Somero announced a trading update last year the day before its AGM. As its 2017 AGM is slated for Tuesday 6th June, were the pattern to repeat itself, then we can expect a trading update tomorrow, Monday 5th June.
The data looks less clear cut this time round than for a while.
The US non residential construction data has been showing some growth, but the rate of growth has definitely slowed compared to previous years. The general commentary is that US banks have tightened their commercial loans criteria to new construction, fearing an overheated market.
http://www.forconstructionpros.com/business/press-release/20863405/associated-builders-and-contractors-inc-abc-nonresidential-construction-spending-falls-17-in-april
Having said that I did listen to the Eagle Materials conference call which was talking about strong US cement demand, which is clearly important for concrete.
http://edge.media-server.com/m/p/p3e53e22
Europe - should be strong looking at the data points
My view - there is a structural growth in Ultra flat floors for internet distribution which should help Somero, but there is a US non residential construction cycle that should not be ignored. The data is less clear cut than in the past and with the shares at record highs the risk / reward is less obvious. I remain a holder.
Veg Patch
Good call VegPatch. Text of today's RNS below including announcement of special dividend.
Gus
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5 June 2017
Somero Enterprises, Inc.
("Somero" or the "Company")
AGM Statement
Somero Enterprises, Inc. is pleased to provide an update on trading ahead of its Annual General Meeting to be held on Tuesday 6 June 2017.
Trading Update
Somero is pleased with the broad contributions to the Company's growth in H1, which has been driven particularly by strong trading in Europe, continuing the momentum in the territory from 2016, and by solid contributions from the Middle East, Latin America and our Rest of World territories. In North America, while H1 trading in 2017 has been flat compared to the prior year due in part to poor weather across the US that has delayed numerous project starts and ongoing political uncertainty, we remain encouraged by healthy market fundamentals in the US that are reflected by the high-level of activity and extended project backlogs our customers continue to report. In China, trading at the start of the year has been slow but we have seen signs of improvement and early traction with our new entry-level products.
On a product basis, sales of Ride-On screeds and the recently launched 3rd generation 3-D Profiler System continue to be strong, and the Company is also encouraged by early opportunities seen with the recently launched S-158 in China and the SP-16 Concrete Hose Puller. The mix of sales of our other products is consistent with our expectations.
The Company continues to make long-term investments that support future growth by hiring additional sales, customer support, and engineering personnel in 2017. The added headcount creates a need for additional office space in our Fort Myers, Florida headquarters. As a result, the Board has approved plans to build a US $1.3M expansion to the Company's Fort Myers headquarters to accommodate planned growth. The building project will be completed in H1 2018, with the majority of the cost expended in 2018.
The Company remains encouraged by the positive trading environment across our footprint, the growth opportunities visible in North America, Europe, Middle East, Latin America and our Rest of World territories, and the prospects for improvement in China for the remainder of 2017. This constructive, positive environment, combined with continued solid margin performance, cost management, and healthy operating cash flow generation means the Company's trading to date is in-line with market expectations for the full year ending 31 December 2017.
Special Dividend
As announced in its 2016 Results Announcement on 15 March 2017, the Board has been reviewing the Company's net cash position alongside the cash requirements for current business needs and future investment. Following completion of this review, the Board is pleased to announce that it will be distributing $7.5m in the form of a special dividend representing a special dividend per share of $0.133 (the "Special Dividend"). The quantum of the Special Dividend reflects the Board's confidence in the medium-term outlook for the Company, and was based on the Board's consideration of a number of factors including the Company's 2016 year-end net cash balance of $20.2m, the Company's intention to maintain an appropriate net cash buffer combined with operational and non-operational capital requirements. The Special Dividend will be paid on 14 August 2017 to shareholders on the register as at 28 July 2017.
The Board will continue to maintain an appropriate net cash buffer for the Company, the quantum of which will depend on the Board's view of the outlook for the Company and its end markets. The Board will consider future Special Dividends if the Company's net cash position moves materially ahead of the Board's view of an appropriate net cash buffer.
For further information, please contact:
