Sun Hydraulics 2006 Sales Rise 22% to $142 Million, Net Income Up 27%, Board Declares First Quarter Dividend of $0.10, SNHY Celebrates 10 Years on NASDAQ
SARASOTA, FL -- (MARKET WIRE) -- 03/06/07 -- Sun Hydraulics Corporation (NASDAQ: SNHY) reported financial results for the year and fourth quarter 2006 as follows:
(Dollars in millions except net income per share)
December 30, December 31,
2006 2005 Increase
Twelve Months Ended
Net Sales $ 142.3 $ 116.8 22%
Net Income $ 16.2 $ 12.8 27%
Net Income per share:
Basic $ 1.49 $ 1.18 26%
Diluted $ 1.48 $ 1.17 26%
Three Months Ended
Net Sales $ 35.0 $ 27.9 25%
Net Income $ 3.8 $ 2.9 31%
Net Income per share:
Basic $ 0.35 $ 0.26 35%
Diluted $ 0.35 $ 0.26 35%
"Fourth quarter orders and shipments finished very strong and our 2006 financial results were even better than we had expected," said Allen Carlson, Sun's President and CEO. "While North America continued to hold up, we saw robust demand in Europe and Asia/Pacific. The strong order trends have continued through January and February and we anticipate first quarter 2007 results will continue to outpace the industry. We expect continued double digit growth in Q1 2007. This is exceptional given the strength of last year's first quarter."
"The keys to our success have not changed," Carlson continued. "Shipping reliability, new complementary and differentiated products, a focus on integrated packages, our strong geographic presence and our website continue to help Sun gain market share. In the product area, we are excited about the launch of additional electro-hydraulic products at the Hannover Fair in Germany in April. Having the right products at the right time has been, and continues to be, our focus," Carlson stated.
"Sun is proud to celebrate 10 years as a public company. During that time we have continued to grow both the top and bottom lines, and have returned to shareholders over $29 million in dividends," confirmed Carlson. "For long-term investors, the value of an investment in Sun in January 1997, has grown more than 300%, compared to a return of over 200% on the S&P 500 over the same 10-year period," Carlson concluded.
Taxes
Year-end tax provision adjustments included additional taxes due from the repatriation of approximately $5 million from our U.K. and German operations. "While our tax rate was slightly higher than expected, we were able to pay down all U.S. debt in the fourth quarter with the cash brought back from Europe," stated Tricia Fulton, Sun's CFO. The effect on earnings per share from the year-end tax provision adjustments, including repatriation and other items, was approximately $0.03.
Dividend
On March 3, 2007, Sun Hydraulics Board of Directors declared a $0.10 per share dividend on its common stock. The dividend is payable on April 15, 2007, to shareholders of record as of March 31, 2007.
Outlook
2007 first quarter sales are estimated to be $39 million, a 14% increase over last year. First quarter earnings per share are estimated to be between $0.42 and $0.45 per share, compared to $0.38 per share last year.
Open House and Webcast
Sun Hydraulics Corporation will broadcast its 2006 financial results conference call live over the Internet at 4:00 P.M. E.T. tomorrow, March 7, 2007. The conference call will be in conjunction with an Investor Open House to be held at the Company's facility at 701 Tallevast Road, Sarasota, Florida, starting at 3:45 P.M. To listen to the webcast, go to http://investor.sunhydraulics.com/medialist.cfm. A copy of this earnings release is posted on the Investor Relations page of our website under "Press Releases."
Webcast Q&A
Questions may be submitted to the Company via email after reviewing this earnings release, 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. If an individual wishes to ask questions directly during the webcast, the conference call may be accessed by dialing 1-877-407-8033.
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 September 30, 2006, 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, 2005. 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
December 30, December 31,
2006 2005
Net sales $ 34,967 $ 27,938
Cost of sales 23,916 19,884
----------- -----------
Gross profit 11,051 8,054
Selling, engineering and administrative expenses 4,814 4,352
----------- -----------
Operating income 6,237 3,702
Interest expense 77 56
Foreign currency transaction (gain) loss 124 (63)
Miscellaneous income (217) (124)
----------- -----------
Income before income taxes 6,253 3,833
Income tax provision 2,440 945
----------- -----------
Net income $ 3,813 $ 2,888
=========== ===========
Basic net income per share $ 0.35 $ 0.26
Basic weighted average shares outstanding 10,837 10,920
Diluted net income per share $ 0.35 $ 0.26
Diluted weighted average share outstanding 10,894 10,994
Dividends declared per share $ 0.100 $ 0.100
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
Twelve Months Ended
December 30, December 31,
2006 2005
Net sales $ 142,282 $ 116,757
Cost of sales 98,350 79,839
----------- -----------
Gross profit 43,932 36,918
Selling, engineering and administrative expenses 18,881 17,738
----------- -----------
Operating income 25,051 19,180
Interest expense 312 441
Foreign currency transaction (gain) loss 187 (362)
Miscellaneous income (351) (36)
----------- -----------
Income before income taxes 24,903 19,137
Income tax provision 8,680 6,329
----------- -----------
Net income $ 16,223 $ 12,808
=========== ===========
Basic net income per share $ 1.49 $ 1.18
Basic weighted average shares outstanding 10,878 10,827
Diluted net income per share $ 1.48 $ 1.17
Diluted weighted average share outstanding 10,939 10,918
Dividends declared per share $ 0.400 $ 0.300
SUN HYDRAULICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 30, December 31,
2006 2005
Assets
Current assets:
Cash and cash equivalents $ 9,379 $ 5,417
Restricted cash 118 413
Accounts receivable, net of allowance for
doubtful accounts of $140 and $110 13,917 10,975
Inventories 10,386 7,870
Income taxes receivable - 236
Deferred income taxes 219 782
Other current assets 986 864
------------ -----------
Total current assets 35,005 26,557
Property, plant and equipment, net 50,355 45,181
Other assets 1,825 1,823
------------ -----------
Total assets $ 87,185 $ 73,561
============ ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 4,812 $ 4,822
Accrued expenses and other liabilities 4,059 3,857
Long-term debt due within one year 426 398
Dividends payable 1,085 1,089
Income taxes payable 608 -
------------ -----------
Total current liabilities 10,990 10,166
Long-term debt due after one year 646 1,986
Deferred income taxes 4,451 4,688
Other liabilities 298 281
------------ -----------
Total liabilities 16,385 17,121
Shareholders' equity:
Common stock 11 11
Capital in excess of par value 30,962 32,466
Unearned compensation related to
outstanding restricted stock - (741)
Retained earnings 35,284 23,406
Accumulated other comprehensive income 4,543 1,647
Treasury stock - (349)
------------ -----------
Total shareholders' equity 70,800 56,440
------------ -----------
Total liabilities and shareholders' equity $ 87,185 $ 73,561
============ ===========
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Twelve Months Ended
December 30, December 31,
2006 2005
Cash flows from operating activities:
Net income $ 16,223 $ 12,808
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 5,849 5,604
Loss on disposal of assets 12 22
Stock-based compensation expense 573 365
Stock options income tax benefit (381) -
Allowance for doubtful accounts 30 (60)
Provision for slow moving inventory 157 (96)
Provision for deferred income taxes 326 (688)
(Increase) decrease in:
Accounts receivable (2,972) (2,304)
Inventories (2,673) (669)
Income taxes receivable 236 (236)
Other current assets (122) (88)
Other assets, net (29) 39
Increase (decrease) in:
Accounts payable (10) 2,286
Accrued expenses and other liabilities 1,385 306
Income taxes payable 989 (261)
Other liabilities 15 (19)
----------- -----------
Net cash from operating activities 19,608 17,009
Cash flows used in investing activities:
Investment in WhiteOak - (400)
Capital expenditures (9,525) (8,813)
Proceeds from dispositions of equipment 28 5
----------- -----------
Net cash used in investing activities (9,497) (9,208)
Cash flows used in financing activities:
Proceeds from debt 7,000 11,599
Repayment of debt (8,312) (21,469)
Proceeds from exercise of stock options 162 2,487
Stock options income tax benefit 381 -
Proceeds from stock issued 238 157
Payments for purchase of treasury stock (2,951) (1,588)
Dividends to shareholders (4,347) (2,701)
----------- -----------
Net cash used in financing activities (7,829) (11,515)
Effect of exchange rate changes on cash and
cash equivalents 1,385 (218)
----------- -----------
Net (decrease) increase in restricted cash (295) (49)
Net (decrease) increase in cash and cash
equivalents 3,962 (3,883)
----------- -----------
Cash and cash equivalents, beginning of period 5,830 9,762
----------- -----------
Cash and cash equivalents, end of period $ 9,497 $ 5,830
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid:
Interest $ 312 $ 441
Income taxes $ 7,510 $ 8,451
United United
States Korea Germany Kingdom Elimination Consolidated
Three Months
Ended December
30, 2006
Sales to
unaffiliated
customers $ 21,972 $ 4,121 $ 4,484 $ 4,390 $ - $ 34,967
Intercompany
sales 6,359 - 18 728 (7,105) -
Operating
income 4,520 521 817 436 (57) 6,237
Depreciation
and amortization 1,044 38 142 252 - 1,476
Capital
expenditures 1,822 76 33 400 - 2,331
Three Months
Ended December
31, 2005
Sales to
unaffiliated
customers $ 18,177 $ 2,695 $ 3,186 $ 3,880 $ - $ 27,938
Intercompany
sales 4,626 - 21 804 (5,451) -
Operating
income 2,587 345 440 337 (7) 3,702
Depreciation
and amortization 1,010 37 132 246 - 1,425
Capital
expenditures 2,442 15 37 112 - 2,606
Twelve Months
Ended December
30, 2006
Sales to
unaffiliated
customers $ 89,077 $ 16,368 $ 19,128 $ 17,709 $ - $ 142,282
Intercompany
sales 25,809 - 106 2,990 (28,905) -
Operating
income 16,608 2,212 4,046 2,330 (145) 25,051
Depreciation
and amortization 4,206 150 510 983 - 5,849
Capital
expenditures 8,408 122 238 757 - 9,525
Twelve Months
Ended December
31, 2005
Sales to
unaffiliated
customers $ 73,998 $ 11,604 $ 15,101 $ 16,054 $ - $ 116,757
Intercompany
sales 21,239 - 80 2,873 (24,192) -
Operating
income 13,443 1,520 3,145 1,260 (188) 19,180
Depreciation
and amortization 3,944 149 473 1,025 - 5,591
Capital
expenditures 7,007 29 843 934 - 8,813
Contact: Richard K. Arter Investor Relations 941-362-1200 Tricia L. Fulton Chief Financial Officer 941-362-1200
Released March 6, 2007