Exhibit 99.1
Sun Hydraulics Reports 2015 Third Quarter Results

SARASOTA, FL, November 2, 2015 – Sun Hydraulics Corporation (NASDAQ: SNHY) today reported financial results for the third quarter of 2015 as follows:
 
September 26, 2015
 
September 27, 2014
 
Increase/(Decrease)
Three Months Ended
 
 
 
 
 
Net sales
$
48.0

 
$
55.0

 
(13
)%
Net income
$
8.4

 
$
9.9

 
(15
)%
Net income per share:
 
 
 
 
 
Basic
$
0.32

 
$
0.37

 
(14
)%
Diluted
$
0.32

 
$
0.37

 
(14
)%
Nine Months Ended
 
 
 
 
 
Net sales
$
156.4

 
$
172.9

 
(10
)%
Net income
$
28.0

 
$
33.4

 
(16
)%
Net income per share:
 
 
 
 
 
Basic
$
1.05

 
$
1.27

 
(17
)%
Diluted
$
1.05

 
$
1.27

 
(17
)%
 
"Third quarter sales were weaker than expected,” stated Allen Carlson, President and CEO. “Demand is down in all geographic markets, and the depreciation of global currencies relative to the U.S. dollar continue to influence performance. Third quarter sales in the Americas were down 14%.  Asian demand decreased by 17%, driven primarily by the weakening of the South Korean economy. European sales were down 8%, with 5% related to currency.  As expected, the strong U.S. Dollar continued to negatively impact sales in Q3 by an estimated $1.8M and reduced EPS by $0.07 over last year."

“It is my sense that we are near the bottom of this difficult economic cycle,” commented Carlson. “Given where we believe we are in the business cycle, Sun’s focus is on investments to drive future growth. Our efforts are concentrated on:

Operational execution - We are cross training in production areas, evaluating manufacturing processes for additional improvements and consistently seeking out opportunities to further our automation efforts. This down cycle affords us the opportunity to implement process improvements.

Product Development - Sun is renowned for its broad scope of products which offer a variety of solutions to meet today’s most demanding hydraulic challenges. We continue to release innovative products, specifically in the electro-hydraulic market. The introduction of the new Digital Logic Valves (DLV) has our customers exploring where they can apply this product to solve problems that go beyond traditional cartridge valve applications.  The DLV’s combination of small size and weight, efficient power consumption and high speed opens doors to markets in agriculture, alternative energy, emergency response, standby systems - any application that demands low-power, portable, reliable fluid power control. The DLV is the kind of smart product innovation that creates powerful opportunities for both Sun and its customers.

Market Penetration - We are growing our worldwide marketing resources to reach more customers by adding field application engineers in all regions - the Americas, Europe and Asia.”

Concluding, Carlson remarked, “Market share gains are made in the beginning of the business cycle and to be prepared requires planning and investment at the bottom of the cycle. When the economy does recover, and it will, Sun will be positioned to respond to customer demand with the superior product and service performance that has become our hallmark.”


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Outlook
Fourth quarter 2015 revenues are expected to be approximately $44 million, down 20% from the fourth quarter of 2014. Earnings per share are estimated to be $0.17 to $0.19 compared to $0.39 in the same period a year ago. This is a result of decreased demand, absorption of fixed costs and currency effects. Currency is responsible for $1.7M of the decline in revenues and approximately $0.06 of the decline in earnings per share in the Q4 estimates. While we expect today’s softened demand to continue into 2016, we foresee business conditions strengthening during the year. With the expectation that the down cycle will be short lived, it is imperative that we focus on investments for future growth.

Webcast
Sun Hydraulics Corporation will broadcast its 2015 third quarter financial results conference call live over the Internet at 9:00 A.M. E.T. tomorrow, November 3, 2015. 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 1-888-329-8893 and using 3024787 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 September 26, 2015, and under the heading “Business” and particularly under the subheading, “Business Risk Factors” in the Company’s Form 10-K for the year ended

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December 27, 2014. 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.
 


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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
 
 
Three months ended
 
September 26, 2015
 
September 27, 2014
 
(unaudited)
 
(unaudited)
Net sales
$
48,036

 
$
55,011

Cost of sales
29,536

 
32,720

Gross profit
18,500

 
22,291

Selling, engineering and administrative expenses
7,463

 
7,656

Operating income
11,037

 
14,635

Interest income, net
(361
)
 
(331
)
Foreign currency transaction gain, net
(140
)
 
(226
)
Miscellaneous (income) expense, net
(1,005
)
 
191

Income before income taxes
12,543

 
15,001

Income tax provision
4,133

 
5,124

Net income
$
8,410

 
$
9,877

Basic net income per common share
$
0.32

 
$
0.37

Weighted average basic shares outstanding
26,695

 
26,455

Diluted net income per common share
$
0.32

 
$
0.37

Weighted average diluted shares outstanding
26,695

 
26,455

Dividends declared per share
$
0.090

 
$
1.090


 
 
Nine months ended
 
September 26, 2015
 
September 27, 2014
 
(unaudited)
 
(unaudited)
Net sales
$
156,438

 
$
172,870

Cost of sales
95,140

 
100,756

Gross profit
61,298

 
72,114

Selling, engineering and administrative expenses
22,077

 
22,375

Operating income
39,221

 
49,739

Interest income, net
(1,021
)
 
(926
)
Foreign currency transaction gain, net
(839
)
 
(256
)
Miscellaneous (income) expense, net
(793
)
 
548

Income before income taxes
41,874

 
50,373

Income tax provision
13,839

 
16,924

Net income
$
28,035

 
$
33,449

Basic net income per common share
$
1.05

 
$
1.27

Weighted average basic shares outstanding
26,662

 
26,425

Diluted net income per common share
$
1.05

 
$
1.27

Weighted average diluted shares outstanding
26,662

 
26,425

Dividends declared per share
$
0.360

 
$
1.360






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SUN HYDRAULICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
September 26, 2015
 
December 27, 2014
 
(unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
76,615

 
$
56,843

Restricted cash
298

 
319

Accounts receivable, net of allowance for doubtful accounts of $158 and $172
16,874

 
17,501

Inventories
11,757

 
14,098

Deferred income taxes
452

 
467

Short-term investments
45,596

 
43,353

Other current assets
3,014

 
2,966

Total current assets
154,606

 
135,547

Property, plant and equipment, net
75,187

 
77,716

Goodwill
4,934

 
5,141

Other assets
5,486

 
4,360

Total assets
$
240,213

 
$
222,764

Liabilities and shareholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
5,029

 
$
4,873

Accrued expenses and other liabilities
5,287

 
7,908

Income taxes payable
116

 
559

Dividends payable
2,403

 
2,392

Total current liabilities
12,835

 
15,732

Deferred income taxes
8,193

 
8,501

Other noncurrent liabilities
252

 
272

Total liabilities
21,280

 
24,505

Commitments and contingencies

 

Shareholders’ equity:
 
 
 
         Preferred stock, 2,000,000 shares authorized, par value $0.001, no shares outstanding

 

Common stock, 50,000,000 shares authorized, par value $0.001, 26,701,871 and 26,572,774 shares outstanding
27

 
27

Capital in excess of par value
80,780

 
73,499

Retained earnings
147,246

 
128,818

Accumulated other comprehensive income (loss)
(9,120
)
 
(4,085
)
Total shareholders’ equity
218,933

 
198,259

Total liabilities and shareholders’ equity
$
240,213

 
$
222,764


 








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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
 
Nine months ended
 
September 26, 2015
 
September 27, 2014
 
(unaudited)
 
(unaudited)
Cash flows from operating activities:
 
 
 
Net income
$
28,035

 
$
33,449

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
7,054

 
6,428

(Gain)Loss on disposal of assets
(1,086
)
 
155

Provision for deferred income taxes
100

 
53

Allowance for doubtful accounts
(14
)
 
29

Stock-based compensation expense
2,975

 
2,744

(Increase) decrease in, net of assets acquired:
 
 
 
Accounts receivable
641

 
(2,850
)
Inventories
2,341

 
204

Income taxes receivable

 
954

Other current assets
(48
)
 
(1,185
)
Other assets
435

 
146

Increase (decrease) in, net of liabilities assumed:
 
 
 
Accounts payable
156

 
1,289

Accrued expenses and other liabilities
914

 
2,949

Income taxes payable
(443
)
 
2,329

Other noncurrent liabilities
(20
)
 
3

Net cash provided by operating activities
41,040

 
46,697

Cash flows from investing activities:
 
 
 
Investment in licensed technology
(1,425
)
 

Capital expenditures
(4,697
)
 
(6,953
)
Proceeds from dispositions of equipment
1,645

 
6

Purchases of short-term investments
(20,666
)
 
(42,788
)
Proceeds from sale of short-term investments
17,459

 
25,396

Net cash used in investing activities
(7,684
)
 
(24,339
)
Cash flows from financing activities:
 
 
 
Proceeds from stock issued
772

 
623

Dividends to shareholders
(9,596
)
 
(9,509
)
Change in restricted cash
21

 
(3
)
Net cash used in financing activities
(8,803
)
 
(8,889
)
Effect of exchange rate changes on cash and cash equivalents
(4,781
)
 
(2,286
)
Net increase (decrease) in cash and cash equivalents
19,772

 
11,183

Cash and cash equivalents, beginning of period
56,843

 
54,912

Cash and cash equivalents, end of period
$
76,615

 
$
66,095

Supplemental disclosure of cash flow information:
 
 
 
Cash paid:
 
 
 
Income taxes
$
14,575

 
$
13,818

Supplemental disclosure of noncash transactions:
 
 
 
Common stock issued for shared distribution through accrued expenses and other liabilities
$
3,535

 
$
3,226


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Contact:
David Lamb
Investor Relations
941-362-1200
Tricia Fulton
Chief Financial Officer
941-362-1200
 



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