-
First Quarter Revenue Up 23.5% to a First Quarter Record of $94.4
million
-
Net Income attributable to Controlling Interest Up 26.2% to $13.3
million
-
EPS of $0.37 and Adjusted EPS of $0.39
-
Raises Full Year Guidance for Sales and Adjusted EBITDA
MP MENASHE, Israel--(BUSINESS WIRE)--
Caesarstone Sdot-Yam Ltd. (NASDAQ:CSTE), a manufacturer of high quality
engineered quartz surfaces, today reported financial results for its
first quarter ended March 31, 2014.
Revenues in the first quarter of 2014 increased by 23.5% to $94.4
million compared to $76.4 million in the same quarter of the prior year.
On a constant currency basis, first quarter revenue growth was 27.9%
compared to the same period of the prior year. Growth in revenues was
broad-based, but primarily driven by continued increases in the United
States, which was up 58.7% to $37.6 million compared to $23.7 million in
the same period in the prior year.
Yosef Shiran, Chief Executive Officer, commented, "We are excited to see
continued strong momentum and support for the Caesarstone brand,
particularly in the United States where our growth remains robust. We
are pleased to have successfully increased our manufacturing throughput
and built our inventories to support continued growth. This improved
product position combined with healthy, ongoing levels of demand give us
confidence in our business."
Gross margin in the first quarter was 41.5% compared to 44.8% in the
same period in the prior year. This year-over-year decline was driven
primarily by the effects of foreign exchange rate fluctuations and, to a
lesser extent, raw material price increases.
Operating expenses in the first quarter were $21.9 million, or 23.2% of
revenues. This compares to the prior year's first quarter level of $21.1
million, or 27.7% of revenues. The improvement compared to the prior
year was primarily due to leverage associated with the revenue growth.
Operating income in the first quarter was up 32.1% to $17.3 million, a
margin of 18.3%, compared to $13.1 million, a margin of 17.1%, in the
first quarter of 2013.
Adjusted EBITDA, which excludes share-based compensation and the excess
cost of acquired inventory, increased by 25.4% to $22.1 million in the
first quarter, a margin of 23.4%. This compares to adjusted EBITDA of
$17.6 million, a margin of 23.1% in the first quarter of the prior year.
Finance expenses in the first quarter were $1.6 million compared to $0.2
million during the same period in the prior year. The increase was
predominantly due to the impact of foreign exchange rate fluctuations.
The Company reported net income attributable to controlling interest for
the first quarter of 2014 of $13.3 million compared to $10.5 million in
the same quarter in the prior year. Diluted net income per share for the
first quarter was $0.37 on 35.4 million shares compared to $0.30 per
diluted share on 35.0 million shares in the prior year's first quarter.
On an adjusted basis, net income per share in the first quarter was
$0.39 compared to $0.32 in the prior year.
The Company's balance sheet as of March 31, 2014 remained solid with
cash, cash equivalents and short-term bank deposits of $90.8 million.
The Company also provided an update with respect to its planned capacity
expansion projects. The Company continues to benefit from expanded
production in its Bar Lev facility and remains on schedule for its
Richmond Hill, Georgia manufacturing plant to be operational in the
second quarter of 2015. Based upon current and expected strong demand,
the Company has decided to accelerate the implementation of a second
line in the Richmond Hill facility. This line, now anticipated to become
operational in the fourth quarter of 2015, will require an acceleration
of planned capital expenditures.
Guidance Increase
Following a strong first quarter and to reflect current and expected
ongoing, healthy demand and an improvement in both inventory and
manufacturing throughput, the Company today increased its revenue
guidance for the full year of 2014 to a new range of $420 to $430
million as compared to its prior range of $410 million to $420 million.
Additionally, the Company increased its expected range of adjusted
EBITDA for the full year to $108 million to $113 million as compared to
its prior expected range of $104 million to $109 million.
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, 2014, at 8:30 a.m. ET to discuss the results of the first
quarter ended March 31, 2014, 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 1-888-455-2263 or +1-719-325-2491
(international). Israeli participants can dial in at 1-80-924-5906. The
pass code is 2663893.
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
2663893. The replay will be available beginning at 11:30 a.m. ET on May
8, 2014 and will last through 11:59 PM ETMay 22, 2014.
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.
(CSTE-E)
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 are provided in the schedules within this
release. 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.
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
|
|
Consolidated balance sheets
|
|
|
|
|
|
|
|
|
|
As of
|
U.S. dollars in thousands
|
|
March 31,
2014
|
|
December 31,
2013
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
30,786
|
|
$
|
22,248
|
Short-term bank deposits
|
|
|
60,000
|
|
|
70,000
|
Trade receivables
|
|
|
53,695
|
|
|
52,304
|
Other accounts receivable and prepaid expenses
|
|
|
23,719
|
|
|
22,853
|
Inventories
|
|
|
69,066
|
|
|
57,867
|
|
|
|
|
|
Total current assets
|
|
|
237,266
|
|
|
225,272
|
|
|
|
|
|
LONG-TERM ASSETS:
|
|
|
|
|
Severance pay fund
|
|
|
4,064
|
|
|
3,973
|
Long-term deposits and prepayments
|
|
|
3,189
|
|
|
1,603
|
|
|
|
|
|
Total long-term assets
|
|
|
7,253
|
|
|
5,576
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
101,033
|
|
|
93,634
|
|
|
|
|
|
OTHER ASSETS
|
|
|
12,503
|
|
|
13,372
|
|
|
|
|
|
GOODWILL
|
|
|
40,308
|
|
|
39,702
|
|
|
|
|
|
Total assets
|
|
$
|
398,363
|
|
$
|
377,556
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Short-term bank credit
|
|
$
|
5,185
|
|
$
|
5,454
|
Trade payables
|
|
|
56,628
|
|
|
50,624
|
Account payables and current maturities to related parties,
|
|
|
including financing leaseback
|
|
|
2,259
|
|
|
2,602
|
Accrued expenses and other liabilities
|
|
|
21,841
|
|
|
20,890
|
|
|
|
|
|
Total current liabilities
|
|
|
85,913
|
|
|
79,570
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Long-term loan and financing leaseback from a related party
|
|
|
12,169
|
|
|
12,342
|
Accrued severance pay
|
|
|
4,612
|
|
|
4,472
|
Other long-term liabilities
|
|
|
1,897
|
|
|
1,704
|
Deferred tax liabilities, net
|
|
|
5,894
|
|
|
6,245
|
|
|
|
|
|
Total long-term liabilities
|
|
|
24,572
|
|
|
24,763
|
|
|
|
|
|
REDEEMABLE NON-CONTROLLING INTEREST
|
|
|
7,548
|
|
|
7,624
|
|
|
|
|
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
Share capital -
|
|
|
|
|
Ordinary shares
|
|
|
365
|
|
|
364
|
Additional paid-in capital
|
|
|
139,221
|
|
|
138,757
|
Accumulated other comprehensive income
|
|
|
4,676
|
|
|
3,680
|
Retained earnings
|
|
|
136,068
|
|
|
122,798
|
|
|
|
|
|
Total equity
|
|
|
280,330
|
|
|
265,599
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
398,363
|
|
$
|
377,556
|
|
|
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
Consolidated statements of income (Unaudited)
|
|
|
Three months ended March 31,
|
U.S. dollars in thousands (except per share data)
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
94,414
|
|
|
$
|
76,444
|
|
Cost of revenues
|
|
|
55,227
|
|
|
|
42,227
|
|
|
|
|
|
|
Gross profit
|
|
|
39,187
|
|
|
|
34,217
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Research and development, net
|
|
|
603
|
|
|
|
473
|
|
Marketing and selling
|
|
|
13,719
|
|
|
|
12,474
|
|
General and administrative
|
|
|
7,598
|
|
|
|
8,199
|
|
|
|
|
|
|
Total operating expenses
|
|
|
21,920
|
|
|
|
21,146
|
|
|
|
|
|
|
Operating income
|
|
|
17,267
|
|
|
|
13,071
|
|
Finance expenses, net
|
|
|
1,565
|
|
|
|
189
|
|
|
|
|
|
|
Income before taxes on income
|
|
|
15,702
|
|
|
|
12,882
|
|
Taxes on income
|
|
|
2,229
|
|
|
|
2,172
|
|
|
|
|
|
|
Net income
|
|
|
13,473
|
|
|
|
10,710
|
|
|
|
|
|
|
Net income attributable to non-controlling interest
|
|
|
(203
|
)
|
|
|
(192
|
)
|
Net income attributable to controlling interest
|
|
$
|
13,270
|
|
|
$
|
10,518
|
|
Basic net income per ordinary share
|
|
$
|
0.38
|
|
|
$
|
0.30
|
|
Diluted net income per ordinary share
|
|
$
|
0.37
|
|
|
$
|
0.30
|
|
Weighted average number of ordinary shares used in computing basic
income per ordinary share
|
|
|
34,808,850
|
|
|
|
34,593,529
|
|
Weighted average number of ordinary shares used in computing diluted
income per ordinary share
|
|
|
35,394,963
|
|
|
|
34,983,519
|
|
|
|
|
|
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
Consolidated statements of cash flows (Unaudited)
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
U.S. dollars in thousands
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
13,473
|
|
|
$
|
10,710
|
|
Adjustments required to reconcile net income to net cash provided by
operating activities:
|
|
Depreciation and amortization
|
|
|
4,245
|
|
|
|
3,613
|
|
Share-based compensation expense
|
|
|
618
|
|
|
|
889
|
|
Accrued severance pay, net
|
|
|
49
|
|
|
|
67
|
|
Changes in deferred tax, net
|
|
|
(1,305
|
)
|
|
|
(41
|
)
|
Capital gains
|
|
|
-
|
|
|
|
(14
|
)
|
Foreign currency translation gains
|
|
|
-
|
|
|
|
(27
|
)
|
Increase in trade receivables
|
|
|
(1,391
|
)
|
|
|
(1,964
|
)
|
Decrease (increase) in other accounts receivable and prepaid expenses
|
|
|
88
|
|
|
|
(4,392
|
)
|
Increase in inventories
|
|
|
(11,199
|
)
|
|
|
(3,682
|
)
|
Increase in trade payables
|
|
|
1,716
|
|
|
|
647
|
|
Increase in warranty provision
|
|
|
26
|
|
|
|
55
|
|
Increase in accrued expenses and other liabilities including related
parties
|
|
|
569
|
|
|
|
249
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
6,889
|
|
|
|
6,110
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Investment in short-term deposits
|
|
|
10,000
|
|
|
|
(15,000
|
)
|
Purchase of property, plant and equipment
|
|
|
(6,380
|
)
|
|
|
(2,793
|
)
|
Increase in long term deposits and prepayments
|
|
|
(1,586
|
)
|
|
|
-
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
2,034
|
|
|
|
(17,793
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Repayment of long-term loans
|
|
|
-
|
|
|
|
(2,684
|
)
|
Short-term bank credit and loans, net
|
|
|
(269
|
)
|
|
|
41
|
|
Repayment of a financing leaseback related to Bar-Lev transaction
|
|
|
(295
|
)
|
|
|
(280
|
)
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(564
|
)
|
|
|
(2,923
|
)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate differences on cash and cash equivalents
|
|
|
179
|
|
|
|
114
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
8,538
|
|
|
|
(14,492
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
22,248
|
|
|
|
29,033
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
30,786
|
|
|
$
|
14,541
|
|
|
|
|
|
|
|
|
|
|
|
Non - cash investing:
|
|
|
|
|
Purchase of fixed assets with credit from suppliers
|
|
|
4,444
|
|
|
|
1,740
|
|
|
|
|
|
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
U.S. dollars in thousands
|
|
|
2014
|
|
|
2013
|
|
|
(Unaudited)
|
(Unaudited)
|
Reconciliation of Net Income to Adjusted EBITDA:
|
|
|
|
Net income
|
|
$
|
13,473
|
|
$
|
10,710
|
Finance expenses, net
|
|
|
1,565
|
|
|
189
|
Taxes on income
|
|
|
2,229
|
|
|
2,172
|
Depreciation and amortization
|
|
|
4,245
|
|
|
3,613
|
Excess cost of acquired inventory (a)
|
|
|
-
|
|
|
70
|
Share-based compensation expense (b)
|
|
|
618
|
|
|
889
|
Adjusted EBITDA
|
|
$
|
22,130
|
|
$
|
17,643
|
|
|
|
|
|
(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 inventory that was purchased from its distributor 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 acquired from Caesarstone USA was
sold in 2011, and the majority of the inventory acquired from the
Australian distributor was sold in 2012.
(b) In 2013, share-based
compensation consists of expenses related to the stock options granted
to employees of the Company. In 2014, share-based compensation consists
primarily of expenses related to the stock options granted to employees
of the Company, as well as expenses related to share based rights
granted in Februrary 2014.
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
U.S. dollars in thousands
|
|
|
2014
|
|
|
2013
|
|
|
(Unaudited)
|
(Unaudited)
|
Reconciliation of net income attributable to controlling interest
to adjusted net income attributable to controlling interest:
|
|
Net income attributable to controlling interest
|
|
$
|
13,270
|
|
$
|
10,518
|
Excess cost of acquired inventory (a)
|
|
|
-
|
|
|
70
|
Share-based compensation expense (b)
|
|
|
618
|
|
|
889
|
Total adjustments before tax
|
|
|
618
|
|
|
959
|
Less tax on above adjustments (c)
|
|
|
88
|
|
|
162
|
Total adjustments after tax
|
|
|
530
|
|
|
797
|
|
|
|
|
|
Adjusted net income attributable to controlling interest
|
|
$
|
13,800
|
|
$
|
11,315
|
Adjusted diluted EPS
|
|
$
|
0.39
|
|
$
|
0.32
|
|
|
|
|
|
|
|
(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 inventory that was purchased from its distributor 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 acquired from Caesarstone USA was
sold in 2011, and the majority of the inventory acquired from the
Australian distributor was sold in 2012.
(b) In 2013, share-based
compensation consists of expenses related to the stock options granted
to employees of the Company. In 2014, share-based compensation consists
primarily of expenses related to the stock options granted to employees
of the Company, as well as expenses related to share based rights
granted in February 2014.
(c) The tax adjustments for the three
months ended March 31, 2014 and 2013 were based on the effective tax
rate for these periods, respectively.
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
|
Geographic breakdown of revenues by region (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
U.S. dollars in thousands
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA |
|
|
37,626
|
|
|
23,706
|
|
Australia |
|
|
21,319
|
|
|
19,383
|
|
Canada |
|
|
11,737
|
|
|
10,715
|
|
Israel |
|
|
11,261
|
|
|
10,553
|
|
Europe |
|
|
4,698
|
|
|
5,892
|
|
Rest of World
|
|
|
7,773
|
|
|
6,195
|
|
|
|
$
|
94,414
|
|
$
|
76,444
|
|
|
|
|
|
|
|
|
Investor Relations
James Palczynski, +1-203-682-8229
Partner
ICR,
Inc.
Source: Caesarstone Sdot-Yam Ltd.
News Provided by Acquire Media