Hurco Companies Inc 10-Q for FY2021 Q3

Hurco Companies Inc (HURC)

10-Q 2021-09-03 For: 2021-07-31

Added on April 09, 2026

About this 10-Q

Hurco Companies Inc filed this 10-Q on September 3, 2021, covering the quarter ended July 31, 2021 (FY2021 Q3).

Headline figures

Quarter ended July 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $54.18M; up 19.4% from $45.38M a year earlier
Net income: $1.57M; down 27.5% from net income of $2.16M a year earlier
Diluted EPS: $0.23; down 28.1% from $0.32 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 Nine Months Ended July 31, 2021 and 2020	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) Three and Nine Months Ended July 31, 2021 and 2020	4

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

	Condensed Consolidated Statements of Cash Flows Three and Nine Months Ended July 31, 2021 and 2020	6

	Condensed Consolidated Statements of Changes in Shareholders’ Equity Three and Nine Months Ended July 31, 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				Nine Months Ended
	July 31,				July 31,
	2021		2020		2021		2020

Sales and service fees	$	54,178	$	45,382	$	166,213	$	126,168

Cost of sales and service		41,204		34,313		126,898		99,231

Gross profit		12,974		11,069		39,315		26,937

Selling, general and administrative expenses		10,331		9,627		32,172		31,072

Operating income (loss)		2,643		1,442		7,143		(4,135)

Interest expense		2		19		23		69

Interest income		17		14		33		104

Investment income		8		11		154		76

Other income (expense), net		11		(223)		(37)		(933)

Income (loss) before income taxes		2,677		1,225		7,270		(4,957)

Provision (benefit) for income taxes		1,109		(937)		2,602		(2,299)

Net income (loss)	$	1,568	$	2,162	$	4,668	$	(2,658)

Income (loss) per common share

Basic	$	0.23	$	0.32	$	0.70	$	(0.39)
Diluted	$	0.23	$	0.32	$	0.70	$	(0.39)

Weighted average common shares outstanding

Basic		6,601		6,595		6,591		6,705
Diluted		6,618		6,604		6,605		6,705

Dividends paid per share	$	0.14	$	0.13	$	0.41	$	0.38


	July 31,		October 31,
	2021		2020
	(unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	80,471	$	57,859
Accounts receivable, net		31,798		27,686
Inventories, net		149,326		149,864
Derivative assets		444		968
Prepaid assets		14,088		13,803
Other		191		1,231
Total current assets		276,318		251,411
Property and equipment:
Land		868		868
Building		7,352		7,352
Machinery and equipment		29,663		29,195
Leasehold improvements		5,152		4,754
		43,035		42,169
Less accumulated depreciation and amortization		(32,047)		(30,248)
Total property and equipment, net		10,988		11,921
Non–current assets:
Software development costs, less accumulated amortization		7,660		7,840
Intangible assets, net		1,645		1,846
Operating lease - right of use assets, net		11,105		11,748
Deferred income taxes		2,682		2,479
Investments and other assets, net		9,348		8,410
Total non–current assets		32,440		32,323
Total assets	$	319,746	$	295,655

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	41,857	$	27,643
Customer deposits		8,194		5,356
Derivative liabilities		909		872
Operating lease liabilities		4,245		4,132
Accrued payroll and employee benefits		7,218		6,931
Accrued income taxes		731		285
Accrued expenses		4,529		4,018
Accrued warranty expenses		1,332		1,200
Total current liabilities		69,015		50,437
Non–current liabilities:
Deferred income taxes		73		131
Accrued tax liability		1,819		1,918
Operating lease liabilities		7,257		7,989
Deferred credits and other		4,655		4,032
Total non–current liabilities		13,804		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 July 31, 2021 and October 31, 2020, respectively		660		657
Additional paid-in capital		62,876		60,997
Retained earnings		174,412		172,484
Accumulated other comprehensive loss		(1,021)		(2,990)
Total shareholders’ equity		236,927		231,148
Total liabilities and shareholders’ equity	$	319,746	$	295,655


	Three Months Ended July 31, 2021 and 2020
								Accumulated
	Common Stock			Additional				Other
	Shares			Paid–in		Retained		Comprehensive
	Outstanding	Amount		Capital		Earnings		Income (Loss)		Total
Balances, April 30, 2020	6,666,226	$	667	$	62,731	$	175,638	$	(8,348)	$	230,688
Net income (loss)	—		—		—		2,162		—		2,162
Other comprehensive income (loss)	—		—		—		—		4,454		4,454
Stock–based compensation expense, net of taxes withheld for vested restricted shares	—		—		638		—		—		638
Exercise of common stock options	3,738		—		67		—		—		67
Stock repurchases	(104,801)		(10)		(3,078)		—		—		(3,088)
Dividends paid	—		—		—		(875)		—		(875)
Balances, July 31, 2020	6,565,163	$	657	$	60,358	$	176,925	$	(3,894)	$	234,046

Balances, April 30, 2021	6,601,406	$	660	$	62,177	$	173,795	$	(32)	$	236,600
Net income (loss)	—		—		—		1,568		—		1,568
Other comprehensive income (loss)	—		—		—		—		(989)		(989)
Stock–based compensation expense, net of taxes withheld for vested restricted shares	—		—		699		—		—		699
Exercise of common stock options	—		—		—		—		—		—
Stock repurchases	—		—		—		—		—		—
Dividends paid	—		—		—		(951)		—		(951)
Balances, July 31, 2021	6,601,406	$	660	$	62,876	$	174,412	$	(1,021)	$	236,927


	Nine Months Ended July 31, 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)	—		—		—		(2,658)		—		(2,658)
Other comprehensive income (loss)	—		—		—		—		5,039		5,039
Stock–based compensation expense, net of taxes withheld for vested restricted shares	47,750		5		916		—		—		921
Exercise of common stock options	3,738		—		67		—		—		67
Stock repurchases	(253,562)		(25)		(6,975)		—		—		(7,000)
Dividends paid	—		—		—		(2,568)		—		(2,568)
Balances, July 31, 2020	6,565,163	$	657	$	60,358	$	176,925	$	(3,894)	$	234,046

Balances, October 31, 2020	6,565,163	$	657	$	60,997	$	172,484	$	(2,990)	$	231,148
Net income (loss)	—		—		—		4,668		—		4,668
Other comprehensive income (loss)	—		—		—		—		1,969		1,969
Stock–based compensation expense, net of taxes withheld for vested restricted shares	36,243		3		1,879		—		—		1,882
Exercise of common stock options	—		—		—		—		—		—
Stock repurchases	—		—		—		—		—		—
Dividends paid	—		—		—		(2,740)		—		(2,740)
Balances, July 31, 2021	6,601,406	$	660	$	62,876	$	174,412	$	(1,021)	$	236,927


	July 31, 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	$	177	Derivative assets	$	495
Foreign exchange forward contracts	Derivative liabilities	$	697	Derivative liabilities	$	279

Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	267	Derivative assets	$	473
Foreign exchange forward contracts	Derivative liabilities	$	212	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
	July 31,					July 31,
	2021		2020			2021		2020
Designated as Hedging Instruments:
(Effective portion)
Foreign exchange forward contracts – Intercompany sales/purchases	$	(277)	$	(480)	Cost of sales and service	$	(20)	$	158
Foreign exchange forward contract – Net investment	$	44	$	(193)


	Location of Gain
	(Loss) Recognized	Amount of Gain (Loss)
Derivatives	in Operations	Recognized in Operations
		Three Months Ended
		July 31,
		2021		2020
Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Other expense, net	$	602	$	(1,784)


	Foreign Currency		Cash Flow
	Translation		Hedges		Total
Balance, April 30, 2021	$	233	$	(265)	$	(32)
Other comprehensive income (loss) before reclassifications		(732)		(277)		(1,009)
Reclassifications		—		20		20
Balance, July 31, 2021	$	(499)	$	(522)	$	(1,021)


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


	Options Already Vested and
	Currently Exercisable
Number of outstanding options		33,307
Weighted average remaining contractual life (years)		0.72
Weighted average exercise price per share	$	22.09
Intrinsic value of outstanding options	$	395,000


		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 July 31, 2021	262,556	$	34.84


	Three Months Ended				Nine Months Ended
	July 31,				July 31,
	2021		2020		2021		2020

Cash flows from operating activities:
Net income (loss)	$	1,568	$	2,162	$	4,668	$	(2,658)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities, net of acquisitions:
Provision for doubtful accounts		(1)		290		226		417
Deferred income taxes		192		142		703		201
Equity in loss (income) of affiliates		(33)		(11)		(69)		(77)
Foreign currency (gain) loss		229		(1,603)		(431)		(36)
Unrealized (gain) loss on derivatives		(163)		1,823		(306)		1,842
Depreciation and amortization		1,034		1,246		3,150		3,418
Stock–based compensation		699		640		2,079		1,419
Change in assets and liabilities, net of acquisitions:
(Increase) decrease in accounts receivable		5,022		(3,409)		(3,851)		11,595
(Increase) decrease in inventories		(4,871)		3,665		2,483		(1,093)
(Increase) decrease in prepaid expenses		481		(487)		(680)		(5,055)
Increase (decrease) in accounts payable		4,200		1,190		13,542		(3,127)
Increase (decrease) in customer deposits		(107)		(200)		2,690		(174)
Increase (decrease) in accrued expenses		(175)		631		694		(5,758)
Increase (decrease) in accrued income tax		216		(526)		432		(2,006)
Net change in derivative assets and liabilities		7		245		170		40
Other		216		(778)		948		1,237
Net cash provided by (used for) operating activities		8,514		5,020		26,448		185

Cash flows from investing activities:
Proceeds from sale of property and equipment		—		1		3		128
Purchase of property and equipment		(325)		(89)		(1,001)		(478)
Software development costs		(227)		(236)		(833)		(692)
Other investments		(28)		—		(210)		—
Net cash provided by (used for) investing activities		(580)		(324)		(2,041)		(1,042)

Cash flows from financing activities:
Dividends paid		(951)		(875)		(2,740)		(2,568)
Taxes paid related to net settlement of restricted shares		—		—		(197)		(498)
Proceeds from exercise of common stock options		—		67		—		67
Stock repurchases		—		(3,088)		—		(7,000)
Net cash provided by (used for) financing activities		(951)		(3,896)		(2,937)		(9,999)


	July 31,		October 31,
	2021		2020
Purchased parts and sub–assemblies	$	37,815	$	30,390
Work–in–process		16,901		12,635
Finished goods		94,610		106,839
	$	149,326	$	149,864


Remainder of 2021	$	1,208
2022		4,116
2023		2,775
2024		1,210
2025		821
2026 and thereafter		1,750
Total		11,880
Less: Imputed interest		(378)
Present value of operating lease liabilities	$	11,502


	Three Months Ended
	July 31,
	2021				2020				$ Change		% Change
Americas	$	19,150	35	%	$	17,870	39	%	$	1,280	7	%
Europe		28,403	53	%		19,538	43	%		8,865	45	%
Asia Pacific		6,625	12	%		7,974	18	%		(1,349)	(17)	%
Total	$	54,178	100	%	$	45,382	100	%	$	8,796	19	%


	Nine Months Ended
	July 31, 2021
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	3,827
Non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	3,003



	Assets				Liabilities
	July 31, 2021		October 31, 2020		July 31, 2021		October 31, 2020
Level 1
Deferred compensation	$	2,398	$	1,868	$	—	$	—

Level 2
Derivatives	$	444	$	968	$	909	$	872


				Contract Amount at
	Notional	Weighted		Forward Rates in
	Amount	Avg.		U.S. Dollars
Forward	in Foreign	Forward		Contract	July 31,
Contracts	Currency	Rate		Date	2021	Maturity Dates
Sale Contracts:
Euro	13,650	1.1979		16,351	16,237	Aug 2021 - Jul 2022
Sterling	6,800	1.3774		9,366	9,455	Aug 2021 - Jul 2022

Purchase Contracts:
New Taiwan Dollar	720,000	27.1531	*	26,516	25,967	Aug 2021 - Jul 2022


			Contract Amount at Forward Rates in
	Notional	Weighted	U.S. Dollars
Forward	Amount	Avg.	Contract	July 31,
Contracts	in Foreign Currency	Forward Rate	Date	2021	Maturity Date
Sale Contracts:
Euro	3,000	1.1892	3,568	3,565	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 July 31, 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
		September 3, 2021

Arch
/s/ Gregory Volovic
Gregory Volovic
Chief Executive Officer
September 3, 2021