CaesarStone Sdot-Yam Ltd. (NASDAQ:CSTE) Q3 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 08:30 am ET


CaesarStone Sdot-Yam Ltd. (NASDAQ:CSTE) Q3 2019 Earnings Conference Call - Final Transcript


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Greetings, welcome to the Caesarstone Third Quarter 2019 Earnings Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to introduce your host, Brad Cray of ICR. Thank you. You may begin.

Brad Cray

Thank you, operator and good morning to everyone. I'm joined by Yuval Dagim, Caesarstone's Chief Executive Officer; and Ophir Yakovian, 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 Securities and Exchange Commission.

In addition, on this call, the Company will make reference to certain non-GAAP financial measures, including adjusted net income, adjusted net income per share, adjusted gross profit and adjusted EBITDA. The reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the Company's third quarter 2019 earnings release, which is posted on the Company's investor relations website.

Thank you. And I would now like to turn the call over to Yuval. Please go ahead.

Yuval Dagim

Thank you, Brad and good morning everyone. Our third quarter 2018 results reflect our focused efforts to execute the various aspects of our Global Growth Acceleration Plan that we introduced earlier this year. Execution against this plan, combined with tight cost control were the primary drivers in helping us grow adjusted EBITDA and achieve higher adjusted EBITDA margin compared to the prior year quarter.

In addition, I'm encouraged with our execution in the U.S. where we drove 8% growth in our core business. This was largely due to the solid execution of our North American leadership team following the realignment of our operation in that region earlier this year. While many of our markets outside the U.S., continue to experience intense competition from low price manufacturers, I'm confident in the steps we are taking to improve our performance and enhance our position. Our new leadership team is now fully in place, executing our strategies to a variety of projects to better leverage our strong brand, more effectively control cost, increase efficiencies and streamline processes. To date we have started 90% out of an initial 30 identified projects under the Growth Acceleration Plan.

Now I would like to provide several updates on our progress so far. First, on the production side, we have already begun to develop improved sourcing strategies and initiated projects to enhance productivity and stability of our manufacturing process. Our initial reduction early this year to less than 50% of our full capacity in our Richmond Hill manufacturing facility has provided us the opportunity to further improve productivity and quality. Working of these new efficient base, we now believe we are in a position to increase effective capacity to 60% while maintaining improved level of performance.

Within our