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HC

HURCO COMPANIES INC (HURC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 revenue rose 3% y/y to $46.41M but fell sequentially vs Q4 FY2024 ($53.70M); gross margin compressed to 18% (Q4: 23%; Q1’24: 22%), and GAAP net loss widened to $4.32M (-$0.67/share) including a $2.39M non-cash tax valuation allowance .
  • Orders fell 20% y/y to $40.09M, with sharp declines in Americas (-30%) and Europe (-18%); Asia Pacific grew 3% y/y .
  • Regional sales mixed: Americas +9% and Asia Pacific +18% y/y, offset by Europe -5% y/y; product mix skewed to competitively priced machines pressured margins .
  • Cash increased to $41.82M from $33.33M at 10/31/24 on working capital optimization; no debt reported .
  • S&P Global consensus for Q1 FY2025 EPS and revenue was unavailable; beat/miss assessment vs Street cannot be determined (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • Americas sales +9% y/y to $18.11M driven by Hurco VM and Milltronics toolroom/vertical machines and lathes; Asia Pacific +18% y/y on higher Hurco and Takumi shipments in China and India .
  • SG&A declined to $10.38M (22% of sales) vs $11.52M (26%) a year ago, reflecting cost discipline (lower discretionary spend, commissions, health insurance) .
  • Liquidity improved: cash and equivalents increased to $41.82M from $33.33M at 10/31/24; working capital remains high at $172.59M .
    • CEO: “Our commitment to financial discipline and optimizing operations and working capital have resulted in a significant addition to our cash position and efficient management of inventory levels.” .

What Went Wrong

  • Orders weakened materially: total -20% y/y to $40.09M; Americas -30% and Europe -18%, signaling near-term demand softness and potential future sales pressure .
  • Gross margin fell to 18% (from 22% y/y and 23% in Q4) due to mix (more lower-margin vertical milling machines in Americas/Europe), lower production volumes, and fixed cost allocation .
  • GAAP loss widened to -$4.32M; tax expense of $2.04M included a $2.39M non-cash valuation allowance (U.S., Italy, China) and no recorded tax benefit for certain pre-tax losses, depressing net results .
  • Europe sales -5% y/y (1% FX headwind) on weaker VMX and lathes in France/Italy and lower LCM accessory shipments .

Financial Results

Consolidated P&L and Orders (chronological: oldest → newest)

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$45.06 $53.70 $46.41
Gross Margin %22% 23% 18%
SG&A % of Sales26% 24% 22%
Operating Margin %-4% -1% -5%
Pre-tax Margin %-5% -2% -5%
Net Income ($USD Millions)-$1.65 -$1.44 -$4.32
Diluted EPS ($)-$0.25 -$0.23 -$0.67
Orders ($USD Millions)$50.22 $51.08 $40.09
Cash & Equivalents ($USD Millions)N/A$33.33 $41.82

Regional Sales (Net Sales and Service Fees)

RegionQ1 2024Q4 2024Q1 2025
Americas ($M)$16.65 $23.33 $18.11
Europe ($M)$22.75 $25.38 $21.61
Asia Pacific ($M)$5.66 $4.99 $6.69
Total ($M)$45.06 $53.70 $46.41

Orders by Region

RegionQ1 2024Q4 2024Q1 2025
Americas ($M)$20.80 $21.22 $14.64
Europe ($M)$23.54 $23.88 $19.37
Asia Pacific ($M)$5.89 $5.98 $6.07
Total ($M)$50.22 $51.08 $40.09

Selected Balance Sheet and Operational KPIs

KPIQ4 2024Q1 2025
Working Capital ($M)$180.79 $172.59
Days Sales Outstanding49 50
Inventory Turns1.0 1.0
Total DebtNone None
Dividend per Share (quarter)$0.00 $0.00

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per share (actual quarterly dividend)Q1$0.16 (Q1 2024 actual) $0.00 (Q1 2025 actual) Lower vs prior year

Note: No quantitative forward guidance (revenue/margins/OpEx/tax rate) was provided in the Q1 FY2025 press release; no updates were included in the filing .

Earnings Call Themes & Trends

Note: A Q1 FY2025 earnings call transcript was not available in our documents set; themes below reflect company press releases.

TopicPrevious Mentions (Q-2: Q3 FY2024)Previous Mentions (Q-1: Q4 FY2024)Current Period (Q1 FY2025)Trend
Orders momentumQ3 orders $52.82M, improved y/y and vs prior two quarters; orders > sales by >$10M Q4 orders $51.08M (-6% y/y) with strength in Asia; H2 orders improved vs H1 Orders $40.09M (-20% y/y); Americas -30%, Europe -18% Softening sequentially
Regional sales mixEurope and Americas weaker; Asia mixed (China down, India up) Americas -21% y/y, Europe -18% y/y; Asia -11% y/y in Q4 Americas +9% y/y, Asia +18% y/y; Europe -5% y/y Mixed; Europe continues weak, Asia/Americas better
Product mix/pricingPrice reductions in Q2/Q3 to penetrate markets; mix pressured margins Gross margin 23% (down y/y) with lower vol/pricing pressure Mix toward competitively priced VM/toolroom machines; gross margin 18% Margin pressure persists
Cost actions/OpExImplemented global cost reductions in Q3 Continued cost reductions; SG&A down y/y SG&A $10.38M (22% of sales), down y/y Positive discipline
Technology/automationNext-gen controls, INSPIRE+, ProCobots/robot integration highlighted pre-IMTS Showcased technology at IMTS; automation emphasis Continued emphasis on diverse portfolio and readiness to serve demand Ongoing strategic focus
Macro/tariffs/supplyCyclical industry; macro uncertainty cited Industry down ~19% in 2024 per Oxford Economics; navigating cycle “Broader economic uncertainty” cited for US order delays Macro remains headwind
Taxes/valuation allowanceU.S. valuation allowance recorded in Q3 $8.45M valuation allowance in FY2024; no U.S. tax benefit $2.39M valuation allowance (U.S., Italy, China); no tax benefit for certain losses Continued GAAP headwind

Management Commentary

  • CEO (Q1 FY2025): “Strong demand for our more competitively priced Hurco (VM) machines, Milltronics toolroom lathes and vertical milling machines, as well as Takumi horizontal machines... notable strength in the Americas (sales +9%) and Asia Pacific (sales +18%). Order volume in the U.S. softened as some customers appeared to delay capital investments amid broader economic uncertainty.” .
  • On operational discipline (Q1 FY2025): “Our commitment to financial discipline and optimizing operations and working capital have resulted in a significant addition to our cash position and efficient management of inventory levels.” .
  • CEO (Q4 FY2024 context): “Global orders for this fiscal year outpaced sales in every region… orders improved from the first half… to the second half… We implemented global cost reductions this year, but… advanced… technological innovations… showcasing next-generation control and automation at IMTS.” .

Q&A Highlights

  • A Q1 FY2025 earnings call transcript was not available in our document set; therefore, Q&A themes and any clarifications from live discussion are unavailable.

Estimates Context

  • S&P Global consensus for Q1 FY2025 EPS and revenue was unavailable at the time of analysis; as a result, we cannot determine beat/miss vs Street for this quarter (S&P Global data unavailable).
  • Actuals reported: Revenue $46.41M; Diluted EPS -$0.67 (includes $2.39M non-cash tax valuation allowance) .

Key Takeaways for Investors

  • Orders deterioration is the key watch item: total orders -20% y/y and Americas -30% point to potential near-term revenue softness despite y/y sales growth in Americas and Asia; sequential orders fell sharply from Q4 .
  • Margin pressure likely persists near term given mix toward competitively priced vertical milling machines and lower production volumes; gross margin at 18% highlights limited fixed-cost absorption .
  • Cost discipline is helping: SG&A down y/y and as a % of sales (22% vs 26%) supports incremental operating leverage once demand stabilizes .
  • Strong liquidity and no debt provide resilience; cash rose to $41.82M with high working capital, enabling continued R&D/automation investments through the cycle .
  • Europe remains weak (-5% y/y sales; -18% y/y orders) and could weigh on mix/margins until demand normalizes; monitor regional trends and LCM accessory demand .
  • Tax valuation allowances will continue to distort GAAP earnings until sustained profitability returns; investors should focus on pre-tax performance and order intake quality .
  • Near-term trading: stock likely sensitive to monthly/quarterly order updates and any signs of U.S. demand reacceleration; medium-term thesis hinges on mix improvement, automation adoption, and execution against cost structure as the machine tool cycle recovers .