REG - Somero Enterprises - Trading Update

Somero EnterprisesAnnouncement

30/01/2025 07:00

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RNS Number : 1970V  Somero Enterprises Inc.  30 January 2025

30 January 2025

Somero Enterprises, Inc.

("Somero" or "the Company")

Trading Update

Solid trading in H2 driven by revenue from new products

and improved weather conditions

Somero® provides the following update on trading for the financial year ended
31 December 2024.

Trading

The Board is pleased to report improved trading during H2 2024, supported by
excellent operational performance in fulfilling customer orders globally. It
expects the Company to report 2024 revenue of US$ 109.2m, in line with
previous guidance and market expectations, with H2 revenues improving by 10.8%
to $57.4m

As anticipated, FY 2024 revenue reflects the H2 2024 moderation of significant
inclement weather experienced in North America during H1 2024 and the positive
impact of three new products launched in the year, which collectively
contributed approximately US$ 7.6m. A strong finish to the year was achieved
despite a continuation of the previously reported headwinds in the US
including project start delays and pauses caused by elevated interest rates,
labor shortages and concrete rationing. 2024 North America revenues were US$
82.2m (2023: US$ 88.4m).

Revenues in Europe, the Company's second largest market, remained consistent
during H2 2024 reporting full year revenue at US$ 14.6m (2023: US$ 15.1m),
reflecting positive non-residential construction market conditions and a busy
customer base. In a market where demand for environmentally friendly products
is strong, the introduction of Somero's first electric screed, the S-940e, has
been particularly well-received. The Company remains focused on expanding and
strengthening its market presence in European countries where Somero's value
proposition resonates most, driven by efforts to spread awareness of quality
and productivity advantages.

Australia reported a revenue decline of 33% to US$ 6.6m against a record high
in 2023 (2023: US$ 9.9m).  The transition from a dealer model to direct sales
alongside the addition of key sales and support personnel facilitated the
rapid expansion of our in-country product range from 2020 onwards. There was
strong initial uptake, contributing to the exceptional growth seen in recent
years. While we anticipate the long-term growth rate in Australia to normalize
to more sustainable levels, with the non-residential construction market
remaining healthy, there remains opportunity to further deepen market
penetration in the region.

In the Rest of World segment, which comprises regions that each contribute
modest revenue and so are susceptible to volatility period-to-period, sales
declined to US$ 5.8m (2023: US$ 7.3m). The decline was primarily because of
volume reduction relating to the divestment of direct operations in China and
a lower contribution from the Middle East. Performance across other regions in
the segment was stable.

In 2024, parts and service revenue declined 11% on 2023 to US$ 16.8m, with
most of the decline in North America, Australia, and China, commensurate with
the overall volume declines in those regions.

Excluding separation-related expenses, the Board expects the Company to report
2024 adjusted EBITDA of US$ 29.1m. The year-end cash position is anticipated
to be US$ 29.5m reflecting lower net working capital investment. 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 with the revenue contribution
from new products introduced in 2024 including the S-940e, an electric version
of the Company's popular S-940 ride-on machine, the SRS-6s, a new product
filling a product-line market application gap, and the STS-11HC high capacity
spreader, which launched at the end of 2024, collectively contributed
meaningfully to revenue.

The Company continues to advance a pipeline of ideas for new products and
innovations that address customer pain points, including the journey toward
electrification and exploring and implementing new technological advancements
that will enhance our current and future offerings.

From an international expansion standpoint, customer feedback on the Belgium
service center, which became fully operational at the end of H1 2024, has been
overwhelmingly positive. The center enhances the Company's ability to serve
customers in the region and meet the demand for local machine repair and
servicing, strengthening customer satisfaction and positioning us to capture
more business in the region.

CEO Succession

The Board has appointed an executive search firm to identify high quality,
experienced candidates for the role of CEO of the Company. Further updates
will be made in due course, once a suitable candidate has been found.

Outlook

In 2025, the Board expects a healthy non-residential construction market in
the US, supported by customers reporting strong levels of activity and
backlogs, continued meaningful contribution from Europe and Australia, and
additional new product introductions. With consideration to these factors, the
Board expects trading in 2025 to moderately improve on 2024 with commensurate
profits and cash generation.

Somero's final 2024 results announcement is scheduled for release on 11 March
2025.

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 &                                                                                                                  +1 239 210 6500
 CEO
 Enzo LiCausi, CFO
 Howard Hohmann, EVP Sales

 Cavendish Capital Markets Ltd (NOMAD and Broker)                                                                                          +44 (0)20 7220 0500
 Matt Goode/Seamus Fricker/Trisyia Jamaludin (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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