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 CORPORATION REPORTS SECOND QUARTER EPS OF $0.12
VERSUS FORECAST OF $0.07
SARASOTA, FLA, AUGUST 7, 2002 - Sun Hydraulics Corporation (NASDAQ: SNHY) today
announced that net sales for the quarter ended June 29, 2002, were $17.4
million, an increase of $1.8 million, or 11.5%, from the previous quarter, and
essentially the same as the net sales for the quarter ended June 30, 2001. Net
income for the quarter ended June 29, 2002, was $0.8 million, or 4.4% of net
sales, compared to $0.4 million, or 2.5% of net sales for the same quarter last
year and $0.1 million, or 1.0%, of net sales for the previous quarter. Both
basic and diluted earnings per share for the quarter ended June 29, 2002, were
$0.12 compared to $0.07 for the quarter ended June 30, 2001.
Net Income
The increase in net income from the previous quarter and the same quarter last
year was a result of improved productivity in the United States operations and
transaction based exchange gains in Germany and Korea. "As local currencies
strengthen against the U.S. dollar, Sun's products become more competitive in
our expanding international markets," commented Allen Carlson, Sun Hydraulics
president.
Customer Demand
Orders for the three months ended June 29, 2002, were $18.2 million. This was a
$1.7 million, or 10.3%, increase over the three months ended June 30, 2001, and
a $1.5 million, or 9.1%, increase compared to the previous quarter. The 9.1%
increase from the previous quarter was comprised of a 7.7% increase in domestic
orders and an 11.4% increase in international orders.
Historically, the Company's order trends have tracked the manufacturing capacity
utilization index in the United States. This percentage increased in March 2002
for the first time in approximately two years and has continued to slowly
increase each month through June.
"Order rates in June and July have slowed from the increases experienced since
the beginning of the year," said Carlson. "It is not clear whether the recent
slowdown in orders is related to a normal summer manufacturing slowdown or a
slower than anticipated recovery of the manufacturing sector."
Outlook
Based on recent order rates, the third quarter net sales forecast is $16.0
million. The Company predicts this level of sales will result in net income per
share for the third quarter ending September 28, 2002, of between $0.06 and
$0.08 per share.
"Most key manufacturing economic indicators remain positive and an early fall
upturn in customer demand is necessary in order to meet our forecasted earnings
per share of $0.40 for the year. Distributor inventories are at historically low
levels and Sun has demonstrated the ability to react to increases in customer
demand by rapidly turning orders into shipments," stated Carlson.
Other Highlights
The $2.2 million expansion of the Company's plant in the United Kingdom is
substantially complete. Internal moves of equipment and furnishings are in
process and the project is planned to be complete by the end of August. This
investment will double the manufacturing space and improve productivity, and is
key to the growth of the Company in Europe.
Sun Hydraulics Corporation will broadcast its second quarter conference call
with analysts live over the Internet at 2:30 P.M. E.S.T. today, August 7, 2002.
To listen, go to http://investor.sunhydraulics.com/medialist.cfm.
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
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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 JUNE 29, 2002, 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 29, 2001. 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 Balance Sheets
(in thousands)
June 29, 2002 December 29, 2001
------------- -----------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 3,473 $ 3,611
Accounts receivable, net of allowance for
doubtful accounts of $185 and $195 6,717 4,755
Inventories 7,211 7,238
Taxes receivable -- 668
Other current assets 797 985
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Total current assets 18,198 17,257
Property, plant and equipment, net 44,091 43,555
Other assets 987 938
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Total assets $63,276 $61,750
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,946 $ 1,323
Accrued expenses and other liabilities 1,754 1,494
Long-term debt due within one year 1,384 1,405
Dividends payable 257 257
Taxes payable 477 --
------- -------
Total current liabilities 5,818 4,479
Long-term debt due after one year 8,831 9,258
Deferred income taxes 3,849 3,848
Other noncurrent liabilities 402 427
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Total liabilities 18,900 18,012
Redeemable Common Stock (See Note Below) 2,250 --
Shareholders' equity:
Preferred stock, 2,000,000 shares authorized, -- --
par value $0.001, no shares outstanding
Common stock, 20,000,000 shares authorized, 6 6
par value $0.001, 6,426,387 shares outstanding
Capital in excess of par value 22,440 24,502
Retained earnings 19,389 19,001
Accumulated other comprehensive income 291 229
------- -------
Total shareholders' equity 42,126 43,738
Total liabilities and shareholders' equity $63,276 $61,750
======= =======
Note: On June 22, 2002, the Company entered into a standby Stock Repurchase
Agreement with the Koski Family Limited Partnership. Under the Agreement, the
Company agrees to purchase up to $2,250 worth of Sun common stock from the Koski
Partnership at its request any time during the next two years. The repurchase
would be at a per share price of either (i) $7.00 per share, or (ii) 15% less
than the average closing price per share of the common stock for the 15 full
trading days immediately preceding the closing date, whichever is lower.
At June 29, 2002, the average closing price of Sun's common stock for the
previous 15 full trading days was $8.06 per share. A 15% discount from this
price would result in a repurchase per share price of $6.85. At this price, Sun
would repurchase 328 shares from the Koski Partnership for $2,250 in cash, if
requested to do so.
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Sun Hydraulics Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
Three months ended
----------------------------------------
June 29, 2002 June 30, 2001
------------- -------------
(unaudited) (unaudited)
Net sales $ 17,413 $ 17,533
Cost of sales 12,887 13,316
-------- --------
Gross profit 4,526 4,217
Selling, engineering and
administrative expenses 3,142 3,375
-------- --------
Operating income 1,384 842
Interest expense 136 259
Miscellaneous expense 60 (38)
-------- --------
Income before income taxes 1,188 621
Income tax provision 414 191
-------- --------
Net income $ 774 $ 430
======== ========
Basic net income per common share $ 0.12 $ 0.07
Weighted average basic shares outstanding 6,429 6,385
Diluted net income per common share $ 0.12 $ 0.07
Weighted average diluted shares outstanding 6,573 6,540
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Sun Hydraulics Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
Six months ended
------------------------------------
June 29, 2002 June 30, 2001
------------- -------------
(unaudited) (unaudited)
Net sales $ 33,026 $ 36,504
Cost of sales 24,807 26,957
-------- --------
Gross profit 8,219 9,547
Selling, engineering and
administrative expenses 6,451 6,832
-------- --------
Operating income 1,768 2,715
Interest expense 302 536
Miscellaneous expense 77 (28)
-------- --------
Income before income taxes 1,389 2,207
Income tax provision 487 744
-------- --------
Net income $ 902 $ 1,463
======== ========
Basic net income per common share $ 0.14 $ 0.23
Weighted average basic shares outstanding 6,429 6,385
Diluted net income per common share $ 0.14 $ 0.22
Weighted average diluted shares outstanding 6,570 6,539
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