First Quarter 2014 Results
May 8, 2014
Caesarstone Reports First Quarter 2014 Results
- 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 Hillfacility. This line, now anticipated to become operational in the fourth quarter of 2015, will require an acceleration of planned capital expenditures.
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 ET May 22, 2014.
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.
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.
James Palczynski, +1-203-682-8229
Source: Caesarstone Sdot-Yam Ltd.
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