Hardinge Reports Fourth Quarter and Full Year 2016 Results

ELMIRA, N.Y., Feb. 09, 2017 (GLOBE NEWSWIRE) -- Hardinge Inc. (NASDAQ:HDNG), a leading international provider of advanced metal-cutting solutions and accessories, reported financial results for its fourth quarter and year ended December 31, 2016.

• Orders for the fourth quarter increased 22% to $90.4 million compared with the prior-year period on strength in all regions: Europe up 37%, Asia up 26% and North America up 4%
• Sales for the quarter were $86.8 million and demonstrated a measurable improvement over the previous three quarters of 2016
• Net income for the quarter was $3.7 million, or $0.29 per diluted share; Non-GAAP⁽¹⁾ adjusted net income was $4.1 million, or $0.31 per diluted share

Richard L. Simons, President and Chief Executive Officer, commented, “We ended 2016 in a much better position than where we started.  Market conditions are improving with the order trend in the second half of 2016 healthier than the first half.  The restructuring program we worked on most of the year has also proven successful.  It was accomplished on time and on budget and, importantly, is achieving our cost reduction goals.”

He concluded, “Based on our strong backlog and favorable outlook, we expect sales to moderately improve in 2017.  Additionally, we are confident that the effects of our restructuring program will be demonstrated in our financial results.”

Sales, Orders and Backlog for the Quarter and Full Year

(Please refer to the Sales and Orders tables included in this release)

North America:  Market conditions in the U.S. have begun to improve.  North America sales were up 5% in the quarter, while orders increased by 4%.  For the full year, sales were down 15% reflecting the weak industrial economy over the last two years.  Orders, however, improved by 3% over 2015 as the inquiry activity in the U.S. was higher in the second half of 2016.

Europe:  Political uncertainty in Europe contributed to a 12% decline in sales during the fourth quarter.  For the full year, Europe sales were down 6%.  Excluding the $2.0 million negative impact from foreign currency translation, sales were down 4% in 2016.  Encouragingly, orders in the fourth quarter increased by 37%.  For the full year, orders were down 5%, partly due to unfavorable foreign currency effect.

Asia:  While Asia’s rate of economic growth remains softer than it has in the past, activity in the second half of 2016 also strengthened in this market.  Fourth quarter sales improved by 8%.  The Company believes the increase was related to the positive impact of its focus on industries and customers that favor high-precision products and custom solutions combined with improving market conditions.  Orders for the quarter of $36.8 million, up 26% over the prior-year period, reached their highest level since 2011.  Sales to Asia for the full year 2016 were relatively unchanged and orders for the full year were down 3%; however, after adjusting for the impact of foreign exchange, both sales and orders increased in 2016.

Consolidated Backlog:  Order backlog at December 31, 2016 was $117.0 million, down slightly from the end of the trailing third quarter, but up 15% over the December 31, 2015 backlog.

Fourth Quarter Operating Results (comparisons are to the prior-year period except where noted)

• Gross profit for the quarter was $28.1 million, or 32.4% of sales, down from the prior-year period due to the mix of sales which included fewer specialized machine tool solutions
• Selling, general and administrative (“SG&A”) expense declined $1.3 million, or 6%, from savings realized from the recently completed restructuring program and the favorable impact of foreign exchange
• Income from operations was $5.0 million.  On a non-GAAP⁽¹⁾ adjusted basis, income from operations was $5.3 million compared with $6.3 million last year.  As a percent of sales, adjusted income from operations was 6.1%.

2016 Full Year Review (comparisons are to the prior-year period except where noted)

• Gross margin of 33.4% was relatively unchanged
    - The impact of lower sales volume and less favorable product mix was more than offset by reduced costs
• SG&A was down $1.6 million to $79.6 million
    - SG&A had a favorable foreign currency impact of approximately $2.1 million and was unfavorably impacted by $1.8 million in additional expenses related to severance and the Company’s strategic review initiative
    - Excluding those aforementioned items, 2016 SG&A decreased by $1.3 million, mostly as a result of savings from the recently completed restructuring program
• Restructuring expenses in 2016 were $0.7 million compared with $3.6 million in 2015.
• Income from operations was $3.4 million.  Non-GAAP⁽¹⁾ adjusted income from operations declined on lower sales to $6.6 million, or 2.2% of sales, compared with $9.9 million, or 3.1% of sales, in 2015.

Webcast and Conference Call

Hardinge will host a conference call and webcast today at 11:00 a.m. ET.  During the conference call and webcast, Richard L. Simons, President and CEO, and Douglas J. Malone, Vice President and CFO, will review the financial and operating results for the quarter, as well as the Company’s strategy and outlook.  A question and answer session will follow the formal discussion.  Supplemental slides will be made available on Hardinge’s website at http://ir.hardinge.com/events.cfm.

The conference call can be accessed by calling (201) 689-8560.  The listen-only audio webcast can be monitored at http://ir.hardinge.com/events.cfm.

A telephonic replay will be available from 2:00 p.m. ET today through Thursday, February 16, 2017.  To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13654118.  Alternatively, the archive can be heard on the Company’s website at http://ir.hardinge.com/events.cfm.  A transcript will also be posted to the website, once available.

About Hardinge

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: http://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. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

⁽¹⁾ Management believes that the use of non-GAAP financial measures help in the understanding of the Company's operating performance. See pages 8 and 9 of this release for the reconciliation tables between reported amounts and non-GAAP measures discussed in this document.

FINANCIAL TABLES FOLLOW.

Hardinge believes that providing non-GAAP financial measures such as adjusted operating income, adjusted net income, and adjusted earnings per diluted share is important for investors and other readers of Hardinge's financial statements, as they are used as an analytical indicator by Hardinge management to better understand its operating performance.