Caesarstone Reports Record Results in Q2 2013
MENASHE, Israel – Supported mainly by North American business, Caesarstone posted record results for this year’s second quarter … but, in the short term, it may be tough act to follow.
And, the U.S. production plant for the company’s quartz surfaces is a bit pricier than first anticipated.
Yesterday, the company (officially Caesarstone Sdot-Yam Ltd) reported $89 million in revenues for April-June this year, up 17.9% from the same time last year. The record amount also beat Wall Street estimates of $84.5 million for the quarter.
As in this year’s first quarter, the bulk of the increase came from the United States and Canada, with sales increase of 33.6% and 35.3%, respectively.
Adjusted net income (attributable to controlling interest) for 2Q 2013 is $18.6 million, up 55.2% from last year’s second quarter, compared to $12.0 million in the same quarter in the prior year. Net cash grew by $11.3 million from the end of last year to $61.1 million as of June 30. The company noted its belief that the balance on hand, along with expected cash flows, will be sufficient to fund capital expenditures and working capital for the foreseeable future.
Caesarstone also stuck by its estimates of $330 million to $340 million in total worldwide revenues this year. EBITDA (earnings before interest, taxes, depreciation and amortization) for 2013 is now estimated at $82 million to $85 million, up approximately 6.2% to 7.8% from previous guidance, although the rise is based mainly on currency exchange-rate movements.
In a conference call with stock analysts yesterday, Caesarstone CEO Yosef Shiran noted that bringing a new production line up to speed in Israel may temper results through the rest of the year, although the expansion should add 25% more capacity by the end of next March.
“In the second quarter, we leveraged some inventory we built up in the first quarter to drive the growth,” Shiran said. “Until we bring our new line into operation late this year, sequential revenue growth in the second half compared to the first half will be more challenging.
“We are on track to increase our capacity in Bar-Lev, our production site in Israel, which will enable us to pursue growth more aggressively starting in 2014.”
Shiran also didn’t share much information about Caesarstone’s alliance with IKEA in providing all non-laminate surfaces in the furnishing giant’s stores.
“It’s going well and progressing according to plan,” he said, “but, given that this information relates also to IKEA, we prefer not to provide specific details. But, it’s not something that which is material yet.”
Caesarstone also aims to complete the first of two manufacturing lines in a planned U.S. plant by December 2014, although the capital-expenditure estimate increased from $75 million to $100 million.
“This (the increase) is primarily to incorporate additional capacities, which are expected to improve efficiency and reduce ongoing costs,” Shiran said.
Investors reacted today by pushing Caesarstone stock (NASDAQ: CSTE) to prices above the $44 mark today, up sharply from the $35.41 close on Tuesday. One year ago (Aug. 10, to be exact), the stock traded as low as $10.08.
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