Source: Caesarstone

Quartz surface manufacturer Caesarstone (NASDAQ:CSTE) posted fourth quarter earnings results on Feb. 10 that showed healthy sales gains on a global basis. Yet growth in the U.S., its biggest market, slowed down, and profitability shrunk as management spent heavily on investing in the business.

Here's a look at how the headline results stacked up against the prior-year period.


Q4 2015 Actuals

Q4 2014 Actuals

YoY Growth


$127 million

$114 million


Net Income

$19 million

$21 million






Source: Caesarstone financial filings

What happened this quarter?
Overall sales growth was 12% -- 21% after accounting for foreign exchange-rate swings -- which brought the company exactly to management's full-year forecast of $500 million of revenue. Other highlights of the fourth quarter include:

  • Growth in the U.S. market slowed to 14% from 22% and 19% in the third and second quarters, respectively. For the full year, the U.S market grew 20% compared to a 50% spike in 2014.
  • Demand increased sharply in Australia and Canada, helping global growth come to 21%, or a slight decrease from the prior quarter's 24% jump.
  • Gross margin dove to 38% of sales from 43% last year despite lower raw material costs. That benefit was overwhelmed by increasing expenses from Caesarstone's new production facility in the U.S.
  • Operating expenses ticked down to 20% of sales from 23%.
  • Bottom line operating income slipped by 2% to $22.6 million.

What management had to say
"We are pleased with our results for the quarter and year," CEO Yosef Shiran said in a press release. "We successfully grew our business, accomplished the opening of our new manufacturing facility in the United States, strengthened our brand leadership position around the world, introduced new, innovative designs and expanded our product offering," he said.

Reflecting their "commitment to drive value to shareholders," management announced a new $40 million share repurchase program. The company should have no problem funding buybacks at that level, as it carried $63 million of cash on its books as of Dec. 31 and generated $86 million of operating cash flow last year, up from $76 million in 2014.

Looking forward
For the year ahead, Shiran and his executive team see reported revenue rising between 10% and 13% to as high as $565 million, which would closely track the pace of growth in 2015.

Caesarstone didn't issue guidance on gross or operating profitability, but it does expect EBITDA to come in at $141 million at the midpoint of guidance. That result would equate to a 25% EBITDA margin this year, on the par with the 25% it logged in 2015 and 26% in 2014.

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