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Hurco(HURC) - 2025 Q1 - Quarterly Report
HURCHurco(HURC)2025-03-07 21:00

Financial Performance - Sales and service fees for Q1 fiscal 2025 were 46.4million,a346.4 million, a 3% increase from 45.1 million in Q1 fiscal 2024, with a negative currency impact of 0.4million[88].−OrdersforQ1fiscal2025totaled0.4 million[88]. - Orders for Q1 fiscal 2025 totaled 40.1 million, a decrease of 20% from 50.2millioninQ1fiscal2024,withanegativecurrencyimpactof50.2 million in Q1 fiscal 2024, with a negative currency impact of 0.4 million[94]. - Gross profit for Q1 fiscal 2025 was 8.3million,representing188.3 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 2.1million,comparedtoalossof2.1 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 10.4million,or2210.4 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 18.1million,whileEuropeansalesdecreasedby518.1 million, while European sales decreased by 5% to 21.6 million, and Asia Pacific sales increased by 18% to 6.7million[89][90][91].−Thecompanyoperatesinacyclicalindustrywithsignificantforeignsales,with476.7 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 33.3millionatOctober31,2024,withapproximately2833.3 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 180.8millionatOctober31,2024,drivenbydecreasesininventoriesandaccountsreceivable[103].−Capitalexpendituresforthefirstthreemonthsoffiscalyear2025were180.8 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 50.6millionavailableforborrowing[110][111].−Thecompanyannouncedatemporarysuspensionofitsregularquarterlycashdividendtoenhancefinancialflexibilityandfocusoncorebusinessreinvestment[105].CurrencyRiskManagement−Thecompanymitigatescashflowrisksfromcurrencyfluctuationsthroughderivativeinstruments,primarilyforeigncurrencyforwardexchangecontracts[87].−Thecompanyenteredintoforeigncurrencyforwardexchangecontractstohedgecashflowrisksrelatedtointer−companysalesandpurchases,primarilyinEuro,PoundSterling,andNewTaiwanDollar[127].−ThecompanyhasaforwardcontractforthesaleofEurowithanotionalamountof3,000,maturinginNovember2025,ataweightedaverageforwardrateof1.1005[129].−ThecompanyhaspurchasecontractsforNewTaiwanDollartotaling1,462,236,withaweightedaverageforwardrateof31.8196,maturingbetweenFebruary2025andApril2025[129].−Thecompany’spurchasesarepredominantlyinforeigncurrencies,withsignificantexposuretoNewTaiwanDollarandEuroexchangeraterisks[126].−Thecompanyutilizesforeigncurrencyrisksharingagreementswithsupplierstomitigatetheeffectsofcurrencyfluctuationsonproductcosts[126].TaxandValuation−IncometaxexpenseforQ1fiscalyear2025was50.6 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 0.6millionintheprioryear,primarilyduetoa0.6 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, 21.7millionremainedavailableunderthe21.7 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 1.2millionandanunrealizedgainof1.2 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].