Somero Enterprises - Final Results

Financial Highlights

 

·    Delivered a year of record annual revenue and profit

·    Strong financial position, with a record level of cash flow generation and US$ 28.2m net cash on the balance sheet

·    Substantial return of cash to shareholders:

·    Paid US$ 12.3m in dividends to shareholders in 2018 (2017: US$ 13.9m that included a US$ 7.5m special dividend in August 2017)

 

 

FY18

FY17

% Increase

Revenue

US$94.0m

US$85.6m

10%

Adjusted EBITDA(1,2)

US$30.8m

US$28.0m

10%

Adjusted EBITDA margin(1,2)

33%

33%

-

Profits before tax

US$29.1m

US$25.7m

13%

Adjusted net income(1,3)

US$21.4m

US$17.5m

22%

Diluted adjusted net income per share(1,3)

US$0.38

US$0.31

23%

Cash flow from operating activities

US$23.8m

US$20.0m

19%

Net cash(4)

US$28.2m

US$19.0m

48%

Ordinary dividend per share

US$0.190

US$0.155

23%

Supplemental dividend per share

US$0.117

US$0.036

225%

 Operational Highlights

·    Healthy demand across markets and product lines:

·    Growth in 2018 predominately led by North America and the Rest of World markets

·    Sales of Boomed screeds grew 9% to US$ 39.2m (2017: US$ 35.9m)

·    Sales of Ride-on screeds grew 23% to US$ 22.9m (2017: US$ 18.6m)

·    New products contributed meaningfully to growth

·    Sales of the S-22EZ and SP-16 Line Pulling & Placing System combined to contribute US$ 3.0m to 2018 growth

Post-Period Highlights

·    Acquired Line Dragon ® business assets ("Line Dragon") in January 2019 to complement Somero's SP-16 Line Pulling & Placing System product offering

·    Launch of the SkyScreed ® 25 at the January 2019 World of Concrete trade show in Las Vegas, USA generating significant attention and interest

Chairman's Statement 

Performance and Dividend

I am delighted to report that Somero delivered another year of outstanding results for our shareholders in 2018, alongside taking important steps to execute its strategy and position the Company for future growth. The Company's strong operational and financial performance supports continuing investment in new opportunities such as the design and development of the SkyScreed ® 25 in 2018, and the acquisition of Line Dragon in January 2019.

We continue to prioritize investments that support executing our growth strategy while remaining committed to a disciplined return of cash to shareholders.  Accordingly, I am also delighted to report that with the Company's impressive 2018 results, healthy financial position, and the Board's confidence in the business outlook, the Board has approved a final 2018 ordinary dividend of 13.5 US cents per share and a supplemental dividend of 11.7 US cents per share, both payable on April 26, 2019 to shareholders on the register at April 5, 2019.  Together with the interim dividend paid in October 2018 of 5.5 US cents per share, the 2018 full year regular dividend payment to shareholders is 19.0 US cents per share, a 23% increase from 2017. The supplemental dividend declared is in accordance with the Company's supplementary dividend policy adopted on March 14, 2018 that states the Company intends to distribute 50% of the excess of net cash over the year-end target of US$ 15.0m. 

Strategic Progress

At the core of our strategy is innovation.  Somero has a long track record of delivering innovative solutions that started with the introduction of the first Laser Screed ® machine in 1986, the product that transformed the concrete contractor industry.  Our latest innovation, the SkyScreed ® 25, is a truly unique product that opens an exciting new market for Somero and, we believe, begins a new chapter of product development.  Bringing the SkyScreed ® 25 to market was the result of dedicated market research and direct engagement with customers to understand their challenges that formed the basis for designing an innovative solution to these challenges.  Through the years, Somero's new product launches have been successful because our product development effort is and always has been a customer led process.  We understand customer involvement throughout the development cycle is critical to ensure our ideas turn into tangible products that create meaningful value.   

The Company's acquisition of Line Dragon is another example of the Company's focus on adding innovations to our product offerings.  We believe the combined best features of the SP-16 and Line Dragon's products will increase the value we provide customers and enhance Somero's product offering.

In 2018, Somero also continued to diversify by geography. Revenues from outside North America grew by US$ 1.5m compared to 2017 to reach US$ 29.3m, or 31% of total revenues for the year. Underlying this growth is Somero's continued effort to deepen our penetration of international markets by promoting adoption of wide-placement theory and quality concrete flooring standards. The demand for quality concrete floors from building owners and end-users is the key driver of market adoption of Somero technology, and we will continue to focus our market development efforts to drive this demand.

Our People

This year the Board was delighted to again meet with the full management team, review the plans and objectives for each function, and see first-hand the energy and commitment of the teams that run the business. Somero's success would not be possible without our employees' unrelenting commitment to Somero's mission of helping our customers build successful, profitable businesses. The positive outcomes we generate for our customers fuel our financial and operational success and support our demonstrated ability to create shareholder value.  On behalf of the Board, I would like to thank the management team and all 190 Somero employees located throughout the world for delivering these outstanding results.

Outlook

The Board believes the Company has numerous meaningful growth opportunities in 2019 across its broad portfolio of markets and products that is supported by positive non-residential construction market conditions and reinforced by customers reporting project backlogs that extend beyond 2019.  Based on this positive environment and the momentum of the business, the Board is confident that Somero is poised to deliver another year of profitable growth to shareholders in 2019.

 Larry Horsch

Non-Executive Chairman

March 13, 2019