Hurco Reports Third Quarter Results

INDIANAPOLIS, Sept. 7, 2012 (GLOBE NEWSWIRE) -- Hurco Companies, Inc., (Nasdaq:HURC) today reported net income of $3,957,000, or $0.61 per diluted share, for its third fiscal quarter ended July 31, 2012, compared to $4,575,000, or $0.70 per diluted share, for the corresponding period in fiscal 2011. For the first nine months of fiscal 2012, Hurco reported net income of $11,552,000, or $1.77 per diluted share, compared to $8,470,000, or $1.30 per diluted share, for the corresponding period in fiscal 2011.

Sales and service fees for the third quarter of fiscal 2012 totaled $49,959,000, a decrease of $614,000, or 1%, compared to the third quarter of fiscal 2011. This year-over-year comparison includes the adverse impact of $3,711,000, or 7%, due to a weaker Euro when translating foreign sales to U.S. Dollars for financial reporting purposes. Sales and service fees for the nine months ended July 31, 2012 totaled $147,050,000, an increase of $15,221,000, or 12%, over the corresponding period in 2011. The unfavorable impact of currency translation on the year-over-year nine-month comparison was $5,522,000, or 4%.

The following table sets forth net sales and service fees by geographic region for the third quarter and first nine months of fiscal 2012 and 2011, respectively:
  Three Months Ended Nine Months Ended
  July 31, July 31,
      %     %
  2012 2011 Change 2012 2011 Change
North America  $ 15,513  $ 13,119 18%  $ 42,835  $ 35,718 20%
Europe  29,049  31,305 -7%  85,614  79,881 7%
Asia Pacific  5,397  6,149 -12%  18,601  16,230 15%
Total  $ 49,959  $ 50,573 -1%  $ 147,050  $ 131,829 12%

Sales during the third quarter of fiscal 2012 remained relatively stable as increased sales in North America were offset by lower sales in Europe and Asia. Sales in Europe were down compared to the prior year period primarily due to the European debt crisis, which resulted in both a decline in demand attributable to economic uncertainty and a weaker Euro. Sales in Asia declined in comparison to the corresponding prior year period due to a slowing economy in that region. During the third quarter of fiscal 2012, unit shipments increased over the corresponding quarter in fiscal 2011 by 6% in North America, but decreased by 10% in Europe and 13% in the Asia Pacific sales region. Unit shipments in the first nine months of fiscal 2012 increased over the prior year period by 8% in North America, 1% in Europe, and 17% in the Asia Pacific sales region.

The following table sets forth new orders booked by geographic region for the third quarter and first nine months of fiscal 2012 and 2011, respectively:

  Three Months Ended Six Months Ended
  July 31, July 31,
      %     %
  2012 2011 Change 2012 2011 Change
North America  $ 12,821  $ 9,116 41%  $ 41,246  $ 36,693 12%
Europe  27,829  22,617 23%  87,477  98,660 -11%
Asia Pacific  5,695  8,073 -29%  17,597  21,327 -17%
Total  $ 46,345  $ 39,806 16%  $ 146,320  $ 156,680 -7%

Orders for the third quarter of fiscal 2012 were $46,345,000, an increase of $6,539,000, or 16%, from the corresponding period in fiscal 2011. Unit orders for the third quarter of fiscal 2012 increased by 102% in North America and 36% in Europe, but decreased by 41% in the Asia Pacific region compared to the prior year period. It should be noted, however, that orders in the third quarter of fiscal 2011 were unusually low due to a surge of customer orders that were placed during the preceding quarter in advance of an announced price increase that went into effect at the end of that quarter. The impact of currency translation on orders was consistent with the impact on sales. Orders for the first nine months of fiscal 2012 were $146,320,000, a decrease of $10,360,000, or 7%, from the corresponding period in fiscal 2011. Unit orders for the first nine months of fiscal 2012 increased by 10% in North America, but decreased by 15% in Europe and 25% in the Asia Pacific region compared to the prior year period.

Gross profit for the third quarter of fiscal 2012 was $16,084,000, or 32% of sales, which was relatively unchanged compared to $15,850,000, or 31% of sales, for the prior year period. Gross profit for the first nine months of fiscal 2012 was $45,961,000 or 31% of sales, compared to $40,192,000 or 30% of sales for the same period in 2011 due primarily to increased sales.

Selling, general and administrative expenses in the third quarter of fiscal 2012 were $10,272,000, an increase of $955,000 from the prior year period, primarily due to global sales and marketing initiatives. Selling, general and administrative expenses of $29,290,000 for the first nine months of fiscal 2012 compared to $27,401,000 for the first nine months of fiscal 2011 also reflected global sales and marketing initiatives.

Cash and cash equivalents totaled $35,095,000 as of July 31, 2012, compared to $44,961,000 as of October 31, 2011. The decrease in cash was primarily due to increased production in fiscal 2012 intended to meet forecasted growth in customer demand. Working capital, excluding cash, was $85,155,000 as of July 31, 2012, compared to $61,885,000 as of October 31, 2011. The increase in working capital, excluding cash, was primarily due to an increase in inventory of $17,620,000 as a result of the increase in production. 

Michael Doar, Chairman, Chief Executive Officer and President, stated, "I am extremely pleased with the sales and order activity in North America, which is where we introduced our distributor partners to the Hurco rebranding initiative at the annual sales meeting last month. I was energized by the unprecedented enthusiasm I noticed from our sales partners when they saw the new machine design, new branding materials, and new machine lineup. We will officially launch this worldwide rebranding initiative to the public later this month at the International Manufacturing Technology Show (IMTS) in Chicago. In addition to acquainting the public with the updated design of the Hurco brand, we will introduce an entire line of high speed machine tools equipped with our patented motion control system called UltiMotion. UltiMotion exemplifies the type of advanced technology we continue to innovate so that our customers can increase their productivity and profitability."

Hurco Companies, Inc. is an industrial technology company that designs and produces interactive computer controls, software and computerized machine tools for the worldwide metal cutting and metal forming industry. The end market for the Company's products consists primarily of independent job shops and short-run manufacturing operations within large corporations in industries such as aerospace, defense, medical equipment, energy, transportation and computer equipment. The Company is based in Indianapolis, Indiana, with manufacturing operations in Taiwan and China, and sells its products through direct and indirect sales forces throughout North America, Europe, and Asia. The Company has sales, application engineering support and service subsidiaries in Canada, China, England, France, Germany, India, Italy, Poland, Singapore, South Africa and the United States of America.  Web Site: www.hurco.com

This news release contains forward-looking statements which 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 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, changes in manufacturing markets, innovations by competitors, the ability to protect our intellectual property, fluctuations in foreign currency exchange rates, increases in prices of raw materials, quality and delivery performance by our vendors, changes in operations due to acquisitions or loss of key personnel, uncertainty concerning our ability to use tax loss carryforwards and governmental actions and initiatives including import and export restrictions and tariffs.
Hurco Companies, Inc.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per-share data)
         
  Three Months Ended  July 31, Nine Months Ended  July 31,
  2012 2011 2012 2011
   (unaudited)   (unaudited) 
Sales and service fees  $ 49,959  $ 50,573  $ 147,050  $ 131,829
         
Cost of sales and service  33,875  34,723  101,089  91,637
Gross profit  16,084  15,850  45,961  40,192
         
Selling, general and administrative expenses  10,272  9,317  29,290  27,401
Operating income  5,812  6,533  16,671  12,791
         
Interest expense  43  47  105  61
         
Interest income  16  35  57  107
         
Investment income (expense)  3  2  5  9
         
Other expense (income), net  190  242  69  721
         
Income before taxes  5,598  6,281  16,559  12,125
         
Provision for income taxes  1,641  1,706  5,007  3,655
         
Net income  $ 3,957  $ 4,575  $ 11,552  $ 8,470
         
Earnings per common share        
Basic  $ 0.61  $ 0.71  $ 1.78  $ 1.31
Diluted  $ 0.61  $ 0.70  $ 1.77  $ 1.30
         
Weighted average common shares outstanding        
Basic  6,447  6,441  6,444  6,441
Diluted  6,465  6,480  6,470  6,474
         
OTHER CONSOLIDATED FINANCIAL DATA Three Months Ended  July 31, Nine Months Ended  July 31,
Operating Data: 2012 2011 2012 2011
   (unaudited)   (unaudited) 
Gross margin 32% 31% 31% 30%
         
SG&A expense as a percentage of sales 21% 18% 20% 21%
         
Operating income as a percentage of sales 12% 13% 11% 10%
         
Pre-tax income as a percentage of sales  11% 12% 11% 9%
         
Effective Tax Rate 29% 27% 30% 30%
         
Depreciation and amortization  955  1,081  3,195  3,227
         
Capital expenditures  1,293  718  2,603  1,745
         
Balance Sheet Data: 7/31/2012 10/31/2011    
   (unaudited)       
Working capital (excluding cash)  $ 85,155  $ 61,885    
         
Days sales outstanding (unaudited)  43  37    
         
Inventory turns (unaudited)  1.4  1.6    
         
Capitalization        
Total debt  $ 3,143  $ 865    
Shareholders' equity  138,492  126,212    
Total  $ 141,635  $ 127,077    
     
Hurco Companies, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per-share data)
     
  July 31, October 31,
  2012 2011
   (Unaudited)   (Audited) 
ASSETS    
Current assets:    
Cash and cash equivalents  $ 35,095  $ 44,961
Accounts receivable, net  30,514  27,057
Refundable taxes  1,255  1,442
Inventories, net  95,717  81,127
Deferred income taxes  744  2,692
Derivative assets  3,104  1,197
Other  9,048  5,598
Total current assets  175,477  164,074
     
Property and equipment:    
Land  782  782
Building  7,353  7,116
Machinery and equipment  16,985  16,336
Leasehold improvements  2,999  2,508
   28,119  26,742
Less accumulated depreciation and amortization  (16,432)  (15,198)
   11,687  11,544
     
Non-current assets:    
Software development costs, less accumulated amortization  4,040  4,928
Other assets  5,792  5,999
   $ 196,996  $ 186,545
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable  $ 38,544  $ 39,046
Derivative liabilities  447  1,609
Accrued expenses  13,093  15,708
Short-term debt  3,143  865
Total current liabilities  55,227  57,228
     
Non-current liabilities:    
Deferred income taxes  2,104  1,982
Deferred credits and other obligations  1,173  1,123
Total liabilities  58,504  60,333
     
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; 6,502,928 and 6,471,710 shares issued; and 6,447,210 and 6,440,851 shares outstanding, as of July 31, 2012 and October 31, 2011, respectively  645  644
Additional paid-in capital  53,260  52,614
Retained earnings  86,500  74,948
Accumulated other comprehensive loss  (1,913)  (1,994)
Total shareholders' equity  138,492  126,212
   $ 196,996  $ 186,545
CONTACT: John G. Oblazney         Vice President & Chief Financial Officer         317-293-5309

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