Sun Hydraulics Reports First Quarter Sales of $54 Million and Earnings of $0.39 per Share

SARASOTA, FL--(Marketwired - May 4, 2015) - Sun Hydraulics Corporation (NASDAQ: SNHY) today reported financial results for the first quarter of 2015 as follows:

    March 28, 2015   March 29, 2014   Increase/(Decrease)
Three Months Ended            
Net sales   $ 54.4   $ 56.8   (4 )%
Net income   $ 10.4   $ 11.4   (9 )%
Net income per share:                
  Basic   $ 0.39   $ 0.43   (9 )%
  Diluted   $ 0.39   $ 0.43   (9 )%

"Strengthening of the U.S. Dollar challenged our first quarter results, reducing sales by $1.5M over last year and shrinking gross profit from 42% to 39%," said Allen Carlson, Sun's President and CEO. "On the cash side, U.S. Dollars held in Europe provided a foreign currency gain of $900K for the quarter, which was included in our estimates. Continuing with year over year comparisons, North American sales were up 1%. European sales decreased a total of 9%, all of which was attributable to currency. Sales in Asia were also down 9% for the quarter, primarily due to declines in the Korean construction industry."

"We continue to make investments to develop new and unique products for the marketplace," continued Carlson. "Earlier this month we introduced an industry first -- Bluetooth-enabled cartridge valves which allow users to configure settings wirelessly using an iPhone® or similar smart device. These electro-hydraulic valves are ideal in both mobile and industrial applications, where cost, reliability and ease of use are critical. The controlling app, AmpSet Blue™, is available through a link on our website. Additional product development efforts are ongoing. We expect to continue releasing innovative products throughout the year, specifically in the electro-hydraulic market."

Continuing, Carlson said, "While we're encouraged that the U.S. PMI continues to operate in positive territory, our second quarter forecast reflects a softening in demand. We remain agile and ready to adapt to changing business conditions and our focus remains on long-term profitable growth by providing both products and services that our customers value. We believe this is the best way to achieve better than average returns for our shareholders."

"On a closing note," Carlson concluded, "we are proud to once again be recognized by Forbes in its list of the 100 Most Trustworthy Companies in America. The list depicts American companies that "consistently demonstrate transparent accounting practices and solid corporate governance."


The outlook is based upon our estimates of demand and currency. Second quarter 2015 revenues are expected to be approximately $54 million, down 12% from the second quarter of 2014 and down 2% sequentially. Earnings per share are estimated to be $0.34 to $0.36 compared to $0.46 in the same period a year ago. Currency is responsible for $2.4M of the decline in revenues and $0.06 of the decline in earnings per share in the Q2 estimates.


Sun Hydraulics Corporation will broadcast its 2015 first quarter financial results conference call live over the Internet at 9:00 A.M. E.T. tomorrow, May 5, 2015. 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 1-888-438-5491 and using 7119208 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 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 March 28, 2015, 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 27, 2014. 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
    March 28, 2015   March 29, 2014
    (unaudited)   (unaudited)
Net sales   $ 54,386     $ 56,809  
Cost of sales     32,992       32,742  
Gross profit     21,394       24,067  
Selling, engineering and administrative expenses     7,286       7,341  
Operating income     14,108       16,726  
Interest (income) expense, net     (316 )     (312 )
Foreign currency transaction (gain) loss, net     (960 )     8  
Miscellaneous (income) expense, net     26       83  
Income before income taxes     15,358       16,947  
Income tax provision     4,981       5,562  
Net income   $ 10,377     $ 11,385  
Basic net income per common share   $ 0.39     $ 0.43  
Weighted average basic shares outstanding     26,605       26,374  
Diluted net income per common share   $ 0.39     $ 0.43  
Weighted average diluted shares outstanding     26,605       26,374  
Dividends declared per share   $ 0.180     $ 0.180  
(in thousands)
    March 28, 2015   December 27, 2014
Current assets:            
  Cash and cash equivalents   $ 62,446     $ 56,843  
  Restricted cash     316       319  
  Accounts receivable, net of allowance for doubtful accounts of $139 and $172     20,505       17,501  
  Inventories     13,481       14,098  
  Deferred income taxes     467       467  
  Short-term investments     43,629       43,353  
  Other current assets     2,908       2,966  
  Total current assets     143,752       135,547  
Property, plant and equipment, net     76,472       77,716  
Goodwill     5,061       5,141  
Other assets     4,869       4,360  
  Total assets   $ 230,154     $ 222,764  
Liabilities and shareholders' equity            
Current liabilities:            
  Accounts payable   $ 6,466     $ 4,873  
  Accrued expenses and other liabilities     4,137       7,908  
  Income taxes payable     2,026       559  
  Dividends payable     4,802       2,392  
  Total current liabilities     17,431       15,732  
Deferred income taxes     8,545       8,501  
Other noncurrent liabilities     272       272  
  Total liabilities     26,248       24,505  
Commitments and contingencies     -       -  
Shareholders' equity:            
  Preferred stock, 2,000,000 shares authorized, par value $0.001, no shares outstanding     -       -  
  Common stock, 50,000,000 shares authorized, par value $0.001, 26,676,008 and 26,572,774 shares outstanding     27       27  
  Capital in excess of par value     78,007       73,499  
  Retained earnings     134,393       128,818  
  Accumulated other comprehensive income (loss)     (8,521 )     (4,085 )
  Total shareholders' equity     203,906       198,259  
  Total liabilities and shareholders' equity   $ 230,154     $ 222,764  
(in thousands)
  Three months ended
  March 28, 2015   March 29, 2014
  (unaudited)   (unaudited)
Cash flows from operating activities:          
Net income $ 10,377     $ 11,385  
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   2,287       2,074  
(Gain) Loss on disposal of assets   31       44  
Provision for deferred income taxes   (8 )     4  
Allowance for doubtful accounts   (33 )     (17 )
Stock-based compensation expense   958       936  
(Increase) decrease in, net of assets acquired:          
  Accounts receivable   (2,971 )     (6,626 )
  Inventories   617       (612 )
  Income taxes receivable   -       954  
  Other current assets   58       (1,206 )
  Other assets   138       111  
Increase (decrease) in, net of liabilities assumed:          
  Accounts payable   1,593       2,015  
  Accrued expenses and other liabilities   (554 )     731  
  Income taxes payable   1,467       293  
  Other noncurrent liabilities   -       (2 )
Net cash provided by operating activities   13,960       10,084  
Cash flows from investing activities:          
Investment in licensed technology   (575 )     -  
Capital expenditures   (1,335 )     (1,959 )
Purchases of short-term investments   (5,989 )     (11,066 )
Proceeds from sale of short-term investments   5,404       7,833  
Net cash used in investing activities   (2,495 )     (5,192 )
Cash flows from financing activities:          
Proceeds from stock issued   333       185  
Dividends to shareholders   (2,392 )     (4,750 )
Change in restricted cash   3       3  
Net cash used in financing activities   (2,056 )     (4,562 )
Effect of exchange rate changes on cash and cash equivalents   (3,806 )     (168 )
Net increase (decrease) in cash and cash equivalents   5,603       162  
Cash and cash equivalents, beginning of period   56,843       54,912  
Cash and cash equivalents, end of period $ 62,446     $ 55,074  
Supplemental disclosure of cash flow information:          
Cash paid:          
  Income taxes $ 3,470     $ 4,311  
Supplemental disclosure of noncash transactions:          
Common stock issued for shared distribution through accrued expenses and other liabilities $ 3,217     $ 2,982