Somero Enterprises Inc. Trading Update (4551B)
June 07 2019 - 1:00AM
UK Regulatory
TIDMSOM
RNS Number : 4551B
Somero Enterprises Inc.
07 June 2019
7 June 2019
Somero Enterprises, Inc.
("Somero" or the "Company")
Trading Update
Somero Enterprises, Inc. (the "Company") provides the following
trading update in advance of its upcoming Annual General Meeting
scheduled for 11 June 2019.
Trading during the five month period to the end of May 2019 has
fallen below management's expectations, primarily due to adverse
weather conditions in the US, the Company's largest market. Broad
sections of the US experienced the highest levels of rainfall on
record.*
The record rainfall seen in the US has delayed project starts
which in turn has slowed the pace of equipment purchased by our
customers, the impact of which was seen through historically strong
trading months of March and April. Whilst there was an improvement
in trading to end the month of May, and although the Company
expects weather conditions and therefore trading in the US will
improve throughout the rest of 2019, the Board now does not expect
the Company to fully recapture the shortfall caused by this
extended period of poor weather in the current financial year.
As such, the Company now expects to deliver 2019 revenues of
approximately US $87m, EBITDA of approximately US $28m, and expects
to have net cash at 31 December 2019 of approximately US $18m,
after one-off investments of $4.0 million related to building
expansions for the Skyscreed (R) 25 and the Fort Myers Training
Facility as well as the $2.0 million acquisition of Line
Dragon.
Somero continues to see growth opportunities across all its
markets, particularly in the US, where customer optimism for 2019
and beyond is reinforced by extended backlogs and healthy new
project starts, albeit much delayed. The positive US market
conditions described in the Company's 14 March 2019 trading update
have not changed and whilst we anticipate it will take some time
for momentum to rebuild, the level of work in front of our
customers remains significant. The Company's strong balance sheet,
flexible operating model and diversity across territories gives the
Board confidence for the medium to long term.
In the Company's other main markets, Europe and China, as well
as in the Rest of World territories, trading in 2019 is at
comparable levels to 2018, and the Company continues to see
opportunities for growth in H2. Growth in India has been steady, as
the Company continues to gain traction in the region. The Middle
East and Latin America are trading below 2018 levels, however the
Company expects improvement in H2 2019, notwithstanding the
political uncertainly and economic challenges seen in these
regions.
Given the aforementioned positive market indicators, Somero is
continuing to make long-term investments for growth by proceeding
with the planned expansions of the Houghton Operations and Support
Offices and Fort Myers Training Facility and by continuing to add
product development, engineering and sales resources focused on new
products. The Company is pleased with progress on the new SkyScreed
(R) 25, having sold the first unit and with continued strong
interest in the product. Traction gained so far with the SkyScreed
(R) 25 is in line with what the Company would expect when bringing
a disruptive product of this nature to market. In addition, the
Company is also pleased with the impact of the SP-16 Concrete Hose
Pulling & Placing System and Line Dragon combination. Despite
the impact of poor weather in the US on sales of these products,
interest in the product line is strong and trading in 2019 has
grown meaningfully compared to 2018.
* An average of 36.2 inches of precipitation has fallen over the
Lower 48 from May 2018 to April 2019 representing the highest level
recorded in over 120 years and six inches over average.
Source: National Oceanic and Atmospheric Administration data
https://www.ncdc.noaa.gov/temp-and-precip/us-maps/
Jack Cooney, CEO of Somero, commented:
"While we are disappointed to revise our outlook for full year
expectations in 2019, caused largely by poor weather in the US, we
do not see a fundamental change in our markets and continue to have
an optimistic outlook for the business in 2019 and beyond as our
customers return to more typical levels of productivity. We are
committed to delivering strong profits and healthy cash flows to
our shareholders, while also making sound strategic investments for
long-term growth. We are pleased with the progress we are making
with our new product initiative and remain focused on growing our
portfolio of products to capture new sources of revenue."
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Enquiries:
Somero Enterprises, Inc. www.somero.com
Jack Cooney, CEO +1 239 210 6500
John Yuncza, CFO
Howard Hohmann, EVP Sales
finnCap Ltd (NOMAD and Broker)
Matt Goode (Corporate Finance)
Carl Holmes (Corporate Finance)
Tim Redfern (Corporate Broking) +44 (0)20 7220 0500
Alma PR (Financial PR Advisor) somero@almapr.co.uk
Rebecca Sanders-Hewett +44 (0) 2034 050 205
Susie Hudson
Sam Modlin
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END
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