Caesarstone (NASDAQ:CSTE) reported a nearly break-even adjusted EBITDA result for the third quarter of 2026, as cost savings and a shift to outside production partners improved margins despite falling revenue and a widening net loss.
Revenue declined to $96.3 million from $102.1 million a year earlier, while adjusted EBITDA was a loss of $0.1 million, compared with a loss of $7.9 million. The company’s net loss attributable to controlling interest widened to $56.1 million, or $1.62 per share, from $18.1 million, or $0.52 per share.
Chief Financial Officer Nahum Trost said higher legal settlements and loss contingencies drove an increase in operating expenses. Management also discussed a recent California jury verdict in a case alleging injury from exposure to silica particles during product fabrication, saying it had created significant uncertainty about the company’s financial condition.
Margins Improve as Production Shifts
Gross margin rose to 25.4% from 17.3% a year earlier and 24% in the second quarter. Adjusted gross margin, which excludes residual costs related to closed plants, increased to 26.9% from 17.3%.
Trost attributed the improvement primarily to savings from closing the Bar-Lev facility and shifting production to global partners. The quarter also included an approximately $0.9 million refund of previously paid U.S. IEEPA tariffs, partly offset by higher tariffs and freight costs.
Chief Executive Officer Yos Shiran said all of Caesarstone’s quartz products are now produced by its global production partners. He said the company’s goal is to achieve positive adjusted EBITDA on a sustained basis.
Operating expenses climbed to $81.4 million from $33.7 million a year earlier. Excluding legal settlements and loss contingencies, impairment and restructuring, operating expenses improved to 28.8% of revenue from 29.1%.
U.S. Weakness Offset by Australian Growth
Revenue fell approximately 7.2% on a constant-currency basis, which Trost attributed mainly to competition and soft demand, particularly in the United States.
U.S. revenue declined 16.9% to approximately $38.8 million, primarily because of lower quartz volumes in the core business. Trost said demand remained soft for commercial projects and sales through stone suppliers, although big-box revenue grew, driven by IKEA.
Australia revenue rose to $22.4 million from $18.5 million, an increase of 12.2% on a constant-currency basis. It was the fifth consecutive quarter of year-over-year growth in the market, supported by the company’s zero-silica ICON products, although Trost said overall Australian demand remained soft.
Canada revenue decreased 0.7% on a constant-currency basis, while EMEA revenue increased 0.8%. In Israel, revenue fell 24.9% on the same basis, which Trost attributed mainly to slow market conditions and the timing of Jewish holidays.
Verdict and Tariffs Add Uncertainty
Trost said a California jury on Oct. 26 apportioned 69% of the fault in one silica-related case to Caesarstone, equivalent to approximately $46.8 million if assessed without modification. Shiran and Trost said the company strongly disagrees with the verdict and will consider available post-trial remedies.
The company also estimates that additional U.S. quartz tariffs will have an annualized impact of $10 million to $15 million. Trost said Caesarstone implemented U.S. price increases in September and is reviewing sourcing and supply-chain changes to reduce the impact.
At Sept. 30, Caesarstone had a net cash position of $50.7 million and no debt to financial institutions, compared with $51.8 million in net cash at June 30. Trost said the company expects annualized savings from its restructuring actions to exceed $100 million by 2027, measured against full-year 2023.
About Caesarstone (NASDAQ:CSTE)
Caesarstone Ltd. (NASDAQ: CSTE) is a manufacturer and distributor of engineered surfaces used primarily in residential and commercial construction and remodeling. The company is best known for quartz surfaces designed for kitchen countertops, bathroom vanities and other interior applications. Its product portfolio also includes porcelain and natural stone surfaces, along with related designs for wall cladding, flooring, tables and outdoor areas. Caesarstone markets its products through distributors, fabricators, retailers, kitchen and bath specialists, and other building-materials channels.
