Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - HARDINGE INC | ex991q1fy16earningsrelease.htm |
| 8-K - 8-K HDNG Q1 FY16 EARNINGS RELEASE - HARDINGE INC | hardingeincq1fy16earningsr.htm |
First Quarter 2016 Financial Results Conference Call May 10, 2016 NASDAQ: HDNG www.hardinge.com Douglas J. Malone Vice President and Chief Financial Officer Richard L. Simons President and Chief Executive Officer
© 2016 Hardinge Inc. www.hardinge.com 2 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.
© 2016 Hardinge Inc. www.hardinge.com 3 Sales ($ in millions) $84 $109 $101 $108 $100 $121 $100 $103 $97 $98 $129 $120 $108 $110 $116 2012 2013 2014 2015 Q1 2016 TTM North America Europe Asia $312 $334 $329 $26 $29 $25 $28 $18 $23 $22 $21 $31 $24 $20 $31 $31 $28 $26 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 North America Europe Asia $69 $82 Quarterly Net Sales Annual Net Sales Q1 2016 sales impacted by unfavorable FX translation of $1.9 million; Excluding FX impact sales increased 1% over prior-year period Growth in Europe and Asia offset weak North America sales compared with Q1 2015 Actual net sales may differ due to rounding. $315 $77 $87 $68 $314
© 2016 Hardinge Inc. www.hardinge.com 4 $334 $329 $312 $315 $314 32.6% 32.7% 32.4% 33.4% 33.6% 2012 2013* 2014* 2015* Q1 2016 TTM $69 $82 $77 $87 $68 32.6% 32.8% 33.1% 34.9% 33.5% Q1 2015* Q2 2015 Q3 2015 Q4 2015 Q1 2016 Gross Margin Quarterly Sales & Adjusted Gross Margin* Annual Sales & Adjusted Gross Margin* Savings from restructuring program of $0.2 million and focus on operational efficiencies drove Q1 2016 gross margin improvement over prior-year period Reclassified R&D from cost of sales to an operating expense line item, providing greater clarity on investments in product development Sales ($ in millions) * Gross Margin for Q1 2015, 2013, 2014 and 2015 were adjusted to exclude atypical items. Adjusted Gross Margin is a non-GAAP measure. See supplemental slides for Adjusted Gross Margin reconciliation and other important disclaimers regarding Adjusted Gross Margin. Amounts shown pertain to continuing operations. Actual net sales may differ due to rounding.
© 2016 Hardinge Inc. www.hardinge.com 5 (1.0)% 2.9% 2.5% 7.4% (0.4)% Q1 2015* Q2 2015 Q3 2015* Q4 2015* Q1 2016* $69 $82 $77 $87 $68 $334 $329 $312 $315 $314 6.1% 5.3% 1.7% 3.2% 3.3% 2012* 2013* 2014* 2015* Q1 2016 TTM* Operating Margin Quarterly Sales & Adjusted Operating Margin* Annual Sales & Adjusted Operating Margin* Sales ($ in millions) * Operating Margin for all periods shown except for Q2 2015 were adjusted to exclude atypical items. Adjusted Operating Margin is a non-GAAP measure. See supplemental slides for Adjusted Operating Margin reconciliation and other important disclaimers regarding Adjusted Operating Margin. Actual net sales may differ due to rounding. Q1 2016 & TTM operating margins include savings from restructuring program: Q1 2016 $0.7 million ($0.2 million COGS, $0.3 million SG&A; $0.2 million R&D) Q1 2016 TTM $1.1 million ($0.4 million COGS; $0.3 million SG&A; $0.4 million R&D) All amounts shown pertain to continuing operations.
© 2016 Hardinge Inc. www.hardinge.com 6 2.3% 5.6% 5.5% 9.3% 2.5% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 $69 $82 $77 $87 $68 $334 $329 $312 $315 $314 8.3% 8.2% 4.8% 5.9% 5.9% 2012 2013 2014 2015 Q1 2016 TTM EBITDA Margin* Quarterly Sales & Adjusted EBITDA & Margin* Annual Sales & Adjusted EBITDA & Margin* Sales ($ in millions) * 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. Actual net sales may differ due to rounding. All amounts shown pertain to continuing operations. $1.6 $4.6 $4.2 $8.1 $27.9 $14.9 $18.5 $26.9 $18.6 $1.7
© 2016 Hardinge Inc. www.hardinge.com 7 ($0.7) $1.6 $0.9 $5.9 ($0.3) Q1 2015* Q2 2015 Q3 2015* Q4 2015* Q1 2016* Quarterly Adjusted Net Income (Loss)* $15.4 $14.9 $2.8 $7.7 $8.1 2012* 2013* 2014* 2015* Q1 2016 TTM* Annual Adjusted Net Income* Net Income (Loss) ($ in millions) * Net Income (Loss) for all periods shown except Q2 2015 were adjusted to exclude atypical items. Adjusted Net Income (Loss) is a non-GAAP measure. See supplemental slides for Adjusted Net Income (Loss) reconciliation and other important disclaimers regarding Adjusted Net Income (Loss). All amounts shown pertain to continuing operations.
© 2016 Hardinge Inc. www.hardinge.com 8 ($ in millions) Annual Orders $79 $86 $105 $99 $96 $106 $95 $109 $97 $82 $103 $107 $117 $120 $110 2012 2013 2014 2015 Q1 2016 TTM North America Europe Asia $331 $288 $288 Quarterly Orders $27 $27 $20 $25 $24 $32 $22 $23 $20 $17 $34 $28 $29 $29 $24 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 North America Europe Asia $93 $77 Low Q1 2016 order levels do not reflect strong pipeline of quoting activity Q1 2015 unseasonably high orders included two large orders totaling $10.9 million Unfavorable foreign exchange impact on orders versus prior-year period of $1.6 million in Q1 2016 Actual orders may differ due to rounding. $72 $316 $74 Geographic Diversity $65 $288
© 2016 Hardinge Inc. www.hardinge.com 9 ($ in millions) Backlog 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 $56 $59 $60 $46 $45 $61 $55 $45 $48 $46 $11 $11 $11 $8 $10 3/31/2015 6/30/2015 9/30/2015 12/31/2015 3/31/2016 Grinding Milling & Turning Workholding Parts & Accessories $125 $102 $128 $116 Backlog by Product Line $101
© 2016 Hardinge Inc. www.hardinge.com 10 Restructuring to Improve Profitability Consolidation of certain facilities and restructuring certain operations Q1 2016 operating margin benefitted by 1.0 points Incurred $0.2 million of restructuring charges in Q1 2016 and $3.6 million in 2015 Expect to be completed by end of second quarter 2016 ($ in millions) Estimated Total Restructuring Charges Charges To-date Estimated Annualized Savings Total Q1 2016 Savings Total Savings to Date $4.5 $3.8 $4.5 $0.7 $1.1
© 2016 Hardinge Inc. www.hardinge.com 11 Source: Oxford Economics Spring 2016 Global Machine Tool Outlook Report Emerging Economies Drive Demand $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Americas Europe Asia World M ac h in e T o ol C o n s u m p ti o n (i n U S $ b ill io n s ) Drivers of Machine Tool Consumption: Older machines – technologically obsolete Skilled machinists – shrinking supply Emerging economies – growing middle class Global competitiveness – advancing productivity 2015-2019 Forecast CAGR World ~3% Asia ~3% Europe ~4% Americas ~2% Oxford Economics Machine Tool Forecast $80 billion industry
© 2016 Hardinge Inc. www.hardinge.com 12 2016 Outlook First quarter sales and orders not indicative of trend for rest of 2016, expecting improved results for Q2-Q4 Quoting activity continues to be strong, expecting to see pipeline convert to orders in future quarters Restructuring expected to improve profitability profile
NASDAQ: HDNG www.hardinge.com First Quarter 2016 Financial Results Conference Call May 10, 2016
NASDAQ: HDNG SUPPLEMENTAL INFORMATION www.hardinge.com
© 2016 Hardinge Inc. www.hardinge.com 15 57 59 61 61 61 2012 2013 2014 2015 Q1 2016 TTM Emphasis on Productivity and Cash Inventory Turns (Monthly Avg) Receivable Days Outstanding (Monthly Avg) * Managed Working Capital is defined as: Receivables + Inventory - Payables - Customer Deposits Managed working capital was 40% of sales, which is in the upper quartile of the industry Machine tool industry requires higher inventory to support customers’ needs 41% 43% 42% 40% 40% 2012 2013 2014 2015 Q1 2016 TTM 1.7 1.7 1.8 1.8 1.8 2012 2013 2014 2015 Q1 2016 TTM Managed Working Capital* as a Percent of Sales (Monthly Avg)
© 2016 Hardinge Inc. www.hardinge.com 16 $161.2 $203.8 $169.6 $161.1 $163.6 $20.0 $26.6 $16.2 $11.6 $14.0 2012 2013 2014 2015 3/31/16 Equity Debt $26.9 $34.7 $16.3 $32.8 $29.3 2012 2013 2014 2015 3/31/16 Financial Strength and Flexibility Capitalization ($ in millions) $7.6 $3.9 $3.2 $4.2 $0.4 2012* 2013 2014 2015 2016 YTD * Reflects expansion capital investments in China and Switzerland of $3.3 million in 2012 Cash & Cash Equivalents Capital Expenditures
© 2016 Hardinge Inc. www.hardinge.com 17 Adjusted Gross Profit & Margin Reconciliation ($ in millions) Gross Profit and Gross Margin for Q1 2015, 2013, 2014 and 2015 were adjusted to exclude atypical items as listed above. Hardinge believes that when used in conjunction with GAAP measures, Adjusted Gross Profit, which is a non-GAAP measure, assists in the understanding of Hardinge’s operating performance. Actual amounts may differ due to rounding. 2012 2013 2014 2015 Q1 2016 TTM Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Sales $ 334.4 $ 329.5 $ 311.6 $ 315.3 $ 314.0 $ 69.1 $ 82.4 $ 76.8 $ 87.0 $ 67.8 Cost of sales 225.3 223.8 210.8 210.7 208.5 47.3 55.4 51.4 56.6 45.1 Gross profit 109.1 105.7 100.8 104.6 105.5 21.8 27.0 25.4 30.4 22.7 Inventory Adjustment - - - 0.7 - 0.7 - - - - Inventory step-up charge - 1.9 0.1 - - - - - - - Adjusted gross profit $ 109.1 $ 107.6 $ 100.9 $ 105.3 $ 105.5 $ 22.5 $ 27.0 $ 25.4 $ 30.4 $ 22.7 Adjusted gross margin 32.6% 32.7% 32.4% 33.4% 33.6% 32.6% 32.8% 33.1% 34.9% 33.5%
© 2016 Hardinge Inc. www.hardinge.com 18 2012 2013 2014 2015 Q1 2016 TTM Net income (loss) 17.9$ 9.9$ (2.1)$ 2.6$ 2.8$ 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 0.2 2.2 0.1 - - Restructuring expenses - - - 3.6 3.8 Professional fees for strategic review process - - - 0.8 1.5 Other adjustments (2.7) 0.2 - - - Adjusted net income 15.4 14.9 2.8 7.7 8.1 Plus: Interest expense, net 0.7 1.0 0.7 0.4 0.4 Adjusted income tax expense 4.3 1.4 1.6 1.9 1.9 Adjusted operating income 20.4 17.3 5.1 10.0 10.4 Depreciation and amortization expense 7.5 9.6 9.8 8.5 8.2 Adjusted EBITDA 27.9$ 26.9$ 14.9$ 18.5$ 18.6$ Sales $334.4 $329.5 $311.6 315.3$ 314.0$ Adjusted operating margin 6.1% 5.3% 1.7% 3.2% 3.3% Adjusted EBITDA margin 8.3% 8.2% 4.8% 5.9% 5.9% Annual Adjusted Net Income, Operating Income & Margin and EBITDA & Margin Net Income (Loss), Operating Income, Operating Margin, EBITDA and EBITDA Margin in 2012, 2013, 2014, 2015 and Q1 2016 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)
© 2016 Hardinge Inc. www.hardinge.com 19 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 Q1 2015, Q3 2015, Q4 2015 and Q1 2016 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 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Net (loss) income (1.4)$ 1.6$ (0.3)$ 2.7$ (1.2)$ Inventory adjustment 0.7 - - - - Restructuring expenses - - 0.9 2.7 0.2 Professional fees for strategic review process - - 0.3 0.5 0.7 Adjusted net (loss) income (0.7) 1.6 0.9 5.9 (0.3) Plus: Interest expense, net 0.1 0.1 0.1 0.1 0.1 Adjusted income tax expense (benefit) (0.1) 0.7 0.9 0.4 (0.1) Adjusted operating (loss) income (0.7) 2.4 1.9 6.4 (0.3) Depreciation and amortization expense 2.3 2.2 2.3 1.7 2.0 Adjusted EBITDA 1.6$ 4.6$ 4.2$ 8.1$ 1.7$ Sales 69.1 82.4 76.8 87.0 67.8 Adjusted operating margin (1.0)% 2.9 % 2.5 % 7.4 % (0.4)% Adjusted EBITDA margin 2.3 % 5.6 % 5.5 % 9.3 % 2.5 %
© 2016 Hardinge Inc. www.hardinge.com 20 Quarterly Financial Appendix Actual amounts may differ due to rounding. (in millions, except per share data) 6/30/2014 9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015 12/31/2015 3/31/2016 Sales 78.9$ 68.9$ 93.0$ 69.1$ 82.4$ 76.8$ 87.0$ 67.8$ Cost of sales 53.6 46.8 62.2 47.3 55.4 51.4 56.6 45.1 Gross profit 25.3 22.1 30.8 21.8 27.0 25.4 30.4 22.7 Gross profit margin 32.1% 32.1% 33.2% 31.6% 32.8% 33.1% 34.9% 33.5% Selling, general and administrative expenses 20.1 20.1 21.7 19.6 21.1 19.9 20.7 20.5 Research & development 3.3 3.4 3.8 3.6 3.5 3.7 3.4 3.3 Restructuring charges - - - - - 0.9 2.7 0.2 Impairment charges - 5.8 - - - - - - Other expense (income) 0.3 (0.3) 0.2 - - 0.2 0.4 (0.1) Income (loss) from operations 1.6 (6.9) 5.1 (1.4) 2.4 0.7 3.2 (1.2) Operating margin 2.1 % (10.0)% 5.5 % (2.0)% 2.9 % 1.0 % 3.7 % (1.8)% Interest expense, net 0.1 0.2 0.2 0.1 0.1 0.1 0.1 0.1 Income (loss) before income taxes 1.5 (7.1) 4.9 (1.5) 2.3 0.6 3.1 (1.3) Income tax expense (benefit) 0.2 0.5 0.4 (0.1) 0.7 0.9 0.4 (0.1) Net income (loss) 1.3$ (7.6)$ 4.5$ (1.4)$ 1.6$ (0.3)$ 2.7$ (1.2)$ Basic earnings (loss) per share Earnings (loss) per share 0.11$ (0.60)$ 0.36$ (0.11)$ 0.12$ (0.03)$ 0.22$ (0.10)$ Diluted earnings (loss) per share Earnings (loss) per share 0.11$ (0.60)$ 0.35$ (0.11)$ 0.12$ (0.03)$ 0.21$ (0.10)$ 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 12.7 12.7 12.7 12.7 12.8 12.8 12.8 12.8 Weighted avg. shares outstanding: Diluted 12.8 12.7 12.8 12.7 12.9 12.8 12.9 12.8