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 3, 2016

 

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):

 

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

 

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

 

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

 

oPre-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 June 3, 2016, Hurco Companies, Inc. (the "Registrant") reported its results of operations for the second fiscal quarter ended April 30, 2016. 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 June 3, 2016

 

 

 

 

 

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 3, 2016
     
  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 June 3, 2016

 

 

 

EXHIBIT 99.1 

 

 

FOR IMMEDIATE RELEASE

FRIDAY, JUNE 3, 2016

 

HURCO REPORTS FISCAL 2016 SECOND QUARTER RESULTS

 

INDIANAPOLIS, INDIANA – June 3, 2016, Hurco Companies, Inc. (Nasdaq Global Select Market: HURC) today reported results for the second fiscal quarter ended April 30, 2016. Hurco recorded net income of $3,674,000, or $0.56 per diluted share, for the second quarter of fiscal 2016 compared to net income of $3,961,000, or $0.60 per diluted share, for the corresponding period in fiscal 2015. For the first six months of fiscal 2016, Hurco reported net income of $7,569,000, or $1.14 per diluted share, compared to $7,727,000, or $1.17 per diluted share, for the corresponding period in fiscal 2015.

 

Sales and service fees for the second quarter of fiscal 2016 were $52,029,000, an increase of $1,846,000, or 4%, compared to the corresponding period in fiscal 2015. Excluding a negative currency impact of $733,000, sales and service fees for the second quarter of fiscal 2016 reflected growth of $2,579,000, or 5%, over the corresponding period in fiscal 2015. Sales for the second quarter of fiscal 2016 included $4,529,000 from the businesses of Milltronics and Takumi, which Hurco acquired in July 2015. Sales and service fees for the first six months of fiscal 2016 were $108,532,000, an increase of $7,377,000, or 7%, compared to the corresponding period in fiscal 2015. Excluding a negative currency impact of $4,006,000, sales and service fees for the first six months of fiscal 2016 reflected growth of $11,383,000, or 11%, over the corresponding period in fiscal 2015. Sales for the first six months of fiscal 2016 included $15,490,000 from the Milltronics and Takumi businesses.

 

The following table sets forth net sales and service fees by geographic region for the second quarter and first six months of fiscal 2016 and 2015 (in thousands):

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
              $    %              $    % 
    2016    2015    Change    Change    2016    2015    Change    Change 
North America  $14,933   $13,735   $1,198    9%  $33,874   $28,586   $5,288    18%
Europe   32,006    32,113    (107)   0%   61,010    63,913    (2,903)   -5%
Asia Pacific   5,090    4,335    755    17%   13,648    8,656    4,992    58%
 Total  $52,029   $50,183   $1,846    4%  $108,532   $101,155   $7,377    7%

 

North American sales for the second quarter of fiscal 2016 increased by 9% compared to the corresponding period in fiscal 2015, primarily due to sales from the acquired business of Milltronics Manufacturing Company. Milltronics sales totaled $3,070,000 for the second quarter of fiscal 2016 and more than offset the decrease in non-Milltronics North American sales of $1,872,000, or 14%, year-over-year. Hurco acquired the assets of the Milltronics business in July 2015 and is operating it through its subsidiary Milltronics USA, Inc. Milltronics manufactures and sells knee mills, tool room bed mills, vertical machining centers, combination lathes, slant-bed lathes, and horizontal machining centers. North American sales for the first six months of fiscal 2016 increased by 18% compared to the corresponding period in fiscal 2015, largely as a result of Milltronics sales of $9,154,000, which were partially offset by decreased non-Milltronics sales in North America of $3,866,000, or 14%. The year-over-year decreases in non-Milltronics North American sales in the second quarter and first six months of fiscal 2016 were due to a lower sales volume and lower sales mix of higher-performance machines.

 

 

 

 

European sales for the second quarter of fiscal 2016 were relatively unchanged compared to the corresponding period in fiscal 2015, reflecting sales growth of 2% offset by a negative currency impact of 2%. European sales for the first six months of fiscal 2016 decreased by 5% compared to the corresponding period in fiscal 2015, reflecting sales growth of 1% that was more than offset by a negative currency impact of 6%. The year-over-year growth in European sales, excluding the effect of the negative currency impact, was driven by increased shipments of higher-performance machines in Germany, France and Italy.

 

Asian Pacific sales for the second quarter of fiscal 2016 increased by 17% compared to the corresponding period in fiscal 2015, primarily due to sales from the acquired business of Takumi Machinery Co., Ltd. Takumi sales for the second quarter of fiscal 2016 totaled $1,459,000 and more than offset a negative currency impact of $149,000, or 3%, and a decrease in non-Takumi Asian Pacific sales of $555,000, or 13%. Hurco acquired certain assets of Takumi, a Taiwan-based business, in July 2015 and is operating it through its subsidiary, Hurco Manufacturing Limited. Takumi designs and manufactures CNC vertical machining centers, double column machining centers, high speed bridge machines and other machine tools equipped with industrial controls. Asian Pacific sales for the first six months of fiscal 2016 increased by 58% compared to the corresponding period in fiscal 2015 and reflected sales from Takumi of $6,336,000, which was partially offset by a negative currency impact of $337,000, or 4%, and decreased non-Takumi Asian Pacific sales of $1,007,000, or 12%. The year-over-year reductions in non-Takumi Asian Pacific sales in the second quarter and first six months of fiscal 2016 were driven by a lower volume of sales in Southeast Asia.

 

Orders for the second quarter of fiscal 2016 were $53,220,000 compared to $53,101,000 in the corresponding period in fiscal 2015. Excluding a negative currency impact of $427,000, or 1%, orders increased by $546,000, or 1%, over the corresponding period in fiscal 2015. Orders for the first six months of fiscal 2016 were $104,510,000 compared to $98,110,000 in the corresponding period in fiscal 2015. Excluding a negative currency impact of $3,551,000, or 3%, orders increased by $9,951,000, or 10%, over the corresponding period in fiscal 2015. Orders for the second quarter and first six months of fiscal 2016 included $7,210,000 and $13,439,000, respectively, of orders from the Milltronics and Takumi businesses.

 

The following table sets forth new orders booked by geographic region for the second quarter and first six months of fiscal 2016 and 2015 (in thousands):

 

   Three Months Ended   Six Months Ended 
   April 30,   April 30, 
              $    %              $    % 
    2016    2015    Change    Change    2016    2015    Change    Change 
North America  $12,106   $15,720   $(3,614)   -23%  $28,969   $29,631   $(662)   -2%
Europe   33,290    33,666    (376)   -1%   61,908    59,645    2,263    4%
Asia Pacific   7,824    3,715    4,109    111%   13,633    8,834    4,799    54%
Total  $53,220   $53,101   $119    0%  $104,510   $98,110   $6,400    7%

 

North American orders for the second quarter and first six months of fiscal 2016 included $2,653,000 and $6,668,000, respectively, of orders from the business of Milltronics. Excluding the increase in orders related to the Milltronics business, orders for North America decreased by 40% and 25% in the second quarter and first six months, respectively, of fiscal 2016 compared to the corresponding prior year periods. The decreases in non-Milltronics North American orders year-over-year were due to decreased overall customer demand and decreased demand for our higher-performance machines.

 

 

 

 

European orders for the second quarter of fiscal 2016 decreased by 1% compared to the corresponding prior year period, due mainly to negative currency impact. For the first six months of fiscal 2016, orders increased by 4% compared to the corresponding prior year period, reflecting order growth of 9%, partially offset by a negative currency impact of 5%. The year-over-year increase in orders in the first six months of fiscal 2016 was due to increased customer demand for our higher-performance machines in Germany, France and Italy.

 

Asian Pacific orders for the second quarter of fiscal 2016 included $4,557,000 of orders related to the Takumi business. Excluding the orders related to the Takumi business, Asian Pacific orders for the second quarter of fiscal 2016 decreased by 12% compared to the corresponding prior year period, primarily due to weaker market conditions in China and Southeast Asia. Asian Pacific orders for the first six months of fiscal 2016 increased by 54% compared to the corresponding period in fiscal 2015 and reflected orders from Takumi of $6,771,000, partially offset by a negative currency impact of $255,000, or 3%, and decreased non-Takumi Asian Pacific orders of $1,717,000, or 19%. The year-over-year reduction in non-Takumi Asian Pacific orders was driven by a lower volume of customer demand in China and Southeast Asia.

 

Gross profit for the second quarter of fiscal 2016 was $16,610,000, or 32% of sales, compared to $16,559,000, or 33% of sales, for the corresponding prior year period. For the first six months of fiscal 2016, gross profit was $34,308,000, or 32% of sales, compared to $33,106,000, or 33% of sales, for the corresponding prior year period. The year-over-year decrease in gross profit as a percentage of sales in each period was due to the new mix of value and industrial brand Milltronics and Takumi machines with the higher-performance Hurco machines. In addition, pricing pressure and the negative impact of foreign currency also contributed to the slight decrease in gross profit as a percentage of sales.

 

Selling, general and administrative expenses for the second quarter of fiscal 2016 were $11,943,000, or 23% of sales, compared to $10,850,000, or 22% of sales, in the corresponding period in fiscal 2015. For the first six months of fiscal 2016, selling, general and administrative expenses were $23,904,000, or 22% of sales, compared to $21,304,000, or 21% of sales, in the corresponding period in fiscal 2015. Selling, general and administrative expenses for the second quarter and first six months of fiscal 2016 included approximately $1,213,000 and $2,401,000, respectively, of Milltronics and Takumi operating expenses.

 

The effective tax rate for the second quarter and first six months of fiscal 2016 was 25% and 28%, respectively, compared to 32% and 34% in the corresponding prior year periods. The changes in the effective tax rates year-over-year were due to changes in geographic mix of income and loss among tax jurisdictions.

 

Cash and cash equivalents totaled $45,325,000 at April 30, 2016, compared to $55,237,000 at October 31, 2015. Working capital, excluding cash and cash equivalents, was $110,086,000 at April 30, 2016 compared to $95,789,000 at October 31, 2015. The increase in working capital, excluding cash and cash equivalents, was primarily due to increased inventories.

 

Michael Doar, Chief Executive Officer, stated, “While the negative impact of currency translation and the weaker than anticipated North American market affected our results for the second quarter, I am encouraged by our continued financial performance, which reflects solid European demand for our higher-performance Hurco machines and global demand for the recently acquired industrial brand CNC machines from Takumi.   This is an exciting year for Hurco as we will be exhibiting three CNC machine brands at IMTS, Milltronics, Takumi, and Hurco, showcasing the largest number of new machines in the company’s 48-year history. IMTS will be the official launch of the Takumi brand in North America and a relaunch of the Milltronics brand. IMTS attendees will see impressive product offerings exhibited by all three brands reflecting Hurco’s continued commitment and focus to deliver CNC machines and technologies that increase profits for our customers.”

 

 

 

 

 

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 North and South 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, the U.S., and Taiwan. 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, 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

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,

 
   2016   2015   2016   2015 
   (unaudited)   (unaudited) 
Sales and service fees  $52,029   $50,183   $108,532   $101,155 
                     
Cost of sales and service   35,419    33,624    74,224    68,049 
Gross profit   16,610    16,559    34,308    33,106 
                     
Selling, general and administrative expenses   11,943    10,850    23,904    21,304 
Operating income   4,667    5,709    10,404    11,802 
                     
Interest expense   25    57    49    126 
                     
Interest income   7    22    22    43 
                     
Investment income (expense)   4    6    106    71 
                     
Other (income)  expense, net   (246)   (159)   (20)   148 
                     
Income before taxes   4,899    5,839    10,503    11,642 
                     
Provision for income taxes   1,225    1,878    2,934    3,915 
                     
Net income  $3,674   $3,961   $7,569   $7,727 
                     
Income per common share                    
Basic  $0.56   $0.60   $1.15   $1.17 
Diluted  $0.56   $0.60   $1.14   $1.17 
                     
Weighted average common shares outstanding                    
Basic   6,570    6,547    6,564    6,535 
Diluted   6,641    6,589    6,630    6,578 
                     

 

OTHER CONSOLIDATED FINANCIAL DATA 

Three Months Ended

April 30,

  

Six Months Ended

April 30,

 
Operating Data:  2016   2015   2016   2015 
   (unaudited)   (unaudited) 
Gross margin   32%   33%   32%   33%
                     
SG&A expense as a percentage of sales   23%   22%   22%   21%
                     
Operating income as a percentage of sales   9%   11%   10%   12%
                     
Pre-tax income as a percentage of sales   9%   12%   10%   12%
                     
Effective tax rate   25%   32%   28%   34%
                     
Depreciation and amortization   972    721    1,934    1,447 
                     
Capital expenditures   1,155    1,091    2,267    1,615 
                     
                     
Balance Sheet Data:   4/30/2016    10/31/2015           
     (unaudited)                 
Working capital (excluding cash)  $110,086   $95,789           
                     
Days sales outstanding (unaudited)   58    42           
                     
Inventory turns (unaudited)   1.4    1.6           
                     
Capitalization                    
Total debt  $1,545   $1,583           
Shareholders' equity   180,747    174,568           
Total  $182,292   $176,151           

 

 

 

 

 

 

Hurco Companies, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per-share data)
       

 

   April 30,   October 31, 
   2016   2015 
   (unaudited)   (audited) 
ASSETS          
Current assets:          
Cash and cash equivalents  $45,325   $55,237 
Accounts receivable, net   40,302    41,766 
Inventories, net   122,736    106,308 
Derivative assets   588    1,228 
Prepaid expenses   10,599    9,769 
Other   1,695    1,804 
Total current assets   221,245    216,112 
           
Property and equipment:          
Land   841    841 
Building   7,352    7,314 
Machinery and equipment   24,115    24,026 
Leasehold improvements   3,404    3,323 
    35,712    35,504 
Less accumulated depreciation and amortization   (22,808)   (22,362)
Total property and equipment   12,904    13,142 
           
Non-current assets:          
       Software development costs, less accumulated amortization   4,419    3,905 
       Goodwill   2,403    2,319 
       Intangible assets, net   1,241    1,289 
       Deferred income taxes   4,724    4,721 
       Investments and other assets, net   7,572    7,089 
Total non-current assets   20,359    19,323 
Total assets  $254,508   $248,577 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable  $46,073   $43,458 
Derivative liabilities   2,258    1,071 
Accrued expenses   15,958    18,974 
Short-term debt   1,545    1,583 
Total current liabilities   65,834    65,086 
           
Non-current liabilities:          
Deferred income taxes   2,848    3,998 
Accrued tax liability   998    953 
Deferred credits and other obligations   4,081    3,972 
Total non-current liabilities   7,927    8,923 
           
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;          
6,720,453 and 6,650,517 shares issued; and 6,573,103 and 6,551,718 shares outstanding,          
as of April 30, 2016 and October 31, 2015, respectively   657    655 
Additional paid-in capital   58,296    57,539 
Retained earnings   132,209    125,760 
Accumulated other comprehensive loss   (10,415)   (9,386)
Total shareholders' equity   180,747    174,568 
Total liabilities and shareholders' equity  $254,508   $248,577