Hardinge Reports Second Quarter 2011 Net Income of $3.1 Million

Board Increases Cash Dividend

Aug 04, 2011, 09:00 ET from Hardinge Inc.

ELMIRA, N.Y., Aug. 4, 2011 /PRNewswire/ -- Hardinge Inc. (NASDAQ: HDNG), a leading international provider of advanced metal-cutting solutions, today announced increased net income, sales and orders for the Company's second quarter ended June 30, 2011.

Second Quarter 2011 Highlights:

  • Orders were $108.1 million, a 26% increase compared to the prior year
  • Sales were $86.7 million, a 45% increase compared to the prior year
  • Net income was $3.1 million, or $0.27 per diluted share, compared with a net loss of $0.8 million, or ($0.07) per diluted share for the same period of 2010
  • Dividend of $0.02 declared, up from $0.005

"Second quarter order and sales activity remained robust, consistent with the strengthening activity we're seeing across much of the globe," said Richard L. Simons, President and Chief Executive Officer. "The Company's six month EBITDA of $10.5 million reflected the benefits of our comprehensive repositioning in 2009 which provided permanent cost reductions, along with more efficient coordination and utilization of our worldwide resources. As expected, we are now leveraging our lower cost structure to provide improved results as global demand for machine tools returns."

"From all perspectives, our second quarter performance was very strong, and we are pleased by order and sales trends, improved margins, and focused expense management, all of which are contributing to improved profitability. We are gratified by our continued ability to leverage the Company's global manufacturing and sales platform to effectively compete for new orders regardless of the point of origin. We remain confident that we'll have a strong performance for the remainder of 2011," said Mr. Simons.

The following tables summarize orders and sales by geographic region for the quarters and six months ended June 30, 2011 and 2010:

Quarter Ended

Quarter Ended

June 30,

(in thousands)

June 30,

(in thousands)

Orders from

 Customers in:

2011

2010

%

Change

 Sales to

  Customers in:

2011

2010

%

Change

North America

$  29,403

$ 19,770

49%

North America

$ 18,529

$   18,698

(1)%

Europe

34,338

17,798

93%

Europe

25,267

13,512

87%

Asia & Other

44,404

48,096

(8)%

Asia & Other

42,860

27,689

55%

$108,145

$ 85,664

26%

$86,656

$   59,899

45%

Six Months Ended

Six Months Ended

June 30,

(in thousands)

June 30,

(in thousands)

Orders from

 Customers in:

2011

2010

%

Change

 Sales to

  Customers in:

2011

2010

%

Change

North America

$  52,621

$  32,591

61%

North America

$  35,743

$   30,247

18%

Europe

63,755

36,225

76%

Europe

45,082

25,930

74%

Asia & Other

105,527

74,335

42%

Asia & Other

79,313

46,891

69%

$221,903

$143,151

55%

$160,138

$ 103,068

55%

The strong growth in our North America order activity reflected industry demand trends, along with the growing effectiveness of our new distribution partners with whom we've been working for just over a year.  European order activity for the first half of 2011 increased by 76% over the prior year, and our second quarter orders were the highest level since third quarter 2008. The growth rate for Asia and Other orders for the first half of 2011, slowed in comparison to prior periods, and second quarter orders were down 8%, reflecting the absence of any orders from the Chinese consumer electronics industry supplier which has contributed significantly to our orders in prior quarters.  Absent these large orders from a single customer, Asia and Other orders for the second quarter and six months were up 82% and 94%, respectively.  

"We remain pleased with the growing pace of demand for machine tools, which is occurring despite the uneven appearance of the economic recovery," Mr. Simons said. "Some of the current strength of our product demand appears to be coming from customers who are anticipating inflationary pressure on pricing, along with customers looking to avoid the possibility of longer lead times for delivery."

The Company's second quarter 2011 gross profit was $23.3 million, an increase of $8.6 million, or 58.8%, compared to the prior year second quarter. Gross margin for the quarter was 26.9%, up from 24.5% for the same period in 2010.  The improvement in the Company's second quarter 2011 gross margin was driven by our product mix along with the continued favorable impact of volume against fixed expenses, cost management initiatives and lower competitive price discounting compared with 2010.

Selling, general and administrative expenses were $19.0 million, or 21.9% of net sales, for second quarter 2011 compared to $16.0 million, or 26.8% of net sales, for the prior year second quarter.  The improvement in SG&A as a percent of net sales is reflective of increasing sales volume as well as the favorable impact of the Company's comprehensive restructuring program and the corresponding reduction in fixed expenses.

For the six months ended June 30, 2011, Hardinge generated net income of $4.5 million, or $0.39 per share, compared with a net loss of $6.0 million, or ($0.52) per share for 2010.

Dividend Declared

The Company's Board of Directors declared a cash dividend of $0.02 per share on the Company's common stock, payable on September 9, 2011 to stockholders of record as of August 31, 2011.

Non-GAAP Measures

This release contains the non-GAAP measure EBITDA (Earnings Before Interest Tax Depreciation and Amortization).  Refer to the accompanying schedules for a discussion of this non-GAAP measure and reconciliation to the reported GAAP measure.

Conference Call

The Company will host a conference call today at 11:00 a.m. Eastern Time to discuss the results for the quarter.  The call can be accessed live at 1-866-411-4706 (904-271-2008 for calls originating outside the U.S. and Canada) or via the internet at http://www.videonewswire.com/event.asp?id=80880.  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: 2670151.  This telephone recording will be available through September 30, 2011.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 77% of the 2010 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 Switzerland, Taiwan, the United States, China and the 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)

June 30,

December 31,

2011

2010

(Unaudited)

Assets

    Cash and cash equivalents

$    18,701

$   30,945

    Restricted cash

5,515

5,225

    Accounts receivable, net

58,580

45,819

    Notes receivable, net

4,329

1,753

    Inventories, net

123,176

105,306

    Deferred income taxes

1,505

1,364

    Prepaid expenses

13,854

11,518

Total current assets

225,660

201,930

    Property, plant and equipment, net

65,319

56,628

    Deferred income taxes

750

451

    Intangible assets, net

13,417

13,642

    Pension assets

2,518

2,111

    Other long-term assets

62

85

Total non-current assets

82,066

72,917

Total assets

$   307,726

$  274,847

Liabilities and shareholders' equity

    Accounts payable

$     38,698

$    33,533

    Notes payable to bank

7,692

1,650

    Accrued expenses

25,343

22,791

    Customer deposits

17,086

10,468

    Accrued income taxes

3,150

3,656

    Deferred income taxes

3,161

2,546

    Current portion of long-term debt

623

617

Total current liabilities

95,753

75,261

    Long-term debt

2,490

2,777

    Accrued pension liability

28,161

29,949

    Accrued postretirement liability

2,164

2,274

    Accrued income taxes

2,228

2,106

    Deferred income taxes

2,705

2,516

    Other liabilities

2,069

2,062

Total non-current liabilities

39,817

41,684

    Common Stock  - $0.01 par value, 12,472,992 issued

125

125

    Additional paid-in capital

113,874

114,183

    Retained earnings

58,015

53,637

    Treasury shares –  812,480 shares at June 30, 2011

           and 865,703 shares at December 31, 2010

(10,372)

(11,022)

    Accumulated other comprehensive income

10,514

979

Total shareholders' equity

172,156

157,902

Total liabilities and shareholders' equity

$     307,726

$  274,847

HARDINGE INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In Thousands Except Per Share Data)

Three Months Ended

June 30,

Six Months Ended

June 30,

2011

2010

2011

2010

(Unaudited)

(Unaudited)

Net sales  

$   86,656

$   59,899

$ 160,138

$  103,068

Cost of sales

63,353

45,228

117,759

79,458

Gross profit

23,303

14,671

42,379

23,610

Selling, general and administrative expenses

18,993

16,041

35,666

30,439

Loss (gain) on sale of assets

7

44

(18)

(228)

Other (income) expense

(72)

(713)

105

(643)

Income (loss) from operations

4,375

(701)

6,626

(5,958)

Interest expense

93

121

171

231

Interest income

(48)

(35)

(87)

(70)

Income (loss) before income taxes

4,330

(787)

6,542

(6,119)

Income tax expense (benefit)

1,217

(13)

2,048

(159)

Net income (loss)

$     3,113

$     (774)

$    4,494

$   (5,960)

Per share data:

Basic earnings (loss) per share:

$       0.27

$    (0.07)

$     0.39

$     (0.52)

Diluted earnings (loss) per share:

$       0.27

$    (0.07)

$     0.39

$     (0.52)

Cash dividends declared per share:

$     0.005

$     0.005

$     0.01

$        0.01

HARDINGE INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In Thousands)

Six Months Ended

June 30,

2011

2010

(Unaudited)

Operating activities

Net income (loss)

$         4,494

$        (5,960)

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

   Depreciation and amortization

3,896

3,609

   Debt issuance amortization

52

165

   Provision for deferred income taxes

(1,272)

515

   (Gain) on sale of assets

(18)

(228)

   Gain on purchase of Jones & Shipman

-

(626)

   Unrealized intercompany foreign currency transaction loss

399

9

   Changes in operating assets and liabilities:

         Accounts receivable

(11,210)

3,088

         Notes receivable

(2,467)

(497)

         Inventories

(12,237)

(11,469)

         Prepaids and other assets

(2,571)

(2,503)

         Accounts payable

4,357

13,900

         Customer deposits

6,008

3,842

         Accrued expenses

317

(1,384)

         Accrued postretirement benefits

(287)

(296)

Net cash (used in) provided by operating activities

(10,539)

2,165

Investing activities

Capital expenditures

(9,002)

(1,077)

Proceeds from sale of assets

864

282

Purchase of Jones & Shipman

-

(2,903)

Net cash (used in) investing activities

(8,138)

(3,698)

Financing activities

Proceeds from short-term notes payable to bank

5,992

2,113

Decrease in long-term debt

(309)

(282)

Proceeds from (repurchase of) equity, net

72

-

Debt issuance fees paid

(25)

(100)

Dividends paid

(116)

(116)

Net cash provided by financing activities

5,614

1,615

Effect of exchange rate changes on cash

819

(466)

Net (decrease) increase in cash

(12,244)

(384)

Cash at beginning of period

30,945

20,419

Cash at end of period

$         18,701

$        20,035

Reconciliation of Net Income to EBITDA

Three months ended

Six months ended

June 30,

June 30,

2011

2010

$ Change

2011

2010

$ Change

(in thousands)

GAAP net income (loss)

$   3,113

$   (774)

$  3,887

$  4,494

$  (5,960)

$   10,454

Plus: Interest expense, net          

45

86

(41)

84

161

(77)

        Income tax expense (benefit)

1,217

(13)

1,230

2,048

(159)

2,207

        Depreciation and amortization

1,980

1,804

176

3,896

3,609

287

EBITDA (1)

$  6,355

$  1,103

$  5,252

$ 10,522

$  (2,349)

$   12,871

  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.

Contact: Edward Gaio Vice President and CFO (607) 378-4207

SOURCE Hardinge Inc.



RELATED LINKS

http://www.hardinge.com