Financial Performance - Hurco reported a net loss of $4,063,000, or $0.62 per diluted share, for Q2 FY 2025, compared to a net loss of $3,922,000, or $0.61 per diluted share, in Q2 FY 2024[1]. - Sales and service fees for Q2 FY 2025 were $40,867,000, a decrease of $4,305,000, or 10%, compared to the same period in FY 2024[2]. - Orders for Q2 FY 2025 were $43,700,000, a decrease of $492,000, or 1%, compared to Q2 FY 2024[7]. - Gross profit for Q2 FY 2025 was $7,829,000, or 19% of sales, compared to $8,019,000, or 18% of sales, in Q2 FY 2024[12]. - Selling, general, and administrative expenses for Q2 FY 2025 were $10,897,000, or 27% of sales, compared to $11,461,000, or 25% of sales, in Q2 FY 2024[13]. - The net loss for the three months ended April 30, 2025, was $4,063,000, compared to a net loss of $3,922,000 for the same period in 2024[19]. - Selling, general and administrative expenses as a percentage of sales increased to 27% for the three months ended April 30, 2025, from 25% in the same period of 2024[20]. - Gross profit for the six months ended April 30, 2025, was $16,119,000, down from $17,714,000 in 2024, reflecting a gross margin of 18% compared to 20% in the prior year[19][20]. Cash and Working Capital - Cash and cash equivalents totaled $43,807,000 at April 30, 2025, compared to $33,330,000 at October 31, 2024[15]. - Working capital was $175,914,000 at April 30, 2025, down from $180,788,000 at October 31, 2024[15]. - Total current assets decreased to $222,909,000 as of April 30, 2025, from $228,577,000 as of October 31, 2024[22]. - Shareholders' equity decreased to $202,280,000 as of April 30, 2025, from $207,172,000 as of October 31, 2024[22]. - The company reported a decrease in accounts receivable, net, to $25,583,000 as of April 30, 2025, from $36,678,000 as of October 31, 2024[22]. - Days sales outstanding increased to 51 days as of April 30, 2025, compared to 49 days as of October 31, 2024[20]. Sales Performance by Region - Sales in the Americas decreased by 9% in Q2 FY 2025 compared to Q2 FY 2024, primarily due to decreased shipments of Hurco and Takumi machines[4]. - European sales decreased by 5% in Q2 FY 2025 compared to Q2 FY 2024, driven by decreased shipments in Germany, France, and Italy[5]. - Asian Pacific sales decreased by 29% in Q2 FY 2025 compared to Q2 FY 2024, primarily due to decreased sales of higher-performance machines in India[6]. Tax and Capital Expenditures - The effective tax rate for the six months ended April 30, 2025, was (44)%, compared to 9% in the same period of 2024[20]. - Capital expenditures for the six months ended April 30, 2025, were $1,356,000, compared to $1,311,000 in 2024[20].

Core Insights - Hurco Companies, Inc. reported a net loss of $4,063,000, or $0.62 per diluted share, for the second quarter of fiscal year 2025, compared to a net loss of $3,922,000, or $0.61 per diluted share, in the same period of fiscal year 2024 [1] - Sales and service fees decreased by 10% to $40,867,000 in the second quarter of fiscal year 2025, with a total of $87,281,000 for the first six months, reflecting a 3% decline compared to the prior year [2] - The CEO emphasized the commitment to long-term strategy and cash flow management despite significant market uncertainties [3] Financial Performance - The gross profit for the second quarter was $7,829,000, or 19% of sales, compared to $8,019,000, or 18% of sales, in the prior year [11] - Selling, general, and administrative expenses for the second quarter were $10,897,000, or 27% of sales, up from 25% in the same period last year [13] - The company recorded an income tax expense of $518,000 for the second quarter, which included a valuation allowance of $1,270,000 against deferred tax assets [14] Sales and Orders - Total orders for the second quarter were $43,700,000, a decrease of 1% compared to the same period in fiscal year 2024 [7] - Sales in the Americas decreased by 9% in the second quarter, while European sales fell by 5% [4][5] - Asian Pacific orders increased by 74% in the second quarter, driven by higher demand for Hurco and Takumi machines [10] Geographic Performance - In the Americas, sales for the second quarter were $15,361,000, down from $16,947,000 in the prior year [3] - European sales totaled $21,608,000, a decrease from $22,720,000, primarily due to reduced shipments in Germany, France, and Italy [4] - Asian Pacific sales were $3,898,000, reflecting a significant decline of 29% compared to the previous year [5] Cash and Working Capital - Cash and cash equivalents increased to $43,807,000 as of April 30, 2025, compared to $33,330,000 at the end of October 2024 [15] - Working capital decreased to $175,914,000 from $180,788,000, driven by reductions in inventories and accounts receivable [15]

Financial Performance - Hurco reported a net loss of $4.3 million, or $0.67 per diluted share, for Q1 fiscal 2025, compared to a net loss of $1.6 million, or $0.25 per diluted share, in the prior-year period [2] - Sales and service fees increased by 3% year over year to $46.4 million, driven by an 8.8% increase in the Americas and an 18.3% increase in the Asia Pacific region, despite a 4.9% decline in European sales [3] - Gross profit decreased by 14.5% to $8.3 million, with gross margin contracting to 18% from 22% due to lower sales volumes of high-margin products [4] Orders and Market Dynamics - Order volume declined by 20.2% year over year to $40.1 million, with a significant 29.6% drop in orders from the Americas and a 17.7% decline in Europe [6] - In Europe, reduced demand for Hurco and Takumi machines contributed to the decline, while the Asia Pacific region saw a modest 3.1% increase in orders, particularly in China [7] Cash and Working Capital - Hurco ended the quarter with $41.8 million in cash and cash equivalents, an increase from $33.3 million at the end of fiscal 2024, while working capital decreased to $172.6 million [8] Management Commentary - CEO Greg Volovic noted the softer order volume in the U.S. due to delayed capital investments amid economic uncertainty, emphasizing the company's financial strength and diverse product portfolio [9] Guidance and Strategic Focus - The company did not provide explicit forward-looking guidance but acknowledged challenges from market uncertainty, focusing on financial discipline and inventory management [10] Share Repurchase and Dividend Policy - The $25 million share repurchase program remains active, with $21.7 million available for future repurchases, although no buybacks occurred during the quarter [11]

Core Viewpoint - Hurco Companies, Inc. (NASDAQ: HURC) has reported results indicating that unlike many larger industrial companies, it believes that destocking has largely concluded and anticipates a recovery in end-market demand in the second half of the year [1] Group 1 - Hurco Companies, Inc. shows a positive outlook on market demand recovery, contrasting with the cautious stance of larger industrial firms [1]

Financial Performance - Sales and service fees for Q1 fiscal 2025 were $46.4 million, a 3% increase from $45.1 million in Q1 fiscal 2024, with a negative currency impact of $0.4 million[88]. - Orders for Q1 fiscal 2025 totaled $40.1 million, a decrease of 20% from $50.2 million in Q1 fiscal 2024, with a negative currency impact of $0.4 million[94]. - Gross profit for Q1 fiscal 2025 was $8.3 million, representing 18% of sales, down from $9.7 million or 22% of sales in the prior year[97]. - Operating loss for Q1 fiscal 2025 was $2.1 million, compared to a loss of $1.8 million in Q1 fiscal 2024, primarily due to lower sales volumes[99]. - Selling, general, and administrative expenses for Q1 fiscal 2025 were $10.4 million, or 22% of sales, down from $11.5 million, or 26% of sales, in the prior year[98]. Sales by Region - Sales in the Americas increased by 9% to $18.1 million, while European sales decreased by 5% to $21.6 million, and Asia Pacific sales increased by 18% to $6.7 million[89][90][91]. - The company operates in a cyclical industry with significant foreign sales, with 47% of revenues from Europe and 14% from Asia Pacific in Q1 fiscal 2025[82]. - Approximately 61% of revenues in the first three months of fiscal year 2025 were derived from customers outside the Americas, invoiced in various foreign currencies[125]. Cash Flow and Capital Management - Cash and cash equivalents increased to $41.8 million as of January 31, 2025, from $33.3 million at October 31, 2024, with approximately 28% in U.S. dollars[102]. - Working capital decreased to $172.6 million as of January 31, 2025, down from $180.8 million at October 31, 2024, driven by decreases in inventories and accounts receivable[103]. - Capital expenditures for the first three months of fiscal year 2025 were $0.6 million, primarily for software development and facility improvements[103]. - As of January 31, 2025, the company had no debt or borrowings under any of its credit facilities, with approximately $50.6 million available for borrowing[110][111]. - The company announced a temporary suspension of its regular quarterly cash dividend to enhance financial flexibility and focus on core business reinvestment[105]. Currency Risk Management - The company mitigates cash flow risks from currency fluctuations through derivative instruments, primarily foreign currency forward exchange contracts[87]. - The company entered into foreign currency forward exchange contracts to hedge cash flow risks related to inter-company sales and purchases, primarily in Euro, Pound Sterling, and New Taiwan Dollar[127]. - The company has a forward contract for the sale of Euro with a notional amount of 3,000, maturing in November 2025, at a weighted average forward rate of 1.1005[129]. - The company has purchase contracts for New Taiwan Dollar totaling 1,462,236, with a weighted average forward rate of 31.8196, maturing between February 2025 and April 2025[129]. - The company’s purchases are predominantly in foreign currencies, with significant exposure to New Taiwan Dollar and Euro exchange rate risks[126]. - The company utilizes foreign currency risk sharing agreements with suppliers to mitigate the effects of currency fluctuations on product costs[126]. Tax and Valuation - Income tax expense for Q1 fiscal year 2025 was $2.0 million, compared to a tax benefit of $0.6 million in the prior year, primarily due to a $2.4 million non-cash valuation allowance on deferred tax assets in Italy, the U.S., and China[101]. Strategic Initiatives - The company continues to explore potential acquisitions, including intellectual property assets, to support its strategic growth initiatives[114]. - As of January 31, 2025, $21.7 million remained available under the $25.0 million share repurchase program, which was extended to November 10, 2026[104]. - The company reported a realized gain of $1.2 million and an unrealized gain of $0.1 million, net of tax, related to the hedging of its net investment in Euro-denominated assets[129].

Financial Performance - Hurco reported a net loss of $4,320,000, or $0.67 loss per diluted share, for Q1 FY 2025, compared to a net loss of $1,648,000, or $0.25 loss per diluted share, in Q1 FY 2024[1][17]. - Sales and service fees for Q1 FY 2025 were $46,414,000, an increase of $1,355,000, or 3%, compared to Q1 FY 2024, despite a 1% unfavorable currency impact[2][17]. - Gross profit for Q1 FY 2025 was $8,290,000, or 18% of sales, down from $9,695,000, or 22% of sales, in Q1 FY 2024[10][18]. - Orders for Q1 FY 2025 totaled $40,085,000, a decrease of $10,133,000, or 20%, compared to Q1 FY 2024, with a notable 30% decrease in the Americas[7][17]. Regional Sales Performance - Sales in the Americas increased by 9% year-over-year, while European sales decreased by 5% and Asia Pacific sales increased by 18%[3][4][6]. Expenses and Cost Management - Selling, general, and administrative expenses for Q1 FY 2025 were $10,382,000, or 22% of sales, down from $11,515,000, or 26% of sales, in Q1 FY 2024[11][18]. Cash and Working Capital - Cash and cash equivalents increased to $41,820,000 at January 31, 2025, compared to $33,330,000 at October 31, 2024[13][18]. - Working capital decreased to $172,591,000 at January 31, 2025, from $180,788,000 at October 31, 2024[13][18]. - The company continues to focus on optimizing operations and managing working capital despite economic uncertainties affecting order volumes[3][4]. Asset and Liability Changes - Total assets decreased from $268,643 million on October 31, 2024, to $255,831 million on January 31, 2025, representing a decline of approximately 4.4%[20]. - Current assets decreased from $228,577 million to $216,555 million, a reduction of about 5.3%[20]. - Accounts receivable decreased from $36,678 million to $28,355 million, a decline of about 22.8%[20]. - Total current liabilities decreased from $47,789 million to $43,964 million, a reduction of approximately 8.0%[20]. - Total shareholders' equity decreased from $207,172 million to $198,143 million, a decline of about 4.4%[20]. - Retained earnings decreased from $161,422 million to $157,102 million, a reduction of approximately 2.0%[20]. - The company reported an increase in additional paid-in capital from $61,500 million to $61,728 million, reflecting a growth of about 0.4%[20]. - Inventories decreased from $153,037 million to $139,736 million, a decline of approximately 8.6%[20]. - Derivative liabilities increased from $705 million to $1,817 million, representing a significant increase of approximately 157.3%[20]. Taxation - The effective tax rate for Q1 FY 2025 was (90)%, compared to 27% in Q1 FY 2024, primarily due to a non-cash tax valuation allowance of $2,385,000[12][18].

Core Insights - Hurco Companies, Inc. reported a net loss of $4.32 million, or $0.67 loss per diluted share, for the first fiscal quarter ended January 31, 2025, compared to a net loss of $1.65 million, or $0.25 loss per diluted share, for the same period in fiscal year 2024 [1][16] Financial Performance - Sales and service fees for the first quarter of fiscal year 2025 were $46.41 million, an increase of $1.36 million, or 3%, compared to the prior year period, despite an unfavorable currency impact of $434,000 [2] - Gross profit for the first quarter was $8.29 million, or 18% of sales, down from $9.70 million, or 22% of sales, in the prior year, primarily due to lower sales volumes of higher-performance machines [10][17] - Selling, general, and administrative expenses decreased to $10.38 million, or 22% of sales, from $11.52 million, or 26% of sales, reflecting lower discretionary spending and reduced sales commissions [11][17] Geographic Sales Breakdown - Sales in the Americas increased by 9% to $18.11 million, driven by higher shipments of Hurco and Milltronics machines [3][4] - European sales decreased by 5% to $21.61 million, impacted by lower shipments of higher-performance machines in France and Italy [4] - Asia Pacific sales rose by 18% to $6.69 million, primarily due to increased shipments in China and India [5] Orders and Demand - Total orders for the first quarter were $40.09 million, a decrease of $10.13 million, or 20%, compared to the prior year, with a notable decline in the Americas and Europe [6][7] - Orders in the Americas fell by 30% to $14.64 million, primarily due to decreased demand for higher-performance machines [7][8] - Asian Pacific orders increased by 3% to $6.07 million, driven by demand in China, partially offset by decreased demand in India [9] Cash Position and Working Capital - Cash and cash equivalents increased to $41.82 million from $33.33 million at the end of the previous quarter, while working capital decreased to $172.59 million from $180.79 million [13][17]

Core Viewpoint - Hurco Companies, Inc. reported significant financial losses for the fourth quarter and the full fiscal year 2024, reflecting a challenging market environment and declining revenues across all geographic segments [2][3][4]. Financial Performance - The company recorded a net loss of $1.4 million, or $(0.23) per diluted share, for Q4 2024, compared to a net income of $2.4 million, or $0.36 per diluted share, in the same period last year [2]. - For the full fiscal year, Hurco reported a net loss of $16.6 million, or $(2.56) per diluted share, against a net income of $4.4 million, or $0.66 per diluted share, in fiscal 2023 [2]. Revenue Analysis - Q4 revenues declined 18.8% year over year to $53.7 million, while full-year revenues fell 18.1% to $186.6 million [3]. - Sales in the Americas and Europe dropped 21.5% and 17.5%, respectively, while Asia Pacific saw a 10.9% decline in Q4 [3]. - For the full fiscal year, revenue in the Americas and Europe decreased 18.1% and 21.2%, respectively, while Asia Pacific experienced a 2.1% increase [4]. Profit Margins - Gross profit margins contracted to 23% in Q4 from 26% a year ago, with annual gross margins declining to 20% in fiscal 2024 from 25% in fiscal 2023 [5]. Expenses - Selling, general, and administrative (SG&A) expenses declined 9.7% to $12.7 million in Q4, representing 24% of sales, compared to 21% of sales in the prior-year period [6]. - Full-year SG&A expenses decreased 7.1% to $46 million, but the ratio to sales increased to 25% from 22% [6]. Orders and Market Trends - New orders for Q4 decreased 6% year over year to $51.1 million, with Asia Pacific orders surging 103%, offsetting declines in the Americas and Europe [7]. - For the full fiscal year, new orders decreased 5% to $198.3 million, with a 54% increase in Asia Pacific partially offsetting declines in the Americas and Europe [7]. Management Insights - CEO Greg Volovic noted a 19% contraction in the global machine tool market but highlighted signs of improvement, including growth in global orders and a stronger second half [8]. - The company showcased technological advancements at the International Manufacturing Technology Show, focusing on innovation to maintain competitive positioning [8]. Influencing Factors - Hurco's performance was impacted by weak demand across most regions, a challenging pricing environment, and decreased shipments of key products [9]. - Positive contributions came from increased sales of higher-performance 5-axis machines and ProCobots automation solutions [9]. Future Outlook - While no specific forward guidance was provided, management expressed optimism about navigating the cyclical nature of the machine tool industry, emphasizing the company's strong balance sheet and technological investments [11].

Industry Overview - Weak demand observed across a range of manufacturing end markets in 2024 [2] - Higher interest rates and uncertainties surrounding the US election cycle contributed to a challenging environment for industrial companies [2] Company Performance (Hurco) - Hurco experienced a difficult year in 2024, as anticipated [2] - The company faced headwinds from broader industry challenges, including weak demand and economic uncertainties [2]

Foreign Currency and Revenue - 61% of the company's revenue in fiscal year 2024 was derived from customers outside the Americas, with transactions conducted in various foreign currencies[233] - The company sources products from foreign suppliers and subsidiaries in Taiwan, the U.S., Italy, and China, with purchases predominantly in foreign currencies, primarily the New Taiwan Dollar and the Euro[234] - The company entered into foreign currency forward exchange contracts to hedge cash flow risks, with notable contracts including €7.5 million in Euro, £3.4 million in Sterling, and NT$490 million in New Taiwan Dollar[236] - A forward contract with a notional amount of €3.0 million was entered into in November 2023 to hedge net investment in Euro-denominated assets, maturing in November 2024 with a realized gain of $1.2 million[238] Product Line Enhancements - The TMX product line was enhanced with higher speed 20,000rpm motorized spindles and refreshed designs for the TM-Mi and TMXi product lines, including the introduction of TM8MY and TM10MY multi-axis live tooling lathes[40] - The Milltronics line introduced the INSPIRE+ control console in 2024, featuring enhanced hardware and graphics, and launched two new product lines: TRL toolroom flatbed lathes and X5 five-axis integrated machines[51] - The Takumi brand offers high-precision, high-speed milling machines, with the H Series featuring direct-drive spindles up to 20,000rpm and options for 24,000rpm and 36,000rpm, targeting die and mold and aerospace customers[56] - The U Series product line consists of six models, with four offering trunnion table sizes of 10, 16, 24, and 31.5 inches, and the UB version featuring a 12,000rpm built-in spindle and a spacious X-axis travel of 126 inches[58] - The G Series product line includes three models with X-axis travels of 22, 30, and 40 inches, designed for machining graphite or copper electrodes with up to 20,000rpm spindles[59] - The BC Series models are available in eight sizes, with X-axis travels ranging from 83 to 197 inches, designed for heavy cutting applications[60] - The HMX Series high-speed horizontal machining centers are available in 400-, 500-, and 630-millimeter pallet sizes, with expandable automatic tool changers holding up to 220 tools[61] - In fiscal year 2024, Takumi introduced the UVC600 five-axis machine with a 600-millimeter cantilever table and the UA400 five-axis model, both featuring 15,000rpm direct drive spindles[63] Research and Development - Research and development expenses totaled $3.9 million, $4.2 million, and $3.4 million in fiscal years 2024, 2023, and 2022, respectively[298] - Estimated amortization expense for software development costs is projected to be $1,065,000 in 2025, $931,000 in 2026, and $1,302,000 in 2027[301] - Intangible asset amortization expense was $237,000, $271,000, and $272,000 for fiscal years 2024, 2023, and 2022, respectively[303] Financial Performance - Net loss for fiscal year 2024 was $16.6 million, compared to net income of $4.4 million in 2023 and $8.2 million in 2022[306] - Inventories decreased to $153,037 thousand in 2024 from $157,952 thousand in 2023, with finished goods remaining stable at $104,224 thousand compared to $104,574 thousand in 2023[319] Credit Facilities and Borrowings - The company has a $40.0 million unsecured revolving credit facility under the 2018 Credit Agreement, with a scheduled maturity date of December 31, 2025[321] - Borrowings under the 2018 Credit Agreement bear interest at floating rates, with letters of credit carrying an annual rate of 1.00%[322] - The 2018 Credit Agreement requires the company to maintain a minimum working capital of $125.0 million and a minimum tangible net worth of $176.5 million[323] - The company has uncommitted revolving credit facilities in Taiwan (150 million New Taiwan Dollars) and China (32.5 million Chinese Yuan), renewed in 2023[324] - As of October 31, 2024, the company had no borrowings under its credit facilities and approximately $50.9 million of available borrowing capacity[326] International Operations and Assets - Long-lived tangible assets in foreign countries increased significantly to $13,025 thousand in 2024 from $4,034 thousand in 2023[384] - Net assets in Europe grew to $88,810 thousand in 2024 from $81,730 thousand in 2023, while Americas decreased to $45,798 thousand from $70,649 thousand[384] - The company operates through approximately 180 independent agents and distributors across the Americas, Europe, and Asia, with direct sales and service organizations in key regions[315] Competitive and Intellectual Property Risks - The company faces competition from larger companies with greater financial resources, which may impact its ability to remain competitive[116] - The company's success depends on its ability to protect intellectual property, which may be inadequately protected in some foreign countries[118]