Hardinge CEO: Economy makes 2008 growth difficult
Hardinge Inc. (Nasdaq: HDNG) CEO J. Patrick Ervin said he believes growth in 2008 for the metal-cutting equipment maker will be more difficult due to the softening of several countries’ economies. Ervin made the comments during a midday conference call.
“However, we believe we are well positioned to gain market share based upon our strong array of product offerings and our extensive sales and support channels,” Ervin said.
The chief executive said customers in North America are apprehensive about the economic outlook, but that Hardinge’s overall business activity remains at good levels.
“We will monitor the North American market closely and make the appropriate adjustments as dictated by the market,” he said.
Ervin said Hardinge expects an impact on gross margins for the first three to six months of 2008 as the Elmira, N.Y.-based company discontinues older products and lowers inventories.
“Going forward, we do not anticipate any impact on our financial performance as a result of accounting changes,” Ervin said. “However, we do anticipate some affect on our gross margin percentage as we continue to phase out older-model products and run our factories temporarily at lower production volumes to reduce inventory levels.”
On Thursday morning, Hardinge reported that it swung to a fourth-quarter loss of $0.97 million, or $0.01 per share, from a profit of $6.2 million, or $0.71 per share, a year earlier. Wall Street analysts, on average, were projecting earnings of $0.43 per share.
“Obviously we are disappointed with our financial performance for the fourth quarter,” Ervin said. “In the quarter, we experienced a combination of prior-period accounting adjustments and the negative impact of operational initiatives which contributed to our poor financial performance.”
The CEO also mentioned that its board of directors approved a stock buyback plan for up to $10 million “over the next few years.” Ervin said the plan was approved because of Hardinge’s internal forecast for strong, positive cash flow.
“We believe that Hardinge will be one of the best long-term investments available in the market and we want the option in a position to further invest in our company as one of our investment options going forward,” Ervin said.
Quarterly revenue rose 3% to $96 million, from $93.4 million during the year-ago period. The results beat analysts’ expectations of $88 million in revenue.
The company said in a press release that it had to "rebalance" production in the United States and Taiwan to lower inventory, adjust to changing demand and phase out older products. Cost of sales swelled 13% to $72 million.
Hardinge (HDNG) also warned that as some economies around the world slow down, the company's orders may be squeezed this year.
