Hurco Companies, Inc. (Nasdaq: HURC) today reported results for the
third fiscal quarter ended July 31, 2024. Hurco recorded a net loss
of $9,596,000, or $(1.47) per diluted share, in the third quarter
of fiscal year 2024, which included a non-cash tax valuation
allowance of $8,158,000 recorded in provision for income taxes.
This net loss of $9,596,000 for the third quarter of fiscal 2024
compares to net income of $260,000, or $0.04 per diluted share, for
the corresponding period in fiscal year 2023. For the nine months
of fiscal year 2024, Hurco reported a net loss of $15,166,000, or
$(2.33) per diluted share, compared to net income of $1,967,000, or
$0.30 per diluted share, for the corresponding period in fiscal
year 2023. The net loss for the nine months of fiscal 2024 also
included the $8,158,000 non-cash tax valuation allowance recorded
in provision for income taxes.
Sales and service fees for the third quarter of
fiscal year 2024 were $42,651,000, a decrease of $10,550,000, or
20%, compared to the corresponding prior year period, and included
an unfavorable currency impact of $42,000, or less than 1%, when
translating foreign sales to U.S. dollars for financial reporting
purposes. Sales and service fees for the nine months of fiscal year
2024 were $132,882,000, a decrease of $28,820,000, or 18%, compared
to the corresponding prior year period, and included a favorable
currency impact of $796,000, or less than 1%, when translating
foreign sales to U.S. dollars for financial reporting purposes.
Greg Volovic, Chief Executive Officer, stated,
“While sales declined this quarter orders were positive. Global
orders for this quarter exceeded $52,000,000 and improved both
year-over-year and compared to the previous two fiscal quarters.
Orders this quarter also outpaced sales by more than $10,000,000.
We are hopeful that this positive order growth is representative of
a trend and are prepared to meet new order growth. The global cost
reductions we implemented this quarter will continue to impact
results going forward. We remain focused on advancing the future of
Hurco with many technological innovations. In September, IMTS
attendees will have the unique opportunity to engage with the
latest concept designs of Hurco's next-generation control and
Milltronics’ new INSPIRE+ control and software. We will also
showcase all of our CNC machines with ProCobots collaborative
robotic systems. Hurco's advanced control software is now
integrated with industrial robot automation from Kawasaki Robotics
and Hurco Automation, powered by ProCobots, eliminating the need
for complex robot programming. We believe that our strong balance
sheet and focus on future technological advancement differentiates
Hurco from our competitors, helping us navigate cyclical periods
and emerge stronger. We look forward to an exciting exhibition at
IMTS and market improvement for machine tools as we close out
fiscal 2024.”
The following table sets forth net sales and
service fees by geographic region for the third fiscal quarter and
nine months ended July 31, 2024, and 2023 (dollars in
thousands):
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
July 31, |
|
July 31, |
|
|
2024 |
2023 |
$ Change |
% Change |
|
2024 |
2023 |
$ Change |
% Change |
|
Americas |
$15,389 |
$18,272 |
($2,883 |
) |
(16)% |
|
$48,986 |
$58,609 |
($9,623 |
) |
(16)% |
|
Europe |
24,068 |
31,162 |
(7,094 |
) |
(23)% |
|
69,538 |
89,745 |
(20,207 |
) |
(23)% |
| Asia
Pacific |
3,194 |
3,767 |
(573 |
) |
(15)% |
|
14,358 |
13,348 |
1,010 |
|
8% |
|
Total |
$42,651 |
$53,201 |
($10,550 |
) |
(20)% |
|
$132,882 |
$161,702 |
($28,820 |
) |
(18)% |
| |
Sales in the Americas for each of the third
quarter and nine months of fiscal year 2024 decreased by 16%,
compared to the corresponding periods in fiscal year 2023,
primarily due to decreased shipments of Hurco and Takumi machines.
The decrease in sales of these machines was mainly attributable to
decreased shipments of Hurco and Takumi 3-axis vertical machines,
partially offset by increased sales of higher-performing Hurco
5-axis machines and Milltronics 3-axis vertical machines.
European sales for each of the third quarter and
nine months of fiscal year 2024 decreased by 23%, compared to the
corresponding periods in fiscal year 2023, and each period included
a favorable currency impact of 1%, when translating foreign sales
to U.S. dollars for financial reporting purposes. The
year-over-year decreases in European sales were primarily
attributable to a decreased volume of shipments of Hurco and Takumi
machines in Germany, Italy, and the United Kingdom, as well as
decreased shipments of electro-mechanical components and
accessories manufactured by our wholly-owned subsidiary, LCM
Precision Technology S.r.l. (“LCM”).
Asian Pacific sales for the third quarter of
fiscal year 2024 decreased by 15%, compared to the corresponding
period in fiscal year 2023, and included an unfavorable currency
impact of 2%, when translating foreign sales to U.S. dollars for
financial reporting purposes. The third quarter of fiscal year 2024
decrease in Asian Pacific sales was mainly due to decreased
shipments of Takumi machines in China and Hurco machines in
Southeast Asia, partially offset by increased shipments of Hurco
machines in India and to one customer with multiple machine orders
in China. Asian Pacific sales for the nine months of fiscal year
2024 increased by 8%, compared to the corresponding prior year
period, and included an unfavorable currency impact of 2%, when
translating foreign sales to U.S. dollars for financial reporting
purposes. The year-over-year increase in Asian Pacific sales in the
nine-month period was primarily attributable to increased shipments
of Hurco machines in India and to one customer with multiple
machine orders in China, partially offset by decreased shipments of
Takumi machines in China and Hurco machines in Southeast Asia.
Orders for the third quarter of fiscal year 2024
were $52,815,000, an increase of $10,733,000, or 26%, compared to
the corresponding period in fiscal year 2023, and included an
unfavorable currency impact of $47,000, or less than 1%, when
translating foreign orders to U.S. dollars. Orders for the nine
months of fiscal year 2024 were $147,225,000, a decrease of
$8,310,000, or 5%, compared to the corresponding period in fiscal
year 2023, and included a favorable currency impact of $846,000, or
less than 1%, when translating foreign orders to U.S. dollars.
The following table sets forth new orders booked
by geographic region for the third fiscal quarter and nine months
ended July 31, 2024, and 2023 (dollars in thousands):
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
July 31, |
|
July 31, |
|
|
2024 |
2023 |
$ Change |
% Change |
|
2024 |
2023 |
$ Change |
% Change |
|
Americas |
$17,625 |
$14,607 |
$3,018 |
|
21% |
|
$55,490 |
$56,548 |
($1,058 |
) |
(2)% |
|
Europe |
28,349 |
24,752 |
3,597 |
|
15% |
|
75,757 |
87,632 |
(11,875 |
) |
(14)% |
| Asia
Pacific |
6,841 |
2,723 |
4,118 |
|
151% |
|
15,978 |
11,355 |
4,623 |
|
41% |
|
Total |
$52,815 |
$42,082 |
$10,733 |
|
26% |
|
$147,225 |
$155,535 |
($8,310 |
) |
(5)% |
| |
Orders in the Americas for the third quarter of
fiscal year 2024 increased by 21%, compared to the corresponding
period in fiscal year 2023. The increase in orders was primarily
due to increased customer demand for Hurco higher-performing 5-axis
machines, Hurco and Milltronics lathes, and Milltronics 3-axis
vertical machines. Orders in the Americas for the nine months of
fiscal year 2024 decreased by 2%, compared to the corresponding
period in fiscal year 2023. The decrease in orders was primarily
due to decreased customer demand for Hurco 3-axis vertical
machines, partially offset by increased demand for Hurco
higher-performing 5-axis machines and Milltronics 3-axis vertical
machines. The decrease in orders was also impacted by a reduction
in average net selling prices for certain machines designed to
penetrate key markets and reduce inventories.
European orders for the third quarter of fiscal
year 2024 increased by 15%, compared to the corresponding prior
year period, and included a favorable currency impact of less than
1%, when translating foreign orders to U.S. dollars. The increase
in orders was driven primarily by increased customer demand for
Hurco machines in the United Kingdom, France and Italy,
particularly Hurco lathes and higher-performing 5-axis machines.
European orders for the nine months of fiscal year 2024 decreased
by 14%, compared to the corresponding prior year period, and
included a favorable currency impact of 1%, when translating
foreign orders to U.S. dollars. The year-over-year decrease was
mainly due to decreased customer demand for Hurco machines across
the European region where our customers are located and for
electro-mechanical components and accessories manufactured by
LCM.
Asian Pacific orders for the third quarter of
fiscal year 2024 increased by 151%, compared to the corresponding
prior year period, and included an unfavorable currency impact of
5%, when translating foreign orders to U.S. dollars. The increase
in Asian Pacific orders was driven primarily by increased customer
demand for Hurco and Takumi machines in China, India, and Southeast
Asia. Orders for the nine months of fiscal year 2024 increased by
41%, compared to the corresponding prior year period, and included
an unfavorable currency impact of 3%, when translating foreign
orders to U.S. dollars. The year-over-year increase in Asian
Pacific orders was driven primarily by increased customer demand
for Hurco machines in China and Hurco and Takumi machines in India,
partially offset by decreased demand for Takumi machines in China.
The increased customer demand for Hurco machines in China and India
for both periods related primarily to two customers with multiple
machine orders.
Gross profit for the third quarter of fiscal
year 2024 was $7,843,000, or 18% of sales, compared to $13,448,000,
or 25% of sales, for the corresponding prior year period. Gross
profit for the nine months of fiscal year 2024 was $25,557,000, or
19% of sales, compared to $38,749,000, or 24% of sales, for the
corresponding prior year period. The year-over-year decreases were
primarily due to the lower volume of vertical milling machine sales
in the Americas and Europe. Additionally, the second and third
quarters of fiscal year 2024 included decreases in average net
selling prices for certain machines, designed to penetrate key
markets and reduce inventories. The decreases in both sales volume
and pricing unfavorably impacted gross profit in dollars and as a
percentage of sales, reducing our leverage of fixed costs, in
comparison to the corresponding prior year periods. Further,
certain cost reductions were implemented in the third quarter of
fiscal 2024 in an effort to help offset the impact of lower sales
volumes and pricing.
Selling, general, and administrative expenses
for the third quarter of fiscal year 2024 were $10,376,000, or 24%
of sales, compared to $12,436,000, or 23% of sales, in the
corresponding fiscal year 2023 period, and included a favorable
currency impact of $27,000, when translating foreign expenses to
U.S. dollars for financial reporting purposes. Selling, general,
and administrative expenses for the nine months of fiscal year 2024
were $33,352,000, or 25% of sales, compared to $35,512,000, or 22%
of sales, in the corresponding fiscal year 2023 period, and
included an unfavorable currency impact of $155,000, when
translating foreign expenses to U.S. dollars for financial
reporting purposes. The year-over-year reductions in selling,
general, and administrative expenses were primarily due to cost
reductions implemented in the third quarter of fiscal year 2024 in
an effort to help offset the impact of lower sales volume. Despite
reductions from an absolute dollar perspective, selling, general,
and administrative expenses increased as a percentage of sales in
the third quarter and nine months of fiscal year 2024, compared to
each of the corresponding prior year periods, due to the lower
volume of sales year-over-year.
Income tax expenses during the third quarter and
nine months of fiscal year 2024 was $6,999,000 and $6,438,000,
respectively, compared to $385,000 and $1,286,000 for the
corresponding periods in 2023. The year-over-year increases in
income tax expense for the third quarter and nine months of fiscal
year 2024 were primarily due to an $8,158,000 non-cash valuation
allowance on U.S. deferred tax assets and changes in geographic mix
of income and loss that includes jurisdictions with differing tax
rates, and, specifically for the nine months of fiscal year 2024,
discrete items related to unvested stock compensation. Because we
have a valuation allowance recorded against our U.S. deferred tax
assets, we did not record a tax benefit for our U.S. net losses for
the nine months ended July 31, 2024. The valuation allowance
recorded during the third quarter of fiscal 2024 reflects a full
valuation allowance of the U.S. deferred tax assets and was
recorded after evaluating changes to tax laws, statutory tax rates,
and our cumulative historical three-year income levels for the U.S.
as of July 31, 2024.
Cash and cash equivalents totaled $36,054,000 at
July 31, 2024, compared to $41,784,000 at October 31, 2023. Working
capital was $181,979,000 at July 31, 2024, compared to $193,257,000
at October 31, 2023. The decrease in working capital was primarily
driven by decreases in accounts receivable, net and cash and cash
equivalents, partially offset by increases in inventories, net and
decreases in accounts payable and accrued payroll and employee
benefits.
Hurco Companies, Inc. is an international,
industrial technology company that sells its three brands of
computer numeric control (“CNC”) machine tools to the worldwide
metal cutting and metal forming industry. Two of the Company’s
brands of machine tools, Hurco and Milltronics, are equipped with
interactive controls that include software that is proprietary to
each respective brand. The Company designs these controls and
develops the software. The third brand of CNC machine tools,
Takumi, is equipped with industrial controls that are produced by
third parties, which allows the customer to decide the type of
control added to the Takumi CNC machine tool. The Company also
produces high-value machine tool components and accessories and
provides automation solutions that can be integrated with any
machine tool. The end markets for the Company's products are
independent job shops, short-run manufacturing operations within
large corporations, and manufacturers with production-oriented
operations. The Company’s customers manufacture precision parts,
tools, dies, and/or molds for industries such as aerospace,
defense, medical equipment, energy, transportation, and computer
equipment. The Company is based in Indianapolis, Indiana, with
manufacturing operations in Taiwan, Italy, the U.S., and China, and
sells its products through direct and indirect sales forces
throughout the Americas, Europe, and Asia. The Company has sales,
application engineering support and service subsidiaries in China,
the Czech Republic, England, France, Germany, India, Italy, the
Netherlands, Poland, Singapore, the U.S., and Taiwan. Web Site:
www.hurco.com
Certain statements in this news release are
forward-looking statements that involve known and unknown risks,
uncertainties, and other factors that may cause our actual results,
performance, or achievements to be materially different from any
future results, performance, or achievements expressed or implied
by such forward-looking statements. These factors include, among
others, the cyclical nature of the machine tool industry; uncertain
economic conditions, which may adversely affect overall demand, in
the Americas, Europe and Asia Pacific markets; the risks of our
international operations; governmental actions, initiatives and
regulations, including import and export restrictions, duties and
tariffs and changes to tax laws; the effects of changes in currency
exchange rates; competition with larger companies that have greater
financial resources; our dependence on new product development; the
need and/or ability to protect our intellectual property assets;
the limited number of our manufacturing and supply chain sources;
increases in the prices of raw materials, especially steel and iron
products; the effect of the loss of members of senior management
and key personnel; our ability to integrate acquisitions;
acquisitions that could disrupt our operations and affect operating
results; failure to comply with data privacy and security
regulations; breaches of our network and system security measures;
possible obsolescence of our technology and the need to make
technological advances; impairment of our assets; negative or
unforeseen tax consequences; uncertainty concerning our ability to
use tax loss carryforwards; changes in the SOFR rate; the impact of
the COVID-19 pandemic and other public health epidemics and
pandemics on the global economy, our business and operations, our
employees and the business, operations and economies of our
customers and suppliers; and other risks and uncertainties
discussed more fully under the caption “Risk Factors” in our
filings with the Securities and Exchange Commission. We expressly
disclaim any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
| Contact: |
Sonja K.
McClelland |
| |
Executive Vice President, Treasurer, & Chief Financial
Officer |
| |
317-293-5309 |
| |
|
|
Hurco Companies, Inc. |
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
|
|
|
|
|
|
(In thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
July 31, |
|
July 31, |
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
(unaudited) |
|
|
|
(unaudited) |
|
|
|
Sales and service fees |
$42,651 |
|
$53,201 |
|
$132,882 |
|
$161,702 |
|
Cost of sales and service |
34,808 |
|
39,753 |
|
107,325 |
|
122,953 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
7,843 |
|
13,448 |
|
25,557 |
|
38,749 |
|
Selling, general and administrative expenses |
10,376 |
|
12,436 |
|
33,352 |
|
35,512 |
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
-2,533 |
|
1,012 |
|
-7,795 |
|
3,237 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
159 |
|
88 |
|
426 |
|
159 |
|
Interest income |
172 |
|
122 |
|
492 |
|
259 |
|
Investment income |
59 |
|
11 |
|
126 |
|
47 |
|
Other (expense) income, net |
-136 |
|
-412 |
|
-1,125 |
|
-131 |
|
(Loss) income before taxes |
-2,597 |
|
645 |
|
-8,728 |
|
3,253 |
|
Provision for income taxes |
6,999 |
|
385 |
|
6,438 |
|
1,286 |
|
Net (loss) income |
($9,596) |
|
$260 |
|
($15,166) |
|
$1,967 |
|
|
|
|
|
|
|
|
|
|
(Loss) income per common share |
|
|
|
|
|
|
|
|
Basic |
($1.47) |
|
$0.04 |
|
($2.33) |
|
$0.30 |
|
Diluted |
($1.47) |
|
$0.04 |
|
($2.33) |
|
$0.30 |
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
6,513 |
|
6,462 |
|
6,505 |
|
6,511 |
|
Diluted |
6,513 |
|
6,469 |
|
6,505 |
|
6,538 |
|
|
|
|
|
|
|
|
|
|
Dividends per share |
$ - |
|
$0.16 |
|
$0.32 |
|
$0.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER CONSOLIDATED FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
July 31, |
|
|
|
July 31, |
|
|
|
Operating Data: |
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
(unaudited) |
|
|
|
(unaudited) |
|
|
|
Gross margin |
18% |
|
25% |
|
19% |
|
24% |
|
SG&A expense as a percentage of sales |
24% |
|
23% |
|
25% |
|
22% |
|
Operating (loss) income as a percentage of sales |
-6% |
|
2% |
|
-6% |
|
2% |
|
Pre-tax (loss) income as a percentage of sales |
-6% |
|
1% |
|
-7% |
|
2% |
|
Effective tax rate |
-270% |
|
60% |
|
-74% |
|
40% |
|
Depreciation and amortization |
$888 |
|
$1,037 |
|
$2,678 |
|
$3,141 |
|
Capital expenditures |
$735 |
|
$345 |
|
$2,046 |
|
$1,751 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data: |
7/31/2024 |
|
10/31/2023 |
|
|
|
|
|
Working capital |
$181,979 |
|
$193,257 |
|
|
|
|
|
Days sales outstanding |
46 |
|
41 |
|
|
|
|
|
Inventory turns |
1 |
|
1.1 |
|
|
|
|
|
Capitalization |
|
|
|
|
|
|
|
|
Total debt |
-- |
|
-- |
|
|
|
|
|
Shareholders' equity |
206,625 |
|
222,231 |
|
|
|
|
|
Total |
$206,625 |
|
$222,231 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
Hurco Companies, Inc. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(In thousands, except share and per share
data) |
|
|
July 31, |
|
October 31, |
|
|
2024 |
|
2023 |
|
ASSETS |
(unaudited) |
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$36,054 |
|
$41,784 |
|
Accounts receivable, net |
25,128 |
|
39,965 |
|
Inventories, net |
164,170 |
|
157,952 |
|
Derivative assets |
83 |
|
740 |
|
Prepaid and other assets |
7,777 |
|
7,789 |
|
Total current assets |
233,212 |
|
248,230 |
|
Property and equipment: |
|
|
|
|
Land |
1,046 |
|
1,046 |
|
Building |
7,387 |
|
7,387 |
|
Machinery and equipment |
26,056 |
|
26,779 |
|
Leasehold improvements |
4,545 |
|
4,473 |
|
|
39,034 |
|
39,685 |
|
Less accumulated depreciation and amortization |
-31,843 |
|
-30,826 |
|
Total property and equipment, net |
7,191 |
|
8,859 |
|
Non-current assets: |
|
|
|
|
Software development costs, less accumulated amortization |
7,076 |
|
7,030 |
|
Intangible assets, net |
798 |
|
994 |
|
Operating lease - right of use assets, net |
12,158 |
|
10,971 |
|
Deferred income taxes |
1,237 |
|
4,749 |
|
Investments and other assets |
10,704 |
|
9,756 |
|
Total non-current assets |
31,973 |
|
33,500 |
|
Total assets |
$272,376 |
|
$290,589 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$26,938 |
|
$29,661 |
|
Customer deposits |
4,341 |
|
2,827 |
|
Derivative liabilities |
1,856 |
|
1,821 |
|
Operating lease liabilities |
3,924 |
|
3,712 |
|
Accrued payroll and employee benefits |
7,985 |
|
9,853 |
|
Accrued income taxes |
830 |
|
1,713 |
|
Accrued expenses |
4,283 |
|
4,092 |
|
Accrued warranty expenses |
1,076 |
|
1,294 |
|
Total current liabilities |
51,233 |
|
54,973 |
|
Non-current liabilities: |
|
|
|
|
Deferred income taxes |
59 |
|
83 |
|
Accrued tax liability |
701 |
|
1,293 |
|
Operating lease liabilities |
8,602 |
|
7,606 |
|
Deferred credits and other |
5,156 |
|
4,403 |
|
Total non-current liabilities |
14,518 |
|
13,385 |
|
Shareholders' equity: |
|
|
|
|
Preferred stock: no par value per share, 1,000,000 shares
authorized; no shares issued |
- |
|
- |
|
Common stock: no par value, $.10 stated value per share, 12,500,000
shares authorized; 6,607,060 and 6,553,673 shares issued and
6,493,846 and 6,462,138 shares outstanding, as of July 31, 2024 and
October 31, 2023, respectively |
649 |
|
646 |
|
Additional paid-in capital |
61,919 |
|
61,665 |
|
Retained earnings |
162,865 |
|
180,124 |
|
Accumulated other comprehensive loss |
-18,808 |
|
-20,204 |
|
Total shareholders' equity |
206,625 |
|
222,231 |
|
Total liabilities and shareholders' equity |
$272,376 |
|
$290,589 |
| |
|
|
|
Hurco Companies (NASDAQ:HURC)
Historical Stock Chart
From Nov 2024 to Dec 2024
Hurco Companies (NASDAQ:HURC)
Historical Stock Chart
From Dec 2023 to Dec 2024
