☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report. |
For the transition period from ______ to ______
OR
☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report.
Commission File Number 001-35464
(Jurisdiction of incorporation or organization)
MP Menashe, 3780400
Israel
(Address of principal executive offices)
Chief Executive Officer
Caesarstone Ltd.
MP Menashe, 3780400
Israel
Telephone: +972 (4) 636-4555
Facsimile: +972 (4) 636-4400
(Name, telephone, email and/or facsimile number and address of company contact person)
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Ordinary Shares, par value NIS 0.04 per share | CSTE | The Nasdaq Stock Market LLC |
Large accelerated filer ☐ | Accelerated filer ☒ | Non-accelerated filer ☐ |
Emerging growth company ☐ |
U.S. GAAP ☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
• |
• | our ability to effectively manage changes to our production and supply chain and effectively collaborate with Original Equipment Manufacturer (“OEM”) suppliers; |
• | our ability to manage or resolve conflicts of interest arising from employee affiliations with Kibbutz Sdot-Yam (the “Kibbutz”) and with Tene Investment in Projects 2016 Limited Partnership (“Tene”); |
• | our ability to maintain our lease agreements with the Kibbutz, the Israeli Lands Administration (the “ILA”) and Caesarea Development Corporation; |
1 | |||
1 | | ||
1 | | ||
1 | | ||
[Reserved] | 1 | ||
Capitalization and Indebtedness | 1 | | |
Reasons for the Offer and Use of Proceeds | 1 | ||
D. | Risk Factors | 1 | |
37 | | ||
History and Development of the Company | 37 | | |
Business Overview | 38 | | |
Organizational Structure | 51 | | |
Property, Plants and Equipment | 52 | | |
54 | | ||
54 | | ||
Operating Results | 54 | | |
Liquidity and Capital Resources | 67 | | |
Research and Development, Patents and Licenses | 70 | | |
Trend Information | 70 | | |
Critical Accounting Estimates | 70 | | |
Directors and Senior Management | 75 | | |
Compensation | 79 | | |
Board Practices | 84 | | |
D. | Employees | ||
E. | Share ownership | ||
Major Shareholders | 99 | | |
Related Party Transactions | 102 | | |
Interests of Experts and Counsel | 107 | | |
Consolidated Financial Statements and Other Financial Information | 107 | | |
Significant Changes | 110 | | |
Offer and Listing Details | 110 | | |
Plan of Distribution | 110 | | |
Markets | 110 | | |
Selling Shareholders | 110 | ||
Dilution | 110 | | |
Expenses of the Issue | 110 | | |
110 | |||
Share Capital | 110 | | |
Memorandum | 111 | | |
Material Contracts | 111 | | |
Exchange Controls | 111 | | |
Taxation | 111 | | |
Dividends and Paying Agents | 122 | | |
Statements by Experts | 122 | | |
Documents on Display | 122 | | |
Subsidiary Information | 122 | | |
J. | Annual Report to Security Holders |
| |||
124 | |||
125 | |||
126 | |||
127 | |||
A. | [Reserved] |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
A. | History and Development of the Company |
B. | Business Overview |
For the year ended December 31, | For the year ended December 31, | |||||||||||||||||||||||||||||||||||||||
2020 | 2016 | 2014 | 2012 | 2010 | 2022 | 2020 | 2016 | 2014 | 2012 | |||||||||||||||||||||||||||||||
Region | ||||||||||||||||||||||||||||||||||||||||
United States | 20 | % | 14 | % | 8 | % | 6 | % | 5 | % | 21 | % | 20 | % | 14 | % | 8 | % | 6 | % | ||||||||||||||||||||
Australia (not including New Zealand) | 47 | % | 45 | % | 39 | % | 35 | % | 32 | % | 48 | % | 47 | % | 45 | % | 39 | % | 35 | % | ||||||||||||||||||||
Canada | 28 | % | 24 | % | 18 | % | 12 | % | 9 | % | 27 | % | 28 | % | 24 | % | 18 | % | 12 | % | ||||||||||||||||||||
Israel (*) | 67 | % | 87 | % | 86 | % | 85 | % | 82 | % | 53 | % | 67 | % | 87 | % | 86 | % | 85 | % |
• | Emissions - Israel. |
• | Workers’ safety and health. The Israeli Ministry of Economics, Labor Division (“IMOE”) in Israel the U.S. Occupational Safety and Health Administration (“ |
2021 | 2020 | 2019 | 2018 | 2017 | ||||||||||||||||
Reconciliation of Gross profit to Adjusted Gross profit: | ||||||||||||||||||||
Gross profit | $ | 171,498 | $ | 133,942 | $ | 148,639 | $ | 163,414 | $ | 197,223 | ||||||||||
Share-based compensation expense (a) | 321 | 416 | 285 | 163 | 285 | |||||||||||||||
Non-recurring import related expenses (income) | — | — | (1,501 | ) | 2,104 | — | ||||||||||||||
Amortization of assets related to acquisitions | 852 | 529 | — | — | — | |||||||||||||||
Other non-recurring items (b) | — | — | 1,661 | — | — | |||||||||||||||
Adjusted Gross profit | $ | 172,671 | $ | 134,887 | $ | 149,084 | $ | 165,681 | $ | 197,508 |
2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
Reconciliation of Gross profit to Adjusted Gross profit: | ||||||||||||||||||||
Gross profit | $ | 163,245 | $ | 171,498 | $ | 133,942 | $ | 148,639 | $ | 163,414 | ||||||||||
Share-based compensation expense (a) | 315 | 321 | 416 | 285 | 163 | |||||||||||||||
Non-recurring import related expenses (income) | — | — | — | (1,501 | ) | 2,104 | ||||||||||||||
Amortization of assets related to acquisitions | 306 | 852 | 529 | — | — | |||||||||||||||
Other non-recurring items (b) | 237 | — | — | 1,661 | — | |||||||||||||||
Adjusted Gross profit | $ | 164,103 | $ | 172,671 | $ | 134,887 | $ | 149,084 | $ | 165,681 |
(a) | Share-based compensation includes expenses related to stock options and restricted stock units granted to employees and directors of the |
(b) | In 2022, reflects workforce reduction, and in 2019, reflects mainly |
2021 | 2020 | 2019 | 2018 | 2017 | 2022 | 2021 | 2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||
Reconciliation of Net Income to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 17,889 | $ | 7,622 | $ | 12,862 | $ | 24,568 | $ | 27,558 | ||||||||||||||||||||||||||||||
Finance expenses, net | 7,590 | 10,199 | 5,578 | 3,639 | 5,583 | |||||||||||||||||||||||||||||||||||
Reconciliation of Net Income to Adjusted EBITDA:s | ||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (56,366 | ) | $ | 17,889 | $ | 7,622 | $ | 12,862 | $ | 24,568 | |||||||||||||||||||||||||||||
Finance expenses (income), net | (3,079 | ) | 7,590 | 10,199 | 5,578 | 3,639 | ||||||||||||||||||||||||||||||||||
Taxes on income | 1,950 | 4,700 | 6,243 | 4,560 | 7,402 | 758 | 1,950 | 4,700 | 6,243 | 4,560 | ||||||||||||||||||||||||||||||
Depreciation and amortization | 35,407 | 29,460 | 28,587 | 28,591 | 29,926 | 36,344 | 35,407 | 29,460 | 28,587 | 28,591 | ||||||||||||||||||||||||||||||
Legal settlements and loss contingencies, net (a) | 3,283 | 6,319 | 12,359 | 8,903 | 24,797 | 568 | 3,283 | 6,319 | 12,359 | 8,903 | ||||||||||||||||||||||||||||||
Contingent consideration adjustment related to acquisition | 284 | — | — | — | — | 120 | 284 | — | — | — | ||||||||||||||||||||||||||||||
Share-based compensation expense (b) | 1,845 | 2,858 | 3,632 | 1,684 | 5,277 | 1,502 | 1,845 | 2,858 | 3,632 | 1,684 | ||||||||||||||||||||||||||||||
Provision for employee fringe benefits (c) | — | — | — | — | (114 | ) | ||||||||||||||||||||||||||||||||||
Impairment expenses related to goodwill and long lived assets | 71,258 | — | — | — | — | |||||||||||||||||||||||||||||||||||
Non-recurring import related expense (income) | — | — | (1,501 | ) | 2,104 | — | — | — | — | (1,501 | ) | 2,104 | ||||||||||||||||||||||||||||
Acquisition-related expenses | — | 921 | — | — | — | 80 | — | 921 | — | — | ||||||||||||||||||||||||||||||
Other non-recurring items | — | — | 1,286 | 1,157 | — | 684 | — | — | 1,286 | 1,157 | ||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 68,248 | $ | 62,079 | $ | 69,046 | $ | 75,206 | $ | 100,429 | $ | 51,869 | $ | 68,248 | $ | 62,079 | $ | 69,046 | $ | 75,206 |
(a) | Consists of legal settlements expenses and loss contingencies, net related to product liability claims and other adjustments to ongoing legal claims, including related legal fees. |
(b) | Share-based compensation includes expenses related to stock options and restricted stock units granted to employees and directors of the |
(c) | In |
2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
Reconciliation of Net Income (loss) Attributable to Controlling Interest to Adjusted Net Income Attributable to Controlling Interest: | ||||||||||||||||||||
Net income (loss) attributable to controlling interest | $ | (57,054 | ) | $ | 18,966 | $ | 7,218 | $ | 12,862 | $ | 24,405 | |||||||||
Legal settlements and loss contingencies, net (a) | 568 | 3,283 | 6,319 | 12,359 | 8,903 | |||||||||||||||
Contingent consideration adjustment related to acquisition | 120 | 284 | — | — | — | |||||||||||||||
Amortization of assets related to acquisitions, net of tax | 2,084 | 2,391 | 446 | — | — | |||||||||||||||
Share-based compensation expense (b) | 1,502 | 1,845 | 2,858 | 3,632 | 1,684 | |||||||||||||||
Non-cash revaluation of lease liabilities (c) | (9,527 | ) | 2,918 | 3,189 | 3,615 | — | ||||||||||||||
Non-recurring import related expense (income) | — | — | — | (1,501 | ) | 2,104 | ||||||||||||||
Impairment expenses related to goodwill and long lived assets | 71,258 | — | — | — | — | |||||||||||||||
Acquisition-related expenses | 80 | — | 921 | — | — | |||||||||||||||
Other non-recurring items (d) | 684 | — | — | 2,486 | 1,157 | |||||||||||||||
Total adjustments before tax | 66,769 | 10,721 | 13,733 | 20,591 | 13,848 | |||||||||||||||
Less tax on above adjustments (e) | (910 | ) | 1,054 | 4,488 | 6,729 | 2,168 | ||||||||||||||
Total adjustments after tax | $ | 67,679 | $ | 9,667 | $ | 9,245 | $ | 13,862 | $ | 11,680 | ||||||||||
Adjusted net income attributable to controlling interest | $ | 10,625 | $ | 28,633 | $ | 16,463 | $ | 26,724 | $ | 36,085 |
2021 | 2020 | 2019 | 2018 | 2017 | ||||||||||||||||
Reconciliation of Net Income Attributable to Controlling Interest to Adjusted Net Income Attributable to Controlling Interest: | ||||||||||||||||||||
Net income attributable to controlling interest | $ | 18,966 | $ | 7,218 | $ | 12,862 | $ | 24,405 | $ | 26,202 | ||||||||||
Legal settlements and loss contingencies, net (a) | 3,283 | 6,319 | 12,359 | 8,903 | 24,797 | |||||||||||||||
Contingent consideration adjustment related to acquisition | 284 | — | — | — | — | |||||||||||||||
Amortization of assets related to acquisitions, net of tax | 2,391 | 446 | — | — | — | |||||||||||||||
Share-based compensation expense (b) | 1,845 | 2,858 | 3,632 | 1,684 | 5,277 | |||||||||||||||
Provision for employee fringe benefits (c) | — | — | — | — | (114 | ) | ||||||||||||||
Non-cash revaluation of lease liabilities (d) | 2,918 | 3,189 | 3,615 | — | — | |||||||||||||||
Non-recurring import related expense (income) | — | — | (1,501 | ) | 2,104 | |||||||||||||||
Acquisition-related expenses | — | 921 | — | — | — | |||||||||||||||
Other non-recurring items (e) | — | — | 2,486 | 1,157 | — | |||||||||||||||
Total adjustments before tax | 10,721 | 13,733 | 20,591 | 13,848 | 29,960 | |||||||||||||||
Less tax on above adjustments (f) | 1,054 | 4,488 | 6,729 | 2,168 | 6,343 | |||||||||||||||
Total adjustments after tax | $ | 9,667 | $ | 9,245 | $ | 13,862 | $ | 11,680 | 23,617 | |||||||||||
Adjusted net income attributable to controlling interest | $ | 28,633 | $ | 16,463 | $ | 26,724 | $ | 36,085 | $ | 49,819 |
(a) | Consists of legal settlements expenses and loss contingencies, net related to product liability claims and other adjustments to ongoing legal claims, including related legal fees. |
(b) | Share-based compensation includes expenses related to stock options and restricted stock units granted to employees and directors of the |
(c) |
Exchange rate differences deriving from revaluation of lease contracts in accordance with FASB ASC 842. |
In 2022, related to workforce reduction, in 2019, relates to non-recurring expenses related to North American region establishment, one time charge related to reduction in headcount and certain activities including discontinuation of certain product group manufacturing, one time amortization of machinery equipment with no future alternative use, and in 2018 also relocation expenses of Caesarstone USA headquarters |
Based on the effective tax rates of the relevant periods. |
C. | Organizational Structure |
D. | Property, Plants and Equipment |
Properties | Issuer’s Rights | Location | Purpose | Size |
Kibbutz Sdot-Yam(1) | Land Use Agreement | Caesarea, Central Israel | Headquarters, manufacturing facility, research and development center | Approximately 30,000 square meters of facility and approximately 48,000 square meters of un-covered yard* |
Bar-Lev Industrial Park manufacturing facility(2) | Land Use Agreement & Ownership | Carmiel, Northern Israel | Manufacturing facility | Approximately 23,000 square meters of facility and approximately 50,000 square meters of un-covered yard** |
Belfast Industrial Center(3)(4) | Ownership | Richmond Hill, Georgia, United States | Manufacturing facility | Approximately 26,000 square meters of facility and approximately 401,000 square meters of un-covered yard (excluding 56,089 square meters of wetland) |
Bharat Nagar(5) | Ownership | Morbi, Gujarat, India | Manufacturing facility | Approximately 60,000 square meters of facility and approximately 55,000 square meters of open land, gas yard, effluent treatment plant, labor colony and roads |
(1) | Leased pursuant to a land use agreement with Kibbutz Sdot-Yam entered in March 2012 with a term of 20 years, which replaced the former land use agreement. Starting from September 2014 we use an additional 9,000 square meters pursuant to Kibbutz Sdot-Yam’s consent under terms materially similar to the land use agreement. However, we have the right to return such additional office space and premises to Kibbutz Sdot-Yam at any time upon 90 days’ prior written notice. In September 2016, we exercised our right to return to the Kibbutz an additional office space of approximately 400 square meters which we used since January 2014 under terms materially similar to the land use agreement. The lands on which these facilities are located are held by the ILA and leased or subleased by Kibbutz Sdot-Yam pursuant to agreements described in “ITEM 7.B: Major Shareholders and Related Party Transactions—Related Party Transactions—Relationship and agreements with Kibbutz Sdot-Yam—Land use agreement.” |
(2) | We own 2,673 square meters of facility and 2,550 square meters of uncovered yard, and the remainder is leased pursuant to a land use agreement with Kibbutz Sdot-Yam entered into in March 2011, with a term of 10 years commencing in September 2012, which will be automatically renewed, unless we give two years’ prior notice, for an additional 10-year term. In 2021, the agreement was extended for an additional ten year period. This agreement was executed simultaneously with the land purchase and leaseback agreement we entered into with Kibbutz Sdot-Yam, according to which Kibbutz Sdot-Yam acquired from us our rights in the lands and facilities of the Bar-Lev industrial center, under a long term lease agreement we entered into with the ILA on June 6, 2007 to use the premises for an initial period of 49 years as of February 6, 2005, with an option to renew for an additional term of 49 years as of the end of the initial period. For more information, see “ITEM 7.B: Major Shareholders and Related Party Transactions—Related Party Transactions—Relationship and agreements with Kibbutz Sdot-Yam—Land purchase agreement and leaseback.” |
(3) | On September 17, 2013, we entered into a purchase agreement for the purchase of approximately 45 acres of land in Richmond Hill, Georgia, United States, comprising approximately 36.6 acres of upland and approximately 9 acres of wetland for our new U.S. manufacturing facility, the construction of which was completed in 2015. On June 22, 2015, we exercised a purchase option in the agreement and acquired approximately 19.4 acres of land, comprising approximately 18.0 acres of upland. On November 25, 2015, we entered into a new purchase agreement for the purchase of approximately 54.9 acres of additional land situated adjacent to the previously purchased land, comprising approximately 51.1 acres of upland. |
(4) | In December 2014, we entered into a bond purchase loan agreement, were issued a taxable revenue bond on December 1, 2014, and executed a corresponding lease agreement. Pursuant to these agreements, the Development Authority of Bryan County, an instrumentality of the State of Georgia and a public corporation (“DABC”), has acquired legal title of our facility in Richmond Hill, in the State of Georgia, U.S., and in consideration leased such facilities back to us. In addition, the facility was pledged by DABC in favor of us and DABC has committed to re-convey title to the facility to us upon the maturity of the bond or at any time at our request, upon our payment of $100 to DABC. Therefore, we consider such facilities to be owned by us. This arrangement was structured to grant us property tax abatement for ten years at 100% and additional five years at 50%, subject to our satisfying certain qualifying conditions with respect to headcount, average salaries paid to our employees and the total capital investment amount in our U.S. plant. In December 2015, we entered into an additional bond purchase loan agreement with the Development Authority of Bryan County, and were issued a second taxable revenue bond on December 22, 2015, to cover additional funds and assets which were utilized in the framework of constructing, acquiring and equipping our U.S. facility. If we were to expand our current U.S. facility, we would have been entitled to an additional taxable revenue bond and a corresponding property tax abatement. In 2017, we notified DABC that we will not be utilizing such additional bond at this time and, accordingly, it has expired. |
(5) | In October 2020, we acquired a majority stake, in Lioli, which owns the Bharat Nagar facility in Morbi, Gujarat, India. For more information on our title to the property in Morbi, Gujarat, India, see “ITEM 3.D. Key Information—Risk Factors—Operational Risks—Fully integrating Lioli’s and Omicron’s businesses may be more difficult, costly and time-consuming than expected, which may adversely affect our results of operations and the value of our common shares.” |
A. | Operating Results |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | 2022 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||
Geographical Region | % of total revenues | Revenues in thousands of USD | % of total revenues | Revenues in thousands of USD | % of total revenues | Revenues in thousands of USD | % of total revenues | Revenues in thousands of USD | % of total revenues | Revenues in thousands of USD | % of total revenues | Revenues in thousands of USD | ||||||||||||||||||||||||||||||||||||
United States | 47.4 | % | $ | 305,353 | 42.7 | % | $ | 207,496 | 45.9 | % | $ | 250,471 | 49.5 | % | $ | 342,293 | 47.4 | % | $ | 305,353 | 42.7 | % | $ | 207,496 | ||||||||||||||||||||||||
Canada | 13.1 | 84,467 | 14.9 | 72,492 | 15.7 | 85,979 | 13.5 | % | 93,377 | 13.1 | 84,467 | 14.9 | 72,492 | |||||||||||||||||||||||||||||||||||
Latin America | 0.7 | 4,702 | 0.4 | 2,149 | 0.8 | 4,115 | 0.6 | % | 4,481 | 0.7 | 4,702 | 0.4 | 2,149 | |||||||||||||||||||||||||||||||||||
Australia (incl. New Zealand) | 18.4 | 118,714 | 21.3 | 103,587 | 19.8 | 108,150 | 16.8 | % | 116,284 | 18.4 | 118,714 | 21.3 | 103,587 | |||||||||||||||||||||||||||||||||||
Asia | 4.7 | 30,390 | 3.0 | 14,566 | 2.8 | 15,514 | 5.0 | % | 34,607 | 4.7 | 30,390 | 3.0 | 14,566 | |||||||||||||||||||||||||||||||||||
EMEA | 9.4 | 60,836 | 9.3 | 45,201 | 7.9 | 43,054 | 9.2 | % | 63,320 | 9.4 | 60,836 | 9.3 | 45,201 | |||||||||||||||||||||||||||||||||||
Israel | 6.1 | 39,430 | 8.4 | 40,921 | 7.1 | 38,692 | 5.3 | % | 36,444 | 6.1 | 39,430 | 8.4 | 40,921 | |||||||||||||||||||||||||||||||||||
Total | 100 | % | $ | 643,892 | 100.0 | % | $ | 486,412 | 100.0 | % | $ | 545,974 | 100.0 | % | $ | 690,806 | 100 | % | $ | 643,892 | 100.0 | % | $ | 486,412 |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | 2022 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | |||||||||||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | (in thousands of U.S. dollars) | |||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||||||||||||||||||||||||||
Revenues: | $ | 643,892 | 100 | % | $ | 486,412 | 100 | % | $ | 545,974 | 100.0 | % | $ | 690,806 | 100 | % | $ | 643,892 | 100 | % | $ | 486,412 | 100.0 | % | ||||||||||||||||||||||||
Cost of revenues | 472,394 | 73.4 | 352,470 | 72.5 | 397,335 | 72.8 | 527,561 | 76.4 | 472,394 | 73.4 | 352,470 | 72.5 | ||||||||||||||||||||||||||||||||||||
Gross profit | 171,498 | 26.6 | 133,942 | 27.5 | 148,639 | 27.2 | 163,245 | 23.6 | 171,498 | 26.6 | 133,942 | 27.5 | ||||||||||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||
Research and development, net | 4,216 | 0.7 | 3,974 | 0.8 | 4,146 | 0.8 | 4,098 | 0.6 | 4,216 | 0.7 | 3,974 | 0.8 | ||||||||||||||||||||||||||||||||||||
Marketing and selling | 85,725 | 13.3 | 62,047 | 12.8 | 66,770 | 12.2 | 94,412 | 13.7 | 85,725 | 13.3 | 62,047 | 12.8 | ||||||||||||||||||||||||||||||||||||
General and administrative | 50,845 | 7.9 | 39,081 | 8.0 | 40,681 | 7.5 | 51,596 | 7.5 | 50,845 | 7.9 | 39,081 | 8.0 | ||||||||||||||||||||||||||||||||||||
Impairment expenses related to goodwill and long lived assets | 71,258 | 10.3 | ||||||||||||||||||||||||||||||||||||||||||||||
Legal settlements and loss contingencies, net | 3,283 | 0.5 | 6,319 | 1.3 | 12,359 | 2.3 | 568 | 0.1 | 3,283 | 0.5 | 6,319 | 1.3 | ||||||||||||||||||||||||||||||||||||
Total operating expenses | 144,069 | 22.4 | 111,421 | 22.9 | 123,956 | 22.7 | 221,932 | 32.3 | 144,069 | 22.4 | 111,421 | 22.9 | ||||||||||||||||||||||||||||||||||||
Operating income | 27,429 | 4.3 | 4.6 | 24,683 | 4.5 | |||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | (58,687 | ) | (8.5 | ) | 27,429 | 4.3 | 22,521 | 4.6 | ||||||||||||||||||||||||||||||||||||||||
Finance expenses, net | 7,590 | 1.2 | 22,521 | 2.1 | 5,578 | 1.1 | (3,079 | ) | (0.4 | ) | 7,590 | 1.2 | 10,199 | 2.1 | ||||||||||||||||||||||||||||||||||
Income before taxes on income | 19,839 | 3.1 | 10,199 | 2.5 | 19,105 | 3.5 | ||||||||||||||||||||||||||||||||||||||||||
Income before taxes on income (loss) | (55,608 | ) | (8.1 | ) | 19,839 | 3.1 | 12,322 | 2.5 | ||||||||||||||||||||||||||||||||||||||||
Taxes on income | 1,950 | 0.3 | 4,700 | 0.9 | 6,243 | 1.1 | 758 | 0.1 | 1,950 | 0.3 | 4,700 | 0.9 | ||||||||||||||||||||||||||||||||||||
Net income | $ | 17,889 | 2.8 | % | $ | 7,622 | 1.6 | % | $ | 12,862 | 2.4 | % | ||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (56,366 | ) | (8.2 | ) | $ | 17,889 | 2.8 | % | $ | 7,622 | 1.6 | % | |||||||||||||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interest | (1,077 | ) | (0.2 | ) | 404 | 0.1 | — | — | 688 | 0.1 | (1,077 | ) | (0.2 | ) | 404 | 0.1 | ||||||||||||||||||||||||||||||||
Net income attributable to controlling interest | $ | 18,966 | 2.9 | % | $ | 7,218 | 1.5 | % | $ | 12,862 | 2.4 | % | ||||||||||||||||||||||||||||||||||||
Net income attributable to controlling interest (loss) | $ | (57,054 | ) | (8.3 | )% | $ | 18,966 | 2.9 | % | $ | 7,218 | 1.5 | % |
Three months ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2022 | Sept. 30, 2022 | June 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | |||||||||||||||||||||||||
(as a % of revenue) | ||||||||||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||||||||||
Revenues: | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||
Gross profit | 19.4 | 23 | 26.4 | 25.3 | 23.2 | 26.2 | 28.0 | 29.7 | ||||||||||||||||||||||||
Operating income (loss) | (47.2 | ) | 1.7 | 3.5 | 4.1 | 2.0 | 5.4 | 3.2 | 6.9 | |||||||||||||||||||||||
Net income (loss) | (46.4 | ) | (0.2 | ) | 6.2 | (0.8 | ) | (1.9 | ) | 3.6 | 0.9 | 9.5 |
Three months ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2022 | Sept. 30, 2022 | June 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | |||||||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||||||||||
Revenues: | $ | 159,369 | $ | 180,727 | $ | 180,272 | $ | 170,438 | $ | 171,057 | $ | 163,341 | $ | 163,462 | $ | 146,032 | ||||||||||||||||
Revenues as a percentage of annual revenue | 23.1 | % | 26.2 | % | 26.1 | % | 24.7 | % | 26.6 | % | 25.3 | % | 25.4 | % | 22.7 | % | ||||||||||||||||
Gross profit | $ | 30,931 | $ | 41,617 | $ | 47,525 | $ | 43,172 | $ | 39,678 | $ | 42,734 | $ | 45,784 | $ | 43,302 | ||||||||||||||||
Operating income (loss) | (75,180 | ) | 3,155 | 6,356 | 6,982 | 3,342 | 8,876 | 5,173 | 10,038 | |||||||||||||||||||||||
Net income (loss) | (73,888 | ) | (364 | ) | 11,230 | (1,348 | ) | (3,303 | ) | 5,870 | 1,480 | 13,842 | ||||||||||||||||||||
Other financial data: | ||||||||||||||||||||||||||||||||
Adjusted Gross profit | 31,326 | 41,776 | 47,660 | 43,340 | 39,864 | 42,885 | 45,981 | 43,941 | ||||||||||||||||||||||||
Adjusted Gross profit as a percentage of annual adjusted Gross profit | 19.1 | % | 25.5 | % | 29 | % | 26.4 | % | 23.1 | % | 24.8 | % | 26.6 | % | 25.5 | % | ||||||||||||||||
Adjusted EBITDA | $ | 5,713 | $ | 13,389 | $ | 17,073 | $ | 15,694 | $ | 11,535 | $ | 17,684 | $ | 18,776 | $ | 20,253 | ||||||||||||||||
Adjusted EBITDA as a percentage of annual adjusted EBITDA | 11 | % | 25.8 | % | 32.9 | % | 30.3 | % | 16.9 | % | 25.9 | % | 27.5 | % | 29.7 | % | ||||||||||||||||
Adjusted net income attributable to controlling interest | $ | (836 | ) | $ | 13 | $ | 6,751 | $ | 4,698 | $ | 163 | $ | 6,830 | $ | 7,207 | $ | 14,434 | |||||||||||||||
Adjusted net income attributable to controlling interest as a percentage of annual adjusted net income | (7.9 | %) | 0.12 | % | 63.5 | % | 44.21 | % | 0.6 | % | 23.8 | % | 25.2 | % | 50.4 | % |
Three months ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | |||||||||||||||||||||||||
(as a % of revenue) | ||||||||||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||||||||||
Revenues: | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||
Gross profit | 23.2 | 26.2 | 28.0 | 29.7 | 28.1 | 31.4 | 20.4 | 28.8 | ||||||||||||||||||||||||
Operating income (loss) | 2.0 | 5.4 | 3.2 | 6.9 | 5.9 | 12.1 | (2.9 | ) | 1.8 | |||||||||||||||||||||||
Net income (loss) | (1.9 | ) | 3.6 | 0.9 | 9.5 | (1.4 | ) | 10.3 | (5.9 | ) | 2.1 |
Three months ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | |||||||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||||||||||
Revenues: | $ | 171,057 | $ | 163,341 | $ | 163,462 | $ | 146,032 | $ | 136,896 | $ | 123,922 | $ | 99,037 | $ | 126,557 | ||||||||||||||||
Revenues as a percentage of annual revenue | 26.6 | % | 25.3 | % | 25.4 | % | 22.7 | % | 28.1 | % | 25.5 | % | 20.4 | % | 26.0 | % | ||||||||||||||||
Gross profit | $ | 39,678 | $ | 42,734 | $ | 45,784 | $ | 43,302 | $ | 38,515 | $ | 38,854 | $ | 20,172 | $ | 36,401 | ||||||||||||||||
Operating income (loss) | 3,342 | 8,876 | 5,173 | 10,038 | 8,091 | 15,047 | (2,904 | ) | 2,287 | |||||||||||||||||||||||
Net income (loss) | (3,303 | ) | 5,870 | 1,480 | 13,842 | (1,981 | ) | 12,807 | (5,882 | ) | 2,678 | |||||||||||||||||||||
Other financial data: | ||||||||||||||||||||||||||||||||
Adjusted Gross profit | 39,864 | 42,885 | 45,981 | 43,941 | 39,107 | 38,954 | 20,294 | 36,532 | ||||||||||||||||||||||||
Adjusted Gross profit as a percentage of annual adjusted Gross profit | 23.1 | % | 24.8 | % | 26.6 | % | 25.5 | % | 29.0 | % | 28.9 | % | 15.0 | % | 27.1 | % | ||||||||||||||||
Adjusted EBITDA | $ | 11,535 | $ | 17,684 | $ | 18,776 | $ | 20,253 | $ | 18,750 | $ | 23,662 | $ | 6,521 | $ | 13,146 | ||||||||||||||||
Adjusted EBITDA as a percentage of annual adjusted EBITDA | 16.9 | % | 25.9 | % | 27.5 | % | 29.7 | % | 30.2 | % | 38.1 | % | 10.5 | % | 21.2 | % | ||||||||||||||||
Adjusted net income attributable to controlling interest | $ | 163 | $ | 6,830 | $ | 7,207 | $ | 14,434 | $ | 1,642 | $ | 14,110 | $ | (3,498 | ) | $ | 4,607 | |||||||||||||||
Adjusted net income attributable to controlling interest as a percentage of annual adjusted net income | 0.6 | % | 23.8 | % | 25.2 | % | 50.4 | % | 9.7 | % | 83.7 | % | (20.7 | )% | 27.3 | % |
Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | Dec. 31, 2022 | Sept. 30, 2022 | June 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Gross profit to Adjusted Gross profit: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit | $ | 39,678 | $ | 42,734 | $ | 45,784 | $ | 43,302 | $ | 38,515 | $ | 38,854 | $ | 20,172 | $ | 36,401 | $ | 30,931 | $ | 41,617 | $ | 47,525 | $ | 43,172 | $ | 39,678 | $ | 42,734 | $ | 45,784 | $ | 43,302 | ||||||||||||||||||||||||||||||||
Share-based compensation expense (a) | 107 | 72 | 37 | 105 | 63 | 100 | 122 | 131 | 86 | 79 | 59 | 90 | 107 | 72 | 37 | 105 | ||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring import related expenses (income) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other non-recurring items (b) | 237 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of assets related to acquisitions | 79 | 79 | 160 | 534 | 529 | — | — | — | 72 | 80 | 76 | 78 | 79 | 79 | 160 | 534 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted Gross profit | $ | 39,864 | $ | 42,885 | $ | 45,981 | $ | 43,941 | $ | 39,107 | $ | 38,954 | $ | 20,294 | $ | 36,532 | $ | 31,326 | $ | 41,776 | $ | 47,660 | $ | 43,340 | $ | 39,864 | $ | 42,885 | $ | 45,981 | $ | 43,941 |
(a) | Share-based compensation includes expenses related to stock options and RSU’s granted to our employees and directors of the company. |
(b) | Restructuring expenses related to workforce reduction. |
Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | Dec. 31, 2022 | Sept. 30, 2022 | June 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Net Income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (3,303 | ) | $ | 5,870 | $ | 1,480 | $ | 13,842 | $ | (1,981 | ) | $ | 12,807 | $ | (5,882 | ) | $ | 2,678 | $ | (73,888 | ) | $ | (364 | ) | $ | 11,230 | $ | 6,656 | $ | (3,303 | ) | $ | 5,870 | $ | 1,480 | $ | 13,842 | ||||||||||||||||||||||||||
Finance (income) expenses, net | 7,425 | 2,403 | 3,095 | (5,333 | ) | 8,613 | (52 | ) | 2,507 | (869 | ) | 407 | 4,307 | (6,445 | ) | (1,348 | ) | 7,425 | 2,403 | 3,095 | (5,333 | ) | ||||||||||||||||||||||||||||||||||||||||||
Taxes on income | (780 | ) | 603 | 598 | 1529 | 1,459 | 2,292 | 471 | 478 | (1,699 | ) | (788 | ) | 1,571 | 1,674 | (780 | ) | 603 | 598 | 1,529 | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization related to acquisitions | 8,916 | 8,802 | 8,781 | 8,908 | 8,300 | 7,058 | 6,987 | 7,115 | 9,121 | 9,200 | 8,823 | 9,200 | 8,916 | 8,802 | 8,781 | 8,908 | ||||||||||||||||||||||||||||||||||||||||||||||||
Legal settlements and loss contingencies, net (a) | (1,181 | ) | (385 | ) | 4,109 | 740 | 1,392 | 452 | 1,637 | 2,838 | (492 | ) | 602 | 1,334 | (876 | ) | (1,181 | ) | (385 | ) | 4,109 | 740 | ||||||||||||||||||||||||||||||||||||||||||
Contingent consideration adjustment related to acquisition | — | — | 284 | — | — | — | — | — | 63 | 57 | — | — | — | — | 284 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense (b) | 458 | 391 | 429 | 567 | 523 | 628 | 801 | 906 | 259 | 375 | 480 | 388 | 458 | 391 | 429 | 567 | ||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition-related expenses | — | — | — | — | 444 | 477 | — | — | — | — | 80 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Impairment expenses related to goodwill and long lived assets | 71,258 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other non-recurring items (c) | 684 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 11,535 | $ | 17,684 | $ | 18,776 | $ | 20,253 | $ | 18,750 | $ | 23,662 | $ | 6,521 | $ | 13,146 | $ | 5,713 | $ | 13,389 | $ | 17,073 | $ | 15,694 | $ | 11,535 | $ | 17,684 | $ | 18,776 | $ | 20,253 |
(a) | Consists of legal settlements expenses and loss contingencies, net, related primarily to product liability claims and other adjustments to ongoing legal claims. |
(b) | Share-based compensation includes expenses related to stock options and company. |
Three months ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | |||||||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||||||||||
Reconciliation of Net Income (loss) Attributable to Controlling Interest to Adjusted Net Income Attributable to Controlling Interest: | ||||||||||||||||||||||||||||||||
Net income (loss) attributable to controlling interest | $ | (2,877 | ) | $ | 5,948 | $ | 1,705 | $ | 14,190 | $ | (2,385 | ) | $ | 12,807 | $ | (5,882 | ) | $ | 2,678 | |||||||||||||
Legal settlements and loss contingencies, net (a) | (1,181 | ) | (385 | ) | 4,109 | 740 | 1,392 | 452 | 1,637 | 2,838 | ||||||||||||||||||||||
Contingent consideration adjustment related to acquisition | — | — | 284 | — | — | — | — | — | ||||||||||||||||||||||||
Amortization of assets related to acquisitions, net of tax | 502 | 502 | 561 | 826 | 446 | — | — | — | ||||||||||||||||||||||||
Share-based compensation expense (b) | 458 | 391 | 429 | 567 | 523 | 628 | 801 | 906 | ||||||||||||||||||||||||
Non-cash revaluation of lease liabilities (c) | 3,461 | 430 | 889 | (1,862 | ) | 3,177 | 227 | 1,256 | (1,471 | ) | ||||||||||||||||||||||
Acquisition-related expenses | — | — | — | — | 444 | 477 | — | — | ||||||||||||||||||||||||
Total adjustments before tax | 3,240 | 938 | 6,272 | 271 | 5,982 | 1,784 | 3,694 | 2,273 | ||||||||||||||||||||||||
Less tax on above adjustments | 200 | 56 | 770 | 28 | 1,955 | 481 | 1,310 | 344 | ||||||||||||||||||||||||
Total adjustments after tax | 3,040 | 882 | 5,502 | 243 | 4,027 | 1,303 | 2,384 | 1,929 | ||||||||||||||||||||||||
Adjusted net income attributable to controlling interest | 163 | 6,830 | 7,207 | 14,434 | 1,642 | 14,110 | (3,498 | ) | 4,607 | |||||||||||||||||||||||
Adjusted diluted EPS | $ | 0.01 | $ | 0.20 | $ | 0.21 | $ | 0.42 | $ | 0.05 | $ | 0.41 | $ | (0.10 | ) | $ | 0.13 |
(c) | Restructuring expenses related to workforce reduction. |
Three months ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2022 | Sept. 30, 2022 | June 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | |||||||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||||||||||
Reconciliation of Net Income (loss) Attributable to Controlling Interest to Adjusted Net Income Attributable to Controlling Interest: | ||||||||||||||||||||||||||||||||
Net income (loss) attributable to controlling interest | $ | (73,966 | ) | $ | (463 | ) | $ | 11,147 | $ | 6,228 | $ | (2,877 | ) | $ | 5,948 | $ | 1,705 | $ | 14,190 | |||||||||||||
Legal settlements and loss contingencies, net (a) | (492 | ) | 602 | 1,334 | (876 | ) | (1,181 | ) | (385 | ) | 4,109 | 740 | ||||||||||||||||||||
Contingent consideration adjustment related to acquisition | 63 | 57 | — | — | — | — | 284 | — | ||||||||||||||||||||||||
Amortization of assets related to acquisitions, net of tax | 536 | 548 | 498 | 501 | 502 | 502 | 561 | 826 | ||||||||||||||||||||||||
Share-based compensation expense (b) | 259 | 375 | 480 | 388 | 458 | 391 | 429 | 567 | ||||||||||||||||||||||||
Non-cash revaluation of lease liabilities (c) | 676 | (796 | ) | (7,478 | ) | (1,928 | ) | 3,461 | 430 | 889 | (1,862 | ) | ||||||||||||||||||||
Acquisition-related expenses | — | — | 80 | — | — | — | — | — | ||||||||||||||||||||||||
Impairment expenses related to goodwill and long lived assets | 71,258 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other non-recurring items (d) | 684 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total adjustments before tax | 72,984 | 786 | (5,086 | ) | (1,915 | ) | 3,240 | 938 | 6,272 | 271 | ||||||||||||||||||||||
Less tax on above adjustments | (146 | ) | 311 | (690 | ) | (385 | ) | 200 | 56 | 770 | 28 | |||||||||||||||||||||
Total adjustments after tax | 73,130 | 476 | (4,396 | ) | (1,530 | ) | 3,040 | 882 | 5,502 | 243 | ||||||||||||||||||||||
Adjusted net income attributable to controlling interest | (836 | ) | 13 | 6,751 | 4,698 | 163 | 6,830 | 7,207 | 14,434 | |||||||||||||||||||||||
Adjusted diluted EPS | $ | 0.02 | $ | 0.01 | $ | 0.20 | $ | 0.14 | $ | 0.01 | $ | 0.20 | $ | 0.21 | $ | 0.42 |
(a) | Consists of legal settlements expenses and loss contingencies, net, related primarily to product liability claims and other adjustments to ongoing legal claims. |
(b) | Share-based compensation includes expenses related to stock options and RSU’s granted to our employees and directors of the company. |
(c) | Exchange rate differences deriving from revaluation of lease contracts in accordance with FASB ASC 842. |
(d) | Restructuring expenses related to workforce reduction. |
B. | Liquidity and Capital Resources |
Year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Net cash provided by operating activities | $ | 20,684 | $ | 47,618 | $ | 83,049 | ||||||
Net cash used in investing activities | (34,885 | ) | (68,305 | ) | (23,587 | ) | ||||||
Net cash used in financing activities | (25,254 | ) | (6,084 | ) | (14,127 | ) |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Net cash provided (used) 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 | ) |
C. | Research and Development, Patents and Licenses |
D. | Trend Information |
E. | Critical Accounting Estimates |
A. | Directors and Senior Management |
Name | Date of Birth | Position | ||
Officers | ||||
Yuval Dagim | December 13, 1962 | Chief Executive | ||
Nahum Trost | September 24, 1978 | Chief Financial Officer | ||
David Cullen | April 10, 1959 | Managing Director, APAC | ||
Ken Williams | April 4, 1961 | Managing Director, North America | ||
Amir Reske | October 13, 1973 | Managing Director, EMEA | ||
Idit Maayan Zohar | November 11, 1972 | Chief Marketing Officer | ||
Efrat Rimmer | March 31, 1977 | Vice President, Global Supply Chain and Commercial | ||
Amihai Seider | November 29, 1967 | Vice President, Global Production | ||
Erez Margalit | July 14, 1967 | Vice President, Global Research and Development | ||
Ron Mosberg | December 15, 1979 | General Counsel and Corporate Secretary | ||
Efrat Yitzhaki | November 23, 1972 | Vice President, Global Human Resources | ||
Eyal Levy | May 26, 1970 | Chief Information Officer | ||
Directors | ||||
Dr. Ariel Halperin(4) | March 18,1955 | Chairman | ||
Nurit Benjamini (1)(2)(3)(5)(6) | October 27, 1966 | Director | ||
Lily Ayalon(1)(2)(3)(5)(6) | June 17, 1965 | Director | ||
Roger Abravanel (4)(5) | July 27, 1946 | Director | ||
Dori Brown(4) | September 2,1971 | Director | ||
Ronald Kaplan(3) (5) | August 15, 1951 | Director | ||
Ofer Tsimchi(1)(2)(5) | September 15, 1959 | Director | ||
Shai Bober | July 17,1975 | Director | ||
Tom Pardo Izhaki | June 3, 1983 | Director |
(1) | Member of our audit committee. |
(2) | Member of our compensation committee. |
(3) | Member of our nominating committee. |
(4) | Member of our strategy committee. |
(5) | Independent under the Nasdaq rules. |
(6) | External director under the Israeli Companies Law. |
B. | Compensation of Officers and Directors |
Name and Principal Position (1) | Salary (2) | Bonus (3) | Equity-Based Compensation (4) | All other compensation (5) | Total | Salary (2) | Bonus (3) | Equity-Based Compensation (4) | All other compensation (5) | Total | ||||||||||||||||||||||||||||||
(in U.S. dollars) | (in U.S. dollars) | |||||||||||||||||||||||||||||||||||||||
Yuval Dagim | 762,492 | 459,853 | 407,195 | - | 1,629,540 | 732,066 | - | 276,954 | - | 1,009,020 | ||||||||||||||||||||||||||||||
Ken Williams | 445,524 | 168,353 | 49,043 | 2,394 | 665,314 | 517,722 | 9,386 | 44,819 | 2,306 | 574,233 | ||||||||||||||||||||||||||||||
Erez Margalit | 399,052 | 93,295 | 48,263 | 14,773 | 555,383 | |||||||||||||||||||||||||||||||||||
Nahum Trost | 339,020 | - | 115,225 | 51,639 | 505.884 | |||||||||||||||||||||||||||||||||||
Amir Reske | 391,978 | 20,898 | 28,582 | 46,165 | 487,623 | |||||||||||||||||||||||||||||||||||
David Cullen | 387,543 | 95,702 | 54,750 | 6,543 | 544,538 | 387,363 | 34,766 | 45,283 | 6,678 | 474,089 | ||||||||||||||||||||||||||||||
Efrat Rimer | 319,277 | 85,116 | 113,399 | 16,310 | 534,102 |
(1) | All Covered Executives are employed by us on a full time (100%) basis. |
(2) | Salary includes the Covered Executive’s gross salary plus payment of social benefits made by us on behalf of such Covered Executive. Such benefits may include, to the extent applicable to the Covered Executive, payments, contributions and/or allocations for savings funds (such as managers’ life insurance policy), education funds (referred to in Hebrew as “keren hishtalmut”), pension, severance, risk insurances (such as life, or work disability insurance), payments for social security and tax gross-up payments, vacation, medical insurance and benefits, convalescence or recreation pay and other benefits and perquisites consistent with our policies. |
(3) | Represents annual bonuses granted to the Covered Executive based on formulas set forth in the bonus plans and approvals set forth in the respective resolutions of our compensation committee and the board of directors. |
(4) | Represents the equity-based compensation expenses recorded in our consolidated financial statements for the year ended December 31, |
(5) | Includes mainly leased car, |
C. | Board Practices |
As of December 31, | As of December 31, | |||||||||||||||||||||||
Department | 2021 | 2020 | 2019 | 2022 | 2021 | 2020 | ||||||||||||||||||
Manufacturing and operations | 1,397 | 1,222 | 911 | 1,339 | 1,397 | 1,222 | ||||||||||||||||||
Research and development | 24 | 26 | 15 | 17 | 24 | 26 | ||||||||||||||||||
Sales, marketing, service and support | 651 | 580 | 424 | 557 | 651 | 580 | ||||||||||||||||||
Management and administration | 200 | 171 | 151 | 198 | 200 | 171 | ||||||||||||||||||
Total | 2,272 | 1,999 | 1,501 | 2,111 | 2,272 | 1,999 |
Name of Beneficial Owner | Number of Shares Beneficially Held(1) | Percent of Class | ||||||
Executive Officers | ||||||||
Yuval Dagim | * | * | ||||||
Nahum Trost | * | * | ||||||
David Cullen | * | * | ||||||
Ken Williams | * | * | ||||||
Amir Reske | * | * | ||||||
Idit Maayan Zohar | * | * | ||||||
Efrat Rimer | * | * | ||||||
Amihai Seider | * | * | ||||||
Erez Margalit | * | * | ||||||
Ron Mosberg | * | * | ||||||
Efrat Yitzhaki | * | * | ||||||
Eyal Levy | * | * | ||||||
Directors | ||||||||
Dr. Ariel Halperin(2) | * | * | ||||||
Nurit Benjamini | * | * | ||||||
Lily Ayalon | * | * | ||||||
Roger Abravanel | * | * | ||||||
Dori Brown | * | * | ||||||
Ronald Kaplan | * | * | ||||||
Ofer Tsimchi | * | * | ||||||
Shai Bober | * | * | ||||||
Tom Pardo Izhaki | * | * | ||||||
All current directors and executive officers as a group (21 persons)(2) |
* | Less than one percent of the outstanding ordinary shares. |
(1) | As used in this table, “beneficial ownership” means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. For purposes of this table, a person is deemed to be the beneficial owner of securities that can be acquired within 60 days from March |
(2) | Includes 14,029,494 ordinary shares beneficially owned by Tene Investment in Projects 2016, L.P. (“Tene”). As further described in footnote (2) under “ITEM 7.A: Major Shareholders and Related Party Transactions—Major Shareholders,” Each of Dr. Halperin, Tene Growth Capital III (G.P.) Company Ltd. (“Tene III”), and Tene Growth Capital 3 (Fund 3 G.P.) Projects, L.P (“Tene III Projects”) may be deemed to share voting power over the 14,029,494 ordinary shares and dispositive power over the 5,589,494 ordinary shares, in each case, beneficially owned by Tene. See “ITEM 7.A: Major Shareholders and Related Party Transactions—Major Shareholders.” |
A. | Major Shareholders |
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Held | ||||||
Mifalei Sdot-Yam Agricultural Cooperative Society Ltd. (1)(3) | 14,029,494 | 40.7 | % | |||||
Tene Investment in Projects 2016, L.P.(2)(3) | 14,029,494 | 40.7 | % | |||||
The Phoenix Holdings Ltd. (4) | 3,868,049 | 11.2 | % | |||||
Global Alpha Capital Management Ltd. (5) | 3,074,555 | 8.9 | % |
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Held | ||||||
Mifalei Sdot-Yam Agricultural Cooperative Society Ltd. (1)(3) | 14,029,494 | 40.7 | % | |||||
Tene Investment in Projects 2016, L.P.(2)(3) | 14,029,494 | 40.7 | % | |||||
The Phoenix Holdings Ltd. (4) | 2,287,901 | 6.6 | % | |||||
Global Alpha Capital Management Ltd. (5) | 2,209,741 | 6.4 | % | |||||
BlackRock, Inc. (6) | 1,906,485 | 5.5 | % |
B. | Related Party Transactions |
C. | Interests of Experts and Counsel |
A. | Consolidated Financial Statements and Other Financial Information |
B. | Significant Changes |
A. | Offer and Listing Details |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
F. | Expenses of the Issue |
A. | Share Capital |
B. | Memorandum of Association and Articles of Association |
C. | Material Contracts |
Material Contract | Location in This Annual Report |
Agreements with Kibbutz Sdot-Yam | “ITEM 7: Major Shareholders and Related Party Transactions—Related Party Transactions—Relationship and agreements with Kibbutz Sdot-Yam.” |
Management Services Agreement with Tene | “ITEM 7: Major Shareholders and Related Party Transactions—Related Party Transactions—Management Services Agreement with Tene.” |
Agreements with Breton S.p.A. (Italy) | “ITEM 3: Key Information—Risk Factors—If we are unable to manufacture and/or ship our existing products globally as planned, our results of operations and future prospects will suffer.” |
Form of Indemnification Agreement | “ITEM 6: Directors, Senior Management and Employees—Board Practices—Exculpation, insurance and indemnification of officer holders.” |
D. | Exchange Controls |
E. | Taxation |
F. | Dividends and Paying Agents |
G. | Statements by Experts |
H. | Documents on Display |
I. | Subsidiary Information |
J. | Annual Report to Security Holders |
Australian dollar against U.S. dollar | Canadian dollar against U.S. dollar | NIS against U.S. dollar | Euro against U.S. dollar | |||||||||||||
2019 | (3.1 | )% | 1.2 | % | 5.3 | % | (1.6 | )% | ||||||||
2020 | (0.6 | )% | (0.9 | )% | 3.7 | % | 2.0 | % | ||||||||
2021 | 8.7 | % | 6.9 | % | 6.4 | % | 3.6 | % |
Australian dollar against U.S. dollar | Canadian dollar against U.S. dollar | NIS against U.S. dollar | Euro against U.S. dollar | |||||||||||||
2021 | 8.7 | % | 6.9 | % | 6.4 | % | 3.6 | % | ||||||||
2022 | (7.6 | )% | (3.7 | )% | (3.8 | )% | (11 | )% |
USD/NIS | EUR/USD | GBP/USD | USD/CAD | AUD/USD | TOTAL | USD/NIS | EUR/USD | GBP/USD | USD/CAD | AUD/USD | TOTAL | |||||||||||||||||||||||||||||||||||||||
Buy forward contracts | Notional | — | 26,450 | — | — | — | 26,450 | Notional | — | 9,305 | 3,511 | — | — | 12,817 | ||||||||||||||||||||||||||||||||||||
Fair value | Fair value | — | (329 | ) | — | — | — | (329 | ) | Fair value | — | 288 | (18 | ) | — | — | 271 | |||||||||||||||||||||||||||||||||
Average rate | Average rate | — | 1.15 | — | — | — | — | Average rate | — | 1.02 | 1.2 | — | — | — | ||||||||||||||||||||||||||||||||||||
Sell forward contracts | Notional | 17,089 | — | — | 24,410 | 7,880 | 49,379 | Notional | 41,699 | — | — | --- | --- | 49,379 | ||||||||||||||||||||||||||||||||||||
Fair value | Fair value | 297 | — | — | 786 | 614 | 1,697 | Fair value | (412 | ) | — | — | --- | --- | 1,697 | |||||||||||||||||||||||||||||||||||
Average rate | Average rate | 3.160 | — | — | 1.233 | 0.788 | — | Average rate | 3.454 | — | — | --- | --- | — | ||||||||||||||||||||||||||||||||||||
Buy put options | Notional | — | — | — | — | — | — | Notional | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Fair value | Fair value | — | — | — | — | — | — | Fair value | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Average rate | Average rate | — | — | — | — | — | — | Average rate | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Sell call options | Notional | — | — | — | — | — | — | Notional | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Fair value | Fair value | — | — | — | — | — | — | Fair value | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Average rate | Average rate | — | — | — | — | — | — | Average rate | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total notional value | 17,089 | 26,450 | — | 24,401 | 7,880 | 75,829 | 41,699 | 9,305 | 3,511 | --- | --- | 54,516 | ||||||||||||||||||||||||||||||||||||||
Total fair value | $ | 297 | $ | (329 | ) | — | $ | 786 | $ | 614 | $ | 1,368 | $ | (412 | ) | $ | 288 | (18 | ) | $ | --- | $ | --- | $ | (141 | ) |
2021 | 2020 | 2022 | 2021 | |||||||||||||
(in thousands of U.S. dollars) | (in thousands of U.S. dollars) | |||||||||||||||
Audit fees(1) | $ | 789 | $ | 619 | $ | 743 | $ | 789 | ||||||||
Audit-related fees(2) | 103 | 87 | 1 | 103 | ||||||||||||
Tax fees(3) | 128 | 119 | 82 | 128 | ||||||||||||
All other fees(4) | 72 | 528 | 193 | 72 | ||||||||||||
Total | $ | 1,092 | $ | 1,353 | $ | 1,019 | $ | 1,092 |
(1) | “Audit fees” include fees for services performed by our independent public accounting firm in connection with the integrated audit of our annual audit consolidated financial statements for |
(2) | “Audit-related fees” relate to assurance and associated services that are traditionally performed by the independent auditor. |
(3) | “Tax fees” include fees for professional services rendered by our independent registered public accounting firm for tax compliance and tax advice and tax planning services on actual or contemplated transactions. |
(4) | “Other fees” include fees for services rendered by our independent registered public accounting firm with respect to supply chain consulting, governmental incentives, due diligence investigations and other matters. |
Number | Description | |
101.INS | Inline XBRL Instance Document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document |
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Label Linkbase Document | |
101.DEF 104 | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
(1) | Previously filed with the Securities and Exchange Commission on March 23, 2020 as Exhibit 1.1 to the Company’s annual report on Form 20-F for the year ended December 31, 2019 and incorporated by reference herein. |
(2) | Previously filed with the Securities and Exchange Commission on March 6, 2012 as Exhibit 3.1 to the Company’s registration statement on Form F-1/A (File No. 333-179556) and incorporated by reference herein. |
(3) | Previously filed with the Securities and Exchange Commission on March 23, 2020 as Exhibit 2.1 to the Company’s annual report on Form 20-F for the year ended December 31, 2019 and incorporated by reference herein. |
(4) | Previously filed with the Securities and Exchange Commission on February 16, 2012 pursuant to a registration statement on Form F-1 (File No. 333-179556) and incorporated by reference herein. |
(5) | Previously filed with the Securities and Exchange Commission on March 7, 2016 pursuant as Exhibit 4.5 to the Company’s annual report on Form 20-F for the year ended December 31, 2015 and incorporated by reference herein. |
(6) | Previously filed with the Securities and Exchange Commission on December 23, 2020 as Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (File No. 333-251642) and incorporated by reference herein. |
(7) | Previously filed with the Securities and Exchange Commission on October 13, 2021 as Exhibit 99.1 to the Company’s current report on Form 6-K and incorporated by reference herein. |
(8) | Previously filed with the Securities and Exchange Commission on March 15, 2022 pursuant as Exhibit 4.10 to the Company’s annual report on Form 20-F for the year ended December 31, 2021 and incorporated by reference herein. |
(9) | Previously filed with the Securities and Exchange Commission on March 15, 2022 pursuant as Exhibit 4.11 to the Company’s annual report on Form 20-F for the year ended December 31, 2021 and incorporated by reference herein. |
(10) | Previously filed with the Securities and Exchange Commission on October 10, 2020 as Exhibit 99.1 to the Company’s current report on Form 6-K and incorporated by reference herein. |
* | Portions of this exhibit were omitted, and a complete copy of each agreement was provided separately to the Securities and Exchange Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 under the Exchange Act, which was subsequently approved by the SEC. |
** | Certain confidential information contained in this document, marked by brackets, was omitted because it is both (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. “(***)” indicates where the information has been omitted from this exhibit |
∞ | English translation of original Hebrew document |
Caesarstone Ltd. | |
By: /s/ Yuval Dagim Yuval Dagim Chief Executive Officer | |
Date: March 15, 2023 |
Page | |
F-2 - F-5 | |
F-6 - F-7 | |
F-8 | |
F-9 | |
F-10 | |
F-11 - F-12 | |
F-13 - | |
(PCAOB ID No. 2233) | |
-----------
Provision for bodily injury claims related to exposure to silica dust | ||
Description of the matter | As described in note 11 to the consolidated financial statements, the Company is subject to numerous claims mainly by fabricators, their employees or the National Insurance Institute ("NII"), alleging that fabricators contracted illnesses, including silicosis, through exposure to silica particles during cutting, polishing, sawing, grinding, breaking, crushing, drilling, sanding or sculpting Company's products. The Company recognized a provision in relation to Silicosis claims when an unfavorable outcome was probable and the amount of the loss could be reasonably estimated. In order to determine the liability amount, the Company consults with legal counsels. Auditing the Company’s accounting for the Silicosis provision was complex due to the significant estimation required in determining the Company’s liability amount of | |
How we addressed the matter in our audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the accounting of Silicosis claims provision, including management's assessment of the assumptions and data underlying the provision valuation. To evaluate the Company's assessment of the probability of incurrence of a loss and whether the loss was reasonably estimated, among other procedures, we read the minutes of the meeting of the committees of the board of directors and gained an understanding of the claims by inquiring of the external and internal legal counsels regarding the allegations. We also obtained external and internal legal counsels confirmation letters as well as a management representation letter. Our substantive procedures also included testing the accuracy, completeness and reasonableness of the underlying data used in management's provision assessment and attending meetings between management and legal counsels to determine a range of reasonably possible loss. We tested management’s assumptions by comparing prior period's estimates versus actual prior period's results and evaluating events occurring up to date of the auditor's report. We also inquired the legal counsels regarding the likelihood of the outcome of the claims and evaluated the Company’s legal contingency disclosures included in Note 11 to the consolidated financial statements. |
Description of the matter | As reflected in the Company’s consolidated financial statements, As disclosed in Note 7 and 2 to the consolidated financial statements, goodwill is tested for impairment at least annually or more frequently if indicators of impairment Long-lived assets (assets group) to be held and used, are reviewed for impairment whenever events or circumstances indicate the carrying amount of the long-lived assets may not be recoverable. Recoverability of the Long-lived assets (assets group) is measured by a comparison of the undiscounted future cash flows the Long-lived assets (assets group) is expected to generate to the carrying amounts of the assets group. If such evaluation indicates that the carrying amount of the long lived assets (assets group) is not recoverable, an impairment loss is calculated based on the excess of the carrying amount of the long- lived assets (assets group) over its fair value. The Management identified indicators for impairment in the fourth quarter of 2022. Consequently, Management performed an impairment assessment of goodwill and impairment test of the long-lived assets of Sdot Yam production facility. Furthermore, management's significant assumptions used in determining the fair value of long-lived assets (assets group) of Sdot Yam production facility included estimation of the fair value for a unit of equipment (machine, storage facility, etc.) according to the age of the equipment, its condition and the estimated value according to accepted equipment prices in the relevant market (local or international market). These assumptions are sensitive and affected by the specific market and industry qualitive factors. | ||
How we addressed the matter in our audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill and long-lived assets (assets group) impairment assessment process. To test the estimated fair value of the long-lived assets (assets group) of Sdot yam production facility, our audit procedures included, among others, understanding the company's valuation process, using a professional with specialized skills and knowledge to review the valuation, understand the work assumptions and the selected data used as part of the assessment. In addition, we performed a sensitivity analysis using performed independent comparative calculation to estimate the fair value of the long-lived assets (assets group) of the Sdot yam production facility. We also evaluated the related disclosures for goodwill and long lived assets included in Notes |
/s/KOST FORER GABBAY & KASIERER | |
A Member of Ernst & Young Global | |
We have served as the Company's auditor since 2004 | |
Tel-Aviv, Israel | |
March 15, |
We have audited Caesarstone Ltd. and subsidiaries’ internal control over financial reporting as of December 31, 2021,2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework (the COSO criteria). In our opinion, Caesarstone Ltd. and subsidiaries (the Company) based on our audit and the report of other auditors maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021,2022, based on the COSO criteria.
/s/KOST FORER GABBAY & KASIERER A Member of Ernst & Young Global |
Tel-Aviv, Israel |
March 15, |
CONSOLIDATED BALANCE SHEETS |
U.S. dollars in thousands |
December 31, | December 31, | ||||||||||||||||||||||
Note | 2021 | 2020 | Note | 2022 | 2021 | ||||||||||||||||||
ASSETS | |||||||||||||||||||||||
CURRENT ASSETS: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 74,315 | $ | 114,248 | $ | 52,081 | $ | 74,315 | |||||||||||||||
Short-term available for sale marketable securities | 3 | 11,228 | 8,112 | 3 | 7,077 | 11,228 | |||||||||||||||||
Trade receivables (net of allowance for credit loss of $9,036 and $6,783 at December 31, 2021 and 2020, respectively) | 82,815 | 84,822 | |||||||||||||||||||||
Trade receivables (net of allowance for credit loss of $9,756 and $9,036 at December 31, 2022 and 2021, respectively) | 77,898 | 82,815 | |||||||||||||||||||||
Other accounts receivable and prepaid expenses | 4 | 35,443 | 26,481 | 4 | 32,570 | 35,443 | |||||||||||||||||
Inventories | 5 | 204,725 | 152,073 | 5 | 238,232 | 204,725 | |||||||||||||||||
Total current assets | 408,526 | 385,736 | 407,858 | 408,526 | |||||||||||||||||||
LONG-TERM ASSETS: | |||||||||||||||||||||||
Severance pay fund | 4,090 | 4,007 | 3,410 | 4,090 | |||||||||||||||||||
Other long-term receivables | 11 | 449 | 1,675 | 11 | - | 449 | |||||||||||||||||
Deferred tax assets, net | 12 | 10,880 | 8,359 | 12 | 16,251 | 10,880 | |||||||||||||||||
Long-term deposits and prepaid expenses | 3,832 | 3,837 | 3,255 | 3,832 | |||||||||||||||||||
Long-term available for sale marketable securities | 3 | 8,647 | 10,926 | 3 | - | 8,647 | |||||||||||||||||
Property, plant and equipment, net | 6 | 221,150 | 222,883 | 6 | 169,292 | 221,150 | |||||||||||||||||
Operating lease right-of-use assets | 10 | 154,652 | 123,928 | 10 | 144,098 | 154,652 | |||||||||||||||||
Intangible assets, net | 7 | 9,627 | 12,098 | 7 | 8,817 | 9,627 | |||||||||||||||||
Goodwill | 7 | 45,800 | 47,472 | 7 | - | 45,800 | |||||||||||||||||
Total long-term assets | 459,127 | 435,185 | 345,123 | 459,127 | |||||||||||||||||||
Total assets | $ | 867,653 | $ | 820,921 | $ | 752,981 | $ | 867,653 |
F - 6
December 31, | |||||||||||
Note | 2021 | 2020 | |||||||||
LIABILITIES AND EQUITY | |||||||||||
CURRENT LIABILITIES: | |||||||||||
Short-term bank credit and current maturities of long- term bank loan | 8 | $ | 12,523 | $ | 13,122 | ||||||
Trade payables | 81,369 | 55,063 | |||||||||
Related party and other loan | 14 | 2,276 | 2,221 | ||||||||
Short term legal settlements and loss contingencies | 11 | 22,592 | 31,039 | ||||||||
Accrued expenses and other liabilities | 9 | 64,534 | 55,570 | ||||||||
Total current liabilities | 183,294 | 157,015 | |||||||||
LONG-TERM LIABILITIES: | |||||||||||
Long-term other loans and financing liability of land from related parties | 14 | 6,240 | 11,163 | ||||||||
Long-term bank loan | 15 | 0 | 9,543 | ||||||||
Accrued severance pay | 5,500 | 5,303 | |||||||||
Deferred tax liabilities, net | 12 | 4,992 | 6,943 | ||||||||
Long-term warranty provision | 1,280 | 1,274 | |||||||||
Long term legal settlements and loss contingencies | 11 | 20,859 | 21,910 | ||||||||
Long-term operating lease liabilities | 10 | 143,324 | 112,719 | ||||||||
Total long-term liabilities | 182,195 | 168,855 | |||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | 11 | 0 | 0 | ||||||||
REDEEMABLE NON-CONTROLLING INTEREST | 1,2 | 7,869 | 7,701 | ||||||||
EQUITY: | 13 | ||||||||||
Share capital- | |||||||||||
Ordinary shares of NIS 0.04 par value - 200,000,000 shares authorized at December 31, 2021 and 2020; 35,756,166 and 35,540,392 issued at December 31, 2021 and 2020, respectively; 34,473,070 and 34,437,296 shares outstanding at December 31, 2021 and 2020, respectively | 371 | 371 | |||||||||
Additional paid-in capital | 161,929 | 160,083 | |||||||||
Capital fund related to non-controlling interest | (5,587 | ) | (5,587 | ) | |||||||
Accumulated other comprehensive income (loss), net | (704 | ) | 1,083 | ||||||||
Retained earnings | 377,716 | 370,830 | |||||||||
Treasury shares at cost – 1,103,096 ordinary shares at December 31, 2021 and 2020 | (39,430 | ) | (39,430 | ) | |||||||
Total equity | 494,295 | 487,350 | |||||||||
Total liabilities and equity | 867,653 | 820,921 |
Year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Revenues | $ | 643,892 | $ | 486,412 | $ | 545,974 | ||||||
Cost of revenues | 472,394 | 352,470 | 397,335 | |||||||||
Gross profit | 171,498 | 133,942 | 148,639 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 4,216 | 3,974 | 4,146 | |||||||||
Selling and marketing | 85,725 | 62,047 | 66,770 | |||||||||
General and administrative | 50,845 | 39,081 | 40,681 | |||||||||
Legal settlements and loss contingencies, net | 3,283 | 6,319 | 12,359 | |||||||||
Total operating expenses | 144,069 | 111,421 | 123,956 | |||||||||
Operating income | 27,429 | 22,521 | 24,683 | |||||||||
Finance expenses, net | 7,590 | 10,199 | 5,578 | |||||||||
Income before taxes on income | 19,839 | 12,322 | 19,105 | |||||||||
Taxes on income | 1,950 | 4,700 | 6,243 | |||||||||
Net income | $ | 17,889 | $ | 7,622 | $ | 12,862 | ||||||
Net income (loss) attributable to non-controlling interest | (1,077 | ) | 404 | 0 | ||||||||
Net income attributable to controlling interest | $ | 18,966 | $ | 7,218 | $ | 12,862 | ||||||
Basic and diluted net income per share of Ordinary shares | $ | 0.51 | $ | 0.21 | $ | 0.37 | ||||||
Weighted average number of Ordinary shares used in computing basic income per share (in thousands) | 34,462 | 34,419 | 34,384 | |||||||||
Weighted average number of Ordinary shares used in computing diluted income per share (in thousands) | 34,570 | 34,474 | 34,460 |
| Year ended December 31, | |||||||||||
| 2021 | 2020 | 2019 | |||||||||
| ||||||||||||
Net income | $ | 17,889 | $ | 7,622 | $ | 12,862 | ||||||
| ||||||||||||
Other comprehensive income (loss) before tax: | ||||||||||||
| ||||||||||||
Foreign currency translation adjustments | (2,186 | ) | 4,386 | (608 | ) | |||||||
Unrealized income on foreign currency cash flow hedge | 329 | 0 | 738 | |||||||||
Unrealized income (loss) on available for sale marketable securities | (59 | ) | 21 | 0 | ||||||||
Income tax expense related to components of other comprehensive income (loss) | (26 | ) | (8 | ) | (241 | ) | ||||||
| ||||||||||||
Total other comprehensive income (loss), net of tax | (1,942 | ) | 4,399 | (111 | ) | |||||||
| ||||||||||||
Comprehensive income | 15,947 | 12,021 | 12,751 | |||||||||
Less - comprehensive income (loss) attributable to non-controlling interest | (1,232 | ) | 432 | 0 | ||||||||
| ||||||||||||
Comprehensive income attributable to controlling interest | $ | 17,179 | $ | 11,589 | $ | 12,751 |
Capital | ||||||||||||||||||||||||||||||||
Accumulated | fund | |||||||||||||||||||||||||||||||
other | related to | |||||||||||||||||||||||||||||||
Additional | comprehensive | non- | ||||||||||||||||||||||||||||||
Common stock | paid-in | Retained | income (loss), | controlling | Treasury | Total | ||||||||||||||||||||||||||
Shares | Amount | capital | earnings | net (1) | interest | shares | equity | |||||||||||||||||||||||||
Balance as of January 1, 2019 | 34,363,211 | 371 | 153,593 | 360,731 | (3,177 | ) | (5,587 | ) | (39,430 | ) | 466,501 | |||||||||||||||||||||
Other comprehensive loss | - | 0 | 0 | 0 | (111 | ) | 0 | 0 | (111 | ) | ||||||||||||||||||||||
Net income attributable to controlling interest | - | 0 | 0 | 12,862 | 0 | 0 | 0 | 12,862 | ||||||||||||||||||||||||
Equity-based compensation expense related to employees (2) | - | 0 | 3,632 | 0 | 0 | 0 | 0 | 3,632 | ||||||||||||||||||||||||
Dividend paid | - | 0 | 0 | (5,160 | ) | 0 | 0 | 0 | (5,160 | ) | ||||||||||||||||||||||
Cashless exercise of options and RSUs | 34,565 | (* | ) | (* | ) | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Balance as of December 31, 2019 | 34,397,776 | 371 | 157,225 | 368,433 | (3,288 | ) | (5,587 | ) | (39,430 | ) | 477,724 | |||||||||||||||||||||
Other comprehensive loss | - | 0 | 0 | 0 | 4,371 | 0 | 0 | 4,371 | ||||||||||||||||||||||||
Net income | - | 0 | 0 | 7,218 | 0 | 0 | 0 | 7,218 | ||||||||||||||||||||||||
Equity-based compensation expense related to employees (2) | - | 0 | 2,858 | 0 | 0 | 0 | 0 | 2,858 | ||||||||||||||||||||||||
Dividend paid | - | 0 | 0 | (4,821 | ) | 0 | 0 | 0 | (4,821 | ) | ||||||||||||||||||||||
Cashless exercise of options and RSUs | 39,520 | (* | ) | (* | ) | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Balance as of December 31, 2020 | 34,437,296 | 371 | 160,083 | 370,830 | 1,083 | (5,587 | ) | (39,430 | ) | 487,350 | ||||||||||||||||||||||
Other comprehensive loss | - | 0 | 0 | 0 | (1,787 | ) | 0 | 0 | (1,787 | ) | ||||||||||||||||||||||
Net income attributable to controlling interest | - | 0 | 0 | 18,966 | 0 | 0 | 0 | 18,966 | ||||||||||||||||||||||||
Equity-based compensation expense related to employees (2) | - | 0 | 1,846 | 0 | 0 | 0 | 0 | 1,846 | ||||||||||||||||||||||||
Adjustment to redemption value of the non-controlling interest | - | 0 | 0 | (1,399 | ) | 0 | 0 | 0 | (1,399 | ) | ||||||||||||||||||||||
Dividend paid | - | 0 | 0 | (10,681 | ) | 0 | 0 | 0 | (10,681 | ) | ||||||||||||||||||||||
Cashless exercise of options and RSUs | 35,774 | (* | ) | (* | ) | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Balance as of December 31, 2021 | 34,473,070 | 371 | 161,929 | 377,716 | (704 | ) | (5,587 | ) | (39,430 | ) | 494,295 |
Year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 17,889 | $ | 7,622 | $ | 12,862 | ||||||
Adjustments required to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 35,407 | 29,460 | 28,587 | |||||||||
Share-based compensation expense | 1,846 | 2,858 | 3,632 | |||||||||
Accrued severance pay, net | 121 | (14 | ) | (246 | ) | |||||||
Changes in deferred tax, net | (4,473 | ) | (895 | ) | (1,509 | ) | ||||||
Capital loss (gain) from sale of property, plant and equipment | (3 | ) | 340 | 326 | ||||||||
Decrease (increase) in trade receivables | 815 | 6,070 | (5,032 | ) | ||||||||
Decrease (increase) in other accounts receivable and prepaid expenses | (9,036 | ) | 9,318 | (6,346 | ) | |||||||
Decrease (increase) in inventories | (54,189 | ) | 313 | 35,303 | ||||||||
Decrease in trade payables | 28,277 | (17,938 | ) | (6,663 | ) | |||||||
Increase (decrease) in warranty provision | 112 | (371 | ) | 69 | ||||||||
Legal settlements and loss contingencies, net | 3,283 | 6,319 | 12,359 | |||||||||
Decrease (increase) in right of use assets | 25,906 | (12,154 | ) | 1,319 | ||||||||
Changes in lease liabilities | (22,085 | ) | 16,126 | 2,602 | ||||||||
Contingent consideration related to acquisition | (288 | ) | 0 | 0 | ||||||||
Amortization of premium and accretion of discount on marketable securities, net | 412 | 161 | 0 | |||||||||
Changes in accrued interest related to marketable securities | 42 | (1 | ) | 0 | ||||||||
Increase (decrease) in accrued expenses and other liabilities including related party | (3,352 | ) | 404 | 5,786 | ||||||||
Net cash provided by operating activities | 20,684 | 47,618 | 83,049 | |||||||||
Cash flows from investing activities: | ||||||||||||
Net cash paid for acquisitions | 0 | (28,962 | ) | 0 | ||||||||
Purchase of property, plant and equipment | (31,477 | ) | (19,824 | ) | (23,590 | ) | ||||||
Proceeds from sale of property, plant and equipment | 9 | 13 | 66 | |||||||||
Repayment of assumed shareholders loan related to acquisition | (1,966 | ) | 0 | 0 | ||||||||
Investment in marketable securities | (11,738 | ) | (24,456 | ) | 0 | |||||||
Sales and maturity of marketable securities | 10,395 | 5,271 | 0 | |||||||||
Increase in long-term deposits | (108 | ) | (347 | ) | (63 | ) | ||||||
Net cash used in investing activities | (34,885 | ) | (68,305 | ) | (23,587 | ) |
CAESARSTONE LTD. AND ITS SUBSIDIARIES
Year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Cash flows from financing activities: | ||||||||||||
Dividend paid | $ | (10,681 | ) | $ | (4,821 | ) | $ | (5,160 | ) | |||
Repayment of short-term bank credit and loans, net | (11,761 | ) | (18 | ) | (7,771 | ) | ||||||
Contingent consideration related to acquisition | (1,492 | ) | 0 | 0 | ||||||||
Repayment of a financing liability of land | (1,320 | ) | (1,245 | ) | (1,196 | ) | ||||||
Net cash used in financing activities | (25,254 | ) | (6,084 | ) | (14,127 | ) | ||||||
Effect of exchange rate differences on cash and cash equivalents | (478 | ) | 1,647 | 475 | ||||||||
Increase (decrease) in cash and cash equivalents | (39,933 | ) | (25,124 | ) | 45,810 | |||||||
Cash and cash equivalents at beginning of year | 114,248 | 139,372 | 93,562 | |||||||||
Cash and cash equivalents at end of year | $ | 74,315 | $ | 114,248 | $ | 139,372 | ||||||
Cash received (paid) during the year for: | ||||||||||||
Interest paid | $ | (1,915 | ) | $ | 0 | $ | 0 | |||||
Interest received | $ | 465 | $ | 460 | $ | 976 | ||||||
Tax paid | $ | (7,377 | ) | $ | (3,676 | ) | $ | (10,155 | ) | |||
Non cash activity during the year for: | ||||||||||||
Changes in trade payables balances related to purchase of property, plant and equipment | $ | (56 | ) | $ | (356 | ) | $ | (3,235 | ) | |||
Operating lease liabilities and right-of-use assets | $ | 57,343 | $ | 60,750 | $ | 73,366 |
CONSOLIDATED BALANCE SHEETS |
U.S. dollars in thousands (except share data) |
December 31, | ||||||||||||
Note | 2022 | 2021 | ||||||||||
LIABILITIES AND EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Short-term bank credit and current maturities of long- term bank loan | 8 | $ | 26,135 | $ | 12,523 | |||||||
Trade payables | 62,194 | 81,369 | ||||||||||
Related party and other loan | 14 | 283 | 2,276 | |||||||||
Short term legal settlements and loss contingencies | 11 | 17,595 | 22,592 | |||||||||
Accrued expenses and other liabilities | 9 | 58,777 | 64,534 | |||||||||
Total current liabilities | 164,984 | 183,294 | ||||||||||
LONG-TERM LIABILITIES: | ||||||||||||
Long-term other loans and financing liability of land from related parties | 14 | 483 | 6,240 | |||||||||
Long-term bank loan | 15 | 4,340 | - | |||||||||
Accrued severance pay | 4,750 | 5,500 | ||||||||||
Deferred tax liabilities, net | 12 | 4,288 | 4,992 | |||||||||
Long-term warranty provision | 1,262 | 1,280 | ||||||||||
Long term legal settlements and loss contingencies | 11 | 19,572 | 20,859 | |||||||||
Long-term operating lease liabilities | 10 | 124,353 | 143,324 | |||||||||
Total long-term liabilities | 159,048 | 182,195 | ||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | 11 | |||||||||||
REDEEMABLE NON-CONTROLLING INTEREST | 1,2 | 7,903 | 7,869 | |||||||||
EQUITY: | 13 | |||||||||||
Share capital- | ||||||||||||
Ordinary shares of NIS 0.04 par value - 200,000,000 shares authorized at December 31, 2022 and 2021; 34,610,399 and 35,756,166 issued at December 31, 2022 and 2021, respectively; 34,507,303 and 34,473,070 shares outstanding at December 31, 2022 and 2021, respectively | 371 | 371 | ||||||||||
Additional paid-in capital | 163,431 | 161,929 | ||||||||||
Capital fund related to non-controlling interest | (5,587 | ) | (5,587 | ) | ||||||||
Accumulated other comprehensive loss, net | (9,578 | ) | (704 | ) | ||||||||
Retained earnings | 311,839 | 377,716 | ||||||||||
Treasury shares at cost – 1,103,096 ordinary shares at December 31, 2022 and 2021 | (39,430 | ) | (39,430 | ) | ||||||||
Total equity | 421,046 | 494,295 | ||||||||||
Total liabilities and equity | 752,981 | 867,653 |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Revenues | $ | 690,806 | $ | 643,892 | $ | 486,412 | ||||||
Cost of revenues | 527,561 | 472,394 | 352,470 | |||||||||
Gross profit | 163,245 | 171,498 | 133,942 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 4,098 | 4,216 | 3,974 | |||||||||
Selling and marketing | 94,412 | 85,725 | 62,047 | |||||||||
General and administrative | 51,596 | 50,845 | 39,081 | |||||||||
Goodwill and long lived assets impairment charges | 71,258 | - | - | |||||||||
Legal settlements and loss contingencies, net | 568 | 3,283 | 6,319 | |||||||||
Total operating expenses | 221,932 | 144,069 | 111,421 | |||||||||
Operating income (loss) | (58,687 | ) | 27,429 | 22,521 | ||||||||
Finance expenses (income), net | (3,079 | ) | 7,590 | 10,199 | ||||||||
Income (loss) before taxes on income | (55,608 | ) | 19,839 | 12,322 | ||||||||
Taxes on income | 758 | 1,950 | 4,700 | |||||||||
Net income (loss) | $ | (56,366 | ) | $ | 17,889 | $ | 7,622 | |||||
Net income (loss) attributable to non-controlling interest | 688 | (1,077 | ) | 404 | ||||||||
Net income (loss) attributable to controlling interest | $ | (57,054 | ) | $ | 18,966 | $ | 7,218 | |||||
Basic and diluted net income (loss) per share of Ordinary shares | $ | (1.66 | ) | $ | 0.51 | $ | 0.21 | |||||
Weighted average number of Ordinary shares used in computing basic income (loss) per share (in thousands) | 34,488 | 34,462 | 34,419 | |||||||||
Weighted average number of Ordinary shares used in computing diluted income (loss) per share (in thousands) | 34,488 | 34,570 | 34,474 |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Net income (loss) | $ | (56,366 | ) | $ | 17,889 | $ | 7,622 | |||||
Other comprehensive income (loss) before tax: | ||||||||||||
Foreign currency translation adjustments | (8,932 | ) | (2,186 | ) | 4,386 | |||||||
Unrealized income (loss) on foreign currency cash flow hedge | (699 | ) | 329 | - | ||||||||
Unrealized income (loss) on available for sale marketable securities | (84 | ) | (59 | ) | 21 | |||||||
Income tax expense related to components of other comprehensive loss | (11 | ) | (26 | ) | (8 | ) | ||||||
Total other comprehensive income (loss), net of tax | (9,726 | ) | (1,942 | ) | 4,399 | |||||||
Comprehensive income (loss) | (66,092 | ) | 15,947 | 12,021 | ||||||||
Less - comprehensive income (loss) attributable to non-controlling interest | 164 | 1,232 | (432 | ) | ||||||||
Comprehensive income (loss) attributable to controlling interest | $ | (65,928 | ) | $ | 17,179 | $ | 11,589 |
Common stock | Additional paid-in | Retained | Accumulated other comprehensive income (loss), | Capital fund related to non- controlling | Treasury | Total | ||||||||||||||||||||||||||
Shares | Amount | capital | earnings | net (1) | interest | shares | equity | |||||||||||||||||||||||||
Balance as of January 1, 2020 | 34,397,776 | 371 | 157,225 | 368,433 | (3,288 | ) | (5,587 | ) | (39,430 | ) | 477,724 | |||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||
Other comprehensive loss | - | - | - | - | 4,371 | - | - | 4,371 | ||||||||||||||||||||||||
Net income | - | - | - | 7,218 | - | - | - | 7,218 | ||||||||||||||||||||||||
Equity-based compensation expense related to employees (2) | - | - | 2,858 | - | - | - | - | 2,858 | ||||||||||||||||||||||||
Dividend paid | - | - | - | (4,821 | ) | - | - | - | (4,821 | ) | ||||||||||||||||||||||
Cashless exercise of options and RSUs | 39,520 | (* | ) | (* | ) | - | - | - | - | - | ||||||||||||||||||||||
Balance as of December 31, 2020 | 34,437,296 | 371 | 160,083 | 370,830 | 1,083 | (5,587 | ) | (39,430 | ) | 487,350 | ||||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||
Other comprehensive loss | - | - | - | - | (1,787 | ) | - | - | (1,787 | ) | ||||||||||||||||||||||
Net income attributable to controlling interest | - | - | - | 18,966 | - | - | - | 18,966 | ||||||||||||||||||||||||
Equity-based compensation expense related to employees (2) | - | - | 1,846 | - | - | - | - | 1,846 | ||||||||||||||||||||||||
Adjustment to redemption value of the non-controlling interest | - | - | - | (1,399 | ) | - | - | - | (1,399 | ) | ||||||||||||||||||||||
Dividend paid | - | - | - | (10,681 | ) | - | - | - | (10,681 | ) | ||||||||||||||||||||||
Cashless exercise of options and RSUs | 35,774 | (* | ) | (* | ) | - | - | - | - | - | ||||||||||||||||||||||
Balance as of December 31, 2021 | 34,473,070 | 371 | 161,929 | 377,716 | (704 | ) | (5,587 | ) | (39,430 | ) | 494,295 | |||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||
Other comprehensive loss | - | - | - | - | (8,874 | ) | - | - | (8,874 | ) | ||||||||||||||||||||||
Net income (loss) attributable to controlling interest | - | - | - | (57,054 | ) | - | - | - | (57,054 | ) | ||||||||||||||||||||||
Equity-based compensation expense related to employees (2) | - | - | 1,502 | - | - | - | - | 1,502 | ||||||||||||||||||||||||
Adjustment to redemption value of the non-controlling interest | - | - | - | (198 | ) | - | - | - | (198 | ) | ||||||||||||||||||||||
Dividend paid | - | - | - | (8,625 | ) | - | - | - | (8,625 | ) | ||||||||||||||||||||||
Cashless exercise of options and RSUs | 34,233 | (* | ) | (* | ) | - | - | - | - | - | ||||||||||||||||||||||
Balance as of December 31, 2022 | 34,507,303 | 371 | 163,431 | 311,839 | (9,578 | ) | (5,587 | ) | (39,430 | ) | 421,046 |
(1) | Accumulated other comprehensive income (loss), net, comprised of foreign currency translation, hedging transactions and marketable securities. |
(2) | See also Note 13. |
(*) | Less than $1. |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | (56,366 | ) | $ | 17,889 | $ | 7,622 | |||||
Adjustments required to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 36,344 | 35,407 | 29,460 | |||||||||
Share-based compensation expense | 1,502 | 1,846 | 2,858 | |||||||||
Accrued severance pay, net | (58 | ) | 121 | (14 | ) | |||||||
Changes in deferred tax, net | (5,693 | ) | (4,473 | ) | (895 | ) | ||||||
Capital loss (gain) from sale of property, plant and equipment | 67 | (3 | ) | 340 | ||||||||
Decrease (increase) in trade receivables | 2,612 | 815 | 6,070 | |||||||||
Decrease (increase) in other accounts receivable and prepaid expenses | 3,645 | (9,036 | ) | 9,318 | ||||||||
Decrease (increase) in inventories | (40,884 | ) | (54,189 | ) | 313 | |||||||
Increase (decrease) in trade payables | (21,032 | ) | 28,277 | (17,938 | ) | |||||||
Increase (decrease) in warranty provision | (119 | ) | 112 | (371 | ) | |||||||
Legal settlements and loss contingencies, net | 568 | 3,283 | 6,319 | |||||||||
Decrease (increase) in right of use assets | 28,056 | 25,906 | (12,154 | ) | ||||||||
Changes in lease liabilities | (36,478 | ) | (22,085 | ) | 16,126 | |||||||
Contingent consideration related to acquisition | 120 | (288 | ) | - | ||||||||
Amortization of premium and accretion of discount on marketable securities, net | 238 | 412 | 161 | |||||||||
Changes in accrued interest related to marketable securities | 74 | 42 | (1 | ) | ||||||||
Goodwill and long-lived assets impairment chargesd | 71,258 | - | - | |||||||||
Increase (decrease) in accrued expenses and other liabilities including related party | (7,165 | ) | (3,352 | ) | 404 | |||||||
Net cash (used in) provided by operating activities | (23,311 | ) | 20,684 | 47,618 | ||||||||
Cash flows from investing activities: | ||||||||||||
Net cash paid for acquisitions | (2,245 | ) | - | (28,962 | ) | |||||||
Purchase of property, plant and equipment | (17,801 | ) | (31,477 | ) | (19,824 | ) | ||||||
Proceeds from sale of property, plant and equipment | 12 | 9 | 13 | |||||||||
Repayment of assumed shareholders loan related to acquisition | - | (1,966 | ) | - | ||||||||
Investment in marketable securities | - | (11,738 | ) | (24,456 | ) | |||||||
Sales and maturity of marketable securities | 12,401 | 10,395 | 5,271 | |||||||||
Proceeds from (investment in) long-term deposits | 348 | (108 | ) | (347 | ) | |||||||
Net cash used in investing activities | (7,285 | ) | (34,885 | ) | (68,305 | ) |
CAESARSTONE LTD. AND ITS SUBSIDIARIES
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Cash flows from financing activities: | ||||||||||||
Dividend paid | $ | (8,625 | ) | $ | (10,681 | ) | $ | (4,821 | ) | |||
Assuming (repayment) of short-term bank credit and loans, net | 18,640 | (11,761 | ) | (18 | ) | |||||||
Contingent consideration related to acquisition | - | (1,492 | ) | - | ||||||||
Repayment of a financing liability of land | (859 | ) | (1,320 | ) | (1,245 | ) | ||||||
Net cash used in financing activities | 9,156 | (25,254 | ) | (6,084 | ) | |||||||
Effect of exchange rate differences on cash and cash equivalents | (794 | ) | (478 | ) | 1,647 | |||||||
Increase (decrease) in cash and cash equivalents | (22,234 | ) | (39,933 | ) | (25,124 | ) | ||||||
Cash and cash equivalents at beginning of year | 74,315 | 114,248 | 139,372 | |||||||||
Cash and cash equivalents at end of year | $ | 52,081 | $ | 74,315 | $ | 114,248 | ||||||
Cash received (paid) during the year for: | ||||||||||||
Interest paid | $ | (1,159 | ) | $ | (1,915 | ) | $ | - | ||||
Interest received | $ | 439 | $ | 465 | $ | 460 | ||||||
Tax paid | $ | (4,968 | ) | $ | (7,377 | ) | $ | (3,676 | ) | |||
Non cash activity during the year for: | ||||||||||||
Changes in trade payables balances related to purchase of property, plant and equipment | $ | (925 | ) | $ | (56 | ) | $ | (356 | ) | |||
Operating lease liabilities and right-of-use assets | $ | 18,569 | $ | 57,343 | $ | 60,750 |
NOTE 1:- | GENERAL |
a. | General: |
b. | Acquisition of Lioli Ceramica Pvt Ltd: |
F - 13
U.S. dollars in thousands (except share data)
The preliminary fair value estimates for the assets acquired and liabilities assumed for Lioli’s acquisition were based upon preliminary calculations and valuations, and the estimates and assumptions for this acquisition were subject to change as the Company obtains additional information during the respective measurement period to the information that was existed as of the acquisition date (up to one year from the respective acquisition dates). As of December 2021 the acquisition purchase price allocation was finalized. The following table summarizes the purchase price allocation of Lioli Acquisition at the acquisition date:
Components of Purchase Price: | ||||
Cash | $ | 10,197 | ||
Lioli's minority shareholders loan assumed | 1,950 | |||
Contingent consideration | 1,492 | |||
Total purchase price | 13,639 | |||
Less: Cash acquired | 65 | |||
Net for allocation | 13,574 | |||
Allocation of Purchase Price: | ||||
Net tangible assets (liabilities): | ||||
Trade receivables, net | 4,729 | |||
Prepaid expenses and other current assets | 1,133 | |||
Inventories, net (1) | 7,488 | |||
Property, plant and equipment, net (2) | 26,937 | |||
Other non-current assets | 20 | |||
Trade payables | (5,007 | ) | ||
Loans (net of Lioli's minority shareholders loan assumed) (3) | (14,083 | ) | ||
Accrued expenses and other current liabilities | (2,969 | ) | ||
Other non-current liabilities | (4,295 | ) | ||
Total net tangible assets | 13,953 | |||
Identifiable intangible assets: | ||||
Customer relationships (4) | 2,049 | |||
Deferred tax liabilities | (597 | ) | ||
Total identifiable intangible assets acquired | 1,452 | |||
Goodwill (5) | 5,438 | |||
Non-controlling interests | (7,269 | ) | ||
Total purchase price allocation | $ | 13,574 |
F - 14
U.S. dollars in thousands (except share data)
c. | Acquisition of Omicron Supplies, LLC: |
F - 1513
U.S. dollars in thousands (except share data)
NOTE 1:- | GENERAL (Cont.) |
d. | Acquisition of Magrab Naturtsen AB: |
Components of Purchase Price: | ||||||||
Cash | $ | 18,862 | $ | 2,607 | ||||
Contingent consideration | 875 | |||||||
Less: Cash acquired | 32 | 373 | ||||||
Net for allocation | 18,830 | 3,109 | ||||||
Allocation of Purchase Price: | ||||||||
Net tangible assets (liabilities): | ||||||||
Trade receivables, net | 6,178 | |||||||
Prepaid expenses and other current assets | 787 | |||||||
Trade receivables and other current assets, net | 524 | |||||||
Property, plant and equipment, net | 41 | |||||||
Inventories, net | 19,462 | 1,233 | ||||||
Property, plant and equipment, net | 75 | |||||||
ROU assets and others | 22,978 | |||||||
ROU assets | 446 | |||||||
Trade payables | (9,722 | ) | (523 | ) | ||||
Accrued expenses and other liabilities | (378 | ) | ||||||
Short-term lease liability | (3,567 | ) | (22 | ) | ||||
Short-term loan, accrued expenses and other current liabilities | (10,430 | ) | ||||||
Long-term lease and other non-current liabilities | (19,369 | ) | (424 | ) | ||||
Total net tangible assets | 6,392 | 897 | ||||||
Identifiable intangible assets: | ||||||||
Customer relationships (1) | 10,144 | 1,789 | ||||||
Deferred tax liabilities | (2,637 | ) | (369 | ) | ||||
Total identifiable intangible assets acquired | 7,507 | 1,420 | ||||||
Goodwill (2) | 4,931 | 792 | ||||||
Total purchase price allocation | $ | 18,830 | $ | 3,109 |
F - 1614
U.S. dollars in thousands (except share data)
NOTE 1:- | GENERAL (Cont.) |
(1) | Customer relationships represent the underlying relationships and agreements with Magrab's customer base. In assessing the value of the Customer Relationships, the Company used an income approach method. The Customer Relationships’ economic useful life is estimated at approximately 8 years, amortized using the straight-line method. |
(2) | The goodwill is primarily attributable to expected synergies resulting from the acquisition. |
Major suppliers: |
F - 1715
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").
a. | Use of estimates: |
b. | Financial statements in U.S. dollars: |
F - 18
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Accordingly, monetary accounts maintained in currencies other than the USD are re-measured into dollars in accordance with Accounting Standards Codification ("ASC") 830, "Foreign Currency Matters" (“ASC 830”). All transaction gains and losses resulting from the re-measurement of monetary balance sheet items denominated in non-USD currencies are reflected in the statements of operations as financial income or expenses as appropriate.
The financial statements of the Company’s subsidiaries of which the functional currency is not the USD have been translated into the USD. All amounts on the balance sheets have been translated into the USD using the exchange rates in effect on the relevant balance sheet dates. All amounts in the statements of income have been translated into the USD using the monthly average exchange rate in accordance with ASC 830. The resulting translation adjustments are reported as a component of accumulated other comprehensive income (loss), net in shareholders' equity.
F - 16
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
c. | Principles of consolidation: |
d. | Cash equivalents: |
e. | Short-term bank deposits: |
f. | Marketable securities: |
F - 19
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The Company classifies its marketable securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable securities with maturities of 12 months or less are classified as short-term and marketable securities with maturities greater than 12 months are classified as long-term.
The Company assessed AFS debt securities with an amortized cost basis in excess of estimated fair value to determine what amount of that difference, if any, is caused by expected credit losses in accordance with ASC 326. Allowance for credit losses on AFS debt securities are recognized as a charge of credit loss expenses (income), net, on the consolidated statements of comprehensive income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders' equity. The Company did not record credit loss allowance on its marketable securities during the year ended December 31, 2022 and 2021.
F - 17
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
g. | Derivatives: |
F - 20
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
F - 2118
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The following tables present fair value amounts of, and gains and losses recorded in relation to, the Company's derivative instruments and related hedged items:
|
| Balance sheet |
| Fair value of |
|
| Balance sheet |
| Fair value of |
| ||||||||||
|
| Year ended |
|
| Year ended December 31, |
| ||||||||||||||
|
| 2021 |
| 2020 |
|
| 2022 |
| 2021 |
| ||||||||||
Derivative assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Foreign exchange option and forward contracts | Other accounts receivable and prepaid expenses | 1,400 | 0 | Other accounts receivable and prepaid expenses | 39 | 1,400 | ||||||||||||||
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Foreign exchange option and forward contracts |
| Other accounts receivable and prepaid expenses |
|
| 297 |
|
|
| 0 |
|
| Other accounts receivable and prepaid expenses |
|
| 333 |
|
|
| 297 |
|
Styrene forward contract | Other accounts receivable and prepaid expenses | 204 | 0 | Other accounts receivable and prepaid expenses | - | 204 | ||||||||||||||
Total |
|
|
|
| 1,901 |
|
|
| 0 |
|
|
|
|
| 371 |
|
|
| 1,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Derivative liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
| ||||||||||
Foreign exchange option and forward contracts | Accrued expenses and other liabilities | (450 | ) | - | ||||||||||||||||
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
| |||||||||||
Foreign exchange option and forward contracts |
| Accrued expenses and other liabilities |
| (329 | ) |
|
| (3,582 | ) |
| Accrued expenses and other liabilities |
|
| (62 | ) |
|
| (329 | ) | |
Styrene forward contract |
| Accrued expenses and other liabilities |
|
| 0 |
|
|
| (209 | ) |
| Accrued expenses and other liabilities |
|
| (430 | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total |
|
|
|
| (329 | ) |
|
| (3,791 | ) |
|
|
|
| (942 | ) |
|
| (329 | ) |
F - 2219
U.S. dollars in thousands (except share data)
The following tables present fair value amounts of, and gains and losses recorded in relation to, the Company's derivative instruments and related hedged items:
|
| Gain recognized in other comprehensive |
| Gain (loss) recognized in |
|
| Gain (loss) recognized in other comprehensive | Gain (loss) recognized in statements of income |
| ||||||||||||||||||||||||||||
|
| Year ended |
| Statements of income |
| Year ended |
|
| Year ended December 31, | Statements of income | Year ended |
| |||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| Item |
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 | Item | 2022 |
|
| 2021 |
| |||||||||||||
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Foreign exchange forward contract |
|
| 297 |
|
|
| 0 |
| Cost of revenues and Operating expenses |
|
| (68 | ) |
|
| 2,406 |
|
|
| (709 | ) |
|
| 297 | Cost of revenues and Operating expenses |
| (2,555 | ) |
|
| (68 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign exchange forward and options contracts |
|
| 0 |
|
|
| 0 |
| Financial expenses, net |
|
| 2,135 |
|
|
| (750 | ) |
|
| - |
|
|
| - | Financial expenses, net |
| 1,506 |
|
|
| 2,135 |
| |||||
Styrene forward contracts |
|
| 0 |
|
|
| 0 |
| Financial expenses, net |
|
| 2,192 |
|
|
| (2,120 | ) |
|
| - |
|
|
| - | Financial expenses, net |
| 520 |
|
|
| 2,192 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total |
|
| 297 |
|
|
| 0 |
|
|
|
| 4,259 |
|
|
| (464 | ) |
|
| (709 | ) |
|
| 297 |
|
| (529 | ) |
|
| 4,259 |
|
h. | Inventories: |
F - 2320
U.S. dollars in thousands (except share data)
h. | Inventories (cont.): |
The following table provides the details of the change in the Company's provision for inventory write-downs:
|
| December 31, |
|
| December 31, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Inventory provision, beginning of year |
| $ | 16,607 |
|
| $ | 18,226 |
|
| $ | 16,789 |
|
| $ | 16,607 |
|
Assumed from business combination |
|
| 0 |
|
|
| 1,405 |
| ||||||||
Increase in inventory provision |
|
| 7,671 |
|
|
| 4,305 |
|
|
| 11,165 |
|
|
| 7,671 |
|
Write off |
|
| (7,489 | ) |
|
| (7,329 | ) |
|
| (6,216 | ) |
|
| (7,489 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory provision, end of year |
| $ | 16,789 |
|
| $ | 16,607 |
|
| $ | 21,738 |
|
| $ | 16,789 |
|
i. | Property, plant and equipment, net: |
1. | Property, plant and equipment are stated at cost, net of accumulated depreciation and investment grants. |
2. | Costs recorded prior to a production line completion are reflected as construction in progress, which are recorded building and machinery assets at the date of purchase. Construction in progress includes direct expenditures for the construction of the production line and is stated at cost. Capitalized costs include costs incurred under the construction contract: advisory, consulting and direct internal costs (including labor) and operating costs incurred during the construction and installation phase. |
3. | Depreciation is calculated using the straight-line method over the estimated useful life of the assets at the following annual rates: |
| % |
|
|
Machinery and manufacturing equipment | 4 - 33 (mainly 10) |
Office equipment and furniture | 7 - 33 (mainly 7) |
Motor vehicles | 10 - 30 (mainly 20) |
Buildings | 4 - 5 |
|
|
| Over the shorter of the term of the lease or the life of the asset |
F - 2421
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
j. | Leases: |
k. | Impairment of long-lived assets: |
F - 2522
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
l. | Goodwill: |
(1) | An initial qualitative assessment may be performed to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. |
(2) | If the Company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative fair value test is performed. An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value is recognized. |
F - 2623
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
m. | Warranty: |
|
| 2021 |
| 2020 |
|
| 2022 |
| 2021 |
| ||||||
|
|
|
|
|
|
| ||||||||||
January 1, |
| $ | 2,579 |
|
| $ | 2,916 |
|
| $ | 2,680 |
|
| $ | 2,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to costs and expenses relating to new sales |
|
| 1,559 |
|
|
| 1,281 |
|
|
| 1,461 |
|
|
| 1,559 |
|
Costs of product warranty claims |
|
| (1,538 | ) |
|
| (1,459 | ) |
|
| (1,923 | ) |
|
| (1,538 | ) |
Foreign currency translation adjustments |
|
| 80 |
|
|
| (159 | ) |
|
| 283 |
|
|
| 80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
| $ | 2,680 |
|
| $ | 2,579 |
|
| $ | 2,501 |
|
| $ | 2,680 |
|
n. | Revenue recognition: |
F - 2724
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
3. Determine the transaction price:
o. | Research and development costs: |
p. | Income taxes: |
F - 2825
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
p. | Income taxes (cont.): |
The Company accounts for its uncertain tax positions in accordance with ASC 740-10. ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with ASC 740. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company classifies interest and penalties on income taxes as taxes on income.
q. | Advertising expenses: |
r. | Concentrations of credit risk: |
F - 2926
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The following table provides the detail of the change in the Company's allowance for credit loss:
|
| 2021 |
| 2020 |
|
| 2022 |
| 2021 |
| ||||||
|
|
|
|
|
|
| ||||||||||
January 1, |
| $ | 6,783 |
|
| $ | 2,497 |
|
| $ | 9,036 |
|
| $ | 6,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges to expenses |
|
| 2,437 |
|
|
| 3,142 |
|
|
| 2,141 |
|
|
| 2,437 |
|
Write offs |
|
| (121 | ) |
|
| (984 | ) |
|
| (1,144 | ) |
|
| (121 | ) |
Assumed from business combinations |
|
| 0 |
|
|
| 2,066 |
| ||||||||
Foreign currency translation adjustments |
|
| (63 | ) |
|
| 62 |
|
|
| (277 | ) |
|
| (63 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
| $ | 9,036 |
|
| $ | 6,783 |
|
| $ | 9,756 |
|
| $ | 9,036 |
|
s. | Severance pay: |
F - 3027
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
t. | Fair value of financial instruments: |
|
| Fair Value |
| Fair value measurements as of December 31, |
|
| Fair Value |
| Fair value measurements as of December 31, |
| ||||||||||
Description |
| Hierarchy |
| 2021 |
| 2020 |
|
| Hierarchy |
| 2022 |
| 2021 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Measured at fair value on a recurring basis: |
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
| ||||||||||
Money market mutual funds |
| Level 1 |
| $ | 175 |
| $ | 1,011 |
|
| Level 1 |
| $ | 27 |
| $ | 175 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Short-term marketable securities: |
|
|
|
|
|
|
|
|
|
| �� |
|
|
|
|
| ||||
Corporate bonds |
| Level 2 |
| $ | 10,751 |
| $ | 7,607 |
|
| Level 2 |
| $ | 7,077 |
| $ | 10,751 |
| ||
Governmental bonds |
| Level 2 |
| $ | 477 |
| $ | 505 |
|
| Level 2 |
| $ | - |
| $ | 477 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Derivatives: |
|
|
|
|
|
|
|
|
| |||||||||||
Derivative assets |
| Level 2 |
| $ | 1,901 |
| $ | 0 |
|
| Level 2 |
| $ | 371 |
| $ | 1,901 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Long-term marketable securities: | Long-term marketable securities: |
|
|
|
|
|
|
| Long-term marketable securities: |
|
|
|
|
|
|
| ||||
Corporate bonds |
| Level 2 |
| $ | 8,647 |
| $ | 10,434 |
|
| Level 2 |
| $ | - |
| $ | 8,647 |
| ||
Governmental bonds |
| Level 2 |
| $ | 0 |
| $ | 492 |
|
| Level 2 |
| $ | - |
| $ | - |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
| ||||||||||
Contingent Consideration |
| Level 3 |
| $ | 0 |
|
| $ | 1,492 |
|
| Level 2 |
| $ | 995 |
|
| $ | - |
|
Derivative liabilities |
| Level 2 |
| $ | (329 | ) |
| $ | (3,791 | ) |
| Level 2 |
| $ | (942 | ) |
| $ | (329 | ) |
Redeemable Non-Controlling Interest | Level 3 | $ | 7,869 | $ | 7,701 | Level 3 | $ | 7,903 | $ | 7,869 |
F - 28
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
t.Fair value of financial instruments: (cont.)
Measured at fair value on a nonrecurring basis:
(a)As of December 31, 2022, in accordance with Subtopic 360-10, long-lived assets held and used were written down to their fair value, resulting in an impairment charge of $26,429, related to Property Plant and Equipment included in Sdot Yam facility production, which was included in the consolidated statements of income for the period. As of December 31, 2021, there were no indicators for fair value measurement of the long-lived assets held or used.
(b)As of December 31, 2022, in accordance with Subtopic 350-20, goodwill was written down in an impairment charge of $44,829, which was included in the consolidated statements of income for the period. As of December 31, 2021, no impairment was identified.
The carrying amounts of financial instruments not measured at fair value, including cash and cash equivalents, trade receivables, other accounts receivables, trade payables, accrued expenses and other liabilities, short term loans and short term bank credit, approximate their fair value due to the short-term maturities of such instruments. The carrying amount of long-term loan approximates its fair value.
F - 31
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
u. | Basic and diluted net income (loss) per share: |
F - 29
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
v. | Comprehensive income and accumulated other comprehensive income (loss): |
|
| December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
|
| |
Accumulated gain (loss) on marketable securities |
| $ | (40 | ) |
| $ | 13 |
|
Accumulated losses on derivative instruments | 297 | 0 | ||||||
Accumulated foreign currency translation differences differences and other |
|
| (961 | ) |
|
| 1,070 |
|
|
|
|
|
|
|
|
|
|
Total accumulated other comprehensive income loss, net |
| $ | (704 | ) |
| $ | 1,083 |
|
|
| December 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
|
| |
Accumulated loss on marketable securities |
| $ | (125 | ) |
| $ | (40 | ) |
Accumulated income (loss) on derivative instruments | (412 | ) | 297 | |||||
Accumulated foreign currency translation differences and other |
|
| (9,041 | ) |
|
| (961 | ) |
|
|
|
|
|
|
|
|
|
Total accumulated other comprehensive loss, net |
| $ | (9,578 | ) |
| $ | (704 | ) |
F - 3230
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The following table summarizes the changes in AOCI, net of taxes for the year ended:
|
| Unrealized gains (losses) on derivative instruments |
| Unrealized gains (losses) on |
| Accumulated foreign |
| Total |
|
| Unrealized gains (losses) on derivative instruments |
| Unrealized gains (losses) on marketable securities |
| Accumulated foreign currency translation differences and other |
| Total |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Balance at January 1, 2020 |
|
| 0 |
|
| 0 |
|
| (3,288 | ) |
|
| (3,288 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
| 2,406 |
|
| 13 |
|
| 4,358 |
|
|
| 6,777 |
| ||||||||||||||||||
Amounts reclassified from AOCI |
|
| (2,406 | ) |
|
| 0 |
|
| 0 |
|
|
| (2,406 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Net current period OCI |
|
| 0 |
|
|
| 13 |
|
| 4,358 |
|
|
| 4,371 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Balance at December 31, 2020 |
|
| 0 |
|
| 13 |
|
| 1,070 |
|
|
| 1,083 |
| ||||||||||||||||||
Balance at January 1, 2021 |
|
| - |
|
| 13 |
|
| 1,070 |
|
|
| 1,083 |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other comprehensive income (loss) before reclassifications |
|
| 229 |
|
| (53 | ) |
|
| (2,031 | ) |
|
| (1,855 | ) |
|
| 229 |
|
| (53 | ) |
|
| (2,031 | ) |
|
| (1,855 | ) | ||
Amounts reclassified from AOCI |
|
| 68 |
|
|
| 0 |
|
| 0 |
|
|
| 68 |
|
|
| 68 |
|
|
| - |
|
| - |
|
|
| 68 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net current period OCI |
|
| 297 |
|
|
| (53 | ) |
|
| (2,031 | ) |
|
| (1,787 | ) |
|
| 297 |
|
|
| (53 | ) |
|
| (2,031 | ) |
|
| (1,787 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Balance at December 31, 2021 |
|
| 297 |
|
|
| (40 | ) |
|
| (961 | ) |
|
| (704 | ) |
|
| 297 |
|
| (40 | ) |
|
| (961 | ) |
|
| (704 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
| (3,264 | ) |
| (85 | ) |
|
| (8,080 | ) |
|
| (11,429 | ) | |||||||||||||||||
Amounts reclassified from AOCI |
|
| 2,555 |
|
|
| - |
|
| - |
|
|
| 2,555 |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Net current period OCI |
|
| (709 | ) |
|
| (85 | ) |
|
| (8,080 | ) |
|
| (8,874 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Balance at December 31, 2022 |
|
| (412 | ) |
|
| (125 | ) |
|
| (9,041 | ) |
|
| (9,578 | ) |
The following table shows the amounts reclassified from AOCI into the Consolidated Statements of Income, and the associated financial statement line item, for 20212022 and 2020:2021:
|
| December 31, |
|
| December 31, |
| ||||||||||
|
| 2021 |
| 2020 |
|
| 2022 |
| 2021 |
| ||||||
Affected line item in the consolidated statements of income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of revenues |
| $ | (52 | ) |
| $ | 1,857 |
|
| $ | 1,921 |
|
| $ | 52 |
|
Research and development |
|
| (2 | ) |
|
| 61 |
|
|
| 68 |
|
|
| 2 |
|
Marketing and selling |
|
| (6 | ) |
|
| 217 |
|
|
| 249 |
|
|
| 6 |
|
General and administrative |
|
| (8 | ) |
|
| 271 |
|
|
| 317 |
|
|
| 8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gain (loss) |
| $ | (68 | ) |
| $ | 2,406 |
| ||||||||
Total loss |
| $ | 2,555 |
|
| $ | 68 |
|
F - 3331
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.):
w. | Accounting for stock-based compensation: |
|
| December 31, |
| December 31, | ||||||||
|
| 2021 |
|
| 2020 |
| 2022 |
| 2021 | |||
|
|
|
|
|
|
|
|
| ||||
Dividend yield |
| 0 - 3 | % |
| 0 - 3 | % |
| 0 - 3% |
| 0 - 3% | ||
Expected volatility |
| 45-48.0 | % |
| 46.0 | % |
| 40-45.0% |
| 45-48.0% | ||
Risk-free interest rate |
| 1-1.5 | % |
| 0.7 | % |
| 1-4.3% |
| 1-1.5% | ||
Expected life (in years) |
| 4-5.5 |
| 5.1 |
| 4-5.5 |
| 4-5.5 |
The Company used volatility data in accordance with ASC 718 and based on Company's historical data.
The computation of risk free interest rate is based on the rate available on the date of grant of a zero-coupon U.S. government bond with a remaining term equal to the expected term of the option.
F - 3432
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The expected term of options granted is calculated using the simplified method (being the average between the vesting periods and the contractual life of the options).
For the vast majority of the options granted in 20212022 and 2020,2021, the dividend yield is zero, due to adjustment mechanism with respect to the exercise price upon payment of a dividend. For those options granted without adjustment mechanism, the dividend yield applied is 3%.
x. | Redeemable non-controlling interest: |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
|
| 2021 |
| 2020 |
| 2019 |
|
| 2022 |
| 2021 |
| 2020 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Beginning of the year |
| $ | 7,701 |
| $ | 0 |
| $ | 0 |
|
| $ | 7,869 |
| $ | 7,701 |
| $ | - |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Assuming the non controlling interest due to acquisition |
|
| 0 |
|
| 7,269 |
|
| 0 |
|
|
| - |
|
| - |
|
| 7,269 |
| ||||
Net income attributable to non-controlling interest |
|
| (1,077 | ) |
|
| 404 |
|
| 0 |
| |||||||||||||
Net income (loss) attributable to non-controlling interest |
|
| 688 |
|
|
| (1,077 | ) |
|
| 404 |
| ||||||||||||
Adjustment to Put option value (*) |
|
| 1,399 |
|
| 0 |
|
| 0 |
|
|
| 198 |
|
| 1,399 |
|
| - |
| ||||
Foreign currency translation adjustments |
|
| (154 | ) |
|
| 28 |
|
| 0 |
|
|
| (852 | ) |
|
| (154 | ) |
|
| 28 |
| |
Redeemable non-controlling interest - end of the year |
| $ | 7,869 |
| $ | 7,701 |
| $ | 0 |
|
| $ | 7,903 |
| $ | 7,869 |
| $ | 7,701 |
|
(*) | See also Note 1b. |
F - 3533
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
y. | Contingencies: |
z. | Business combination: |
F - 3634
U.S. dollars in thousands (except share data)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)
aa. | Impact of recently issued accounting standards: |
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606). This guidance is effective for fiscal years beginning after 15 December 2022 and interim periods within those fiscal years. Early adoption is permitted. |
F - 37
U.S. dollars in thousands (except share data)
The following is a summary of available-for-sale marketable securities at December 31, 2021:2022:
|
| Amortized cost |
| Gross unrealized gains |
| Gross unrealized losses |
| Accrued Interest |
| Fair value |
| Amortized cost | Gross unrealized gains | Gross unrealized losses | Accrued Interest | Fair value | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Available-for-sale – matures within one year: |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Corporate bonds |
| $ | 10,688 |
| $ | 2 |
| $ | 4 |
|
| $ | 65 |
| $ | 10,751 |
| $ | 7,164 | $ | - | $ | 126 | $ | 39 | $ | 7,077 | |||||||||||||
Governmental bonds |
|
| 472 |
|
| 0 |
|
| 0 |
|
|
| 5 |
|
| 477 |
| |||||||||||||||||||||||
Total |
| $ | 11,160 |
| $ | 2 |
| $ | 4 |
|
| $ | 70 |
| $ | 11,228 |
| $ | 7,164 | $ | - | $ | 126 | $ | 39 | $ | 7,077 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Available for-sale – matures after one year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Corporate bonds |
| $ | 8,642 |
| $ | 0 |
| $ | 38 |
|
| $ | 43 |
| $ | 8,647 |
| |||||||||||||||||||||||
Governmental bonds |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
| 0 |
|
| 0 |
| |||||||||||||||||||||||
Total |
| $ | 8,642 |
| $ | 0 |
| $ | 38 |
|
| $ | 43 |
| $ | 8,647 |
| |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total |
| $ | 19,802 |
| $ | 2 |
| $ | 42 |
|
| $ | 113 |
| $ | 19,875 |
|
The following is a summary of available-for-sale marketable securities at December 31, 2020:
|
| Amortized cost |
|
| Gross unrealized gains |
|
| Gross unrealized losses |
|
| Accrued Interest |
|
| Fair value |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Available-for-sale – matures within one year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Corporate bonds |
| $ | 7,570 |
|
| $ | 2 |
|
| $ | 2 |
|
| $ | 37 |
|
| $ | 7,607 |
|
Governmental bonds |
|
| 504 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1 |
|
|
| 505 |
|
Total |
| $ | 8,074 |
|
| $ | 2 |
|
| $ | 2 |
|
| $ | 38 |
|
| $ | 8,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for-sale – matures after one year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds |
| $ | 10,353 |
|
| $ | 13 |
|
| $ | 2 |
|
| $ | 70 |
|
| $ | 10,434 |
|
Governmental bonds |
|
| 483 |
|
|
| 2 |
|
|
| 0 |
|
|
| 7 |
|
|
| 492 |
|
Total |
| $ | 10,836 |
|
| $ | 15 |
|
| $ | 2 |
|
| $ | 77 |
|
| $ | 10,926 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
| $ | 18,910 |
|
| $ | 17 |
|
| $ | 4 |
|
| $ | 115 |
|
| $ | 19,038 |
|
As of December 31, 2021 and 2020 the Company didn’t record an allowance for credit losses for its AFS marketable debt securities.
F - 3835
U.S. dollars in thousands (except share data)
NOTE 3: MARKETABLE SECURITIES (Cont.)
The following is a summary of available-for-sale marketable securities at December 31, 2021:
Amortized cost | Gross unrealized gains | Gross unrealized losses | Accrued Interest | Fair value | ||||||||||||||||
Available-for-sale – matures within one year: | ||||||||||||||||||||
Corporate bonds | $ | 10,688 | $ | 2 | $ | 4 | $ | 65 | $ | 10,751 | ||||||||||
Governmental bonds | 472 | - | - | 5 | 477 | |||||||||||||||
Total | $ | 11,160 | $ | 2 | $ | 4 | $ | 70 | $ | 11,228 | ||||||||||
Available for-sale – matures after one year: | ||||||||||||||||||||
Corporate bonds | $ | 8,642 | $ | - | $ | 38 | $ | 43 | $ | 8,647 | ||||||||||
Governmental bonds | - | - | - | - | - | |||||||||||||||
Total | $ | 8,642 | $ | - | $ | 38 | $ | 43 | $ | 8,647 | ||||||||||
Total | $ | 19,802 | $ | 2 | $ | 42 | $ | 113 | $ | 19,875 |
As of December 31, 2022 and 2021 the Company didn’t record an allowance for credit losses for its AFS marketable debt securities.
NOTE 4:- | OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES |
December 31, | December 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Prepaid expenses | $ | 5,882 | $ | 5,567 | $ | 6,313 | $ | 5,882 | ||||||||
Government authorities | 14,289 | 8,176 | 13,005 | 14,289 | ||||||||||||
Advances to suppliers | 5,541 | 4,843 | 3,439 | 5,541 | ||||||||||||
Derivatives | 1,901 | 0 | 371 | 1,901 | ||||||||||||
Other receivables (*) | 7,830 | 7,895 | 9,442 | 7,830 | ||||||||||||
$ | 35,443 | $ | 26,481 | $ | 32,570 | $ | 35,443 |
NOTE 5:- | INVENTORIES |
December 31, | December 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Raw materials | $ | 35,896 | $ | 23,023 | $ | 32,443 | $ | 35,896 | ||||||||
Work-in-progress | 2,948 | 1,534 | 4,058 | 2,948 | ||||||||||||
Finished goods | 165,881 | 127,516 | 201,731 | 165,881 | ||||||||||||
$ | 204,725 | $ | 152,073 | $ | 238,232 | $ | 204,725 |
F - 3936
U.S. dollars in thousands (except share data)
NOTE 6:- | PROPERTY, PLANT AND EQUIPMENT, NET |
December 31, | ||||||||
2021 | 2020 | |||||||
Cost: | ||||||||
Machinery and manufacturing equipment, net (1) | $ | 325,188 | $ | 304,679 | ||||
Office equipment and furniture | 32,362 | 26,807 | ||||||
Motor vehicles | 5,150 | 4,533 | ||||||
Buildings and leasehold improvements | 142,868 | 139,361 | ||||||
Prepaid expenses related to operating lease (2) | 939 | 939 | ||||||
506,507 | 476,319 | |||||||
Accumulated depreciation: | ||||||||
Machinery and manufacturing equipment, net | 207,365 | 185,133 | ||||||
Office equipment and furniture | 21,278 | 18,571 | ||||||
Motor vehicles | 3,664 | 3,362 | ||||||
Buildings and leasehold improvements | 52,896 | 46,226 | ||||||
Prepaid expenses related to operating lease | 154 | 144 | ||||||
285,357 | 253,436 | |||||||
Depreciated cost | $ | 221,150 | $ | 222,883 |
December 31, | ||||||||
2022 | 2021 | |||||||
Cost: | ||||||||
Machinery and manufacturing equipment, net (1) | $ | 334,156 | $ | 325,188 | ||||
Office equipment and furniture | 36,079 | 32,362 | ||||||
Motor vehicles | 5,139 | 5,150 | ||||||
Buildings and leasehold improvements | 129,679 | 142,868 | ||||||
Prepaid expenses related to operating lease (2) | 939 | 939 | ||||||
505,992 | 506,507 | |||||||
Accumulated depreciation and impairment: | ||||||||
Machinery and manufacturing equipment, net | 230,063 | 207,365 | ||||||
Office equipment and furniture | 24,491 | 21,278 | ||||||
Motor vehicles | 3,832 | 3,664 | ||||||
Buildings and leasehold improvements | 51,722 | 52,896 | ||||||
Prepaid expenses related to operating lease | 163 | 154 | ||||||
Impairment of fixed assets (3) | 26,429 | - | ||||||
336,700 | 285,357 | |||||||
Depreciated cost | $ | 169,292 | $ | 221,150 |
(1) | Presented net of investment grants received in the total amount of |
(2) | Until 2012, the Company leased land from the Israel Lands Administration ("ILA") for its Bar-Lev manufacturing facility. The lease term started on February 6, 2005. The lease is for an initial non-cancellable term of 49 years, with a renewal option of an additional 49 years. |
(3) | Non cash pre-tax impairment charges (see also Note 2k). |
F - 4037
U.S. dollars in thousands (except share data)
NOTE 7:- | a. Goodwill: The changes in the carrying amount of goodwill for the years ended December 31,
(*) (**) The Company performs its annual testing of goodwill in the fourth quarter of each year in accordance with ASC 350 (see also Note 2l). During the fourth quarter of 2022, completed an impairment test of its reporting unit and b. Intangible assets:
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
Short-term bank credit and loans are classified as follows:
As of December 31, 2022 and 2021, the Company had short-term and revolving credit lines of approximately $53,113 and $18,860 (out of which $26,135 and $12,523, respectively, were utilized and outstanding, and presented in the table above), respectively, from various banks in Israel and India. The Company's current credit lines, if not extended, will expire through (*) Credit line in Israel - assumed during 2022 from Bank Leumi. The credit line agreement contains customary covenants mainly related to Debt to EBITDA ratio and to Tangible assets ratio. As of December 31, 2022 the Company is in compliance with the covenants under the credit line agreement.
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
As of December 31, 2022, the Company had operating lease agreements for facilities and vehicles in the United States, Canada, Australia, United Kingdom, European Union, Israel, India, Sweden and Singapore. The Company’s leases have remaining lease terms of up to 14 years, some of which include options to extend the leases for up to five years. Such options are included in the lease term when it is reasonably certain that the option will be exercised. Leases with an initial term of 12 months or less are not recorded on the balance sheet, the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. The Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. During 2021, the Company's lease fees related to the Land Use Agreement with the Kibbutz were amended. The amendment included an increase in the lease fees and was not accounted for as a new lease. As a result of the amendment, the operating lease right of use asset and liability increased by approximately $35.6 million. See also note 14c.
Lease term and discount rate:
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
NOTE 10:- LEASES (CONT.)
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
NOTE 10:- LEASES (CONT.)
Claim by former South African distributor In December 2007, the Company terminated its agency agreement with its former South African agent, World of Marble and Granite (“WOMAG”), on the basis that WOMAG had breached the agreement.
Following negotiations held during 2020 between the parties, on January 15, 2021, the Company paid WOMAG an amount of approximately EUR 7.2 million ($8,900) as part of the settlement for the majority of WOMAG’s claim for breach of contract. The remaining minimal disputed amounts Bodily injury claims related to exposure to silica dust: Overview:
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
Individual claims in Israel As of December 31, As of December 31, Most of the claims in Israel do not specify a total amount of damages sought, as the plaintiff’s future damages are intended to be determined at trial. In November 2015 and in May 2017, the Company entered into agreements with the State of Israel and with its main distributors in Israel, respectively, with the consent of its insurance carriers, under which the Company agreed with the State and each of its main distributors to cooperate, subject to certain terms, with respect to the management of the individual claims that have been filed and claims that may be submitted during a certain time period (NII claims are excluded from the Company’s agreement with the State) and on the apportionments of the total liability between the Company , the State, and the distributors, if found, in such claims. During January 2020, the State of Israel approved an additional 5 Class action in Israel: In April 27, 2014, a lawsuit by a single plaintiff and a motion for the recognition of this lawsuit as a class action was filed against the Company in the Central District Court in Israel. The plaintiff alleges that, if the lawsuit is recognized as a class action, the claim against the Company is estimated to be NIS 216 million (approximately $56,180). In addition, the claim includes an unstated sum in compensation for special and general damages. On January 4, 2018, the Company and the plaintiff submitted to the Israeli District Court a settlement agreement, which was approved in July 2021. The claim was dismissed and during 2022, the Company During 2021 the Company received refund of NIS 7.0 million (approximately $2,100) from its
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
Individual claims in Australia: As of December 31, Commencing 2021, the Company reassessed the expected outcome of the individual product liability claims in Australia following Company's and its insurance carrier consent for several settlements. Based on this development and also based on its legal advisors’ Summary of the claims mentioned: In order to reasonably estimate the losses for bodily injury claims in Israel and Australia reflected in the table below, the Company performed a case-by-case analysis with its legal advisors of the relevant facts that were reasonably available to it, related to the claims filed, including, among other things, the specific known or estimated health condition of the claimants, their ages, salaries, related probable future subrogation claims from the NII, and other factors that might have an impact on the final outcome of such claims. The Company will continue to regularly monitor changes in facts for each claim and will update its best estimate if required. Accordingly, the reserve for all the above mentioned bodily injury claims (including class action) as of December 31,
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
A summary of bodily injury claims for which the Company provided provision is as follows:
Insurance The Company maintains insurance for product liability claims, including for bodily injury claims related to exposure to silica dust. The Company has purchased insurance policies for the period from 2008 and to date from several insurance carriers that provide coverage for product liability losses, subject to certain terms and conditions, and the related defense costs up to a certain limit per case and per policy year. As of December 31,
The collectability of the Company's insurance receivables is regularly evaluated, and the amounts recorded are probable of collection. This conclusion is based on analysis of the terms of the underlying insurance policies, experience in successfully recovering individual product liability claims from Company's insurers, the insurance carrier was party to the agreement with the State of Israel and the financial ability of the insurance carriers to pay the claims and the relevant facts and applicable law. As of December 31, In F - 45 CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
General: From time to time, the Company is involved in other legal proceedings and claims in the ordinary course of business related to a range of matters. While the outcome of these other claims cannot be predicted with certainty, the Company monitors and estimates the possible loss deriving from these claims based on new information available and based on its legal advisors, and believes that it recorded an adequate reserve for these claims in accordance with ASC 450.
The Company's significant contractual obligations and commitments as of December 31,
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
The corporate tax rate in Israel was 23% in 2022 and 2021, and
Under the Foreign Exchange Regulations, Caesarstone Ltd. calculates its tax liability in U.S. Dollars according to certain orders. The tax liability, as calculated in U.S. Dollars is translated into New Israeli Shekels according to the exchange rate as of December 31st of each year.
The Company is an "Industrial Company," as defined by the Law for the Encouragement of Industry (Taxes), 1969, and as such, the Company is entitled to certain tax benefits, primarily amortization of costs relating to know-how and patents over eight years, accelerated depreciation and the right to deduct public issuance expenses for tax purposes.
According to the Law for the Encouragement of Capital Investments, 1959 (the "Encouragement Law"), the Company is entitled to various tax benefits by virtue of the "Preferred Enterprise" status granted to its enterprises, in accordance with the Encouragement Law. The Company chose to be taxed according to the "Preferred Enterprise" track under Amendment No. 68 to the Encouragement Law (the "Amendment No. 68"). In order to implement Amendment No. 68 and to be taxed under the "Preferred Enterprise" track, the Company waived the tax benefits of the previous tracks -"Approved Enterprise" and "Beneficiary Enterprise" - under the Encouragement Law, starting from the 2011 tax year. The principal benefits by virtue of the Encouragement Law are the following: Tax benefits and reduced tax rates under the Preferred Enterprise track: The tax rate on preferred income from a Preferred Enterprise commencing 2017 is 16% and in development area A – 7.5% (relates to Company's manufacturing plant in Bar-Lev industrial zone). In order to receive benefits as a "Preferred Enterprise," Amendment No. 68 states certain conditions must be met. The basic condition for receiving the benefits under Amendment No. 68 is that the enterprise contributes to the country's economic growth and is a competitive factor for the gross domestic product (a "competitive enterprise"). In order to comply with this condition, the Encouragement Law prescribes various requirements.
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
As for industrial enterprises, in each tax year, one of the following conditions must be met:
Amendment No. 68 also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise's earnings as discussed above will be subject to tax at a rate of 20% from 2014 and onwards (or a reduced rate under an applicable double tax treaty). Since the Company chose to apply the provisions of Amendment No. 68, by submitting the waiver form before June 30, 2015, the Company is eligible to distribute taxed earnings derived from a Beneficiary Enterprise and/or Approved Enterprise to an Israeli company without being subject to withholding tax. In development area A, in addition to the tax benefits, as mentioned above, some of the Company's facilities are eligible for grants at rate of 20% and/or loans, subject to an approval of the Israeli Investment Center. Accelerated depreciation: The Company is eligible for a deduction of accelerated depreciation on machinery and equipment used by the Approved Enterprise or the Beneficiary Enterprise or the Preferred Enterprise at a rate of 200% (or 400% for buildings) from the first year of the asset's operation.
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
Conditions for entitlement to benefits: The above mentioned benefits are contingent upon the fulfillment of the conditions stipulated by the Encouragement Law, regulations published thereunder and the letters of approval for the investments in the Preferred Enterprises, as discussed above. Non-compliance with the conditions may cancel all or part of the benefits and require a refund of the amount of the benefits, including interest. The Company's management believes that the Company meets the aforementioned conditions. The tax-exempt income attributable to the Approved Enterprise cannot be distributed to shareholders without subjecting the Company to taxes. If dividends are distributed out of tax-exempt profits, the Company will then become liable for tax at the rate applicable to its profits from the Approved Enterprise in the year in which the income was earned, as if it was not under the "Alternative benefits track" (taxed at the rate of no more than 25% as of December 31, In November 2021, amendment No. 74 to the Investment Law (the “Trapped Earnings Law”) came into effect. Amendment 74 to the Encouragement Law: On November 15, 2021, the Economic Efficiency Law (Legislative Amendments for Achieving Budget Targets for the 2021 and 2022 Budget Years), 2021 ("the Economic Efficiency Law"), was enacted. This Law establishes a temporary order allowing Israeli companies to release tax-exempt earnings ("trapped earnings" or "accumulated earnings") accumulated until December 31, 2020, through a mechanism established for a reduced corporate income tax rate applicable to those earnings ("the Temporary Order"). In addition to the reduced corporate income tax (CIT) rate, Article 74 to the Encouragement Law was amended whereby effective from August 15, 2021, for any dividend distribution (including a dividend as per Article 51B to the Encouragement Law) by a company which has trapped earnings, there will be a requirement to allocate a portion of that distribution to the trapped earnings. The Company distributed Of the Company's retained earnings as of December 31, As of December 31,
F - 49 CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
According to the Temporary Order, the reduction of CIT will apply to earnings that are released (with no requirement for an actual distribution) within a period of one year from the date of enactment of the Temporary Order. The reduction in the CIT is dependent on the proportion of the trapped earnings that are released in relation to the total trapped earnings, and on the foreign investment percentage in the years the earnings were generated. Consequently, the larger the proportion of the trapped earnings that are released, the lower the tax in respect of the distribution. The minimum tax rate applied to the company is 10%. Further, a company that elects to pay a reduced CIT is required to invest in its industrial enterprise a designated amount in accordance with the Economic Efficiency Law within a period of five years commencing from the tax year in which the election is made. The designated investment should be utilized for the acquisition of production assets, and/or investments in research and development and/or compensation to additional new employees. The
Non-Israeli subsidiaries are taxed based on tax laws in their countries of residence. Statutory tax rates for Non-Israeli subsidiaries are as follows: Company incorporated in United States – 25.8% tax rate (federal and state). Company incorporated in Australia - 30% tax rate. Company incorporated in Singapore - 17% tax rate. Company incorporated in Canada – 26.6% tax rate (federal and state). Company incorporated in England – 19% tax Company incorporated in India – Company incorporated in Sweden – 20.6% tax rate. Israeli income taxes and foreign withholding taxes were not provided for undistributed earnings of the Company's foreign subsidiaries. The Company intends to reinvest these earnings indefinitely in the foreign subsidiaries. Accordingly, no deferred income taxes have been provided. If these earnings were distributed to Israel in the form of dividends or otherwise, the Company would be subject to additional Israeli income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. F - 50 CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the schedule of reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
The Company operates in multiple jurisdictions throughout the world, and its tax returns are periodically audited or subject to review by both domestic and foreign authorities. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. The following describes the open tax years, by major tax jurisdiction, as of December 31, Israel 2019 – present Australia 2017 - present Canada United States Singapore 2017 - present England India Sweden 2021 - present F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
The balances at December 31, A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:
The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with management's expectations, the Company could be required to adjust the provision for income taxes in the period such resolution occurs. The Company does not expect uncertain tax positions to change significantly over the next 12 months, except in the case of settlements with tax authorities, the likelihood and timing of which is difficult to estimate.
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
Ordinary shares confer on their holders voting rights and the right to receive dividends.
In February 2020 the Company revised its dividend policy so that cash dividend will be distributed up to 50% of the year to date reported net income attributable to controlling interest less any amounts already paid as dividend for the respective period, provided that such calculated dividend is not less than $0.10. Any dividend payment is subject to approval by the Company’s board of directors. Pursuant to the above policy the Company paid a total amount of $8,625 and $10,681 in 2022 and F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
On January 1, 2011, the Board of Directors adopted the Caesarstone Ltd 2011 Incentive Compensation Plan (the “2011 Plan”) pursuant to which non-employee directors, officers, employees and consultants may receive stock options and RSUs exercisable for ordinary shares, if certain conditions are met. Under the plan the Company can grant up to 3,275,000 ordinary shares. On September 17, 2020 the Board of Directors adopted Caesarstone Ltd 2020 Share incentive plan (the “2020 Plan”). Under the 2020 Plan up to 2,500,000 ordinary shares may be granted. In addition, any shares that remain available for issuance under the 2011 Plan, as of the Effective Date, which shall not exceed 1,000,000 Shares, may also be granted under the 2020 Plan. As of December 31, As of December 31, The following is a summary of activities relating to the Company’s stock options granted to employees under the Company’s plan during the year ended December 31,
The weighted average fair value of options granted during 2022, 2021 and 2020 was $3.8, $5.2 and F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
The intrinsic value of exercisable options (the difference between the Company’s closing share price on the last trading day in fiscal year The following is a summary of activities relating to the Company’s RSUs granted to employees under the Plan during the year ended December 31,
The awards outstanding as of December 31,
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
Compensation expenses related to options and RSUs granted were recorded in the consolidated statements of operations, as follows:
The Company's controlling shareholder, Kibbutz Sdot-Yam (the “Kibbutz"), has an ownership interest in the Company of approximately 30.3%, as of December 31, On September 5, 2016, Kibbutz Sdot-Yam entered into a term sheet with Tene Investment in Projects 2016 Limited Partnership (“Tene”), pursuant to which both the Kibbutz and Tene are deemed the Company’s controlling shareholders under the Israeli Companies Law. Pursuant to the agreement, the parties agreed, among other things, to vote at general meetings of the shareholders of the Company in the same manner, following discussions intended to reach an agreement on any matters proposed to be voted upon, with Tene determining the manner in which both parties shall vote if no agreement is reached, except with respect to certain carved-out matters, with respect to which, Mifalei Sdot-Yam will determine the manner in which both parties shall vote if no agreement is reached. The term sheet provides for the sale of 1,000,000 ordinary shares by Kibbutz Sdot-Yam to Tene as well as a call option conferring upon Tene for a period of five years the right to purchase from Mifalei Sdot-Yam up to 2,000,000 ordinary shares. On February 20, 2018, the term of the call option was extended by an additional two-year period. As of December 31, The Company is party to a series of agreements with the Kibbutz that govern different aspects of the Company's relationship and are described below.
On July 2011, the Company entered into a manpower agreement with Kibbutz Sdot-Yam such was automatically renewed during F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
On July 30, 2015, and on October 14, 2018, following the approval of Company's audit committee, compensation committee and board of directors, Company's shareholders approved an addendum to the Manpower Agreement by and between Kibbutz Sdot-Yam and the Company, with respect to the engagement of office holders affiliated with Kibbutz Sdot-Yam, for an additional three-year term as of the date of the shareholders’ approval. During 2021, following the approval of Company’s audit committee and the board of directors, the manpower agreement is valid through 2030. Under the manpower agreement and its addendum, Kibbutz Sdot-Yam will provide the Company with labor services staffed by Kibbutz members, candidates for Kibbutz membership and Kibbutz residents (“Kibbutz Appointees”). The consideration to be paid for each Kibbutz Appointee will be based on the Company's total cost of employment for a non-Kibbutz Appointee employee performing a similar role. The number of Kibbutz Appointees may change in accordance with the Company's needs. Under the manpower agreement, the Company will notify Kibbutz Sdot-Yam of any roles that require staffing, and if the Kibbutz offers candidates with skills similar to other candidates, the Company will give preference to hiring of the relevant Kibbutz members. Kibbutz Sdot-Yam is entitled under this agreement, at its sole discretion, to discontinue the engagement of any Kibbutz Appointee of manpower services through his or her employment by Kibbutz Sdot-Yam and require such appointee to become employed directly by the Company. The manpower agreement and addendum also includes Kibbutz Sdot-Yam’s obligation to customary liability, insurance, indemnification and confidentiality and intellectual property provisions. Office holders who are Kibbutz Appointees shall have all benefits applicable to Company's other office holders, including without limitation, directors’ and officers’ liability insurance, and Company's indemnification and exemption undertaking. Manpower service fees paid were $1,768, $1,803 F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
On July 30, 2015, following the approval of the audit committee and the board, Company’s shareholders approved an amended services agreement pursuant to which, Kibbutz Sdot-Yam will continue to provide various services it provides in the ordinary course of Company's business, for a period of three years commencing as of the date of approval by the shareholders. On October 14, 2021, following the approval of the audit committee and the board, Company’s shareholders approved a further amended services agreement (“Amended Services Agreement”) for an additional period of three years. The amount that the Company pays to Kibbutz Sdot-Yam under the Amended Services Agreement depends on the scope of services the Company will receive and is based on rates specified in such agreement which were determined based on market terms, taking into account the added value of consuming services from Kibbutz Sdot-Yam, considering its physical proximity to Company’s manufacturing plant in Sdot-Yam and its expertise. The amounts the Company pays for the services are subject to certain adjustments for increases in the Israeli consumer price index. In addition, the Amended Services Agreement grants Kibbutz Sdot-Yam right of first proposal in special projects with respect to the metal workshop services. The amended services agreement also outlines the distribution mechanism between the Company and the Kibbutz for certain expenses and payments due to local authorities, such as certain taxes and fees in connection with the Company’s business facilities. Each party may terminate such agreement upon a material breach, following a 30-day prior notice, or upon liquidation of the other party, following a 45-days’ prior notice. The Company's net service fees paid to the Kibbutz pursuant to the Original and Amended Services Agreements were $1,334, $1,468 F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
Land leased to Kibbutz Sdot-Yam by the ILA and the Caesarea Development Corporation The Company's principal offices and research and development facilities, as well as one of its two manufacturing facilities, are located on the grounds of the Kibbutz and include buildings spaces of approximately 30,744 square meters and unbuilt areas of approximately 60,870 square meters. The Company signed a land use agreement with the Kibbutz, which has a term of 20 years commencing on April 1, 2012. Under the land use agreement, Kibbutz Sdot-Yam permits the Company to use approximately 100,000 square meters of land, consisting of facilities and unbuilt areas, in consideration for an annual fee of NIS 12.9 million (approximately $4,000) in 2013 and thereafter, (this amount does not include approximately NIS 62,000 (approximately $19) for an additional area that the Company has leased on the grounds of Kibbutz Sdot-Yam due to the Company's needs and Kibbutz Sdot-Yam's consent under the same terms as the land use agreement), plus VAT, adjusted every six months based on any increase of the Israeli consumer price index compared to the index as of January 2011. During January 2018, the Kibbutz requested to increase the fees due to it, pursuant to the land lease agreement. Following the assessment of an appointed appraiser and negotiations between the Company and the Kibbutz, it was agreed to increase the fees under such agreement, such that for the year 2018 the Company paid additional amount of NIS 950,000 (approximately $250), and commencing 2019 and on the Company was paying an additional annual amount of NIS 1,100,000 (approximately $342). As per the agreement, the annual fee may be adjusted after January 1, 2021 and every three years thereafter, at the election of Kibbutz Sdot-Yam by obtaining an updated appraisal. The appraiser will be mutually agreed upon or, in the absence of agreement, will be chosen by Kibbutz Sdot-Yam out of the list of appraisers recommended at that time by Bank Leumi Le-Israel ("Bank Leumi"). During 2021, The Kibbutz elected this option and the parties mutually agreed upon a land appraiser, and based on its study the fees were adjusted for 2021 onwards for annual amount of approximately NIS 18,600,000 (approximately $5,980), linked to the Israeli consumer price Under the land use agreement, the Company may not terminate the operation of either of its two production lines at its plant in Kibbutz Sdot-Yam as long as the Company continues to operate production lines elsewhere in Israel, and its headquarters must remain at Kibbutz Sdot-Yam. The Company may also not decrease or return to Kibbutz Sdot-Yam any part of the land underlying the land use agreement; however, it may submit a written request to Kibbutz Sdot-Yam to return certain lands. Kibbutz Sdot-Yam will have three months to accept or reject such request, in its sole discretion, provided that if it does not respond within such three-month period, the Company will be entitled to sublease such lands to a person approved in advance by Kibbutz Sdot-Yam. In such event, the Company will continue to be liable to Kibbutz Sdot-Yam with respect to such lands.
Pursuant to the land use agreement, if the Company needs additional facilities on the land that the Company is permitted to use in Kibbutz Sdot-Yam, subject to obtaining the permits required by law, Kibbutz Sdot-Yam will build such facilities for the Company, by using the proceeds of a loan that the Company will make to Kibbutz Sdot-Yam, which loan shall be repaid to the Company by off-setting the monthly additional payment that the Company will pay for such new facilities and, if not fully repaid during the land use agreement term, upon termination thereof. In addition, the Company has committed to fund the cost of construction, up to a maximum of NIS 3.3 million (approximately $1,100) plus VAT, required to change the access road leading to Kibbutz Sdot-Yam and its facilities, such that the entrance of the Company's facilities will be separated from the entrance into Kibbutz Sdot-Yam. In addition, the Company has committed to pay NIS 200,000 (approximately $64) plus VAT to cover the cost of paving an area of land leased from Kibbutz Sdot-Yam with such payment to be deducted in monthly installments over a four-year period beginning in the year that the construction completed, from the lease payments to be made to Kibbutz Sdot-Yam under the land use agreement related to the Company's Sdot-Yam facility.
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
Pursuant to the Land Use Agreement, the Company has entered into an agreement with Kibbutz Sdot-Yam dated August 6, 2013, under which Kibbutz Sdot-Yam acquired additional land of approximately 12,800 square meters on the grounds near the Company's Bar-Lev facility, which the Company required in connection with the construction of the fifth production line at the Company's Bar-Lev manufacturing facility, leased it to the Company for a monthly fee of approximately NIS 70,000 (approximately $22). Under the agreement, Kibbutz Sdot-Yam committed to (i) acquire the long-term leasing rights of the Additional Bar-Lev Land from the ILA, (ii) perform preparation work and construction, in conjunction with the administrative body of Bar-Lev industrial park and other contractors according to Company’s plans, (iii) build a warehouse according Company’s plans, and (iv) obtain all permits and approvals required for performing the preparation work of the Additional Bar-Lev Land and for the building of the warehouse. The warehouse in Bar-Lev will be situated both on the current and new land. The finance of the building of the warehouse will be made through a loan that will be granted by the Company to Kibbutz Sdot-Yam, in the amount of the total cost related to the building of the warehouse and such loan, including principle and interest, shall be repaid by setoff of the lease due to Kibbutz Sdot Yam by the Company for its use of the warehouse. The principle amount of such loan will bear an interest at a rate of 1.4% a year. On November 30, 2015 the land preparation work had been completed and the holding of the Additional Bar-Lev Land was delivered to the Company. As of December 31, The Company's payments pursuant to the land use agreement totaled $5,684, $5,305
Pursuant to a land purchase and leaseback agreement, dated as of March 31, 2011, which became effective upon the Company’s IPO, between the Company and Kibbutz Sdot-Yam, the Company completed the selling of the rights in the lands and facilities of the Bar-Lev Industrial Center (the "Bar-Lev Grounds") to Kibbutz Sdot-Yam in consideration for NIS 43.7 million (approximately $10,900). The land purchase agreement was executed simultaneously with the execution of a land use agreement. Pursuant to the land use agreement, Kibbutz Sdot-Yam permits the Company to use the Bar-Lev Grounds for a period of 10 years commencing on September 2012 that will be automatically renewed, unless the Company gives two years prior notice, for a ten-year term in consideration for an annual fee of NIS 4.1 million (approximately $1,200) to be linked to increases in the Israeli consumer price index. As per the agreement, the fee is subject to adjustment following January 1, 2021 and every three years thereafter at the option of Kibbutz Sdot-Yam if Kibbutz Sdot-Yam chooses to obtain an appraisal that supports such an increase. The appraiser would be mutually agreed upon or, in the absence of agreement, will be chosen by Kibbutz Sdot-Yam from a list of assessors recommended at that time by Bank Leumi. During 2021, The Kibbutz elected this option and the parties mutually agreed upon a land appraiser, and based on its study the fees were adjusted for 2021 onwards for total annual amount of approximately NIS 8,100,000 (approximately $2,600), linked to the Israeli consumer price index. The transaction was not qualified as "sale lease-back" accounting under both ASC 840 and ASC 842 and the Company recorded the entire amount received as consideration as a liability. The financing liability of land from a related party The balance at December 31, 2022 and 2021, includes $0 and The Company's payments pursuant to the land purchase agreement and leaseback totaled $2,479, $2,360
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
The following table presents total revenues for the years ended December 31, 2022, 2021 and 2020, respectively:
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
No customer represented 10% or more of the Company’s total revenues for the years ended December 31, 2022, 2021
F - CAESARSTONE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data)
The following table sets forth the computation of basic and diluted net earnings per share: Numerator:
Denominator:
Earnings per share:
F - 66 Caesarstone Australia Pty Ltd Opinion on the financial statements We have audited the accompanying balance sheets of Caesarstone Australia Pty Ltd (the “Company”) as of December 31, 2022 and 2021, the related statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”) (not included herein). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 15, 2023 expressed an unqualified opinion. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved Impairment of Goodwill In accordance with ASC 350 Intangibles – Goodwill and Other, goodwill is allocated to the Company’s reporting units. Caesarstone Australia is considered its own reporting unit with AUD $22.245 million goodwill allocated prior to assessment of impairment. For each reporting unit to which goodwill has been allocated, the Company is required to The principal considerations for our determination that impairment of goodwill is Our audit procedures related to the
F - 67
Bodily injury claims related to exposure to silica dust The principal considerations for our determination that the Our audit procedures related to the bodily injury claims related to exposure to silica dust included
/s/ We have served as the Company’s auditor since 2008. Melbourne, Australia March 15, F - Caesarstone Australia Pty Ltd Opinion on internal control over financial reporting We have audited the internal control over financial reporting of Caesarstone Australia Pty Ltd (the “Company”) as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the financial statements of the Company as of and for the year ended December 31, 2022, and our report dated March 15, 2023 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Melbourne, Australia March 15, F - |