Sun Hydraulics Corporation (SNHY) reported better-than-expected results for fourth-quarter 2014. Earnings came in at 39 cents per share, up 21.9% from the year-ago tally of 32 cents. Also, the bottom line surpassed the Zacks Consensus Estimate of 38 cents by a penny.
For 2014, the company’s earnings were $1.65 per share, up compared with $1.45 per share in 2013 and above the Zacks Consensus Estimate of $1.64.
Revenues
Sun Hydraulics generated net sales of $54.8 million in the quarter, reflecting an increase of 11.7% year over year, but coming in line with the Zacks Consensus Estimate of $55 million.
The year-over-year increase was driven by strong demand across all end markets as well as sales growth of 18% in North America, 5% in Europe and 5% in Asia/Pacific.
For 2014, the company’s net sales were $227.7 million, up 10.9% year over year.
Margins
Sun Hydraulics’ cost of sales grew 11.5% year over year, representing 60.3% of total revenue as against 60.4% in the year-ago quarter. Gross margin inched up 10 basis points (bps) year over year to 39.7%. Selling, engineering and administrative (SG&A) expenses, as a percentage of revenues, stood at 13.6%, below 14.4% recorded in the year-ago quarter.
Operating income grew 15.6% year over year to $14.3 million, while margin came in at 26.2% versus 25.3% in the year-ago comparable quarter.
Balance Sheet and Cash Flow
Exiting fourth-quarter 2014, Sun Hydraulics had cash and cash equivalents of $56.8 million versus $66.1 million at the end of the preceding quarter.
In 2014, Sun Hydraulics generated cash of $62.8 million from its operating activities, up compared with $47.1 million in the previous year. Capital spending dropped 40.5% year over year to $10.7 million.
During the year, the company distributed $38.4 million as dividends.
Concurrent with the earnings release, the company announced the distribution of $6.1 million of shares, consisting of 9 cents per share of cash dividend payment as well as addition of the company’s shares, worth 10% of wages, into the employee retirement plans.
Outlook: For first-quarter 2015, Sun Hydraulics anticipates revenues at approximately $55 million, reflecting a year-over-year decline of 3%. Earnings are predicted within 40−42 cents per share.
With a market capitalization of $1.1 billion, Sun Hydraulics currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include II-VI Incorporated (IIVI), Kadant Inc. (KAI) and Pioneer Power Solutions, Inc. (PPSI). While II-VI Incorporated sports a Zacks Rank #1 (Strong Buy), both Kadant and Pioneer Power hold a Zacks Rank #2 (Buy).
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