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Hardinge Inc. (HDNG) Announces Fourth Quarter Net Income of $1.9 Million

ELMIRA, N.Y., Feb. 17, 2011 /PRNewswire/ — 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.

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

December 31,

December 31,

Orders from

Customers in:

2010

2009

%

Change

Sales to

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

December 31,

December 31,

Orders from

Customers in:

2010

2009

%

Change

Sales to

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.

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.

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 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.

Contact:

Edward Gaio

Vice President and CFO

(607) 378-4207

– 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 income (loss) 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.

SOURCE Hardinge Inc.

Thursday, February 17th, 2011 Uncategorized
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