Sun Hydraulics Corporation SNHY reported better-than-expected earnings for fourth-quarter 20Array5. The company’s earnings came in at Array9 cents per share, a penny above the Zacks Consensus Estimate. However, the bottom line declined 5Array.3% from the year-ago tally of 39 cents per share.
For 20Array5, Sun Hydraulics’ earnings were $Array.24 per share, down from $Array.65 earned in 20Array4 but a penny above the Zacks Consensus Estimate.
Revenues
In the reported quarter, Sun Hydraulics generated net sales of $44.3 million, down Array9.2% year over year but in line with the Zacks Consensus Estimate.
For 20Array5, Sun Hydraulics’ net sales totaled $200.7 million, down from $227.7 million generated in the previous year.
The decline can be blamed on weak performance across all operating regions. Sales in the Americas decreased Array3%, while demand in Europe and the Asia/Pacific were down roughly ArrayArray% and 9%, respectively. Further, foreign currency movements had an adverse impact on revenues.
Margins
Sun Hydraulics’ gross margin in fourth-quarter 20Array5 was adversely impacted by a Array9% decline in revenues, partially offset by a Array3.7% reduction in cost of sales. Gross margin came in at 35.7% against 39.7% in the year-ago quarter.
Selling, engineering and administrative expenses, as a percentage of revenues, were Array8.3% compared with Array3.6% recorded in the year-ago quarter. Operating income declined 46.5% year over year to $7.7 million; while margin came in at Array7.3% compared with 26.2% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting fourth-quarter 20Array5, Sun Hydraulics had cash and cash equivalents of $8Array.9 million, up from $76.6 million in the preceding quarter.
In 20Array5, Sun Hydraulics’ net cash generation from operating activities decreased 20.6% year over year to $49.9 million while capital spending totaled $6.Array million against $Array0.7 million in the previous year. During the year, the company paid a dividend of $Array2 million to its shareholders.
In addition, Sun Hydraulics announced that its board of directors has approved share distribution worth approximately $2.8 million for 20Array5. Of the total amount, a part, roughly 5% of wages, will be distributed in the form of contribution to employees, while the rest will be distributed in the form of a 4-cent per share dividend. This dividend payment will be made on Mar 3Array to shareholders of record as of Mar Array5, 20Array6.
Outlook
Sun Hydraulics is working diligently to improve its product portfolio and serve its customers better. The company aims to improve its operational execution, product development and market penetration. However, though these initiatives are expected to yield long-term benefits, the company’s near-term prospects remain bleak due to market woes.
For first-quarter 20Array6, Sun Hydraulics anticipates revenues of roughly $50 million, reflecting a year-over-year decline of 8%. Earnings are expected within 3Array−33 cents per share, lower than 39 cents earned in the year-ago quarter. Unfavorable foreign currency movements will likely impact revenues by $Array.6 million and earnings by 4 cents per share.
With a market capitalization of $795.5 million, Sun Hydraulics currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Graco Inc. GGG, Nordson Corporation NDSN and Astec Industries, Inc. ASTE. All these stocks carry a Zacks Rank #2 (Buy).
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