CSTE · Caesarstone Ltd.

Caesarstone's first quarter 2026 results reflect ongoing structural transformation amid persistent revenue headwinds. Revenue of $88.7 million declined 10.9% year-over-year, driven by continued softness in global demand and competitive pressures, particularly in North America, partially offset by strength in Australia. On a constant currency basis, revenue fell approximately 14.9%. Despite the top-line pressure, gross margin expanded 100 basis points to 22.3% (23.9% on an adjusted basis), benefiting from cost savings associated with the transition to a third-party manufacturing model following the closure of the Bar-Lev facility. Operating expenses rose to 44.1% of revenue from 36.1%, largely due to lower revenue and impairment expenses. Operating loss widened to $19.4 million from $14.8 million, and net loss attributable to controlling interest increased to $21.1 million ($0.61 per share) from $12.9 million ($0.26 per share). Adjusted EBITDA loss was $7.5 million, roughly in line with the prior year's $7.1 million loss. Management reiterated its target of achieving positive Adjusted EBITDA in the third quarter of 2026, assuming no material deterioration in global economic or geopolitical conditions. The company ended the quarter with a net cash position of $50.4 million, down from $57.5 million at year-end 2025. Key risks include U.S. tariffs and potential quartz import restrictions, as 45% of revenue is generated in the U.S. The ITC has recommended a tariff-rate quota structure, with a final determination expected within 60 days. Additionally, silicosis litigation remains a significant overhang, with a provision of $48.8 million and insurance receivables of $11.6 million. A recent favorable jury verdict in Colorado provides some positive signal, but the overall legal environment remains uncertain.