Hurco Companies (HURC) Q3 2024 earnings summary

Executive summary

• Sales and service fees for Q3 2024 declined 20% year-over-year to $42.7 million, with all major regions experiencing lower sales volumes, especially in Europe and the Americas.

• Operating loss for Q3 2024 was $2.5 million, compared to operating income of $1.0 million in Q3 2023, driven by lower sales and reduced leverage of fixed costs.

• Net loss for Q3 2024 was $9.6 million, primarily due to an $8.2 million non-cash valuation allowance on U.S. deferred tax assets.

• Orders in Q3 2024 increased 26% year-over-year to over $52 million, with significant growth in the Asia Pacific region and orders outpacing sales by over $10 million.

• Cost reductions implemented in Q3 2024 are expected to impact future results, with a focus on technological innovation and automation integration.

Financial highlights

• Q3 2024 sales and service fees: $42.7 million, down 20% year-over-year; nine-month sales: $132.9 million, down 18%.

• Gross profit margin for Q3 2024 was 18% (vs. 25% in Q3 2023); nine-month margin was 19% (vs. 24%).

• Operating loss for Q3 2024: $2.5 million (-6% margin); nine-month operating loss: $7.8 million (-6% margin).

• SG&A expenses reduced to $10.4 million in Q3 (24% of sales); nine-month SG&A was $33.4 million (25% of sales).

• Cash and cash equivalents at July 31, 2024: $36.1 million; working capital: $182.0 million.

Outlook and guidance

• Management implemented cost reductions in Q3 2024 and suspended the regular quarterly dividend to enhance financial flexibility and focus on reinvestment and share repurchases.

• The company remains focused on product innovation, targeted market penetration, and potential acquisitions, supported by a strong balance sheet and liquidity.

• Management is optimistic about positive order growth and prepared to meet new demand; expects continued impact from cost reductions and focus on innovation.

• Anticipates showcasing new technologies and automation solutions at IMTS, aiming for market improvement as FY24 closes.