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 Second Quarter 2024 Financial Results By: Caesarstone Ltd. via Business Wire August 07, 2024 at 07:00 AM EDT - 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/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. 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Caesarstone Reports Second Quarter 2024 Financial Results By: Caesarstone Ltd. via Business Wire August 07, 2024 at 07:00 AM EDT - 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/Contacts Investor Relations: ICR, Inc. - Rodny Nacier CSTE@icrinc.com +1 (646) 200-8870
- 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/
