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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): September 5, 2014

 

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))

 

 
 

 

Item 2.02Results of Operations and Financial Condition

 

On September 5, 2014, Hurco Companies, Inc. (the "Registrant") reported its results of operations for the third quarter ended July 31, 2014. The Registrant'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. The attached Exhibit 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 September 5, 2014

 

 
 

 

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: September 5, 2014  
       
  HURCO COMPANIES, INC.  
       
       
  By: /s/ Sonja K. McClelland  
    Sonja K. McClelland, Vice President, Secretary,
Treasurer and Chief Financial Officer		  

 

 
 

 

EXHIBIT INDEX

 

99.1Press Release of Hurco Companies, Inc. dated September 5, 2014

 

 

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

Friday, September 5, 2014

HURCO REPORTS THIRD QUARTER RESULTS

 

INDIANAPOLIS, INDIANA, — September 5, 2014, Hurco Companies, Inc. (Nasdaq, Global Select Market: HURC) today reported net income of $4,375,000, or $0.66 per diluted share, for its third fiscal quarter ended July 31, 2014, compared to $854,000, or $0.13 per diluted share, for the corresponding period in fiscal 2013. For the first nine months of fiscal 2014, Hurco reported net income of $10,280,000, or $1.56 per diluted share, compared to $6,291,000, or $0.96 per diluted share, for the corresponding period in fiscal 2013.

 

Sales and service fees for the third quarter of fiscal 2014 totaled $55,379,000, an increase of $10,221,000, or 23%, compared to the third quarter of fiscal 2013. Sales and service fees for the nine months ended July 31, 2014, totaled $160,080,000, an increase of $21,218,000, or 15%, compared to the corresponding period in fiscal 2013. The year-over-year increases in sales and service fees for the third quarter and the first nine months of fiscal 2014 benefitted from favorable currency impacts of approximately $1,655,000 and $3,956,000, respectively, when translating foreign sales to U.S. Dollars for financial reporting purposes.

 

The following table sets forth sales and service fees by geographic region for the third quarter and the first nine months of fiscal 2014 and 2013, respectively (in thousands):

 

   Three Months Ended   Nine Months Ended 
   July 31,   July 31, 
              $    %              $    % 
    2014    2013    Change    Change    2014    2013    Change    Change 
North America  $13,643   $14,730   $(1,087)   -7%  $42,223   $44,062   $(1,839)   -4%
Europe   36,627    25,973    10,654    41%   100,898    82,539    18,359    22%
Asia Pacific   5,109    4,455    654    15%   16,959    12,261    4,698    38%
 Total  $55,379   $45,158   $10,221    23%  $160,080   $138,862   $21,218    15%

 

Sales and service fees in Europe and the Asia Pacific region increased during the third quarter of fiscal 2014 by 41% and 15%, respectively, compared to the corresponding prior year period. The overall improvement in sales for these regions was driven by increased shipments and a favorable mix of higher-performance machines. European sales and service fees for the third quarter and the first nine months of fiscal 2014 included $2,616,000 and $6,419,000, respectively, of sales from electro-mechanical components and accessories manufactured by Hurco’s Italian-based subsidiary, LCM Precision Technologies (LCM), compared to $523,000, representing one month’s sales in each of those periods in fiscal 2013. Hurco acquired the LCM machine tool component business on July 1, 2013. The increase in European sales and service fees for the third quarter and the first nine months of fiscal 2014 benefitted from favorable currency impacts of approximately $1,735,000 and $4,249,000, respectively, due primarily to a stronger Euro and Pound Sterling when translating foreign sales to U.S. Dollars for financial reporting purposes.

 

 
 

 

Sales and service fees in North America decreased during the third quarter of fiscal 2014 by 7% compared to the corresponding prior year period. During the first nine months of fiscal 2014, sales in North America have experienced some market softening in comparison to the record level sales achieved during fiscal 2013. In general, the softening of sales in North America is not unusual in the months prior to the International Manufacturing Technology Show which is held in September of even-numbered years.

 

Orders for the third quarter of fiscal 2014 were $56,378,000, an increase of $10,244,000, or 22%, over the corresponding period in fiscal 2013. European orders for the third quarter of fiscal 2014 included $1,258,000 of LCM products compared to $3,768,000 in the third quarter of fiscal 2013. LCM orders for the third quarter of fiscal 2013 included backlog orders existing at the date of acquisition and one month of new orders booked subsequent to the acquisition. Orders for the first nine months of fiscal 2014 were $167,152,000, an increase of $21,145,000, or 14%, over the corresponding period in fiscal 2013 and included $7,285,000 of orders for LCM products. The increase in European orders for the third quarter and the first nine months of fiscal 2014 were primarily driven by increased orders in Germany and England. The year-over-year improvement in Asian Pacific orders for the third quarter and nine month periods included the benefit of multiple machine orders and a favorable mix of higher-performance machines. The impact of currency translation on orders booked in the third quarter and the first nine months of fiscal 2014 was consistent with the impact on sales in those periods.

 

The following table sets forth new orders booked by geographic region for the third quarter and the first nine months of fiscal 2014 and 2013, respectively:

 

   Three Months Ended   Nine Months Ended 
   July 31,   July 31, 
           $   %           $   % 
   2014   2013   Change   Change   2014   2013   Change   Change 
North America  $14,039   $14,427   $(388)   -3%  $40,040   $42,076   $(2,036)   -5%
Europe   36,368    28,267    8,101    29%   110,698    89,719    20,979    23%
Asia Pacific   5,971    3,440    2,531    74%   16,414    14,212    2,202    15%
 Total  $56,378   $46,134   $10,244    22%  $167,152   $146,007   $21,145    14%

 

Hurco’s gross profit for the third quarter of fiscal 2014 was $18,012,000, or 33% of sales, compared to $11,715,000, or 26% of sales, for the corresponding period in fiscal 2013. Gross profit for the first nine months of fiscal 2014 was $48,560,000, or 30% of sales, compared to $39,914,000, or 29% of sales, for the corresponding prior year period. The increases in gross profit were attributable to a higher sales volume, particularly in Europe, the primary market for higher-performance machines, and the increased cost efficiencies realized from higher production levels during fiscal 2014.

 

Selling, general and administrative expenses for the third quarter of fiscal 2014 were $11,869,000, or 21% of sales, compared to $10,012,000, or 22% of sales, in the corresponding period in fiscal 2013. Selling, general and administrative expenses for the first nine months of fiscal 2014 were $33,675,000, or 21% of sales, compared to $29,611,000, or 21% of sales, for the corresponding prior year period. The year-over-year increases in selling, general and administrative expenses were primarily due to incremental operating expenses associated with the acquisition of the LCM business and increased incentive compensation expense.

 

 
 

 

The effective tax rate for the third quarter of fiscal 2014 was 28%, compared to 24% for the corresponding prior year period. The effective tax rate for the first nine months of fiscal 2014 was 29%, compared to 33% for the corresponding prior year period. The changes in effective tax rates in the year-over-year comparisons reflected the shift in geographic mix of income or loss among tax jurisdictions.

 

Cash and cash equivalents totaled $51,345,000 at July 31, 2014, compared to $42,804,000 at October 31, 2013.

 

Michael Doar, Chief Executive Officer, stated, “I am extremely pleased that Europe has performed so well this quarter, with marked increases in both sales and orders. Europe continues to be an extremely important market for Hurco due to the fact that it accounts for a large percentage of our high-performance machines. We are gaining traction in Asia as we continue to identify companies with more complex manufacturing needs, which is important since these companies can realize the greatest benefit from our control technologies. While activity in North America was somewhat softer than in the corresponding periods in 2013, I am confident our new machines, next generation control and new software technologies will generate excitement at the upcoming International Manufacturing Technology Show as customers seek to increase their productivity and profitability.”

 

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, 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

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 July 31,   Nine Months Ended July 31, 
   2014   2013   2014   2013 
   (unaudited)   (unaudited) 
Sales and service fees  $55,379   $45,158   $160,080   $138,862 
                     
Cost of sales and service   37,367    33,443    111,520    98,948 
Gross profit   18,012    11,715    48,560    39,914 
                     
Selling, general and administrative expenses   11,869    10,012    33,675    29,611 
Operating income   6,143    1,703    14,885    10,303 
                     
Interest expense   65    74    196    194 
                     
Interest income   23    14    55    61 
                     
Investment income (expense)   4    4    40    19 
                     
Other (income) expense, net   46    530    331    861 
                     
Income before income taxes   6,059    1,117    14,453    9,328 
                     
Provision for income taxes   1,684    263    4,173    3,037 
                     
Net income  $4,375   $854   $10,280   $6,291 
                     
Income per common share                    
                     
Basic  $0.67   $0.13   $1.57   $0.96 
Diluted  $0.66   $0.13   $1.56   $0.96 
                     
Weighted average common shares outstanding                    
Basic   6,505    6,458    6,493    6,452 
Diluted   6,548    6,507    6,529    6,495 

 

OTHER CONSOLIDATED FINANCIAL DATA  Three Months Ended July 31,   Nine Months Ended July 31, 
Operating Data:  2014   2013   2014   2013 
   (unaudited)   (unaudited) 
Gross margin   33%   26%   30%   29%
                     
SG&A expense as a percentage of sales   21%   22%   21%   21%
                     
Operating income as a percentage of sales   11%   4%   9%   7%
                     
Pre-tax income as a percentage of sales   11%   2%   9%   7%
                     
Effective tax rate   28%   24%   29%   33%
                     
Depreciation and amortization   808    791    2,359    2,506 
                     
Capital expenditures   761    608    2,135    1,897 

 

Balance Sheet Data:   7/31/2014   10/31/2013
     (unaudited)      
Working capital (excluding cash)  $88,300  $86,512 
          
Days sales outstanding (unaudited)   48   45 
          
Inventory turns (unaudited)   1.5   1.4 
          
Capitalization         
Total debt  $3,239  $3,665 
Shareholders' equity   161,252   151,491 
Total  $164,491  $155,156 

 

 
 

 

Hurco Companies, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

   July 31,   October 31, 
   2014   2013 
   (Unaudited)   (Audited) 
ASSETS        
Current assets:        
Cash and cash equivalents  $51,345   $42,804 
Accounts receivable, net   37,620    36,145 
Inventories, net   99,338    95,260 
Deferred income taxes   2,096    2,080 
Derivative assets   1,189    699 
Prepaid expenses   8,691    6,584 
Other   1,479    1,430 
Total current assets   201,758    185,002 
           
Property and equipment:          
Land   782    782 
Building   7,314    7,326 
Machinery and equipment   19,787    19,059 
Leasehold improvements   3,594    3,634 
    31,477    30,801 
Less accumulated depreciation and amortization   (19,490)   (18,502)
    11,987    12,299 
           
Non-current assets:          
       Software development costs, less accumulated amortization   3,625    3,714 
       Goodwill   2,771    2,807 
       Intangible assets, net   1,811    2,155 
       Other assets   5,746    5,258 
   $227,698   $211,235 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable  $41,819   $35,527 
Derivative liabilities   668    1,212 
Accrued expenses   16,387    15,282 
Short-term debt   3,239    3,665 
Total current liabilities   62,113    55,686 
           
Non-current liabilities:          
Deferred income taxes   804    743 
Accrued tax liability   1,127    1,103 
Deferred credits and other obligations   2,402    2,212 
Total liabilities   66,446    59,744 
           
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;          
6,585,918 and 6,533,510 shares issued; and 6,504,880 and 6,465,054 shares outstanding,          
as of July 31, 2014 and October 31, 2013, respectively   651    647 
Additional paid-in capital   55,651    54,698 
Retained earnings   107,174    98,130 
Accumulated other comprehensive loss   (2,224)   (1,984)
Total shareholders' equity   161,252    151,491 
   $227,698   $211,235