Sun Hydraulics Second Quarter Sales and Earnings Remain Strong
SARASOTA, FL -- (MARKET WIRE) -- 08/08/11 -- Sun Hydraulics Corporation (NASDAQ: SNHY) today reported financial results for the second quarter of 2011 as follows:
(Dollars in millions except net income per share)
July 2, July 3,
2011 2010 Increase
Three Months Ended
Net Sales $ 54.8 $ 39.2 40%
Net Income $ 10.4 $ 6.1 70%
Net Income per share:
Basic $ 0.41 $ 0.24 71%
Diluted $ 0.41 $ 0.24 71%
Six Months Ended
Net Sales $ 105.5 $ 70.9 49%
Net Income $ 20.2 $ 9.4 115%
Net Income per share:
Basic $ 0.79 $ 0.37 114%
Fully Diluted $ 0.79 $ 0.37 114%
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.
"The global capital goods expansion is strong and Sun's second quarter activity reflects that," commented Allen Carlson, Sun's CEO and president. "Sales were a bit higher than our Q2 estimates and all regions contributed to the top line growth. Earnings were consistent with our strong first quarter results. Gross margin remains high, at 39.6%, as we continue to leverage our manufacturing assets. The U.S. PMI, Sun's primary leading indicator, continued to show growth in July for the 24th month in a row, albeit at a slower rate. This demonstrates to us that the economy is still expanding."
"Product development continues to yield interesting additions to Sun's product line," Carlson continued. "New products, which account for approximately 10% - 12% of sales, provide new and efficient innovative solution possibilities. Sun's brand is built on developing products that help customers create unique solutions for their motion control needs and we continue to meet that challenge."
"In June, the Board declared a 50% stock dividend," stated Carlson. "The new share amounts enhance the trading activity in the marketplace and provide Sun a flexible platform for future financing activities. Coupled with the stock dividend, the Board elected to keep the cash dividend at $0.09 per share on the new shares outstanding, effectively increasing the cash dividend by 50%. We continue to believe that Sun is an attractive and rewarding choice for the investment community."
Outlook
Third quarter 2011 revenues are expected to be approximately $53 million, reflecting what the Company believes is its normal seasonal business pattern. This represents a 39% increase over 2010 third quarter revenue of $38 million.
Earnings per share for the third quarter are estimated to be $0.38 to $0.41, commensurate with sales levels, and compared with $0.23 in the same quarter last year.
Webcast
Sun Hydraulics Corporation will broadcast its Q2 financial results conference call live over the Internet at 9:00 A.M. E.T. tomorrow, August 9, 2011. 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 (800) 218-2154 and using 3546326 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 July 2, 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 January 1, 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
July 2, 2011 July 3, 2010
(unaudited) (unaudited)
Net sales $ 54,770 $ 39,246
Cost of sales 33,096 25,262
------------- -------------
Gross profit 21,674 13,984
Selling, engineering and administrative
expenses 6,290 4,845
------------- -------------
Operating income 15,384 9,139
Interest income, net (186) (144)
Foreign currency transaction (gain) loss, net (33) 69
Miscellaneous expense (income), net 32 (109)
------------- -------------
Income before income taxes 15,571 9,323
Income tax provision 5,134 3,210
------------- -------------
Net income $ 10,437 $ 6,113
============= =============
Basic net income per common share (1) $ 0.41 $ 0.24
Weighted average basic shares outstanding (1) 25,638 25,429
Diluted net income per common share (1) $ 0.41 $ 0.24
Weighted average diluted shares outstanding
(1) 25,674 25,477
Dividends declared per share (1) $ 0.090 $ 0.060
(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)
Six months ended
July 2, 2011 July 3, 2010
(unaudited) (unaudited)
Net sales $ 105,473 $ 70,850
Cost of sales 63,857 46,747
------------- -------------
Gross profit 41,616 24,103
Selling, engineering and administrative
expenses 12,322 10,001
------------- -------------
Operating income 29,294 14,102
Interest income, net (349) (281)
Foreign currency transaction (gain) loss, net (87) 41
Miscellaneous income, net (258) (128)
------------- -------------
Income before income taxes 29,988 14,470
Income tax provision 9,781 5,047
------------- -------------
Net income $ 20,207 $ 9,423
============= =============
Basic net income per common share (1) $ 0.79 $ 0.37
Weighted average basic shares outstanding (1) 25,593 25,421
Diluted net income per common share (1) $ 0.79 $ 0.37
Weighted average diluted shares outstanding
(1) 25,629 25,471
Dividends declared per share (1) $ 0.223 $ 0.120
(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)
July 2, 2011 January 1, 2011
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 49,720 $ 33,206
Restricted cash 139 131
Accounts receivable, net of allowance
for doubtful accounts of $83 and $82 23,352 16,399
Inventories 12,049 10,773
Income taxes receivable 483 1,154
Deferred income taxes 446 446
Marketable securities 12,866 11,614
Other current assets 2,907 2,556
---------------- ---------------
Total current assets 101,962 76,279
Property, plant and equipment, net 53,031 53,127
Other assets 1,481 2,628
---------------- ---------------
Total assets $ 156,474 $ 132,034
================ ===============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 5,175 $ 3,348
Accrued expenses and other liabilities 6,364 5,250
Dividends payable 2,307 1,531
---------------- ---------------
Total current liabilities 13,846 10,129
Deferred income taxes 5,690 5,684
Other noncurrent liabilities 1,562 1,197
---------------- ---------------
Total liabilities 21,098 17,010
Shareholders' equity:
Common stock 26 26
Capital in excess of par value 47,583 44,001
Retained earnings 85,610 71,132
Accumulated other comprehensive income 2,157 (135)
---------------- ---------------
Total shareholders' equity 135,376 115,024
---------------- ---------------
Total liabilities and shareholders' equity $ 156,474 $ 132,034
================ ===============
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six months ended
July 2, 2011 July 3, 2010
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 20,207 $ 9,423
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,368 3,460
(Gain) loss on disposal of assets 69 21
Provision for deferred income taxes 6 (18)
Allowance for doubtful accounts 1 (13)
Stock-based compensation expense 829 540
Stock options income tax benefit - (29)
(Increase) decrease in:
Accounts receivable (6,954) (6,634)
Inventories (1,276) (1,501)
Income taxes receivable 671 1,485
Other current assets (352) (936)
Other assets (318) 549
Increase (decrease) in:
Accounts payable 1,827 2,301
Accrued expenses and other liabilities 3,526 752
Taxes payable - 203
Other noncurrent liabilities 365 (37)
------------- -------------
Net cash provided by operating activities 21,969 9,566
Cash flows from investing activities:
Proceeds from sale of joint venture 1,451 -
Capital expenditures (2,811) (1,325)
Proceeds from dispositions 30 -
Purchases of marketable securities (5,500) (11,126)
Proceeds from sale of marketable securities 4,190 5,390
------------- -------------
Net cash used in investing activities (2,640) (7,061)
Cash flows from financing activities:
Proceeds from exercise of stock options 61 39
Proceeds from stock issued 281 176
Dividends to shareholders (4,952) (3,051)
Stock options income tax benefit - 29
------------- -------------
Net cash used in financing activities (4,610) (2,807)
Effect of exchange rate changes on cash and
cash equivalents 1,803 (2,160)
------------- -------------
Net increase (decrease) in cash and cash
equivalents 16,522 (2,462)
Cash and cash equivalents, beginning of period 33,337 30,446
------------- -------------
Cash and cash equivalents, end of period $ 49,859 $ 27,984
============= =============
Supplemental disclosure of cash flow
information:
Cash paid:
Income taxes $ 9,104 $ 3,406
Supplemental disclosure of noncash
transactions:
Common stock issued for shared distribution
through accrued expenses and other
liabilities $ 2,412 $ -
United United
States Korea Germany Kingdom Elimination Consolidated
-------- -------- -------- -------- ----------- ------------
Three Months
Ended July 2,
2011
Sales to
unaffiliated
customers $ 35,152 $ 5,674 $ 7,308 $ 6,636 $ - $ 54,770
Intercompany
sales 8,470 - 63 407 (8,940) -
Operating
income 11,383 659 1,922 1,281 139 15,384
Depreciation 1,292 29 88 246 - 1,655
Capital
expenditures 1,615 23 5 56 - 1,699
Three Months
Ended July 3,
2010
Sales to
unaffiliated
customers $ 25,259 $ 4,644 $ 4,669 $ 4,674 $ - $ 39,246
Intercompany
sales 6,785 - 28 287 (7,100) -
Operating
income 7,005 651 911 759 (187) 9,139
Depreciation 1,320 22 102 234 - 1,678
Capital
expenditures 515 48 1 92 - 656
Six Months
Ended July 2,
2011
Sales to
unaffiliated
customers $ 65,618 $ 11,697 $ 14,496 $ 13,662 $ - $ 105,473
Intercompany
sales 17,959 - 116 783 (18,858) -
Operating
income 21,359 1,599 3,662 2,487 187 29,294
Depreciation 2,585 54 188 486 - 3,313
Capital
expenditures 2,510 146 50 104 - 2,810
Six Months
Ended July 3,
2010
Sales to
unaffiliated
customers $ 44,228 $ 8,836 $ 9,368 $ 8,418 $ - $ 70,850
Intercompany
sales 11,882 - 81 625 (12,588) -
Operating
income (loss) 9,875 1,277 2,028 1,095 (173) 14,102
Depreciation 2,648 44 214 484 - 3,390
Capital
expenditures 1,081 113 5 125 - 1,324
Contact: Richard K. Arter Investor Relations 941-362-1200 Tricia Fulton Chief Financial Officer 941-362-1200
Source: Sun Hydraulics Corporation
Released August 8, 2011