SOM Somero Enterprise Inc.

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.

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