Somero Enterprises Aktie

Good afternoon, and welcome to the Somero Enterprises Interim Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Tim Averkamp. Good afternoon.

Welcome, and thank you for joining us. We're pleased to be here with you today to review our first half 2026 results. I'm Tim Averkamp, CEO of Somero; and presenting alongside of me is Enzo LiCausi, our CFO.

Here's how we'll run through the slide deck today. I'll open with some context on the business and our key messages, then cover our governance update. Enzo will take you through the first half financials in detail. I'll come back to the strategic plan update and then close on the outlook. We've kept time at the end for questions.

Before we get into the numbers, a brief word on our 40th anniversary. Somero was founded in 1986, and this year marks 40 years of continuous operation. Very few businesses in our industry reach 40 years and few are still while defining the category they operate in. That longevity isn't sentiment, it's evidence. We have sustained a global business that has successfully navigated through multiple construction cycles and the standards that customers build to today are the standards that Somero helped create.

That legacy is the foundation for the next 40 years. The discipline, innovation and closeness to the customer that got us here are exactly what delivered this first half. This is what we are investing behind today through new products in our strategic plan. With that as a backdrop, let me briefly frame who Somero is. For those newer to the story, here's a quick overview of Somero. We created the laser screed category and still lead it.

Our promise is 3 words: faster, flatter, fewer. Our equipment lets contractors place better floors with higher productivity and fewer people. That reach is global with customers in more than 90 countries, served from 6 locations, including our headquarters and training institute in Florida and manufacturing operations in Michigan. And that model goes well beyond the machines. Parts, service and training keep customers productive and give us aftermarket recurring revenue alongside the equipment sales. There's more information on our products and financial profile in the appendix. That's who we are.

Let me turn to the key messages we want you to take away with today. Three things stand out from the first half. First, a strong return to growth. Revenue was up 22% to $48.7 million. Markets did stabilize, but this result is above all about our own execution, winning new customers, converting the pipeline and holding price and cost discipline as we scaled. Growth was broad-based across every region in most product lines, and it dropped through to the bottom line. Delivering 22% growth against ongoing macro uncertainty is genuinely a strong outcome and reflects the actions this team has taken.

Second, our strategy is firmly in action, and it is working. Fortify, innovate and amplify are how we run the business day-to-day and the results are measurable. New customers are now 28% of direct machine revenue, up from around 21% a year ago. That is deliberate share gain, not a market effect. Recent launches are gaining traction across the range and proactive shareholder engagement has strengthened our governance and our Board. This is the execution engine behind the numbers you just saw.

And third, that momentum gives us the confidence to upgrade our full year 2026 guidance to around $95 million of revenue, delivering $19.5 million of adjusted EBITDA. Customer activity is steady and customer backlogs are healthy, and we enter the second half with real momentum behind us. We stay alert to tariffs, interest rates and geopolitical conflicts, particularly in Europe, but we are managing through them. The fundamentals are firmly intact, and we are well positioned to outperform as conditions improve.

Let me start with governance because that's the foundation that everything else sits on and it's been a real focus for us this year. At the end of August, we published an RNS announcement regarding the governance and Board update. We announced a review of our governance arrangements and legal constitution in June, then consulted directly with shareholders, including our largest holders. That consultation is complete, and I want to thank them. Their feedback has helped us shape where we landed.

Two changes came out of that consultation. First, moving towards majority voting in uncontested director elections; and second, moving from a 3-year staggered term to a 2-year staggered reelection. Both raised the bar in accountability. These will go to shareholders for a vote at a special meeting to be scheduled soon. Alongside that, a Board refresh is in process with a search for a new independent nonexecutive director wrapping up very soon. We are deliberately shifting the balance towards independence while maintaining continuity and deep industry knowledge around the table as our shareholders have asked.

The point I'd leave you with is this, it's a very positive one. We listened, we acted, and now we have a framework with stronger accountability and a more effective Board. Let's walk through the changes in Board evolution. As previously announced, Larry Horsch will step down as Non-Executive Director. Howard Hohmann takes on the role of Chief Commercial Officer and transitions off the Board as a Director. This is a deliberate move to put his commercial experience where it drives the most value, closer to the customers, the channel and our growth initiatives.

I want to thank them both. Larry for many years of service and counsel, including his time as Chairman and Howard for his contribution around the Board table, which continues in this new executive role. There are 2 seats in play. As I mentioned, the search for a new independent nonexecutive director to succeed Larry is expected to wrap up in the coming weeks. We are also working towards filling the seat that Howard vacates. We will update the market on both of these as they conclude.

Taken together, these moves strengthen the Board. Bob Scheuer as Chairman, with Tom Anderson and Anne Ellis brings continuity, industry knowledge and a track record of independent oversight. The 2 additions noted will add fresh perspective and lift the nonexecutive share, sharpening independence and accountability. Enzo and I continue as executive directors and the executive team is otherwise unchanged. The result is a Board equipped to steward the strategic plan and to hold the management team accountable for delivering long-term shareholder value. With the governance work in good shape, let me hand it over to Enzo to take you through the highlights of the first half.

Thanks, Tim. The first half saw growth return across every territory in most product lines with recent new and next-generation products contributing meaningfully to revenue. That growth came with real operating leverage reflected in the increase in profit margin, which converted efficiently into operating cash flow. And with a strong cash balance and disciplined allocation framework, we returned over $9 million to shareholders while continuing to invest in the business. In looking at the overall market, the stabilization trend we pointed to in late 2025 has continued.

Project activity and customer backlogs have picked up with some customers reporting backlogs well into 2027 and broad leading market indicators continuing to signal improvement, albeit gradual. As you can see in the graphic on this slide, the market is bifurcated between growth and data center-related work, which today accounts for approximately 7% to 10% of total private nonresidential construction and ongoing declines in most other segments.

We expect that demand for AI-led infrastructure will continue to translate into demand for our products. And while the other segments have not yet returned to growth, the declines are lessening and excess industrial capacity is shrinking. We believe that this sets the stage for continued market expansion in the coming years. That said, we balance the market outlook with lingering uncertainty around interest rates, strict immigration policy, tariffs and geopolitical conditions. While our customers report a positive outlook, they remain cautious.

Lastly, we have not seen any changes in the competitive landscape, and we maintain a dominant market share. With that backdrop, we'll now turn to the financial highlights for the first half of the year. H1 2026 revenue was up to $48.7 million, up 22% compared to the prior year, and that is the primary driver of all the improvements on this slide. We held gross margin at approximately 53% and through significant operating leverage, increased profitability and operating cash flow. After returning over $9 million to shareholders through dividends and share buybacks, we ended the period with a healthy cash balance just under $30 million. This positions us well to continue organically funding our strategic initiatives and capital allocation priorities.

Moving on to the regional performance. North America remains by far our largest market at 80% of group revenue. Revenue increased 22% to $38.9 million, led by our boomed and ride-on screeds. Those are the machines used for larger projects that were most heavily impacted during the down cycle. So it's encouraging to see that volume return. Our customers report steady activity and robust backlogs, and we're seeing improvement in large project starts. Aside from the data center work driving demand, as I mentioned, we also benefited from a broadening of our customer base.

Direct machine revenue from new customers was 28% of total direct machine revenue in North America, up from 19% in H1 2025. The introduction of the Hammerhead, which is intended to target customers at the broader end of the market and expanding our dealer network have also contributed to new customer acquisitions with 65% of Hammerhead sold through dealers going to new customers. Tim will cover this a bit more later in the presentation.

Turning to Europe. Revenue increased 41% to $4.9 million. That was driven by increased activity across approximately 12 countries in the region. Although data center activity is also up in Europe, the underlying market remains somewhat constrained and private investment cautious as macroeconomic and geopolitical concerns continue. Nevertheless, Europe remains a focus with significant long-term growth potential as wide placement flatness specifications spread across the region and as we deepen penetration in existing countries.

Direct machine revenue from new customers was 28% against 38% a year ago. Due to the relatively modest size of the business in this region, a small shift in volume can have a significant impact on this ratio. Although the competitive landscape is more intense in Europe, there is no evidence that our market share has changed. On the dealer side, of the Hammerhead sold to dealers in Europe, 45% went to new customers, again, demonstrating that the Hammerhead design and dealer strategy are materializing into a broader customer base. Our service center in Belgium continues to support local repair, service, parts and training, which underpins the aftermarket sales and keeps us close to customers.

Moving on to Australia. Revenue increased 12% to $2.4 million. The market continues to face severe shortages of skilled tradesmen, persistent inflation and tight monetary policy. Against that backdrop, the growth in the first half was solid. The direct machine revenue from new customers was 16% compared to 25% a year ago. Like Europe, given the relative size of the business in Australia, a couple of machine sales can skew the ratio from period to period.

Our focus remains on broadening market awareness and expanding the dealer network, and we continue to see opportunity to deepen penetration of our small line machines converting manual labor. Finally, Rest of World. Rest of World includes Latin America, India, China, Middle East, Korea and Southeast Asia. Revenue increased 7% to $2.5 million, driven primarily by higher sales in Latin America. We have a relatively small base of business in each individual geography. As such, trading will fluctuate from period to period, which is further exacerbated by the geopolitical conditions in the Middle East.

Moving on to product performance. This slide sets out comparable sales by major product category. The headline is growth across most all product categories. Boomed screeds and Ride-on screeds increased 33% and 45%, respectively, primarily driven by volume benefiting from improving market conditions and contributions from new and next-generation products.

Our large line Boomed screeds have been on a decline as larger scale projects were most affected by higher interest rates and tariffs. Therefore, it's encouraging to see that, that downward trend has reverted back to growth. The 3D Profiler system, which expands our machines capabilities to screed contours grew similarly. Increasing recurring revenue is a strategic focal point as we look to offset cyclicality in machine sales. And although the increase in aftermarket parts and service is modest, we are in the midst of implementing a number of initiatives aligned with our strategic framework, which are at various stages and all geared at driving recurring revenue. Tim will discuss this more in the presentation.

Next, we'll take a look at revenue through the P&L. Picking up with gross profit, which increased 22%. We held gross margins at around 53%, overcoming suppliers, steel and aluminum surcharges and tariffs through manufacturing efficiencies and component sourcing actions. Total operating expenses were $17.6 million, up only moderately in the context of the revenue growth, which underscores the operating leverage of our variable cost structure and resulted in an increase of 72% in operating income.

Other income, which is primarily favorable foreign exchange impact and net interest income took income before taxes to $9.1 million. The effective tax rate was 26.3% against 47%, reflecting the nonrecurring deferred tax valuation charge last year. This all nets down to $6.7 million of net income against $2.6 million last year.

Now turning our attention to the balance sheet. The balance sheet remains very healthy. We ended the first half with net cash of just under $30 million against $33 million at the end of last year. That movement is entirely a return of capital, which we'll cover in the coming slides. Accounts receivable fell 20% to $5.6 million on strong collection. The majority of our sales are paid in advance. So generally receivables stay low relative to revenue. Inventory increased 5% to $22.2 million, supporting new product introductions and second half demand. Stockholder equity stands at $79.8 million against total liabilities of just $12.5 million, remaining unlevered and flexible to deploy capital to maximize returns.

Turning to the cash flow. The business is generally highly cash generative and the first half bears that out. Strong profits, coupled with efficient working capital led to a 76% increase in operating cash flow. The net working capital outflow was largely the inventory build I mentioned earlier. Capital expenditures remain modest against our typical run rate of around $2 million a year, and we have no major capital projects planned. On financing, we paid $3.4 million of dividends, which was the 2025 ordinary dividend. The prior period also included supplemental dividend, which we've shifted to share purchases in 2026.

And this segues into the next slide about our capital allocation framework. We first prioritize a strong balance sheet, ensuring sufficient cash to support our cyclical business. Secondly, we invest in the business where we can get the greatest return on invested capital. Being a capital-light business, investments in the business are primarily in the form of strategic hire and initiatives. Next, we consider options to create shareholder value either through strategic acquisitions or returning capital to shareholders via dividends or share buybacks, weighing a number of factors, including acquisition prospects, market conditions and our share price, just to name a couple.

Our ordinary dividend policy has remained unchanged, and that is 50% payout of adjusted net income. The Board has declared an interim dividend of $0.05 per share, which is up from last year at $0.04 a share and is payable on October 16 to shareholders of record as of September 18. As we assess alternative options for deploying capital, at present, we believe that we can maximize shareholder value returns by buying back shares.

As such, we completed $5.8 million in the first half against $800,000 in the prior period, reducing our outstanding share count by 4.5%. We added a further $6 million to the authorization for the rest of 2026. Stepping back a moment, through the end of H1 2026, we've returned a total of $180 million to shareholders over the company's lifetime while maintaining a strong balance sheet. That is the track record behind this framework, and it leaves us with the capacity to keep investing. In summary, the company financial health remains robust and cash generative. Now I'll hand it back to Tim for the strategic plan update.

Thanks, Enzo. Let me turn to our strategic plan and where we stand today. We introduced Somero 3.0 to investors last September and walked through it again with our full year results in March. So now I want to focus on execution. The 3 pillars, fortify, innovate and amplify are deliberately unchanged. That's important. The pillars drive consistency and focus. What has changed is the depth. The plan is now embedded in how we operate day-to-day, owned by leaders and teams across the organization, and it drives where we spend our time and our capital. The first half gave us a clearer read on that execution. With volumes recovering despite some of the pressures, we can see the initiatives working.

Let's start with the first pillar, fortify. Under fortify, our focus is on reinforcing the foundation of the business. Starting with operational excellence. We have a highly successful operations team that demonstrates great agility while also embraces continuous improvement. Lean visual management, success and workplace organization are now part of how we run the plant rather than initiatives we talk about. The balance scale on the slide -- left-hand side of the slide shows one example of that output. On one side are the cost pressures, input inflation, supplier surcharges and to a lesser extent, tariffs.

On the other side are the actions that are within our control, efficiency gains on the floor, sourcing and supplier negotiations and aligning our cost to demand. As you can see, the 2 pans of the scale sit level, and that's the point. We were able to counterbalance the pressures deliberately, holding gross margin around 53% while volumes grew. The pressure did not reach the bottom line and the margin profile you expect from us is unchanged.

Two things I would emphasize. First, this is repeatable rather than a one-off cut because it comes in how we run the operations every day. Second, we did it without hollowing out the business, which is why we could respond as quickly as we did when activity picked up. The second area is organizational development. Strategy does not execute itself, our people do. So we treat investment in them with the same discipline as investment in the plant or in new products. That means continued investment in training and development, structured cross-functional collaboration, so teams solve problems together rather than in silos and succession planning that builds bench strength at every level, not just at the top.

We are deliberately developing the next generation of leaders internally. For investors, the point is engagement and retention. This is a specialized business and the know-how sits with our people. An engaged, well-trained team is what has allowed us to respond quickly when activities picked up, and it's what protects continuity of execution through the cycles. Every element of the strategic plan runs through the organization. So this is the capability that makes the rest of it deliverable.

Staying with fortify, let me turn to how we support customers. Customer support is foundational to Somero and one of our most notable competitive advantages. Our customers are on job sites where downtime is expensive. So our 24/7 technical support, training and field service teams matter enormously to them. We've been expanding what we offer around the machine. Service agreements and fleet management let customers plan for preventative maintenance around their job site calendar rather than reacting to a breakdown.

Telematics gives both sides visibility on machine health and uptime. That shifts the relationship from reactive repair towards partnership. This feeds a broader area of focus, growing our aftermarket recurring revenue. Service and parts are less dependent on the capital equipment cycle. They carry attractive margins and deepen the customer relationship. Training sits alongside that.

Our on-site contractor training is now complemented by a structured education through the Somero Concrete Institute, which we've now extended into Europe with facilities in Belgium and Chesterfield in the U.K. Belgium is worth a word because it has evolved. We stood it up around Brexit as a staging location for machines, and we are now building out the parts, service and training there. Coursework is underway at Chesterfield. And over time, we expect this to support higher utilization for customers and dealers and stronger aftermarket engagement for Somero.

From a broader perspective, globally in the first half of the year, we ran nearly 60 classroom courses for more than 270 participants in addition to delivering on-site training to crew at more than 90 companies across 5 regions. Anyone can sell a machine, very few can support that machine globally, around the clock for the life of the machine and across the customer's fleet. This is where we separate from the competition. That's fortify.

Let's move to innovate. Innovation has been core to Somero since our inception, and it's the second pillar. We covered both of these boomed screeds in detail with our full year results, so I'll focus on how they have been received. The next-generation S-15EZ launched in the summer of 2025 builds on a proven platform with advanced automation and precision control, superior maneuverability for tighter job site access and higher uptime. The S-22EZ+ launched at World of Concrete in January is a significant advancement of our flagship platform with more than 30 new features focused on automation, ease of use and connectivity. It came directly out of our customer feedback. What matters now is the market response, and it has been strong. Boomed screed sales were up $17.6 million, 33% versus 1 year ago. These next 2 generation products were a meaningful part of that increase.

That's innovation at the top of our range. Now let me show you what we've done at the other end of the market. We've talked about these 2 products before, so I'll focus on why they matter strategically. Historically, Somero has served the larger end of the market. These 2 products are deliberately aimed at the other end. Hammerhead opens the small to midsized segment with a more accessible entry point and Viper, which debuted at the World of Concrete goes lower still, a compact walk-behind built for small pours and tight job sites.

That expands our total addressable market. There are more than 40,000 concrete contractors in the United States. The large majority have historically been below the size where our traditional products made sense. These 2 products bring that group into reach -- the reach of Somero without competing with our core range. We are already seeing it in the numbers. Ride-on screed sales were up 45% in the U.S. 65% of the Hammerhead sold through our dealers went to customers who had never bought from Somero before. In Europe, 45% of dealer units went to new customers.

The photo on the bottom left brings that to life. This is taken from the jobs of the contractor who was the winner of the Hammerhead raffle at the World of Concrete this year. They are a small operator in the Northwest United States who had been focused on residential work. They were considering stepping up to a screed to take on larger, more efficient jobs but had difficulty with the return on investment. That core is for a 40x 40-foot carport.

Before the Hammerhead, they would have screeded this job by hand. Straight feedback from the contractor is the Hammerhead is a game changer for a small business like ours. The important point is that these are entry points, not endpoints. The arrows on the pyramid show this. New customers come in at the residential and light commercial end and move up the range as their work grows, not only with the laser screed, but with our parts, service and training alongside of them.

Underpinning all of this range is technology, and that's where I'll go next. I touched on telematics when we talked about customer support, and it's worth a moment here because it's becoming a genuine part of how we serve customers. Telematics is now standard in the large boomed screeds. So every machine that goes into the field adds to a connected installed base. It is still in early stage, but the base grows with each delivery. To add to this, we are currently underway with the development of a small machine offering.

That technology turns machine data into insight. We can see what a machine may need before the customer has to give us a call. We can diagnose that machine remotely rather than sending a technician to the site. For a contractor with a pour schedule, support is in minutes and hours, not days.

The value shows up in 2 places. First, improved uptime and utilization because our customers make money when the machine is running. Second, as a direct enabler of Fortify, it strengthens our 24/7 support. It allows us to have proactive conversations about parts and preventative maintenance. This is a long-term build and the value compounds as the connected fleet grows.

Now let's turn towards our innovation pipeline. The products we have just discussed did not appear overnight, and they are not the end of the story. Our pipeline is active and robust. We continue to invest in research and development across all of our platforms, focused on our customers' needs and where they are going. We've also strengthened the capability behind it. We've expanded product management. We've added depth in software engineering, which matters more each year as our machines become more automated and connected.

A launch is just the beginning of a product's life, not the end of the project. We stay with the product in the aftermarket, supporting customers and refining it as we learn how it performs in the field. What underpins all of it is the engagement, the years of R&D experience and the direct input from customers and dealers behind each product. There is more to come. That covers innovate, so let me turn to Amplify.

We've spoken about amplify before, so I want to focus on what we've added and what those additions are producing. We have grown the global dealer network by 23% to 37 dealers, 16 dealers with approximately 50 locations in North America, 14 dealers in Europe and the balance across Latin America, Australia and Southeast Asia. 7 were added this year, 5 in the first half. We've been deliberate about it. We want genuine reach, proximity and real aftermarket support, not a longer list of names. Our dealers largely carry the ride-on and walk-behind screeds, 940s, the 485s, Hammerheads and Vipers where local coverage and quick response matters most, while the larger machines continue to be sold direct.

We have also expanded our product specialist group to accelerate Hammerhead adoption. Coverage is how you win territory. More boots on the ground means we are closer to the contractor and respond faster where local competitors have a proximity advantage. On the outputs, new customers now represent about 28% of direct machine revenue against 21% last year. That's the clearest measures that the expanded coverage is working.

Aftermarket parts and service revenue was $9.1 million, up 9%. And we have an e-commerce platform in development for parts. The intent is simple, easy, anytime ordering, so a customer can find and order what they need whenever they need it. That improves our connectivity to them is a direct driver of aftermarket growth. Everything I've described here is organic. The other way we can amplify our reach is inorganic through acquisition opportunities. So I'll hand it over to Enzo to set out the bar that we would apply.

I set out our capital allocation priorities earlier, so I won't repeat them. What I want to share with you now is how we think about acquisitions. As you know, Somero has grown organically for the most part and dominate the niche market. And while opportunities to continue to grow organically remain, we want to be mindful of other opportunities that can help curb our cyclicality or accelerate expansion of the total addressable market.

However, we're not looking to scale for the sake of scale. Anything we look at must be synergistic and have strategic puts and filters, some of which are presented in this slide. In addition, it must make clear financial sense and be accretive to our existing business over time. Importantly, we will not excessively lever the balance sheet up to do a deal. As I mentioned, our top capital allocation priority is to maintain a strong balance sheet.

Over the past year, we have built a process to source, screen and diligence opportunities against these filters and the discipline to say no when something does not clear them. And nothing proceeds on management's judgment alone. Any opportunity we believe clears this framework and our financial hurdles goes to the Board to be reviewed and tested before any decision is made to proceed. Although no transaction is imminent at this time, we've established the capacity, the process and governance to act. We will be patient and selective about when we do. And with that, I'll hand it back to Tim to close the prepared presentation.

Thanks, Enzo. Let me pull this together. Number one, the first half delivered a clear return to growth. The growth was broad-based across our regions and most product lines rather than driven by any one area. Revenue was up 22% and because that growth came with real operating leverage, adjusted EBITDA was up 59%. Growth that converts to profit is what matters. It also converted to cash. We remain debt free with net cash of $29.6 million. And in the first half, we returned $9.2 million through $5.8 million of buybacks and $3.4 million of dividends.

Number two, our strategy is in action rather than on paper. between our new products and the broader dealer and customer coverage, we are reaching contractors we simply were not reaching before. And we have strengthened our governance with the consultation complete. The constitutional changes go into a shareholder vote and the Board refresh is in process.

Lastly, number three, looking ahead, we are upgrading our full year 2026 guidance to approximately $95 million of revenue, delivering $19.5 million of adjusted EBITDA and $29 million of year-end net cash, assuming the additional share repurchase is fully executed. That implies a second half broadly in line with the first at a similar margin. As such, this is an upgrade built on momentum rather than a back-end weighted assumption.

Before we close, I want to thank our employees. These results are a direct reflection of their contribution, and I'm grateful for their effort and commitment. Let me finish with one last slide on why we believe Somero is a compelling investment. Our investment case rests on 6 core strengths. They reinforce one another, and they have been built and tested over 40 years across multiple construction cycles. We lead the category we created. We keep that lead through innovation and protected technology built around what contractors face on the job site across more than 20 products.

We go to market as a total solutions provider. Equipment and expertise with parts, service and consultative support is one model, which is what keeps customers with us over the long term. Behind all of it is a long-tenured leadership team. That depth is a large part contributor as to why the initiatives that we have covered today have moved as quickly as they have. We sell into markets worldwide. Certainly, the U.S. is the largest market, but we do get balanced when any one market slows.

All this shows up in strong and consistent financial performance, highly cash generative and debt-free with a track record of investing in the business while returning cash to shareholders. Disciplined execution and an expanding opportunity, that's how I summarize this first half. And with that, Enzo and I are happy to take questions.

[Operator Instructions] Today I would like to remind you that recording of this presentation, along with a copy of the slides and the published can be accessed via our investor dashboard.

Tim, Enzo, if I may now move straight on to the Q&A session. And we have received a number of questions on capital allocation. So let's start with these. What minimum cash balance does the Board consider appropriate? And how does it balance share buybacks, ordinary and special dividends and capital investment? How does Somero's share valuation and existing capacity influence those decisions?

Thank you for the question. I'll take that. So we're continuously assessing our cash balance based on our outlook of cash needs to invest in the business organically and potentially inorganically. We do want to maintain a very healthy dividend. That's one of the attractive investment themes for Somero over the years. And so we will continue that. At the same time, we also recognize that share buybacks are becoming a greater preference for shareholders in general and reflecting on the stock price where it is, it's an attractive opportunity for us to maximize returns.

In terms of cash balance and what we'll maintain, again, that sort of depends on market conditions, outlook. Historically, we've maintained a minimum of $20 million to $25 million on the balance sheet, in part to have some cash reserves to offset or prepare for any downturns. But now we also want to maintain that reserve to take advantage of any opportunities from an M&A standpoint that might arise.

I'll just add to that, really continued very deliberate on our approach and conservative on how we look at things, and it's a dynamic scale that we look at over time.

Perfect. Switching gears to questions on acquisitions. Could you outline the strategic and financial criteria a potential acquisition would need to meet, including how you define the cost of capital used for the ROIC test? Can you also comment on the current pipeline of opportunities?

Yes, certainly. So in our presentation, we laid out some broad stroke criteria from a strategic standpoint and from a financial standpoint. And first and foremost, any opportunity that we consider needs to be synergistic and would be complementary to our business. So we're not necessarily looking at any transformational type of acquisition. Obviously, Somero has a great business. We want to protect and grow that business going forward. So anything we would consider will be complementary, be it expanding our addressable market or introducing new technology to our products, geographic expansion.

So a number of benefits that we could augment our existing business and drive or accelerate growth going forward. Now financial criteria, obviously, we've always been very disciplined and conservative in our way. So it would also need to pass financial criteria, be it accretive to revenue, cash flow. In terms of our working capital or cost of capital, excuse me, generally in the range of 10% to 15% is where we seem to fluctuate. And so any deal would have to at least exceed that threshold, if not above that as well. We laid out the financial and strategic framework to allow us the flexibility long term and give us sufficient leeway.

I think there was a question on pipeline. Enzo did a good job laying out in the presentation. Overall is our focus over the past year has really been building the process and the discipline behind it. We continue to look at opportunities. There's nothing that's imminent right now. And so we'll continue to focus and be ready if an opportunity shows itself.

Moving on. Where are you seeing the strongest demand today, data centers, manufacturing, warehouses, infrastructure or other commercial construction? And which end markets do you think have the longest runway?

Yes. So in the presentation, we provided a market update. And clearly, data centers and data center-related facilities is certainly a tailwind. That segment has grown 22% year-over-year. And although some of the other segments have not returned to growth, yet there is activity around warehousing, establishing facilities for that final mile of delivery. Speed to customer is obviously an ongoing theme.

Long term, certainly, AI is going to continue as a trend. And our customers are generally agnostic to the end application. The same customer will do a warehouse or manufacturing facility or a data center. So at the end of the day, we're agnostic to the end application. But we do see that some of these other markets that have been slower in the past couple of years are starting to bottom and should start entering a recovery here, hopefully in the not-too-distant future.

Next question here asks, if you look through the unusually strong post-COVID period and the soft environment more recently, how do you think about a normalized mid-cycle level of revenue and profitability for Somero?

Yes, that's a good question. I'll start with that, Enzo, you can add to that. I think very difficult really to predict what the new cycle looks like. If you go back even before the financial crisis in the 2008, '09 time frame, it was historically a very repeatable construction equipment cycle, probably over 3 cycles. And as we know, during COVID, that's really changed as well beyond that. And so I think where we are today, we certainly see upside. Enzo talked about some of the end markets that our customers are using the product for. So we see growth there. Certainly, from a profitability, we've demonstrated that as the business grows and we scale with that, we can add certainly to the bottom line overall.

Yes. I guess the other element that I would add to that, aside from market growth, really entering a new customer segment for us, which is sort of at the bottom end of the market, which is much broader. Historically, Somero has served the very top of the market, customers that are doing data centers or Amazon warehouses, real high-profile complex projects. And then the folks at the bottom end of that pyramid, the entry point in terms of price and ROI just wasn't enough there for them to make an investment.

So with our recent launch of the Hammerhead, which is priced to target this customer segment and designed for simplicity. So it's less complex and the expansion of our dealer network really is getting us to a new customer segment that we wouldn't otherwise attract. As I mentioned in the presentation, our percentage of revenue from new customer increased in the first half of this year to 28% from 18% in the same period last year in the U.S. So that's indicative of that strategy kind of materializing and bearing fruit.

That's a great point. So really expanding our overall total addressable market that would exist today.

Thank you. Next up, with your very high market share, what do you believe is the hardest part of the business for a competitor to replicate?

Yes. I think what we talked about through the presentation is really our customer service support and our intimacy with the customers, the knowledge that we have and how we support customers is really key. I talked about in the presentation, our customers are doing these jobs in the middle of the night in a lot of cases, and it's critical for them to be up and running.

So the service and support, really the efforts that we have around fortify, improving our service agreements, improving fleet management, really making it even closer, adding to our training portfolio. And then on the amplify side, adding more dealer coverage, more boots on the ground to serve those customers is really key. So I think we've got a moat around the business today. We will make that even stronger. It's difficult to replicate with the years of experience that we have in the field.

And following from that, an investor asks, provide an update on competitive position of the company relative to its competitors, including market share and margin profile. If there's anything that you'd like to add?

Yes, I'll take that one. We haven't seen any significant changes in the competitive landscape period-over-period. As we have mentioned in earlier reports, a couple of years back, some of the Chinese manufacturers were making their way into European countries in Spain and Portugal, in particular. And that really hasn't changed ever since then. The moat around the business that Tim referred to the barrier of entry is really difficult for a competitor to replicate. And that's where Somero, aside from the products, the quality, but where Somero shines is that consultative service that we provide to customers, their support.

A lot of these pours occur overnight because of weather conditions and other factors. If a machine doesn't perform as intended on a job site and the machine needs to be pulled, that delays the entire project and can cause the contractor significant financial ramifications. Therefore, having a company like Somero that's available 24/7, 7 days a week, you can have a technician on the line within 10 minutes, and we can troubleshoot 85% to 90% of problems in the field just by the phone. And if we need to deliver a part, we can do so overnight.

No other competitor can provide that level of service. And then you add on top of that, the training, the level of expertise that we have, it's a pretty deep moat. And we continue to focus on it to make it even deeper and wider to make that barrier of entry for our competitors even more challenging.

And we continue to focus on being the technology leader, right, making sure we stay ahead of the game, which is really key for us. Great question. Thank you.

Perfect. Another one here asks, what is the typical payback period for a contractor purchasing a Somero machine? And how important is ROI in the purchasing decision?

Great question. I'll take that in reverse. The ROI is very important. I mentioned earlier when we talked about the Hammerhead and targeting a new customer segment where they couldn't justify an ROI on our other equipment that could range, say, $300,000 to $600,000. And so coming out with a product that's properly priced where depending on their utilization, they can justify that ROI. Generally, it's 1 to 2 year. Again, it depends on utilization in terms of payback or it could even be less. It just -- it really depends on the utilization, the size of the project and obviously, the type of product it is.

That's really where our strength shows. Again, we have over 20 different products that are available. When our teams work with the customers, we can help them define what the right solution is, right? We're not just selling them X or Y. We've got multiple alternatives that really fit the application and what their needs are.

Next question here asks, I appreciate you assemble your machines in the U.S., but wondered if you imported parts from China and have therefore been hit by tariffs.

Yes, good question. We have been hit by tariffs, but to a lesser extent than a lot of the other OEMs. 85% to 90% of our components are sourced domestically. We do bring some components in from Canada, Mexico and some electronics from China, but the vast majority are domestic. And therefore, through some other cost-saving initiatives and increasing our price on the equipment, which we do on an annual basis, we've been able to mitigate some of the incremental tariffs and surcharge costs.

And staying on equipment here. How much of equipment demand is replacement demand versus customers adding capacity? What does the normal replacement cycle look like?

Yes. The majority of our sales are fleet additions. We do obviously have quite a bit of replacements. Generally, the life of a piece of equipment, again, kind of depends on utilization, but it ranges between 7 and 10 years. The smaller equipment at the bottom end of that range, the larger equipment at the higher end of the range. And it also depends on geography. In the U.S., customers like to keep their fleets fresh and they're more adept to upgrade to new technology, whereas outside the U.S., customers will hold the equipment a little longer and they'll only buy when they absolutely need to.

And perhaps a couple of more questions as we reach the hour. How much was gross margin change driven by pricing versus costs?

We typically put through a low single-digit price increase year-over-year, really intended to mitigate typical inflation from year-to-year. And so we did the same for this year. We were able to maintain gross margins at about 53%, similar to last year as we were able to garner some cost savings, engineer savings, process improvements, lean manufacturing, which will be an ongoing process for us. So it's not a one-and-done program.

And the last question is the guide assumes a slight sequential decline in revenue and profits. Yet the messaging has been very positive on momentum and market. What is the disconnect?

Yes. We're setting out a conservative estimate. There's a question mark around second half performance in Europe as we reflect on the impact of the Middle East and the cost of fuel trickling throughout that region. The U.S., we think it is going to be very strong. The first couple of months here of the second half have been very strong. And so we consider the guidance that we've issued conservative, and we'll update the market when we're confident that it may be any different.

That's great. Tim, Enzo, thank you for addressing those questions from investors today. I redirect investors to provide you with a feedback, which is particularly important to yourself and the company. Could I please just ask you for a few closing comments?

Yes. Thank you. Thanks for all your interest today in Somero and for joining us today. We're encouraged by our strong first half performance and the positive momentum we continue to see across the business, while remaining mindful of the broader macroeconomic environment. With strong financial performance, a solid balance sheet, disciplined execution of our strategic priorities and a clear focus on long-term value creation, we believe Somero is well positioned for the future. Thanks again.

Fantastic. Thank you once again for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon.

Hello, and welcome to the Somero Enterprises 2026 Annual General Meeting. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the meeting over to Mr. Robert Scheuer, Chairman of the Board. Mr. Chairman, please go ahead.

Thank you. Good morning, ladies and gentlemen. Welcome to this Annual General Meeting of Somero Enterprises, Inc., at which all shareholders are entitled to be present and vote on the resolutions to be proposed at the meeting. The quorum for an Annual General Meeting is 1/3 of the outstanding voting shares of the company in person or by their duly appointed proxy and entitlement to vote. As the requisite quorum is present, I declare the meeting open.

Assuming that everyone has a copy of the notice convening the meeting, with your permission, we will take the notice convening the meeting as read. Is this agreed? All agreed, say Aye. All opposed, say no. Okay. We will now proceed to convene the meeting as scheduled.

The item on the agenda for today's meeting is for shareholders to consider and if thought fit to pass the following resolutions in the form set out in the notice convening this meeting. One, to ratify the Directors' Report and the annual report and the company's audited financial statements for the year ended December 31, 2025. Two, to ratify the Directors' Remuneration Report, excluding the Directors' Remuneration Policy for the year ended December 31, 2025. And three, to ratify the Directors' Remuneration Policy as set out in the Directors' Remuneration Report. Four, to reelect Lawrence L. Horsch as a Class II Director. Five, to reelect Thomas M. Anderson as a Class II Director. Six, to reelect Vincenzo LiCausi as Class II Director. And to ratify the appointment of Whitley Penn LLP as the auditors of the company for the fiscal year ending December 31, 2026.

I will now put the resolution to the meeting. As the company is a Delaware corporation, in accordance with the company's bylaws, the outcome of the resolutions shall be determined by a majority vote, provided that the resolutions relating to reelection of directors shall be determined by plurality vote. I will announce the results of the proxy votes received on each resolution. If any shareholder present at the meeting has not previously delivered a proxy, please let me know, and we will take account of votes represented by your shares as appropriate.

I now propose Resolution #1 to ratify the Directors' Report and the Annual Report and the company's audited financial statements for the year ended December 31, 2025, as stated in the form set out in the notice convening this meeting.

I would ask Enzo LiCausi to second the resolution.

I second.

The proxy votes received regarding this resolution were: for, 14,013,747; against, 14,150,066; chairman's discretion, 0.

I now propose Resolution #2 to ratify the Directors' Remuneration Report for the year ended December 31, 2025, as stated in the form set out in the notice convening this meeting.

I would ask Tim Averkamp to second the resolution.

I second the resolution.

The proxy votes received regarding this resolution were: for, 13,974,428; against, 14,184,134; chairman's discretion, 0.

I now propose Resolution #3 to ratify the Directors' Remuneration Policy as set out in the Directors' Remuneration Report as stated in the form set out in the notice convening this meeting.

I would ask Tom Anderson to second the resolution.

I second.

The proxy votes received regarding this resolution were: for, 10,884,339; against, 17,274,223; chairman's discretion, 0.

I now propose Resolution #4 to Reelect Lawrence L. Horsch as a Class II Director as stated in the form set out in the notice convening this meeting.

I would ask Anne Ellis to second the resolution.

I second the resolution.

The proxy votes received regarding this resolution were: for, 8,049,411; against, 17,293,897; chairman's discretion, 0.

I now propose resolution #5 to Reelect Thomas M. Anderson as a Class II Director as stated in the form set out in the notice convening this meeting.

I would ask Anne Ellis to second the resolution.

I second the resolution.

The proxy votes received regarding this resolution were: for, 8,072,085; against, 17,271,223; chairman's discretion, 0.

I now propose Resolution #6 to Reelect Vincenzo LiCausi as a Class II Director, as stated in the form set out in the notice convening this meeting.

I would ask Tim Anderson to -- Tom Anderson to second resolution.

I second.

The proxy votes received regarding this resolution were: for, 14,009,060; against, 14,150,753; chairman's discretion, 0.

I now propose Resolution #7 to ratify the appointment of Whitley Penn LLP as the auditors of the company for the fiscal year ending December 31, 2026, as stated in the form set out in the notice convening this meeting.

I would ask Enzo LiCausi to second the resolution.

I second.

The proxy votes received regarding this resolution were: for, 12,147,217; against, 16,016,596; chairman's discretion, 0.

As the company is a Delaware corporation, in accordance with the company's bylaws, the outcome of the resolutions contained in the Notice of Annual General Meeting of Stockholders shall be determined by majority vote provided that the resolutions relating to reelection of directors shall be determined by plurality vote.

Accordingly, each of the directors standing for reelection were reelected. Resolutions 1, 2, 3 and 7 were not approved by a majority vote. As stated in the notice, those resolutions are not mandatory under Delaware law, and the Board will reconsider its approval on the relevant matters.

Before we move on to questions, though, I want to take a moment to address the significant number of votes that were cast against the resolutions today. From the conversations we've had with shareholders, we understand that the votes cast against the resolution principally reflect concerns regarding the company's governance arrangements and legal constitution and its capital allocation strategy.

In our AGM statement, we announced a thorough review of our governance arrangements and our constitution. That review is underway already, and it's a priority for me and for this Board. We will keep talking with shareholders as part of it because we want a full range of views. And if or where the review leads to changes that need your approval, those changes will come back to you to vote on. We're committed to report on progress in mid-July, and our intention is to have the review completed as soon as possible. Alongside that, our search for a new independent director continues, which is part of keeping this Board fresh and effective.

Let me leave you with one final thought before I hand it over to Tim. The Board remains confident in the company. We lead our markets, we generate cash through the cycle, and we have a balance sheet that gives us real strength and real choices. Tim will take you through the business in a moment.

To everyone who voted and to those who've taken the time to speak with us, thank you. My door and this Board's door remains open.

I will now turn the meeting over to Tim Averkamp, CEO, to say a few words.

Thank you, Bob. I'll keep this short, but I want to leave you with a clear picture of how the business is performing. That's where my focus is on every single day. Earnings so far this year is in line with our plan. That doesn't happen by chance. It's our team executing well as markets show early signs of stabilization, staying close to our customers and remaining focused on our long-term strategy. I want to thank our people for that. They're the reason I can stand here confidently about where the business is and where it's going.

We continue to return cash to shareholders. We're about halfway through this year's $6 million buyback in addition to our dividend. We'll keep weighing the right balance between investing in the business and returning capital to you. The Board has heard the views on that clearly, and I'd stress it as an active conversation, not a closed one.

As we look to the rest of the year, the focus is straightforward, stay disciplined, execute and build on the momentum that we have. We look forward to providing a full update with our half year results in July.

Thank you all for joining us today and for your continued support of Somero.

That concludes the formal business of the Annual General Meeting, which I now declare closed. The Board will now take questions.

[Operator Instructions] At this time, we are showing no questions. We will now turn it back over to management for closing remarks.

I apologize. We do have questions that have been inbound. So we'll take those questions, and we'll plan to respond to them. So Enzo LiCausi is going to read off the questions that we have, and then, we'll do our best to answer those as best we can.

Enzo, do we have our first question first?

Yes. So first question, can you talk us through what management is focused on to build value from here and whether you see a catalyst on the horizon?

This is Tim Averkamp. I'll take that question. Like I noted in my closing statement, our focus right now is on the current business focused on execution, staying close to our customers and executing our long-term strategy. As we talked about in our previous RNS and today, we are trading within our plan right now. We see some signs, positive signs of market stabilization. As we know, there's still a geopolitical risk that's out there. But as the market changes, we're ready to go with that, right, over time.

In terms of our long-term strategy in our full year results, we talked about the strategy of Fortify, Innovate and Amplify. As I noted at that time, we have a number of strategic initiatives that are already in play and really addressing a lot of those issues. So we're focused on things that we can control and making good progress on that right now.

Next question. M&A appears to be a more important part of Somero's strategy than in the past. What specific experience do management bring to acquisition underwriting and capital allocation? And who will be accountable for ensuring Somero avoids value-destructive deals?

Correct, it certainly -- and this is Enzo LiCausi again. M&A is a greater part of our long-term strategy in the sense that we're broadening our view on potential acquisition targets. Historically, we've only considered companies that would have high IP and very high gross margins comparable to Somero. As we all know, Somero is a unique company in this space. There are other synergistic opportunities that potentially an acquisition can bring to the table.

Relative to the experience in the company, the Board has extensive experience in M&A. Bob was the former CFO at Dover Corporation with hundreds of acquisitions under their belt. And Ellis has also been a consultant, consulting firms on M&A strategy. Larry has been in the VC world for many years. And of course, Tom has had a long career with -- in the construction concrete space, in particular, going through a couple of acquisitions of his own. As you all have Tim's biography, he's been through a number of acquisitions and post-integration, which obviously is a critical element to the M&A strategy.

And so we feel we have a pretty good breadth of experience. We did bring in an additional adviser really to help us build the muscle, rigor and process around considering and scoring various target opportunities in the event that an opportunity does arise. So we're just building the muscle to be able to undertake an acquisition when that opportunity comes up.

I'll just add to that, Enzo. Of course, with the tools and the process, we also have strong governance in place, right? So our Board is part and parcel to any opportunity. We will review and make sure we meet the financial thresholds and make sure it's truly accretive to the business. We're focused on that.

Next question. Could you please provide an update on the benefits you're seeing from the expansion of the Belgium facility? And what feedback from customers you've had?

Yes, I'll speak to that. So our Belgium facility has really been tilted up 2 to 3 years here over time. That was an opportunity for us when Brexit happened to add to our facility that we have in the U.K. to really serve that European customer base. Myself and a couple of other leadership team members had a chance to visit that facility in December. And it's really an opportunity where we can have parts there, sales training and service training.

During the time that we were there in December, we had a dealer open house. And in fact, we introduced the Hammerhead, the new product that we talked about to that dealer group and talked about the pros and cons, the benefits of that machine versus the competitive environment. The dealers really see it as a great showcase for us. Again, it's about staying closer, getting closer to our customers and serving them as best we can.

Next is not a question, but a comment. The individual says, well done with the way you've delivered the message about taking investment feedback and reacting to it. So thank you for that comment.

We also have a question from a shareholder that's present here at the meeting. The first question is, how have your customers' needs changed over time. And I'll let Howard Hohmann, our Executive Vice President of Sales, to address that first one.

Thank you. As we always say that we want to get a customer into the family, into the business, and they start off with a smaller machine. As they grow the business, they need larger equipment. So we have a breadth of equipment inside/exterior concrete, paving, 3D applications. So we have the right products for them to grow the business. And as you look at our larger customers, their need to upgrade to new technology. So we have a breadth of products to support a new up-and-coming company and growing their business and also maintain existing business as well for larger customers.

Thank you, Howard. Next question is, what hasn't changed about Somero? Why our customers continue to choose Somero?

What hasn't changed? Yes. I think the faster and flatter fewer, as Larry indicated, I think we continue to provide quality equipment that outperform our customers' expectations. And I think that's key on maintaining customer loyalty, market leadership. So we continue to maintain that as we did Day 1, and our customers see that, right, the serviceability and everything else...

Yes. I think it's continuing with the core values that we established 4 years ago and really reflected in our mission that we work hard to ensure our customers' success, and that continuation has gone on.

We have another question that just came in. Do the elected directors feel that they have a mandate to continue to serve even though there were twice as many no votes as those in favor?

First of all, I think we do take all voting on resolution seriously. We are in the process right now of reviewing our governance arrangements and legal constitution. And we're going to have something back to you by July. So we'll be able to talk through that at that point.

At this point, there are no other questions in the queue. I'll hand it back over to the operator at this time, Rocco.

Yes, sir. That concludes our question-and-answer session. And that does -- are there any closing remarks from your side, sir?

Yes.

Again, thank you for everybody's participation and support, and we look forward to giving you that update in July.

Thank you.

Thank you. That does conclude our conference for today, and we thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

Good afternoon, ladies and gentlemen. Welcome to the Somero Enterprises Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And if you could give that your kind attention, I'm sure the company will be most grateful. I'd now like to hand over to the management team. Good afternoon.

Hello, and thank you all for joining us today for our Somero Enterprises 2025 Results Presentation. I'm Tim Averkamp, Chief Executive Officer. Presenting alongside of me is Enzo LiCausi, our Chief Financial Officer.

I'll begin with an overview and operating context. Enzo will review our financial performance, then we will walk through our strategic plan update summarize, and we'll make time at the end to answer your questions. As we begin the presentation today, I'm excited to note that 2026 marks Somero's 40th anniversary, an incredible accomplishment that began as a simple idea, sketched on a paper napkin by the Somero Brothers and has grown into a foundation and legacy that has fundamentally changed our industry.

That 4-decade journey provides important context for the leadership transition that took place in 2025, a pivotal year for our organization. I'm proud to report that the CEO transition was executed smoothly, providing stability while sharpening our focus on execution.

On April 1st, I stepped into the CEO role, drawing on my experience in the construction equipment industry to help guide Somero's next chapter. My first priority was to listen and learn by engaging with our customers, employees, dealers and shareholders to better understand what drives our success and where we can further improve.

This reinforced 2 clear observations. First, Somero's differentiation is real and durable. Second, there is meaningful opportunity ahead if we remain focused, disciplined and intentional on how we grow. At this important moment for Somero, I am humbled and energized to carry forward our legacy, and I'm grateful to the Board and my team for their support throughout my transition into the CEO role.

Continuing with the Board, we also experienced an important change. Bob Scheuer, who has served as a director since 2015, has taken on the role of Chairman, succeeding Larry Horsch. We sincerely appreciate Larry's leadership past and ongoing as a director, and we welcome Bob as Chairman.

With these transitions, we remain committed to strong governance and a disciplined approach to execution. During the year, we also developed a refreshed strategic framework to guide how we operate and execute going forward. And importantly, our strategy is actively driving execution. We'll come back to that shortly.

Continuing on the topic of leadership, I want to take a moment to highlight the depth and experience of our leadership team and Board, which are key strengths of Somero. Starting with the executive team, Enzo LiCausi, our CFO, whom I mentioned earlier, has been with the company for more than 7 years and serves as a strong business partner. Howard Hohmann, our Executive Vice President of Sales, brings 28 years with Somero.

Along with prior experience as a concrete contractor, which gives them deep industry knowledge and credibility with our customers. Many of you have met Howard from previous investor meetings. Lastly, Jesse Aho, our President of Global Operations, is approaching 18 years with the company and plays a critical role in driving operational excellence and execution across the organization, including engineering and customer support.

Turning to our independent directors of the Board, Bob Scheuer, Tom Anderson, Laird Horsch and Anne Ellis bring extensive industry and business experience along with strong governance oversight. Together, the Board and leadership team provide continuity, discipline and a long-term perspective as we continue to execute our strategy.

In the next few slides, I'll provide some high-level background on Somero. Somero pioneered the laser screed category over 40 years ago, and we continue to refine it today. We serve customers in more than 90 countries, but our differentiation extends well beyond global reach.

It's the combination of equipment, training, parts, service support and expertise that enables contractors to place higher-quality floors with greater productivity and fewer people. That integrated model is difficult to replicate and underpins our leadership position.

From a footprint standpoint, our global headquarters in the Somero Concrete Institute Training facility are based in Fort Myers, Florida. With manufacturing, production and operations centered in Houghton, Michigan. We complement that with regional sales, parts and service centers in Belgium, the U.K., Australia and India, allowing us to stay close to customers and support them consistently across markets.

Our competitive advantage is layered. We lead with innovation and protected technology. We design products directly around customer job site needs, and we support customers through training and service that extends well beyond the initial sale. Somero's reputation is built on performance.

Our equipment is specified where quality matters most, reinforcing our leadership position. That performance has earned recognition across the industry, and we remain actively engaged to understand evolving requirements and deliver solutions that advance both our customers and the industry.

We actively support multiple industry trade associations globally as part of our commitment, where we frequently interact with our customers who are also members. Also note that the image on the bottom right of the slide is from the Concrete Industry Management 2026 auction.

Somero is a proud sponsor of the CIM program, and we're pleased to donate a new hammerhead laser screed in support of this year's auction.

The CIM program plays a vital role in preparing the next generation of concrete industry talent, and we're proud to support the students and professionals who help shape the future of our industry. Before we get into this year's results, I want to step back and reinforce what has consistently differentiated Somero a strong financial profile.

This slide summarizes the structural characteristics of the model to support profitability through cycles, strong cash generation and balance sheet flexibility. Somero's profitability is supported by a premium brand, a flexible operating model and disciplined cost management.

We've demonstrated the ability to remain profitable through the cycles, scale efficiently when demand improves and protect margins when volumes soften. That resilience is a core strength of the business. We maintained strong cash generation, preserve balance sheet strength and retain flexibility to invest in growth while continuing to return capital to shareholders. That financial foundation gives us confidence as we look forward. Our overall product portfolio consists of over 20 products and spans a wide range of applications. Our laser screeds are used in a variety of applications from small to large cores to more complex commercial placements.

Importantly, 2025 product launches strengthen our balance across the portfolio. We're no longer addressing just the top end of the market. We're deliberately expanding coverage to serve a broader range of contractors and job site requirements.

Beyond core machines, our broader portfolio supports adjacent workflows, including material placement, grading, profiling and above-ground applications. Together, these models demonstrate the versatility of the Somero portfolio across a wide range of application and job site requirements.

Now I'd like to shift our focus to the business and walk through our results from 2025 and the beginning of 2026. As we step back, there are a few key messages we want investors to take away.

First, 2025 was an uneven year for the construction market with a softer first half followed by improving momentum in the second half. Demand was inconsistent and decision-making slowed in certain segments, but the year also demonstrated the resilience of the Somero business model.

With this backdrop, our team executed with discipline, protecting margins, preserving cash and continuing to invest strategically. Second, our strategy is firmly in action. We refreshed our strategic framework and translated it into how we run the business day-to-day, guided by 3 clear priorities: Fortify, Innovate and Amplify.

And finally, as we look ahead, late 2025 nonresidential momentum has carried into 2026, and customers are reporting healthier activity levels and backlogs while also remaining appropriately cautious. At the same time, global macro and geopolitical uncertainty remains elevated, and that backdrop continues to influence customer decision-making, yet long-term fundamentals remain intact.

Having walked through the broader context, I'd like to highlight a few key outcomes from 2025 that best summarize how the year played out. 2025 finished largely as we anticipated as the year progressed with a stronger end to the year and full year performance coming in line with revised market expectations.

That outcome reflects disciplined execution in an uneven market environment. New and next-generation products launched during the year collectively contributed approximately $13 million in revenue, reinforcing the importance of continued investment in innovation even in softer market conditions.

At the same time, we took targeted cost actions that partially offset the impact of lower volumes, enabling us to deliver EBITDA margins of 20% and improving operating cash flow. Strong cash generation supported a solid return to shareholders while still holding -- still allowing us to invest for the future.

Key investments include the continued development of our product and innovation pipeline and the advancement of our refreshed strategic framework plan and initiatives. Together, these actions reflect a year where we balance discipline and investment, protected profitability and cash generation and position the business for its next phase of growth with additional product launches planned for 2026. And with that, I'll hand it over to Enza.

Thanks, Tim. Before we get into the 2025 results, I'd like to set the market backdrop for the year. As we enter 2025, after coming off a strong December in 2024, we expected market improvement in 2026. It seemed as though the market was coming to terms with the monetary environment and looking forward to a pro-business administration.

However, that sentiment changed dramatically with the increase in tariffs and coupled with interest rate speculation and restrictive immigration policies created tremendous instability and uncertainty in the market, which persisted throughout the year. Despite these headwinds, we had strong trading in the second half of the year with the help of new products and a seasonal uplift.

Zooming out a bit, it's challenging to gauge the direction of the concrete laser screeding market since it is a niche segment within overall construction with no specific publicly available data. That said, there are broad measures that provide a sense of the overall construction market and may be indicative of future direction.

We've called out a few of these market indicators. In summary, they appear to show early signs of market stabilization. Some forecasters call for a slight improvement in 2026. I reiterate that these indicators are not always directly correlated to Somero or our customers, but are nevertheless encouraging.

Our most reliable source of information comes from our customers, and they too have relayed a consistent sentiment. The level of bidding is elevated and their backlogs are in good shape. Still, they remain cautious until there's more clarity and confidence in the market. The recent developments in the Middle East certainly don't help matters. As with other markets in our ROW region, we have a relatively small base of business in the Middle East.

It remains to be seen how this conflict will affect the broader markets. In terms of the competitive landscape, we have not seen any material changes and Somero remains the clear market leader. As we stated, we ended the year as anticipated, delivering improved second half results with total revenue increasing 23% over H1, albeit down on a full year basis compared to 2024.

Cost-cutting measures undertaken during the year preserved profits and cash. Despite the softer profitability, cash from operations remained on par with prior year, aided by several factors, including strong advanced customer deposits. The strong cash generation enabled us to continue to pay out dividends, buyback shares during the year and end the year in a good cash position.

Moving on to the regional performance and starting with North America, which is by far our largest market. Revenue in H2 increased 14% compared to the first half of the year, accounting for approximately half of the total increase H1 -- H2 over H1.

On a full year basis, revenue was down 17%, driven by lower sales volumes of our Boomed and Ride-on screeds as the larger projects were more heavily impacted by market headwinds. We continue to attract new customers even during the down cycle, in part benefiting from the entrance into a new customer segment with the launch of the Hammerhead, which Tim will discuss in more detail.

Parts and service revenue declined to a lesser extent than machine revenue, partly due to our heightened focus on recurring revenue. In Europe, revenue in H2 was up meaningfully on H1, albeit down 39% on a full year basis compared to 2024. In addition to the uncertainty in the U.S., which impacted markets globally, the underlying European market continues to be a bit weak with private investment remaining constrained.

As a result, sales volumes were down in our Boomed and Ride-on screeds. Sales to new customers was consistent with prior years. The purchasing behavior outside of the U.S. tends to be more project-driven and customers tend to hold on to their equipment longer and don't buy equipment on a regular cadence.

Therefore, a greater portion of revenue in our international regions comes from new markets, whereas in the U.S., customers will also purchase equipment to keep their fleet fresh and/or upgrade to new technology. Therefore, a greater portion of revenue in the U.S. comes from existing customers.

Sales of parts and service held up with customers opting to repair and service machines supported by our local sales and service center in Belgium. The Australian market continued to be challenged with a shortage of trades people, persistent inflation and significantly tightened monetary policy to bring inflation back within targets.

Consistent with our other regions, trading in H2 was meaningfully higher than H1, but down 15% on a fit full year basis. The revenue decline was primarily driven by lower sales of Ride-on screeds, while sales of our Boomed screeds held steady.

Similar to Europe, a good portion of our revenue comes from new customers. We continue to believe there remains opportunity for us to further deepen market penetration in Australia. Our rest of world consists of a number of small markets that historically tend to fluctuate.

Similar to our other regions, H2 revenue in ROW was also meaningfully up. On a full year basis, revenue from ROW was up 10% over 2024, driven by an increase in Boomed screeds sold in the Middle East. This was partly offset by a decline in Latin America.

The next slide reflects comparable sales by product line. In 2025, we experienced declines across all product lines. Note that our product mix is dictated by project size and application. As mentioned, new and next-generation machines provided an uplift in the second half of the year within the Boomed and Ride-on categories. New and next-generation products will remain an integral part of our long-term strategy. We have separated sales of parts and service, including accessories sold with machines, which was previously reported in the other product category as recurring revenue will be a focus for us going forward.

As such, we're pleased that sales of parts and service were resilient, declining to a lesser extent compared to our machine revenue despite challenging market conditions.

Moving on to our operating results. Gross margin was 52% compared to 54% in 2024, reflecting the impact of unabsorbed overhead due to lower sales volume. On a positive note, annual price increases to offset input cost increases held up.

Looking ahead, rightsizing operations puts us in a good position to be more efficient in 2026. Operating expenses were down compared to last year as expected, following workforce reductions and cost-cutting actions, which were partly offset by nonrecurring administrative costs.

Lastly, in H1, we incurred noncash onetime charge related to foreign tax deferred assets, mostly from Australia, which impacted our provision for taxes. We expect that our effective tax rate will return to normal levels of around 23% in 2026.

From a financial position standpoint, the balance sheet remains very healthy. Ending cash was higher than expected as a result of higher advanced customer deposits, a favorable impact of the new U.S. tax legislation and lower-than-planned CapEx and interim dividends.

Receivables were consistent relative to revenue as the majority of our sales are paid in advance. Inventory remains a bit elevated. There are 3 main drivers for this. The first is excess inventory that built up during the COVID period when raw material lead times were extended that has not been fully depleted.

Secondly, our short sales order lead times and fluid product mix forecast necessitates maintaining adequate inventory globally. And the third factor is new product introductions. Moving down to liabilities. Current liabilities were up in part due to the increase in advanced customer deposits. With respect to cash flows, as noted, the company is generally highly cash generative.

The increase in adjustments to net of income reflected a noncash tax adjustment that I mentioned earlier. Net working capital benefited from relatively high customer deposits, which is a bit of an anomaly, and therefore, we do not expect will be a recurring trend.

CapEx was relatively light compared to our typical run rate of approximately $2 million per year. Entering 2026, we had no major CapEx projects planned. And with the cash generation, we continue to pay out dividends and purchase shares while maintaining a healthy cash position.

As it relates to dividends, the Board declared a final ordinary dividend based on our fixed payout ratio of 50% of adjusted net income, which will be paid on May 8th to shareholders of record as of April 10th.

Moreover, the Board did not declare a supplemental dividend. Having formalized a capital allocation framework, which I'll talk about later in this presentation, we are prioritizing more aggressive M&A activity and share buybacks, which we intend to double in 2026, increasing from our historical $2 million per year to $4 million. And now I'll hand it over back to Tim.

Thanks, Enzo. In the coming slides, I'll talk about how we're positioning the business going forward and walk through our strategy. One of our key priorities in 2025 was the development of a clear long-term strategic plan. We introduced the framework to investors in September, and today we'll provide a brief update.

The creation of our long-term strategic plan started with defining a clear set of pillars, simple and durable priorities that reflect what matters most for Somero's next phase of growth. This work has been actively shaped and driven by leaders and teams across the broader Somero organization, ensuring that the strategy is embedded in how we operate day-to-day. We refer to this next chapter as Somero 3.0, the third phase in the company's evolution, shaping excellence.

The first phase of the company was about creating the laser screed category. The second phase focused on expanding the portfolio and building a global footprint. This third phase is about building on that foundation with greater clarity, focus and consistency across the business.

We anchored the plan around Fortify, Innovate and Amplify because together, they capture what the business needs to do well over time, strengthening the core, advancing innovation and extending our reach in a disciplined way.

Since introducing this framework to investors last fall, we've moved beyond definition and have made tangible progress across each pillar even as market conditions remain uneven.

The progress we made on select initiatives is summarized in the slides that follow. As part of our Shaping Excellence strategy development, we stepped back to reexamine how we articulate who Somero is and where we are going. This work was about ensuring our purpose and vision clearly reflect the next phase of the company's evolution.

Historically, our vision emphasized the reach of our technology and its presence wherever concrete is placed. That framing reflected an earlier stage of Somero's growth when expanding adoption, scale and category leadership were the primary objectives.

Today, Somero has expanded how we define leadership. We continue to lead with differentiated products and technology while increasingly focusing on the value they create, the problems they solve and the standards they set for our customers and the industry. Our updated purpose to shape a future where innovation and excellence lead the way defines why Somero exists and the mindset we bring to everything that we do.

Our vision to level today's challenges to build tomorrow's solutions defines the future we are building toward with a clear focus on impact, problem solving and long-term relevance.

Together, these statements shift the focus from product presence to customer outcomes, industry leadership and sustainable value creation while providing clear direction as we execute our strategy. Our core values remain consistent and serve as our guiding principles.

Culture plays a critical role in bringing this to life, especially in more challenging markets. Our values emphasize accountability, problem solving, urgency and customer focus, and they help guide key decisions throughout 2025 from cost actions to investment priorities.

When markets are strong, culture accelerates growth. When markets soften, culture protects the business. Ours does exactly that. Under Fortify, our focus has been on reinforcing the foundation of the business, including aligning cost with demand. We took targeted cost actions in 2025, but importantly, we did so while protecting core capabilities and continuing to invest where it matters most. We are embedding lean practices and improved execution discipline in our operations, creating a more resilient operating model.

This work strengthens consistency across the organization, improves decision-making speed and ensures we can scale efficiently as market conditions improve. The result is a business that remains disciplined for softer markets, but is also well positioned to respond quickly and effectively as demand recovers.

Training and support are central to how we differentiate Somero. One such area is the exceptional training offerings that we provide to our customers. Our approach extends and complements long-standing on-site contractor training with structured education through the Somero Concrete Institute, helping customers ramp up faster, use their equipment more effectively and achieve more consistent job site results.

Work began at the end of 2025 on the development of our European Somero Concrete Institute in Belgium. Recently launched in the first quarter of 2026, we've expanded the proven model of the Fort Myers Florida SCI to better support customers locally in Europe. We're excited with the launch and expect resulting higher utilization, improved productivity and stronger long-term value for our customers while also supporting aftermarket engagement and recurring revenue for Somero.

Innovate is our second pillar. Innovation has been a core pillar of Somero since our inception. This slide highlights key product launches from 2025 that we referenced earlier in our first half results last September that are now active in the market.

These innovations reflect our focus on delivering practical job site value while reinforcing Somero's category leadership. The SRS-4e, our first Electric Boomed laser screed launched in 2025, delivers gas equivalent performance with 0 emissions and onboard charging. It allows customers to place large volumes of concrete efficiently while meeting evolving environmental and site requirements.

We also launched the Next Generation S-15EZ in the summer of 2025, building on a proven platform with enhanced automation, maneuverability and integrated intelligence. The result is higher floor quality, improved productivity and easier operation and maintenance for customers.

Together, these 2025 launches demonstrate how we're advancing the core portfolio, addressing customer needs today while expanding our opportunity set for the future. The Hammerhead Ride-on Screed is strategically important for Somero because it expands our addressable market and lowers the entry point for customers to adopt the Somero machine.

We launched Hammerhead in the second half of 2025 to address a large global segment of contractors who either continue to place concrete manually or have been challenged to understand or justify the return of a larger Boomed screed -- screeds solution.

Importantly, Hammerhead creates a new entry-level market, particularly in the U.S. Additionally, in certain international markets, it also provides customers with compelling Somero alternative to certain lower-priced imported machines while delivering core Somero performance, reliability and support.

Strategically, Hammerhead has more than a single product. By bringing these customers into the Somero ecosystem earlier, it establishes long-term relationships and creates a natural upgrade path as customers grow into larger, more complex applications over time.

In that way, Hammerhead expands the funnel, strengthens lifetime customer value and reinforces Somero leadership across a broader range of the market. Our technology development goes beyond the iron through the 2025 introductions of virtual reality training, the Somero Experts App and standard Telematics on large Boomed screeds, we're using digital tools to help customers ramp up faster, reduce downtime and get more value from their equipment.

Together, these capabilities improve utilization, uptime and overall customer experience, again, extending Somero's value well beyond the machine. The next-generation S-22EZ+ represents a significant advancement of our flagship S22 platform and underscores our continued focus on innovation at the top end of the portfolio.

We launched the S-22EZ+ at World of Concrete in January 2026, and it builds directly on customer feedback and job site experience. With more than 30 new features, the S-22EZ+ is focused on automation, ease of use and consistency. Enhancements like One-Touch Stabilizers, automated elevation control, proportional head rotation and improved hydraulic performance simplify operation while delivering more consistent results on the job site.

Importantly, the S-22EZ+ also incorporates enhanced connectivity, diagnostics and utilization insights, along with operator-focused features like cameras, remote control and the Easy Clean Head. The result is higher productivity, improved uptime and easier to run machines to help customers place quality floors more efficiently and with fewer people.

Viper is another example of how we're expanding the portfolio to broaden across access to Somero technology. Also launched at the World of Concrete in January 2026, Viper is a compact walk-behind laser screed designed to bring Somero level precision to smaller pores and more constrained job sites.

With accurate grade control and a lightweight maneuverable design, Viper delivers consistent floor quality and faster placement, particularly on decks, weight-sensitive applications in confined spaces. It allows contractors to improve productivity and reduce labor requirements on small jobs while maintaining the quality standards Somero is known for.

Under our third pillar of Amplify, we've been focusing -- focused on strengthening how we go to market and how we support customers across the full equipment life cycle. A key area of progress has been commercial coverage, ensuring we are closer to the customer, more responsive and better aligned to their needs.

We have continued to strengthen dealer coverage across both domestic and international markets with particular focus on supporting the launch of the Hammerhead. This expanded dealer presence helps us reach a broader audience of contractors, especially those entering laser screening for the first time and improves accessibility in local markets.

At the same time, we've introduced product-specific territory managers to provide deeper specialist expertise and clear accountability across product lines. This more integrated commercial approach is designed to support adoption and utilization while driving growth in parts, service and train revenue over the equipment life cycle.

Together, these actions strengthen customer relationships, support more resilient aftermarket performance and position the business well for long-term sustainable growth. I'll now turn it back over to Enzo to speak about our updated capital allocation and M&A framework.

Thanks, Tim. In conjunction with the refresh of our strategic plan, we formalized a capital allocation framework and an M&A framework as part of our Amplify pillar. Our overall capital allocation philosophy is to take a disciplined approach that prioritizes balance sheet strength, invest in value-creating growth and return capital reasonably to shareholders.

To do this, we have defined the following 4 priorities in order of importance. The first priority is to maintain a strong and flexible balance sheet with sufficient cash to support day-to-day operations, fund strategic initiatives and provide a cushion against unexpected market conditions.

The second priority is to invest in the business to drive organic growth through commercial and operational expansion, excellence and efficiency.

The third priority is to pursue value-accretive acquisition opportunities that builds on the core business and expands our total addressable market, which we would intend to fund with existing cash and possibly a conservative level of debt, no more than 2x EBITDA. I'll talk more about the M&A framework in a moment.

The fourth priority is to return capital to shareholders in a sustained, balanced and strategically aligned manner via dividends and share buybacks. Next, we established a disciplined M&A framework designed to expand Somero's reach, enhance capabilities and drive long-term value creation.

Our focus is highly selective and aligned with our strategic priorities, whether that's technology and product enhancement, recurring revenue or expanding our addressable market. To support this, we've engaged an experienced adviser to reinforce process discipline, targeted outreach and an opportunity assessment.

While we remain early and patient, active discussions are underway, guided by clear strategic filters and strict financial criteria. Importantly, we're committed to maintaining financial discipline.

Any transaction must meet our return thresholds, be accretive to free cash flow and strengthen the business operationally and commercially. This approach allows us to stay active but disciplined as we look to deploy capital in ways that create durable shareholder value.

With that, I'll hand it back to Tim to close out the strategy section.

Thanks, Enzo. As we walk through the strategic plan, it's clear that the Fortify, Innovate and Amplify framework is embedded in how we operate day-to-day. I'm encouraged by the level of engagement across the organization and the tangible progress already underway.

Our focus now is on consistent execution. That means delivering against priorities, refining initiatives as we learn and allocating resources where they create the greatest impact. As we move forward, we will continue to build on this foundation, demonstrate progress over time and translate that strategy into consistent execution and performance. As we wrap up, I want to bring this all together and leave you with a few key takeaways as we look ahead to 2026. Late 2025 momentum has carried into 2026 with customers reporting healthier activity levels and improving backlogs.

At the same time, customers remain appropriately cautious given elevated macro and geopolitical uncertainty, and we continue to plan with discipline. While softness in the Boomed screeds category is expected to persist, we believe disciplined strategic execution and continued expansion into new customer segments can help offset that pressure over time.

Our broadened portfolio, improved commercial coverage and increased focus on utilization and aftermarket engagement are designed to support performance through the cycle. Our strategy is actively driving execution. Our expanded portfolio is broadening customer reach.

We are maintaining strong cash discipline and balance sheet flexibility and the long-term fundamentals supporting nonresidential construction remain intact. Taken together, the Board expects 2026 revenue, profitability and cash generation to be broadly comparable to 2025.

As I reflect back on my first year as Chief Executive Officer, I'm proud of what the team has accomplished in 2025. It was a challenging year, but one where we executed with discipline, protected profitability, continue to invest in innovation and strengthen the foundation of our business.

I want to thank our employees across the world for their commitment, professionalism and resilience throughout the year. With that foundation in place, we are approaching 2026 with confidence, discipline and flexibility, and we believe Somero is well positioned to perform through the cycle and create long-term value.

With that, I thank everyone for their attention, and we'd now like to open the floor for questions.

That's great, Tim, Vincenzo. Thank you very much indeed for updating investors [indiscernible] [Operator Instructions] just to remind you, of course, a recording of this presentation will be available on the Investor Meet Company platform.

Well, Tim, Vincenzo, as expected, you've received a lot of questions today from investors. So firstly, thank you to everybody for your engagement. A lot of them -- well, I say a lot of them, some of them overlap with one another.

So perhaps I'll try to merge some of these that relate to the likes of M&A and competition. So I don't give -- everybody's question out. So maybe I can start off with the first one, which is, as you evaluate potential acquisitions, how do you think about Somero's cost of capital and the trade-off between acquisitions versus larger share repurchases?

Thank you. That's a great question. And certainly, we take into consideration our cost of capital. We would engage in a potential opportunity for M&A to the extent that we feel we could get a greater return from an acquisition than our cost of capital. Obviously, share buybacks will continue to be part of our capital allocation policy. Nevertheless, we feel that we can generate higher accretive earnings through an M&A deal than simply just doing share buybacks.

Great. The new framework references the possibility of up to 2x net debt to EBITDA. Given the cyclical nature of earnings, how should shareholders really think about appropriate leverage through the cycle? And if I may, and to what -- what has changed strategically that makes introducing leverages appropriate today?

Sure. So that was set out as a cap really and would only be used for purposes of consummating an M&A deal for really no other reason. And we've established that threshold really to give us -- or that cap to give us flexibility to potentially do multiple deals over time or to do more meaningful deals.

Clearly, we have sufficient cash in and of itself to be able to fund a small transaction. And if that was the situation, we would probably not take out any additional debt. But to the extent we have multiple deals, multiple opportunities or opportunities that are of more meaningful size, then we would be willing to take out debt -- we've also demonstrated during the down cycles that we can continue to remain cash flow positive and so be able to service that debt in the future.

Maybe I'll take a step back, and I'll add some additional commentary to that. So as Enzo went through our M&A framework, we put a lot of structure and tools and process in place for us to assess. Again, we're very early in that assessment and our outreach as it works right now. Enzo reinforced that we're really focused on maintaining financial discipline.

We know from a historical standpoint, we've been very focused on cash preservation and generation. We'll be very selective as we go forward. So we're not going to be looking for opportunistic things, has to be things that make sense and add synergy to us as we go forward. So I'm confident that, again, those will be only in play if we have a great deal. But again, we're early in the throes of that advancement.

I mean, I guess staying with maybe acquisitions for a little bit longer, what capabilities do you think give you a better long-term you becoming the better owner, I guess, of assets rather than potential buyers such as private equity sponsors?

Yes, that's a great question. So again, we're very early in that outreach. As we talked about and some of you who are very familiar, Somero is a leading brand, right? We really create the latest screed category. Our brand is synonymous with quality and robustness. And so we've had early conversations with certain potential strategics.

They've actually commented to us that they may have been approached by other private equity or other investors, but they see the strategic value by joining forces with Somero and again, not every target will be something that we want to pursue. But again, we see that, we hear that feedback.

When we think about our customer interactions, my first year in the job, there's a lot of customer job sites, and we often hear from our customers that we make great products. Again, we change the lives of the contractors in the way they do business. But it's not just the equipment, against it's the service, the solutions, all those type of things that we provide. And so they often say, again, as you guys support your equipment, if there was other things that were part of your offering, we'd be more than willing to purchase that. So again, those are the things that we think with confidence. Again, it has to be a great match for us, but we have received feedback that from a strategic perspective, we can add value.

Just switching, I guess, around competition, a question here. Can you add some more color on the competitor environment?

Yes, absolutely. So we had previously reported that we've had competition historically from the beginning. In the U.S., there is one competitor outside the U.S. and Europe, there are a handful of competitors. Most of them are just entrepreneurial individuals. Don't have the capabilities that Somero does. However, in 2024, there was a manufacturer from China that started gaining some traction in European countries, particularly Spain and Portugal and the like, really marketing to the low end of the market. And so they're selling purely on price, typically less than half of what we sell our machines at. But they don't have sort of the staying power, having demonstrated staying power, the ability to support their customers like we do, the ability to supply parts. And laser screeding is a high-risk industry.

Our customers are relatively small companies. And if they have a floor that does not pass the flatness specifications and they may have to tear it up and replace it, it can potentially may help them, excuse me. And so particularly in the U.S., highly unlikely that they would risk their reputation in their business by taking on a Chinese machine.

In Europe, customers tend to be a little bit more price sensitive. And then again, at the low end of the market, they're willing to take a risk on this equipment. But generally, if the customer is working on a high-profile project, be it a data center or a warehouse, highly unlikely that they would take that risk.

Year-over-year, we have not seen any material change. Somero remains the market leader. We had engaged an outside party to undertake a study for us because there is no public information relative to market share. And in conclusion, basically came out that Somero was at least 80% to 85% of the market.

So still clearly the market leader. We continue to monitor the situation with the Chinese and really promote the fact that our support and service and parts availability, training, expertise, there's also a consultative aspect to our selling is really unparalleled, and that is really the moat around the business.

Yes. Great point. And I'll add to that. So as Enzo talked about, as part of our strategic plan refresh last year, we did do some research on market penetration and strategy and certainly that solidify that we've continued to maintain that share of market. We'll continue to do that as we go forward. But from a strategy, as we talked about with the pillars, the focus on Fortify, Innovate and Amplify is really helping us take back share and look for opportunities there. So we talked about increasing our level of training, increasing our level of service support again.

We believe that, that's a great value prop that Somero provides that the competition can't. So we're really close to our customers on that side. The launch of the Hammerhead product, really bringing a lower entry point product that's in the Somero ecosystem to provide a different offering at a lower price point to bring customers in where they don't have to pay for the lower-priced machine and concern -- have a concern about the lifetime support of it.

And then again, growing our channel footprint to get our reach out there to expand that. So we're attacking that through our strategic initiatives. We're very focused on making sure that we maintain and deliver solutions to our customers.

That's great. A question from [Ramon]. Thank you for your question, Ramon. How are you currently benefiting from the AI data center Boomed in terms of orders and revenue from ultraflat concrete flooring needs? And potentially maybe looking forward, what key growth opportunities do you see from this trend over the next 3 to 5 years?

Yes. So our customers do a variety of work, including data centers, and that is a hot area for us. But really, to put it into context, at least in the U.S., data center spending represents 5% to 6% of total private nonresidential construction. So although the headlines make it sound like it's sort of a boom, which to some extent, it is, in the big picture, it's really not as big as the broader markets.

And given the fact that some of the other market segments have declined since the peak in 2021, warehousing, in particular, manufacturing. So warehousing, although it's contributed and it's been accretive, it hasn't completely backfilled for the declines in other segments. So overall, construction continues to decline since 2021.

That's great. If I may turn to a question from [ Angus Soenke]. What examples of lean efficiency initiatives are underway? And what targets reasonable time frame for delivery can you share with us?

Yes, it's a great question. So again, we're a very agile organization. I think we've demonstrated over time our flexibility to move with the business and move with the market in the cycle. We're a very capital-light business. We're predominantly an assembly manufacturing operation. We do some [ sheet ] glass and painting.

We source a lot of our bigger components. Our focus is really trying to streamline some of our assembly operations. We put it within the presentation, simple focus on 6S, which is very rudimentary, but focus on lean manufacturing, continuous improvement. So some examples would include visual management boards, focused on safety, quality, delivery and cost and really rolling that out through a pilot program right now.

We haven't -- we don't have programs deliverables that we're going to share right now. But again, we're early in that journey, but providing some visual management to really get our system more efficient as we go forward. Again, we're good, but we think we can get better and fortifying the business overall.

Question from [ Marco]. I'll try and read it, I think, as you meant, but how conservative is your guidance for 2026 revenues and earnings to be flattish relative to 2025? Conditions improved in the second half of '25. The momentum continues through this year, and you continue to cut costs last year.

Good question. So our base case for 2026 considers the decline in our large line Boomed screeds. For the previous 3 years, we've seen 20-plus percent decreases in the large line Boomed that are sort of applicable for the larger projects that have been more acutely impacted by some of the macro factors that we talk about.

And therefore, the base case assumes that, that trend will continue in 2026. Now we have seen some early signs of stabilization. As noted, we certainly had momentum at the end of 2025, and that has carried over into 2026. It's a bit early to conclude that, that's a trend. And so for the moment, from a budget standpoint, we're assuming that, that trend on the large line continues.

We'll offset that with increases in sales of our Hammerhead, which we had launched in August really when we were really fully selling. So we'll have a full year of selling the Hammerhead as well as adding to the dealer network. So on balance, we'll be broadly in line with 2025.

That said, I think if the trend on the large line sort of settles and we don't get that continued decline, there could be the potential for improvement in 2026.

Of course, that sounds that's considering any geopolitical or other things that happen in the overall global perspective, right? So good question. Thank you for asking that.

Guys. Question from Will. Thank you, Will. Why is the share buyback plan only $4 million? Is there a plan to upsize this? It seems there is more cash than is needed on the balance sheet and the shares feel very undervalued, certainly close to the 52-week low.

Yes. At the moment, we are prioritizing a heightened emphasis on M&A. So in part, preserving some of that cash to fund an M&A transaction. We did increase the share buyback 100% compared to what it was before. So it was previously $2 million. We've doubled it to $4 million. There are currently no plans to change that, but we will continue to assess it on a go-forward basis.

That's great. Thank you very much indeed. A follow-on question from Will. What is the replacement cycle for your products? How much demand pulled forward into 2021, but I think I'm sure about that, but the other years continue to impact demand today.

Yes. Generally, it's 5 to 10 years depending on utilization and also depending on geography. In the U.S., it tends to be shorter. Customers like to keep their fleets fresh. They'll also upgrade for new technology, and they tend to replace the equipment after it's paid off. Whereas in Europe and Australia, they tend to hold on to the equipment a bit longer.

They'll purchase for specific projects. They don't tend to upgrade for new technology.

I'll add to that. I think part of that question was what does that look like from a recovery. So Enzo talked about the declines that we've experienced over 2 past 2 or 3 years, that's really off a high peak that happened in 2022 when Somero's business really grew 150% overall.

And so again, that's forecasted decline really depends on utilization. We've done some simple math, and we would expect that there could be some stabilization, replenishment starting later this year or next year. We're not quite sure what that looks like. But again, as that gets to be more normal mode, we expect that will be past -- similar to the past cycles that we've seen over time in terms of replenishment.

Well, great. Thank you very much to you both for taking the time to respond to those questions. And thank you to everybody for your engagement. If there are any topics or anything that we may have missed, we'll supply those questions to the company post today's meeting. Tim, Vincenzo, I know investor feedback is particularly important to you both.

I'll shortly redirect those on the call to give you their thoughts and their expectations. But I guess before doing so, if I may, Tim, just ask you for a couple of closing comments.

Yes. Thank you so much. Again, thanks for everybody's time. I'll maybe just end on 3 notes just to kind of summarize where we've talked about today. I think we've carried late 2025 momentum into 2026 and customers remain cautious considering some of the uncertainty.

We're focused still on delivering robust financial performance overall, like we've demonstrated over time. And then third, really our strategy is in action. It's no longer a theory, it's really in action. We're focused on execution right now. So with that, I thank you all for your time and appreciate your engagement today.

That's great. Thank you very much to you both for updating investors. If we could please ask investors not to close this session as we'll now redirect you so that you can provide your feedback in order that the company can better understand your views and expectations.

It will take a couple of moments to complete. I'm sure it will be greatly valued by the company. On behalf of the management team of Somero [ plc ] we'd like to thank you for attending today's presentation, and good afternoon to you all.