Summary of First Quarter Performance: ELMIRA, N.Y., May 7
/PRNewswire-FirstCall/ -- Hardinge Inc. (NASDAQ: HDNG), a leading
international provider of advanced metal-cutting solutions, today
reported net sales of $52.1 million and a net loss of ($5.4)
million for the first quarter of 2009. This compares with net sales
of $85.6 million and a net loss of ($0.7) million for the first
quarter of 2008. On a per share basis, the diluted net loss for the
quarter was ($0.47), compared to ($0.06) for the same period of
2008. Excluding one-time costs which include a voluntary early
retirement program, severance costs related to staffing reductions,
and recognition of unamortized expenses associated with the early
termination of the company's revolving credit facility, the net
loss would have been ($2.9) million, or a net loss per share of
($0.25). Cash flow from operations was $10 million in the quarter
reflecting reduced working capital requirements, primarily related
to reduced accounts receivable balances. During the first quarter,
the Company reduced its outstanding debt by $15.9 million. At March
31, 2009, outstanding debt net of cash was $1.5 million. Selling,
general and administrative (SG&A) expenses were down 23%, to
$18.2 million in the first quarter, compared to $23.5 million in
2008. Excluding non-recurring charges of $1.5 million related to
the voluntary early retirement program and severance related costs,
SG&A expenses were down 29%, compared to 2008. Foreign currency
translation had a favorable impact of approximately $1.8 million on
SG&A compared to the same quarter in 2008. "The global
manufacturing marketplace remains severely weakened, and our first
quarter sales and customer orders reflect the very difficult
business environment that exists in all of our markets," said
Richard L. Simons, President and Chief Executive Officer.
"Currently, limited visibility exists for sales and order activity
in future quarters making it prudent to take aggressive action to
reduce overhead costs, maximize our cash flow, and reduce our debt.
Hardinge remains solidly positioned to emerge from the current
business climate with low-debt, a reduced overhead structure and
the same highly regarded products upon which our business was
built. In fact, we will introduce two new turning center models and
a 5-Axis machining center to the marketplace this quarter." The
following tables summarize orders and sales by geographical region
for the quarter ended March 31, 2009 and 2008: Quarter Ended March
31, Orders from % Customers in: 2009 2008 Change North America
$12,439 $25,698 (52)% Europe 11,119 43,348 (74)% Asia & Other
9,249 24,075 (62)% $32,807 $93,121 (65)% Quarter Ended March 31,
Sales from % Customers in: 2009 2008 Change North America $16,123
$28,556 (44)% Europe 24,287 37,563 (35)% Asia & Other 11,704
19,480 (40)% $52,114 $85,599 (39)% Decreased first quarter order
and sales activity occurred across all regions reflecting the
global slowdown in manufacturing. Decreases in first quarter order
and sales activity, compared to 2008, also occurred across all
product lines. Currency exchange rates had an unfavorable impact on
orders and sales of $1.5 million and $3.9 million, respectively,
compared to the first quarter in 2008. First quarter gross profit
was $14.1 million, down 44% compared to the prior year quarter.
Gross profit as a percentage of sales was 27.0%, compared to 29.4%
in the first quarter of 2008. Gross profit was negatively impacted
by increased competitive pricing pressures and lower sales volume.
SG&A expense as a percentage of sales was 34.8% for the
quarter, compared to 27.5% for the prior year quarter. SG&A
expense as a percent of sales increased, despite a 23% reduction in
SG&A expense compared to 2008, reflecting significantly lower
net sales for the quarter. The reduction in SG&A expenses
during the first quarter was the result of continued cost cutting
actions by the Company, which included staffing reductions,
temporary plant shut downs, and reduced levels of discretionary
spending. Excluding non-recurring charges of $1.5 million related
to the voluntary early retirement program and severance related
costs, SG&A for the quarter was $16.7 million, or 32% of net
sales. Interest expense for the current quarter was negatively
impacted by the expensing of $1.0 million in unamortized deferred
financing costs related to the termination of the multi-currency
credit facility. Hardinge has also announced that beginning May
11th, the Elmira, NY manufacturing facility will begin a ten week
furlough for approximately 80 employees in its machine division.
Customer demand will be satisfied with inventory on hand. Other
areas of the Elmira factory will continue to work a four day
workweek. Beginning May 1, 2009 the Company reduced the pay of all
U.S. based salaried employees, including corporate officers, by an
additional 5% resulting in a year to date decrease of 10%.
Similarly, effective May 1, 2009, the Company's Board of Directors
cash compensation has been reduced by 10%. The Company will also
suspend future accrual of benefits under its U.S. defined benefit
pension plan (which was closed to new participants in 2004) as of
June 15, 2009 as well as suspend Company contributions to the
401(K) program as of the same date. Company operations in Asia and
Europe are working on a reduced schedule, or have plans to go to
such a work schedule over the next few months. "These are
unprecedented times, forcing unprecedented actions which must be
taken during a period when we have very little comfort in
forecasted order rates,' said Mr. Simons. "However, we continue
with confidence in the ability of our worldwide team of employees
to manage through this crisis and emerge a stronger company. We
will manage the business with cash flow being of paramount
importance." New Financing Arrangement On March 16, 2009, Hardinge
entered into a new financing arrangement with Manufacturers and
Traders Trust Company ("M&T"), which provided the Company a $10
million term loan secured by substantially all of the Company's U.
S. assets, as well as two thirds of the Company's investment in its
foreign subsidiaries. Proceeds from the term loan were used to
repay approximately $8 million of Company indebtedness under a
multi-currency secured credit facility entered into in June 2008.
The multi-currency secured credit facility has been paid in full
and terminated. Currently the Company is working on an asset based
revolving credit facility which would replace the term loan and
provide a flexible credit facility that could adjust to working
capital needs as business volumes dictate. Dividend Declared The
Hardinge Board of Directors declared a cash dividend of $0.005 per
share on the Company's common stock, payable on June 10, 2009 to
stockholders of record as of June 1, 2009. Conference Call The
Company will host an investor call at 11:00 AM (ET) today to
discuss results for the first quarter of 2009. The call can be
accessed live at 1-866-411-4706, or via the internet at
http://videonewswire.com/event.asp?id=58375. A recording of the
call can be accessed from the "Investor Relations" section of the
Company's website, http://www.hardinge.com/, where it will be
posted for one year. A recording of the call can also be accessed
approximately one hour after its completion by dialing
1-888-284-7564, or 1-904-596-3174 if outside the U.S. & Canada,
and entering the reference number: 248338. This telephone recording
will be available through June 30, 2009. Hardinge is a global
designer, manufacturer and distributor of machine tools,
specializing in high-precision, computer controlled, metal-cutting
machines. The Company's products are distributed to most of the
industrialized markets around the world and in 2008 approximately
69% of sales were from outside of North America. Hardinge has a
very diverse international customer base and serves a wide variety
of end-user markets. Along with metalworking manufacturers which
make parts for a variety of industries, our customers include 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 United States,
Switzerland, Taiwan and China. Hardinge's common stock trades on
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) March 31, December 31, 2009 2008 (Unaudited) Assets
Current assets: Cash and cash equivalents $10,683 $18,430 Accounts
receivable, net 38,506 60,110 Notes receivable, net 1,333 994
Inventories, net 139,757 144,957 Deferred income tax 384 398
Prepaid expenses 8,627 10,964 Total current assets 199,290 235,853
Property, plant and equipment: Property, plant and equipment
177,412 183,387 Less accumulated depreciation 120,978 123,790 Net
property, plant and equipment 56,434 59,597 Non-current assets:
Notes receivable, net 795 923 Deferred income taxes 1,440 1,406
Intangible assets 10,510 10,725 Other long-term assets 886 1,321
13,631 14,375 Total assets $269,355 $309,825 Hardinge Inc. and
Subsidiaries Consolidated Balance Sheets - Continued (In Thousands,
Except Share Data) March 31, December 31, 2009 2008 (Unaudited)
Liabilities and shareholders' equity Current liabilities: Accounts
payable $15,509 $20,059 Notes payable to bank 8,353 - Accrued
expenses 25,453 33,255 Accrued income taxes 2,985 2,911 Deferred
income taxes 3,253 3,466 Current portion of long-term debt 530
24,549 Total current liabilities 56,083 84,240 Other liabilities:
Long-term debt 3,315 3,572 Accrued pension expense 43,616 44,962
Deferred income taxes 34 - Accrued postretirement benefits 2,813
2,528 Accrued income taxes 2,208 2,153 Other liabilities 4,464
4,243 Total other liabilities 56,450 57,458 Shareholders' equity:
Preferred stock, Series A, par value $.01 per share; Authorized
2,000,000; issued - none Common stock, $.01 par value: Authorized
shares - 20,000,000; Issued shares - 12,472,992 at March 31, 2009
and December 31, 2008 125 125 Additional paid-in capital 114,174
114,841 Retained earnings 87,209 92,700 Treasury shares - 940,740
at March 31, 2009 and 1,003,828 shares at December 31, 2008
(12,097) (13,037) Accumulated other comprehensive (loss) (32,589)
(26,502) Total shareholders' equity 156,822 168,127 Total
liabilities and shareholders' equity $269,355 $309,825 HARDINGE
INC. AND SUBSIDIARIES Consolidated Statements of Operations (In
Thousands, Except Per Share Data) Three Months Ended March 31, 2009
2008 (Unaudited) (Unaudited) Net sales $52,114 $85,599 Cost of
sales 38,063 60,471 Gross profit 14,051 25,128 Selling, general and
administrative expenses 18,150 23,501 Other (income) expense (189)
2,024 (Loss) from operations (3,910) (397) Interest expense 1,232
451 Interest (income) (46) (40) (Loss) before income taxes (5,096)
(808) Income taxes 280 (78) Net (loss) $(5,376) $(730) Per share
data: Basic (loss) per share: $(0.47) $(0.06) Weighted average
number of common shares outstanding (in thousands) 11,368 11,323
Diluted (loss) per share: $(0.47) $(0.06) Weighted average number
of common shares outstanding (in thousands) 11,368 11,323 Cash
dividends declared per share $0.01 $0.05 HARDINGE INC. AND
SUBSIDIARIES Consolidated Statements of Cash Flows (In Thousands)
Three Months Ended March 31, 2009 2008 (Unaudited) (Unaudited)
Operating activities Net (loss) $(5,376) $(730) Adjustments to
reconcile net (loss) to net cash provided by (used in) operating
activities: Depreciation and amortization 2,209 2,611 Provision for
deferred income taxes (282) 663 Debt issuance amortization 1,045 -
Unrealized intercompany foreign currency transaction (gain) loss
(386) 1,919 Changes in operating assets and liabilities: Accounts
receivable 19,716 3,419 Notes receivable (240) 977 Inventories 994
(6,749) Prepaids/other assets 1,909 (1,678) Accounts payable
(3,906) 2,345 Accrued expenses (5,998) (4,741) Accrued
postretirement benefits 285 (112) Net cash provided by (used in)
operating activities 9,970 (2,076) Investing activities Capital
expenditures (906) (1,236) Net cash (used in) investing activities
(906) (1,236) Financing activities Increase (decrease) in
short-term notes payable to bank 8,353 (2,322) (Decrease) increase
in long-term debt (24,132) 3,575 Net sale (purchases) of treasury
stock 168 (498) Dividends paid (115) (576) Debt issuance fees paid
(628) - Net cash (used in) provided by financing activities
(16,354) 179 Effect of exchange rate changes on cash (457) 1,320
Net (decrease) in cash (7,747) (1,813) Cash at beginning of period
18,430 16,003 Cash at end of period $10,683 $14,190 Contact: Edward
Gaio Vice President and CFO (607) 378-4207 DATASOURCE: Hardinge
Inc. CONTACT: Edward Gaio, Vice President and CFO, +1-607-378-4207
Web Site: http://www.hardinge.com/
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