Slide 1: Caesarstone's Response to Spruce Point
Exhibit 99.1 Caesarstone’s Response to Spruce Point September 9, 2015 1
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: Executive Summary
Executive Summary § This presentation is a direct response to the Spruce Point report published on August 19, 2015, which is a misleading and otherwise factually inaccurate description of Caesarstone § This presentation generally relies upon Caesarstone’s prior statements and disclosures and other p
Slide 4: Caesarstone Global Leader in the Quartz Surface Market
Caesarstone Global Leader in the Quartz Surface Market 4
Slide 5: Company Overview
Company Overview § Pioneered the quartz surfaces 28 years ago and has led the category since then § Strong premium brand known for high quality, innovation, inspiring design and excellent service § 12% global market share as of December 2014¹ § Distribution network across more than 50 countries § Di
Slide 6: Quartz Market Opportunity — Fastest Growing Category in an $81bn Market
Quartz Market Opportunity — Quartz is the Fastest Growing Category in an $81bn¹ Market $81B Global Countertop Market Material Segmentation (2014 sales) § 2014 market penetration - 10% by sales² § Fastest growing surfaces category (’99 - ’14) § Grew at 15.7% CAGR § From 2% penetration in 1999 § Captu
Slide 7: The U.S. Remains a Significant Opportunity
The U.S. Remains a Significant Opportunity Caesarstone U.S. Revenue Performance U.S. Market Penetration (by ($mm) 50% 186 volume) 1% increase in penetration ≈ $350mm1 42% 23% 21% 9% YoY organic growth U.S. New Housing Starts2 U.S. Home Improvement Product Sales3 1,400k 1,001k 2014 2016E 1 Source: Fr
Slide 8: Successful Innovative Products
Successful Innovative Products 8
Slide 9: Statuario Nuvo 5111
Statuario Nuvo 5111 ©caesarstone
Slide 10: Vanilla Noir
Vanilla Noir 5100 10
Slide 11: Bianco Drift
a, er ~~ ~~~ Bianco Drift et kes Sa ww er www YY @3&€aesarstone 5
Slide 12: A Leading Brand
A Leading Brand Ty Pennington, Television Host “You walk into a home and you Designer Trace Lehnhoff chose see the kitchen has Caesarstone in it? It changes the way you look at Caesarstone Pure White for Neil Patric the value of that house.” Harris’ new kitchen (Published in Architectural Digest) To
Slide 13: Fast Growing Company
Fast Growing Company Caesarstone was ranked #63 in FORTUNE’s Fastest-Growing Companies list for 2015 (Published 2015) 13
Slide 14: Spruce Point Report
Spruce Point Report Spruce Point Capital Management published on August 19, 2015 a so-called “Investment Research Report” while identifying itself as having a short position in Caesarstone’s shares and stating that it therefore stands to realize significant gains if the price of Caesarstone’s shares
Slide 15: Spruce Point Report
Spruce Point Report Spruce Point misrepresents Caesarstone’s business, and stands to profit from any negative view created in the minds of investors relying on its misrepresentations and its “short agenda”. Spruce Point’s claims refer to the following: - Caesarstone’s products and brand - Caesarston
Slide 16: Caesarstone Products and Brand
Caesarstone Products and Brand 16
Slide 17: Stated Quartz Content
Stated Quartz Content ! Spruce Point’s misrepresentation: FACT: Caesarstone advertises that its products Caesarstone states clearly that its products contain 93% quartz, but they may contain contain up to 93% quartz less quartz From Caesarstone’s web site § Caesarstone states very clearly that its p
Slide 18: Quartz Content Comparison
Quartz Content Comparison FACT: ! Spruce Point’s misrepresentation : Caesarstone’s products contain optimal quartz Caesarstone’s products contain less quartz content compared to competitors’ products; than competitors’ products Product quality relative to competing products cannot be simply measured
Slide 19: Quality — Consumer Satisfaction
Quality — Consumer Satisfaction ! Spruce Point’s misrepresentation: FACT: Cautionary reviews amplify concerns about Very high level of consumer satisfaction with product quality Caesarstone products’ quality § Caesarstone faces less than 0.5% warranty claims out of sold From countertop investigator
Slide 20: Innovation Pace
Innovation Pace ! Spruce Point’s misrepresentation: FACT: Since 1987 the company has introduced three Since 2012 Caesarstone has successfully additional product collections. Caesarstone launched 20 new colors in the U.S. market. has introduced only a few new collections in Caesarstone continues to e
Slide 21: Caesarstone Financials and Reports
Caesarstone Financials and Reports 21
Slide 22: Quartz Prices Increase
Quartz Prices Increase ! Spruce Point’s misrepresentation: FACT: Quartz prices increased by 20% as opposed Our cost of quartz increased by approximately to 4% represented by the Company 4% from 2013 to 2014 as stated in our Form 20-F for 2014 Spruce Point presented two letters entered into between C
Slide 23: Quartz Content and Cost Saving
Quartz Content and Cost Saving ! Spruce Point’s misrepresentation: FACT: In light of the rising Quartz prices, it is As stated in our 20-F, polyester is significantly mo possible expensive than quartz. The company’s cost incentiv that Caesarstone is mitigating price increases will thus always be to
Slide 24: Gross Margins of the Australian and Singaporean Subsidiaries
Gross Margins of the and Singaporean Subsidiaries Australian ! Spruce Point’s misrepresentation: FACT: Caesarstone’s reported gross margin is in Subsidiary-level gross margins reflect transfer prici question because of the gross margins of adjustments and are not relevant to the consolidated Austral
Slide 25: Impact of Foreign Exchange Rates
Impact of Foreign Exchange Rates ! Spruce Point’s misrepresentation: FACT: Significant margin erosion appears to be Q2’15 gross margin was impacted negatively by masked by FX benefits; a pro-forma analysis approximately 200 basis points compared to Q2’14 for Q2 2015 prepared by Spruce Point stated i
Slide 26: Cash Flow vs. Balance Sheet
Cash Flow vs. Balance Sheet ! Spruce Point’s misrepresentation : FACT: Caesarstone’s Cash Flow not reconciling with Cash Flow and Balance Sheet changes are aligned Balance Sheet changes subject to standard accounting rule requirements § All year over year changes reflected in our BS are fully aligne
Slide 27: PCAOB Comments
PCAOB Comments ! Spruce Point’s misrepresentation: FACT: PCAOB 2013 inspection reports show significant PCAOB reports referred to by Spruce Point are not deficiencies related to Caesarstone, and Spruce Point had no reason to assume otherwise § Spruce Point wrongly suggests that Caesarstone’s financi
Slide 28: Gap Between Payables and Receivables Days
Gap Between Payables and Receivables Days ! Spruce Point’s misrepresentation: FACT: § Unusual significant spread between CSTE’s DSO Spruce Point drew a misleading graph with two and separate bars and scales for DSO and DPO, thereby DPO - “The spread of 30 at year end 2014 was creating the wrong impr
Slide 29: Gap Between Payables and Receivables Days (cnt'd)
Gap Between Payables and Receivables Days (cnt’d) Spruce Point chart with misleading Chart with single scales scale 29
Slide 30: Market Trends and Caesarstone Premium Position
Market Trends and Caesarstone Premium Position 30
Slide 31: Fabricators' Business Insights
Fabricators’ Business Insights FACT: ! Spruce Point’s misrepresentation: A minority of fabricators (naturally) see margins Stone fabricators are worried about margin as a challenge and the majority are reporting contraction growth in their business at the same time and expecting the stone market to
Slide 32: R&D Expenses
R&D Expenses ! Spruce Point’s misrepresentation: FACT: Caesarstone portrays itself as a premium We have a strong and high performing R&D product but its R&D margins and headcount team, responsible for our continuing are shrinking successful offering of innovative products. R&D expenses and headcount
Slide 33: M&S Expenses
M&S Expenses ! Spruce Point’s misrepresentation: FACT: Caesarstone Marketing and Sales margins have fallen We have strong marketing and sales sharply resources, as reflected in our strong brand § If Caesarstone doesn’t spend more - sales growth and top line growth will decline § If Caesarstone spend
Slide 34: Manufacturing Expansion in the U.S.
Manufacturing Expansion in the U.S. FACT: ! Spruce Point’s misrepresentation: We believe the quartz revolution is gaining Caesarstone is expanding its manufacturing into momentum in the U.S. market and there is much a rapidly saturated market potential for growth. We have added additional capacity i
Slide 35: Caesarstone's Market Share in the U.S. Market
Caesarstone’s Market Share in the U.S. Market ! Spruce Point’s misrepresentation: FACT: Caesarstone is using Freedonia paid-for Import data presented by Spruce Point is research to provide market data, therefore the misleading and not indicative as to actual data can’t be considered as unbiased; Imp
Slide 36: Thank you
Thank you ©caesarstone’ 36
Slide 37: Footnotes to reconciliation
(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 38: Footnotes to reconciliation
(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