0000315374false00003153742022-01-072022-01-07

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): January 7, 2022

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

The Nasdaq Stock Market LLC

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 January 7, 2022, Hurco Companies, Inc. (the "Registrant") reported its results of operations for the fourth quarter and full fiscal year ended October 31, 2021. The Registrant's earnings release for those periods 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 January 7, 2022

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

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: January 7, 2022

 

 

 

HURCO COMPANIES, INC.

 

 

 

 

 

 

 

 

 

By:

/s/ Sonja K. McClelland_______________

 

 

Sonja K. McClelland, Executive Vice President,

Treasurer and Chief Financial Officer

Exhibit 99.1

FOR IMMEDIATE RELEASE

FRIDAY, JANUARY 7, 2022

 

HURCO REPORTS FOURTH QUARTER AND FULL YEAR RESULTS FOR FISCAL 2021

 

INDIANAPOLIS, INDIANA – January 7, 2022 -- Hurco Companies, Inc. (Nasdaq: HURC) today reported results for the fourth fiscal quarter and fiscal year ended October 31, 2021. Hurco recorded net income of $2,096,000, or $0.31 per diluted share, for the fourth quarter of fiscal 2021, compared to a net loss of $3,589,000 or $(0.54) per diluted share, for the corresponding period in fiscal 2020. For fiscal 2021, Hurco reported net income of $6,764,000, or $1.01 per diluted share, compared to a net loss of $6,247,000, or $(0.93) per diluted share, for fiscal 2020. The net loss for the fourth quarter and fiscal 2020 included a one-time $4,903,000 non-cash goodwill impairment charge attributable primarily to the then prolonged ongoing uncertainty in the global markets due to the COVID-19 pandemic.

Sales and service fees for the fourth quarter of fiscal 2021 were $68,982,000, an increase of $24,523,000, or 55%, compared to the corresponding prior year period, and included a favorable currency impact of $1,072,000, or 2%, when translating foreign sales to U.S. Dollars for financial reporting purposes. Sales and service fees for fiscal 2021 were $235,195,000, an increase of $64,568,000, or 38%, compared to fiscal 2020, and included a favorable currency impact of $7,749,000, or 5%, when translating foreign sales to U.S. Dollars for financial reporting purposes. During fiscal 2021, sales increased year-over-year for all product brands and in all regions as countries began to lift the government-mandated COVID-19 stay-at-home orders or other similar operating restrictions put in place in fiscal 2020.

Greg Volovic, Chief Executive Officer, stated, “I’m proud of the way our employees responded to the needs of our customers across the globe during 2021. We rebounded well from very uncertain and unstable times caused by the pandemic. We delivered products in high demand to our customers as we navigated vendor delays, transportation issues, inflationary cost increases, and competitive labor markets. We increased factory production, hired new employees, and completed our new software control platform for multi-axis, multi-spindle turning centers. Most importantly, we provided outstanding customer support and service, a signature part of our brand that sets us apart from our competition. The many contributions of our employees are greatly appreciated. Global sales for fiscal 2021 totaled $235.2 million and orders totaled $265.4 million, reflecting year-over-year increases of 38% and 59%, respectively. We also managed to move from approximately $10.0 million in operating losses in fiscal 2020 to approximately $10.0 million in operating income in fiscal 2021. We leveraged the strength of our balance sheet to grow our business and we believe we are prepared for unexpected challenges, poised for further growth, and focused on continuous innovation as we look forward into fiscal 2022.”  


The following table sets forth net sales and service fees by geographic region for the fourth quarter and fiscal year ended October 31, 2021 and 2020 (dollars in thousands):

Three Months Ended

October 31,

Fiscal Year Ended

October 31,

2021

2020

$

Change

%

Change

2021

2020

$

Change

%

Change

Americas

$24,180

$15,453

$ 8,727

56%

$86,301

$67,498

$18,803

28%

Europe

35,924

23,577

12,347

52%

117,522

77,936

39,586

51%

Asia Pacific

8,878

5,429

3,449

64%

31,372

25,193

6,179

25%

Total

$68,982

$44,459

$24,523

55%

$235,195

$170,627

$64,568

38%

Sales in the Americas for the fourth quarter and fiscal 2021 increased by 56% and 28%, respectively, compared to the corresponding periods in fiscal 2020. The increases in sales in the Americas for the fourth quarter and fiscal 2021 were primarily due to an increased volume of shipments of Hurco, Takumi and Milltronics machines, and an increase in sales of ProCobots automation solutions. The improved sales volume of machines primarily reflected increased shipments of Hurco Lathes, VM and VMX machines, as well as Milltronics Lathes and toolroom machines.

European sales for the fourth quarter and fiscal 2021 increased by 52% and 51%, respectively, compared to the corresponding periods in fiscal 2020, and included a favorable currency impact of 3% and 8%, respectively, when translating foreign sales to U.S. Dollars for financial reporting purposes. The year-over-year increases in European sales were primarily attributable to an increased volume of shipments of Hurco and Takumi machines in Germany, the United Kingdom, France and Italy, as well as increased shipments of machine tool components and accessories manufactured by our wholly owned subsidiary, LCM Precision Technology S.r.l. (“LCM”). The improved sales volume of machines was primarily attributable to increased shipments of Hurco Lathes, VM and VMX machines.

Asian Pacific sales for the fourth quarter and fiscal 2021 increased by 64% and 25%, respectively, compared to the corresponding periods in fiscal 2020, and included a favorable currency impact of 6% for each period, when translating foreign sales to U.S. Dollars for financial reporting purposes. The year-over-year increases in Asian Pacific sales for the fourth quarter and fiscal 2021 were primarily due to increased volume of shipments of Hurco machines in Southeast Asia and China and Takumi machines in Taiwan.

Orders for the fourth quarter of fiscal 2021 were $75,666,000, an increase of $26,951,000, or 55%, compared to the corresponding period in fiscal 2020, and included a favorable currency impact of $361,000, or 1%, when translating foreign orders to U.S. Dollars. Orders for fiscal 2021 were $265,421,000, an increase of $98,483,000, or 59%, compared to fiscal 2020, and included a favorable currency impact of $8,364,000, or 5%, when translating foreign orders to U.S. Dollars. Similar to sales, orders increased year-over-year for all product brands and in all regions.


The following table sets forth new orders booked by geographic region for the fourth quarter and fiscal year ended October 31, 2021 and 2020 (dollars in thousands):

Three Months Ended

October 31,

Fiscal Year Ended

October 31,

2021

2020

$

Change

%

Change

2021

2020

$

Change

%

Change

Americas

$28,779

$17,177

$11,602

68%

$95,767

$67,577

$28,190

42%

Europe

39,608

25,603

14,005

55%

133,802

77,079

56,723

74%

Asia Pacific

7,279

5,935

1,344

23%

35,852

22,282

13,570

61%

Total

$75,666

$48,715

$26,951

55%

$265,421

$166,938

$98,483

59%

Orders in the Americas for the fourth quarter and fiscal 2021 increased by 68% and 42%, respectively, compared to the corresponding periods in fiscal 2020. The increased order levels reflected a higher demand for all categories of Hurco, Takumi, and Milltronics machines as well as increased demand for ProCobots automation solutions.

European orders for the fourth quarter and fiscal 2021 increased by 55% and 74%, respectively, compared to the corresponding prior year periods, and included a favorable currency impact of 1% and 9%, respectively, when translating foreign orders to U.S. Dollars. The year-over-year increases in orders were driven primarily by increased customer demand for Hurco and Takumi machines in Germany, the United Kingdom, France, and Italy, as well as increased demand for LCM machine tool components and accessories.

Asian Pacific orders for the fourth quarter and fiscal 2021 increased by 23% and 61%, respectively, compared to the corresponding prior year periods, and included a favorable currency impact of 2% and 8%, respectively, when translating foreign orders to U.S. Dollars. The increase in orders for the fourth quarter of fiscal 2021 was primarily due to increased customer demand for Hurco vertical milling machines in Southeast Asia and China. The year-over-year increase in Asian Pacific orders for fiscal 2021 was primarily due to increased customer demand for Hurco vertical milling machines in Southeast Asia, China and India, as well as increased customer demand for Takumi machines in Taiwan.

Gross profit for the fourth quarter of fiscal 2021 was $16,934,000, or 25% of sales, compared to $9,520,000, or 21% of sales, for the corresponding prior year period. Gross profit for fiscal 2021 was $56,249,000, or 24% of sales, compared to $36,457,000, or 21% of sales, for fiscal 2020. The year-over-year increases in gross profit as a percentage of sales for the fourth quarter and fiscal 2021 reflected improved leverage of fixed overhead costs through higher levels of machine sales, improved pricing due to changes in demand and more normalized inventory levels, and the favorable impact of foreign currency translation compared to the corresponding prior year periods. Additionally, approximately $1,243,000 of the gross profit improvement for fiscal 2021 was a result of recording the employee retention credit extended to Hurco under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act and the American Rescue Plan Act of 2021 (the “employee retention credit”). The improvement in gross profit as a percentage of sales in the fourth quarter and fiscal 2021 was partially offset by inflationary increases in cost of materials and higher costs associated with transporting finished goods on a global basis.

 


Selling, general, and administrative expenses for the fourth quarter of fiscal 2021 were $13,829,000, or 20% of sales, compared to $10,344,000, or 23% of sales, in the corresponding fiscal 2020 period, and included an unfavorable currency impact of $108,000, when translating foreign expenses to U.S. Dollars for financial reporting purposes. Selling, general, and administrative expenses for fiscal 2021 were $46,001,000, or 20% of sales, compared to $41,416,000, or 24% of sales, for fiscal 2020, and included an unfavorable currency impact of $1,241,000, when translating foreign expenses to U.S. Dollars for financial reporting purposes.  Selling, general and administrative expenses for the fourth quarter and fiscal 2021 trended downward as a percentage of sales from fiscal 2020 as a result of the cost management plans implemented during fiscal 2020 and continued during fiscal 2021. Additionally, approximately $1,672,000 of the selling, general, and administrative expense reduction for fiscal 2021 was a result of recording the employee retention credit.

Operating income for the fourth quarter of fiscal 2021 was $3,105,000, or 5% of sales, compared to an operating loss of $5,727,000, or (13%) of sales, for the corresponding prior year period. Operating income for fiscal 2021 was $10,248,000, or 4% of sales, compared to an operating loss of $9,862,000, or (6%) of sales, for fiscal 2020. The year-over-year increases in operating income for the fourth quarter and fiscal 2021 were primarily due to increases in the sales volume of Hurco, Takumi and Milltronics machines, LCM components and accessories and ProCobots automation solutions. Operating income for fiscal 2021 included a benefit of $2,915,000 related to the employee retention credit recorded during fiscal 2021. The operating loss for the fourth quarter and fiscal 2020 included a one-time $4,903,000 non-cash goodwill impairment charge attributable primarily to the then prolonged ongoing uncertainty in the global markets due to the COVID-19 pandemic.

The effective tax rates for the fourth quarter and fiscal 2021 were 26% and 33%, respectively, compared to 39% and 42% in the corresponding prior year periods. The year-over-year changes in the effective tax rates were primarily due to changes in geographic mix of income and loss that include jurisdictions with differing tax rates, various discrete income tax expense items, and more specifically related to the prior year periods, changes in income tax laws to address the unfavorable impact of the COVID-19 pandemic.

Cash and cash equivalents totaled $84,063,000 at October 31, 2021, compared to $57,859,000 at October 31, 2020. Working capital was $208,700,000 at October 31, 2021, compared to $200,974,000 at October 31, 2020. The increase in working capital was primarily driven by the increase in cash and accounts receivable, partially offset by an increase in accounts payable.

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 Company also produces high-value machine tool components and accessories and provides automation solutions that can be integrated with any 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, the Netherlands, Poland, Singapore, 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 impact of the COVID-19 pandemic and other public health epidemics and pandemics on the global economy, our business and operations, our employees and the business, operations and economies of our customers and suppliers; the cyclical nature of the machine tool industry; uncertain economic conditions, which may adversely affect overall demand, in the Americas, Europe and Asia Pacific markets; the risks of our international operations; governmental actions, initiatives and regulations, including import and export restrictions, duties and tariffs and changes to tax laws; the effects of changes in currency exchange rates; competition with larger companies that have greater financial resources; the United Kingdom’s withdrawal from the European Union (Brexit); our dependence on new product development; the need and/or ability to protect our intellectual property assets; the limited number of our manufacturing and supply chain sources; increases in the prices of raw materials, especially steel and iron products; the effect of the loss of members of senior management and key personnel; our ability to integrate acquisitions; acquisitions that could disrupt our operations and affect operating results; failure to comply with data privacy and security regulations; breaches of our network and system security measures; possible obsolescence of our technology and the need to make technological advances; impairment of our assets; negative or unforeseen tax consequences; uncertainty concerning our ability to use tax loss carryforwards; changes in the SOFR rate; and other risks and uncertainties discussed more fully under the caption “Risk Factors” in our 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, Treasurer, & Chief Financial Officer

317-293-5309


Hurco Companies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended October 31,

Twelve Months Ended October 31,

2021

2020

2021

2020

(audited)

(audited)

Sales and service fees

$ 68,982

$ 44,459

$ 235,195

$ 170,627

Cost of sales and service

52,048

34,939

178,946

134,170

Gross profit

16,934

9,520

56,249

36,457

Selling, general and administrative expenses

13,829

10,344

46,001

41,416

Goodwill impairment

-

4,903

-

4,903

Operating income (loss)

3,105

(5,727)

10,248

(9,862)

Interest expense

1

25

24

94

Interest income

1

26

34

130

Investment income

19

57

173

133

Other expense, net

273

177

310

1,110

Income (loss) before taxes

2,851

(5,846)

10,121

(10,803)

Provision (benefit) for income taxes

755

(2,257)

3,357

(4,556)

Net income (loss)

$ 2,096

($ 3,589)

$ 6,764

($ 6,247)

Income (loss) per common share

Basic

$ 0.31

($ 0.54)

$ 1.01

($ 0.93)

Diluted

$ 0.31

($ 0.54)

$ 1.01

($ 0.93)

Weighted average common shares outstanding

Basic

6,607

6,565

6,595

6,670

Diluted

6,633

6,565

6,608

6,670

Dividends per share

$ 0.14

$ 0.13

$ 0.55

$ 0.51

OTHER CONSOLIDATED FINANCIAL DATA

Three Months Ended October 31,

Twelve Months Ended October 31,

Operating Data:

2021

2020

2021

2020

Gross margin

25%

21%

24%

21%

SG&A expense as a percentage of sales

20%

23%

20%

24%

Goodwill impairment charges as a percentage of sales

0%

11%

0%

3%

Operating income (loss) as a percentage of sales

5%

(13)%

4%

(6)%

Pre-tax income (loss) as a percentage of sales

4%

(13)%

4%

(6)%

Effective tax rate

26%

39%

33%

42%

Depreciation and amortization

$ 1,043

$ 1,129

$ 4,193

$ 4,547

Capital expenditures

$ 535

$ 486

$ 2,369

$ 1,656

Balance Sheet Data:

10/31/2021

10/31/2020

Working capital

$ 208,700

$ 200,974

Days sales outstanding (unaudited)

42

45

Inventory turns (unaudited)

1.2

0.9

Capitalization

Total debt

--

--

Shareholders' equity

238,419

231,148

Total

$ 238,419

$ 231,148


Hurco Companies, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

October 31,

October 31,

2021

2020

ASSETS

(audited)

(audited)

Current assets:

Cash and cash equivalents

$ 84,063

$ 57,859

Accounts receivable, net

42,620

27,686

Inventories, net

148,216

149,864

Derivative assets

905

968

Prepaid assets

13,091

13,803

Other

975

1,231

Total current assets

289,870

251,411

Property and equipment:

Land

868

868

Building

7,352

7,352

Machinery and equipment

29,533

29,195

Leasehold improvements

5,172

4,754

42,925

42,169

Less accumulated depreciation and amortization

(32,318)

(30,248)

Total property and equipment, net

10,607

11,921

Non-current assets:

Software development costs, less accumulated amortization

7,553

7,840

Intangible assets, net

1,565

1,846

Operating lease - right of use assets, net

10,624

11,748

Deferred income taxes

3,154

2,479

Investments and other assets, net

9,562

8,410

Total non-current assets

32,458

32,323

Total assets

$ 332,935

$ 295,655

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 48,881

$ 27,643

Customer deposits

8,593

5,356

Derivative liabilities

467

872

Operating lease liabilities

4,221

4,132

Accrued payroll and employee benefits

10,389

6,931

Accrued income taxes

1,192

285

Accrued expenses

5,911

4,018

Accrued warranty expenses

1,516

1,200

Total current liabilities

81,170

50,437

Non-current liabilities:

Deferred income taxes

68

131

Accrued tax liability

1,749

1,918

Operating lease liabilities

6,794

7,989

Deferred credits and other

4,735

4,032

Total non-current liabilities

13,346

14,070

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; 6,691,052 and 6,636,906 shares issued and 6,617,717 and 6,565,163 shares outstanding, as of October 31, 2021 and October 31, 2020, respectively

662

657

Additional paid-in capital

63,924

60,997

Retained earnings

175,574

172,484

Accumulated other comprehensive loss

(1,741)

(2,990)

Total shareholders' equity

238,419

231,148

Total liabilities and shareholders' equity

$ 332,935

$ 295,655