TIDMSOM
RNS Number : 3893M
Somero Enterprises Inc.
21 January 2021
21 January 2021
Somero Enterprises, Inc.
("Somero" or the "Company")
Trading Update
Strong finish to 2020 significantly exceeding previous guidance
driven by healthy North American market
Somero(R) provides the following update on trading for the
financial year ended 31 December 2020 (the "Period").
The Board is pleased to report that with strong, profitable
trading in the fourth quarter, and in particular December, that
exceeded the Board's previous expectations, revenues for the
six-month period ended 31 December 2020 significantly increased
from H1 2020 and surpassed revenues reported pre-pandemic in H2
2019, driven by robust trading activity in the Company's largest
market, North America.
As a result, the Board is pleased to report that it now expects
to report revenue of approximately US $88.0m for the Period,
significantly ahead of market expectations of US$ 80.0m, and annual
adjusted EBITDA of approximately US$ 26.0m, also significantly
ahead of market expectations of US$ 21.0m. These estimates remain
subject to any audit adjustments.
In addition to the stronger than expected trading and
corresponding profits, H2 2020 profits converted efficiently to
cash flow due to particularly strong collection of accounts
receivable and a solid reduction of inventory from the levels
reported as at 30 June 2020 in the Interim Results announcement.
The combined impact of these two factors has resulted in a one-time
benefit of approximately US$ 5.0m to H2 2020 operating cash flow,
resulting in net cash as at 31 December 2020 of approximately US$
35.0m, substantially ahead of previous guidance of US$ 26.0m. As a
result of this significantly improved net cash balance, the Board
expects to declare a supplemental dividend declared in accordance
with the Company's supplementary dividend policy adopted on March
14, 2018.
Growth from Production Innovation
The Company continues to make meaningful progress executing its
product innovation growth strategy. During the Period the Company
introduced three new products, the SkyScreed(c) 36, the SRS-4
boomed-screed, and the Somero Broom + Cure(TM) . We are pleased to
report that on a combined basis these products contributed over US$
7.0m to revenue in the Period. This strong performance reflects
rapid market acceptance of the new products, highlighting the
effectiveness of the Company's customer-driven product development
strategy. With regard to the SkyScreed(c) product line, the
loosening of US job-site COVID-19 restrictions in H2 2020 enabled
the Company to perform job-site product demonstrations that are
critical to the selling process. As a result, H2 2020 SkyScreed(c)
revenues were US$ 0.9m, all relating to sales of the newly released
SkyScreed(c) 36.
On the strength of the H2 2020 performance, all product
categories grew compared to 2019 on a full-year basis, with the
exception of the Boomed-screed category, reflecting well-balanced
trading during the Period. While the Boomed-screed category
declined compared to 2019, H2 2020 trading for this product line
reflected significant improvement compared to H1 2020. As
mentioned, new products made a material contribution to H2 2020
trading in addition to strong trading performance in the Ride-on
screeds and Somero Line Dragon product lines.
Regional breakdown
On a full-year geographic basis, while only one of the Company's
six regions grew compared to 2019 (North America), revenues from
each of the six regions grew in H2 2020 compared to H1 2020.
North America reported particularly strong H2 2020 trading
reflecting a healthy non-residential construction market that has
remained intact throughout the year. Our positive view of US
non-residential market conditions remains unchanged as we enter
2021 based on consistent customer feedback indicating extended
project backlogs that carry well into 2021.
As expected, European trading improved modestly in H2 2020
compared to H1 2020 but did end lower compared to 2019 on a
full-year basis as COVID-19 restrictions were more impactful on
customer purchasing decisions in this region than in the US.
H2 2020 trading performance in China also improved modestly from
H1 2020 but declined meaningfully compared to 2019 on a full-year
basis as activity in the Company's targeted, quality market segment
remained slow during the period.
Trading activity in the remaining regions (Latin America, Middle
East, and the Rest of World territories) all followed a similar
pattern of H2 2020 improvement compared to H1 2020 but falling
short of full-year 2019 totals. In all non-US regions, while
generally positive market conditions and activity levels were
present in H2 2020, performance in these territories was tempered
due to the broad impact of COVID-19 restrictions to a greater
degree than experienced in the US.
Outlook
As we look forward, we are confident in the long-term growth
opportunity from new products. In support of the effort to
continually expand our product offering, the Board has made the
decision to increase investment in sales and support staff in 2021.
As a result of this investment, the Company expects to report a
meaningful increase to operating costs alongside typical
inflationary cost increases in the Company's operations in 2021.
Although the Board expects modest financial growth in the coming
year, this net investment will temper our profitability in 2021,
but the long term-growth opportunity from new products is
substantial and the business is in a good position to be able to
make this investment now, in order to realize the benefit in future
years.
The Board is pleased with the strong finish to 2020 and looks
forward to 2021 with confidence in the strength of the US market
supported by healthy customer project backlogs carrying over to
2021. The Board also recognizes that while market conditions and
activity levels remain generally positive in non-US regions,
factors impacting each market, including the lingering uncertainty
of COVID-19, temper underlying growth expectations for 2021. Taking
a longer-term view, the Board recognizes the significant long-term
value creation opportunity from the Company's pipeline of new
products and is committed to accelerating investment in sales and
support resources to drive this effort beginning in 2021, a
necessary near-term investment with longer-term benefit. With a
combined view of all these factors, the Board expects 2021 will be
another profitable year with healthy cash generation, modest
revenue growth and EBITDA comparable to 2020 due to the
aforementioned planned investment in resources for future
growth.
The information communicated in this announcement contains
inside information.
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) +44 (0)20 7220 0500
Kate Bannatyne (Corporate Finance)
Tim Redfern (Corporate Broking)
Alma PR (Financial PR Advisor) somero@almapr.co.uk
Rebecca Sanders-Hewett +44 (0) 2034 050 205
David Ison
Sam Modlin
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTSESEESEFSEDF
(END) Dow Jones Newswires
January 21, 2021 02:00 ET (07:00 GMT)
Somero Enterprise (LSE:SOM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Somero Enterprise (LSE:SOM)
Historical Stock Chart
From Apr 2023 to Apr 2024