Caesarstone: Revenues Still Growing

By Emerson Schwartzkopf

MP MENASHE, Israel –Caesarstone Ltd. continued its run of double-digit increases in revenue, but it’s also reflective of keeping up with inflation.

The surfaces manufacturer noted another record in this year’s second quarter, with $180.27 million in revenues beating 2021’s 2Q total by 10.3%. Not all of that came with increased product volume, however.

“We achieved our 6th consecutive quarter of double-digit year-over-year revenue growth, including nearly 20% growth in the U.S.,” said Yuval Dagim, Caesarstone CEO, “while also implementing successful pricing actions that helped us continue to mitigate increasing costs of raw materials and shipping and improve our margins on a sequential basis.”

In a conference call with Wall Street analysts last week, Dagim noted that the company’s revenue forecast for the year “is a growth of double digit against last year mostly dominated by prices. Originally, we thought it’s going to be probably one-third growth by volume and two-thirds by prices. I think, it’s becoming more dominant by prices rather than volume.”

Caesarstone implemented two price increases worldwide on its products in January and April. The company began implementing another increase last month.

The U.S. market provided the bulk of the company’s gains in this year’s second quarter, with the $93 million in revenues outpacing 2021 by 19.5%. Canada also kept well ahead of last year’s figures with its $25.3 million offering a 15.6% year-to-year increase.

Nahum Troost, Caesarstone CFO, noted that “strong organic growth” drove U.S. performance, which also included natural stone and other products from its Omicrom distribution network. Canada’s increase, he added, came from “strong performance in all channels, with IKEA sales continuing to experience strong year-over-year growth.”

A 4.4% revenue decline in Australia, which Troost attributed to supply-chain issues, and tepid performance in Europe pared the worldwide 2Q 2022 increase to 10.3%.

Net 2Q 2022 income worldwide (attributable to controlling interest) came to $11.1 million; because of major one-time financial adjustments in last year’s second quarter, the two periods can’t be compared fairly. Looking at half-year performance, however, Caesarstone posted total net income of $17.3 million for the first six months for an increase of 16.3% from 2021.

The second-quarter financial report didn’t detail specific actions in North America, although Dagim told analysts that noted the company is making progress in rolling out its CS Connect computer platform. He also noted continued work on productivity at Caesarstone’s quartz-surface factory in Richmond Hill, Ga.,

“Improved efficiencies at our Richmond Hill facility in the U.S. has put us in a better setup to locally serve the North American region, resulting in shorter lead times and cost savings,” Dagim said.

The company also stood by its earlier expectations for full-year 2022 worldwide revenues to be in the $710 million to $725 million range.

“With an estimated 60% to 70% of our business in our key markets tied to the historically resilient repair and remodel end market, I am confident that we have the right plan in place to deliver on our strategic objectives while navigating through a complex global environment,” Dagim said. “In doing so, we will continue to leverage our world-class brand, innovative go-to-market initiatives, and multi-material product offerings to drive additional value for our shareholders.”