Caesarstone Company Overview March, 2019 1
Written and oral statements made in this presentation and responses to various questions that reflect our views about our future performance, the Company ’ s financial position, business strategy and plans and objectives of management for future operations constitute “ forward-looking statements ” under the Private Securities Litigation Reform Act of 1995. These statements, which contain words such as "believe, ” “ expect, ” “ anticipate, ” “ intend, ” “ estimate, ” “ forecast, ” “ project, ” “ will, ” “ may, ” “ should ” , “ plan ” , “ seek ” and similar expressions or references to future periods, reflect the beliefs and expectations of the Company and are subject to risks and uncertainties, including those described under “ Risk factors ” in the Company ’ s most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission, that may cause actual results to differ materially from the results discussed in our forward- looking statements. These risks and uncertainties include, among other factors, but are not limited to the strength of the home renovation and construction sectors; economic conditions within any of our key existing markets; actions by our competitors; changes in raw material prices, particularly polymer resins and pigments; fluctuations in currency exchange rates; the success of our expansion efforts in the United States; the outcome of silicosis claims and the claim by our former quartz processor; unpredictability of seasonal fluctuations in revenues; delays in manufacturing and other factors. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. These forward-looking statements are made only as of the date hereof, and neither the Company, nor any of its respective agents, employees or advisors intend, undertake or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise. The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. This presentation includes certain non-GAAP measures, which should all be considered in addition to, and not as a substitute for, comparable GAAP measures. A reconciliation of GAAP gross profit to adjusted gross profit, GAAP net income to adjusted EBITDA and adjusted net income are provided below. The Company provides these non-GAAP financial measures because it believes that they present a better measure of the Company ’ s core business and management uses the non-GAAP measures internally to evaluate the Company ’ s ongoing performance. Accordingly, the Company believes that they are useful to investors in enhancing an understanding of the Company ’ s operating Disclaimer performance. However these measures should not be considered as substitutes for GAAP measures and may be inconsistent with similar measures presented by other companies. 2
Presenting Today Yuval Dagim, Chief Executive Officer • Mr. Dagim joined as CEO in 2018 • Over 28 years of experience in global business and leadership across multiple industries, including building materials, consumer and construction • Successfully spearheaded numerous organizational enhancements and global business developments at several companies Ophir Yakovian, Chief Financial Officer • Mr. Yakovian joined as CFO in 2018 • Nearly 20 years of experience in various financial and leadership roles • Formerly served as CFO of Lumenis Ltd. (previously NASDAQ: LMNS), Tnuva Group and Perion Network Ltd. (NASDAQ:PERI) • Certified Public Accountant 3
A Global Leader in the Attractive Quartz Surface Market Caesarstone invented the engineered Diversified geographical revenue Proven track record of innovation quartz countertop; and sustainable growth Product and the market with North America portion of ~58% Solid global distribution platform - World-class capabilities in: Attractive across approximately 45 countries Manufacturing, R&D and Marketing financial profile Premium brand, with superior A Global market leader Experienced and motivated customer value proposition with ~9% global market share (by volume) 1 management team 1 Source: Freedonia February 2017 study; company market share derived from company volume sales data and Freedonia global market size Caesarstone surfaces are a centrepiece in millions of homes around the world 4 4
Caesarstone ’ s Superior Value Proposition Killer application - Superior to any natural stone Endorsement “ Quartz received the highest overall score Impact Resistant Flexible among countertop materials ” Consumer Reports Magazine, USA “ Scratch Resistant Easy Fabrication With computers, quartz has supplanted granite as the people ’ s choice ” The Washington post, USA Stain Resistant Multi-functional “ You walk into a home and you see the kitchen has Caesarstone in it. It changes the way you look at the value of that house ” Heat Resistant Versatile Designs Ty Pennington, TV Personality, USA “ To me, Caesarstone is where beauty and function come together ” Non Porous Mario Batali, Prominent Chef, USA Low cost of ownership & Ever lasting beauty Caesarstone - where creativity meets quality 5
Leading Global Footprint with Diverse Revenue Mix Canada UK USA Israel Singapore 31 Caesarstone Direct Sales in 6 countries (DC & offices) Australia 45 Caesarstone Distributors 5.5% - ROW CS partners along the value chain 10% Indirect 22.8% - Australia Architects & Designers ~240 K 6.0% - Europe distribution Kitchen & Bath ~18 K 6.9% - Israel 2018 2018 90% Fabricators ~9 K Channels Region Direct Split Split Developers/builders ~9 K distribution 17.3% - Canada 41.5% - USA relevant in the direct sales market 6
World Class Manufacturing and R&D Capabilities 3 Production sites 1 in The US, Richmond hill – 2 lines 2 in Israel: Sdot Yam and Bar-lev – 5 lines Leading by Innovation Caesarstone invented the engineered quartz countertop Since then, our R&D capabilities have advanced to maintain the company ’ s product line at the forefront of the industry Our technologies, product & colors, have been a role model to a long list of followers The company intends to accelerate the investment in R&D and boost the throughput of its capabilities 7
A Comprehensive and Lucrative Product Offering Classico Metropolitan Supernatural Concetto P r e m i u m P o s i t i o n i n g Inspired by nature Our wide range Inspired by the Hand-incorporated of evergreen colors industrial trend semi-precious Luxurious marble & and designs stones granite designs Proprietary technology Proprietary technology 8
Pioneering Innovative Designs and Technology Color Leadership Rugged Concrete 4033 9 9
Pioneering Innovative Designs and Colors Proprietary Technology Excava 4046 10 10
Pioneering Innovative Designs and Colors A Trend Setter Cloudburst concrete 4011 1 1 1 1
Financial Section 12 12
Growth and Profitability Revenue ($mm) Adjusted Gross Profit and % Margin ($mm) 43.0% 45.5% 42.4% 40.2% 40.1% 39.4% 39.5% 33.5% 588.1 575.9 538.5 28.8% 499.5 212.5 447.4 200.2 197.2 189.7 165.5 162.1 356.6 296.6 127.4 259.7 104.3 198.8 78.3 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 Adj. Net Income and % Margin ($mm) 1 Adj. EBITDA and % Margin ($mm) 25.4% 25.7% 26.1% 25.2% 17.9% 18.4% 24.2% 16.8% 23.4% 15.1% 22.6% 15.0% 13.4% 14.8% 130.3 17.1% 125.7 83.7 116.6 81.2 13.1% 82.5 100.4 8.5% 91.7 6.3% 64.0 75.2 49.8 69.4 44.0 58.8 36.1 50.5 34.8 29.8 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 13 ¹ Adjusted net income attributable to controlling interest
Q4 ’ 18 Financial Performance Revenue Adj. Gross Profit (0.7%) CCB ( 3.6%) (15.5%) $46.3M $148.1M $142.9M M$ $39.2M % margin 31.3% 27.4% Q4'17 Q4'18 Q4'17 Q4'18 o Higher average cost per unit in Israel related mostly to (2.2%) (1.3%) (0.7%) 0.2% increased volume of differentiated products o Favorable geographic and product o Adverse currency exchange impact mix o Inventory and logistical inefficiencies and higher raw material costs Adj. EBITDA Adj. Net Income (9.1%) (14.9%) M$ M$ $7.7M $21.0M $7.0M $17.8M 12.5% 0 .22 $ 14.2% % margin EPS 0.20$ Q4'17 Q4'18 Q4'17 Q4'18 14
Thank You 15
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