Sun Hydraulics Reports 2011 Sales of $204 Million With Earnings of $1.47 per Share; Announces Shared Distribution Based on 2011 Performance
SARASOTA, FL -- (MARKET WIRE) -- 03/12/12 -- Sun Hydraulics Corporation (NASDAQ: SNHY) today reported financial results for the fourth quarter and year-end 2011 as follows:
(Dollars in millions except net income per share)
December 31, January 1, Increase/
2011 2011 Decrease
Twelve Months Ended
Net Sales $ 204.2 $ 150.7 36%
Net Income $ 37.7 $ 21.4 76%
Net Income per share:
Basic $ 1.47 $ 0.84 75%
Diluted $ 1.47 $ 0.84 75%
Three Months Ended
Net Sales $ 45.7 $ 41.8 9%
Net Income $ 6.1 $ 6.3 -3%
Net Income per share:
Basic $ 0.24 $ 0.25 -4%
Diluted $ 0.24 $ 0.25 -4%
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.
"Sun grew its top line by 36% in 2011, and the bottom line by 76%," reported Allen Carlson, Sun Hydraulics CEO and president. "Sales grew in all geographic markets with sales to North America increasing 40%, Europe 33%, and Asia/Pacific 30%."
"In addition to our strong operational results in 2011, we engaged in a number of activities that position us well to take advantage of future growth opportunities," added Carlson. "We opened a sales office in China, which helped us to increase sales by 49% in this region. Despite an end of year slow down in the region, we expect China to regain its growth trajectory in the long term. We added capability and capacity in 2011, notably in the design and manufacturing engineering area. These additions will help us develop the products and processes that will contribute to our growth. In September 2011, we acquired the remaining interest in High Country Tek (HCT). HCT products and capabilities integrate nicely with our line of electrically-actuated hydraulic valves, creating new opportunities in the marketplace."
Commenting on the recent shared distribution, Carlson, said, "At the foundation of Sun's success are its employees. Their creativity and dedication to quality and service make Sun the place it is today. In 2008, the Board initiated the concept of a shared distribution as a way to reward our employees and shareholders when Sun has a successful year. The shared distribution is at the discretion of the Board and may be considered annually. The Board voted unanimously to grant this year's distribution totaling $7.7 million, with 60% provided to employees and 40% to shareholders."
The 2011 shared distribution consists of a contribution for employees equal to 13.5% of wages, most of which will be paid into retirement plans via Sun Hydraulics stock, and a $0.12 per share cash dividend to shareholders. The shared distribution cash dividend is payable on March 31, 2012, to shareholders of record on March 22, 2012.
Concluding, Carlson said, "First quarter demand has rebounded and is forecast to be 5% above last year's level. Orders are strong in all major geographic regions. Coupled with positive PMI numbers, we expect growth in 2012. We are ready for increasing demand and expect to continue to deliver strong operating results."
Outlook
First quarter 2012 revenues are expected to be approximately $53 million, up approximately 5% from the first quarter of 2011. Earnings per share are estimated to be $0.37 to $0.39 compared to $0.38 in the same period a year ago.
Webcast
Sun Hydraulics Corporation will broadcast its 2011 financial results conference call live over the Internet at 9:00 A.M. E.T. tomorrow, March 13, 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 1-888-221-9554 and using 1414483 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 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
December 31, January 1,
2011 2011
Net sales $ 45,657 $ 41,772
Cost of sales 28,809 27,083
------------ ------------
Gross profit 16,848 14,689
Selling, engineering and administrative expenses 6,376 5,935
------------ ------------
Operating income 10,472 8,754
Interest income, net (186) (170)
Foreign currency transaction (gain) loss, net (124) 59
Miscellaneous expense, net 168 103
------------ ------------
Income before income taxes 10,614 8,762
Income tax provision 4,540 2,495
------------ ------------
Net income $ 6,074 $ 6,267
============ ============
Basic net income per common share (1) $ 0.24 $ 0.25
Weighted average basic shares outstanding (1) 25,729 25,504
Diluted net income per common share (1) $ 0.24 $ 0.25
Weighted average diluted shares outstanding (1) 25,778 25,555
Dividends declared per share (1) $ 0.090 $ 0.393
(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)
Twelve Months Ended
December 31, January 1,
2011 2011
Net sales $ 204,171 $ 150,695
Cost of sales 124,956 98,352
------------ ------------
Gross profit 79,215 52,343
Selling, engineering and administrative expenses 23,946 21,304
------------ ------------
Operating income 55,269 31,039
Interest income, net (775) (653)
Foreign currency transaction (gain) loss, net (161) 106
Miscellaneous income, net (1,381) (57)
------------ ------------
Income before income taxes 57,586 31,643
Income tax provision 19,909 10,243
------------ ------------
Net income $ 37,677 $ 21,400
============ ============
Basic net income per common share (1) $ 1.47 $ 0.84
Weighted average basic shares outstanding (1) 25,642 25,428
Diluted net income per common share (1) $ 1.47 $ 0.84
Weighted average diluted shares outstanding (1) 25,684 25,478
Dividends declared per share (1) $ 0.403 $ 0.573
(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)
December 31, January 1,
2011 2011
Assets
Current assets:
Cash and cash equivalents $ 51,262 $ 33,206
Restricted cash 46 131
Accounts receivable, net of allowance for
doubtful accounts of $83 and $82 16,227 16,399
Inventories 12,829 10,773
Income taxes receivable 120 1,154
Deferred income taxes 260 446
Marketable securities 21,832 11,614
Other current assets 1,354 2,556
------------ ------------
Total current assets 103,930 76,279
Property, plant and equipment, net 56,959 53,127
Other assets 6,639 2,628
------------ ------------
Total assets $ 167,528 $ 132,034
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 4,402 $ 3,348
Accrued expenses and other liabilities 7,466 5,250
Dividends payable 2,318 1,531
------------ ------------
Total current liabilities 14,186 10,129
Deferred income taxes 6,917 5,684
Other liabilities 1,149 1,197
------------ ------------
Total liabilities 22,252 17,010
Shareholders' equity:
Common stock 26 26
Capital in excess of par value 48,944 44,001
Retained earnings 98,426 71,132
Accumulated other comprehensive income (loss) (2,120) (135)
------------ ------------
Total shareholders' equity 145,276 115,024
------------ ------------
Total liabilities and shareholders' equity $ 167,528 $ 132,034
============ ============
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Twelve Months Ended
December 31, January 1,
2011 2011
Cash flows from operating activities:
Net income $ 37,677 $ 21,400
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,721 6,873
(Gain) loss on disposal of assets (32) (43)
Gain on Investment in HCT (1,244)
Stock-based compensation expense 1,752 1,149
Deferred director and phantom stock unit expense
(income) (22) 557
Stock compensation income tax benefit (144) (175)
Allowance for doubtful accounts 1 (8)
Provision for slow moving inventory (19) (159)
Provision for deferred income taxes 1,419 622
(Increase) decrease in:
Accounts receivable 741 (6,442)
Inventories (1,593) (2,815)
Income taxes receivable 1,178 506
Other current assets (662) (759)
Other assets, net (1,081) 750
Increase (decrease) in:
Accounts payable 499 861
Accrued expenses and other liabilities 4,390 2,775
Other noncurrent liabilities (37) (2)
------------ ------------
Net cash from operating activities 49,544 25,090
Cash flows used in investing activities:
Sale of China Joint Venture 1,451 -
Investment in HCT (1,776) -
Capital expenditures (10,143) (3,856)
Proceeds from dispositions of equipment 35 175
Purchases of marketable securities (18,405) (14,175)
Proceeds from sale of marketable securities 7,517 10,230
------------ ------------
Net cash used in investing activities (21,321) (7,626)
Cash flows used in financing activities:
Repayment of debt (100) -
Proceeds from exercise of stock options 61 44
Stock compensation income tax benefit 144 175
Proceeds from stock issued 574 423
Dividends to shareholders (9,596) (14,635)
------------ ------------
Net cash used in financing activities (8,917) (13,993)
Effect of exchange rate changes on cash and cash
equivalents (1,335) (580)
------------ ------------
Net decrease in restricted cash (85) (1)
Net increase in cash and cash equivalents 18,056 2,892
------------ ------------
Cash and cash equivalents and restricted cash,
beginning of period 33,337 30,446
------------ ------------
Cash and cash equivalents and restricted cash,
end of period $ 51,308 $ 33,337
============ ============
Supplemental disclosure of cash flow
information:
Cash paid:
Income taxes $ 17,456 $ 9,290
Supplemental disclosure of noncash transactions:
Common stock issued to ESOP through accrued
expenses and other liabilities $ 2,412 $ -
Unrealized gain (loss) on available for sale
securities $ (549) $ (59)
United United
States Korea Germany Kingdom Elimination Consolidated
Three Months
Ended December
31, 2011
Sales to
unaffiliated
customers $ 31,199 $ 3,788 $ 5,677 $ 4,993 $ - $ 45,657
Intercompany
sales 6,989 - 26 348 (7,363) -
Operating income 8,366 317 1,025 788 (24) 10,472
Depreciation and
amortization 1,240 31 85 220 - 1,576
Capital
expenditures 3,009 40 7 309 - 3,365
Three Months
Ended January 1,
2011
Sales to
unaffiliated
customers $ 26,170 $ 4,134 $ 5,000 $ 6,468 $ - $ 41,772
Intercompany
sales 7,267 - 42 289 (7,598) -
Operating income 6,528 592 935 700 (1) 8,754
Depreciation and
amortization 1,361 23 109 241 - 1,734
Capital
expenditures 1,688 76 6 26 - 1,796
Twelve Months
Ended December
31, 2011
Sales to
unaffiliated
customers $131,714 $20,566 $27,997 $23,894 $ - $ 204,171
Intercompany
sales 33,711 - 201 1,536 (35,448) -
Operating income 41,847 2,492 6,715 4,167 48 55,269
Depreciation and
amortization 5,308 114 357 942 6,721
Capital
expenditures 9,324 274 63 482 10,143
Twelve Months
Ended January 1,
2011
Sales to
unaffiliated
customers $ 94,067 $16,284 $19,770 $20,574 $ - $ 150,695
Intercompany
sales 26,022 - 160 1,225 (27,407) -
Operating income
(loss) 22,040 2,246 4,024 2,822 (93) 31,039
Depreciation and
amortization 5,388 89 429 967 6,873
Capital
expenditures 3,400 217 27 212 3,856
Contact: Richard K. Arter Investor Relations 941-362-1200 Tricia Fulton Chief Financial Officer 941-362-1200
Source: Sun Hydraulics Corporation
Released March 12, 2012