Caesarstone Q1 2025 Earnings Report
Caesarstone Ltd., a global leader in the development and manufacturing of premium engineered surfaces, today released its financial results for the first quarter ended March 31, 2025, revealing a period of modest sequential improvement amidst a persistent and challenging global economic environment. The company highlighted its ongoing efforts to stabilize its business, advance strategic initiatives, and navigate emerging headwinds, including recently imposed U.S. tariffs.
Yos Shiran, Chief Executive Officer of Caesarstone, acknowledged the complexities of the current market landscape. “We delivered modest sequential improvement this quarter as our business continues to stabilize in a challenging market environment,” commented Shiran. “These results reflect our ability to effectively navigate a complex global landscape while advancing key initiatives that are designed to transform our business for long-term success. Our manufacturing optimization efforts are already yielding measurable benefits, our porcelain expansion is gaining momentum, and we anticipate that our R&D investments will drive growth.”
Despite the progress in its internal initiatives, Caesarstone is closely monitoring external factors that could impact its performance. “While we are carefully monitoring the impact of recently imposed U.S. tariffs, our strong balance sheet and operational flexibility leave us well positioned to manage near-term headwinds as we continue to build a more agile, innovation and marketing driven organization well equipped to capture long-term growth opportunities,” Shiran added, underscoring the company’s resilience and strategic focus.
First Quarter 2025 Financial Performance:
Caesarstone reported revenue of $99.6 million for the first quarter of 2025, a decrease compared to the $118.3 million reported in the same period of the prior year. On a constant currency basis, revenue declined by 14.5% year-over-year, primarily driven by lower sales volumes. The decrease in volume was attributed to prevailing global economic headwinds across the Company’s key regions, leading to reduced demand and heightened competitive pressures within the market.
The company’s gross margin for the first quarter of 2025 was 21.3%, down from 24.5% in the first quarter of 2024. The adjusted gross margin also reflected a similar trend, coming in at 21.2% compared to 24.4% in the prior year. This contraction in gross margin was primarily due to an unfavorable product mix and lower overall production volumes, which resulted in reduced absorption of fixed manufacturing costs. These negative impacts were partially offset by the positive effects of the company’s ongoing efforts to optimize its production footprint.
Operating expenses for the first quarter of 2025 totaled $35.9 million, representing 36.1% of revenue, compared to $34.6 million, or 29.2% of revenue, in the prior year quarter. Excluding legal settlements and loss contingencies, as well as restructuring and impairment expenses, operating expenses as a percentage of revenue increased to 32.6% from 28.6% in the prior year, primarily due to the decline in overall revenues.
As a result of these factors, Caesarstone reported an operating loss of $14.8 million in the first quarter of 2025, a widening from the $5.6 million operating loss in the corresponding period of 2024. This increase in operating loss primarily reflected the lower gross profit and higher legal settlements and loss contingencies incurred during the quarter.
Adjusted EBITDA for the first quarter of 2025, which excludes specific non-recurring items, resulted in a loss of $7.1 million, a significant shift from the $0.6 million gain reported in the first quarter of the previous year.
Finance income for the first quarter of 2025 was $2.5 million, an increase from the $0.7 million reported in the prior year quarter. This difference was primarily attributed to fluctuations in foreign currency exchange rates.
The net loss attributable to controlling interest for the first quarter of 2025 was $12.9 million, compared to a net loss of $5.1 million in the first quarter of 2024. Consequently, the net loss per share for the first quarter of 2025 was $0.37, compared to a net loss per share of $0.15 in the prior year. The adjusted diluted net loss per share for the first quarter was $0.29, based on 34.6 million shares, compared to an adjusted diluted net loss per share of $0.13 on 34.6 million shares in the prior year quarter.
Balance Sheet and Liquidity:
As of March 31, 2025, Caesarstone maintained a solid financial position with cash, cash equivalents, and short-term bank deposits totaling $88.8 million. The company’s total debt to financial institutions remained relatively low at $3.5 million, resulting in a strong net cash position of $85.3 million.
U.S. Tariffs Update:
Caesarstone addressed the recent announcement by the U.S. government regarding new tariffs on various imported products, including a current 10% tariff on the majority of imported goods. The U.S. market accounts for approximately 49% of the Company’s revenues, served by its global production network. While the full impact of these tariffs remains uncertain, Caesarstone is actively engaging with its manufacturing partners to optimize its supply chain and is also evaluating potential pricing adjustments within the U.S. market to mitigate the impact.
Legal Proceedings Update:
As of March 31, 2025, Caesarstone was involved in ongoing legal proceedings related to 357 individuals alleging injuries from exposure to respirable crystalline silica dust. These lawsuits are distributed geographically, with 51 in Israel, 130 in Australia, and 176 in the United States. The Company has recorded a provision of $50.0 million to cover its estimated probable and estimable exposure related to these pending claims, while its insurance receivables for silicosis-related claims totaled $31.6 million. The Company has assessed the remaining 174 claims in the U.S. and currently believes that a loss is only reasonably possible or that these claims are still in the early stages of litigation. Caesarstone cautioned that changes in the assessment of these claims or insurance coverage could have a material adverse impact on its financial results.
Outlook:
Nahum Trost, Caesarstone’s Chief Financial Officer, provided an update on the company’s outlook. “We are on track to realize the full benefits of our cost optimization initiatives and strategic investments for 2025. However, given the persistent macroeconomic pressures across our global footprint and the recently imposed U.S. tariffs, we are withdrawing our full year outlook provided on March 5, 2025 as we assess the potential direct and indirect impacts on our 2025 results.”
Despite the withdrawn outlook, Trost reiterated the company’s strategic focus. “Even so, we remain focused on the disciplined execution of our transformation while continuing to invest strategically in innovation and marketing to drive long-term profitable growth,” concluded Trost, emphasizing Caesarstone’s commitment to building a more resilient and growth-oriented organization despite the current market uncertainties.
