CSTE

• Profitability Improvement

  • Gross margin expanded 440 basis points year-over-year to 24%, and increased 170 basis points sequentially from Q1 2026; adjusted gross margin reached 26.5% compared to 19.7% in the prior-year quarter.
  • Adjusted EBITDA loss narrowed significantly to $1 million, from a loss of $6.4 million in Q2 2025 and a loss of $7.5 million in Q1 2026. Adjusted diluted net loss per share fell to 10 cents from 33 cents year-over-year.
  • The improved margin performance reflects cost savings from completed restructuring actions, including the closure of the Bar Lev facility and the full transition of quartz production to the company's global manufacturing partner network. The quarter also received a $2 million refund from previously paid U.S. IEEPA tariffs that boosted gross margin.

• Strategic and Operational Progress

  • The company has completed its transition to a leaner, more flexible operating model with an optimized manufacturing footprint and global production partner network, which is delivering expected margin improvements and better customer service.
  • Top priority for the business remains restoring revenue growth amid continued competitive pressures and soft global market conditions, particularly in North America.
  • The company continues to invest in long-term growth drivers including brand building, product innovation, and its porcelain product offering.
  • As of June 30, 2026, the company held a net cash position of $51.8 million and had repaid all outstanding credit facility debt, leaving no outstanding debt to financial institutions.

• Legal Update

  • The company has recorded a $51.2 million loss provision for 800 global silica exposure injury claims, approximately 600 of which are in the U.S. Most U.S. claims are in early stages or classified as only reasonably possible losses, so no additional provision has been recorded.
  • The company recorded $12 million in global insurance receivables, though coverage disputes with insurers are ongoing; the company continues to vigorously defend all claims. In Q2 2026, the company resolved four claims in California, received a favorable no-liability jury verdict in a Colorado claim, and was dismissed from multiple additional cases across various states.

• Full annualized cash savings from the Bar Lev facility closure are expected to reach approximately $22 million, bringing total expected annualized cost savings from all restructuring actions to more than $100 million by 2027, compared to full year 2023 results.
• Remaining cash costs for the restructuring program are expected to total $3 million to $4 million during the second half of 2026, after $1.2 million in cash restructuring costs were recorded in Q2 2026.
• Prior to the announcement of new U.S. tariffs, the company was on track to achieve positive adjusted EBITDA in the third quarter of 2026. Management is currently reassessing the timing of hitting this positive adjusted EBITDA target while evaluating mitigation actions for the new tariff policy.

Caesarstone reported total global revenue of $96.6 million in Q2 2026, down 7.7% year-over-year on a constant currency basis, versus $101.1 million in the prior-year quarter.

• U.S. segment: Revenue was $42.7 million, a 14.1% year-over-year decrease, accounting for approximately 44% of total global revenue. The decline was driven by lower core business volumes from weak commercial channel conditions, though big-box channel revenue grew 3% year-over-year led by IKEA.
• Canada segment: Revenue decreased 17.5% year-over-year on a constant currency basis, pressured by lower housing completions and broad slow market conditions.
• Australia segment: Revenue was $20.3 million, a 10.1% year-over-year increase on a constant currency basis. This marked the fourth consecutive quarter of year-over-year growth, supported by strong demand for the zero-silica Icon Collection as the company regains market share.
• EMEA segment: Revenue declined 9.8% year-over-year on a constant currency basis, primarily due to unfavorable timing of customer order shipments in the quarter.
• Israel segment: Revenue increased 32.4% year-over-year on a constant currency basis, resulting from a favorable comparison to the prior-year quarter, which was negatively impacted by regional conflict.

• Broad macroeconomic and market risks: Persistent soft demand and competitive pressures, particularly in the North American market, are driving year-over-year revenue declines, with additional pressure from slowing housing activity in Canada.
• New U.S. trade policy risk: A new U.S. tariff rate quota on imported surface products will go into effect on August 15, 2026. Imports within the quota will face an additional 25% tariff in the first year, with out-of-quota imports facing an additional 50% tariff. While the company is evaluating impacts and planning mitigation, the new policy will increase input costs for a large share of the company's U.S. revenue.
• Existing U.S. trade cost risk: Broad-based road import tariffs are already in effect for most sourcing origins, with an average applicable tariff of 15% on products imported to the U.S., creating ongoing upward pressure on cost of goods.
• Legal and liability risk: The company faces approximately 800 outstanding silica exposure injury claims, with significant uncertainty around total ultimate liability, even after recording a $51.2 million loss provision. Ongoing coverage disputes with insurance carriers mean the company may not recover the full expected amount of defense and settlement costs from insurers. Case outcomes remain uncertain, with prior verdicts still under appeal.

No question and answer section was included in the provided transcript, as the conference was concluded immediately after management's closing remarks.