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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): March 8, 2019

 

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 March 8, 2019, Hurco Companies, Inc. (the "Registrant") reported its results of operations for the first fiscal quarter ended January 31, 2019. The Registrant's earnings release for this 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. The attached Exhibit is furnished pursuant to Item 2.02 of Form 8-K.

 

 

 

 

Item 9.01Financial Statements and Exhibits

 

Exhibit Index

 

99.1Press Release of Hurco Companies, Inc. dated March 8, 2019

 

 

 

 

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: March 8, 2019
     
  HURCO COMPANIES, INC.
     
  By:   /s/ Sonja K. McClelland
   

Sonja K. McClelland, Executive Vice President,

Secretary, Treasurer and Chief Financial Officer

 

 

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

FRIDAY, MARCH 8, 2019

 

HURCO REPORTS FIRST QUARTER RESULTS FOR FISCAL 2019

 

INDIANAPOLIS, INDIANA – March 8, 2019, Hurco Companies, Inc. (Nasdaq Global Select Market: HURC) today reported results for the first fiscal quarter ended January 31, 2019. Hurco recorded net income of $6,654,000, or $0.97 per diluted share, for the first quarter of fiscal 2019 compared to net income of $2,937,000, or $0.43 per diluted share, for the corresponding period in fiscal 2018.

 

Sales and service fees for the first quarter of fiscal 2019 were $74,213,000, an increase of $5,769,000, or 8%, compared to the corresponding prior year period and included an unfavorable currency impact of $2,484,000, or 4%, 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 quarter ended January 31, 2019 and 2018 (dollars in thousands):

 

   Three Months Ended 
   January 31, 
   2019   2018   $ Change    % Change  
Americas  $29,156   $21,030   $8,126    39%
Europe   35,711    38,318    (2,607)   (7%)
Asia Pacific   9,346    9,096    250    3%
Total  $74,213   $68,444   $5,769    8%

 

Sales in the Americas for the first quarter of fiscal 2019 increased by 39%, compared to the corresponding period in fiscal 2018, and reflected improved U.S. market conditions and demand from U.S. customers for vertical milling machines.

 

European sales for the first quarter of fiscal 2019 decreased by 7%, compared to the corresponding period in fiscal 2018. The decrease in European sales for the first quarter of fiscal 2019 was primarily attributable to an unfavorable currency impact of 5%, when translating foreign sales to U.S. dollars for financial reporting purposes, and decreased shipments of Hurco vertical milling machines in Italy and France.

 

Asian Pacific sales for the first quarter of fiscal 2019 increased by 3%, compared to the corresponding period in fiscal 2018, and included an unfavorable currency impact of 6%, when translating foreign sales to U.S. dollars for financial reporting purposes. The increase in Asian Pacific sales for the first quarter of 2019 was primarily attributable to increased shipments of Hurco vertical milling machines in India and China, partially offset by decreased shipments of Takumi bridge mills in China.

 

Orders for the first quarter of fiscal 2019 were $68,007,000, a decrease of $8,900,000, or 12%, compared to the corresponding period in fiscal 2018, and included an unfavorable currency impact of $2,759,000, or 4%, 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, 2019 and 2018 (dollars in thousands):

 

   Three Months Ended 
   January 31, 
   2019   2018   $ Change    % Change  
Americas  $24,730   $20,514   $4,216    21%
Europe   33,310    44,226    (10,916)   (25%)
Asia Pacific   9,967    12,167    (2,200)   (18%)
Total  $68,007   $76,907   $(8,900)   (12%)

 

Michael Doar, Chief Executive Officer, stated, "As we begin to see a shift in global demand, I remain confident that we are ready for new opportunities and have the agility to adjust operationally as needed to meet the needs of our customers no matter where they are located around the world. Our global presence allows us to participate in all markets as they change with continuous commitment to long-term growth and profitability. We remain focused on our strategic investments in new technologies, targeted product expansion, and quality of service to provide our customers with the most efficient machine tools equipped with sophisticated technologies that help to make their manufacturing businesses more profitable. "

 

Orders in the Americas for the first quarter of fiscal 2019 increased by 21%, compared to the corresponding period in fiscal 2018. This increase was primarily attributable to increased customer demand in the U.S. for vertical milling machines.

 

European orders for the first quarter of fiscal 2019 decreased by 25%, compared to the corresponding prior year period, and included an unfavorable currency impact of 4% when translating foreign orders to U.S. dollars. The year-over-year decrease in orders was driven primarily by decreased customer demand for Hurco and Takumi vertical milling machines in Germany, as well as a decrease in customer demand for electro-mechanical components and accessories manufactured by our wholly-owned subsidiary, LCM Precision Technology S.r.l.

 

Asian Pacific orders for the first quarter of fiscal 2019 decreased by 18%, compared to the corresponding prior year period, and included an unfavorable currency impact of 8% when translating foreign orders to U.S. dollars. The year-over-year decrease in orders was mainly the result of decreased customer demand for Hurco and Takumi machines in China, partially offset by increased customer demand for Hurco machines in Southeast Asia.

 

Gross profit for the first quarter of fiscal 2019 was $22,142,000, or 30% of sales, compared to $20,121,000, or 29% of sales, for the corresponding prior year period. The year-over-year increase in gross profit as a percentage of sales reflected the increased volume of sales of vertical milling machines.

 

Selling, general and administrative expenses for the first quarter of fiscal 2019 were $13,914,000, or 19% of sales, compared to $12,966,000, or 19% of sales, in the corresponding period in fiscal 2018, and included a favorable currency impact of $455,000 when translating foreign expenses to U.S. dollars for financial reporting purposes.

 

The effective tax rate for the first quarter of fiscal 2019 was 27%, compared to 61% in the corresponding prior year period. The decrease in the effective tax rate for the first quarter of fiscal 2019 compared to the corresponding prior year period was primarily due to a one-time provisional adjustment related to the Tax Cuts and Jobs Act (the “Tax Reform Act”) that was enacted in the first quarter of fiscal 2018. The Tax Reform Act, among other things, lowered the U.S. corporate tax rate from 35% to 21% effective January 1, 2018, implemented a territorial tax system and imposed a tax on the deemed repatriated earnings of foreign subsidiaries. As a result of the changes in tax law, a one-time non-cash tax charge of $394,000 related to the revaluation of deferred tax assets and liabilities was recorded in the first quarter of fiscal 2018. In addition, a one-time charge of $2,500,000 related to the transition tax on deemed repatriation of accumulated foreign income was recorded in the first quarter of fiscal 2018. The impact of these charges increased the effective tax rate by approximately 39% for the first quarter of fiscal 2018.

 

Cash and cash equivalents totaled $69,758,000 at January 31, 2019, compared to $77,170,000 at October 31, 2018. Working capital was $201,095,000 at January 31, 2019, compared to $194,632,000 at October 31, 2018. The increase in working capital was primarily due to an increase in inventories and decreases in accounts payable and accrued payroll and employee benefits.

 

 

 

 

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, governmental actions and initiatives, including import and export restrictions and tariffs, and other risks and uncertainties discussed more fully under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2018, and in our subsequent 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

317-293-5309

 

 

 

 

Hurco Companies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per-share data)

 

   Three Months Ended
January 31,		 
   2019   2018 
   (unaudited) 
Sales and service fees  $74,213   $68,444 
Cost of sales and service   52,071    48,323 
Gross profit   22,142    20,121 
Selling, general and administrative expenses   13,914    12,966 
Operating income   8,228    7,155 
Interest expense   12    20 
Interest income   82    18 
Investment income   242    116 
Other income (expense), net   567    168 
Income before taxes   9,107    7,437 
Provision for income taxes   2,453    4,500 
Net income  $6,654   $2,937 
Income per common share          
Basic  $0.98   $0.44 
Diluted  $0.97   $0.43 
Weighted average common shares outstanding          
Basic   6,735    6,659 
Diluted   6,807    6,745 
           
Dividends per share  $0.11   $0.10 

 

OTHER CONSOLIDATED FINANCIAL DATA    
   Three Months Ended
January 31,		 
Operating Data:  2019   2018 
   (unaudited) 
Gross margin   30%   29%
SG&A expense as a percentage of sales   19%   19%
Operating income as a percentage of sales   11%   10%
Pre-tax income as a percentage of sales   12%   11%
Effective tax rate   27%   61%
Depreciation and amortization   939    888 
Capital expenditures   1,243    1,480 
           
Balance Sheet Data:  1/31/2019   10/31/2018 
Working capital  $201,095   $194,632 
Days sales outstanding (unaudited)   56    47 
Inventory turns (unaudited)   1.5    1.6 
Capitalization          
Total debt  $-   $1,434 
Shareholders' equity   230,021    222,853 
Total  $230,021   $224,287 

 

 

 

 

Hurco Companies, Inc.

CONSOLIDATED BALANCE SHEETS

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

 

   January 31,   October 31, 
   2019   2018 
ASSETS          
           
Current assets:          
Cash and cash equivalents  $69,758   $77,170 
Accounts receivable, net   53,045    54,414 
Inventories, net   146,715    137,609 
Derivative assets   1,092    3,085 
Prepaid expenses   8,418    7,332 
Other   2,183    1,825 
Total current assets   281,211    281,435 
           
Property and equipment:          
Land   868    868 
Building   7,352    7,352 
Machinery and equipment   27,722    26,840 
Leasehold improvements   4,011    3,801 
    39,953    38,861 
Less accumulated depreciation and amortization   (26,762)   (25,902)
Total property and equipment   13,191    12,959 
           
Non-current assets:          
Software development costs, less accumulated amortization   7,641    7,452 
Goodwill   2,403    2,377 
Intangible assets, net   916    938 
Deferred income taxes   2,326    2,234 
Investments and other assets, net   8,388    8,012 
Total non-current assets   21,674    21,013 
Total assets  $316,076   $315,407 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable  $55,244   $57,518 
Derivative liabilities   1,241    2,020 
Accrued payroll and employee benefits   8,515    14,032 
Accrued income taxes   7,587    5,180 
Accrued expenses   4,909    4,122 
Accrued warranty   2,620    2,497 
Short-term debt   -    1,434 
Total current liabilities   80,116    86,803 
           
Non-current liabilities:          
Deferred income taxes   3    - 
Accrued tax liability   2,212    2,194 
Deferred credits and other obligations   3,724    3,557 
Total non-current liabilities   5,939    5,751 
           
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;
6,955,895 and 6,891,508 shares issued; and 6,758,123 and 6,723,160 shares outstanding,
as of January 31, 2019 and October 31, 2018, respectively		   676    672 
Additional paid-in capital   64,391    64,185 
Retained earnings   173,766    167,859 
Accumulated other comprehensive loss   (8,812)   (9,863)
Total shareholders' equity   230,021    222,853 
Total liabilities and shareholders' equity  $316,076   $315,407