- Record 1H revenues up 9% to $68.5 million
- Cost inflation and headcount offset by price increases
- Full year guidance reiterated
Concrete leveling equipment specialist Somero Enterprises (SOM:AIM) posted a record first half through June with revenues 9% higher year-on-year at $68.5 million.
Higher operating expenses from cost inflation and additional recruitment was mostly offset by price increases and better operational efficiencies.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) fell 2% to $24.1 million. Somero reiterated full year guidance in line with market expectations.
Revenues are anticipated to grow 4% year-on-year to around $138.8 million while EBITDA is expected to reach approximately $47.7 million.
CEO Jack Cooney said: ‘The Company delivered record H1 2022 revenues thanks to the remarkable performance by our talented and dedicated employees who managed to keep pace with a highly active US market, delivering equipment to meet our customers' needs and continuing to reinforce our reputation as reliable partners.’
DISAPPOINTING INVESTOR REACTION
The company said favourable first half activity carried over in the second half supported by a healthy US non-residential construction market. Investors seems unimpressed with the in line guidance however, with the shares falling 3.4% to 420p.
Despite a record half and earnings estimates rising 10% since the start of 2022, the PE (price-to-earnings) ratio is 38% below where it started the year.
North America represents around 80% of group revenues and remained a key driver of growth. Australia (6% of sales) saw revenues climb 48% reflecting prior actions to take the sales team inhouse which sold a broader range of products.
Somero’s board declared an 11% increase in the first half dividend to $0.10 per share, representing a total payment of around $5.6 million payable on 21 October to shareholders on the share register as at 23 September.
David Buxton, director of research at Finncap, is forecasting a stronger year of cash generation in fiscal 2023 with net cash building to $44.9 million, supporting a forecast dividend of $0.49 per share, implying a yield of 9.7% at current exchange rates.
Buxton is forecasting flat revenues and slightly lower EPS (earnings per share) of $0.59 due to higher operating costs.
