Hurco(HURC)2024-09-06 19:52Sales Performance - Sales and service fees for Q3 FY2024 were $42.7 million, a 20% decrease compared to Q3 FY2023, with an unfavorable currency impact of less than 1%[82] - European sales for Q3 FY2024 decreased by 23% compared to Q3 FY2023, with a favorable currency impact of less than 1%[84] - Asian Pacific sales for Q3 FY2024 decreased by 15% compared to Q3 FY2023, with an unfavorable currency impact of 2%[86] - Sales of computerized machine tools for Q3 FY2024 decreased by 23% compared to Q3 FY2023, with an unfavorable currency impact of less than 1%[88] - Sales and service fees for the nine months ended July 31, 2024, were $132.9 million, down 18% YoY, with a favorable currency impact of $0.8 million[95] - Americas sales for the nine months ended July 31, 2024, decreased by 16% YoY to $48.986 million, driven by lower shipments of Hurco and Takumi machines[96] - European sales for the nine months ended July 31, 2024, decreased by 23% YoY to $69.538 million, with a 1% favorable currency impact[97] - Asian Pacific sales for the nine months ended July 31, 2024, increased by 8% YoY to $14.358 million, despite a 2% unfavorable currency impact[98] - Sales of computerized machine tools for the nine months ended July 31, 2024, decreased by 21% YoY to $104.176 million[99] Orders and Demand - Orders for Q3 FY2024 were $52.8 million, a 26% increase compared to Q3 FY2023, with an unfavorable currency impact of less than 1%[89] - Asian Pacific orders for Q3 FY2024 increased by 151% compared to Q3 FY2023, with an unfavorable currency impact of 5%[90] - Orders for the nine months ended July 31, 2024, were $147.2 million, down 5% YoY, with a favorable currency impact of $0.8 million[101] Financial Performance - Gross profit for Q3 FY2024 was $7.8 million, or 18% of sales, compared to $13.4 million, or 25% of sales, for Q3 FY2023[91] - Selling, general, and administrative expenses for Q3 FY2024 were $10.4 million, or 24% of sales, compared to $12.4 million, or 23% of sales, for Q3 FY2023[92] - Operating loss for Q3 FY2024 was $2.5 million, compared to operating income of $1.0 million in Q3 FY2023, primarily due to lower sales of vertical milling machines and fixed cost impacts[93] - Income tax expense for Q3 FY2024 was $7.0 million, up from $0.4 million in Q3 FY2023, driven by an $8.2 million non-cash valuation allowance on U.S. deferred tax assets[94] - Gross profit for the nine months ended July 31, 2024, was $25.6 million, or 19% of sales, down from $38.7 million, or 24% of sales, in the prior year period[104] - Operating loss for the nine months ended July 31, 2024, was $7.8 million, compared to operating income of $3.2 million in the prior year period[106] Capital and Shareholder Activities - Cash dividends paid to shareholders totaled $2.1 million for the nine months ended July 31, 2024[111] - The company repurchased $1.3 million (73,765 shares) of its common stock through August 30, 2024[111] Credit Facilities and Financial Obligations - The 2018 Credit Agreement provides for a maximum aggregate amount of $40.0 million in revolving credit and letter of credit facilities[112] - The company must maintain a minimum working capital of $125.0 million and a minimum tangible net worth of $176.5 million under the 2018 Credit Agreement[114] - As of July 31, 2024, the company had no debt or borrowings under its credit facilities, which include a €1.5 million facility in Germany, a 150 million New Taiwan Dollars facility in Taiwan, a 32.5 million Chinese Yuan facility in China, and the $40.0 million 2018 Credit Agreement[115] - The company had approximately $50.7 million available for borrowing under its credit facilities as of July 31, 2024[116] - The company had no borrowings outstanding under any of its credit facilities as of July 31, 2024[121] Foreign Exchange and Currency Risk - Approximately 63% of the company's revenues in the nine months of fiscal year 2024 were derived from customers located outside the Americas[122] - The company had nine outstanding third-party payment guarantees totaling approximately $0.9 million as of July 31, 2024[119] - Forward contracts for the sale or purchase of foreign currencies as of July 31, 2024 included €6.9 million at a weighted average forward rate of 1.0912 and £3.5 million at a weighted average forward rate of 1.2601[125] - The company entered into a forward contract to purchase 470,000 New Taiwan Dollars at a weighted average forward rate of 30.7976 as of July 31, 2024[125] - The company has a forward contract with a notional amount of €3.0 million to hedge its net investment in Euro-denominated assets, maturing in November 2024, with a realized gain of $1.2 million as of July 31, 2024[126] - Approximately 63% of the company's revenues in the nine months of fiscal year 2024 were derived from customers located outside the Americas, invoiced and received in foreign currencies[122] - The company's purchases are predominantly in foreign currencies, with significant exchange rate risk related to the New Taiwan Dollar and the Euro[123] - Forward contracts for the sale or purchase of foreign currencies as of July 31, 2024, include Euro sale contracts with a notional amount of 10,146 and a weighted average forward rate of 1.0824, maturing between August 2024 and November 2024[126] - Forward contracts for the purchase of New Taiwan Dollars as of July 31, 2024, include a notional amount of 1,315,881 and a weighted average forward rate of 31.7645, maturing between August 2024 and February 2025[126] - The company has forward contracts for the sale of Euro with a notional amount of 6,900 and a weighted average forward rate of 1.0912, maturing between August 2024 and July 2025[125] - Forward contracts for the sale of Sterling as of July 31, 2024, include a notional amount of 3,500 and a weighted average forward rate of 1.2601, maturing between August 2024 and July 2025[125] - The company has forward contracts for the purchase of New Taiwan Dollars with a notional amount of 470,000 and a weighted average forward rate of 30.7976, maturing between August 2024 and July 2025[125] Internal Controls and Procedures - The company's disclosure controls and procedures were evaluated and found to be effective as of July 31, 2024, under the supervision of management, including the CEO and CFO[126]