Q3 2025 Caesarstone Ltd Earnings Call

Greetings and welcome to the Caesar Stone. Third quarter 2025 earnings conference call.

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A brief question and answer session will follow the formal presentation.

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As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host. Brad. Kay of icr, thank you. And you may begin

Thank you, operator. And good morning to everyone on the line.

I am joined by yoss. Sharan Caesar Stones, chief executive officer.

In the home, trust Caesarstone's Chief Financial Officer.

Stuart and statements in today's conference call and responses to various questions, May constitute for 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 20f and subsequent filings with the SEC.

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 for share.

Adjusted gross profit, adjusted, divida and constant currency.

The reconciliation of these non-gaap measures to the most directly comparable. Gaap measures can be found in the company's third quarter 2025 earnings release, which is posted on the company's investor relations website.

On today's call, Yos will discuss our business activity and the whom 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 yios. Please go ahead.

Thank you, Brad and good morning everyone. Thank you for joining us to discuss our third quarter, 2025 results.

We are rapidly advancing, the transformation of our business model to focus on Innovation, product, development and marketing.

while we continue to be deeply involved in the production and quality control activities with our production business partners,

we are investing in strengthening the Caesar Stone brand, expanding our postal and offering and enhancing our R&D capabilities.

As part of these strategic transformation and following careful evaluation, we have decided to move our production to our Global manufacturing partners.

And close by live manufacturing activity. In order to further optimize our production footprint.

This strategic action is intended to increase competitiveness, improve our profitability and cash flow and hence service and drive additional cost savings.

These actions are expected to generate annualized cash savings of approximately, 22 million and bring total savings.

Since 2023 to over 85 million.

Since launching our transformation strategy in 2023, we have fundamentally reshaped Caesarstone.

Currently over 70% of our production is sourced through Global Partners and upon completion of the BV closure.

We will reach 100%. Outsourced production, excluding porcelain, where we continue to operate and invest in our plant in India.

These actions are necessary steps in reinforcing our competitive position and enabling a return to positive adjusted earnings in the third quarter of next year.

But our transformation goes beyond manufacturing efficiency and cost savings. We are building a company focused on Innovation Brands. Thanks and customer value creation.

With a lighter Capital production assets.

Of lowly bringing our ownership to 100%.

This acquisition.

Feather strengthens our position in this expending category.

And enables us to capture new market opportunities.

To conclude Caesar stone is a different company.

We are more agile, more Innovative and better positioned.

To scale efficiently as we move forward towards profitable growth over the long term.

I now,

Turn the call over to Nahum to review our financial results.

Thank you. Yes, and good morning everyone.

Looking at our third quarter results, Global Revenue was 102.1 million.

Compared to 107.6 million in the prior quarter.

On a constant currency basis.

Third quarter Revenue decreased by 5.7% year-over-year.

To lower volumes reflecting continued, global economic, headwinds, and competitive pressures.

We have seen Revenue levels stabilized in recent quarters, which is encouraging.

Breaking down our original performance, in the U.S., sales were down 10.9% to $46.7 million.

The decline was driven by persistent softness in the market and competitive pressure.

Another search decreased by 10.8%, on a constant currency basis with similar market dynamics as the US.

Australia improved this quarter with sales up 8.5% on a constant currency basis. Our first year of the Year growth in this market, since the silica ban implementation.

EMA delivered, strong performance with sales up 12.4% on a constant currency basis.

Our expanded presence in Germany, contributed positively.

Israel sends increased by 2.5% on a constant currency basis as market conditions, continue normalizing,

now, looking at our third quarter pnl performance,

Go smaller in the South Quarter was 17.3% compared to 19.9% in the prior quarter.

The decline was primarily due to lower volumes and production which resulted in lower fixed cost absorption.

And cost associated with ramping up new products.

These factors were partially offset by benefits from the Council of production to our Global Network.

Operating expenses in the third quarter, were 33.7 million or 35% of Revenue.

Compared to 25.4 million or 23.6% of Revenue in the prior quarter.

Excluding legal settlements and loss contingencies and restructuring and impairment expenses.

Operating expenses were $29.7 million, or 29.1% of revenue.

Compared to 30.2 million or 28.1% in the prior year quarter.

In absolute dollars, we reduced expenses by approximately half a million.

With the higher percentage, primarily driven by lower revenues.

Just a dividend in the third quarter. Was a loss of 7.9 million compared to a loss of 4.1 million in the prior quarter.

Finance expenses was 1.8 million compared to finance income of 0.3 million in the prior quarter. Primarily due to foreign currency exchange, rate fluctuations.

Adjusted diluted net loss per share for the third quarter was 40 cents on 34.6 million shares.

Compared to adjusted net loss per share of 24 cents in the prior quarter on 35 million shares.

Turning to our cash line, balance sheet as of September 30, 2025.

We had cash and short-term deposits.

Of $69.3 million and total debt to financial institutions of $2.6 million for a net cash position of $66.7 million.

Now, let me provide important context on several items.

The facility closure that you just mentioned will generate significant 1-time charges and ongoing savings.

2026.

These estimates exclude a potential non-cash Rider on the facility list, which runs through 2032 and which we plan to service.

Once full implemented, we expect annualized case Savings of approximately 22 million with additional potential savings from sub listing the facility.

Combined with prior cost, reductions our total annualized savings will exceed 85 million compared to 2022.

The separately with regard to our Rich M Hillside discussion, our progressing with the potential buyer to acquire the site at the price that is approximating its books value.

Regarding your service.

We continue to monitor the impact of existing and proposed use stories affecting various countries and product categories that are currently in a wide range on the majority of imported products.

approximately 48% of our revenues during the first 9 months of 2025 were generated in the US market, served by our Global Production Network,

We are in continuous dialogue with our manufacturing Partners to optimize our supply chain and recently announced the price increase in the US market in order to mitigate the increased cost of goods imported to the US.

in addition, to these tariffs on September 15 2025,

A petition was filed with the ITC by a U.S. court manufacturer, alleging serious injury caused to the entire U.S. domestic industry.

By Imports of quotes surface products.

taking hard quarters of the quantity of quote, surfaces products that can be imported into the US and or

Tariffs of up to 50% on all Quote, surfaces products that are imported into the US for many countries.

Hundreds of objections were received to this petition by us domestic businesses including Fabricators. And the process is in a very early stage.

On legal proceedings.

As of September 30th 2025. We had 514 lawsuits alleging City recall, related injuries.

This included 43 in Israel, 151 in Australia and 320 claims in the US.

We have recorded the 46 million provision representing our best estimate of overall losses with 24.3 million dollars in insurance or services.

In the US during 2025 we won 1 case which remains under appeal and settled another in 2024. We received 1 adverse verdict which is also currently under repeat

Remaining U.S. claims are in early stages or losses only reasonably possible.

Even the complexity of the preliminary nature of this matters, we cannot reasonably estimate potential losses beyond our current position.

We in certain insurance carriers initiated proceedings in July 2025.

Regarding the interpretation of our insurance coverage. This proceeding is in the early stages.

A bill titled.

the protection of lawful Commerce in stone slab products Act was introduced in the House of Representatives

The proposed legislation.

Aims to ensure that manufacturing and Distributors are not held liable for injuries caused by unsafe fabrication or alteration performed by Third parties.

While it remains in early stages and there is no guarantee of adoption into law. We see this as a constructive step toward restoring fairness and balance across the stone product supply chain.

Before we conclude, let me reinforce a few key points.

Third quarter results, reflect stabilizing Trends in our Top Line compared to recent quarters.

The structural transformation of our business is proceeding in line with our plan.

Combined with over 85 million dollars in cost savings, we have fundamentally repositioned seasonal stone for a long term growth. And we have a line of sight to reach positive, adjusted DBA in the third quarter of 2026.

With that, we are now ready to open the call for questions.

Thank you.

We will now begin the question and answer session.

to ask a question, you may press star then 1 on your touchtone phone,

if you are using a speaker phone, please pick up your handset before. Pressing the keys.

And you would like to withdraw your question. Please. Press star then 2

At this time, we will pause momentarily to assemble our roster.

There are no further questions.

This concludes our question-and-answer session.

I would like to turn the conference back over to your surround for any closing remarks.

Thank you for your attention this morning as we close out 2025 and move into 2026. Our team remains focused

on executing our transformation plan and positioning Caesar stone for sustainable profitable growth.

We appreciate your continued support and look forward to updating you on our progress next quarter.

Thank you.

The conference has now concluded, thank you for attending today's presentation. You may now disconnect. Thank you.