Hardinge Inc. Reports First Quarter Results

Hardinge Inc. Reports First Quarter Results

ELMIRA, N.Y., May 9, 2013 (GLOBE NEWSWIRE) -- Hardinge Inc. (Nasdaq:HDNG), a
leading international provider of advanced metal-cutting solutions, reported
financial results for its first quarter ended March 31, 2013. Hardinge
separately announced that it has entered into a definitive agreement to
acquire the Forkardt Workholding Group from Illinois Tool Works (NYSE:ITW).
The Forkardt companies are leading global providers of high-precision,
specialty and customized workholding devices for machine tools. The
acquisition is expected to be completed today.

Net sales ("sales") were $67.2 million in the first quarter of 2013, down $7.5
million from sales of $74.7 million in the prior-year's first quarter. When
compared with the trailing fourth quarter of 2012, first quarter 2013 sales
were down $23.3 million, or 26%.

During the first quarter of 2013 the company had breakeven net income compared
with net income of $2.4 million, or $0.21 per diluted share, in the
prior-year's first quarter.

Richard L. Simons, Chairman, President and Chief Executive Officer, commented,
"The first quarter of 2013 represented a slow start to the year as we
anticipated it would. However, we are encouraged that orders have improved by
15% over the fourth quarter of 2012. Asia appears to be experiencing an
improvement in activity and we expect that by the end of the second quarter we
will have a good idea of how the year will look for China and the Asia region
in general. In North America, the market has been steady.While it was
encouraging to see that our order levels out of Europe improved from what we
experienced last quarter, we continue to expect weaker organic sales in 2013
as a result of the recession there."

                                                                            
Sales by Region                                                              
($ in thousands)                                                             
                   Quarter Ended                                            
                   March 31, 2013      March 31, 2012     December 31, 2012 
Sales to Customers  $       % of Total $        % Change $       % Change 
in
North America       24,848 37%        18,621 33%     24,030 3%      
Europe              20,996  31%        24,657   (15)%    34,878  (40)%    
Asia                21,375  32%        31,372   (32)%    31,652  (32)%    
Total               67,219           74,650  (10)%    90,560 (26)%    

Sales in North America were up $6.2 million over the prior-year period and up
$0.8 million over the trailing fourth quarter.European sales were down by
$3.7 million compared with the prior year and by $13.9 million compared with
the trailing fourth quarter on lower sales across all product lines,
particularly grinding machines.The economic recession in Europe continues to
have a negative impact on sales.First quarter sales in Asia decreased by
$10.0 million compared with the prior-year period on lower grinding sales due
to reduced order levels from Asia during 2012.Compared with the trailing
fourth quarter, Asia sales were down $10.3 million on lower order levels in
2012 and the impact of the Chinese New Year Spring Festival in February.The
economic weakness experienced in Asia during 2012, which has shown signs of
recovery in 2013, impacted sales to that region in the first quarter of 2013.

Fluctuations in Hardinge's sales in total and among geographic locations and
industries can vary from quarter-to-quarter based on the timing and magnitude
of orders and projects.Hardinge does not believe that such quarter-to-quarter
fluctuations are necessarily indicative of larger business trends. Rather,
the Company believes that such business trends can be discerned from the
Company's performance during a longer period of time, such as a trailing
twelve-month period.

Margins Reflect Lower Sales

Gross profit was $19.0 million, or 28.2% of sales, in the first quarter of
2013 compared with $21.2 million, or 28.4% of sales, in the same period of the
prior year, and gross profit of $27.7 million, or 30.6% of sales, in the
trailing fourth quarter of 2012.Changes to first quarter 2013 gross profit
when compared with the prior-year period were primarily the result of lower
sales volume and product mix.

Selling, general and administrative ("SG&A") expense in the 2013 first quarter
was up by $0.6 million to $18.2 million, or 27.1% of sales, compared with
$17.6 million, or 23.6% of sales, in the prior-year's first quarter.The
increase in SG&A compared with the prior-year period was due to $0.6 million
of costs related to the Forkardt acquisition, and incremental SG&A related to
the Usach acquisition, completed in the fourth quarter of 2012.

Income from operations in the first quarter of 2013 was $0.5 million, down 87%
from $3.4 million during the prior-year's first quarter.As a percentage of
sales, income from operations was 0.7%, a 3.8 point decrease from the same
period of the prior year.Compared with the trailing fourth quarter, income
from operations declined by $6.0 million, from $6.5 million, and operating
income as a percent of sales declined by 6.5 points.The decrease in income
from operations when compared with the prior-year period and trailing fourth
quarter was primarily due to lower sales volume.

Solid Balance Sheet

Cash and cash equivalents at March 31, 2013 decreased by $7.5 million to $19.4
million compared with $26.9 million at December 31, 2012, and decreased by
$2.8 million from $22.2 million at March 31, 2012.Decreased cash compared
with December 31, 2012 was driven by increased working capital requirements
due to timing of payments in the first quarter of 2013.Capital expenditures
in 2013 are expected to be in the $4.0 to $5.0 million range for general
maintenance expenditures.

Cash used in operations was $6.7 million in the first quarter of 2013,
compared with $3.5 million of cash used in the prior-year period.

                                                                            
Orders by Region                                                             
($ in thousands)                                                            
                    Quarter Ended                                           
                    March 31, 2013      March 31, 2012    December 31, 2012 
Orders from          $       % of Total $       % Change $       % Change 
Customers in
North America        17,448 26%        20,699 (16%)    17,410 0%       
Europe               22,824  34%        29,796  (23%)    19,937  14%      
Asia                 26,499  40%        30,867  (14%)    20,968  26%      
Total                66,771           81,362 (18%)    58,315 15%      

Net orders ("orders") during the quarter were $66.8 million, a decrease of
$14.6 million when compared with the first quarter of 2012.Sequentially,
orders were up $8.5 million from the trailing fourth quarter of 2012.

Compared with the prior-year period, first quarter 2013 orders declined $3.3
million in North America as U.S. based distributors continued to manage their
inventories to a lower level.In Europe, orders declined when compared with
the prior-year period as the recession has negatively impacted demand, however
were up by $2.9 million from the trailing fourth quarter.Orders in Asia
declined by $4.4 million in the first quarter compared with the prior year,
but were up $5.5 million compared with the fourth quarter of 2012 due to
improving activity levels in China. The Company's order backlog at March 31,
2013 was $122.9 million.

Outlook

Mr. Simons noted, "We are encouraged by our positive momentum in Asia and
believe that we will be able to capture a greater share of the growth there
with our recently upgraded facility in China. Our long term growth strategy
will continue to be based on both organic expansion and acquisitions, such as
Usach and Forkardt, which help to broaden our product base and improve our
margin profile."

Webcast and Conference Call

Hardinge will host a conference call and webcast today at 11:00 a.m. Eastern
Time.During the conference call and webcast, Richard L. Simons, Chairman,
President and CEO, and Edward J. Gaio, 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.Their review will be accompanied by a slide presentation which
will be available on Hardinge's website at www.hardinge.com.

The conference call can be accessed by calling (201) 689-8560.The listen-only
audio webcast can be monitored at www.hardinge.com.

A telephonic replay will be available from 2:00 p.m. ET the day of the call
through Thursday, May 16, 2013.To listen to the archived call, dial (858)
384-5517 and enter conference ID number 412301.Alternatively, the archive can
be heard on the Company's website at www.hardinge.com.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. 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 equipment
Hardinge produces. With approximately 75% of its sales outside of North
America, Hardinge serves the worldwide metal working market. Hardinge's
machine tool 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,
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.

FINANCIAL TABLES FOLLOW.


HARDINGE INC. AND SUBSIDIARIES
Consolidated statements of operations
(in thousands except per share data)
                                                      
                                            Quarter Ended
                                            March 31,
                                            2013       2012
                                            (unaudited)
                                                      
Net sales                                    $67,219  $74,650
Cost of sales                                48,246     53,461
Gross profit                                 18,973     21,189
Gross profit margin                         28.2%      28.4%
                                                      
Selling, general and administrative expenses 18,245     17,599
Gain on sale of assets                       (42)       (2)
Other expense                                318        204
Income from operations                       452        3,388
Operating margin                            0.7%       4.5%
                                                      
Interest expense                             205        140
Interest income                              (15)       (24)
Income before income taxes                   262        3,272
                                                      
Income tax expense                           222       829
Net income                                   $40      $2,443
                                                      
Basic earnings per share                     $ -- $0.21
                                                      
Diluted earnings per share                   $-- $0.21
                                                      
Cash dividends declared per share            $0.02    $0.02
                                                      
Weighted avg. shares outstanding: Basic      11,660     11,524
Weighted avg. shares outstanding: Diluted    11,743     11,557

                                      


HARDINGE INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands except share and per share data)
                                                            
                                                 March 31,   December 31,
                                                 2013        2012
                                                 (unaudited) 
Assets                                                       
Cash and cash equivalents                         $19,407   $26,855
Restricted cash                                   2,729      2,634
Accounts receivable, net                          47,837     51,871
Inventories, net                                  125,235    128,000
Other current assets                              13,413     12,580
Total current assets                              208,621   221,940
                                                            
Property, plant and equipment, net                68,690     71,035
Goodwill and other intangible assets, net         29,782     30,321
Other non-current assets                          2,475      2,358
Total non-current assets                          100,947    103,714
Total assets                                      $309,568  $325,654
                                                            
Liabilities and shareholders' equity                         
Accounts payable                                  $23,152   $27,779
Notes payable to bank                             13,120     11,500
Accrued expenses                                  22,076     29,307
Customer deposits                                 19,009     15,720
Accrued income taxes                              2,422      3,952
Deferred income taxes                             2,878      2,980
Current portion of long-term debt                 3,333      2,873
Total current liabilities                         85,990     94,111
                                                            
Long-term debt                                    3,883      5,616
Pension and postretirement liabilities            48,967     50,312
Deferred income taxes                             3,273      3,431
Other liabilities                                 10,623     10,977
Total non-current liabilities                     66,746     70,336
                                                            
Common stock ($0.01 par value, 12,472,992 issued) 125       125
Additional paid-in capital                        113,991    114,072
Retained earnings                                 81,766     81,961
Treasury shares                                  (9,192)    (9,442)
Accumulated other comprehensive loss              (29,858)  (25,509)
Total shareholders' equity                        156,832    161,207
Total liabilities and shareholders' equity        $309,568  $325,654

                                      


HARDINGE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                 
                                                      Quarter Ended March 31,
                                                      2013        2012
Operating activities                                   (unaudited)
Net income                                             $40       $2,443
Adjustments to reconcile net income to net cash used              
in operating activities:
Depreciation and amortization                          1,981      1,743
Debt issuance amortization                             22         52
Provision for deferred income taxes                    143        981
Gain on sale of assets                                 (42)       (2)
Unrealized intercompany foreign currency transaction   (595)      427
(gain) loss
Changes in operating assets and liabilities:                      
Accounts receivable                                    3,231      14,108
Inventories                                            (211)      (8,447)
Other assets                                           (1,467)    (295)
Accounts payable                                       (4,061)    (5,564)
Customer deposits                                      3,477      676
Accrued expenses                                       (9,109)    (9,505)
Accrued postretirement benefits                        (100)     (124)
Net cash used in operating activities                  (6,691)    (3,507)
                                                                 
Investing activities                                              
Capital expenditures                                   (851)      (2,113)
Proceeds on sale of assets                             69         --
Net cash used in investing activities                  (782)      (2,113)
                                                                 
Financing activities                                              
Net proceeds from short-term notes payable to bank    1,762      5,588
Repayments of long-term debt                           (1,117)    324
Dividends paid                                         (233)      (233)
Other financing activities                             --         (49)
Net cash provided by financing activities              412        5,630
                                                                 
Effect of exchange rate changes on cash                (387)      460
Net (decrease) increase in cash                        (7,448)    470
Cash and cash equivalents at beginning of period       26,855     21,736
Cash and cash equivalents at end of period             $19,407   $22,206

CONTACT: Company:
         Edward J. Gaio
         Chief Financial Officer
         Phone: (607) 378-4207
        
         Investor Relations:
         Deborah K. Pawlowski, Kei Advisors LLC
         Phone: (716) 843-3908
         Email: dpawlowski@keiadvisors.com
 
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