Hurco Companies Inc.

$HURC - Nasdaq - Heavy Machinery
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Hurco Reports Fourth Quarter and Full-Year Results

INDIANAPOLIS, Jan. 11, 2013 (GLOBE NEWSWIRE) -- Hurco Companies, Inc., (Nasdaq:HURC) today reported results for the fourth quarter and the fiscal year ended October 31, 2012. For the fourth quarter of fiscal 2012, Hurco recorded net income of $4,086,000, or $0.63 per diluted share, as compared to net income of $2,654,000, or $0.41 per diluted share, for the corresponding period in fiscal 2011. For the full fiscal year 2012, Hurco recorded net income of $15,638,000, or $2.40 per diluted share, as compared to net income of $11,124,000, or $1.71 per diluted share, for fiscal 2011.

Sales and service fees for the fourth quarter of fiscal 2012 were $56,067,000, an increase of $7,496,000, or 15%, from the prior year period. This quarter-over-quarter improvement is net of the adverse impact of $2,087,000, or 4%, in the fourth quarter of fiscal 2012, due to a weaker Euro when translating foreign sales to U.S. Dollars for financial reporting purposes. Sales and service fees for the full fiscal year totaled $203,117,000, an increase of $22,716,000, or 13%, from fiscal 2011. The unfavorable impact of currency translation on the full fiscal year-over-year comparison was $7,609,000, or 4%.

The following table sets forth net sales and service fees by geographic region for the quarter and fiscal year ending October 31, 2012 and 2011 (in thousands), respectively:

     
 Net Sales and Service Fees by Geographic Region            
             
   Quarter Ended
October 31,
Fiscal Year Ended
October 31,
       
  2012 2011 %
Change
2012 2011 %
Change
North America  $ 17,692  $ 13,919 27%  $ 60,527  $ 49,637 22%
Europe  33,745  31,199 8%  119,359  111,080 7%
Asia Pacific  4,630  3,453 34%  23,231  19,683 18%
Total  $ 56,067  $ 48,571 15%  $203,117  $ 180,400 13%

The fourth quarter increase in sales was driven by increased demand in North America and Europe. The 8% increase in Europe was actually 15% when adjusted to exclude the negative impact of foreign currency translation due to a weaker Euro. Compared to the fourth quarter of fiscal 2011, unit shipments for the fourth quarter of fiscal 2012 increased in North America by 33%, in Europe by 13%, and in Asia Pacific by 12%. For the full fiscal year, sales increased in all regions, driven by higher customer demand. Unit shipments for the full year 2012, compared to fiscal 2011, increased in North America by 14%, in Europe by 4% and in Asia Pacific by 16%. 

The following table sets forth new orders booked by geographic region for the fourth quarter and fiscal year ending October 31, 2012 and 2011 (in thousands), respectively:

         
Orders by Geographic Region            
             
   Quarter Ended
October 31,
 Fiscal Year Ended
October 31,
       
  2012 2011 %
Change
2012 2011 %
Change
North America  $ 20,398  $ 13,365 53%  $ 61,644  $ 50,058 23%
Europe  27,745  22,614 23%  115,222  121,274 -5%
Asia Pacific  3,674  4,324 -15%  21,271  25,651 -17%
Total  $ 51,817  $ 40,303 29%  $198,137  $ 196,983 1%

During the fourth quarter of 2012, orders increased in North America and Europe due to favorable market conditions. We experienced increased orders in North America, following our successful showing at the International Manufacturing Technology Show (IMTS) in Chicago where we launched our rebranding initiative and new line of high speed machines. We experienced a decline in order activity in Asia where industrial activity has been slowing. Compared to the fourth quarter of fiscal 2011, unit orders for the fourth quarter of fiscal 2012 increased in North America by 54% and in Europe by 22%, but decreased in Asia Pacific by 9%. During the full fiscal year 2012, orders remained relatively consistent with the prior fiscal year. Unit orders for the fiscal year 2012 compared to fiscal 2011 increased in North America by 22%, but decreased in Europe by 9% and in Asia Pacific by 22%. The impact of currency translation on orders booked in the fourth quarter and full fiscal year was consistent with the impact on sales.  

Hurco's fourth quarter gross profit was $17,220,000, or 31% of sales, compared to $15,682,000, or 32% of sales, for the prior year period. For the full fiscal year 2012, gross profit was $63,181,000, or 31% of sales, compared to $55,874,000, or 31% of sales, for fiscal 2011. The increase in gross profit for the fourth quarter and the year was due primarily to the increase in sales.

Selling, general and administrative expenses for the fourth quarter of fiscal 2012 were $11,870,000, an increase of $778,000, or 7%, from the corresponding period in 2011.  Selling, general and administrative expenses were $41,160,000 for fiscal 2012, an increase of $2,667,000, or 7%, over fiscal 2011. The increases in selling, general and administrative expenses for the fourth quarter and fiscal year were primarily due to higher sales and marketing expenses and higher commissions as a result of increased sales.   

Other expenses during the fourth quarter of fiscal 2012 decreased $1,051,000 compared to the fourth quarter of fiscal 2011. Other expenses for fiscal 2012 decreased by $1,605,000. These decreases were primarily due to decreased foreign currency losses experienced in fiscal 2012.

Cash and cash equivalents totaled $35,770,000 as of October 31, 2012, compared to $44,961,000 as of October 31, 2011. Inventories as of October 31, 2012 were $91,320,000, an increase of $10,193,000, or 13%, from the end of the prior fiscal year primarily due to an increase in finished goods inventory intended to meet forecasted growth in customer demand. Working capital, excluding cash, was $88,239,000 as of October 31, 2012, compared to $61,885,000 as of October 31, 2011. The increase in working capital, excluding cash, was primarily due to increased inventory resulting from higher production levels and increased accounts receivable from higher sales volumes.

Michael Doar, President and Chief Executive Officer, stated, "Considering the economic uncertainty in Europe, we finished the year with a strong performance. I believe our results are a testament to customer acceptance of our cutting edge control technology and product line expansion. North America achieved record sales for the quarter, which I attribute to the excitement surrounding the rebranding initiative that we introduced at the International Manufacturing Technology Show in Chicago. Additionally, I believe U.S. customers appreciate the fact that our control technology focuses on helping them increase profitability, especially in the manufacture of small-to-medium-sized lots, which accounts for the majority of their machining activity. Going forward, we will continue to deliver machine tools with advanced technology that simplifies complex operations, while providing a user interface that is intuitive and user-friendly."

Hurco Companies, Inc. is an industrial technology company that designs and produces interactive computer controls, software and computerized machine tools 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 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

The Hurco Companies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=14761

This news release contains 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, changes in operations due to acquisitions, the loss of key personnel, and governmental actions and initiatives including import and export restrictions and tariffs.

Hurco Companies, Inc.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per-share data)
         
  Three Months Ended 
October 31,
Twelve Months Ended 
October 31,
  2012 2011 2012 2011
   (unaudited)   
Sales and service fees  $ 56,067  $ 48,571  $ 203,117  $ 180,400
         
Cost of sales and service  38,847  32,889  139,936  124,526
Gross profit  17,220  15,682  63,181  55,874
         
Selling, general and administrative expenses  11,870  11,092  41,160  38,493
Operating income  5,350  4,590  22,021  17,381
         
Interest expense  63  82  168  143
         
Interest income  11  25  69  132
         
Investment income (expense)  2  4  7  13
         
Other expense (income), net  (5)  1,043  65  1,764
         
Income before taxes  5,305  3,494  21,864  15,619
         
Provision for income taxes  1,219  840  6,226  4,495
         
Net income  $ 4,086  $ 2,654  $ 15,638  $ 11,124
         
Earnings per common share        
         
Basic  $ 0.63  $ 0.41  $ 2.41  $ 1.72
Diluted  $ 0.63  $ 0.41  $ 2.40  $ 1.71
         
Weighted average common shares outstanding        
Basic  6,447  6,441  6,445  6,441
Diluted  6,469  6,467  6,470  6,472
         
OTHER CONSOLIDATED FINANCIAL DATA Three Months Ended 
October 31,
Twelve Months Ended 
October 31,
Operating Data: 2012 2011 2012 2011
   (unaudited)   
Gross margin 31% 32% 31% 31%
         
SG&A expense as a percentage of sales 21% 23% 20% 21%
         
Operating income as a percentage of sales 10% 9% 11% 10%
         
Pre-tax income as a percentage of sales  9% 7% 11% 9%
         
Effective Tax Rate 23% 24% 28% 29%
         
Depreciation and amortization  931  1,073  4,126  4,300
         
Capital expenditures  1,129  1,097  3,732  2,842
         
Balance Sheet Data: 10/31/2012 10/31/2011    
         
Working capital (excluding cash)  $ 88,239  $ 61,885    
         
Days sales outstanding (unaudited)  38  37    
         
Inventory turns (unaudited)  1.5  1.6    
         
Capitalization        
Total debt  $ 3,206  $ 865    
Shareholders' equity  143,793  126,212    
Total  $ 146,999  $ 127,077    
 
Hurco Companies, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per-share data)
     
  October 31, 2012 October 31, 2011
     
ASSETS    
Current assets:    
Cash and cash equivalents  $ 35,770  $ 44,961
Accounts receivable, net  35,297  27,057
Refundable taxes  1,459  1,442
Inventories, net  91,320  81,127
Deferred income taxes  1,182  2,692
Derivative assets  708  1,197
Other  7,645  5,598
Total current assets  173,381  164,074
     
Property and equipment:    
Land  782  782
Building  7,352  7,116
Machinery and equipment  17,411  16,336
Leasehold improvements  3,467  2,508
   29,012  26,742
Less accumulated depreciation and amortization  (16,933)  (15,198)
   12,079  11,544
     
Non-current assets:    
 Software development costs, less accumulated amortization  3,969  4,928
 Other assets  5,883  5,999
   $ 195,312  $ 186,545
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable  $ 29,788  $ 39,046
Derivative liabilities  569  1,609
Accrued expenses  15,809  15,708
Short-term debt  3,206  865
Total current liabilities  49,372  57,228
     
Non-current liabilities:    
Deferred income taxes  903  1,982
Deferred credits and other obligations  1,244  1,123
Total liabilities  51,519  60,333
     
Commitments and contingencies    
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; 6,502,928 and 6,471,710 shares issued; and 6,447,210 and 6,440,851 shares outstanding, as of October 31, 2012 and October 31, 2011, respectively  645  644
Additional paid-in capital  53,415  52,614
Retained earnings  90,586  74,948
Accumulated other comprehensive loss  (853)  (1,994)
Total shareholders' equity  143,793  126,212
   $ 195,312  $ 186,545
CONTACT: John G. Oblazney
         Vice President & Chief Financial Officer
         317-293-5309

Source: Hurco Companies, Inc.
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