Sun Hydraulics Corporation (SNHY) has reported a 38.90 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $3.12 million, or $0.12 a share in the quarter, compared with $5.10 million, or $0.19 a share for the same period last year.

Revenue during the quarter grew 12.59 percent to $49.86 million from $44.29 million in the previous year period. Gross margin for the quarter contracted 94 basis points over the previous year period to 34.72 percent. Total expenses were 90.20 percent of quarterly revenues, up from 82.68 percent for the same period last year. That has resulted in a contraction of 752 basis points in operating margin to 9.80 percent.

Operating income for the quarter was $4.89 million, compared with $7.67 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $11.11 million compared with $9.46 million in the prior year period. At the same time, adjusted EBITDA margin improved 92 basis points in the quarter to 22.28 percent from 21.36 percent in the last year period.

Wolfgang Dangel, Sun's president and chief executive officer, commented, "We made significant progress during 2016 as it was a year of transformational evolution, driven by a strategic assessment of our future. We considered the megatrends impacting our markets including globalization, growing sophistication of machinery and equipment, and advancement of computing power. These trends helped to shape our 2025 Vision that will lead us to $1 billion in sales while maintaining superior profitability and financial strength."

For fiscal year 2017, Sun Hydraulics Corporation projects revenue to be in the range of $295 million to $310 million. The company projects operating income to grow in the range of 20 percent to 22 percent.

The company has spent $169.79 million cash to meet investing activities during the year as against cash outgo of $9.31 million in the last year. It has incurred net capital expenditure of $6.18 million on net basis during the year, up 38.53 percent or $1.72 million from year ago.

Cash flow from financing activities was $128.22 million for the year as against cash outgo of $10.82 million in the last year period.

Cash and cash equivalents stood at $74.22 million as on Dec. 31, 2016, down 9.41 percent or $7.71 million from $81.93 million on Jan. 02, 2016.

Working capital declines

Sun Hydraulics Corporation has witnessed a decline in the working capital over the last year. It stood at $110.19 million as at Dec. 31, 2016, down 24.18 percent or $35.14 million from $145.34 million on Jan. 02, 2016. Current ratio was at 4.55 as on Dec. 31, 2016, down from 13.44 on Jan. 02, 2016.

Cash conversion cycle (CCC) has increased to 52 days for the quarter from 28 days for the last year period. Days sales outstanding went up to 24 days for the quarter compared with 14 days for the same period last year.

Days inventory outstanding has increased to 42 days for the quarter compared with 21 days for the previous year period. At the same time, days payable outstanding went up to 14 days for the quarter from 7 for the same period last year.