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 AN INCREASE OF SALES IN THE U.S. AND THIRD
QUARTER NET INCOME OF $0.08 PER SHARE
SARASOTA, FLA, NOVEMBER 4, 2003 -Sun Hydraulics Corporation (NASDAQ: SNHY) today
announced that sales for the third quarter ended September 27, 2003, were $17.9
million, a decrease of 5.6% from the second quarter and a 11.3% increase from
the same quarter last year. Net income was $0.5 million, equal to net income for
the same quarter last year. Basic and diluted earnings per share for the quarter
ended September 27, 2003, were $0.08 equal to the same period last year.
Allen Carlson, Sun Hydraulics' president commented, "Sales in the United States
increased 6% compared to the same quarter last year. We hope this signals the
long awaited recovery in the United States manufacturing economy. International
sales increased 17.0% in the third quarter compared to the same quarter last
year, with continued strength in Germany and Korea."
Carlson continued, "Net income per share was equal to the same quarter last
year, despite an 11% increase in total sales, primarily because of the
investments we are making in marketing and related areas. So far this year we
have started an operation in the Midwest, opened a sales/marketing office in
France and launched a new line of electro-hydraulic valves. We also have
continued to invest in our website, focusing on electronically providing
customers visual and technical information on millions of possible combinations
of our cartridge/manifold assemblies. This feature will be available early next
year."
During the quarter ended September 27, 2003, the Company paid a special dividend
of $13.3 million and increased debt $10.9 million to $20.0 million at quarter
end. Year to date the Company has generated $6.9 million from operations and
cash on hand at September 27, 2003, was $5.1 million.
OUTLOOK
Sales for the fourth quarter are projected to be $17.0 million, with net income
of $0.08 per share. Last year sales for the fourth quarter were $15.5 million
and net income was $0.06 per share. Until there are more positive signs of a
recovery in the economy, the Company is reluctant to provide an estimate of
sales for 2004.
WEBCAST
Sun Hydraulics Corporation will broadcast its third quarter financial results
conference call with analysts live over the Internet at 2:30 P.M. E.T. tomorrow,
November 5, 2003. To listen, 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 this
earnings release. Sun management will then answer these and other questions
during the Company's webcast.
Questions can be submitted by going to the Sun Hydraulics website,
WWW.SUNHYDRAULICS.COM, and clicking on Investor Relations on the left hand 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 Hydraulics will answer as many legitimate questions pertaining to
the 3rd quarter earnings release as possible during the webcast time.
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
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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 27, 2003, 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 28, 2002. 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.
* Please see attached document for financial information.
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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
Three Months Ended
-----------------------------
September 27, September 28,
2003 2002
------------- -------------
Net sales $ 17,851 $ 16,043
Cost of sales 13,328 11,995
-------- --------
Gross profit 4,523 4,048
Selling, engineering and administrative expenses 3,604 3,021
-------- --------
Operating income 919 1,027
Interest expense 137 153
Foreign currency transaction loss (gain) (1) 87
Miscellaneous expense (income) (1) 7
-------- --------
Income before income taxes 784 780
Income tax provision 275 273
-------- --------
Net income $ 509 $ 507
======== ========
Basic net income per share $ 0.08 $ 0.08
Basic weighted average shares outstanding 6,594 6,433
Diluted net income per share $ 0.08 $ 0.08
Diluted weighted average share outstanding 6,638 6,577
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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
Nine Months Ended
---------------------------
September 27, September 28,
2003 2002
------------- -------------
Net sales $ 53,188 $ 49,069
Cost of sales 39,059 36,803
-------- --------
Gross profit 14,129 12,266
Selling, engineering and administrative expenses 11,491 9,472
-------- --------
Operating income 2,638 2,794
Interest expense 415 455
Foreign currency transaction loss (gain) (190) 76
Miscellaneous expense (income) (24) 95
-------- --------
Income before income taxes 2,437 2,168
Income tax provision 857 759
-------- --------
Net income $ 1,580 $ 1,409
======== ========
Basic net income per share $ 0.24 $ 0.22
Basic weighted average shares outstanding 6,492 6,429
Diluted net income per share $ 0.24 $ 0.21
Diluted weighted average share outstanding 6,536 6,573
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CONSOLIDATED BALANCE SHEETS
(in thousands)
September 27, December 28,
2003 2002
------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,070 $ 3,958
Accounts receivable, net of allowance for
doubtful accounts of $229 and $194 7,874 5,690
Inventories 6,812 6,846
Other current assets 198 810
-------- --------
Total current assets 19,954 17,304
Property, plant and equipment, net 42,792 43,987
Other assets 1,510 994
-------- --------
TOTAL ASSETS $ 64,256 $ 62,285
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,180 $ 1,706
Accrued expenses and other liabilities 3,022 1,081
Long-term debt due within one year 932 1,421
Dividends payable 269 258
Income taxes payable 694 10
-------- --------
Total current liabilities 7,097 4,476
Long-term debt due after one year 19,118 8,190
Deferred income taxes 4,091 4,092
Other liabilities 340 378
Redeemable Common Stock 2,250 2,250
-------- --------
Total liabilities 32,896 19,386
Shareholders' equity:
Common stock 7 6
Capital in excess of par value 24,085 22,690
Unearned compensation related to
outstanding restricted stock (494) (170)
Retained earnings and
accumulated comprehensive income 7,762 20,373
-------- --------
Total shareholders' equity 31,360 42,899
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 64,256 $ 62,285
======== ========
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CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Nine Months Ended
-----------------------------
September 27, September 28,
2003 2002
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,580 $ 1,409
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,907 3,873
Gain/(Loss) on disposal of assets 367 155
Allowance for doubtful accounts 35 6
Provision for deferred income taxes (1) 10
(Increase) decrease in:
Accounts receivable (2,219) (1,546)
Inventories 34 302
Income tax receivable -- 668
Other current assets 612 603
Other assets, net (516) (51)
Increase (decrease) in:
Accounts payable 474 464
Accrued expenses and other liabilities 1,941 292
Dividends payable 11 1
Income taxes payable 684 458
Other liabilities (38) (37)
-------- --------
Net cash from operating activities 6,871 6,607
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures (3,090) (4,883)
Proceeds from dispositions of equipment 11 53
-------- --------
Net cash used in investing activities (3,079) (4,830)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from debt 18,850 --
Repayment of debt (8,411) (778)
Proceeds from stock issued 1,072 217
Dividends to shareholders (14,133) (771)
-------- --------
Net cash used in financing activities (2,622) (1,332)
Effect of exchange rate changes on cash and
cash equivalents (58) 113
Net increase (decrease) in cash and cash equivalents 1,112 558
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,958 3,611
CASH AND CASH EQUIVALENTS, END OF PERIOD 5,070 4,169
Supplemental disclosure of cash flow information:
Cash paid/(received):
Interest $ 415 $ 455
Income taxes $ 174 $ (377)
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United United
States Korea Germany Kingdom Elimination Consolidated
------ ----- ------- ------- ----------- ------------
THREE MONTHS
ENDED SEPTEMBER 27, 2003
Sales to unaffiliated customers $ 11,208 $ 1,630 $ 2,316 $ 2,697 $ -- $ 17,851
Intercompany sales 2,918 -- 9 323 (3,250) --
Operating income 508 187 432 (190) (18) 919
Depreciation 900 32 94 235 -- 1,261
Capital expenditures 757 386 111 466 -- 1,720
THREE MONTHS
ENDED SEPTEMBER 28, 2002
Sales to unaffiliated customers $ 10,390 $ 1,399 $ 1,704 $ 2,550 $ -- $ 16,043
Intercompany sales 2,498 -- 5 325 (2,828) --
Operating income 557 167 175 58 70 1,027
Depreciation 912 28 79 203 -- 1,222
Capital expenditures 726 30 19 720 -- 1,495
NINE MONTHS
ENDED SEPTEMBER 27, 2003
Sales to unaffiliated customers $ 32,473 $ 5,175 $ 6,951 $ 8,589 $ -- $ 53,188
Intercompany sales 9,794 -- 33 1,032 (10,859) --
Operating income 1,806 541 925 (655) 21 2,638
Depreciation 2,752 89 285 781 -- 3,907
Capital expenditures 1,688 418 203 781 -- 3,090
NINE MONTHS
ENDED SEPTEMBER 28, 2002
Sales to unaffiliated customers $ 31,593 $ 4,606 $ 5,008 $ 7,863 $ -- $ 49,069
Intercompany sales 8,485 -- 24 1,245 (9,753) --
Operating income 1,528 369 332 589 (25) 2,794
Depreciation 3,005 87 224 557 -- 3,873
Capital expenditures 1,795 78 62 2,948 -- 4,883
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