EXHIBIT 99.1
FOR RELEASE: Immediately
Contact:
Richard K. Arter Investor Relations 941-362-1200
Richard J. Dobbyn Chief Financial Officer 941-362-1200
SUN HYDRAULICS CORPORATION MEETS FIRST QUARTER FORECAST
DEMAND REBOUNDS
SARASOTA, FLA, MAY 8, 2002 - Sun Hydraulics Corporation (NASDAQ: SNHY)
today announced that net sales for the quarter ended March 30, 2002, were $15.6
million, an increase of $2.2 million, or 17.0%, from the previous quarter, and a
decrease of $3.4 million, or 17.7%, compared to net sales for the quarter ended
March 31, 2001. Net income for the quarter ended March 30, 2002 was $0.1
million, or 1.0% of net sales, compared to $1.0 million, or 5.5% of net sales
for the same quarter last year. Both basic and diluted earnings per share for
the quarter ended March 30, 2002, were $0.02, compared to $0.16 for the quarter
ended March 31, 2001.
CUSTOMER DEMAND STRENGTHENS
Orders for the first quarter of 2002 were $16.7 million, an increase of 32%
over the fourth quarter of 2001. The rate of increase was approximately the same
for domestic and international orders. "Although the weekly order rate was
relatively static throughout the quarter, the April order rate was up 13% from
first quarter and we believe the trend will remain favorable," said Sun
Hydraulics President, Allen Carlson.
"Two key indicators showed favorable trends in the first quarter. The
inventory of Sun product held by U.S. distributors continued to decrease at the
end of March. We expect distributors will begin building inventory as the
capital goods industries increase their production. Also, historically, Sun
Hydraulics' order trends have tracked closely to the rise and fall of the United
States manufacturing capacity utilization index. After two years of steady
decline, this index leveled off in January and February and then turned up in
March," concluded Carlson.
OUTLOOK
The Company projects that net sales for the second quarter will increase to
approximately $17.0 million, a 9% increase over the first quarter. This should
result in net income per share of approximately $0.07. "Sun has taken advantage
of the protracted downturn by implementing new production processes, improving
product designs and enhancing our marketing tools," said Carlson. "As industry
conditions continue to improve, Sun's margins as a percent of sales will exceed
those experienced before the downturn."
OTHER HIGHLIGHTS
Sun's new website was unveiled in April at the Company's display during a
major industry exhibition in North America. "Customer awareness about the broad
offering of Sun products has been expanded greatly by the launch of our new
website. The myriad of applications and capabilities of the Sun product line is
now available 24/7, throughout the world, on an up-to-date basis, and includes
products not previously catalogued," stated Carlson. "This easy access to
technical information by Sun customers will fuel our growth and is key to Sun's
continued success in the marketplace."
"The expansion of our UK manufacturing facility is scheduled to be complete
this summer. It will double the production space and prepare us to meet the
continuing growth in Europe," Carlson concluded.
Sun Hydraulics Corporation will broadcast its first quarter conference
call with analysts live over the Internet at 2:30 P.M. E.S.T. today, May 8,
2002. To listen, go to http://investor.sunhydraulics.com/medialist.cfm.
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 30, 2002, 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 29, 2001. 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.
2
Sun Hydraulics Corporation
Consolidated Balance Sheets
(in thousands)
March 30, 2002 December 29, 2001
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 2,370 $ 3,611
Accounts receivable, net of allowance for
doubtful accounts of $168 and $195 6,940 4,755
Inventories 7,337 7,238
Taxes receivable -- 668
Other current assets 763 985
------- -------
Total current assets 17,410 17,257
Property, plant and equipment, net 43,636 43,555
Other assets 985 938
------- -------
Total assets $62,031 $61,750
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,842 $ 1,323
Accrued expenses and other liabilities 1,583 1,494
Long-term debt due within one year 1,361 1,405
Dividends payable 257 257
Taxes payable 6 --
------- -------
Total current liabilities 5,049 4,479
Long-term debt due after one year 8,875 9,258
Deferred income taxes 3,844 3,848
Other noncurrent liabilities 415 427
------- -------
Total liabilities 18,183 18,012
Shareholders' equity:
Preferred stock, 2,000,000 shares authorized,
par value $0.001, no shares outstanding -- --
Common stock, 20,000,000 shares authorized,
par value $0.001, 6,426,387 shares outstanding 6 6
Capital in excess of par value 24,644 24,502
Retained earnings 18,872 19,001
Accumulated other comprehensive income 326 229
------- -------
Total shareholders' equity 43,848 43,738
Total liabilities and shareholders' equity $62,031 $61,750
======= =======
-4-
Sun Hydraulics Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
Three months ended
March 30, 2002 March 31, 2001
(unaudited) (unaudited)
Net sales $15,613 $18,979
Cost of sales 11,921 13,663
------- -------
Gross profit 3,692 5,316
Selling, engineering and
administrative expenses 3,309 3,457
------- -------
Operating income 383 1,859
Interest expense 166 270
Miscellaneous expense 17 3
------- -------
Income before income taxes 200 1,586
Income tax provision 72 552
------- -------
Net income $ 128 $ 1,034
======= =======
Basic net income per common share $ 0.02 $ 0.16
Weighted average basic shares outstanding 6,425 6,385
Diluted net income per common share $ 0.02 $ 0.16
Weighted average diluted shares outstanding 6,578 6,585
-5-