Slide 1: Investors presentation December, 2015
Investors presentation December, 2015
Slide 2: Disclaimer
Disclaimer Written and oral statements made in and in connection with the following presentation that reflect management’s views about the Company’s future performance, financial position, business strategy and plans and objectives for future operations constitute “forward-looking statements” under
Slide 3: Company Overview
Company Overview • 27 years of leadership • Strong premium brand • 12% global market share (by volume) • Distribution network across over 50 countries • Diversified revenue with approximately 55% of revenue from North America Quartz Market Opportunity 1 • 2014 market penetration: 10% by sales • Fast
Slide 4: Key Investment Highlights
Key Investment Highlights • Premium brand with superior customer value proposition • Global market leader in high growth quartz surfaces market • Strong, diversified global distribution platform • World-class marketing, R&D and manufacturing capabilities • Proven track record of growth and product i
Slide 5: Caesarstone's Superior Value Proposition
Quartz received the highest overall score among countertop materials - Consumer Reports Magazine, July 2013 Caesarstone’s Superior Value Proposition • Premium product with unique combination of high quality & long lasting beauty • Trend-setting innovation with top design • High service level with co
Slide 6: A Globally Recognized Premium Brand
A Globally Recognized Premium Brand Basic colors Concetto Supernatural • Patterned textures • Patented • Customizable • Hand-incorporated semi- precious stones Supernatural Ultra • The beauty of luxurious marble with Caesarstone quality • Proprietary technology • Inspired by nature • Marble and gran
Slide 7: Leading Global Footprint with Diverse Revenue Mix
Leading Global Footprint with Diverse Revenue Mix Singapore Canada USA Australia Direct distribution Indirect distribution
Slide 8: Positioned to Capture Growth from Quartz Penetration
Positioned to Capture Growth from Quartz Penetration $81B Global Countertop Market Material Segmentation (2014 sales) 2014 Quartz Share of Countertop Market by Region (by volume) Source: Freedonia February 2015; company estimates Note: Quartz share based on value
Slide 9: The U.S. Remains a Significant Opportunity
Caesarstone continues to execute on its go-to-market strategy in the U.S. driven by increasing quartz penetration 21% 9% 42% 50% YoY organic growth 23% The U.S. Remains a Significant Opportunity Source: Freedonia February 2015; Company estimates 1 Calculation applies 1% increase in quartz penetratio
Slide 10: Growing Brand Awareness in the U.S.
Growing Brand Awareness in the U.S. WALL STREET he JOURNAL todas t Printing West Village From Midcentury to Modern The new kitchen was created out of what is dominated by an 18-foot-long island made of whit Cassarstone quartz ‘Source: Wall Steet Jour (March22,2013:*From Midcentryte Moser Source: tp
Slide 11: The most important tool in the kitchen is not a tool at all
THE MOST IMPORTANT TOOL IN THE KITCHEN IS NOT A TOOL AT ALL
Slide 12: Quartz Market Opportunity
Quartz Market Opportunity 2 • Fastest growing surfaces category (’99 - ’14) • Grew at 15.7% CAGR • From 2% penetration in 1999 Significant Growth Potential $8bn Quartz Market (10% penetration) 2 Premium Value For Money Price $81bn¹ Total Market Premium Value For Money Price > $81bn Total Potential A
Slide 13: A Comprehensive Marketing Approach
A Comprehensive Marketing Approach Distributor Fabricator Kitchen/ Bathroom Store Contractor / Commercial End User Push Fabricator § Technical support § Seminars § Warranty § Loyalty Club In-Store § Display slabs § Brochures § Sample books § Display stands Architects & Designers § Exhibitions & spec
Slide 14: World Class Manufacturing and R&D Capabilities
• Unique advanced technological capabilities • Continued investment in differentiated products • Product superiority with zero defect policy World Class Manufacturing and R&D Capabilities Current Facilities • High standards (ISO, Leed, NSF SCS, Greenguard) • High throughput and lean approach • Binde
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Slide 18: Differentiated Products Backed by R&D and IP
Our successful collection backed by proprietary technology drives ASP and margins Differentiated Products Backed by R&D and IP Calacatta Nuvo • Luxurious natural marble look • Launched in 2014 Supernatural - Marble • Inspired by marble • Successful 2012 rollout Shitake • Sophisticated blend of brown
Slide 19: Proven Track Record of Growth and Innovation
Market Entry New Products Direct Distribution Manufacturing History of execution with a clear strategy to capture future growth Proven Track Record of Growth and Innovation • Proven ability to enter and develop key markets • Continued introduction of innovative new products Israel South East Asia Co
Slide 20: Strong Growth and Profitability
Revenue ($mm) Adj. EBITDA and % Margin ($mm) Adj. Net Income and % Margin 1 ($mm) Gross Profit and % Margin ($mm) Strong Growth and Profitability YoY Growth: 30.6% 22.2% 20.2% 14.2% 33.2% 45.6% 27.3% 22.2% YoY Growth: YoY Growth: 16.4% 46.8% 32.1% 18.2% 16.8% 85.9% 45.3% 26.6% YoY Growth: ¹ Adjusted
Slide 21: Quarterly Financial Performance
Revenue ($mm) Adj. EBITDA ($mm) Quarterly Financial Performance • Industry characterized by seasonality with strong Q3 and weaker Q1 annually • Consistent year-over-year revenue growth across quarters • Robust Adjusted EBITDA growth year-over-year despite volatility in raw material costs, exchange r
Slide 22: Cash Flow Supports Future Growth
Strong and robust free cash flow generation will support investment in future growth Capital Expenditure ($mm) Adj. EBITDA Less Capital Expenditure ($mm) Cash Flow Supports Future Growth • Strong cash flow generation and growth enabling $20mm dividend distribution in 2013 and 2014 • Ability to inves
Slide 23: YTD'15 Highlights
YTD’15 Highlights
Slide 24: Financial Highlights
Financial Highlights • Revenue growth of 11.5% YoY, 22.3% on a constant currency basis - § U.S. up 22.7% despite slower housing growth, reflecting continued Quartz conversion; § Australia up 21.3% on a constant currency basis, driven by our new product successes (new Calacatta and Statuario) and str
Slide 25: Proxy contest at the 2015 AGM held on December 3, 2015
» Proxy contest at the 2015 AGM held on December 3, 2015 , initiated by Kibbutz Sdot Yam (owner of 32.4% of Company’s shares) = Per the preliminary results, Company’s slate of directors was supported by more than 91% of votes cast by non-affiliates of the Kibbutz = As concluded by ISS, Glass Lewis a
Slide 26: Additional Information - cnt'd
Additional Information - cnt’d
Slide 27: Additional Information - cnt'd: Legal Proceedings
Additional Information - cnt’d • Legal Proceedings * § Silicosis claims - Q3’15 included a non-cash expense of $4.7M related to silicosis claims (other than the claim filed seeking class action status), reflecting an estimate of the Company’s total uninsured exposure (recorded under Operating Expens
Slide 28: Caesarstone's Growth Prospects
Caesarstone’s Growth Prospects • Strengthen the brand through investment in strong R&D and continue developing innovative new colors, designs, and textures • Increase awareness of our premium brand by continuing to focus on quality, service and implementation of our proven marketing approach Premium
Slide 29: © caesarstone
© caesarstone
Slide 30: Non-GAAP reconciliation footnotes
(1) Consists of our portion of the results of operations of Caesarstone USA prior to its acquisition by us in May 2011. (2) 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
Slide 31: Non-GAAP reconciliation footnotes
(1) 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 inventory that was purchased from its distributor and Caesarstone Australia Pty Limi