Caesarstone (NASDAQ:CSTE) reported first-quarter 2026 results that showed improved gross margins despite lower revenue, as the company continued shifting its production model and reducing costs under a broad restructuring plan.
Chief Executive Officer Yos Shiran said the quarter reflected “meaningful structural progress” in Caesarstone’s transformation. He pointed to a 100-basis-point increase in gross margin, even as revenue declined, supported by the company’s move to a third-party manufacturing model and a more optimized production footprint.
Revenue Declines Amid North America Weakness
Global revenue for the quarter was $88.7 million, down from $99.6 million in the prior-year period. On a constant-currency basis, revenue declined approximately 14.9% year over year, which Chief Financial Officer Nahum Trost attributed primarily to continued softness in global demand and competitive dynamics, mainly in North America.
In the United States, revenue was approximately $40 million, compared with $49.1 million a year earlier. Trost said the decline reflected persistent market softness and competitive pressures. Canada revenue fell 23.8% on a constant-currency basis due to similar dynamics.
Australia was a bright spot. Revenue there was approximately $17.1 million, up from $13.8 million in the prior-year quarter, representing an 11.2% increase on a constant-currency basis. Trost said it was the third consecutive quarter of year-over-year growth in Australia, reflecting growing acceptance of Caesarstone’s ICON products.
Shiran said Australia continued to perform strongly as the company regained market position following the introduction of its zero-silica ICON products. “This reinforces that our brand and innovation can drive renewed commercial momentum when aligned with market needs,” he said.
In EMEA, sales declined 10.3% on a constant-currency basis, primarily because of shipment timing in the company’s indirect distributor channel. Trost said Caesarstone expects that timing issue to normalize in the second quarter, while its direct business in Sweden and operations in the U.K. were relatively stable. In Israel, revenue declined to $4.2 million from $5 million, mainly due to the impact of regional conflict.
Gross Margin Improves as Restructuring Advances
Caesarstone’s gross margin was 22.3% in the quarter, compared with 21.3% in the prior-year period. Adjusted gross margin increased to 23.9% from 21.2%.
Trost said the improvement reflected benefits from the company’s production footprint changes. Quartz production has now been fully transitioned from Caesarstone’s Bar-Lev facility to its global manufacturing partner network. Porcelain production continues at the company’s Lioli facility in India.
The company said it continues to expect annualized cash savings of approximately $22 million by 2027 from the Bar-Lev transition, bringing total expected savings since 2023 to more than $100 million. Trost said restructuring cash costs were $0.4 million in the first quarter, with an additional $3 million to $5 million expected for the remainder of 2026.
Operating expenses were $39.2 million, or 44.1% of revenue, compared with $35.9 million, or 36.1% of revenue, in the prior-year quarter. Excluding legal settlements, loss contingencies, and impairment and restructuring expenses, operating expenses were 34.5% of revenue, compared with 32.6% a year earlier. Trost said the year-over-year difference was primarily due to lower revenue.
Adjusted EBITDA was a loss of $7.5 million, compared with a loss of $7.1 million in the prior-year quarter. Trost said the relatively stable adjusted EBITDA performance despite lower revenue underscored the benefit of Caesarstone’s strategic initiatives.
Balance Sheet, Tariffs and Trade Matters
As of March 31, 2026, Caesarstone had cash, cash equivalents and short-term bank deposits totaling $52.3 million. Total debt to financial institutions was $1.8 million, resulting in a net cash position of $50.4 million, compared with $57.5 million at the end of 2025.
Trost said the company is also evaluating additional steps to improve profitability and cash flow, including distribution center consolidation and other fixed cost reductions.
The company addressed the U.S. tariff environment, noting that broad-based import tariffs have been implemented across a range of countries and product categories. Trost said the average tariff applicable to products Caesarstone imports into the U.S. market is currently about 15%. Approximately 45% of Caesarstone’s revenue is generated in the United States and served by its global manufacturing partner network.
Trost said Caesarstone has been working with production partners to optimize its supply chain and has implemented a U.S. price increase to partially offset higher costs.
He also discussed a separate U.S. International Trade Commission investigation involving quartz-based trade matters. The ITC voted affirmatively on injury during the first quarter and, on May 5, issued recommended remedies that included a proposed four-year tariff-rate quota structure. Trost said President Trump is expected to issue a final determination within 60 days, and Caesarstone is assessing potential outcomes.
Legal Proceedings and Outlook
Caesarstone said that as of March 31, 2026, it faced 711 lawsuits alleging silica-related injuries, including 36 in Israel, 156 in Australia and 509 in the U.S. The company recorded a $48.8 million provision for its best estimate of probable losses, with $11.6 million in insurance receivables.
Trost said a jury in Colorado ruled in favor of Caesarstone in May, assigning no liability to the company. He also said the company settled four additional claims in California during the first quarter.
Looking ahead, management said the external environment remains uncertain due to evolving trade policies, macroeconomic pressures, geopolitical volatility and competitive dynamics. Shiran said the company remains focused on restructuring execution, production partnerships and sustainable profitability.
Based on its current operating plan and assuming no material deterioration in global economic and geopolitical conditions, Caesarstone said it remains on track to achieve positive adjusted EBITDA in the third quarter of 2026.
About Caesarstone (NASDAQ:CSTE)
Caesarstone Ltd. is an Israel-based manufacturer specializing in engineered quartz surfaces for residential and commercial applications. The company’s core business centers on the design, production and marketing of quartz slabs and tiles used for kitchen countertops, bathroom vanities, flooring and wall cladding. Caesarstone’s products combine natural quartz with resins and pigments to deliver durable, low-maintenance surfaces known for their aesthetic versatility and resistance to scratches, stains and heat.
Founded in 1987 and headquartered at Kibbutz Sdot Yam, Israel, Caesarstone has grown into a global brand with distribution in over 50 countries.
