Greetings, and welcome to the Caesarstone Third Quarter 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host Brad Cray of ICR. Thank you. You may begin.

Thank you, operator, and good morning to everyone on the line. I am joined by Yos Shiran, Caesarstone's Chief Executive Officer, and Nahum Trost, Caesarstone's Chief Financial Officer. Certain statements in today's conference call and responses to various questions may constitute forward-looking statements. We caution you that such statements reflect only the company's current expectations and that actual events or results may differ materially. For more information, please refer to the risk factors contained in the company's most recent annual report on Form 20-F and subsequent filings with the SEC. In addition, on this call, the company will make reference to certain non-GAAP financial measures, including adjusted net loss, income, adjusted net loss/income per share, adjusted gross profit, adjusted EBITDA and constant currency. The reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the company's third quarter 2024 earnings release, which is posted on the company's Investor Relations website. On today's call, Yos will discuss our business activity and Nahum will then cover additional details regarding financial results before we open the call for questions. Thank you. And I would now like to turn the call over to Yos. Please go ahead.

Thank you, Brad. Good day everyone and thank you for joining us to discuss our third quarter 2024 results. I want to begin by expressing my sincere appreciation to our global Caesarstone team for their dedication and resilience during what continues to be a challenging operating environment. Our third quarter performance reflects the significant pressure we are experiencing across our business with revenues declining year-over-year amid persistent weakness in global renovation and remodeling activity. That said, our ongoing transformation efforts and manufacturing optimization initiatives have helped sustain gross margin improvement year-over-year on much lower revenues, which underscores the positive impact of our restructuring actions over the last year. We continue to make important progress on our strategic initiatives while our team is carefully managing expenses. We have successfully transitioned approximately 70% of our production to our network of manufacturing partners compared to just 30% a year ago. These shifts has enhanced our operational flexibility allowing us to meet customers demand at various price points while helping to maintain margins even at lower volumes. Additionally, we have maintained strong working capital discipline and monetized non-core assets to generate healthy operating cash flow of $16 million in the quarter. To that point, we reached an important milestone with the completion of our previously announced sales of 69 acres of undeveloped land at our Richmond Hill facility for $10 million. We are actively pursuing opportunities to maximize value for the remaining 51 acres of developed land and structures at this site, which carry higher values per acre than the recently sold land. Looking at our markets, we are seeing consistent challenges across our regions. The renovation remodeling market and large ticket items in particular remain pressured by factors including high interest rates and general economic uncertainty. While our commercial and big boxes business have shown some relative stability, residential activity continues to be significantly constrained in the current environment. In Australia, the transition to our zero crystalline silica products is taking longer than expected. We now expect to have our full zero crystalline silica collection in the market by the end of Q1. This should help us to gradually recover revenues in Australia. In response to these conditions, we are intensifying our focus on operational efficiency while making targeted investments to strengthen our competitive position. We are directing resources toward brand development, expanding our marketing programs and accelerating development of innovative products to help stimulate demand. We are also continuing to invest strategically in R&D and our premium posted and offering which we believe positions us well for growth as market conditions normalize. While we expect market headwinds to persist in the near term, we are confident in our structural improvements we are making to our business from our optimized production footprint to our enhanced product development capabilities. We remain confident in our strategy and will continue to take decisive actions to restore profitable growth. I will now turn the call over to Nahum to review our financial results in more detail.

Thank you, Yos, and good morning everyone. Looking at our third quarter results, global revenue for the third quarter was $107.6 million, down 24.8% on a constant currency basis. The decrease was primarily driven by lower volumes which were primarily impacted by global economic headwinds, particularly in residential renovation and remodeling channels across our main regions. This resulted in lower demand accompanied by competitive pressures. In the U.S., sales were down 20.5% to $52.4 million. This decline was mainly driven by softer residential end markets and less favorable product mix. This was partially offset by better performance in our big box business. Canada sales were down 23.8% on a constant currency basis, experiencing similar market dynamics as the U.S. Australia sales were off by approximately 37.7% on a constant currency basis, mainly reflecting slower market conditions and the transition to alternative materials that comply with new regulations in Australia. Our EMEA region saw a decline of 26% on a constant currency basis due to slow market conditions in the U.K., Sweden and our indirect EMEA business. In Israel, sales were off by 24.5% on a constant currency basis in the third quarter, mainly as a result of the war on terror, which has significantly reduced activity in the region. Looking at our third quarter P&L performance, gross margin in the third quarter improved to 19.9% compared to 19.1% in the prior year quarter. Adjusted gross margin was 19.8% which remained stable with the prior year quarter. The relative stability in the adjusted gross margin was primarily driven by the benefits of an improved production footprint partially offset by unfavorable product mix and the increased shipping and material cost we discussed last quarter. Operating expenses in the third quarter were $25.4 million or 23.6% of revenue compared to $29.2 million or…

[Operator Instructions] Our first question comes from Reuben Garner with Benchmark. Please go ahead.

Good morning, this is John McGlade on for Reuben Garner. Thank you for taking my questions. First off, I just wanted to ask if you could provide a big picture macro outlook by region. Any trends you're seeing areas that may be recovering faster than others.

Hi, good morning. Thank you. So in general we see a negative trend in almost all the markets which stem to our opinion because of the economical downturn, mainly in renovation following a high interest rate and also competition from the Far East, mainly India in the States and also India and China in other areas. However, despite this trend, we look at what we have accomplished so far in terms of building the company to be more agile and ready for the future and we believe we have a head start compared with some of our main competitors and we believe that despite that this restructuring takes a bit of time, there will come a time that we will reap the benefits and we are quite confident with the steps that we are taking. So this is a general statement maybe? Yes. If you are interested in any specific market we can dive in or Nahum, do you have anything to add?

Maybe just to add on the Australian market that was impacted not only on the back of the macroeconomic, but also as a result of the transition in that market. And we now expect to have the full offering by the end of Q1 and to regain our leading position in that market down the road during 2025.

Yes. So maybe to add that. Nahum, thanks. Regarding Australia, we are transitioning from regular quartz products to crystalline silica free products. And first of all, in some of the regions the guidance to stop selling quartz products came earlier than expected in July and this forced us to accelerate the transition into crystalline silica free. And this transformation is taking a bit longer than we thought. So we are fighting in the markets with half of the collection and we are improving the collection from month to month. By the end of Q1, we will have the full, let's say the full starting collection. And from then we expect that the Australian performance will improve significantly to what we are seeing now.

Okay, thank you. Also just curious, with the shipping rates remaining as high as they are, we've heard recently from other companies that there's potential for that price to rise again, could you just give a little color on pricing as these volume pressures continue and combined with the shipping rate factor, how you'd be able to offset in the future?

Yes. So first of all, we don't change the pricing often. So even if shipping costs rises, we are not immediately changing the prices. And this is -- the impact of that you've seen in H2 this year. So we -- as we said before, we suffer about $6 million, $5 million from shipping rate increase in Q3 and Q4. We see now a downturn in the shipping cost, and it went down quite significantly. And we expect to see the benefit of that starting in Q1. We are not -- at the moment, we are not foreseeing any shipping increase on the contrary. Any shipping rate increase, yes.

All right, thank you for that. You also mentioned in your prepared remarks that there were some bright spots with U.S. big box retailers. Are you able to provide any more details on kind of the trends you're seeing there? What products are more popular or less popular with them?

I don't think it's a matter of product, but in general we see more resilience in the big boxes compared to the renovation area. And you see this and this is reflected in our performance there.

So maybe just to reiterate that the residential R&R is the most pressured channel that we see. And compared to that, the commercial business is a bit more resilient. And the big box activity is also showing some positive signs, again, compared to the commercial and the residential channel.

Okay. And just two short follow-ups just from the conversation last quarter. Curious if there's any potential deals or on the horizon maybe for the Richmond Hill developed land? And just wanted to also verify that to Sdot-Yam, subletting time line is still unchanged and you expect to see those cash flow benefits in Q1?

Yes. So first of all, we are pleased with the fact that we've completed the transaction for the undeveloped land in Richmond Hill during this quarter and we are still and we are still looking for the right buyer for the developed land. So no update in this regard other than the fact that we are still looking for the right buyer. And with regard to Sdot-Yam, so we are on track in accordance with our plan to sublist most or the vast majority of the available land in this site. So we are also on track in this regard.

All right, thank you. That's all I have. I appreciate your time.

Thank you very much.

This concludes our question-and-answer session. I would like to turn the conference back over to Yos Shiran for any closing remarks.

Thank you. Thank you for your attention this morning. We look forward to updating you on our progress next quarter. See you. Bye.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.