Hurco Stock Declines Following Lower Q2 Earnings and Revenues

Core Viewpoint - Hurco Companies, Inc. reported a net loss for the second quarter of fiscal 2025, with significant declines in revenue and orders, contrasting with a positive performance of the S&P 500 Index during the same period [1][2][5]. Financial Performance - The company recorded a net loss of $4.1 million, or $0.62 per diluted share, compared to a net loss of $3.9 million, or $0.61 per share, in the same quarter last year, indicating a marginal increase in losses [2]. - Revenues decreased by 9.5% to $40.9 million from $45.2 million year-over-year, attributed to lower shipments of machines [2]. - Gross profit was $7.8 million, representing 19.2% of sales, an improvement from 17.8% in the same quarter last year, due to a favorable sales mix and lower fixed costs [3]. - Operating loss narrowed to $3.1 million from $3.4 million, while SG&A expenses decreased by 4.9% to $10.9 million [3]. Segment Performance - Sales in the Americas declined by 9.4% to $15.4 million, Europe saw a 4.9% decrease to $21.6 million, and Asia Pacific experienced a 29.2% fall to $3.9 million [4]. - Total new orders booked were $43.7 million, down 1.1% from the prior year, with significant regional variations [5]. - For the six-month period, total orders declined 11.3% to $83.8 million, with notable softness in the Americas and Europe, while Asia Pacific registered a 28.5% increase [6]. Tax and Balance Sheet - The effective tax rate was (15%), influenced by valuation allowances against deferred tax assets [7]. - Cash and equivalents increased to $43.8 million as of April 30, 2025, compared to $33.3 million as of October 31, 2024, while working capital decreased to $175.9 million [8]. Operational Efficiency - Inventory turnover remained at 1x, and days sales outstanding increased from 49 to 51 days [9]. - Capital expenditures rose to $800,000 from $479,000 a year earlier, indicating modest reinvestment [9]. Management Commentary - CEO Greg Volovic highlighted challenges in global markets and reaffirmed the company's commitment to long-term strategies, including cash flow improvement and cost reduction [11]. - The company emphasized ongoing product development and innovation despite short-term headwinds [11]. Performance Influences - Hurco's performance was negatively impacted by reduced machine shipments, particularly in the Americas and Europe, while Asia Pacific saw increased demand [12][13]. - The gross margin improvement was supported by a favorable regional sales mix and lower overhead costs [13]. Other Developments - No acquisitions, divestitures, or major restructuring announcements were reported, and no dividends were declared for the fiscal second quarter [14].