Exhibit 99.1
Hardinge Inc. | Contact: |
One Hardinge Drive | Edward Gaio |
Elmira, N.Y. 14902 | Vice President and CFO |
| (607) 378-4207 |
Hardinge Reports First Quarter 2011
Net Income of $1.4 Million
ELMIRA, N.Y. — May 6, 2011 — 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 first quarter ended March 31, 2011.
First Quarter 2011 Performance Summary:
· Orders increased 98%, to $113.8 million, compared to the prior year
· Sales were $73.5 million, a 70% increase compared to the prior year
· Net income was $1.4 million, or $0.12 per diluted share, compared with a net loss of ($5.2) million, or ($0.45) per diluted share for the same period of 2010.
“The worldwide market recovery for machine tools continues, led by very strong growth in China,” said Richard L. Simons, President and Chief Executive Officer. “Our global organizations continue to provide an effective platform for Hardinge to participate appreciably in this growth.”
“As expected, our first quarter sales were significantly stronger than first quarter 2010, and we remain encouraged by the prospects for a strong and profitable 2011. First quarter 2011 sales growth, like order activity, was driven by strong demand across all of the Company’s geographic markets,” said Mr. Simons.
“We began the year with a substantial backlog and our first quarter orders of $113.8 million were a record for the Company. This activity included another large order, of $11.0 million, from a Chinese supplier to the consumer electronics industry. In addition, we experienced strong order activity from several industries in China, resulting in new unprecedented order levels. The positive momentum we experienced in the United States was driven by order activity from our new distribution partners, and orders in Europe reflected stronger distributor demand and their increased confidence in the vitality of the economic recovery. This combined activity helped to push our order volume up 37% over an already strong $83 million in fourth quarter 2010,” Mr. Simons added.
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The following tables summarize orders and sales by geographic region for the quarters ended March 31, 2011 and 2010:
| | Quarter Ended | | | |
Orders from | | March 31,
(in thousands) | | % | |
Customers in: | | 2011 | | 2010 | | Change | |
North America | | $ | 23,205 | | $ | 12,820 | | 81 | % |
Europe | | 29,425 | | 18,422 | | 60 | % |
Asia & Other | | 61,128 | | 26,245 | | 133 | % |
| | $ | 113,758 | | $ | 57,487 | | 98 | % |
| | Quarter Ended | | | |
Sales to | | March 31,
(in thousands) | | % | |
Customers in: | | 2011 | | 2010 | | Change | |
North America | | $ | 17,214 | | $ | 11,550 | | 49 | % |
Europe | | 19,815 | | 12,418 | | 60 | % |
Asia & Other | | 36,453 | | 19,202 | | 90 | % |
| | $ | 73,482 | | $ | 43,170 | | 70 | % |
“We will sound one note of caution in regard to an otherwise very satisfying period of customer activity,” said Mr. Simons. “We remain concerned with the potential for component shortages which could affect the timing of shipments in the short to medium term. These industry wide shortages are related to the accelerated ramp up of global demand for machine tools, as well as production disruptions for suppliers of these components resulting from the earthquake that impacted Japan. Currently, this situation remains fluid, and we continue to monitor potential changes to component availability very closely.”
The Company’s gross profit was $19.1 million for first quarter 2011, an increase of $10.1 million, or 113%, compared to the prior year first quarter. Gross margin for the quarter was 26.0%, up from 20.7% for the same period in 2010. The improvement in the Company’s first quarter 2011 gross margin was driven by the significant increase in volume against fixed expenses, cost management initiatives and reduced price discounting compared with early 2010.
Selling, general and administrative expenses were $16.7 million, or 22.7% of net sales, for first quarter 2011 compared to $14.4 million, or 33.4% of net sales, for the prior year first quarter. The $2.3 million increase is primarily related to increased variable selling expenses on the higher sales volume.
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 June 10, 2011 to stockholders of record as of June 1, 2011.
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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 1-866-790-1863 (904-520-5759 for calls originating outside the U.S. and Canada) or via the internet at http://www.videonewswire.com/event.asp?id=78143. 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: 2633581. This telephone recording will be available through June 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)
| | March 31, | | December 31, | |
| | 2011 | | 2010 | |
| | (Unaudited) | | | |
Assets | | | | | |
Cash and cash equivalents | | $ | 24,945 | | $ | 30,945 | |
Restricted cash | | 5,144 | | 5,225 | |
Accounts receivable, net | | 46,567 | | 45,819 | |
Notes receivable, net | | 3,669 | | 1,753 | |
Inventories, net | | 115,786 | | 105,306 | |
Deferred income taxes | | 1,383 | | 1,364 | |
Prepaid expenses | | 12,777 | | 11,518 | |
Total current assets | | 210,271 | | 201,930 | |
Net property, plant and equipment | | 59,945 | | 56,628 | |
Deferred income taxes | | 618 | | 451 | |
Intangible assets | | 13,422 | | 13,642 | |
Pension assets | | 2,228 | | 2,111 | |
Other long-term assets | | 51 | | 85 | |
Total non-current assets | | 76,264 | | 72,917 | |
Total assets | | $ | 286,535 | | $ | 274,847 | |
| | | | | |
Liabilities and shareholders’ equity | | | | | |
Accounts payable | | $ | 34,599 | | $ | 33,533 | |
Notes payable to bank | | 7,000 | | 1,650 | |
Accrued expenses | | 21,200 | | 22,791 | |
Customer deposits | | 15,681 | | 10,468 | |
Accrued income taxes | | 3,487 | | 3,656 | |
Deferred income taxes | | 2,686 | | 2,546 | |
Current portion of long-term debt | | 612 | | 617 | |
Total current liabilities | | 85,265 | | 75,261 | |
Long-term debt | | 2,602 | | 2,777 | |
Accrued pension liability | | 28,553 | | 29,949 | |
Accrued postretirement benefits | | 2,210 | | 2,274 | |
Accrued income taxes | | 2,187 | | 2,106 | |
Deferred income taxes | | 2,549 | | 2,516 | |
Other liabilities | | 1,974 | | 2,062 | |
Total non-current liabilities | | 40,075 | | 41,684 | |
Common Stock — $0.01 par value, 12,472,992 issued | | 125 | | 125 | |
Additional paid-in capital | | 114,200 | | 114,183 | |
Retained earnings | | 54,960 | | 53,637 | |
Treasury shares — 854,980 shares at March 31, 2011 and 865,703 shares at December 31, 2010 | | (10,890 | ) | (11,022 | ) |
Accumulated other comprehensive income | | 2,800 | | 979 | |
Total shareholders’ equity | | 161,195 | | 157,902 | |
Total liabilities and shareholders’ equity | | $ | 286,535 | | $ | 274,847 | |
HARDINGE INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In Thousands Except Per Share Data)
| | Three Months Ended | |
| | March 31, | |
| | 2011 | | 2010 | |
| | (Unaudited) | |
| | | |
Net sales | | $ | 73,482 | | $ | 43,170 | |
Cost of sales | | 54,406 | | 34,230 | |
Gross profit | | 19,076 | | 8,940 | |
| | | | | |
Selling, general and administrative expenses | | 16,673 | | 14,398 | |
Gain on sale of assets | | (25 | ) | (272 | ) |
Other expense | | 177 | | 71 | |
Income (loss) from operations | | 2,251 | | (5,257 | ) |
| | | | | |
Interest expense | | 78 | | 110 | |
Interest income | | (39 | ) | (35 | ) |
Income (loss) before income taxes | | 2,212 | | (5,332 | ) |
| | | | | |
Income tax expense (benefit) | | 831 | | (146 | ) |
Net income (loss) | | $ | 1,381 | | $ | (5,186 | ) |
| | | | | |
Per share data: | | | | | |
| | | | | |
Basic earnings (loss) per share: | | $ | 0.12 | | $ | (0.45 | ) |
| | | | | |
Diluted earnings (loss) per share: | | $ | 0.12 | | $ | (0.45 | ) |
| | | | | |
Cash dividends declared per share | | $ | 0.005 | | $ | 0.005 | |
HARDINGE INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands)
| | Three Months Ended | |
| | March 31, | |
| | 2011 | | 2010 | |
| | (Unaudited) | |
Operating activities | | | | | |
Net income (loss) | | $ | 1,381 | | $ | (5,186 | ) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | | | | | |
Depreciation and amortization | | 1,916 | | 1,807 | |
Debt issuance amortization | | 26 | | 80 | |
Provision for deferred income taxes | | (1,085 | ) | (8 | ) |
(Gain) on sale of assets | | (25 | ) | (273 | ) |
Unrealized intercompany foreign currency transaction (gain) loss | | (215 | ) | 59 | |
Changes in operating assets and liabilities: | | | | | |
Accounts receivable | | (449 | ) | 9,152 | |
Notes receivable | | (1,859 | ) | (504 | ) |
Inventories | | (9,311 | ) | (5,917 | ) |
Prepaids and other assets | | (1,079 | ) | (1,071 | ) |
Accounts payable | | 1,081 | | 5,641 | |
Accrued expenses | | 2,388 | | (346 | ) |
Accrued postretirement benefits | | 176 | | (149 | ) |
Net cash (used in) provided by operating activities | | (7,055 | ) | 3,285 | |
| | | | | |
Investing activities | | | | | |
Capital expenditures | | (4,354 | ) | (657 | ) |
Proceeds on sale of assets | | 25 | | 283 | |
Net cash (used in) investing activities | | (4,329 | ) | (374 | ) |
| | | | | |
Financing activities | | | | | |
Borrowings under short-term notes payable to bank | | 5,380 | | 884 | |
(Decrease) in long-term debt | | (154 | ) | (141 | ) |
Purchase of treasury stock, net | | 33 | | –– | |
Debt issuance fees paid | | (13 | ) | (67 | ) |
Dividends paid | | (58 | ) | (58 | ) |
Net cash provided by financing activities | | 5,188 | | 618 | |
| | | | | |
Effect of exchange rate changes on cash | | 196 | | (131 | ) |
Net (decrease) increase in cash | | (6,000 | ) | 3,398 | |
| | | | | |
Cash at beginning of period | | 30,945 | | 20,419 | |
| | | | | |
Cash at end of period | | $ | 24,945 | | $ | 23,817 | |
Reconciliation of net income (loss) to EBITDA
| | Three Months Ended
March 31, | | | |
| | 2011 | | 2010 | | Change | |
| | (dollars in thousands) | |
GAAP net income (loss) | | $ | 1,381 | | $ | (5,186 | ) | $ | 6,567 | |
Plus: | Interest expense, net of interest income | | 39 | | 75 | | (36 | ) |
| Income tax expense (benefit) | | 831 | | (146 | ) | 977 | |
| Depreciation and amortization | | 1,916 | | 1,807 | | 109 | |
EBITDA (1) | | $ | 4,167 | | $ | (3,450 | ) | $ | 7,617 | |
(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.
