Shares in construction industry equipment manufacturer Somero Enterprises (SOM:AIM) hit a new high on Wednesday, surging 14% to 535p after the company reported record first half revenues and profits and raised its full year guidance.
Today’s upgrade to full year numbers comes on top of raised guidance given at the July trading update when the company increased revenue and EBITDA (earnings before interest, taxes, depreciation, and amortisation) guidance to $110 million and $35 million respectively.
Full year revenues and EBITDA are now expected to be $120 million and $42 million respectively, compared with consensus estimates of $110 million and $35 million, according to Refinitiv data.
FinnCap this morning raised its 2021 earnings per share estimate by 21% to $0.55 and its dividend estimate by 48% to $0.41 while also raising its 2022 revenue expectations by 8.5% to $127.7 million.
STRONG POST-COVID REBOUND
The company said a rapid acceleration in non-residential construction activity and some ‘catch-up’ in Covid-19 delayed projects led to ‘unprecedented’ demand for its products which it delivered to customers despite 'challenging' supply chain issues.
First half revenues to June increased 82% year-on-year to $64.4 million while EBITDA jumped 183% to $24.6 million and pre-tax profit surged 213% to $23.5 million.
Increased volumes and pricing resulted in a ‘considerable’ increase in gross margin to 58.6% compared with 54.7% last year and allowed the company to offset higher material and logistics expenses.
While the US makes up the lion's share of revenues, growing 83% to $50.9 million, other regions also chipped in with international revenues contributing $13.5 million, an 80% increase, while China remained disappointing with revenues falling 6% to $1.7 million.
INVESTING IN CAPACITY
The strong revenue recovery in the first half combined with an expanded product portfolio has prompted the company to increase capacity at its Houghton facility by 50% at a cost of $9.5 million, which should expand the group’s revenue capacity to around $175 million.
Somero Enterprises is a running Shares Great Idea.
