-
First Quarter Revenue Up 13.5% to $76.4 million
-
Net Income Attributable to Controlling Interest More Than Doubled
to $10.5 million
-
EPS of $0.30; Adjusted EPS of $0.32
MP MENASHE, Israel--(BUSINESS WIRE)--
Caesarstone Sdot-Yam Ltd. (CSTE), a manufacturer of high quality
engineered quartz surfaces, today reported financial results for its
first quarter ended March 31, 2013.
Revenues in the first quarter of 2013 increased by 13.5% to $76.4
million compared to $67.3 million in the same quarter of the prior year.
Growth in revenues was experienced in each region, but was primarily
driven by continued increases in sales in the United States and Canada,
up 26.3% and 21.8%, respectively, compared to the same period in the
prior year. On a constant currency basis, first quarter revenue growth
was 13.9% compared to the same period last year.
Yosef Shiran, Chief Executive Officer, commented, "We are pleased to
have begun the year with a good first quarter. Our growth in North
America continues to be strong and we are excited to build our presence
into the fast-growing U.S. and Canadian markets as they embrace quartz
as a superior material. We are also pleased to see growth in sales and
margins following a strong global response to our innovative
Super-Naturals product line."
Gross margin in the first quarter was 44.8% compared to 41.8% in the
same period in the prior year. The Company noted that in the first
quarter of last year, excluding compensation related to its initial
public offering, gross margin was 43.0%. The comparable year-over-year
improvement resulted from benefits of scale, higher margins associated
with new products, and favorable changes in the regional mix of revenues.
Operating expenses in the first quarter were $21.1 million, or 27.7% of
revenues. This compares to the prior year's first quarter level of $21.0
million, or 31.2% of revenues. The Company noted that expenses in the
first quarter of 2012 included $1.1 million for non-recurring
compensation costs related to the Company's initial public offering and
$0.8 million of management fees. Excluding these expenses, operating
expenses were 28.3% of revenues.
Operating income in the first quarter increased by 82.5% from the first
quarter of 2012 to $13.1 million, a margin of 17.1%. This compares to
operating income in the first quarter of last year of $7.2 million, or
10.6% of revenues.
Adjusted EBITDA, which excludes share-based compensation, the excess
cost of acquired inventory and other non-recurring costs, increased by
28.9% to $17.6 million in the first quarter, a margin of 23.1%. This
compares to adjusted EBITDA of $13.7 million, a margin of 20.3% in the
first quarter of the prior year.
Finance expense in the first quarter was $0.2 million compared to
finance expense of $1.5 million during the same period in the prior
year, which consisted mainly of expenses related to foreign exchange
rate fluctuations.
The Company's reported GAAP net income attributable to controlling
interest for the first quarter of 2013 of $10.5 million compared to $4.8
million in the same quarter in the prior year. Diluted earnings per
share for the first quarter were $0.30 on 35.0 million shares compared
to $0.18 per diluted ordinary share on 27.5 million shares in the prior
year's first quarter.
Adjusted net income attributable to controlling interest for the first
quarter was $11.3 million, an increase of 52.1%, compared to $7.4
million in the same quarter in the prior year. Adjusted earnings per
diluted share for this year's first quarter were $0.32 compared to $0.27
per diluted ordinary share in the prior year period.
The Company's balance sheet as of March 31, 2013 remained solid with a
cash balance of $73.2 million. Net cash grew by $3.1 million from
December 31, 2012 and was $52.9 million as of March 31, 2013. The
Company continues to believe its cash position and expected cash flows
will be sufficient to fund its need for capital expenditures and working
capital for the foreseeable future.
Guidance
Today, the Company reiterated its revenue guidance for the full year of
2013 in the range of $330 million to $340 million. The Company also
maintained its adjusted EBITDA guidance of a range of $76 million to $80
million, but now believes, given the strong first quarter performance,
that its results will be in the upper part of this range.
Conference Call Details
Yosef Shiran, the Company's Chief Executive Officer, and Yair Averbuch,
the Company's Chief Financial Officer, will host a conference call
today, May 8, 2013, at 8:30 a.m. ET to discuss the results of the first
quarter ended March 31, 2013, followed by a question and answer session
for the investment community. A live webcast of the call can be accessed
at ir.caesarstone.com.
To access the call, dial toll-free 1-877-857-6177 or +1-719-325-4748
(international). Israeli participants can dial in at 1-80-925-8243. The
pass code is 8587578.
To listen to a telephonic replay of the conference call, dial toll-free
1-877-870-5176 or +1-858-384-5517 (international) and enter pass code
8587578. The replay will be available beginning at 11:30 a.m. ET on May
8, 2013 and will last through 11:59 PM ESTMay 22, 2013.
About Caesarstone
Caesarstone manufactures high quality engineered quartz surfaces, which
are used in both residential and commercial buildings as countertops,
vanities, wall cladding, floors and other interior surfaces. The wide
variety of colors, styles, designs and textures of Caesarstone®
products, along with Caesarstone's inherent characteristics such as
hardness, non-porous, scratch and stain resistance and durability,
provide consumers with excellent surfaces for their internal spaces
which are highly competitive to granite, manufactured solid surfaces and
laminate, as well as to other engineered quartz surfaces. Caesarstone's
four collections of products — Classico, Supremo, Motivo and Concetto —
are available in over 40 countries around the world. For more
information about the Company, 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. A
reconciliation of GAAP net income attributable to controlling interest
to adjusted net income attributable to controlling interest and net
income to Adjusted EBITDA. 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" as defined in
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements generally relate to the Company's plans,
objectives and expectations for future operations, including its
projected results of operations and the expected timing of expanding its
manufacturing facilities. 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. These factors include, but
are not limited to: the strength of the home renovation and construction
sectors; economic conditions within any of our key existing markets;
actions by our competitors; changes in raw material prices, particularly
polymer resins and pigments; unpredictability of seasonal fluctuations
in revenues; the outcome of silicosis claims and the claim by our former
quartz processor; fluctuations in currency exchange rates; delays in
manufacturing if our suppliers are unable to supply raw materials; and
other factors discussed under the heading "Risk Factors" in the final
prospectus for our initial public offering and other documents filed
with the Securities and Exchange Commission. 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.
(CSTE-E)
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
Consolidated balance sheets
|
|
|
|
|
|
|
|
As of
|
U.S. dollars in thousands
|
|
March 31, 2013
|
|
December 31, 2012
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
14,541
|
|
$
|
29,033
|
Short-term bank deposits
|
|
|
58,700
|
|
|
43,700
|
Trade receivables
|
|
|
46,030
|
|
|
44,066
|
Other accounts receivable and prepaid expenses
|
|
|
20,186
|
|
|
16,238
|
Inventories
|
|
|
54,232
|
|
|
50,550
|
|
|
|
|
|
Total current assets
|
|
|
193,689
|
|
|
183,587
|
|
|
|
|
|
LONG-TERM INVESTMENTS:
|
|
|
|
|
Severance pay fund
|
|
|
3,543
|
|
|
3,424
|
Long-term deposits and prepayments
|
|
|
1,426
|
|
|
1,198
|
|
|
|
|
|
Total long-term investments
|
|
|
4,969
|
|
|
4,622
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
74,788
|
|
|
72,987
|
|
|
|
|
|
OTHER ASSETS
|
|
|
15,975
|
|
|
16,898
|
|
|
|
|
|
GOODWILL
|
|
|
43,068
|
|
|
42,955
|
|
|
|
|
|
Total assets
|
|
$
|
332,489
|
|
$
|
321,049
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Short-term bank credit
|
|
$
|
5,289
|
|
$
|
5,248
|
Current maturities of long-term loans
|
|
|
2,793
|
|
|
5,500
|
Trade payables
|
|
|
39,113
|
|
|
36,925
|
Account payables to related parties
|
|
|
2,309
|
|
|
2,888
|
Accrued expenses and other liabilities
|
|
|
16,008
|
|
|
15,314
|
|
|
|
|
|
Total current liabilities
|
|
|
65,512
|
|
|
65,875
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Long-term loan and a financing leaseback from related party
|
|
|
12,275
|
|
|
12,188
|
Capital leases
|
|
|
-
|
|
|
2
|
Accrued severance pay
|
|
|
4,173
|
|
|
3,987
|
Long-term warranty provision
|
|
|
1,620
|
|
|
1,599
|
Deferred tax liabilities, net
|
|
|
6,118
|
|
|
6,375
|
|
|
|
|
|
Total long-term liabilities
|
|
|
24,186
|
|
|
24,151
|
|
|
|
|
|
REDEEMABLE NON-CONTROLLING INTEREST
|
|
|
7,154
|
|
|
7,106
|
|
|
|
|
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
Share capital -
|
|
|
|
|
Ordinary shares
|
|
|
363
|
|
|
360
|
Additional paid-in capital
|
|
|
136,323
|
|
|
135,437
|
Accumulated other comprehensive income
|
|
|
8,830
|
|
|
8,517
|
Retained earnings
|
|
|
90,121
|
|
|
79,603
|
|
|
|
|
|
Total equity
|
|
|
235,637
|
|
|
223,917
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
332,489
|
|
$
|
321,049
|
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
Consolidated statements of income
|
|
|
|
|
|
|
|
Three months ended March 31,
|
U.S. dollars in thousands (except per share data)
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
76,444
|
|
|
$
|
67,346
|
|
Cost of revenues
|
|
|
42,227
|
|
|
|
39,195
|
|
|
|
|
|
|
Gross profit
|
|
|
34,217
|
|
|
|
28,151
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Research and development, net
|
|
|
473
|
|
|
|
737
|
|
Marketing and selling
|
|
|
12,474
|
|
|
|
11,894
|
|
General and administrative
|
|
|
8,199
|
|
|
|
8,359
|
|
|
|
|
|
|
Total operating expenses
|
|
|
21,146
|
|
|
|
20,990
|
|
|
|
|
|
|
Operating income
|
|
|
13,071
|
|
|
|
7,161
|
|
Finance expenses, net
|
|
|
189
|
|
|
|
1,455
|
|
|
|
|
|
|
Income before taxes on income
|
|
|
12,882
|
|
|
|
5,706
|
|
Taxes on income
|
|
|
2,172
|
|
|
|
755
|
|
|
|
|
|
|
Net income
|
|
|
10,710
|
|
|
|
4,951
|
|
|
|
|
|
|
Net income attributable to non-controlling interest
|
|
|
(192
|
)
|
|
|
(129
|
)
|
Net income attributable to controlling interest
|
|
$
|
10,518
|
|
|
$
|
4,822
|
|
Diluted net income per share of ordinary shares
|
|
$
|
0.30
|
|
|
$
|
0.18
|
|
Weighted average number of ordinary shares used in computing basic
income per share
|
|
|
34,593,529
|
|
|
|
27,471,052
|
|
Weighted average number of ordinary shares used in computing diluted
income per share
|
|
|
34,983,519
|
|
|
|
27,480,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
|
|
|
Consolidated statements of cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
U.S. dollars in thousands
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$ 10,710 |
|
|
|
$ 4,951 |
|
|
|
Adjustments required to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
3,613
|
|
|
|
3,589
|
|
|
|
Share-based compensation expense
|
|
|
|
889
|
|
|
|
908
|
|
|
|
Accrued severance pay, net
|
|
|
|
67
|
|
|
|
28
|
|
|
|
Changes in deferred tax, net
|
|
|
|
(41)
|
|
|
|
(651)
|
|
|
|
Capital gains
|
|
|
|
(14)
|
|
|
|
-
|
|
|
|
Foreign currency translation gains
|
|
|
|
(27)
|
|
|
|
(167)
|
|
|
|
Increase in trade receivables
|
|
|
|
(1,964)
|
|
|
|
(4,520)
|
|
|
|
Increase in other accounts receivable and prepaid expenses
|
|
|
|
(4,392)
|
|
|
|
(3,147)
|
|
|
|
Increase in inventories
|
|
|
|
(3,682)
|
|
|
|
(5,090)
|
|
|
|
Increase in trade payables
|
|
|
|
647
|
|
|
|
2,418
|
|
|
|
Increase in warranty provision
|
|
|
|
55
|
|
|
|
25
|
|
|
|
Increase in accrued expenses and other liabilities including related
parties
|
|
|
|
249
|
|
|
|
3,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
6,110
|
|
|
|
1,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in short-term deposits
|
|
|
|
(15,000)
|
|
|
|
-
|
|
|
|
Purchase of property, plant and equipment
|
|
|
|
(2,793)
|
|
|
|
(624)
|
|
|
|
Acquisition of the business of Prema Asia Marketing PTE Ltd. |
|
|
|
-
|
|
|
|
(150)
|
|
|
|
Decrease in long-term deposits
|
|
|
|
-
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
(17,793)
|
|
|
|
(755)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receipt from issuance of ordinary shares, net
|
|
|
|
-
|
|
|
|
66,916
|
|
|
|
Repayment of long-term loans
|
|
|
|
(2,684)
|
|
|
|
(3,465)
|
|
|
|
Short-term bank credit and loans, net
|
|
|
|
41
|
|
|
|
(100)
|
|
|
|
Repayment of a financing leaseback related to Bar-Lev transaction
|
|
|
|
(280)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
(2,923)
|
|
|
|
63,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate differences on cash and cash equivalents
|
|
|
|
114
|
|
|
|
(1,917)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
(14,492)
|
|
|
|
62,552
|
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
|
29,033
|
|
|
|
11,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
|
|
14,541
|
|
|
|
74,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non - cash investing and financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
Declared dividend
|
|
|
|
-
|
|
|
|
27,182
|
|
|
|
Purchase of fixed assets with credit from suppliers
|
|
|
|
1,740
|
|
|
|
2,986
|
|
|
|
Receipt from issue of shares
|
|
|
|
-
|
|
|
|
(10,275)
|
|
|
|
IPO deferred expenses
|
|
|
|
-
|
|
|
|
1,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
|
|
|
|
|
|
|
Three months ended March 31,
|
U.S. dollars in thousands
|
|
2013
|
|
2012
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted EBITDA:
|
|
|
|
|
Net income
|
|
$
|
10,710
|
|
$
|
4,951
|
Finance expenses, net
|
|
|
189
|
|
|
1,455
|
Taxes on income
|
|
|
2,172
|
|
|
755
|
Depreciation and amortization
|
|
|
3,613
|
|
|
3,589
|
Excess cost of acquired inventory (a)
|
|
|
70
|
|
|
469
|
Share-based compensation expense (b)
|
|
|
889
|
|
|
243
|
IPO bonus (c)
|
|
|
-
|
|
|
1,970
|
Caesarstone USA contingent consideration adjustment (d)
|
|
|
-
|
|
|
255
|
Adjusted EBITDA
|
|
$
|
17,643
|
|
$
|
13,687
|
|
|
|
|
|
|
|
(a)
|
|
Consists of charges to cost of goods sold for the difference
between the higher carrying cost of the inventory of two of the
company's subsidiaries, Caesarstone USA's inventory at the time of
its acquisition and Caesarstone Australia Pty Limited's inventory
that was purchased from its distributor, and the standard cost of
the Company's inventory, which adversely impacts the company's
gross margins until such inventory is sold. The majority of the
inventory purchased from the Australian distributor was sold in
2012.
|
|
(b)
|
|
In 2012, share-based compensation consists primarily of expenses
related to the stock options granted to employees of the Company, as
well as changes in the value of share-based rights granted to the
Company's Chief Executive Officer in January 2009. In 2013,
share-based compensation consists of expenses related to the stock
options granted to employees of the Company.
|
|
(c)
|
|
Consists of the payment of $1.72 million to certain employees of the
Company and $0.25 million to the Company's Chairman for their
contribution to the completion of the Company's initial public
offering, or IPO.
|
|
(d)
|
|
Relates to the change in fair value of the contingent consideration
that was part of the consideration transferred in connection with
the acquisition of Caesarstone USA.
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
U.S. dollars in thousands
|
|
2013
|
|
2012
|
|
|
|
|
|
Reconciliation of net income attributable to controlling interest
to adjusted net income attributable to controlling interest:
|
|
|
Net income attributable to controlling interest
|
|
$
|
10,518
|
|
$
|
4,822
|
Excess cost of acquired inventory (a)
|
|
|
70
|
|
|
469
|
Share-based compensation expense (b)
|
|
|
889
|
|
|
243
|
IPO bonus (c)
|
|
|
-
|
|
|
1,970
|
Caesarstone USA contingent consideration adjustment (d)
|
|
|
-
|
|
|
255
|
Total adjustments before tax
|
|
|
959
|
|
|
2,937
|
Less tax on above adjustments (e)
|
|
|
162
|
|
|
321
|
Total adjustments after tax
|
|
|
797
|
|
|
2,616
|
|
|
|
|
|
Adjusted net income attributable to controlling interest
|
|
$
|
11,315
|
|
$
|
7,438
|
Adjusted diluted EPS
|
|
|
0.32
|
|
|
0.27
|
|
|
|
|
|
|
|
(a)
|
|
Consists of charges to cost of goods sold for the difference between
the higher carrying cost of the inventory of two of the company's
subsidiaries, Caesarstone USA's inventory at the time of its
acquisition and Caesarstone Australia Pty Limited's inventory that
was purchased from its distributor, and the standard cost of the
Company's inventory, which adversely impacts the company's gross
margins until such inventory is sold. The majority of the inventory
purchased from the Australian distributor was sold in 2012.
|
|
(b)
|
|
In 2012, share-based compensation consists primarily of expenses
related to the stock options granted to employees of the Company, as
well as changes in the value of share-based rights granted in
January 2009 to the Company's Chief Executive Officer. In 2013,
share-based compensation consists of expenses related to the stock
options granted to employees of the Company.
|
|
(c)
|
|
Consists of the payment of $1.72 million to certain employees of the
Company and $0.25 million to the Company's Chairman for their
contribution to the completion of the Company's IPO.
|
|
(d)
|
|
Relates to the change in fair value of the contingent consideration
that was part of the consideration transferred in connection with
the acquisition of Caesarstone USA.
|
|
(e)
|
|
The tax adjustments for the first quarter of 2012 were based on the
effective tax rate for 2011. The tax adjustments for the first
quarter of 2013 were based on the effective tax rate for the first
quarter of 2013.
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
Geographic breakdown of revenues by region
|
|
|
|
|
|
|
|
Three months ended March 31,
|
U.S. dollars in thousands
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
USA |
|
|
23,706
|
|
|
18,774
|
Australia |
|
|
19,383
|
|
|
19,031
|
Canada |
|
|
10,715
|
|
|
8,797
|
Israel |
|
|
10,553
|
|
|
9,265
|
Europe |
|
|
5,892
|
|
|
5,725
|
Rest of World
|
|
|
6,195
|
|
|
5,754
|
|
|
$
|
76,444
|
|
$
|
67,346
|
|
|
|
|
|
|
|

Investor Relations Contact
ICR, Inc.
James Palczynski,
+1-203-682-8229
Senior Managing Director
Source: Caesarstone Sdot-Yam Ltd.
News Provided by Acquire Media