HURCO COMPANIES INC
For the period ended Jul 31, 2024. Filed Sep 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2024 · Filed Sep 6, 2024
HURC$20.63-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-04-30; filed 2024-06-07.
0001558370-24-009007
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-31; filed 2024-09-06.
0001558370-24-012651
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 95 previous paragraphs and 95 current paragraphs.
52 unchanged; 35 reworded; 8 added; 8 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
The following table sets forth sales and service fees by geographic region for the third fiscal quarter ended July 31, 2024 and 2023 (dollars in thousands):
Current report
Asian Pacific sales for the third quarter of fiscal year 2024 decreased by 15%, compared to the corresponding prior year period, and included an unfavorable currency impact of 2%, when translating foreign sales to U.S. dollars for financial reporting purposes. The third quarter of fiscal year 2024 decrease in Asian Pacific sales was mainly due to decreased shipments of Takumi machines in China and Hurco machines in Southeast Asia, partially offset by increased shipments of Hurco machines in India and one customer with multiple machine orders in China.
Current report
European orders for the third quarter of fiscal year 2024 increased by 15%, compared to the corresponding prior year period, and included a favorable currency impact of less than 1%, when translating foreign orders to U.S. dollars. The increase in orders was driven primarily by increased customer demand for Hurco machines in the United Kingdom, France and Italy, particularly Hurco lathes and higher-performing 5-axis machines.
Current report
Income Taxes. Income tax expense during the third quarter of fiscal 2024 was $7.0 million, compared to $0.4 million for the corresponding period in 2023. The year-over-year increase in income tax expense for the third quarter of fiscal 2024 was primarily due to an $8.2 million non-cash valuation allowance on U.S. deferred tax assets, changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, and discrete items related to unvested stock compensation. Because we have a valuation allowance recorded against our U.S. deferred tax assets, we did not record a tax benefit for our U.S. net losses for the three months ended July 31, 2024. The valuation allowance recorded during the third quarter of fiscal 2024 reflects a full valuation allowance of the U.S. deferred tax assets and was recorded based on our conclusion that the deferred tax assets were not more likely than not going to be realized.
Current report
Nine Months Ended July 31, 2024 Compared to Nine Months Ended July 31, 2023
Current report
The following table sets forth sales and service fees by geographic region for the nine months ended July 31, 2024 and 2023 (dollars in thousands):
Current report
Orders. Orders for the nine months of fiscal year 2024 were $147.2 million, a decrease of $8.3 million, or 5%, compared to the corresponding period in fiscal year 2023, and included a favorable currency impact of $0.8 million, or less than 1%, when translating foreign orders to U.S. dollars.
Current report
Income Taxes. Income tax expense during the nine months of fiscal 2024 was $6.4 million, compared to income tax expense of $1.3 million for the corresponding period in 2023. The year-over-year increase in income tax expense for the nine months of fiscal 2024 was primarily due to an $8.2 million non-cash valuation allowance on U.S. deferred tax assets, changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, and discrete items related to unvested stock compensation. Because we have a valuation allowance recorded against our U.S. deferred tax assets, we did not record a tax benefit for our U.S. net losses for the nine months ended July 31, 2024. The valuation allowance recorded during the third quarter of fiscal 2024 reflects a full valuation allowance of the U.S. deferred tax assets and was recorded based on our conclusion that the deferred tax assets were not more likely than not going to be realized.
Removed paragraphs (8)
Previous report
The following table sets forth sales and service fees by geographic region for the second fiscal quarter ended April 30, 2024 and 2023 (dollars in thousands):
Previous report
Asian Pacific sales for the second quarter of fiscal year 2024 were relatively unchanged compared to the corresponding prior year period, and included an unfavorable currency impact of 3%, when translating foreign sales to U.S. dollars for financial reporting purposes. The second quarter of fiscal year 2024 increased sales of higher-performance VMX and 5-axis Hurco and Takumi machines in India, almost fully offset by reductions in shipment of Hurco and Takumi machines in China and Southeast Asia.
Previous report
European orders for the second quarter of fiscal year 2024 decreased by 28%, compared to the corresponding prior year period, and included a favorable currency impact of less than 1%, when translating foreign orders to U.S. dollars. The decrease in orders was driven primarily by decreased customer demand for Hurco and Takumi machines in Germany, the United Kingdom, and Italy, as well as decreased demand for electro-mechanical components and accessories manufactured by LCM, partially offset by increased customer demand for Hurco machines in France.
Previous report
Income Taxes. The effective tax rate for the second quarter of fiscal year 2024 was (1)%, compared to 44% for the corresponding prior year period. The year-over-year decrease in the effective tax rate was primarily due to changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, a discrete item related to stock compensation and the impact of valuation allowances on an overall lower level of income before taxes.
Previous report
Six Months Ended April 30, 2024 Compared to Six Months Ended April 30, 2023
Previous report
The following table sets forth sales and service fees by geographic region for the six months ended April 30, 2024 and 2023 (dollars in thousands):
Previous report
Orders. Orders for the first six months of fiscal year 2024 were $94.4 million, a decrease of $19.0 million, or 17%, compared to the corresponding period in fiscal year 2023, and included a favorable currency impact of $0.9 million, or less than 1%, when translating foreign orders to U.S. dollars.
Previous report
Income Taxes. The effective tax rate for the first six months of fiscal year 2024 was 9%, compared to 35% for the corresponding prior year period. The year-over-year decrease in the effective tax rates was primarily due to changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, a discrete item related to stock compensation and the impact of valuation allowances on an overall lower level of income before taxes.
Reworded paragraphs (35)
Previous wording
The market for machine tools is international in scope. We have both significant foreign sales and significant foreign manufacturing operations. During the first six months of fiscal 2024, approximately 51% of our revenues were attributable to customers in Europe, where we typically sell more of our higher-performance, higher-priced VMX series machines. Additionally, approximately 12% of our revenues were attributable to customers in the Asia Pacific region, where we encounter greater pricing pressures. We operate in a cyclical industry where sales and order trends often change periodically and can vary from region to region.
Current wording
The market for machine tools is international in scope. We have both significant foreign sales and significant foreign manufacturing operations. During the nine months of fiscal 2024, approximately 52% of our revenues were attributable to customers in Europe, where we typically sell more of our higher-performance, higher-priced VMX series machines. Additionally, approximately 11% of our revenues were attributable to customers in the Asia Pacific region, where we encounter greater pricing pressures. We operate in a cyclical industry where sales and order trends often change periodically and can vary from region to region.
Previous wording
During a year of global uncertainty and lower sales volumes, we turn our attention to adjusting overhead expenses and operating expenses to minimize the impact of the lower volumes of sales on operating income. Additionally, we adjust and manage inventories (excluding the impact of foreign currency) and use that cashflow to manage our capital allocation strategies to continue investing in new technologies, product development and necessary capital expenditures to maximize cashflows without incurring any significant indebtedness as we continue to seek new acquisitions and other growth opportunities. The cyclicality of our business requires that we exercise discipline in managing through unexpected changes in the markets and industries in which we operate. Our long history of profitability and the strength of our balance sheet provide us with stability to manage through these business cycles and rely on our experience to make measured decisions for the long-term success of our business.
Current wording
During a time of global uncertainty and lower sales volumes, we have turned our attention to adjusting overhead expenses and operating expenses to help minimize the impact of the lower volumes of sales on operating income. We implemented cost reductions in the third quarter of fiscal year 2024 and adjusted and managed inventories (excluding the impact of foreign currency). We used that cashflow to manage our capital allocation strategies to continue investing in new technologies, product development, and necessary capital expenditures to maximize cashflows without incurring any significant indebtedness as we continue to seek new acquisitions and other growth opportunities. The cyclicality of our business requires that we exercise discipline in managing through unexpected changes in the markets and industries in which we operate. We believe that our long history of profitability and the strength of our balance sheet can provide us with stability to manage through these business cycles and we rely on our past experience in making measured decisions for the long-term success of our business.
Previous wording
*Sales and Service Fees.*Sales and service fees for the second quarter of fiscal year 2024 were $45.2 million, a decrease of $8.6 million, or 16%, compared to the corresponding prior year period, and included a favorable currency impact of $0.1 million, or less than 1%, when translating foreign sales to U.S. dollars for financial reporting purposes.
Current wording
*Sales and Service Fees.*Sales and service fees for the third quarter of fiscal year 2024 were $42.7 million, a decrease of $10.6 million, or 20%, compared to the corresponding prior year period, and included an unfavorable currency impact of less than $0.1 million, or less than 1%, when translating foreign sales to U.S. dollars for financial reporting purposes.
Previous wording
Sales in the Americas for the second quarter of fiscal year 2024 decreased by 8%, compared to the corresponding period in fiscal year 2023, primarily due to decreased shipments of Hurco machines. The decrease in sales of Hurco machines was primarily attributable to decreased shipments of VM machines, partially offset by increased sales of higher-performing VMX and 5-axis machines.
Current wording
Sales in the Americas for the third quarter of fiscal year 2024 decreased by 16%, compared to the corresponding period in fiscal year 2023, primarily due to decreased shipments of Hurco and Takumi machines. The decrease in sales of these machines was primarily attributable to decreased shipments of Hurco and Takumi 3-axis vertical machines, partially offset by increased sales of higher-performing Hurco 5-axis machines and Milltronics 3-axis vertical machines.
Previous wording
European sales for the second quarter of fiscal year 2024 decreased by 24%, compared to the corresponding period in fiscal year 2023, and included a favorable currency impact of less than 1%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year decrease in European sales was primarily attributable to a decreased volume of shipments of Hurco and Takumi machines in Germany, the United Kingdom, and Italy, as well as a decreased volume of shipments of electro-mechanical components and accessories manufactured by our wholly-owned subsidiary, LCM, partially offset by an increased volume of shipments of Hurco machines in France.
Current wording
European sales for the third quarter of fiscal year 2024 decreased by 23%, compared to the corresponding period in fiscal year 2023, and included a favorable currency impact of less than 1%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year decrease in European sales was primarily attributable to a decreased volume of shipments of Hurco and Takumi machines in Germany, Italy, and the United Kingdom, as well as decreased shipments of electro-mechanical components and accessories manufactured by our wholly-owned subsidiary, LCM.
Previous wording
The following table sets forth sales and service fees by product group and services for the second fiscal quarter ended April 30, 2024 and 2023 (dollars in thousands):
Current wording
The following table sets forth sales and service fees by product group and services for the third fiscal quarter ended July 31, 2024 and 2023 (dollars in thousands):
Previous wording
Sales of computerized machine tools for the second quarter of fiscal year 2024 decreased by 20%, compared to the corresponding prior year period, primarily due to a decreased volume of shipments of Hurco and Takumi machines in Germany, the United Kingdom, the Americas, China, and Italy, and included a favorable currency impact of less than 1% when translating foreign sales to U.S. dollars for financial reporting purposes. Sales of computer control systems and software for the second quarter of fiscal year 2024 decreased by 5%, compared to the corresponding prior year period, due mainly to decreased aftermarket control systems and software sales in the United Kingdom. Service fees for the second quarter of fiscal year 2024 increased by 6%, compared to the corresponding prior year period, primarily due to increased aftermarket services performed in the United Kingdom and France.
Current wording
Sales of computerized machine tools for the third quarter of fiscal year 2024 decreased by 23%, compared to the corresponding prior year period, primarily due to a decreased volume of shipments of Hurco and Takumi machines in Germany, the Americas, Italy, and China, and included an unfavorable currency impact of less than 1% when translating foreign sales to U.S. dollars for financial reporting purposes. Sales of computer control systems and software for the third quarter of fiscal year 2024 decreased by 10%, compared to the corresponding prior year period, due mainly to decreased aftermarket sales of Hurco software upgrades in France and the Americas, partially offset by increased aftermarket sales of systems and software upgrades in the United Kingdom. Sales of service parts for the third quarter of fiscal year 2024 decreased by 9%, compared to the corresponding prior year period, primarily due to decreased aftermarket sales of Hurco service parts in Germany and the Americas. Service fees for the third quarter of fiscal year 2024 increased by 8%, compared to the corresponding prior year period, primarily due to increased aftermarket services performed in the United Kingdom and Germany.
Previous wording
Orders. Orders for the second quarter of fiscal year 2024 were $44.2 million, a decrease of $16.0 million, or 27%, compared to the corresponding period in fiscal year 2023, and included a favorable currency impact of $0.1 million, or less than 1%, when translating foreign orders to U.S. dollars.
Current wording
Orders. Orders for the third quarter of fiscal year 2024 were $52.8 million, an increase of $10.7 million, or 26%, compared to the corresponding period in fiscal year 2023, and included an unfavorable currency impact of less than $0.1 million, or less than 1%, when translating foreign orders to U.S. dollars.
Previous wording
The following table sets forth new orders booked by geographic region for the second fiscal quarter ended April 30, 2024 and 2023 (dollars in thousands):
Current wording
The following table sets forth new orders booked by geographic region for the third fiscal quarter ended July 31, 2024 and 2023 (dollars in thousands):
Previous wording
Orders in the Americas for the second quarter of fiscal year 2024 decreased by 23%, compared to the corresponding period in fiscal year 2023. The decrease in orders was primarily due to decreased customer demand for Hurco VM machines, partially offset by increased orders of higher-performing VMX and 5-axis machines.
Current wording
Orders in the Americas for the third quarter of fiscal year 2024 increased by 21%, compared to the corresponding period in fiscal year 2023. The increase in orders was primarily due to increased customer demand for Hurco higher-performing 5-axis machines, Hurco and Milltronics lathes, and Milltronics 3-axis vertical machines.
Previous wording
Asian Pacific orders for the second quarter of fiscal year 2024 decreased by 35%, compared to the corresponding prior year period, and included an unfavorable currency impact of 2%, when translating foreign orders to U.S. dollars. The decrease in Asian Pacific orders was driven primarily by decreased customer demand for Hurco and Takumi machines in China, India, and Southeast Asia.
Current wording
Asian Pacific orders for the third quarter of fiscal year 2024 increased by 151%, compared to the corresponding prior year period, and included an unfavorable currency impact of 5%, when translating foreign orders to U.S. dollars. The increase in Asian Pacific orders was driven primarily by increased customer demand for Hurco and Takumi machines in China, India, and Southeast Asia. The increased customer demand for Hurco machines in China and India related primarily to two customers with multiple machine orders.
Previous wording
Gross Profit. Gross profit for the second quarter of fiscal year 2024 was $8.0 million, or 18% of sales, compared to $12.6 million, or 23% of sales, for the corresponding prior year period. The year-over-year decrease in gross profit as a percentage of sales was primarily due to the lower volume of sales of higher-performance vertical milling machines in the Americas and Europe. Additionally, the second quarter of fiscal 2024 included decreases in average net selling prices for certain machines, designed to penetrate key markets and reduce inventories. The decreases in both sales volume and pricing unfavorably impacted gross profit in dollars and as a percentage of sales, reducing our leverage of fixed costs, in comparison to the same period in the prior year.
Current wording
Gross Profit. Gross profit for the third quarter of fiscal year 2024 was $7.8 million, or 18% of sales, compared to $13.4 million, or 25% of sales, for the corresponding prior year period. The year-over-year decrease in gross profit was primarily due to the lower volume of vertical milling machine sales in the Americas and Europe. Additionally, the third quarter of fiscal 2024 included decreases in average net selling prices for certain machines, designed to penetrate key markets and reduce inventories. The decreases in both sales volume and pricing unfavorably impacted gross profit in dollars and as a percentage of sales, reducing our leverage of fixed costs, in comparison to the corresponding prior year period. Further, certain cost reductions were implemented in the third quarter of fiscal 2024 in an effort to help offset the impact of lower sales volumes and pricing.
Previous wording
Operating Expenses. Selling, general, and administrative expenses for the second quarter of fiscal year 2024 were $11.5 million, or 25% of sales, compared to $11.6 million, or 22% of sales, in the corresponding fiscal year 2023 period, and included an unfavorable currency impact of less than $0.1 million, when translating foreign expenses to U.S. dollars for financial reporting purposes. Selling, general, and administrative expenses as a percentage of sales increased due to the lower volume of sales year-over-year.
Current wording
Operating Expenses. Selling, general, and administrative expenses for the third quarter of fiscal year 2024 were $10.4 million, or 24% of sales, compared to $12.4 million, or 23% of sales, in the corresponding fiscal year 2023 period, and included an unfavorable currency impact of less than $0.1 million, when translating foreign expenses to U.S. dollars for financial reporting purposes. The year-over-year reduction in selling, general and administrative expenses in absolute dollar terms was primarily due to cost reductions implemented in the third quarter of fiscal year 2024 in an effort to help offset the impact of lower sales volume. Despite the reduction in absolute dollar terms, selling, general, and administrative expenses as a percentage of sales increased in the third quarter of fiscal year 2024 compared to the corresponding prior year period due to the lower volume of sales year-over-year.
Previous wording
Operating Income/Loss*.* Operating loss for the second quarter of fiscal year 2024 was $3.4 million, compared to operating income of $1.0 million for the corresponding period in fiscal year 2023. The change was primarily due to a lower volume of sales of vertical milling machines and the negative impact of fixed costs on lower sales and production volumes.
Current wording
Operating Income/Loss*.* Operating loss for the third quarter of fiscal year 2024 was $2.5 million, compared to operating income of $1.0 million for the corresponding period in fiscal year 2023. The change was primarily due to a lower volume of sales of vertical milling machines and the negative impact of fixed costs on lower sales and production volumes.
Previous wording
Other (Expense) Income, Net. Other expense, net for the second quarter of fiscal year 2024 was $0.5 million compared to $0.4 million for the corresponding period in fiscal year 2023, due mainly to a reduction in equity in income of affiliates in the second quarter of fiscal year 2024 compared to the same period in fiscal year 2023.
Current wording
Other (Expense) Income, Net. Other expense, net for the third quarter of fiscal year 2024 was $0.1 million compared to $0.4 million for the corresponding period in fiscal year 2023. The decrease in other expense was due mainly to a reduction in foreign currency exchange loss in the third quarter of fiscal year 2024 compared to the same period in fiscal year 2023.
Previous wording
*Sales and Service Fees.*Sales and service fees for the first six months of fiscal year 2024 were $90.2 million, a decrease of $18.3 million, or 17%, compared to the corresponding prior year period, and included a favorable currency impact of $0.8 million, or less than 1%, when translating foreign sales to U.S. dollars for financial reporting purposes.
Current wording
*Sales and Service Fees.*Sales and service fees for the nine months of fiscal year 2024 were $132.9 million, a decrease of $28.8 million, or 18%, compared to the corresponding prior year period, and included a favorable currency impact of $0.8 million, or less than 1%, when translating foreign sales to U.S. dollars for financial reporting purposes.
Previous wording
Sales in the Americas for the first six months of fiscal year 2024 decreased by 17%, compared to the corresponding period in fiscal year 2023, primarily due to decreased shipments of Hurco machines. The decrease in sales of Hurco machines was primarily attributable to decreased shipments of VM machines, partially offset by increased sales of higher-performing VMX and 5-axis machines.
Current wording
Sales in the Americas for the nine months of fiscal year 2024 decreased by 16%, compared to the corresponding period in fiscal year 2023, primarily due to decreased shipments of Hurco and Takumi machines. The decrease in sales of these machines was primarily attributable to decreased shipments of Hurco and Takumi 3-axis vertical machines, partially offset by increased sales of higher-performing Hurco 5-axis machines and Milltronics 3-axis vertical machines.
Previous wording
European sales for the first six months of fiscal year 2024 decreased by 22%, compared to the corresponding period in fiscal year 2023, and included a favorable currency impact of 2%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year decrease in European sales was primarily attributable to a decreased volume of shipments of Hurco and Takumi machines in Germany, the United Kingdom, and Italy, as well as decreased volume of shipments of electro-mechanical components and accessories manufactured by our wholly-owned subsidiary, LCM, partially offset by an increased volume of shipments of Hurco machines in France.
Current wording
European sales for the nine months of fiscal year 2024 decreased by 23%, compared to the corresponding period in fiscal year 2023, and included a favorable currency impact of 1%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year decrease in European sales was primarily attributable to a decreased volume of shipments of Hurco and Takumi machines in Germany, Italy, and the United Kingdom, as well as decreased shipments of electro-mechanical components and accessories manufactured by our wholly-owned subsidiary, LCM.
Previous wording
Asian Pacific sales for the first six months of fiscal year 2024 increased by 17%, compared to the corresponding prior year period, and included an unfavorable currency impact of 2%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year increase in Asian Pacific sales was primarily attributable to increased sales of higher-performance VMX and 5-axis Hurco and Takumi machines in India, partially offset by reductions in shipments of Hurco and Takumi machines in China and Southeast Asia.
Current wording
Asian Pacific sales for the nine months of fiscal year 2024 increased by 8%, compared to the corresponding prior year period, and included an unfavorable currency impact of 2%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year increase in Asian Pacific sales in the nine-month period was primarily attributable to increased shipments of Hurco machines in India and one customer with multiple machine orders in China, partially offset by decreased shipments of Takumi machines in China and Hurco machines in Southeast Asia.
Previous wording
The following table sets forth sales and service fees by product group and services for the six months ended April 30, 2024 and 2023 (dollars in thousands):
Current wording
The following table sets forth sales and service fees by product group and services for the nine months ended July 31, 2024 and 2023 (dollars in thousands):
Previous wording
Sales of computerized machine tools for the first six months of fiscal year 2024 decreased by 21%, compared to the corresponding prior year period, primarily due to a decreased volume of shipments of Hurco and Takumi machines in Germany, the Americas, Italy, and the United Kingdom, and included a favorable currency impact of less than 1% when translating foreign sales to U.S. dollars for financial reporting purposes. Sales of computer control systems and software for the first six months of fiscal year 2024 increased by 3%, compared to the corresponding prior year period, due mainly to increased aftermarket software sales in France. Service fees for the first six months of fiscal year 2024 increased by 3%, compared to the corresponding prior year period, primarily due to increased aftermarket services performed in the United Kingdom and France.
Current wording
Sales of computerized machine tools for the nine months of fiscal year 2024 decreased by 21%, compared to the corresponding prior year period, primarily due to a decreased volume of shipments of Hurco and Takumi machines in Germany, the Americas, Italy, and the United Kingdom, and included a favorable currency impact of less than 1% when translating foreign sales to U.S. dollars for financial reporting purposes. Sales of computer control systems and software for the nine months of fiscal year 2024 decreased by 3%, compared to the corresponding prior year period, due mainly to decreased aftermarket sales of Hurco software upgrades in Germany, Italy and the Americas, partially offset by increased aftermarket sales of systems and software upgrades in the United Kingdom and Southeast Asia. Sales of service parts for the nine months of fiscal year 2024 decreased by 3%, compared to the corresponding prior year period, primarily due to decreased aftermarket sales of Hurco service parts in the Americas and the United Kingdom, partially offset by increased aftermarket sales of Hurco service parts in Germany and France. Service fees for the nine months of fiscal year 2024 increased by 5%, compared to the corresponding prior year period, primarily due to increased aftermarket services performed in the United Kingdom and France, partially offset by decreased aftermarket services performed in the Americas.
Previous wording
The following table sets forth new orders booked by geographic region for the six months ended April 30, 2024 and 2023 (dollars in thousands):
Current wording
The following table sets forth new orders booked by geographic region for the nine months ended July 31, 2024 and 2023 (dollars in thousands):
Previous wording
Orders in the Americas for the first six months of fiscal year 2024 decreased by 10%, compared to the corresponding period in fiscal year 2023. The decrease in orders was primarily due to decreased customer demand for Hurco Hurco VM machines, partially offset by increased orders of higher-performing VMX and 5-axis machines.
Current wording
Orders in the Americas for the nine months of fiscal year 2024 decreased by 2%, compared to the corresponding period in fiscal year 2023. The decrease in orders was primarily due to decreased customer demand for Hurco 3-axis vertical machines, partially offset by increased demand for Hurco higher-performing 5-axis machines and Milltronics 3-axis vertical machines. The decrease in orders was also impacted by a reduction in average net selling prices for certain machines, designed to penetrate key markets and reduce inventories.
Previous wording
European orders for the first six months of fiscal year 2024 decreased by 25%, compared to the corresponding prior year period, and included a favorable currency impact of 2%, when translating foreign orders to U.S. dollars. The year-over-year decrease was mainly due to decreased customer demand for Hurco machines across the European region where our customers are located and for electro-mechanical components and accessories manufactured by LCM.
Current wording
European orders for the nine months of fiscal year 2024 decreased by 14%, compared to the corresponding prior year period, and included a favorable currency impact of 1%, when translating foreign orders to U.S. dollars. The year-over-year decrease was mainly due to decreased customer demand for Hurco machines across the European region where our customers are located and for electro-mechanical components and accessories manufactured by LCM.
Previous wording
Asian Pacific orders for the first six months of fiscal year 2024 increased by 6%, compared to the corresponding prior year period, and included an unfavorable currency impact of 2%, when translating foreign orders to U.S. dollars. The year-over-year increase in Asian Pacific orders was driven primarily by increased customer demand for Hurco machines in China and India, partially offset by decreased demand for Takumi machines in China.
Current wording
Asian Pacific orders for the nine months of fiscal year 2024 increased by 41%, compared to the corresponding prior year period, and included an unfavorable currency impact of 3%, when translating foreign orders to U.S. dollars. The year-over-year increase in Asian Pacific orders was driven primarily by increased customer demand for Hurco machines in China and Hurco and Takumi machines in India, partially offset by decreased demand for Takumi machines in China. The increased customer demand for Hurco machines in China and India related primarily to two customers with multiple machine orders.
Previous wording
Gross Profit. Gross profit for the first six months of fiscal year 2024 was $17.7 million, or 20% of sales, compared to $25.3 million, or 23% of sales, for the corresponding prior year period. The year-over-year decrease in gross profit as a percentage of sales was primarily due to the lower volume of sales of higher-performance vertical milling machines in the Americas and Europe. Additionally, the second quarter of fiscal 2024 included changes in average net selling prices for certain machines to penetrate key markets and reduce inventories. Both the change in sales volume and pricing unfavorably impacted gross profit in dollars and as a percentage of sales, reducing our leverage of fixed costs, in comparison to the same period in prior year.
Current wording
Gross Profit. Gross profit for the nine months of fiscal year 2024 was $25.6 million, or 19% of sales, compared to $38.7 million, or 24% of sales, for the corresponding prior year period. The year-over-year decrease was primarily due to the lower volume of vertical milling machine sales in the Americas and Europe. Additionally, the second and third quarters of fiscal 2024 included decreases in average net selling prices for certain machines, designed to penetrate key markets and reduce inventories. The decreases in both sales volume and pricing unfavorably impacted gross profit in dollars and as a percentage of sales, reducing our leverage of fixed costs, in comparison to the corresponding prior year period. Further, certain cost reductions were implemented in the third quarter of fiscal 2024 in an effort to help offset the impact of lower sales volumes and pricing.
Previous wording
Operating Expenses. Selling, general, and administrative expenses for the first six months of fiscal year 2024 were $23.0 million, or 25% of sales, compared to $23.1 million, or 21% of sales, in the corresponding fiscal year 2023 period, and included an unfavorable currency impact of $0.2 million, when translating foreign expenses to U.S. dollars for financial reporting purposes. Selling, general, and administrative expenses as a percentage of sales increased due to the lower volume of sales year-over-year.
Current wording
Operating Expenses. Selling, general, and administrative expenses for the nine months of fiscal year 2024 were $33.4 million, or 25% of sales, compared to $35.5 million, or 22% of sales, in the corresponding fiscal year 2023 period, and included an unfavorable currency impact of $0.2 million, when translating foreign expenses to U.S. dollars for financial reporting purposes. The year-over-year reduction in selling, general and administrative expenses in absolute dollar terms was primarily due to cost reductions implemented in the third quarter of fiscal year 2024 in an effort to help offset the impact of lower sales volume. Despite the reduction in absolute dollar terms, selling, general, and administrative expenses as a percentage of sales increased in the nine months of fiscal year 2024 compared to the corresponding prior year period due to the lower volume of sales year-over-year.
Previous wording
Operating Income/Loss*.* Operating loss for the first six months of fiscal year 2024 was $5.3 million, compared to operating income of $2.2 million for the corresponding period in fiscal year 2023. The change was primarily due to a lower volume of sales of vertical milling machines and the negative impact of fixed costs on lower sales and production volumes.
Current wording
Operating Income/Loss*.* Operating loss for the nine months of fiscal year 2024 was $7.8 million, compared to operating income of $3.2 million for the corresponding period in fiscal year 2023. The change was primarily due to a lower volume of sales of vertical milling machines and the negative impact of fixed costs on lower sales and production volumes.
Previous wording
Other (Expense) Income, Net. Other expense, net for the first six months of fiscal year 2024 was $1.0 million compared to other income, net of $0.3 million for the corresponding period in fiscal year 2023, due mainly to an increase in foreign currency exchange loss in the first six months of fiscal year 2024 compared to the same period in fiscal year 2023.
Current wording
Other (Expense) Income, Net. Other expense, net for the nine months of fiscal year 2024 was $1.1 million compared to $0.1 million for the corresponding period in fiscal year 2023, due mainly to an increase in foreign currency exchange loss in the nine months of fiscal year 2024 compared to the same period in fiscal year 2023.
Previous wording
At April 30, 2024, we had cash and cash equivalents of $37.5 million, compared to $41.8 million at October 31, 2023. Approximately 19% of the $37.5 million of cash and cash equivalents was denominated in U.S. dollars. The balance was attributable to our foreign operations and is held in the local currencies of our various foreign entities, subject to fluctuations in currency exchange rates. We do not believe that the indefinite reinvestment of these funds offshore impairs our ability to meet our domestic working capital needs.
Current wording
At July 31, 2024, we had cash and cash equivalents of $36.1 million, compared to $41.8 million at October 31, 2023. Approximately 26% of the $36.1 million of cash and cash equivalents was denominated in U.S. dollars. The balance was attributable to our foreign operations and is held in the local currencies of our various foreign entities, subject to fluctuations in currency exchange rates. We do not believe that the indefinite reinvestment of these funds offshore impairs our ability to meet our domestic working capital needs.
Previous wording
Working capital was $187.6 million at April 30, 2024, compared to $193.3 million at October 31, 2023. The decrease in working capital was primarily driven by decreases in accounts receivable, net and cash and cash equivalents, partially offset by increases in inventories, net and prepaid and other assets and decreases in accounts payable and accrued payroll and employee benefits.
Current wording
Working capital was $182.0 million at July 31, 2024, compared to $193.3 million at October 31, 2023. The decrease in working capital was primarily driven by decreases in accounts receivable, net and cash and cash equivalents, partially offset by increases in inventories, net and decreases in accounts payable and accrued payroll and employee benefits.
Previous wording
Capital expenditures of $1.3 million during the first six months of fiscal year 2024 were primarily for capital improvements in existing facilities and software development costs. We funded these expenditures with cash on hand.
Current wording
Capital expenditures of $2.1 million during the nine months of fiscal year 2024 were primarily for capital improvements in existing facilities and software development costs. We funded these expenditures with cash on hand.
Previous wording
On January 6, 2023, we announced a share repurchase program in an aggregate amount of up to $25.0 million. Repurchases under the program may be made in the open market or through privately negotiated transactions from time to time through November 10, 2024, subject to applicable laws, regulations, and contractual provisions. The program may be amended, suspended, or discontinued at any time and does not commit us to repurchase any shares of our common stock. During the first six months of fiscal year 2024, no shares were repurchased under that program, and $23.2 million remained available under the program as of April 30, 2024.
Current wording
On January 6, 2023, we announced a share repurchase program in an aggregate amount of up to $25.0 million. Repurchases under the program may be made in the open market or through privately negotiated transactions from time to time through November 10, 2024, subject to applicable laws, regulations, and contractual provisions. The program may be amended, suspended, or discontinued at any time and does not commit us to repurchase any shares of our common stock. During the three months and nine months ended July 31, 2024, we repurchased $0.5 million, or 29,413 shares, under that program, and $22.7 million remained available under the program as of that date. In August 2024, we repurchased an additional $0.8 million, or 44,352 shares, under that program, leaving $21.9 million repurchase authority remaining as of August 30, 2024.
Previous wording
During the six months ended April 30, 2024, we paid cash dividends to our shareholders of $2.1 million. Future dividends are subject to approval of our Board of Directors and will depend upon many factors, including our results of operations, financial condition, capital requirements, regulatory and contractual restrictions, our business strategy and other factors deemed relevant by our Board of Directors from time to time.
Current wording
During the nine months ended July 31, 2024, we paid cash dividends to our shareholders of $2.1 million. On June 14, 2024, we announced a temporary suspension of our regular quarterly cash dividend as we seek to enhance our financial flexibility and improve our ability to manage market volatility while focusing on strengthening our balance sheet, reinvesting in our core business and research and development related to emerging technologies, and returning value to shareholders via the appropriate channels in both the near and long-term. Future dividends are subject to approval of our Board of Directors and will depend upon many factors, including our results of operations, financial condition, capital requirements, regulatory and contractual restrictions, our business strategy and other factors deemed relevant by our Board of Directors from time to time. Subsequent to the June 14, 2024, dividend suspension announcement, we repurchased a total of $1.3 million, or 73,765 shares, through August 30, 2024, in an effort to continue returning value to shareholders.
Previous wording
Our MD&A is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles. The preparation of financial statements in conformity with those accounting principles requires us to make judgments and estimates that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Those judgments and estimates have a significant effect on the financial statements because they result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Actual results could differ from those estimates. Our critical accounting estimates, which are described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023, are frequently evaluated as our judgment and estimates are based upon historical experience and on various other assumptions that we believe to be reasonable under the circumstances. During the first six months of fiscal year 2024, there were no material changes to our critical accounting estimates as described in the MD&A included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023.
Current wording
Our MD&A is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles. The preparation of financial statements in conformity with those accounting principles requires us to make judgments and estimates that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Those judgments and estimates have a significant effect on the financial statements because they result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Actual results could differ from those estimates. Our critical accounting estimates, which are described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023, are frequently evaluated as our judgment and estimates are based upon historical experience and on various other assumptions that we believe to be reasonable under the circumstances. During the nine months of fiscal year 2024, there were no material changes to our critical accounting estimates as described in the MD&A included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023.