Hardinge Reports First Quarter 2018 Results
ELMIRA, N.Y., May 3, 2018 – Hardinge Inc. (NASDAQ: HDNG), a leading international provider of advanced metal-cutting solutions and accessories, reported financial results for its first quarter ended March 31, 2018.
Sales, Orders and Backlog for First Quarter
Sales for the first quarter of 2018 increased 24% to $79.9 million driven by higher demand in all regions. Orders of $90.4 million were up 24%. Excluding favorable foreign currency translation of $4.2 million on sales and $5.0 million on orders, sales and orders both increased 17%.
Americas: Sales grew 10% to $21.5 million primarily from increased demand for workholding products. Orders for the region were $24.5 million, up 4% in the quarter, and have fluctuated from quarter to quarter as a result of changes being implemented with sales channel partners.
Europe: Sales in Europe of $21.2 million were up 20% from favorable mix of more complex grinding machines. Orders in the region were up 55% due to strengthening industrial conditions driving higher demand across all product lines. Excluding favorable foreign currency translation of $1.7 million on sales and $2.7 million on orders, sales increased 10% and orders increased 43%.
Asia: Sales of $37.2 million for the quarter were up 36% as strong demand in China was supplemented by high demand in other parts of Asia. Orders of $32.9 million increased 18%. Excluding favorable foreign currency impact of $2.5 million and $2.3 million on sales and orders, respectively, sales were up 27% and orders were up 9%.
Consolidated backlog: Backlog at March 31, 2018 was $144.3 million, up 14% from March 31, 2017.
First Quarter Operating Review
- Gross profit was $28.1 million, an increase of $7.0 million, or 33% from higher sales volume and improved margins. As a percent of sales, gross profit was 35.2%, a 2.4 point improvement over the prior year quarter due to favorable mix.
- Excluding professional services fees of $0.9 million in the current year and $0.1 million of other unusual costs in the prior year, selling, general and administrative (SG&A) expenses increased $2.0 million in the quarter due to higher commissions of $1.0 million related to increased volume, and unfavorable foreign currency translation of $1.0 million.
- Operating income of $2.6 million increased $4.2 million as a result of higher volume partially offset by unusual costs in the current year. Operating margin expanded 5.6 points to 3.3% of sales.
- Adjusted Non-GAAP operating income(1) was $4.9 million in the quarter, up significantly from $0.1 million in the prior-year period. Adjusted operating margin was 6.2%, a 6.1 point expansion.
- Net income was $1.8 million, or $0.14 per diluted share, up from a $2.0 million loss, or $(0.16) per diluted share in the prior-year period. Adjusted Non-GAAP net income(1) was $4.1 million, or $0.31 per diluted share, a significant increase over last year’s adjusted net loss in the quarter.
- (1)Management believes that the use of non-GAAP measures helps in the understanding of the Company’s operating performance. See page 8 of this release for the reconciliation tables between reported amounts and non-GAAP measures discussed in this document.
Recent Merger Announcement
On February 12, 2018, Hardinge announced that it had entered into a definitive agreement with affiliates of Privet Fund Management LLC (“Privet”) under which Privet has agreed to acquire Hardinge for $18.50 per share in an all-cash transaction valued at approximately $245 million, subject to approval of Hardinge shareholders and other customary closing conditions.
In light of the announcement, Hardinge will not hold a conference call to discuss these financial results. There is a Special Meeting of Shareholders of Hardinge Inc., scheduled to be held on Tuesday, May 22, 2018, for shareholders to vote on the adoption of the agreement and plan of merger.
Hardinge is a leading global designer and manufacturer of high precision, computer-controlled machine tool solutions developed for critical, hard-to-machine metal parts, and of technologically advanced workholding accessories. The Company’s strategy is to leverage its global brand strength to further penetrate global market opportunities where customers will benefit from the technologically advanced, high quality, reliable products Hardinge produces. With approximately two-thirds of its sales outside of North America, Hardinge serves the worldwide metal working market. Hardinge’s machine tool and accessory solutions can also be found in a broad base of industries to include aerospace, agricultural, automotive, construction, consumer products, defense, energy, medical, technology, and transportation.
Hardinge applies its engineering design and manufacturing expertise in high performance machining centers, high-end cylindrical and jig grinding machines, SUPER-PRECISION® and precision CNC lathes, and technologically advanced workholding accessories. Hardinge has manufacturing operations in China, France, Germany, India, Switzerland, Taiwan, the United Kingdom, and the United States.
The Company regularly posts information on its website: https://www.hardinge.com.
Safe Harbor Statement
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.
Certain factors could cause actual results to differ from those anticipated in the forward-looking statements in this release, including the possibility that the proposed transaction with Privet is delayed or does not close, including due to the failure to receive required shareholder approval, due to litigation in respect of the Merger ,due to alternative acquisition proposals, the taking of governmental action (including the passage of legislation) to block the transaction, the failure of Privet to obtain the equity and debt financing or other funds required to financethe transaction, or the failure of other closing conditions, disruptions of our business as a result of the announcement and pursuit of the Merger, the possibility that the expected financial impacts will not be realized, or will not be realized within the expected time period, including as a result of fluctuations in the machine tool business, the cyclical nature of our markets, changes in general economic conditions in the U.S. or internationally, the mix of products sold and the profit margins thereon, the relative success of our entry into new product and geographic markets, our ability to manage our operating costs and announced cost reduction initiatives, product liability claims, work stoppages or other labor issues, our ability to execute on our previously announced real estate sale and other restructuring activities, actions taken by customers such as order cancellations or reduced bookings by customers or distributors, competitors’ actions such as price discounting or new product introductions, governmental regulations and environmental matters, loss of key management or other personnel, failure of operating equipment or information technology infrastructure, changes in the availability and cost of materials and supplies, the implementation of new technologies and currency fluctuations, and other risks and factors described in our quarterly reports on Form 10-Q and annual reports on Form 10-K and in our other filings with the Securities and Exchange Commission or in materials incorporated therein by reference.
The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
For more information contact:
Douglas J. Malone
Chief Financial Officer
Phone: (607) 378-4140
Deborah K. Pawlowski, Kei Advisors LLC
Phone: (716) 843-3908