Caesarstone: U.S. Now Top Market
Caesarstone Ltd. posted a record second quarter this year as the United States emerged as its largest market.
Worldwide revenues for the Menache, Israel-based maker of Caesarstone-branded quartz surfaces totaled $75.4 million in April-June, up 14.2% from the same time last year.
The increase came mainly from a boom in North American business, with revenues increasing 60% in the United States and 27.5% in Canada from second quarter 2011.
Gross margin in the second quarter increased to 43%, compared to 40.3% in 2011. The improvement came as Caesarstone took over direct distribution in the United States late last year, and by economies of scale over fixed manufacturing expenses.
In announcing financial results in a conference call with stock analysts last week, Caesarstone CEO Yosef Shiran noted that the United States became the company’s largest market for the first time, moving ahead of previous leader Australia.
Shiran credited the U.S.-market performance to “deploying the same strategy that has been successful elsewhere in the world.”
Shiran said Caesarstone’s direction in the United States is to continue investing in marketing and brand, developing sales networks and improving execution of business practices such as fulfillment, education and customer service.
U.S. operations are also extending more efforts in dealing with commercial projects, Shiran said, particular by cooperating with partners in the market..
“In the past, Caesarstone has really done a good a very good job in the residential market for kitchen and bath, but the business is really developing to be much more than that,” Shiran said. “Overall, what you can see is for us to continue the good trend on the residential and stronger business evolving into the commercial part.”
On the U.S. residential side, Shiran noted that “volumes are going up and we are happy with the pricing there.” He also downplayed any increased move into business through big-box retailers such as Lowe’s and Home Depot.
“We don’t want to sacrifice margin or brand for the sake of volume,” Shiran said. “On the higher end of the market, we work with a number of home centers where we have found a balance between price and value, and we’ve been able to do that without a negative impact on the brand.
“If. we are able to that balance with Home Depot and Lowe’s, we’ll consider it. But, for the time, we’ll continue to operate in the (current) direction and selectively choose the right partners there.”
The company also received a boost from the United States in an administrative move; it changed its currency of record to the U.S. dollar from Israeli sheckels. Operating income was minimally impacted by the strong dollar as it reduced both sales and operating expenses, which Caesarstone largely denominates in foreign currencies.
Caesarstone Ltd. went public on March 22, trading on NASDAQ with the symbol CSTE.
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