Hurco(US:HURC)2022-09-02 17:12Sales Performance - Sales and service fees for Q3 fiscal 2022 were $57.6 million, an increase of $3.5 million, or 6%, compared to Q3 fiscal 2021, with an unfavorable currency impact of $4.3 million, or 8%[94] - Sales in the Americas increased by 24% to $23.7 million, primarily due to inflationary price increases and higher shipments of Hurco and Takumi machines[95] - European sales increased by 2% to $28.9 million, despite a 14% unfavorable currency impact, driven by higher shipments of machines in Germany and France[96] - Asian Pacific sales decreased by 25% to $5.0 million, impacted by a 5% unfavorable currency effect and reduced shipments due to COVID-19 lockdowns in China[97] - Sales and service fees for the nine months ended July 31, 2022, were $187.4 million, an increase of $21.1 million, or 13%, compared to the prior year, with a currency impact of $7.9 million, or 5%[108] - Sales in the Americas for the nine months of fiscal 2022 increased by 13% to $70.2 million, while European sales increased by 15% to $93.9 million[109][110] - Asian Pacific sales for the nine months of fiscal 2022 increased by 3% to $23.3 million, despite a currency impact of 2%[111] Orders and Income - Orders for Q3 fiscal 2022 were $52.9 million, a decrease of $13.8 million, or 21%, with an unfavorable currency impact of $4.1 million, or 6%[100] - Operating income for Q3 fiscal 2022 was $1.8 million, down from $2.6 million in Q3 fiscal 2021, primarily due to a $1.0 million employee retention credit recorded in the prior year[106] - Operating income for the nine months of fiscal 2022 increased to $10.0 million from $7.1 million in the prior year, driven by increased sales volume[119] - Orders for the nine months of fiscal 2022 were $182.6 million, a decrease of $7.2 million, or 4%, compared to the prior year, with a currency impact of $7.2 million, or 4%[114] Profitability and Expenses - Gross profit for Q3 fiscal 2022 was $14.4 million, or 25% of sales, compared to $13.0 million, or 24% of sales in Q3 fiscal 2021, benefiting from higher-performance machine sales and inflationary price increases[104] - Gross profit for the nine months of fiscal 2022 was $46.9 million, or 25% of sales, compared to $39.3 million, or 24% of sales in the prior year[117] - Selling, general, and administrative expenses for Q3 fiscal 2022 were $12.6 million, or 22% of sales, up from $10.3 million, or 19% of sales in the prior year, driven by increased marketing and employee benefit costs[105] - Selling, general, and administrative expenses for the nine months of fiscal 2022 were $36.9 million, or 20% of sales, up from $32.2 million, or 19% in the prior year[118] Cash Flow and Financial Position - Cash and cash equivalents at July 31, 2022, were $73.5 million, down from $84.1 million at October 31, 2021[123] - Working capital decreased to $202.3 million at July 31, 2022, from $208.7 million at October 31, 2021[124] - As of July 31, 2022, the company had approximately $51.4 million available for borrowing under its credit facilities and was in compliance with all related covenants[132] - The company derived approximately 62% of its revenues from customers located outside of the Americas during the nine months of fiscal 2022[143] Currency Risk Management - The company has implemented measures to mitigate cash flow risks from currency fluctuations, including the use of foreign currency forward exchange contracts[92] - The company entered into foreign currency forward exchange contracts to hedge cash flow risks related to forecasted inter-company sales and purchases, primarily in Euro, Pound Sterling, and New Taiwan Dollar[145] - The company has forward contracts for the sale of Euro amounting to €26,750 with a weighted average forward rate of 1.0838, maturing between August 2022 and July 2023[146] - The company has forward contracts for the purchase of New Taiwan Dollar totaling 980,000 with a weighted average forward rate of 28.1293, maturing between August 2022 and July 2023[146] - The company maintained a forward contract with a notional amount of €3.0 million to hedge its net investment in Euro-denominated assets, with a realized gain of $0.9 million as of July 31, 2022[147] - The company had no debt or borrowings under any of its credit facilities at July 31, 2022[131] - As of July 31, 2022, the company had forward contracts for the sale of Euro amounting to €25,442,000 with a weighted average forward rate of 1.0439, translating to a contract value of $26,559,000[147] - The company also had forward contracts for the sale of Sterling totaling £4,709,000 at a weighted average forward rate of 1.2178, resulting in a contract value of $5,735,000[147] - For the purchase of New Taiwan Dollar, the company had contracts amounting to NT$713,985,000 with a weighted average forward rate of 29.5834, equating to a contract value of $24,135,000[147] - As of July 31, 2022, the company reported a realized gain of $0.9 million and an unrealized gain of $0.3 million related to the hedging of its net investment in Euro-denominated assets[147] - The forward contract for the sale of Euro designated as a net investment hedge had a contract value of $3,467,000 with a maturity date in November 2022[147] International Operations - Approximately 50% of revenues were from Europe, with 12% from the Asia Pacific region, highlighting the company's international market exposure[88] - The company operates through over 180 independent agents and distributors globally, with significant manufacturing in Taiwan and China[90] - The company has an international cash pooling strategy that provides access to available cash deposits and credit facilities to fund global operations over the next twelve months and beyond[133] - The company is actively reviewing information on businesses and assets for potential acquisition, including intellectual property assets[134]