Caesarstone Ltd. (NASDAQ:CSTE) reported a narrower-than-expected adjusted loss for the third quarter of 2026, although revenue declined 5.7% year over year as the engineered surfaces manufacturer continued to face lower demand and competitive pressures, particularly in the United States.
The company recorded an adjusted loss of $0.05 per share, compared with the analyst consensus estimate for a loss of $0.16 per share.
Quarterly revenue reached $96.3 million, below market expectations of $105.2 million and down from $102.1 million in the corresponding period of 2025.
Caesarstone shares were unchanged in after-hours trading following the announcement.
The company reported an improvement in gross margin and adjusted EBITDA, while its reported net loss increased to $56.1 million, reflecting a $46.8 million charge associated with a California jury verdict issued in October 2026.
Caesarstone generated revenue of $96.3 million during the third quarter, representing a 5.7% decrease compared with the corresponding period of 2025.
On a constant currency basis, revenue declined 7.2% year over year.
The company attributed the decrease to lower global demand and competitive pressures affecting its engineered surfaces business.
Market conditions in the United States remained a particular factor in the quarterly performance, while sales activity in Australia partially offset the decline.
Reported revenue was approximately $8.9 million below the analyst consensus estimate of $105.2 million.
The difference between reported and constant currency revenue changes reflected the impact of foreign exchange movements during the period.
Caesarstone reported a third-quarter gross margin of 25.4%, compared with 17.3% in the corresponding period of 2025.
The increase of 8.1 percentage points reflected changes in the company’s production arrangements and cost structure.
Management attributed the improvement primarily to savings associated with its transition to a global network of manufacturing partners following the closure of its Bar-Lev production facility.
The company has been restructuring its manufacturing operations to reduce costs and adjust its production model.
The quarter also benefited from a refund of previously paid US tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
These factors contributed to the improvement in gross profitability despite lower quarterly revenue.
Caesarstone reported that its gross margin had improved on a year-over-year basis for three consecutive quarters.
Caesarstone recorded an adjusted EBITDA loss of $0.1 million for the third quarter, compared with a loss of $7.9 million in the same period of 2025.
The improvement of $7.8 million reflected the effects of the company’s restructuring initiatives and changes to its manufacturing operations.
The result brought adjusted EBITDA close to break-even for the quarter.
Caesarstone also reported an adjusted loss of $0.05 per share, narrower than the analyst consensus estimate of $0.16 per share.
The adjusted financial measures reflected improvements in the company’s underlying operating performance, although revenue remained below the previous year’s level.
The company identified its revised production network and associated cost savings as contributors to the reduction in adjusted losses.
Chief Executive Officer Yos Shiran said Caesarstone continued implementing its strategic and operational initiatives during the third quarter.
“Our underlying business performed well as we continued to execute our strategic plan,” Shiran said.
“Gross margin improved year-over-year for the third consecutive quarter, reaching 25.4%. We also delivered near breakeven Adjusted EBITDA reflecting the benefits of our optimized production network and the cost savings from our restructuring plan.”
The comments followed the company’s reported improvement in gross margin and reduction in adjusted EBITDA losses.
Caesarstone’s transition to external production partners has been a central component of its restructuring activities.
The closure of the Bar-Lev facility and changes to the company’s manufacturing arrangements contributed to lower production-related costs.
However, the company continued to report declining revenue amid challenging market conditions.
Caesarstone reported a net loss of $56.1 million for the third quarter, including a $46.8 million charge associated with a California jury verdict issued in October 2026.
The legal charge had a substantial effect on the company’s reported financial results.
The company stated that it strongly disagrees with the verdict and is considering available post-trial remedies.
The potential legal steps may include challenges to the verdict, although Caesarstone did not specify which remedies it intends to pursue in the supplied announcement.
The ultimate outcome of the legal proceedings remains uncertain.
The reported net loss contrasts with the company’s adjusted EBITDA loss of $0.1 million, reflecting the difference between its adjusted operating measure and results that include the legal charge.
Caesarstone did not provide additional information in the supplied results regarding the expected timing of any post-trial proceedings.
Caesarstone identified continued softness in the US market as one of the main factors affecting third-quarter sales.
The company also cited competitive pressures and lower demand across its international operations.
These conditions contributed to the 7.2% decline in revenue on a constant currency basis.
Australia provided a partial offset, with the company reporting comparatively better performance in that market.
The geographic differences reflected varying demand conditions across Caesarstone’s operating markets.
Although the company achieved improvements in gross margin and adjusted EBITDA, the decline in revenue indicated that its restructuring measures had not been accompanied by a return to overall sales growth during the quarter.
Caesarstone did not issue specific financial guidance for the fourth quarter of 2026 or fiscal 2027.
The company therefore provided no numerical revenue or profitability targets for the upcoming reporting periods in the supplied announcement.
Its third-quarter results showed improvements in gross margin and adjusted operating performance, alongside lower revenue and a substantial reported net loss.
The company’s future financial performance will depend on market demand, competitive conditions, the effects of its manufacturing restructuring and developments relating to the California legal proceedings.
The absence of formal guidance leaves the timing and extent of any further financial improvement unspecified.
Caesarstone’s third-quarter results reflected a reduction in adjusted losses and higher gross profitability despite declining sales.
The company’s adjusted loss per share of $0.05 was narrower than analyst expectations, while revenue of $96.3 million fell below consensus estimates.
Gross margin increased to 25.4%, supported by manufacturing cost savings and a US tariff refund, while the adjusted EBITDA loss narrowed to $0.1 million.
However, the $46.8 million charge associated with the California jury verdict contributed to a reported net loss of $56.1 million.
The company continues to assess potential post-trial remedies while implementing its restructuring programme.
With no specific fourth-quarter or 2027 guidance issued, future results will provide further information on the sustainability of the margin improvements and the development of demand across Caesarstone’s markets.
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