Hurco Companies Inc 10-Q for FY2021 Q2

Hurco Companies Inc (HURC)

10-Q 2021-06-04 For: 2021-04-30

Added on April 09, 2026

About this 10-Q

Hurco Companies Inc filed this 10-Q on June 4, 2021, covering the quarter ended April 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended April 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $57.92M; up 56.0% from $37.13M a year earlier
Net income: $2.44M; compared with a net loss of $3.93M a year earlier
Diluted EPS: $0.36; compared with -$0.58 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Indiana		35-1150732
(State or other jurisdiction of		(I.R.S. Employer Identification Number)
incorporation or organization)

One Technology Way
Indianapolis, Indiana		46268
(Address of principal executive offices)		(Zip code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	HURC	Nasdaq Global Select Market

Large accelerated filer ◻	Accelerated filer ⌧
Non-accelerated filer ◻	Smaller reporting company ◻
Emerging growth company ◻

Part I - Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Statements of Operations Three and Six Months Ended April 30, 2021 and 2020	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) Three and Six Months Ended April 30, 2021 and 2020	4

	Condensed Consolidated Balance Sheets as of April 30, 2021 and October 31, 2020	5

	Condensed Consolidated Statements of Cash Flows Three and Six Months Ended April 30, 2021 and 2020	6

	Condensed Consolidated Statements of Changes in Shareholders’ Equity Three and Six Months Ended April 30, 2021 and 2020	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	31

Part II - Other Information

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

Signatures		34


	Three Months Ended				Six Months Ended
	April 30,				April 30,
	2021		2020		2021		2020

Sales and service fees	$	57,920	$	37,126	$	112,035	$	80,786

Cost of sales and service		43,126		30,417		85,694		64,918

Gross profit		14,794		6,709		26,341		15,868

Selling, general and administrative expenses		11,273		10,599		21,841		21,445

Operating income (loss)		3,521		(3,890)		4,500		(5,577)

Interest expense		2		32		21		50

Interest income		—		20		16		90

Investment income		25		3		146		65

Other expense, net		(160)		(793)		(48)		(710)

Income (loss) before income taxes		3,384		(4,692)		4,593		(6,182)

Provision (benefit) for income taxes		947		(765)		1,493		(1,362)

Net income (loss)	$	2,437	$	(3,927)	$	3,100	$	(4,820)

Income (loss) per common share

Basic	$	0.37	$	(0.58)	$	0.47	$	(0.71)
Diluted	$	0.36	$	(0.58)	$	0.46	$	(0.71)

Weighted average common shares outstanding

Basic		6,596		6,739		6,585		6,760
Diluted		6,612		6,739		6,598		6,760

Dividends paid per share	$	0.14	$	0.13	$	0.27	$	0.25


	April 30,		October 31,
	2021		2020
	(unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	73,888	$	57,859
Accounts receivable, net		37,041		27,686
Inventories, net		145,308		149,864
Derivative assets		410		968
Prepaid assets		14,461		13,803
Other		248		1,231
Total current assets		271,356		251,411
Property and equipment:
Land		868		868
Building		7,352		7,352
Machinery and equipment		29,938		29,195
Leasehold improvements		5,093		4,754
		43,251		42,169
Less accumulated depreciation and amortization		(31,866)		(30,248)
Total property and equipment, net		11,385		11,921
Non–current assets:
Software development costs, less accumulated amortization		7,788		7,840
Intangible assets, net		1,721		1,846
Operating lease - right of use assets, net		11,532		11,748
Deferred income taxes		2,869		2,479
Investments and other assets, net		9,175		8,410
Total non–current assets		33,085		32,323
Total assets	$	315,826	$	295,655

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	37,808	$	27,643
Customer deposits		8,321		5,356
Derivative liabilities		928		872
Operating lease liabilities		4,282		4,132
Accrued payroll and employee benefits		7,766		6,931
Accrued income taxes		516		285
Accrued expenses		4,132		4,018
Accrued warranty expenses		1,417		1,200
Total current liabilities		65,170		50,437
Non–current liabilities:
Deferred income taxes		91		131
Accrued tax liability		1,761		1,918
Operating lease liabilities		7,646		7,989
Deferred credits and other		4,558		4,032
Total non–current liabilities		14,056		14,070
Shareholders’ equity:
Preferred stock: no par value per share, 1,000,000 shares authorized; no shares issued		—		—
Common stock: no par value, $.10 stated value per share, 12,500,000 shares authorized; 6,674,741 and 6,636,906 shares issued and 6,601,406 and 6,565,163 shares outstanding, as of April 30, 2021 and October 31, 2020, respectively		660		657
Additional paid-in capital		62,177		60,997
Retained earnings		173,795		172,484
Accumulated other comprehensive loss		(32)		(2,990)
Total shareholders’ equity		236,600		231,148
Total liabilities and shareholders’ equity	$	315,826	$	295,655


	Three Months Ended April 30, 2021 and 2020
								Accumulated
	Common Stock			Additional				Other
	Shares			Paid–in		Retained		Comprehensive
	Outstanding	Amount		Capital		Earnings		Income (Loss)		Total
Balances, January 31, 2020	6,803,163	$	680	$	65,985	$	180,444	$	(8,734)	$	238,375
Net income (loss)	—		—		—		(3,927)		—		(3,927)
Other comprehensive income (loss)	—		—		—		—		386		386
Stock–based compensation expense, net of taxes withheld for vested restricted shares	11,824		2		642		—		—		644
Stock repurchases	(148,761)		(15)		(3,896)		—		—		(3,911)
Dividends paid	—		—		—		(879)		—		(879)
Balances, April 30, 2020	6,666,226	$	667	$	62,731	$	175,638	$	(8,348)	$	230,688

Balances, January 31, 2021	6,583,626	$	658	$	61,458	$	172,282	$	261	$	234,659
Net income (loss)	—		—		—		2,437		—		2,437
Other comprehensive income (loss)	—		—		—		—		(293)		(293)
Stock–based compensation expense, net of taxes withheld for vested restricted shares	17,780		2		719		—		—		721
Dividends paid	—		—		—		(924)		—		(924)
Balances, April 30, 2021	6,601,406	$	660	$	62,177	$	173,795	$	(32)	$	236,600


	Six Months Ended April 30, 2021 and 2020
								Accumulated
	Common Stock			Additional				Other
	Shares			Paid–in		Retained		Comprehensive
	Outstanding	Amount		Capital		Earnings		Income (Loss)		Total
Balances, October 31, 2019	6,767,237	$	677	$	66,350	$	182,151	$	(8,933)	$	240,245
Net income (loss)	—		—		—		(4,820)		—		(4,820)
Other comprehensive income (loss)	—		—		—		—		585		585
Stock–based compensation expense, net of taxes withheld for vested restricted shares	47,750		5		277		—		—		282
Stock repurchases	(148,761)		(15)		(3,896)		—		—		(3,911)
Dividends paid	—		—		—		(1,693)		—		(1,693)
Balances, April 30, 2020	6,666,226	$	667	$	62,731	$	175,638	$	(8,348)	$	230,688

Balances, October 31, 2020	6,565,163	$	657	$	60,997	$	172,484	$	(2,990)	$	231,148
Net income (loss)	—		—		—		3,100		—		3,100
Other comprehensive income (loss)	—		—		—		—		2,958		2,958
Stock–based compensation expense, net of taxes withheld for vested restricted shares	36,243		3		1,180		—		—		1,183
Dividends paid	—		—		—		(1,789)		—		(1,789)
Balances, April 30, 2021	6,601,406	$	660	$	62,177	$	173,795	$	(32)	$	236,600


	April 30, 2021			October 31, 2020
	Balance Sheet	Fair		Balance Sheet	Fair
Derivatives	Location	Value		Location	Value
Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	192	Derivative assets	$	495
Foreign exchange forward contracts	Derivative liabilities	$	576	Derivative liabilities	$	279

Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	218	Derivative assets	$	473
Foreign exchange forward contracts	Derivative liabilities	$	352	Derivative liabilities	$	593


					Location of Gain	Amount of Gain
	Amount of Gain (Loss)				(Loss) Reclassified	(Loss) Reclassified
	Recognized in Other				from Other	from Other
	Comprehensive				Comprehensive	Comprehensive
Derivatives	Income (Loss)				Income (Loss)	Income (Loss)
	Three Months Ended					Three Months Ended
	April 30,					April 30,
	2021		2020			2021		2020
Designated as Hedging Instruments:
(Effective portion)
Foreign exchange forward contracts – Intercompany sales/purchases	$	(75)	$	551	Cost of sales and service	$	340	$	30
Foreign exchange forward contract – Net investment	$	30	$	64


	Location of Gain
	(Loss) Recognized	Amount of Gain (Loss)
Derivatives	in Operations	Recognized in Operations
		Three Months Ended
		April 30,
		2021		2020
Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Other expense, net	$	(590)	$	970


	Foreign Currency		Cash Flow
	Translation		Hedges		Total
Balance, January 31, 2021	$	111	$	150	$	261
Other comprehensive income (loss) before reclassifications		122		(75)		47
Reclassifications		—		(340)		(340)
Balance, April 30, 2021	$	233	$	(265)	$	(32)


	Foreign		Cash
	Currency		Flow
	Translation		Hedges		Total
Balance, October 31, 2020	$	(4,073)	$	1,083	$	(2,990)
Other comprehensive income (loss) before reclassifications		4,306		(629)		3,677
Reclassifications		—		(719)		(719)
Balance, April 30, 2021	$	233	$	(265)	$	(32)


		Weighted Average
	Stock Options	Exercise Price
Outstanding at October 31, 2020	33,307	$	22.09
Options granted	—		—
Options exercised	—		—
Options cancelled	—		—
Outstanding at April 30, 2021	33,307	$	22.09


	Options Already Vested and
	Currently Exercisable
Number of outstanding options		33,307
Weighted average remaining contractual life (years)		0.97
Weighted average exercise price per share	$	22.09
Intrinsic value of outstanding options	$	408,000


	Three Months Ended				Six Months Ended
	April 30,				April 30,
	2021		2020		2021		2020

Cash flows from operating activities:
Net income (loss)	$	2,437	$	(3,927)	$	3,100	$	(4,820)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities, net of acquisitions:
Provision for doubtful accounts		146		139		227		127
Deferred income taxes		379		(49)		511		59
Equity in loss (income) of affiliates		(93)		(23)		(36)		(66)
Foreign currency (gain) loss		296		1,460		(660)		1,567
Unrealized (gain) loss on derivatives		(372)		(647)		(143)		19
Depreciation and amortization		1,050		1,067		2,116		2,172
Stock–based compensation		721		643		1,380		779
Change in assets and liabilities, net of acquisitions:
(Increase) decrease in accounts receivable		(9,247)		3,852		(8,873)		15,004
(Increase) decrease in inventories		1,640		(3,462)		7,354		(4,758)
(Increase) decrease in prepaid expenses		426		(2,443)		(1,161)		(4,568)
Increase (decrease) in accounts payable		7,351		989		9,342		(4,317)
Increase (decrease) in customer deposits		3,048		(740)		2,797		26
Increase (decrease) in accrued expenses		655		89		869		(6,389)
Increase (decrease) in accrued income tax		(30)		(853)		216		(1,480)
Net change in derivative assets and liabilities		392		(103)		163		(205)
Other		101		1,919		732		2,014
Net cash provided by (used for) operating activities		8,900		(2,089)		17,934		(4,836)

Cash flows from investing activities:
Proceeds from sale of property and equipment		3		54		3		127
Purchase of property and equipment		(378)		(203)		(676)		(389)
Software development costs		(282)		(193)		(606)		(456)
Other investments		(42)		—		(182)		—
Net cash provided by (used for) investing activities		(699)		(342)		(1,461)		(718)

Cash flows from financing activities:
Dividends paid		(924)		(879)		(1,789)		(1,693)
Taxes paid related to net settlement of restricted shares		—		—		(197)		(498)
Stock repurchases		—		(3,911)		—		(3,911)
Net cash provided by (used for) financing activities		(924)		(4,790)		(1,986)		(6,102)


		Weighted Average Grant
	Number of Shares	Date Fair Value
Unvested at October 31, 2020	231,960	$	39.03
Shares or units granted	116,032		28.85
Shares or units vested	(36,243)		31.12
Shares or units cancelled	(42,625)		43.99
Shares withheld	(6,568)		38.20
Unvested at April 30, 2021	262,556	$	34.84


	April 30,		October 31,
	2021		2020
Purchased parts and sub–assemblies	$	33,834	$	30,390
Work–in–process		15,978		12,635
Finished goods		95,496		106,839
	$	145,308	$	149,864


Remainder of 2021	$	2,379
2022		3,867
2023		2,537
2024		1,092
2025		761
2026 and thereafter		1,691
Total		12,327
Less: Imputed interest		(399)
Present value of operating lease liabilities	$	11,928


	Six Months Ended
	April 30, 2021
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	2,586
Non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	2,243



	Assets				Liabilities
	April 30, 2021		October 31, 2020		April 30, 2021		October 31, 2020
Level 1
Deferred compensation	$	2,282	$	1,868	$	—	$	—

Level 2
Derivatives	$	410	$	968	$	928	$	872


				Contract Amount at
	Notional	Weighted		Forward Rates in
	Amount	Avg.		U.S. Dollars
Forward	in Foreign	Forward		Contract	April 30,
Contracts	Currency	Rate		Date	2021	Maturity Dates
Sale Contracts:
Euro	12,375	1.1981		14,826	14,923	May 2021 - April 2022
Sterling	5,275	1.3601		7,174	7,299	May 2021 - April 2022

Purchase Contracts:
New Taiwan Dollar	630,000	27.2993	*	23,078	22,969	May 2021 - April 2022


			Contract Amount at Forward Rates in
	Notional	Weighted	U.S. Dollars
Forward	Amount	Avg.	Contract	April 30,
Contracts	in Foreign Currency	Forward Rate	Date	2021	Maturity Date
Sale Contracts:
Euro	3,000	1.1892	3,568	3,622	Nov 2021

3.1		Amended and Restated Articles of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended July 31, 1997.

3.2		Amended and Restated By-Laws of the Registrant as amended through March 12, 2021, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on March 12, 2021.

31.1		Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

31.2		Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

32.1		Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Changes in Shareholders’ Equity; and (vi) Notes to Condensed Consolidated Financial Statements.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.

	HURCO COMPANIES, INC.


	By:	/s/ Sonja K. McClelland
		Sonja K. McClelland
		Executive Vice President, Treasurer
		& Chief Financial Officer

		June 4, 2021

Arch
/s/ Gregory Volovic
Gregory Volovic
Chief Executive Officer
June 4, 2021


/s/ Sonja K. McClelland
Sonja K. McClelland
Executive Vice President, Secretary, Treasurer & Chief Financial Officer