Hurco Reports Second Quarter Results
20 May 1999
Hurco Reports Second Quarter Results
INDIANAPOLIS, Ind., May 20 -- The following is being issued
by Hurco:
Summary Results
(Dollars in millions,
except per share amounts)
Second Quarter Six Months
Ended April 30, Ended April 30,
1999 1998 % Inc(Dec) 1999 1998 % Inc(Dec)
Sales and
service fees $21.5 $21.5 -- $42.7 $43.7 (2%)
Net income $.6 $4.3 (86%) $.7 $6.5 (89%)
Earnings per share
Basic $.09 $.65 (86%) $.12 $.98 (88%)
Diluted $.09 $.63 (86%) $.12 $.96 (88%)
Order Intake $20.0 $26.2 (24%) $44.7 $48.3 (8%)
Backlog $9.1 $12.5 (27%) $9.1 $12.5 (27%)
Hurco Companies, Inc. today announced that for its second
fiscal quarter, which ended April 30, 1999, the Company recorded net income of
$554,000, or $.09 per share, which compares to $4.3 million, or $.63 per
share, reported for the corresponding period a year ago. For the first six
months of fiscal 1999, net income totaled $729,000, or $.12 per share,
compared to $6.5 million, or $.96 per share, for the corresponding 1998
period. The Company attributed the significant decline in second quarter net
income primarily to an anticipated reduction in income from patent licensing
fees which had aggregated $3.7 million, net of taxes, in the corresponding
prior year period.
Sales and service fees for the second quarter of fiscal 1999 of $21.5
million were substantially equal to the prior year level. Sales of
computerized machine systems increased 13.4% to $15.5 million in spite of weak
market conditions, reflecting the introduction of new products in late fiscal
1998. It should be noted, however, that shipments in the second quarter of
fiscal 1998 were adversely affected by a temporary delay in availability of
finished products at that time. Sales of stand-alone computer control systems
continued to decline due to the previously announced repositioning of the
product line. Revenues from service fees and parts declined approximately six
percent, reflecting the ongoing transition of service activities to
full-service distributors.
New order bookings during the second quarter of fiscal 1999 were $20.0
million, a decrease of 23.7% from the $26.2 million reported for the second
quarter of fiscal 1998. Orders for computerized machine systems declined $4.1
million, or 22.6%. The decline was most pronounced in the United States,
where demand has been significantly lower in response to the weak market
conditions in the metal cutting and metal forming industries that have
persisted since the third quarter of fiscal 1998. Orders for computerized
machine systems were also lower in Europe, which posted a 15% decline in order
value, reflecting an 8% reduction in unit orders and a decrease in the
percentage of large machine systems in the sales mix. Orders for stand-alone
computer control systems declined by $1.7 million, or 44%, reflecting the
ongoing repositioning of these products. Backlog was $9.1 million at April
30, 1999 as compared to $11.0 million at January 31, 1999, a decrease of $1.9
million, reflecting increased availability of new products for shipment.
Brian McLaughlin, President and CEO, stated, "Domestic market conditions
continue to be weak and have resulted in high inventories of finished product
that are overhanging the market. We don't expect any significant improvement
in the U.S. market during this fiscal year. The U.K. market also continues to
be weak and we are seeing softer market conditions in Germany, France and
Italy. Although price competition is intense, our gross profit margins held
up reasonably well at 27.2% compared to the 28.4% reported for the first
quarter of this fiscal year, with the decrease due primarily to lower
absortion of manufacturing costs into inventory along with a decline in the
percentage of large model machines in the mix of shipments."
Mr. McLaughlin also noted, "We are pleased with customer acceptance of our
new products. We are focusing on controlling our operating expenses during
this difficult market period, but we plan to continue to pursue our planned
product development and sales organization development activities, which are
important to our future growth."
Hurco Companies, Inc. is an industrial automation company that designs and
produces interactive computer controls, software and computerized machine
systems 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 the aerospace, defense, medical equipment, energy, transportation and
computer equipment. The Company is based in Indianapolis, Ind., and has
sales, application engineering and service subsidiaries in Farmington Hills,
Mich.; High Wycombe, England; Munich, Germany; Paris, France and Singapore.
Products are sold through independent agents and distributors in the United
States, Europe and Asia. The Company also has direct sales forces in the
United States, the United Kingdom, Germany, France, and Asia.
This news release contains forward looking statements which involve known
and unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements of the machine took industry to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, among others, (i) changes in general economic and business conditions
that affect demand for computerized machine systems, computer numerical
control systems and software products, (ii) changes in manufacturing markets,
(iii) innovations by competitors, (iv) quality and delivery performance by our
contract manufacturers and (v) governmental actions and initiatives including
import and export restrictions and tariffs.
For more information on Hurco via fax, free of charge, dial 1-800-PRO-INFO
and enter the ticker "HURC."
HURCO COMPANIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per-share data)
Three Months Ended Six Months Ended
April 30 April 30
1999 1998 1999 1998
(unaudited) (unaudited)
Sales and service fees $21,532 $21,542 $ 42,679 $43,662
Cost of sales and service 15,674 15,256 30,817 31,252
Gross profit 5,858 6,286 11,862 12,410
Selling, general and
administrative expenses 5,352 5,354 10,686 10,378
Restructuring charge (103) -- (103) --
Operating income 609 932 1,279 2,032
License fee income and litigation
settlement fees, net 86 4,291 169 5,785
Interest expense 340 210 640 484
Other expense, net 68 47 107 25
Income before taxes 287 4,966 701 7,308
Income tax expense (benefit) (267) 696 (28) 852
Net income $554 $4,270 $729 $6,456
Earnings per common share
Basic $.09 $.65 $.12 $.98
Diluted $.09 $.63 $.12 $.96
Weighted average common
shares outstanding
Basic 5,945 6,560 6,011 6,557
Diluted 6,031 6,764 6,100 6,751
OTHER CONSOLIDATED FINANCIAL DATA
Three Months Six Months
1999 1998 1999 1998
Gross Margin 27.2% 29.2% 27.8% 28.4%
SG&A expense as a
percentage of sales 24.8% 24.9% 25.0% 23.8%
Operating income as a
percentage of sales 2.8% 4.3% 3.0% 4.7%
Pre-tax income as a
percentage of sales 1.3% 23.1% 1.6% 16.7%
License fees and
litigation settlement fees,
net of expenses and
foreign withholding taxes $86 $3,715 $169 $5,137
EBITDA $1,076 $5,726 $2,324 $8,864
Depreciation 449 550 983 1,072
Capital Expenditures 700 564 1,176 919
Balance Sheet Data 4/30/99 4/30/98 4/30/99 4/30/98
Working Capital
(ex. Short Term Debt) $37,065 $26,881 $ 37,065 $26,881
Days Sales Outstanding 56 54 56 54
Inventory turns 1.9 3.0 1.9 3.0
Net assets per $ of revenue
(trailing twelve months)
Operating working capital,
net $.40 $.20 $.40 $.20
All other .17 .15 .17 .15
Total $.57 $.45 $.57 $.45
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
April 30, October 31,
1999 1998
ASSETS (Unaudited) (Audited)
Current assets:
Cash and temporary investments $3,694 $3,276
Accounts receivable 15,938 18,896
Inventories 31,808 30,817
Other 1,188 2,154
Total current assets 52,628 55,143
Long-term license fees receivable 797 797
Property and equipment:
Land 761 761
Building 7,135 7,067
Machinery and equipment 11,250 11,184
Leasehold improvements 1,007 1,107
Less accumulated depreciation
and amortization (11,186) (11,037)
8,967 9,082
Software development costs, less amortization 4,310 4,231
Other assets 3,196 2,443
$69,898 $71,696
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $8,903 $15,791
Accrued expenses 6,660 8,217
Current portion of long-term debt 1,786 1,786
Total current liabilities 17,349 25,794
Non-current liabilities
Long-term debt 16,040 6,572
Deferred credits and other obligations 1,521 1,590
Total non-current liabilities 17,561 8,162
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; and 5,945,359
and 6,340,111 shares issued and
outstanding, respectively 595 634
Additional paid-in capital 46,325 48,662
Accumulated deficit (6,422) (7,150)
Foreign currency translation adjustment (5,510) (4,406)
Total shareholders' equity 34,988 37,740
$69,898 $71,696