• Hurco Reports Third Quarter Results for Fiscal Year 2023

    来源: Nasdaq GlobeNewswire / 08 9月 2023 08:00:00   America/New_York

    INDIANAPOLIS, Sept. 08, 2023 (GLOBE NEWSWIRE) -- Hurco Companies, Inc. (Nasdaq: HURC) today reported results for the third fiscal quarter ended July 31, 2023. Hurco recorded net income of $260,000, or $0.04 per diluted share, for the third quarter of fiscal year 2023, compared to net income of $1,238,000, or $0.18 per diluted share, for the corresponding period in fiscal year 2022. For the nine months of fiscal year 2023, Hurco reported net income of $1,967,000, or $0.30 per diluted share, compared to net income of $6,802,000, or $1.01 per diluted share, for the corresponding period in fiscal year 2022.

    Sales and service fees for the third quarter of fiscal year 2023 were $53,201,000, a decrease of $4,439,000, or 8%, compared to the corresponding prior year period, and included a favorable currency impact of $579,000, or 1%, when translating foreign sales to U.S. dollars for financial reporting purposes. Sales and service fees for the nine months of fiscal year 2023 were $161,702,000, a decrease of $25,650,000, or 14%, compared to the corresponding prior year period, and included an unfavorable currency impact of $4,113,000, or 2%, when translating foreign sales to U.S. dollars for financial reporting purposes.

    Greg Volovic, Chief Executive Officer, stated, “This quarter we saw softening conditions in the key machine tool markets in the world (U.S., China, and Germany). In contrast, smaller European markets like Italy, the United Kingdom and France achieved higher sales with the benefit of a strong mix of higher-performance VMX and five-axis machine sales. We experienced improved orders and sales of Milltronics machines in Europe, a market we are focused on growing, and increased sales of electromechanical components and accessories manufactured by LCM. Our highest priority is to focus on reducing inventory levels and generating higher levels of cash flow for the rest of the year as we adjust production to changing levels of demand. We remain patient and poised for the markets to recover with a plan for new products and a strong balance sheet that will allow us to continue our investment in the best technology for our customers.”

    The following table sets forth net sales and service fees by geographic region for the third fiscal quarter and nine months ended July 31, 2023, and 2022 (dollars in thousands):

     Three Months Ended Nine Months Ended
     July 31, July 31,
      2023 2022$ Change% Change  2023 2022$ Change% Change
    Americas$18,272$23,736$(5,464)-23% $58,609$70,154$(11,545)-16%
    Europe 31,162 28,932 2,230 8%  89,745 93,932 (4,187)-4%
    Asia Pacific 3,767 4,972 (1,205)-24%  13,348 23,266 (9,918)-43%
    Total$53,201$57,640$(4,439)-8% $161,702$187,352$(25,650)-14%


    Sales in the Americas for the third quarter and nine months of fiscal year 2023 decreased by 23% and 16%, respectively, compared to the corresponding periods in fiscal year 2022, primarily due to decreased shipments of Hurco and Milltronics machines, particularly the higher-performance VMX machines.

    European sales for the third quarter of fiscal year 2023 increased by 8%, compared to the corresponding period in fiscal year 2022, and included a favorable currency impact of 2%, when translating foreign sales to U.S. dollars for financial reporting purposes. The increase in European sales was primarily attributable to an increased volume of shipments and improved mix of higher-performance Hurco VMX and five-axis machines in Italy and France, increased European sales of Milltronics machines, and increased sales of electro-mechanical components and accessories manufactured by our wholly owned subsidiary, LCM Precision Technology S.r.l. (“LCM”).   Additionally, while the volume of machine sales in the third quarter did not increase year-over-year in the United Kingdom, overall sales in dollars in the U.K. increased due to an improved mix of higher-performance VMX machines.

    European sales for the nine months of fiscal year 2023 decreased by 4%, compared to the corresponding period in fiscal year 2022, and included an unfavorable currency impact of 3%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year decrease in European sales was primarily attributable to a decreased volume of shipments of Hurco machines in Germany, France, and Italy, partially offset by increased sales of higher-performance Hurco VMX machines in the United Kingdom, increased European sales of Milltronics machines, and increased sales of electro-mechanical components and accessories manufactured by LCM.

    Asian Pacific sales for the third quarter and nine months of fiscal year 2023 decreased by 24% and 43%, respectively, compared to the corresponding periods in fiscal year 2022, and included an unfavorable currency impact of 3% and 4%, respectively, when translating foreign sales to U.S. dollars for financial reporting purposes. The decreases in Asian Pacific sales in both periods primarily resulted from a reduced volume of shipments of Hurco and Takumi machines in China, Southeast Asia, and India.

    Orders for the third quarter of fiscal year 2023 were $42,082,000, a decrease of $10,800,000, or 20%, compared to the corresponding period in fiscal year 2022, and included a favorable currency impact of $1,064,000, or 2%, when translating foreign orders to U.S. dollars. Orders for the nine months of fiscal year 2023 were $155,535,000, a decrease of $27,060,000, or 15%, compared to the corresponding period in fiscal year 2022, and included an unfavorable currency impact of $4,024,000, or 2%, 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, 2023, and 2022 (dollars in thousands):

              
     Three Months Ended Nine Months Ended
     July 31, July 31,
      2023 2022$ Change% Change  2023 2022$ Change% Change
    Americas$14,607$21,652$(7,045)-33% $56,548$68,189$(11,641)-17%
    Europe 24,752 26,429 (1,677)-6%  87,632 94,964 (7,332)-8%
    Asia Pacific 2,723 4,801 (2,078)-43%  11,355 19,442 (8,087)-42%
    Total$42,082$52,882$(10,800)-20% $155,535$182,595$(27,060)-15%


    Orders in the Americas for the third quarter and nine months of fiscal year 2023 decreased by 33% and 17%, respectively, compared to the corresponding periods in fiscal year 2022. The decreases in orders in both periods were primarily due to decreased customer demand for Hurco and Milltronics machines, particularly higher-performance VMX and five-axis machines.

    European orders for the third quarter of fiscal year 2023 decreased by 6%, compared to the corresponding prior year period, and included a favorable currency impact of 4%, when translating foreign orders to U.S. dollars. The decrease in orders was driven primarily by decreased customer demand for Hurco machines in Germany and Italy, partially offset by increased customer demand for Hurco machines in France, Milltronics machines in Europe and electro-mechanical components and accessories manufactured by LCM. Additionally, while the volume of machine orders in the third quarter of fiscal 2023 did not increase year-over-year in the United Kingdom, overall orders in dollars in the U.K. increased due to an improved mix of higher-performance VMX and five-axis machines.

    European orders for the nine months of fiscal year 2023 decreased by 8%, compared to the corresponding prior year period, and included an unfavorable currency impact of 4%, when translating foreign orders to U.S. dollars. The decrease in orders was driven primarily by decreased customer demand for Hurco machines in Germany and France, partially offset by increased customer demand for higher-performance Hurco VMX machines in the United Kingdom and Italy, and for electro-mechanical components and accessories manufactured by LCM.

    Asian Pacific orders for the third quarter and nine months of fiscal year 2023 decreased by 43% and 42%, respectively, compared to the corresponding prior year periods, and included an unfavorable currency impact of less than 1% and 3%, respectively, when translating foreign orders to U.S. dollars. The reduction in Asian Pacific orders in both periods was driven primarily by a decrease in customer demand for Hurco and Takumi machines in China, India, and Southeast Asia.

    Gross profit for the third quarter of fiscal year 2023 was $13,448,000, or 25% of sales, compared to $14,399,000, or 25% of sales, for the corresponding prior year period. Gross profit for the nine months of fiscal year 2023 was $38,749,000, or 24% of sales, compared to $46,908,000, or 25% of sales, for the corresponding prior year period. The year-over-year decreases in gross profit in both periods were primarily due to the lower volume of sales of vertical milling machines and the negative impact of fixed costs on lower sales and production volumes. Gross profit as a percentage of sales for the third quarter and nine months of fiscal 2023 was relatively unchanged year-over year despite the reduced volume, as sales reflected an increased mix of higher-performance VMX and five-axis machines sold in Europe.

    Selling, general, and administrative expenses for the third quarter of fiscal year 2023 were $12,436,000, or 23% of sales, compared to $12,647,000, or 22% of sales, in the corresponding fiscal year 2022 period, and included an unfavorable currency impact of $81,000, when translating foreign expenses to U.S. dollars for financial reporting purposes. Selling, general, and administrative expenses for the nine months of fiscal year 2023 were $35,512,000, or 22% of sales, compared to $36,859,000, or 20% of sales, in the corresponding fiscal year 2022 period, and included a favorable currency impact of $739,000, when translating foreign expenses to U.S. dollars for financial reporting purposes. The year-over-year decreases in selling, general and administrative expenses in absolute dollar terms in both periods were primarily attributable to lower costs related to sales commissions, marketing and tradeshow expenses, and employee support costs for the global operations.

    The effective tax rates for the third quarter and nine months of fiscal year 2023 were 60% and 40%, respectively, compared to 28% and 31% in each of the respective corresponding prior year periods. The year-over-year increases in the effective tax rates were primarily due to changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, discrete items related to stock compensation and the impact of valuation allowances for our China operations combined with lower levels of consolidated income before taxes.

    Cash and cash equivalents totaled $41,030,000 at July 31, 2023, compared to $63,922,000 at October 31, 2022. Working capital was $198,120,000 at July 31, 2023, compared to $194,733,000 at October 31, 2022. The increase in working capital was primarily driven by increases in inventories, net and prepaid and other assets and decreases in accounts payable and accrued payroll and employee benefits, partially offset by decreases in cash and cash equivalents and accounts receivable, net.

    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 July 31, Nine Months Ended July 31,
      2023   2022   2023   2022 
     (unaudited) (unaudited)
    Sales and service fees$53,201  $57,640  $161,702  $187,352 
    Cost of sales and service 39,753   43,241   122,953   140,444 
         Gross profit 13,448   14,399   38,749   46,908 
    Selling, general and administrative expenses 12,436   12,647   35,512   36,859 
         Operating income  1,012   1,752   3,237   10,049 
    Interest expense 88   9   159   22 
    Interest income 122   16   259   69 
    Investment income (loss), net 11   (11)  47   170 
    Other income (expense), net (412)  (22)  (131)  (440)
         Income before taxes 645   1,726   3,253   9,826 
    Provision for income taxes 385   488   1,286   3,024 
         Net income $260  $1,238  $1,967  $6,802 
            
    Income per common share       
       Basic$0.04  $0.19  $0.30  $1.02 
       Diluted$0.04  $0.18  $0.30  $1.01 
    Weighted average common shares outstanding       
       Basic 6,462   6,567   6,511   6,585 
       Diluted 6,469   6,629   6,538   6,637 
            
    Dividends per share$0.16  $0.15  $0.47  $0.44 
            
            
    OTHER CONSOLIDATED FINANCIAL DATA       
     Three Months Ended July 31, Nine Months Ended July 31,
    Operating Data: 2023   2022   2023   2022 
     (unaudited) (unaudited)
    Gross margin 25%  25%  24%  25%
    SG&A expense as a percentage of sales 23%  22%  22%  20%
    Operating income as a percentage of sales 2%  3%  2%  5%
    Pre-tax income as a percentage of sales 1%  3%  2%  5%
    Effective tax rate 60%  28%  40%  31%
    Depreciation and amortization$1,037  $1,049  $3,141  $2,956 
    Capital expenditures$345  $522  $1,751  $1,628 
            
    Balance Sheet Data:7/31/2023 10/31/2022    
    Working capital$198,120  $194,733     
    Days sales outstanding 54   38     
    Inventory turns 1.0   1.2     
    Capitalization       
    Total debt --   --     
    Shareholders' equity 225,801   222,644     
    Total$225,801  $222,644     
            


    Hurco Companies, Inc.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands, except share and per share data)
        
     July 31, October 31,
      2023   2022 
    ASSETS(unaudited)  
    Current assets:   
    Cash and cash equivalents$41,030  $63,922 
    Accounts receivable, net 33,281   38,444 
    Inventories, net 178,423   156,207 
    Derivative assets 169   2,515 
    Prepaid and other assets 9,060   6,981 
    Total current assets 261,963   268,069 
    Property and equipment:   
    Land 1,046   868 
    Building 7,392   7,352 
    Machinery and equipment 27,940   26,532 
    Leasehold improvements 4,638   4,351 
      41,016   39,103 
    Less accumulated depreciation and amortization (33,119)  (30,620)
    Total property and equipment, net 7,897   8,483 
    Non-current assets:   
    Software development costs, less accumulated amortization 7,085   7,302 
    Intangible assets, net 1,071   1,246 
    Operating lease - right of use assets, net 10,921   8,460 
    Deferred income taxes 4,305   3,442 
    Investments and other assets, net 9,975   9,235 
    Total non-current assets 33,357   29,685 
    Total assets$303,217  $306,237 
        
    LIABILITIES AND SHAREHOLDERS' EQUITY   
    Current liabilities:   
    Accounts payable$36,338  $40,707 
    Customer deposits 5,502   4,839 
    Derivative liabilities 2,603   3,632 
    Operating lease liabilities 3,945   3,973 
    Accrued payroll and employee benefits 8,331   10,751 
    Accrued income taxes 1,545   2,611 
    Accrued expenses 4,261   5,397 
    Accrued warranty expenses 1,318   1,426 
    Total current liabilities 63,843   73,336 
    Non-current liabilities:   
    Deferred income taxes 88   67 
    Accrued tax liability 1,290   1,281 
    Operating lease liabilities 7,342   4,814 
    Deferred credits and other 4,853   4,095 
    Total non-current liabilities 13,573   10,257 
        
    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; 6,553,673 and 6,645,352 shares issued and 6,462,138 and 6,566,994 shares outstanding, as of July 31, 2023 and October 31, 2022, respectively 646   657 
    Additional paid-in capital 61,274   63,635 
    Retained earnings 178,751   179,877 
    Accumulated other comprehensive loss (14,870)  (21,525)
    Total shareholders' equity 225,801   222,644 
    Total liabilities and shareholders' equity$303,217  $306,237 

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