TIDMSOM
RNS Number : 3080O
Somero Enterprises Inc.
31 January 2023
31 January 2023
Somero Enterprises, Inc.
("Somero" or "the Company")
Trading Update
Record revenues driven by a healthy North American market,
significant contributions from Europe and Australia
Somero(R) provides the following update on trading for the
financial year ended 31 December 2022 ("the Period").
The Board is pleased to report that with strong, profitable
trading and excellent operational performance in delivering global
customer orders during H2 2022, it expects the Company to report
2022 revenue of approximately US$ 134.0m. This is a new record for
the Company, surpassing 2021 revenues of US$ 133.3m, which in turn
grew a remarkable 50% over 2020.
This 2022 revenue expectation falls modestly below previous
guidance of US$ 138.8m, reflecting the impact, albeit limited, of
supply chain shortages in our North America market on our
customers' pace of work. This risk was noted in the Company's 7
September 2022 interim results release.
Commensurate with the level of expected revenue, the Board
expects the Company to report annual adjusted EBITDA of
approximately US$ 46.0m, modestly below previous guidance of US$
47.7m, and expects the Company to report ending cash of
approximately US$ 34.0m, with some impact from the timing of tax
refunds and working capital investment. These estimates remain
subject to any audit adjustments.
Regional Breakdown
Trading in North America during the second half of 2022
reflected a healthy and active underlying non-residential
construction market, although H2 2022 trading was somewhat down
from H1 2022. On a full-year basis, trading was slightly down
albeit from the record setting 2021 revenue of US$ 106.7m. This was
due in large part to supply chain shortages, most notably the
inconsistent availability of concrete nationwide that stems from a
shortage of cement and drivers to transport material to job sites,
that have slowed the pace of customers' work on certain projects.
As we move into 2023, while it is difficult to predict when and to
what extend the aforementioned challenges will ease, underlying
market conditions in North America remain positive, with customers
reporting a significant volume of work comparable to 2022 levels
and extended project backlogs.
H2 2022 trading in Europe increased significantly from H1 2022
and grew on a full-year basis by over 20% from the US$ 12.1m
reported in 2021. 2022 reported revenues in Europe are a record for
the region, surpassing the previous high of approximately US$ 14.0m
(US$ 10.1m on a constant currency basis) recorded in 2007. Trading
during H2 2022 benefitted from a healthy non-residential
construction market along with increased availability of inventory
and the positive impact of the previously announced strategic shift
internationally to focus on, and allocate resources, to the
European and Australian markets.
In Australia, we expect to report increased H2 2022 revenues
compared to H1 2022, growing nearly 40% on a full-year basis
compared to the US$ 6.1m reported in 2021. This again represents a
record performance. Trading during H2 2022 reflected a high-level
of non-residential construction activity, increased availability of
inventory, and the positive impact of increased selling and support
staff in the market following the Company's decision to go direct
at the end of 2020.
We expect to report that H2 2022 revenue in China grew modestly
from H1 2022 as COVID restrictions lessened in the second half of
the year. As expected, following the previously announced shift in
the Company's international strategy away from China, full-year
revenue in the region declined by over 50% from the US$ 2.7m
reported in 2021, amounting to only a modest contribution to the
Company's annual 2022 revenues.
H2 2022 trading activity in the remaining regions, the most
significant of which are India, Latin America, the Middle East,
grew modestly on a combined basis compared to H1 2022 and on a
full-year basis compared to 2021. Market conditions across these
regions were positive during the second half of the year and remain
so entering 2023.
Product Breakdown
On a product basis, H2 2022 trading in the Boomed-screed product
line grew slightly compared to H1 2022 and on a full-year basis
compared to 2021. This was driven by sales of the S-28EZ, the
Company's largest machine. The success of the S-28EZ is a result of
the Company's commitment to improving and adding value to its core
existing product offering, which sits alongside its innovation
strategy for entirely new solutions.
H2 2022 trading across all other product lines, including
Ride-on screed equipment, was balanced reflecting healthy diversity
in the size of and type of customer projects. On a combined basis,
whilst H2 2022 revenue across all products excluding Boomed-screeds
was down modestly from H1 2022, we expect to report 2022 revenue at
a comparable level to FY 2021.
2022 revenues from newer products released since 2019 that
target entirely new market segments, including the SkyScreed,
SkyStrip(R), S-PS50, and Somero Broom+Cure, grew modestly on a
combined basis from 2021 to contribute approximately US$ 4.0m to
2022 revenue. The Company remains focused on gaining traction in
these new markets with the understanding the pace of market
adoption for these disruptive products takes time.
Strategy Update
Led by Europe and Australia, full-year 2022 revenue outside
North America on a combined basis grew nearly 20% compared to 2021.
This meant the contribution to revenue from international markets
grew to approximately 24% of total sales compared to 20% in 2021.
The 2022 growth is the direct result of the shift in international
focus to Europe and Australia and the addition of key sales and
support personnel to these markets. The Company continues to see an
attractive international growth opportunity from new customers and
new products, particularly in Europe and Australia.
In Q4 2022, the Company completed the US$ 9.5m project to add
50,000 square feet to the Houghton, Michigan facility and expects
the expansion will be fully operational in early Q1 2023.
Completion of this project is essential to Company's longer-term
growth strategy adding manufacturing capacity and workflow
efficiencies while expanding in-house engineering capabilities.
Outlook
The Board is pleased with the strong finish to 2022 and looks
forward to 2023 with confidence based on the strength of the US
market, direct feedback from our customer base on activity, and the
growth opportunity in Europe and Australia and from new products.
To capture this opportunity, the Company remains committed to
adding product development, sales, and support resources; a
necessary near-term investment and cost with longer-term
benefit.
With consideration to these factors, the Board expects 2023 will
be a highly profitable year with healthy cash generation, revenues
that are comparable to 2022, and EBITDA that reflects the planned
investment to add strategic resources for future growth.
Somero's final 2022 results announcement is scheduled for
release on 8 March 2023.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 as retained as part of UK
law by virtue of the European Union (Withdrawal) Act 2018 as
amended. Upon the publication of this Announcement, this inside
information is now considered to be in the public domain.
Enquiries:
Somero Enterprises, Inc. www.somero.com
Jack Cooney, CEO +1 239 210 6500
John Yuncza, President
Vincenzo LiCausi, CFO
Howard Hohmann, EVP Sales
finnCap Ltd (NOMAD and Broker)
Matt Goode (Corporate Finance)
Seamus Fricker (Corporate Finance)
Fergus Sullivan (Corporate Finance)
Tim Redfern (ECM)
Harriet Ward (ECM) +44 (0)20 7220 0500
somero@almapr.co.uk
Alma PR (Financial PR Advisor) +44 (0)20 3405 0205
David Ison
Pippa Crabtree
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END
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