Hurco Companies Inc 10-Q for FY2024 Q2

Hurco Companies Inc (HURC)

10-Q 2024-06-07 For: 2024-04-30

Added on April 09, 2026

About this 10-Q

Hurco Companies Inc filed this 10-Q on June 7, 2024, covering the quarter ended April 30, 2024 (FY2024 Q2).

Headline figures

Quarter ended April 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $45.17M; down 16.1% from $53.82M a year earlier
Net loss: $3.92M; compared with net income of $377K a year earlier
Diluted EPS: -$0.61; compared with $0.06 a year earlier

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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	The Nasdaq Stock Market LLC

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, 2024 and 2023	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) Three and Six Months Ended April 30, 2024 and 2023	4

	Condensed Consolidated Balance Sheets as of April 30, 2024 and October 31, 2023	5

	Condensed Consolidated Statements of Cash Flows Three and Six Months Ended April 30, 2024 and 2023	6

	Condensed Consolidated Statements of Changes in Shareholders’ Equity Three and Six Months Ended April 30, 2024 and 2023	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4.	Controls and Procedures	29

Part II - Other Information

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

Signatures		32


	Three Months Ended				Six Months Ended
	April 30,				April 30,
	2024		2023		2024		2023

		(unaudited)				(unaudited)
Sales and service fees	$	45,172	$	53,819	$	90,231	$	108,501

Cost of sales and service		37,153		41,236		72,517		83,200

Gross profit		8,019		12,583		17,714		25,301

Selling, general and administrative expenses		11,461		11,592		22,976		23,076

Operating (loss) income		(3,442)		991		(5,262)		2,225

Interest expense		136		55		267		71

Interest income		164		85		320		137

Investment income, net		8		7		67		36

Other (expense) income, net		(476)		(360)		(989)		281

(Loss) income before income taxes		(3,882)		668		(6,131)		2,608

Provision (benefit) for income taxes		40		291		(561)		901

Net (loss) income	$	(3,922)	$	377	$	(5,570)	$	1,707

(Loss) income per common share

Basic	$	(0.61)	$	0.06	$	(0.86)	$	0.26
Diluted	$	(0.61)	$	0.06	$	(0.86)	$	0.26

Weighted average common shares outstanding

Basic		6,518		6,486		6,500		6,536
Diluted		6,518		6,516		6,500		6,570

Dividends paid per share	$	0.16	$	0.16	$	0.32	$	0.31


	April 30,		October 31,
	2024		2023
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	37,542	$	41,784
Accounts receivable, net		27,052		39,965
Inventories, net		163,806		157,952
Derivative assets		365		740
Prepaid and other assets		10,209		7,789
Total current assets		238,974		248,230
Property and equipment:
Land		1,046		1,046
Building		7,387		7,387
Machinery and equipment		25,843		26,779
Leasehold improvements		4,523		4,473
		38,799		39,685
Less accumulated depreciation and amortization		(31,453)		(30,826)
Total property and equipment, net		7,346		8,859
Non–current assets:
Software development costs, less accumulated amortization		6,985		7,030
Intangible assets, net		860		994
Operating lease - right of use assets, net		11,490		10,971
Deferred income taxes		4,880		4,749
Investments and other assets		10,291		9,756
Total non–current assets		34,506		33,500
Total assets	$	280,826	$	290,589
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	27,356	$	29,661
Customer deposits		3,244		2,827
Derivative liabilities		2,578		1,821
Operating lease liabilities		3,658		3,712
Accrued payroll and employee benefits		7,592		9,853
Accrued income taxes		1,190		1,713
Accrued expenses		4,660		4,092
Accrued warranty expenses		1,121		1,294
Total current liabilities		51,399		54,973
Non–current liabilities:
Deferred income taxes		61		83
Accrued tax liability		698		1,293
Operating lease liabilities		8,189		7,606
Deferred credits and other		4,902		4,403
Total non–current liabilities		13,850		13,385
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; 6,636,473 and 6,553,673 shares issued and 6,523,259 and 6,462,138 shares outstanding, as of April 30, 2024 and October 31, 2023, respectively		652		646
Additional paid-in capital		62,155		61,665
Retained earnings		172,461		180,124
Accumulated other comprehensive loss		(19,691)		(20,204)
Total shareholders’ equity		215,577		222,231
Total liabilities and shareholders’ equity	$	280,826	$	290,589


	Three Months Ended April 30, 2024 and 2023
								Accumulated
	Common Stock			Additional				Other
	Shares			Paid–in		Retained		Comprehensive
(unaudited)	Outstanding	Amount		Capital		Earnings		Income (Loss)		Total
Balances, January 31, 2023	6,587,694	$	659	$	63,621	$	180,212	$	(11,642)	$	232,850
Net income (loss)	—		—		—		377		—		377
Other comprehensive income (loss)	—		—		—		—		(1,367)		(1,367)
Stock–based compensation expense, net of taxes withheld for vested restricted shares	13,914		1		749		—		—		750
Exercise of common stock options	—		—		—		—		—		—
Stock repurchases	(139,470)		(14)		(3,852)		—		—		(3,866)
Dividends paid	—		—		—		(1,039)		—		(1,039)
Balances, April 30, 2023	6,462,138	$	646	$	60,518	$	179,550	$	(13,009)	$	227,705

Balances, January 31, 2024	6,506,033	$	651	$	61,936	$	177,444	$	(15,474)	$	224,557
Net income (loss)	—		—		—		(3,922)		—		(3,922)
Other comprehensive income (loss)	—		—		—		—		(4,217)		(4,217)
Stock–based compensation expense, net of taxes withheld for vested restricted shares	17,226		1		219		—		—		220
Dividends paid	—		—		—		(1,061)		—		(1,061)
Balances, April 30, 2024	6,523,259	$	652	$	62,155	$	172,461	$	(19,691)	$	215,577


	Six Months Ended April 30, 2024 and 2023
								Accumulated
	Common Stock			Additional				Other
	Shares			Paid–in		Retained		Comprehensive
(unaudited)	Outstanding	Amount		Capital		Earnings		Income (Loss)		Total
Balances, October 31, 2022	6,566,994	$	657	$	63,635	$	179,877	$	(21,525)	$	222,644
Net income (loss)	—		—		—		1,707		—		1,707
Other comprehensive income (loss)	—		—		—		—		8,516		8,516
Stock–based compensation expense, net of taxes withheld for vested restricted shares	49,874		5		1,206		—		—		1,211
Exercise of common stock options	11,559		1		269		—		—		270
Stock repurchases	(166,289)		(17)		(4,592)		—		—		(4,609)
Dividends paid	—		—		—		(2,034)		—		(2,034)
Balances, April 30, 2023	6,462,138	$	646	$	60,518	$	179,550	$	(13,009)	$	227,705

Balances, October 31, 2023	6,462,138	$	646	$	61,665	$	180,124	$	(20,204)	$	222,231
Net income (loss)	—		—		—		(5,570)		—		(5,570)
Other comprehensive income (loss)	—		—		—		—		513		513
Stock–based compensation expense, net of taxes withheld for vested restricted shares	61,121		6		490		—		—		496
Dividends paid	—		—		—		(2,093)		—		(2,093)
Balances, April 30, 2024	6,523,259	$	652	$	62,155	$	172,461	$	(19,691)	$	215,577


	April 30, 2024			October 31, 2023
	Balance Sheet	Fair		Balance Sheet	Fair
Derivatives	Location	Value		Location	Value
Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	186	Derivative assets	$	363
Foreign exchange forward contracts	Derivative liabilities	$	955	Derivative liabilities	$	1,232

Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	179	Derivative assets	$	377
Foreign exchange forward contracts	Derivative liabilities	$	1,623	Derivative liabilities	$	589


					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,
	2024		2023			2024		2023
Designated as Hedging Instruments:
(Effective portion)
Foreign exchange forward contracts – Intercompany sales/purchases	$	(640)	$	(847)	Cost of sales and service	$	(407)	$	50
Foreign exchange forward contract – Net investment	$	46	$	(25)


	Location of Gain
	(Loss) Recognized	Amount of Gain (Loss)
Derivatives	in Operations	Recognized in Operations
		Three Months Ended
		April 30,
		2024		2023
Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Other (expense) income, net	$	(1,854)	$	(1,109)


	Foreign Currency		Cash Flow
	Translation		Hedges		Total
Balance, January 31, 2024	$	(13,485)	$	(1,989)	$	(15,474)
Other comprehensive income (loss) before reclassifications		(3,984)		(640)		(4,624)
Reclassifications		—		407		407
Balance, April 30, 2024	$	(17,469)	$	(2,222)	$	(19,691)


	Foreign		Cash
	Currency		Flow
	Translation		Hedges		Total
Balance, October 31, 2023	$	(17,985)	$	(2,219)	$	(20,204)
Other comprehensive income (loss) before reclassifications		516		(622)		(106)
Reclassifications		—		619		619
Balance, April 30, 2024	$	(17,469)	$	(2,222)	$	(19,691)


		Weighted Average Grant
	Number of Shares	Date Fair Value
Unvested at October 31, 2023	318,317	$	28.27
Shares or units granted	185,850		21.31
Shares or units vested	(61,121)		27.90
Shares or units cancelled	(50,375)		27.97
Shares withheld	(14,579)		27.77
Unvested at April 30, 2024	378,092	$	24.97


Remainder of 2024	$	2,239
2025		3,272
2026		2,409
2027		1,916
2028		1,637
2029 and thereafter		1,319
Total		12,792
Less: Imputed interest		(945)
Present value of operating lease liabilities	$	11,847


	Three Months Ended				Six Months Ended
	April 30,				April 30,
	2024		2023		2024		2023

		(unaudited)				(unaudited)
Cash flows from operating activities:
Net (loss) income	$	(3,922)	$	377	$	(5,570)	$	1,707
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Provision for doubtful accounts		11		(22)		(60)		62
Deferred income taxes		(49)		149		(141)		301
Equity in (income) loss of affiliates		(109)		(232)		(87)		(222)
Foreign currency (gain) loss		(1,118)		(656)		(606)		(2,243)
Unrealized (gain) loss on derivatives		1,895		438		1,239		50
Depreciation and amortization		882		1,050		1,790		2,104
Stock–based compensation		220		750		811		1,524
Change in assets and liabilities:		—		—
(Increase) decrease in accounts receivable		5,708		203		13,236		5,954
(Increase) decrease in inventories		(1,247)		(7,487)		(3,743)		(10,471)
(Increase) decrease in prepaid expenses		(24)		548		(2,412)		(2,656)
Increase (decrease) in accounts payable		183		7,450		(2,336)		2,206
Increase (decrease) in customer deposits		(628)		(102)		393		713
Increase (decrease) in accrued expenses		988		(111)		481		(1,927)
Increase (decrease) in accrued payroll and employee benefits		91		504		(2,258)		(2,804)
Increase (decrease) in accrued income tax		(368)		(1,381)		(544)		(980)
Increase (decrease) in accrued tax liability		(598)		—		(595)		—
Net change in derivative assets and liabilities		(48)		47		(106)		600
Other		12		(574)		(182)		(953)
Net cash provided by (used for) operating activities		1,879		951		(690)		(7,035)

Cash flows from investing activities:
Proceeds from sale of property and equipment		10		1		25		1
Purchase of property and equipment		(130)		(443)		(574)		(657)
Software development costs		(349)		(364)		(737)		(749)
Other investments		117		273		117		273
Net cash provided by (used for) investing activities		(352)		(533)		(1,169)		(1,132)

Cash flows from financing activities:
Proceeds from exercise of common stock options		—		—		—		270
Dividends paid		(1,061)		(1,039)		(2,093)		(2,034)


	April 30,		October 31,
	2024		2023
Purchased parts and sub–assemblies, net	$	38,778	$	37,161
Work–in–process		15,628		16,217
Finished goods		109,400		104,574
Inventories, net	$	163,806	$	157,952


	Three Months Ended April 30,				Six Months Ended April 30,
	2024		2023		2024		2023
Computerized Machine Tools	$	35,213	$	43,929	$	70,985	$	89,346
Computer Control Systems and Software ^†		586		614		1,169		1,138
Service Parts		7,211		7,244		13,854		13,935
Service Fees		2,162		2,032		4,223		4,082
Total	$	45,172	$	53,819	$	90,231	$	108,501


	Three Months Ended
	April 30,
	2024				2023				$ Change		% Change
Americas	$	16,947	38	%	$	18,324	34	%	$	(1,377)	(8)	%
Europe		22,720	50	%		29,991	56	%		(7,271)	(24)	%
Asia Pacific		5,505	12	%		5,504	10	%		1	0	%
Total	$	45,172	100	%	$	53,819	100	%	$	(8,647)	(16)	%



	Assets				Liabilities
	April 30, 2024		October 31, 2023		April 30, 2024		October 31, 2023
Level 1
Mutual Funds	$	2,648	$	2,217	$	—	$	—

Level 2
Derivatives	$	365	$	740	$	2,578	$	1,821


				Contract Amount at
	Notional	Weighted		Forward Rates in
	Amount	Avg.		U.S. Dollars
Forward	in Foreign	Forward		Contract	April 30,
Contracts	Currency	Rate		Date	2024	Maturity Dates
Sale Contracts:
Euro	8,100	1.0913		8,840	8,716	May 2024 - Apr 2025
Sterling	3,500	1.2516		4,381	4,382	May 2024 - Apr 2025

Purchase Contracts:
New Taiwan Dollar	540,000	30.5355	*	17,684	16,778	May 2024 - Apr 2025



	Notional	Weighted	Contract Amount at Forward Rates in
	Amount	Avg.	U.S. Dollars
Forward	in Foreign	Forward	Contract	April 30,	Maturity
Contracts	Currency	Rate	Date	2024	Date
Sale Contracts:
Euro	3,000	1.0823	3,247	3,232	Nov 2024

3.1		Amended and Restated Articles of Incorporation of the Registrant, as amended effective March 15, 2024.

3.2		Amended and Restated By-Laws of the Registrant as amended through March 15, 2024.

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 information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2024, 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; (vi) Notes to Condensed Consolidated Financial Statements; and (vii) information regarding trading arrangements set forth in Part II, Item 5.

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 7, 2024


	(iii)	The rate or rates and the time or times at which dividends and other distributions on the shares of such series shall be paid, the relationship or priority of such dividends to those payable on Common Stock or to other series of Preferred Stock, and whether or not any such dividends shall be cumulative;


	(vii)	Rights, if any, to convert any shares of such series, either into shares of Common Stock or into other series of Preferred Stock and the prices, premiums or penalties, ratios and other terms applicable to any such conversion;

Arch
/s/ Gregory Volovic
Gregory Volovic
Chief Executive Officer
June 7, 2024