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 Announces Third Quarter Earnings Per Share of $0.02
SARASOTA, FLA, November 7, 2001 - Sun Hydraulics Corporation (NASDAQ: SNHY)
today announced that net income was $0.2 million for the quarter ended September
29, 2001. This compares with net income of $0.4 million last quarter and $1.0
million for the quarter ended September 30, 2000. Net sales for the quarter
ended September 29, 2001, were $15.1 million, a decrease of 13.8% from last
quarter and 24.9% from the same quarter last year. Basic and diluted earnings
per share were $0.02 for the third quarter of 2001, compared to $0.16 for the
same period last year.
"Orders for the third quarter decreased 11% from the second quarter," said Sun
Hydraulics President Allen Carlson. "Domestic orders continued to decline, but
at a lesser rate, only 5% from last quarter. International orders weakened
further, down 17%.
"The 14% sales decrease from last quarter was worse than we had anticipated, but
the profit generated on this level of sales reflected a great team effort,"
Carlson continued. "Over the past two quarters, controllable manufacturing costs
have been reduced in proportion to the decreases in sales and we have reduced
our discretionary spending where possible. Next quarter looks like another
challenge and based on current order rates, net sales could be in the $13
million range with a net loss of between $0.5 to $0.7 million. For the year, we
expect net income to be $0.9 to $1.1 million.
"The Company's cash balance has increased $1.5 million since the beginning of
the year, while debt has been reduced $0.8 million and dividends of $0.8 million
have been paid to shareholders," added Carlson. "Sun's cash flow and financing
capability ensure that it will remain financially strong through a protracted
economic downturn.
"We continue to emphasize investments in product engineering, enhanced customer
service, and marketing programs," Carlson stated. "We have kept our experienced
work force intact and have not made any cost reductions that will compromise
performance in the long run or hinder our ability to respond rapidly to an
upturn in business.
"We believe that the basic fundamentals for an economic recovery are still in
place and that during the extensive decline in the manufacturing sector Sun has
improved its strength in the world marketplace," Carlson concluded.
Sun Hydraulics Corporation will broadcast its 3rd quarter 2001 financial results
conference call with analysts live over the Internet at 2:30 P.M. E.S.T., today,
November 7, 2001. To listen, go to http://investor.sunhydraulics.com/
medialist.cfm.
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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 29, 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.
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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
SEPTEMBER 29, 2001 SEPTEMBER 30, 2000
------------------ ------------------
(UNAUDITED) (UNAUDITED)
NET SALES $ 15,119 $19,973
Cost of sales 11,849 14,465
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GROSS PROFIT 3,270 5,508
Selling, engineering and
administrative expenses 2,975 3,621
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OPERATING INCOME 295 1,887
Interest expense 218 293
Miscellaneous expense (income) (125) 44
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INCOME BEFORE INCOME TAXES 202 1,550
Income tax provision 51 528
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NET INCOME $ 151 $ 1,022
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BASIC NET INCOME PER COMMON SHARE $ 0.02 $ 0.16
WEIGHTED AVERAGE SHARES OUTSTANDING 6,408 6,385
DILUTED NET INCOME PER COMMON SHARE $ 0.02 $ 0.16
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING 6,564 6,540
The accompanying Notes to the Consolidated Financial Statements are an integral
part of these financial statements.
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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED
SEPTEMBER 29, 2001 SEPTEMBER 30, 2000
------------------ ------------------
(UNAUDITED) (UNAUDITED)
NET SALES $ 51,623 $61,938
Cost of sales 38,807 45,127
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GROSS PROFIT 12,816 16,811
Selling, engineering and
administrative expenses 9,807 10,831
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OPERATING INCOME 3,009 5,980
Interest expense 675 896
Miscellaneous expense (income) (74) 184
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INCOME BEFORE INCOME TAXES 2,408 4,900
Income Tax Provision 795 1,645
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NET INCOME $ 1,613 $ 3,255
======== =======
BASIC NET INCOME PER COMMON SHARE $ 0.25 $ 0.51
WEIGHTED AVERAGE SHARES OUTSTANDING 6,392 6,385
DILUTED NET INCOME PER COMMON SHARE $ 0.25 $ 0.50
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING 6,547 6,539
The accompanying Notes to the Consolidated Financial Statements are an integral
part of these financial statements.
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SUN HYDRAULICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 29, 2001 DECEMBER 30, 2000
------------------ -----------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 4,167 $ 2,698
Accounts receivable, net of allowance for
doubtful accounts of $190 and $163 5,858 6,112
Inventories 8,681 9,033
Taxes receivable 468 --
Other current assets 413 536
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Total current assets 19,587 18,379
Property, plant and equipment, net 43,743 44,984
Other assets 948 1,011
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TOTAL ASSETS $ 64,278 $64,374
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,543 $ 1,787
Accrued expenses and other liabilities 2,051 1,585
Long-term debt due within one year 1,922 1,779
Dividends payable 256 255
Taxes payable -- 315
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Total current liabilities 5,772 5,721
Long-term debt due after one year 9,253 10,233
Deferred income taxes 4,103 4,106
Other noncurrent liabilities 440 478
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Total liabilities 19,568 20,538
Shareholders' equity:
Preferred stock -- --
Common stock 6 6
Capital in excess of par value 24,486 24,486
Retained earnings 19,920 19,073
Accumulated other comprehensive income 298 271
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Total shareholders' equity 44,710 43,836
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 64,278 $64,374
======== =======
The accompanying Notes to the Consolidated Financial Statements are an integral
part of these financial statements.
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