Exhibit 99.1
FOR RELEASE: Immediately
Contact:
Richard K. Arter Investor Relations 941-362-1200
Clyde G. Nixon President 941-362-1200
SUN HYDRAULICS CORPORATION REPORTS $0.11 EARNINGS PER SHARE ON
$18.5 MILLION 1ST QUARTER SALES
SARASOTA, FLA, May 12, 1999 - Sun Hydraulics Corporation (NASDAQ: SNHY) today
announced net sales were $18.5 million for the quarter ended April 3, 1999,
representing a 3.5% decrease compared to first quarter 1998 net sales. Net
income for the first quarter of 1999 was $0.7 million, compared to $1.6 million
in the same quarter of 1998 and $0.8 million in the fourth quarter of 1998.
Both basic and diluted earnings per share for the first quarter of 1999 were in
line with expectations at $0.11.
"First quarter shipments exceeded incoming orders, which continued at the same
level as the fourth quarter of 1998," said Sun Hydraulics President Clyde
Nixon. "Profit margins were similar to the fourth quarter of 1998, and, as we
said in our last release, we do not expect to see margin improvements until the
second half of the year.
"We anticipate reduced shipping levels in the second quarter as shipments will
more closely reflect incoming orders which we believe are being affected by
distributor inventory reductions. Additionally, productivity in the second
quarter will be affected by the implementation of a new Y2K compliant
integrated software system in the United States operations in May. Our
productivity improvement initiatives remain on track for the second half of the
year," Nixon concluded.
Sun Hydraulics Corporation, with manufacturing and distribution facilities in
Sarasota and Manatee County, Florida, Coventry England, Erkelenz, Germany and
Incheon, Korea, is a leading designer and manufacturer of high performance
screw-in hydraulic cartridge valves and manifolds for worldwide industrial and
mobile markets.
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; (vi) the
Company's Year 2000 readiness plans and costs; and (vii) 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
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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; (vi) the Company's ability timely to become Year 2000 ready,
including the Company's ability to identify all critical systems that will be
impacted by the Year 2000, the Company's ability, in a cost-efficient manner,
to correct, upgrade or replace such systems, and the Year 2000 readiness of
third parties with which the Company has material relationships; and (vii)
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 headings
"Risk Factors" in the Form S-1 Registration Statement and Prospectus for the
Company's initial public offering, and "Business" and "Management's Discussion
and Analysis of Financial Condition" in the Company's Form 10-K for the year
ended December 31, 1998. 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 - APRIL 3, 1999
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
THREE MONTHS ENDED
APRIL 3, MARCH 31,
1999 1998
----------- -----------
(unaudited) (unaudited)
NET SALES $18,465 $ 19,133
COST OF SALES 13,945 13,347
GROSS PROFIT 4,520 5,786
Selling, engineering and
administrative expenses 3,092 3,014
Operating income 1,428 2,772
INTEREST EXPENSE 253 260
MISCELLANEOUS EXPENSE (INCOME) 63 43
Income before income taxes 1,112 2,469
Income tax provision 355 829
Net income before equity loss in joint venture 757 1,640
Equity loss in joint venture 34 --
NET INCOME $ 723 $ 1,640
Basic net income
per common share .11 .26
Basic weighted average
shares outstanding 6,367 6,325
Diluted net income
per common share .11 .25
Diluted weighted average
shares outstanding 6,520 6,499
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CONSOLIDATED BALANCE SHEETS
(in thousands)
April 3, December 31,
1999 1998
----------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,715 $ 1,592
Accounts receivable, net of allowance for
doubtful accounts of $44 and $47 5,713 5,342
Inventories 7,639 8,125
OTHER CURRENT ASSETS 914 891
TOTAL CURRENT ASSETS 15,981 15,950
Property, plant and equipment, net 44,128 44,003
Investment in joint venture 212 246
Other assets 788 820
Total assets $61,109 $61,019
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,896 $ 2,877
Accrued expenses and other liabilities 1,777 2,065
Long-term debt due within one year 4,395 4,302
Notes payable to related parties due within one year 340 578
Dividends payable 255 254
Income taxes payable 529 245
Total current liabilities 9,192 10,321
Long-term debt due after one year 7,099 6,461
Notes payable to related parties due after one year 571 566
Deferred income taxes 3,633 3,656
TOTAL LIABILITIES 20,495 21,004
Shareholders' equity:
Preferred stock -- --
Common stock 6 6
Capital in excess of par value 24,473 24,386
Retained earnings 15,830 15,363
Equity adjustment for foreign currency translation 305 260
Total shareholders' equity 40,614 40,015
Total liabilities and shareholders' equity $61,109 $61,019
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