Sun Hydraulics Reports Strong First Quarter Results With Sales of $55 Million and Earnings of $0.41 per Share
SARASOTA, FL -- (Marketwire) -- 05/07/12 -- Sun Hydraulics Corporation (NASDAQ: SNHY) today reported financial results for the first quarter of 2012 as follows:
(Dollars in millions except net income per share)
March 31, April 2,
2012 2011 Increase
Three Months Ended
Net Sales $ 55.3 $ 50.7 9%
Net Income $ 10.6 $ 9.8 8%
Net Income per share:
Basic $ 0.41 $ 0.38 8%
Diluted $ 0.41 $ 0.38 8%
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.
"First quarter sales and earnings rebounded nicely after a soft fourth quarter," said Allen Carlson, Sun's CEO and president. "Results were driven by strong North American demand, which was responsible for most of the year-over-year first quarter increase in both sales and earnings. Asian and European sales, which decreased in the second half of 2011, rebounded to first quarter 2011 levels. European sales were consistent with last year despite non-recurring sales of about $1.8 million relating to a onetime project in the prior year."
"As we announced in January, we have begun site work for a third factory in Sarasota," Carlson continued. "Total spending for site work and the building in 2012 will be approximately $6 million. The new capacity is expected to be completed in the first half of 2013, with a total expenditure of $16 million. This expansion will provide the infrastructure necessary for Sun's future growth."
"North American demand continues to drive our second quarter forecast," Carlson concluded. "European and Asian demand is expected to be stable in the second quarter. The first half of 2012 will be strong. The 54.8 PMI number announced last week indicates the U.S. manufacturing sector's expansion, in place now for 33 months, is continuing. This signals a good environment for accelerated growth in the second half of 2012."
Outlook
Second quarter 2012 revenues are expected to be approximately $56 million, up approximately 2% from the second quarter of 2011. Earnings per share are estimated to be $0.41 to $0.43, compared to $0.41 in the same period a year ago.
Webcast
Sun Hydraulics Corporation will broadcast its 2012 first quarter financial results conference call live over the Internet at 9:00 A.M. E.T. tomorrow, May 8, 2012. 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 1-888-278-8471 and using 3117204 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 March 31, 2012, and under the heading "Business" and particularly under the subheading, "Business Risk Factors" in the Company's Form 10-K for the year ended December 31, 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
March 31, 2012 April 2, 2011
(unaudited) (unaudited)
Net sales $ 55,274 $ 50,703
Cost of sales 33,056 30,761
-------------- --------------
Gross profit 22,218 19,942
Selling, engineering and administrative
expenses 6,954 6,031
-------------- --------------
Operating income 15,264 13,911
Interest income, net (341) (163)
Foreign currency transaction gain, net (11) (54)
Miscellaneous income, net (125) (289)
-------------- --------------
Income before income taxes 15,741 14,417
Income tax provision 5,118 4,647
-------------- --------------
Net income $ 10,623 $ 9,770
============== ==============
Basic net income per common share (1) $ 0.41 $ 0.38
Weighted average basic shares outstanding
(1) 25,785 25,547
Diluted net income per common share (1) $ 0.41 $ 0.38
Weighted average diluted shares outstanding
(1) 25,834 25,602
Dividends declared per share (1) $ 0.210 $ 0.133
(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)
March 31, December 31,
2012 2011
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 53,337 51,262
Restricted cash 48 46
Accounts receivable, net of allowance for
doubtful accounts of $101 and $83 21,702 16,227
Inventories 14,199 12,829
Income taxes receivable - 120
Deferred income taxes 260 260
Marketable securities 26,083 21,832
Other current assets 2,000 1,354
------------- -------------
Total current assets 117,629 103,930
Property, plant and equipment, net 57,367 56,959
Other assets 6,491 6,639
------------- -------------
Total assets $ 181,487 $ 167,528
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 5,635 $ 4,402
Accrued expenses and other liabilities 4,414 7,466
Income taxes payable 3,964 -
Dividends payable 2,331 2,318
------------- -------------
Total current liabilities 16,344 14,186
Deferred income taxes 6,920 6,917
Other noncurrent liabilities 1,233 1,149
------------- -------------
Total liabilities 24,497 22,252
Shareholders' equity:
Common stock 26 26
Capital in excess of par value 53,480 48,944
Retained earnings 103,599 98,426
Accumulated other comprehensive income (115) (2,120)
------------- -------------
Total shareholders' equity 156,990 145,276
------------- -------------
Total liabilities and shareholders' equity $ 181,487 $ 167,528
============= =============
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended
March 31, April 2,
2012 2011
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 10,623 $ 9,770
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,793 1,689
(Gain) loss on disposal of assets (21) (139)
Unrealized foreign exchange gain (19) -
Provision for deferred income taxes 3 6
Allowance for doubtful accounts 18 (1)
Stock-based compensation expense 641 402
(Increase) decrease in, net of acquisition:
Accounts receivable (5,493) (3,743)
Inventories (1,370) (1,211)
Income taxes receivable 120 1,154
Other current assets (646) (667)
Other assets 93 (296)
Increase (decrease) in, net of acquisition:
Accounts payable 1,233 2,265
Accrued expenses and other liabilities 701 1,187
Income taxes payable 3,964 3,148
Other noncurrent liabilities 84 266
----------- -----------
Net cash provided by operating activities 11,724 13,830
Cash flows from investing activities:
Proceeds from sale of joint venture - 1,451
Capital expenditures (1,786) (1,111)
Proceeds from dispositions 21 140
Purchases of marketable securities (4,638) (1,989)
Proceeds from sale of marketable securities 712 1,059
----------- -----------
Net cash used in investing activities (5,691) (450)
Cash flows from financing activities:
Proceeds from stock issued 142 133
Dividends to shareholders (5,437) (3,411)
----------- -----------
Net cash used in financing activities (5,295) (3,278)
Effect of exchange rate changes on cash and cash
equivalents 1,337 1,283
----------- -----------
Net increase (decrease) in cash and cash
equivalents 2,075 11,385
Cash and cash equivalents, beginning of period 51,262 33,206
----------- -----------
Cash and cash equivalents, end of period $ 53,337 $ 44,591
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid:
Income taxes $ 1,032 $ 339
Supplemental disclosure of noncash transactions:
Common stock issued for shared distribution
through accrued expenses and other liabilities $ 3,753 $ 2,412
United United
States Korea Germany Kingdom Elimination Consolidated
Three Months
Ended March 31,
2012
Sales to
unaffiliated
customers $35,620 $5,952 $ 7,421 $ 6,281 $ - $ 55,274
Intercompany
sales 9,075 - 23 374 (9,472) -
Operating income 11,781 706 1,545 1,134 98 15,264
Depreciation 1,325 27 82 218 - 1,652
Capital
expenditures 1,593 11 17 165 - 1,786
Three Months
Ended April 2,
2011
Sales to
unaffiliated
customers $30,467 $6,023 $ 7,188 $ 7,025 $ - $ 50,703
Intercompany
sales 9,489 - 52 376 (9,917) -
Operating income 9,976 941 1,740 1,206 48 13,911
Depreciation 1,292 25 99 241 - 1,657
Capital
expenditures 896 122 45 48 - 1,111
Contact: Richard K. Arter Investor Relations 941-362-1200 Tricia Fulton Chief Financial Officer 941-362-1200
Source: Sun Hydraulics Corporation
Released May 7, 2012