Q1 2024 Caesarstone Ltd Earnings Call
Operator: Greetings, and welcome to the Caesarstone First Quarter 2024 Earnings Conference Call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone. If you would like to withdraw your question, please press star, then 2. Please note that today's event is being recorded. I would now like to introduce you to our host for today, Brad Cray of ICR. Thank you, and you may begin, sir.
Greetings and welcome to the Caesar Stone first quarter 2024 earnings conference call.
All participants will be in a listen only mode should you need assistance during todays call. Please signal for a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone if you would like to withdraw your question. Please press Star then two please note that today's event is being recorded.
I would now like to introduce you to our host for today, Brad Cray of ICR. Thank you you may begin sir.
Brad Cray: Thank you, Operator, and good morning to everyone on the line. I am joined by Yosef Shiran, Caesarstone's Chief Executive Officer, and Nahum Trost, Caesarstone's Chief Financial Officer. Certain statements in today's conference call and responses to various questions may constitute forward-looking statements. We caution you that such statements reflect only the company's current expectations and that actual events or results may differ materially. For more information, please refer to the risk factors contained in the company's most recent annual report on Form 20-F and subsequent filings with the SEC.
Brad Cray: Thank you operator, and good morning to everyone on the line.
Brad Cray: I am joined by Youre sure Ed These are stern Chief Executive Officer.
Brad Cray: Charles <unk> Chief Financial Officer.
Brad Cray: Certain statements in todays conference call and responses to various questions may constitute forward looking statements.
Brad Cray: We caution you that such statements reflect only the company's current expectations and that actual events or results may differ materially.
Brad Cray: For more information please refer to the risk factors contained in the company's most recent annual report on form 20-F, and subsequent filings with the SEC. In addition on this call the company will make reference to certain non-GAAP financial measures.
Brad Cray: <unk> adjusted net loss income adjusted net loss income per share.
Brad Cray: Adjusted gross profit adjusted EBITDA and constant currency.
Brad Cray: The reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the company's first quarter 2024 earnings release, which is posted on the company's Investor Relations website.
Speaker Change: On today's call <unk> will discuss our business activity and whom will then cover additional details regarding financial results before we open the call for questions. Thank.
Brad Cray: In addition, on this call, the company will make reference to certain non-GAAP financial measures, including adjusted net loss income, adjusted net loss income per share, adjusted gross profit, adjusted EBITDA, and constant currency. The reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the company's first quarter 2024 earnings release, which is posted on the company's investor relations website. On today's call, Yosef will discuss our business activity, and Nahum will then cover additional details regarding financial results before we open the call for questions. Thank you, and I would now like to turn the call over to Yosef. Please go ahead.
Speaker Change: Thank you and I would now like to turn the call over to yes. Please go ahead.
Yosef Shiran: Thank you Brad, good day everyone, and thank you for joining us to discuss our first quarter 2024 results. Our first quarter results are aligned with our goals to deliver a full year of positive adjusted EBITDA and cash flow from operations. Our team has demonstrated resilience and adaptability to start off 2024 in the face of persistent global economic headwinds, regulatory changes in Australia, and the ongoing conflict in Israel. Yet, our revenues fell short of our expectations in the first quarter, and we are working decisively to improve execution and resume revenue growth.
Speaker Change: Thank you Brad and good day, everyone and thank you for joining us to discuss our first quarter 'twenty 'twenty four results.
Speaker Change: Our first quarter results are in line with our goal is to deliver a full year of positive adjusted EBITDA and cash flow from operations.
Speaker Change: Our team has demonstrated the resilience and the ability to start off 2024 in the face of persistent global economic headwinds.
Speaker Change: Regulatory changes in Australia, and the ongoing conflict in Israel.
Speaker Change: Yet our revenues fell short of our expectations in the first quarter and we are working decisively to improve execution and resume revenue growth.
Yosef Shiran: Despite these challenges, we have made significant progress in our strategic transformation, shifting from a manufacturing-centric approach to a strategy that prioritizes research and development, marketing, and branding to drive revenue growth. We are successfully transforming our manufacturing footprint, having transitioned over 50% of our production to our global network of production business partners. This should allow us to better align production levels and sources with the demand for our products.
Speaker Change: Despite these challenges we have made significant progress in our strategic transformation shifting from manufacturing strength centric approach to a strategy that prioritizes research and development marketing and branding to drive revenue growth.
Speaker Change: We are successfully transforming our manufacturing footprint, having transitioned over 50% of our production to our global network of production business partners.
Speaker Change: This should allow us to better align production levels and sources with the demand for our products.
Yosef Shiran: Although we are making this shift, we still have strong production capabilities in quartz and growing capabilities in porcelain. We are beginning to see the benefits of these restructuring actions, which contributed to the first quarter gross margin expansion. The Stotiam and Richmond Hill plant closures are on pace to have a more pronounced impact on our results in the second half of 2024 and should ultimately save us approximately $30 million annually by next year compared to 2023.
Speaker Change: Although we are making this shift we still have strong production capabilities in quotes and growing capabilities in Barcelona.
Speaker Change: We are beginning to see the benefits of these restructuring actions, which contributed to the first quarter gross margin expansion.
Speaker Change: Yeah I'm in Richmond Hill plant closures are on pace to have a more pronounced impact on our results in the second half of 'twenty 'twenty four.
Speaker Change: And should ultimately save us approximately $30 million annually by next you compelled to 'twenty to 'twenty three.
Yosef Shiran: These savings are getting partially reinvested into additional innovation and marketing efforts to drive higher revenues. Since announcing our restructuring plan last year, one of our primary financial objectives has been to generate positive cash flow from operations and improve our net cash position. We have made solid progress on this initiative and plan to continue delivering positive cash flow from operations. With fortified balance sheets and ample net cash, we are well positioned to continue executing on our strategic objectives in 2024. Furthermore, we have separated our U.S. and Canadian leadership teams to allow each team to better focus on the opportunities in their respective markets.
Speaker Change: These savings are getting partially reinvested into additional innovation and marketing efforts to drive higher revenues.
Speaker Change: Since announcing our restructuring plan last year.
Speaker Change: One of our primary financial objectives has been to generate positive cash flow from operations and improve our net cash position.
Speaker Change: We've made solid progress on this initiative and plan to continue delivering positive cash flow from operations.
Speaker Change: We have a fortified balance sheet and ample net cash we are well positioned to continue executing on our strategic objectives in 2024.
Speaker Change: Furthermore, we have separated our U S and Canadian leadership teams to allow each team to better focus on the opportunities in their respective markets.
Yosef Shiran: Regarding the shift of the Australian market to free crystalline silica products... We have been proactive in the development of alternative products that comply with the new regulations and have begun offering them in the market. By the end of the second quarter of 2024, a majority of our collection will consist of alternative products, with a full collection of compliant products available by the end of the year, which we believe will allow us to retain our leading position in the Australian market.
Speaker Change: Regarding the shift of the Australian market to free crystalline silica products.
Speaker Change: We have been proactive in the development of alternative products.
Speaker Change: Imply within Europe relations and have begun offering them in the market.
Speaker Change: By the end of the second quarter of 'twenty 'twenty, four and majority of our collection will consist of alternative products with a full collection of compliant products available by end of the year.
Speaker Change: We believe will allow us to retain our leading position in the Australian market.
Yosef Shiran: In conclusion, as we progress through 2024 and navigate current market dynamics, our strategy is firmly focused on enhancing innovation and brand development while further refining our production footprint. We are committed to reducing our manufacturing costs while increasing investment in R&D, marketing, our brand, and the expansion of our premium porcelain offering to drive sales growth and profitability across the board. We remain confident that Caesarstone can rise to its potential. Thank you, and I will now turn the call over to Nahum to walk you through the details of our financial performance.
Speaker Change: In conclusion, as we progress through 2024 and navigate current market dynamics I'll start. The G is firmly focused on enhancing innovation and brand development, while further refining our production footprint, we're committed to reducing our manufacturing cost base, while increasing investment in R&D.
Speaker Change: The marketing our brand and the expansion of our premium posted an offering to drive sales growth and profitability across the business.
Speaker Change: We remain confident that sees a stone can rise to its potential.
Speaker Change: Thank you and I will now turn the call over to <unk> to walk you through the details of our financial performance.
Nahum Trost: Thank you Yosef and good morning everyone. I'm looking at our first quarter results. Global revenue in the first quarter was $118.3 million compared to $150.6 million in the first quarter of last year. On a constant currency basis, sales were down 21%. The decrease was primarily driven by lower volumes due to softer global market conditions. In addition, our sales were impacted by competitive pressure. In the U.S., sales were down 19.8%, mainly tied to soft residential land markets and a less favorable product mix resulted in a lower ASP related to the impact of higher interest rates on the housing market and renovation projects. Partially offset by our commercial on the Big Book Channel, Reuben.
Speaker Change: Thank you Jos and good morning, everyone.
Nahum Trost: Canada's sales were lower by 9.9% on a constant currency basis, experiencing similar market dynamics as the U.S., but to a lesser extent. Australia's sales were off by approximately 17.5% on a constant currency basis, mainly reflecting slower market conditions and an air pocket in sales as we introduce alternative materials that comply with new regulations during the first half of 2024. In Israel, sales were off 39.3% on a constant currency basis in the first quarter, mainly as a result of the war on terror, which has significantly diminished regional activity.
Speaker Change: Looking at our first quarter results.
Speaker Change: Global revenue in the first quarter was $119 $3 million.
Speaker Change: Compared to $156 million in the first quarter of last year.
Speaker Change: On a constant currency basis sales were down 21%.
Speaker Change: The decrease supposed to play literally driven by lower volumes due to softer global market conditions.
Speaker Change: In addition, our sales were impacted by competitive bushels.
Speaker Change: In the U S census was down 19.8%.
Speaker Change: [laughter] tied to software residential end markets and less favorable product mix resulted in lower are you still related to the impact of the higher interest rates on the housing market and renovation projects.
Speaker Change: Partially offset by our commercial and big box channels avenues.
Speaker Change: Canada sales were lower by nine 9% on a constant currency basis.
Speaker Change: And seeing similar market dynamics as the U S, but to a lesser extent.
Speaker Change: Australia sales were off by approximately 17, 5% on a constant currency basis.
Speaker Change: Mainly reflecting slower market conditions, and then there are pocketing cells as we introduce alternative materials that comply with new regulations. During the first half of 'twenty 'twenty four.
Speaker Change: In Atlanta, Central 39, 3% on a constant currency basis in the first quarter, mainly as a result of the war on table, which has significantly diminished regional activity.
Nahum Trost: On a sequential basis, sales in Israel improved 68.9%, which is encouraging. Looking at our first quarter P&L performance, our gross margin was 24.5% for the quarter, and adjusted gross margin was 24.4% compared to 19.7% in the prior year quarter. The notable improvement in our margins on a year-over-year basis is partially due to the enhanced efficiency of our production footprint, a result of our previous restructuring efforts. We believe these enhancements to margin are sustainable and should continue through 2024.
Speaker Change: On a sequential basis sales in Israel improved 68, 9%, which is encouraging.
Speaker Change: Looking at our first quarter P&L performance gross margin was 24, 5% for the quarter. Adjusted gross margin was 24, 4% compared to 19, 7% in the party real quota.
Speaker Change: The notable improvement in our margins on a year over year basis is partially due to the enhanced efficiency of our production footprint as a result of all previously talked to them and get a false.
Speaker Change: We believe these thing hang fence to margin of sustainable and should continue to ramp through 'twenty 'twenty four.
Nahum Trost: The gross margin also reflects roughly 260 basis points of benefits related to the timing of excess inventory sold, mainly in Australia and from our Richmond Hill plan during the first quarter. I would like to take a moment to address the recent trade restrictions imposed by Turkey. We have been sourcing raw materials for several years from Turkey, and the recently announced trade restrictions could have a negative impact on our Barlev plant production in the short term. We are actively seeking alternative sources for raw materials to minimize any potential disruption.
Speaker Change: The gross margin also reflects the roughly 260 basis points of benefit related to the timing effects of inventory sold.
Speaker Change: Mainly in Australia and form our Richmond Hill plant during the first quarter.
Speaker Change: I would like to take a moment to address the recent trade restrictions imposed by Turkey.
Speaker Change: We have been so singular materials for civil use from Turkey.
Speaker Change: And the recently announced trade restrictions.
Speaker Change: They have a negative impact on our belief plans production in the short term.
Speaker Change: We are actively seeking alternative sources for all materials to minimize any potential disruptions.
Nahum Trost: While we anticipate an increase in production costs at our Bar-Lev Manufacturing Facility, due to these restrictions, we do not foresee currently a significant negative impact on our overall financial results. Our operating expenses in the first quarter were $34.6 million compared to $35.5 million in the prior year quarter. Excluding legal settlements and lost contingencies, adjusted operating expenses were 28.6% of revenue, compared to 24.5% in the prior year quarter. The higher percentage mainly resulted from lower revenue.
Speaker Change: While we anticipate an increase in production cost to talk a little about 11 manufacturing facility.
Speaker Change: Due to these restrictions.
Speaker Change: We do not foresee currently a significant negative impact on our overall financial results.
Speaker Change: But I think expenses in the first quarter was $34 $6 million compared to $35 $5 million into part of your quota.
Speaker Change: Excluding legal settlements and loss contingencies adjusted operating expenses were 28, 6% of revenue compared to 24, 5% in the prior real cool too.
Speaker Change: The higher percentage, mainly resulted from the lower revenues.
Speaker Change: Adjusted EBITDA in the first quarter was zero point $6 million relatively stable compared to the zero point $7 million into prior year quarter.
Nahum Trost: Adjusted diluted divisa in the first quarter was $0.6 million, relatively stable compared to the $0.7 million in the prior year quarter. Turning to our balance sheet, Caesarstone has a strong balance sheet with ample liquidity to support its planned strategic objectives. As of March 31, 2024, cash, cash equivalents, and short-term bank deposits totaled $96.2 million, with a total debt to financial institutions of $6.8 million. During the first quarter, we generated another quarter of positive cash flow from operations of $8.7 million.
Speaker Change: Turning to our balance sheet.
Speaker Change: This was sun has a strong balance sheet with ample liquidity to support our planned strategic objective.
Speaker Change: As of March 31st 2024.
Speaker Change: Cash cash equivalents and short term bank deposits total to $96 $2 million with a total debt to financial institutions of $6 million to $8 million.
Speaker Change: During the first quarter, we generated another quarter of positive cash flow from operations of $8 7 million tonnes.
Nahum Trost: Our net cash position as of March 31st, 2024 was $89.4 million compared to $83.5 million as of December 31st, 2024. Regarding our outlook, based on our significant restructuring initiatives underway, our linear operations, and our focus on profitability, we are reiterating our outlook for adjusted EBITDA to be positive for the full year of 2022. In addition, we continue to expect another full year of positive cash flow from operations. Historically, we see a sequential increase in revenues in the second quarter compared to the first quarter due to seasonality.
Speaker Change: Our net cash position as of March 31st 2024 was $89 4 million compared to $83 5 million as of.
Speaker Change: December 31st 2023.
Speaker Change: In regards to all of outlook.
Speaker Change: Based on our significant restructuring initiatives underway.
Speaker Change: Operations and our focus on profitability.
Speaker Change: We already did I didn't go with outlook for adjusted EBITDA to be positive in the full year of 'twenty 'twenty four.
Speaker Change: In addition, we continue to expect another full year of positive cash flow from operations.
Speaker Change: Historically, we see a sequential increase in revenues in the second quarter compared to the first quarter due to seasonality.
Nahum Trost: In regards to the Zloty Am plant closure, which occurred during the second quarter of 2023, and Richmond Hill plant closure, which occurred during January of 2024, we reiterate our expectation to realize savings of $20 million and $30 million thereafter. Additionally, we have begun to sublet portions of our non-cancellable lease agreement associated with the Zotia manufacturing facility, which will allow us to recognize additional cash inflows on top of the planned cost savings. We are also looking for the best alternative to monetize our Richmond Hills property.
Speaker Change: With regards to the plant closure, which occurred during the second quarter of 2020 three.
Speaker Change: In Richmond Hill plant closer which occurred during January of 'twenty 'twenty four.
Speaker Change: Till they thought with expectation to realize savings of $20 million in 'twenty 'twenty, four and 30 million thereafter.
Speaker Change: We have begun to sublease portions of flywheel noncancelable lease agreement associated with the OTR manufacturing facility, which will allow us to recognize additional cash inflows on top over the planned cost savings.
Speaker Change: We are also looking for the best alternative to monetize our Richmond Hill site.
Nahum Trost: In conclusion, our strategic actions to restructure the business and to optimize our co-structure have begun to yield financial benefits, as reflected in this quarter, mainly in our improved gross margin and sustained positive cash flow even on lower volumes. We remain committed to our strategic initiatives that aim to enhance our sales and marketing initiatives, production efficiency, and drive growth in our top line. With that said, we are now ready to open the call for questions.
Speaker Change: In conclusion, our strategic actions to restructure the business and to optimize that will of course talk to have begun to yield financial benefits.
Speaker Change: Reflected in this quarter, mainly in our improved gross margin and sustained positive cash flow even on lower volume.
Speaker Change: We remain committed to our strategic initiatives that aim to enhance our sales and marketing getting each of these.
Speaker Change: Production efficiency and drive growth in our top line.
Speaker Change: With that we are now ready to open the call for questions.
Speaker Change: Yeah.
Speaker Change: Thank you we.
Operator: We will now begin the question and answer session. As a reminder, to ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been answered and you would like to withdraw it, please press star then 2. At this time, we will pause momentarily to assemble our roster, and today's first question comes from Reuben Garner with The Benchmark Company. Please proceed.
Speaker Change: We will now begin the question and answer session. As a reminder to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw it. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Speaker Change: And today's first question comes from Reuben Garner with the benchmark company. Please proceed.
Speaker Change: Yeah.
Reuben Garner: Thanks. Good afternoon, guys. Um, pretty strong gross margin performance despite what was, I think, a weaker volume environment than expected. Can you talk about what kind of surprised you to the upside there and how sustainable that 24% plus level is as we go through the rest of 24?
Reuben Garner: Thanks, Good afternoon guys.
Reuben Garner: Hum.
Reuben Garner: So I.
Reuben Garner: Again, I guess to start pretty strong.
Reuben Garner: Gross margin performance, despite what what.
Reuben Garner: I think a weaker volume environment than expected can you talk about what kind of surprised you to the upside there and how sustainable that that 24% plus level is as we go through the rest of the 24.
Nahum Trost: Hi Reuben, it's Nahum. The growth margin mostly reflects the restructuring actions that we already took in the last year. We mentioned roughly 260 basis points of excess inventory that we expedited itself in connection with the closure of the Richmond Hill plant and in connection with future regulations in Australia. So we expedited the sale of certain inventory items. So these items are significantly higher than usual, the 260 basis points. But other than that, we benefited from the restructuring actions, specifically from a favorable production source mix, better prices on raw materials, and basically lent costs. This is on the positive side. On the other hand, as you also mentioned, the volume was a negative impact, and also the significant unfavorable product mix that resulted in lower margins.
Speaker Change: Hi, Robin it's nothing.
Speaker Change: So.
Speaker Change: The gross margin are more.
Speaker Change: Mostly reflects the restructuring actions.
Speaker Change: That we already took in the last year.
Speaker Change: We we mentioned are roughly 260 basis points of.
Speaker Change: Excess inventory that we expedited our I'd sales in connection with the closure of the Richmond Hill plant and in connection with the <unk>.
Speaker Change: Future regulations in Australia, So we expedited the sale of Oh Hilton inventory items. So these items is significantly higher than usual, the 260 basis points, but other than that.
Speaker Change: We benefited from the restructuring actions specifically from a you know a favorable pro.
Speaker Change: Adoption solves makes better prices on raw materials and landed cost basically this is on the positive side on the other hand as he also mentioned the volume was a negative impact and also the and also the significant.
Speaker Change: Unfavorable product mix.
Speaker Change: That resulted in lower margins.
Speaker Change: But may and June.
Speaker Change: One man just yet.
Yosef Shiran: [inaudible] Reuben, may I just add that, in general, it also reflects the heavy restructuring that we have been going through in the last year, and I think that our platform is stronger, and we estimate that we will continue to see the benefits of that, also in the gross margin.
Speaker Change: But in general it.
Speaker Change: It reflects the and heavy restructuring that too we have been going through in the last year.
Speaker Change: And I think that our platform is stronger and we will.
Speaker Change: We estimate that we will continue to see the benefits of that in also in the gross the gross margin.
Reuben Garner: So how much revenue, how much did revenue benefit from the accelerated sales of some of those? [inaudible]
Speaker Change: So how much revenue how much the revenue benefit from that.
Speaker Change: It accelerated sales estimable.
Speaker Change: Channel inventory.
Speaker Change: Okay.
Reuben Garner: Sorry, Reuben, can you repeat, please? The line was breaking.
Speaker Change: So can you repeat please the language braking.
Reuben Garner: Sorry about that. How much did revenue benefit from the accelerated sale of that inventory?
Speaker Change: Oh, sorry about that yes.
Speaker Change: How much did revenue benefit from the accelerated sale of that inventory.
Nahum Trost: So it was 260. How much revenue? In terms of revenue, it wasn't that significant, but those items were, you know, fully covered with inventory provision, so it had a significant impact, mainly on the gross margin.
Speaker Change: So it was 260 bps, how much revenue in in terms of revenue it wasn't it wasn't that significant but.
Speaker Change: Those items with.
Speaker Change: You know fully covered with inventory provision. So we've had a significant impact mainly on the gross margin.
Speaker Change: Yeah.
Reuben Garner: Okay, I got it. And your outlook for the full year to be break even on EBITDA, what sort of revenue number do you need to achieve that? I mean, you were breakeven in the first quarter at $118 million. I know you had a little bit of help from the one-time inventory item, but what do we think about that? What four-year revenue target do you need to hit to achieve break even?
Speaker Change: Okay I got it.
Speaker Change: Your outlook for the whole year to be breakeven on.
Speaker Change: On EBITDA, what sort of revenue number do you need to achieve.
Speaker Change: That I mean, you were breakeven in the first quarter at $118 million I know you had a little bit of help from the one time inventory.
Speaker Change: Oh hi.
Speaker Change: Item, but but how.
Speaker Change: How do we think about that with full year revenue target do you need to hit to achieve that breakeven.
Nahum Trost: So we do not provide specific guidance on revenues for the full year, but as we discussed previously, we do expect to see the same seasonality trend that we used to see in previous years, meaning Q1, you know, the lowest quarter, and then improvement in Q2 and Q3, and Q4 is slightly lower than the second and third quarters. This is in terms of revenues, and we do expect to be, you know, to show higher... and I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm And with regard to the outlook, we reiterated that we expect a positive EBITDA for the full year and also a positive operating cash flow.
Speaker Change: So we do not provide specific guidance on revenues for the full year, but Uh huh.
Reuben Garner: How much of the $20 million in savings has been realized thus far?
Nahum Trost: The $20 million is the number for the full year, so basically, one quarter, and we expect to gain more and more savings as we continue through 2024, again on the back of closing the Richmond Hill plan.
Speaker Change: As we discussed also previously we do expect to see the same seasonality trends that we used to see in previous years, meaning a Q1 are.
Speaker Change: You know and the.
Speaker Change: The lowest quarter, and then improvement in Q2, and Q3 and Q4.
Speaker Change: This is slightly lower than the second than the third quarter. This is in terms of Ah.
Speaker Change: In terms of revenue and we do expect to be you know to show higher.
Speaker Change: Paul Fitz, Ohio margins as we continue through 2020 full as we complete our dermal expensive inventory that came from Richmond Hill plant.
Speaker Change: And as our restructuring actions are taking.
Speaker Change: Oh I was taking the most significant most of them will give us.
Speaker Change: The most significant impact on the overall results.
Speaker Change: And with regard to the outlook, we reiterated that we expect the positive EBITDA for the full year and also a positive operating.
Speaker Change: Operating cash flow.
Speaker Change: How much of the $20 million in savings has been realized.
Speaker Change: Thus far.
Speaker Change: The 21.
Speaker Change: $20 million is the number for the full year. So you know basically one quarter.
Speaker Change: We expect to benefit and we expect to gain more and more savings as we continue through 2020 full again on the back of closing the Richmond Hill plant.
Reuben Garner: Okay, thanks guys, I appreciate it; good luck.
Speaker Change: Okay. Thanks, guys I appreciate it good luck.
Speaker Change: Thank you.
Operator: And the next question comes from Stanley Elliott with Stifel. Please proceed.
Speaker Change: And the next question comes from Stanley Elliott with Stifel. Please proceed.
Stanley Stoker Elliott: Hey guys, this is Andrew on behalf of Stanley. Thank you for taking my question. I think you said that U.S. big box stores were holding up relatively better than other parts of the business. I'm wondering if you could expand on that. What's your outlook for repair and remodel for this year, and then do you have any commentary on inter-quarter trends or even trends you've seen for U.S. volumes into April?
Speaker Change: Hey, guys. This is Andrew on for Stanley. Thank you for taking my question.
Andrew: I think you said that U S. Big box stores are holding up relatively better than other parts of the business I'm wondering if you could expand on that.
Speaker Change: What's your outlook for repair and remodel.
Speaker Change: For this year and then do you have any commentary on intra quarter trends or even trends you've seen for U S volumes into April.
Speaker Change: Okay.
Yosef Shiran: Hi, and thanks. Yeah, so in general, we perform better in the big boxes than in the residential segment. We cannot say that we have, you know, a global analysis of why it is happening. We believe that high interest rates... The activity on the residential side. On the other hand, big boxes are still doing well, and so are we within these channels. And, uh... Again, going forward, we will continue to expand our activity and our effort in all the channels in the States as well as in other places, in other markets like Canada and Australia. In the States specifically, we will see more effort in the contractors and developer segment, and we hope that step by step, we will also see improvement in the residential segment.
Speaker Change: Hi.
Speaker Change: Thanks, Yeah. So in general we performed better in the big boxes than in the residential segment.
Speaker Change: We cannot say that we have you know the.
Speaker Change: Global analysis of why is it happening.
Speaker Change: We believe that high interest rate.
Nahum Trost: Reduce or depressed.
Speaker Change: The activity on the residential side.
Speaker Change: On the other hand, the big boxes are still doing well.
Speaker Change: And so how cells within these channels.
Speaker Change: And again going forward, we will continue to expand our activity in our airports in all the channels are in the states as well as in other places in other markets like Canada like like Australia.
Yosef Shiran: In the states specifically, we will we will see a more airport.
Yosef Shiran: On the.
Yosef Shiran: Contractors.
Speaker Change: <unk> developed this segment.
Yosef Shiran: And.
Yosef Shiran: We hope that the step by step we will also see improvement in the residential segment.
Stanley Stoker Elliott: And then, I'm wondering if you could give us an update on the porcelain rollout, how it is going, and what early feedback from customers has been like so far.
Speaker Change: And then I'm wondering if you could give us an update on the porcelain rollout how's that going and what is early feedback from customers been like so far.
Yosef Shiran: So are you referring to the role in the States or in other areas?
Speaker Change: So are you relating to the rollout in the states or in other areas.
Stanley Stoker Elliott: U.S.
Yosef Shiran: Yes.
Speaker Change: The U S.
Stanley Stoker Elliott: Yes.
Yosef Shiran: We started to offer porcelain in the States. Overall, the porcelain activity is still small for Caesarstone but very promising. We are investing a lot in expanding the collection, improving it, and offering additional products within the porcelain realm. So, it's not significant yet in terms of numbers, but it is very important in terms of the potential for the future of Caesarstone.
Speaker Change: Yes so.
Speaker Change: Yes, we started to offer the porcelain in auto lending in the states overall porcelain activity is still.
Yosef Shiran: Smaller foresees, a stone, but very promising.
Yosef Shiran: We are.
Yosef Shiran: Investing a lot.
Yosef Shiran: And in expanding the collection and improving it.
Yosef Shiran: Oh offering additional.
Yosef Shiran: Products within the postal in area one.
Yosef Shiran: So it's not significant yet in terms of numbers.
Yosef Shiran: But it is a very important in terms of the potential for <unk> in the feed for the future of Caesar stone.
Stanley Stoker Elliott: And then last one for me, I was wondering if you could quantify how much inventory is left at the Richmond Hill plant and when you would expect that to hit cash flows or earnings. Thanks.
Speaker Change: And then last one for me.
Stanley Stoker Elliott: I Wonder if you could quantify how much inventory is left at the Richmond Hill plant and when you would expect that to hit cash flows or our earnings. Thanks.
Nahum Trost: So the majority of the inventory was, you know, sold and digested through Q1, and it is also reflected in the gross margin, as we discussed in the earnings. But, and to a lesser extent in Q2, so basically, most of it was done in Q1. Let's say that after Q2, we will not see the negative impact of the old inventory of rich models.
Speaker Change: So the majority of so the majority of the inventory was was you know are sold and they just did a through Q1 and it is also reflected.
Nahum Trost:
Nahum Trost: In the gross margin as we discussed in the earnings, but and to a lesser extent in Q2, so basically.
Nahum Trost: Most of it is done in Q1, let's say that after Q2, we will not see the negative impact of the all in Bulgaria.
Nahum Trost: For each model.
Nahum Trost: Yeah.
Nahum Trost: Okay.
Speaker Change: Thank you.
Speaker Change: Thank you.
Nahum Trost: Okay.
Yosef Shiran: And at this time, this concludes our question and answer session. I would now like to turn the conference back over to Yosef Shiran for any closing remarks.
Nahum Trost: And at this time. This concludes our question and answer session I would now like to turn the conference back over to Yosef <unk> for any closing remarks.
Yosef Shiran: Yeah, thank you, and thank you all for your attention this morning, and we look forward to updating you on our progress next quarter. Bye.
Yosef Shiran: Yeah. Thank you and thank you all for your attention. This morning, and we look forward to updating you on our progress next quarter.
Speaker Change: Thank you.
Operator: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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