Caesarstone Posts Another Quarterly Loss
MP MENASHE, Israel — Caesarstone Ltd. reported a net loss of $887,000 for this year’s third quarter — an amount almost double from the same time in 2022.
Company officials today cited weakness in revenues from the United States — the company’s largest market — plus other global economic issues for the down performance. They also cited the company’s strong cash position and cash flow as a positive, although bottom-line sluggishness will continue through the end of the year.
“Moving into 2024 and beyond, we remain focused on optimizing our business to operate more efficiently, investing in our brand, and introducing innovative products as we create a new foundation to support long-term profitable growth,” said Yos Shiran, Caesarstone CEO.
Global third-quarter revenues of $142.3 million for the Israeli surfacing company represented a 21.2% decline from 3Q 2022. The biggest regional revenue drop came from the United States, with this year’s 3Q $65.8 million dropping 25.3% from the same time last year.
The U.S. market is Caesarstone’s biggest sector, accounting for more than 46% of total revenue.
“The decrease of 21.2% was primarily driven by softer global market conditions, particularly in the North American renovation and remodel channels, mainly as a result of higher interest rate, which has impacted residential spending,” said Nahum Trost, company CFO, in a conference call today with Wall Street analysts. “In addition, our sales are also impacted by the competitive landscape for our product.
“The impact of softer residential sales activity, which slowed down commencing in the second half of 2022 has been more pronounced in our results since the second quarter of this year.”
Canada, Caesarstone’s third-largest regional market, showed a 19.7% loss from last year with 3Q 2023 revenues of $18.9 million.
Australia, Caesarstone’s second-largest market, reported 3Q revenues of $27.3 million, down 12.7% from the same time last year.
Shiran noted that Caesarstone remains in a strong cash position, although overall financial performance will run through the end of the year as the company works on restructuring efforts.
He said the company will continue to invest in U.S. marketing. While the company saw good results in the commercial sector and big-box-store retail, he noted a need to “reinforce our other channel,” including kitchen-and-bath and stone suppliers that “have also performed quite badly in the last year.”
Company officials today also detailed other efforts in restructuring, including the lowering of inventories, with a target of 100-day supply.
Caesarstone will also include more third-party-produced materials in their product flow. Shiran said the company started the year with 20% of sales with partner-produced product; that’s now at 40% and will increase to 50% in 2024.
Shiran also addressed the current situation of engineered stone in Australia, where a report by regulators advised a ban on the material. Australian safety officials will meet later this year to discuss further action.
“At this time, it is difficult to predict exact outcome of the Australian government’s decision on the matter and whether the ultimate decision will be a total ban, partial ban or other,” Shiran said. “We are working diligently with our strong Australian team to maintain our market share in this market, regardless of the decision.”
Shiran also said the current Israel-Hamas conflict puts uncertainty in it’s home-country market, “we have taken the steps necessary to ensure business continuity and have not experienced any material impact to our strategy, global operations or Israeli production operations.
“We are monitoring the situation closely and see no major impediments to continue serving our customers globally.”
Shiran also noted the company’s plan to contribute 2,000 countertops to rebuild properties in Israel affected by attacks.
“We at Caesarstone remain committed to supporting the people of Israel and the rehabilitation of our effected townships,” he said.
