Greetings, and welcome to Caesarstone Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference 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 Yosef 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 second quarter 2025 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, and good morning, everyone. Thank you for joining us to discuss our second quarter 2025 results. Our second quarter results reflect persistent softness mainly in repair and remodel activity across the industry. We are taking decisive actions to align our cost structure and improve profitability. To that point, during the quarter, we initiated incremental cost reductions that are expected to bring an additional $10 million of annualized savings commencing in the second half of 2025. This adds to the approximately $10 million in incremental cost savings we are already on track to realize in 2025 compared to 2024. Combined, this brings our total annualized cost savings since initiating our transformation to over $55 million compared to 2022. These measures add to the benefits we are attaining from our improved production footprint. We have shifted over 70% of our production to our global manufacturing network, which provides us with enhanced operational flexibility. We continue to expand our production partnerships to further reinforce our competitiveness. Regarding our Porcelain business, we are accelerating product development and expanding our Porcelain portfolio to capture growing market opportunities in this attractive product category. In Australia, we continue to make solid progress with our zero crystalline silica products, ensuring our compliance with regulatory requirements while strengthening our competitive position. During the quarter, we completed development and launch of the full zero crystalline silica collection. In our other markets and in Australia, we expect to launch additional innovative products during the remainder of the year as well as for the next year. As we move forward, we remain focused on investing in our strategic transformation initiatives to better position Caesarstone to scale efficiently. The structural improvements we have made, including cost reductions and operational enhancements position us well to achieve higher levels of profitability as volumes improve. I'll 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 second quarter results. Global revenue was $101.1 million compared to $119.4 million in the prior year quarter. On a constant currency basis, second quarter revenue was down 15.6% year-over-year due to lower volumes resulting from continued global economic headwinds affecting activity across all channels in addition to competitive pressures. In the U.S., sales declined by 17% to $49.6 million, mainly reflecting softer market conditions in the residential channel, including business to stone suppliers as well as challenges in the commercial segment. Our business with Lowe's remained a bright spot, increasing in double-digit percentages compared to the second quarter of 2024. Australia sales were down 18.2% on a constant currency basis, reflecting the continued shifts in that region following the government silica ban that became effective on July 1, 2024, combined with slower demand due to high interest rates and fewer new home completions. Canada sales decreased by 12.5% on a constant currency basis with softer performance in our core business, mainly due to market conditions, partially offset by higher levels of big box activity. EMEA sales remained relatively stable, increasing by 0.7% on a constant currency basis. This reflects solid performance across both our direct and indirect channels, driven by stronger volumes and favorable order timing. Our expanded direct presence in Germany also contributed positively to the EMEA results. Israel sales declined by 21.6% on a constant currency basis, mainly given the impact of the regional conflict during the quarter. Looking at our second quarter P&L performance. Gross margin was 19.6% compared to 22.9% in the prior year quarter. Adjusted gross margin was 19.7% compared to 23.8% in the prior year quarter. The difference in gross margin was mainly driven by lower volumes and production, which resulted in lower fixed…

[Operator Instructions] The first question comes from Reuben Garner with The Benchmark.

I just want to start with a question on the revenue in the U.S. Any signs that the silica cases in Australia are impacting demand in the States? I know it's a softer market. It's just tough to see other industries that are related not kind of seeing the level of declines. Is there something specific about the category or your products or your markets that's leading to more pressure than others?

No, Reuben, it's Yos. No, I don't think there is a connection between the Australian cases to the U.S. We have enough cases in the U.S. today. And anyway, I don't think that it has any impact on demand. We are suffering because of other reasons, but not because of this reason.

Okay. And then on the gross margin line, can you talk about -- it looks like there was a little bit -- maybe the top line was comparable to a little bit up Q1 to Q2, but the gross margin fell 150 basis points. That was a little surprising. Can you talk about what changed quarter-over-quarter there? What cost pressures, incremental cost pressures did you see on the cost of goods front?

Yes, Reuben, it's Nahum. The small decline compared to Q1 relates partially to the production levels that we had in our Bar-Lev plant here in Israel, partially also as a result of the conflict that we experienced here during June, the production levels in our plant here in Bar-Lev were lower, which resulted in lower fixed cost absorption, which impacted negatively the overall gross margin. In addition to that, we are adjusting prices to remain competitive in the market. So this also impacted the second quarter gross margin.

And how much were prices of the 15% or 16% revenue decline, how much was price year-over-year versus volume?

Year-over-year, prices were 6.5%, 650 basis points. So this was one major impact compared to last year. The other impact, as I said, was the lower production utilization, 250 basis points. On the positive side, our improved production source mix, we reached to a 70% level, improved gross margin by 450 basis points and also lower inventory charges improved the gross margin compared to last year by 320 basis points. So those were the main items.

Okay. And then you implemented some cost-saving actions. The second quarter SG&A came in really low. I mean, did it already start happening there in Q2? Or was that from previous actions and we could see SG&A move lower sequentially through the year as some of the actions you've had to take hold?

I think you are right. It's a combination between actions that we took in previous quarters plus a very tight control over those expenses that are within our control. And we have been doing that in recent quarters, and we continue to plan and we continue to do that also in future quarters to closely monitor those expenses. Yes. So it's a combination. We still did not see the incremental -- the impact of the incremental $10 million of savings. Those actions that we took will impact Q3 and Q4 and down the road.

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

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

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