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 7, 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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

 

Name of each exchange on which registered
Common Stock, no par value HURC Nasdaq Global Select Market

 

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 7, 2019, Hurco Companies, Inc. (the "Registrant") reported its results of operations for the second fiscal quarter ended April 30, 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

 

99.1 Press Release of Hurco Companies, Inc. dated June 7, 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: June 7, 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, JUNE 7, 2019

 

HURCO REPORTS SECOND QUARTER RESULTS FOR FISCAL 2019

 

INDIANAPOLIS, INDIANA – June 7, 2019, Hurco Companies, Inc. (Nasdaq Global Select Market: HURC) today reported results for the second fiscal quarter ended April 30, 2019. Hurco recorded net income of $5,252,000, or $0.76 per diluted share, for the second quarter of fiscal 2019 compared to net income of $3,751,000, or $0.55 per diluted share, for the corresponding period in fiscal 2018. For the first six months of fiscal 2019, Hurco reported net income of $11,906,000, or $1.73 per diluted share, compared to $6,688,000, or $0.98 per diluted share, for the corresponding period in fiscal 2018.

 

Sales and service fees for the second quarter of fiscal 2019 were $70,674,000, an increase of $250,000, or less than 1%, compared to the corresponding prior year period and included an unfavorable currency impact of $3,026,000, or 4%, when translating foreign sales to U.S. dollars for financial reporting purposes. Sales and service fees for the first six months of fiscal 2019 were $144,887,000, an increase of $6,019,000, or 4%, compared to the corresponding period in fiscal 2018, and included an unfavorable currency impact of $5,707,000, 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 second quarter and six months ended April 30, 2019 and 2018 (dollars in thousands):

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
   2019   2018   $
Change
   %
Change
   2019   2018   $
Change
   %
Change
 
Americas  $23,830   $21,653   $2,177    10%  $52,986   $42,683   $10,303    24%
Europe   38,103    38,246    (143)   (0%)   73,815    76,564    (2,749)   (4%)
Asia Pacific   8,741    10,525    (1,784)   (17%)   18,086    19,621    (1,535)   (8%)
Total  $70,674   $70,424   $250    0%  $144,887   $138,868   $6,019    4%

 

Sales in the Americas for the second quarter and first six months of fiscal 2019 increased by 10% and 24%, respectively, compared to the corresponding periods in fiscal 2018. The increases in sales for the second quarter and first six months of fiscal 2019 were primarily attributable to sales of vertical milling machines from a U.S. machine tool distributor acquired by Hurco in the fourth quarter of fiscal 2018 located in California, one of the largest machine tool markets in the U.S., and increased customer demand for Hurco and Takumi vertical milling machines in the U.S.

 

European sales for the second quarter of fiscal 2019 were relatively unchanged compared to the corresponding period in fiscal 2018, and included an unfavorable currency impact of 7%, when translating foreign sales to U.S. dollars for financial reporting purposes, which was largely offset by increased sales of Hurco vertical milling machines in Germany. The 4% decrease in European sales for the first six months of fiscal 2019 was primarily attributable to an unfavorable currency impact of 6%, when translating foreign sales to U.S. dollars for financial reporting purposes.

 

Asian Pacific sales for the second quarter and first six months of fiscal 2019 decreased by 17% and 8%, respectively, compared to the corresponding periods in fiscal 2018. The decrease in Asian Pacific sales for each of the second quarter and first six months of fiscal 2019 was primarily attributable to decreased shipments of Hurco vertical milling machines and Takumi bridge mill machines in China and an unfavorable currency impact of 2% and 5%, respectively, when translating foreign sales to U.S. dollars for financial reporting purposes.

 

 

 

 

Orders for the second quarter of fiscal 2019 were $67,207,000, a decrease of $12,717,000, or 16%, compared to the corresponding period in fiscal 2018, and included an unfavorable currency impact of $2,550,000, or 3%, when translating foreign orders to U.S. dollars. Orders for the first six months of fiscal 2019 were $135,214,000, a decrease of $21,617,000, or 14%, compared to the corresponding period in fiscal 2018, and included an unfavorable currency impact of $5,166,000, or 3%, when translating foreign orders to U.S. dollars.

 

The following table sets forth new orders booked by geographic region for the second quarter and six months ended April 30, 2019 and 2018 (dollars in thousands):

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
   2019   2018   $
Change
   %
Change
   2019   2018   $
Change
   %
Change
 
Americas  $20,268   $20,869   $(601)   (3%)  $44,998   $41,383   $3,615    9%
Europe   36,840    46,084    (9,244)   (20%)   70,150    90,310    (20,160)   (22%)
Asia Pacific   10,099    12,971    (2,872)   (22%)   20,066    25,138    (5,072)   (20%)
Total  $67,207   $79,924   $(12,717)   (16%)  $135,214   $156,831   $(21,617)   (14%)

 

Michael Doar, Chief Executive Officer, stated, "Even though we are seeing some hesitation in customer demand in the European and Asia Pacific regions, the U.S. market has remained relatively stable. During times like these, I realize how fortunate Hurco is to have multiple brands to reach a more diverse group of customers, a strong balance sheet, and an agile corporate structure that can quickly adjust as needed. We know the machine tool business is cyclical and fluctuates from time to time, but we are able to manage our business with a long-term outlook and continue to advance the products and technologies we provide our customers around the world. While we are disciplined at managing costs, we know that investing in the future can preserve sustainable profitability.”

 

Orders in the Americas for the second quarter of fiscal 2019 decreased by 3%, compared to the corresponding period in fiscal 2018, due primarily to decreased customer demand in the U.S. for vertical milling machines, partially offset by an increase in orders for vertical milling machines by the newly acquired distributor. Orders in the Americas for the first six months of fiscal 2019 increased by 9% and included orders for vertical milling machines by the newly acquired distributor, as well as increased customer demand for Hurco vertical milling machines in the U.S.

 

European orders for the second quarter and first six months of fiscal 2019 decreased by 20% and 22%, respectively, compared to the corresponding prior year periods, and included an unfavorable currency impact of 5% in each period when translating foreign orders to U.S. dollars. The year-over-year decreases in orders were driven primarily by decreased customer demand for Hurco and Takumi vertical milling machines, as well as, for the six month period, 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 second quarter and first six months of fiscal 2019 decreased by 22% and 20%, respectively, compared to the corresponding prior year periods. The year-over-year decrease in orders for each period included an unfavorable currency impact of 2% and 4%, respectively, when translating foreign orders to U.S. dollars. The year-over-year decreases in orders were mainly the result of decreased customer demand for Hurco and Takumi machines in China.

 

 

 

 

Gross profit for the second quarter of fiscal 2019 was $21,637,000, or 31% of sales, compared to $19,313,000, or 27% of sales, for the corresponding prior year period. Gross profit for the first six months of fiscal 2019 was $43,779,000, or 30% of sales, compared to $39,434,000, or 28% of sales, for the corresponding prior year period. The year-over-year increases in gross profit as a percentage of sales reflected an increased mix of larger, higher-priced vertical milling machine sales and margin contribution from vertical milling machine sales from the newly acquired distributor.

 

Selling, general and administrative expenses for the second quarter of fiscal 2019 were $14,111,000, or 20% of sales, compared to $13,320,000, or 19% of sales, in the corresponding period in fiscal 2018, and included a favorable currency impact of $503,000 when translating foreign expenses to U.S. dollars for financial reporting purposes. Selling, general and administrative expenses for the first six months of fiscal 2019 were $28,025,000, or 19% of sales, compared to $26,286,000, or 19% of sales, in the prior year period and included a favorable currency impact of $958,000 when translating foreign expenses to U.S. dollars for financial reporting purposes. The increase in year-over-year selling, general and administrative expenses in each period was primarily related to increased salaries and benefits, increased sales and marketing expenses and operating expenses associated with the newly acquired distributor.

 

The effective tax rate for the second quarter of fiscal 2019 was 32%, compared to 31% in the corresponding prior year period. The year-over-year increase in the effective tax rate for the second quarter was primarily due to a shift in taxable income and loss among the various geographic regions. The effective tax rate for the first six months of fiscal 2019 was 29%, compared to 48% in the corresponding prior year period. The year-over-year decrease in the effective tax rate for the first six months was primarily due to one-time charges of $2.9 million related to the U.S. Tax Cuts and Jobs Act of 2017 recorded in the first quarter of fiscal 2018. The impact of these one-time charges increased the effective tax rate by approximately 39% for the first quarter of fiscal 2018. 

 

Cash and cash equivalents totaled $70,180,000 at April 30, 2019, compared to $77,170,000 at October 31, 2018. Working capital was $205,130,000 at April 30, 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, governmental actions and initiatives, including import and export restrictions and tariffs, 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 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

(In thousands, except per share data)

 

   Three Months Ended
April 30,
   Six Months Ended
April 30,
 
   2019   2018   2019   2018 
   (unaudited)   (unaudited) 
Sales and service fees  $70,674   $70,424   $144,887   $138,868 
Cost of sales and service   49,037    51,111    101,108    99,434 
                     
Gross profit   21,637    19,313    43,779    39,434 
Selling, general and administrative expenses   14,111    13,320    28,025    26,286 
                     
Operating income   7,526    5,993    15,754    13,148 
                     
Interest expense   14    25    26    45 
Interest income   99    12    181    30 
Investment income   129    6    371    122 
Other income (expense), net   (7)   (579)   560    (411)
Income before taxes   7,733    5,407    16,840    12,844 
Provision for income taxes   2,481    1,656    4,934    6,156 
Net income  $5,252   $3,751   $11,906   $6,688 
Income per common share                    
Basic  $0.77   $0.55   $1.75   $0.99 
Diluted  $0.76   $0.55   $1.73   $0.98 
Weighted average common shares outstanding                    
Basic   6,764    6,706    6,750    6,682 
Diluted   6,824    6,784    6,816    6,763 
                     
Dividends per share  $0.12   $0.11   $0.23   $0.21 

 

OTHER CONSOLIDATED FINANCIAL DATA  Three Months Ended
April 30,
   Six Months Ended
April 30,
 
Operating Data:  2019   2018   2019   2018 
   (unaudited)   (unaudited) 
Gross margin   31%   27%   30%   28%
SG&A expense as a percentage of sales   20%   19%   19%   19%
Operating income as a percentage of sales   11%   9%   11%   9%
Pre-tax income as a percentage of sales   11%   8%   12%   9%
Effective tax rate   32%   31%   29%   48%
Depreciation and amortization  $906   $1,023   $1,845   $1,911 
Capital expenditures  $1,007   $1,416   $2,250   $2,896 
                     
Balance Sheet Data:  4/30/2019   10/31/2018           
Working capital  $205,130   $194,632           
Days sales outstanding (unaudited)   50    47           
Inventory turns (unaudited)   1.5    1.6           
Capitalization                    
Total debt  $-   $1,434           
Shareholders' equity   234,034    222,853           
Total  $234,034   $224,287           

 

 

 

 

Hurco Companies, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

   April 30,   October 31, 
   2019   2018 
ASSETS  (unaudited)   (audited) 
Current assets:          
Cash and cash equivalents  $70,180   $77,170 
Accounts receivable, net   44,255    54,414 
Inventories, net   148,688    137,609 
Derivative assets   1,514    3,085 
Prepaid expenses   8,839    7,332 
Other   2,197    1,825 
Total current assets   275,673    281,435 
Property and equipment:          
Land   868    868 
Building   7,352    7,352 
Machinery and equipment   27,943    26,840 
Leasehold improvements   4,028    3,801 
    40,191    38,861 
Less accumulated depreciation and amortization   (27,219)   (25,902)
Total property and equipment   12,972    12,959 
Non-current assets:          
       Software development costs, less accumulated amortization   7,904    7,452 
       Goodwill   2,358    2,377 
       Intangible assets, net   881    938 
       Deferred income taxes   2,190    2,234 
       Investments and other assets, net   8,498    8,012 
Total non-current assets   21,831    21,013 
Total assets  $310,476   $315,407 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
Current liabilities:          
Accounts payable  $50,109   $57,518 
Derivative liabilities   961    2,020 
Accrued payroll and employee benefits   10,102    14,032 
Accrued income taxes   2,440    5,180 
Accrued expenses   4,586    4,122 
Accrued warranty   2,345    2,497 
Short-term debt   -    1,434 
Total current liabilities   70,543    86,803 
Non-current liabilities:          
Accrued tax liability   2,058    2,194 
Deferred credits and other obligations   3,841    3,557 
Total non-current liabilities   5,899    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;          
6,967,719 and 6,891,508 shares issued and 6,767,237 and 6,723,160 shares outstanding,          
as of April 30, 2019 and October 31, 2018, respectively   677    672 
Additional paid-in capital   65,114    64,185 
Retained earnings   178,200    167,859 
Accumulated other comprehensive loss   (9,957)   (9,863)
Total shareholders' equity   234,034    222,853 
Total liabilities and shareholders' equity  $310,476   $315,407