Comprehensive Financial Analysis of Hurco Companies, Inc. (Ticker: HURC) - SEC Filing Overview

Snapshot of Key Financial Information

• Entity: Hurco Companies, Inc.
• CIK: 0000315374
• Reporting Type: 10-K (Annual Report)
• Reporting Period: Year ending October 31, 2024
• Total Revenue: $186.58 million
• Net Income (Loss): $(16.61) million
• Earnings Per Share (EPS): $(2.56)
• Total Assets: $186.58 million
• Total Liabilities: $227.81 million
• Total Stockholders' Equity: $250.81 million
• Recommendation: Hold - While the company's financials show some recovery signs, the net loss and ongoing challenges merit cautious observation before making new investments.

Detailed Financial Analysis

Revenue Performance

Hurco reported total revenues of $186.58 million for the fiscal year ending October 31, 2024, a decrease from $227.81 million in the previous year. The decline is primarily attributed to reduced sales across its key segments, particularly in the Americas, where revenues dropped significantly.

Revenue Breakdown by Geography:

• Americas: $73.30 million
• Europe: $90.92 million
• Asia Pacific: $72.56 million

The company's geographical revenue distribution indicates a robust international presence, with 61% of total sales coming from customers outside the Americas. This diversification can help mitigate risks associated with regional downturns.

Profitability Metrics

Hurco experienced a net loss of $(16.61) million for the fiscal year, a stark contrast to the net income of $4.39 million in 2023. The declining profitability can be traced to several factors:

• Increased costs associated with operations and supply chain disruptions.
• A significant rise in the valuation allowance against deferred tax assets, impacting overall income.

Earnings Per Share (EPS)

The calculated EPS of $(2.56) highlights the company's struggles in maintaining profitability and reflects the potential dilution of shareholder value.

EBITDA and Growth Rate Analysis

While the report does not provide explicit EBITDA figures, the substantial net loss suggests that EBITDA may also be negative, reflecting operational inefficiencies. The growth rate in revenue should be closely monitored, particularly as declining revenues indicate potential market share losses.

Balance Sheet Strength

Assets and Liabilities

• Total Assets: $186.58 million
• Total Liabilities: $227.81 million
• Total Stockholders' Equity: $250.81 million

Hurco's balance sheet reflects a leveraged position, with total liabilities exceeding total assets. This could raise concerns about financial stability if operating losses continue.

Cash Flow Management

The company's cash management strategies will be vital moving forward. Effective management of working capital, particularly accounts receivable and inventory, will be crucial to improving liquidity and operational efficiency.

Hedging and Risk Management Strategies

Hurco has actively employed foreign exchange forward contracts to mitigate currency risks associated with its international operations. The company recorded unrealized losses from these hedging strategies, which need to be closely monitored in light of ongoing market volatility.

Market and Competitive Landscape

In the current macroeconomic environment, characterized by rising interest rates and inflationary pressures, Hurco's performance could be further challenged. The CNC machining industry is competitive, with players like Haas Automation and DMG Mori also vying for market share, making it essential for Hurco to innovate and optimize its operations.

Conclusion and Investment Recommendation

Hurco Companies, Inc. has demonstrated resilience in navigating a challenging financial landscape, but the recent losses and declining revenues highlight significant operational hurdles. Investors should adopt a cautious stance, holding their current positions while monitoring the company's performance and strategic initiatives closely.

In summary, the financial report reveals a complex picture of Hurco's operations. While there are opportunities for recovery and growth, particularly in international markets, the current financial metrics suggest that investors should remain vigilant as the company works to stabilize and improve profitability.