22nd Jan 2020 12:56
(Alliance News) - Somero Enterprises Inc on Wednesday said 2019 revenue and adjusted earnings will be slightly ahead of previous guidance due to a strong profitable trading in the final quarter of the year.
The concrete-levelling equipment maker expects 2019 revenue to be "modestly ahead" of the top end of its guidance of USD87 million provided in July 2019. Adjusted earnings before interest, taxes, depreciation and amortisation is also predicted to rise by a similar quantum versus top end of the company's previous guidance range of USD28 million.
In 2018, Somero recorded USD94 million in revenue and adjusted Ebitda of USD30.8 million.
Somero said trading in the fourth quarter of 2019 was stronger than expected due to improved weather conditions in the US, resulting in a significant rise in revenue for the second half versus the first half.
The company, which is based in US state of Florida, expects to maintain its dividend policy 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 USD15 million. Cash at December-end is estimated to total USD23 million, significantly ahead of USD18 million guidance.
Somero said its SkyScreed 25 product met its 2019 sales target of USD1 million, and therefore the board has decided to increase its investment in the product to support its future growth.
Although increased investment would result in higher operating costs and impact profitability in 2020, the long term-growth opportunity for the SkyScreed 24 is substantial, Somero added.
SkyScreed 25 - a product targeting the structural high-rise market segment - was launched at the annual World of Concrete trade show in Las Vegas, Nevada in January 2018.
Somero said North America, China, and Latin America markets grew in 2019 as compared to 2018.
North America reported particularly strong trading in the second half of 2019 as weather conditions improved and previously delayed customer projects were started, the company explained.
Activity in China - despite the negative impact of tariffs - remained solid throughout the year with trading in the second half modestly favourable compared to the same period in 2018.
Latin America also reported improved trading in the second half with contributions from multiple countries including Brazil resulting in a modest increase in full-year revenue.
Europe, the Middle East and Australia experienced a revenue decline due to economic uncertainty, geo-political tensions and unfavourable Australian dollar currency effect.
Looking ahead, Somero said it remains confident for 2020 due to US project backlogs. It, however, added that certain market factors in non-US regions may "slightly temper" underlying growth expectations for 2020.
"With this combined view, the board expects 2020 will be a profitable year with healthy cash generation, revenues comparable to 2019 and Ebitda broadly in line with 2019 and in line with current market expectations due to the aforementioned planned increase in investment for future growth," Somero said.
Shares in Somero were up 9.8% at 285.36 pence each on Wednesday afternoon in London.
By Ife Taiwo; [email protected]
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