Welcome to the Somero Enterprises Full Year 2022 Results Webinar. All attendees are in listen only mode and at the end of the presentation, there will be the opportunity to ask questions. You can submit a question at any time by clicking on the Q&A button. This webinar is being recorded. I now hand over to Jack Cooney, CEO, John Yuncza, President, and Enzo LiCausi, CFO. Jack, over to you. Thank you, Tamzin. Welcome everyone. Thank you for taking the time to come to the webinar today. We're really looking forward to talking to you and to answering your questions. I'll get started right in on it. 2022 was a very strong year for us. We had record-setting revenues that surpassed our previous record of the previous year. We had strong contributions from both Europe and Australia. As you know, and probably have heard, there was a great deal of supply chain problems all year long, which continue now. Our operating team did an outstanding job of being able to procure all of the components necessary to get the machines to our customers right at the time they needed them to do the job. Did an outstanding job of that. We completed our expansion of the Houghton facility, which added significant space to take us over $200 million in sales. We had very good profits and operating cash this year. We'll be able to fund our dividends. With that, I'll turn it over to John Yuncza to take you through some highlights. Thank you, Jack. As Jack mentioned, we had a very strong year in terms of revenue. Going through the financial highlights. We just eclipsed our 2021 revenue total, which was an extraordinary year where we grew 50% from 2020. Our profitability margins in terms of adjusted EBITDA margins and the profitability before tax, all were down somewhat, which is reflective of the net investment we made in resources which are geared towards driving our strategy forward and providing source of long term growth. Cash flow from operations, you know, very strong. We did have a level of working capital investment that was necessary, with that strong cash generation, we ended the year in a secure financial position and are pleased to be able to pay another significant dividend to shareholders. Looking at sales by territory on slide five. You know, starting with North America, our largest market, very healthy market conditions. We saw a very high level of activity, continuation of the strong activity that we saw in 2021. We saw good take rates across our product portfolio, and particularly strong sales of the boom screed category, fueled in part by our S-28 that we released in 2022. Very good growing contribution from our targeted international markets, Europe and Australia. On a combined basis, our international markets contributed nearly 20% growth. We achieved record level of revenue in Europe and Australia, which is just a function of solid execution of our growth strategy and a strategic measured investment in the resources to execute that strategy, particularly customer facing positions such as sales and customer support. In the rest of the world category, we have a number of markets. The biggest contributors in that group are Latin America and India. Generally speaking, in that category, we see opportunistic selling. We see meaningful opportunities from growth. We do anticipate somewhat uneven trading from period to period based on the small base of revenues. Jumping to sales by product on slide six. Again, boom screeds represent the majority of our sales. We had very good performance in that category. The S-28 EZ was the prime contributor to that very good performance in 2022. Across the remaining product lines, Ride-on Screeds down through the SkyScreed, we saw varying take rates. There were certainly some changes. In some cases it was down, trading and unit volume was down somewhat compared to the prior year. As always, we are seeing and have continued to see that the take rates across our lineup is very much dictated by the type of work and type of projects our customers are undertaking. We do anticipate from time to time there will be some variation. A couple of lines to call out. Remanufactured machines was a good performance in 2022. The improvement year-over-year was very much driven by availability of inventory, trade-in inventory. That's not a, as we've said in the past, that's not a product category that we're anticipating growth. It's really intended to facilitate the sales of new equipment. The SkyScreed, which we'll talk about a little bit more in the strategy section is, you know, an example of one of our disruptive new products targeting a new market segment. Performance year-over-year was flat. We continue to work through the broad market acceptance of that product and overcoming some of the obstacles that we have been encountering. With regards to our other product line, our other revenue category that's primarily made up of parts, aftermarket, or after sales of parts replacement and wear components, that's the vast majority of that total. We saw very good performance in 2022, which is indicative of a particularly strong and high utilization rate of our install base of equipment. With that, we'll turn it over to Enzo to walk through the operating results. Great. Thank you, John. Overall, we have very good operating results for 2022. We maintain very healthy profit margins while continuing to fill out our organization to support the base of business, as well as make additional investments towards future growth. From a gross profit standpoint, we continue to face increases in input costs in this inflationary environment. However, we've partly offset those costs with efficiencies in our plant, as well as increasing prices to our customers, at a modest level, which underscores a continued value proposition for our customers. Moving down to operating expenses. The hiring that was triggered last year by the sort of substantial growth that we experienced carried over into 2022. The business grew from slightly below $90 million to over $130 million, needed a bit of time before the organization could catch up with that demand. We've done so in 2022. In addition to that, we continue to make investments towards future revenue growth in the form of product development resources, all aligned with our strategic growth strategy. We're offsetting some of those cost increases with one-timers from 2021, excuse me, 2022, not intended to repeat in 2023. Ending the year very profitable, with over $31 million in net income. Moving on to our financial position. The balance sheet remains very healthy. I'll talk a little bit about cash in the following slide. Just to point out a couple of highlights here. We did experience a slight increase in our accounts receivables. Really, that's mostly a timing issue where a bolus of sales at the very end of the period were completed and collected early in 2023. From an inventory standpoint, there's more of a structural uplift there for a number of reasons. Firstly, and as we've mentioned in the past, to the extent we introduce new products and expand our product portfolio, that entails managing additional SKUs, and we'll have a natural uplift in our inventory. Secondarily, in this environment of supply chain shortages and delivery lead times, we've had to maintain higher levels of safety stock to ensure we are able to fulfill our customer orders on time. The third element is with regards to our international operations and ensuring that we have adequate stock in-country, which enables us to conduct sales demonstrations and then capitalize on those sales when they arise. It's very important to maintain those inventory levels at an adequate level outside the U.S. in addition to the U.S. With respect to our cash flow, again, as always, we maintain, we remain highly cash generative. I referred to some of the working capital investments previously. In terms of our capital expenditure, as you saw in our release, we completed the Operational Expansion at the end of 2022. That is operational here in the first quarter. We don't have any other long-term CapEx projects in queue. Therefore, we would expect our CapEx to return to more normal levels in the range of $1 million-$2 million per year. We had a record dividend payout in 2022, $29 million, which is 30% higher than the previous year. We continued our share buyback program, which is intended to offset dilution from our internal employee equity incentive programs. Moving on to the dividend slide. This is an illustration of our dividend policy. We maintain a very disciplined policy whereby we distribute 50% of adjusted net income in the form of an ordinary dividend, as well as 50% of excess cash over $25 million as a supplemental dividend, both of which will be paid out on May fifth to shareholders of record as of April 11th. It's important to note we do first view internally to reinvest the cash in the business for longer-term growth. However, being that we are highly cash generative, the supplemental dividend ensures that we don't keep idle cash or inefficient cash on the balance sheet. With that, I'll hand it back to John. Thank you, Enzo. So now to take a walk through the strategy update. Moving on to the long-term growth slide. Our strategy has been intact for since really the beginning of the company, focused on two primary levers of growth. That's new products and growth in our international markets, and they're very much intertwined. We had good contribution in 2022 from new products, particularly the S-28 EZ, which was a big driver of the strong boom screed sales growth year-over-year. We also continue to have growing contribution from our newer disruptive products, contributing just over $4 million, around about a $1 million increase over 2021. Importantly, 2022 was a very active year of job site visits, engagement with customers through innovation councils, some of which were based in our international markets, Europe, to really focus on setting the stage for the next round of new product releases. With regards to the international markets, as mentioned briefly before, we had strong performance in our Australian and European markets, both contributing record sales. That's really been driven by a very focused strategy, but also the key strategic addition of seven positions in both markets combined in the second half of 2021 through 2022. Part of that growth strategy involves growth from new products, in particular introducing the Sky Screed to both Australia and Europe at the very end of 2022, as well as the launch of the EcoScreed, which is a very attractive entry-level Ride-on Screed product for the European market, also released in the second half of 2022. Stepping on to product development. It's important also to know that we have really two primary lanes of product development. We have new product releases that are geared towards our existing core products, enhancements, introducing new innovations, and filling out gaps within our core existing product lineup to ensure that we have value-added solutions to our customers, and we continually innovate on those products. The second lane is really just completely new products, geared towards new markets, new market segments that really increases our addressable market. These are often very disruptive products, provide a great long-term growth opportunity, but oftentimes take, have an extended timeline to gain market acceptance and critical mass. As mentioned earlier, a prime example of this is the SkyScreed product launch, which is geared towards the high-rise structural market, which is a very attractive, very large market for us. SkyScreed continues to slowly gain traction in the market, but the primary obstacle at this point in time is the lack of strength of demand for flatness and levelness across a broad range of high-rise structural projects. In terms of future development, 2022, as mentioned, was a very active year, really as our customer engagement really leads the product development process, as it always has. We had significant engagement with our customers, both on job site visits and through innovation councils, focused on identifying customer pain points, so we can help develop solutions that will address those pain points and create meaningful value for our customer base. Also giving us guidance as to what are the new technologies that we should be exploring that could improve machine performance, operator performance, ease of operation and maintenance, as well as some of the emerging trends that will be affecting our different industries and different regions, particularly the environmental restrictions that are coming down the road in many of our markets. Stepping on also to slide 14, the products and applications. Our lineup, as we've represented in the past, is a very broad set of solutions that build the needs for our customers for a wide range of projects and applications. Of note, this is a situation for the company, in early 2023, we have made the decision to relaunch our S-22 to the market based on very specific customer demand. We see a place in the market for both the S-22 and the S-28, with the S-22 providing somewhat better transportability, slightly smaller size, makes it easier for our customers to transport to different job sites. Therefore, we see a need for both products in the market. Moving on to the international growth look for Europe. Obviously very strong performance as we mentioned, growing over 20% compared to the prior year, and significantly also over the 2020 period. That really starts with adding key resources. We've expanded our team to 14 direct sales support and some operational staff, and that's a 40% increase over our team size in the second half of 2021. With that, we also have very focused efforts that are targeting the 10 countries within the region that we see the best chance for success. That is based on the criteria in those markets that value quality, have high labor costs, have an acceptance of automation. In 2022, 75% of our revenue, the growth came from those target countries within the region. Then the other part of our growth strategy within Europe, in addition to that focus in gaining new customer relationships is growing the range of products that we're selling into the market, taking advantage of our 19 product portfolio, and ensure that we're adequately representing and aggressively representing a broad range of solutions. Moving on to the Australia growth slide. Similar strategy, thankfully similar results. We have delivered a record year in 2022, growing revenues nearly 40% from the prior year and substantially from the just over $1 million in sales in 2020. Really benefiting from the decision to go direct in that market and adding to the team. We've grown the team to a seven-person team based in Australia with our base of operations in Melbourne. We've also added more products that we're selling into the region, including the Sky Screed, which we introduced in late 2022. We also sold seven different product types in 2022 compared to only four in 2020. That strategy, again, is focused on gaining new customer relationships and increasing the range of products we're selling into the marketplace. With that, moving on to our outlook. It really starts with the health of our underlying target markets. That's the U.S., that's Europe and Australia. The U.S. market being our primary market. What we're seeing is, to enter this year and at the end of last year and carrying into this year, is a very healthy level of U.S. non-residential construction. The U.S. non-residential construction market continues to be very active. We gauge, we make our assessment of the market based on the direct feedback we get from our customer base. Our customers are reporting extended project backlogs that extend well into 2023 and in some cases into 2024. That gives us confidence in the underlying health of the market. In addition, we've had good momentum in Europe and Australia. We've really capitalized on the positive market conditions. We've added targeted staff, both on the selling side and the support side of the business. We're continuing to add to the products that we're broadly representing in the market to gain traction across a broader portion of our product lineup. We continue to see significant long-term growth opportunities, both from new products and new market segments. That is again a long-term growth opportunity, and we'll continue to make progress in those areas. In order to execute that growth plan, we'll continue to be adding in a measured way, resources to sell, support, and develop new products on our key growth teams that we have. That has in turn added some expectations for near-term costs to increase in 2023 and the years to come. With all that in consideration, you know, the board expects 2023 will be a year with high cash generation, as we always have had, revenues that are comparable to 2022 as the market conditions are very comparable, that we envision. EBITDA that has some modest downward pressure based on the added positions for future growth, as previously mentioned. Year-end cash that is also comparable to 2022. With that ends our prepared comments. We're happy to answer questions. Thank you very much. To ask your question, click on the Q&A button. We have loads of questions. First question, when do you expect to see the benefit of the Houghton expansion, either in additional revenues or improved margins? With Houghton, can an updated figure be provided for the percentage of Somero's cost base that's now of a variable nature? Sure. The decision to expand the Houghton facility was to enable the next phase of growth. The expansion added roughly 35% capacity to our business, so we can support a business that's over $200 million in revenue. It also added the ability to make for a more efficient flow of products and materials through our facility, as well as allowing us to bring in-house some select activities pre-assembly to give us greater control over the assembly process and the timelines. As well as adding some system engineering, development, prototype testing that's within the building, within a controlled environment to help accelerate some of our product development efforts. You know, we see this as the next phase to support the next phase of growth. We don't have a particular timeline, certainly we feel very comfortable with the space we've created. Thank you. Any figures on the percentage of Somero's cost base that's now of a variable nature? Yeah. The business continues to remain highly variable from a cost standpoint. The expansion of the Houghton facility, which we funded through operating cash flow, no debt. There's no debt service Most of the incremental costs will be in the form of depreciation, over a 30-year period, some additional utilities. We're not a capital-intensive business. We are an assembler, any scaling would be with regards to adding people, and assemblers. Therefore, the mix of fixed versus variable remains very consistent with our previous structure. Thank you very much. Although revenue grew slightly, the number of units dropped by 18%, suggesting that price rises were the main driver of this. Has the higher pricing led to lower demand, or is this a general market factor? Can we expect unit sales to increase going forward, not just higher pricing? Sure. Obviously, pricing was a certainly contributor to growth in 2022. You know, the unit volume changes that we saw across our product lineup certainly is really something as we've attributed in the past. It's really driven by customer project types. It's the type of project activity that customers have really dictates the types of products they choose from us, and that's the benefit of having a very broad product lineup. Really from a sort of assessment of the market health, you know, we get back to we're seeing a very active market. We're seeing our customers have a lot of work in front of them, and we're not really seeing any change in terms of the market climate. We're continuing to see a very healthy, North American market filled with a lot of activity. How sensitive are customers to price rises? In general, pricing is less of a selling discussion. The discussion really revolves around getting the right machine for the application or the scale of the job and the timing of delivery. We have had price increases every year, typically in an inflationary environment. We've actually had multiple in one year. However, for 2023, we have passed through a typical price increase for us once at the beginning of the year. How quickly can you pass on price increases if you're experiencing cost increases? We don't have a very deep order log, typically. Any sort of orders or quotes prior to the price increase tends to flush through relatively quickly. We have experienced in the past couple years, very good traction when we do pass through price increases. I just would add, too, we are able to adjust to changing conditions in terms of if input costs change based on supplier cost increases. We have a lot of flexibility to adjust our pricing mid-year, as we did in 2022. Thank you very much. Are you seeing any trends emerging outside of, say, data centers and large storage facilities that Somero can capitalize on going forward? Are you exposed if there's a reduction in building data centers and large storage facilities? It's a sort of double question on both sides of that. Sure. Basically, it's important to understand our customers are concrete contractors that do work on a wide range of types of buildings for different end markets. They're essentially agnostic as to what type of project it is. Generally what we've seen in the past is there's going to be evolution in terms of what types of projects are more prevalent than others. Certainly we're seeing a lot of activity with reshoring, you know, bringing assembly and production capabilities back into the U.S. as an example. Certainly data centers, you know, chip plants, medical facilities, you know, there's a range of types of activity that's increasing. We really don't predict what end markets are going to be the most robust because at the end of the day, it really comes down to the overall volume of work that our customers have. That's sort of how we gauge the momentum of the business. Thanks very much. What happened to the sales of Line Dragon, and will these recover? The Line Dragon sales, it's actually a good example of the types of projects in the market dictate the types of products that we sell. The Line Dragon is a niche product. It's not a Laser Screed. It's really suited for often mezzanine type work, you know, particular footprint work, where there's a requirement to have concrete hose as opposed to a concrete boom pump. That type of project was less prevalent in 2022 than in prior years, but we continue to see great opportunity for that product in future years. It will be, there'll be some ebbs and flows in terms of volume. Thank you. In terms of the drop in unit volumes, is it indicative of a weaker construction market or down to difficulties of supply? You know, the overall activity level that we see has been very consistent throughout 2022 and to start of 2023. That's really, you know, the primary means of assessing the health of our primary market. Certainly as we did mention in the second half of 2022, you know, there are certain supply chain constraints, particularly the unreliable supply of concrete to job sites, which had the practical impact of slowing the pace of work for some of our customers, not changing the overall volume of work that they have on the books, certainly slowing the pace of work, which very well could have had an impact on trading, difficult to quantify. We're seeing, you know, those conditions basically continue on into 2023, but not worse. Thank you. Does the slight rise in remanufactured machines suggest that customers may be under some pressure and looking to buy used machines which are cheaper? No, no. It really is the sales of the remanufactured equipment is primarily a function of availability of inventory, trade in-inventory. You know, customers choose the remanufactured equipment for a variety of reasons. That's typically is a good entry-level product or perhaps a good backup piece of equipment. Those reasons have always been the driver for sales of that product line. You know, it really depends. Ultimate sales really depends on availability of our inventory. Thank you. What's the average age? What's the lifespan of most of your units? The useful life of our equipment varies by type of product. Our largest equipment, the boom screeds, has a long useful life, but it's really dependent upon care and maintenance. Generally, the life of one of our boom screeds would be in the high single digits in terms of years. As you go down the product lineup, into the Ride-on Screed category, it's generally more in the mid, you know, five to seven years. The lower useful life is really determined by the fact that those smaller machines are used more frequently as well as and therefore transported more frequently and subject to more wear and tear. Thank you very much. What percentage of sales are direct to customer versus percentage through distributors? If any distributors, how many distributors do you work with across the U.S. and then separately the E.U.? Hello, this is Jack. We have very few distributors around the world. They're all located basically in the United States. We use a couple of them in rural locations to work in areas that are relatively sparse for us. We prefer to go direct to the customer and provide him the sales and the service. In Europe, we use. Basically, they're not distributors. They're really doing translations for us. They occasionally give us a few leads. Overall, we're a direct sales and direct service company. Thank you. What's the impact of currency movements on international sales? The currency, you know, our selling prices are pegged to the dollar. Weakening foreign currencies, local currencies, you know, have the effect of being an effective price increase in those particular markets. Generally what happens with the fluctuations, it could impact the timing of purchasing. It doesn't necessarily determine that a purchase will occur. We've experienced a strong dollar throughout 2022 and continue to have really good performance internationally. It hasn't really impacted our sales. Thank you very much. The company spent a lot on new hires in 2022 with all the attendant ongoing costs, which delivered, if anything, in terms of revenue in 2022 and a lower gross profit. The company is saying revenue in 2023 will be comparable to 2022. It seems little delivery from these hires and the EBITDA will be down. Why are you hiring staff if you can't get value out of them after 18 months? There are two aspects to that answer. First and foremost, we experienced a significant growth in 2021 in revenue of 50%. Therefore, for a period of time, the hiring really lagged the demand or the revenue for most of the year and had to catch up really in 2022. That's just to support that base of business. In addition, with the growth outside the U.S., which introduced an additional layer of complexity from an exporting/importing standpoint, managing the inventory movement. That then also required some additional resources. Some of the new investments that we make in sales and product development, really the benefit will be recognized in the future. Our sales folks take some time to train. The product development folks, really creating ideas that ultimately, materialize into new products is gonna fuel growth in the future. We've always. This is our model. We've always sort of pursued these investments, which we do in a very measured way, and we'll continue to do that going forward. Great. Thank you very much. In customer organizations, who makes the buying decision, and how does that person weigh up the price versus service versus reliability versus satisfaction of technical standards? Is there a factor that you don't get fired for hiring IBM? Sure. The purchasing decision is generally, you know, kind of taking a step back. Our customer base consists primarily of small businessmen, small privately owned businesses. The purchasing decision is made by oftentimes the owner operator of the equipment. That basically sort of purchase evaluation comes down to that particular individual determining what is the payback on this investment. By payback it's obviously the value the equipment provides to them, but also in consideration of the total package, including the training, the support, you know, the access to expertise that we provide. It's the complete package. It's a very compelling value proposition. Certainly, our customers understand that there are many very happy customers of ours across the world that are really the best advertising. Tremendous. Thank you. How is Somero's customer proposition unique, given that competitors also have a service component? When a competitor wins an order against you, what's been their key selling point that wins them the order? When it comes to competitors, we've had competitors since 1989. All the competitors claim that they have a service factor to their business. There's an awful lot to the strength of the service factor. It can go anywhere from just teaching you how to drive the machine to actually teaching you how to become profitable once you have the machine, how to put down slabs of concrete, which very consistently, and also training you and all of your employees in the proper way to utilize the Laser Screed and also train you in the proper way to put down a slab that meets all the specifications that exist for that particular job. Where flatness is the most important thing, being able to teach somebody how to use the machine and how to meet this flatness specifications is critically important. We have over 30 years of training people and training them to be successful. That's what separates us from everybody else. When it comes to the factors that a customer that didn't buy our machine, those aren't usually things that that customer is willing to share with us. Typically, if they decide to buy somebody else's machine, they have their own personal reasons and they'd rather not explain them to us. Thank you. Why do competitors not focus on the sort of service that you offer as part of their proposition? The service we offer is very, very technical because it as I just said, it doesn't go to just teaching you how to drive the machine. We have direct sales and direct service because we're not a machine builder that just sells you a machine. Our job is to make you successful, because if that customer is not successful, we will not be successful. We teach you and your employees in every aspect of the business, and we continue to help you with our great support and service around the world, 360 days a year, 24 hours a day. Any problems you have, anytime, you can get in touch with a certified engineer, and we're gonna make sure that you are highly successful as you go forward in life. That is not true for our competitors. Tremendous. Thank you very much. I believe manufacturing is executed by third parties using your designs and specifications. Number of suppliers and locations. What's the risk of the IP leakage in these third-party environments? Sure. Actually we do not utilize third parties to construct our equipment. We are an assembly business, so we procure parts and components from tier two and tier three suppliers into our Houghton facility and complete the final assembly and testing of the product and then ship it to our customers. We have a very wide range of suppliers that provide those components. They're primarily based here in the U.S. or in the U.S. domestically. We don't have any real reliance on anything that's procured from Asia. It's primarily U.S. with some European components. As a result of all that, we really don't have any risk of IP leakage to any kind of contract manufacturer. Tremendous. Thank you very much. Does the customer maintain the equipment or do they get someone else to do it? Is it costly to maintain? Is it technically difficult to maintain? The, the customers, the owners, do maintain the equipment themselves. It, you know, the difficulty of maintaining the equipment, is not technically difficult, but it does require an element of training in terms of best practices, which is part of the value we provide the customer. We want them to get the greatest value from the equipment and have it perform optimally for a very long time. It's something that we go through in terms of the training. As far as the cost, it's very comparable to other pieces of capital equipment. It's not particularly different. It really just does require discipline and diligence because it is a significant investment. For our customers. Thank you very much. Going forward, do you see that U.S. softness will continue to be offset by growth in Europe and Australia? We continue to see growth opportunities in Europe and Australia. Certainly we're looking to increase the contribution from our international markets to our overall revenue base. U.S. market we continue to see as being very active, and it's a market that we feel confident in terms of the underlying health of the market and the work our customers have in front of them, as previously mentioned. I think as you look over time, you know, we're certainly hoping to have a increased overall percentage of revenues coming from markets outside of the U.S. That's a long-term target for us. Thanks very much indeed. Will you be able to harness the opportunity that comes from public government grants? For example, in Italy, there are many tax benefits for general contractors who buy construction equipment. Do Somero know how to exploit these chances of growth? You know, our sales team in those markets is certainly aware of different incentives for customers that may come from purchasing a piece of our equipment and certainly uses that as part of their selling process. It really comes down to the customers choosing to pursue that to subsidize the purchase. We certainly use it whenever we have those opportunities to basically help the customer make the purchase even more attractive. Thank you very much. What's management's basis for their preference for dividends over share buybacks, considering the company's low valuation? Sure. Historically, as you know, we have allocated our capital back to shareholders via dividends. That has been the overwhelming preference of our existing shareholder base. We do evaluate share buybacks continuously and have to date limited the share buyback just to offset the equity programs internally. It is something that we're open to for sure. The predominant share of our investor base have expressed very strong preference for dividends. Thank you very much. How do you evaluate what you invest in and what return you're looking to get from that? It really comes down to the type of investment. In terms of investment in equipment or, you know, factory expansion, you know, there's always an element of strategic importance. Certainly in types of more general purchases, it's gonna be payback on, you know, what level of improvement or efficiency we would gain from that type of investment. When it comes to investments in terms of people or investments that really are strategically important to execute our growth strategy, you know, that assessment really comes down to are these resources and investments necessary to give us that future benefit in terms of revenues and help us execute this growth strategy and in some cases diversify our revenue streams. That assessment has more of a long-term view, but certainly it's all geared towards providing additional value to the organization and ultimately to the shareholders. Thank you. How large is the total addressable market in the U.S.? Do you need underlying growth in U.S. construction to sustain Somero sales? There is not data available to accurately assess or quantify the addressable market. The way we look at it is in terms of penetration of our different product lines. You know, really, when you look at the breakdown, our largest equipment, the large boom screeds, have a very high penetration rate in terms of the market. Large projects, large footprint facilities, warehousing is going to invariably use a Laser Screed. It's the only cost-effective way to reliably hit the specifications in a very productive way. As you move down the product lineup, into some of the smaller equipment and ancillary equipment, there's much less market penetration. That's where the opportunity lies in terms of longer term growth in the U.S. domestic market. Then internationally, it's similar in the developed markets. you know, you get outside that into, in terms of emerging markets, it's overall very low penetration. Thank you very much. Can you give us any idea what January 23 sales were like compared with January 22? How did the World of Concrete go? You know, as we started the year, we were fortunate to have had a an early World of Concrete in January in Las Vegas that was very well attended. It gave us an opportunity to really engage. What we heard consistently across the board was a lot of confidence in terms of the work in front of our customers in 2023. Again, in some cases it expanded to 2024. Our customers had a, you know, good sense that 2023 was gonna be a very busy year for them. That's really how we gauge our outlook for 2023. That's, you know-Overall, the activity level that we are seeing from our customer base is similar to what we've seen in prior years. Thank you very much. In light of recent news in the banking sector, are your unsecured cash deposits overexposed to any banks in particular? No, we're diversified in terms of our banking. We've got banking relationships and accounts around the world in our key markets. We've been reassured from all of our banks that are global banks in and of themselves, that they are in a very healthy and secure financial position. Thank you very much. Could you flesh out the competitive landscape? Who are the key competitors, what do European and Australian contractors currently use? there's many As I said before, there's many competitors, in all parts of the world, and they've been around for a long, long time, and competitors will continue to be around for a long, long time. We think all of them are ones that, we work hard to be doing a better job than they are. In terms of, Australia. Competitors. I don't think there are any competitors. Yeah. There may be some in Australia, but they're Basically, we're not aware of it. The ones we're most aware of, are the ones that are in Europe, and U.S., and a few in China. It's a very scattered amount of competitors, and they come and go as time goes on. Thank you. While you're investing for growth, do you have a strategic plan of where growth will come from? Sure. It's been consistent through the years. The focus is on new products and international penetration. That's gonna continue to be the avenues of growth. The strategic plan is to capitalize in those areas through investment, and really focused activities. That's something we'll continue to do for years to come. Can you tell us a little bit about the traction that you're having in the Indian market? The writer here has seen Somero India promoting on Twitter. Sure. We had a very good year in 2022 in India. Actually a record year. We had two and a half million dollars was contributed by that particular market. We're really pleased with that performance. India, it continues to be, you know, a market that we continue to see opportunity. However, we do see some inherent limitations, primarily infrastructure related, which really we think is a inhibitor to dramatic improvement in that particular market. That really relates to an inability to get adequate building materials, concrete to job sites. That inherently limits the size of the placements and ultimately the size of the projects that our customers can work on. We're pleased with the performance it's given us. Thank you very much. Is shipping a significant cost? No. Shipping is not a significant component of our cost structure. I think with shipping, the bigger challenge is the reliability of timelines. You know, that's been something that's not unique to us, it's just something that we have to work to manage, and our operational team does a great job of doing so. Thank you. Although not under your control, perhaps in the U.K., we don't see concrete shortages or in Europe, but what are the constraints in the U.S., and what are the factors affecting the concrete going forward in 2023 and beyond? Sure. As I mentioned, we did see, some, you know, across the country in pockets, we saw an unreliable supply of concrete to job sites. There's an element of rationing that occurred, which slowed the pace of work by customers. The sort of the drivers of that particular challenge, it really came down to two elements. The first being there's a lack of drivers to basically to transport the concrete from the ready mix batch plants to the job sites, as well as also transport the raw materials to the batch plants. The second being there are has been some shortages of some of the raw materials, particularly the cement, the key elements of the mix. That has caused basically a, you know, again, a rationing and an impact to the workflows of our customer base. Thank you very much. Why do you focus your discussions on EBITDA rather than pre-tax profit? We, you know, we believe EBITDA has consistently been a good metric. It's effectively a proxy for cash flow. We think it's a clean way to look at the overall performance of the company. You know, we also think it's very suitable for an equipment producer like us. Thank you very much. As at 2022, the group has a net cash position of $33.7 million, which is cash and cash equivalents, less borrowing and bank obligations and exclusive of deferred finance costs. I'm therefore under the impression that this figure does not include the group's leases, finance leases. Is this correct? It does not include. Our finance, our leases really are in the form of vehicles, for our salespeople and that sits on the balance sheet as part of our fixed assets and our liabilities, and is not part of our cash. Our cash is true cash, that we have, obviously on a GAAP basis. Thank you. On average, what's the useful life of the group's patents? It really varies. We have a portfolio of over 100 patents, some very, very recent. Our engineering team continues to add to the portfolio, so it's a very difficult question to answer with the in terms of the average useful life, 'cause it's continually changing, but it's continually growing. Thank you. Are you actively working on new equipment ideas for entirely new markets, like the Sky Screed for high-rise market being an example? Are there other examples? Sure. We have a really active product development funnel that explores really, you know, again, kind of both types of product development enhancements to our existing core products as well as completely new. In both cases, we're exploring all those opportunities to see what really has the strongest value proposition that we believe we can come up with a very effective quality solution for our customers. Yes, it's something we certainly continue to look at. Will you be looking at a electric vehicle rather than the normal combustion engine? Sure. You know, we continually stay abreast of the emerging trends, and some of the requirements of different markets, particularly, you know, those types of requirements are more seen in Europe, and potentially Australia versus in the U.S., which isn't quite as far up the curve on that. We certainly are continuing to stay very current on emerging trends and emerging technologies. Thank you. What's your view on acquisitions to aid growth? We've always, you know, we've basically exclusively been an organic growth company up to this point with very few acquisitions that have taken place through the years. The last being the Line Dragon asset acquisition. We continually look. We have a very disciplined criteria. We want it to have a strong margin profile. We want it to be a proprietary product. To date, we haven't found anything that fits that profile. As a result, we've continued to distribute cash in a very disciplined way to not carry excess funds on our inefficient excess cash on our balance sheet. Tremendous. Thank you very much. We do have lots more questions, but we've run out of time. Do you have any closing remarks? I wanna thank everybody for coming. Greatly appreciate all of the questions. They're excellent questions. We look forward to seeing you the next time we have a webinar. Thank you very much. Many thanks, Jack, John, and Enzo. For everyone here, you'll now be taken to a webpage to give feedback on today's presentation. If you're unable to complete it now, you'll receive a follow-up email. We'd be really grateful if you could take a few minutes to complete. Many thanks for joining us. This is the end of the webinar.