(Dollars in millions except net income per share)
September 29, September 30,
2007 2006 Increase
Three Months Ended
Net Sales $ 41.8 $ 36.2 15%
Net Income $ 5.2 $ 3.9 33%
Net Income per share:
Basic $ 0.32 $ 0.24 33%
Diluted $ 0.32 $ 0.24 33%
Nine Months Ended
Net Sales $ 126.1 $ 107.3 18%
Net Income $ 17.0 $ 12.4 37%
Net Income per share:
Basic $ 1.04 $ 0.76 37%
Fully Diluted $ 1.03 $ 0.76 36%
Note: The Company announced a 50% stock dividend to shareholders of record
on June 30, 2007, payable on July 15, 2007. All earnings per share and
weighted average share information reflect the 50% stock dividend.
"Both revenue and income remained strong, sustaining double digit growth
for the quarter and year to date," said Allen Carlson, Sun's President and
CEO. "We are pleased with our performance and believe that our growth
continues to outpace the industry, resulting in additional market share."
"Our international presence provides a necessary balance to our business,"
Carlson continued. "While the US economy appears to be softening, our
international sales continue to contribute significantly to our top and
bottom lines, with international sales making up 59% of the total last
quarter."
"We announced last week our intention to take an equity ownership in High
Country Tek. We believe this relationship will enhance our ability to
better understand our customers' needs, especially with regard to the
electro-hydraulic solutions being sought by the marketplace," concluded
Carlson.
Outlook
2007 fourth quarter sales are estimated to be approximately $40 million and
earnings per share are estimated to be in the range of $0.28 to $0.30.
This would represent an increase of approximately 14% in sales and 26% in
earnings per share over last year.
2007 year-end sales are estimated to be approximately $166 million, a 17%
increase compared to 2006. Earnings per share for 2007 are estimated to be
between $1.31 and $1.33, up approximately 33% over last year.
Webcast
Sun Hydraulics Corporation will broadcast its third quarter financial
results conference call live over the Internet at 2:30 P.M. E.T. today,
November 5, 2007. To listen to the webcast, go to
http://investor.sunhydraulics.com/medialist.cfm. A copy of this earnings
release is posted on the Investor Relations page of our website under
"Press Releases."
Webcast Q&A
Questions may be submitted to the Company via email after reviewing the
earnings release by going to the Sun Hydraulics website,
www.sunhydraulics.com, and clicking on Investor Relations. Scroll down to
the bottom of the page and click on contact email:
investor@sunhydraulics.com. Sun management will answer these and other
questions during the Company's webcast. If an individual wishes to ask
questions directly during the webcast, the conference call may be accessed
by dialing 1-877-407-8033.
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 headings Item 1.
"Business," Item 1A. "Risk Factors" and Item 7. "Management's Discussion
and Analysis of Financial Conditions and Results of Operations" in the
Company's Form 10-K for the year ended December 30, 2006, and "Management's
Discussion and Analysis of Financial Conditions and Results of Operations"
in the Company's Form 10-Q for the quarter ended September 29, 2007. 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
September 29, September 30,
2007 2006
(unaudited) (unaudited)
Net sales $ 41,809 $ 36,202
Cost of sales 28,485 25,540
--------------- ---------------
Gross profit 13,324 10,662
Selling, engineering and
administrative expenses 5,279 4,707
--------------- ---------------
Operating income 8,045 5,955
Interest (income)/expense, net (120) 61
Foreign currency transaction loss, net - 32
Miscellaneous income, net (115) (34)
--------------- ---------------
Income before income taxes 8,280 5,896
Income tax provision 3,034 1,980
--------------- ---------------
Net income $ 5,246 $ 3,916
=============== ===============
Basic net income per common share (1) $ 0.32 $ 0.24
Weighted average basic shares
outstanding (1) 16,460 16,217
Diluted net income per common share (1) $ 0.32 $ 0.24
Weighted average diluted shares
outstanding (1) 16,507 16,300
Dividends declared per share (1) $ 0.090 $ 0.067
(1) The Company announced a 50% stock dividend to shareholders of record on
June 30, 2007, payable on July 15, 2007. 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)
Nine months ended
September 29, September 30,
2007 2006
(unaudited) (unaudited)
Net sales $ 126,085 $ 107,315
Cost of sales 84,581 74,433
--------------- ---------------
Gross profit 41,504 32,882
Selling, engineering and
administrative expenses 15,932 14,068
--------------- ---------------
Operating income 25,572 18,814
Interest (income)/expense, net (282) 142
Foreign currency transaction loss, net 2 63
Miscellaneous income, net (321) (41)
--------------- ---------------
Income before income taxes 26,173 18,650
Income tax provision 9,169 6,240
--------------- ---------------
Net income $ 17,004 $ 12,410
=============== ===============
Basic net income per common share (1) $ 1.04 $ 0.76
Weighted average basic shares
outstanding (1) 16,401 16,338
Diluted net income per common share (1) $ 1.03 $ 0.76
Weighted average diluted shares
outstanding (1) 16,468 16,431
Dividends declared per share (1) $ 0.247 $ 0.200
(1) The Company announced a 50% stock dividend to shareholders of record on
June 30, 2007, payable on July 15, 2007. All per share and weighted
average share information reflect the 50% stock dividend.
SUN HYDRAULICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 29, December 30,
2007 2006
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 17,206 $ 9,379
Restricted cash 145 118
Accounts receivable, net of allowance for
doubtful accounts of $101 and $140 18,297 13,917
Inventories 11,321 10,386
Deferred income taxes 219 219
Other current assets 2,470 986
------------- -------------
Total current assets 49,658 35,005
Property, plant and equipment, net 55,676 50,355
Other assets 2,076 1,825
------------- -------------
Total assets $ 107,410 $ 87,185
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 6,047 $ 4,812
Accrued expenses and other liabilities 5,433 4,059
Long-term debt due within one year 458 426
Dividends payable 1,482 1,085
Income taxes payable 1,034 608
------------- -------------
Total current liabilities 14,454 10,990
Long-term debt due after one year 292 646
Deferred income taxes 4,529 4,451
Other noncurrent liabilities 502 298
------------- -------------
Total liabilities 19,777 16,385
Shareholders' equity:
Common stock 16 16
Capital in excess of par value 33,633 30,962
Retained earnings 48,202 35,279
Accumulated other comprehensive income 5,782 4,543
------------- -------------
Total shareholders' equity 87,633 70,800
------------- -------------
Total liabilities and shareholders' equity $ 107,410 $ 87,185
============= =============
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Nine months ended
September 29, September 30,
2007 2006
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 17,004 $ 12,410
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 4,657 $ 4,372
(Gain)/Loss on disposal of assets (60) 37
Provision for deferred income taxes 78 20
Allowance for doubtful accounts (39) 4
Stock-based compensation expense 542 421
Stock options income tax benefit (286) (82)
(Increase) decrease in:
Accounts receivable (4,341) (4,167)
Inventories (935) (1,448)
Income taxes receivable - 236
Other current assets (1,484) 492
Other assets (271) (72)
Increase (decrease) in:
Accounts payable 1,235 673
Accrued expenses and other liabilities 2,759 1,474
Income taxes payable 712 840
Other noncurrent liabilities 204 (15)
--------------- ---------------
Net cash provided by operating activities 19,775 15,195
Cash flows from investing activities:
Capital expenditures (9,448) (7,194)
Proceeds from dispositions of equipment 76 20
--------------- ---------------
Net cash used in investing activities (9,372) (7,174)
Cash flows from financing activities:
Proceeds from debt - 7,000
Repayment of debt (322) (4,791)
Proceeds from exercise of stock options 267 112
Proceeds from stock issued 191 179
Payments for purchase of treasury stock - (2,951)
Dividends to shareholders (3,684) (3,267)
Stock options income tax benefit 286 82
--------------- ---------------
Net cash used in financing activities (3,262) (3,636)
Effect of exchange rate changes on cash
and cash equivalents 713 862
--------------- ---------------
Net increase in cash and cash equivalents 7,854 5,247
Cash and cash equivalents, beginning of
period 9,497 5,830
--------------- ---------------
Cash and cash equivalents, end of period $ 17,351 $ 11,077
=============== ===============
Supplemental disclosure of cash flow
information:
Cash paid:
Interest $ 35 $ 235
Income taxes $ 8,884 $ 5,226
Supplemental disclosure of noncash
transactions:
Common stock issued to ESOP through
accrued expenses and other
liabilities $ 1,386 $ 1,183
United United Elimina- Consolid-
States Korea Germany Kingdom tion ated
Three Months
Ended September
29, 2007
Sales to
unaffiliated
customers $ 24,770 $ 5,244 $ 6,033 $ 5,762 $ - $ 41,809
Intercompany
sales 7,551 - 65 609 (8,225) -
Operating
income 4,871 613 1,583 1,007 (29) 8,045
Depreciation 1,142 46 131 284 - 1,603
Capital
expenditures 1,957 55 5 547 - 2,564
Three Months
Ended September
30, 2006
Sales to
unaffiliated
customers $ 22,912 $ 4,085 $ 4,874 $ 4,331 $ - $ 36,202
Intercompany
sales 6,158 - 26 810 (6,994) -
Operating
income 3,760 488 1,114 572 21 5,955
Depreciation 1,023 37 127 247 - 1,434
Capital
expenditures 2,179 26 143 30 - 2,378
Nine Months
Ended September
29, 2007
Sales to
unaffiliated
customers $ 74,375 $ 15,896 $ 18,730 $ 17,084 $ - $ 126,085
Intercompany
sales 23,715 - 115 2,143 (25,973) -
Operating
income 16,767 1,759 4,604 2,529 (87) 25,572
Depreciation 3,301 129 403 804 - 4,637
Capital
expenditures 7,675 264 52 1,458 - 9,448
Nine Months
Ended September
30, 2006
Sales to
unaffiliated
customers $ 67,105 $ 12,247 $ 14,644 $ 13,319 $ - $ 107,315
Intercompany
sales 19,450 - 88 2,262 (21,800) -
Operating
income 12,088 1,691 3,230 1,893 (88) 18,814
Depreciation 3,142 112 368 730 - 4,352
Capital
expenditures 6,586 46 205 357 - 7,194
Contact Information: Contact: Richard K. Arter Investor Relations 941-362-1200 Tricia L. Fulton Chief Financial Officer 941-362-1200