Somero Enterprises Inc. Trading Update

RNS Number : 4406B

Somero Enterprises Inc.

31 January 2024

 

31 January 2024

Somero Enterprises, Inc.

("Somero" or "the Company")

Trading Update

Strong trading in H2 driven by healthy North American market,

meaningful contribution from Europe and continued growth in Australia

Somero® provides the following update on trading for the financial year ended 31 December 2023.

Trading

The Board is pleased to report that with good trading and excellent operational performance in fulfilling customer orders globally during H2 2023, it expects the Company to report 2023 revenue of US$ 120.7m, in line with previous guidance and market expectations.

As anticipated, the 2023 revenue expectation reflects the positive impact of the S-22EZ relaunch at full production on H2 trading and a resilient US non-residential construction market. A strong finish to the year was achieved despite ongoing headwinds in the US from concrete supply chain shortages, elevated interest rates and tightened bank lending, as noted in the Company's 20 June 2023 trading update.  2023 North America revenues were US$ 88.4m (2022: US$ 101.8m).

Facilitated by the Company's increased strategic focus on and resource allocation to Europe and Australia, full year trading in both territories continued to improve year-over-year, driven by sales to new customers and underpinned by healthy non-residential construction market conditions.  Notably, following the transition from a dealer model to selling direct in Australia and the addition of key sales and support personnel, facilitating the broadening of our products represented in country, sales in Australia grew 18% on 2022 to US$ 9.9m.  Sales in Europe grew to a lesser extent to US$ 15.1m compared to US$ 14.9m in 2022, albeit demand for parts and service has escalated significantly.

In 2023, parts and service revenue grew 9% on 2022 to US$20.5m.  All key markets contributed to the meaningful growth, particularly Europe and Australia which grew 19% and 43% on 2022, respectively.

In the Rest of World segment, which comprises regions that each contribute modest revenue and so are susceptible to volatility period-to-period, sales were down mostly due to product mix in Latin America and planned volume decline in China. Except for China, where at the end of the year we completed the divestment of our direct operations, market conditions in Rest of World territories were generally positive. Revenues from the Rest of World segment were US$7.3m (2022: US$8.5m).

Commensurate with the level of expected revenue, the Board expects the Company to report annual adjusted EBITDA in line with previous guidance and market expectations of US$ 36.0m. The yearend cash position is expected to be $33.0m, slightly better than anticipated reflecting lower net working capital. These estimates remain subject to any audit adjustments.

Strategic Progress

With the introduction of new and innovative products a key component of the Group's growth strategy, the Board is pleased to announce it has completed the first step in the long journey toward electrification with the January 2024 launch of the S-940e, an electric version of the Company's popular S-940 ride-on machine. Further demonstrating Somero's commitment to addressing customer needs, a new product filling a product-line market application gap, the SRS-6s, was also released in the month, with a third machine scheduled to be launched later this year.

From an international expansion standpoint, we have secured a new facility in Belgium to better serve customers in the region and to address the growing demand for local repair and servicing of machines.  We expect to move into the facility in Q1 2024 and to be fully operational later in the year.

Outlook

In 2024, the Board expects the US market to remain strong, supported by customers reporting high levels of activity and healthy backlogs, continued growth in Europe and Australia, and multiple new product launches.  With consideration to these factors, the Board expects 2024 will be another highly profitable year with healthy cash generation, revenues that are comparable to 2023, and EBITDA that reflects modest incremental investment including the new Belgium service and training center and the annualized impact of strategic resources added in 2023. This incremental investment is expected to be within our traditionally targeted US$ 2.0m. 

Somero's final 2023 results announcement is scheduled for release on 5 March 2024.

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.

For further information, please contact:

Somero Enterprises, Inc.                                                                                     www.somero.com Jack Cooney, President & CEO                                                                             [phone] Enzo LiCausi, CFO Howard Hohmann, EVP Sales   Cavendish Capital Markets Ltd (NOMAD and Broker)             [phone] Matt Goode/Seamus Fricker/Fergus Sullivan (Corporate Finance)   Tim Redfern/Harriet Ward (ECM)       Alma (Financial Communications Advisor)             [e-mail] David Ison            [phone] Rebecca Sanders-Hewett Will Merison

 

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