Somero Regulatory News (SOM)

5 June 2020

Somero Enterprises, Inc.

("Somero" or the "Company")

COVID-19 Update

Somero® 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.