REG - Somero Enterprises - Trading Update

Somero EnterprisesAnnouncement

31/01/2024 07:00

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RNS Number : 4406B  Somero Enterprises Inc.  31 January 2024

31 January 2024

Somero Enterprises, Inc.

("Somero" or "the Company")

Trading Update

Strong trading in H2 driven by healthy North American market,

meaningful contribution from Europe and continued growth in Australia

Somero® provides the following update on trading for the financial year ended
31 December 2023.

Trading

The Board is pleased to report that with good trading and excellent
operational performance in fulfilling customer orders globally during H2 2023,
it expects the Company to report 2023 revenue of US$ 120.7m, in line with
previous guidance and market expectations.

As anticipated, the 2023 revenue expectation reflects the positive impact of
the S-22EZ relaunch at full production on H2 trading and a resilient US
non-residential construction market. A strong finish to the year was achieved
despite ongoing headwinds in the US from concrete supply chain shortages,
elevated interest rates and tightened bank lending, as noted in the Company's
20 June 2023 trading update.  2023 North America revenues were US$ 88.4m
(2022: US$ 101.8m).

Facilitated by the Company's increased strategic focus on and resource
allocation to Europe and Australia, full year trading in both territories
continued to improve year-over-year, driven by sales to new customers and
underpinned by healthy non-residential construction market conditions.
 Notably, following the transition from a dealer model to selling direct in
Australia and the addition of key sales and support personnel, facilitating
the broadening of our products represented in country, sales in Australia grew
18% on 2022 to US$ 9.9m.  Sales in Europe grew to a lesser extent to US$
15.1m compared to US$ 14.9m in 2022, albeit demand for parts and service has
escalated significantly.

In 2023, parts and service revenue grew 9% on 2022 to US$20.5m.  All key
markets contributed to the meaningful growth, particularly Europe and
Australia which grew 19% and 43% on 2022, respectively.

In the Rest of World segment, which comprises regions that each contribute
modest revenue and so are susceptible to volatility period-to-period, sales
were down mostly due to product mix in Latin America and planned volume
decline in China. Except for China, where at the end of the year we completed
the divestment of our direct operations, market conditions in Rest of World
territories were generally positive. Revenues from the Rest of World segment
were US$7.3m (2022: US$8.5m).

Commensurate with the level of expected revenue, the Board expects the Company
to report annual adjusted EBITDA in line with previous guidance and market
expectations of US$ 36.0m. The yearend cash position is expected to be $33.0m,
slightly better than anticipated reflecting lower net working capital. These
estimates remain subject to any audit adjustments.

Strategic Progress

With the introduction of new and innovative products a key component of the
Group's growth strategy, the Board is pleased to announce it has completed the
first step in the long journey toward electrification with the January 2024
launch of the S-940e, an electric version of the Company's popular S-940
ride-on machine. Further demonstrating Somero's commitment to addressing
customer needs, a new product filling a product-line market application gap,
the SRS-6s, was also released in the month, with a third machine scheduled to
be launched later this year.

From an international expansion standpoint, we have secured a new facility in
Belgium to better serve customers in the region and to address the growing
demand for local repair and servicing of machines.  We expect to move into
the facility in Q1 2024 and to be fully operational later in the year.

Outlook

In 2024, the Board expects the US market to remain strong, supported by
customers reporting high levels of activity and healthy backlogs, continued
growth in Europe and Australia, and multiple new product launches.  With
consideration to these factors, the Board expects 2024 will be another highly
profitable year with healthy cash generation, revenues that are comparable to
2023, and EBITDA that reflects modest incremental investment including the new
Belgium service and training center and the annualized impact of strategic
resources added in 2023. This incremental investment is expected to be within
our traditionally targeted US$ 2.0m.

Somero's final 2023 results announcement is scheduled for release on 5 March
2024.

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as retained as part of UK law by virtue of
the European Union (Withdrawal) Act 2018 as amended. Upon the publication of
this Announcement, this inside information is now considered to be in the
public domain.

For further information, please contact:

 Somero Enterprises, Inc.

  www.somero.com (http://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

 

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