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Caesarstone Reports Third Quarter 2012 Results

Stocks in this article: CSTE

Caesarstone Sdot-Yam Ltd. ( CSTE), a manufacturer of high quality engineered quartz surfaces, today reported financial results for its third quarter ended September 30, 2012.

Revenues in the third quarter of 2012 increased by 4.6% to $77.6 million compared to $74.2 million in the same quarter in the prior year. Growth in revenues was predominantly driven by continued increases in sales in the United States and Canada, up 17.7% and 29.1% respectively, compared to the same period in the prior year. Revenue growth was partially offset by the impact of a stronger US Dollar and a challenging housing market in Australia. On a constant currency basis, third quarter revenue growth was 8.5% compared to the same period last year.

Yosef Shiran, Chief Executive Officer, commented, “We are very pleased with our third quarter, which set a record for any quarter in our history for both sales and profitability. We are positioned as the highest quality quartz brand and are successfully executing our global growth strategy.”

Gross margin in the third quarter increased to 45.0% compared to 42.4% in the same period in the prior year. This improvement was driven primarily by economies of scale over fixed manufacturing expenses and favorable geographical revenue mix. While changes in foreign exchange rates impacted revenue negatively, they also reduced cost of goods sold equally, eliminating the impact on gross profit and thereby increasing gross margins.

Operating expenses in the third quarter were $18.2 million, or 23.5% of revenues. This compares to the prior year’s third quarter’s level of $17.8 million, or 24.1% of revenues. The Company noted that the year-ago quarter contained a litigation credit of $1.8 million and adjusting for that, operating expenses were down approximately 7% compared to the prior year. This reduction was driven mainly by the elimination of management fees, and favorable foreign exchange rates. While overall expenses declined, the Company noted that it had increased sales and marketing expenses by 11.6% compared to the same quarter in the prior year.

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