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Hurco Reports Third Quarter Results -- Sales Up 18% and Earnings Up 13% INDIANAPOLIS, Aug. 28, 2008 (GLOBE NEWSWIRE) -- Hurco Companies,
Inc. (NasdaqGS:HURC - News) today reported for its third quarter
ended July 31, 2008, net income of $5,826,000, or $.90 per
share, a 13% increase over the $5,163,000, or $.80 per share,
reported for the corresponding period in fiscal 2007. For
the first nine months of fiscal 2008, Hurco reported net
income of $19,098,000, or $2.96 per share, a 25% increase
over the $15,239,000, or $2.37 per share, reported for the
corresponding period in fiscal 2007. Sales and service fees for the third quarter of fiscal 2008 totaled $57,318,000, an increase of $8,763,000, or 18%, over the third quarter of fiscal 2007, despite a 19% decrease in the North American region, which accounts for approximately 13% of the worldwide machine tool market. Approximately $5,073,000, or 10%, of the year-over-year increase reflects the effect of a weaker U.S. dollar when translating foreign sales to U.S. dollars for financial reporting purposes. Sales and service fees for the nine months ended July 31, 2008, totaled $176,526,000, an increase of $38,599,000, or 28%, over the corresponding period in 2007. The following table sets forth net sales and service fees by geographic region for the third quarter of fiscal 2008 and 2007:
Net Sales and Service Fees by Geographic Region
Three Months Ended
July 31,
%
2008 2007 Change
--------------------------
North America $ 10,643 $ 13,086 -19%
Europe 43,071 33,044 30%
Asia Pacific 3,604 2,425 49%
--------------------------
Total $ 57,318 $ 48,555 18%
--------------------------
Growth was primarily driven by strong demand in existing European markets, particularly in Germany and the United Kingdom, and continued expansion into Eastern European markets. Growth in the Asia Pacific region was primarily due to increased market demand. The effect of a weaker U.S. dollar when translating foreign sales into U.S. dollars for financial reporting purposes had a favorable impact of approximately 14% on the year-over-year increase in both the European and Asia Pacific markets. Sales in North America reflected continued market weakness throughout the United States due to customer concerns over unfavorable economic conditions. New order bookings in the third quarter of fiscal 2008 were $52,458,000, an increase of $3,813,000, or 8%, over the prior year period. European and Asia Pacific orders increased $6,046,000, or 19%, and $750,000, or 33%, respectively. North American orders decreased $2,983,000, or 22%. For the nine months ended July 31, 2008, new orders totaled $172,514,000, an increase of $28,321,000, or 20%, over the corresponding period in 2007. Hurco's gross margin for the third quarter of fiscal 2008 was 36%, compared to 38% for the 2007 period. The reduction in gross margin was primarily attributable to recent price increases for raw materials which have significantly affected the machine tool industry. The recent price increases for raw materials were partially offset by a more favorable mix of sales by product and region. Selling, general and administrative expenses were $11,829,000 for the third quarter of fiscal 2008, an increase of $1,601,000 over the 2007 period, reflecting greater expenditures for global market expansion and product development. The increase also reflected the unfavorable effect of a weaker U.S. dollar during the 2008 period when translating foreign operating expenses for financial reporting purposes, as well as, stock-based compensation expense recorded for stock options granted to two new directors. Cash increased by $5,439,000 for the third quarter to $31,048,000 and was primarily driven by increased net income. Inventory increased by $5,754,000 during the third quarter to $74,489,000 resulting from approximately $2,800,000 of increased inventory at our manufacturing facilities associated with the forthcoming launch of new products and a slight shift in mix to higher cost VMX machines to support product demand. The increased inventory was primarily financed through increased cash collections. ``Our results demonstrate the value of our strategic plan that focuses on targeted expansion in emerging markets worldwide, agile product development processes, and a strong global supply chain. While I am satisfied with the overall increase in net income and sales for the third quarter, I think it is important to address the decline in the sales numbers for North America. In spite of adverse economic conditions in the United States, I believe we may see increased activity in the near future due to our new product introductions and the timing of our industry's largest trade show,'' said Chief Executive Officer Michael Doar. ``The International Manufacturing Technology Show (IMTS) will be held next month in Chicago. We are introducing 14 new machines at this bi-annual show, which is the largest product introduction that we have ever had in our 40-year history. Based on the response from customers who previewed some of these machines at our annual open house last month, we believe our new products will be well received by IMTS attendees given the benefits of our software technology. Specifically, our 5-axis technology is critical to mature markets, such as North America, because business owners in these markets understand that investing in technology is the most expedient way to increase productivity and profitability,'' said Doar. 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 the aerospace, defense, medical equipment, energy, transportation and computer equipment. The Company is based in Indianapolis, Indiana, and has sales, application engineering and service subsidiaries in High Wycombe, England; Munich, Germany; Paris, France; Milan, Italy; Shanghai, China; Chennai, India; Mississauga, Canada; and Singapore, along with manufacturing operations in Taiwan and China. Products are sold through independent agents and distributors in North America, Europe and Asia. The Company also has direct sales organizations in Canada, England, France, Germany, Italy, Singapore and China. Web Site: http://www.hurco.com 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, changes in general economic and business conditions that affect demand for computerized machine systems, computer numerical control systems and software products, changes in manufacturing markets, innovations by competitors, our ability to protect our intellectual property, fluctuations in exchange rates, fluctuations in prices of raw materials, changes in market demands, quality and delivery performance by our contract manufacturers and governmental actions and initiatives including import and export restrictions and tariffs.
Hurco Companies, Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per-share data)
Three Months Ended Nine Months Ended
July 31, July 31,
------------------ ------------------
2008 2007 2008 2007
--------------------------------------- -------- -------- --------
(unaudited) (unaudited)
Sales and service fees $ 57,318 $ 48,555 $176,526 $137,927
Cost of sales and service 36,439 30,138 110,459 85,838
-------- -------- -------- --------
Gross profit 20,879 18,417 66,067 52,089
Selling, general and
administrative expenses 11,829 10,228 35,881 28,883
-------- -------- -------- --------
Operating income 9,050 8,189 30,186 23,206
Interest expense 25 11 46 165
Interest Income 154 172 436 561
Investment Income 72 113 363 191
Other (income) expense, net 471 (359) 1,311 (867)
-------- -------- -------- --------
Income before taxes 8,780 8,822 29,628 24,660
Provision for income taxes 2,954 3,659 10,530 9,421
-------- -------- -------- --------
Net income $ 5,826 $ 5,163 $ 19,098 $ 15,239
======== ======== ======== ========
Earnings per common share
Basic $ 0.91 $ 0.81 $ 2.98 $ 2.39
======== ======== ======== ========
Diluted $ 0.90 $ 0.80 $ 2.96 $ 2.37
======== ======== ======== ========
Weighted average common shares
outstanding
Basic 6,414 6,379 6,414 6,379
======== ======== ======== ========
Diluted 6,439 6,440 6,445 6,435
======== ======== ======== ========
OTHER CONSOLIDATED FINANCIAL
DATA Three Months Ended Nine Months Ended
July 31, July 31,
------------------ ------------------
Operating Data: 2008 2007 2008 2007
-------- -------- -------- --------
(unaudited) (unaudited)
Gross margin 36.4% 37.9% 37.4% 37.8%
SG&A expense as a percentage
of sales 20.6% 21.1% 20.3% 20.9%
Operating income as a
percentage of sales 15.8% 16.9% 17.1% 16.8%
Pre-tax income as a percentage
of sales 15.3% 18.2% 16.8% 17.9%
Effective Tax Rate 33.6% 41.5% 35.5% 38.2%
Depreciation 777 589 2,190 1,376
Capital expenditures 1,542 656 3,456 2,298
Balance Sheet Data: 7/31/2008 7/31/2007
--------- ---------
Working capital (excluding
short term debt) $ 90,794 $ 69,284
Days sales outstanding 44 44
Inventory turns 2.0 2.2
Capitalization
Total debt $ -- $ --
Shareholders' equity 118,942 91,980
-------- --------
Total $118,942 $ 91,980
======== ========
HURCO COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except per-share data)
July 31, October 31,
2008 2007
-------------------------------------------------------- -----------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 31,048 $ 29,760
Short-term investments 1,925 10,000
Accounts receivable, net 29,505 25,645
Inventories, net 74,489 61,121
Deferred tax assets, net 9,108 8,258
Other 7,827 4,481
----------- -----------
Total current assets 153,902 139,265
----------- -----------
Property and equipment:
Land 782 776
Building 7,135 7,135
Machinery and equipment 15,674 13,629
Leasehold improvements 1,935 1,473
----------- -----------
25,526 23,013
Less accumulated depreciation and
amortization (12,067) (11,617)
----------- -----------
13,459 11,396
----------- -----------
Non-current assets:
Software development costs, less
amortization 5,475 5,960
Long-term investments 4,774 --
Other assets 7,280 7,160
----------- -----------
$ 184,890 $ 163,781
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 36,926 $ 35,486
Accrued expenses 26,182 27,729
----------- -----------
Total current liabilities 63,108 63,215
----------- -----------
Non-current liabilities:
Deferred tax liability, net 1,878 1,956
Deferred credits and other obligations 962 1,007
----------- -----------
Total liabilities 65,948 66,178
----------- -----------
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 6,420,851 and 6,392,220
shares issued, respectively 642 639
Additional paid-in capital 51,633 50,971
Retained earnings 68,467 49,369
Accumulated other comprehensive income (1,800) (3,376)
----------- -----------
Total shareholders' equity 118,942 97,603
----------- -----------
$ 184,890 $ 163,781
=========== ===========
Contact: Hurco Companies, Inc.
John G. Oblazney, Vice President & Chief Financial Officer
317-293-5309
Source: Hurco Companies, Inc.
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