INDIANAPOLIS, March 05, 2021 (GLOBE NEWSWIRE) -- Hurco Companies, Inc. (Nasdaq: HURC) today reported results for the first fiscal quarter ended January 31, 2021. Hurco recorded net income of $663,000, or $0.10 per diluted share, for the first quarter of fiscal 2021, compared to a net loss of $893,000, or $(0.13) per diluted share, for the corresponding period in fiscal 2020.
Sales and service fees for the first quarter of fiscal 2021 were $54,115,000, an increase of $10,455,000, or 24%, compared to the corresponding prior year period, and included a favorable currency impact of $1,641,000, or 4%, when translating foreign sales to U.S. dollars for financial reporting purposes.
Michael Doar, Chief Executive Officer, stated, “With all geographic regions experiencing some level of recovery during our first quarter of fiscal 2021, we remain cautiously optimistic. Orders outpaced sales for the second consecutive quarter, which is a trend we often see during an economic recovery. We must continue to be responsive to their need to work harder and smarter in order to recover faster. We believe that technology innovation can certainly support recovery for our customers, and we will continue our product development plans, which will position us to meet demand from both current customers and prospective customers as activity at their businesses increases. Additionally, we will continue to evaluate acquisition opportunities that could better position us to benefit from any economic expansion.”
The following table sets forth net sales and service fees by geographic region for the first quarter ended January 31, 2021 and 2020 (dollars in thousands):
|Three Months Ended|
|2021||2020||$ Change||% Change|
During fiscal 2020, our operating results were adversely affected by the international business disruption due to the outbreak of coronavirus and the ongoing economic slowdown in Europe, uncertainty surrounding the U.K. Brexit activities, and political friction in the U.S. Many of our customers deferred or eliminated investments in capital equipment last year, which we attributed largely to the uncertainty these events created. During the first quarter of fiscal 2021, our sales increased year-over-year in all regions, particularly in the Americas and Europe, our primary markets for our higher-performance, higher-priced machines. We also saw global machine tool manufacturers price their excess inventories aggressively to compete in the market recovery.
Sales in the Americas for the first quarter of fiscal 2021 increased by 33%, compared to the corresponding period in fiscal 2020, primarily due to an increased volume of shipments of Hurco machines. The increased machine shipments reflected higher sales volumes of lathes and VM and VMX machines, particularly in the Southeast and Midwest regions of the U.S.
European sales for the first quarter of fiscal 2021 increased by 21%, compared to the corresponding period in fiscal 2020, and included a favorable currency impact of 7%, when translating foreign sales to U.S. dollars for financial reporting purposes. The increase in European sales for the first quarter of fiscal 2021 was primarily attributable to an increased volume of shipments of Hurco machines in the United Kingdom and Germany, partially offset by reduced volumes in France and Italy.
Asian Pacific sales for the first quarter of fiscal 2021 increased by 9%, compared to the corresponding period in fiscal 2020, and included a favorable currency impact of 5%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year increase in Asian Pacific sales primarily resulted from an increased volume of shipments of Hurco vertical milling machines in China and Southeast Asia, partially offset by reduced volume of shipments of Hurco machines in India and Takumi machines in China.
Orders for the first quarter of fiscal 2021 were $57,323,000, an increase of $11,743,000, or 26%, compared to the corresponding period in fiscal 2020, and included a favorable currency impact of $2,053,000, or 5%, when translating foreign orders to U.S. dollars.
The following table sets forth new orders booked by geographic region for the first quarter ended January 31, 2021 and 2020 (dollars in thousands):
|Three Months Ended |
|2021||2020||$ Change||% Change|
Orders in the Americas for the first quarter of fiscal 2021 increased by 31%, compared to the corresponding period in fiscal 2020, primarily due to increased customer demand for Hurco machines. The increased order levels, similar to the increased sales levels, reflected a higher demand for lathes and VM and VMX machines.
European orders for the first quarter of fiscal 2021 increased by 19%, compared to the corresponding prior year period, and included a favorable currency impact of 8%, when translating foreign orders to U.S. dollars. The year-over-year increase in orders was driven primarily by increased customer demand for Hurco machines in Germany, France and the United Kingdom.
Asian Pacific orders for the first quarter of fiscal 2021 increased by 35%, compared to the corresponding prior year period, and included a favorable currency impact of 7%, when translating foreign orders to U.S. dollars. The year-over-year increase in Asian Pacific orders was driven primarily by an increase in customer demand for Hurco vertical milling machines in China and Southeast Asia, partially offset by decreased demand for Takumi machines in China.
Gross profit for the first quarter of fiscal 2021 was $11,547,000, or 21% of sales, compared to $9,159,000, or 21% of sales, for the corresponding prior year period. Gross profit as a percentage of sales remained relatively unchanged year-over-year on a higher level of sales, as global excess inventory levels continue to apply competitive pricing pressure on the machine tool industry. Additionally, similar to fiscal 2020, the first quarter of fiscal 2021 gross profit continued to be impacted by the allocation of fixed costs on lower production volumes year-to-date.
Selling, general, and administrative expenses for the first quarter of fiscal 2021 were $10,568,000, or 20% of sales, compared to $10,846,000, or 25% of sales, in the corresponding fiscal 2020 period, and included an unfavorable currency impact of $289,000, when translating foreign expenses to U.S. dollars for financial reporting purposes. The year-over-year reduction in selling, general, and administrative expenses was primarily due to operating cost reduction measures implemented in the first two quarters of fiscal 2020, partially offset by increases in incentive compensation.
The effective tax rate for the first quarter of fiscal 2021 was 45%, compared to 40% in the corresponding prior year period. The year-over-year increase in the effective tax rate was primarily due to changes in geographic mix of income and loss which includes jurisdictions with differing tax rates and other events that are not consistent from period to period, such as changes in income tax laws to address the unfavorable impact of the COVID-19 pandemic and a discrete income tax expense related to unvested stock awards in the first quarter of fiscal 2021.
Cash and cash equivalents totaled $66,553,000 at January 31, 2021, compared to $57,859,000 at October 31, 2020. Working capital was $204,043,000 at January 31, 2021, compared to $200,974,000 at October 31, 2020. The increase in working capital was primarily driven by an increase in prepaid expenses, offset by a reduction in inventory and an increase in accounts payable.
Hurco Companies, Inc. is an international, industrial technology company that sells its three brands of computer numeric control (“CNC”) machine tools to the worldwide metal cutting and metal forming industry. Two of the Company’s brands of machine tools, Hurco and Milltronics, are equipped with interactive controls that include software that is proprietary to each respective brand. The Company designs these controls and develops the software. The third brand of CNC machine tools, Takumi, is equipped with industrial controls that are produced by third parties, which allows the customer to decide the type of control added to the Takumi CNC machine tool. The Company also produces high-value machine tool components and accessories and provides automation solutions that can be integrated with any machine tool. The end markets for the Company's products are independent job shops, short-run manufacturing operations within large corporations, and manufacturers with production-oriented operations. The Company’s customers manufacture precision parts, tools, dies, and/or molds for industries such as aerospace, defense, medical equipment, energy, transportation and computer equipment. The Company is based in Indianapolis, Indiana, with manufacturing operations in Taiwan, Italy, the U.S., and China, and sells its products through direct and indirect sales forces throughout the Americas, Europe, and Asia. The Company has sales, application engineering support and service subsidiaries in China, England, France, Germany, India, Italy, the Netherlands, Poland, Singapore, the U.S., and Taiwan. Web Site: www.hurco.com
Certain statements in this news release are forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the impact of the COVID-19 pandemic and other public health epidemics on the global economy, the cyclical nature of the machine tool industry, changes in general economic and business conditions that affect demand for our products, the risks of our international operations, governmental actions and initiatives, including import and export restrictions and tariffs, fluctuations in foreign currency exchange rates, innovations by competitors, the United Kingdom’s withdrawal from the European Union (Brexit), our ability to develop new products and expand product offerings, the ability to protect our intellectual property, quality and delivery performance by our vendors, increases in prices of raw materials, loss of key personnel, our ability to effectively integrate acquisitions, failure to comply with data privacy and security regulations, breaches of our network and system security measures, obsolescence of inventory or impairment of assets due to changes in technology or market demand, negative or unforeseen tax consequences, changes in the LIBOR rate, and other risks and uncertainties discussed more fully under the caption “Risk Factors” in our filings with the Securities and Exchange Commission. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
|Contact:||Sonja K. McClelland|
|Executive Vice President, Secretary, Treasurer, & Chief Financial Officer|
|Hurco Companies, Inc.|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(In thousands, except per share data)|
|Three Months Ended January 31,|
|Sales and service fees||$||54,115||$||43,660|
|Cost of sales and service||42,568||34,501|
|Selling, general and administrative expenses||10,568||10,846|
|Operating income (loss)||979||(1,687||)|
|Other income, net||112||83|
|Income (loss) before taxes||1,209||(1,490||)|
|Provision (benefit) for income taxes||546||(597||)|
|Net income (loss)||$||663||$||(893||)|
|Income (loss) per common share|
|Weighted average common shares outstanding|
|Dividends per share||$||0.13||$||0.12|
|OTHER CONSOLIDATED FINANCIAL DATA|
|Three Months Ended January 31,|
|SG&A expense as a percentage of sales||20||%||25||%|
|Operating income (loss) as a percentage of sales||2||%||-4||%|
|Pre-tax income (loss) as a percentage of sales||2||%||-3||%|
|Effective tax rate||45||%||40||%|
|Depreciation and amortization||$||1,066||$||1,105|
|Balance Sheet Data:||1/31/2021||10/31/2020|
|Days sales outstanding (unaudited)||42||45|
|Inventory turns (unaudited)||1.0||0.9|
|Hurco Companies, Inc.|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(In thousands, except share and per share data)|
|January 31,||October 31,|
|Cash and cash equivalents||$||66,553||$||57,859|
|Accounts receivable, net||28,008||27,686|
|Total current assets||258,728||251,411|
|Property and equipment:|
|Machinery and equipment||29,759||29,195|
|Less accumulated depreciation and amortization||(31,304||)||(30,248||)|
|Total property and equipment, net||11,673||11,921|
|Software development costs, less accumulated amortization||7,822||7,840|
|Intangible assets, net||1,796||1,846|
|Operating lease - right of use assets, net||12,199||11,748|
|Deferred income taxes||2,863||2,479|
|Investments and other assets, net||8,891||8,410|
|Total non-current assets||33,571||32,323|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Operating lease liabilities||4,418||4,132|
|Accrued payroll and employee benefits||6,428||6,209|
|Accrued income taxes||548||285|
|Accrued warranty expenses||1,246||1,200|
|Total current liabilities||54,685||50,437|
|Deferred income taxes||111||131|
|Accrued tax liability||1,934||1,918|
|Operating lease liabilities||8,173||7,989|
|Deferred credits and other||4,410||4,032|
|Total non-current liabilities||14,628||14,070|
|Preferred stock: no par value per share, 1,000,000 shares authorized; no shares issued||-||-|
|Common stock: no par value, $.10 stated value per share, 12,500,000 shares authorized; 6,665,033 and 6,636,906 shares issued and 6,583,626 and 6,565,163 shares outstanding, as of January 31, 2021 and October 31, 2020, respectively||658||657|
|Additional paid-in capital||61,458||60,997|
|Accumulated other comprehensive income (loss)||261||(2,990||)|
|Total shareholders' equity||234,659||231,148|
|Total liabilities and shareholders' equity||$||303,972||$||295,655|