Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - HARDINGE INC | ex991q1fy17earningsrelease.htm |
| 8-K - 8-K - HARDINGE INC | hardingeincq1fy17earningsr.htm |
© 2017 Hardinge Inc. 1 www.Hardinge.com
May 5, 2017
First Quarter 2017
Financial Results
© 2017 Hardinge Inc. 2 www.Hardinge.com
Safe Harbor Statement
This presentation may contain 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). Any such statements
are based upon 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 following factors are among those that could cause actual
results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that
should be considered in evaluating any such statement: fluctuations in the machine tool business cycles,
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 the Company’s entry into new product and geographic markets, the
Company’s ability to manage its operating costs, actions taken by customers such as order cancellations or
reduced bookings by customers or distributors, competitor’s actions such as price discounting or new product
introductions, governmental regulations and environmental matters, changes in the availability of cost of
materials and supplies, the implementation of new technologies and currency fluctuations. The Company
undertakes no obligation to publicly update any forward-looking statement, whether as a result of new
information, future events, or otherwise.
© 2017 Hardinge Inc. 3 www.Hardinge.com
Sales
($ in millions)
$109 $101 $108 $93 $96
$100 $103 $97 $91 $85
$120 $108 $110
$108 $108
2013 2014 2015 2016 Q1 2017
TTM
$315 $292 $312 $289
$329
$17 $21 $25
$30
$20
$24 $22
$18
$27
$18
$27 $27 $24
$30
$27
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Quarterly Net Sales Annual Net Sales
Excluding unfavorable FX impact of $1.5 million, Q1 2017 sales were down 2.5% compared
to Q1 2016
Light quarter sales were expected as a result of customer scheduling in Europe and U.S
Sales in Europe were soft due to political uncertainty driving weaker orders in 2016
Actual net sales may differ due to rounding.
$68 $70 $67 $65
North America Europe Asia
$87
© 2017 Hardinge Inc. 4 www.Hardinge.com
$22.7 $23.6 $23.2
$28.1
$21.4
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Gross Profit & Margin
Quarterly Annual
Gross profit margin was a healthy 33.1% despite light sales in quarter
Margins continue to benefit from the 2015-2016 restructuring
$105.7 $100.8 $104.6 $97.5 $96.3
2013 2014 2015 2016 Q1 2017
TTM
33.5% 33.6% 34.4% 32.4%
32.1% 32.3% 33.2% 33.4% 33.3%
All amounts shown pertain to continuing operations.
33.1%
($ in millions)
© 2017 Hardinge Inc. 5 www.Hardinge.com
$14.9
$2.8
$7.7
$4.4 $4.0
*
($1.2)
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
($2.0)
$3.7
$0.1
($0.3) ($0.6)
* * * ($0.2)
$2.6
2013 2014 2015 2016 Q1 2017
TTM
$9.9
$(2.1)
$1.2 $0.4
Quarterly Net Income (Loss)
Reported & Adjusted*
Annual Net Income (Loss)
Reported & Adjusted*
Net Income (Loss)
($ in millions)
* Adjusted Net Income (Loss) is a non-GAAP financial measure. Hardinge believes that the use of Adjusted Net Income (Loss) helps in the understanding of the Company’s
financial results. See supplemental slides for an Adjusted Net Income (Loss) reconciliation and other important disclaimers.
All amounts shown pertain to continuing operations.
$0.7
GAAP NON-GAAP*
*
*
*
* *
($1.4)
$4.2 *
© 2017 Hardinge Inc. 6 www.Hardinge.com
$26.9
$14.9
$18.8
$15.7 $15.6
2013 2014 2015 2016 Q1 2017
TTM
$2.0
$3.1 $2.9
$7.7
$1.9
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
EBITDA and Margin*
Adjusted EBITDA & Margin* Adjusted EBITDA & Margin*
* Adjusted EBITDA & Margin are non-GAAP financial measures. Hardinge believes that the use of Adjusted EBITDA & Margin helps in the understanding of the Company’s
financial results. See supplemental slides for an Adjusted EBITDA & Margin reconciliation and other important disclaimers regarding Adjusted EBITDA & Margin.
All amounts shown pertain to continuing operations.
8.2% 4.8% 6.0% 5.4% 5.4% 2.9% 4.4% 4.3% 8.9% 2.9%
($ in millions)
© 2017 Hardinge Inc. 7 www.Hardinge.com
($ in millions)
Annual Orders
$86 $105 $99 $102 $102
$95
$109 $97 $92 $96
$107
$117
$120 $117 $121
2013 2014 2015 2016 Q1 2017
TTM
$331
$288
$319
Quarterly Orders
$24 $26 $27 $25 $24
$17
$27 $20 $28 $21
$24
$28
$28
$37
$28
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
$81
$75
Orders were up 12% in Q1 2017 over Q1 2016, with strength in Europe and Asia:
Europe +24%, Asia +17%, North America (1)%
North America orders showed significant strength in March
Order strength globally driven by demand for grinding machines
Actual orders may differ due to rounding.
$316
$73
Geographic Diversity
$65
$311
North America Europe Asia
$90
© 2017 Hardinge Inc. 8 www.Hardinge.com
($ in millions)
Backlog
Backlog increased 9% over Q4 2016 and 26% versus the prior-year period on
strong order volume, especially grinding
Lead times vary by product line
Grinding: six to nine months; Milling and turning: two to six months
Workholding parts and accessories: Standard - next day, Specials – four to eight weeks
$45
$58 $64 $57 $64
$46
$41
$43 $51
$51
$10
$11
$10 $9
$12
3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017
Grinding Milling & Turning Workholding Parts & Accessories
$127
Backlog by Product Line
$101
$110
$117
$117
© 2017 Hardinge Inc. 9 www.Hardinge.com
$203.6 $169.6
$161.1 $155.9
$158.2
$26.6
$16.2
$11.8 $5.9 $5.2
2013 2014 2015 2016 3/31/2017
Equity Debt
$34.7
$16.3
$32.8
$28.3 $26.7
2013 2014 2015 2016 3/31/2017
Total Capitalization
($ in millions)
$3.9
$3.2
$4.2
$2.5 $2.5
2013 2014 2015 2016 Q1 2017
TTM
Cash & Cash Equivalents Capital Expenditures
Financial Strength and Flexibility
© 2017 Hardinge Inc. 10 www.Hardinge.com
59 61
61 61 61
2013 2014 2015 2016 Q1 2017
Inventory Turns (monthly avg.) Receivable Days
Outstanding (monthly avg.)
* Managed Working Capital is defined as: Receivables + Inventory - Payables - Customer Deposits
43% 42% 40% 42%
43%
2013 2014 2015 2016 Q1 2017
1.7
1.8 1.8
1.6
1.7
2013 2014 2015 2016 Q1 2017
Managed Working Capital*
as a Percent of Sales (monthly avg.)
Emphasis on Productivity and Cash
Managed working capital at 43%
of sales: remains within upper
quartile in industry
Machine tool industry requires
higher levels of inventory to
support customers needs
© 2017 Hardinge Inc. 11 www.Hardinge.com
Source: Oxford Economics Spring 2017 Global Machine Tool Outlook Report
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Americas Europe Asia World
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Oxford Economics Machine Tool Forecast
Machine tool industry - $80 billion
Drivers of Machine Tool Consumption:
Emerging economies - growing middle class
Obsolescence - older machines technologically outdated
Automation - shrinking supply of skilled machinists
Global competitiveness - advancing productivity
Expect moderate long-term demand growth ~3%
Emerging Economies Drive Demand
China driving
global growth
© 2017 Hardinge Inc. 12 www.Hardinge.com
2017 Outlook
Expecting moderate sales growth in 2017
Solid order activity across all product lines, particularly grinding
Order strength and backlog levels point to improved 2017 revenue
Strong aftermarket activity as leading indicator
Well positioned to benefit from building momentum in the machine tool
industry
EBITDA will reflect full year of post 2015-2016 restructuring
cost savings
New restructuring program to generate additional $2.0 million
to $2.5 million in annualized savings upon completion
To be completed by mid-2018
Restructuring costs estimated to be $3.8 million to $4.3 million;
approximately $1.6 million noncash
© 2017 Hardinge Inc. 13 www.Hardinge.com
May 5, 2017
First Quarter 2017
Financial Results
© 2017 Hardinge Inc. 14 www.Hardinge.com
SUPPLEMENTAL
INFORMATION
© 2017 Hardinge Inc. 15 www.Hardinge.com
Annual Adjusted Net Income, Operating
Income & Margin and EBITDA & Margin
Net Income (Loss), Operating Income, Operating Margin, EBITDA and EBITDA Margin in 2013, 2014, 2015, 2016 and Q1 2017 TTM were adjusted to exclude atypical items as listed above.
Hardinge believes that when used in conjunction with GAAP measures, Adjusted Net Income, Adjusted Operating Income and Adjusted EBITDA, which are non-GAAP measures, assist in the
understanding of Hardinge’s operating performance.
Actual amounts may differ due to rounding.
($ in millions)
2013 2014 2015 2016
Q1 17
TTM
Net (loss) income 9.9$ (2.1)$ 2.6$ 1.2$ 0.4$
Impairment charges 6.2 5.4 - - -
Income from discontinued operations and gain on
disposal of discontinued operation, net of tax (5.5) (0.2) - - -
Gain on purchase of business - (0.5) - - -
Inventory adjustment - - 0.7 - -
Inventory step-up charge 1.9 0.1 - - -
Acquisition transaction expenses 2.2 0.1 - - -
Restructuring expenses - - 3.6 0.7 1.9
Professional fees for strategic review process - - 0.8 1.3 0.6
Pension Settlement Loss - - - 0.5 0.5
Other adjustments 0.2 - - 0.7 0.6
Adjusted net income 14.9 2.8 7.7 4.4 4.0
Plus: Interest expense, net 1.0 0.7 0.4 0.4 0.4
Adjusted income tax expense 1.4 1.6 1.9 2.1 2.4
Adjusted operating income 17.3 5.1 10.0 6.9 6.8
Depreciation and amortization expense 9.6 9.8 8.8 8.8 8.8
Adjusted EBITDA 26.9$ 14.9$ 18.8$ 15.7$ 15.6$
Sales $329.5 $311.6 315.3$ 292.0$ 288.8$
Adjusted operating margin 5.3% 1.7% 3.2% 2.4% 2.4%
Adjusted EBITDA margin 8.2% 4.8% 6.0% 5.4% 5.4%
© 2017 Hardinge Inc. 16 www.Hardinge.com
Quarterly Adjusted Net Income (Loss), Operating
Income (Loss) & Margin and EBITDA & Margin
Quarterly Net Income (Loss) , Operating Income (Loss) , Operating Margin, EBITDA and EBITDA Margin in all periods presented were adjusted to exclude atypical items as listed above.
Hardinge believes that when used in conjunction with GAAP measures, Adjusted Net Income (Loss), Adjusted Operating Income (Loss) and Adjusted EBITDA, which are non-GAAP
measures, assist in the understanding of Hardinge’s operating performance.
Actual amounts may differ due to rounding.
($ in millions)
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Net (loss) income (1.2)$ 0.1$ (1.4)$ 3.7$ (2.0)$
Restructuring expenses 0.2 0.2 0.2 0.1 1.4
Professional fees for strategic review process 0.7 0.4 0.1 0.1 -
Pension Settlement Loss - - 0.6 (0.1) -
Other adjustments 0.1 - 0.2 0.4 -
Adjusted net income (loss) (0.2) 0.7 (0.3) 4.2 (0.6)
Plus: Interest expense, net 0.1 0.1 0.1 0.1 0.1
Adjusted income tax expense (benefit) (0.1) 0.1 0.9 1.2 0.2
Adjusted operating income (loss) (0.2) 0.9 0.7 5.5 (0.3)
Depreciation and amortization expense 2.2 2.2 2.2 2.2 2.2
Adjusted EBITDA 2.0$ 3.1$ 2.9$ 7.7$ 1.9$
Sales 67.8 70.2 67.2 86.8 64.6
Adjusted operating margin (0.3)% 1.3 % 1.0 % 6.3 % (0.5)%
Adjusted EBITDA margin 2.9 % 4.4 % 4.3 % 8.9 % 2.9 %
© 2017 Hardinge Inc. 17 www.Hardinge.com
(in millions, except per share data)
Quarterly Financial Appendix
Actual amounts may differ due to rounding.
6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017
Sales 82.4$ 76.8$ 87.0$ 67.8$ 70.2$ 67.2$ 86.8$ 64.6$
Cost of sales 55.4 51.4 56.6 45.1 46.6 44.0 58.7 43.2
Gross profit 27.0 25.4 30.4 22.7 23.6 23.2 28.1 21.4
Gross profit margin 32.8% 33.1% 34.9% 33.5% 33.6% 34.4% 32.4% 33.1%
Selling, general and administrative expenses 21.1 19.9 20.7 20.5 19.7 20.0 19.3 18.0
Research & development 3.5 3.7 3.4 3.3 3.4 3.3 3.6 3.6
Restructuring charges - 0.9 2.7 0.2 0.2 0.2 0.1 1.4
Impairment charges - - - - - - - -
Other expense (income) - 0.2 0.4 (0.1) - 0.3 0.1 0.2
Income (loss) from operations 2.4 0.7 3.2 (1.2) 0.3 (0.6) 5.0 (1.8)
Operating margin 2.9 % 1.0 % 3.7 % (1.8)% 0.4 % (0.9)% 5.8 % (2.8)%
Interest expense, net 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Income (loss) before income taxes 2.3 0.6 3.1 (1.3) 0.2 (0.7) 4.9 (1.9)
Income tax expense (benefit) 0.7 0.9 0.4 (0.1) 0.1 0.7 1.2 0.2
Net income (loss) 1.6$ (0.3)$ 2.7$ (1.2)$ 0.1$ (1.4)$ 3.7$ (2.0)$
Basic earnings (loss) per share:
Earnings (loss) per share 0.12$ (0.03)$ 0.22$ (0.10)$ 0.01$ (0.11)$ 0.29$ (0.16)$
Diluted earnings (loss) per share:
Earnings (loss) per share 0.12$ (0.03)$ 0.21$ (0.10)$ 0.01$ (0.11)$ 0.29$ (0.16)$
Cash dividends declared per share 0.02$ 0.02$ 0.02$ 0.02$ 0.02$ 0.02$ 0.02$ 0.02$
Weighted avg. shares outstanding: Basic 12.8 12.8 12.8 12.8 12.8 12.8 12.9 12.9
Weighted avg. shares outstanding: Diluted 12.9 12.8 12.9 12.8 12.9 12.8 12.9 12.9