SARASOTA, FL--(Marketwire - Nov 7, 2011) - Sun Hydraulics Corporation (
| (Dollars in millions except net income per share) | ||||||||||
| October 1, | October 2, | |||||||||
| 2011 | 2010 | Increase | ||||||||
| Three Months Ended | ||||||||||
| Net Sales | $ | 53.0 | $ | 38.1 | 39 | % | ||||
| Net Income | $ | 11.4 | $ | 5.7 | 100 | % | ||||
| Net Income per share: | ||||||||||
| Basic | $ | 0.44 | $ | 0.22 | 100 | % | ||||
| Diluted | $ | 0.44 | $ | 0.22 | 100 | % | ||||
| Nine Months Ended | ||||||||||
| Net Sales | $ | 158.5 | $ | 108.9 | 46 | % | ||||
| Net Income | $ | 31.6 | $ | 15.1 | 109 | % | ||||
| Net Income per share: | ||||||||||
| Basic | $ | 1.23 | $ | 0.60 | 105 | % | ||||
| Fully Diluted | $ | 1.23 | $ | 0.59 | 108 | % | ||||
| Note: The Company announced a three-for-two stock split, effected in the form of a 50% stock dividend, to shareholders of record on June 30, 2011, payable on July 15, 2011. All earnings per share and weighted average share information reflect the 50% stock dividend. |
"Third quarter sales increased in all major geographic regions, with our North American business leading the way," commented Allen Carlson, Sun's CEO and President. "2011 will be another great year, evidenced by our forecast of breaking the $200 million revenue level. We continue to grow our revenues and gain market share while reporting exceptionally strong operating performance."
"Third quarter earnings were augmented by the acquisition of High Country Tek, Inc. (HCT) which added three cents per share to earnings related to a gain on our original investment," Carlson said. "HCT designs and produces ruggedized electronic control products that are important elements in hydraulic systems. HCT's product line and capabilities complement Sun's products and will enable us to offer more complete solutions for our customers, providing additional future growth opportunities for Sun and HCT."
Continuing, Carlson said, "Our fourth quarter forecast reflects softening in orders compared to earlier this year, but we expect fourth quarter 2011 to be stronger than fourth quarter 2010. The decline in orders compared with earlier in the year was predicted by the PMI (which peaked in February). We are encouraged that the U.S. PMI continues to operate in positive territory. Sun is well positioned to continue to grow and gain market share over the long term while achieving exceptional operating results."
Outlook
Fourth quarter 2011 revenues are expected to be approximately $44 million, up approximately 5% from the fourth quarter of 2010. Earnings per share are estimated to be $0.26 to $0.28 compared to $0.25 in the same period a year ago.
Management estimates year-end 2011 sales to be approximately $202 million, an increase of approximately 34% over 2010 sales. Earnings per share for 2011 are estimated to be $1.49 to $1.51, compared to $0.84 in 2010.
Fourth quarter and year-end estimates include approximately $1.3 million in revenue from HCT's operations, with minimal impact on earnings.
Webcast
Sun Hydraulics Corporation will broadcast its Q3 financial results conference call live over the Internet at 9:00 A.M. E.T. tomorrow, November 8, 2011. To listen to the webcast, go to the Investor Relations section of www.sunhydraulics.com.
Webcast Q&A
If an individual wishes to ask questions directly during the webcast, the conference call may be accessed by dialing (888) 417-8531 and using 3043530 as the access code. Questions also may be submitted to the Company via email by going to the Sun Hydraulics website, www.sunhydraulics.com, and clicking on Investor Relations on the top menu. Scroll down to the bottom of the page and click on contact email: investor@sunhydraulics.com, which will open an email window to type in your message. Sun management will then answer these and other questions during the Company's webcast. A copy of this earnings release is posted on the Investor Relations page of our website under "Press Releases."
Sun Hydraulics Corporation is a leading designer and manufacturer of high performance screw-in hydraulic cartridge valves and manifolds for worldwide industrial and mobile markets. For more information about Sun, please visit our website at www.sunhydraulics.com.
FORWARD-LOOKING INFORMATION
Certain oral statements made by management from time to time and certain statements contained herein that are not historical facts are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and, because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements, including those in Management's Discussion and Analysis of Financial Condition and Results of Operations are statements regarding the intent, belief or current expectations, estimates or projections of the Company, its Directors or its Officers about the Company and the industry in which it operates, and assumptions made by management, and include among other items, (i) the Company's strategies regarding growth, including its intention to develop new products; (ii) the Company's financing plans; (iii) trends affecting the Company's financial condition or results of operations; (iv) the Company's ability to continue to control costs and to meet its liquidity and other financing needs; (v) the declaration and payment of dividends; and (vi) the Company's ability to respond to changes in customer demand domestically and internationally, including as a result of standardization. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that the anticipated results will occur.
Important factors that could cause the actual results to differ materially from those in the forward-looking statements include, among other items, (i) the economic cyclicality of the capital goods industry in general and the hydraulic valve and manifold industry in particular, which directly affect customer orders, lead times and sales volume; (ii) conditions in the capital markets, including the interest rate environment and the availability of capital; (iii) changes in the competitive marketplace that could affect the Company's revenue and/or cost bases, such as increased competition, lack of qualified engineering, marketing, management or other personnel, and increased labor and raw materials costs; (iv) changes in technology or customer requirements, such as standardization of the cavity into which screw-in cartridge valves must fit, which could render the Company's products or technologies noncompetitive or obsolete; (v) new product introductions, product sales mix and the geographic mix of sales nationally and internationally; and (vi) changes relating to the Company's international sales, including changes in regulatory requirements or tariffs, trade or currency restrictions, fluctuations in exchange rates, and tax and collection issues. Further information relating to factors that could cause actual results to differ from those anticipated is included but not limited to information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Form 10-Q for the quarter ended October 1, 2011, and under the heading "Business" and particularly under the subheading, "Business Risk Factors" in the Company's Form 10-K for the year ended January 1, 2011. The Company disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
| SUN HYDRAULICS CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (in thousands except per share data) | ||||||||
| Three months ended | ||||||||
| October 1, 2011 | October 2, 2010 | |||||||
| (unaudited) | (unaudited) | |||||||
| Net sales | $ | 53,041 | $ | 38,073 | ||||
| Cost of sales | 32,293 | 24,523 | ||||||
| Gross profit | 20,748 | 13,550 | ||||||
| Selling, engineering and | ||||||||
| administrative expenses | 5,249 | 5,368 | ||||||
| Operating income | 15,499 | 8,182 | ||||||
| Interest income, net | (241 | ) | (195 | ) | ||||
| Foreign currency transaction loss, net | 50 | 14 | ||||||
| Miscellaneous income, net | (1,292 | ) | (46 | ) | ||||
| Income before income taxes | 16,982 | 8,409 | ||||||
| Income tax provision | 5,588 | 2,700 | ||||||
| Net income | $ | 11,394 | $ | 5,709 | ||||
| Basic net income per common share (1) | $ | 0.44 | $ | 0.22 | ||||
| Weighted average basic shares outstanding (1) | 25,652 | 25,441 | ||||||
| Diluted net income per common share (1) | $ | 0.44 | $ | 0.22 | ||||
| Weighted average diluted shares outstanding (1) | 25,701 | 25,490 | ||||||
| Dividends declared per share (1) | $ | 0.090 | $ | 0.060 | ||||
(1) The Company announced a three-for-two stock split, effected in the form of a 50% stock dividend, to shareholders of record on June 30, 2011, payable on July 15, 2011. All per share and weighted average share information reflect the 50% stock dividend.
| SUN HYDRAULICS CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (in thousands except per share data) | ||||||||
| Nine months ended | ||||||||
| October 1, 2011 | October 2, 2010 | |||||||
| (unaudited) | (unaudited) | |||||||
| Net sales | $ | 158,514 | $ | 108,923 | ||||
| Cost of sales | 96,147 | 71,270 | ||||||
| Gross profit | 62,367 | 37,653 | ||||||
| Selling, engineering and | ||||||||
| administrative expenses | 17,570 | 15,369 | ||||||
| Operating income | 44,797 | 22,284 | ||||||
| Interest income, net | (590 | ) | (477 | ) | ||||
| Foreign currency transaction (gain) loss, net | (36 | ) | 56 | |||||
| Miscellaneous income, net | (1,550 | ) | (175 | ) | ||||
| Income before income taxes | 46,973 | 22,880 | ||||||
| Income tax provision | 15,369 | 7,747 | ||||||
| Net income | $ | 31,604 | $ | 15,133 | ||||
| Basic net income per common share (1) | $ | 1.23 | $ | 0.60 | ||||
| Weighted average basic shares outstanding (1) | 25,613 | 25,428 | ||||||
| Diluted net income per common share (1) | $ | 1.23 | $ | 0.59 | ||||
| Weighted average diluted shares outstanding (1) | 25,653 | 25,478 | ||||||
| Dividends declared per share (1) | $ | 0.313 | $ | 0.180 | ||||
(1) The Company announced a three-for-two stock split, effected in the form of a 50% stock dividend, to shareholders of record on June 30, 2011, payable on July 15, 2011. All per share and weighted average share information reflect the 50% stock dividend.
| SUN HYDRAULICS CORPORATION | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (in thousands) | ||||||||||
| October 1, 2011 | January 1, 2011 | |||||||||
| (unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 52,712 | $ | 33,206 | ||||||
| Restricted cash | 132 | 131 | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $98 and $82 | 19,880 |
16,399 |
||||||||
| Inventories | 12,040 | 10,773 | ||||||||
| Income taxes receivable | 288 | 1,154 | ||||||||
| Deferred income taxes | 446 | 446 | ||||||||
| Marketable securities | 14,932 | 11,614 | ||||||||
| Other current assets | 1,181 | 2,556 | ||||||||
| Total current assets | 101,611 | 76,279 | ||||||||
| Property, plant and equipment, net | 55,312 | 53,127 | ||||||||
| Other assets | 5,700 | 2,628 | ||||||||
| Total assets | $ | 162,623 | $ | 132,034 | ||||||
| Liabilities and Shareholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 5,392 | $ | 3,348 | ||||||
| Accrued expenses and other liabilities | 6,611 | 5,250 | ||||||||
| Notes payable - 1 year | 100 | - | ||||||||
| Dividends payable | 2,309 | 1,531 | ||||||||
| Total current liabilities | 14,412 | 10,129 | ||||||||
| Deferred income taxes | 5,684 | 5,684 | ||||||||
| Other noncurrent liabilities | 1,051 | 1,197 | ||||||||
| Total liabilities | 21,147 | 17,010 | ||||||||
| Shareholders' equity: | ||||||||||
| Common stock | 26 | 26 | ||||||||
| Capital in excess of par value | 48,100 | 44,001 | ||||||||
| Retained earnings | 94,674 | 71,132 | ||||||||
| Accumulated other comprehensive income | (1,324 | ) | (135 | ) | ||||||
| Total shareholders' equity | 141,476 | 115,024 | ||||||||
| Total liabilities and shareholders' equity | $ | 162,623 | $ | 132,034 | ||||||
| SUN HYDRAULICS CORPORATION | |||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (in thousands) | |||||||||
| Nine months ended | |||||||||
| October 1, 2011 | October 2, 2010 | ||||||||
| (unaudited) | (unaudited) | ||||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | 31,604 | $ | 15,133 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Depreciation and amortization | 5,025 | 5,116 | |||||||
| (Gain) loss on disposal of assets | (27 | ) | 22 | ||||||
| Gain on investment in HCT | (1,244 | ) | - | ||||||
| Provision for deferred income taxes | - | (6 | ) | ||||||
| Allowance for doubtful accounts | 16 | 3 | |||||||
| Stock-based compensation expense | 1,218 | 798 | |||||||
| Stock options income tax benefit | - | (32 | ) | ||||||
| (Increase) decrease in, net of acquisition: | |||||||||
| Accounts receivable | (2,927 | ) | (6,474 | ) | |||||
| Inventories | (823 | ) | (1,962 | ) | |||||
| Income taxes receivable | 866 | 1,509 | |||||||
| Other current assets | (488 | ) | (1,184 | ) | |||||
| Other assets | (88 | ) | 622 | ||||||
| Increase (decrease) in, net of acquisition: | |||||||||
| Accounts payable | 1,534 | 1,994 | |||||||
| Accrued expenses and other liabilities | 3,535 | 1,569 | |||||||
| Other noncurrent liabilities | (202 | ) | 164 | ||||||
| Net cash provided by operating activities | 37,999 | 17,272 | |||||||
| Cash flows from investing activities: | |||||||||
| Proceeds from sale of joint venture | 1,451 | - | |||||||
| Investment in HCT, net of cash received | (1,776 | ) | - | ||||||
| Capital expenditures | (6,778 | ) | (2,060 | ) | |||||
| Proceeds from dispositions | 30 | - | |||||||
| Purchases of marketable securities | (10,395 | ) | (11,626 | ) | |||||
| Proceeds from sale of marketable securities | 6,497 | 7,326 | |||||||
| Net cash used in investing activities | (10,971 | ) | (6,360 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Proceeds from exercise of stock options | 61 | 44 | |||||||
| Proceeds from stock issued | 408 | 303 | |||||||
| Dividends to shareholders | (7,284 | ) | (4,583 | ) | |||||
| Stock options income tax benefit | - | 32 | |||||||
| Net cash used in financing activities | (6,815 | ) | (4,204 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | (706 |
) | (205 |
) | |||||
| Net increase (decrease) in cash and cash equivalents | 19,507 | 6,503 | |||||||
| Cash and cash equivalents, beginning of period | 33,337 | 30,446 | |||||||
| Cash and cash equivalents, end of period | $ | 52,844 | $ | 36,949 | |||||
| Supplemental disclosure of cash flow information: | |||||||||
| Cash paid: | |||||||||
| Income taxes | $ | 14,503 | $ | 6,276 | |||||
| Supplemental disclosure of noncash transactions: | |||||||||
| Common stock issued for shared distribution through accrued expenses and other liabilities | $ | 2,412 |
$ | - |
|||||
| United | United | ||||||||||||||||||
| States | Korea | Germany | Kingdom | Elimination | Consolidated | ||||||||||||||
| Three Months | |||||||||||||||||||
| Ended October 1, 2011 | |||||||||||||||||||
| Sales to unaffiliated customers | $ | 34,897 | $ | 5,081 | $ | 7,824 | $ | 5,239 | $ | - | $ | 53,041 | |||||||
| Intercompany sales | 8,763 | - | 60 | 405 | (9,228 | ) | - | ||||||||||||
| Operating income | 12,119 | 575 | 2,028 | 892 | (115 | ) | 15,499 | ||||||||||||
| Depreciation | 1,294 | 28 | 85 | 235 | - | 1,642 | |||||||||||||
| Capital expenditures | 4,121 | 89 | 7 | 68 | - | 4,285 | |||||||||||||
| Three Months | |||||||||||||||||||
| Ended October 2, 2010 | |||||||||||||||||||
| Sales to unaffiliated customers | $ | 23,668 | $ | 3,315 | $ | 5,402 | $ | 5,688 | $ | - | $ | 38,073 | |||||||
| Intercompany sales | 6,873 | - | 37 | 311 | (7,221 | ) | - | ||||||||||||
| Operating income | 5,636 | 378 | 1,061 | 1,028 | 79 | 8,182 | |||||||||||||
| Depreciation | 1,243 | 21 | 107 | 242 | - | 1,613 | |||||||||||||
| Capital expenditures | 631 | 28 | 15 | 62 | - | 736 | |||||||||||||
| Nine Months | |||||||||||||||||||
| Ended October 1, 2011 | |||||||||||||||||||
| Sales to unaffiliated customers | $ | 100,515 | $ | 16,778 | $ | 22,320 | $ | 18,901 | $ | - | $ | 158,514 | |||||||
| Intercompany sales | 26,722 | - | 176 | 1,188 | (28,086 | ) | - | ||||||||||||
| Operating income | 33,481 | 2,175 | 5,690 | 3,379 | 72 | 44,797 | |||||||||||||
| Depreciation | 3,879 | 83 | 272 | 721 | - | 4,955 | |||||||||||||
| Capital expenditures | 6,631 | 234 | 57 | 173 | - | 7,095 | |||||||||||||
| Nine Months | |||||||||||||||||||
| Ended October 2, 2010 | |||||||||||||||||||
| Sales to unaffiliated customers | $ | 67,896 | $ | 12,151 | $ | 14,770 | $ | 14,106 | $ | - | $ | 108,923 | |||||||
| Intercompany sales | 18,755 | - | 118 | 936 | (19,809 | ) | - | ||||||||||||
| Operating income (loss) | 15,511 | 1,655 | 3,088 | 2,122 | (92 | ) | 22,284 | ||||||||||||
| Depreciation | 3,891 | 66 | 320 | 727 | - | 5,004 | |||||||||||||
| Capital expenditures | 1,712 | 141 | 20 | 187 | - | 2,060 | |||||||||||||
Contact Information:
Contact:
Richard K. Arter
Investor Relations
941-362-1200
Tricia Fulton
Chief Financial Officer
941-362-1200