Caesarstone Reports Third Quarter 2013 Results
November 6, 2013
Caesarstone Reports Third Quarter 2013 Results
- Third Quarter Revenue Up 21.6% to a Record of $94.3 million
- Net Income Attributable to Controlling Interest Up 27.8% to $0.46 Per Share
- Declares One-Time Dividend of $20 million, Record Date of November 27, 2013
- Raises Full Year Guidance for Sales and Adjusted EBITDA
MP MENASHE, Israel--(BUSINESS WIRE)-- Caesarstone Sdot-Yam Ltd. (CSTE), a manufacturer of high quality engineered quartz surfaces, today reported financial results for its third quarter ended September 30, 2013.
Revenues in the third quarter of 2013 increased by 21.6% to $94.3 million compared to $77.6 million in the same quarter of the prior year. On a constant currency basis, third quarter revenue growth was 24.0% compared to the same period last year. Growth in revenues was broad-based, but primarily driven by continued increases in the United States and Canada, up 47.8% and 22.2%, respectively, compared to the same period in the prior year.
Yosef Shiran, Chief Executive Officer, commented, "We are pleased with our results for the third quarter, particularly in the United States, which is our largest and fastest growing market. Our strong brand, leading products and improved market conditions all contributed to our significant increase in revenues and our strong cash flow. We expect to continue to drive value to our shareholders, partners and customers through ongoing growth in our business."
Gross margin in the third quarter was 44.5% compared to 45.0% in the same period in the prior year. This slight decline was driven by increased manufacturing costs, including those associated with the planned expansion in the Company's Bar Lev manufacturing facility, and the overall negative currency impact in the quarter. These factors were partially offset by favorable changes in the mix of revenues and scale-related benefits.
Operating expenses in the third quarter were $21.1 million, or 22.4% of revenues. This compares to the prior year's third quarter level of $18.2 million, or 23.5% of revenues.
Operating income in the third quarter was up 25.2% to $20.9 million, a margin of 22.2%, compared to $16.7 million, a margin of 21.5%, in the third quarter of 2012.
Adjusted EBITDA, which excludes share-based compensation, the excess cost of acquired inventory and other non-recurring costs, increased by 18.4% to$25.2 million in the third quarter, a margin of 26.8%. This compares to adjusted EBITDA of $21.3 million, a margin of 27.5% in the third quarter of the prior year.
Finance expenses in the third quarter were $1.1 million compared to $2.0 million during the same period in the prior year.
The Company reported net income attributable to controlling interest for the third quarter of 2013 of $16.1 million compared to $12.4 million in the same quarter in the prior year. Diluted earnings per share for the third quarter were $0.46 on 35.3 million shares compared to $0.36 per diluted ordinary share on 34.4 million shares in the prior year's third quarter. On an adjusted basis, earnings per share in the third quarter were $0.47 compared to $0.39 in the prior year.
The Company's balance sheet as of September 30, 2013 remained solid with cash and bank deposits of $104.9 million, growth of $32.2 million fromDecember 31, 2012.
The Company also today provided an update with respect to its planned capacity expansion projects. In November it began utilizing expanded capacity in its Bar Lev facility with an expected completion of a full fifth line in the second quarter of 2014. The Company also today announced that it has selected Richmond Hill, Georgia as the location for its new manufacturing plant in the United States. Site-specific considerations have prompted the Company to revise its expected start date for the first of two lines to the second quarter of 2015. The Company has decided to accelerate its initial investment to approximately 70% of the total expected capital cost of $100 million in order to support an expedited launch of the second line. Upon completion, the Company's manufacturing operations will encompass seven full production lines.
The Company announced that it will pay a one-time dividend of $20 million, or approximately $0.58 per ordinary share, to shareholders of record on November 27, 2013, payable on December 11, 2013. The Company believes that, due to its strong recent and expected cash flow and current cash position, the dividend will not affect its ability to fund its growth strategy, anticipated capital expenditures and working capital needs for the foreseeable future.
Following a strong third quarter, the Company today increased its revenue guidance for the full year of 2013 to a new range of $343 to $348 million as compared to its prior range of $330 million to $340 million.
Additionally, the Company increased its expected range of adjusted EBITDA for the full year to $87 million to $89 million as compared to its prior expected range of $82 million to $85 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, November 6, 2013, at 8:30 a.m. ET to discuss the results of the third quarter ended September 30, 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 1-888-312-3048 or +1-719-325-2432 (international). Israeli participants can dial in at 1-80-924-5906. The pass code is 9735686.
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 9735686. The replay will be available beginning at 11:30 a.m. ET on November 6, 2013 and will last through 11:59 PM EST November 20, 2013.
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. 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.
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 and cost 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.
James Palczynski, Senior Managing Director, +1 (203) 682-8229
Source: Caesarstone Sdot-Yam Ltd.
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