Somero Enterprises Inc. COVID-19 Update (0063P)
05 Giugno 2020 - 8:00AM
UK Regulatory
TIDMSOM
RNS Number : 0063P
Somero Enterprises Inc.
05 June 2020
5 June 2020
Somero Enterprises, Inc.
("Somero" or the "Company")
COVID-19 Update
Somero(R) provides the following update on trading and the
precautionary actions carried out by the Company in response to the
evolving COVID-19 pandemic.
While the Company remains in a strong financial position,
because the implications and duration of the COVID-19 pandemic
remain difficult to determine, in addition to the previously
announced measures, the Company is implementing a range of further
precautionary actions to reduce costs and conserve cash during this
period of uncertainty.
The Board remains confident in the health of the business and
its growth prospects over the long-term and is taking these actions
now to ensure the business is in a strong position once the
operating environment becomes more normal.
Management actions
As of the date of this update, management has taken the
following additional actions, all of which will be kept under
constant review as circumstances change:
-- Furloughing approximately 20% of our workforce
-- Cancelling of all bonus and profit-sharing payments for the
calendar year 2020, a decision that impacts all Somero employees
not on sales commission plans
-- Curtailing discretionary spending across all departments
-- Curtailing further capital expenditure beyond what has
already been committed to on-going building expansion projects
The annualized pre-tax impact of these cost saving measures is
expected to approximate US$ 5.0m.
Financial position and cash management
Somero entered this period of uncertainty with a strong balance
sheet and good liquidity and its financial position has been
strengthened further by these additional financial and cost saving
measures. On 30 March, the Company indicated its net cash position
exceeded US$ 24.0m. Management expects its net cash position at the
end of 30 June will continue to exceed US$ 24.0m and the Company
continues to have access to substantial additional liquidity
through its US$ 10.0m line of credit. In addition, the Company will
continue to closely monitor, and pursue as applicable, all US
government funding opportunities for which the Company may be
eligible.
Current trading and outlook
Even though the COVID-19 pandemic has resulted in current
trading that has fallen approximately 25% below levels required to
achieve the market expectation at the start of the year of US$
90.0m in 2020 revenues, the Company remains profitable and cash
generative. The Board is confident that, following the actions
taken by the Company described above, the Company would continue to
be cash generative even in the scenario where revenues fall an
additional 20% from current levels, to approximately $54.0m, which
provides Management substantial flexibility during this challenging
period.
Uncertainty around the scale, duration and impact of the
COVID-19 pandemic on Somero's end markets in the non-residential
construction industry, makes it difficult at this time to provide
further guidance on the Company's financial performance in the rest
of 2020 and beyond. While extended project backlogs reported by our
customers prior to the COVID-19 pandemic, particularly in the US,
indicate the non-residential construction market was active and
healthy entering this period, financial performance for 2020 and
beyond will depend on a number variables over which the Company has
no control.
Somero's operating model enables the Company to adjust quickly
to changing conditions, protect profitability and preserve its
strong financial position. In addition, it is important to
highlight that the cost saving actions taken by management are
specifically designed to not impact investment in new product
development, a key element to the Company's long-term growth
strategy. In fact, new product development activity remains at the
high level seen in recent years.
The range and depth of impact from the COVID-19 pandemic creates
significant short-term uncertainty, but the Board remains confident
in the health of our business and the long-term growth
opportunities in front of us. The Company is positioned well to
withstand impacts from COVID-19, benefitting from a strong
financial position, a flexible operating model, and a continued
pipeline of new products to fuel growth, until such time as
non-residential construction activity reverts to more normalized
activity.
The Company will hold its Annual General Meeting on June 9, 2020
at 9 am local time via webcast. Registration information can be
found at https://investors.somero.com/.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Enquiries:
Somero Enterprises, Inc. www.somero.com
Jack Cooney, CEO +1 239 210 6500
John Yuncza, CFO
Howard Hohmann, EVP Sales
finnCap Ltd (NOMAD and Broker)
Matt Goode (Corporate Finance) +44 (0)20 7220 0500
Carl Holmes (Corporate Finance)
Kate Bannatyne (Corporate Finance)
Tim Redfern (Corporate Broking)
Alma PR (Financial PR Advisor) somero@almapr.co.uk
Rebecca Sanders-Hewett +44 (0) 2034 050 205
Susie Hudson
Sam Modlin
David Ison
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contact rns@lseg.com or visit www.rns.com.
END
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