(Dollars in millions except net income per share)
January 2, December 27, Increase/
2010 2008 Decrease
Twelve Months Ended
Net Sales $ 97.4 $ 178.3 -45%
Net Income $ 1.9 $ 25.7 -93%
Net Income per share:
Basic $ 0.11 $ 1.55 -93%
Diluted $ 0.11 $ 1.55 -93%
Three Months Ended
Net Sales $ 27.3 $ 32.9 -17%
Net Income $ 1.3 $ 2.5 -48%
Net Income per share:
Basic $ 0.08 $ 0.15 -47%
Diluted $ 0.08 $ 0.15 -47%
"The fourth quarter finished strong, and we have now seen sequential
quarterly growth since Q2," said Allen Carlson, Sun's CEO and President.
"We believe the worst of last year's recession is over. Sun's order rates,
capital goods inventory conditions, and indicators like PMI and Capacity
Utilization are all showing signs of strength. We are optimistic about
2010. As expressed in our forecast, we estimate the first quarter will
show continued improvement."
"We are pleased to have remained profitable for 2009, despite a drop in
revenues of 45%," Carlson continued. "We did this without sacrificing our
capacity or capabilities. We continued to make capital investments,
develop and release new products, and, perhaps most critical, maintain
workforce readiness."
"We are encouraged by customer inquiries and the prototype activity we have
experienced at all Sun locations," commented Carlson. "Some prototypes
have already led to production orders. We are confident that our prototype
activities will continue to drive new business."
Concluding, Carlson said, "As we have frequently stated, we believe market
share gains are taken on the upturn of the cycle by those companies that
are able to respond to the market demand and opportunities created. Sun's
depth and breadth of products, our ability to provide complete systems
solutions, and deliver reliably will allow us to gain share during this
recovery."
Outlook
In 2010, weekly order rates have increased compared to Q4. First quarter
2010 sales are expected to be approximately $30 million, a 19% increase
over last year and 10% over the last quarter. First quarter earnings per
share are estimated to be between $0.17 and $0.19 per share, compared to
$0.03 per share in the first quarter last year and $0.08 last quarter.
Dividend
The Board of Directors of Sun Hydraulics Corporation declared a $0.09 per
share cash dividend on Sun's common stock. The dividend is payable on April
15, 2010, to shareholders of record as of March 31, 2010.
Sun Hydraulics advises all shareholders to familiarize themselves with
rules regarding dividends, payment dates and ex-dividend dates. See the
following website for more information
http://www.sec.gov/answers/dividen.htm.
Webcast
Sun Hydraulics Corporation will broadcast its 2009 financial results
conference call live over the Internet at 9:00 A.M. E.T. tomorrow, March 9,
2010. To listen to the webcast, go to
http://investor.sunhydraulics.com/eventdetail.cfm?eventid=76500.
Webcast Q&A
If an individual wishes to ask questions directly during the webcast, the
conference call may be accessed by dialing 1-877-212-8518. 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, 2009, 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 2, 2010. 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
January 2, December 27,
2010 2008
Net sales $ 27,262 $ 32,936
Cost of sales 20,468 24,726
----------- -----------
Gross profit 6,794 8,210
Selling, engineering and administrative expenses 5,245 5,536
----------- -----------
Operating income 1,549 2,674
Interest income, net (135) (293)
Foreign currency transaction (gain) loss, net 22 (309)
Miscellaneous expense, net 36 122
----------- -----------
Income before income taxes 1,626 3,154
Income tax provision 340 674
----------- -----------
Net income $ 1,286 $ 2,480
=========== ===========
Basic net income per common share $ 0.08 $ 0.15
Weighted average basic shares outstanding 16,927 16,647
Diluted net income per common share $ 0.08 $ 0.15
Weighted average diluted shares outstanding 16,962 16,675
Dividends declared per share $ 0.090 $ 0.090
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
Twelve Months Ended
January 2, December 27,
2010 2008
Net sales $ 97,393 $ 178,278
Cost of sales 75,436 119,161
----------- -----------
Gross profit 21,957 59,117
Selling, engineering and administrative expenses 19,814 22,740
----------- -----------
Operating income 2,143 36,377
Interest income, net (562) (793)
Foreign currency transaction (gain) loss, net 265 (467)
Miscellaneous income, net 423 (92)
----------- -----------
Income before income taxes 2,017 37,729
Income tax provision 161 11,994
----------- -----------
Net income $ 1,856 $ 25,735
=========== ===========
Basic net income per common share $ 0.11 $ 1.55
Weighted average basic shares outstanding 16,837 16,603
Diluted net income per common share $ 0.11 $ 1.55
Weighted average diluted shares outstanding 16,870 16,634
Dividends declared per share $ 0.450 $ 0.450
SUN HYDRAULICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
January 2, December 27,
2010 2008
Assets
Current assets:
Cash and cash equivalents $ 30,314 $ 35,176
Restricted cash 132 127
Accounts receivable, net of allowance for
doubtful accounts of $90 and $92 9,949 12,502
Inventories 7,799 9,960
Income taxes receivable 1,485 1,353
Deferred income taxes 575 259
Marketable Securities 7,844 -
Other current assets 1,797 1,290
----------- -----------
Total current assets 59,895 60,667
Property, plant and equipment, net 56,633 57,726
Other assets 3,405 3,992
----------- -----------
Total assets $ 119,933 $ 122,385
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,442 $ 3,258
Accrued expenses and other liabilities 2,475 5,546
Long-term debt due within one year - 147
Dividends payable 1,524 1,499
----------- -----------
Total current liabilities 6,441 10,450
Long-term debt due after one year - 125
Deferred income taxes 5,191 4,871
Other liabilities 687 383
----------- -----------
Total liabilities 12,319 15,829
Shareholders' equity:
Common stock 17 17
Capital in excess of par value 42,210 38,042
Retained earnings 64,383 70,099
Accumulated other comprehensive income 1,004 (1,602)
----------- -----------
Total shareholders' equity 107,614 106,556
----------- -----------
Total liabilities and shareholders' equity $ 119,933 $ 122,385
=========== ===========
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Twelve Months Ended
January 2, December 27,
2010 2008
Cash flows from operating activities:
Net income $ 1,856 $ 25,735
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,968 7,096
Loss on disposal of assets 30 138
Stock-based compensation expense 960 896
Stock options income tax benefit (9) (55)
Allowance for doubtful accounts (2) (123)
Provision for slow moving inventory (41) 102
Provision for deferred income taxes 4 (195)
(Increase) decrease in:
Accounts receivable 2,555 4,650
Inventories 2,202 1,359
Income taxes receivable (123) (1,353)
Other current assets (507) (80)
Other assets, net 560 465
Increase (decrease) in:
Accounts payable (816) (2,410)
Accrued expenses and other liabilities (274) 2,944
Income taxes payable - (619)
Other liabilities 304 (23)
----------- -----------
Net cash from operating activities 13,667 38,527
Cash flows used in investing activities:
Capital expenditures (5,096) (10,874)
Proceeds from dispositions of equipment - 99
Purchases of Marketable Securities (10,600) -
Proceeds from Sale of Marketable Securities 2,863 -
----------- -----------
Net cash used in investing activities (12,833) (10,775)
Cash flows used in financing activities:
Repayment of debt (261) (416)
Proceeds from exercise of stock options 11 87
Stock options income tax benefit 9 55
Proceeds from stock issued 392 359
Dividends to shareholders (7,547) (7,465)
----------- -----------
Net cash used in financing activities (7,396) (7,380)
Effect of exchange rate changes on cash and cash
equivalents 1,705 (4,406)
----------- -----------
Net (decrease) increase in restricted cash 5 (19)
Net (decrease) increase in cash and cash
equivalents (4,862) 15,985
----------- -----------
Cash and cash equivalents, beginning of period 35,303 19,337
----------- -----------
Cash and cash equivalents, end of period $ 30,446 $ 35,303
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid:
Interest $ 9 $ 31
Income taxes $ 289 $ 14,216
Supplemental disclosure of noncash transactions:
Common stock issued to ESOP through accrued
expenses and other liabilities $ 2,797 $ 2,255
United United Elimina- Consoli-
States Korea Germany Kingdom tion dated
Three Months Ended
January 2, 2010
Sales to
unaffiliated
customers $ 17,200 $ 3,012 $ 3,613 $ 3,437 $ - $ 27,262
Intercompany sales 3,964 - 21 186 (4,171) -
Operating income 320 213 703 284 29 1,549
Depreciation and
amortization 1,288 24 123 265 - 1,700
Capital
expenditures 461 10 (7) 84 - 548
Three Months Ended
December 27, 2008
Sales to
unaffiliated
customers $ 22,345 $ 1,782 $ 4,789 $ 4,020 $ - $ 32,936
Intercompany sales 4,552 - 53 472 (5,077) -
Operating income 1,752 (183) 834 371 (100) 2,674
Depreciation and
amortization 1,389 27 129 254 - 1,799
Capital
expenditures 1,412 3 9 220 - 1,644
Twelve Months Ended
January 2, 2010
Sales to
unaffiliated
customers $ 59,278 $ 9,978 $14,654 $13,483 $ - $ 97,393
Intercompany sales 15,545 - 139 1,101 (16,785) -
Operating income (2,110) 616 2,475 884 278 2,143
Depreciation and
amortization 5,335 104 502 1,027 6,968
Capital
expenditures 4,758 41 30 267 5,096
Twelve Months Ended
December 27, 2008
Sales to
unaffiliated
customers $111,180 $17,455 $27,356 $22,287 $ - $ 178,278
Intercompany sales 28,656 - 245 2,282 (31,183) -
Operating income 24,531 1,148 7,693 3,231 (226) 36,377
Depreciation and
amortization 5,139 151 572 1,234 7,096
Capital
expenditures 9,904 39 298 633 10,874
Contact Information: Contact: Richard K. Arter Investor Relations 941-362-1200 Tricia Fulton Chief Financial Officer 941-362-1200