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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT Pursuant

to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported):   June 2, 2017  

 

Hurco Companies, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Indiana

(State or Other Jurisdiction of Incorporation)

 

0-9143   35-1150732
(Commission File Number)   (IRS Employer Identification No.)

 

One Technology Way    

Indianapolis, Indiana

  

46268

(Address of Principal Executive Offices)   (Zip Code)

 

(317) 293-5309

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

Item 2.02Results of Operations and Financial Condition.

 

On June 2, 2017, Hurco Companies, Inc. (the “Company”) reported its results of operations for the second fiscal quarter ended April 30, 2017. The Company’s earnings release for the period is attached as Exhibit 99.1, and the information set forth therein is incorporated herein by reference and constitutes a part of this report. Exhibit 99.1 is furnished pursuant to Item 2.02 of Form 8-K.

 

Item 9.01Financial Statements and Exhibits.

 

99.1Press release of Hurco Companies, Inc. dated June 2, 2017

  

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Dated:  June 2, 2017
       
  HURCO COMPANIES, INC.
   
       
  By:   /s/ Sonja K. McClelland  
    Sonja K. McClelland,  
    Executive Vice President, Secretary, Treasurer  
    and Chief Financial Officer  

 

 

 

 

EXHIBIT INDEX

 

99.1Earnings Release of Hurco Companies, Inc. dated June 2, 2017

  

 

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

FRIDAY, JUNE 2, 2017

 

HURCO REPORTS FISCAL 2017 SECOND QUARTER RESULTS

 

INDIANAPOLIS, INDIANA – June 2, 2017, Hurco Companies, Inc. (Nasdaq Global Select Market: HURC) today reported results for the second fiscal quarter ended April 30, 2017. Hurco recorded net income of $3,646,000, or $0.54 per diluted share, for the second quarter of fiscal 2017, compared to net income of $3,674,000, or $0.56 per diluted share, for the corresponding period in fiscal 2016. For the first six months of fiscal 2017, Hurco reported net income of $4,525,000, or $0.67 per diluted share, compared to $7,569,000, or $1.14 per diluted share, for the corresponding period in fiscal 2016.

 

Sales and service fees for the second quarter of fiscal 2017 were $58,222,000, an increase of $6,193,000, or 12%, compared to the corresponding period in fiscal 2016, and included a negative currency impact of $1,648,000, or 3%, when translating foreign sales to U.S. dollars for financial reporting purposes. Sales and service fees for the first six months of fiscal 2017 were $106,966,000, a decrease of $1,566,000, or 1%, compared to the corresponding period in fiscal 2016, and included a negative currency impact of $3,128,000, or 3%, 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 second quarter and first six months of fiscal 2017 and 2016 (in thousands):

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
           $   %           $   % 
   2017   2016   Change   Change   2017   2016   Change   Change 
Americas  $18,050   $14,933   $3,117    21%  $34,759   $33,874   $885    3%
Europe   31,572    32,006    (434)   -1%   57,144    61,011    (3,867)   -6%
Asia Pacific   8,600    5,090    3,510    69%   15,063    13,647    1,416    10%
Total  $58,222   $52,029   $6,193    12%  $106,966   $108,532   $(1,566)   -1%

 

Sales in the Americas for the second quarter and first six months of fiscal 2017 increased by 21% and 3%, respectively, compared to the corresponding periods in fiscal 2016, due primarily to increased sales of Hurco, Milltronics and Takumi machines in the U.S. The increase in sales was primarily attributable to an increased sales volume of vertical milling machines from all product lines.

 

European sales for the second quarter of fiscal 2017 decreased by 1%, compared to the corresponding period in fiscal 2016, and included a negative currency impact of 5%, when translating foreign sales to U.S. dollars for financial reporting purposes. Excluding the negative impact of currency, the year-over-year increase in European sales for the second quarter was driven primarily by increased sales of Hurco and Takumi machines in the United Kingdom, France and Germany. European sales for the first six months of fiscal 2017 decreased by 6%, compared to the corresponding period in fiscal 2016, and included a negative currency impact of 5%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year decrease in European sales for the first six months was driven primarily by decreased shipments of higher-performance Hurco machines in Germany, France and Italy during the first quarter of fiscal 2017.

 

Asian Pacific sales for the second quarter and first six months of fiscal 2017 increased by 69% and 10%, respectively, compared to the corresponding periods in fiscal 2016, primarily due to increased sales of Hurco and Takumi machines in China.

 

 

 

 

Orders for the second quarter of fiscal 2017 were $63,364,000, an increase of $10,144,000, or 19%, compared to the corresponding period in fiscal 2016, and included a negative currency impact of $2,047,000, or 4%, when translating foreign orders to U.S. dollars. Orders for the first six months of fiscal 2017 were $124,384,000, an increase of $19,874,000, or 19%, compared to the corresponding period in fiscal 2016, and included a negative currency impact of $3,996,000, or 4%, when translating foreign orders to U.S. dollars.

 

The following table sets forth new orders booked by geographic region for the second quarter and first six months of fiscal 2017 and 2016 (in thousands):

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
           $   %           $   % 
   2017   2016   Change   Change   2017   2016   Change   Change 
Americas  $18,474   $12,106   $6,368    53%  $38,816   $28,969   $9,847    34%
Europe   32,571    33,290    (719)   -2%   64,920    61,908    3,012    5%
Asia Pacific   12,319    7,824    4,495    57%   20,648    13,633    7,015    51%
Total  $63,364   $53,220   $10,144    19%  $124,384   $104,510   $19,874    19%

 

Orders in the Americas for the second quarter and first six months of fiscal 2017 increased by 53% and 34%, respectively, compared to the corresponding periods in fiscal 2016, due primarily to increased demand for Hurco, Milltronics and Takumi vertical milling machines in the U.S.

 

European orders for the second quarter of fiscal 2017 decreased by 2%, compared to the corresponding prior year period, and included a negative currency impact of 6%, when translating foreign orders to U.S. dollars. Excluding the negative impact of currency, the year-over-year increase in European orders for the second quarter was driven primarily by increased demand for Hurco machines in Italy and France. For the first six months of fiscal 2017, European orders increased by 5%, compared to the corresponding prior year period, and included a negative currency impact of 7%, when translating foreign orders to U.S. dollars. The year-over-year increase in European orders in the first six months was primarily due to increased customer demand for Hurco and Takumi machines in the United Kingdom and Germany.

 

Asian Pacific orders for the second quarter and first six months of fiscal 2017 increased by 57% and 51%, respectively, compared to the corresponding prior year periods. The year-over-year increases in orders were driven primarily by increased demand for Hurco and Takumi machines in all Asian Pacific countries, with the largest increase coming from China.

 

Michael Doar, Chief Executive Officer, stated, “For the first time in our company’s 49-year history, order levels have exceeded $60 million for three consecutive quarters. This trend combined with the order growth we are experiencing quarter over quarter and year over year, is encouraging for our company’s future. Both orders and sales in the Americas and Asia Pacific regions have shown good improvement this year and the European region continues to be a strong contributor despite the negative impact of currency translation. Hurco is performing well in this dynamic and competitive global market, which means we are serving our customers well by delivering CNC machine technology that makes their businesses more profitable.”

 

Gross profit for the second quarter of fiscal 2017 was $17,068,000, or 29% of sales, compared to $16,610,000, or 32% of sales, for the corresponding prior year period. For the first six months of fiscal 2017, gross profit was $29,654,000, or 28% of sales, compared to $34,308,000, or 32% of sales, for the corresponding prior year period. The year-over-year decreases in gross profit as a percentage of sales for the second quarter and first six months reflected the negative impact of foreign currency translation compared to the corresponding prior year periods and a sales mix comprised of more entry-level machines, such as those under the Milltronics and Takumi brands, in price competitive geographic regions, such as the Americas and Asia Pacific. The decrease in gross profit year to date was the biggest driver in the year-over-year reduction in earnings per share.

 

 

 

 

Selling, general and administrative expenses for the second quarter of fiscal 2017 were $11,714,000, or 20% of sales, compared to $11,943,000, or 23% of sales, in the corresponding period in fiscal 2016. For the first six months of fiscal 2017, selling, general and administrative expenses were $22,881,000, or 21% of sales, compared to $23,904,000, or 22% of sales, in the corresponding period in fiscal 2016. The year-over-year reduction in selling, general and administrative expenses for the second quarter and first six months of fiscal 2017 included favorable currency impacts of $287,000 and $553,000, respectively, when translating foreign expenses to U.S. dollars for financial reporting purposes.

 

The effective tax rates for the second quarter and first six months of fiscal 2017 were 29% and 31%, respectively, compared to 25% and 28% in the corresponding prior year periods. The changes in the effective tax rates year-over-year were due to changes in the geographic mix of income and loss among tax jurisdictions.

 

Cash and cash equivalents totaled $60,614,000 at April 30, 2017, compared to $41,217,000 at October 31, 2016. Working capital was $166,943,000 at April 30, 2017 compared to $160,413,000 at October 31, 2016. The increase in working capital was primarily due to the increase in cash and cash equivalents, partially offset by a reduction in accounts receivable.

 

 

 

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 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, Poland, Singapore, South Africa, 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 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.

 

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

 

 

 

 

Hurco Companies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

  

   Three Months Ended
April 30,		   Six Months Ended
April 30,		 
   2017   2016   2017   2016 
   (unaudited)   (unaudited) 
Sales and service fees  $58,222   $52,029   $106,966   $108,532 
Cost of sales and service   41,154    35,419    77,312    74,224 
Gross profit   17,068    16,610    29,654    34,308 
Selling, general and administrative expenses   11,714    11,943    22,881    23,904 
Operating income   5,354    4,667    6,773    10,404 
Interest expense   24    25    45    49 
Interest income   7    7    18    22 
Investment income   16    4    80    106 
Other (income) expense, net   240    (246)   291    (20)
Income before taxes   5,113    4,899    6,535    10,503 
Provision for income taxes   1,467    1,225    2,010    2,934 
Net income  $3,646   $3,674   $4,525   $7,569 
Income per common share                    
Basic  $0.55   $0.56   $0.68   $1.15 
Diluted  $0.54   $0.56   $0.67   $1.14 
Weighted average common shares outstanding                    
Basic   6,617    6,570    6,600    6,564 
Diluted   6,671    6,641    6,664    6,630 
                     
OTHER CONSOLIDATED FINANCIAL DATA 

Three Months Ended 
April 30, 

   Six Months Ended
April 30,		 
Operating Data:   2017    2016    2017    2016 
     (unaudited)           (unaudited)       
Gross margin   29%   32%   28%   32%
SG&A expense as a percentage of sales   20%   23%   21%   22%
Operating income as a percentage of sales   9%   9%   6%   10%
Pre-tax income as a percentage of sales   9%   9%   6%   10%
Effective tax rate   29%   25%   31%   28%
Depreciation and amortization   823    972    1,782    1,934 
Capital expenditures   825    1,137    2,105    2,267 
                     
Balance Sheet Data:  4/30/2017   10/31/2016           
    (unaudited)    (audited)           
Working capital  $166,943   $160,413           
Days sales outstanding (unaudited)   46    52           
Inventory turns (unaudited)   1.3    1.4           
Capitalization                    
Total debt  $1,451   $1,476           
Shareholders' equity   192,134    185,475           
Total  $193,585   $186,951           

  

 

 

 

Hurco Companies, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per-share data)

 

   April 30,   October 31, 
   2017   2016 
ASSETS          
Current assets:          
Cash and cash equivalents  $60,614   $41,217 
Accounts receivable, net   35,831    48,631 
Inventories, net   118,853    117,025 
Derivative assets   1,227    1,725 
Prepaid expenses   8,519    8,207 
Other   2,056    1,576 
Total current assets   227,100    218,381 
Property and equipment:          
Land   841    841 
Building   7,352    7,352 
Machinery and equipment   24,731    23,515 
Leasehold improvements   3,590    3,487 
    36,514    35,195 
Less accumulated depreciation and amortization   (24,375)   (22,898)
Total property and equipment   12,139    12,297 
Non-current assets:          
Software development costs, less accumulated amortization   5,520    4,926 
Goodwill   2,298    2,314 
Intangible assets, net   1,087    1,150 
Deferred income taxes   6,146    6,138 
Investments and other assets, net   7,079    6,743 
Total non-current assets   22,130    21,271 
Total assets  $261,369   $251,949 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
Current liabilities:          
Accounts payable  $43,957   $37,200 
Derivative liabilities   517    538 
Accrued expenses   14,232    18,754 
Short-term debt   1,451    1,476 
Total current liabilities   60,157    57,968 
Non-current liabilities:          
Deferred income taxes   4,492    4,294 
Accrued tax liability   1,178    963 
Deferred credits and other obligations   3,408    3,249 
Total non-current liabilities   9,078    8,506 
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; 6,7582,006 and 6,720,453 shares issues; and 6,624,197 and
6,573,103 shares outstanding, as of April 30, 2017 and October 31, 2016, respectively		   663    657 
Additional paid-in capital   60,028    59,119 
Retained earnings   140,014    136,742 
Accumulated other comprehensive loss   (8,571)   (11,043)
Total shareholders' equity   192,134    185,475 
Total liabilities and shareholders' equity  $261,369   $251,949