REG - Somero Enterprises - Trading Update

Somero EnterprisesAnnouncement

26/01/2022 07:05

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RNS Number : 6274Z  Somero Enterprises Inc.  26 January 2022

26 January 2022

Somero Enterprises, Inc.

("Somero" or "the Company")

 

Trading Update

Strong finish to 2021 that exceeds previous guidance, healthy North American
market drives results

Somero® provides the following update on trading for the financial year ended
31 December 2021 (the "Period").

The Board is pleased to report that with strong, profitable trading and
excellent operational performance to deliver on customer orders in the fourth
quarter, and in particular December, it now expects the Company to report 2021
revenue, EBITDA, and year-end cash ahead of guidance provided in the Company's
7 December 2021 trading update. The Board expects the Company to report
revenue of approximately US $133.0m (+50% v 2020) ahead of previous guidance
of US$ 130.0m, annual adjusted EBITDA of approximately US$ 48.0m (+83% v 2020)
ahead of previous guidance of US$ 45.0m, and ending cash of approximately US$
42.0m (+18% v 2020) ahead of previous guidance of US$ 39.0m. These estimates
remain subject to any audit adjustments.

Leading Through Production Innovation

The Company made meaningful progress executing its product innovation growth
strategy during the Period completing another active year of new product
development. In June 2021, the Company launched the SkyStrip® high-rise
structural shoring plywood removal solution, a disruptive product for the
high-rise structural market. In 2021, the Company completed development of the
S-PS50, a large boomed-screed that provides a mechanical alternative to the
traditional manual process used to level concrete in tilt-up panel casting
applications. Also in 2021, the Company completed development of the S-28EZ,
the next generation large boomed-screed that replaces the S-22EZ.

The SkyScreed, SkyStrip and Somero Broom+Cure(TM), all recently launched
products, contributed a combined US$ 1.8m to H2 2021 revenues and US$ 3.2m to
the Period, representing an increase of US$ 1.0m in 2021 revenues compared to
2020. H2 2021 SkyScreed(©) sales were US$ 0.7m, an improvement from H1 2021
that reflects a modestly higher volume of jobsite product demonstrations,
critical to the selling process, during the last six months of the year. The
Company sees a significant opportunity in the high-rise structural market and
expects continued, measured progress in penetrating it in 2022 and beyond. The
Company also remains focused on identifying other opportunities to expand the
product offering, such as with the recent Somero Broom+Cure(TM) and just
introduced S-PS50, to increase the Company's addressable market and to create
a runway for long-term growth.

Regional and Product Breakdown

North America reported particularly strong trading results in H2 2021,
representing improvement from H1 2021 revenues, to end a record-breaking year.
In North America, full-year 2021 revenues grew an extraordinary 50% from the
US$ 70.7m reported in 2020, robust trading performance that reflects the
healthy, highly active US non-residential construction market in place
throughout the year. Entering 2022, US non-residential market conditions
remain positive, a view supported by customers reporting extended project
backlogs that carry well into 2022.

H2 2021 trading in Europe was comparable to H1 2021 and on a full-year basis
in 2021 revenues grew approximately 40% from the US$ 8.7m reported in 2020, a
meaningful contribution to growth for the year. As in the US, European
non-residential market conditions remain positive entering 2022, similarly
supported by reported customer project backlogs.

H2 2021 trading in Australia increased compared to H1 2021, and increased
significantly compared to H2 2020, to result in full-year 2021 revenues that
grew more than 450% from the US$ 1.1m reported in 2020. This impressive
performance was driven by an effective in-country direct sales and support
team that capitalized on positive market conditions and favorable currency
exchange rates to significantly improve the contribution from this market.
Going forward, the Australian market is expected to provide a meaningful
opportunity for growth from new products.

China reported H2 2021 trading that declined modestly from H1 2021 and
full-year 2021 revenues that declined approximately 30% from the US$ 3.9m
reported in 2020. The quality market segment in China, the Company's primary
target, initially driven by western multi-national company development in the
country, has been slower to grow than originally anticipated. In light of
current market conditions and recent performance, the Company plans to reduce
the cost structure of its China operations to begin 2022 while continuing to
maintain consistency in supporting the customer base as we continue to
evaluate our approach to target the long-term opportunity in this market.

H2 2021 trading activity in the remaining regions, specifically Latin America,
the Middle East, and the Rest of World territories that includes India, was
positive and these regions on a combined basis reported H2 2021 revenues that
were comparable to H1 2021. Full year 2021 revenues, for these regions
combined, grew approximately 38% from the  US$ 4.3m reported in 2020.

On a product basis, while H2 2021 trading across all product categories
increased significantly compared to H2 2020, the most notable, significant
driver of H2 2021 trading was the Boomed-screed product line. H2 2021
boomed-screed revenues improved compared to H1 2021 and 2021 full-year
revenues for this product line grew more than 100% from the US$ 31.7m reported
in 2020. The robust 2021 performance in this product category reflects a
high-level of large footprint, non-residential construction projects in the US
that includes new warehousing required to support the rapid growth of
e-commerce activity, factors that translated to an all-time record in unit
sales of the Company's largest boomed-screed, the S-22EZ, in 2021.

Outlook

The Board is pleased with the strong finish to 2021 and looks forward to 2022
with confidence based on the strength of the US market, positive market
conditions in Europe and Australia, targeted opportunities for growth from the
other regions, and opportunities for growth from new products. Regarding new
products, and taking a longer-term view, the Board recognizes the significant
long-term value creation opportunity that comes from increasing the Company's
addressable market by developing innovative solutions for new applications and
market segments. As such, the Company remains committed to investment in
product development, sales, and support resources to drive this effort, a
necessary near-term investment and cost with longer-term benefit. With a
combined view of these factors, the Board expects 2022 will be a highly
profitable year with healthy cash generation, modest revenue growth, and
EBITDA comparable to 2021 that reflects the planned investment in resources
for future growth and the full-year impact of 2021 staffing additions required
to support the growth of the business.

Somero's final 2021 results announcement is scheduled for release on 9 March
2022.

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.

 Enquiries:

 Somero Enterprises, Inc.

 www.somero.com (file:///C:/Users/Susie/Documents/Redleaf/www.somero.com)

 Jack Cooney,
 CEO
 +1 239 210 6500

 John Yuncza, President

 Enzo LiCausi, 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/Richard Chambers (ECM)

 Alma PR (Financial PR Advisor)
                                         somero@almapr.co.uk

 David
 Ison
 +44 (0)20 3405 0205

 Sam Modlin

 Molly Gretton

 

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