Somero Enterprises Inc. – SOM – Final Results

Somero Enterprises Inc. – SOM – Final Results

Somero Enterprises, Inc. reports its annual results for the twelve months ended 31 December 2020.

Financial Highlights

·    Leveraged flexible cost structure when combined with strong H2 trading delivered healthy profits and stable margins

·    Global H2 2020 sales were US$ 53.3m (H1 2020: US$ 35.3m), with record US H2 sales

·    Adjusted EBITDA margin of 29% (2019: 32%)

·    Adjusted net income in the year of US$ 18.9m (2019: US$ 21.1m)

·    Operating cash flows grew to US$ 30.6m in 2020 (2019: US$18.9m) driven by effective working capital management

·    Reductions to accounts receivable and inventory provided a significant one-time benefit of US$ 6.7m to 2020 operating cash flow

·    Year-end cash of US$ 35.4m (2019: US$ 23.8m) reflects the highlest level in Somero's history

·    Disciplined return of cash to shareholders

·    Paid US$ 13.9m in dividends to shareholders in 2020 (2019: US$ 17.4m)

·    Completed US$ 1.0m share buy-back program authorized in August 2020

FY20

FY19

% Change

(US$)

(US$)

Revenue                                                          

88.6m

89.3m

-1%

Adjusted EBITDA(1,2)

26.1m

28.7m

-9%

Adjusted EBITDA margin(1,2)

29%

32%

Profits before tax

24.6m

27.0m

-9%

Adjusted net income(1,3)

18.9m

21.1m

-10%

Diluted adjusted net income per share(1,3)

0.33

0.37

-11%

Cash flow from operations

30.6m

18.9m

62%

Net cash(4)

35.4m

23.8m

49%

Ordinary dividend per share

0.1681

0.1875

-10%

Supplemental dividend per share

0.181

0.077

135%

Operational Highlights

·    Flexible operating model allowed rapid adjustments in response to changing maket conditions in 2020

·    Trading in each of the six regions grew in H2 2020 compared to H1 2020, led by North America

·    New products contributed meaningfully to 2020 results

·    SkyScreed© 36, the SRS-4 boomed-screed, and the Somero Broom + CureTM  combined to contribute US$ 7.4m to 2020 revenues

·    Completed the US$ 3.5m expansion to the Houghton, Michigan Operations and Support Center and the US$ 0.5m expansion to the Fort Myers, Florida Global Headquarters and Training Facility

Post-Period Highlights

·    Declared a 12.81 US cents per share final 2020 ordinary dividend and a 18.1 US cents per share supplemental dividend, totaling a combined US$ 17.3m, payable on April 30, 2021 to shareholders on the register at April 9, 2021

·    Authorized a new share buyback program of an aggregate value of up to US$ 1.0m to offset dilution from on-going equity award programs, expected to be completed by the end of 2021

Notes:

1. The Company uses non-US GAAP financial measures to provide supplemental information regarding the Company's operating performance. See further information regarding non-GAAP measures below.

2.  Adjusted EBITDA as used herein is a calculation of the Company's net income plus tax provision, interest expense, interest income, foreign exchange loss, other expense, depreciation, amortization stock-based compensation and non-cash lease expense.

3. Adjusted net income as used herein is a calculation of net income plus amortization of intangibles and excluding the tax impact of stock option and RSU settlements and other special items.

4.  Net cash is defined as cash and cash equivalents less borrowings under bank obligations exclusive of deferred financing costs.

 

Jack Cooney, CEO of Somero, said:

 

"As we navigated through the pandemic, the health and well-being of our employees and customers always remained our number one priority.  Our management team worked diligently to implement strict health and safety protocols that redefined how we work and communicate, and our employees exhibited tremendous flexibility to adapt to these changes and deliver for our customers with minimal interruption.  I am so proud of the extraordinary effort of our team, that in turn delivered healthy revenues, profits and strong cash generation to our shareholders significantly exceeding the expectations established on 9 September 2020 alongside our interim results.

We were able to strike the right balance of managing short-term requirements brought on by the crisis while advancing our long-term strategy.  In 2020, we introduced three new products that contributed immediately and meaningfully to current year results and completed expansions of our operational and training facilities in Michigan and Florida, laying the foundation to support future growth.  I believe Somero is emerging as a stronger company having made lasting improvements in the efficiency and effectiveness of our operations and communications during this time.  With all the unexpected changes and challenges it presented, 2020 provided a great example of the the strength and resilience of our Company that comes from our talented and dedicated employees.

We closed the period with the strongest cash position in company history and are well positioned to make investments that will drive long-term growth in new and existing markets by expanding our product offering.  We are excited by the opportunities that lie ahead and confident in our strategy and ability to deliver strong results and dividends for our shareholders."

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