Hardinge sales, profit fall in the third quarter

ELMIRA — Sales declined in the third quarter at Hardinge, Inc. (NASDAQ: HDNG), falling just a bit short of the figure company officials were shooting for, but still coming in line with expectations for the quarter, officials said.

After a second quarter that netted sales of $86 million, Hardinge Chairman, President, and CEO Richard Simons said in August that he expected third-quarter sales to fall in line with the second quarter.

However, sales for the third quarter came in just under that level at $82.9 million, down 8 percent from the $90.4 million Hardinge generated in the third quarter of 2011. Foreign-currency translation negatively affected sales by $3.6 million, but sales still decreased $3.9 million, or 4 percent, without the currency impact, according to the Nov. 8 earnings report from Hardinge.

The company posted net income of $4 million, or 34 cents per share, down from $4.2 million, or 36 cents, in the third quarter of 2011.

“Our quarter was in line with our expectations,” Simons said during a Nov. 8 conference call with investors and the media. Going forward, Simons said he expects fourth-quarter sales to be similar to the third quarter. Analysts estimate full-year sales of $293.8 million for Hardinge with earnings-per-share of $1.05.

Hardinge shares fell 6.4 percent on the first trading day following the earnings report.

European sales, which comprise 33 percent of total sales, slipped 18 percent in the quarter to $27.4 million as the region continues to struggle with a recession, Simons said.

Hardinge sales in North America also fell, dropping 10 percent to $20.2 million, but Simons categorized that decline as normal fluctuations due to inventory management by customers.

Hardinge’s sales to Asia rose 2 percent. The shipment during the quarter of several large multi-machine orders placed in 2011, and totaling about $9 million, helped offset an overall decrease in orders from China as the economy there slows down, Simons said.

There were some bright spots that stood out during the quarter that show some promise for the future, Simons noted. Hardinge participated in the International Manufacturing Technology Show Sept. 10-15 in Chicago. Attendance at the show was up about 20 percent over the previous year to about 100,000 visitors, Simons said, noting that Hardinge’s booth showed a similar surge in visitors. During the show, manufacturers, particularly those from North America, showed an interest in adding machine tools to increase productivity to compensate for a lack of available skilled labor, Simons said. Other companies noted an increase in “re-shoring work,” which is work that was once outsourced to overseas manufacturers but has since come back to the United States, he said.

While those bright spots are good, he said, overall indicators show that 2013 business conditions won’t improve much, if at all, over 2012. “Next year’s sales numbers may well be below our 2012 levels,” he cautioned. Hardinge will focus on new product development, cost-reduction initiatives, and productivity improvements to solidly position the company to react quickly to any market recovery, he said.

For the first nine months of 2012, Hardinge reported net sales of $243.9 million, down $6.7 million from a year ago. Net income rose 16 percent to $10.1 million, from $8.7 million in the first nine months of 2011. Earnings per share grew 15 percent to 86 cents, from 75 cents in the year-ago period.

Hardinge (www.hardingeus.com) manufactures machine tools for the aerospace, agricultural, transportation, consumer-goods, communications, electronics, construction, defense, energy, pharmaceutical and medical-equipment, and recreation industries. The company employs about 430 people at its Elmira facility. Hardinge also operates plants in Switzerland, Taiwan, and China.

Contact DeLore at tdelore@tgbbj.com