Tariffs, Legal Challenges Vex Caesarstone
MP MENASHE, Israel – Surfaces manufacturer Caesarstone Ltd. offered a mix of good and bad news to describe this year’s third quarter … along with some future challenges.
Improvements in gross margin and earnings topped the 3Q report from the company, but it also noted lower sales in key markets, U.S. tariffs, and continuing legal battles that resulted in a net loss of $56 million, up from a $18 million loss in last year’s third quarter.
Company officials cited progress in Caesarstone’s ongoing strategy to streamline operations and put it back in the black financially.
“The third quarter marked an important milestone in our efforts to restore Caesarstone’s profitability, with meaningful progress in our underlying business,” said CEO Yos Shiran in an earnings call on Nov. 11.
The positive news came with a near-breakeven EBITDA, with a year-to-year improvement of nearly $8 million, Shiran said, along with a jump in gross margin from 17.3% in 3Q 2025 to 25.4% this year.
Most of the uptick came from the company’s strategic plan that closed engineered-stone plants, outsourced manufacturing to outside suppliers, and reorganized management and marketing efforts.
Caesarstone’s 3Q total revenues of $96.2 million, however, represented at 5.7% year-over-year decline, with U.S. sales of $38.7 million falling 16.9% from the same time last year.
Shiran noted the drop is “mainly reflecting soft demand and competitive pressure in the United States. In the US, we are working closely with our key customers to strengthen our position.”
Caesarstone CFO Nahum Trost noted that much of the U.S. decline resulted from “lower quartz volumes in our core business. Demand remained soft in commercial projects, including new development, and in sales for stone suppliers.”
Caesarstone’s sales at big-box retailers grew, Shiran said, noting improvements in Canada through IKEA outlets. Total revenues in Canada, meanwhile, only took a 2.3% dip from 3Q 2025.
Australia continued to be Caesarstone’s most-dynamic market, with $22.3 million in 3Q revenue this year beating the same time in 2025 by 21% with wide adoption of the company’s ICON silica-free surfaces.
It’s the U.S. market, however, that poses immediate dilemmas for Caesarstone in two areas: tariffs and silicosis lawsuits.
The United States accounted for nearly 40% of 3Q revenues. Trost estimated the four-year Safeguard tariffs that went into effect in mid-August will have an annual impact of between $10 million to $15 million on Caesarstone products.
“We implemented price increases in the U.S. in September to help offset this impact,” Trost said. “We are also reviewing additional sourcing and supply chain changes to reduce the impact of these tariffs.”
Tariffs also worked to the company’s advantage in the third quarter. Trost noted that the raise in gross margin included $900,000 in refunds of previous tariffs, although other tariffs and freight costs partially offset benefits.
Caesarstone’s legal troubles became the major financial factor, though, in third-quarter results. Legal settlements and loss contingencies totalled $55.4 million, or 98.9% of the net loss of $56 million.
Lawsuits related to silica exposure during fabrication now stand at 870 worldwide, with 670 claims in the United States. A news release on Caesarstone’s third-quarter results noted the latest California jury verdict late last month that found the company responsible for $48.6 million in damages.
“The Company strongly disagrees with the jury’s verdict,” according to the statement. “It believes the verdict is not supported by the facts of the case or the applicable law, including the fault attributable to the plaintiff’s employer, and that the trial included significant legal errors and will consider its available post-trial remedies.”
However, the jury’s decision is causing other concerns for Caesarstone.
“The jury verdict has created significant uncertainty regarding the Company’s financial condition and prospects and raises substantial doubt about its ability to continue as a going concern in the ordinary course,” the statement added. “The Company is evaluating the impact of the verdict on its business, results of operations, liquidity and financial condition and is considering its alternatives.”
At the end of 3Q 2026, Caesarstone recorded a provision of $105.5 million as a “best estimate of probable and reasonably estimable losses associated with legal proceedings.” The company also noted $13.6 million of insurance receivables related to claims in Israel and Australia.
Caesarstone Ltd. is traded on the NASDAQ under the symbol CSTE.
