Caesarstone reports second quarter 2021 financial results
Mp menashe, israel--(business wire)--caesarstone ltd. (nasdaq: cste), a leading developer and manufacturer of high-quality engineered surfaces, today reported financial results for its second quarter ended june 30, 2021. “i am very pleased with our ability to deliver record sales during the second quarter driven by strong performance across our business, as well as the positive contributions from our recent accretive acquisitions of omicron and lioli” commented yuval dagim, caesarstone’s chief executive officer. “this achievement is attributable to the focused execution of our global growth acceleration plan as we continue to leverage our world-class brand and innovative go-to-market initiatives to enhance customer experience and engagement. to that point, our new cs connect platform represents a technological leap for our business, transforming the way we communicate with our customers and consumers, and we are highly encouraged by the initial feedback we have received. looking to the second half of 2021, we have a strong balance sheet in place with ample capital to build on our success as we further execute our growth strategy to transform caesarstone into a leading premium, multi-material countertop company.” (*) cash position is defined as cash and cash equivalents and short-term bank deposits and long and short-term investment in marketable securities less debt from financial institutions. second quarter 2021 results revenue in the second quarter of 2021 grew 65.1% to a record of $163.5 million compared to $99.0 million in the prior year quarter. on a constant currency basis, second quarter revenue was higher by 55.5% year-over-year. sales growth was primarily driven by improved demand across the majority of our global footprint, as economies around the world continue to recover from the pandemic, in addition to the contribution of our recent acquisitions. gross margin in the second quarter improved to 28.0% compared to 20.4% in the prior year quarter. adjusted gross margin in the second quarter was 28.1% compared to 20.5% in the prior year quarter. the year-over-year improvement in gross margin mainly reflects better regional and product mix, more favorable currency exchange rates, enhanced productivity in our factories, and growing demand since the beginning of the pandemic which were partly offset by lower sales prices and higher raw material and shipping inflation. operating expenses in the second quarter were $40.6 million, or 24.8% of revenue, compared to $23.1 million, or 23.3% of revenue in the prior year quarter. excluding legal settlements and loss contingencies, operating expenses were 22.3% of revenue, compared to 21.6% in the prior year quarter, mainly due to higher marketing and selling expenses related to initiatives under the company’s global growth acceleration plan. operating income grew to $5.2 million compared to operating loss of $2.9 million in the prior year quarter. the year-over-year growth mainly reflects higher gross profit. adjusted ebitda, which excludes expenses for non-cash share-based compensation, legal settlements and loss contingencies and for non-recurring items, more than doubled year-over-year to $18.8 million in the second quarter, representing a margin of 11.5%. this compares to adjusted ebitda of $6.5 million, representing a margin of 6.6%, in the prior year quarter. the year-over-year margin improvement primarily reflects the higher gross margin. finance expense in the second quarter was $3.1 million compared to finance expense of $2.5 million in the prior year quarter. the difference was primarily a result of higher credit cards fees due to higher volume as well as interest related to bank loan. net income attributable to controlling interest for the second quarter was $1.7 million compared to net loss of $5.9 million in the prior year quarter. net income per share for the second quarter was $0.05 compared to net loss per share of $0.17 in the prior year quarter. adjusted diluted net income per share for the second quarter was $0.21 on 34.6 million shares, compared to adjusted diluted net loss per share of $0.10 in the prior year quarter on 34.5 million shares. balance sheet & liquidity as of june 30, 2021, the company’s balance sheet remained strong, including cash, cash equivalents and short-term bank deposits and short and long-term marketable securities of $121.1 million and total debt to financial institutions of $13.3 million. dividend the company’s dividend policy provides for a quarterly cash dividend of up to 50% of reported net income on a year-to-date basis, less any amount already paid as dividend for the respective period (the “calculated dividend”), subject in each case to approval by the company’s board of directors. no dividend is paid if it would be less than $0.10 per share. pursuant to the company’s dividend policy, the company does not intend to pay a dividend for the second quarter of 2021, based on its reported net income attributable to controlling interest for the period. outlook the company reiterates its expectation for 2021 revenue and adjusted ebitda to be higher year-over-year. the company anticipates revenue to grow faster than ebitda in 2021 mainly due to higher raw material and shipping costs, coupled with a return to more normalized levels of sales and marketing expenses and other investments to support growth initiatives. the company’s outlook includes the investment costs associated with its global growth acceleration plan. the company’s outlook also assumes that pandemic related business restrictions will continue to fade as the year progresses. webcast and conference call details the company will host a live webcast and conference call today at 8:30 a.m. et to discuss the results, followed by a question and answer session for the investment community. the live webcast of the call can be accessed at ir.caesarstone.com. for those unable to access the webcast, the conference call will be accessible by dialing 1-877-407-4018 (domestic) or +1-201-689-8471 (international). the toll-free israeli number is 1 80 940 6247. upon dialing in, please request to join the caesarstone second quarter earnings call. to listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 (domestic) or +1-412-317-6671 (international) and enter pass code 13721368. the replay will be available beginning at 11:30 a.m. et on wednesday, august 4, 2021 and will last through 11:59 p.m. et on wednesday, august 11, 2021. about caesarstone caesarstone is a concept and lifestyle-driven company with a customer-centered approach to designing, developing, and producing high-end engineered stone countertops, used in residential and commercial buildings. our products offer superior aesthetic appeal and perfected functionality through a distinct variety of colors, styles, textures, and finishes used in diverse countertop applications, marked by inherent longevity. strong commitment to service has fostered growing customer loyalty in over 50 countries where the caesarstone product collections are available: classico, supernatural, metropolitan and outdoor. for more information please visit our website: www.caesarstone.com. non-gaap financial measures the non-gaap measures presented by the company should be considered in addition to, and not as a substitute for, comparable gaap measures. reconciliations of gaap gross profit to adjusted gross profit, gaap net income (loss) to adjusted net income (loss) and net income (loss) to adjusted ebitda are provided in the schedules to this release. to calculate revenues growth rates that exclude the impact of changes in foreign currency exchange rates, the company converts actual reported results from local currency to u.s. dollars using constant foreign currency exchange rates in the current and comparable period. the company provides these non-gaap financial measures because it believes that they present a better measure of the company's core business and management uses the non-gaap measures internally to evaluate the company's ongoing performance. accordingly, the company believes that they are useful to investors in enhancing an understanding of the company's operating performance. forward-looking statements information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the private securities litigation reform act of 1995. these forward-looking statements relate to the company's plans, objectives and expectations for future operations, including estimations relating to the impact of the covid-19 pandemic and mitigation measures in connection thereto, expectations of the results of the company’s business optimization initiative , integration of the company’s acquisitions and its projected outlook and results of operations. these forward-looking statements are based upon management's current estimates and projections of future results or trends. actual results may differ materially from those projected as a result of certain risks and uncertainties, both known or unknown. these factors include, but are not limited to: the impact of the covid-19 pandemic on end-consumers, economic conditions in our key markets, raw material shortages and prices, , fluctuations in home renovation and construction sectors; the company’s ability to compete with lower-priced products and other intense competitive pressures; the outcome of silicosis and other bodily injury claims; regulatory requirements relating to hazards associated with exposure to silica dust; ability to efficiently manufacture products and managing required changes in production and supply chain in light of our recent acquisitions; fluctuations in currency exchange rates; the success of our expansion efforts in the united states; unpredictability of seasonal fluctuations in revenues and other factors discussed under the heading "risk factors" in our most recent annual report on form 20-f and other documents filed with the securities and exchange commission. these forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. caesarstone ltd. and its subsidiaries condensed consolidated balance sheets as of june 30, 2021 december 31, 2020 (unaudited) (audited) $ 101,288 $ 114,248 13,246 8,112 86,970 84,822 39,609 26,481 167,495 152,073 408,608 385,736 3,932 4,007 3,763 3,837 9,034 8,359 404 1,675 119,829 123,928 6,596 10,926 218,562 222,883 57,743 59,570 419,863 435,185 $ 828,471 $ 820,921 $ 13,314 $ 13,122 73,844 55,063 2,229 2,221 23,361 31,039 58,670 55,570 171,418 157,015 6,597 20,706 25,770 21,910 6,025 6,943 107,978 112,719 5,296 5,303 1,283 1,274 152,949 168,855 7,111 7,701 371 371 (39,430) (39,430) 161,079 160,083 (5,587) (5,587) 1,306 1,083 379,254 370,830 496,993 487,350 $ 828,471 $ 820,921 caesarstone ltd. and its subsidiaries condensed consolidated statements of income three months ended june 30, six months ended june 30, 2021 2020 2021 2020 (unaudited) (unaudited) $ 163,462 $ 99,037 $ 309,494 $ 225,594 117,678 78,865 220,408 169,021 45,784 20,172 89,086 56,573 1,114 763 2,219 1,543 23,594 11,435 41,870 30,064 11,794 9,241 24,937 21,108 4,109 1,637 4,849 4,475 40,611 23,076 73,875 57,190 5,173 (2,904) 15,211 (617) 3,095 2,507 (2,238) 1,638 2,078 (5,411) 17,449 (2,255) 598 471 2,127 949 $ 1,480 $ (5,882) $ 15,322 $ (3,204) 225 - 573 - $ 1,705 $ (5,882) $ 15,895 $ (3,204) $ 0.05 $ (0.17) $ 0.45 $ (0.09) $ 0.05 $ (0.17) $ 0.45 $ (0.09) 34,451,071 34,412,369 34,449,483 34,406,107 34,539,958 34,412,369 34,525,127 34,406,107 caesarstone ltd. and its subsidiaries selected condensed consolidated statements of cash flows six months ended june 30, 2021 2020 (unaudited) $ 15,322 $ (3,204) 17,689 14,102 996 1,707 72 7 (1,856) (640) (4) 22 4,849 4,475 (2,307) 9,942 (8,985) 3,172 (15,383) (12,621) 19,049 (16,117) 16 (98) 3,987 (1,347) (4,277) 1,554 204 6 27 (8) (6,311) 4,173 23,088 5,125 (1,966) - (1,780) (12,472) (12,459) 5 6 (1,042) (13,002) 40 (711) (17,215) (26,166) (7,234) - (10,983) (459) (650) (610) (18,867) (1,069) 34 (198) (12,960) (22,308) 114,248 139,372 $ 101,288 $ 117,064 (316) (954) caesarstone ltd. and its subsidiaries three months ended june 30, six months ended june 30, 2021 2020 2021 2020 (unaudited) (unaudited) $ 45,784 $ 20,172 $ 89,086 $ 56,573 37 122 142 253 160 - 694 - $ 45,981 $ 20,294 $ 89,922 $ 56,826 (a) share-based compensation includes expenses related to stock options and restricted stock units granted to employees and directors of the company. caesarstone ltd. and its subsidiaries three months ended june 30, six months ended june 30, 2021 2020 2021 2020 (unaudited) (unaudited) $ 1,480 $ (5,882) $ 15,322 $ (3,204) 3,095 2,507 (2,238) 1,638 598 471 2,127 949 8,781 6,987 17,689 14,102 4,109 1,637 4,849 4,475 284 - 284 - 429 801 996 1,707 $ 18,776 $ 6,521 $ 39,029 $ 19,667 (a) consists of legal settlements expenses and loss contingencies, net, related to product liability claims and other adjustments to on-going legal claims, including related legal fees. (b) share-based compensation includes expenses related to stock options and restricted stock units granted to employees and directors of the company. caesarstone ltd. and its subsidiaries three months ended june 30, six months ended june 30, 2021 2020 2021 2020 (unaudited) (unaudited) $ 1,705 $ (5,882) $ 15,895 $ (3,204) 4,109 1,637 4,849 4,475 284 - 284 - 561 - 1,387 - 429 801 996 1,707 889 1,256 (973) (215) 6,272 3,694 6,543 5,967 770 1,310 797 2,116 5,502 2,384 5,746 3,851 $ 7,207 $ (3,498) $ 21,641 $ 647 $ 0.21 $ (0.10) $ 0.63 $ 0.02 (a) consists of legal settlements expenses and loss contingencies, net, related to product liability claims and other adjustments to on-going legal claims, including related legal fees. (b) share-based compensation includes expenses related to stock options and restricted stock units granted to employees and directors of the company. (c) exchange rate differences deriving from revaluation of lease contracts in accordance with fasb asc 842. (d) tax adjustments for the three and six months ended june 30, 2021 and 2020, based on the effective tax rates. (e) in calculating adjusted diluted (non-gaap) eps for the three and six months ended june 30, 2021 and 2020, the diluted weighted average number of shares outstanding excludes the effects of share-based compensation expense in accordance with fasb asc 718. caesarstone ltd. and its subsidiaries geographic breakdown of revenues by region three months ended june 30, six months ended june 30, 2021 2020 2021 2020 (unaudited) (unaudited) $ 77,844 $ 41,726 $ 148,675 $ 101,781 21,946 14,435 39,725 32,993 741 132 1,599 638 100,531 56,293 189,999 135,412 31,597 23,534 58,769 45,888 7,370 1,732 15,147 4,563 38,967 25,266 73,916 50,451 15,852 8,031 28,570 19,371 8,112 9,447 17,009 20,360 $ 163,462 $ 99,037 $ 309,494 $ 225,594 caesarstone ltd. and its subsidiaries geographic breakdown of revenues by region - supplemental data three months ended 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 (unaudited) $ 77,844 $ 70,831 $ 53,618 $ 52,097 $ 41,726 $ 60,055 $ 64,659 $ 64,805 $ 64,590 21,946 17,779 20,325 19,174 14,435 18,558 20,575 21,881 23,341 741 858 1,387 124 132 506 735 1,434 1,351 100,531 89,468 75,330 71,395 56,293 79,119 85,969 88,120 89,282 31,597 27,172 29,953 27,746 23,534 22,354 26,000 28,642 28,294 7,370 7,777 7,122 2,881 1,732 2,831 3,932 3,675 3,311 38,967 34,949 37,075 30,627 25,266 25,185 29,932 32,317 31,605 15,852 12,718 14,408 11,422 8,031 11,340 9,464 11,719 11,418 8,112 8,897 10,083 10,478 9,447 10,913 8,502 10,683 8,766 $ 163,462 $ 146,032 $ 136,896 $ 123,922 $ 99,037 $ 126,557 $ 133,867 $ 142,839 $ 141,071 year-over-year % change 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 (unaudited) 86.6% 17.9% -17.1% -19.6% -35.4% 52.0% -4.2% -1.2% -12.4% -38.2% 461.4% 69.6% 88.8% -91.4% -90.2% 78.6% 13.1% -12.4% -19.0% -36.9% 34.3% 21.6% 15.2% -3.1% -16.8% 325.5% 174.7% 81.1% -21.6% -47.7% 54.2% 38.8% 23.9% -5.2% -20.1% 97.4% 12.2% 52.2% -2.5% -29.7% -14.1% -18.5% 18.6% -1.9% 7.8% 65.1% 15.4% 2.3% -13.2% -29.8% year-over-year % change in constant currency (*) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 (unaudited) 86.6% 17.9% -17.1% -19.6% -35.4% 35.1% -9.6% -2.4% -11.7% -36.0% 460.5% 69.8% 88.7% -91.3% -90.2% 74.2% 11.8% -12.7% -18.8% -36.4% 14.6% 2.8% 7.9% -7.1% -11.5% 312.8% 169.5% 80.7% -21.2% -45.9% 35.1% 21.5% 17.5% -8.7% -15.1% 77.6% 3.3% 45.8% -5.9% -26.9% -20.5% -24.6% 9.4% -4.5% 4.5% 55.5% 9.8% -0.4% -14.4% -28.3%
