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Hurco Reports First Quarter Results

INDIANAPOLIS, March 6, 2015 (GLOBE NEWSWIRE) -- Hurco Companies, Inc. (Nasdaq:HURC) today reported results for the first fiscal quarter ended January 31, 2015. Hurco recorded net income of $3,766,000, or $0.57 per diluted share, for the first quarter of fiscal 2015 compared to net income of $2,369,000 or $0.36 per diluted share, for the corresponding period in fiscal 2014.

Sales and service fees for the first quarter of fiscal 2015 were $50,972,000, a slight increase from the same period in the prior year. However, sales and service fees for the first quarter of fiscal 2015 were adversely affected by an unfavorable currency impact of approximately $3,578,000, or 7%, when translating foreign sales to U.S. Dollars for financial reporting purposes.

The following table sets forth net sales and service fees by geographic region for the first quarters of fiscal 2015 and 2014 (in thousands):

Three Months Ended
January 31,
$ %
2015 2014 Change Change
North America $ 14,851 $ 16,293 $ (1,442) -9%
Europe 31,800 29,234 2,566 9%
Asia Pacific 4,321 5,443 (1,122) -21%
Total $ 50,972 $ 50,970 $ 2 0%

European sales increased during the first quarter of fiscal 2015 by 9% compared to the corresponding prior year period. European sales for the first quarter of fiscal 2015 were adversely affected by an unfavorable currency impact of approximately $3,365,000, or 12%, due primarily to a weaker Euro and Pound Sterling when translating foreign sales to U.S. Dollars for financial reporting purposes. The year-over-year improvement in European sales was primarily driven by increased shipments of higher-performance machines in Germany, France and Italy. North American sales decreased in the first quarter of fiscal 2015 by 9%, reflecting lower order levels in comparison to the same period in the prior year, as many customers took advantage of promotional activities for the International Manufacturing Technology Show (IMTS) during the fourth quarter of fiscal 2014. Asian Pacific sales decreased in the first quarter of fiscal 2015 by 21% compared to the corresponding prior year period, primarily due to a large multiple machine order received in the prior year period from a customer in China.

Orders in the first quarter of fiscal 2015 were $45,009,000, a decrease of $12,085,000, or 21%, compared to the corresponding period in fiscal 2014. The following table sets forth new orders booked by geographic region for the first quarters of fiscal 2015 and 2014 (in thousands):

Three Months Ended
January 31,
$ %
2015 2014 Change Change
North America $ 13,911 $ 14,572 $ (661) -5%
Europe 25,979 36,511 (10,532) -29%
Asia Pacific 5,119 6,011 (892) -15%
Total $ 45,009 $ 57,094 $ (12,085) -21%

European orders for the first quarter of fiscal 2015 decreased by 29% compared to the corresponding period in fiscal 2014 primarily due to softening market conditions, particularly in Eastern Europe. European orders for the first quarter of fiscal 2015 were adversely affected by an unfavorable currency impact of approximately $2,878,000, or 9%, due primarily to a weaker Euro and Pound Sterling when translating foreign orders to U.S. Dollars for financial reporting purposes. North American orders for the first quarter of fiscal 2015 decreased by 5% compared to the corresponding period in fiscal 2014, as many customers took advantage of promotional activities at the IMTS during the fourth quarter of fiscal 2014. The year-over-year decrease in Asian Pacific orders of 15% was due primarily to a large multiple machine order received in the prior year period from a customer in China.

Hurco's gross profit for the first quarter of fiscal 2015 was $16,547,000, or 32% of sales, compared to $13,919,000, or 27% of sales, for the corresponding prior year period. The increase in gross profit was attributable to increased sales in Europe of higher-performance machines and improved leverage of fixed costs over higher production levels in comparison to the corresponding prior year period.

Selling, general and administrative expenses for the first quarter of fiscal 2015 were $10,454,000, or 21% of sales, compared to $10,600,000, or 21% of sales, in the corresponding period in fiscal 2014. Selling, general and administrative expenses were favorably impacted by approximately $474,000, or 4%, when translating foreign expenses to U.S. Dollars for financial reporting purposes.

The effective tax rate for the first quarter of fiscal 2015 was 35%, compared to 28% for the corresponding prior year period, due to changes in the geographic mix of income and loss among tax jurisdictions.

Cash and cash equivalents totaled $59,855,000 at January 31, 2015, compared to $53,846,000 at October 31, 2014. Working capital, excluding cash and cash equivalents, was $85,831,000 at January 31, 2015 compared to $90,105,000 at October 31, 2014. The decrease in working capital, excluding cash, was primarily due to decreases in accounts receivable and the impact of translating foreign currencies to U.S. Dollars for financial reporting purposes.

Michael Doar, Chief Executive Officer, stated, "We continue to focus on shareholder return and investing in new products for our customers. Increased sales, excluding the impact of currency, and improved earnings reflect our discipline and financial stability despite challenging market conditions. We continue to expand our product line as we are confident these new products will enable us to fulfill the needs of more manufacturers worldwide. Additionally, we have begun the transition to our new control technology that we introduced at the International Manufacturing Technology Show last year. The new control features and numerous enhancements offer efficiencies that we expect to improve profitability for our customers."

Hurco Companies, Inc. is an industrial technology company that designs and produces interactive computer controls, software and computerized machine tools and machine tool components 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, Italy, 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 China, England, France, Germany, India, Italy, Poland, Singapore, South Africa and the United States of America. Web Site: www.hurco.com

Certain statements in this news release are 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, breaches of our network and system security measures, fluctuations in foreign currency exchange rates, increases in prices of raw materials, quality and delivery performance by our vendors, our ability to effectively integrate acquisitions, negative or unforeseen tax consequences 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)
Quarter Ended
January 31,
2015 2014
(unaudited)
Sales and service fees $ 50,972 $ 50,970
Cost of sales and service 34,425 37,051
Gross profit 16,547 13,919
Selling, general and administrative expenses 10,454 10,600
Operating income 6,093 3,319
Interest expense 69 77
Interest income 21 16
Investment income 65 31
Other expense (income), net 307 16
Income before taxes 5,803 3,273
Provision for income taxes 2,037 904
Net income $ 3,766 $ 2,369
Earnings per common share
Basic $ 0.57 $ 0.36
Diluted $ 0.57 $ 0.36
Weighted average common shares outstanding
Basic 6,523 6,477
Diluted 6,569 6,514
OTHER CONSOLIDATED FINANCIAL DATA Quarter Ended
January 31,
Operating Data: 2015 2014
(unaudited)
Gross margin 32% 27%
SG&A expense as a percentage of sales 21% 21%
Operating income as a percentage of sales 12% 7%
Pre-tax income as a percentage of sales 11% 6%
Effective Tax Rate 35% 28%
Depreciation and amortization 726 735
Capital expenditures 524 519
Balance Sheet Data: 1/31/2015 10/31/2014
(unaudited) (audited)
Working capital (excluding cash) $ 85,831 $ 90,105
Days sales outstanding (unaudited) 55 49
Inventory turns (unaudited) 1.6 1.5
Capitalization
Total debt $ 3,198 $ 3,272
Shareholders' equity 165,265 164,645
Total $ 168,463 $ 167,917
Hurco Companies, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per-share data)
January 31, October 31,
2015 2014
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 59,855 $ 53,846
Accounts receivable, net 37,234 45,435
Inventories, net 91,104 95,992
Deferred income taxes 889 2,062
Derivative assets 7,455 3,127
Prepaid expenses 10,375 8,927
Other 1,282 1,365
Total current assets 208,194 210,754
Property and equipment:
Land 782 782
Building 7,314 7,314
Machinery and equipment 18,741 19,432
Leasehold improvements 3,294 3,523
30,131 31,051
Less accumulated depreciation and amortization (19,136) (19,546)
10,995 11,505
Non-current assets:
Software development costs, less accumulated amortization 3,455 3,519
Goodwill 2,373 2,606
Intangible assets, net 1,431 1,635
Other assets 6,876 6,912
$ 233,324 $ 236,931
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 40,853 $ 42,718
Derivative liabilities 1,269 705
Accrued expenses 17,188 20,108
Short-term debt 3,198 3,272
Total current liabilities 62,508 66,803
Non-current liabilities:
Deferred income taxes 1,194 993
Accrued tax liability 969 1,054
Deferred credits and other obligations 3,388 3,436
Total liabilities 68,059 72,286
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; 6,638,931 and 6,589,918 shares issued; and 6,537,983 and 6,508,880 shares outstanding, as of January 31, 2015 and October 31, 2014, respectively 654 651
Additional paid-in capital 56,418 55,974
Retained earnings 114,889 111,580
Accumulated other comprehensive loss (6,696) (3,560)
Total shareholders' equity 165,265 164,645
$ 233,324 $ 236,931

CONTACT: Sonja K. McClelland Vice President, Secretary, Treasurer & Chief Financial Officer 317-293-5309

Source:Hurco Companies, Inc.