,065 $ 77,844 $ 70,831 $ 53,618 $ 52,097 $ 41,726 $ 60,055 $ 64,659 $ 64,805 $ 64,590 Canada 22,479 21,946 17,779 20,325 19,174 14,435 18,558 20,575 21,881 23,341 Latin America 1,485 741 858 1,387 124 132 506 735 1,434 1,351 America's 103,029 100,531 89,468 75,330 71,395 56,293 79,119 85,969 88,120 89,282 Australia 29,215 31,597 27,172 29,953 27,746 23,534 22,354 26,000 28,642 28,294 Asia 7,232 7,370 7,777 7,122 2,881 1,732 2,831 3,932 3,675 3,311 APAC 36,447 38,967 34,949 37,075 30,627 25,266 25,185 29,932 32,317 31,605 EMEA 14,106 15,852 12,718 14,408 11,422 8,031 11,340 9,464 11,719 11,418 Israel 9,759 8,112 8,897 10,083 10,478 9,447 10,913 8,502 10,683 8,766 Total Revenues $ 163,341 $ 163,462 $ 146,032 $ 136,896 $ 123,922 $ 99,037 $ 126,557 $ 133,867 $ 142,839 $ 141,071 Year-over-year % change 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 (Unaudited) USA 51.8% 86.6% 17.9% -17.1% -19.6% -35.4% Canada 17.2% 52.0% -4.2% -1.2% -12.4% -38.2% Latin America 1097.6% 461.4% 69.6% 88.8% -91.4% -90.2% America's 44.3% 78.6% 13.1% -12.4% -19.0% -36.9% Australia 5.3% 34.3% 21.6% 15.2% -3.1% -16.8% Asia 151.0% 325.5% 174.7% 81.1% -21.6% -47.7% APAC 19.0% 54.2% 38.8% 23.9% -5.2% -20.1% EMEA 23.5% 97.4% 12.2% 52.2% -2.5% -29.7% Israel -6.9% -14.1% -18.5% 18.6% -1.9% 7.8% Total Revenues 31.8% 65.1% 15.4% 2.3% -13.2% -29.8% Year-over-year % change in constant currency (*) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 (Unaudited) USA 51.8% 86.6% 17.9% -17.1% -19.6% -35.4% Canada 11.0% 35.1% -9.6% -2.4% -11.7% -36.0% Latin America 1097.3% 460.5% 69.8% 88.7% -91.3% -90.2% America's 42.6% 74.2% 11.8% -12.7% -18.8% -36.4% Australia 2.5% 14.6% 2.8% 7.9% -7.1% -11.5% Asia 148.9% 312.8% 169.5% 80.7% -21.2% -45.9% APAC 16.3% 35.1% 21.5% 17.5% -8.7% -15.1% EMEA 18.2% 77.6% 3.3% 45.8% -5.9% -26.9% Israel -12.2% -20.5% -24.6% 9.4% -4.5% 4.5% Total Revenues 29.2% 55.5% 9.8% -0.4% -14.4% -28.3% (*) Change in revenues at constant currency is calculated so that revenues can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of business performance. Change in revenues adjusted for currency are calculated by translating current period activity in local currency using the comparable prior-year period’s currency conversion rate. Exchange rates used, are the representative exchange rate published by the Bank of Israel for the relevant periods. View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005461/en/
