2008 Summary:
- Fourth quarter orders down 51%, with full year orders down 5% compared to 2007
- Fourth quarter sales down 21%, with full year sales down 3% compared to 2007
- Company continues to institute cost reduction actions in response to the global economy
- Fourth quarter cash flow from operations was $6.8 million, $9.7 million for the full year
ELMIRA, N.Y., Feb. 19 /PRNewswire-FirstCall/ -- Hardinge Inc. (Nasdaq: HDNG), a leading international provider of advanced metal-cutting solutions, today reported net sales of $76.2 million for the fourth quarter of 2008, a decrease of 21% compared to $96.0 million for the fourth quarter 2007. Net sales for the full year were $345.0 million, a decrease of 3% over 2007 net sales of $356.3 million.
Hardinge reported a net loss for fourth quarter 2008 of ($4.1) million, or ($0.36) per diluted and basic share, compared to a net loss of ($0.1) million, or ($0.01) per diluted and basic share for the same period of 2007. Net loss for the full year was ($12.7) million compared to net income of $14.9 million in 2007. Diluted loss per share for 2008 was ($1.12) compared to diluted earnings per share of $1.41 for 2007.
Cash flow from operations was $6.8 million in the quarter and $9.7 million for the year. The cash generation was primarily a result of breakeven performance at the operating EBITDA level and reduced working capital requirements that were driven by the Company's inventory reduction actions and reduced accounts receivable balances as sales volumes have declined.
Fourth quarter results were impacted by a $19.7 million reduction in sales, compared with the prior year, and are reflective of the challenging business climate that exists worldwide. The Company reduced fourth quarter SG&A expenses by $2.0 million, in comparison to 2007, after excluding non-recurring charges of $0.4 million for a voluntary early retirement program, $0.3 million in severance related costs and $0.3 million related to the closure of our Canadian facility taken during the fourth quarter of 2008.
'Fourth quarter sales and customer orders reflect the very difficult business environment that exists for manufacturing companies worldwide,' said Richard L. Simons, President and Chief Executive Officer. 'During 2009 we will focus our efforts on reducing overhead costs and maximizing our cash flow. We expect these actions will accelerate our return to profitability once the economic environment improves. Our balance sheet remains a strength with low-debt (net of cash) and should enable Hardinge to effectively weather this storm and emerge from the worldwide recession as a strong survivor.'
The following tables summarize orders and sales by geographical region for the quarters and years ended December 31, 2008 and 2007:
Quarter Ended Quarter Ended
December 31, December 31,
Orders from % Sales from %
Customers in: 2008 2007 Change Customers in: 2008 2007 Change
North America $18,131 $29,662 (39)% North America $23,895 $29,530 (19)%
Europe 21,131 46,040 (54)% Europe 35,021 47,460 (26)%
Asia & Other 7,286 19,852 (63)% Asia & Other 17,312 18,973 (9)%
$46,548 $95,554 (51)% $76,228 $95,963 (21)%
Year Ended Year Ended
December 31, December 31,
Orders from % Sales from %
Customers in: 2008 2007 Change Customers in: 2008 2007 Change
North North
America $103,249 $117,532 (12)% America $108,501 $121,520 (11)%
Europe 156,320 170,916 (9)% Europe 158,947 165,144 (4)%
Asia & Other 81,605 72,092 13% Asia & Other 77,558 69,658 11%
$341,174 $360,540 (5)% $345,006 $356,322 (3)%
Fourth quarter orders and sales decreased by $49.0 million or 51% and $19.7 million or 21% respectively, compared to the prior year. These decreases occurred across all regions as the recession is worldwide and eliminated year to date increases of $29.6 million or 11% and $8.4 million or 3%, respectively, at the end of the third quarter. The decreases in orders and sales were impacted by $9 million in order cancellations and $11 million in shipment deferrals primarily due to the current global economic conditions. The Company currently anticipates that these deferrals will generate sales during the first half of 2009. On a full year basis, orders and sales decreased by $19.3 million or 5% and $11.3 million or 3% compared to the prior year. These declines were generated as a result of fourth quarter activity which eliminated full year increases in orders and sales of 11% and 3%, respectively, at the end of the third quarter.
Gross profit for the quarter was $18.7 million and $92.3 million for the full year, decreases of 22% and 14%, respectively, compared to 2007. Gross profit in the fourth quarter was negatively impacted by $1.9 million in reduced margins related to actions taken to reduce discontinued product lines in the U.S., $1.2 million in inventory write downs and $0.6 as a result of a voluntary early retirement program and lower sales volume. Gross profit for the year decreased due to a $6.3 million impairment charge associated with the discontinuance of certain product lines and a review of other expected inventory usage patterns, $4.6 million due to reduced factory utilization, $3.0 million in reduced margins associated with the Company's efforts to reduce discontinued product lines and overall sales volume. These negative impacts were offset by approximately $4.6 million related to the strengthening of foreign currencies relative to the U.S. dollar. Gross profit percentage for the quarter and full year was 24.6% and 26.7% of net sales, compared to 25.0% and 30.1% for the same periods in 2007.
Selling, general and administrative (SG&A) expenses for the quarter decreased 4% or $1.0 million to $21.7 million compared to the prior year. Excluding non-recurring charges of $0.4 million related to a voluntary early retirement program, $0.3 million in severance and $0.3 million related to the closure of our Canadian facility, the Company reduced SG&A expenses by $2.0 million during the fourth quarter. The reduction in SG&A expenses is the result of cost cutting actions taken by the company, which included head count reductions, plant shut downs, and reduced levels of discretionary spending.
