• Q4 Revenue Up 12.1% to $127.4 million; up 21.6% on a Constant Currency Basis
• Q4 Net Income Attributable to Controlling Interest of $18.7 million; Diluted EPS of $0.53; Adjusted diluted
• FY15 Revenue Up 11.6% to $499.5 million; up 22.1% on a Constant Currency Basis
• EPS of $0.55
• FY15 Net Income Attributable to Controlling Interest of $77.8 million; Diluted EPS of $2.19; Adjusted diluted EPS of $2.36
• Company Issues FY16 Guidance and Announces $40 million Share Repurchase Program

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 fourth quarter and fiscal year ended December 31, 2015.
Revenue in the fourth quarter of 2015 increased by 12.1% to $127.4 million compared to $113.6 million in the prior year. On a constant currency basis, fourth quarter revenue growth was 21.6% year-over-year. Growth was primarily driven by continued demand in the United States, the Company's largest market, with Canada and Australia delivering the highest growth rates on a constant currency basis.
Yosef Shiran, Chief Executive Officer, commented, "We are pleased with our results for the quarter and year. We successfully grew our business, accomplished the opening of our new manufacturing facility in the United States, strengthened our brand leadership position around the world, introduced new, innovative designs and expanded our product offering. We are positioned well to further grow our business".
Gross margin in the fourth quarter was 37.9% compared to 43.0% in the prior year period. The decrease was primarily driven by costs related to the ramp up of both lines in the Company's U.S. manufacturing facility and the impact of significant negative exchange rate fluctuations, which were partially offset by favorable product mix and lower raw material costs.
Operating expenses in the fourth quarter were $25.6 million, or 20.1% of revenues. This compares to the prior year fourth quarter's level of $25.9 million, or 22.8% of revenues. The improvement was primarily due to increased operating leverage as well as a foreign exchange benefit.
Operating income in the fourth quarter was $22.6 million, a decrease of 1.5% compared to $23.0 million in the fourth quarter of 2014. This decrease is the result of lower gross profit.
Adjusted EBITDA, which excludes the impact of share-based compensation expenses, the excess cost of acquired inventory, expenses for legal settlements and loss contingencies and other non-recurring items, was $30.4 million in the fourth quarter, a margin of 23.9%. This compares to adjusted EBITDA of $28.1 million, a margin of 24.8%, in the fourth quarter of the prior year.
Finance expenses in the fourth quarter were $0.7 million compared to finance income of $0.9 million during the same period in the prior year. The change was primarily due to lower net gains related to currency exchange rates fluctuation in the fourth quarter of 2015 compared with the fourth quarter of 2014.
The Company reported net income attributable to controlling interest for the fourth quarter of 2015 of $18.7 million compared to $20.4 million in the same quarter in the prior year. Diluted earnings per share for the fourth quarter were $0.53 on 35.45 million shares, compared to $0.58 on 35.44 million shares in the prior year. On an adjusted basis, diluted earnings per share in the fourth quarter were $0.55 compared to $0.59 in the prior year.
Full-Year Results
Revenues for the full year of 2015 grew by 11.6% to $499.5 million compared to $447.4 million in 2014. On a constant currency basis, growth was 22.1% year over year. The revenue increase was led by the United States, which grew by 20.3% and remains the Company's largest market. On a constant currency basis, revenue growth was broad-based, with Canada and Australia delivering the highest growth rates.
Full-year gross margin was 40.1%, a decrease of 230 basis points compared to the prior-year. The gross margin decline year-over-year was driven primarily by the excess costs related to the ramp-up of production in the Company's U.S. manufacturing facility and the impact of significant negative exchange rate fluctuations, which were partially offset by favorable product mix and lower raw material costs.
Operating expenses in 2015 were 20.8% of revenue compared to 21.1% in the prior year, reflecting the benefits of scale and increased volume. Operating expenses in 2015 included $4.7 million non-cash legal settlement and loss contingencies expenses.
Operating income margin in 2015 was 19.3%, compared with 21.2% in the prior year, reflecting lower gross margin and legal settlement and loss contingencies expenses mentioned above.
Adjusted EBITDA in 2015 increased by 7.8% to $125.7 million, a margin of 25.2%, compared to $116.6 million, a margin of 26.1%, in 2014.
Adjusted net income attributable to controlling interest for the full year of 2015 was $83.7 million, a slight increase compared to 2014 level of $82.5 million. Adjusted diluted earnings per share were $2.36 in 2015, compared to $2.33 in the prior year.
The Company's balance sheet as of December 31, 2015 remained solid, following strong cash flow from operations, with cash, cash equivalents and short-term bank deposits of $62.8 million, after $76.5 million cash spent on capital expenditures.
The Company is ramping up its U.S. manufacturing facility in Richmond Hill, Georgia with both lines operating at a higher pace. This ramp will enable the Company to better serve the U.S. market and support the Company's ongoing growth.
Share repurchase
The Company also announced today that its Board of Directors has authorized a $40 million ordinary share repurchase program. The Board noted that this authorization reflects its commitment to drive value to shareholders, the Company's strong balance sheet, and confidence that Caesarstone is well positioned to generate significant future free cash flow. Under the authorization, the Company may repurchase shares in the open market from time to time, subject to regulatory requirements. The program does not obligate the Company to acquire any specific number of shares and may be suspended or discontinued at any time.
Guidance
The Company today issued guidance for the full-year of 2016. Taking into consideration, among other items, current exchange rates, it expects its 2016 revenue to be in the range of $550 million to $565 million, and adjusted EBITDA to be in the range 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, February 10, 2016, at 8:30 a.m. ET to discuss the results, 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 tollfree 1-888-359-3624 or +1-719-325-2215 (international). The toll-free Israeli number is 1 80 924 5906. The pass code is 5795404.
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 5795404. The replay will be available beginning at 11:30 a.m. ET on Wednesday, February 10, 2016 and will last through 11:59 p.m. ET February 24, 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, nonporous, 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 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 curreny 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.