5 March 2024
This announcement contains inside information for the
purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of
MAR.
Somero Enterprises,
Inc.
("Somero" or "the Company")
Final
Results
A healthy North American
market and significant contributions from Europe and Australia
drive strong finish to 2023
Somero Enterprises, Inc. reports
its annual results for the twelve months ended 31 December
2023.
|
FY23
|
FY22
|
% Change
|
|
(US$)
|
(US$)
|
|
Revenue
|
120.7m
|
133.6m
|
-9.7%
|
Adjusted
EBITDA(1,2)
|
36.5m
|
46.0m
|
-20.7%
|
Adjusted EBITDA
margin(1,2)
|
30%
|
34%
|
-400bps
|
Profit before tax
|
33.2m
|
40.8m
|
-18.6%
|
Adjusted net
income(1,3)
|
25.7m
|
31.0m
|
-17.1%
|
Diluted adjusted net income per
share(1,3)
|
0.47
|
0.55
|
-14.5%
|
Cash flow from
operations
|
24.4m
|
27.8m
|
-12.2%
|
Net cash(4)
|
33.3m
|
33.7m
|
-1.2%
|
Ordinary dividend per
share
|
23.19c
|
27.78c
|
-16.5%
|
Supplemental dividend per
share
|
7.4c
|
7.7c
|
-3.9%
|
Financial Highlights
·
Strong trading to end 2023 with results in line
with market expectations after an exceptional 2022
·
Continued revenue growth in key international
markets (7%) and overall parts and service revenue (9%)
·
Meaningful H2 sales contribution from relaunched
S-22EZ
·
Cash flow impacted by sales decline in North
America, partly offset by strong cash collection compared to prior
year
·
Substantial return of cash to
shareholders
·
Paid US$ 19.8m in dividends during 2023 (2022:
US$ 29.0m)
·
US$ 2.0m share buy-back, authorized in February
2023, largely completed
Operational Highlights
·
Strategic investment in international markets
yielding positive results
· Revenue in Australia grew 18% driven by new customer
acquisition and broader product range
· Parts and service sales in Europe and Australia grew 19% and
43% respectively
·
Completed installation of in-house painting and
material preparation systems in the US
·
Completed relocation of Australia operations to a
larger facility to meet growing demand
·
Increased European footprint with a new site in
Belgium
Post-Period Highlights
·
Non-residential construction remains healthy with
customers reporting high activity levels and extended project
backlogs, and expect market conditions to remain consistent in
2024
·
Three new products launching in 2024, including
the first step toward electrification with the launch of the S-940e
in January
·
Declared a 13.2 US cents per share final 2023
ordinary dividend and a 7.4 US cents per share supplemental
dividend, totaling a combined US$ 11.4m
·
Authorized a new share buyback program of an
aggregate value of up to US$ 2m to offset dilution from on-going
equity award programs, expected to be completed by the end of
2024
Notes:
1. The Company uses non-US GAAP financial measures to provide
supplemental information regarding the Company's operating
performance. See further information regarding non-GAAP measures
below.
2. Adjusted EBITDA as used herein is a calculation of
the Company's net income plus tax provision, interest expense,
interest income, foreign exchange gain (loss) other income
(expense), depreciation, amortization, stock-based compensation and
non-cash lease expense.
3. Adjusted net income as used herein is a calculation of net
income plus amortization of intangibles and excluding the tax
impact of stock option and RSU settlements and other special
items.
4. Net cash is defined as cash and cash equivalents
less borrowings under bank obligations exclusive of deferred
financing costs.
Jack Cooney, CEO of Somero, said:
"To have successfully navigated a challenging year and
delivered against market expectations set in June is a good result
and I am proud of how our employees around the world rose to the
challenge.
The success we achieved in our key international markets was
particularly satisfying. The product of an increased strategic
focus on and allocation of resources to Europe and Australia, we
have been working hard to lay the foundations for accelerated
growth overseas and so it is gratifying to see our efforts
beginning to pay off. While trading in the US was subdued by
factors outside of our control, the underlying market remains
active and healthy.
2023 was one of our busiest and most productive years in
terms of product development, with extensive jobsite visits and
innovation council sessions in both the US and overseas.
During the year, we completed the development of our first electric
machine ahead of launch at the start of 2024. Electrification
will be a long journey but we are well-positioned ahead of the
demand curve. With another new product launched in January and one
scheduled for release later in the year, we are maintaining our
steadfast commitment to exploring new ways to meet the evolving
needs of our customers.
Looking ahead, the outlook is positive, with customers
continuing to report high levels of activity and healthy backlogs.
While the timing and extent of a return to more normal trading
conditions in the US remains challenging to predict, our confidence
in the long-term prospects for our home market remains
resolute.
We will continue to build on our success overseas in 2024
while bolstering our product offering, remaining agile, adaptive
and optimistic about growth opportunities available to us globally.
I am grateful to everyone across the business for their
contributions and look forward to another year of
progress."
Final Results Investor Presentation
As part of its engagement with
investors, management will host a live virtual presentation and
Q&A on 13 March 2024 at 17:00 GMT. The presentation is open to
all existing and potential shareholders and will be given by
President & Chief Executive Officer Jack Cooney and Chief
Financial Officer Enzo LiCausi .
To register to attend, please use
the following link: https://bit.ly/SOM_FY23_webinar
Questions can be submitted at any
time during the live presentation. A recording will be made
available via the Group's website following the conclusion of the
presentation.
For further information, please
contact:
Somero Enterprises, Inc.
www.somero.com
Jack Cooney, President & CEO
+1 239 210 6500
Enzo LiCausi, CFO
Howard Hohmann, EVP
Sales
Cavendish Capital Markets Ltd (NOMAD and
Broker)
|
+44 (0)20 7220
0500
|
Matt Goode/Seamus Fricker/Fergus
Sullivan (Corporate Finance)
|
|
Tim Redfern/Harriet Ward
(ECM)
|
|
|
|
Alma (Financial Communications Advisor)
|
somero@almastrategic.com
|
David Ison
|
+44 (0)20 3405
0205
|
Rebecca Sanders-Hewett
Will Merison
|
|
Notes to Editors
Somero Enterprises provides
industry-leading concrete-levelling equipment, training, education
and support to customers in over 90 countries. The Company's
cutting-edge technology allows its customers to install
high-quality horizontal concrete floors faster, flatter and with
fewer people. Somero®
equipment that incorporates laser-technology and
wide-placement methods is used to place
and screed the concrete slab in all building types and has been
specified for use in a wide range of commercial construction
projects for numerous global blue-chip companies.
Somero pioneered the Laser
Screed® market in
1986 and has maintained its market-leading position by continuing
to focus on bringing new products to market and developing
patent-protected proprietary designs. In addition to its products,
Somero offers customers unparalleled global service, technical
support, training and education, reflecting the Company's emphasis
on helping its customers achieve their business and profitability
goals, a key differentiator to its peers.
For more information, visit
www.somero.com
Chairman's and Chief Executive Officer's
Statement
Overview
Against an exceptional 2022 and
taking into consideration the previously reported factors impacting
the pace of sale of boomed screeds in North America, the Board is
pleased with a solid overall performance in 2023. We have delivered
continued growth in our key international markets, in particular
sales of parts and service, while maintaining healthy
profitability. Group 2023 revenues totaled US$ 120.7m (2022:
US$133.6m), with the 10% decline driven by the trading slowdown in
North America. The Company's flexible cost structure enabled
it to quickly adjust its operational headcount to the changing
circumstances. Customer facing and product development
headcount were not impacted, enabling us to continue to execute and
support the long-term growth strategy. As a result, 2023
gross margin was 55.8% (2022: 57.0%) and adjusted EBITDA margin was
30.2% (2022: 34.5%). Net income of US$ 27.9m (2022: US$
31.1m) converted efficiently to operating cash flow of US$ 24.4m in
2023 (2022: US$ 27.8m), reflecting healthy profitability and strong
cash collection. The 2023 operating cash flow funded US$
19.8m in dividend payments. December 31, 2023 net cash
totaled US$ 33.3m (2022: US$ 33.7m). The Company's final 2023
results were in line with guidance provided on 20 June
2023.
Region and Product
Reviews
North
America
2023 North American sales declined
13.2% from 2022 to US$ 88.4m. Our US customers continue to
report a high level of activity and a diverse range of projects
ranging from large footprint manufacturing facilities, data centers
and warehousing to smaller footprint retail, schools, and medical
centers, and maintain robust project backlogs. While
underlying market conditions remain positive, factors noted in the
20 June 2023 Trading Update led to delayed starts and pauses to
non-residential construction projects and impacted the translation
of construction activity into trading in the US compared to
2022. Although US customers have not reported project
cancellations, the project delays have impacted their equipment
purchase decision. H2 trading benefitted from the re-launched
S-22EZ reaching full production at the end of H1 2023. The
long-standing and worsening shortage of skilled labor necessitating
the need for automation and work productivity, coupled with strong
end-user demand, such as onshoring of manufacturing, electric
vehicle battery plants, and chip manufacturing, provides long-term
demand for our products.
Europe
Europe, one of our target
international markets where we see meaningful opportunity for
growth, reported sales of US$ 15.1m in 2023, up 1.3% from US$ 14.9m
in 2022. Of particular note, revenue from the sale of parts
and service grew 19% on 2022. The Company's investments in customer
facing resources and capabilities, including adding three
European-based sales positions and customer support employees, led
to an increase in new customer acquisitions, deeper penetration of
new and existing products, and, with a growing installed base, an
elevated demand for machine repair and service. The Company
remains focused on attracting new customers by leveraging
entry-level equipment such as the SRS-4 in the boomed screed
category and the EcoScreed in the ride-on category, and intends to
continue to invest in this market in 2024 with the addition of a
new facility in Belgium commencing in Q1 2024 and expected to be
fully operational later in the year. This enables us to stock
machines and parts and offer training and machine repair
capabilities closer to our customers across
Europe.
Australia
Australia is also a target
international market where we see meaningful opportunity for growth
through increased market penetration across our product
portfolio. The transition to a direct sales and support model
at the end of 2020 provided the foundation for the strong
performance in 2023 and future growth.
Australia reported 2023 sales of
US$ 9.9m, a 17.9% increase from the US$ 8.4m in 2022. Similar
to Europe, the higher sales were attributable to our direct sales
and customer support teams that were expanded with additional
staff, focus on new customer acquisitions and selling a broader
range of new and existing products.
Due to the success and continued
growth in the region, in late H1 2023 we secured a larger facility
to replace the current one. This provides additional space to stock
a broader range of our products locally to quickly capitalize on
sales opportunities, accommodate recent and future staff additions,
and enhance our training and machine repair capabilities in the
market. Operations were transitioned to the new facility in August
2023. The expanded capability has enabled us to capture
incremental machine repair opportunities resulting in an increase
in revenue from sale of parts and service of 43% on
2022.
Rest of
World
Our Rest of World region, which
includes Latin America, the Middle East,
India, Southeast Asia, Korea and China.
Excluding China, the Rest of World region reported combined 2023
revenues of US$ 6.6m (2022: US$ 7.5m). The main
contributors to 2023 revenues were Latin America, India and the
Middle East, which reported respective sales of US$ 2.6m (2022: US$
3.6m), US$ 1.8m (2022: US$ 2.6m), and US$ 1.5m (2022: US$
0.8m). As expected, China continued to
report declines to US$ 0.7m in 2023 from the US$ 1.1m reported in
2022. At the end of 2023, we completed the divestment of our
direct operations in China. Excluding China, market
conditions in Rest of World territories were generally
positive. Given the relatively small base of business
in each region, trading will fluctuate from period to
period.
Products
Demand for our product categories
is impacted by the type and size of projects, and applications,
which are ultimately driven by end users. Large Boomed
screeds are suitable for large footprint projects such as
warehousing, medical facilities and manufacturing facilities, while
Ride-on screeds are suitable for smaller footprint projects and
smaller concrete slabs. Different applications drive demand
for other equipment, such as exterior applications driving demand
for the 3D Profiler Systems and the Somero
Broom+CureTM. As these variables shift, our
product mix fluctuates accordingly.
2023 Boomed screed sales decreased
to US$ 53.9m from the US$ 67.2m reported in 2022, driven by
the factors in the US noted in the 20 June
2023 Trading Update and above.
Nonetheless, there continues to be healthy demand for large Boomed
screeds driven by recent onshoring efforts, an increase in electric
vehicle battery plants and US legislation including the CHIPS Act,
a statute providing roughly US$ 280 billion in new funding to boost
domestic research and manufacturing of semiconductors in the United
States. 2023 sales of ride-on screeds
totaling US$ 20.4m grew 4.6% (2022: US$ 19.5m), while sales of 3D
Profiler Systems, remanufactured machines and total other revenue
remained relatively comparable to 2022. Within the other
revenue category, revenue from parts and service increased 9% to
US$ 20.5m from US$ 18.8m reported in 2022. As detailed above,
investments in customer support in our EU and Australia markets and
growing installed bases contributed to this
growth.
Products released since 2019, the
SkyScreed® 36, S-PS50, SkyStrip® and the Somero
Broom+CureTM, that target new market
segments, together contributed US$ 2.1m in 2023 revenues (2022: US$
4.2m), which was mostly from sales of
Broom+CureTM. These are new inventions that
address entirely new market segments and customer
bases. The SkyScreed® 36 and the other
products in this group are highly disruptive solutions supported by
a strong value proposition that deliver meaningful value to
customers, but also significantly change long-established jobsite
work practices and workflows. We remain confident that the
long-term opportunity in these new market segments, including the
high-rise structural market, far exceeds reported 2023 revenue for
the Company, but understand as with all disruptive technology,
gaining broad market acceptance will be a gradual process and
trading will be volatile.
We continue to dedicate
significant organizational time and resources to engage customers
directly to develop a pipeline of ideas for solutions that address
pain points. 2023 was an active period in this regard, with
extensive jobsite visits and innovation council sessions both in
the US and internationally, which will lead to the launch of three
new products in 2024.
The first of these is the initial
step in the long journey toward electrification, the S-940e, an
electric version of the Company's popular S-940 ride-on machine.
The second, further demonstrating Somero's commitment to addressing
customer needs, is a new product filling a product-line market
application gap, the SRS-6s. Both of these machines launched in
January with a third scheduled for release later this
year.
As part of our R&D process, we
continue to explore and implement new technological advancements
that will enhance our current and future
offerings.
Strategic
Progress
Somero's strategy is to capture
growth from new products and in our international markets. The
Company began in 1986 with an industry transforming invention, the
laser screed machine, and to this day Somero remains committed to
leading the industry forward by developing solutions that help
customers build better, safer, and more profitable
businesses. Developing new products creates value for
customers and expands our growth opportunity. The Company's
new product releases include entirely new, disruptive products that
target new market segments as well as products closely related to
our current portfolio.
Cashflow and Balance
Sheet
Somero reported operating cash
flow in 2023 of US$ 24.4m, a strong result nonetheless driven by
healthy profitability, albeit down from the exceptional US$ 27.8m
reported in 2022. Inventory required to support the Company's
European and Australian operations remained elevated. While
we drive to work down excess safety stock, which was built up to
mitigate supply chain shortages, the addition of the new products
will cause a natural uplift to inventory levels. Therefore,
we anticipate overall inventory to remain relatively comparable to
2023.
The Company spent US$ 1.7m in 2023
on capital expenditures, relating to
on-going product software programs, and other activities in the
ordinary course of business. With the goal
of continuously enhancing productivity and customer engagement, the
Company intends to make incremental investment in technological
solutions in 2024 within operations, customer training, and
marketing. The Company also paid dividends in 2023 totaling
US$ 19.8m (2022: US$ 29.0m), reflecting the Company's ongoing
commitment to disciplined return of cash to shareholders, and
repurchased US$ 1.4m in common stock under the Company's share
buyback program.
The Company ended 2023 with US$
33.3m in net cash slightly down from the US$ 33.7m reported in 2022
reflecting lower net income, offset by lower capital expenditures
and lower dividend payments, but still providing a secure financial
position with a December 31, 2023 net cash balance that comfortably
exceeds the Board approved minimum year-end cash reserve of US$
25.0m.
Dividend and share buyback
program
Based on the results of 2023, our
secure financial position, and outlook for 2024, we are pleased to
report that the Board has declared a final 2023 ordinary dividend
of US$ 0.1319 per share, calculated based on the Board
approved payout ratio of 50% of adjusted
net income, and after reviewing anticipated future cash
requirements for the business, the Board has also declared a
supplemental dividend of US$ 0.0740 per share, calculated as a 50%
distribution of December 31, 2023 cash that exceeds the Board
approved year-end US$ 25.0m minimum cash reserve. The final
2023 ordinary dividend when combined with
the US$ 0.10 per share interim dividend paid in October 2023,
results in a total 2023 ordinary dividend of US$ 0.2319, a 16.5%
decrease from the US$ 0.2778 per share 2022 ordinary
dividend. Both the final 2023 ordinary dividend and the 2023
supplemental dividend will be payable on 10 May, 2024 to
shareholders on the register at 12 April, 2024. The common
stock ex-dividend date is 11 April 2024.
In 2023, the Company repurchased a
total of 373,635 shares of common stock under the Company's share
buyback program put in place to offset dilution from on-going
equity award programs. Under the buyback program, the maximum price
paid per common share is to be no more than the higher of 105% of
the average middle market closing price of common share for the
five business days preceding the date of any share buyback, the
price of the last independent trade and the highest current
independent purchase bid. It is intended that any shares
repurchased will be immediately cancelled and the Company will make
further announcements to the market as and when share purchases are
made.
The Board has approved a 2024
share buyback program, pursuant to which, the Board intends to
carry out a buyback US$ 2.0m of common shares in order to mitigate
future dilution resulting from share issuances under the Company's
equity award programs. The Company expects to complete the
program by the end of 2024.
Our People
On behalf of the Board, we would
like to thank all our global employees for their performance in
2023. A core strength of the Somero team is its ability to
quickly adjust to changing conditions while always delivering the
highest level of products and service to our customers. This
underpins the Company's highly flexible cost model that enables it
to deliver healthy profits. The Board and
management team remain as committed as ever to providing all our
employees with a rewarding and challenging working environment that
is full of opportunity.
Environmental, Social and
Governance
The Board closely monitors
environmental, social and governance topics that materially impact
our stakeholders. These topics are discussed to ensure Somero
strikes the appropriate balance of meeting shareholder expectations
and addressing the concerns of key stakeholders necessary to ensure
sustainability of the business.
A primary material topic is the
environmental impact of our business including the use of our
equipment in the construction process. In 2023, we completed
a phase two environmental study by Colorado State University, which
supplements the phase one study that was completed in 2021 by
Middle Tennessee State University, the results of which were
outlined in white papers. The phase one study concluded that
the use of our laser screed machines in non-residential
construction provides a number of environmental benefits, including
a reduction in required concrete used in slab-on-grade projects
that in turn reduces carbon emissions during construction that
would otherwise occur from the use of alternative manual methods,
which quantified in the phase two study to be approximately
3%.
Moreover, as noted above, the
Company introduced its first electric machine as the first step
toward electrification. The Board is committed to continuing
down the path of electrifying our machines as customer demand
dictates.
Additionally, we continue to
invest resources not only in expanding and enhancing customer
training, but also employee training. This commitment extends
beyond Somero to the broader industry by sponsoring and prominently
participating in a number of industry organizations with the goal
of advancing the industry in general and on a variety of topics
including safety, education, and best practices.
Lastly, the Board continues to
prioritize independence and diversity on the Board reflecting a
broad variety of disciplines, experiences, backgrounds and
gender.
Conclusion and
Outlook
Thanks to the talent, dedication
and resolve of our employees, 2023 was a successful year under
challenging conditions. The Company reported 2023 results in
line with revised market expectations, paid US$19.8m in dividends
to shareholders, capitalized on strategic investments which led to
revenue growth, expanded sales of parts and service in Europe and
Australia, and completed product development activities to set
forth three new product launches in 2024. There is much to be
proud of as we look back.
Looking forward, the Board expects
US non-residential construciton to remain strong, supported by
customers reporting high levels of activity and healthy
backlogs, with market conditions expected
to remain consistent to 2023, continued
contribution from Europe and Australia, and multiple new product
launches. With the Board's vision of long-term growth from
new products and deeper international penetration, it has committed
to continue making targeted investments to add resources to drive
long-term growth. With the planned addition of the new
Belgium service and training center and the annualized impact of
strategic resources added in 2023, we expect an increase in 2024
operating costs that is within our traditionally targeted US$ 2.0m
incremental investment.
The Board expects the Company to
deliver strong revenues, profits, and cash flows to shareholders in
2024, supported by a strong balance sheet with no outstanding debt
and full availability of it's US$ 25.0m credit
facility. The health of the non-residential construction
markets in the US, Europe and Australia form the foundation of the
Company's 2024 expectations. With all factors considered,
2024 revenues are expected to be comparable with 2023, EBITDA
slightly lower from 2023 reflecting modest incremental investment
including the new Belgium service and training center and the
annualized impact of strategic resources added in 2023, and a
commensurate level of year-end 2024 cash.
Larry
Horsch
Jack
Cooney
Non-Executive Chairman
President
& Chief Executive Officer
5 March 2024
Notes:
(1) Net Cash is defined as total cash and cash
equivalents less borrowings under bank obligations exclusive of
deferred financing costs.
FINANCIAL REVIEW
|
|
|
|
|
|
Summary of financial results
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2023
|
2022
|
|
US$ 000
Except per
share
data
|
US$ 000
Except per share
data
|
|
|
|
Revenue
|
120,699
|
133,590
|
Cost of sales
|
53,343
|
57,431
|
Gross profit
|
67,356
|
76,159
|
|
|
|
Operating expenses
|
|
|
Selling, marketing and customer
support
|
14,742
|
14,289
|
Engineering and product
development
|
2,679
|
2,600
|
General and
administrative
|
16,340
|
16,170
|
Total operating
expenses
|
33,761
|
33,059
|
Operating income
|
33,595
|
43,100
|
Other income (expense)
|
|
|
Interest expense
|
(19)
|
(18)
|
Interest income
|
196
|
62
|
Foreign exchange impact
|
(731)
|
(1,342)
|
Other
|
196
|
(1,001)
|
Income before income taxes
|
33,237
|
40,801
|
|
|
|
Provision for income taxes
|
5,259
|
9,682
|
Net income
|
27,978
|
31,119
|
|
|
|
|
Per Share
|
Per Share
|
|
US$
|
US$
|
Basic earnings per
share
|
0.50
|
0.56
|
Diluted earnings per
share
|
0.50
|
0.55
|
Basic adjusted net income per
share(1), (3), (4)
|
0.46
|
0.55
|
Diluted adjusted net income per
share(1), (3), (4)
|
0.46
|
0.55
|
|
|
|
Other data
|
|
|
Adjusted EBITDA
(1), (2), (4)
|
36,459
|
46,026
|
Adjusted net income
(1), (3), (4)
|
25,737
|
31,000
|
Depreciation expense
|
1,425
|
1,322
|
Amortization of
intangibles
|
135
|
135
|
Capital expenditures
|
1,740
|
5,367
|
Notes:
1. Adjusted EBITDA and Adjusted net income are not
measurements of the Company's financial performance under US GAAP
and should not be considered as an alternative to net income,
operating income or any other performance measures derived in
accordance with US GAAP or as an alternative to US GAAP cash flow
from operating activities as a measure of profitability or
liquidity. Adjusted EBITDA and Adjusted net income are presented
herein because management believes they are useful analytical tools
for measuring the profitability and cash generation of the
business. Adjusted EBITDA is also used to determine pricing and
covenant compliance under the Company's credit facility and as a
measurement for calculation of management incentive compensation.
The Company understands that although Adjusted EBITDA is frequently
used by securities analysts, lenders, and others in their
evaluation of companies, its calculation of Adjusted EBITDA may not
be comparable to other similarly titled measures reported by other
companies.
2. Adjusted EBITDA as used herein is a calculation of net
income plus tax provision, interest expense, interest income,
foreign exchange gain(loss), other income (expense), depreciation,
amortization, stock-based compensation and non-cash lease
expense.
3. Adjusted net income as used herein is a calculation
of net income plus amortization of intangibles and excluding the
tax impact of stock option and RSU settlements, and other special
items.
4. The Company uses non-US GAAP financial measures to provide
supplemental information regarding the Company's operating
performance. The non-US GAAP financial measures presented herein
should not be considered in isolation from, or as a substitute to,
financial measures calculated in accordance with US GAAP. Investors
are cautioned that there are inherent limitations associated with
the use of each non-US GAAP financial measure. In particular,
non-US GAAP financial measures are not based on a comprehensive set
of accounting rules or principles, and many of the adjustments to
the US GAAP financial measures reflect the exclusion of items that
may have a material effect on the Company's financial results
calculated in accordance with US GAAP.
Net income to adjusted EBITDA reconciliation
and
|
|
|
Adjusted net income reconciliation
|
|
|
|
|
|
|
Year ended December
31,
|
|
2023
|
2022
|
|
US$ 000
|
US$ 000
|
Adjusted EBITDA reconciliation
|
|
|
Net income
|
27,978
|
31,119
|
Tax provision
|
5,259
|
9,682
|
Interest expense
|
19
|
18
|
Interest income
|
(196)
|
(62)
|
Foreign exchange impact
|
731
|
1,342
|
Other
|
(196)
|
1,001
|
Depreciation
|
1,425
|
1,322
|
Amortization
|
135
|
135
|
Stock-based
compensation
|
985
|
1,165
|
Non-cash lease expense
|
319
|
304
|
Adjusted EBITDA
|
36,459
|
46,026
|
|
|
|
Adjusted net income
|
|
|
Net income
|
27,978
|
31,119
|
Amortization
|
135
|
135
|
Tax impact of stock option &
RSU settlements
|
(183)
|
(254)
|
Change in uncertain tax position
reserve
|
(2,193)
|
-
|
Adjusted net income
|
25,737
|
31,000
|
Notes:
1. Adjusted EBITDA and Adjusted net income are not
measurements of the Company's financial performance under US GAAP
and should not be considered as an alternative to net income,
operating income or any other performance measures derived in
accordance with US GAAP or as an alternative to US GAAP cash flow
from operating activities as a measure of profitability or
liquidity. Adjusted EBITDA and Adjusted net income are presented
herein because management believes they are useful analytical tools
for measuring the profitability and cash generation of the
business. Adjusted EBITDA is also used to determine pricing and
covenant compliance under the Company's credit facility and as a
measurement for calculation of management incentive compensation.
The Company understands that although Adjusted EBITDA is frequently
used by securities analysts, lenders, and others in their
evaluation of companies, its calculation of Adjusted EBITDA may not
be comparable to other similarly titled measures reported by other
companies.
2. Adjusted EBITDA as used herein is a calculation of net
income plus tax provision, interest expense, interest income,
foreign exchange gain(loss), other income (expense), depreciation,
amortization, stock-based compensation and non-cash lease
expense.
3. Adjusted net income as used herein is a calculation of net
income plus amortization of intangibles and excluding the tax
impact of stock option and RSU settlements, and other special
items.
4. The Company uses non-US GAAP financial measures in order
to provide supplemental information regarding the Company's
operating performance. The non-US GAAP financial measures presented
herein should not be considered in isolation from, or as a
substitute to, financial measures calculated in accordance with US
GAAP. Investors are cautioned that there are inherent limitations
associated with the use of each non-US GAAP financial measure. In
particular, non-US GAAP financial measures are not based on a
comprehensive set of accounting rules or principles, and many of
the adjustments to the US GAAP financial measures reflect the
exclusion of items that may have a material effect on the Company's
financial results calculated in accordance with US
GAAP.
Revenues
The Company's consolidated
revenues decreased to US$ 120.7m (2022: US$ 133.6m). Company
revenues consist primarily of sales from Boomed screed products,
which include the S-28EZ, S-22EZ, S-15R, S-10A and SRS-4 Laser
Screed® machines, sales from Ride-on screed products, which are drive
through the concrete machines that include the S-485, S-940, and
S-158C Laser Screed®
machines, Remanufactured machine sales, 3-D
Profiler System®,
SkyScreed® and Other revenues which consist primarily of revenue from
sales of parts and accessories, sales of other equipment, including
the Broom + CureTM, SkyStripTM,
S-PS50, service, training and shipping charges.
Boomed screed sales decreased to
US$ 53.9m (2022: US$ 67.2m) primarily due to reduced volume year
over year. Ride-on screed sales increased to US$ 20.4 (2022:
US$ 19.5m) mainly due to higher selling prices, while
Remanufactured sales decreased slightly to US$ 6.8m (2022: US$
6.9m). Sales of 3D Profiler System® decreased to US$ 8.5m (2022:
US$ 8.7m) due to lower selling prices. Other revenues
increased to US$ 31.1m (2022: US$ 30.2m) primarily attributable to
an increase in parts sales and service.
Revenue breakdown by geography
|
|
|
|
|
|
|
|
|
|
|
|
North
America
US$ in
millions
|
EMEA(1)
US$ in
millions
|
ROW(2)
|
Total
US$ in
millions
|
|
US$ in
millions
|
2023
|
2022
|
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
Net sales
|
% of Net
sales
|
Net sales
|
% of Net
sales
|
Boomed screeds
(3)
|
38.1
|
49.7
|
9.0
|
9.9
|
6.8
|
7.6
|
53.9
|
44.7%
|
67.2
|
50.3%
|
Ride-on screeds
(4)
|
14.8
|
14.4
|
2.5
|
1.8
|
3.1
|
3.3
|
20.4
|
16.9%
|
19.5
|
14.6%
|
Remanufactured machines
|
5.5
|
5.2
|
.9
|
.9
|
.4
|
.8
|
6.8
|
5.6%
|
6.9
|
5.2%
|
3-D Profiler System
|
6.5
|
8.2
|
.4
|
.1
|
1.6
|
.4
|
8.5
|
7.0%
|
8.7
|
6.5%
|
SkyScreed
|
-
|
1.1
|
-
|
-
|
-
|
-
|
-
|
0%
|
1.1
|
.8%
|
Other (5)
|
23.5
|
23.2
|
3.8
|
3.0
|
3.8
|
4.0
|
31.1
|
25.8%
|
30.2
|
22.6%
|
Total
|
88.4
|
101.8
|
16.6
|
15.7
|
15.7
|
16.1
|
120.7
|
100.0%
|
133.6
|
100.0%
|
Notes:
1. EMEA includes Europe, Middle East, and
Scandinavia.
2. ROW includes Australia, Latin America, India,
China, Korea, and Southeast Asia.
3. Boomed Screeds include the S-28EZ, S-22EZ, S-15R,
S-10A and SRS-4.
4. Ride-on Screeds include the S-940, S-485, and
S-158C.
5. Other includes parts, accessories, services and freight,
as well as other equipment such as the SkyStripTM,
Somero Broom + CureTM, STS-11M Topping Spreader,
Copperhead, Somero Line Dragon®, Mini Screed C and
S-PS50.
Units by product line
|
2023
|
2022
|
Boomed screeds
|
174
|
187
|
Ride-on screeds
|
168
|
166
|
Remanufactured machines
|
33
|
32
|
3D Profiler System
|
82
|
71
|
SkyScreed®
|
-
|
3
|
Other (1)
|
93
|
92
|
Total
|
550
|
551
|
Notes:
1. Other includes equipment
SkyStripTM, Somero Broom +
CureTM, STS-11M
Topping Spreader, Copperhead, Somero Line Dragon®, Mini
Screed C and S-PS50.
Sales to customers located in
North America contributed 73% of total revenue (2022: 76%), sales
to customers in EMEA (Europe, Middle East, and Scandinavia)
contributed 14% (2022: 12%) and sales to customers in ROW
(Australia, Latin America, India, China, Korea, and Southeast
Asia) contributed 13% (2022: 12%).
Sales in North America were US$
88.4m (2022: US$ 101.8m) down 13% driven by lower sales volume of
large-line Boomed Screeds. Sales in EMEA were US$ 16.6m
(2022: US$ 15.7m), which is an increase of 6% primarily due to high
volume Ride-on Screeds and other products. Sales in ROW were
US$ 15.7m (2022: US$ 16.1), representing a 3% decrease driven
primarily by lower sales volume of large Boomed Screeds in Latin
America, India and China, partly offset by an increase in volume in
Australia across most of the product line, including parts and
service, and Boomed Screeds in Middle East.
|
US$ in
millions
|
Regional sales
|
2023
|
2022
|
North America
|
88.4
|
101.8
|
Europe
|
15.1
|
14.9
|
Australia
|
9.9
|
8.4
|
Rest of World
(1)
|
7.3
|
8.5
|
Total
|
120.7
|
133.6
|
Notes:
1. Includes Latin America, India, Southeast Asia,
Middle East, and Korea.
Gross profit
Gross profit decreased to US$ 67.4
m (2022: US$ 76.2m), with gross margins decreasing slightly to
56% (2022: 57%) primarily due to higher input costs and lower
Boomed screed volume, partly offset by price increases.
Operating expenses
Operating expenses for 2023 were
approximately US$ 33.8m (2022: US$ 33.1), which is reflective of
increased staffing that includes investment in sales and support
staff in the US and abroad, and increased travel, offset by lower
incentive compensation and sales commissions.
Debt
As of December 31, 2023, the
Company had no outstanding debt. In August 2022, the Company
updated its credit facility to a US$ 25.0m secured revolving line
of credit, with a maturity date of August 2027. The interest
rate on the revolving credit line is based on the BSBY Index plus
1.25%. The Company's credit facility is secured by
substantially all its business assets.
Other income (expense)
Other income (expense) was US$
0.2m of other income in 2023, compared to US$ 1.0m of other expense
in 2022, primarily due to a lower unrealized foreign currency
exchange loss.
Provision for income taxes
The provision for income taxes was
US$ 5.3m in 2023 compared to US$ 9.7m in 2022. Overall, Somero's
effective tax rate changed to 15.8% in 2023 from 23.7% in 2022, due
to the removal of an uncertain tax position, previously reflected
as a liability, upon IRS acceptance.
Earnings per share
Basic earnings per share
represents income available to common stockholders divided by the
weighted average number of shares outstanding during the
period. Diluted earnings per share reflect additional common
shares that would have been outstanding if dilutive potential
common shares had been issued, as well as any adjustments to income
that would result from the assumed issuance. Potential common
shares that may be issued by the Company relate to outstanding
restricted stock units.
Earnings per common share has been
computed based on the following:
|
Year ended December
31,
|
|
|
2023
US$ 000
|
2022
US$ 000
|
|
|
|
|
Income available to
stockholders
|
27,978
|
31,119
|
|
|
|
Basic weighted shares
outstanding
|
55,735,120
|
55,947,900
|
Net dilutive effect of restricted
stock units
|
617,553
|
661,193
|
Diluted weighted average shares
outstanding
|
56,352,673
|
56,609,093
|
|
Per Share
|
Per Share
|
|
US$
|
US$
|
Basic earnings per
share
|
0.50
|
0.56
|
Diluted earnings per
share
|
0.50
|
0.55
|
Basic adjusted net income per
share
|
0.46
|
0.55
|
Diluted adjusted net income per
share
|
0.46
|
0.55
|
Consolidated Balance Sheets
|
|
|
As of December 31, 2023 and
2022
|
|
|
|
|
As of December 31,
|
|
|
2023
|
2022
|
|
|
US$ 000
|
US$ 000
|
Assets
|
|
|
Current assets:
|
|
|
|
Cash and cash
equivalents
|
33,311
|
33,699
|
|
Accounts receivable -
net
|
8,835
|
10,315
|
|
Inventories- net
|
19,375
|
18,849
|
|
Prepaid expenses and other
assets
|
2,388
|
2,022
|
|
Income tax receivable
|
-
|
702
|
Total current assets
|
63,909
|
65,587
|
Accounts receivable, non-current -
net
|
431
|
414
|
Property, plant, and equipment -
net
|
25,928
|
25,650
|
Financing lease right-of-use
assets - net
|
346
|
323
|
Operating lease right-of-use
assets - net
|
1,606
|
1,066
|
Intangible assets - net
|
1,120
|
1,257
|
Goodwill
|
3,294
|
3,294
|
Deferred tax asset
|
1,674
|
1,165
|
Other assets
|
242
|
235
|
Total assets
|
98,550
|
98,991
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
3,410
|
9,683
|
|
Accrued expenses
|
7,768
|
8,495
|
|
Financing lease liability -
current
|
199
|
175
|
|
Operating lease liability -
current
|
342
|
304
|
|
Income tax payable
|
2,099
|
-
|
|
Total current
liabilities
|
13,818
|
18,657
|
Financing lease liability -
long-term
|
110
|
98
|
Operating lease liability -
long-term
|
1,305
|
799
|
Other liabilities
|
82
|
2,311
|
Total liabilities
|
15,315
|
21,865
|
|
|
|
|
Stockholders' equity
|
|
|
|
Preferred stock, US$.001 par
value, 50,000,000 shares authorized, no shares issued and
outstanding
|
-
|
-
|
|
Common stock, US$.001 par value,
80,000,000 shares authorized, 55,550,697 and 55,818,357 shares
issued and 55,499,368 and 55,812,857 shares outstanding at December
31, 2023 and 2022, respectively
|
26
|
26
|
|
Less: treasury stock, shares
51,329 as of December 31, 2023 and 5,500 shares as of December 31,
2022 at cost
|
(213)
|
(39)
|
|
Additional paid in
capital
|
13,253
|
14,625
|
|
Retained earnings
|
72,498
|
64,325
|
|
Other comprehensive
loss
|
(2,329)
|
(1,811)
|
|
Total stockholders' equity
|
83,235
|
77,126
|
Total liabilities and stockholders' equity
|
98,550
|
98,991
|
|
|
|
|
See Notes to consolidated
financial statements.
|
|
|
|
|
|
|
| |
Consolidated Statements of Comprehensive
Income
|
|
|
For the years ended December 31,
2023 and 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December
31,
|
|
|
2023
|
2022
|
|
|
US$ 000
|
US$ 000
|
|
|
except share and per share
data
|
except share and per share
data
|
|
|
|
|
Revenue
|
120,699
|
133,590
|
Cost of sales
|
53,343
|
57,431
|
Gross profit
|
67,356
|
76,159
|
|
|
|
|
Operating expenses
|
|
|
|
Sales, marketing and customer
support
|
14,742
|
14,289
|
|
Engineering and product
development
|
2,679
|
2,600
|
|
General and
administrative
|
16,340
|
16,170
|
|
Total operating
expenses
|
33,761
|
33,059
|
|
|
|
|
Operating income
|
33,595
|
43,100
|
Other income (expense)
|
|
|
|
Interest expense
|
(19)
|
(18)
|
|
Interest income
|
196
|
62
|
|
Foreign exchange impact
|
(731)
|
(1,342)
|
|
Other
|
196
|
(1,001)
|
Income before income taxes
|
33,237
|
40,801
|
|
|
|
Provision for income taxes
|
5,259
|
9,682
|
|
|
|
Net income
|
27,978
|
31,119
|
|
|
|
Other comprehensive income
|
|
|
|
Cumulative translation
adjustment
|
(518)
|
658
|
Comprehensive income
|
27,460
|
31,777
|
|
|
|
|
Earnings per common share
|
|
|
Earnings per share -
basic
|
0.50
|
0.56
|
Earnings per share -
diluted
|
0.50
|
0.55
|
|
|
|
|
Weighted average number of common shares
outstanding
|
|
|
Basic
|
55,735,120
|
55,947,900
|
|
Diluted
|
56,352,673
|
56,609,093
|
|
|
|
|
See Notes to consolidated
financial statements.
|
|
|
Consolidated Statements of Changes in Stockholders'
Equity
|
|
|
For the years ended December 31,
2023 and 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
Treasury
stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
Additional
paid-in
capital
|
|
Amount
|
Retained
earnings
|
Other
Comprehensive
income
(loss)
|
Total Stockholders'
equity
|
|
|
Shares
|
US$ 000
|
US$ 000
|
Shares
|
US$ 000
|
US$ 000
|
US$ 000
|
US$ 000
|
|
Balance - January 1, 2022
|
56,246,964
|
26
|
16,769
|
207,040
|
(848)
|
62,187
|
(2,469)
|
75,665
|
|
Cumulative translation
adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
658
|
658
|
|
Net income
|
-
|
-
|
-
|
-
|
-
|
31,119
|
-
|
31,119
|
|
Stock-based
compensation
|
-
|
-
|
1,165
|
-
|
-
|
-
|
-
|
1,165
|
|
Dividend
|
-
|
-
|
-
|
-
|
-
|
(28,981)
|
-
|
(28,981)
|
|
Treasury stock
|
(483,960)
|
-
|
(2,236)
|
(483,960)
|
2,236
|
-
|
-
|
-
|
|
RSUs settled for cash
|
-
|
-
|
(1,073)
|
-
|
-
|
-
|
-
|
(1,073)
|
|
Share buy-back
|
-
|
-
|
-
|
282,420
|
(1,427)
|
-
|
-
|
(1,427)
|
|
New Shares Issued
|
55,353
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Balance - December 31,
2022
|
55,818,357
|
26
|
14,625
|
5,500
|
(39)
|
64,325
|
(1,811)
|
77,126
|
|
Cumulative translation
adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
(518)
|
(518)
|
|
Net income
|
-
|
-
|
-
|
-
|
-
|
27,978
|
-
|
27,978
|
|
Stock-based
compensation
|
-
|
-
|
985
|
-
|
-
|
-
|
-
|
985
|
|
Dividend
|
-
|
-
|
-
|
-
|
-
|
(19,805)
|
-
|
(19,805)
|
|
Treasury stock
|
(327,806)
|
-
|
(1,202)
|
(327,806)
|
1,202
|
-
|
-
|
-
|
|
RSUs settled for cash
|
-
|
-
|
(1,155)
|
-
|
-
|
-
|
-
|
(1,155)
|
|
Share buy-back
|
-
|
-
|
-
|
373,635
|
(1,376)
|
-
|
-
|
(1,376)
|
|
New shares issued
|
60,146
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Balance - December 31, 2023
|
55,550,697
|
26
|
13,253
|
51,329
|
(213)
|
72,
498
|
(2,329)
|
83,235
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to consolidated
financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Consolidated Statements of Cash Flows
|
|
|
For the years ended December 31,
2023 and 2022
|
|
|
|
|
|
Year ended December 31,
|
|
2023
US$ 000
|
2022
US$ 000
|
|
Cash flows from operating activities:
|
|
|
Net income
|
27,978
|
31,119
|
Adjustments to reconcile
net income to net cash provided by operating activities:
|
|
|
Deferred
taxes
|
(510)
|
(993)
|
Depreciation
and amortization
|
1,560
|
1,457
|
Non-cash lease expense
|
319
|
304
|
Bad debt
expense (recoveries)
|
(4)
|
247
|
Stock-based
compensation
|
985
|
1,165
|
Gain/Loss on
disposal of property and equipment
|
40
|
(158)
|
Working capital
changes:
|
|
|
Accounts
receivable
|
1,468
|
(2,824)
|
Inventories
|
(526)
|
(4,556)
|
Prepaid
expenses and other assets
|
(366)
|
(273)
|
Other
assets
|
(7)
|
159
|
Accounts
payable, accrued expenses and other liabilities
|
(9,292)
|
481
|
Income taxes
receivable/ payable
|
2,801
|
1,674
|
Net cash provided by operating
activities
|
24,446
|
27,802
|
|
|
|
Cash flows from investing activities:
|
|
|
Proceeds from sale of
property and equipment
|
-
|
143
|
Property and equipment
purchases
|
(1,740)
|
(5,367)
|
Net cash used in investing
activities
|
(1,740)
|
(5,224)
|
|
|
|
Cash flows from financing activities:
|
|
|
Payment of
dividend
|
(19,805)
|
(28,981)
|
RSUs settled for
cash
|
(1,155)
|
(1,073)
|
Stock buy-back
|
(1,376)
|
(1,427)
|
Payments under financing
leases
|
(240)
|
(202)
|
Net cash used in financing
activities
|
(22,576)
|
(31,683)
|
|
|
|
Effect of exchange rates on cash
and cash equivalents
|
(518)
|
658
|
|
|
|
Net decrease in cash and cash
equivalents
|
(388)
|
(8,447)
|
|
|
|
Cash and cash
equivalents:
|
|
|
Beginning of year
|
33,699
|
42,146
|
End of year
|
33,311
|
33,699
|
|
|
|
See Notes to consolidated
financial statements.
|
|
|
Notes to the Consolidated Financial
Statements
As of December 31, 2023 and
2022
1. Organization and description of
business
Nature of
business
Somero Enterprises, Inc. (the
"Company" or "Somero") designs, assembles, remanufactures, sells
and distributes concrete levelling, contouring and placing
equipment, related parts and accessories, and training services
worldwide. Somero's Operations and Support Offices are located in
Michigan, USA with Global Headquarters and Training Facilities in
Florida, USA. Sales and service offices are located in
Chesterfield, England; Shanghai, China; New Delhi, India; and
Melbourne, Australia.
2. Summary of significant accounting
policies
Basis of
presentation
The consolidated financial
statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of
America using the accrual basis of accounting.
Principles of
consolidation
The consolidated financial
statements include the accounts of Somero Enterprises, Inc. and its
subsidiaries. All significant intercompany transactions and
accounts have been eliminated in consolidation.
Use of
estimates
The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America (US GAAP) requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Cash and cash
equivalents
Cash includes cash on hand, cash
in banks, and temporary investments with a maturity of three months
or less when purchased. The Company maintains deposits
primarily in one financial institution, which may at times exceed
amounts covered by insurance provided by the U.S. Federal Deposit
Insurance Corporation ("FDIC"). The Company has not
experienced any losses related to amounts in excess of FDIC
limits.
Restricted
Cash
Restricted cash of approximately
US$ 251,000 is included in "Cash and cash equivalents" on the
consolidated balance sheet as of December 31, 2023. This represents
cash deposited by the Company into a guaranteed deposit account and
designated as collateral for the building lease in Australia in
accordance with the lease agreement.
Accounts receivable and
allowances for doubtful accounts
Financial instruments which
potentially subject the Company to concentrations of credit risk
consist primarily of accounts receivable. The Company's accounts
receivable are derived from revenue earned from a diverse group of
customers. The Company performs credit evaluations of its
commercial customers and maintains an allowance for doubtful
accounts receivable based upon the expected ability to collect
accounts receivable. Allowances, if necessary, are
established for amounts determined to be uncollectible based on
estimate of future losses. As of December 31, 2023 and 2022,
the allowance for doubtful accounts was approximately US$ 1,862,000
and US$ 1,780,000, respectively. Bad debt expense (recovery) was
US$ (4,000) and US$ 247,000 in 2023 and 2022, respectively. The
opening balance of accounts receivable at January 1, 2022 was
$8,152,000, which includes $461,000 of non-current accounts
receivable.
Inventories
Inventories are stated using the
first in, first out ("FIFO") method at the lower of cost or net
realizable value ("NRV"). Provision for potentially obsolete or
slow-moving inventory is made based on management's analysis of
inventory levels and future sales forecasts. As of December
31, 2023 and 2022, the provision for obsolete and slow-moving
inventory was US$ 707,000 and US$ 643,000,
respectively.
Intangible assets and
goodwill
Intangible assets consist
primarily of customer relationships, trademarks and patents, and
are carried at their fair value when acquired, less accumulated
amortization. Intangible assets are amortized using the
straight-line method over a period of three to seventeen years,
which is their estimated period of economic benefit.
Goodwill is not amortized but is
subject to impairment tests on an annual basis, and the Company has
chosen December 31 as its periodic assessment date. Goodwill
represents the excess cost of the business combination over the
Company's interest in the fair value of the identifiable assets and
liabilities. Goodwill arose from the Company's prior sale from
Dover Corporation to The Gores Group in 2005 and the purchase of
the Line Dragon, LLC business assets in January
2019.
Revenue
recognition
The Company generates revenue by
selling equipment, parts, accessories, service agreements and
training. The Company recognizes revenue for equipment, parts and
accessories when it satisfies the performance obligation of
transferring the control to the customer. For product sales where
shipping terms are FOB shipping point, revenue is recognized at a
point in time upon shipment. For arrangements which include
FOB destination shipping terms, revenue is recognized at a point in
time upon delivery to the customer. The Company recognizes the
revenue for service agreements and training at a point in time once
the service or training has occurred.
As of December 31, 2023 and 2022
there are US$ 600,000 and US$ 582,000, respectively, of extended
service agreement liabilities. The opening balance of extended
service agreement liabilities at January 1, 2022 was US$ 517,000.
During the years ended December 31, 2023 and 2022, US$ 451,000 and
US$ 425,000, respectively, of revenue was recognized related to the
amounts recorded as liabilities on the consolidated balance sheets
in the prior year (deferred contract revenue).
As of December 31, 2023 and 2022,
there are US$ 1,635,000 and US$ 2,180,000, respectively, in
customer deposit liabilities for advance payments received during
the period for contracts expected the following period. The
opening balance of customer deposit liabilities for advance
payments received at January 1, 2022 was US$ 4,009,000. As of the
year ended December 31, 2023 and 2022, there are no significant
contract costs such as sales commissions or costs deferred.
Interest income on financing arrangements is recognized as interest
accrues, using the effective interest method.
Warranty
liability
The Company provides warranties on
all equipment sales ranging from 60 days to three years, depending
on the product. Warranty liabilities are estimated net of the
warranty passed through to the Company from vendors, based on
specific identification of issues and historical experience and is
recorded in accrued expenses in the accompanying consolidated
balance sheets.
|
US$ 000
|
Balance, January 1, 2022
|
(1,986)
|
Warranty charges
|
808
|
Accruals
|
(270)
|
Balance, December 31,
2022
|
(1,448)
|
|
|
|
|
|
|
|
|
|
US$ 000
|
Balance, January 1, 2023
|
(1,448)
|
Warranty charges
|
986
|
Accruals
|
(828)
|
Balance, December 31,
2023
|
(1,290)
|
Property, plant, and
equipment
Property, plant and equipment is
stated at cost, net of accumulated depreciation and amortization.
Land is not depreciated. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets,
which is 31.5 to 40 years for buildings (depending on the nature of
the building), 15 years for improvements, and 3 to 10 years for
machinery and equipment.
Income
taxes
The Company determines income
taxes using the asset and liability approach. Tax laws require
items to be included in tax filings at different times than the
items reflected in the financial statements. Deferred tax assets
and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax basis and operating loss and tax credit carry
forwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date. Deferred tax assets are reduced by a
valuation allowance, if necessary, to the extent that it appears
more likely than not that such assets will be unrecoverable.
The Company evaluates tax positions that have been taken or are
expected to be taken in its tax returns and records a liability for
uncertain tax positions. This involves a two-step approach to
recognizing and measuring uncertain tax positions. First, tax
positions are recognized if the weight of available evidence
indicates that it is more likely than not that the position will be
sustained upon examination, including resolution of related appeals
or litigation processes, if any. Second, the tax position is
measured as the largest amount of tax benefit that has a greater
than 50% likelihood of being realized upon
settlement.
Stock-based
compensation
The Company recognizes the cost of
employee services received in exchange for an award of equity
instruments in the financial statements over the period the
employee is required to perform the services in exchange for the
award (presumptively the vesting period). The Company
measures the cost of employee services in exchange for an award
based on the grant-date fair value of the award, which is the stock
price on the grant date multiplied by the number of shares.
Compensation expense related to stock-based payments was US$
985,000 and US$ 1,165,000 for the years ended December 31, 2023 and
2022, respectively. In addition, the Company settled US$
1,155,000 and US$ 1,073,000 in restricted stock units for cash
during the years ended December 31, 2023 and 2022,
respectively.
Transactions in and
translation of foreign currency
The functional currency for the
Company's subsidiaries outside the United States is the applicable
local currency. The preparation of the consolidated financial
statements requires the translation of these financial statements
to USD. Balance sheet amounts are translated at period-end
exchange rates and the statement of comprehensive income accounts
are translated at average rates. The resulting gains or
losses are charged directly to accumulated other comprehensive
income. The Company is also exposed to market risks related
to fluctuations in foreign exchange rates because some sales
transactions, and some assets and liabilities of its foreign
subsidiaries, are denominated in foreign currencies other than the
designated functional currency. Gains and losses from
transactions are included as foreign exchange impact in the
accompanying consolidated statements of comprehensive
income.
Comprehensive
income
Comprehensive income is the
combination of reported net income and other comprehensive income
("OCI"). OCI is changes in equity of a business enterprise during a
period from transactions and other events and circumstances from
non-owner sources not included in net income.
Earnings per
share
Basic earnings per share
represents income available to common stockholders divided by the
weighted average number of common shares outstanding during the
year. Diluted earnings per share reflect additional common
shares that would have been outstanding if dilutive potential
common shares had been issued using the treasury stock
method. Potential common shares that may be issued by the
Company relate to outstanding stock options and restricted stock
units.
Earnings per common share have
been computed based on the following:
|
Year ended
December 31,
|
|
2023
US$
000
|
2022
US$ 000
|
Income available to
stockholders
|
27,978
|
31,119
|
Basic weighted shares
outstanding
|
55,735,120
|
55,947,900
|
Net dilutive effect of stock
options and restricted stock units
|
617,553
|
661,193
|
Diluted weighted average shares
outstanding
|
56,352,673
|
56,609,093
|
Fair value
The carrying values of cash and
cash equivalents, accounts receivable, accounts payable, and other
current assets and liabilities approximate fair value because of
the short-term nature of these instruments.
Recently Adopted Accounting
Guidance
In June 2016, the Financial
Accounting Standards Board ("FASB") issued Accounting Standards
Update ("ASU" or "standard") 2016-13, Financial Instruments -
Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments. Subsequently, the FASB issued several
clarifying standard updates to clarify and improve the ASU. These
ASUs significantly change how entities will measure credit losses
for most financial assets and certain other instruments that are
not measured at fair value through net income. The most significant
change in this standard is a shift from the incurred loss model to
the expected loss model that will be based on an estimate of
current expected credit loss ("CECL"). Under the standard,
disclosures are required to provide users of the financial
statements with useful information in analyzing an entity's
exposure to credit risk and the measurement of credit losses.
Financial assets held by the Company that are subject to the
guidance in Topic 326 were trade accounts receivable.
The Company adopted the standard
effective January 1, 2023. The impact of the adoption was not
considered material to the financial statements and primarily
resulted in new and enhanced disclosures only.
3. Inventories
Inventories consisted of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
US $ 000
|
|
US $ 000
|
Raw material
|
10,607
|
|
11,393
|
Finished goods and work in
process
|
5,161
|
|
5,768
|
Remanufactured
|
|
|
3,607
|
|
1,688
|
Total
|
|
|
|
19,375
|
|
18,849
|
4. Goodwill and intangible assets
Goodwill represents the excess of
the cost of a business combination over the fair value of the net
assets acquired. The Company is required to test goodwill for
impairment, at the reporting unit level, annually and when events
or circumstances indicate the fair value of a unit may be below its
carrying value. The results of the qualitative assessment
indicated that goodwill was not impaired as of December 31, 2023
and 2022, and that the value of patents and other intangibles were
not impaired as of December 31, 2023 and 2022. The
following table reflects other intangible assets:
|
|
Weighted
average
|
Year ended December 31,
|
|
|
Amortization
|
2023
|
2022
|
|
|
Period
|
US$ 000
|
US$ 000
|
Capitalized cost
|
Patents
|
12
years
|
19,247
|
19,247
|
|
Intangible Assets
|
|
7,434
|
7,434
|
|
|
|
26,681
|
26,681
|
Accumulated amortization
|
Patents
|
12
years
|
18,770
|
18,721
|
|
Intangible Assets
|
|
6,791
|
6,703
|
|
|
|
25,559
|
25,424
|
Net carrying costs
|
Patents
|
12
years
|
477
|
526
|
|
Intangible Assets
|
|
643
|
731
|
|
|
|
1,120
|
1,257
|
|
|
|
|
|
|
|
| |
Amortization expense associated
with the intangible assets in each of the years ended December 31,
2023 and 2022 was approximately US$ 135,000 and US$ 135,000,
respectively. The amortization expense for each of the next
five years will be US$ 135,000 and the remaining amortization
thereafter will be US$ 445,000.
5. Property, plant, and equipment
Property, plant, and equipment
consist of the following:
|
Year ended
December 31,
|
|
|
2023
|
2022
|
|
|
US$ 000
|
US$ 000
|
|
|
|
|
|
Land
|
864
|
864
|
|
Building and
improvements
|
25,465
|
24,812
|
|
Machinery and equipment
|
8,487
|
8,744
|
|
|
34,816
|
34,420
|
|
Less: accumulated
depreciation and amortization
|
(8,888)
|
(8,770)
|
|
|
25,928
|
25,650
|
|
|
|
|
| |
Depreciation expense for the years
ended December 31, 2023 and 2022 was approximately US$ 1,425,000
and US$ 1,322,000, respectively.
6. Line of credit
In August 2022, the Company
updated its credit facility to a US$ 25.0m secured revolving line
of credit, with a maturity date of August 2027. The interest
rate on the revolving credit line is based on the BSBY Index plus
1.25%. The Company's credit facility is secured by
substantially all its business assets. No amounts were drawn under
the secured revolving line of credit in the years ended December
31, 2023 or 2022.
Interest expense for the years
ended December 31, 2023 and 2022 was approximately US$ 19,000 and
US$ 18,000, respectively, and relates primarily to interest costs
on leased vehicles.
7. Retirement program
The Company has a savings and
retirement plan for its employees, which is intended to qualify
under Section 401(k) of the US Internal Revenue Code ("IRC"). This
savings and retirement plan provides for voluntary contributions by
participating employees, not to exceed maximum limits set forth by
the IRC. The Company's matching contributions vest
immediately. The Company contributed approximately US$
1,039,000 to the savings and retirement plan during 2023 and
contributed US$ 1,058,000 during 2022.
8. Leases
The Company leases property,
vehicles, and equipment under leases accounted for as operating and
finance leases. The leases have remaining lease terms of less than
1 year to 9 years, some of which include options for renewal. The
exercise of these renewal options is at the sole discretion of the
Company. The right-of-use assets and related liabilities presented
on the consolidated balance sheet, reflect management's current
expectations regarding the exercise of renewal options. Some of our
building leases have additional fees related to maintenance costs,
property taxes, etc. We have elected the practical expedient not to
separate lease and nonlease components for all of our building
leases. In addition, we have elected the short-term lease
practical expedient related to leases of various equipment which
the lease term is less than 12 months. The components
for lease expense were as follows as of December 31,
2023:
|
US$ 000
|
Operating lease cost
|
407
|
Finance lease cost:
|
Amortization of right-of-use assets
|
319
|
Interest
on lease liabilities
|
17
|
Total finance lease
cost
|
336
|
As of December 31, 2023, the
weighted average discount rate for finance and operating leases was
5.4% and 5.3%, respectively, and the weighted average remaining
lease term for finance and operating leases was 1.8 years and 6.1
years, respectively.
Maturities of lease liabilities
are as follows for the years ended:
|
Operating
Leases
|
Finance
Leases
|
|
US$ 000
|
US$ 000
|
2024
|
421
|
210
|
2025
|
311
|
80
|
2026
|
311
|
27
|
2027
|
311
|
8
|
2028
|
186
|
-
|
Thereafter
|
386
|
-
|
Total
|
1,926
|
325
|
Less imputed interest
|
(279)
|
(16)
|
Total
1,647
309
9. Supplemental cash flow and non-cash financing
disclosures
|
Year ended December
31,
|
|
2023
|
2022
|
|
US$ 000
|
US$ 000
|
Cash paid for interest
|
19
|
18
|
Cash paid for taxes
|
4,858
|
8,806
|
Finance lease liabilities arising
from obtaining right-of-use assets
|
35
|
(37)
|
Operating lease liabilities arising
from obtaining right-of-use assets
|
544
|
(513)
|
|
|
|
10. Business and credit concentration
The Company's line of business
could be significantly impacted by, among other things, the state
of the general economy, the Company's ability to continue to
protect its intellectual property rights, and the potential future
growth of competitors. Any of the foregoing may significantly
affect management's estimates and the Company's performance.
At December 31, 2023 and 2022, the Company had three customers
which represented 32% and five customers which represented 42% of
total accounts receivable, respectively.
11. Allowance for Credit Losses
The allowance for credit losses
for accounts receivable and the related activity as of December
31:
|
2023
|
2022
|
|
US$ 000
|
US$ 000
|
Beginning balance
|
1,780
|
1,638
|
Provision for credit
losses
|
9
|
185
|
Write-offs
|
(52)
|
(43)
|
Recoveries
|
125
|
-
|
Ending balance
|
1,862
|
1,780
|
|
|
|
12. Commitments and contingencies
The Company has entered into
employment agreements with certain members of senior
management. The terms of these are for renewable one-year
periods and include non-compete and non-disclosure provisions as
well as provide for defined severance payments in the event of
termination or change in control.
The Company is also subject to
various unresolved legal actions which arise in the normal course
of its business. Although it is not possible to predict with
certainty the outcome of these unresolved legal actions or the
range of possible losses, the Company believes these unresolved
legal actions will not have a material effect on its consolidated
financial statements.
13. Income taxes
|
Year ended December
31,
|
|
2023
US$ 000
|
2022
US$ 000
|
Current Income Tax
|
|
|
Federal
|
4,133
|
8,703
|
State
|
1,286
|
1,332
|
Foreign
|
349
|
640
|
Total current income tax
expense
|
5,768
|
10,675
|
Deferred tax benefit
|
|
|
Federal
|
(474)
|
(820)
|
State
|
(35)
|
(89)
|
Foreign
|
-
|
(84)
|
Total deferred tax
benefit
|
(509)
|
(993)
|
Total tax provision
|
5,259
|
9,682
|
|
|
|
As of December 31, 2023 and 2022,
the effects of temporary differences that give rise to the deferred
tax assets are as follows:
|
Year ended December
31,
|
|
2023
US$ 000
|
2022
US$ 000
|
Deferred tax assets
|
|
|
Bad debt allowance
|
317
|
349
|
Inventory
|
283
|
325
|
Accrued expenses
|
405
|
343
|
UK intangibles
|
146
|
146
|
Stock compensation
|
377
|
386
|
Italy - NOL
|
454
|
385
|
Lease liability
|
26
|
43
|
Capital research
expenditures
|
1,155
|
683
|
Other
|
521
|
494
|
Total deferred tax
assets
|
3,684
|
3,154
|
Deferred tax
liabilities
|
|
|
Prepaid insurance
|
(158)
|
(149)
|
Fixed assets
|
(859)
|
(783)
|
Intangible assets
|
(502)
|
(631)
|
Right of use asset
|
(37)
|
(41)
|
Total deferred tax
liabilities
|
(1,556)
|
(1,604)
|
Valuation allowance
|
(454)
|
(385)
|
Total net deferred tax
asset
|
1,674
|
1,165
|
A reconciliation of the income tax
provision with the amount of tax computed by applying the U.S.
federal statutory rate to pretax income follows:
Year ended
December 31,
|
2023
US$ 000
|
2022
US$ 000
|
Consolidated income before
tax
|
33,237
|
40,801
|
Statutory rate
|
21%
|
21%
|
Statutory tax expense
|
6,980
|
8,568
|
State taxes
|
909
|
1,007
|
Foreign taxes
|
245
|
723
|
Permanent differences due to stock
options and RSUs
|
(33)
|
(55)
|
Permanent differences due to other
items
|
152
|
344
|
Foreign derived intangible
income
|
(624)
|
(738)
|
Change in valuation
allowance
|
69
|
117
|
Change in reserve
|
(2,193)
|
-
|
Tax credits
|
(182)
|
(158)
|
Other
|
(64)
|
(126)
|
Tax expense
|
5,259
|
9,682
|
As of December 31, 2023, the
Company has US$ 1.89m of foreign loss carryforwards with an
indefinite carryforward life. Management assesses the
recoverability of our deferred tax assets as of the end of each
quarter, weighing all positive and negative evidence, and is
required to establish and maintain a valuation allowance for these
assets if we determine that it is more likely than not that some or
all of the deferred tax assets will not be realized. The weight
given to the evidence is commensurate with the extent to which the
evidence can be objectively verified. If negative evidence exists,
positive evidence is necessary to support a conclusion that a
valuation allowance is not needed. As of December 31, 2023
management has determined that a valuation allowance is currently
needed against the Company's net operating loss carryforward
deferred tax assets.
The Company files income tax
returns in the U.S. federal jurisdiction and various state
jurisdictions. The Company has open years for the tax year 2020 and
forward at the end of December 31, 2023. The Company has open
years related to United Kingdom filings for the tax year 2019, and
open years related to Italian filings for tax years 2018
forward.
The Company adopted the accounting
standard for uncertain tax positions, ASC 740-10, in accordance
with US GAAP, and as required by the standard, the Company
recognizes the financial statement benefit of a tax position only
after determining that the relevant tax authority would more likely
than not sustain the position following an audit. For tax
positions meeting the more likely than not threshold, the amount
recognized in the financial statements is the largest benefit that
has a greater than 50 percent likelihood of being realized upon
ultimate settlement with the relevant tax authority.
Increases or decreases to the
unrecognized tax benefits could result from management's belief
that a position can or cannot be sustained upon examination based
on subsequent information or potential lapse of the applicable
statute of limitation for certain tax positions.
Unrecognized tax benefits - January
1, 2022
|
1,450
|
Increases from positions taken
during prior periods
|
-
|
Increases from positions taken
during current period
|
-
|
Settled positions
|
-
|
Lapse of statute of
limitations
|
-
|
Unrecognized tax benefits -
December 31, 2022
|
1,450
|
|
|
Unrecognized tax benefits - January
1, 2023
|
1,450
|
Increases from positions taken
during prior periods
|
-
|
Increases from positions taken
during current period
|
-
|
Settled positions
|
(1,450)
|
Lapse of statute of
limitations
|
-
|
Unrecognized tax benefits -
December 31, 2023
|
-
|
During the tax year ended December
31, 2023 the Company settled all uncertain tax position that
existed as of December 31, 2022 and, as a result, removed the
unrecognized tax reserve classed as "Other Long-Term Liabilities"
from the Company's Consolidated Balance Sheet.
14. Revenues by geographic region
The Company sells its products to
customers throughout the world. The breakdown by location is
as follows:
|
2023
|
2022
|
|
US$ 000
|
US$ 000
|
United States and U.S.
possessions
|
88,374
|
101,773
|
Rest of World
|
32,325
|
31,817
|
Total
|
120,699
|
133,590
|
15. Stock-based compensation
The Company has stock-based
compensation plans which are described below. The compensation cost
that has been charged against income for the plans was
approximately US$ 985,000 and US$ 1,165,000 for the years ended
December 31, 2023 and 2022, respectively. The income tax
effect recognized for stock-based compensation was US$ 0.2m and US$
0.3m, respectively, for the years ended December 31, 2023 and
2022.
Restricted stock
units
The Company regularly issues
restricted stock units to employees subject to Board
approval. The Company establishes the fair market value of
the restricted stock units at the grant date, based on the stock
price and applicable exchange rate.
A summary of restricted stock unit
activity in 2023 and 2022 is presented below:
|
Shares
|
Grant date fair market value
US$
|
Outstanding at January 1,
2022
|
681,356
|
2,752,120
|
Granted
|
176,808
|
1,133,698
|
Vested or settled for
cash
|
(183,666)
|
(925,674)
|
Forfeited
|
(6,508)
|
(25,000)
|
Outstanding at December 31,
2022
|
667,990
|
2,
935,144
|
|
Shares
|
Grant date fair market value
US$
|
Outstanding at January 1,
2023
|
667,990
|
2,935,144
|
Granted
|
284,437
|
1,217,027
|
Vested or settled for
cash
|
(307,845)
|
(869,737)
|
Forfeited
|
(73,832)
|
(380,981)
|
Outstanding at December 31,
2023
|
570,750
|
2,901,453
|
RSUs settled for cash were US$
1.2m in 2023 and US$ 1.1m in 2022.
As of December 31, 2023, there was
US$ 1,201,000 total unrecognized compensation cost related to
non-vested restricted stock units. Restricted stock unit
expense is being recognized over the three-year vesting
period. The weighted average remaining vesting period is 1.34
years.
16. Employee compensation
The Board approved management
bonuses and profit-sharing payments totaling US$ 1.2m, partly paid
in December 2023 and the remainder to be paid in early 2024, based
upon the Company meeting certain financial targets. Amounts not
paid during 2024, are included in accrued expenses in the
accompanying consolidated balance sheets.
Equity bonus
plan
The Company has an Equity Bonus
Plan, under which eligible senior managers may choose to receive a
percentage of their annual performance bonus in shares of common
stock. In March 2023, the Company issued 21,114 shares
of common stock, valued at US$ 91,000 at the time of grant.
In March 2022, the Company issued 40,467 shares of common stock,
valued at US$ 261,000 at the time of grant.
17. Share buyback
In February 2022 and 2023, the
Board authorized on-market share buyback programs for such number
of its listed shares of common stock as are equal to US$ 2,000,000
for each program. The maximum price paid per common share was
no more than the higher of 105 percent of the average middle market
closing price of common share for the five business days preceding
the date of the share buyback, the price of the last independent
trade and the highest current independent purchase bid. As of
December 31, 2023, the Company purchased 217,919 shares of common
stock for an aggregate value of US$ 765,000 pursuant to the share
buyback program authorized in 2023, and 155,716 shares of common
stock for an aggregate value of US$ 611,000 , which completed the
share buyback program authorized in 2022. The Company
estimates the share buyback program authorized in 2023 will be
completed by the end of H1 2024. In connection with the
Company's share buyback programs authorized in 2023 and 2022,
327,806 shares held in treasury were cancelled in 2023.
18. Subsequent events
In preparing the consolidated
financial statements, the Company has evaluated all subsequent
events and transactions for potential recognition or disclosure
through March 5, 2024, the date the
consolidated financial statements were available for
issuance.
Dividend
In recognition of Somero's strong
performance and the Board of Directors' confidence in the continued
growth of the Company, the Board approved a dividend payout ratio
of 50% of adjusted net income and is pleased to announce a final
2023 dividend of 13.19 US cents per share that will be payable on
May 10, 2024 to shareholders on the register at April 12,
2024. Together with the interim dividend paid in October 2023
of 10.00 US cents per share, this represents a full year regular
dividend to shareholders of 23.19 US cents per share. In
addition, due to the strength of the Company's cash position at the
end of 2023, and upon the review of anticipated future cash
requirements for the business, the Board of Directors' has approved
a supplemental dividend of 7.4 US cents per share that will be paid
together with the final 2023 dividend on May 10, 2024 to
shareholders on the register at April 12, 2024. The combined
dividend payment will total 20.59 US cents per share, representing
a total dividend payment of US$ 11.4m.
Distribution amount:
|
$0.2059 cents per share
|
Ex-dividend date:
|
11 April 2024
|
Dividend record date:
|
12 April 2024
|
Final day for currency
election:
|
26 April 2024
|
Payment date:
|
10 May 2024
|
Further, any participant holding
the security on behalf of beneficial owners resident in a treaty
country with the United States of America can facilitate claims for
tax relief at source for its underlying beneficial owners. In
order to ensure that the appropriate rate of US Withholding Tax is
applied correctly, completed documentation must be provided to the
Depositary, Computershare Investor Services PLC.
Equity bonus plan
In January 2024, the Board
approved the 2023 Equity Bonus Plan, under which eligible senior
managers can elect to receive up to 100% of their 2023 annual
performance bonus in shares of common stock. The Company
expects to issue shares for awards under the 2023 Equity Bonus Plan
in 2024.
Share buyback
In January 2024, the Board
approved a share buyback program, pursuant to which, the Board
intends to carry out an on-market buyback of such number of its
listed shares of common stock as are equal to US$ 2,000,000.
The purpose of the program is to mitigate future dilution resulting
from share issuances under the Company's equity award
programs. The Company estimates that the program will be
fulfilled by the end of 2024.
Other Unaudited Information
Dividend
All dividends, including both
ordinary and supplemental, have the option of being paid in either
GBP or USD subject to the underlying agreements between
shareholders and their brokers which Somero cannot override.
Payments in USD can be paid by Check or through CREST. Payments in
GBP can be paid via Check, CREST and BACS. The default option
if no election is made will be for a USD payment via check. Should
shareholders wish to change their current currency or payment
methods, forms are available through Computhershare Investor
Services PLC at
https://www-uk.computershare.com/Investor/Content/c057a8a7-f4f8-4fcb-a497-836ce2f708d5.
If shares are held as Depositary
Interests through a broker or nominee, the holding company must be
contacted and advised of the payment preferences. Such
requests are subject to the terms and conditions of the broker or
nominee.
Additional information on currency
election and tax withholding can be found at:
https://investors.somero.com/aim-rule-26.
Shareholders can also contact Computershare Investor Services PLC
by telephone at +44 (0370) 702 0000 or
email via webcorres@computershare.co.uk.
Annual General Meeting
The Annual General Meeting of
Stockholders (the "AGM") of the Company will be held at 14530
Global Parkway, Fort Myers, FL 33913 USA on June 18, 2024 at 9:00
am local time. The notice of the AGM shall be released with
the Annual Report and shall include instructions for remote
participation. Stockholders of record at the close of
business on May 17, 2024 will be entitled to receive notice of, and
vote at, the AGM.
5 March 2024
This announcement contains inside information for the
purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of
MAR.