EX-99.1 2 a10-20647_1ex99d1.htm EX-99.1

EXHIBIT 99.1

 

Hardinge Inc.

Contact:

One Hardinge Drive

Edward Gaio

Elmira, N.Y.  14902

Vice President and CFO

 

(607) 378-4207

 

Hardinge Inc. Announces Third Quarter 2010 Results

 

ELMIRA, N.Y. — November 4, 2010 — Hardinge Inc. (NASDAQ: HDNG), a leading international provider of advanced metal-cutting solutions, today announced results for its third quarter and nine months ended September 30, 2010.

 

Performance Summary:

 

·                  Third quarter orders were $70.6 million, a 51% increase compared to third quarter 2009

·                  Third quarter sales were $71.9 million, a 44% increase compared to third quarter 2009

 

Hardinge had a net loss of ($1.2) million, or ($0.11) per basic and diluted share, for the third quarter, down from a net loss of ($14.7) million, or ($1.29) per basic and diluted share, for the same period of 2009. Year to date, the Company had a net loss of ($7.2) million, also down from a net loss of ($25.0) million for the same period in 2009. Third quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) was $1.7 million up from a loss of ($12.3) million for the same period of 2009. On a year to date basis EBITDA was a loss of ($0.7) million compared to a loss of ($16.7) million for the same period of 2009.

 

“Worldwide demand for machine tools continued to improve during the third quarter as reflected in the Company’s strong double-digit increases in orders for all major markets compared to 2009,” said Richard L. Simons, President and Chief Executive Officer.  “For a second consecutive quarter we realized positive EBITDA, and our net loss was ($1.2) million despite the inclusion of $1.5 million in professional services costs related to an unsuccessful and unsolicited tender offer, as well as a $0.6 million charge associated with settlement of a tax audit in a foreign subsidiary. Asia and Other order and sales activity remains particularly robust reflecting a number of larger orders received from leading consumer electronics and technology companies. Order activity for North America showed continuing signs of improvement consistent with industry wide trends. European orders were the highest we’ve experienced since the third quarter of 2008, however this activity remains well below peak European order levels in 2008.”

 

-MORE-

 


 

The following tables summarize orders and sales by geographic region for the quarter and nine months ended September 30, 2010 and 2009:

 

 

 

Quarter Ended

 

 

 

 

 

Quarter Ended

 

 

 

Orders from

 

September 30,

 

%

 

Sales to

 

September 30,

 

%

 

Customers in:

 

2010

 

2009

 

Change

 

Customers in:

 

2010

 

2009

 

Change

 

North America

 

$

 15,462

 

$

 11,433

 

35

%

North America

 

$

   12,877

 

$

  15,704

 

(18

)%

Europe

 

22,366

 

12,891

 

74

%

Europe

 

18,230

 

18,581

 

(2

)%

Asia & Other

 

32,735

 

22,414

 

46

%

Asia & Other

 

40,824

 

15,779

 

159

%

 

 

$

 70,563

 

$

 46,738

 

51

%

 

 

$

   71,931

 

$

  50,064

 

44

%

 

 

 

Nine Months Ended

 

 

 

 

 

Nine Months Ended

 

 

 

Orders from

 

September 30,

 

%

 

Sales to

 

September 30,

 

%

 

Customers in:

 

2010

 

2009

 

Change

 

Customers in:

 

2010

 

2009

 

Change

 

North America

 

$

  48,052

 

$

  34,979

 

37

%

North America

 

$

   43,124

 

$

  46,373

 

(7

)%

Europe

 

58,591

 

38,238

 

53

%

Europe

 

44,161

 

66,647

 

(34

)%

Asia & Other

 

107,071

 

50,894

 

110

%

Asia & Other

 

87,714

 

44,420

 

97

%

 

 

$

213,714

 

$

124,111

 

72

%

 

 

$

 174,999

 

$

 157,440

 

11

%

 

2010 third quarter orders and sales included $4.1 million and $13.5 million from a China-based supplier to the consumer electronics industry.  Year to date, orders and sales to this customer were $29.1 million and $20.6 million, respectively.

 

Asia and Other orders increased compared to third quarter 2009 due to several multi-machine orders from consumer electronics, technology and automotive companies in China, including the previously mentioned large order from a China-based consumer electronics company. Sales in Europe were driven by strong activity in the automotive industry. North American order activity increased over the prior year reflecting improved product demand consistent with industry trends.  The Company also believes that the successful transition to its new distribution partners continues to positively affect North America.

 

The year to date increase in total orders is reflective of improved conditions across all of the Company’s major markets. Product demand was particularly robust in the Company’s Asia and Other market reflecting significant orders from a range of industries including consumer electronics, technology and automotive.

 

The increase in third quarter sales was driven primarily by strong demand in Asia and Other from a variety of industries as well as the previously mentioned large sale to a China-based consumer electronics company.

 

Year to date sales increased on the strength of Asia and Other product demand. Through the first three quarters of 2010, Asia and Other sales were 50% of total sales, while North America and Europe were both 25% of the total.

 

-MORE-

 


 

“We continue to respond to global machine tool opportunities wherever they appear, as evidenced by our changing geographic sales distribution from third quarter 2009 until now,” said Mr. Simons. “Our $40.8 million in Asia and Other sales for the third quarter was up 47% from the second quarter, which in turn was up 44% over the first quarter and reflected the growing strength of the manufacturing sector in the Far East. We remain solidly positioned to compete for business in the region, along with business in North America and Europe as global machine tool demand continues to recover.”

 

Gross profit for the quarter was $17.9 million compared to $3.7 million for the prior year quarter, an increase of $14.2 million or 378%. Gross margin for the quarter was 24.9% of net sales, up from 7.5% for the prior year third quarter.  2009 gross profit was negatively impacted by $6.1 million in inventory write downs.  Excluding the 2009 inventory write downs, the improvement in gross margin was driven by the significant increase in volume, along with the benefits of the Company’s 2008 and 2009 cost reduction initiatives.

 

Selling, general and administrative (“SG&A”) expenses were $18.7 million or 26.0% of net sales for the third quarter, compared to $17.9 million, or 35.7% of net sales for the prior year quarter. 2010 SG&A included one-time expenses of $1.5 million for professional services related to an unsolicited tender offer and $0.6 million associated with settlement of a tax audit in a foreign subsidiary.  2009 SG&A included one-time expenses of $2.6 million primarily related to restructuring activities in North America and Europe.  Excluding these items third quarter 2010 SG&A would have been $16.6 million compared to $15.3 million for the prior year quarter. The increase is attributed to our Jones & Shipman acquisition and increased commission expense on higher sales levels.

 

In September 2010, the Company recognized a gain of $0.8 million related to the previously announced sale of excess machinery and equipment at the Company’s Elmira, New York manufacturing facility.

 

Dividend Declared

 

The Company’s Board of Directors declared a cash dividend of $0.005 per share on the Company’s common stock, payable on December 10, 2010 to stockholders of record as of December 1, 2010.

 

Conference Call

 

The Company will host a conference call at 11:00 a.m. Eastern Time today to discuss the results for the quarter.  The call can be accessed live at 1-877-551-8082 (904-520-5770 for calls originating outside the U.S and Canada) or via the internet at http://www.videonewswire.com/event.asp?id=73306.  A recording of the call will be available approximately one hour after its conclusion at 888-284-7564 (904-596-3174 outside the U.S. & Canada) using the reference number: 2551581.  This telephone recording will be available through December 31, 2010. A transcript of the call will be available from the “Investor Relations” section of the Company’s website, www.hardinge.com, for one year.

 

-MORE-

 


 

Hardinge is a global designer, manufacturer and distributor of machine tools, specializing in SUPER PRECISION™ and precision CNC Lathes, high performance Machining Centers, high-end cylindrical and jig Grinding Machines, and technologically advanced Workholding & Rotary Products. The Company’s products are distributed to most of the industrialized markets around the world with approximately 70% of the 2009 sales outside of North America. Hardinge has a very diverse international customer base and serves a wide variety of end-user markets. This customer base includes metalworking manufacturers which make parts for a variety of industries, as well as a wide range of end users in the aerospace, agricultural, transportation, basic consumer goods, communications and electronics, construction, defense, energy, pharmaceutical and medical equipment, and recreation industries, among others. The Company has manufacturing operations in the Switzerland, Taiwan, United States, China and United Kingdom. Hardinge’s common stock trades on the NASDAQ Global Select Market under the symbol, “HDNG.” For more information, please visit http://www.hardinge.com.

 

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 —

 


 

HARDINGE INC. AND SUBSIDIARIES

 

Consolidated Balance Sheets

(In Thousands Except Share and Per Share Data)

 

 

 

September 30,

 

December 31,

 

 

 

2010

 

2009

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

   22,407

 

$

   24,632

 

Accounts receivable, net

 

52,116

 

39,936

 

Notes receivable, net

 

1,015

 

2,364

 

Inventories, net

 

114,175

 

97,266

 

Deferred income taxes

 

531

 

732

 

Prepaid expenses

 

12,441

 

9,375

 

Total current assets

 

202,685

 

174,305

 

Property, plant and equipment

 

152,453

 

144,635

 

Less accumulated depreciation

 

98,131

 

89,924

 

Net property, plant and equipment

 

54,322

 

54,711

 

Notes receivable, net

 

14

 

157

 

Deferred income taxes

 

863

 

446

 

Intangible assets

 

10,605

 

10,527

 

Pension assets

 

2,809

 

2,032

 

Other long-term assets

 

43

 

26

 

Total non-current assets

 

14,334

 

13,188

 

Total assets

 

$

  271,341

 

$

  242,204

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

Accounts payable

 

$

   35,124

 

$

    16,285

 

Notes payable to bank

 

5,351

 

1,364

 

Accrued expenses

 

22,641

 

17,777

 

Customer deposits

 

10,491

 

4,400

 

Accrued income taxes

 

1,273

 

1,535

 

Deferred income taxes

 

3,084

 

2,832

 

Current portion of long-term debt

 

577

 

563

 

Total current liabilities

 

78,541

 

44,756

 

Long-term debt

 

2,740

 

3,095

 

Accrued pension expense

 

21,315

 

22,082

 

Accrued postretirement benefits

 

2,308

 

2,472

 

Accrued income taxes

 

1,885

 

2,377

 

Deferred income taxes

 

4,151

 

4,030

 

Other liabilities

 

1,734

 

1,862

 

Total other liabilities

 

34,133

 

35,918

 

 

 

 

 

 

 

Common Stock  - $0.01 par value

 

125

 

125

 

Additional paid-in capital

 

114,036

 

114,387

 

Retained earnings

 

51,771

 

59,103

 

Treasury shares –  865,703 shares at September  30, 2010 and 939,240 shares at December 31, 2009

 

(11,022

)

(11,978

)

Accumulated other comprehensive income (loss)

 

3,757

 

(107

)

Total shareholders’ equity

 

158,667

 

161,530

 

Total liabilities and shareholders’ equity

 

$

271,341

 

$

242,204

 

 


 

HARDINGE INC. AND SUBSIDIARIES

 

Consolidated Statements of Operations

(In Thousands Except Per Share Data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

71,931

 

$

50,064

 

$

174,999

 

$

157,440

 

Cost of sales

 

53,994

 

46,315

 

133,451

 

126,694

 

Gross profit

 

17,937

 

3,749

 

41,548

 

30,746

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

18,717

 

17,856

 

49,156

 

53,148

 

Other expense (income)

 

(741

)

304

 

(1,612

)

752

 

(Loss) from operations

 

(39

)

(14,411

)

(5,996

)

(23,154

)

 

 

 

 

 

 

 

 

 

 

Interest expense

 

103

 

232

 

334

 

1,705

 

Interest income

 

(18

)

(41

)

(87

)

(95

)

(Loss) before income taxes

 

(124

)

(14,602

)

(6,243

)

(24,764

)

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

1,074

 

90

 

915

 

261

 

Net (loss)

 

$

(1,198

)

$

(14,692

)

$

(7,158

)

$

(25,025

)

 

 

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share:

 

$

(0.11

)

$

(1.29

)

$

(0.63

)

$

(2.20

)

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per share:

 

$

(0.11

)

$

(1.29

)

$

(0.63

)

$

(2.20

)

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

0.005

 

$

0.005

 

$

0.015

 

$

0.02

 

 


 

HARDINGE INC. AND SUBSIDIARIES

 

Consolidated Statements of Cash Flows

(In Thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2010

 

2009

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

Net (loss)

 

$

(7,158

)

$

(25,025

)

Adjustments to reconcile net (loss) to net cash provided by operating activities:

 

 

 

 

 

Non-cash inventory writedown

 

—

 

7,591

 

Impairment charge (recovery)

 

(25

)

—

 

Depreciation and amortization

 

5,330

 

6,471

 

Provision for deferred income taxes

 

856

 

(468

)

(Gain) loss on sale of assets

 

(960

)

105

 

(Gain) on purchase of Jones & Shipman

 

(647

)

—

 

Debt issuance amortization

 

234

 

1,243

 

Unrealized intercompany foreign currency transaction loss (gain)

 

94

 

(215

)

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(8,728

)

24,937

 

Notes receivable

 

1,513

 

229

 

Inventories

 

(11,049

)

24,669

 

Prepaids/other assets

 

(3,182

)

1,015

 

Accounts payable

 

15,395

 

(4,628

)

Accrued expenses/other liabilities

 

6,553

 

(10,316

)

Accrued postretirement benefits

 

(441

)

(154

)

Net cash (used in) provided by operating activities

 

(2,215

)

25,454

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Capital expenditures

 

(2,154

)

(2,254

)

Proceeds from sale of assets

 

1,469

 

21

 

Purchase of Jones & Shipman

 

(2,949

)

—

 

Net cash (used in) investing activities

 

(3,634

)

(2,233

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Increase in short-term notes payable to bank

 

3,867

 

8,354

 

(Decrease) in long-term debt

 

(423

)

(24,406

)

Dividends paid

 

(174

)

(231

)

Debt issuance fees paid

 

(97

)

(706

)

Net cash provided by (used in) financing activities

 

3,173

 

(16,989

)

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

451

 

693

 

Net (decrease) increase in cash

 

(2,225

)

6,925

 

 

 

 

 

 

 

Cash at beginning of period

 

24,632

 

18,430

 

 

 

 

 

 

 

Cash at end of period

 

$

22,407

 

$

25,355

 

 


 

HARDINGE INC. AND SUBSIDIARIES

 

Reconciliation of Net (Loss) Income to EBITDA

(In Thousands)

 

The following table provides a reconciliation of the Company’s reported net (loss) income to EBITDA for the three and nine months ended September 30, 2010 and 2009, respectively:

 

 

 

Three months ended

 

 

 

Nine months ended

 

 

 

 

 

September 30,

 

 

 

September 30,

 

 

 

 

 

2010

 

2009

 

$ Change

 

2010

 

2009

 

$ Change

 

 

 

(dollars in thousands)

 

GAAP Net Income (Loss)

 

$

(1,198

)

$

(14,692

)

$

13,494

 

$

(7,158

)

$

(25,025

)

$

17,867

 

Plus:

 Interest expense net of interest income

 

85

 

191

 

(106

)

247

 

1,610

 

(1,363

)

 

Taxes

 

1,074

 

90

 

984

 

915

 

261

 

654

 

 

Depreciation and amortization

 

1,737

 

2,076

 

(339

)

5,330

 

6,471

 

(1,141

)

EBITDA (1)

 

$

1,698

 

$

(12,335

)

$

14,033

 

$

(666

)

$

(16,683

)

$

16,017

 

 

(1)          EBITDA, a non-GAAP financial measure, is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business.