Hurco Companies Faces Challenges with Declining Sales and Losses
Shares of Hurco Companies, Inc. HURC have lost 3.9% since the company reported its earnings for the quarter ended Oct. 31, 2024. This compares to the S&P 500 Index’s 1.3% decline over the same time frame. Over the past month, the stock lost 2.8% compared with the S&P 500’s 3.9% decline.
Earnings Report Insights
Hurco reported a net loss of $1.4 million, or $(0.23) per diluted share, for the fourth quarter of fiscal 2024 compared to a net income of $2.4 million, or $0.36 per diluted share, in the same quarter last year. For the entire fiscal year, the company recorded a net loss of $16.6 million, or $(2.56) per diluted share, against a net income of $4.4 million, or $0.66 per diluted share, in fiscal 2023.
In the fourth quarter, revenues declined by 18.8% year-over-year to $53.7 million, while full-year revenues fell 18.1% to $186.6 million. All geographic segments showed weakness. Sales in the Americas dropped 21.5%, and Europe saw a 17.5% decline, while Asia Pacific experienced a 10.9% decrease. The revenues from these regions were $23.3 million, $25.4 million, and $4.9 million, respectively, in the fiscal fourth quarter.
During the full fiscal year, revenue in the Americas decreased by 18.1%, while Europe saw a 21.2% drop. In contrast, Asia Pacific reported a slight increase of 2.1%. Full-year revenues from the Americas, Europe, and Asia Pacific amounted to $72.3 million, $94.9 million, and $19.3 million, respectively.
Key Financial Metrics
Gross profit margins shrank to 23% in the fourth quarter from 26% one year earlier. Annual gross margins also declined, dropping to 20% in fiscal 2024 from 25% in fiscal 2023. This decline resulted from reduced sales volumes of vertical milling machines in the Americas and Europe and lower selling prices aimed at clearing inventories.
Selling, general, and administrative (SG&A) expenses decreased by 9.7% to $12.7 million in the quarter, representing 24% of sales, compared to $14 million, or 21% of sales, in the prior-year period. For the full year, SG&A expenses dropped 7.1% to $46 million, yet the ratio to sales increased to 25% from 22%, reflecting lower revenue volumes.
New orders for the fourth quarter fell 6% year-over-year to $51.1 million. However, Asia Pacific orders surged 103%, partially offsetting declines of 11% in the Americas and 13% in Europe. For the year, new orders decreased by 5% to $198.3 million, with a 54% increase in Asia Pacific offsetting the declines of 5% in the Americas and 13% in Europe.
Hurco Companies, Inc. Price, Consensus and EPS Surprise
Hurco Companies, Inc. price-consensus-eps-surprise-chart | Hurco Companies, Inc. Quote
Management’s Perspective
CEO Greg Volovic underscored the various challenges faced throughout the year, notably the 19% contraction in the global machine tool market. Despite these struggles, he indicated signs of improvement, such as growth in global orders and expectations for a better second half. The company also highlighted its advancements in technology displayed at the International Manufacturing Technology Show, including new control systems and autonomous machining capabilities, pointing to its commitment to innovation.
Influencing Factors
Hurco’s performance was negatively impacted by low demand in most regions, worsened by tough pricing conditions and reduced shipments of key products like Hurco and Takumi machines. However, there was an increase in sales of Hurco’s high-performance 5-axis machines and ProCobots automation solutions. Currency fluctuations also adversely affected results in specific regions.
Future Outlook
Although no specific guidance was issued, management remains optimistic about navigating the cyclical nature of the machine tool sector. Volovic emphasized the strength of the company’s balance sheet, ongoing technological investments, and commitment to returning to profitability as crucial factors for its long-term outlook.
Company Updates
No significant acquisitions, divestitures, or restructuring activities were reported during the quarter.
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