Hurco(HURC) - 2024 Q4 - Annual Report

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]