Caesarstone Reports Record 2Q 2014
MP MENASHE, Israel – Caesarstone continued its steady double-digit growth this year with a 30.4% increase in worldwide revenues in the second quarter.
Yosef Shiran, Caesarstone CEOThe quartz-surfaces company also reported, in its earnings briefing yesterday with Wall Street stock analysts, that all its expansion plans are moving ahead, including a new U.S. manufacturing plant in southeast Georgia next year.
And, Caesarstone’s supply of surfaces to IKEA stores here also showed up on the bottom line … in a somewhat unexpected place.
Worldwide revenues in 2Q 2014 totaled $116.1 million – a new quarterly record for the company – compared to $89.0 million in the same quarter last year. Growth in revenues was primarily driven by continued increases in the United States, which grew 55.0% to $47.9 million, as well as contributions from Australia, Canada and other regions.
“This was a strong quarter with significant growth,” said Yosef Shiran, Caesarstone CEO. “Market demand for our products is robust and the Caesarstone brand continues to be a market leader, known for quality and innovative design. We are operating well, controlling our costs and growing our capacity to meet the demand for our products.”
Gross margin in the second quarter was 41.0% compared to 49.8% in 2Q 2013. Company officials noted that 2Q 2014 one-time charges this year included $0.8 million of non-recurring cost related taxable employee fringe benefits, and it posted a second-quarter credit last year of $3.5 million relating to inventory value.
The second-quarter gross margin decline of 4.2 % year-over-year included the effects of foreign exchange fluctuations. And, as turns out, the company’s IKEA contract played a role.
Caesarstone officials noted strong growth from IKEA in 2Q 2014. However, that also included a significant portion of lower-margin fabrication and installation revenue.
Caesarstone now estimates 2014 full-year worldwide revenues to be somewhere between $435 million and $445 million. Previous, its 2014 revenue forecast was $420 million to $430 million.
Company officials also noted indicated that Caesarstone remains on schedule for its Richmond Hill, Ga., manufacturing plant to be operational in 2Q 2015, with a second production line set to run by the end of next year.
Caesarstone bumped its estimate of costs by $15 million, noting that the adjusted total of $115 million, will now accommodate improvements in operations, including upgraded machinery for higher manufacturing capacity. The company will initiate steps towards establishing its second building in Richmond Hill to accommodate additional manufacturing capacity in the future, “as needed to satisfy potential demand.”
