Executive Summary

Q2 FY2025 revenue declined 10% year over year to $40.87M with a net loss of $4.06M (−$0.62 diluted EPS), reflecting lower shipments across regions and an additional $1.27M non‑cash tax valuation allowance; gross margin improved 100 bps to 19% on mix and lower fixed overhead .
Orders were resilient at $43.70M (down 1% YoY), with notable strength in Asia Pacific (+74% YoY), while Americas and Europe orders fell modestly; orders exceeded sales in the quarter, supporting near‑term backlog stability .
Cash increased to $43.81M (from $33.33M at FY24 year‑end), working capital was $175.91M, and the company reported no debt; SG&A fell in dollars but rose to 27% of sales on deleveraging .
Stock reaction: since the release, shares fell ~5.6%, with investors reacting to lower revenue and continued losses; catalysts include Asian order strength vs. softer Americas/Europe, gross margin stabilization, and cash discipline .

What Went Well and What Went Wrong

What Went Well
- Asia orders surged 74% YoY in Q2, and total orders slightly outpaced shipments, helping support backlog into 2H .
- Gross margin improved to 19% (from 18% YoY) as European mix improved and cost savings from 2H’24 lowered overhead burden .
- Liquidity strengthened: cash rose to $43.81M versus $33.33M at FY24 year‑end; working capital remained robust at $175.91M .
- Management tone: “We’ve taken deliberate steps to strengthen cash flow and reduce costs… focus on a return to profitability,” while continuing to invest in product development to be ready as momentum returns .
What Went Wrong
- Revenue fell 10% YoY to $40.87M on reduced shipments of Hurco VMX and Takumi machines, with sales down across Americas (−9%), Europe (−5%), and Asia Pacific (−29%) .
- SG&A deleverage: expenses decreased YoY in dollars but rose to 27% of sales (vs. 25% prior year) on lower revenue, pressuring operating margin (−8% of sales) .
- Tax headwind: the company recorded a $1.27M valuation allowance in Q2 and maintained full valuation allowances in the U.S., Italy, and China, eliminating recognition of tax benefits on losses and lifting reported tax expense .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$45.17	$46.41	$40.87
Gross Margin %	18%	18%	19%
Operating Income ($M)	($3.44)	($2.09)	($3.07)
SG&A % of Sales	25%	22%	27%
Net Income ($M)	($3.92)	($4.32)	($4.06)
Diluted EPS ($)	($0.61)	($0.67)	($0.62)
Effective Tax Rate %	(1)%	(90)%	(15)%

Sales by Region ($USD Millions)

Region	Q2 2024	Q1 2025	Q2 2025
Americas	$16.95	$18.11	$15.36
Europe	$22.72	$21.61	$21.61
Asia Pacific	$5.51	$6.69	$3.90
Total Sales	$45.17	$46.41	$40.87

Orders by Region ($USD Millions)

Region	Q2 2024	Q1 2025	Q2 2025
Americas	$17.07	$14.64	$16.95
Europe	$23.87	$19.37	$21.09
Asia Pacific	$3.25	$6.07	$5.67
Total Orders	$44.19	$40.09	$43.70

Balance Sheet / KPIs

Metric	FY24 YE (Oct 31, 2024)	Q1 2025 (Jan 31, 2025)	Q2 2025 (Apr 30, 2025)
Cash & Cash Equivalents ($M)	$33.33	$41.82	$43.81
Working Capital ($M)	$180.79	$172.59	$175.91
Days Sales Outstanding (days)	49	50	51
Inventory Turns (x)	1.0	1.0	1.0
Total Debt	—	—	—
Shareholders’ Equity ($M)	$207.17	$198.14	$202.28

Estimates vs. Actuals (S&P Global)

Metric	Q2 2025 Consensus	Actual
Revenue ($USD Millions)	N/A*	$40.87
Primary EPS ($)	N/A*	($0.62)
Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend per Share	Ongoing	$0.16/share in FY2024 until suspended (June 14, 2024)	$0.00 in Q2 FY2025 (no dividend paid)	Lowered / Suspended
Formal Financial Guidance (Revenue, Margins, OpEx, etc.)	Q3–Q4 FY2025	Not provided	Not provided in Q2 materials	Maintained (no formal guidance)

Earnings Call Themes & Trends

Note: No Q2 FY2025 earnings call transcript was available in our sources; themes reflect management commentary from the company’s Q1 and Q2 press releases.

Topic	Previous Mentions (Q4 FY2024, Q1 FY2025)	Current Period (Q2 FY2025)	Trend
Macro / Demand	FY2024: machine tool market down ~19%; order improvement 1H→2H FY2024; cost reductions implemented	“Significant uncertainty across global markets”; variability in forecasting; continued cost discipline	Persistent uncertainty; disciplined execution
Regional Trends	Q1: Americas sales +9% YoY; Asia sales +18% YoY; Europe −5% YoY; U.S. orders softened	Q2 sales down across regions; Asia orders +74% YoY; Europe/Americas orders lower	Mixed: orders better in Asia; softer West
Product Mix	FY2024: lower 3‑axis volume; some price actions; showcased next‑gen control/automation at IMTS	Lower shipments of VMX and Takumi bridge/horizontal; continuing product investment priority	Mix under pressure; R&D investment maintained
Cost / Margin Actions	FY2024: cost reductions; margin affected by lower volumes/pricing	Gross margin +100 bps YoY on mix/overhead; SG&A in dollars down YoY	Margins stabilizing; OpEx controlled
Tax / Valuation Allowance	FY2024: full U.S. valuation allowance; higher tax expense	Continued valuation allowances in U.S., Italy, China; no tax benefit on losses	Continued headwind to reported EPS

Management Commentary

Strategic stance: “We’ve taken deliberate steps to strengthen cash flow and reduce costs… support our balance sheet and focus on a return to profitability… fully committed to investing in our product development initiatives… to respond quickly as momentum returns” — Greg Volovic, CEO .
Regional/mix context: Sales declines tied to reduced shipments of Hurco VMX and Takumi machines in the Americas; in Europe, lower volume in Germany/France/Italy partially offset by higher‑performance Hurco machines in the UK; Asia sales fell on lower higher‑performance/5‑axis demand in India, offset by VM/bridge/horizontal activity in China/SE Asia .
Orders dynamics: Americas/Europe orders softened on lower OEM and Hurco/Takumi demand, whereas Asia orders broadened across the region .
Tax: A $1.27M valuation allowance in Q2; full valuation allowances in key jurisdictions limited tax benefits despite losses .

Q&A Highlights

No public Q2 FY2025 earnings call transcript was available in our sources; management insights above are derived from the company’s Q2 and Q1 press releases .

Estimates Context

S&P Global consensus for Q2 FY2025 revenue and EPS was not available; we therefore benchmark actuals only and expect limited street coverage to constrain estimate dispersion.*
Given revenue down 10% YoY and operating loss similar to prior year, while orders held near flat and Asia orders accelerated, modest downward revisions (if any) would likely focus on near‑term sales cadence in Americas/Europe; gross margin stabilization could temper negative EPS revisions given mix and cost actions .

Values retrieved from S&P Global.*

Key Takeaways for Investors

Near‑term: Revenue pressure persisted, but orders (~$43.7M) slightly exceeded sales, with Asia strength a key offset—watch conversion to revenue in Q3–Q4 and whether Americas/Europe demand stabilizes .
Margins: Gross margin improved to 19% on mix and lower overhead; continued OpEx control (SG&A dollars down YoY) provides a floor as volume stabilizes .
Liquidity: $43.81M cash, ample working capital, and no debt provide capacity to invest through the cycle and support inventory/lead times as demand recovers .
Tax optics: Full valuation allowances in U.S./Italy/China create asymmetric EPS pressure (no tax benefit on losses); EPS leverage could be meaningful when profitability returns .
Product/regions: Monitor mix shift back toward higher‑performance machines and the sustainability of Asia order momentum; Europe/Americas order trends are the swing factors for 2H .
Capital returns: Dividend remains suspended (Q2 dividend $0.00 vs. $0.16 prior year) as management prioritizes flexibility; any reinstatement would likely follow sustained profitability .
Stock setup: Shares pulled back ~5.6% post‑print; catalysts include evidence of order‑to‑revenue conversion, incremental margin resilience, and signs of demand stabilization in the West .

HURCO COMPANIES INC (HURC)·Q2 2025 Earnings Summary