Financial Data and Key Metrics Changes - Global revenue in Q3 2023 was $142.4 million, down 21.2% from $180.7 million in Q3 2022, primarily due to softer global market conditions, especially in North America [14][21] - Adjusted gross margin improved sequentially to 19.8% in Q3 2023, compared to 19.1% in the previous quarter, but decreased from 23% in the prior year quarter [11][22] - Positive cash flow from operations was $28.2 million in Q3 2023, significantly up from $3.5 million in Q3 2022 [17] Business Line Data and Key Metrics Changes - In the US, sales decreased by 24.8%, mainly due to softer residential end markets, although there was improved performance with big box customers [15] - Canadian sales were down 17.5% on a constant currency basis, while Australian sales fell by approximately 8.4% [15] Market Data and Key Metrics Changes - The Israeli market, which accounted for about 5% of revenues, was impacted by recent events, leading to a significant near-term reduction in revenues [9][18] - The competitive landscape has intensified, with increased competition affecting sales performance [49] Company Strategy and Development Direction - The company is focused on restructuring actions to optimize production and improve cost structure, with a goal of having 40% of products sourced from third-party manufacturers by year-end [11][35] - There is an emphasis on increasing marketing spend, particularly in the US market, to elevate brand presence and reach traditional customers [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in business continuity despite external challenges, noting that global operations are running smoothly [8] - The outlook for Q4 2023 includes expectations for similar adjusted EBITDA compared to Q3, factoring in a significant reduction in Israeli revenues [18][30] Other Important Information - The company plans to donate 2,000 kitchen surfaces to families affected by recent events in Israel [9] - The closure of the Sdot Yam manufacturing facility is expected to yield annualized savings of approximately $10 million to $15 million [24] Q&A Session Summary Question: Impact of recent events on margins and expectations for Q4 - Management indicated that the near-term reduction in Israeli revenues would significantly impact overall results, with Q4 typically being lower due to seasonality [30][32] Question: Production transition to third-party vendors - The company expects to have around 40% of production from third-party vendors by year-end, up from approximately 20% at the beginning of 2023 [35] Question: Pricing strategy and marketing investments - Marketing expenses are primarily aimed at the US market to enhance brand visibility, with expectations to increase production through strategic partnerships [37] Question: Working capital management - The company has improved working capital, aiming for around 100 days of inventory, with a target of 25% working capital out of revenues [45][46] Question: Competitive landscape and pricing - Management noted that the decline in sales volume is largely due to soft market conditions and higher inflation, impacting residential spending [47][49]

Company Overview - Caesarstone is a leading designer and producer of premium multi-material engineered surfaces [62] - The company's revenue in fiscal year 2022 was approximately $691 million, representing a growth of 7.3% compared to 2021 (10.8% on a constant currency basis) [53] - The company has a global presence in over 50 countries [53] Market Analysis - The global countertop market is estimated at $160 billion in 2022, with engineered quartz accounting for 18% and porcelain for 2% of the market [8] - In the U S market, engineered quartz holds 21% of the countertop demand by volume ($ value $10 1 billion), while porcelain holds 3% ($ value $1 8 billion) [11] - The U S countertop market is projected to grow at a CAGR of 6 3% from 2022-2026 [12] Financial Performance (Q3 2023) - Revenue for Q3 2023 was $142 4 million, compared to $180 7 million in Q3 2022 [23] - Adjusted gross margin for Q3 2023 was $28 1 million, or 19 8%, compared to $41 8 million, or 23 1%, in Q3 2022 [23] - Adjusted EBITDA for Q3 2023 was $13 4 million, representing 1 3% margin [84, 85]

C caesarstone® - Remains Focused on Global Strategic Restructuring Actions to Reignite Long-term Growth and Profitability - Adjusted EBITDA in the third quarter of 2023, which excludes expenses for non-cash share-based compensation, legal settlements and loss contingencies and for other items, was $1.9 million, compared to adjusted EBITDA of $13.4 million in the prior year quarter. The year-over-year decrease primarily reflects the operating loss. Finance income in the third quarter of 2023 was $1.3 million ...

Caesarstone Ltd (NASDAQ:CSTE) Q2 2023 Results Conference Call August 9, 2023 8:30 AM ET Company Participants Brad Cray - Investor Relations Yosef Shiran - Chief Executive Officer Nahum Trost - Chief Financial Officer Conference Call Participants Reuben Garner - The Benchmark Company Stanley Elliott - Stifel Operator Good day, and welcome to the Caesarstone Second Quarter 2023 Conference Call. All participants will be listen-only mode. [Operator Instructions]. After today’s presentation there will be an oppo ...

O caesarstone® Caesarstone Reports Second Quarter 2023 Financial Results MP MENASHE, Israel – August 9, 2023 - Caesarstone Ltd. (NASDAQ: CSTE), a leading developer and manufacturer of high-quality engineered surfaces, today reported financial results for its second quarter ended June 30, 2023. Nahum Trost, Caesarstone's Chief Financial Officer added, "Our restructuring actions and strategic plan are in in motion to achieve a step change in the Company's cash generating ability. We achieved more than $25 mil ...

Caesarstone Ltd. (NASDAQ:CSTE) Q1 2023 Earnings Conference Call May 10, 2023 8:30 AM ET Company Participants Brad Cray - Investor Relations Yosef Shiran - Chief Executive Officer Nahum Trost - Chief Financial Officer Conference Call Participants Reuben Garner - Benchmark Company Stanley Elliott - Stifel Operator Good morning, and welcome to the Caesarstone Limited First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation the ...

First Quarter 2023 Earnings Report [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Caesarstone reported Q1 2023 revenues of $150.6 million, a net loss of $3.8 million, and positive operating cash flow, alongside a new global restructuring plan - Q1 2023 Key Financial Metrics | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenues | $150.6 Million | $170.4 Million | | Net (Loss) Income Attributable to Controlling Interest | ($3.8 Million) | $6.2 Million | | (Loss) Earnings Per Share | ($0.11) | $0.18 | | Cash Flow from Operations | $7.9 Million | ($23.3 Million) | - The company has initiated a global restructuring plan, commencing with the permanent closure of its oldest manufacturing facility in Sdot-Yam, Israel, to improve efficiencies and reduce operating costs[1](index=1&type=chunk)[4](index=4&type=chunk) [Global Restructuring and Cost Optimization](index=1&type=section&id=Global%20Restructuring%20and%20Cost%20Optimization) The company is closing its Sdot-Yam, Israel facility, its oldest plant, as the first major step in a comprehensive restructuring plan, expecting $10.0 to $15.0 million in annualized cash savings and incurring $4.0 to $8.0 million in closure costs - The closure of the Sdot-Yam facility is expected to result in annualized cash savings of approximately **$10.0 to $15.0 million**[5](index=5&type=chunk) - The company expects to incur estimated cash costs of **$4.0 million to $8.0 million** related to the facility closure, starting in Q2 2023 and continuing for 12 months[2](index=2&type=chunk) - The restructuring includes a headcount reduction of approximately **150 employees**, mostly associated with the Sdot-Yam facility[4](index=4&type=chunk) - The decision to close the facility was also driven by the impractical investment needed to upgrade the plant to meet future Israeli environmental emission regulations[22](index=22&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) Q1 2023 revenue decreased 11.6% to $150.6 million, with gross margin contracting to 19.7%, resulting in an operating loss of $5.9 million and a net loss of $3.8 million [Revenue](index=2&type=section&id=Revenue) First-quarter revenue decreased 11.6% to $150.6 million, driven by lower volumes, with Americas declining 13.5% and EMEA growing 4.6% - Q1 2023 revenue was **$150.6 million**, compared to **$170.4 million** in Q1 2022. On a constant currency basis, revenue decreased by **8.9%** year-over-year, mainly due to lower volume partially offset by pricing actions[24](index=24&type=chunk) - Geographic Breakdown of Revenues (USD in thousands) | Region | Q1 2023 | Q1 2022 | YoY % Change | | :--- | :--- | :--- | :--- | | USA | $76,070 | $85,237 | (10.8)% | | Canada | $18,324 | $23,734 | (22.8)% | | Australia | $25,396 | $25,539 | (0.6)% | | EMEA | $15,922 | $15,223 | 4.6% | | Israel | $7,416 | $10,205 | (27.3)% | | **Total Revenues** | **$150,633** | **$170,438** | **(11.6)%** | [Profitability](index=2&type=section&id=Profitability) Q1 2023 profitability sharply declined, with gross margin falling to 19.7%, resulting in an operating loss of $5.9 million and Adjusted EBITDA plummeting to $0.7 million - Gross margin was **19.7%** compared to **25.3%** in the prior year quarter, primarily due to lower fixed cost absorption from reduced capacity utilization, higher raw material costs, and unfavorable FX rates[6](index=6&type=chunk) - Profitability Metrics (USD in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Gross Profit | $29,602 | $43,172 | | Operating (Loss) Income | ($5,918) | $6,982 | | Net (Loss) Income | ($3,851) | $6,656 | | Adjusted EBITDA | $717 | $15,694 | - Adjusted diluted net loss per share was **$0.17**, compared to adjusted diluted net income per share of **$0.14** in the prior year quarter[27](index=27&type=chunk) [Balance Sheet, Liquidity, and Cash Flow](index=3&type=section&id=Balance%20Sheet%2C%20Liquidity%2C%20and%20Cash%20Flow) The company significantly improved cash management, generating $7.9 million in operating cash flow, driven by decreased inventories, and improving its net cash position to $33.3 million - Generated positive cash flow from operations of **$7.9 million** in Q1 2023, compared to cash used in operations of **$23.3 million** in Q1 2022[28](index=28&type=chunk)[16](index=16&type=chunk) - The improvement in operating cash flow was largely due to a **$26.8 million** decrease in inventories during the quarter[16](index=16&type=chunk) - The company's net cash position (cash and marketable securities less total debt) improved to **$33.3 million** as of March 31, 2023, from **$28.2 million** as of December 31, 2022[28](index=28&type=chunk) [Shareholder Returns and Outlook](index=3&type=section&id=Shareholder%20Returns%20and%20Outlook) Caesarstone will not pay a Q1 2023 dividend due to net loss and has withdrawn full-year 2023 guidance, now prioritizing positive operating cash flow - The company will not pay a dividend for the first quarter of 2023, based on its reported net loss and dividend policy[29](index=29&type=chunk) - The company is no longer providing a full-year outlook for revenues or Adjusted EBITDA margin due to slow macroeconomic conditions and volatile trends[30](index=30&type=chunk) - The company's amended outlook prioritizes cash flow, with the expectation to generate positive cash flow from operations and end 2023 with an improved net cash position[30](index=30&type=chunk) [Consolidated Financial Statements and Non-GAAP Reconciliations](index=5&type=section&id=Consolidated%20Financial%20Statements%20and%20Non-GAAP%20Reconciliations) This section presents unaudited consolidated financial statements for Q1 2023, including Balance Sheets, Income Statements, Cash Flows, and reconciliations of GAAP to non-GAAP measures [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2023, the company reported total assets of $710.5 million, total liabilities of $286.2 million, and total equity of $416.3 million - Balance Sheet Highlights (USD in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash, cash equivalents & short-term deposits | $45,987 | $52,081 | | Inventories | $211,179 | $238,232 | | Total Current Assets | $374,546 | $407,858 | | Total Assets | $710,481 | $752,981 | | Total Current Liabilities | $139,085 | $164,984 | | Total Liabilities | $286,165 | $324,032 | | Total Equity | $416,294 | $421,046 | [Condensed Consolidated Statements of Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) For Q1 2023, the company reported revenues of $150.6 million, a gross profit of $29.6 million, and a net loss of $3.9 million - Income Statement Highlights (USD in thousands) | Account | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Revenues | $150,633 | $170,438 | | Gross Profit | $29,602 | $43,172 | | Operating (Loss) Income | ($5,918) | $6,982 | | Net (Loss) Income | ($3,851) | $6,656 | | Diluted (Loss) Income Per Share | ($0.11) | $0.18 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2023, net cash provided by operating activities was $7.9 million, with net cash used in investing activities of $1.5 million and financing activities of $12.6 million - Cash Flow Highlights (USD in thousands) | Account | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $7,937 | ($23,260) | | Net provided by (used in) investing activities | ($1,452) | $741 | | Net cash used in financing activities | ($12,620) | ($1,334) | | Decrease in cash and cash equivalents | ($6,094) | ($23,782) | [Reconciliation of GAAP to Non-GAAP Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides reconciliations for key non-GAAP metrics, including Adjusted Gross Profit of $29.7 million, Adjusted EBITDA of $0.7 million, and Adjusted Net Loss of $6.0 million for Q1 2023 - Reconciliation of Net Income (Loss) to Adjusted EBITDA (USD in thousands) | | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net income (loss) | ($3,851) | $6,656 | | Adjustments... | | | | **Adjusted EBITDA (Non-GAAP)** | **$717** | **$15,694** | - Reconciliation to Adjusted Net Income (Loss) (USD in thousands) | | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net income (loss) attributable to controlling interest | ($3,778) | $6,228 | | Adjustments... | | | | **Adjusted net income (loss) (Non-GAAP)** | **($6,042)** | **$4,698** | | **Adjusted earning (loss) per share** | **($0.17)** | **$0.14** |

PART I [Key Information](index=9&type=section&id=ITEM%203%3A%20Key%20Information) This section outlines Caesarstone's significant economic, operational, legal, and strategic risks, including macroeconomic downturns and silicosis claims [Risk Factors](index=9&type=section&id=D.%20Risk%20Factors) The company faces diverse risks including adverse global economic conditions, sector downturns, raw material volatility, supply chain issues, intense competition, and significant silicosis litigation - Adverse global conditions, including macroeconomic slowdowns, geopolitical instability (such as the Russia-Ukraine conflict), inflation, and rising interest rates, negatively impact the company's financial results by increasing material and shipping costs and potentially disrupting the supply chain[26](index=26&type=chunk)[27](index=27&type=chunk) - The company's sales are highly dependent on the home renovation, remodeling, and new residential construction sectors. Economic downturns, high inflation, and rising interest rates have eroded consumer confidence and demand, impacting revenues and margins, leading to a workforce reduction of approximately **9% in 2022**[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - The company faces significant legal and financial risk from numerous lawsuits related to silicosis, a lung disease linked to exposure to respirable crystalline silica (RCS) from its products. As of December 31, 2022, there were **163 pending lawsuits globally**, with an estimated total exposure of approximately **$36 million** for claims in Israel and Australia[97](index=97&type=chunk)[99](index=99&type=chunk) - Changes in laws and regulations regarding RCS exposure, particularly in Australia, pose a significant threat. A major Australian union is calling for a ban on engineered stone products by July 2024, which could lead to a major loss of market share and materially harm financial results[105](index=105&type=chunk)[107](index=107&type=chunk) - Due to lower market capitalization, higher interest rates, and a global market slowdown, the company conducted impairment testing and recorded significant non-cash impairment charges in fiscal year 2022, totaling **$44.8 million for goodwill** and **$26.4 million for long-lived assets**[62](index=62&type=chunk)[63](index=63&type=chunk) - The company's controlling shareholders, Kibbutz Sdot-Yam and Tene Investment, collectively own approximately **40.7% of shares** and have a voting agreement, giving them significant influence over corporate matters. This concentration of ownership and relationships with the Kibbutz for land leases and services create potential conflicts of interest[152](index=152&type=chunk)[175](index=175&type=chunk) [Information on the Company](index=45&type=section&id=ITEM%204%3A%20Information%20on%20the%20Company) Caesarstone, founded in 1987, is a multi-material countertop producer with global operations, diverse products, and four manufacturing facilities - On March 16, 2023, Mr. Yos Shiran was appointed as the new Chief Executive Officer, replacing Yuval Dagim. Mr. Shiran previously served as the company's CEO from January 2009 to August 2016[227](index=227&type=chunk)[470](index=470&type=chunk) Capital Expenditures (2020-2022) | Year | Capital Expenditures (in millions USD) | | :--- | :--- | | 2022 | $17.8 | | 2021 | $31.5 | | 2020 | $19.8 | [History and Development of the Company](index=45&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Founded in 1987, Caesarstone expanded globally through acquisitions, diversifying into multi-material countertops and listing on Nasdaq in 2012 - The company has expanded its direct distribution network through strategic acquisitions of its former distributors in Australia, Canada, the U.S., Singapore, and most recently Sweden in July 2022[225](index=225&type=chunk) - Caesarstone diversified its product portfolio by acquiring a majority stake in Lioli, an India-based porcelain slab producer, in October 2020, and Omicron, a U.S.-based stone supplier, in December 2020[225](index=225&type=chunk) [Business Overview](index=46&type=section&id=B.%20Business%20Overview) Caesarstone designs and sells engineered quartz, natural stone, and porcelain countertops globally, with key markets in the U.S., Australia, Canada, and Israel Revenue by Geographic Market (2022) | Region | % of 2022 Revenue | | :--- | :--- | | United States | 49.5% | | Australia (incl. NZ) | 16.8% | | Canada | 13.5% | | Israel | 5.3% | | **Total Key Markets** | **85.2%** | - The company's product portfolio includes engineered quartz collections (Classico, Supernatural, Metropolitan, Outdoor) and porcelain products. It also resells natural stone and ancillary products following the Omicron acquisition[240](index=240&type=chunk)[241](index=241&type=chunk)[243](index=243&type=chunk) - Caesarstone utilizes a dual distribution model: direct sales channels in key markets like the U.S., Australia, and Canada, and a network of third-party distributors in over 45 other countries. Sales to third-party distributors accounted for approximately **10% of revenues in 2022**[246](index=246&type=chunk)[250](index=250&type=chunk) - The company sources a significant portion of its products from third-party OEMs. In 2022, products produced by third parties accounted for approximately **21% of revenues**, with plans to increase these purchases in 2023[276](index=276&type=chunk) - The company's manufacturing facilities are subject to extensive environmental, health, and safety regulations in Israel, the U.S., and India, with ongoing compliance issues related to styrene and dust emissions at its Israeli plants[288](index=288&type=chunk)[290](index=290&type=chunk)[293](index=293&type=chunk) [Organizational Structure](index=59&type=section&id=C.%20Organizational%20Structure) Caesarstone Ltd. operates globally through wholly-owned subsidiaries and a regional structure covering North America, APAC, EMEA, and Israel - The company operates under a regional structure comprising North America, APAC, EMEA, and Israel, established in 2019[314](index=314&type=chunk) - Caesarstone Ltd. has wholly-owned subsidiaries in key markets including the USA, Canada, Australia, UK, Singapore, and Sweden, and a majority-owned subsidiary in India (Lioli)[313](index=313&type=chunk) [Property, Plants and Equipment](index=60&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) As of December 31, 2022, Caesarstone operates four manufacturing facilities in Israel, the U.S., and India, with Israeli sites on leased land Key Manufacturing Facilities | Location | Purpose | Ownership/Lease Status | | :--- | :--- | :--- | | Kibbutz Sdot-Yam, Israel | Headquarters, manufacturing, R&D | Land Use Agreement | | Bar-Lev Industrial Park, Israel | Manufacturing facility | Land Use Agreement & Ownership | | Richmond Hill, Georgia, USA | Manufacturing facility | Ownership | | Morbi, Gujarat, India | Manufacturing facility | Ownership | [Operating and Financial Review and Prospects](index=62&type=section&id=ITEM%205%3A%20Operating%20and%20Financial%20Review%20and%20Prospects) In 2022, Caesarstone's revenue grew to $690.8 million, but a net loss of $57.1 million resulted from a $71.3 million impairment charge and declining gross margins Key Financial Metrics (2021 vs. 2022) | Metric (in millions USD) | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Revenues | $690.8 | $643.9 | +7.3% | | Gross Profit | $163.2 | $171.5 | -4.8% | | Gross Margin | 23.6% | 26.6% | -3.0 p.p. | | Operating Income (Loss) | ($58.7) | $27.4 | N/A | | Net Income (Loss) Attributable to Controlling Interest | ($57.1) | $19.0 | N/A | | Adjusted EBITDA | $51.9 | $68.2 | -23.9% | - The company recorded a significant pre-tax non-cash impairment charge of **$71.3 million in 2022**, consisting of **$44.8 million for goodwill** and **$26.4 million for long-lived assets**, driven by lower market capitalization, higher interest rates, and a market slowdown[348](index=348&type=chunk)[349](index=349&type=chunk)[378](index=378&type=chunk) - Gross margin decreased to **23.6% in 2022** from **26.6% in 2021**, primarily due to higher raw material costs (polyester and quartz), increased shipping prices, and unfavorable exchange rates, which were only partially offset by selling price increases[373](index=373&type=chunk) - Net cash used in operating activities was **$23.3 million in 2022**, a significant decrease from the **$20.7 million provided by operations in 2021**. This was mainly due to a decrease in trade payables and higher inventory levels[407](index=407&type=chunk)[409](index=409&type=chunk) [Directors, Senior Management and Employees](index=83&type=section&id=ITEM%206%3A%20Directors%2C%20Senior%20Management%20and%20Employees) This section details Caesarstone's board, executive management, compensation, governance practices, and employee breakdown as of March 2023 - As of March 15, 2023, the board consists of nine directors. Effective March 16, 2023, Yosef (Yos) Shiran was appointed CEO, replacing Yuval Dagim[467](index=467&type=chunk)[470](index=470&type=chunk) 2022 Compensation for Top 5 Covered Executives | Name and Principal Position | Total Compensation (USD) | | :--- | :--- | | Yuval Dagim, CEO | $1,009,020 | | Ken Williams, President Americas | $574,233 | | Nahum Trost, CFO | $505,884 | | Amir Reske, MD EMEA | $487,623 | | David Cullen, MD APAC | $474,089 | - As of December 31, 2022, the company had **2,111 employees globally**, a decrease from 2,272 in 2021, primarily due to restructuring efforts. The largest group of employees (**1,339**) is in manufacturing and operations[614](index=614&type=chunk) - The company has adopted a 2020 Share Incentive Plan. As of March 10, 2023, **2,113,715 ordinary shares** remained available for future grants under this plan[518](index=518&type=chunk) [Major Shareholders and Related Party Transactions](index=108&type=section&id=ITEM%207%3A%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section details Caesarstone's ownership structure, with Kibbutz Sdot-Yam and Tene as major shareholders, and significant related-party transactions - As of March 10, 2023, Kibbutz Sdot-Yam and Tene Investment in Projects 2016, L.P. are the major shareholders, each beneficially owning **40.7% of the company's shares** due to a voting agreement[624](index=624&type=chunk)[631](index=631&type=chunk)[632](index=632&type=chunk) - The company has extensive related-party transactions with Kibbutz Sdot-Yam, including land use agreements for its Sdot-Yam and Bar-Lev facilities, a manpower agreement for labor services, and a services agreement for operational needs. Payments to the Kibbutz for these services totaled **$11.3 million in 2022**[365](index=365&type=chunk)[640](index=640&type=chunk) - In November 2021, the company entered into a management services agreement with Tene, providing for the services of the Executive Chairman of the Board (Dr. Ariel Halperin) and another director for an aggregate annual fee of **NIS 870,000**[508](index=508&type=chunk)[665](index=665&type=chunk) [Financial Information](index=116&type=section&id=ITEM%208%3A%20Financial%20Information) This section details Caesarstone's legal proceedings, primarily silicosis claims with $36.0 million estimated exposure, and its dividend policy [Consolidated Financial Statements and Other Financial Information](index=116&type=section&id=A.%20Consolidated%20Financial%20Statements%20and%20Other%20Financial%20Information) This sub-section details Caesarstone's significant legal proceedings, primarily 163 pending silicosis lawsuits with an estimated $36.0 million exposure - As of December 31, 2022, the company was subject to **163 pending lawsuits globally** (99 in Israel, 56 in Australia, 8 in the U.S.) related to silicosis claims[677](index=677&type=chunk) - The company's total estimated exposure for all pending silicosis-related lawsuits in Israel and Australia was approximately **$36.0 million** as of year-end 2022[685](index=685&type=chunk) - A class action lawsuit in Israel was settled, and in 2022 the company paid approximately **$2.9 million** to fund safety-related expenses and plaintiff's compensation without admission of liability[684](index=684&type=chunk) - The company's dividend policy provides for a quarterly cash dividend of up to **50% of year-to-date net income**. A dividend of **$0.25 per share** was distributed in the third quarter of 2022[689](index=689&type=chunk) [Additional Information](index=119&type=section&id=ITEM%2010%3A%20Additional%20Information) This section covers corporate details, material contracts, exchange controls, and extensive taxation information for Israeli and U.S. shareholders - The company's Israeli facilities have "Preferred Enterprise" status, which provides tax benefits. The corporate tax rate for the Bar-Lev facility is **7.5%**, and for the Sdot-Yam facility is **16%**, compared to the standard Israeli corporate rate of **23%**[356](index=356&type=chunk)[725](index=725&type=chunk)[728](index=728&type=chunk) - For U.S. Holders, the company does not believe it was a Passive Foreign Investment Company (PFIC) for the 2022 taxable year and does not expect to be one for 2023, but this is a factual determination made annually and is subject to change[766](index=766&type=chunk) - Dividends paid to non-Israeli residents are generally subject to a **25% or 30% withholding tax**, which may be reduced to **20%** if distributed from a "Preferred Enterprise" or further reduced by an applicable tax treaty[747](index=747&type=chunk)[749](index=749&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=130&type=section&id=ITEM%2011%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Caesarstone's market risks, primarily foreign currency fluctuations, and its use of forward contracts to hedge exposure Foreign Exchange Rate Sensitivity (2022) | Currency Change vs. USD | Impact on Operating Income (in millions USD) | | :--- | :--- | | 10% decrease in AUD | -$6.3 | | 10% decrease in CAD | -$5.0 | | 10% decrease in NIS | +$10.9 | | 10% decrease in EUR | +$2.3 | - The company uses forward contracts to hedge against foreign currency risk. As of December 31, 2022, the total notional value of its foreign currency hedge portfolio was **$54.5 million**[791](index=791&type=chunk)[793](index=793&type=chunk) PART II [Controls and Procedures](index=133&type=section&id=ITEM%2015%3A%20Controls%20and%20Procedures) As of December 31, 2022, management and auditors concluded that Caesarstone's disclosure controls and internal control over financial reporting were effective - Management concluded that as of December 31, 2022, the company's disclosure controls and procedures were effective[802](index=802&type=chunk) - Management assessed the internal control over financial reporting using the COSO 2013 framework and concluded it was effective as of December 31, 2022. This was attested to by the independent registered public accounting firm[803](index=803&type=chunk)[804](index=804&type=chunk) PART III [Financial Statements](index=136&type=section&id=ITEM%2018%3A%20Financial%20Statements) This section presents Caesarstone's audited consolidated financial statements for 2022, with an unqualified audit opinion highlighting silicosis claims and asset impairment as critical matters [Report of Independent Registered Public Accounting Firm](index=140&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor issued an unqualified opinion on Caesarstone's 2022 financial statements, identifying silicosis claims and asset impairment as critical audit matters - The auditor identified the provision for bodily injury claims related to silica dust as a critical audit matter due to the significant estimation uncertainty in determining the **$36 million liability**[845](index=845&type=chunk) - The impairment of goodwill and long-lived assets was also deemed a critical audit matter because of the complex and highly judgmental nature of estimating the fair value of the reporting unit and asset groups, which is sensitive to assumptions about future market conditions, growth rates, and discount rates[847](index=847&type=chunk) [Consolidated Financial Statements](index=144&type=section&id=Consolidated%20Financial%20Statements) Caesarstone's 2022 consolidated financial statements show decreased assets and equity, a $56.4 million net loss due to impairment, and negative operating cash flow Consolidated Balance Sheet Highlights (in thousands USD) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $52,081 | $74,315 | | Inventories | $238,232 | $204,725 | | Property, plant and equipment, net | $169,292 | $221,150 | | Goodwill | $0 | $45,800 | | Total Assets | $752,981 | $867,653 | | Total Liabilities | $324,032 | $365,489 | | Total Equity | $421,046 | $494,295 | Consolidated Statement of Income Highlights (in thousands USD) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Revenues | $690,806 | $643,892 | $486,412 | | Gross Profit | $163,245 | $171,498 | $133,942 | | Goodwill and long lived assets impairment charges | $71,258 | $0 | $0 | | Operating Income (Loss) | ($58,687) | $27,429 | $22,521 | | Net Income (Loss) | ($56,366) | $17,889 | $7,622 | | Basic and Diluted EPS | ($1.66) | $0.51 | $0.21 | Consolidated Statement of Cash Flows Highlights (in thousands USD) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($23,311) | $20,684 | $47,618 | | Net cash used in investing activities | ($7,285) | ($34,885) | ($68,305) | | Net cash provided (used) by financing activities | $9,156 | ($25,254) | ($6,084) |

Caesarstone Ltd. (NASDAQ:CSTE) Q4 2022 Earnings Conference Call March 1, 2023 8:30 AM ET Company Participants Brad Cray - IR, ICR Yuval Dagim - CEO Nahum Trost - CFO Conference Call Participants Reuben Garner - The Benchmark Company Brock Cannon - Stifel Operator Greetings, and welcome to the Caesarstone Limited Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instruction ...

[**Executive Summary & Strategic Overview**](index=1&type=section&id=Executive%20Summary%20%26%20Strategic%20Overview) Caesarstone achieved record full-year revenue in FY2022 despite Q4 decline and net loss, driven by strategic initiatives focusing on cost optimization and multi-material expansion [Key Financial Highlights](index=1&type=section&id=1.1.%20Key%20Financial%20Highlights) Caesarstone achieved record revenue of $690.8 million in FY2022, a 7.3% YoY increase (10.8% at constant currency), despite a 6.8% Q4 revenue decline (2.1% at constant currency), reporting a full-year net loss of $57.1 million primarily due to a $71.3 million non-cash impairment charge FY2022 Key Financial Highlights | Metric | Amount (million USD) | | :--- | :--- | | **Full-Year Revenue** | 690.8 | | **Full-Year Revenue YoY Growth** | 7.3% | | **Full-Year Revenue YoY Growth (Constant Currency)** | 10.8% | | **Full-Year Net Loss** | 57.1 | | **Full-Year Loss Per Share** | 1.66 | | **Full-Year Adjusted Net Income** | 10.6 | | **Full-Year Adjusted Diluted EPS** | 0.31 | | **Full-Year Adjusted EBITDA** | 51.9 | Q4 2022 Key Financial Highlights | Metric | Amount (million USD) | | :--- | :--- | | **Q4 Revenue** | 159.4 | | **Q4 Revenue YoY Decrease** | 6.8% | | **Q4 Revenue YoY Decrease (Constant Currency)** | 2.1% | | **Q4 Net Loss** | 74.0 | | **Q4 Loss Per Share** | 2.15 | | **Q4 Adjusted Diluted Loss Per Share** | 0.02 | | **Q4 Adjusted EBITDA** | 5.7 | [CEO Commentary & Strategic Initiatives](index=1&type=section&id=1.2.%20CEO%20Commentary%20%26%20Strategic%20Initiatives) CEO Yuval Dagim highlighted record full-year revenue despite macroeconomic challenges, focusing on a multi-pronged growth strategy including cost rationalization, working capital management, expanded distribution, and new product launches - The company is focusing on cost control and future growth investments through its global growth acceleration plan, including **9% workforce reduction** in H2 2022[3](index=3&type=chunk) - The company is more effectively managing working capital by balancing facility production and reducing SKUs to align inventory levels with current demand[3](index=3&type=chunk) - The company is expanding its U.S. operations, investing in new distribution centers, and acquiring a Swedish distributor to expand in Europe; new porcelain products will launch in the U.S. and Canada in H1 2023 as part of its multi-material strategy[3](index=3&type=chunk) [**Full Year 2022 Financial Results**](index=2&type=section&id=Full%20Year%202022%20Financial%20Results) This section provides a detailed overview of Caesarstone's full-year 2022 financial performance, covering revenue, gross profit, operating expenses, net income, and adjusted EBITDA [Revenue Performance](index=2&type=section&id=2.1.%20Revenue%20Performance) Full-year 2022 revenue reached a record $690.8 million, increasing 7.3% year-over-year, or 10.8% at constant currency, primarily driven by growth in the U.S. and Canada FY2022 Revenue Overview | Metric | 2022 (million USD) | 2021 (million USD) | YoY Growth | YoY Growth (Constant Currency) | | :----- | :------------------ | :------------------ | :--------- | :----------------------------- | | Revenue | 690.8 | 643.9 | 7.3% | 10.8% | [Gross Profit and Margin](index=2&type=section&id=2.2.%20Gross%20Profit%20and%20Margin) Gross margin for FY2022 decreased to 23.6% from 26.6% in 2021, primarily due to lower capacity utilization, increased raw material and shipping costs, and unfavorable exchange rates, partially offset by product mix and pricing FY2022 Gross Margin | Metric | 2022 | 2021 | | :----- | :--- | :--- | | Gross Margin | 23.6% | 26.6% | | Adjusted Gross Margin | 23.8% | 26.8% | - The decrease in adjusted gross margin primarily reflects increased manufacturing costs due to lower capacity utilization, higher raw material prices, unfavorable exchange rates, and increased shipping costs, partially offset by a favorable product mix and higher selling prices[23](index=23&type=chunk) [Operating Expenses and Income (Loss)](index=2&type=section&id=2.3.%20Operating%20Expenses%20and%20Income%20(Loss)) Operating expenses significantly increased to $221.9 million in 2022, including a $71.3 million non-cash impairment charge, resulting in an operating loss of $58.7 million compared to income of $27.4 million in 2021 FY2022 Operating Expenses and Income (Loss) | Metric | 2022 (million USD) | 2021 (million USD) | | :----- | :------------------ | :------------------ | | Operating Expenses | 221.9 | 144.1 | | Impairment Expenses | 71.3 | - | | Operating Income (Loss) | (58.7) | 27.4 | - Operating expenses in 2022 included a **$71.3 million non-cash impairment charge**[10](index=10&type=chunk) - Excluding legal settlements, loss contingencies, and impairment charges, adjusted operating expenses as a percentage of revenue improved to **21.7%** from 21.9% in the prior year[10](index=10&type=chunk) [Finance Income (Expenses)](index=3&type=section&id=2.4.%20Finance%20Income%20(Expenses)) The company reported net finance income of $3.1 million in FY2022, a significant improvement from a $7.6 million expense in the prior year, primarily due to foreign exchange rate fluctuations FY2022 Finance Income (Expenses) | Metric | 2022 (million USD) | 2021 (million USD) | | :----- | :------------------ | :------------------ | | Finance Income (Expenses), Net | 3.1 | (7.6) | - The difference in finance income (expenses) primarily resulted from foreign exchange rate fluctuations[11](index=11&type=chunk) [Net Income (Loss) and EPS](index=3&type=section&id=2.5.%20Net%20Income%20(Loss)%20and%20EPS) Net loss attributable to controlling interest was $57.1 million in FY2022, including the after-tax impact of impairment charges, resulting in a diluted loss per share of $1.66, while adjusted diluted EPS was $0.31 FY2022 Net Income (Loss) and EPS | Metric | 2022 (million USD) | 2021 (million USD) | | :----- | :------------------ | :------------------ | | Net Loss Attributable to Controlling Interest | (57.1) | 19.0 | | Net Loss Per Share | (1.66) | 0.51 | | Adjusted Diluted Net Income Per Share | 0.31 | 0.83 | [Adjusted EBITDA](index=3&type=section&id=2.6.%20Adjusted%20EBITDA) Adjusted EBITDA for FY2022 was $51.9 million with a 7.5% margin, down from $68.2 million and a 10.6% margin in 2021, primarily reflecting the decrease in gross margin FY2022 Adjusted EBITDA | Metric | 2022 (million USD) | 2021 (million USD) | 2022 Margin | 2021 Margin | | :----- | :------------------ | :------------------ | :---------- | :---------- | | Adjusted EBITDA | 51.9 | 68.2 | 7.5% | 10.6% | - The year-over-year decrease in adjusted EBITDA margin primarily reflects the lower gross margin[25](index=25&type=chunk) [**Fourth Quarter 2022 Financial Results**](index=1&type=section&id=Fourth%20Quarter%202022%20Financial%20Results) This section presents Caesarstone's financial performance for the fourth quarter of 2022, detailing revenue, gross profit, operating expenses, net income, and adjusted EBITDA [Revenue Performance](index=1&type=section&id=3.1.%20Revenue%20Performance) Fourth quarter 2022 revenue decreased 6.8% year-over-year to $159.4 million, or 2.1% at constant currency, as APAC growth was offset by weaker performance in other regions due to macroeconomic challenges Q4 2022 Revenue Overview | Metric | Q4 2022 (million USD) | Q4 2021 (million USD) | YoY Change | YoY Change (Constant Currency) | | :----- | :-------------------------- | :-------------------------- | :--------- | :----------------------------- | | Revenue | 159.4 | 171.1 | (6.8)% | (2.1)% | - Sales improvement in APAC (at constant currency) was offset by weaker performance in other regions due to macroeconomic challenges and decreased demand[20](index=20&type=chunk) [Gross Profit and Margin](index=1&type=section&id=3.2.%20Gross%20Profit%20and%20Margin) Gross margin for Q4 2022 was 19.4%, down from 23.2% in the prior year, primarily due to lower capacity utilization, increased raw material and shipping costs, and unfavorable foreign exchange rates, partially offset by pricing actions Q4 2022 Gross Margin | Metric | Q4 2022 | Q4 2021 | | :----- | :------------- | :------------- | | Gross Margin | 19.4% | 23.2% | | Adjusted Gross Margin | 19.7% | 23.3% | - The year-over-year decrease in gross margin was primarily due to increased manufacturing costs from lower capacity utilization, higher raw material and shipping costs, and unfavorable foreign exchange rate fluctuations, partially offset by pricing actions[5](index=5&type=chunk) [Operating Expenses and Income (Loss)](index=2&type=section&id=3.3.%20Operating%20Expenses%20and%20Income%20(Loss)) Operating expenses surged to $106.1 million in Q4 2022, including a $71.3 million one-time non-cash impairment charge, resulting in an operating loss of $75.2 million compared to income of $3.3 million in Q4 2021 Q4 2022 Operating Expenses and Income (Loss) | Metric | Q4 2022 (million USD) | Q4 2021 (million USD) | | :----- | :-------------------------- | :-------------------------- | | Operating Expenses | 106.1 | 36.3 | | Impairment Expenses | 71.3 | - | | Operating Income (Loss) | (75.2) | 3.3 | - Operating expenses in Q4 2022 included a **$71.3 million one-time non-cash impairment charge**[6](index=6&type=chunk) - Excluding legal settlements, loss contingencies, and impairment charges, adjusted operating expenses as a percentage of revenue were **22.2%**, slightly higher than 21.9% in the prior year period[6](index=6&type=chunk) [Finance Expenses](index=2&type=section&id=3.4.%20Finance%20Expenses) Net finance expenses for Q4 2022 were $0.4 million, a significant decrease from $7.4 million in the prior year, primarily reflecting foreign exchange rate fluctuations Q4 2022 Finance Expenses | Metric | Q4 2022 (million USD) | Q4 2021 (million USD) | | :----- | :-------------------------- | :-------------------------- | | Finance Expenses, Net | 0.4 | 7.4 | - The difference in finance expenses primarily reflects foreign exchange rate fluctuations[8](index=8&type=chunk) [Net Income (Loss) and EPS](index=2&type=section&id=3.5.%20Net%20Income%20(Loss)%20and%20EPS) Net loss attributable to controlling interest was $74.0 million in Q4 2022, primarily due to the after-tax impact of impairment charges, resulting in a diluted loss per share of $2.15, while adjusted diluted loss per share was $0.02 Q4 2022 Net Income (Loss) and EPS | Metric | Q4 2022 (million USD) | Q4 2021 (million USD) | | :----- | :-------------------------- | :-------------------------- | | Net Loss Attributable to Controlling Interest | (74.0) | (2.9) | | Net Loss Per Share | (2.15) | (0.11) | | Adjusted Diluted Net Income (Loss) Per Share | (0.02) | 0.01 | [Adjusted EBITDA](index=2&type=section&id=3.6.%20Adjusted%20EBITDA) Adjusted EBITDA for Q4 2022 was $5.7 million with a 3.6% margin, down from $11.5 million and a 6.7% margin in the prior year, primarily reflecting lower operating income Q4 2022 Adjusted EBITDA | Metric | Q4 2022 (million USD) | Q4 2021 (million USD) | Q4 2022 Margin | Q4 2021 Margin | | :----- | :-------------------------- | :-------------------------- | :------------------- | :------------------- | | Adjusted EBITDA | 5.7 | 11.5 | 3.6% | 6.7% | - The year-over-year decrease in adjusted EBITDA primarily reflects lower operating income[7](index=7&type=chunk) [**Balance Sheet and Liquidity**](index=3&type=section&id=Balance%20Sheet%20and%20Liquidity) This section outlines Caesarstone's financial position as of December 31, 2022, including key balance sheet figures, debt levels, and the company's dividend policy [Key Balance Sheet Figures](index=3&type=section&id=4.1.%20Key%20Balance%20Sheet%20Figures) As of December 31, 2022, the company held $59.2 million in cash, cash equivalents, and marketable securities, with total debt to financial institutions of $31.0 million, while total assets decreased from $867.653 million in 2021 to $752.981 million Key Balance Sheet Data (as of December 31) | Metric | 2022 (thousand USD) | 2021 (thousand USD) | | :--- | :-------------- | :-------------- | | Cash and cash equivalents and short-term bank deposits | 52,081 | 74,315 | | Short-term available for sale marketable securities | 7,077 | 11,228 | | Short-term bank credit | 26,135 | 12,523 | | Long-term bank and other loans and financing liability of land from a related party | 4,823 | 6,240 | | Total assets | 752,981 | 867,653 | | Total liabilities and equity | 752,981 | 867,653 | [Dividend Policy](index=3&type=section&id=4.2.%20Dividend%20Policy) Caesarstone's dividend policy allows for quarterly cash dividends up to 50% of year-to-date reported net income, with a minimum of $0.10 per share, but no dividend is planned for Q4 2022 due to a net loss attributable to controlling interest - The company's dividend policy stipulates quarterly cash dividends up to **50%** of year-to-date reported net income, but no less than **$0.10 per share**[27](index=27&type=chunk) - In accordance with the dividend policy, the company does not intend to pay a dividend for Q4 2022 due to the net loss attributable to controlling interest[27](index=27&type=chunk) [**Outlook for 2023**](index=3&type=section&id=Outlook%20for%202023) Given challenging macroeconomic conditions and slowing construction, Caesarstone anticipates 2023 revenue to be flat year-over-year, with modest gradual improvement in full-year adjusted EBITDA margin, driven by pricing, cost optimization, and other mitigating measures - The company anticipates 2023 revenue to be flat year-over-year, primarily offsetting lower volumes and unfavorable exchange rates through pricing actions[13](index=13&type=chunk) - The company expects a modest gradual improvement in full-year 2023 adjusted EBITDA as a percentage of sales, attributed to pricing strategies, cost optimization, and other measures expected to offset higher raw material and shipping costs in 2023 inventory[13](index=13&type=chunk) - CFO Nahum Trost stated that the company's outlook is achievable and appropriate given industry uncertainties, and it is prepared to execute its multi-pronged growth strategy[28](index=28&type=chunk) [**Company Information**](index=4&type=section&id=Company%20Information) This section provides background on Caesarstone as a global leader in premium surface materials, explains the use of non-GAAP financial measures, and includes a disclaimer regarding forward-looking statements [About Caesarstone](index=4&type=section&id=6.1.%20About%20Caesarstone) Caesarstone is a global leader in premium surface materials, specializing in countertop products since 1987, pioneering quartz countertops and expanding into porcelain and natural stone, with operations in over 50 countries - Caesarstone is a global leader in premium surface materials, specializing in countertop products, pioneering quartz countertops since **1987** and expanding into porcelain and natural stone[31](index=31&type=chunk) - The company offers a multi-material product portfolio of **over 100 colors**, combining innovative technology and design passion to deliver high-quality, sustainable surface materials for various indoor and outdoor applications[31](index=31&type=chunk) [Non-GAAP Financial Measures Explanation](index=4&type=section&id=6.2.%20Non-GAAP%20Financial%20Measures%20Explanation) The company provides non-GAAP financial measures (Adjusted Gross Profit, Adjusted Net Income/Loss, Adjusted EBITDA) as supplementary information to GAAP metrics, used by management to assess core business performance and aid investor understanding - The non-GAAP measures provided by the company should be considered supplementary to, not a substitute for, comparable GAAP measures[15](index=15&type=chunk) - The company provides these non-GAAP financial measures as they better measure its core business, are used internally by management to evaluate ongoing performance, and are believed to assist investors in understanding the company's operating performance[15](index=15&type=chunk) [Forward-Looking Statements Disclaimer](index=5&type=section&id=6.3.%20Forward-Looking%20Statements%20Disclaimer) This press release contains forward-looking statements regarding future events, objectives, and expectations, subject to known and unknown risks and uncertainties, including global economic factors, supply chain issues, and regulatory changes, with no obligation to update these statements - Information in this press release may contain “forward-looking statements” protected by the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of **1995**[32](index=32&type=chunk) - Actual results may differ materially from projections due to known or unknown risks and uncertainties, including COVID-19 impacts, global economic and geopolitical factors, supply chain constraints, raw material shortages, exchange rate fluctuations, competitive pressures, and regulatory requirements[32](index=32&type=chunk) - The company undertakes no obligation to update or revise forward-looking statements[32](index=32&type=chunk) [**Financial Statements (Condensed Consolidated)**](index=6&type=section&id=Financial%20Statements%20(Condensed%20Consolidated)) This section provides the condensed consolidated financial statements, including the balance sheets, statements of income (loss), and statements of cash flows for the specified periods [Balance Sheets](index=6&type=section&id=7.1.%20Balance%20Sheets) The condensed consolidated balance sheets present Caesarstone's financial position as of December 31, 2022, and 2021, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (as of December 31, in thousand USD) | U.S. dollars in thousands | Dec 31, 2022 (Unaudited) | Dec 31, 2021 (Audited) | | :----------------------- | :----------------------- | :--------------------- | | **ASSETS:** | | | | Cash and cash equivalents and short-term bank deposits | $52,081 | $74,315 | | Short-term available for sale marketable securities | 7,077 | 11,228 | | Trade receivables, net | 77,898 | 82,815 | | Inventories | 238,232 | 204,725 | | Total current assets | 407,858 | 408,526 | | Property, plant and equipment, net | 169,292 | 221,150 | | Goodwill | - | 45,800 | | Total assets | $752,981 | $867,653 | | **LIABILITIES AND EQUITY:** | | | | Short-term bank credit | $26,135 | $12,523 | | Trade payables | 62,194 | 81,369 | | Total current liabilities | 164,984 | 183,294 | | Long-term bank and other loans and financing liability of land from a related party | 4,823 | 6,240 | | Total long-term liabilities | 159,048 | 182,195 | | Total equity | 421,046 | 494,295 | | Total liabilities and equity | $752,981 | $867,653 | [Statements of Income (Loss)](index=8&type=section&id=7.2.%20Statements%20of%20Income%20(Loss)) The condensed consolidated statements of income (loss) present the company's financial performance for the three and twelve months ended December 31, 2022, and 2021, including revenues, costs, and net income/loss Condensed Consolidated Statements of Income (Loss) (in thousand USD, except per share data) | U.S. dollars in thousands (except per share data) | Three months ended Dec 31, 2022 (Unaudited) | Three months ended Dec 31, 2021 | Twelve months ended Dec 31, 2022 (Unaudited) | Twelve months ended Dec 31, 2021 (Audited) | | :---------------------------------------------- | :------------------------------------------ | :------------------------------ | :------------------------------------------- | :----------------------------------------- | | Revenues | $159,369 | $171,057 | $690,806 | $643,892 | | Cost of revenues | 128,438 | 131,379 | 527,561 | 472,394 | | Gross profit | 30,931 | 39,678 | 163,245 | 171,498 | | Total operating expenses | 106,111 | 36,336 | 221,932 | 144,069 | | Operating income (loss) | (75,180) | 3,342 | (58,687) | 27,429 | | Finance expenses (income), net | 407 | 7,425 | (3,079) | 7,590 | | Net income (loss) attributable to controlling interest | (73,966) | (2,877) | (57,054) | 18,966 | | Diluted net income (loss) per ordinary share | (2.15) | (0.11) | (1.66) | 0.51 | [Statements of Cash Flows](index=9&type=section&id=7.3.%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows detail cash flows from operating, investing, and financing activities for the twelve months ended December 31, 2022, and 2021 Condensed Consolidated Statements of Cash Flows (as of December 31, in thousand USD) | U.S. dollars in thousands | Twelve months ended Dec 31, 2022 (Unaudited) | Twelve months ended Dec 31, 2021 (Audited) | | :------------------------ | :------------------------------------------- | :----------------------------------------- | | Net cash provided by (used in) operating activities | $(23,311) | $20,684 | | Net cash used in investing activities | $(7,285) | $(34,885) | | Net cash provided by (used in) financing activities | $9,156 | $(25,254) | | Decrease in cash and cash equivalents and short-term bank deposits | $(22,234) | $(39,933) | | Cash and cash equivalents and short-term bank deposits at end of the period | $52,081 | $74,315 | [**Non-GAAP Reconciliations**](index=10&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP financial measures to their corresponding non-GAAP adjustments for various periods [Gross Profit to Adjusted Gross Profit Reconciliation](index=10&type=section&id=8.1.%20Gross%20Profit%20to%20Adjusted%20Gross%20Profit) This section provides the reconciliation of GAAP gross profit to adjusted gross profit for Q4 and full-year 2022 and 2021, detailing adjustments such as share-based compensation, acquisition-related asset amortization, and restructuring expenses Gross Profit to Adjusted Gross Profit Reconciliation (in thousand USD) | U.S. dollars in thousands | Three months ended Dec 31, 2022 (Unaudited) | Three months ended Dec 31, 2021 | Twelve months ended Dec 31, 2022 (Unaudited) | Twelve months ended Dec 31, 2021 | | :------------------------ | :------------------------------------------ | :------------------------------ | :------------------------------------------- | :------------------------------- | | Gross profit | $30,931 | $39,678 | $163,245 | $171,498 | | Share-based compensation expense (a) | 86 | 107 | 315 | 321 | | Amortization of assets related to acquisitions | 72 | 79 | 306 | 852 | | Restructuring expenses (b) | 237 | - | 237 | - | | Adjusted Gross profit (Non-GAAP) | $31,326 | $39,864 | $164,103 | $172,671 | [Net Income (Loss) to Adjusted EBITDA Reconciliation](index=10&type=section&id=8.2.%20Net%20Income%20(Loss)%20to%20Adjusted%20EBITDA) This reconciliation details the adjustments from GAAP net income (loss) to adjusted EBITDA for Q4 and full-year 2022 and 2021, including finance expenses, taxes, depreciation, amortization, legal settlements, and impairment charges Net Income (Loss) to Adjusted EBITDA Reconciliation (in thousand USD) | U.S. dollars in thousands | Three months ended Dec 31, 2022 (Unaudited) | Three months ended Dec 31, 2021 | Twelve months ended Dec 31, 2022 (Unaudited) | Twelve months ended Dec 31, 2021 | | :------------------------ | :------------------------------------------ | :------------------------------ | :------------------------------------------- | :------------------------------- | | Net income (loss) | $(73,888) | $(3,303) | $(56,366) | $17,889 | | Finance expenses (income), net | 407 | 7,425 | (3,079) | 7,590 | | Taxes on income | (1,699) | (780) | 758 | 1,950 | | Depreciation and amortization | 9,121 | 8,916 | 36,344 | 35,407 | | Legal settlements and loss contingencies, net (a) | (492) | (1,181) | 568 | 3,283 | | Impairment expenses related to goodwill and long lived assets | 71,258 | - | 71,258 | - | | Adjusted EBITDA (Non-GAAP) | $5,713 | $11,535 | $51,869 | $68,248 | [Net Income (Loss) Attributable to Controlling Interest to Adjusted Net Income (Loss) Attributable to Controlling Interest Reconciliation](index=11&type=section&id=8.3.%20Net%20Income%20(Loss)%20Attributable%20to%20Controlling%20Interest%20to%20Adjusted%20Net%20Income%20(Loss)%20Attributable%20to%20Controlling%20Interest) This reconciliation provides detailed adjustments from GAAP net income (loss) attributable to controlling interest to non-GAAP adjusted net income (loss) for Q4 and full-year 2022 and 2021, including legal settlements, acquisition adjustments, share-based compensation, and impairment expenses Net Income (Loss) Attributable to Controlling Interest to Adjusted Net Income (Loss) Attributable to Controlling Interest Reconciliation (in thousand USD, except per share data) | U.S. dollars in thousands (except per share data) | Three months ended Dec 31, 2022 (Unaudited) | Three months ended Dec 31, 2021 | Twelve months ended Dec 31, 2022 (Unaudited) | Twelve months ended Dec 31, 2021 | | :---------------------------------------------- | :------------------------------------------ | :------------------------------ | :------------------------------------------- | :------------------------------- | | Net income (loss) attributable to controlling interest | $(73,966) | $(2,877) | $(57,054) | $18,966 | | Legal settlements and loss contingencies, net (a) | (492) | (1,181) | 568 | 3,283 | | Amortization of assets related to acquisitions, net of tax | 536 | 502 | 2,084 | 2,391 | | Share-based compensation expense (b) | 259 | 458 | 1,502 | 1,845 | | Impairment expenses related to goodwill and long lived assets | 71,258 | - | 71,258 | - | | Restructuring expenses (d) | 684 | - | 684 | - | | Total adjustments after tax | 73,130 | 3,040 | 67,679 | 9,668 | | Adjusted net income (loss) attributable to controlling interest (Non-GAAP) | $(836) | $163 | $10,625 | $28,634 | | Adjusted earning (loss) per share (f) | $(0.02) | $0.01 | $0.31 | $0.83 | [**Geographic Revenue Breakdown**](index=11&type=section&id=Geographic%20Revenue%20Breakdown) This section presents a detailed table of revenue breakdown by geographic region for the fourth quarter and full year of 2022 and 2021, including year-over-year changes [Geographic Revenue Breakdown Table](index=11&type=section&id=9.1.%20Geographic%20Revenue%20Breakdown%20Table) This section provides detailed revenue data by geographic region (USA, Canada, Latin America, Australia, Asia, EMEA, Israel) for Q4 and full-year 2022 and 2021, including reported and constant currency year-over-year percentage changes Geographic Revenue Breakdown (in thousand USD) | U.S. dollars in thousands | Three months ended Dec 31, 2022 (Unaudited) | Three months ended Dec 31, 2021 | Twelve months ended Dec 31, 2022 (Unaudited) | Twelve months ended Dec 31, 2021 (Audited) | YoY % change (Q4) | YoY % change CCB (Q4) | YoY % change (FY) | YoY % change CCB (FY) | | :------------------------ | :------------------------------------------ | :------------------------------ | :------------------------------------------- | :----------------------------------------- | :---------------- | :-------------------- | :---------------- | :-------------------- | | USA | $76,394 | $77,613 | $342,293 | $305,353 | (1.6)% | (1.6)% | 12.1% | 12.1% | | Canada | 20,673 | 22,263 | 93,377 | 84,467 | (7.1)% | 0.1% | 10.5% | 14.6% | | Latin America | 964 | 1,618 | 4,481 | 4,702 | (40.4)% | (40.4)% | (4.7)% | (4.7)% | | America's Total | 98,031 | 101,494 | 440,151 | 394,522 | (3.4)% | (1.8)% | 11.6% | 12.4% | | Australia | 29,346 | 30,730 | 116,284 | 118,714 | (4.5)% | 6.6% | (2.0)% | 6.2% | | Asia | 7,891 | 8,011 | 34,607 | 30,390 | (1.5)% | (0.3)% | 13.9% | 15.3% | | APAC Total | 37,237 | 38,741 | 150,891 | 149,104 | (3.9)% | 5.1% | 1.2% | 8.1% | | EMEA | 15,266 | 18,160 | 63,320 | 60,836 | (15.9)% | (4.0)% | 4.1% | 16.7% | | Israel | 8,835 | 12,662 | 36,444 | 39,430 | (30.2)% | (23.7)% | (7.6)% | (4.5)% | | Total Revenues | $159,369 | $171,057 | $690,806 | $643,892 | (6.8)% | (2.1)% | 7.3% | 10.8% |