Somero (SOM) FY20 results presentation

23rd Mar '21 by TamzinPiworld

6 comments 733 reads

Jack Cooney, CEO, John Yuncza, CFO & Enzo LiCausi, VP of Finance outline the results for the period. They achieved a balance between short-term requirements due to CV19 while advancing their long-term strategy. They introduced three new products that contributed immediately to the current year figures and completed expansions of the operation and training facilities, laying the foundation for future growth. The period closed with the strongest cash position in the company’s history and they are well positioned to make investments for long-term growth in new and existing markets. Video & Podcast.

Jack Cooney, CEO:
00:00 Introduction
00:26 2020 in review

John Yuncza, CFO:
02:40 Financial Highlights
04:05 Sales by Territory
08:15 Sales by Product

Enzo LiCausi, VP of Finance:
12:00 Operating Results
14:20 Financial position
15:35 Cash Flows
17:19 Dividend

John Yuncza, CFO:
18:20 Global Growth Strategy
20:05 New products
22:15 Products and Applications
23:33 Training & Expertise
24:20 2021 Outlook

27:00 Q&A

Jack Cooney, CEO:
47:45 Closing remarks

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dmcarver

28th Mar '21

I have just finished listening to the 48-minute presentation on 2020 results and 2021 outlooks.

1. Once again, I am totally impressed with management. Their presentations are a business school demonstration of how a well-run company should operate. General management, marketing, finance, product development, expressed coherently with meaningful slides. This is what lies at the heart of Somero's on-going success.

2. Though the exact dimension of the market cannot be determined, their rough estimate is that they occupy about 90% of the sectors they are interested in, i.e. high-quality sensitive concrete customers. 90%!!!

3. Margins and growth rates are more than dynamic. They are rarely seen.

4. How can this be? Patents, some 80, that protect their competitive, technical advantages backed by innovative drive which leads to new, market-oriented equipment on a regular basis. Patents they are quick to defend and, apparently, have never lost a challenge.

5. Well defined market potential attuned to intensive customer feedback. Internet boom of on-line sales requiring vast warehousing, explosive, after-the-pandemic growth in the States, anticipated slower, but no less dynamic European recovery, sanguine long-term view of the Chinese market. New material created to serve niche markets such as quality, high-rise office space.

6.Significant investment in center for training machinery operators for customers lacking sufficient technical personnel.

7. Prolific cash flow and cash reserves committed according to well-defined criteria to shareholder remuneration without ever compromising development requirements.

Conclusion: a rather unique, small business opportunity that, in the light of all the positive features mentioned above, is surely on the radar screen of one or more construction equipment manufacturers; If an acquisition ever occurs, the premium to be paid should be significant. While waiting, the dividend and the quote are to be appreciated.

I have been and will continue to invest on good news which seems to arrive regularly.

Boon

5th Apr '21

I see you have very rose tinted glasses when it comes to Somero Enterprises Inc (LON:SOM)

Not a single negative?

6th Apr '21

I'm waiting for your analysis. I've done my part.

DanTE

23rd May '21

From whatever judgement i can pass off of this result presentation alone, the biggest negative would be their expansion outside of US. It is a small company and there's only so much they can do with their capital, but if they are to grow they need to find more revenue outside of US. If the products they offer have such a big competitive advantage, the worlds need to find out about it and put it to good use otherwise their opportunities are limited.

smilingmickey

15th Jun '21

I've posted about Somero numerous times, and remain a long term holder.

If you are looking for a Company with a very high market share, a moat to gloat over, in a niche growing market, that generates good cash levels and pays out large, rising dividends, look no further.

WhaleHQ

17th Jun '21

Thanks for your summary. I'm coming back around to this after holding it for a short while some years ago and being disappointed with the much heralded Chinese growth story.

I'm seeing some evidence of a global labour shortage in construction (certainly in US/ UK and ROI. This I believe is driven by pandemic support benefits and repatriation of foreign labour during the pandemic.

The machine screeds by nature cut down on labour requirements significantly so I can envision that certain concreters may purchase one of Somero's machines to keep up with commitments and take on new work. Presenting a tailwind of sorts.

The other side of this sword is double edged as the labour shortage seemingly extends to all trades e.g. in my world block-layers are a bit of a problem currently. This in isolation may not present much of an issue to the non-resi section of the market that Somero caters for as masonry typically doesn't form a major component of warehouse builds for example but if similar shortages are seen in groundworkers, steel erection crews, precast concrete erectors, cladders etc then we could see a bit of a slowdown in construction generally. This coupled with the ever rising price of materials notably steel may add a some friction to capex.

Somero can't control this however but their screeds seem to solve an issue in their segment of the market, which I suppose is all you can ask for. I've taken a medium position with the attitude that the e-commerce operations (mentioned in the last update) will throw money at solving the above mentioned (potential) issues and with an aim of doing a bit more research into the tolerances their machines achieve .

Somero (SOM) FY20 results presentation

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TamzinPiworld

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