Caesarstone Ltd. Q2 FY2025 earnings call

• Persistent softness in repair and remodel; initiated incremental cost reductions for $10M annualized savings in H2 2025, total over $55M since 2022. - Shifted over 70% production to global network, expanding partnerships. - Accelerating porcelain product dev, launched full zero crystalline silica collection in Aus, more innovative products to launch. - Focus on strategic transformation, cost reductions, and operational enhancements to improve profitability as volumes improve.

Global revenue was $101.1 million in the second quarter, down from $119.4 million in the prior year quarter. On a constant currency basis, revenue was down 15.6% y/y due to lower volumes. U.S. sales declined 17% to $49.6 million, with residential channel softness and commercial challenges, but business with Lowe's was a bright spot. Australia sales were down 18.2% constant currency due to silica ban, high interest rates, and fewer new home completions. Canada sales decreased 12.5% constant currency, core business softer but big box activity partially offset. EMEA sales were relatively stable, up 0.7% constant currency. Israel sales declined 21.6% constant currency due to regional conflict.

• Additional $10M annualized cost savings in 2025 H2, total over $55M since 2022. - Confident structural improvements will enable higher profitability as volumes improve. - Evaluating pricing in U.S. to balance market competitiveness and margin protection.

• U.S. tariffs estimated to impact products 15%-25%, U.S. represents half of total revenues. - Bodily injury claims: 423 cases, provision $44.9M, insurance $25.6M; U.S. jury found in favor but post-trial motions/appeal possible; California courts coordinating silicosis cases.

Q: Any signs that the silica cases in Australia are impacting demand in the States?

A: No, don't think there's a connection.

Q: What changed quarter-over-quarter in gross margin?

A: Lower production levels, lower fixed cost absorption, price adjustments.

Q: Did SG&A cost-saving actions start in Q2?

A: Combination of previous actions and tight control over controllable expenses; incremental $10M savings impact Q3/Q4