Sun Hydraulics Corp. (SNHY, Financial) filed Quarterly Report for the period ended 2009-09-26.
Sun Hydraulics is a leading designer and manufacturer of high-performancescrew-in hydraulic cartridge valves and manifolds which control force speed and motion as integral components in fluid power systems. The Company sells its products globally through independent distributors. Sun Hydraulics Corp. has a market cap of $343.9 million; its shares were traded at around $20.37 with a P/E ratio of 37 and P/S ratio of 1.9. The dividend yield of Sun Hydraulics Corp. stocks is 1.8%. Sun Hydraulics Corp. had an annual average earning growth of 15.8% over the past 10 years.
The U.S. reporting segment had sales of $13.9 million in the third quarter of 2009, down $14.9 million or 51.8%, compared to sales of $28.8 million during the third quarter last year. The decrease was driven by demand in our end markets and the general downturn in the global economy. International sales out of the U.S. were $4.2 million during the third quarter of 2009, down 57.5% or $5.7 million, compared to $9.9 million during the third quarter last year. Significant decreases in sales were noted in almost all geographic regions.
North American sales decreased 51.9% or $34.1 million, to $31.7 million, Asian sales decreased 55.0% or $14.8 million, to $12.1 million, and European sales decreased 50.6% or $24.8 million, to $24.2 million.
The 2009 gross profit decreases were primarily related to lower sales volume, which contributed $26.4 million of the decrease. The remaining decreases in gross profit were attributed to productivity declines of approximately $2.5 million, and increases in overhead expenses as a percentage of sales of approximately $8.7 million, both of which occurred primarily in the U.S. In periods of sharp declining sales, the Company cannot reduce costs at the same pace. However, the decrease in gross profit was partially offset by lower material costs as a percent of sales of approximately $1.6 million, primarily in the U.S. Additionally, the Company eliminated overtime premiums equal to approximately $1.1 million, reduced retirement benefits primarily related to the shared distribution of approximately $1.6 million that was included in the prior year results, and reduced health benefit costs of $0.5 million. These reductions were all primarily in the U.S. Additionally, the Company had cost savings of approximately $0.9 for the period ended September 26, 2009, resulting from the furloughs and salary reductions.
Cash from operations for the nine months ended September 26, 2009, was $11.3 million, compared to $30.8 million for the nine months ended September 27, 2008. The $19.5 million decrease in the Companys net cash flow from operations during the period was due primarily to the decrease in net income of $22.7 million, change in taxes payable/receivable of $0.8 million, and lower cash inflow from accumulation of accounts payable and accrued expenses compared to the prior year. Decreases in accounts receivable and inventory totaling $3.7 million compared to increases in the prior year totaling $1.9 million partially offset the reduction in operating cash flows. Cash on hand decreased $5.1 million from $35.3 million in 2008 to $30.2 million in 2009. However, this decrease was largely the result of net purchases of marketable securities totaling $7.5 million. Days sales outstanding (DSO) were 42 and 38 at September 26, 2009, and September 27, 2008, respectively. Customer payments have not been an issue thus far and the Company does not anticipate collectability issues even in this difficult economic environment. Inventory turns decreased to 8.9 as of September 26, 2009, compared to 10.4 as of September 27, 2008.
Capital expenditures were $4.5 million for the nine months ended September 26, 2009, compared to $9.2 million for the nine months ended September 27, 2008. The current year includes purchases of machinery and equipment of $2.8 million and a land purchase of $1.7 million. The prior year includes purchases of machinery and equipment of $6.7 million and a land purchase of $2.5 million. The parcels of land along with already owned property that includes one of the Companies existing facilities combine to provide the Company with 27 contiguous acres. It provides the Company with excellent options if it determines that additional bricks and mortar are needed. Capital expenditures for the year are projected to be approximately $6.5 million.
Read the The complete ReportSNHY is in the portfolios of John Keeley of Keeley Fund Management.
Sun Hydraulics is a leading designer and manufacturer of high-performancescrew-in hydraulic cartridge valves and manifolds which control force speed and motion as integral components in fluid power systems. The Company sells its products globally through independent distributors. Sun Hydraulics Corp. has a market cap of $343.9 million; its shares were traded at around $20.37 with a P/E ratio of 37 and P/S ratio of 1.9. The dividend yield of Sun Hydraulics Corp. stocks is 1.8%. Sun Hydraulics Corp. had an annual average earning growth of 15.8% over the past 10 years.
Highlight of Business Operations:
North American sales decreased 50.0% or $10.5 million, to $10.5 million, Asian sales decreased 40.5% or $3.0 million, to $4.4 million, and European sales decreased 49.2% or $7.4 million, to $7.6 million.The U.S. reporting segment had sales of $13.9 million in the third quarter of 2009, down $14.9 million or 51.8%, compared to sales of $28.8 million during the third quarter last year. The decrease was driven by demand in our end markets and the general downturn in the global economy. International sales out of the U.S. were $4.2 million during the third quarter of 2009, down 57.5% or $5.7 million, compared to $9.9 million during the third quarter last year. Significant decreases in sales were noted in almost all geographic regions.
North American sales decreased 51.9% or $34.1 million, to $31.7 million, Asian sales decreased 55.0% or $14.8 million, to $12.1 million, and European sales decreased 50.6% or $24.8 million, to $24.2 million.
The 2009 gross profit decreases were primarily related to lower sales volume, which contributed $26.4 million of the decrease. The remaining decreases in gross profit were attributed to productivity declines of approximately $2.5 million, and increases in overhead expenses as a percentage of sales of approximately $8.7 million, both of which occurred primarily in the U.S. In periods of sharp declining sales, the Company cannot reduce costs at the same pace. However, the decrease in gross profit was partially offset by lower material costs as a percent of sales of approximately $1.6 million, primarily in the U.S. Additionally, the Company eliminated overtime premiums equal to approximately $1.1 million, reduced retirement benefits primarily related to the shared distribution of approximately $1.6 million that was included in the prior year results, and reduced health benefit costs of $0.5 million. These reductions were all primarily in the U.S. Additionally, the Company had cost savings of approximately $0.9 for the period ended September 26, 2009, resulting from the furloughs and salary reductions.
Cash from operations for the nine months ended September 26, 2009, was $11.3 million, compared to $30.8 million for the nine months ended September 27, 2008. The $19.5 million decrease in the Companys net cash flow from operations during the period was due primarily to the decrease in net income of $22.7 million, change in taxes payable/receivable of $0.8 million, and lower cash inflow from accumulation of accounts payable and accrued expenses compared to the prior year. Decreases in accounts receivable and inventory totaling $3.7 million compared to increases in the prior year totaling $1.9 million partially offset the reduction in operating cash flows. Cash on hand decreased $5.1 million from $35.3 million in 2008 to $30.2 million in 2009. However, this decrease was largely the result of net purchases of marketable securities totaling $7.5 million. Days sales outstanding (DSO) were 42 and 38 at September 26, 2009, and September 27, 2008, respectively. Customer payments have not been an issue thus far and the Company does not anticipate collectability issues even in this difficult economic environment. Inventory turns decreased to 8.9 as of September 26, 2009, compared to 10.4 as of September 27, 2008.
Capital expenditures were $4.5 million for the nine months ended September 26, 2009, compared to $9.2 million for the nine months ended September 27, 2008. The current year includes purchases of machinery and equipment of $2.8 million and a land purchase of $1.7 million. The prior year includes purchases of machinery and equipment of $6.7 million and a land purchase of $2.5 million. The parcels of land along with already owned property that includes one of the Companies existing facilities combine to provide the Company with 27 contiguous acres. It provides the Company with excellent options if it determines that additional bricks and mortar are needed. Capital expenditures for the year are projected to be approximately $6.5 million.
Read the The complete ReportSNHY is in the portfolios of John Keeley of Keeley Fund Management.
