Caesarstone Reports First Quarter 2024 Financial Results
Caesarstone (NASDAQ: CSTE) reported first-quarter 2024 financial results with revenue of $118.3 million, gross margin improvement to 24.5%, and a net cash position of $89.4 million. Despite facing economic headwinds, the company aims to enhance profitability through strategic actions.
Improved gross margin from 19.7% to 24.5% in Q1 2024.
Strong balance sheet with a net cash position of $89.4 million as of March 31, 2024.
Company generated positive cash flow from operations of $8.7 million in Q1 2024.
Reaffirmed outlook to deliver positive adjusted EBITDA and operating cash flow for full year 2024.
Revenue decreased to $118.3 million in Q1 2024 from $150.6 million in the prior year quarter.
Net loss attributable to controlling interest was $5.1 million in Q1 2024.
Adjusted EBITDA was $0.6 million in Q1 2024 compared to $0.7 million in the prior year quarter.
Insights
Caesarstone's first quarter numbers show a mixed performance with revenue dropping to $118.3 million, a significant decrease from $150.6 million year-over-year. This may be attributed to the reduced demand and increased competitive pressures in the renovation and remodeling channels. Notably, they've mentioned global economic headwinds which could be an indicator of broader market challenges. The silver lining here is the improved gross margin, lifting from 19.7% to 24.5%. This jump suggests that the company's efforts to optimize its production process are bearing fruit, likely through reduced raw material and shipping costs.
However, an eye should be kept on the operating expenses which, at 29.2% of the revenue, have grown proportionally due to the revenue shrinkage. Their net cash position of $89.4 million provides some financial stability and the positive operating cash flow is a good sign for liquidity management. Though they've reported a net loss of $5.1 million, the reaffirmation of a positive adjusted EBITDA outlook implies a confident management team, but investors should remain cautious of whether these cost savings will truly materialize in the face of ongoing economic uncertainty.
In the context of the industry, Caesarstone’s financial results reveal broader trends that are impacting the engineered surfaces sector. The 21% decline in constant currency revenue echoes the difficulties companies are facing due to economic headwinds. In particular, the company's report indicates a softening in the renovation and remodeling markets, which could suggest a wider slowdown in consumer spending on home improvements. The separation of the U.S. and Canadian leadership teams could be seen as a strategic move to tailor operations more closely to regional market conditions and consumer preferences, which may help in optimizing market-specific strategies.
Positive adjusted EBITDA and operating cash flow in conjunction with restructuring-related cost savings are forward-looking statements that hinge on successful execution. They are projecting a post-restructuring scenario with significant savings, but whether this will be sufficient to offset the decline in revenue remains to be seen. The long-term effect of their strategic actions, especially in improving profitability and cash generation, will be critical for future investor confidence.
- Revenue of
- Gross Margin of
- Strong Balance Sheet with Net Cash Position of
- Reaffirms Outlook to Deliver Positive Adjusted EBITDA and Operating Cash Flow in 2024 -
MP MENASHE,
Yos Shiran, Caesarstone’s Chief Executive Officer commented, “Our team has demonstrated resilience and adaptability to start off 2024 while facing persistent global economic headwinds, regulatory changes in
First Quarter 2024 Results
Revenue in the first quarter of 2024 was
Gross margin in the first quarter of 2024 improved to
Operating expenses in the first quarter of 2024 were
Operating loss in the first quarter of 2024 was
Adjusted EBITDA in the first quarter of 2024, which excludes expenses for non-cash share-based compensation, legal settlements and loss contingencies, and other non-recurring items, was
Finance income in the first quarter of 2024 was
Net loss attributable to controlling interest for the first quarter of 2024 was
Balance Sheet & Liquidity
During the first quarter of 2024, the Company generated positive cash flow from operations of
Outlook
The Company reaffirms its expectation to deliver positive adjusted EBITDA for full year 2024 along with another full year of positive operating cash flow. The Company also reiterates its expectation to realize restructuring-related cost savings of approximately
Webcast and Conference Call Details
The Company will host a webcast and conference call today, May 8, 2024, at 8:30 a.m. ET to discuss the results, followed by a question and answer session for the investment community. The live webcast can be accessed through the Investor Relations section of the Company’s website at ir.caesarstone.com. For those unable to access the webcast, the conference call will be accessible domestically or internationally, by dialing 1-844-825-9789 and 1-412-317-5180, respectively. The toll-free Israeli number is 1 80 921 3284. Upon dialing in, please request to join the Caesarstone First Quarter 2024 Earnings Conference Call.
To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 or +1-412-317-6671 (international) and enter pass code 10187886. The replay will be available beginning at 12:30 p.m. ET on Wednesday, May 8, 2024 and will last through 11:59 p.m. ET on Wednesday, May 15, 2024.
About Caesarstone
Caesarstone is a global leader of premium surfaces, specializing in countertops that create dynamic spaces of inspiration in the heart of the home. Established in 1987, its multi-material portfolio of over 100 colors combines the company’s innovative technology with its powerful design passion. Spearheading high-quality, sustainable surfaces, Caesarstone delivers functional resilience with timeless beauty, for a vast range of applications, including kitchen countertops, bathroom vanities, and more, for indoor and outdoor spaces.
Since it pioneered quartz countertops over thirty years ago, the brand has expanded into porcelain and natural stone and is on the ground in more than 50 countries worldwide while enhancing customer experience through the expansion of groundbreaking digital platforms & services. More information on Caesarstone: caesarstoneus.com, Facebook, Twitter, YouTube, Pinterest, and Instagram
The Company has filed its annual report on Form 20-F for the year ended December 31, 2023 with the
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
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
Caesarstone Ltd. and its subsidiaries |
||||||||
Condensed consolidated balance sheets |
||||||||
| As of | ||||||||
| March 31, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents and short-term bank deposits | $ |
96,152 |
|
$ |
91,123 |
|
||
| Trade receivables, net |
|
65,293 |
|
|
66,888 |
|
||
| Other accounts receivable and prepaid expenses |
|
20,014 |
|
|
25,489 |
|
||
| Inventories |
|
119,423 |
|
|
136,446 |
|
||
| Total current assets |
|
300,882 |
|
|
319,946 |
|
||
| LONG-TERM ASSETS: | ||||||||
| Severance pay fund |
|
1,773 |
|
|
1,994 |
|
||
| Deferred tax assets, net |
|
2,836 |
|
|
3,061 |
|
||
| Long-term deposits and prepaid expenses |
|
4,975 |
|
|
4,961 |
|
||
| Operating lease right-of-use assets |
|
114,840 |
|
|
120,156 |
|
||
| Property, plant and equipment, net |
|
122,057 |
|
|
123,480 |
|
||
| Intangible assets, net |
|
5,505 |
|
|
6,257 |
|
||
| Total long-term assets |
|
251,986 |
|
|
259,909 |
|
||
| Total assets | $ |
552,868 |
|
$ |
579,855 |
|
||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term bank credit | $ |
5,324 |
|
$ |
5,118 |
|
||
| Trade payables |
|
34,741 |
|
|
42,848 |
|
||
| Related parties |
|
175 |
|
|
257 |
|
||
| Short term legal settlements and loss contingencies |
|
15,852 |
|
|
16,106 |
|
||
| Accrued expenses and other liabilities |
|
51,809 |
|
|
56,894 |
|
||
| Total current liabilities |
|
107,901 |
|
|
121,223 |
|
||
| LONG-TERM LIABILITIES: | ||||||||
| Long-term bank and other loans |
|
1,935 |
|
|
2,549 |
|
||
| Legal settlements and loss contingencies long-term and other liabilities |
|
11,557 |
|
|
11,814 |
|
||
| Deferred tax liabilities, net |
|
2,926 |
|
|
3,006 |
|
||
| Long-term lease liabilities |
|
108,027 |
|
|
114,146 |
|
||
| Accrued severance pay |
|
3,087 |
|
|
3,065 |
|
||
| Long-term warranty provision |
|
1,213 |
|
|
1,204 |
|
||
| Total long-term liabilities |
|
128,745 |
|
|
135,784 |
|
||
| REDEEMABLE NON-CONTROLLING INTEREST |
|
7,995 |
|
|
7,789 |
|
||
| EQUITY: | ||||||||
| Ordinary shares |
|
371 |
|
|
371 |
|
||
| Treasury shares - at cost |
|
(39,430 |
) |
|
(39,430 |
) |
||
| Additional paid-in capital |
|
165,041 |
|
|
164,456 |
|
||
| Capital fund related to non-controlling interest |
|
(5,587 |
) |
|
(5,587 |
) |
||
| Accumulated other comprehensive income (loss), net |
|
(10,732 |
) |
|
(8,402 |
) |
||
| Retained earnings |
|
198,564 |
|
|
203,651 |
|
||
| Total equity |
|
308,227 |
|
|
315,059 |
|
||
| Total liabilities and equity | $ |
552,868 |
|
$ |
579,855 |
|
||
Caesarstone Ltd. and its subsidiaries |
|||||||||
Condensed consolidated statements of income (loss) |
|||||||||
| Three months ended March 31, | |||||||||
|
2024 |
|
|
2023 |
|
||||
| (Unaudited) | |||||||||
| Revenues | $ |
118,292 |
|
$ |
150,633 |
|
|||
| Cost of revenues |
|
89,305 |
|
|
121,031 |
|
|||
| Gross profit |
|
28,987 |
|
|
29,602 |
|
|||
| Operating expenses: | |||||||||
| Research and development |
|
1,212 |
|
|
1,046 |
|
|||
| Sales and Marketing |
|
22,368 |
|
|
21,825 |
|
|||
| General and administrative |
|
10,305 |
|
|
13,979 |
|
|||
| Legal settlements and loss contingencies, net |
|
705 |
|
|
(1,330 |
) |
|||
| Total operating expenses |
|
34,590 |
|
|
35,520 |
|
|||
| Operating loss |
|
(5,603 |
) |
|
(5,918 |
) |
|||
| Finance income, net |
|
(706 |
) |
|
(2,336 |
) |
|||
| Loss before taxes |
|
(4,897 |
) |
|
(3,582 |
) |
|||
| Tax expenses, net |
|
26 |
|
|
269 |
|
|||
| Net loss | $ |
(4,923 |
) |
$ |
(3,851 |
) |
|||
| Net loss (income) attributable to non-controlling interest |
|
(164 |
) |
|
73 |
|
|||
| Net loss attributable to controlling interest | $ |
(5,087 |
) |
$ |
(3,778 |
) |
|||
| Basic net loss per ordinary share (*) | $ |
(0.15 |
) |
$ |
(0.11 |
) |
|||
| Diluted net loss per ordinary share (*) | $ |
(0.15 |
) |
$ |
(0.11 |
) |
|||
| Weighted average number of ordinary shares used in computing basic loss per ordinary share |
|
34,534,185 |
|
|
34,513,374 |
|
|||
| Weighted average number of ordinary shares used in computing diluted loss per ordinary share |
|
34,534,185 |
|
|
34,513,374 |
|
|||
| (*) The numerator for the calculation of net loss per share for the three months ended March 31, 2024 and 2023, has been decreased by approximately |
Caesarstone Ltd. and its subsidiaries |
||||||||
Selected Condensed consolidated statements of cash flows |
||||||||
| Three months ended March 31, | ||||||||
|
2024 |
|
|
2023 |
|
|||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ |
(4,923 |
) |
$ |
(3,851 |
) |
||
| Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization |
|
4,328 |
|
|
7,571 |
|
||
| Share-based compensation expense |
|
585 |
|
|
316 |
|
||
| Accrued severance pay, net |
|
247 |
|
|
(107 |
) |
||
| Changes in deferred tax, net |
|
360 |
|
|
(1,553 |
) |
||
| Capital loss |
|
15 |
|
|
61 |
|
||
| Legal settlements and loss contingencies, net |
|
705 |
|
|
(1,330 |
) |
||
| Decrease (increase) in trade receivables |
|
627 |
|
|
(3,714 |
) |
||
| Decrease in other accounts receivable and prepaid expenses |
|
5,314 |
|
|
3,180 |
|
||
| Decrease in inventories |
|
15,944 |
|
|
26,750 |
|
||
| Decrease in trade payables |
|
(8,049 |
) |
|
(18,159 |
) |
||
| Decrease in warranty provision |
|
(235 |
) |
|
(17 |
) |
||
| Changes in right of use assets |
|
4,795 |
|
|
5,495 |
|
||
| Changes in lease liabilities |
|
(6,044 |
) |
|
(7,058 |
) |
||
| Increase (decrease) in accrued expenses and other liabilities including related parties |
|
(4,926 |
) |
|
353 |
|
||
| Net cash provided by operating activities |
|
8,743 |
|
|
7,937 |
|
||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment |
|
(2,797 |
) |
|
(2,935 |
) |
||
| Proceeds from sale of property, plant and equipment |
|
31 |
|
|
5 |
|
||
| Maturity of marketable securities |
|
- |
|
|
1,400 |
|
||
| Decrease (increase) in long term deposits |
|
(92 |
) |
|
78 |
|
||
| Net used in investing activities |
|
(2,858 |
) |
|
(1,452 |
) |
||
| Cash flows from financing activities: | ||||||||
| Changes in short-term bank credits and long-term loans, including related parties |
|
(407 |
) |
|
(12,620 |
) |
||
| Net cash used in financing activities |
|
(407 |
) |
|
(12,620 |
) |
||
| Effect of exchange rate differences on cash and cash equivalents |
|
(449 |
) |
|
41 |
|
||
| Increase (decrease) in cash and cash equivalents and short-term bank deposits |
|
5,029 |
|
|
(6,094 |
) |
||
| Cash and cash equivalents and short-term bank deposits at beginning of the period |
|
91,123 |
|
|
52,081 |
|
||
| Cash and cash equivalents and short-term bank deposits at end of the period | $ |
96,152 |
|
$ |
45,987 |
|
||
| Non - cash investing: | ||||||||
| Changes in trade payables balances related to purchase of fixed assets |
|
(213 |
) |
|
308 |
|
||
Caesarstone Ltd. and its subsidiaries |
|||||||
| Three months ended March 31, | |||||||
|
2024 |
|
|
2023 |
|||
| (Unaudited) | |||||||
| Reconciliation of Gross profit to Adjusted Gross profit: | |||||||
| Gross profit | $ |
28,987 |
|
$ |
29,602 |
||
| Share-based compensation expense (a) |
|
12 |
|
|
67 |
||
| Amortization of assets related to acquisitions |
|
71 |
|
|
72 |
||
| Other non recurring items |
|
(152 |
) |
|
- |
||
| Adjusted Gross profit (Non-GAAP) | $ |
28,918 |
|
$ |
29,741 |
||
(a) |
Share-based compensation includes expenses related to stock options and restricted stock units granted to employees and directors of the Company. |
Caesarstone Ltd. and its subsidiaries |
||||||||
| Three months ended March 31, | ||||||||
|
2024 |
|
|
2023 |
|
|||
| (Unaudited) | ||||||||
| Reconciliation of Net Loss to Adjusted EBITDA: | ||||||||
| Net loss | $ |
(4,923 |
) |
$ |
(3,851 |
) |
||
| Finance income, net |
|
(706 |
) |
|
(2,336 |
) |
||
| Taxes on income |
|
26 |
|
|
269 |
|
||
| Depreciation and amortization |
|
4,480 |
|
|
7,571 |
|
||
| Legal settlements and loss contingencies, net (a) |
|
705 |
|
|
(1,330 |
) |
||
| Contingent consideration adjustment related to acquisition |
|
25 |
|
|
78 |
|
||
| Share-based compensation expense (b) |
|
585 |
|
|
316 |
|
||
| Residual operating expenses related to closed plants after closing |
|
595 |
|
|
- |
|
||
| Other non recurring items |
|
(152 |
) |
|
- |
|
||
| Adjusted EBITDA (Non-GAAP) | $ |
635 |
|
$ |
717 |
|
||
(a) |
Consists primarily of legal settlements expenses and loss contingencies, net, related to product liability claims. | |
(b) |
Share-based compensation includes expenses related to stock options and restricted stock units granted to employees and directors of the Company. |
Caesarstone Ltd. and its subsidiaries |
||||||||
| Three months ended March 31, | ||||||||
|
2024 |
|
|
2023 |
|
|||
| (Unaudited) | ||||||||
| Reconciliation of net loss attributable to controlling interest to adjusted net loss attributable to controlling interest: | ||||||||
| Net loss attributable to controlling interest | $ |
(5,087 |
) |
$ |
(3,778 |
) |
||
| Legal settlements and loss contingencies, net (a) |
|
705 |
|
|
(1,330 |
) |
||
| Contingent consideration adjustment related to acquisition |
|
25 |
|
|
78 |
|
||
| Amortization of assets related to acquisitions, net of tax |
|
535 |
|
|
535 |
|
||
| Share-based compensation expense (b) |
|
585 |
|
|
316 |
|
||
| Non cash revaluation of lease liabilities (c) |
|
(1,567 |
) |
|
(1,705 |
) |
||
| Residual operating expenses related to closed plants after closing |
|
595 |
|
|
- |
|
||
| Other non recurring items |
|
(152 |
) |
|
- |
|
||
| Total adjustments |
|
726 |
|
|
(2,106 |
) |
||
| Less tax on non-tax adjustments (e) |
|
(4 |
) |
|
160 |
|
||
| Total adjustments after tax |
|
730 |
|
|
(2,264 |
) |
||
| Adjusted net loss attributable to controlling interest (Non-GAAP) | $ |
(4,357 |
) |
$ |
(6,042 |
) |
||
| Adjusted loss per share (f) | $ |
(0.13 |
) |
$ |
(0.17 |
) |
||
(a) |
Consists primarily of legal settlements expenses and loss contingencies, net, related to product liability claims. | |
(b) |
Share-based compensation includes expenses related to stock options and restricted stock units granted to employees and directors of the Company. | |
(c) |
Exchange rate differences deriving from revaluation of lease contracts in accordance with FASB ASC 842. | |
(e) |
Tax adjustments for the three months ended March 31, 2024 and 2023, based on the effective tax rates. | |
(f) |
In calculating adjusted (Non-GAAP) loss per share, the diluted weighted average number of shares outstanding excludes the effects of share-based compensation expense in accordance with FASB ASC 718. |
Caesarstone Ltd. and its subsidiaries |
|||||||||||||
Geographic breakdown of revenues by region |
|||||||||||||
| Three months ended March 31, | Three months ended March 31, | ||||||||||||
|
2024 |
|
2023 |
||||||||||
| (Unaudited) | YoY % change |
YoY % change CCB |
|||||||||||
$ |
60,999 |
$ |
76,070 |
-19.8 |
% |
-19.8 |
% |
||||||
|
16,556 |
|
18,324 |
-9.6 |
% |
-9.9 |
% |
||||||
|
776 |
|
506 |
53.3 |
% |
53.3 |
% |
||||||
| America's |
|
78,331 |
|
94,900 |
-17.5 |
% |
-17.5 |
% |
|||||
|
20,145 |
|
25,396 |
-20.7 |
% |
-17.5 |
% |
||||||
| Asia |
|
3,908 |
|
6,999 |
-44.2 |
% |
-43.7 |
% |
|||||
| APAC |
|
24,054 |
|
32,395 |
-25.7 |
% |
-23.2 |
% |
|||||
| EMEA |
|
11,535 |
|
15,922 |
-27.6 |
% |
-29.0 |
% |
|||||
|
4,372 |
|
7,416 |
-41.0 |
% |
-39.3 |
% |
||||||
| Total Revenues | $ |
118,292 |
$ |
150,633 |
-21.5 |
% |
-21.0 |
% |
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508163990/en/
Investor Relations:
ICR, Inc. - Rodny Nacier
CSTE@icrinc.com
+1 (646) 200-8870
Source: Caesarstone Ltd.
FAQ
What was Caesarstone's revenue in the first quarter of 2024?
Caesarstone's revenue in the first quarter of 2024 was $118.3 million.
What was Caesarstone's gross margin in the first quarter of 2024?
Caesarstone's gross margin improved to 24.5% in the first quarter of 2024 compared to 19.7% in the prior year quarter.
What is Caesarstone's NASDAQ symbol?
Caesarstone's NASDAQ symbol is CSTE.
What was Caesarstone's net cash position as of March 31, 2024?
Caesarstone's net cash position was $89.4 million as of March 31, 2024.
What did Caesarstone reaffirm for full year 2024?
Caesarstone reaffirmed its expectation to deliver positive adjusted EBITDA and operating cash flow for full year 2024.
