CAESARSTONE SDOT-YAM LTD.
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Date: February 12, 2014
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By:
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/s/ Yair Averbuch | |
Name: | Yair Averbuch | ||
Title: | Chief Financial Officer |
99.1
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Press release dated February 12, 2014, titled, “Caesarstone Reports Fourth Quarter and Full Year 2013 Results.”
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·
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Q4 Revenue Up 27.0% to a Record of $96.8 million
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Q4 Net Income Attributable to Controlling Interest Up 58.1%; EPS of $0.48
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FY13 Revenue Up 20.2% to $356.6 million
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·
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FY13 Net Income Attributable to Controlling Interest Up 59.8%; EPS of $1.80
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Company Issues FY14 Guidance, Expects Continued Growth
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Caesarstone Sdot-Yam Ltd. and its subsidiaries
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Consolidated balance sheets
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As of
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U.S. dollars in thousands
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December 31, 2013
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December 31, 2012
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ASSETS
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CURRENT ASSETS:
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Cash and cash equivalents
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$ | 22,248 | $ | 29,033 | ||||
Short-term bank deposits
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70,000 | 43,700 | ||||||
Trade receivables
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52,304 | 44,066 | ||||||
Other accounts receivable and prepaid expenses
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22,853 | 16,238 | ||||||
Inventories
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57,867 | 50,550 | ||||||
Total current assets
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225,272 | 183,587 | ||||||
LONG-TERM ASSETS:
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Severance pay fund
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3,973 | 3,424 | ||||||
Long-term deposits and prepayments
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1,603 | 1,198 | ||||||
Total long-term assets
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5,576 | 4,622 | ||||||
PROPERTY, PLANT AND EQUIPMENT, NET
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93,634 | 72,987 | ||||||
OTHER ASSETS
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13,372 | 16,898 | ||||||
GOODWILL
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39,702 | 42,955 | ||||||
Total assets
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$ | 377,556 | $ | 321,049 | ||||
LIABILITIES AND EQUITY
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CURRENT LIABILITIES:
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Short-term bank credit
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$ | 5,454 | $ | 5,248 | ||||
Current maturities of long-term loans
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- | 5,500 | ||||||
Trade payables
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50,624 | 36,925 | ||||||
Account payables to related parties
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2,602 | 2,888 | ||||||
Accrued expenses and other liabilities
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20,890 | 15,314 | ||||||
Total current liabilities
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79,570 | 65,875 | ||||||
LONG-TERM LIABILITIES:
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Long-term loan and financing leaseback from a related party
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12,342 | 12,188 | ||||||
Accrued severance pay
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4,472 | 3,989 | ||||||
Long-term warranty provision
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1,704 | 1,599 | ||||||
Deferred tax liabilities, net
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6,245 | 6,375 | ||||||
Total long-term liabilities
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24,763 | 24,151 | ||||||
REDEEMABLE NON-CONTROLLING INTEREST
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7,624 | 7,106 | ||||||
COMMITMENTS AND CONTINGENT LIABILITIES
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EQUITY:
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Share capital -
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Ordinary shares
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364 | 360 | ||||||
Additional paid-in capital
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138,755 | 135,437 | ||||||
Accumulated other comprehensive income
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3,682 | 8,517 | ||||||
Retained earnings
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122,798 | 79,603 | ||||||
Total equity
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265,599 | 223,917 | ||||||
Total liabilities and equity
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$ | 377,556 | $ | 321,049 |
Consolidated statements of income
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Three months ended December 31,
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Twelve months ended December 31,
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U.S. dollars in thousands (except per share data)
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2013
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2012
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2013
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2012
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Revenues
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$ | 96,813 | $ | 76,222 | $ | 356,554 | $ | 296,564 | ||||||||
Cost of revenues
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55,230 | 44,365 | 194,436 | 169,169 | ||||||||||||
Gross profit
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41,583 | 31,857 | 162,118 | 127,395 | ||||||||||||
Operating expenses:
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Research and development, net
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554 | 403 | 2,002 | 2,100 | ||||||||||||
Marketing and selling
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12,876 | 12,532 | 51,209 | 46,911 | ||||||||||||
General and administrative
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8,380 | 6,732 | 32,904 | 28,423 | ||||||||||||
Total operating expenses
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21,810 | 19,667 | 86,115 | 77,434 | ||||||||||||
Operating income
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19,773 | 12,190 | 76,003 | 49,961 | ||||||||||||
Finance expenses (income), net
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416 | (225 | ) | 1,314 | 2,773 | |||||||||||
Income before taxes on income
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19,357 | 12,415 | 74,689 | 47,188 | ||||||||||||
Taxes on income
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2,340 | 1,444 | 10,336 | 6,821 | ||||||||||||
Net income
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17,017 | 10,971 | 64,353 | 40,367 | ||||||||||||
Net income attributable to non-controlling interest
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(12 | ) | (214 | ) | (1,009 | ) | (735 | ) | ||||||||
Net income attributable to controlling interest
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$ | 17,005 | $ | 10,757 | $ | 63,344 | $ | 39,632 | ||||||||
Basic net income per ordinary share
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$ | 0.49 | $ | 0.31 | $ | 1.83 | $ | 1.21 | ||||||||
Diluted net income per ordinary share
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$ | 0.48 | $ | 0.31 | $ | 1.80 | $ | 1.21 | ||||||||
Weighted average number of ordinary shares used in computing basic income per ordinary share
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34,739,315 | 34,365,250 | 34,666,514 | 32,641,701 | ||||||||||||
Weighted average number of ordinary shares used in computing diluted income per ordinary share
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35,393,947 | 34,561,697 | 35,209,946 | 32,699,748 |
Caesarstone Sdot-Yam Ltd. and its subsidiaries
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Consolidated statements of cash flows
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Twelve months ended
December 31,
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U.S. dollars in thousands
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2013
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2012
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Cash flows from operating activities:
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Net income
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$ | 64,353 | $ | 40,367 | ||||
Adjustments required to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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14,994 | 14,368 | ||||||
Share-based compensation expense
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2,514 | 3,660 | ||||||
Decrease in share-based payment in subsidiary
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- | (1,383 | ) | |||||
Accrued severance pay, net
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(64 | ) | (61 | ) | ||||
Changes in deferred tax, net
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674 | (1,927 | ) | |||||
Capital gains
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(22 | ) | (79 | ) | ||||
Compensation paid by a former shareholder
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810 | - | ||||||
Foreign currency translation losses (gains)
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(132 | ) | 417 | |||||
Increase in trade receivables
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(8,238 | ) | (8,561 | ) | ||||
Increase in other accounts receivable and prepaid expenses
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(7,419 | ) | (3,291 | ) | ||||
Increase in inventories
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(7,317 | ) | (3,816 | ) | ||||
Increase in trade payables
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9,351 | 5,201 | ||||||
Increase in warranty provision
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401 | 297 | ||||||
Increase (decrease) in accrued expenses and other liabilities including related parties
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5,765 | (9,922 | ) | |||||
Net cash provided by operating activities
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75,670 | 35,270 | ||||||
Cash flows from investing activities:
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Investment in short-term deposits
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(26,300 | ) | (43,700 | ) | ||||
Purchase of property, plant and equipment
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(27,372 | ) | (13,481 | ) | ||||
Acquisition of the business of Prema Asia Marketing PTE Ltd.
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- | (150 | ) | |||||
Increase in long term deposits and prepayments
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(405 | ) | (849 | ) | ||||
Net cash used in investing activities
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(54,077 | ) | (58,180 | ) | ||||
Cash flows from financing activities:
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Dividend paid
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(20,149 | ) | (27,182 | ) | ||||
Receipt from issuance of ordinary shares, net
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- | 76,768 | ||||||
Repayment of long-term loans
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(5,372 | ) | (12,670 | ) | ||||
Short-term bank credit and loans, net
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206 | 1,275 | ||||||
Repayment of contingent consideration related to U.S. Quartz Products, Inc. acquisition
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- | (6,242 | ) | |||||
Receipt of a financing leaseback related to Bar-Lev transaction
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- | 10,893 | ||||||
Repayment of a financing leaseback related to Bar-Lev transaction
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(1,149 | ) | (362 | ) | ||||
Net cash provided by (used in) financing activities
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(26,464 | ) | 42,480 | |||||
Effect of exchange rate differences on cash and cash equivalents
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(1,914 | ) | (2,487 | ) | ||||
Increase (decrease) in cash and cash equivalents
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(6,785 | ) | 17,083 | |||||
Cash and cash equivalents at beginning of year
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29,033 | 11,950 | ||||||
Cash and cash equivalents at end of year
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22,248 | 29,033 | ||||||
Non - cash investing:
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Purchase of fixed assets with credit from suppliers
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4,880 | 2,141 |
Caesarstone Sdot-Yam Ltd. and its subsidiaries
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Three months ended
December 31,
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Twelve months ended
December 31,
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U.S. dollars in thousands
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2013
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2012
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2013
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2012
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Reconciliation of Net Income to Adjusted EBITDA:
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Net income
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$ | 17,017 | $ | 10,971 | $ | 64,353 | $ | 40,367 | ||||||||
Finance expenses, net
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416 | (225 | ) | 1,314 | 2,773 | |||||||||||
Taxes on income
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2,340 | 1,444 | 10,336 | 6,821 | ||||||||||||
Depreciation and amortization
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3,894 | 3,553 | 14,994 | 14,368 | ||||||||||||
Excess cost of acquired inventory (a)
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15 | 103 | 188 | 885 | ||||||||||||
Share-based compensation expense (b)
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534 | 615 | 2,514 | 3,007 | ||||||||||||
Inventory - change of estimate (c)
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- | - | (3,458 | ) | - | |||||||||||
Follow-on expenses (d)
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- | - | 1,470 | - | ||||||||||||
IPO bonus (e)
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- | - | - | 1,970 | ||||||||||||
Caesarstone USA contingent consideration adjustment (f)
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- | - | - | 255 | ||||||||||||
Litigation gain (g)
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- | - | - | (1,001 | ) | |||||||||||
Adjusted EBITDA
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$ | 24,216 | $ | 16,461 | $ | 91,711 | $ | 69,445 |
(a)
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Consists of charges to cost of goods sold for the difference between the higher carrying cost of the inventory of two of the Company's subsidiaries, Caesarstone USA's inventory at the time of its acquisition and Caesarstone Australia Pty Limited's inventory that was purchased from its distributor, and the standard cost of the Company's inventory, which adversely impacts the Company's gross margins until such inventory is sold. The majority of the aquired inventory from Caesarstone USA was sold in 2011, and the majority of the inventory purchased from the Australian distributor was sold in 2012.
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(b)
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In 2012, share-based compensation consists primarily of expenses related to stock options granted to employees of the Company, as well as changes in the value of share-based rights granted to the Company's Chief Executive Officer in January 2009. In 2013, share-based compensation consists of expenses related to the stock options granted to employees of the Company.
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(c)
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Relates to a change in estimate for the value of inventory following the implementation of the Company’s new ERP system in April 2013.
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(d)
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Consists of direct expenses related to a follow on-offering that closed in April 2013, including a bonus paid by the Company's former shareholder, Tene, to certain employees of the Company that under US GAAP the Company is required to expense against paid-in capital.
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(e)
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Consists of the payment of $1.72 million to certain employees of the Company and $0.25 million to the Company's Chairman for their contribution to the completion of the Company's initial public offering, or IPO.
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(f)
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Relates to the change in fair value of the contingent consideration that was part of the consideration transferred in connection with the acquisition of Caesarstone USA.
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(g)
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In 2011, litigation gain consists of a mediation award in the Company's favor pursuant to two trademark infringement cases brought by Caesarstone Australia Pty Limited. In 2012, litigation gain resulted from a settlement agreement with the former chief excecutive officer of Caesarstone Australia Pty Limited related to litigation that had been commenced in 2010. Pursuant to the settlement, he transferred to the Company the ownership of all his shares in Caesarstone Australia Pty Limited received in connection with his employment. The Company did not make any payments in connection with such transfer or other payments to the former chief executive officer. As a result of the settlement, the Company reversed the liability provision in connection with the litigation and the adjustment is presented net of the related litigation expenses incurred in connection with the settlement.
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Caesarstone Sdot-Yam Ltd. and its subsidiaries
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Three months ended
December 31,
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Twelve months ended
December 31,
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U.S. dollars in thousands
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2013
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2012
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2013
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2012
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Reconciliation of net income attributable to controlling interest to adjusted net income attributable to controlling interest:
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Net income attributable to controlling interest
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$ | 17,005 | $ | 10,757 | $ | 63,344 | $ | 39,632 | ||||||||
Excess cost of acquired inventory (a)
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15 | 103 | 188 | 885 | ||||||||||||
Share-based compensation expense (b)
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534 | 615 | 2,514 | 3,007 | ||||||||||||
IPO bonus (c)
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- | - | - | 1,970 | ||||||||||||
Caesarstone USA contingent consideration adjustment (d)
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- | - | - | 255 | ||||||||||||
Inventory - change of estimate (e)
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- | - | (3,458 | ) | - | |||||||||||
Follow-on expenses (f)
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- | - | 1,470 | - | ||||||||||||
Litigation gain (g)
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- | - | - | (1,001 | ) | |||||||||||
Total adjustments before tax
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549 | 718 | 714 | 5,116 | ||||||||||||
Less tax on above adjustments (h)
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75 | 260 | 99 | 740 | ||||||||||||
Total adjustments after tax
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474 | 458 | 615 | 4,376 | ||||||||||||
Adjusted net income attributable to controlling interest
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$ | 17,479 | $ | 11,215 | $ | 63,959 | $ | 44,008 | ||||||||
Adjusted diluted EPS
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0.49 | 0.32 | 1.82 | 1.35 |
(a)
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Consists of charges to cost of goods sold for the difference between the higher carrying cost of the inventory of two of the Company's subsidiaries, Caesarstone USA's inventory at the time of its acquisition and Caesarstone Australia Pty Limited's inventory that was purchased from its distributor, and the standard cost of the Company's inventory, which adversely impacts the Company's gross margins until such inventory is sold. The majority of the aquired inventory from Caesarstone USA was sold in 2011, and the majority of the inventory purchased from the Australian distributor was sold in 2012.
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(b)
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In 2012, share-based compensation consists primarily of expenses related to stock options granted to employees of the Company, as well as changes in the value of share-based rights granted to the Company's Chief Executive Officer in January 2009. In 2013, share-based compensation consists of expenses related to the stock options granted to employees of the Company.
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(c)
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Consists of the payment of $1.72 million to certain employees of the Company and $0.25 million to the Company's Chairman for their contribution to the completion of the Company's IPO.
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(d)
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Relates to the change in fair value of the contingent consideration that was part of the consideration transferred in connection with the acquisition of Caesarstone USA.
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(e)
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Relates to a change in estimate for the value of inventory following the implementation of the Company’s new ERP system in April 2013.
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(f)
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Consists of direct expenses related to a follow on-offering that closed in April 2013, including a bonus paid by the Company's former shreholder, Tene, to certain employees of the Company that under US GAAP the Company is required to expense against paid-in capital.
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(g)
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In 2011, litigation gain consists of a mediation award in the Company's favor pursuant to two trademark infringement cases brought by Caesarstone Australia Pty Limited. In 2012, litigation gain resulted from a settlement agreement with the former chief excecutive officer of Caesarstone Australia Pty Limited related to litigation that had been commenced in 2010. Pursuant to the settlement, he transferred to the Company the ownership of all his shares in Caesarstone Australia Pty Limited received in connection with his employment. The Company did not make any payments in connection with such transfer or other payments to the former chief executive officer. As a result of the settlement, the Company reversed the liability provision in connection with the litigation and the adjustment is presented net of the related litigation expenses incurred in connection with the settlement.
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(h)
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The tax adjustments for the first three quarters of 2012 were based on effective tax rate for 2011. For the twelve months ended December 31, 2012, the 2012 annual effective tax rate was used. The Company recognized the cumulative effect of the change in effective tax rate in the fourth quarter. The tax adjustments for the three and twelve months ended December 31, 2013, were based on the effective tax rate for the twelve months ended December 31, 2013.
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Caesarstone Sdot-Yam Ltd. and its subsidiaries
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Geographic breakdown of revenues by region
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Three months ended
December 31,
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Twelve months ended
December 31,
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U.S. dollars in thousands
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2013
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2012
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2013
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2012
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USA
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34,659 | 21,772 | 123,399 | 86,759 | ||||||||||||
Australia
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24,315 | 25,315 | 89,894 | 88,935 | ||||||||||||
Canada
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12,058 | 10,926 | 49,214 | 40,322 | ||||||||||||
Israel
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10,546 | 8,699 | 42,024 | 36,373 | ||||||||||||
Europe
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6,622 | 4,397 | 22,973 | 20,749 | ||||||||||||
Rest of World
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8,613 | 5,113 | 29,050 | 23,426 | ||||||||||||
$ | 96,813 | $ | 76,222 | $ | 356,554 | $ | 296,564 |