16 January 2019
Somero Enterprises, Inc.
("Somero" or the "Company")
Strong growth drives revenue, EBITDA and cash ahead of expectations
Expected to beat five-year revenue target established in 2014
Somero® provides the following update on trading for the financial year ended 31 December 2018.
The Board is pleased to report that the Company delivered strong, profitable growth and healthy cash generation in the six months since 30 June 2018. As a result of the strong H2 performance, the Board now expects 2018 revenues will be moderately ahead of market expectations and the Company's previously stated 5-Year Plan objective of $90.0m, while EBITDA will also be moderately ahead of market expectations of $29.0m driven by the volume increase and effective management of operating costs. In addition, the Board expects net cash at 31 December 2018 will be more significantly ahead of market expectations of $25.0m. As such, the Board intends to maintain the Company's dividend policy, announced on 14 March 2018, consisting of a regular dividend payment equal to 50% of adjusted net income for the calendar year and a supplemental dividend equal to 50% of excess net cash over the year-end target of $15.0m.
The Company continues to make good progress in executing its product innovation growth strategy highlighted by the introduction of the new SkyScreed© 25, a new, innovative product targeting the structural high-rise market segment. The SkyScreed© 25 will be officially launched at the annual World of Concrete trade show in Las Vegas, Nevada in late January 2019. In addition, new products were a meaningful contributor to the strong performance for the year, with the S-22EZ, launched in late 2017, contributing $2.2M to 2018 revenue growth.
On a full-year geographic basis, three of the Company's six regions grew compared to 2017 led by strong performance in the North American and the Rest of World territories along with a positive contribution from the Middle East. In the Company's other territories, Europe and China were slightly down from 2017, while in Latin America 2018 trading fell below 2017 levels, though H2 2018 trading in this market improved from the first half of the year.
In North America, the particularly strong H2 2018 trading reflects the strong pipeline of construction projects that remain in front of our US customer base. The growth in the Rest of World territories was led by a significant contribution from Australia along with positive contributions from Scandinavia and India. In the Middle East, activity levels were solid throughout the year leading to the increase compared to 2017. In Europe, while 2018 trading ended slightly below 2017 levels, the Company saw healthy demand for new products and technology upgrades, in addition to opportunities to refresh the installed base of equipment. In China, the Company is pleased with its efforts to refine its strategy to target the quality market segment, although these efforts have yet to gain full traction. In Latin America, as previously indicated, trading improved in H2 2018 compared to H2 2017 and the Company is encouraged by the addition of future project opportunities seen in this market. Most important of all, the Company is pleased with the activity levels and opportunities for growth seen across all its markets.
On a product basis, growth in H2 2018 trading was very balanced with sales in all product categories increasing compared to H2 2017, led by particularly strong performance in the Ride-on screed category.
Following record results in 2018, the Board is confident in the Company's ability to deliver another year of profitable growth in 2019. The underlying market conditions in our North American and European markets remain buoyant, and the Board sees meaningful growth opportunities in China and our other territories, alongside growth opportunities from new products.
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
Somero Enterprises, Inc. www.somero.com
Jack Cooney, CEO +1 239 210 6500
John Yuncza, CFO
Howard Hohmann, EVP Sales
finnCap Ltd (NOMAD and Broker)
Matt Goode (Corporate Finance) +44 (0)20 7220 0500
Carl Holmes (Corporate Finance)
Tim Redfern (Corporate Broking)
Alma PR (Financial PR Advisor) [email protected]
Rebecca Sanders-Hewett +44 (0) 2034 050 205
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