Starting this year, non-residential construction has remained very, very healthy. Trading in North America continues to be impeded by project delays, elevated interest rates, labor shortages, concrete rationing, and also by significant weather problems throughout the entire United States. We were able to launch two new products this year, including our first electric machine, with a third new product on track for the next couple of months, the latter part of this year. The European market continues reporting good results, comparable to H1 of 2023. Our Belgium work center is up and operational at the end of H1, and it's showing very, very good results. We did have a restructuring at the end of July as business slowed down, but it shows our ability to adjust to our expenses very rapidly. We also declared an $0.08 dividend, payable in October of 2024.
Going on to the next page, we'll talk about sales by territory. North America, as I mentioned, has been slow with all of the problems that we've had, and you can see that the majority of the shortfall has been in the US. It's declined by 8%, and most of it has been on the boom screed side, and what that means is that it's more the large buildings that are not being processed as much as they normally were, and that's because many of the larger developers have paused their jobs to try and get lower interest rates. With the Federal Reserve going to reduce the interest rates starting next week, their loans from the original start of the job are expiring, and therefore they want to get the best possible rates they can.
So that has slowed things down on the boom screed side. You'll see later on that the small screed side of things is very, very healthy, which means that a lot of the smaller projects were not paused as much as the larger ones. We still have very good, healthy market conditions in Europe. We have inclement weather in Australia, and once again, that has, as I mentioned, been a problem for trading. Also, last year in Australia was a record high year. Very, very high. And the rest of the world continues to be relatively consistent. It has its ups and downs in small volume. And on the next slide, you can see here that the boom screeds are a big impact.
It's, you know, it's $5 million of the shortfall, and when you look at the Ride-on Screeds , you can see that it's pretty much the same. The revenue from remanufactured machines has benefited from a higher inventory. The remanufactured machines, we take trade-ins from our customers, remanufacture the machine, and then resell it at a lower price, mostly for new people that are coming into the market and cannot afford to buy a brand-new large line machine, and therefore we have a remanufactured machine. And this has been very healthy because we had the significant inventory to be able to produce it. 3-D Profiler systems have been very good. We had no Sky Screed sales this year so far, but we remain very dedicated to continuing to think that this product is definitely needed in the industry.
We're doing a lot of demonstrations, and we're going to remain diligent on trying to convince companies that this is a very meaningful piece of equipment for them to own. On the next slide, please. With that, I'll turn it over to Enzo.
Thanks, Jack. So starting on slide five, our financial highlights. As we compare these various metrics year-over-year, the decline has been predominantly due to the volume decrease that Jack outlined for us. As a result, our EBITDA margin declined about six hundred basis points. We did put into effect a restructuring in July. The benefit of that reduction or the savings will be realized in the second half of this year, and the order of magnitude is, you know, approximately $2 million worth of people and people-related expenses. It was 15% of our workforce across the company, so operations and SG&A, predominantly in the U.S. We preserved the individuals that we've added not too long ago in Europe and Australia for strategic reasons.
Factoring in the restructuring, the EBITDA margin on an annualized basis would have been 29%, and clearly very much in line with, with last year. Moving further down, we'll, we'll talk a bit more about these various results in, in the upcoming slides, but I do wanna call out relative to the interim dividend. That will be paid out to shareholders on October 18th, to shareholders of record as of September 20th. Next slide, we start getting into the operating results. You know, picking up on, on the gross margin, 55% this year compared to 57% last year. We did put through a price increase, as we normally do, typically in the low single digits, but that wasn't sufficient to cover the higher input costs that we incurred this year. Material costs vary from year to year.
We try to get as much information from our suppliers at the very beginning of the year so that we can set our prices accordingly, but over the year, you know, things change. But overall, we're still in the mid-50s%, which is our targeted Gross Margin range. Moving further down to total operating expenses, relatively in line with last year. However, we do have some puts and takes. On the one hand, customer support expenses increased as we ramped up the Belgian facility. On the other hand, we have lower variable compensation costs by not hitting our revenue targets. Overall, we ended at a net income of $8.1 million, compared to $12.4 million in the same period last year. Next slide. We have our financial position.
We ended the year with over $20 million in cash, and this is after paying out our final 2023 ordinary dividend, as well as a supplemental dividend, which combined was $11.4 million. Our receivables remained well under control. Our inventory has ticked up quite a bit, and it's due to a combination of reasons. One is the stocking of our Belgium facility, where we have machines, parts, and the like. We did introduce two new products in the first half of the year, and our sales, obviously, did not meet our forecast, and therefore, we have a bit more inventory than we would've liked, but we do anticipate that the inventory will come down a bit by the end of the year, as we are reducing future incoming inventory.
Our liabilities remain relatively consistent to last year, and we continue to remain debt-free, so obviously, a very strong financial position, going forward. Flipping over to the cash flow, I mentioned the inventory being sort of the primary driver for the working capital increase. In terms of CapEx, the increase year-over-year is attributable to the renovation work that we're doing with our in our Houghton facility, which is substantially complete. And we don't have any other major CapEx projects in the pipeline. I did mention the dividends, and I do wanna point out that we were more aggressive and opportunistic this year with our share buyback program, compared to the same period last year, buying back almost $2 million worth, compared to $400,000 in the first half of last year.
Overall, cash changed $12.5 million, compared to $8.5 million last year. And with that, I'll hand it back to Jesse with regards to our new products.
Thank you, Enzo. As Jack mentioned, we came out with two new products in the first half. The first was the S-940E, which we introduced at the World of Concrete, the first Somero battery-powered Laser Screed. This machine has no emissions and certainly has no compromise to productivity, with very good power relatable to the gas and diesel unit that we offer. This machine has been accepted very well globally, due to the eight hours of runtime and the pleasant surprise of having very little noise associated with the machine. The second machine is the SRS-6, which is a remote-controlled boom Laser Screed, which is a step up from our widely accepted SRS-4. This machine came in the middle of the second... or excuse me, in the middle of the first half, and has productivity gains that our customers were requesting.
Both of these machines have had a very good impact in the first half. We have been able to build up our inventory and distribute them globally to ensure a successful second half, and we are right on track to introduce our third machine, launching in the second half of this year. At this time, I'll hand it back to Jack to talk about Europe.
On the international side, revenue in Europe was very consistent with last year, and it also is good to see that we have 18% of our sales are from new customers. And as Jesse mentioned about the parts and service center, well, growth over there has been very nice at 10%, and we've continued with new training in the Belgium service center. Next slide, please. In Australia, we said the revenue was down. It came very strongly from a record high last year, but the inclement weather really did play a part in the problems that they've had over there. They still continue to get a significant amount of new customers, which is a very positive thing. On the next slide, we're taking a look at this year. Overall, our customers are all telling us that they have a significant amount of orders in their backlog.
And it's the delays that are keeping them from working basically 100% of the time. So the shortages that are causing this problem is impacting everyone, which it, as I mentioned earlier, include the elevated interest rates, the labor shortages, and the concrete shortages. The second half of the year, we expect to be slightly better than the first half of the year, and Europe continues to deliver strong results. We also had a meaningful company-wide reduction, as Enzo mentioned, earlier in the year, and we anticipate that the full year will end up at $110 million, which we've already communicated to everybody. And with that, we'll take any questions that you might have.
Tremendous. Thank you very much. So if you have a question, click on the Q&A button and type it in. And we've got quite a few questions already. What's the approximate life in years or operating hours of a boom screed and a Ride-on Screed?
Jesse?
We see a wide variety of machines that come through our trade-in program. It's very common to see boom screeds anywhere from 8,000 to 15,000 hours, and the smaller screeds, again, a wide variety, anywhere from 2,000 to 4,000 hours.
Great. Thank you very much. And what phase of a commercial construction project does Laser Screeding typically take place? So if there's a battery plant, warehouse, or data center being built, and the project might take five years, in what year will the Laser Screeding occur?
Usually, the pouring of the foundation comes early in the process. So if it were a five-year program, it might be year two or three, just depending upon how the schedule is set up.
Great. Thank you very much. And what do you think needs to change for sales of Sky Screed to pick up?
The Sky Screed is one of those things, and we've had some other product, products in the past, where we're ahead of the industry. The Sky Screed works very, very well. It's an outstanding piece of equipment. The problems that we have with it is that there's other jobs that are being done on the slab at the same time. There's different stub-ups that are being done that is controlled by other groups of people and not controlled by the concrete contractor, and so it's getting the whole job site to work together, which will make things better for everybody, and that's something that we work on constantly with the building owners.
Great. Thank you very much. And in the results, you noted that demand remains positive for onshoring of manufacturing, electric vehicles, and battery plants, and chip manufacturing, but data centers weren't mentioned as a tailwind. Was there any reason why, and is there some reason data centers don't use traditional concrete that must be screeded?
No, data centers are still a very important part of it. I think we were just highlighting a lot of the typical things that are coming in, but there's an awful lot of onshoring coming in. We just didn't list all of them.
Great. Thank you. And how do you see the growth in total addressable market for the long term?
The long term is very difficult for us to forecast because we get all of our information direct from our customers. We sell and service direct in over ninety countries in the world, so our customers are the ones that are telling us what their backlog looks like, what their bidding is, how many quotes they're winning. So they have a real handle on which direction, in general, the construction industry is going, but they don't know for sure until they get the purchase order, which is frequently a month before they have to start the job. So the picking a way to forecast the future is very difficult because you can't put all of this together in a pile and try and understand if it's going up or down. Typically, we have about three months' worth of what we think is very comfortable forecasting.
Great. Thank you very much, and a couple of questions about share buybacks. In half two, given the depressed share price versus the strong results in cash generation, will you be announcing more, and how do you prioritize share buybacks over increasing the dividend?
Yeah, that's a great question and a popular one as well. The board is strongly considering our capital allocation policy overall, and that includes share buybacks as well. It is still under board consideration, and we will have more information to share in due course.
Great. Thank you very much. Cement or concrete has been mentioned by you for some time. Is there any sign that the supply of concrete is improving?
The supply of concrete is not a concrete problem. It's a trucker's problem that trucks the concrete in all phases of the process for developing concrete. So the shortage is driven mostly coming out of the pandemic, where we had an extraordinary amount of older people that retired, and they're having a real problem finding enough of the people in today's generation that wanna be truck drivers. So the shortage is one of truck drivers, which means that because of the shortage of truck drivers, they can't get the amount of concrete they need at the ready-mix company. And everybody's working on it, trying to find a way to improve the number of people that are interested in driving trucks in the construction industry, but it hasn't been extremely successful so far.
But there's an awful lot of work being done to attract people to that part of the industry.
Great. Thank you very much. And I'm not sure if there are other site bottlenecks. This question asks: "What catalysts are required to free up the site bottlenecks in the U.S.? Do you have any visibility on timeframes, and are the current bottlenecks as a consequence of cyclical factors you have seen before or something else?
No, this bottleneck is something that we've never seen before. There's always been shortages in the concrete industry for labor. We've talked about that for years, and our products are targeted directly at that when it comes to screeding concrete. You need fewer people to be able to screed the concrete, and you get a much better finish with our products, so that's a real positive. But the construction industry has struggled for years getting enough qualified people to get work in the industry, and there's a lot of programs done throughout the country to try and attract more people there.
We have the Somero Concrete Institute in Florida, where we train people how to put down concrete slabs so that anybody that's interested in the industry doesn't necessarily have to have experience, but they can come in, and we will teach them how to pour a concrete slab, finish it, and that provides a lot of help to our customers to be able to get people that have some experience in doing it. But once again, it's one of those problems that we haven't had to this degree ever before.
Great. Thank you very much. And why are some contractors choosing power trowel machines and not Somero machines?
The power trowel machines are for the finishing of the concrete, not for the screeding of it, so it's for a completely different use that takes place about two hours after the screeding has finished, and the concrete starts to set up, then the power trowel machines come in to do the finishing part of the concrete.
Okay, great. So who are your main competitors?
The first competitor came in 1987, and they were located in Europe, and we have had competitors ever since then. There's one in the United States, there's probably three or four in Europe, there's a number of them in China. They've always been around. We've always had competitors, and we always will have competitors. We just work very hard at doing a better job every single day so that we can keep our technology and our talented people ahead of the competitors in the industry.
Thank you very much. And would you consider mergers or acquisitions?
Yes. We've constantly looked for mergers and acquisitions through the years. We just haven't found the right company to acquire.
And what would you be looking for through that?
We'd be looking for a company that was located in our industry, in our construction industry, and had very, very good margins, similar to what we have as a company.
Great. Thank you very much. And what future does Chesterfield headquarters have following the opening of Belgium?
I'll let Jesse take that.
Thank you, Jack. Right now, the Belgium facility was ramped up in the first half. We continued to get steady transactions, both in Belgium and in the U.K., and so at this point, we continue to fulfill machine parts, service, and training requests at both facilities, and we will continue to do so as the market conditions exist.
Great. Thank you very much. And you've mentioned interest rates might drive demand. To what extent the interest rate reduction of, say, 0.25% or 0.5% would encourage the U.S. consumer to resume their building? How big does it have to be in order for you to notice a tangible difference?
Enzo, you wanna help us with that one?
Sure. Yeah, so we know that it's had a meaningful impact on developers. It's hard to gauge the order of magnitude that would be required in terms of a reduction, that, and how that would impact their decision-making. We do know that the Fed is going to cut rates over the coming months and years. We don't know to what degree or what level and to what extent developers are going to continue to wait to get the lowest interest rate possible, but it is one of the major factors contributing to the slowdown.
Thank you very much. And would you predict that in 10 or 15 years, the demand for screeding machines will be higher than it is today?
Yes, definitely. We have a lot of new technology that we're constantly looking at. A lot of it is geared to making the machine simpler and easier to use over the long run. Ways to basically try and make the requirements of people, the number of people, and the talents required less, which is a benefit to our customers, given the shortage of people that we have, but definitely, we will grow over the long period of time.
Thank you. What proportion of cost of goods sold is imported, and how much of that comes from China?
Very little comes from China, if anything at all. The majority of our raw materials are actually sourced from local suppliers in the US. We do have a couple of suppliers in Italy, for motors and the like, but very little, if anything, in China.
This is probably quite a challenging question to answer verbally, but could you give us an estimated breakdown of usage of your products for various types of buildings? So logistics, warehouses, manufacturing facilities, data centers, commercial buildings, parkings, parking, apartments, office buildings, and other.
Basically, the best way to look at how the equipment is used is by the size of the project, and by that I mean, if you're going to do a data center, you're going to have to pour larger slabs, and therefore, you want the larger equipment, which is more productive and can get the job done faster and still meet the flatness requirements, so when we talk to our customers about their needs, it's based on the size of the jobs they have that determine what's the best machine for them to buy. Because with the smaller machines, you need smaller trucks to transport it around, it has less cost to it, and therefore, it makes them more competitive in the job, so they're really all driven by the size of the project, then you fit the machine to fit the project.
Great. Thank you very much. And what degree of cost inflation are you experiencing this year? And has the expansion of Houghton had the desired effect on efficiency improvements?
Jesse?
The recent expansion that we put on the Michigan factory has been wonderful. It has allowed us to expand our paint capabilities with the state-of-the-art technology that we implemented, and the efficiency gains have been very, very good. Nice, steady flow throughout the factory, and we're very pleased with it.
Cost inflation-
And I'll take the question.
Thank you.
In terms of cost inflation, approximately 5%, in terms of, you know, material cost increases, as well as, customary, you know, inflation year-over-year, in SG&A and, and really across the board. Overall average would be 5%.
Are you able to pass that forward?
Thus far, we did put through a price increase, but we have not been able to recoup that entire 5% cost increase, which is the reason why you see a decrease in our gross margin year-over-year.
Thank you very much. And how have you managed to mitigate the effect of, staff morale, or by workforce cutbacks?
We are very open and honest with our employees. We have monthly meetings with our employees to ensure that they understand the state of the business, and so they are in a good morale at this point due to the communication, the culture that we have, and the ethics and values that we follow.
Thank you very much indeed. And are you concerned about the UK forthcoming budget and the possibility of IHT relief being withdrawn from AIM-listed businesses, and the impact this would have on the support for the company's shares? And would you consider another listing on another index?
Yes, that's a question that's brought up frequently, and we understand that it's been talked about a great deal. It's very hard to know exactly what's gonna happen and when it's going to happen. But certainly, if something of that nature took place, we would have to give strong consideration to listing on another exchange, yes.
Thank you very much, and if you need to reemploy the numbers that you've laid off, how long would it take to upskill the new employees to replace them?
That's a great question. Somero is recognized as one of the leading businesses in our region. We are well recognized for the way that we treat our employees, a very good compensation benefit program, and so the recruitment process and onboarding to bring people back would be a process that we feel very comfortable with, and it would happen in a very efficient process. Good timing.
Thank you. And are the industry problems of weather and trucker availability noticeably hurting your competitors more than Somero or vice versa?
No, I would assume that the weather is impacting everybody, because we're all dealing with the same weather in the same location. So no, I would say it's the same.
Great. Thank you very much. And that is all the questions at this time. So tremendous thank you very much indeed for your comprehensive overview. Jack, do you have any closing remarks?
Yes, I'd like to thank everybody for taking the time and all of the wonderful questions that you've given us, and hopefully, we've given you a very good understanding of what Somero does and where we are right now, and we're very excited about the options we have going forward. So we thank you for taking the time, and if you have any other questions, you can certainly send them in, and we will be glad to respond to them. Have a great day. Thank you.
Thank you very much, Jack and Enzo and Jesse. And to everyone listening, you'll now be taken to a webpage to give feedback on the presentation. If you can't complete it now, you'll get a-