Good day ladies and gentlemen. Thank you for standing by. Welcome to the Caesarstone Fourth Quarter and Full Year 2013 Earnings Conference Call. Today’s conference is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up with your questions. I would now like to turn the call over to your host Mr. [Michael Callahan of ICR]. You may now begin sir.

Thank you operator, and good morning to everyone. Certain statements in today's conference call in responses to various questions may constitute forward-looking statements. We wish to 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 annual report on Form 20-F. In addition, the company will make reference to certain non-GAAP financial measures, including adjusted gross margin, adjusted operating expenses, adjusted net income, adjusted net income per diluted share, adjusted net income attributable to controlling interest, adjusted EBITDA and various metrics that maybe presented on a pro forma basis. The reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the company's fourth quarter earnings release, which is posted on the company's website. With that, I’d now like to turn the call over to Yos Shiran, Caesarstone’s Chief Executive Officer.

Good day and thank you for joining us to discuss our fourth quarter which was a great finish for the year. We’re pleased to once again report record results. I would like to start with some highlights for the quarter. Sales in the fourth quarter increased to a record of $97 million, 27% growth rate was in higher (inaudible) year. Fourth quarter adjusted EBITDA was $24.2 million, up 47% compared to last year. Adjusted net income for the quarter for the fourth quarter was $17.5 million, up 66% versus last year and we reported adjusted net income per diluted share of $0.49 in the quarter versus $0.32 in the fourth quarter last year. Overall we posted a solid finish to the year and our business continues to strengthen. We grew average (inaudible) region in which we operate. We also expanded margins significantly over the prior year as a result of higher volume, the success of our Super-Natural collection and good cost controls. I would like to now give an update on each of our major markets both for the quarter and the totals for the year. Fourth quarter sales in United States were $34.7 million. Our year-over-year growth rate accelerated to 59%. This continues to be our largest and fastest growing market. For the full year, sales in the United States were $123.4 million, an increase of 42% over 2012. We believe these results demonstrate the realization of our quartz penetration vision and our robust position in the U.S. markets. We continue to see a very large growth opportunity as the adoption rate for quartz is still low relative to our other key markets. We set the solid base in 2013 and believe we will also benefit from improving housing starts and remodeling activity. I would like to note that…

Thank you, Yos and good morning to everyone. I will start with our income statement for the fourth quarter. Sales in the fourth quarter increased by 27% to $96.8 million compared to $76.2 million in the same quarter of last year. This is another quarterly record for us. On a constant currency basis, sales increased by 29.7% versus last year. Gross margin in the quarter was 43% compared with 41.8% last year. This increase was driven mainly by scale on our volume and increase ever in selling price. The price increase mainly reflects growth in our Super-Natural collection sales. I also note that our gross margin improvement was partially offset by a significantly unfavorable exchange rate impact. Operating expenses in the fourth quarter were $21.8 million or 22.5% of sale versus $19.7 million last year, which was 25.8% of sales. This efficiency improvement primarily reflects our increased volume. Operating income grew by 62.2% to $19.8 million compared to $12.2 million in the fourth quarter of last year. Our operating margins go to 20.4% from 16% last year. Adjusted EBITDA in the quarter which eliminate share-based compensation expense, the excess cost of acquired inventory and other non-recurring items, increased by 47.1% over prior year to $24.2 million in margin of 25% versus last year margin of 21.6%. Finance expense in the quarter was $0.4 million compared to finance income of $0.2 million last year. Our taxes in the fourth quarter were $2.3 million, 12.1% of the income before tax, compared to last year rate of 11.6%. Adjusted net income attributable to controlling the interest in the fourth quarter increased by 55.9% to $17.5 million or 18.1% of revenue compared with $11.2 million last year, which was 14.7% of revenue. Adjusted earnings per share in the quarter were $0.49 on $35.4 million…

(Operator Instructions). And we’ll take our first question from Stephen Kim from Barclays.

Thanks very much, guys. Congratulations very strong quarter, very nice to see.

Thank you.

And quite a few questions, but let me just get a couple of out. So, first of all I was wondering if you could clarify the expansion plans, any anticipated impact in the 2014 guidance that we should be thinking about? And can you also remind us any cost from Bar Lev that came through in the income statement if you said it, I missed it?

Okay. So regarding 2014, the U.S. line should not expect taking out CapEx on the P&L, it shouldn’t have a major impact in 2014 and most of the impact will be towards the end of the year naturally as we prepare ourselves more towards opening the line. With regards to Q4 this year, there was some impact on opening line size, if some inefficiency some of you invoiced when you startup the line and it doesn’t produce immediately group [search]. So it does, it did have a new factor which is part of the reason to that gross margin difference between Q3 and Q4 this year.

Can you quantify that for us anyway? I think you had said in the third quarter that the price maybe…

Yes it was -- the impact of this was around 1%.

1% okay got it. That’s great. Okay. And then can you talk a little bit about the IKEA initiative I know that that is going well and you are encouraged by. I am curious as to what potential benefit the loading represented in the quarter? And also longer term what are your plans for IKEA potentially outside the U.S. or share of your overall business that you think might go through that channel?

Stephen, so in the fourth quarter we finished the requirements of -- into the 38 IKEA stores. It was the first time actually that we have a chance to sell across the broad there. And this was towards the end of the quarter. So, the reaction that we see is very positive and we expect this trend to continue. So, we cannot discuss yet what will be the size of it, but it seems quite promising. At the moment, we operate in this manner only in the states. And we work with IKEA in annual different arrangements in other countries over the world, nothing but very significant. So, most of the focus with IKEA is in the United States.

And we'll take our next question from John Baugh from Stifel.

Good morning and my congratulations as well. Could you comment on whether you got any capacity expansion in Q4 from Bar Lev? Whether you were able to increase the production of any of the other four lines or were the incremental revenue over what we believe it was more or less capacity on those four lines driven by the mix shift at Super-Natural?

Hi John. So, overall the four lines are working very good. And if you look what we have achieved in the last few years you can notice that we've improved our efficiency. So, the years and manage also with some small investment for that we need to improve the throughput out of these lines. Line number five has just begun towards the end of Q4. And it will produce more and more as we progress into 2014. The full line will be deployed by the end of Q2. But until then we can still use power [grids] and use other machineries that we have in the companies to produce more and to increase the throughput. So, you don’t see -- you see a very small part of it in the throughput that we did in Q4.

Okay. Thank you. And then in terms of the ‘14 guidance, do we have FX headwinds, what are we thinking about in terms of a start-up expense or any other factors that are impacting the ‘14 EBITDA number negatively? Thank you.

So, with respect to the guidance in 2014, do with significant expecting (inaudible) us. If I compare the current exchange rate to what they were in 2013, the impact is around $4 million cost for us. And that’s in our guidance.

Okay. And we will take our next question from Michael Rehaut from JP Morgan.

Thanks. Great quarter everyone, congratulations.

Thank you.

First question, just to go into the 2014 EBITDA it does imply a similar ratio to sales as 2013 and so here you just broke out that you expect FX to be -- and if I understood it right an incremental $4 million headwind versus 2013. Please correct me if that’s not the case. But I was wondering if you could…. sorry.

No, the exchange rate I may have misstated myself. The exchange rate is a negative impact for us in 2014, so it dragged our profitability down by around $4 million compared to 2013.

Okay. So, that’s incremental, it’s an incremental negative impact because you already had some negative impact in 2013?

Correct.

So, just bigger picture though you have a negative impact from currency, what would be sort of the positive drivers to the margin in ‘14 and the negative ones? It would appear that volume in Super-Natural be positive ones. Are there any other negative impacts that offset to keep the ratio or the margin at the same level versus ‘13?

Yes, there are two negative impacts; one is the exchange rate that Yosef discussed. The other one is raw material price increases mostly in the quartz or due to the significant demand there are some price increases, which are based again into the guidance. So, the impact of the raw material cost increase is similar to that of the FX.

Okay. If I can just add to that I think that the trend is very strong, very strong positively. And then of course we have something that could work negatively something that could work to the other side also. So, overall this is how we see it.

Okay. And just in terms of couple of below the operating line items. The finance expense at $0.4 million in the quarter sometimes that works as a positive hedge against currency, it doesn’t appear that that was the case in the fourth quarter. I just wanted your thoughts around that and also how to think about the tax rate for 2014?

Okay. So exchange rates this quarter in finance expenses we got was insignificant. So, probably what you see now is I would say good run rate maybe it’s like more than best. There was some positive impact, but very small. On tax rate as we have discussed before, those should go up a little bit given that the tax rate in Israel are going in from 12.5% to 16% next year and in Bar Lev from 7% to 9% next year. Overall, I believe that our…

Just to mention that the 9% would be with the higher rate.

Yes with higher rates was Bar Lev because now we will have three lines there instead of two so there will higher mix of low tax benefit. But overall, I believe that anywhere between 13% to 16% tax rate without any major adjustment or any kind would be ongoing. That’s what I foresee.

(Operator Instructions). And we will take our next question from Josh Chan from Baird.

Just wondering given the pace of growth that you are experiencing, what is the capacity utilization. Are you having to squeeze incremental capacity before the fifth line becomes fully productive in order to meet demand; I mean how much of constrain is capacity is right now?

So capacity is quite a constrain. However, we have demonstrated that we can squeeze it a little bit more in the past year and also specifically in the fourth quarter. We continue to work on improving the capacity of the current production line. Of course we will try to accelerate the operation of the fifth line. And other thing that you should bring into account is also the product mix. We are focused in general increasing our differentiated lines as example is Supernatural but there are also other products in our offering today and also there will be future products of course that we suppose to launch during this year. So overall, capacity is constrain but we have seen a little bit (inaudible).

Okay, thanks for that. And if I look at the sales growth for 2014, if I take out currency, it seems like you are assuming that sales growth is pretty similar to what you generated in 2013. I was just wondering as you look across the different regions, are there certain regions that you think could accelerate versus ‘13 and are there other regions that you think that could slow down a bit?

Well, we are not providing revenue guidance by region. But given our trend, I think that you can guess that our growth in North America will continue to be strong.

Okay. Thank you for your time.

Thanks.

And we'll take our next question from Michael Dahl from Credit Suisse.

Hi, thank you. I wanted to ask about just to how to think about the revenues given your current mix, if we think about 4Q being $97 million that's really only reflecting the four full lines. Would that mean at the current mix levels that once you get the fifth line open, we should really be thinking about $475 million to $480 million as what your full capacity would be?

So, in general, each line, if you look to what we have completed in Q3, you can see that each line can produce around $95 million. So, if we have five lines and all of them are fully operated and all the throughputs and there is an equivalent demand for all the throughput, then you can get five times 95, which is 475. But this is of course not the case right now first of all not the line number five is not still up and running. And second as we always say, the fact that we increase production does mean that immediately we get the ability to sell all that, it takes time. So of course we have the time when we get there, but as for this time, our guidance is what we believe we can achieve in life of all the constraints.

I would add to what Yos said that we need to also recognize that Q1, there is a seasonality in Q1 that is unrelated to capacity. So all-in-all as Yos said, this is all built into our guidance.

Thank you. That's helpful. And then second question, if we think about the IKEA relationship, then clearly it’s very new here, but as we see some successes there, does that change the way you think about expanding relationships or building relationships with some of the, call it mass merchants or bigger home centers here in U.S. as you bring on new capacity?

So, I think in the short term of course, I think we will continue with the strategy that we are currently taking in the market, because of course it doesn’t make sense in eyes of the capacity constraint right now to enter into a mass market. In addition, IKEA, we choose to cooperate with IKEA, because we believe that IKEA is very focused on kitchens. Again, as we said in the past, once we have excess capacity in the future, we may reconsider this approach and then we may approach other mass retailers that are in the market in the U.S. or in other places, all over the world.

Great, thanks. And if I could squeeze one last one, and you mentioned that you’re seeing the raw material price increases. What are you doing on the price side, your own pricing, obviously there is a strong demand here, so there should be some pricing power, is there anything in plan as far as increases for ‘14?

So in general we try to base our relationship with the customers for long-term and no to use short-term situations and try to raise prices even though we have disability. Of course, special products like the Supernatural that brings special variances to the consumers, we will try to price in a way that recognizes this hand or this contribution to the consumers and to us. So, there we will be very sensitive around pricing. As to raw materials, there is some increase in quartz prices. And from time-to-time, we didn’t experience so much this year but in the past we experienced also a full year price increase. And again as we said, we have the full ability to pass it on to our consumers but we will be very cautious with that again everything due to our strategy to build long-term relationship.

Okay, thank you.

And we will take our final question today from Lars Dollman from Adelphi Capital.

Hi gentlemen, congratulations on the year. Just want to follow on the pricing power you have. As you are obviously this close to capacity and you see some cost increases, would it be fair to say that if you see further cost increases and obviously unfavorable exchange rate, what you are already expecting for to come, but you should be at least able to catch on further cost increases as obviously your competitor with the competitive products will have some cost increases. So what…

Yes. If we see that raw materials or other expenses are going up, we will -- or there will be currency negative currency effects or certain hurdle, then we will raise prices.

Okay, thank you very much.

Thank you. Operator.

Yes. That does conclude today’s question-and-answer session. And I would like to turn the conference back over to Mr. Shiran for any additional comments or remarks.

Okay. So, thank you all for joining us today. We are very pleased with the fourth quarter and the year we had in 2013. As we are starting 2014, we see another strong and exciting year of growth ahead of us as the growth story unfolds globally and particularly in the United States. We are working hard to capture that opportunity to big capacity to serve the demand in the market and to launch new differentiated and attractive products that will fair enhance the Caesarstone global brands. Thank you again for your support, time and attention. And have a good day, bye.

And this does conclude teleconference. And we thank you for your participation.