Hardinge reports improved first quarter

ELMIRA — Machine-tool manufacturer Hardinge, Inc. continued its return to profitability with a strong first quarter in which profit jumped and sales edged up.

Hardinge (NASDAQ: HDNG) reported that its first-quarter net income soared to $2.4 million, or 21 cents per share, from $1.4 million, or 12 cents, in the year-ago period.

The Elmira–based company’s net sales ticked up 2 percent to $74.7 million in the quarter from $73.5 million in the first quarter of 2011.

“We delivered another solid quarter with comparable year-on-year sales levels, but improved profitability, driven by favorable product mix and pricing,” Hardinge President and CEO Richard Simons said in a May 9 conference call with investors and the media.

However, Hardinge sales declined 18 percent, from the fourth quarter of 2011, when many customers accelerated purchases to take advantage of tax benefits expiring in 2011, the firm says.

Hardinge sales in Europe grew 24 percent to $24.7 million, while sales in North America increased 8 percent to $18.6 million for the first quarter. Strong sales in Germany and the United Kingdom bolstered European sales, while a strengthening industrial economy helped increase sales in North America, Simons said.

The company’s sales to Asia declined 14 percent during the quarter to $31.4 million, owing in part to weakness due to plant shutdowns for the Chinese Lunar New Year.

“We have mentioned before that, given our geographical mix of sales, which is more heavily weighted to Asia, our first quarter will typically be our lowest shipment quarter of the year, due to the effect of a normal two-week shutdown by our customers and our own plants celebrating their New Year,” Simons said.

While Hardinge sales increased slightly during the quarter, overall orders declined 28 percent to $81.4 million. Orders in Asia declined 50 percent to $30.9 million and North American orders declined 11 percent to $20.7 million. Orders in Europe rose just 1 percent to $29.8 million.

“As we discussed at this time last year, order levels in Asia in the first quarter of 2011 were overheated, as our customers, primarily in China, reacted to the increasing prices and extended lead times last year, leading to the record high order volumes there,” Simons said. “Looking to the same period this year, our sales channels experienced a high level of quote activity during the first three months of the year, but orders started off slowly; however, during February and March, orders picked up and continued to be strong through April.”

Hardinge reported $2.1 million in capital expenditures during the first quarter and expects to spend between $7 million and $9 million for the year. About $3 million to $5 million of that will be for general maintenance purposes, with the remainder going toward the completion of the company’s new facility in China and to improve productivity at the company’s Switzerland facility.

The company has a backlog of $149 million, most of which will ship in 2012.

Simons expects the company to follow along with long-term industry trends calling for about 10 percent compounded annual growth, primarily in Asia and forecast second-quarter sales of $90 million.

“As we look out into the remainder of 2012 and beyond, we believe we can continue to capitalize on the worldwide expansion of machine-tool consumption by leveraging our strong brand and channels to market, taking care of our traditional markets, and targeting emerging markets, such as Asia, for exceptional growth,” Simons said.

Headquartered in Elmira, 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 400 people at its Elmira facility. Hardinge also operates plants in Switzerland, Taiwan, and China, but did not disclose employment figures for those facilities.