1
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 FIRST QUARTER NET INCOME INCREASES 21%
SARASOTA, FLA, May 9, 2001 - Sun Hydraulics Corporation (NASDAQ: SNHY) today
announced that net income for the first quarter ended March 31, 2001, was $1.0
million, an increase of 20.7% compared to the first quarter of 2000. The
increase in net income was achieved despite a 6.2% decrease in net sales. Gross
profit as a percent of sales for the first quarter improved to 28.0%, compared
to 25.1% for the same period one year ago. Both basic and diluted earnings per
share for the first quarter of 2001 were $0.16, compared to $0.13 for the first
quarter of 2000.
"Domestically, we performed well in comparison to other U.S. hydraulics
companies and our international locations also continued to do well. First
quarter orders increased 17.2% over the previous quarter," said Sun Hydraulics
President, Allen Carlson. "We were able to turn a significant portion of the
order increase into shipments in the current quarter which helped to increase
profits.
"The first quarter order increase was the result of a strong January and
February. In March and April incoming order rates decreased to levels
experienced in the fourth quarter of last year," Carlson continued. "Capacity
utilization in the United States manufacturing sector is at the lowest levels we
have seen since 1991. At current incoming order rates, we expect second quarter
shipments will be 10% to 15% below first quarter levels.
"Despite the weakness in our markets, we continue to invest for growth and
operational improvements," Carlson said. "This summer we will begin expansion of
our United Kingdom operation, essentially doubling the manufacturing space at
this facility. Our European business continues to increase and this investment
will help us to meet future growth."
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.
Sun Hydraulics Corporation will broadcast its 1st quarter 2001 financial results
conference call with analysts live over the Internet at 2:30 P.M. E.D.T., today,
May 9, 2001. To listen, go to http://investor.sunhydraulics.com/medialist.cfm.
-1-
2
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 31, 2001, 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 30, 2000. 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-
3
SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31, 2001 APRIL 1, 2000
(UNAUDITED) (UNAUDITED)
NET SALES $18,979 $ 20,233
Cost of sales 13,663 15,150
-------------------------
GROSS PROFIT 5,316 5,083
Selling, engineering and
administrative expenses 3,457 3,644
-------------------------
OPERATING INCOME 1,859 1,439
Interest expense 270 290
Miscellaneous expense (income) 3 (53)
-------------------------
INCOME BEFORE INCOME TAXES 1,586 1,202
Income tax provision 552 345
-------------------------
NET INCOME $ 1,034 $ 857
=========================
BASIC NET INCOME PER COMMON SHARE $ 0.16 $ 0.13
WEIGHTED AVERAGE SHARES OUTSTANDING 6,385 6,385
DILUTED NET INCOME PER COMMON SHARE $ 0.16 $ 0.13
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING 6,585 6,589
-3-
4
SUN HYDRAULICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, 2001 DECEMBER 30, 2000
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 2,856 $ 2,698
Accounts receivable, net of allowance for
doubtful accounts of $174 and $163 7,442 6,112
Inventories 8,983 9,033
Taxes receivable -- --
Other current assets 663 536
-----------------------------
Total current assets 19,944 18,379
Property, plant and equipment, net 44,596 44,984
Other assets 975 1,011
-----------------------------
TOTAL ASSETS $65,515 $64,374
=============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,838 $ 1,787
Accrued expenses and other liabilities 1,811 1,585
Long-term debt due within one year 1,848 1,779
Dividends payable 255 255
Taxes payable 593 315
-----------------------------
Total current liabilities 6,345 5,721
Long-term debt due after one year 10,131 10,233
Deferred income taxes 4,096 4,106
Other noncurrent liabilities 465 478
-----------------------------
Total liabilities 21,037 20,538
Shareholders' equity:
Preferred stock -- --
Common stock 6 6
Capital in excess of par value 24,486 24,486
Retained earnings 19,852 19,073
Accumulated other comprehensive income 134 271
-----------------------------
Total shareholders' equity 44,478 43,836
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $65,515 $64,374
=============================
The accompanying Notes to the Consolidated Financial Statements are an integral
part of these financial statements.
-4-