Post Earnings Coverage as Caesarstone's Top- and Bottom-line Results Outperformed Expectations
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LONDON, UK / ACCESSWIRE / May 31, 2017 / Active Wall St. announces its post-earnings coverage on Caesarstone Ltd (NASDAQ: CSTE). The Company reported its first quarter fiscal 2017 financial results on May 10, 2017. The maker of quartz surface slabs reported that sales increased by 16.7% on a y-o-y basis. Register with us now for your free membership at:
One of Caesarstone's competitors within the General Building Materials space, Martin Marietta Materials, Inc. (NYSE: MLM), reported on May 02, 2017, financial results for Q1 ended March 31, 2017. AWS will be initiating a research report on Martin Marietta Materials in the coming days.
Today, AWS is promoting its earnings coverage on CSTE; touching on MLM. Get our free coverage by signing up to:
For the quarter ended March 31, 2017, Caesarstone's revenue increased by 16.7% to $136.4 million compared to revenue of $116.9 million in Q1 2016. On a constant currency basis, the Company's reported quarter revenue grew 14.5%. Caesarstone's revenue numbers came in ahead of analysts' consensus of $124.97 million.
For Q1 2017, Caesarstone's gross profit increased to $49.2 million, a margin of 36.1%, compared to gross profit of $42.6 million, a margin of 36.5% in Q1 2016. The slight decrease in margin was driven primarily by higher manufacturing costs in Israel related to new product introduction; higher portion of revenue from IKEA, which incorporates a low margin fabrication and installation component; and increased raw material costs.
Caesarstone's operating expenses in Q1 2017 totaled $34.1 million, or 25.0% of revenues, compared to operating expenses of $28.4 million, or 24.3% of revenues, in Q1 2016. The Company's operating income in the reported quarter was $15.1 million, a margin of 11.1% versus $14.2 million, a margin of 12.2%, in the year earlier same quarter. Caesarstone's adjusted EBITDA increased to $24.3 million, a margin of 17.8%, compared to 23.0 million, a margin of 19.7%, in Q1 2016.
Caesarstone's reported net income attributable to controlling interest of $11.1 million for Q1 2017 compared to $11.8 million in Q1 2016, driven mainly by higher finance expenses. Diluted net income per share for the reported quarter was $0.31 compared to $0.33 per diluted share for the prior year's same quarter. On an adjusted basis, Caesarstone's net income per diluted share in Q1 2017 was $0.36 compared to $0.38 in Q1 2016. The Company's earnings surpassed Wall Street's expectations of $0.27 per share.
Segment Results
During Q1 2017, Caesarstone's revenue from the United States increased 17.7% to $58 million compared to $49.3 million in Q1 2016. In Australia, the Company's sales in the reported quarter totaled $29.5 million, up by 14.8% compared to $25.7 million in the prior year's corresponding quarter. On a constant currency basis, Australia was up by 9%, reflecting a robust growth, given the ongoing soft housing condition within the region. Caesarstone's sales in Canada surged 26.4% to $22.3 million in Q1 2017 against last year's $17.6 million. On a constant currency basis, growth in Canada was 22.2%, driven by good IKEA business. The Company stated that it has grown in Canada by over 70% on a constant currency basis with significant growth coming both from the core market and from its relationship with IKEA.
For Q1 2017, Caesarstone' sales in Israel were $11.7 million, up by 13.8% on a y-o-y basis. On a constant currency basis, sales were up by 7.4%. The Company's sales from the European region in the reported quarter were $6.4 million, down by 2.8% on a y-o-y basis. On a constant currency basis, sales were down by 0.3%. Caesarstone's revenue in the rest of the world grew at a rate of 15% to $8.5 million compared to $7.4 million in the prior year's same quarter. On a constant currency basis, revenue growth was 17.6%.
Balance Sheet
Caesarstone' balance sheet as of March 31, 2017, included cash, cash equivalents, and short-term bank deposits of $121.0 million versus $106.3 million on December 31, 2016, and $59.9 million on March 31, 2016. During the reported quarter, the Company generated $30 million in free cash flow.
Guidance
Caesarstone reiterated its full-year 2017 guidance for revenue of $580 million to $595 million and for full-year adjusted EBITDA of $119 million to $126 million.
Stock Performance
Caesarstone's share price finished yesterday's trading session at $37.55, slipping 1.31%. A total volume of 133.50 thousand shares exchanged hands. The stock has soared 12.43% and 32.45% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the Company have soared 31.06%. The stock is trading at a PE ratio of 17.55 and currently has a market cap of $1.29 billion.
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