EX-99.1 2 ex991q1fy15earningsrelease.htm EXHIBIT 99.1 HDNG Q1 FY15 EARNINGS RELEASE EX. 99.1 Q1 FY15 Earnings Release
Exhibit 99.1

NEWS
RELEASE

Hardinge Inc. One Hardinge Drive, Elmira, N.Y. 14902

For more information contact:
 
 
 
Company:
Investor Relations:
Douglas J. Malone
Chief Financial Officer
Phone: (607) 378-4140
Deborah K. Pawlowski, Kei Advisors LLC
Phone: (716) 843-3908
Email: dpawlowski@keiadvisors.com

Hardinge Reports First Quarter 2015 Results

•
First quarter 2015 orders increase 15% over prior year to $92.9 million
•
John J. Perrotti appointed Chairman of the Board

ELMIRA, N.Y., May 7, 2015 - Hardinge Inc. (NASDAQ: HDNG), a leading international provider of advanced metal-cutting solutions and accessories, reported financial results for its first quarter ended March 31, 2015.

Net sales (“sales”) for the quarter were $69.1 million, essentially unchanged from the prior year’s first quarter after considering the impact of unfavorable foreign currency translation of $2.5 million. Orders for the quarter increased 15% to $92.9 million, compared with $81.0 million in the prior-year period. This increase was driven by demand for the Company’s grinding machines, especially in Europe.

Net loss was $1.4 million, or $0.11 per diluted share for the quarter, compared with net loss of $0.5 million, or $0.04 per diluted share, in the prior year’s first quarter.

Richard L. Simons, President and Chief Executive Officer, commented, “Revenue for the quarter was in line with our expectations. As in 2014, we anticipated that we would have a slow start to 2015 given the effect that the Chinese Lunar New Year holiday has on our results. We were especially pleased with our strong order levels for the quarter. Orders were up double digit percentages in all of our geographic regions compared with last year’s first quarter, and orders for our specialized grinding machines were the key contributor to our order growth. During the quarter we also received our first orders for our newly acquired Voumard product line. We believe this demonstrates the strength of the brand acquired last September and the market opportunities it presents."

Mr. Simons added, “With orders in excess of $90 million for the second consecutive quarter, backlog is at the highest level it has been in nearly two years. Thus, despite headwinds with currency exchange rates, we anticipate second quarter sales to be in the mid $80 million range. As always, variables that impact the level of recognized quarterly sales include our dependency upon timing of customer acceptances for large customized equipment orders. Such timing can be impacted by customer travel schedules, receipt of test material, readiness of the customer facilities and our ability to finalize complex and demanding processes to meet their requirements. However, as we look out over the year, given the recent order trend and our current pipeline, our confidence in our expectations for solid growth in 2015 has been bolstered."


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Hardinge Reports First Quarter 2015 Results
May 7, 2015
Page 2 of 7



Quarterly Orders by Region
($ in thousands)
 
Quarter Ended
 
March 31, 2015
March 31, 2014
December 31, 2014
Orders from Customers in
  $
% of Total
  $
Year-over-Year
% Change
  $
Sequential
% Change
North America
27,354

29%
24,361

12%
31,467

(13)%
Europe
31,294

34%
28,437

10%
31,302

—%
Asia
34,279

37%
28,241

21%
31,582

9%
Total
92,927

 
81,039

15%
94,351

(2)%

Net orders (“orders”) during the quarter were $92.9 million, reflecting 15% improvement over the prior-year period. Excluding the impact of foreign currency translation, orders for the quarter were up 18% over the prior year. The quarter benefited from two large orders in excess of $5 million each, one for the European auto industry and the other for the Chinese consumer electronic industry. The Company’s order backlog of
$128.1 million at March 31, 2015 is the highest backlog level since June 2013.

Quarterly Sales by Region
($ in thousands)
 
Quarter Ended
 
March 31, 2015
March 31, 2014
December 31, 2014
Sales to Customers in
  $
% of Total
  $
Year-over-Year
% Change
  $
Sequential
% Change
North America
26,305

38%
23,203

13%
28,636

(8)%
Europe
22,929

33%
25,305

(9)%
31,102

(26)%
Asia
19,894

29%
22,342

(11)%
33,270

(40)%
Total
69,128

 
70,850

(2)%
93,008

(26)%
____________________
Note: Fluctuations in Hardinge’s consolidated sales among geographic locations and industries can vary from quarter to quarter based on the timing and magnitude of orders and projects. Hardinge does not believe that such quarter-to-quarter fluctuations are necessarily indicative of larger business trends. Rather, the Company believes that such business trends can be discerned from the Company’s performance during a longer period of time, such as a trailing twelve-month period.

First Quarter Review

Sales of $69.1 million were essentially flat year-over-year after considering the impact of unfavorable foreign currency translation of $2.5 million. Sales to the North America market increased over the prior-year period as improved economic activity and industrial capacity utilization in the U.S. led to investments in production. Reduced sales to Europe and Asia were largely a result of unfavorable currency translation and offset sales growth in North America.

Gross profit of $18.2 million declined $1.0 million compared with the prior-year period. Gross profit was favorably impacted by increased levels of machine production, particularly at the Company’s European grinding facility. However, an inventory valuation adjustment of approximately $0.7 million at one of its European subsidiaries, combined with $0.6 million of unfavorable foreign currency translation more than offset the improvement realized by increased production levels. Gross margin as a percent of sales declined to 26.4%, compared with 27.1% in the first quarter of 2014.

Selling, general and administrative (“SG&A”) expense increased by $0.5 million compared with the prior-year period to $19.6 million, or 28.4% of sales. SG&A increases were primarily related to our investments for growth in the recently acquired Voumard business, increased expenses to support the higher demand for grinding machines, and expansion of the Company’s Forkardt businesses in China and India. These increases were partially offset by $0.7 million of favorable foreign currency translation when compared with the prior-year period.

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Hardinge Reports First Quarter 2015 Results
May 7, 2015
Page 3 of 7




Operating loss was $1.4 million, compared with an operating loss of $0.3 million in the prior-year period.

Flexible Balance Sheet for Strategic Investments

Cash and cash equivalents at March 31, 2015 were $18.3 million. Total debt was $15.1 million, a reduction of $1.1 million from December 31, 2014 levels.

Chairman Appointed

On May 5, 2015, Hardinge's Board of Directors voted to separate the positions of Chairman of the Board and Chief Executive Officer. As a result, John J. Perrotti was elected to succeed Richard L. Simons as Chairman of the Board. Mr. Perrotti, age 54, has served as a director of the Company since 2003 and had been serving as the Company's Lead Independent Director since 2014. Mr. Perrotti has spent over 20 years as a machine tool company executive with Gleason Corporation, a global, privately-held manufacturer of gear production equipment. He is a Director of Gleason and has served as its President and Chief Executive Officer since 2005. He has an M.B.A from the Simon School of Business at the University of Rochester.

Webcast and Conference Call

Hardinge will host a conference call and webcast today at 11:00 a.m. ET. During the conference call and webcast, Richard L. Simons, President and CEO, and Douglas J. Malone, Vice President and CFO, will review the financial and operating results for the quarter, as well as the Company’s strategy and outlook. A question and answer session will follow the formal discussion. Their review will be accompanied by a slide presentation which will be available on Hardinge’s website at www.hardinge.com/ir/events.

The conference call can be accessed by calling (315) 625-6888. The listen-only audio webcast can be monitored at www.hardinge.com/ir/events.

A telephonic replay will be available from 2:00 p.m. ET the day of the call through Thursday, May 14, 2015. To listen to the archived call, dial (404) 537-3406 and enter conference ID number 24789822. Alternatively, the archive can be heard on the Company’s website at www.hardinge.com/ir/events. A transcript will also be posted to the website, once available.

About Hardinge

Hardinge is a leading global designer and manufacturer of high precision, computer-controlled machine tool solutions developed for critical, hard-to-machine metal parts and of technologically advanced workholding accessories.  The Company’s strategy is to leverage its global brand strength to further penetrate global market opportunities where customers will benefit from the technologically advanced, high quality, reliable products Hardinge produces.  With approximately two-thirds of its sales outside of North America, Hardinge serves the worldwide metal working market.  Hardinge’s machine tool and accessory solutions can also be found in a broad base of industries to include aerospace, agricultural, automotive, construction, consumer products, defense, energy, medical, technology and transportation. 

Hardinge applies its engineering design and manufacturing expertise in high performance machining centers, high-end cylindrical and jig grinding machines, SUPER-PRECISION® and precision CNC lathes and technologically advanced workholding accessories.  Hardinge has manufacturing operations in China, France, Germany, India, Switzerland, Taiwan, the United Kingdom and the United States.   

The Company regularly posts information on its website: http://www.hardinge.com.


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Hardinge Reports First Quarter 2015 Results
May 7, 2015
Page 4 of 7


Safe Harbor Statement

This news release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). Such statements are based on management's current expectations that involve risks and uncertainties. Any statements that are not statements of historical fact or that are about future events may be deemed to be forward-looking statements. For example, words such as "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends," and similar expressions are intended to identify forward-looking statements. The Company's actual results or outcomes and the timing of certain events may differ significantly from those discussed in any forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

FINANCIAL TABLES FOLLOW.

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Hardinge Reports First Quarter 2015 Results
May 7, 2015
Page 5 of 7


HARDINGE INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except share and per share data)
 
 
Three Months Ended 
 March 31,
 
2015
 
2014
 
(unaudited)
 
 
 
 
Sales
$
69,128

 
$
70,850

Cost of sales
50,880

 
51,630

Gross profit
18,248

 
19,220

Gross profit margin
26.4
 %
 
27.1
 %
 
 
 
 
Selling, general and administrative expenses
19,600

 
19,120

Other expense, net
65

 
391

Loss from operations
(1,417
)
 
(291
)
Operating margin
(2.0
)%
 
(0.4
)%
 
 
 
 
Interest expense
157

 
243

Interest income
(17
)
 
(20
)
Loss from continuing operations before income taxes
(1,557
)
 
(514
)
Income taxes
(149
)
 
157

Net loss from continuing operations
(1,408
)
 
(671
)
 
 
 
 
Gain from disposal of discontinued operation, net of tax
—

 
218

 
 
 
 
Net loss
$
(1,408
)
 
$
(453
)
 
 
 
 
Per share data:
 

 
 

 
 
 
 
Basic loss per share:
 

 
 

Continuing operations
$
(0.11
)
 
$
(0.05
)
Discontinued operations
—

 
0.01

Basic loss per share
$
(0.11
)
 
$
(0.04
)
 
 
 
 
Diluted loss per share:
 

 
 

Continuing operations
$
(0.11
)
 
$
(0.05
)
Discontinued operations
—

 
0.01

Diluted loss per share
$
(0.11
)
 
$
(0.04
)
 
 
 
 
Cash dividends declared per share:
$
0.02

 
$
0.02

 
 
 
 
Weighted avg. shares outstanding: Basic
12,742

 
12,499

Weighted avg. shares outstanding: Diluted
12,742

 
12,499



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Hardinge Reports First Quarter 2015 Results
May 7, 2015
Page 6 of 7


HARDINGE INC. AND SUBSIDIARIES
 Consolidated Balance Sheets
(in thousands, except share and per share data)
 
March 31,
2015
 
December 31,
2014
 
(Unaudited)
 
 
Assets
 

 
 

Cash and cash equivalents
$
18,300

 
$
16,293

Restricted cash
3,019

 
3,151

Accounts receivable, net
55,600

 
62,877

Inventories, net
116,281

 
111,821

Other current assets
13,818

 
10,545

Total current assets
207,018

 
204,687

 
 
 
 
Property, plant and equipment, net
65,375

 
65,874

Goodwill
6,718

 
6,698

Other intangible assets, net
29,870

 
30,217

Other non-current assets
4,119

 
3,844

Total non-current assets
106,082

 
106,633

Total assets
$
313,100

 
$
311,320

 
 
 
 
Liabilities and shareholders’ equity
 

 
 

Notes payable to bank
$
124

 
$
—

Accounts payable
27,128

 
25,592

Accrued expenses
22,810

 
25,071

Customer deposits
16,077

 
12,736

Accrued income taxes
1,682

 
646

Deferred income taxes
2,326

 
2,332

Current portion of long-term debt
4,247

 
3,972

Total current liabilities
74,394

 
70,349

 
 
 
 
Long-term debt
10,740

 
12,253

Pension and postretirement liabilities
52,558

 
53,119

Deferred income taxes
2,467

 
2,516

Other liabilities
3,548

 
3,487

Total non-current liabilities
69,313

 
71,375

Commitments and contingencies
 
 
 
Common stock ($0.01 par value, 20,000,000 authorized; 12,847,716 issued and
outstanding as of March 31, 2015, and 12,825,468 issued and 12,821,768
outstanding as of December 31, 2014)
128

 
128

Additional paid-in capital
120,900

 
120,538

Retained earnings
86,112

 
87,777

Treasury shares (at cost, none as of March 31, 2015, and 3,700 as of
December 31, 2014)
—

 
(46
)
Accumulated other comprehensive loss
(37,747
)
 
(38,801
)
Total shareholders’ equity
169,393

 
169,596

Total liabilities and shareholders’ equity
$
313,100

 
$
311,320



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Hardinge Reports First Quarter 2015 Results
May 7, 2015
Page 7 of 7


HARDINGE INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
 
Three Months Ended 
 March 31,
 
2015
 
2014
 
(Unaudited)
Operating activities
 

 
 

Net loss
$
(1,408
)
 
$
(453
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 

 
 

Depreciation and amortization
2,338

 
2,531

Debt issuance costs amortization
10

 
14

Deferred income taxes
(64
)
 
205

Loss (gain) on sale of assets
8

 
(42
)
Gain on sale of business
—

 
(218
)
Unrealized foreign currency transaction loss (gain)
1,309

 
(325
)
Changes in operating assets and liabilities:
 

 
 

Accounts receivable
6,640

 
5,468

Inventories
(4,821
)
 
1,705

Other assets
(2,605
)
 
(1,389
)
Accounts payable
2,083

 
(1,540
)
Customer deposits
3,378

 
(1,683
)
Accrued expenses
(3,021
)
 
(5,453
)
Accrued pension and postretirement liabilities
(34
)
 
(22
)
Net cash provided by (used in) operating activities
3,813

 
(1,202
)
 
 
 
 
Investing activities
 

 
 

Capital expenditures
(699
)
 
(325
)
Proceeds from sales of assets
—

 
48

Net cash used in investing activities
(699
)
 
(277
)
 
 
 
 
Financing activities
 

 
 

Proceeds from short-term notes payable to bank
10,212

 
4,455

Repayments of short-term notes payable to bank
(10,088
)
 
(4,455
)
Repayments of long-term debt
(1,458
)
 
(5,792
)
Dividends paid
(255
)
 
(249
)
Net proceeds from sales of common stock
—

 
5,202

Net cash used in financing activities
(1,589
)
 
(839
)
 
 
 
 
Effect of exchange rate changes on cash
482

 
94

Net increase (decrease) in cash
2,007

 
(2,224
)
 
 
 
 
Cash and cash equivalents at beginning of period
16,293

 
34,722

 
 
 
 
Cash and cash equivalents at end of period
$
18,300

 
$
32,498


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