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. McClellandExecutive Vice
President, Treasurer, & Chief Financial Officer317-293-5309
|
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 |
|
Hurco Companies (NASDAQ:HURC)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Hurco Companies (NASDAQ:HURC)
Gráfica de Acción Histórica
De May 2023 a May 2024