Hardinge Inc. Announces Third Quarter 2010 Results

ELMIRA, N.Y., Nov. 4, 2010 /PRNewswire-FirstCall/ -- 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."

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

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.

"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.

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.

SOURCE Hardinge Inc.