Sun Hydraulics 2012 Sales Reach a New High

SARASOTA, FL--(Marketwire - Mar 4, 2013) - Sun Hydraulics Corporation (NASDAQ: SNHY) today reported financial results for the fourth quarter and year-end 2012 and the Board of Directors announced a $6.0 million shared distribution and $0.09 per share quarterly dividend.

(Dollars in millions except net income per share)  
    December 29, 2012   December 31, 2011   Increase/Decrease  
Twelve Months Ended                  
Net Sales   $ 204.4   $ 204.2   0 %
Net Income   $ 37.4   $ 37.7   -1 %
Net Income per share:                  
  Basic   $ 1.44   $ 1.47   -2 %
  Diluted   $ 1.44   $ 1.47   -2 %
Three Months Ended                  
Net Sales   $ 43.2   $ 45.7   -5 %
Net Income   $ 6.7   $ 6.1   10 %
Net Income per share:                  
  Basic   $ 0.26   $ 0.24   8 %
  Diluted   $ 0.26   $ 0.24   8 %

"A stronger than expected fourth quarter allowed us to achieve our highest top line year ever," said Allen Carlson, Sun Hydraulics' president and CEO. "Despite deteriorating business conditions in all markets in the second half, we were able to maintain margin performance and add new customers in what was a difficult and uncertain year. On the heels of the $1.00 per share special dividend in December, Sun's Board has declared another shared distribution totaling approximately $6.0 million, to be paid in March, reflecting the strong performance last year."

"There is still a lot of uncertainty in the macro economy, but things seem to be settling down a bit," Carlson continued. "Our first quarter forecast indicates a sequential rebound in demand led by Asia and Europe. As our existing customers' business rebounds in China and Europe, with the new customers we have added, we expect to see the top line continue to grow. U.S. PMI numbers have been positive for three months now, which is a good sign for the 2013 capital goods environment."

The 2012 shared distribution consists of a contribution to employees equal to 10.5% of wages, most of which will be paid into retirement plans in the form of Sun Hydraulics stock, and $0.09 per share cash dividend to be paid to all shareholders. The shared distribution dividend is payable on March 31, 2013, to shareholders of record as of March 15, 2013.

First Quarter Dividend

Sun's Board also announced a $0.09 per share quarterly cash dividend on its common stock. The dividend is payable on April 15, 2013, to shareholders of record as of March 31, 2013.


First quarter 2013 revenues are expected to be approximately $51 million, down approximately 8% from the first quarter of 2012. Earnings per share are estimated to be $0.34 to $0.36 compared to $0.41 in the same period a year ago.


Sun Hydraulics Corporation will broadcast its 2012 financial results conference call live over the Internet at 9:00 A.M. E.T. tomorrow, March 5, 2013. To listen to the webcast, go to the Investor Relations section of

Webcast Q&A

If an individual wishes to ask questions directly during the webcast, the conference call may be accessed by dialing 1-888-466-4462 and using 3684906 as the access code. Questions also may be submitted to the Company via email by going to the Sun Hydraulics website,, and clicking on Investor Relations on the top menu. Scroll down to the bottom of the page and click on contact email:, 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 advises all shareholders to familiarize themselves with rules regarding dividends, payment dates and ex-dividend dates. See the following website for more information

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

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, 2012, 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 31, 2011. 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. 

(in thousands except per share data)  
    Three Months Ended  
    December 29,     December 31,  
    2012     2011  
Net sales   $ 43,237     $ 45,657  
Cost of sales     27,249       28,809  
Gross profit     15,988       16,848  
Selling, engineering and administrative expenses     6,502       6,376  
Operating income     9,486       10,472  
Interest income, net     (328 )     (186 )
Foreign currency transaction (gain) loss, net     (41 )     (124 )
Miscellaneous expense, net     199       168  
Income before income taxes     9,656       10,614  
Income tax provision     2,963       4,540  
Net income   $ 6,693     $ 6,074  
Basic net income per common share   $ 0.26     $ 0.24  
Weighted average basic shares outstanding     26,068       25,729  
Diluted net income per common share   $ 0.26     $ 0.24  
Weighted average diluted shares outstanding     26,078       25,778  
Dividends declared per share   $ 1.090     $ 0.090  
(in thousands except per share data)  
    Twelve Months Ended  
    December 29,     December 31,  
    2012     2011  
Net sales   $ 204,367     $ 204,171  
Cost of sales     123,795       124,956  
Gross profit     80,572       79,215  
Selling, engineering and administrative expenses     26,163       23,946  
Operating income     54,409       55,269  
Interest income, net     (1,368 )     (775 )
Foreign currency transaction (gain) loss, net     (116 )     (161 )
Miscellaneous (income) expense, net     40       (1,381 )
Income before income taxes     55,853       57,586  
Income tax provision     18,455       19,909  
Net income   $ 37,398     $ 37,677  
Basic net income per common share   $ 1.44     $ 1.47  
Weighted average basic shares outstanding     25,944       25,642  
Diluted net income per common share   $ 1.44     $ 1.47  
Weighted average diluted shares outstanding     25,971       25,684  
Dividends declared per share   $ 1.480     $ 0.403  
(in thousands)  
    December 29,   December 31,  
    2012   2011  
Current assets:              
  Cash and cash equivalents   $ 34,478   $ 42,834  
  Restricted cash     329     46  
  Accounts receivable, net of allowance for doubtful accounts of $124 and $83     14,394     16,227  
  Inventories     12,559     12,829  
  Income taxes receivable     728     120  
  Deferred income taxes     248     260  
  Marketable securities     37,700     30,260  
  Other current assets     2,009     1,354  
    Total current assets     102,445     103,930  
Property, plant and equipment, net     64,672     56,959  
Other assets     8,004     6,639  
Total assets   $ 175,121   $ 167,528  
Liabilities and Shareholders' Equity              
Current liabilities:              
  Accounts payable   $ 4,606   $ 4,402  
  Accrued expenses and other liabilities     7,641     7,466  
  Dividends payable     -     2,318  
    Total current liabilities     12,247     14,186  
Deferred income taxes     7,230     6,917  
Other liabilities     371     1,149  
    Total liabilities     19,848     22,252  
Shareholders' equity:              
  Common stock     26     26  
  Capital in excess of par value     57,402     48,944  
  Retained earnings     97,242     98,426  
  Accumulated other comprehensive income (loss)     603     (2,120 )
    Total shareholders' equity     155,273     145,276  
Total liabilities and shareholders' equity   $ 175,121   $ 167,528  
(in thousands)  
    Twelve Months Ended  
    December 29,     December 31,  
    2012     2011  
Cash flows from operating activities:                
Net income   $ 37,398     $ 37,677  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization     7,186       6,721  
(Gain) loss on disposal of assets     193       (32 )
Gain on Investment in HCT     -       (1,244 )
Stock-based compensation expense     2,333       1,752  
Deferred director and phantom stock unit expense (income)     20       (22 )
Stock compensation income tax benefit     (88 )     (144 )
Allowance for doubtful accounts     26       1  
Provision for slow moving inventory     (298 )     (19 )
Provision for deferred income taxes     325       1,419  
(Increase) decrease in, net of acquisition:                
  Accounts receivable     1,903       741  
  Inventories     678       (1,593 )
  Income taxes receivable     (520 )     1,178  
  Other current assets     (650 )     (662 )
  Other assets, net     240       (1,081 )
Increase (decrease) in, net of acquisition:                
  Accounts payable     (742 )     499  
  Accrued expenses and other liabilities     4,547       4,390  
  Other noncurrent liabilities     (353 )     (37 )
Net cash from operating activities     52,198       49,544  
Cash flows used in investing activities:                
Proceeds from sale of joint venture     -       1,451  
Acquisition of business, net of cash acquired     (1,140 )     (1,776 )
Capital expenditures     (13,359 )     (10,143 )
Proceeds from dispositions of equipment     56       35  
Purchases of marketable securities     (40,495 )     (26,833 )
Proceeds from sale of marketable securities     32,912       7,517  
Net cash used in investing activities     (22,026 )     (29,749 )
Cash flows used in financing activities:                
Repayment of debt     (169 )     (100 )
Proceeds from exercise of stock options     -       61  
Stock compensation income tax benefit     88       144  
Proceeds from stock issued     700       574  
Dividends to shareholders     (40,900 )     (9,596 )
Change in restricted cash     (272 )     84  
Net cash used in financing activities     (40,553 )     (8,833 )
Effect of exchange rate changes on cash and cash equivalents     2,025       (1,334 )
Net increase (decrease) in cash and cash equivalents     (8,356 )     9,628  
Cash and cash equivalents, beginning of period     42,834       33,206  
Cash and cash equivalents, end of period   $ 34,478     $ 42,834  
Supplemental disclosure of cash flow information:                
Cash paid:                
  Income taxes   $ 18,739     $ 17,456  
Supplemental disclosure of noncash transactions:                
Common stock issued for shared distribution through accrued expenses and other liabilities   $ 4,407     $ 2,412  
Common stock issued for deferred director's compensation through other noncurrent liabilities   $ 930     $ -  
Unrealized gain (loss) on available for sale securities   $ 326     $ (549 )