Sun Hydraulics Reports Strong Finish to 2009, Profitable for the 38th Consecutive Year; Board Declares First Quarter Dividend
SARASOTA, FL -- (MARKET WIRE) -- 03/08/10 -- Sun Hydraulics Corporation (NASDAQ: SNHY) reported financial results for the year and fourth quarter 2009 as follows:
(Dollars in millions except net income per share)
January 2, December 27, Increase/
2010 2008 Decrease
Twelve Months Ended
Net Sales $ 97.4 $ 178.3 -45%
Net Income $ 1.9 $ 25.7 -93%
Net Income per share:
Basic $ 0.11 $ 1.55 -93%
Diluted $ 0.11 $ 1.55 -93%
Three Months Ended
Net Sales $ 27.3 $ 32.9 -17%
Net Income $ 1.3 $ 2.5 -48%
Net Income per share:
Basic $ 0.08 $ 0.15 -47%
Diluted $ 0.08 $ 0.15 -47%
"The fourth quarter finished strong, and we have now seen sequential quarterly growth since Q2," said Allen Carlson, Sun's CEO and President. "We believe the worst of last year's recession is over. Sun's order rates, capital goods inventory conditions, and indicators like PMI and Capacity Utilization are all showing signs of strength. We are optimistic about 2010. As expressed in our forecast, we estimate the first quarter will show continued improvement."
"We are pleased to have remained profitable for 2009, despite a drop in revenues of 45%," Carlson continued. "We did this without sacrificing our capacity or capabilities. We continued to make capital investments, develop and release new products, and, perhaps most critical, maintain workforce readiness."
"We are encouraged by customer inquiries and the prototype activity we have experienced at all Sun locations," commented Carlson. "Some prototypes have already led to production orders. We are confident that our prototype activities will continue to drive new business."
Concluding, Carlson said, "As we have frequently stated, we believe market share gains are taken on the upturn of the cycle by those companies that are able to respond to the market demand and opportunities created. Sun's depth and breadth of products, our ability to provide complete systems solutions, and deliver reliably will allow us to gain share during this recovery."
Outlook
In 2010, weekly order rates have increased compared to Q4. First quarter 2010 sales are expected to be approximately $30 million, a 19% increase over last year and 10% over the last quarter. First quarter earnings per share are estimated to be between $0.17 and $0.19 per share, compared to $0.03 per share in the first quarter last year and $0.08 last quarter.
Dividend
The Board of Directors of Sun Hydraulics Corporation declared a $0.09 per share cash dividend on Sun's common stock. The dividend is payable on April 15, 2010, to shareholders of record as of March 31, 2010.
Sun Hydraulics advises all shareholders to familiarize themselves with rules regarding dividends, payment dates and ex-dividend dates. See the following website for more information http://www.sec.gov/answers/dividen.htm.
Webcast
Sun Hydraulics Corporation will broadcast its 2009 financial results conference call live over the Internet at 9:00 A.M. E.T. tomorrow, March 9, 2010. To listen to the webcast, go to http://investor.sunhydraulics.com/eventdetail.cfm?eventid=76500.
Webcast Q&A
If an individual wishes to ask questions directly during the webcast, the conference call may be accessed by dialing 1-877-212-8518. 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 September 26, 2009, 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 2, 2010. 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
January 2, December 27,
2010 2008
Net sales $ 27,262 $ 32,936
Cost of sales 20,468 24,726
----------- -----------
Gross profit 6,794 8,210
Selling, engineering and administrative expenses 5,245 5,536
----------- -----------
Operating income 1,549 2,674
Interest income, net (135) (293)
Foreign currency transaction (gain) loss, net 22 (309)
Miscellaneous expense, net 36 122
----------- -----------
Income before income taxes 1,626 3,154
Income tax provision 340 674
----------- -----------
Net income $ 1,286 $ 2,480
=========== ===========
Basic net income per common share $ 0.08 $ 0.15
Weighted average basic shares outstanding 16,927 16,647
Diluted net income per common share $ 0.08 $ 0.15
Weighted average diluted shares outstanding 16,962 16,675
Dividends declared per share $ 0.090 $ 0.090
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
Twelve Months Ended
January 2, December 27,
2010 2008
Net sales $ 97,393 $ 178,278
Cost of sales 75,436 119,161
----------- -----------
Gross profit 21,957 59,117
Selling, engineering and administrative expenses 19,814 22,740
----------- -----------
Operating income 2,143 36,377
Interest income, net (562) (793)
Foreign currency transaction (gain) loss, net 265 (467)
Miscellaneous income, net 423 (92)
----------- -----------
Income before income taxes 2,017 37,729
Income tax provision 161 11,994
----------- -----------
Net income $ 1,856 $ 25,735
=========== ===========
Basic net income per common share $ 0.11 $ 1.55
Weighted average basic shares outstanding 16,837 16,603
Diluted net income per common share $ 0.11 $ 1.55
Weighted average diluted shares outstanding 16,870 16,634
Dividends declared per share $ 0.450 $ 0.450
SUN HYDRAULICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
January 2, December 27,
2010 2008
Assets
Current assets:
Cash and cash equivalents $ 30,314 $ 35,176
Restricted cash 132 127
Accounts receivable, net of allowance for
doubtful accounts of $90 and $92 9,949 12,502
Inventories 7,799 9,960
Income taxes receivable 1,485 1,353
Deferred income taxes 575 259
Marketable Securities 7,844 -
Other current assets 1,797 1,290
----------- -----------
Total current assets 59,895 60,667
Property, plant and equipment, net 56,633 57,726
Other assets 3,405 3,992
----------- -----------
Total assets $ 119,933 $ 122,385
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,442 $ 3,258
Accrued expenses and other liabilities 2,475 5,546
Long-term debt due within one year - 147
Dividends payable 1,524 1,499
----------- -----------
Total current liabilities 6,441 10,450
Long-term debt due after one year - 125
Deferred income taxes 5,191 4,871
Other liabilities 687 383
----------- -----------
Total liabilities 12,319 15,829
Shareholders' equity:
Common stock 17 17
Capital in excess of par value 42,210 38,042
Retained earnings 64,383 70,099
Accumulated other comprehensive income 1,004 (1,602)
----------- -----------
Total shareholders' equity 107,614 106,556
----------- -----------
Total liabilities and shareholders' equity $ 119,933 $ 122,385
=========== ===========
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Twelve Months Ended
January 2, December 27,
2010 2008
Cash flows from operating activities:
Net income $ 1,856 $ 25,735
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,968 7,096
Loss on disposal of assets 30 138
Stock-based compensation expense 960 896
Stock options income tax benefit (9) (55)
Allowance for doubtful accounts (2) (123)
Provision for slow moving inventory (41) 102
Provision for deferred income taxes 4 (195)
(Increase) decrease in:
Accounts receivable 2,555 4,650
Inventories 2,202 1,359
Income taxes receivable (123) (1,353)
Other current assets (507) (80)
Other assets, net 560 465
Increase (decrease) in:
Accounts payable (816) (2,410)
Accrued expenses and other liabilities (274) 2,944
Income taxes payable - (619)
Other liabilities 304 (23)
----------- -----------
Net cash from operating activities 13,667 38,527
Cash flows used in investing activities:
Capital expenditures (5,096) (10,874)
Proceeds from dispositions of equipment - 99
Purchases of Marketable Securities (10,600) -
Proceeds from Sale of Marketable Securities 2,863 -
----------- -----------
Net cash used in investing activities (12,833) (10,775)
Cash flows used in financing activities:
Repayment of debt (261) (416)
Proceeds from exercise of stock options 11 87
Stock options income tax benefit 9 55
Proceeds from stock issued 392 359
Dividends to shareholders (7,547) (7,465)
----------- -----------
Net cash used in financing activities (7,396) (7,380)
Effect of exchange rate changes on cash and cash
equivalents 1,705 (4,406)
----------- -----------
Net (decrease) increase in restricted cash 5 (19)
Net (decrease) increase in cash and cash
equivalents (4,862) 15,985
----------- -----------
Cash and cash equivalents, beginning of period 35,303 19,337
----------- -----------
Cash and cash equivalents, end of period $ 30,446 $ 35,303
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid:
Interest $ 9 $ 31
Income taxes $ 289 $ 14,216
Supplemental disclosure of noncash transactions:
Common stock issued to ESOP through accrued
expenses and other liabilities $ 2,797 $ 2,255
United United Elimina- Consoli-
States Korea Germany Kingdom tion dated
Three Months Ended
January 2, 2010
Sales to
unaffiliated
customers $ 17,200 $ 3,012 $ 3,613 $ 3,437 $ - $ 27,262
Intercompany sales 3,964 - 21 186 (4,171) -
Operating income 320 213 703 284 29 1,549
Depreciation and
amortization 1,288 24 123 265 - 1,700
Capital
expenditures 461 10 (7) 84 - 548
Three Months Ended
December 27, 2008
Sales to
unaffiliated
customers $ 22,345 $ 1,782 $ 4,789 $ 4,020 $ - $ 32,936
Intercompany sales 4,552 - 53 472 (5,077) -
Operating income 1,752 (183) 834 371 (100) 2,674
Depreciation and
amortization 1,389 27 129 254 - 1,799
Capital
expenditures 1,412 3 9 220 - 1,644
Twelve Months Ended
January 2, 2010
Sales to
unaffiliated
customers $ 59,278 $ 9,978 $14,654 $13,483 $ - $ 97,393
Intercompany sales 15,545 - 139 1,101 (16,785) -
Operating income (2,110) 616 2,475 884 278 2,143
Depreciation and
amortization 5,335 104 502 1,027 6,968
Capital
expenditures 4,758 41 30 267 5,096
Twelve Months Ended
December 27, 2008
Sales to
unaffiliated
customers $111,180 $17,455 $27,356 $22,287 $ - $ 178,278
Intercompany sales 28,656 - 245 2,282 (31,183) -
Operating income 24,531 1,148 7,693 3,231 (226) 36,377
Depreciation and
amortization 5,139 151 572 1,234 7,096
Capital
expenditures 9,904 39 298 633 10,874
Contact: Richard K. Arter Investor Relations 941-362-1200 Tricia Fulton Chief Financial Officer 941-362-1200
Released March 8, 2010