Hurco(US:HURC)2026-01-09 21:42Financial Performance - In fiscal year 2025, Hurco reported sales and service fees of $178.6 million, a decrease of $8.0 million, or 4%, compared to fiscal year 2024[15]. - The company experienced a net loss of $15.1 million, or $2.34 per diluted share, for fiscal year 2025, compared to a net loss of $16.6 million, or $2.56 per diluted share, for fiscal year 2024[15]. - Gross profit for fiscal year 2025 was $33.0 million, or 18% of sales, down from $37.7 million, or 20% of sales, in fiscal year 2024, primarily due to lower sales volume and increased costs from tariffs[200]. - Operating loss for fiscal year 2025 was $10.3 million, or 6% of sales, compared to an operating loss of $8.3 million, or 4% of sales, for fiscal year 2024[202]. - Orders for fiscal year 2025 were $171.3 million, a decrease of $27.0 million, or 14%, compared to fiscal year 2024, with a favorable currency impact of $1.8 million, or less than 1%[196]. - Backlog as of October 31, 2025, decreased to $34.3 million from $40.8 million as of October 31, 2024, primarily due to decreased customer demand[199]. - Cash and cash equivalents as of October 31, 2025, were $48.7 million, an increase from $33.3 million as of October 31, 2024, primarily due to reductions in inventories and accounts receivable[206]. - Working capital as of October 31, 2025, was $173.1 million, down from $180.8 million as of October 31, 2024, driven by decreases in inventories and accounts receivable[207]. - Selling, general, and administrative expenses for fiscal year 2025 were $43.2 million, or 24% of sales, compared to $46.0 million, or 25% of sales, in fiscal year 2024[201]. Revenue Sources - Computerized machine tools accounted for 80% of total revenues in fiscal year 2025, generating $142.3 million, down from $147.6 million in fiscal year 2024[20]. - Service parts contributed 14% to total revenues in fiscal year 2025, amounting to $25.1 million, compared to $27.6 million in fiscal year 2024[20]. - Approximately 62% of the company's revenues in fiscal year 2025 were derived from customers outside the Americas, highlighting the global market reach[93]. - In fiscal year 2025, approximately 51% of revenues were generated from customers in Europe, with 11% from the Asia Pacific region[180]. - Approximately 62% of the company's revenues in fiscal year 2025 were derived from sales to customers located outside of the Americas[114]. Market and Competitive Landscape - The demand for machine tools has fluctuated due to global economic and regulatory conditions, impacting shipment volumes in key markets[15]. - The company competes with larger machine tool producers, emphasizing proprietary software and features to enhance productivity and ease of use[96][98]. - Economic uncertainty may lead to reductions in customer capital expenditures and longer sales cycles, negatively impacting the company's business[111]. - The company competes with larger firms that have greater financial resources, making it challenging to maintain competitiveness[120]. Strategic Initiatives - The company has made five acquisitions since 2013, enhancing product offerings and improving machine tool accuracy and precision[14]. - Hurco's strategy includes market expansion to reach more customers globally, with a focus on product diversity and penetration across various industries[14]. - The company actively seeks acquisitions to expand its product offerings, which involve risks such as integration difficulties and diversion of management's attention[130]. - The company has introduced non-Hurco branded products to diversify its offerings and reduce the impact of geographic cyclicality in the machine tool market[86]. Product Development and Innovation - The DCX series offers four sizes of machining centers designed for large parts and molds, with 2- and 3-meter models featuring two spindle sizes and 3- and 4-meter models available as five-axis machines[38]. - The TM product line includes 2-axis turning models in four sizes, with the TM-M series enhancing productivity through motorized tooling, allowing secondary operations while parts are held in the chuck[39]. - The next generation VC 500 5-axis machine is set to launch in early 2026, featuring improved automation integration and ergonomics, aligning with market needs[42]. - The Milltronics INSPIRE+ control console, launched in 2024, enhances cutting precision and surface finish, compatible with G & M Code programs[43]. - The new TRL toolroom flatbed lathes and X5 five-axis integrated machines were introduced in fiscal year 2024, expanding Milltronics' product offerings[53]. - The Takumi UVC600 five-axis machine features a 600mm cantilever table and a 15,000rpm direct drive spindle for high accuracy and complex parts production[66]. - Software options for Hurco computerized machine tools include Advanced Verification Graphics and Solid Model Import, enhancing programming efficiency and accuracy[69]. - The VM product line consists of attractively-priced vertical machining centers available in four sizes, designed for job shops and general machining applications[46]. - The HMX Series high-speed horizontal machining centers are capable of up to 1G acceleration and include twin pallets for maximizing cutting time[64]. - The DXF Transfer software option enhances operator productivity by eliminating manual data entry, allowing direct transfer of AutoCAD® drawing files into the control software[71]. - UltiMonitor, a web-based tool, enables customers to monitor and receive notifications about their Hurco machines from any internet-accessible location, improving operational efficiency[72]. - The Tool and Material Library option streamlines tool data management, saving time and preventing tool crash conditions by storing information centrally[74]. - Simultaneous Five-Axis Contouring software allows for concurrent motion on all axes, increasing productivity and enabling complex geometries with a single setup[79]. Operational Risks and Challenges - The company faces significant risks due to fluctuations in global economic conditions, which have adversely affected its results of operations and financial condition[110]. - Tariffs imposed by the U.S. government on foreign goods have increased operating costs and could require significant costs to transition to alternative manufacturers or suppliers[112]. - The company is exposed to exchange rate fluctuations, as approximately 62% of revenues are invoiced in foreign currencies, primarily the Euro, Pound Sterling, Chinese Yuan, and Indian Rupee[119]. - The company relies on its wholly owned subsidiaries and third-party suppliers for production, and any unplanned interruptions could materially affect its business and financial condition[127]. - The company must comply with complex foreign and U.S. laws, and violations could result in significant penalties and adversely affect its operations[116]. - Fluctuations in the prices of raw materials, especially steel and energy, could adversely affect the company's sales, costs, and profitability[128]. - The company faces risks related to mergers and acquisitions, including potential failure to integrate acquired companies, which could adversely affect business and financial condition[131]. - Compliance with data privacy and security laws is critical, with potential penalties for violations that could significantly impact operating results[135]. - Cybersecurity threats are a significant risk, and while the company has not experienced material incidents, ongoing risks could affect business strategy and financial condition[157]. - The company has implemented a comprehensive cybersecurity strategy, including advanced safeguards and an incident response plan to mitigate risks[155]. - Public health emergencies, such as pandemics, have disrupted operations and could continue to adversely affect business and financial results[139]. - The company continues to monitor and assess the impact of evolving data protection laws in various jurisdictions, which may impose substantial compliance costs[134]. Human Resources and Corporate Structure - As of October 31, 2025, the company employed approximately 651 full-time employees, with 30% in the Americas and 70% in other global regions, focusing on advanced manufacturing[101]. - The company’s executive team includes experienced professionals with backgrounds in technology and finance, contributing to effective risk management[159]. - The company has a strong focus on cybersecurity risk management, overseen by the Audit Committee and senior management[159]. - The company has a history of profitability and a strong balance sheet, which it relies on to navigate market cyclicality[181]. - The company’s facilities are well maintained and adequate for current and future needs, with leases expiring between January 2026 and July 2032[160]. - The company sells products through approximately 160 independent agents and distributors globally, with a significant presence in major machine tool consuming markets[183]. - The company’s corporate headquarters in Indianapolis, Indiana, spans 165,000 square feet, while its manufacturing facility in Taichung, Taiwan, covers 370,100 square feet[160].