CSTE - Earnings call transcript Q4 2021

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Operator

Greetings and welcome to Caesarstone Limited Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require Operator assistance during the conference, [Operator Instructions].

As a reminder, this conference is being recorded. pleasure your my Investor Brad now Relations. is to host, introduce Cray, It you. Thank

You may begin.

Brad Cray

events And and to questions such and the good joined operator. in you Certain you, Thank morning that conference today's forward-looking that Dagim 's Financial differ current materially. or call Chief company's statements. statements Caesarstone caution in by to results everyone. only Caesarstone's Executive constitute may Trost, statements Officer, various actual reflect Nahum responses Chief expectations Officer. may Yuval am I We

For contained more and recent on risk information, please SEC. refer XX-F to Annual in the factors subsequent Form the most the with filings company's Report

net this financial non share, adjusted income to call, on and will can company quarter gross certain company's which in profit, comparable like addition, adjusted measures, the found make go the currency. these call be net to directly non-GAAP adjusted website. turn Relations Investor posted of EBITDA, The reconciliation fourth company's I reference is to adjusted Yuval. loss you In the including constant - Thank GAAP would most ahead. Please per the loss, to and measures GAAP now release, earnings on measures over XXXX the income

Yuval Dagim

for for opportunities captured Thank with history. year first well We us to close and revenue Caesarstone more conclude a quarter growth end revenue results, allowed progress year-over-year successfully everyone. revenue, record to to in of $XXX exceptional initiatives in you, marking executed achieve our million strategic time demand of a record We're and a with Caesarstone. morning, growth. report fourth markets as Brad, sales, than solid fifth quarter as the straight quarter XXXX and the These good of our happy our fourth in year of

results strong into U.S. further primarily penetration by driven the were Our

and thrilled channel Home sales tile quarter. organic the sales by big box significant Depot the positive three accomplished saw to growth, at During we year-over-year growth of channel solid box growth, the Omicron during a big the and the our the acquisition. We see We grant in branded continuation stores. in areas; of key fourth Caesarstone slabs were contribution momentum in quarter, of U.S. driven growth

sales XX% In in continued increasing to recover, addition, IKEA quarter-over-quarter. approximately

customers organic strong beyond were to strong a to performance, contribution This deepen U.S. attractive acquisition our our global of an solid within see Lioli are continue acquisition. in our of successful we with from synergies markets. better to Caesarstone integration remain us brand Looking on collection track launch providing quarter the be to under we XXXX. pleased and new were with spot serve Separately, two business, platform of XXXX as performance a Omicron acquisitions, accretive as the our bringing direct proven Overall, these presence our has bright Ceramica results we completed and which of porcelain pleased our to integration fourth in both XXXX. proceeding the is we planned, innovative in to

of today interest track in products journey revenue the for With includes our which the goal forward, to momentum are progress as strategy, with a next and introduce solid that into stronger path boosted XXXX. platform, to well U.S. clear excited leverage. have our These to high a by following foundations the look developed mid confidence $X new for increase our of forward well as of in and meaningful continued augment percent for our footprint goals we our we are financial stage are [Indiscernible] long-term we and a premium long-term best growth strategy, results adjusted offerings end, leverage as teen from the As demand in executing product gross revenue incremental implement broaden addressable to innovation to our our year go-to-market based we offerings, Connect CS of have SG&A growth excited the of as capabilities, the in multi-material record seeing margin benefits margin our expected a and strategy we further and Caesarstone billion growing range, our introduction and multi-material on through in from XXXX, ability our EBITDA our a reflect as market combination multi-material

and augmented these recognition. to strategy accomplish combine and targets go-to-market premium transformation, supply to from production expect efficiencies, technological benefits our We enhanced brand chain

continue have countertops. can and expansion. results offerings, delivering for new a Plan do name, customer that And we are the categorized initiatives Global to multi-material porcelain, and plan position expect premium so. multi-material premier In to regards three these our to of to products acquisition under The engagement, footprint from pillars: our offering, into as part experience in we Omicron be as design brand Growth materials. Lioli global to Acceleration stone the products leveraged We are and of and Caesarstone all choice natural our our quartz, teams enhance our incorporate and strategic working

countertop has offerings share to allowing propriety the to initiative knowledge, that salesforce than of industry. doubled The more Caesarstone growth global in proposition. value our In which to Our our development, with has product addressable a innovative, our conjunction our trendsetter multi-material accelerate leverages marketing unique teams as a define the a global our player, also and become to technology our superior market. continue been utilize engineering drive leading and design salesforce craftsmanship, countertop

partners the we relates our bath it positive platform, quarter seeing U.S. third Connect of customer retail nationwide As and during to to of are our launched the CS XXXX. continued engagement, in reception kitchen which

from Connect channels, in content revenue significant to to over own Connect vision to of create business has CS technology, counting, CS With chain, the now performed customers new our already coming partners rollout leverage over and strategic XXX line to our the to expect platform while of closer with us Our and bringing value partners. retail and generate we revenue years.

view opportunities that goals Overall, multiple growth, we in are proud to key can of organic have continue approach targets we that capital a to point part provide growth value-enhancing our While review clear the strategy us will disciplined primarily levers inflection and profit of M&A strategy. coming place XXXX financial a long-term attractive our to we drive with entered synergies. our take an today to revenue allocation as And with financial you a growth in years. and we do share with and believe year-over-year reflects in

strategic further our confident to tailwinds record Looking believe more of We confidence cost demand global cash-generation, remain proven are strong balance sheet, the around all on position we in the choice countertops demand our well-defined our a collectively ability pricing to With to actions outlook. world. and navigate to as recent continued for financial be details advanced ahead, capture provide I of leader. countertop Nahum us and that, first to the current call brand will in results actions, taking discuss initiatives, as with and we now I the environment the turn through our

Nahum Trost

Thank And good morning, everyone. will Yuval. quarter our you, I results. discussing start by fourth

the sales X.X%. big by in IKEA XX.X%, business acquisition, stores the fourth In UK, were up grew $XX.X to the acquisition quarter Omicron. sales reflecting well in primarily indirect up to previous acquisition EMEA $XXX.X basis, for In to same quarter. well and year, quarter-on-quarter. a up were of constant box the and strong growth currency region, constant Israel of constant performance, better last to the our of were the the constant constant growth. Depot The In comp, our revenue compared of XX.X%, basis, quarter up channel. currency in on accounts U.S. fourth in increase which a In an strong currency the as in due XXXX, U.S. as performance fourth a in On growth APAC record In core given regions. quarter driven market. in currency million sales fourth was as in were Americas, so the experienced currency as our constant Canada, currency Omicron our growth contribution took were region in XX.X%, by XX.X% on last as the sales revenue our sales well XX% reflecting in to compared majority the region, in all year. sales up Australia easier included grew to And the We period of fourth organic year. million of during mainly also and quarter performance X.X% solid our strong the our primarily both XX.X% quarter driven the of in the sales Home sales the as basis, a products, million place increase a global the Jewish in in up stores $XXX.X due Omicron, higher for XX% from growth, sales the by year-over-year were IKEA. an the fourth sales In holidays, contribution For growth

the in favorable our margin year in higher in Operating reflected raw which price were compared compared addition XX.X% prior Looking difference shipping in of gross was by in quarter. our material was was expenses quarter. with to XX.X% XX.X% partially XX.X% offset revenue and mainly in prices, primarily line mix. quarter polyester increasing gross quarter. margin and product year-over-year increases at prices, for to P&L the Adjusted performance, expectations, prior-year was XX.X% fourth gross the our to The margin

margin margin share same to Adjusted operating related the count. was to primarily quarter. fourth compared Excluding earnings EBITDA in of share period Growth quarter lower and the legal a diluted compared to $X.XX contingencies, initiatives of with margin prior-year loss the reflects earnings adjusted last investments representing and of we a diluted to in expenses share in to normalized expectations, over in compared to the per decline compared prior-year under will million, per of $XX.X return levels In X.X%, settlements year-over-year a of expenses $X.XX Plan. gross our and on marketing line Global the was the in XX.X% The quarter $XX.X selling million last Acceleration year similar as quarter. revenue Adjusted XX.X% our XX.X% year.

and which XX.X% were reflects progressed favorable our the pressures point financial year. our a I raw at included by as favorable product increased was a increase $XX.X highlights. looking more gross adjusted prices, will This particularly were Sales previous made up in mainly increase, includes, with year Now, last The to material million price Lioli. full-year exchange basis, On from expectations. and gross XX.X%. performance the acquisitions increases, higher full-year in selling the cost price by mix, offset material we've the margin raw reiterate polyester partially shipping quarters that XX.X%. rates. line compared difference Adjusted our currency and XX.X% contribution were margin Omicron sales for in of up constant

our from Given impacting ongoing to rising experience which impacted of quarter cost, [Indiscernible] us the material supply fourth environment impacts we industry, XXXX. the continue in

ongoing cost expect We that an margins material XXXX. entered raw shipping we will higher our as headwind to and be

So mitigate year contingencies to loss XXXX. were we of impact expect pandemic-related mitigate to prior price impact. legal the excluding cost XX.X% to into partially that increases effect and went to year, cutting Operating on in due compared expenses, efforts January settlements in Xst, XX.X% prior revenue through primarily this the

full year $XX.X margin. margin, million, a to XXXX Our year was EBITDA or last a million adjusted $XX.X XX.X% compared XX.X

to diluted the to were as share the acquisitions similar With count. prior to of margin Adjusted a $X.XX due higher on the as earnings in gross year-over-year compared operating lower expenses year our fourth change XXXX. $X.XX well and in share quarter the margins of primarily per result growth, revenue in

securities Turning us deposits, cash net a of with bank financial a short-term debt cash $XX.X short million, XXXX, to sheet of institutions with cash, balance total and and solid balance million. of as $XX.X million, included XXst, December Caesarstone's to sheets. marketable providing equivalents, position our long-term $XX.X of

ample us to leaves Our have our in XXXX. place sheet strong execute further into we resources strategic balance confident initiative that

The revenue in of key million. Moving XX% to of improvements the growth of approximately our range. midpoint $XXX of guidance our be introduce This markets. to the at million to outlook, pleased price and XXXX of in over volume are $XXX drivers XXXX to we growth implies range for the

prices EBITDA to We similar We raw remain adjusted expect costs shipping. a the anticipate materials percentage compared to and increased selling in of higher connection as and to offset sales XXXX. sales with

the our acceleration costs Yuval includes for associated me also plan. closing Global investment outlook turn With to comments. Growth let Our with that, call back the

Yuval Dagim

results, Thank which I'm you, in Nahum. closing, XXXX Plan. In Growth executing Global our progress Acceleration with happy tangible demonstrated our

value available continue our M&A growth creation bring As acquisitions in drive an leaders point our our countertop into we we to are meaningful a market can move see multiple addressable XXXX, evaluate $X to The becoming carefully extending enter leader inflection and integration and synergies. journey we to in and our us long-term opportunities that of billion to Omicron Lioli business. additional

successful of experience. confidence have the you look the we goals. trajectory create business Based step with near further pleased for you, I to engagement to ability and progress are in in CS to questions. strategic our have change and call the and our are rollout our a way to place, on is which at the We longer-term in the open on customer updating we of in Connect I utmost quarters. on in the coming helping Thank upward our forward now the ready platform our deliver we initiatives U.S., manage

Operator

your question-and-answer session. [Operator in indicate line Instructions]. you. Instructions]. and Thank this question queue. confirmation gentlemen, will we time, is a at conducting the tone [Operator A be Ladies will

question Company. Please The Garner with question. from first of Our line your Benchmark the with proceed comes Reuben

Thomas Henry

Good Garner. on afternoon, Henry for Thomas This everyone. is Reuben

volume growth? You Could us double-digit in points price you attributable is of how the a sense both XX price mentioned give and growth and the driving much of both to better XXXX.

Nahum Trost

the for Thanks Thomas. question. Hi,

more We to our better we start clearer price engines now, much of direction, this are Plan. than a we we experiencing And in as see outcome it's think so porcelain market consumer XXXX. that plan Global Growth We the of path natural what servicing growth now more are technology, we the in with have great our as journey. a a I -- few it's are advising stone working just increase. introduced in than launched with Acceleration consumer new with for with and we now together with see manage business our market journey customers And is our tool go-to-market be or quartz. based addressable us purchase on doubled tool partners to overcame

All growth we're two U.S., and in digit coming Box in We for be it's well, a years going these we're new executing in going Valley direct double bringing collections I that plan see as you in acquisition are obviously, we to growing access in Ohio engines to year are with U.S. the new organically, Big to growth of Florida a all XXXX, our that or all, areas launching -- have And the well. much regions, the and together believe us row. for now And second and sustainable now or a after it's a them. the Omicron, of accelerated strategy

Yuval Dagim

And to for we to add price to its will the XXXX, year. XXXX, the that have gradually that increase introduced the market, over January impact

the in is -- attributed also and to quantities those So and higher will to higher partially increases quantities price that gradually us demand. to increase revenue impact

Thomas Henry

latter catch flows in will outlook the a inflation margin All to that you. of Thank part implying Is a that improvement just we'll be trying for half? follow-up. And Is year the XXXX? see flat earlier quick right. that you there the up and that pricing with as through

Yuval Dagim

sure. much Pretty

be and demonstrating of we the in margin $XXX quarter-over-quarter line the gross in with see gross mentioned, bringing improvement. in just greater in to guidance you are growth as EBITDA moment, are macroeconomic our as we think are we with $XXX the back a and And improvement bringing up volatility guidance confidence more company. -- will mention that But catching at to In becoming our with say market, bed in as that have -- I to commodities, issued the margin. million the revenue inputs, -- we that, guidance in you we we growth the over we the EBITDA much revenue. As to in it's important journey, margin

it's So to to the going quite similar year we before. be believe

Thomas Henry

for outside you the final volume there material or from question of one be me. that expecting geographies U.S. Are And standpoint? any you. Thank are material well. leaders to As laggards a

Nahum Trost

we In saw demand in continue and only well. expect trend XXXX, improved we as the to but territories in in not other into this XXXX, regions U.S. all also

Thomas Henry

everyone. much Thank you very

Yuval Dagim

Thomas. you, Thank

Operator

line with the with question question. of Please Our Stifel. next from Stanley comes your Elliott proceed

Stanley Elliott

taking to you additional the Savannah any curious the Just talk guys there? down capacity Thank level at of And question. you, happening adding terms Quick how plant for yields? see question. update how guys, operating is everybody. what's performing. on the footprint you Could then throughput in Hey, about are in

Yuval Dagim

good we utilizing we're Nahum in XXXX. Hi, from that start -- hear to in efficiencies to then from yet I so. facility say, capacity in Richmond will Hill But I and edging We're months Stanley. be not with quarter-to-quarter. you from hear We're capacity approaching capacity full would of experiencing XX will over the improvement to quite nice or Good the, plant, and are full rest [Indiscernible]. regional completing the question.

in Hill more growing Israeli our was our and U.S. terms more without adding quite is to and growing all in and And rapidly is major volume facility customers a business Stanley, So capacity in utilization U.S. from quarters. the business the changes as prior any all, QX the quarter Richmond good the of serve our to in for plants,

Stanley Elliott

how are about sources Great. kind you material With alternative just being some transportation inputs, in of supply of higher, your the guys doing finding costs terms of impact? thinking chain for

Nahum Trost

until in to We efficiency are quarter-to-quarter And P&L's so Yet we constantly are a issued will experiencing a increase cost, the and [Indiscernible] maintain can we we increasing itself gradual it's -- third mitigate are year-end. with price maximum. to the with materials intending locations it of the January. improvements looking the effective and before be something on we at substitute

ongoing not potential mitigating as it our in from improvement those costs, taking be we'll advising at and be So any upside are our the we in that will us view, are top all, we all I moment believe of on quarter-to-quarter. the

Stanley Elliott

much. Thank of you Best luck. everybody. so Perfect,

Yuval Dagim

much. you Thank very

Operator

remarks. back like the further in questions I'd call management for queue. to hand to are closing no There the

Yuval Dagim

this on quarter. Thank you forward updating progress you your morning. to our look We Thank attention for you. next

Operator

this include and Ladies participation. your you gentlemen, today's teleconference. Thank does for

lines You this day. may disconnect time wonderful your have a at and

Yuval Dagim

Thank you.

Nahum Trost

Thank you.

Caesarstone (CSTE) 9 Feb 222021 Q4 Earnings call transcript