Q2 2026 Caesarstone Ltd Earnings Call Transcript
Key Points
- Gross margin improved significantly to 24% in Q2 2026, up 440 basis points year-over-year, driven by cost savings from the closure of the Bar-Lev facility and the transition to a global production partner network.
- Adjusted EBITDA loss narrowed sharply to $1 million from $6.4 million a year ago and $7.5 million in Q1 2026, reflecting the success of restructuring actions.
- Australia delivered its fourth consecutive quarter of year-over-year growth, with revenue up 10.1% on a constant currency basis, supported by the zero-silica Icon collection.
- The company strengthened its big-box channel in North America, with revenue growing approximately 3% year-over-year, driven by strong growth with IKEA.
- Caesarstone Ltd (CSTE) maintained a strong balance sheet with a net cash position of $51.8 million and repaid its credit facility, leaving no outstanding debt to financial institutions.
- The company received a favorable defense jury verdict in a Colorado silica claim and resolved four claims in California, demonstrating progress in legal defense.
- Restructuring actions are expected to generate annualized savings of more than $100 million by 2027, with the Bar-Lev closure alone contributing $22 million in annualized cash savings.
- Global revenues declined 7.7% year-over-year on a constant currency basis, reflecting competitive pressures and soft market conditions, particularly in North America.
- U.S. revenue decreased 14.1% year-over-year to $42.7 million, driven by lower volumes in the core business and soft conditions in the commercial channel.
- Canada revenue fell 17.5% on a constant currency basis, due to fewer housing completions and slow market conditions.
- The new U.S. tariff rate quota on quartz surface products, effective August 15, 2026, imposes additional tariffs of 25% (in-quota) and 50% (above-quota), which could negatively impact costs and delay the path to positive adjusted EBITDA.
- Operating expenses increased to $33.4 million, or 34.6% of revenue, primarily due to higher legal settlements and loss contingencies, which remain a significant overhang.
- The company faces ongoing legal proceedings with approximately 800 silica-related claims, and has recorded a provision of $51.2 million, with insurance recoveries still uncertain.
- Adjusted EBITDA is still negative, and the company is reassessing the timing of achieving positive adjusted EBITDA due to the new tariffs, indicating continued profitability challenges.
Greetings, and welcome to the Caesar Stone Second Quarter 2026 Earnings Conference Call. Please note this event is being recorded.
I would now like to turn the conference over to your host, Brad Cray of ICR.
Thank you. Please go ahead.
Thank you, operator, and good morning to everyone on the line.
I am joined by Yos Shiran, Caesarstone's Chief Executive Officer, and Nahum Trost, Caesarstone's Chief Financial Officer.
Certain statements in today's conference call and responses to various questions may constitute forward-looking statements. We caution you that such statements reflect only the company's current expectations and that actual events or results may differ materially. For more information, please refer to the risk factors contained in the company's most recent annual report on Form 20-F and subsequent filings with the SEC.
In addition, on this call, the company will make reference to certain non-GAAP financial measures, including adjusted net loss, income, adjusted net
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