INDIANAPOLIS, Jan. 08, 2016 (GLOBE NEWSWIRE) -- Hurco Companies, Inc. (Nasdaq:HURC) today reported results for the fourth fiscal quarter and fiscal year ended October 31, 2015. Hurco recorded net income of $4,804,000, or $0.72 per diluted share, for the fourth quarter of fiscal 2015 compared to net income of $4,863,000, or $0.74 per diluted share, for the corresponding period in fiscal 2014. For fiscal 2015, Hurco reported net income of $16,214,000, or $2.44 per diluted share, compared to $15,143,000, or $2.30 per diluted share, for fiscal 2014.
Sales and service fees for the fourth quarter of fiscal 2015 were $65,693,000, an increase of $3,470,000, or 6%, compared to the corresponding period in fiscal 2014. Excluding the negative currency impact of $5,160,000, sales and service fees for the fourth quarter of fiscal 2015 reflected growth of $8,630,000, or 14%, over the corresponding period in fiscal 2014. Sales and service fees for fiscal 2015 were $219,383,000, a decrease of $2,920,000, or 1%, compared to fiscal 2014. Excluding the negative currency impact of $21,223,000, sales and service fees for fiscal 2015 reflected growth of $18,303,000, or 8%, over fiscal 2014. Sales for the fourth quarter and fiscal 2015 included $8,957,000 and $9,960,000, respectively, from the recently acquired businesses of Milltronics and Takumi.
The following table sets forth net sales and service fees by geographic region for the quarter and fiscal year ended October 31, 2015 and 2014 (in thousands):
| Quarter Ended | Fiscal Year Ended | ||||||||||||||||||||||||
| October 31, | October 31, | ||||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||||
| 2015 | 2014 | Change | Change | 2015 | 2014 | Change | Change | ||||||||||||||||||
| North America | $ | 25,345 | $ | 19,919 | $ | 5,426 | 27 | % | $ | 70,169 | $ | 62,142 | $ | 8,027 | 13 | % | |||||||||
| Europe | 33,936 | 37,303 | (3,367 | ) | -9 | % | 129,335 | 138,201 | (8,866 | ) | -6 | % | |||||||||||||
| Asia Pacific | 6,412 | 5,001 | 1,411 | 28 | % | 19,879 | 21,960 | (2,081 | ) | -9 | % | ||||||||||||||
| Total | $ | 65,693 | $ | 62,223 | $ | 3,470 | 6 | % | $ | 219,383 | $ | 222,303 | $ | (2,920 | ) | -1 | % | ||||||||
North American sales increased during the fourth quarter and fiscal 2015 by 27% and 13%, respectively, compared to the corresponding periods in fiscal 2014. The increases in sales year-over-year were primarily due to sales from the recently acquired business of Milltronics Manufacturing Company totaling $5,718,000 for the fourth quarter and $6,648,000 for the fiscal year. Hurco acquired the assets of this business in July 2015 and is operating it through its newly-formed 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.
European sales for the fourth quarter of fiscal 2015 decreased by 9% compared to the corresponding period in fiscal 2014, reflecting sales growth of 4% and the negative currency impact of 13%. European sales for fiscal 2015 decreased by 6% compared to fiscal 2014, reflecting sales growth of 8% and the negative currency impact of 14%. The year-over-year growth in European sales was driven by increased shipments of higher-performance machines in Germany, France and Italy.
Asian Pacific sales for the fourth quarter increased by 28% compared to the corresponding period in fiscal 2014, reflecting sales growth of 36% and the negative impact of currency of 8%. Asian Pacific sales for fiscal 2015 decreased by 9% compared to fiscal 2014, primarily due to softer markets in China and India and the negative impact of currency. Sales for the fourth quarter and fiscal 2015 included sales from the recently acquired business of Takumi Machinery Co., Ltd totaling $3,239,000 and $3,312,000, respectively. Hurco acquired certain assets of this 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.
Orders for the fourth quarter of fiscal 2015 were $62,301,000, a decrease of $3,001,000, or 5%, compared to the corresponding period in fiscal 2014. Excluding the negative currency impact of $5,466,000, orders reflected growth of $2,465,000, or 4%, over the corresponding period in fiscal 2014. Orders for fiscal 2015 were $223,186,000, a decrease of $9,268,000 or 4%, compared to fiscal 2014. Excluding the negative currency impact of $21,225,000, orders reflected growth of $11,957,000, or 5%, over fiscal 2014. Orders for the fourth quarter and fiscal 2015 included $6,370,000 and $20,706,000, respectively, from the recently acquired businesses of Milltronics and Takumi.
The following table sets forth new orders booked by geographic region for the fourth quarter and fiscal year ended October 31, 2015 and 2014 (in thousands):
| Quarter Ended | Fiscal Year Ended | ||||||||||||||||||||||||
| October 31, | October 31, | ||||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||||
| 2015 | 2014 | Change | Change | 2015 | 2014 | Change | Change | ||||||||||||||||||
| North America | $ | 21,567 | $ | 23,339 | $ | (1,772 | ) | -8 | % | $ | 72,021 | $ | 63,379 | $ | 8,642 | 14 | % | ||||||||
| Europe | 37,311 | 37,797 | (486 | ) | -1 | % | 126,511 | 148,495 | (21,984 | ) | -15 | % | |||||||||||||
| Asia Pacific | 3,423 | 4,166 | (743 | ) | -18 | % | 24,654 | 20,580 | 4,074 | 20 | % | ||||||||||||||
| Total | $ | 62,301 | $ | 65,302 | $ | (3,001 | ) | -5 | % | $ | 223,186 | $ | 232,454 | $ | (9,268 | ) | -4 | % | |||||||
Excluding the $4,327,000 of orders related to the recently acquired Milltronics business, orders for North America decreased by 26% in the fourth quarter of fiscal 2015 compared to the same period in prior year when promotional activities related to the International Manufacturing Technology Show held in September 2014 led to an increase in orders in that period. North American orders for fiscal 2015 include $10,091,000 of orders related to Milltronics.
European orders for the fourth quarter of fiscal 2015 decreased by 1%, reflecting order growth of 13% and the negative currency impact of 14%. The year-over-year increase in orders was due to strong customer demand for our higher performance machines. European orders for fiscal 2015 decreased by 15%, reflecting an order reduction of 1% and the negative currency impact of 14%. The year-over-year reduction in European orders was primarily driven by foreign currency weakness in the United Kingdom and fluctuating customer demand for electro-mechanical components and accessories manufactured by Hurco’s Italian-based subsidiary, LCM Precision Technologies (LCM).
Asian Pacific orders for the fourth quarter and fiscal 2015 included $2,043,000 and $10,615,000, respectively, of orders related to the recently acquired Takumi business. Excluding the orders related to the Takumi business, Asian Pacific orders for the fourth quarter of fiscal 2015 and for fiscal 2015 decreased by 67% and 32%, respectively, compared to the corresponding periods in fiscal 2014 primarily due to softer market conditions in China and India.
Gross profit for the fourth quarter of fiscal 2015 was $19,355,000, or 29% of sales, compared to $20,052,000, or 32% of sales, for the corresponding prior year period. The year-over-year decrease in gross profit as a percentage of sales in the three-month period was due to increased pricing pressure in North America and Europe and the negative impact of foreign currency. Gross profit for fiscal 2015 was $69,091,000, or 31% of sales, compared to $68,612,000, or 31% of sales, for fiscal 2014. The year-over-year improvement in gross profit was primarily attributable to increased sales of higher-performance machines across all regions, net of the pricing pressure and the negative impact of currency.
Selling, general and administrative expenses for the fourth quarter of fiscal 2015 were $12,632,000, or 19% of sales, compared to $12,940,000, or 21% of sales, in the corresponding period in fiscal 2014. Selling, general and administrative expenses for fiscal 2015 were $45,287,000, or 21% of sales, compared to $46,615,000, or 21% of sales, in fiscal 2014. Fiscal year 2015 expenses included approximately $2,393,000 related to Milltronics and Takumi, of which $732,000 represented one-time acquisition costs. Selling, general and administrative expenses were favorably impacted by approximately $809,000, or 1% of sales, and $3,161,000, or 1% of sales, for the fourth quarter and fiscal 2015, respectively, when translating foreign expenses to U.S. Dollars for financial reporting purposes.
The effective tax rate for the fourth quarter of fiscal 2015 was 28%, compared to 30% for the corresponding period in fiscal 2014. The effective tax rate for fiscal 2015 was 31%, compared to 29% for fiscal 2014. Changes in the effective tax rates year-over-year were primarily due to a shift in geographic mix of income and loss among tax jurisdictions.
Cash and cash equivalents totaled $55,237,000 at October 31, 2015, compared to $53,846,000 at October 31, 2014. Working capital, excluding cash and cash equivalents, was $97,774,000 at October 31, 2015 compared to $90,105,000 at October 31, 2014. The increase in working capital, excluding cash, was primarily attributable to inventories acquired from Milltronics and Takumi during fiscal 2015.
Michael Doar, Chief Executive Officer, stated, “Overall, it was a very good year for Hurco. In fact, when excluding the negative impact of currency translation, we had a record year in sales and orders as a result of the strong performance in Europe and the additions of Milltronics and Takumi. The ability of our team to conduct acquisitions and integrate new businesses with Hurco while maintaining focus on product development and accelerating sales is especially noteworthy since Hurco is a relatively small company. I attribute this ability to the culture of agility and industriousness that defines Hurco, as we continually focus on helping our customers be more productive and profitable. All sales regions are performing well, when excluding the impact of foreign currency translation, and the integration of Takumi and Milltronics has been extremely efficient. From a Hurco product standpoint, the transition to our latest control is complete with an enthusiastic reception from customers around the world. Going forward, we remain focused on our strategic plan that provides the flexibility to successfully respond to market needs and navigate economic conditions quickly and efficiently so we can continue the development of technologies that can make manufacturers more productive and profitable.”
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.
| Hurco Companies, Inc. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||
| Three Months Ended October 31, | Twelve Months Ended October 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (unaudited) | ||||||||||||||||
| Sales and service fees | $ | 65,693 | $ | 62,223 | $ | 219,383 | $ | 222,303 | ||||||||
| Cost of sales and service | 46,338 | 42,171 | 150,292 | 153,691 | ||||||||||||
| Gross profit | 19,355 | 20,052 | 69,091 | 68,612 | ||||||||||||
| Selling, general and administrative expenses | 12,632 | 12,940 | 45,287 | 46,615 | ||||||||||||
| Operating income | 6,723 | 7,112 | 23,804 | 21,997 | ||||||||||||
| Interest expense | 24 | 68 | 198 | 264 | ||||||||||||
| Interest income | 1 | 23 | 76 | 78 | ||||||||||||
| Investment income (expense) | 3 | 2 | 78 | 42 | ||||||||||||
| Other (income) expense, net | 48 | 161 | 207 | 492 | ||||||||||||
| Income before taxes | 6,655 | 6,908 | 23,553 | 21,361 | ||||||||||||
| Provision for income taxes | 1,851 | 2,045 | 7,339 | 6,218 | ||||||||||||
| Net income | $ | 4,804 | $ | 4,863 | $ | 16,214 | $ | 15,143 | ||||||||
| Income per common share | ||||||||||||||||
| Basic | $ | 0.73 | $ | 0.74 | $ | 2.46 | $ | 2.31 | ||||||||
| Diluted | $ | 0.72 | $ | 0.74 | $ | 2.44 | $ | 2.30 | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | 6,552 | 6,508 | 6,543 | 6,497 | ||||||||||||
| Diluted | 6,606 | 6,564 | 6,602 | 6,538 | ||||||||||||
| OTHER CONSOLIDATED FINANCIAL DATA | Three Months Ended October 31, | Twelve Months Ended October 31, | ||||||||||||||
| Operating Data: | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| (unaudited) | ||||||||||||||||
| Gross margin | 29 | % | 32 | % | 31 | % | 31 | % | ||||||||
| SG&A expense as a percentage of sales | 19 | % | 21 | % | 21 | % | 21 | % | ||||||||
| Operating income as a percentage of sales | 10 | % | 11 | % | 11 | % | 10 | % | ||||||||
| Pre-tax income as a percentage of sales | 10 | % | 11 | % | 11 | % | 10 | % | ||||||||
| Effective tax rate | 28 | % | 30 | % | 31 | % | 29 | % | ||||||||
| Depreciation and amortization | $ | 966 | $ | 950 | $ | 3,222 | $ | 3,309 | ||||||||
| Capital expenditures | $ | 1,970 | $ | 500 | $ | 4,533 | $ | 2,635 | ||||||||
| Balance Sheet Data: | 10/31/2015 | 10/31/2014 | ||||||||||||||
| Working capital (excluding cash) | $ | 97,774 | $ | 90,105 | ||||||||||||
| Days sales outstanding (unaudited) | 42 | 45 | ||||||||||||||
| Inventory turns (unaudited) | 1.4 | 1.5 | ||||||||||||||
| Capitalization | ||||||||||||||||
| Total debt | $ | 1,583 | $ | 3,272 | ||||||||||||
| Shareholders' equity | 174,568 | 164,645 | ||||||||||||||
| Total | $ | 176,151 | $ | 167,917 | ||||||||||||
| Hurco Companies, Inc. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share and per share data) | ||||||||
| October 31, | October 31, | |||||||
| 2015 | 2014 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 55,237 | $ | 53,846 | ||||
| Accounts receivable, net | 41,766 | 45,435 | ||||||
| Inventories, net | 106,308 | 95,992 | ||||||
| Deferred income taxes | 1,985 | 2,062 | ||||||
| Derivative assets | 1,228 | 3,127 | ||||||
| Prepaid expenses | 9,769 | 8,927 | ||||||
| Other | 1,804 | 1,365 | ||||||
| Total current assets | 218,097 | 210,754 | ||||||
| Property and equipment: | ||||||||
| Land | 841 | 782 | ||||||
| Building | 7,314 | 7,314 | ||||||
| Machinery and equipment | 24,026 | 19,432 | ||||||
| Leasehold improvements | 3,323 | 3,523 | ||||||
| 35,504 | 31,051 | |||||||
| Less accumulated depreciation and amortization | (22,362 | ) | (19,546 | ) | ||||
| 13,142 | 11,505 | |||||||
| Non-current assets: | ||||||||
| Software development costs, less accumulated amortization | 3,905 | 3,519 | ||||||
| Goodwill | 2,319 | 2,606 | ||||||
| Intangible assets, net | 1,289 | 1,635 | ||||||
| Other assets | 7,089 | 6,912 | ||||||
| $ | 245,841 | $ | 236,931 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 43,458 | $ | 42,718 | ||||
| Derivative liabilities | 1,071 | 705 | ||||||
| Accrued expenses | 18,974 | 20,108 | ||||||
| Short-term debt | 1,583 | 3,272 | ||||||
| Total current liabilities | 65,086 | 66,803 | ||||||
| Non-current liabilities: | ||||||||
| Deferred income taxes | 1,262 | 993 | ||||||
| Accrued tax liability | 953 | 1,054 | ||||||
| Deferred credits and other obligations | 3,972 | 3,436 | ||||||
| Total liabilities | 71,273 | 72,286 | ||||||
| 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; 6,650,517 and 6,589,918 shares issued; and 6,551,718 and 6,508,880 shares outstanding, as of October 31, 2015 and October 31, 2014, respectively | 655 | 651 | ||||||
| Additional paid-in capital | 57,539 | 55,974 | ||||||
| Retained earnings | 125,760 | 111,580 | ||||||
| Accumulated other comprehensive loss | (9,386 | ) | (3,560 | ) | ||||
| Total shareholders' equity | 174,568 | 164,645 | ||||||
| $ | 245,841 | $ | 236,931 | |||||