Hurco Companies (NASDAQ: HURC ) is a CNC machine manufacturer that trades at around half its tangible book value and at a market cap just north of $100 million. It has no debt and ample cash andI'm a private investor focused on deep value and special situations, particularly in the small-cap and micro-cap space. I especially like finding companies trading below tangible book or sitting on excess capital. Areas of interest include thrift conversions, community banks, shipping, and places where value is overl ...

Core Insights - Hurco Companies (NASDAQ: HURC) is a CNC machine manufacturer trading at approximately half its tangible book value with a market capitalization just above $100 million [1] - The company has no debt and possesses ample cash reserves, making it an attractive option for deep value investors [1] - The focus of investment interest includes small-cap and micro-cap companies that are undervalued or have excess capital [1] Company Overview - Hurco Companies operates in the CNC machine manufacturing sector, which is critical for precision engineering and manufacturing processes [1] - The company is characterized by its strong financial position, highlighted by the absence of debt and significant cash holdings [1] Investment Perspective - The investment strategy emphasizes identifying companies trading below tangible book value, which is a key indicator of potential undervaluation [1] - Areas of interest for investment include thrift conversions, community banks, and shipping, indicating a broader strategy that looks for overlooked value in various sectors [1]

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Core Viewpoint - Hurco Companies, Inc. reported a net loss for the third quarter of fiscal 2025, but showed improvements in revenue and gross margin, indicating a mixed performance amid regional disparities in demand [2][3][4]. Financial Performance - Hurco posted a net loss of $3.7 million, or $0.58 per diluted share, for Q3 2025, an improvement from a loss of $9.6 million, or $1.47 per share, in the same quarter last year [2]. - Revenue increased by 7.4% year over year to $45.8 million, up from $42.7 million, driven by favorable foreign currency translation and strong sales in the Americas and Asia Pacific [2][3]. - Gross margin expanded to 20% from 18% a year earlier, reflecting improved cost management and a better mix of machine sales [3]. Geographic Performance - Sales in the Americas advanced by 9.8%, while Asia Pacific surged by 48.4%. However, Europe remained flat due to lower demand in Germany and France [3]. - Orders fell 22.4% year over year to $40.9 million, with declines across all regions: Americas down 11.7%, Europe down 28.5%, and Asia Pacific down 24.5% [4][8]. Cost Management and Expenses - Gross profit improved by 16.2% to $9.1 million from $7.8 million, while selling, general, and administrative expenses rose by 3.7% to $10.8 million [4]. - Despite revenue and margin gains, the operating loss was $1.7 million, narrower than the $2.5 million loss in the prior year [4]. Liquidity and Cash Position - Cash and cash equivalents were $44.5 million as of July 31, 2025, up from $33.3 million at the end of fiscal 2024, indicating a stronger liquidity position [5]. - Working capital slightly decreased to $176.8 million from $180.8 million as of October 31, 2024 [5]. Management Insights - CEO Greg Volovic emphasized the company's discipline in cost control and sales growth in the Americas and Asia Pacific, highlighting a healthy cash balance for future investments [6]. - Management expressed confidence in returning to profitability over time, supported by strong liquidity and ongoing technology investments [9]. Share Repurchase and Future Plans - Hurco continued its share repurchase program, buying back 104,472 shares for nearly $2 million in the quarter, with a total of approximately $5.3 million repurchased since the program's inception [10]. - Management indicated that reinstating dividend payments may be considered once profitability resumes, alongside exploring potential acquisitions for long-term growth [10].

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=Part%20I%20-%20Financial%20Information) This section presents Hurco Companies, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Hurco Companies, Inc.'s unaudited condensed consolidated financial statements and related notes for periods ended July 31, 2025, and October 31, 2024 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This table provides a summary of the company's sales, gross profit, operating income, and net income for specified periods Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales and service fees | $45,806 | $42,651 | $133,087 | $132,882 | | Gross profit | $9,112 | $7,843 | $25,231 | $25,557 | | Operating (loss) income | $(1,650) | $(2,533) | $(6,810) | $(7,795) | | Net (loss) income | $(3,693) | $(9,596) | $(12,076) | $(15,166) | | Basic (Loss) income per common share | $(0.58) | $(1.47) | $(1.87) | $(2.33) | | Diluted (Loss) income per common share | $(0.58) | $(1.47) | $(1.87) | $(2.33) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This table details the company's net income and other comprehensive income components for specified periods Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net (loss) income | $(3,693) | $(9,596) | $(12,076) | $(15,166) | | Total other comprehensive (loss) income | $6,310 | $1,210 | $9,277 | $1,723 | | Comprehensive (loss) income | $2,617 | $(8,386) | $(2,799) | $(13,443) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table presents the company's assets, liabilities, and shareholders' equity at specific balance sheet dates Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | July 31, 2025 | October 31, 2024 | | :-------------------------------- | :------------ | :--------------- | | Cash and cash equivalents | $44,494 | $33,330 | | Accounts receivable, net | $27,645 | $36,678 | | Inventories | $147,538 | $153,037 | | Total current assets | $228,294 | $228,577 | | Total assets | $269,088 | $268,643 | | Total current liabilities | $51,539 | $47,789 | | Total non–current liabilities | $13,877 | $13,682 | | Total liabilities and shareholders' equity | $269,088 | $268,643 | | Total shareholders' equity | $203,672 | $207,172 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table outlines the company's cash flows from operating, investing, and financing activities for specified periods Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by (used for) operating activities | $2,538 | $(622) | $13,872 | $(1,312) | | Net cash provided by (used for) investing activities | $(745) | $(734) | $(1,925) | $(1,903) | | Net cash provided by (used for) financing activities | $(2,000) | $(508) | $(2,352) | $(2,916) | | Net increase (decrease) in cash and cash equivalents | $687 | $(1,488) | $11,164 | $(5,730) | | Cash and cash equivalents at end of period | $44,494 | $36,054 | $44,494 | $36,054 | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This section details changes in common stock, retained earnings, and comprehensive loss for shareholders' equity Condensed Consolidated Statements of Changes in Shareholders' Equity (in thousands, except shares) | Metric (in thousands, except shares) | July 31, 2025 | October 31, 2024 | | :----------------------------------- | :------------ | :--------------- | | Common Stock Shares Outstanding | 6,402,396 | 6,435,624 | | Retained Earnings | $149,346 | $161,422 | | Accumulated Other Comprehensive Loss | $(7,095) | $(16,394) | | Total Shareholders' Equity | $203,672 | $207,172 | - For the nine months ended July 31, 2025, the company reported a net loss of **$(12,076) thousand**, contributing to a decrease in retained earnings. Stock repurchases amounted to **$(2,000) thousand**, reducing common stock and additional paid-in capital. Accumulated other comprehensive loss improved significantly from **$(16,394) thousand** to **$(7,095) thousand**, primarily due to other comprehensive income (loss) of **$9,277 thousand**[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies and financial statement items [Note 1. General](index=11&type=section&id=Note%201.%20General) This note describes Hurco Companies, Inc.'s business operations and the nature of the financial information presented - Hurco Companies, Inc. designs, manufactures, and sells computerized (CNC) machine tools, primarily vertical machining centers and turning centers, to the metal cutting industry globally[21](index=21&type=chunk) - The condensed consolidated financial information for July 31, 2025, and the three and nine months ended July 31, 2025 and 2024, is unaudited and includes normal recurring adjustments[22](index=22&type=chunk) [Note 2. Revenue Recognition](index=11&type=section&id=Note%202.%20Revenue%20Recognition) This note outlines the company's policies for recognizing revenue from machine tool sales and service fees - Revenue from machine tool sales is recognized upon delivery to the customer or distributor, typically at shipment, as the customer obtains control at this point[24](index=24&type=chunk)[25](index=25&type=chunk) - Service fees from maintenance contracts are deferred and recognized prorata over the contract term, with discounts and estimated returns recorded as revenue reductions[26](index=26&type=chunk) [Note 3. Derivative Instruments and Hedging Activities](index=13&type=section&id=Note%203.%20Derivative%20Instruments%20and%20Hedging%20Activities) This note details the company's use of foreign currency derivatives to manage exchange rate risks - The company uses foreign currency forward exchange contracts to manage foreign currency risk related to net equity investments, gross profit, and foreign currency receivables/payables, primarily for Euros, Pounds Sterling, and other currencies[27](index=27&type=chunk)[28](index=28&type=chunk) - Derivatives designated as hedging instruments defer effective gains/losses in Accumulated other comprehensive loss, while non-designated derivatives report fair value changes in Other (expense) income, net[29](index=29&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk) Fair Value of Derivative Instruments (in thousands) | Derivatives | July 31, 2025 (Fair Value) | October 31, 2024 (Fair Value) | | :---------------------------------------- | :------------------------- | :---------------------------- | | Designated as Hedging Instruments: | | | | Foreign exchange forward contracts (assets) | $612 | $165 | | Foreign exchange forward contracts (liabilities) | $669 | $430 | | Not Designated as Hedging Instruments: | | | | Foreign exchange forward contracts (assets) | $2,170 | $158 | | Foreign exchange forward contracts (liabilities) | $1,369 | $275 | Effect of Derivative Instruments on Statements of Operations (Three Months Ended July 31, in thousands) | Derivative Type (Net of Tax) | 2025 (Gain/Loss) | 2024 (Gain/Loss) | | :---------------------------------------- | :--------------- | :--------------- | | Designated (Other Comprehensive Income) | $544 | $(248) | | Reclassified from OCI (Cost of sales and service) | $(304) | $(373) | | Not Designated (Other (expense) income, net) | $2,395 | $(632) | [Note 4. Equity Incentive Plan](index=17&type=section&id=Note%204.%20Equity%20Incentive%20Plan) This note describes the company's equity incentive plan, including share grants and stock-based compensation expense - The Hurco Companies, Inc. 2016 Equity Incentive Plan, amended in March 2022 and March 2025, allows for grants of stock options, restricted stock, and performance stock units, with an additional **850,000 shares** authorized[38](index=38&type=chunk) - In January 2025, executive officers received time-based restricted shares (**75,119 shares at $19.81/share**) and PSUs (**50,078 'PSU – NI' and 41,735 'PSU – FCF' at $19.81/PSU**) with three-year vesting periods tied to net income and free cash flow goals[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) Restricted Stock and PSU Activity (Nine Months Ended July 31, 2025) | Metric | Number of Shares | Weighted Average Grant Date Fair Value | | :-------------------------- | :--------------- | :------------------------------------- | | Unvested at October 31, 2024 | 378,092 | $24.97 | | Shares or units granted | 210,325 | $19.41 | | Shares or units vested | (71,244) | $25.80 | | Shares or units cancelled | (42,472) | $31.06 | | Shares withheld | (17,748) | $28.51 | | Unvested at July 31, 2025 | 456,953 | $21.58 | - Stock-based compensation expense for the nine months ended July 31, 2025, was approximately **$1.6 million**, up from **$1.1 million** in the prior year, with **$3.5 million** unrecognized cost as of July 31, 2025[46](index=46&type=chunk) [Note 5. Earnings (Loss) Per Share](index=19&type=section&id=Note%205.%20Earnings%20(Loss)%20Per%20Share) This note presents the calculation of basic and diluted earnings (loss) per share for common shareholders Earnings (Loss) Per Share (in thousands, except per share amounts) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net (loss) income applicable to common shareholders | $(3,693) | $(9,596) | $(12,076) | $(15,166) | | Weighted average shares outstanding | 6,463 | 6,513 | 6,474 | 6,505 | | (Loss) income per share (Basic & Diluted) | $(0.58) | $(1.47) | $(1.87) | $(2.33) | - Stock options and contingently issuable securities were excluded from diluted loss per share calculations due to their anti-dilutive effect resulting from net losses[48](index=48&type=chunk) [Note 6. Accounts Receivable](index=21&type=section&id=Note%206.%20Accounts%20Receivable) This note provides details on accounts receivable, net of the provision for credit losses Accounts Receivable, Net of Provision for Credit Losses (in thousands) | Date | Accounts Receivable, Net | | :-------------- | :----------------------- | | July 31, 2025 | $27,645 | | October 31, 2024 | $36,678 | - The provision for credit losses was **$1.3 million** as of July 31, 2025, a decrease from **$1.5 million** as of October 31, 2024[49](index=49&type=chunk) [Note 7. Inventories](index=21&type=section&id=Note%207.%20Inventories) This note breaks down the company's inventory by category and states its valuation method Inventories (in thousands) | Category | July 31, 2025 | October 31, 2024 | | :------------------------ | :------------ | :--------------- | | Purchased parts and sub–assemblies | $37,122 | $35,385 | | Work–in–process | $11,476 | $13,428 | | Finished goods | $98,940 | $104,224 | | Total Inventories | $147,538 | $153,037 | - Inventories are priced at the lower of cost (first-in, first-out method) or net realizable value[50](index=50&type=chunk) [Note 8. Leases](index=21&type=section&id=Note%208.%20Leases) This note details the company's lease portfolio, including right-of-use assets and lease liabilities - The company's lease portfolio includes production facilities, warehouses, offices, vehicles, and equipment, with terms generally ranging from two to five years, and right-of-use assets and lease liabilities recorded for leases over 12 months[51](index=51&type=chunk)[52](index=52&type=chunk) Operating Lease Expense (in thousands) | Period | 2025 (Operating Lease Expense) | 2024 (Operating Lease Expense) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Three Months Ended July 31 | $1,300 | $1,300 | | Nine Months Ended July 31 | $4,000 | $4,100 | Maturities of Undiscounted Lease Commitments (as of July 31, 2025, in thousands) | Period | Amount | | :------------------ | :----- | | Remainder of 2025 | $1,228 | | 2026 | $4,360 | | 2027 | $3,517 | | 2028 | $2,303 | | 2029 | $772 | | 2030 and thereafter | $926 | | Total | $13,106 | | Less: Imputed interest | $(800) | | Present value of operating lease liabilities | $12,306 | - As of July 31, 2025, the weighted-average remaining lease term was approximately **3.5 years**, and the weighted-average discount rate was approximately **3.4%**[55](index=55&type=chunk) [Note 9. Segment Information](index=23&type=section&id=Note%209.%20Segment%20Information) This note identifies the company's single operating segment and provides sales data by product group - The company operates in a single operating and reportable segment: industrial automation equipment, which includes the design, manufacture, and sale of computerized machine tools to the metal cutting industry[56](index=56&type=chunk) Sales and Service Fees by Product Group and Services (in thousands) | Product Group / Service | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Computerized Machine Tools | $36,889 | $33,191 | $106,347 | $104,176 | | Computer Control Systems and Software | $530 | $697 | $1,843 | $1,866 | | Service Parts | $6,309 | $6,535 | $18,404 | $20,389 | | Service Fees | $2,078 | $2,228 | $6,493 | $6,451 | | Total | $45,806 | $42,651 | $133,087 | $132,882 | [Note 10. Guarantees and Product Warranties](index=24&type=section&id=Note%2010.%20Guarantees%20and%20Product%20Warranties) This note discusses outstanding third-party payment guarantees and the estimated liability for product warranties - As of July 31, 2025, the company had four outstanding third-party payment guarantees totaling approximately **$0.4 million**, which are accrued at fair value and considered insignificant[58](index=58&type=chunk) - Product warranties are generally one year for machines and shorter for service parts, with an estimated liability recognized at the time of sale based on historical trends[59](index=59&type=chunk) Changes in Warranty Estimated Liability (in thousands) | Metric | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Balance, beginning of period | $1,086 | $1,294 | | Provision for warranties during the period | $1,747 | $1,629 | | Charges to the estimated liability | $(1,890) | $(1,861) | | Impact of foreign currency translation | $18 | $14 | | Balance, end of period | $961 | $1,076 | - The year-over-year decrease in warranty liability was primarily due to lower sales volume of more complex, higher-performance machines[60](index=60&type=chunk) [Note 11. Debt Agreements](index=24&type=section&id=Note%2011.%20Debt%20Agreements) This note outlines the company's credit facilities, including terms, covenants, and available borrowing capacity - The 2018 Credit Agreement provides an unsecured revolving credit and letter of credit facility of up to **$40.0 million**, maturing on December 31, 2025, with covenants including minimum working capital of **$125.0 million** and tangible net worth of **$176.5 million**[61](index=61&type=chunk)[63](index=63&type=chunk) - Additional credit facilities include a **€1.5 million** revolving credit facility in Germany, a **150 million New Taiwan Dollars** facility in Taiwan, and a **32.5 million Chinese Yuan** facility in China[65](index=65&type=chunk) - As of July 31, 2025, there were no borrowings under any credit facilities, with approximately **$51.2 million** of available borrowing capacity remaining[66](index=66&type=chunk) [Note 12. Income Taxes](index=26&type=section&id=Note%2012.%20Income%20Taxes) This note details income tax expense, effective tax rate, valuation allowances, and unrecognized tax benefits Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :---------------------- | :------------------------------ | :------------------------------ | | Income tax expense | $3,126 | $6,438 | | Effective tax rate | (35)% | (74)% | - The year-over-year reduction in income tax expense was mainly due to a lower valuation allowance against U.S. deferred tax assets and changes in geographic income mix, partially offset by an increased valuation allowance against Italian deferred tax assets[68](index=68&type=chunk) - A valuation allowance of **$5.3 million** was recorded for the nine months of fiscal 2025 (compared to **$8.2 million** in 2024) against U.S., Chinese, and Italian deferred tax assets, reflecting unlikelihood of realization[68](index=68&type=chunk) - Unrecognized tax benefits were **$29,000** as of July 31, 2025, including accrued interest, with no material impact expected from the U.S. OBBB bill[69](index=69&type=chunk)[71](index=71&type=chunk) [Note 13. Financial Instruments](index=28&type=section&id=Note%2013.%20Financial%20Instruments) This note explains the fair value hierarchy for financial instruments and notional amounts of derivative contracts - The company uses a three-tier fair value hierarchy (Level 1, 2, 3) for financial instruments, with cash and cash equivalents as Level 1 and derivatives as Level 2, estimated using market prices and exchange rates[74](index=74&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) Fair Value Hierarchy for Financial Assets and Liabilities (in thousands) | Category | July 31, 2025 (Assets) | October 31, 2024 (Assets) | July 31, 2025 (Liabilities) | October 31, 2024 (Liabilities) | | :---------- | :--------------------- | :------------------------ | :-------------------------- | :----------------------------- | | Level 1: Mutual Funds | $3,282 | $2,942 | — | — | | Level 2: Derivatives | $2,782 | $323 | $2,038 | $705 | - The U.S. dollar equivalent notional amounts of foreign currency forward exchange contracts were **$89.1 million** at July 31, 2025, up from **$85.1 million** at October 31, 2024[77](index=77&type=chunk) [Note 14. Contingencies and Litigation](index=30&type=section&id=Note%2014.%20Contingencies%20and%20Litigation) This note addresses routine claims and lawsuits, with management expecting no material adverse financial effects - The company is involved in routine claims and lawsuits, accruing minimum liabilities when an estimated loss range is known, with management expecting no material adverse effect on financial position or results of operations[79](index=79&type=chunk) [Note 15. New Accounting Pronouncements](index=30&type=section&id=Note%2015.%20New%20Accounting%20Pronouncements) This note outlines new ASUs being assessed for impact on segment reporting, income taxes, and expense disaggregation - The company is assessing the impact of new ASUs: ASU No. 2023-07 (Segment Reporting, effective FY2025), ASU No. 2023-09 (Income Taxes, effective FY2026), and ASU No. 2024-03 (Expense Disaggregation, effective FY2028)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition, liquidity, capital resources, and results of operations for specified periods [Executive Overview](index=31&type=section&id=Executive%20Overview) This overview introduces Hurco Companies, Inc.'s business, market presence, and key financial drivers - Hurco Companies, Inc. is an international industrial technology company specializing in the design, manufacture, and sale of computerized (CNC) machine tools for the metal cutting industry[85](index=85&type=chunk) - Approximately **51%** of fiscal 2025 nine-month revenues came from Europe, and **11%** from Asia Pacific, with sales and order trends varying by region in a cyclical industry[87](index=87&type=chunk) - Sales and service fees for the nine months of fiscal 2025 increased slightly year-over-year, driven by increased sales of Hurco and Milltronics machines in the Americas and Takumi machines in Asia Pacific[88](index=88&type=chunk) - The company's product portfolio includes Hurco, Milltronics, and Takumi brands, along with non-Hurco branded products and automation solutions through ProCobots LLC and machine tool components from LCM Precision Technology S.r.l.[89](index=89&type=chunk) - Sales to foreign customers are denominated in local currencies (Euro, Pound Sterling, Chinese Yuan), while product costs are primarily in New Taiwan Dollar and U.S. dollar, exposing the company to foreign currency exchange risk mitigated by derivatives[91](index=91&type=chunk)[92](index=92&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) [Three Months Ended July 31, 2025 Compared to Three Months Ended July 31, 2024](index=33&type=section&id=Three%20Months%20Ended%20July%2031%2C%202025%20Compared%20to%20Three%20Months%20Ended%20July%2031%2C%202024) This section analyzes the company's financial performance for the third quarter of fiscal 2025 versus the prior year [Sales and Service Fees](index=33&type=section&id=Sales%20and%20Service%20Fees%20(3%20months)) This section details the changes in sales and service fees for the three-month period - Sales and service fees for the third quarter of fiscal year 2025 increased by **$3.2 million**, or **7%**, to **$45.8 million**, including a favorable currency impact of **$1.4 million**, or **3%**[93](index=93&type=chunk) [Sales and Service Fees by Geographic Region](index=33&type=section&id=Sales%20and%20Service%20Fees%20by%20Geographic%20Region%20(3%20months)) This section breaks down sales and service fees by geographic region for the three-month period Sales and Service Fees by Geographic Region (Three Months Ended July 31, in thousands) | Region | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :----------- | :--------- | :-------------- | :--------- | :-------------- | :------- | :------- | | Americas | $16,901 | 37% | $15,389 | 36% | $1,512 | 10% | | Europe | $24,166 | 53% | $24,068 | 56% | $98 | 0% | | Asia Pacific | $4,739 | 10% | $3,194 | 8% | $1,545 | 48% | | Total | $45,806 | 100% | $42,651 | 100% | $3,155 | 7% | - Americas sales increased by **10%** due to higher Hurco and Milltronics machine shipments; European sales increased by less than **1%** (with **5%** favorable currency impact); Asia Pacific sales surged by **48%** (with **4%** favorable currency impact) driven by Takumi machine sales[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [Sales and Service Fees by Product Category](index=35&type=section&id=Sales%20and%20Service%20Fees%20by%20Product%20Category%20(3%20months)) This section categorizes sales and service fees by product type for the three-month period Sales and Service Fees by Product Category (Three Months Ended July 31, in thousands) | Product Category | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :------------------------------ | :--------- | :-------------- | :--------- | :-------------- | :------- | :------- | | Computerized Machine Tools | $36,889 | 80% | $33,191 | 78% | $3,698 | 11% | | Computer Control Systems and Software | $530 | 1% | $697 | 2% | $(167) | (24)% | | Service Parts | $6,309 | 14% | $6,535 | 15% | $(226) | (3)% | | Service Fees | $2,078 | 5% | $2,228 | 5% | $(150) | (7)% | | Total | $45,806 | 100% | $42,651 | 100% | $3,155 | 7% | - Computerized machine tool sales increased by **11%**, driven by Hurco in Americas/UK/Italy and Takumi in Asia Pacific, while computer control systems and software sales decreased by **24%**[98](index=98&type=chunk) [Orders](index=35&type=section&id=Orders%20(3%20months)) This section reports new orders booked, detailing changes by geographic region for the three-month period - Orders for the third quarter of fiscal year 2025 decreased by **$11.8 million**, or **22%**, to **$41.0 million**, including a favorable currency impact of **$1.2 million**, or **2%**[99](index=99&type=chunk) New Orders Booked by Geographic Region (Three Months Ended July 31, in thousands) | Region | 2025 Orders | 2025 % of Total | 2024 Orders | 2024 % of Total | $ Change | % Change | | :----------- | :---------- | :-------------- | :---------- | :-------------- | :------- | :------- | | Americas | $15,557 | 38% | $17,625 | 33% | $(2,068) | (12)% | | Europe | $20,274 | 49% | $28,349 | 54% | $(8,075) | (28)% | | Asia Pacific | $5,165 | 13% | $6,841 | 13% | $(1,676) | (24)% | | Total | $40,996 | 100% | $52,815 | 100% | $(11,819) | (22)% | - Orders decreased across all regions: Americas (**-12%**) due to reduced demand for Hurco and Milltronics machines; Europe (**-28%**, with **4%** favorable currency impact) due to decreased demand for Hurco and Takumi machines in Germany, UK, and France, and LCM accessories; Asia Pacific (**-24%**, with **1%** favorable currency impact) due to reduced Hurco machine orders in China[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) [Gross Profit](index=37&type=section&id=Gross%20Profit%20(3%20months)) This section analyzes the changes in gross profit and gross profit percentage for the three-month period - Gross profit for the third quarter of fiscal year 2025 increased to **$9.1 million** (**20% of sales**) from **$7.8 million** (**18% of sales**), primarily due to a higher concentration of machine sales in Europe and lower fixed costs[102](index=102&type=chunk) [Operating Expenses](index=37&type=section&id=Operating%20Expenses%20(3%20months)) This section details selling, general, and administrative expenses for the three-month period - Selling, general, and administrative expenses for the third quarter of fiscal year 2025 were **$10.8 million** (**23% of sales**), up from **$10.4 million** (**24% of sales**), mainly due to an unfavorable currency impact of **$0.3 million**, or **3%**[103](index=103&type=chunk) [Operating Income/Loss](index=37&type=section&id=Operating%20Income%2FLoss%20(3%20months)) This section discusses the operating loss and factors contributing to its change for the three-month period - Operating loss for the third quarter of fiscal year 2025 decreased to **$1.7 million** from **$2.5 million**, primarily due to a higher concentration of machine sales in Europe and lower fixed costs from cost savings[104](index=104&type=chunk) [Other (Expense) Income, Net](index=37&type=section&id=Other%20(Expense)%20Income%2C%20Net%20(3%20months)) This section analyzes other expense, net, including foreign currency exchange loss and equity investment income - Other expense, net, for the third quarter of fiscal year 2025 increased to **$1.5 million** from **$0.1 million**, mainly due to an increase in foreign currency exchange loss and a decrease in equity investment income[105](index=105&type=chunk) [Income Taxes](index=37&type=section&id=Income%20Taxes%20(3%20months)) This section details income tax expense and the impact of valuation allowances for the three-month period - Income tax expense for the third quarter of fiscal year 2025 was **$0.6 million**, down from **$7.0 million**, mainly due to a lower valuation allowance (**$1.6 million** vs. **$8.2 million**) against U.S. deferred tax assets and changes in geographic income mix[106](index=106&type=chunk) [Nine Months Ended July 31, 2025, Compared to Nine Months Ended July 31, 2024](index=37&type=section&id=Nine%20Months%20Ended%20July%2031%2C%202025%2C%20Compared%20to%20Nine%20Months%20Ended%20July%2031%2C%202024) This section analyzes the company's financial performance for the nine months of fiscal 2025 versus the prior year [Sales and Service Fees](index=37&type=section&id=Sales%20and%20Service%20Fees%20(9%20months)) This section details the changes in sales and service fees for the nine-month period - Sales and service fees for the nine months of fiscal year 2025 increased slightly by **$0.2 million**, or less than **1%**, to **$133.1 million**, including a favorable currency impact of **$1.2 million**, or less than **1%**[107](index=107&type=chunk) [Sales and Service Fees by Geographic Region](index=37&type=section&id=Sales%20and%20Service%20Fees%20by%20Geographic%20Region%20(9%20months)) This section breaks down sales and service fees by geographic region for the nine-month period Sales and Service Fees by Geographic Region (Nine Months Ended July 31, in thousands) | Region | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :----------- | :--------- | :-------------- | :--------- | :-------------- | :------- | :------- | | Americas | $50,370 | 38% | $48,986 | 37% | $1,384 | 3% | | Europe | $67,388 | 51% | $69,538 | 52% | $(2,150) | (3)% | | Asia Pacific | $15,329 | 11% | $14,358 | 11% | $971 | 7% | | Total | $133,087 | 100% | $132,882 | 100% | $205 | 0% | - Americas sales increased by **3%**; European sales decreased by **3%** (with **2%** favorable currency impact); Asia Pacific sales increased by **7%** (with less than **1%** unfavorable currency impact) driven by Takumi machine sales[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Sales and Service Fees by Product Category](index=38&type=section&id=Sales%20and%20Service%20Fees%20by%20Product%20Category%20(9%20months)) This section categorizes sales and service fees by product type for the nine-month period Sales and Service Fees by Product Category (Nine Months Ended July 31, in thousands) | Product Category | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :------------------------------ | :--------- | :-------------- | :--------- | :-------------- | :------- | :------- | | Computerized Machine Tools | $106,347 | 80% | $104,176 | 79% | $2,171 | 2% | | Computer Control Systems and Software | $1,843 | 1% | $1,866 | 1% | $(23) | (1)% | | Service Parts | $18,404 | 14% | $20,389 | 15% | $(1,985) | (10)% | | Service Fees | $6,493 | 5% | $6,451 | 5% | $42 | 1% | | Total | $133,087 | 100% | $132,882 | 100% | $205 | 0% | - Computerized machine tool sales increased by **2%**, driven by Hurco/Milltronics in Americas and Takumi in Asia Pacific, while service parts sales decreased by **10%**[113](index=113&type=chunk) [Orders](index=38&type=section&id=Orders%20(9%20months)) This section reports new orders booked, detailing changes by geographic region for the nine-month period - Orders for the nine months of fiscal year 2025 decreased by **$22.4 million**, or **15%**, to **$124.8 million**, including a favorable currency impact of **$0.9 million**, or less than **1%**[114](index=114&type=chunk) New Orders Booked by Geographic Region (Nine Months Ended July 31, in thousands) | Region | 2025 Orders | 2025 % of Total | 2024 Orders | 2024 % of Total | $ Change | % Change | | :----------- | :---------- | :-------------- | :---------- | :-------------- | :------- | :------- | | Americas | $47,145 | 38% | $55,490 | 38% | $(8,345) | (15)% | | Europe | $60,730 | 49% | $75,757 | 51% | $(15,027) | (20)% | | Asia Pacific | $16,906 | 13% | $15,978 | 11% | $928 | 6% | | Total | $124,781 | 100% | $147,225 | 100% | $(22,444) | (15)% | - Orders decreased in Americas (**-15%**) and Europe (**-20%**, with **1%** favorable currency impact), while Asia Pacific orders increased by **6%** (with less than **1%** unfavorable currency impact)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [Gross Profit](index=40&type=section&id=Gross%20Profit%20(9%20months)) This section analyzes the changes in gross profit and gross profit percentage for the nine-month period - Gross profit for the nine months of fiscal year 2025 was **$25.2 million** (**19% of sales**), slightly down from **$25.6 million** (**19% of sales**) in the prior year[118](index=118&type=chunk) [Operating Expenses](index=40&type=section&id=Operating%20Expenses%20(9%20months)) This section details selling, general, and administrative expenses for the nine-month period - Selling, general, and administrative expenses for the nine months of fiscal year 2025 decreased to **$32.0 million** (**24% of sales**) from **$33.4 million** (**25% of sales**), due to lower discretionary spending and reduced employee health insurance costs[119](index=119&type=chunk) [Operating Income/Loss](index=40&type=section&id=Operating%20Income%2FLoss%20(9%20months)) This section discusses the operating loss and factors contributing to its change for the nine-month period - Operating loss for the nine months of fiscal year 2025 decreased to **$6.8 million** from **$7.8 million**, primarily due to lower fixed costs, reduced discretionary spending, and lower employee health insurance costs[120](index=120&type=chunk) [Other (Expense) Income, Net](index=40&type=section&id=Other%20(Expense)%20Income%2C%20Net%20(9%20months)) This section analyzes other expense, net, including foreign currency exchange loss and equity investment income - Other expense, net, for the nine months of fiscal year 2025 increased to **$2.5 million** from **$1.1 million**, mainly due to an increase in foreign currency exchange loss and a decrease in equity investment income[121](index=121&type=chunk) [Income Taxes](index=40&type=section&id=Income%20Taxes%20(9%20months)) This section details income tax expense and the impact of valuation allowances for the nine-month period - Income tax expense for the nine months of fiscal year 2025 was **$3.1 million**, down from **$6.4 million**, mainly due to a lower valuation allowance (**$5.3 million** vs. **$8.2 million**) against U.S. deferred tax assets and changes in geographic income mix[122](index=122&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, working capital, capital expenditures, and borrowing capacity Cash and Cash Equivalents (in thousands) | Date | Amount | | :-------------- | :----- | | July 31, 2025 | $44,494 | | October 31, 2024 | $33,330 | - Working capital decreased to **$176.8 million** at July 31, 2025, from **$180.8 million** at October 31, 2024, primarily due to decreases in accounts receivable and inventories[124](index=124&type=chunk) - Capital expenditures for the nine months of fiscal 2025 were **$2.3 million**, mainly for software development and facility improvements[125](index=125&type=chunk) - The company repurchased **$2.0 million** (**104,472 shares**) of common stock during Q3 FY2025 under its **$25.0 million** program, with **$19.7 million** remaining available[126](index=126&type=chunk) - The company temporarily suspended its regular quarterly cash dividend on June 14, 2024, to enhance financial flexibility and focus on strengthening the balance sheet and reinvesting in core business[127](index=127&type=chunk) - As of July 31, 2025, the company had no borrowings under its **$40.0 million** 2018 Credit Agreement or other credit facilities, with approximately **$51.2 million** available borrowing capacity[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [Critical Accounting Estimates](index=43&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to critical accounting estimates during the nine months of fiscal 2025 - There were no material changes to the company's critical accounting estimates during the nine months of fiscal year 2025, as described in the Annual Report on Form 10-K for the year ended October 31, 2024[137](index=137&type=chunk) [Contractual Obligations and Commitments](index=43&type=section&id=Contractual%20Obligations%20and%20Commitments) This section states no material changes to contractual obligations and commitments since the last annual report - There have been no material changes to contractual obligations and commitments from the information provided in the Annual Report on Form 10-K for the fiscal year ended October 31, 2024[138](index=138&type=chunk) [Off Balance Sheet Arrangements](index=43&type=section&id=Off%20Balance%20Sheet%20Arrangements) This section discloses outstanding third-party payment guarantees related to customer financing for machine sales - As of July 31, 2025, the company's subsidiaries had four outstanding third-party payment guarantees totaling approximately **$0.4 million**, related to customer financing for machine sales, considered insignificant[139](index=139&type=chunk) [Cautionary Statement Concerning Forward-Looking Statements](index=43&type=section&id=Cautionary%20Statement%20Concerning%20Forward-Looking%20Statements) This section warns that forward-looking statements are subject to risks, including industry cyclicality, economic conditions, and international operations - This section contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially, including industry cyclicality, uncertain economic conditions, and international operations risks[140](index=140&type=chunk)[142](index=142&type=chunk) - Readers are cautioned not to place undue reliance on these statements, and the company disclaims any obligation to update or revise them[143](index=143&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to interest rate and foreign currency exchange risks and hedging strategies - The company is exposed to interest rate risk, though no borrowings were outstanding, and significant foreign currency exchange risk, with **62%** of revenues from outside the Americas and product costs predominantly in New Taiwan Dollar and U.S. dollar[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Foreign currency forward exchange contracts are used to hedge cash flow risk from inter-company sales/purchases and to protect against fluctuations on inter-company receivables/payables, without speculating in financial markets[148](index=148&type=chunk) Forward Contracts Designated as Cash Flow Hedges (as of July 31, 2025, in thousands) | Contract Type | Notional Amount in Foreign Currency | Weighted Avg. Forward Rate | Contract Amount at Forward Rates in U.S. Dollars (July 31, 2025) | Maturity Dates | | :---------------- | :---------------------------------- | :------------------------- | :--------------------------------------------------------------- | :------------------- | | Sale Contracts: | | | | | | Euro | 5,000 | 1.1071 | $5,763 | Aug 2025 - Jul 2026 | | Sterling | 2,950 | 1.2883 | $3,908 | Aug 2025 - Jul 2026 | | Purchase Contracts: | | | | | | New Taiwan Dollar | 485,000 | 30.0091 * | $16,587 | Aug 2025 - Jul 2026 | * New Taiwan Dollars per U.S. dollar Forward Contracts Not Designated as Hedges (as of July 31, 2025, in thousands) | Contract Type | Notional Amount in Foreign Currency | Weighted Avg. Forward Rate | Contract Amount at Forward Rates in U.S. Dollars (July 31, 2025) | Maturity Dates | | :---------------- | :---------------------------------- | :------------------------- | :--------------------------------------------------------------- | :------------------- | | Sale Contracts: | | | | | | Euro | 14,397 | 1.0851 | $16,575 | Aug 2025 - Dec 2025 | | Purchase Contracts: | | | | | | New Taiwan Dollar | 1,378,415 | 30.8336 * | $46,442 | Aug 2025 - Mar 2026 | * New Taiwan Dollars per U.S. dollar - A forward contract with a notional amount of **€3.0 million** is designated as a net investment hedge for Euro-denominated assets, resulting in a realized gain of **$1.2 million** and an unrealized loss of **$0.1 million**, net of tax, recorded in Accumulated other comprehensive loss[150](index=150&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes to internal control - Management concluded that the company's disclosure controls and procedures were effective as of July 31, 2025, with no material changes in internal control over financial reporting during the three months ended July 31, 2025[151](index=151&type=chunk)[152](index=152&type=chunk) [PART II - OTHER INFORMATION](index=48&type=section&id=Part%20II%20-%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, other information, and exhibits for the reporting period [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses routine claims and lawsuits, with no expected material adverse effects on financial position or results - The company is involved in routine claims and lawsuits, accruing minimum liabilities for known claims, with management expecting no material adverse effect on financial position or results of operations[155](index=155&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, adding a new risk related to changes in U.S. trade policy and tariffs - A new risk factor has been added concerning changes in U.S. trade policy, including tariffs, which could increase operating costs, require supplier transitions, and lead to retaliatory tariffs, potentially impacting business and financial condition[156](index=156&type=chunk)[157](index=157&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase program, including shares repurchased and remaining authorization - The company has a share repurchase program approved on January 6, 2023, for up to **$25.0 million**, extended through November 10, 2026, with **104,472 shares** repurchased for **$2.0 million** during the three months ended July 31, 2025[158](index=158&type=chunk) Share Repurchase Activity (Three Months Ended July 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs ($ in thousands) | | :-------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------- | | May 1-31, 2025 | — | $— | — | $21,688 | | June 1-30, 2025 | 36,275 | $18.16 | 36,275 | $21,029 | | July 1-31, 2025 | 68,197 | $19.74 | 68,197 | $19,682 | | Total | 104,472 | | 104,472 | | - As of July 31, 2025, **$19.7 million** remained available under the share repurchase program[158](index=158&type=chunk)[159](index=159&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) This section discloses Audit Committee engagement for non-audit services and confirms no changes to Rule 10b5-1 trading arrangements - The Audit Committee engaged the independent registered public accounting firm for non-audit, tax planning services during the reporting period[161](index=161&type=chunk) - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the three months ended July 31, 2025[162](index=162&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents and certifications - Exhibits include Amended and Restated Articles of Incorporation and By-Laws, CEO and CFO certifications (pursuant to Rule 13a-14(a) and Section 906 of Sarbanes-Oxley Act), and Inline XBRL formatted financial statements and related information[164](index=164&type=chunk) [Signatures](index=51&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q filing on behalf of Hurco Companies, Inc - The report is signed by Sonja K. McClelland, Executive Vice President, Treasurer & Chief Financial Officer, on behalf of Hurco Companies, Inc., on September 5, 2025[166](index=166&type=chunk)

[Third Quarter and Nine Months Fiscal Year 2025 Financial Highlights](index=1&type=section&id=Third%20Quarter%20and%20Nine%20Months%20Fiscal%20Year%202025%20Financial%20Highlights) This section provides an overview of Hurco's financial performance for the third quarter and first nine months of fiscal year 2025, highlighting net loss, sales, and strategic commentary [Net Loss and Earnings Per Share](index=1&type=section&id=Net%20Loss%20and%20Earnings%20Per%20Share) Hurco reported a net loss for both the third quarter and nine months of fiscal year 2025, significantly narrowing losses compared to the prior year due to reduced non-cash tax valuation allowances Net Loss and Earnings Per Share (Diluted) | Metric | Q3 FY2025 | Q3 FY2024 | Nine Months FY2025 | Nine Months FY2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | ($3,693,000) | ($9,596,000) | ($12,076,000) | ($15,166,000) | | Diluted Loss Per Share | ($0.58) | ($1.47) | ($1.87) | ($2.33) | | Non-Cash Tax Valuation Allowance | $1,639,000 | $8,158,000 | $5,294,000 | $8,158,000 | [Sales and Service Fees Overview](index=1&type=section&id=Sales%20and%20Service%20Fees%20Overview) Third-quarter sales and service fees increased by 7% year-over-year to $45.8 million, with favorable foreign currency exchange rates contributing 3%, while nine-month sales saw a slight increase of less than 1% Sales and Service Fees | Metric | Q3 FY2025 | Q3 FY2024 | YOY Change | Nine Months FY2025 | Nine Months FY2024 | YOY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales and Service Fees | $45,806,000 | $42,651,000 | +7% | $133,087,000 | $132,882,000 | <1% | | Favorable FX Impact (Q3) | $1,379,000 | - | +3% | - | - | - | | Favorable FX Impact (9 Months) | - | - | - | $1,156,000 | - | <1% | [CEO's Strategic Commentary](index=1&type=section&id=CEO's%20Strategic%20Commentary) CEO Greg Volovic expressed encouragement regarding quarterly progress, noting improved financial performance through enhanced gross margins and reduced operating costs despite macroeconomic uncertainties - Despite macroeconomic uncertainties leading to cautious capital purchasing decisions, the company made progress this quarter in improving **gross profit** and reducing **operating costs**, enhancing financial performance[3](index=3&type=chunk) - **Americas sales grew 10%** and **Asia Pacific sales grew nearly 50%**, with the balance sheet strengthened and **cash and cash equivalents exceeding $44 million**[3](index=3&type=chunk) - The company maintains a healthy cash position and continues to invest in technology, positioning Hurco for a return to profitability and long-term shareholder value creation[3](index=3&type=chunk) [Detailed Sales and Order Performance](index=1&type=section&id=Detailed%20Sales%20and%20Order%20Performance) This section details Hurco's sales and new order performance across various geographic regions for the third quarter and first nine months of fiscal year 2025 [Sales and Service Fees by Geographic Region](index=1&type=section&id=Sales%20and%20Service%20Fees%20by%20Geographic%20Region) Americas and Asia Pacific regions experienced strong sales growth in Q3 FY2025, with 10% and 48% increases respectively, while European sales remained flat Net Sales and Service Fees by Geographic Region (Thousands of USD) | Region | Q3 FY2025 | Q3 FY2024 | USD Change | Percentage Change | Nine Months FY2025 | Nine Months FY2024 | USD Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Americas | $16,901 | $15,389 | $1,512 | 10% | $50,370 | $48,986 | $1,384 | 3% | | Europe | $24,166 | $24,068 | $98 | 0% | $67,388 | $69,538 | ($2,150) | (3)% | | Asia Pacific | $4,739 | $3,194 | $1,545 | 48% | $15,329 | $14,358 | $971 | 7% | | **Total** | **$45,806** | **$42,651** | **$3,155** | **7%** | **$133,087** | **$132,882** | **$205** | **0%** | [Americas Sales Performance](index=2&type=section&id=Americas%20Sales%20Performance) Americas sales grew by 10% in Q3 and 3% in the first nine months of FY2025, driven by increased shipments of Hurco and Milltronics machines - Americas sales increased by **10%** in Q3 FY2025 and **3%** for the nine-month period, primarily due to increased shipments of Hurco and Milltronics machines, particularly lathes, toolroom machines, and vertical machining centers[4](index=4&type=chunk) [Europe Sales Performance](index=2&type=section&id=Europe%20Sales%20Performance) European sales saw a marginal increase of less than 1% in Q3 FY2025 (including a 5% favorable currency impact) and a 3% decline for the nine-month period - European sales marginally increased by **less than 1%** in Q3 FY2025 (including a **5% favorable foreign currency impact**) and decreased by **3%** for the nine-month period (including a **2% favorable foreign currency impact**)[5](index=5&type=chunk) - The decline was mainly due to reduced shipments of Hurco and Takumi machines in France and Germany, and fewer electromechanical components and accessories from LCM Precision Technology, partially offset by increased Hurco machine sales in the UK and Italy[5](index=5&type=chunk) [Asia Pacific Sales Performance](index=2&type=section&id=Asia%20Pacific%20Sales%20Performance) Asia Pacific sales surged by 48% in Q3 and 7% for the nine months of FY2025, primarily due to increased sales of Takumi machines - Asia Pacific sales increased by **48%** in Q3 FY2025 (including a **4% favorable foreign currency impact**) and **7%** for the nine-month period (including a **less than 1% unfavorable foreign currency impact**), primarily driven by increased sales of Takumi vertical, gantry, horizontal, and 5-axis machines in the region[6](index=6&type=chunk) [New Orders Booked by Geographic Region](index=2&type=section&id=New%20Orders%20Booked%20by%20Geographic%20Region) Global new orders decreased by 22% year-over-year in Q3 FY2025 and 15% for the nine-month period, with significant declines in Americas and Europe New Orders by Geographic Region (Thousands of USD) | Region | Q3 FY2025 | Q3 FY2024 | USD Change | Percentage Change | Nine Months FY2025 | Nine Months FY2024 | USD Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Americas | $15,557 | $17,625 | ($2,068) | (12)% | $47,145 | $55,490 | ($8,345) | (15)% | | Europe | $20,274 | $28,349 | ($8,075) | (28)% | $60,730 | $75,757 | ($15,027) | (20)% | | Asia Pacific | $5,165 | $6,841 | ($1,676) | (24)% | $16,906 | $15,978 | $928 | 6% | | **Total** | **$40,996** | **$52,815** | **($11,819)** | **(22)%** | **$124,781** | **$147,225** | **($22,444)** | **(15)%** | [Overall Order Trends](index=2&type=section&id=Overall%20Order%20Trends) Total new orders for Q3 FY2025 were $40.996 million, marking a 22% year-over-year decrease, with a 15% decline for the nine-month period - New orders for Q3 FY2025 totaled **$40,996,000**, a **22% decrease** year-over-year (including a **2% favorable foreign currency impact**)[7](index=7&type=chunk) - New orders for the nine-month period were **$124,781,000**, a **15% decrease** year-over-year (including a **less than 1% favorable foreign currency impact**)[7](index=7&type=chunk) [Americas Order Performance](index=2&type=section&id=Americas%20Order%20Performance) Americas orders declined by 12% in Q3 and 15% for the nine months of FY2025, driven by reduced demand for various machine types - Americas orders decreased by **12%** in Q3 FY2025 and **15%** for the nine-month period, primarily due to reduced demand for Hurco, Milltronics, and Takumi machines, as well as OEM machines[8](index=8&type=chunk) [Europe Order Performance](index=3&type=section&id=Europe%20Order%20Performance) European orders decreased by 28% in Q3 and 20% for the nine months of FY2025, primarily due to reduced demand in Germany, the UK, and France - European orders decreased by **28%** in Q3 FY2025 (including a **4% favorable foreign currency impact**) and **20%** for the nine-month period (including a **1% favorable foreign currency impact**), mainly due to reduced demand for Hurco and Takumi machines and LCM accessories in Germany, the UK, and France[9](index=9&type=chunk) [Asia Pacific Order Performance](index=3&type=section&id=Asia%20Pacific%20Order%20Performance) Asia Pacific orders decreased by 24% in Q3 FY2025 due to lower Hurco machine orders in China, but grew 6% for the nine-month period - Asia Pacific orders decreased by **24%** in Q3 FY2025 (including a **1% favorable foreign currency impact**), primarily due to fewer Hurco machine orders in China[10](index=10&type=chunk) - For the nine-month period, orders increased by **6%** (including a **less than 1% unfavorable foreign currency impact**), driven by increased Takumi machine orders, partially offset by reduced Hurco machine orders in China[10](index=10&type=chunk) [Profitability and Expense Analysis](index=3&type=section&id=Profitability%20and%20Expense%20Analysis) This section analyzes Hurco's gross profit, selling, general, and administrative expenses, and income tax expenses for the third quarter and first nine months of fiscal year 2025 [Gross Profit Analysis](index=3&type=section&id=Gross%20Profit%20Analysis) Gross profit increased by 16.2% in Q3 FY2025, with the gross margin improving to 20%, driven by higher European machine sales and reduced fixed costs Gross Profit (Thousands of USD) | Metric | Q3 FY2025 | Q3 FY2024 | YOY Change | Nine Months FY2025 | Nine Months FY2024 | YOY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $9,112 | $7,843 | +16.2% | $25,231 | $25,557 | -1.3% | | Gross Margin | 20% | 18% | +2% | 19% | 19% | 0% | - The increase in Q3 gross margin is primarily attributable to a higher concentration of **European machine sales** and reduced fixed costs allocated to overhead due to **cost-saving initiatives** implemented over the past twelve months[11](index=11&type=chunk) [Selling, General, and Administrative Expenses (SG&A)](index=3&type=section&id=Selling%2C%20General%2C%20and%20Administrative%20Expenses%20%28SG%26A%29) SG&A expenses slightly increased in Q3 FY2025 due to unfavorable currency impacts but decreased as a percentage of sales, while nine-month SG&A declined year-over-year Selling, General, and Administrative Expenses (Thousands of USD) | Metric | Q3 FY2025 | Q3 FY2024 | YOY Change | Nine Months FY2025 | Nine Months FY2024 | YOY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | SG&A Expenses | $10,762 | $10,376 | +3.7% | $32,041 | $33,352 | -3.9% | | SG&A as % of Sales | 23% | 24% | -1% | 24% | 25% | -1% | | Unfavorable FX Impact (Q3) | $276 | - | +3% | - | - | - | | Unfavorable FX Impact (9 Months) | - | - | - | $221 | - | <1% | - The year-over-year decrease in SG&A expenses for the nine-month period reflects **lower discretionary spending** and reduced employee health insurance costs[12](index=12&type=chunk) [Income Tax Expense](index=4&type=section&id=Income%20Tax%20Expense) Income tax expense significantly decreased in Q3 and the nine months of FY2025, primarily due to a reduction in the valuation allowance for U.S. deferred tax assets and changes in the geographic mix of income and losses Income Tax Expense (Thousands of USD) | Metric | Q3 FY2025 | Q3 FY2024 | YOY Change | Nine Months FY2025 | Nine Months FY2024 | YOY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Income Tax Expense | $567 | $6,999 | -91.9% | $3,126 | $6,438 | -51.4% | | Valuation Allowance | $1,639 | $8,158 | -79.9% | $5,294 | $8,158 | -35.1% | - The decrease in income tax expense is primarily attributable to a **lower valuation allowance** for U.S. deferred tax assets and changes in the geographic mix of income and losses across different tax rate jurisdictions[13](index=13&type=chunk) - The company has recorded a **full valuation allowance** against its deferred tax assets in the U.S., China, and Italy, thus no tax benefit was recorded for net losses in the U.S. and China[13](index=13&type=chunk) [Financial Position and Capital Management](index=4&type=section&id=Financial%20Position%20and%20Capital%20Management) This section outlines Hurco's balance sheet highlights, share repurchase program, and capital allocation strategy for future growth and shareholder value [Balance Sheet Highlights](index=4&type=section&id=Balance%20Sheet%20Highlights) As of July 31, 2025, cash and cash equivalents significantly increased to $44.494 million, while working capital slightly decreased due to changes in receivables and inventory Balance Sheet Key Data (Thousands of USD) | Metric | July 31, 2025 | October 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | $44,494 | $33,330 | +$11,164 | | Working Capital | $176,755 | $180,788 | ($4,033) | - The decrease in working capital was primarily driven by reductions in **net accounts receivable** and **inventory**, along with increases in accounts payable and derivative liabilities, partially offset by increases in cash and cash equivalents and derivative assets[14](index=14&type=chunk) [Share Repurchase Program](index=4&type=section&id=Share%20Repurchase%20Program) The company repurchased nearly $2 million of common stock in Q3 FY2025, with over $5.3 million repurchased since the program's inception and approximately $19.7 million remaining Share Repurchase Program | Metric | Q3 FY2025 | Since Program Inception (as of July 31, 2025) | Remaining Available for Repurchase | | :--- | :--- | :--- | :--- | | Repurchase Amount | $1,999,820 | $5,304,548 | $19,682,471 | | Number of Common Shares Repurchased | 104,472 | 259,620 | - | | Total Program Amount | - | - | $25,000,000 | - The share repurchase program has been extended through **November 10, 2026**[15](index=15&type=chunk) [Capital Allocation Strategy and Future Outlook](index=4&type=section&id=Capital%20Allocation%20Strategy%20and%20Future%20Outlook) The CEO emphasized a balanced capital allocation strategy prioritizing a strong balance sheet, liquidity, value-added growth, and shareholder value, with continued investment in technology and potential acquisitions - The company is committed to a **balanced capital allocation strategy**, prioritizing a strong balance sheet and available liquidity while focusing on value-added growth and shareholder value[16](index=16&type=chunk) - Continued investment in **capital expenditures**, emerging technologies, and research and development is planned, with a re-evaluation of dividend payments upon a return to profitability[16](index=16&type=chunk) - The company will continue to evaluate potential acquisitions while maintaining financial discipline, positioning for long-term sustainable growth[16](index=16&type=chunk) [Company Overview and Disclosures](index=5&type=section&id=Company%20Overview%20and%20Disclosures) This section provides a business description of Hurco Companies, Inc., outlines forward-looking statements and risk factors, and includes contact information for inquiries [Business Description](index=5&type=section&id=Business%20Description) Hurco Companies, Inc. is an international industrial technology company selling CNC machine tools under three brands (Hurco, Milltronics, Takumi) to the global metal cutting and forming industries - Hurco Companies, Inc. is an international industrial technology company that sells computer numerical control (CNC) machine tools under its three brands (Hurco, Milltronics, and Takumi) to the global metal cutting and metal forming industries[17](index=17&type=chunk) - Hurco and Milltronics brand machines feature the company's proprietary interactive control technology and software, while Takumi brand machines are equipped with third-party industrial control systems[17](index=17&type=chunk) - The company also manufactures high-value machine tool components and accessories and provides automation solutions that integrate with any machine tool, serving customers in aerospace, defense, medical equipment, energy, transportation, and computer equipment industries[17](index=17&type=chunk) [Forward-Looking Statements and Risk Factors](index=5&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The press release contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations - Certain statements in the press release are forward-looking statements involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations[17](index=17&type=chunk) - Risk factors include the cyclical nature of the machine tool industry, uncertain economic conditions, international operations risks, government actions, foreign currency exchange rate fluctuations, competition, reliance on new product development, need for intellectual property protection, supply chain constraints, rising raw material prices, loss of key personnel, acquisition integration risks, data privacy and security compliance, technological obsolescence, asset impairment, tax consequences, uncertainty of tax loss carryforwards, SOFR rate changes, and the impact of the COVID-19 pandemic[17](index=17&type=chunk) [Contact Information](index=5&type=section&id=Contact%20Information) Investors and media can contact Sonja K. McClelland, Executive Vice President, Treasurer, and Chief Financial Officer, for further information - Contact: Sonja K. McClelland, Executive Vice President, Treasurer, and Chief Financial Officer, at **317-293-5309**[18](index=18&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Hurco's condensed consolidated financial statements, including statements of operations, other financial data, and balance sheets for the specified periods [Statements of Operations](index=6&type=section&id=Statements%20of%20Operations) This section provides Hurco's condensed consolidated statements of operations for Q3 and the first nine months of FY2025, detailing key financial metrics like sales, gross profit, and net income Condensed Consolidated Statements of Operations (Thousands of USD, except per share data) | Metric | Q3 FY2025 | Q3 FY2024 | Nine Months FY2025 | Nine Months FY2024 | | :--- | :--- | :--- | :--- | :--- | | Sales and Service Fees | $45,806 | $42,651 | $133,087 | $132,882 | | Cost of Sales and Service | $36,694 | $34,808 | $107,856 | $107,325 | | Gross Profit | $9,112 | $7,843 | $25,231 | $25,557 | | Selling, General, and Administrative Expenses | $10,762 | $10,376 | $32,041 | $33,352 | | Operating (Loss) Income | ($1,650) | ($2,533) | ($6,810) | ($7,795) | | (Loss) Income Before Income Taxes | ($3,126) | ($2,597) | ($8,950) | ($8,728) | | Income Tax Provision (Benefit) | $567 | $6,999 | $3,126 | $6,438 | | Net (Loss) Income | ($3,693) | ($9,596) | ($12,076) | ($15,166) | | Basic (Loss) Earnings Per Share | ($0.58) | ($1.47) | ($1.87) | ($2.33) | | Diluted (Loss) Earnings Per Share | ($0.58) | ($1.47) | ($1.87) | ($2.33) | | Dividends Per Share | $ - | $ - | $ - | $0.32 | [Other Financial Data](index=6&type=section&id=Other%20Financial%20Data) This section presents additional consolidated financial data for Q3 and the first nine months of FY2025, including gross margin, SG&A as a percentage of sales, and balance sheet metrics Other Consolidated Financial Data | Operating Data | Q3 FY2025 | Q3 FY2024 | Nine Months FY2025 | Nine Months FY2024 | | :--- | :--- | :--- | :--- | :--- | | Gross Margin | 20% | 18% | 19% | 19% | | SG&A as % of Sales | 23% | 24% | 24% | 25% | | Operating (Loss) Income as % of Sales | (4)% | (6)% | (5)% | (6)% | | (Loss) Income Before Income Taxes as % of Sales | (7)% | (6)% | (7)% | (7)% | | Effective Tax Rate | (18)% | (270)% | (35)% | (74)% | | Depreciation and Amortization (Thousands of USD) | $642 | $888 | $2,000 | $2,678 | | Capital Expenditures (Thousands of USD) | $932 | $735 | $2,288 | $2,046 | Balance Sheet Data (Thousands of USD) | Metric | July 31, 2025 | October 31, 2024 | | :--- | :--- | :--- | | Working Capital | $176,755 | $180,788 | | Days Sales Outstanding | 47 | 49 | | Inventory Turns | 1.0 | 1.0 | | Total Debt | -- | -- | | Shareholders' Equity | $203,672 | $207,172 | [Balance Sheets](index=7&type=section&id=Balance%20Sheets) This section provides Hurco's condensed consolidated balance sheets as of July 31, 2025, and October 31, 2024, detailing assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets (Thousands of USD) | Assets | July 31, 2025 | October 31, 2024 | | :--- | :--- | :--- | | **Current Assets:** | | | | Cash and Cash Equivalents | $44,494 | $33,330 | | Accounts Receivable, Net | $27,645 | $36,678 | | Inventories | $147,538 | $153,037 | | Derivative Assets | $2,782 | $323 | | Prepaid and Other Assets | $5,835 | $5,209 | | **Total Current Assets** | **$228,294** | **$228,577** | | **Noncurrent Assets:** | | | | Property and Equipment, Net | $8,319 | $8,796 | | Software Development Costs, Net | $7,684 | $7,044 | | Intangible Assets, Net | $663 | $763 | | Operating Lease Right-of-Use Assets, Net | $11,929 | $11,313 | | Deferred Income Taxes | $641 | $1,349 | | Investments | $8,821 | $8,216 | | Other Assets | $2,737 | $2,585 | | **Total Noncurrent Assets** | **$32,475** | **$31,270** | | **Total Assets** | **$269,088** | **$268,643** | | **Liabilities and Shareholders' Equity:** | | | | **Current Liabilities:** | | | | Accounts Payable | $27,343 | $24,951 | | Customer Deposits | $4,453 | $4,308 | | Derivative Liabilities | $2,038 | $705 | | Operating Lease Liabilities | $4,190 | $3,829 | | Accrued Payroll and Employee Benefits | $6,819 | $7,786 | | Accrued Income Taxes | $1,622 | $866 | | Accrued Expenses | $4,113 | $4,258 | | Accrued Warranty | $961 | $1,086 | | **Total Current Liabilities** | **$51,539** | **$47,789** | | **Noncurrent Liabilities:** | | | | Deferred Income Taxes | $47 | $53 | | Accrued Tax Liabilities | $29 | $537 | | Operating Lease Liabilities | $8,116 | $7,852 | | Deferred Credits and Other | $5,685 | $5,240 | | **Total Noncurrent Liabilities** | **$13,877** | **$13,682** | | **Shareholders' Equity:** | | | | Common Stock | $640 | $644 | | Additional Paid-in Capital | $60,781 | $61,500 | | Retained Earnings | $149,346 | $161,422 | | Accumulated Other Comprehensive Loss | ($7,095) | ($16,394) | | **Total Shareholders' Equity** | **$203,672** | **$207,172** | | **Total Liabilities and Shareholders' Equity** | **$269,088** | **$268,643** |

Core Viewpoint - Hurco Companies, Inc. reported a net loss of $3.69 million for Q3 2025, an improvement from a net loss of $9.60 million in Q3 2024, indicating progress in financial performance despite ongoing challenges in the market [1][18]. Financial Performance - For Q3 2025, Hurco's sales and service fees reached $45.81 million, a 7% increase from $42.65 million in Q3 2024, aided by a favorable currency impact of $1.38 million [2][18]. - The gross profit for Q3 2025 was $9.11 million, representing 20% of sales, compared to $7.84 million or 18% of sales in the same quarter of the previous year [10][18]. - Selling, general, and administrative expenses for Q3 2025 were $10.76 million, or 23% of sales, down from 24% in Q3 2024, reflecting cost management efforts [11][12]. Geographic Sales Breakdown - Sales in the Americas increased by 10% to $16.90 million in Q3 2025, while sales in Europe remained flat at $24.17 million, and Asia Pacific saw a significant increase of 48% to $4.74 million [3][4][5]. - For the nine months of fiscal year 2025, total sales were $133.09 million, a slight increase of less than 1% compared to the same period in 2024 [2][3]. Orders and Demand - Total orders for Q3 2025 were $40.99 million, a decrease of 22% from $52.82 million in Q3 2024, with notable declines in orders from the Americas and Europe [6][7][8]. - Orders in the Americas decreased by 12% in Q3 2025, primarily due to reduced demand for Hurco and Milltronics machines [7][8]. Cash Position and Capital Allocation - As of July 31, 2025, cash and cash equivalents totaled $44.49 million, an increase from $33.33 million at the end of October 2024, indicating a strengthened cash position [14][18]. - The company has a share repurchase program with $19.68 million available for future repurchases, reflecting a commitment to returning value to shareholders [15][16]. Management Commentary - The CEO expressed optimism about the company's progress, highlighting improved gross profit and reduced operating costs, while acknowledging cautious capital purchase decisions due to macroeconomic uncertainty [3][16].

Group 1 - The equity markets are performing relatively well, but there is significant uncertainty and concern in the manufacturing sector in North America and Western Europe [1] - This uncertainty in the manufacturing sector is negatively impacting companies like Hurco [1]

Core Viewpoint - Hurco Companies, Inc. reported a net loss for the second quarter of fiscal 2025, with significant declines in revenue and orders, contrasting with a positive performance of the S&P 500 Index during the same period [1][2][5]. Financial Performance - The company recorded a net loss of $4.1 million, or $0.62 per diluted share, compared to a net loss of $3.9 million, or $0.61 per share, in the same quarter last year, indicating a marginal increase in losses [2]. - Revenues decreased by 9.5% to $40.9 million from $45.2 million year-over-year, attributed to lower shipments of machines [2]. - Gross profit was $7.8 million, representing 19.2% of sales, an improvement from 17.8% in the same quarter last year, due to a favorable sales mix and lower fixed costs [3]. - Operating loss narrowed to $3.1 million from $3.4 million, while SG&A expenses decreased by 4.9% to $10.9 million [3]. Segment Performance - Sales in the Americas declined by 9.4% to $15.4 million, Europe saw a 4.9% decrease to $21.6 million, and Asia Pacific experienced a 29.2% fall to $3.9 million [4]. - Total new orders booked were $43.7 million, down 1.1% from the prior year, with significant regional variations [5]. - For the six-month period, total orders declined 11.3% to $83.8 million, with notable softness in the Americas and Europe, while Asia Pacific registered a 28.5% increase [6]. Tax and Balance Sheet - The effective tax rate was (15%), influenced by valuation allowances against deferred tax assets [7]. - Cash and equivalents increased to $43.8 million as of April 30, 2025, compared to $33.3 million as of October 31, 2024, while working capital decreased to $175.9 million [8]. Operational Efficiency - Inventory turnover remained at 1x, and days sales outstanding increased from 49 to 51 days [9]. - Capital expenditures rose to $800,000 from $479,000 a year earlier, indicating modest reinvestment [9]. Management Commentary - CEO Greg Volovic highlighted challenges in global markets and reaffirmed the company's commitment to long-term strategies, including cash flow improvement and cost reduction [11]. - The company emphasized ongoing product development and innovation despite short-term headwinds [11]. Performance Influences - Hurco's performance was negatively impacted by reduced machine shipments, particularly in the Americas and Europe, while Asia Pacific saw increased demand [12][13]. - The gross margin improvement was supported by a favorable regional sales mix and lower overhead costs [13]. Other Developments - No acquisitions, divestitures, or major restructuring announcements were reported, and no dividends were declared for the fiscal second quarter [14].

Financial Performance - Sales and service fees for the second quarter of fiscal year 2025 were $40.9 million, a decrease of $4.3 million, or 10%, compared to the same period in fiscal year 2024[90]. - Orders for the second quarter of fiscal year 2025 were $43.7 million, a decrease of $0.5 million, or 1%, compared to the corresponding period in fiscal year 2024[96]. - Sales in the Americas for the second quarter of fiscal year 2025 decreased by 9%, while European sales decreased by 5%, and Asian Pacific sales decreased by 29% compared to the same period in fiscal year 2024[91][92][93]. - Gross profit for the second quarter of fiscal year 2025 was $7.8 million, or 19% of sales, compared to $8.0 million, or 18% of sales, for the corresponding prior year period[99]. - Selling, general, and administrative expenses for the second quarter of fiscal year 2025 were $10.9 million, or 27% of sales, compared to $11.5 million, or 25% of sales, in the corresponding fiscal year 2024 period[100]. - Operating loss for the second quarter of fiscal year 2025 was $3.1 million, compared to $3.4 million for the corresponding period in fiscal year 2024[101]. - Sales of computerized machine tools for the second quarter of fiscal year 2025 decreased by 10%, while sales of computer control systems and software increased by 12%[95]. - Sales and service fees for the first six months of fiscal year 2025 were $87.3 million, a decrease of $3.0 million, or 3%, compared to the prior year period[104]. - Orders for the first six months of fiscal year 2025 were $83.8 million, a decrease of $10.6 million, or 11%, compared to the prior year period[111]. - Gross profit for the first six months of fiscal year 2025 was $16.1 million, or 18% of sales, compared to $17.7 million, or 20% of sales, for the prior year period[115]. - Operating loss for the first six months of fiscal year 2025 was $5.2 million, compared to $5.3 million for the prior year period[117]. Cash Flow and Capital Management - Cash and cash equivalents at April 30, 2025, were $43.8 million, compared to $33.3 million at October 31, 2024[120]. - Working capital was $175.9 million at April 30, 2025, compared to $180.8 million at October 31, 2024[121]. - Capital expenditures of $1.4 million during the first six months of fiscal year 2025 were primarily for software development costs and capital improvements[121]. - The company announced a share repurchase program of up to $25.0 million, with $21.7 million remaining available as of April 30, 2025[122]. - The company suspended its regular quarterly cash dividend on June 14, 2024, to enhance financial flexibility and manage market volatility[123]. - As of April 30, 2025, the company had no debt or borrowings under any of its credit facilities, with approximately $50.8 million available for borrowing[129][130]. Credit Facilities and Compliance - The 2018 Credit Agreement provides for an unsecured revolving credit facility of up to $40.0 million, with a maturity date of December 31, 2025[124]. - The company has a minimum working capital requirement of $125.0 million and a minimum tangible net worth of $176.5 million under the 2018 Credit Agreement[126]. - The company is in compliance with all covenants related to its credit facilities as of April 30, 2025[130]. - The company has renewed its uncommitted revolving credit facilities in Taiwan and China on substantially similar terms in February and December 2023, respectively[128]. Market and Strategic Initiatives - The company operates in a cyclical industry with approximately 50% of revenues from Europe and 12% from the Asia Pacific region[84]. - The company derived approximately 62% of its revenues from customers located outside of the Americas in the first six months of fiscal year 2025[142]. - The company is committed to product innovation, acquisitions, and targeted penetration of developing markets as part of its strategic plan[131]. - The company continues to review potential acquisitions, including intellectual property assets[132]. Currency and Risk Management - The company seeks to mitigate cash flow risks from fluctuating currency exchange rates through the use of derivative instruments[89]. - The company has entered into foreign currency forward exchange contracts to hedge against cash flow risks related to forecasted inter-company sales and purchases, with notional amounts including €6,000,000 and £3,150,000[145]. - The company has maintained a forward contract with a notional amount of €3.0 million to hedge its net investment in Euro-denominated assets, maturing in November 2025[146]. - As of April 30, 2025, the company had seven outstanding third-party payment guarantees totaling approximately $0.8 million[135].