FOR IMMEDIATE RELEASE
FRIDAY, AUGUST 28, 2009
HURCO REPORTS THIRD QUARTER RESULTS
INDIANAPOLIS, INDIANA, — August 28, 2009, Hurco Companies, Inc., (Nasdaq, Global Select Market: HURC) today reported a net loss of $1,231,000, or ($0.19) per diluted share, for its third quarter ended July 31, 2009, compared to net income of $5,826,000, or $0.90 per diluted share, for the corresponding quarter in fiscal 2008. For the first nine months of fiscal 2009, Hurco reported a net loss of $1,158,000, or ($0.18) per diluted share, compared to net income of $19,098,000, or $2.96 per diluted share, reported for the corresponding period in fiscal 2008.
Sales and service fees for the third quarter of fiscal 2009 totaled $19,039,000, a decrease of $38,279,000 from the third quarter of fiscal 2008. Sales and service fees reflected an operational decrease of 64% and a negative impact of foreign currency translation of 3%. Sales and service fees for the nine months ended July 31, 2009, declined to $67,835,000, reflecting an operational decrease of 58% and a negative currency translation impact of 4% from the corresponding period in fiscal 2008.
The following table sets forth net sales and service fees by geographic region for the third quarter and first nine months of fiscal 2009 and 2008, respectively:
| Net Sales and Service Fees by Geographic Region | |
| | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | July 31, | | | July 31, | |
| | | | | | | | | % | | | | | | | | | % | |
| | | 2009 | | | 2008 | | | Change | | | 2009 | | | 2008 | | | Change | |
| North America | | $ | 5,809 | | | $ | 10,643 | | | | -45 | % | | $ | 21,618 | | | $ | 35,427 | | | | -39 | % |
| Europe | | | 11,777 | | | | 43,071 | | | | -73 | % | | | 42,879 | | | | 130,776 | | | | -67 | % |
| Asia Pacific | | | 1,453 | | | | 3,604 | | | | -60 | % | | | 3,338 | | | | 10,323 | | | | -68 | % |
| Total | | $ | 19,039 | | | $ | 57,318 | | | | -67 | % | | $ | 67,835 | | | $ | 176,526 | | | | -62 | % |
Similar to the first and second quarters of fiscal 2009, sales in the third quarter were significantly impacted by the worldwide recession. The decrease in sales was primarily driven by lower volume, particularly for higher priced VMX machines, and continued pricing pressures globally. Unit shipments for the third quarter of fiscal 2009 decreased in the North America, Europe and Asia Pacific sales regions by 51%, 68% and 57%, respectively compared to the third quarter of fiscal 2008.
New order bookings in the third quarter of fiscal 2009 were $17,914,000, a decrease of $34,544,000, or 66%, compared to the prior year period. Orders in the North America, Europe and Asia Pacific regions decreased $5,423,000, or 50%, $27,274,000, or 71%, and $1,847,000, or 61%, respectively. For the first nine months of fiscal 2009, new orders totaled $60,565,000, a decrease of $111,949,000, or 65%, from the corresponding period in 2008. Of that decrease, North America, Europe and Asia Pacific orders decreased $15,310,000, or 45%, $89,555,000, or 70%, and $7,084,000, or 72%, respectively. The impact of currency translation on new orders booked in the third quarter and first nine months of 2009 was consistent with the impact on sales.
Hurco’s gross margin for the third quarter of fiscal 2009 was 28%, compared to 36% for the 2008 period. The decrease in margin as a percentage of sales was primarily due to lower sales of higher priced VMX machines and competitive pricing pressures on a global basis. Selling, general and administrative expenses were $7,200,000, a decrease of $4,629,000, or 39%, from the corresponding period in 2008, reflecting lower sales commissions, the benefit of cost reduction initiatives and the favorable effect of a stronger U.S. Dollar in 2009 when translating foreign operating expenses for financial reporting purposes.
Cash decreased during the third quarter of fiscal 2009 by $1,154,000 to a balance of $26,696,000. Inventory increased by $404,000, or 1%. Monthly unit production levels for the third and fourth quarters of fiscal 2009 have been reduced by more than 80% from fiscal 2008 production levels in an effort to decrease inventory.
Michael Doar, Chief Executive Officer, said, “We implemented cost reduction initiatives earlier this year, which minimized our operating loss even though sales decreased 62% during the first three quarters of fiscal 2009. I credit both our organizational agility and the fiscally conservative culture of our company for allowing us to maintain product development schedules, which will allow us to participate in the eventual recovery with an expanded and more advanced product line. We are fortunate that we have been able to avoid the credit crisis so many companies are facing at this time due to our strong cash position and zero debt.”
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 aerospace, defense, medical equipment, energy, transportation and computer equipment. The Company is based in Indianapolis, Indiana, with manufacturing operations in Taiwan and China, and sells its products through direct and indirect sales forces throughout North America, Europe, and Asia. The company has sales, application engineering support and service subsidiaries in Canada, China, England, France, Germany, India, Italy, Poland, Singapore, South Africa, Spain, and the United States of America. Web Site: 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, the impact of the current global economic recession, including disruption in credit markets, other 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.
| Contact: | John Oblazney |
| | Vice President & Chief Financial Officer 317-293-5309 |
