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 Fourth Quarter
Net Income of $1.9 Million
ELMIRA, N.Y. — February 17, 2011 — Hardinge Inc. (NASDAQ: HDNG), a leading international provider of advanced metal-cutting solutions, today announced results for its fourth quarter ended December 31, 2010.
Performance Summary:
· Sales were $82.0 million for the quarter, a 45% increase compared to the prior year
· Orders were $83.0 million for the quarter, a 63% increase compared to the prior year
· Cash flow from operations was $17.1 million in the fourth quarter 2010
The Company reported net income of $1.9 million, or $0.17 per basic and diluted share for the fourth quarter, compared with a net loss of ($8.3) million, or ($0.73) per basic and diluted share for the same period of 2009. EBITDA was $4.9 million for fourth quarter 2010, improved from a loss of ($4.4) million in the fourth quarter 2009.
“Significant order growth continued into the fourth quarter with gains in all three of our major market areas illustrating our ability to participate in the continuing rebound in global manufacturing,” said Richard L. Simons, President and Chief Executive Officer. “European order activity was particularly robust with the strongest level of new bookings since the third quarter 2008, while product demand in China remained strong. The combination of improving sales activity and our actions to reduce operating costs enabled the Company to achieve net income for the quarter.”
“We are encouraged by the upward trend for global machine tool demand in 2010 and expect those trends to continue in the coming year across all of our key markets,” said Mr. Simons. “We expect first quarter 2011 sales to be significantly stronger than the same quarter of last year, while somewhat lower than the fourth quarter of 2010 reflecting the impact of the Chinese New Year on Asian manufacturing, as well as long build times for some of the orders received.”
“We are convinced that the steps we took over the past several years to restructure our operations and reduce fixed costs will enable us to continue to compete effectively in the global marketplace. Based upon the growth of our order rate, increased backlog and the more positive market outlook, we are confident that 2011 will be a profitable year for Hardinge, a much improved outlook from a year ago at this time,” Mr. Simons said.
-MORE-
The following tables summarize orders and sales by geographic region for the quarter and year ended December 31, 2010 and 2009:
| | Quarter Ended | | | | | | Quarter Ended | | | |
Orders from | | December 31, | | % | | Sales to | | December 31, | | % | |
Customers in: | | 2010 | | 2009 | | Change | | Customers in: | | 2010 | | 2009 | | Change | |
North America | | $ | 19,161 | | $ | 17,568 | | 9 | % | North America | | $ | 15,314 | | $ | 17,954 | | (15 | )% |
Europe | | 32,027 | | 12,016 | | 167 | % | Europe | | 30,289 | | 20,657 | | 47 | % |
Asia & Other | | 31,800 | | 21,344 | | 49 | % | Asia & Other | | 36,405 | | 18,020 | | 102 | % |
| | $ | 82,988 | | $ | 50,928 | | 63 | % | | | $ | 82,008 | | $ | 56,631 | | 45 | % |
| | Year Ended | | | | | | Year Ended | | | |
Orders from | | December 31, | | % | | Sales to | | December 31, | | % | |
Customers in: | | 2010 | | 2009 | | Change | | Customers in: | | 2010 | | 2009 | | Change | |
North America | | $ | 67,213 | | $ | 52,547 | | 28 | % | North America | | $ | 58,438 | | $ | 64,327 | | (9 | )% |
Europe | | 90,618 | | 50,254 | | 80 | % | Europe | | 74,449 | | 87,304 | | (15 | )% |
Asia & Other | | 138,871 | | 72,238 | | 92 | % | Asia & Other | | 124,120 | | 62,440 | | 99 | % |
| | $ | 296,702 | | $ | 175,039 | | 70 | % | | | $ | 257,007 | | $ | 214,071 | | 20 | % |
Customer orders in the fourth quarter of 2010 increased by $32.1 million over the same quarter of the prior year reflecting growing demand across all of our geographic markets. Demand was particularly strong in Europe and Asia with significant orders from a range of industries including consumer electronics, computer and automotive.
Orders during the fourth quarter included $6.7 million from a supplier to the consumer electronics industry in China. This customer has been a significant source of new business for the Company in 2010 with orders totaling $35.8 million.
Fourth quarter 2010 sales growth, like orders, was driven by strong demand in Europe and Asia from a variety of industries, including consumer electronics, computer and automotive. Sales for the fourth quarter 2010 and full year included $7.0 million and $27.6 million, respectively, to the supplier to the consumer electronics industry in China.
Fourth quarter 2010 gross profit was $19.7 million, an increase of $9.7 million, or 96% compared to the prior year fourth quarter. Gross margin for the quarter was 24.1% compared to 17.7% for the same period in 2009.The improvement in the Company’s fourth quarter 2010 gross margin was driven by the significant increase in volume, cost management and heavier price discounting in 2009.
-MORE-
Selling, general and administrative (“SG&A”) expenses were $16.5 million or 20.1% of net sales for the fourth quarter 2010 compared to $14.9 million, or 26.2% of net sales for the prior year quarter. The improvement in SG&A as a percentage of net sales is the direct result of our cost control efforts. The $1.6 million increase in SG&A is primarily related to the Jones & Shipman acquisition and increased variable selling expenses on the higher sales volume.
During the fourth quarter of 2009, the Company recorded a one-time impairment charge of $1.7 million associated with certain machinery and equipment at its Elmira, NY facility.
The Company’s balance sheet remained strong at December 31, 2010, with cash of $30.9 million, and cash net of current debt of $28.7 million up from $18.5 million at December 31, 2009.
For the year ended December 31, 2010, the Company had a net loss of ($5.2) million, or ($0.46) per basic and diluted share, compared with a net loss of ($33.3) million, or ($2.93) per basic and diluted share for 2009. EBITDA for the full year 2010 was $4.3 million, improved from a loss of ($21.1) million for 2009.
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 March 10, 2011 to stockholders of record as of March 1, 2011.
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=75947. 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: 2596911. This telephone recording will be available through March 31, 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.
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.
-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 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 Compan y 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 certa in 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
| | December 31, | | December 31, | |
| | 2010 | | 2009 | |
| | (In Thousands Except Share and
Per Share Data) | |
Assets | | | | | |
Cash and cash equivalents | | $ | 30,945 | | $ | 20,419 | |
Restricted cash | | 5,225 | | 4,213 | |
Accounts receivable, net | | 45,819 | | 39,936 | |
Notes receivable, net | | 1,753 | | 2,364 | |
Inventories, net | | 105,306 | | 97,266 | |
Deferred income taxes | | 1,364 | | 732 | |
Prepaid expenses | | 11,518 | | 9,375 | |
Total current assets | | 201,930 | | 174,305 | |
| | | | | |
Property, plant and equipment | | 156,709 | | 144,635 | |
Less accumulated depreciation | | 100,081 | | 89,924 | |
Net property, plant and equipment | | 56,628 | | 54,711 | |
| | | | | |
Notes receivable, net | | 35 | | 157 | |
Deferred income taxes | | 451 | | 446 | |
Intangible assets | | 13,642 | | 10,527 | |
Pension assets | | 2,111 | | 2,032 | |
Other long-term assets | | 50 | | 26 | |
Total non-current assets | | 16,289 | | 13,188 | |
| | | | | |
Total assets | | $ | 274,847 | | $ | 242,204 | |
| | | | | |
Liabilities and shareholders’ equity | | | | | |
Accounts payable | | $ | 33,533 | | $ | 16,285 | |
Notes payable to bank | | 1,650 | | 1,364 | |
Accrued expenses | | 23,934 | | 17,777 | |
Customer deposits | | 10,468 | | 4,400 | |
Accrued income taxes | | 3,656 | | 1,535 | |
Deferred income taxes | | 2,546 | | 2,832 | |
Current portion of long-term debt | | 617 | | 563 | |
Total current liabilities | | 76,404 | | 44,756 | |
| | | | | |
Long-term debt | | 2,777 | | 3,095 | |
Accrued pension liability | | 29,125 | | 22,082 | |
Accrued postretirement benefits | | 2,274 | | 2,472 | |
Accrued income taxes | | 2,106 | | 2,377 | |
Deferred income taxes | | 2,516 | | 4,030 | |
Other liabilities | | 1,743 | | 1,862 | |
Total non-current liabilities | | 40,541 | | 35,918 | |
Common Stock - $0.01 par value | | | | | |
Issued shares -12,472,992 at December 31, 2010 and 2009 | | 125 | | 125 | |
Additional paid-in capital | | 114,183 | | 114,387 | |
Retained earnings | | 53,637 | | 59,103 | |
Treasury shares — 865,703 shares at December 31, 2010 and 939,240 shares at December 31, 2009 | | (11,022 | ) | (11,978 | ) |
Accumulated other comprehensive income (loss) | | 979 | | (107 | ) |
Total shareholders’ equity | | 157,902 | | 161,530 | |
| | | | | |
Total liabilities and shareholders’ equity | | $ | 274,847 | | $ | 242,204 | |
HARDINGE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
| | Quarter Ended | | Year Ended | |
| | December 31, | | December 31, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
Net sales | | $ | 82,008 | | $ | 56,631 | | $ | 257,007 | | $ | 214,071 | |
Cost of sales | | 62,266 | | 46,581 | | 195,717 | | 173,275 | |
Gross profit | | 19,742 | | 10,050 | | 61,290 | | 40,796 | |
| | | | | | | | | |
Selling, general and administrative expenses | | 16,494 | | 14,852 | | 65,650 | | 68,000 | |
(Gain) loss on sale of assets | | (85 | ) | 135 | | (1,045 | ) | 240 | |
Other expense (income) | | 67 | | (91 | ) | (560 | ) | 556 | |
Impairment charge | | — | | 1,650 | | (25 | ) | 1,650 | |
Income (loss) from operations | | 3,266 | | (6,496 | ) | (2,730 | ) | (29,650 | ) |
| | | | | | | | | |
Interest expense | | 92 | | 221 | | 426 | | 1,926 | |
Interest (income) | | (3 | ) | (19 | ) | (90 | ) | (114 | ) |
Income (loss) before income taxes | | 3,177 | | (6,698 | ) | (3,066 | ) | (31,462 | ) |
| | | | | | | | | |
Income taxes | | 1,253 | | 1,586 | | 2,168 | | 1,847 | |
Net income (loss) | | $ | 1,924 | | $ | (8,284 | ) | $ | (5,234 | ) | $ | (33,309 | ) |
| | | | | | | | | |
Per share data: | | | | | | | | | |
| | | | | | | | | |
Basic earnings (loss) per share: | | $ | 0.17 | | $ | (0.73 | ) | $ | (0.46 | ) | $ | (2.93 | ) |
Weighted average number of common shares outstanding (in thousands) | | 11,409 | | 11,373 | | 11,409 | | 11,372 | |
| | | | | | | | | |
Diluted earnings (loss) per share: | | $ | 0.17 | | $ | (0.73 | ) | $ | (0.46 | ) | $ | (2.93 | ) |
Weighted average number of common shares outstanding (in thousands) | | 11,586 | | 11,373 | | 11,409 | | 11,372 | |
| | | | | | | | | |
Cash dividends declared per share | | $ | 0.005 | | $ | 0.005 | | $ | 0.02 | | $ | 0.025 | |
HARDINGE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Year Ended December 31, | |
| | 2010 | | 2009 | |
| | (In Thousands) | |
Operating activities | | | | | |
Net (loss) income | | $ | (5,234 | ) | $ | (33,309 | ) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | | | | | |
Non-cash — inventory write down | | — | | 8,127 | |
Impairment charge | | (25 | ) | 1,650 | |
Depreciation and amortization | | 7,042 | | 8,504 | |
Debt issuance amortization | | 310 | | 1,341 | |
Provision for deferred income taxes | | (1,983 | ) | 347 | |
(Gain) loss on sale of assets | | (1,045 | ) | 240 | |
(Gain) on purchase of Jones & Shipman | | (647 | ) | — | |
Unrealized intercompany foreign currency transaction loss (gain) | | 615 | | (140 | ) |
Changes in operating assets and liabilities: | | | | | |
Accounts receivable | | (1,414 | ) | 21,009 | |
Notes receivable | | 805 | | (580 | ) |
Inventories | | 622 | | 41,474 | |
Prepaids/other assets | | (3,077 | ) | (2,186 | ) |
Accounts payable | | 12,520 | | (3,574 | ) |
Accrued expenses | | 9,388 | | (12,744 | ) |
Accrued postretirement benefits | | (741 | ) | (1,010 | ) |
Net cash provided by operating activities | | 17,136 | | 29,149 | |
| | | | | |
Investing activities | | | | | |
Capital expenditures | | (3,728 | ) | (3,178 | ) |
Proceeds on sale of assets | | 1,576 | | 125 | |
Purchase of Land Use Rights | | (2,594 | ) | — | |
Purchase of Jones & Shipman, net of cash acquired | | (3,014 | ) | — | |
Purchase of technical information | | — | | (142 | ) |
Net cash (used in) investing activities | | (7,760 | ) | (3,195 | ) |
| | | | | |
Financing activities | | | | | |
Borrowings under short-term notes payable to bank | | 10,416 | | 11,357 | |
Repayments of short-term notes payable to bank | | (10,272 | ) | (10,038 | ) |
(Decrease) in long-term debt | | (571 | ) | (24,545 | ) |
Debt issuance fees paid | | (111 | ) | (739 | ) |
Dividends paid | | (232 | ) | (288 | ) |
Net cash (used in) financing activities | | (770 | ) | (24,253 | ) |
| | | | | |
Effect of exchange rate changes on cash | | 1,920 | | 856 | |
Net increase in cash | | 10,526 | | 2,557 | |
| | | | | |
Cash and cash equivalents at beginning of year | | 20,419 | | 17,862 | |
| | | | | |
Cash and cash equivalents at end of year | | $ | 30,945 | | $ | 20,419 | |
HARDINGE INC. AND SUBSIDIARIES
Reconciliation of Net Income (Loss) to EBITDA
The following table provides a reconciliation of the Company’s reported net (loss) income to EBITDA for the three months and year ended December 31, 2010 and 2009, respectively:
| | Quarter Ended | | | | Year Ended | | | |
| | December 31, | | | | December 31, | | | |
| | 2010 | | 2009 | | $ Change | | 2010 | | 2009 | | $ Change | |
| | (In thousands) | |
GAAP Net Income (Loss) | | $ | 1,924 | | $ | (8,284 | ) | $ | 10,208 | | $ | (5,234 | ) | $ | (33,309 | ) | $ | 28,075 | |
Plus: | Interest expense net of interest income | | 89 | | 202 | | (113 | ) | 336 | | 1,812 | | (1,476 | ) |
| Taxes | | 1,253 | | 1,586 | | (333 | ) | 2,168 | | 1,847 | | 321 | |
| Depreciation and amortization | | 1,678 | | 2,051 | | (373 | ) | 7,042 | | 8,504 | | (1,462 | ) |
EBITDA (1) | | $ | 4,944 | | $ | (4,445 | ) | $ | 9,389 | | $ | 4,312 | | $ | (21,146 | ) | $ | 25,458 | |
(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.
