-
Quarterly Revenue Grows 8.4% to $116.9 million; up 12.3% on a
Constant Currency Basis
-
Reports First Quarter Diluted EPS of $0.33; Adjusted Diluted EPS of
$0.38
-
Reiterates 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, 2016.
Revenue in the first quarter of 2016 increased by 8.4% to $116.9 million
compared to $107.8 million in the same quarter of the prior year. On a
constant currency basis, first quarter revenue growth was 12.3%. Growth
in revenue was driven primarily by continued increases in Canada and
Australia sales, which were up 26.7% and 10.1%, respectively. On a
constant currency basis, Canada and Australia revenue grew by 41.2% and
19.6%, respectively. Growth in the United States was 2.7% in the first
quarter and the company expects the growth rate in this region to
accelerate along the year.
Yosef Shiran, Chief Executive Officer, commented, "Our overall first
quarter results were in line with our expectations and we remain
confident in our full year plan. We are executing our strategy while
focusing on accelerating our U.S. sales growth and improving efficiency
of our U.S manufacturing operations. We believe that our strong brand,
backed with our new innovative products, position us to capture our
global growth opportunity."
Gross margin in the first quarter was 36.5% compared to 42.0% in the
same period in the prior year. The decrease was predominantly driven by
inefficiencies related to the Company's U.S. manufacturing facility.
Favorable product mix and lower raw material costs were offset by
negative exchange rate fluctuations.
Operating expenses in the first quarter were $28.4 million, or 24.3% of
revenues. This compares to the prior year first quarter level of $24.6
million, or 22.8% of revenues. Excluding an increase in share-based
compensation expenses derived from recent equity grants, and legal
settlements and loss contingency expenses that were not incurred in the
prior year's first quarter, operating expenses as a percentage of
revenue would have been the same as last year.
Operating income in the first quarter was $14.2 million, a margin of
12.2%, compared to $20.7 million, an operating margin of 19.2%, in the
first quarter of 2015.
Adjusted EBITDA, which excludes share-based compensation and legal
settlements and loss contingencies expenses, was $23.0 million in the
first quarter of 2016, a margin of 19.7%. This compares to adjusted
EBITDA of $25.5 million, a margin of 23.7% in the first quarter of the
prior year. This year-over-year margin difference primarily reflects
inefficiencies related to the Company's U.S. manufacturing facility
described above.
Finance income in the first quarter was $0.2 million compared to finance
expense of $1.9 million during the same period in the prior year. The
change was primarily due to $1.0 million net gains related to currency
exchange rates fluctuations in the first quarter of 2016 compared with
net losses of $1.1 million in the first quarter of 2015.
The Company reported net income attributable to controlling interest for
the first quarter of 2016 of $11.8 million compared to $16.4 million in
the same quarter in the prior year. Diluted net income per share for the
first quarter was $0.33 on 35.3 million shares. This compares to $0.46
per diluted share on 35.5 million shares in the prior year's first
quarter. On an adjusted basis, net income per diluted share in the first
quarter was $0.38 compared to $0.46 in the prior year.
The Company's balance sheet as of March 31, 2016 included cash, cash
equivalents and short-term bank deposits of $59.9 million. The Company
noted that, following its recent authorization, it repurchased 334,307
shares of common stock for a total of approximately $11.8 million in the
first quarter.
Guidance Reiterated
The Company today reiterated its full-year 2016 guidance for revenue of
$550 million to $565 million and for full-year adjusted EBITDA of $138
million to $145 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 4, 2016, at 8:30 a.m. ET to discuss the results of the first
quarter ended March 31, 2016, 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 1-888-505-4375 or +1-719-457-2697
(international). The toll-free Israeli number is 1 80 924 5906. The pass
code is 1214256.
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
1214256. The replay will be available beginning at 11:30 a.m. ET on
Wednesday, May 4, 2016 and will last through 11:59 p.m. ETMay 18, 2016.
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, Supernatural, Motivo, and
Concetto — are available in over 50 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; fluctuations in currency exchange rates;
the success of our expansion efforts in the United States; the outcome
of silicosis claims and the claim by our former quartz processor;
unpredictability of seasonal fluctuations in revenues; delays in
manufacturing if our suppliers are unable to supply raw materials; and
other factors discussed under the heading "Risk Factors" in our most
recent annual report on Form 20-F 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
|
Condensed consolidated balance sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
U.S. dollars in thousands
|
|
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
Cash and cash equivalents and short-term bank deposits
|
|
|
|
$
|
59,877
|
|
|
|
$
|
62,807
|
|
Trade receivables, net
|
|
|
|
|
64,599
|
|
|
|
|
59,185
|
|
Other accounts receivable and prepaid expenses
|
|
|
|
|
37,085
|
|
|
|
|
32,230
|
|
Inventories
|
|
|
|
|
105,131
|
|
|
|
|
95,479
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
266,692
|
|
|
|
|
249,701
|
|
|
|
|
|
|
|
|
|
LONG-TERM ASSETS:
|
|
|
|
|
|
|
|
Severance pay fund
|
|
|
|
|
3,387
|
|
|
|
|
3,296
|
|
Other receivables long-term
|
|
|
|
|
8,483
|
|
|
|
|
8,603
|
|
|
|
|
|
|
|
|
|
Total long-term assets
|
|
|
|
|
11,870
|
|
|
|
|
11,899
|
|
|
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
|
224,136
|
|
|
|
|
225,438
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
6,291
|
|
|
|
|
6,883
|
|
|
|
|
|
|
|
|
|
GOODWILL |
|
|
|
|
36,737
|
|
|
|
|
35,821
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
$
|
545,726
|
|
|
|
$
|
529,742
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term bank credit
|
|
|
|
$
|
7,265
|
|
|
|
$
|
3,241
|
|
Trade payables
|
|
|
|
|
50,911
|
|
|
|
|
46,382
|
|
Related party and other loan
|
|
|
|
|
3,338
|
|
|
|
|
3,251
|
|
Accrued expenses and other liabilities
|
|
|
|
|
31,009
|
|
|
|
|
27,986
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
92,523
|
|
|
|
|
80,860
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term loan and financing leaseback from a related party
|
|
|
|
|
8,651
|
|
|
|
|
8,472
|
|
Legal settlements and loss contingencies long-term
|
|
|
|
|
11,396
|
|
|
|
|
11,190
|
|
Accrued severance pay
|
|
|
|
|
4,561
|
|
|
|
|
4,309
|
|
Long-term warranty provision
|
|
|
|
|
921
|
|
|
|
|
934
|
|
Deferred tax liabilities, net
|
|
|
|
|
15,188
|
|
|
|
|
14,767
|
|
Share-based payment
|
|
|
|
|
32
|
|
|
|
|
148
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
|
|
40,749
|
|
|
|
|
39,820
|
|
|
|
|
|
|
|
|
|
REDEEMABLE NON-CONTROLLING INTEREST
|
|
|
|
|
9,835
|
|
|
|
|
8,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
|
|
370
|
|
|
|
|
370
|
|
Treasury shares - at cost
|
|
|
|
|
(11,778
|
)
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
|
|
144,104
|
|
|
|
|
142,765
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(831
|
)
|
|
|
|
(1,892
|
)
|
Retained earnings
|
|
|
|
|
270,754
|
|
|
|
|
258,978
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
|
|
402,619
|
|
|
|
|
400,221
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
|
$
|
545,726
|
|
|
|
$
|
529,742
|
|
|
|
|
|
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
Condensed consolidated statements of income
|
|
|
|
|
Three months ended March 31,
|
U.S. dollars in thousands (except per share data)
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
116,914
|
|
|
|
$
|
107,811
|
|
Cost of revenues
|
|
|
|
|
74,296
|
|
|
|
|
62,497
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
42,618
|
|
|
|
|
45,314
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
|
824
|
|
|
|
|
708
|
|
Marketing and selling
|
|
|
|
|
16,974
|
|
|
|
|
15,562
|
|
General and administrative
|
|
|
|
|
9,852
|
|
|
|
|
8,299
|
|
Legal settlements and loss contingencies, net
|
|
|
|
|
733
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
28,383
|
|
|
|
|
24,569
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
14,235
|
|
|
|
|
20,745
|
|
Finance expenses (income), net
|
|
|
|
|
(245
|
)
|
|
|
|
1,892
|
|
|
|
|
|
|
|
|
|
Income before taxes on income
|
|
|
|
|
14,480
|
|
|
|
|
18,853
|
|
Taxes on income
|
|
|
|
|
2,370
|
|
|
|
|
2,471
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
12,110
|
|
|
|
$
|
16,382
|
|
|
|
|
|
|
|
|
|
Net income attributable to non-controlling interest
|
|
|
|
|
(334
|
)
|
|
|
|
(21
|
)
|
Net income attributable to controlling interest
|
|
|
|
$
|
11,776
|
|
|
|
$
|
16,361
|
|
Basic net income per ordinary share
|
|
|
|
$
|
0.33
|
|
|
|
$
|
0.47
|
|
Diluted net income per ordinary share
|
|
|
|
$
|
0.33
|
|
|
|
$
|
0.46
|
|
Weighted average number of ordinary shares used in computing
basic income per ordinary share
|
|
|
|
|
35,214,127
|
|
|
|
|
35,146,499
|
|
Weighted average number of ordinary shares used in computing
diluted income per ordinary share
|
|
|
|
|
35,349,909
|
|
|
|
|
35,465,204
|
|
|
|
|
|
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
Selected Condensed consolidated statements of cash flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
U.S. dollars in thousands
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$ 12,110 |
|
|
$ 16,382 |
Adjustments required to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
|
6,905
|
|
|
4,681
|
Share-based compensation expense
|
|
|
|
1,130
|
|
|
(266)
|
Accrued severance pay, net
|
|
|
|
161
|
|
|
(4)
|
Changes in deferred tax, net
|
|
|
|
(919)
|
|
|
(2,015)
|
Capital loss
|
|
|
|
8
|
|
|
-
|
Legal settlements and loss contingencies, net
|
|
|
|
733
|
|
|
-
|
Increase in trade receivables
|
|
|
|
(5,414)
|
|
|
(2,673)
|
Increase in other accounts receivable and prepaid expenses
|
|
|
|
(3,259)
|
|
|
(1,500)
|
Increase in inventories
|
|
|
|
(9,652)
|
|
|
(10,627)
|
Increase (decrease) in trade payables
|
|
|
|
4,153
|
|
|
(681)
|
Decrease in warranty provision
|
|
|
|
(53)
|
|
|
(231)
|
Increase (decrease) in accrued expenses and other liabilities
including related party
|
|
|
|
3,199
|
|
|
(374)
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
9,102
|
|
|
2,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
|
|
(4,446)
|
|
|
(19,835)
|
Proceeds from sale of property, plant and equipment
|
|
|
|
21
|
|
|
-
|
Decrease (increase) in long term deposits
|
|
|
|
(47)
|
|
|
50
|
|
|
|
|
|
|
|
|
Net cash used in investing activities (*)
|
|
|
|
(4,472)
|
|
|
(19,785)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in short-term bank credit and loans, net
|
|
|
|
4,024
|
|
|
5,128
|
Repayment of a financing leaseback related to Bar-Lev transaction
|
|
|
|
(272)
|
|
|
(269)
|
Purchase of treasury shares at cost
|
|
|
|
(11,778)
|
|
|
-
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
(8,026)
|
|
|
4,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate differences on cash and cash equivalents
|
|
|
|
466
|
|
|
(963)
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents and short-term bank deposits
|
|
|
|
(2,930)
|
|
|
(13,197)
|
Cash and cash equivalents and short-term bank deposits at beginning
of the period
|
|
|
|
62,807
|
|
|
54,327
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and short-term bank deposits at end of the
period
|
|
|
|
$ 59,877 |
|
|
$ 41,130 |
|
|
|
|
|
|
|
|
Non - cash investing:
|
|
|
|
|
|
|
|
Changes in trade payables balances related to purchase of fixed
assets
|
|
|
|
376
|
|
|
13,791
|
|
|
|
|
|
|
|
|
(*) Cash used in investing activities does not include changes in
bank deposits as such balance is included in the "cash and cash equivalents
and short term bank deposits" line at the beginning and end of the
period.
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
U.S. dollars in thousands
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted EBITDA:
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
12,110
|
|
|
|
$
|
16,382
|
Finance expenses (income), net
|
|
|
|
|
(245
|
)
|
|
|
|
1,892
|
Taxes on income
|
|
|
|
|
2,370
|
|
|
|
|
2,471
|
Depreciation and amortization
|
|
|
|
|
6,905
|
|
|
|
|
4,681
|
Legal settlements and loss contingencies (a)
|
|
|
|
|
733
|
|
|
|
|
-
|
Share-based compensation expense (b)
|
|
|
|
|
1,130
|
|
|
|
|
88
|
Adjusted EBITDA (Non-GAAP)
|
|
|
|
$
|
23,003
|
|
|
|
$
|
25,514
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Consists of legal settlements expenses and loss contingencies, net,
related to individual silicosis claims.
|
(b)
|
|
Share-based compensation includes expenses related to stock options
and restricted stock units granted to employees of the Company.
|
|
|
In addition, includes expenses for phantom awards granted and
related payroll expenses as a result of exercises.
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
U.S. dollars in thousands
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Reconciliation of net income attributable to controlling interest
to adjusted net income attributable to controlling interest:
|
|
|
|
|
Net income attributable to controlling interest
|
|
|
|
$
|
11,776
|
|
|
$
|
16,361
|
Legal settlements and loss contingencies (a)
|
|
|
|
|
733
|
|
|
|
-
|
Share-based compensation expense (b)
|
|
|
|
|
1,130
|
|
|
|
88
|
Total adjustments
|
|
|
|
|
1,863
|
|
|
|
88
|
Less tax on non-tax adjustments (c)
|
|
|
|
|
305
|
|
|
|
12
|
Total adjustments after tax
|
|
|
|
|
1,558
|
|
|
|
76
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to controlling interest (Non-GAAP)
|
|
|
|
$
|
13,334
|
|
|
$
|
16,437
|
Adjusted diluted EPS (d)
|
|
|
|
$
|
0.38
|
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Consists of legal settlements expenses and loss contingencies, net,
related to individual silicosis claims.
|
(b)
|
|
Share-based compensation includes expenses related to stock options
and restricted stock units granted to employees of the Company.
|
|
|
In addition, includes expenses for phantom awards granted and the
related payroll expenses as a result of exercises.
|
(c)
|
|
Tax adjustments for the three months ended March 31, 2016 and 2015
were based on the effective tax rates for these periods,
respectively.
|
(d)
|
|
In calculating adjusted diluted (Non-GAAP) EPS, the diluted
weighted average number of shares outstanding excludes the effects
of share-based compensation expense in accordance with FASB
ASC 718.
|
|
|
|
|
Caesarstone Sdot-Yam Ltd. and its subsidiaries
|
Geographic breakdown of revenues by region (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
U.S. dollars in thousands
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA |
|
|
|
$
|
49,312
|
|
|
$
|
48,014
|
Australia |
|
|
|
|
25,726
|
|
|
|
23,370
|
Canada |
|
|
|
|
17,649
|
|
|
|
13,927
|
Israel |
|
|
|
|
10,284
|
|
|
|
9,850
|
Europe |
|
|
|
|
6,562
|
|
|
|
4,653
|
Rest of World
|
|
|
|
|
7,381
|
|
|
|
7,997
|
|
|
|
|
$
|
116,914
|
|
|
$
|
107,811
|
|
|
|
|
|
|
|
|
|
|

View source version on businesswire.com: http://www.businesswire.com/news/home/20160504005835/en/
Investor Relations
ICR, Inc.
James Palczynski,
+1-203-682-8229
Partner
Source: Caesarstone Sdot-Yam Ltd.
News Provided by Acquire Media