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HC

HURCO COMPANIES INC (HURC)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue increased 7% year over year to $45.806M, with gross margin expanding to 20% and net loss narrowing to $3.693M (-$0.58 diluted EPS); strength came from Americas (+10%) and Asia Pacific (+48%) sales .
  • Orders fell 22% year over year to $40.996M, driven by broad demand weakness in Europe and the Americas, tempering near‑term visibility .
  • Balance sheet strengthened: cash and cash equivalents rose to $44.494M; the company repurchased $2.000M of stock in Q3 and has $19.682M remaining under the program; management is evaluating reinstating dividends upon a return to profitability .
  • Management reiterated disciplined cost control and product investments; margin improvement attributed to favorable mix and lower overhead, positioning for a return to profitability when demand normalizes .

What Went Well and What Went Wrong

What Went Well

  • Americas sales +10% and Asia Pacific sales +48% YoY on higher Hurco and Milltronics shipments; APAC strength in Takumi vertical, bridge mill, horizontal, and 5‑axis machines .
  • Gross margin improved to 20% (vs. 18% prior year) due to higher European sales mix and lower fixed costs from cost savings implemented over the last 12 months .
  • Liquidity and shareholder returns improved: cash reached $44.494M; buybacks of $1.9998M in Q3 and $5.305M cumulatively with $19.682M authorization remaining; management will evaluate reinstating dividends upon profitability .
  • CEO tone constructive: “We increased our gross profit and reduced our operating costs... With a healthy cash position and ongoing investments in technology, we believe Hurco is well positioned to return to profitability...” .

What Went Wrong

  • Orders declined 22% YoY in Q3, including Europe -28% and Americas -12%; softness broad‑based with reduced demand for Hurco/Takumi and LCM accessories, particularly in Germany, UK, France and China (Hurco machines) .
  • SG&A rose modestly quarter over quarter to $10.762M (23% of sales), primarily due to unfavorable currency translation, partially offset by lower discretionary spending and health insurance costs year to date .
  • Persistent net losses driven in part by valuation allowances; Q3 income tax expense was $567k, including $1.639M valuation allowance; no tax benefit recorded for U.S./China losses due to full valuation allowances .

Financial Results

Quarter-over-Quarter and Year-over-Year Comparison

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$46.414 $40.867 $45.806
Gross Margin (%)18% 19% 20%
SG&A (% of Sales)22% 27% 23%
Operating Margin (%)(5)% (8)% (4)%
Net Income ($USD Millions)($4.320) ($4.063) ($3.693)
Diluted EPS ($USD)($0.67) ($0.62) ($0.58)
MetricQ3 2024Q3 2025
Revenue ($USD Millions)$42.651 $45.806
Gross Margin (%)18% 20%
Net Income ($USD Millions)($9.596) ($3.693)
Diluted EPS ($USD)($1.47) ($0.58)

Segment Sales by Geography

RegionQ1 2025 ($USD Thousands)Q2 2025 ($USD Thousands)Q3 2025 ($USD Thousands)
Americas$18,108 $15,361 $16,901
Europe$21,614 $21,608 $24,166
Asia Pacific$6,692 $3,898 $4,739
Total$46,414 $40,867 $45,806

Orders by Geography

RegionQ1 2025 ($USD Thousands)Q2 2025 ($USD Thousands)Q3 2025 ($USD Thousands)
Americas$14,643 $16,945 $15,557
Europe$19,370 $21,086 $20,274
Asia Pacific$6,072 $5,669 $5,165
Total$40,085 $43,700 $40,996

KPIs

KPIQ1 2025Q2 2025Q3 2025
Cash and Cash Equivalents ($USD Millions)$41.820 $43.807 $44.494
Working Capital ($USD Thousands)$172,591 $175,914 $176,755
Days Sales Outstanding (days)50 51 47
Inventory Turns (x)1.0 1.0 1.0
Capital Expenditures ($USD Thousands)$556 $800 $932
Effective Tax Rate (%)(90)% (15)% (18)%

Versus Estimates

MetricQ3 2025 ActualQ3 2025 Consensus# of Estimates
Revenue ($USD Millions)$45.806 N/AN/A
Diluted EPS ($USD)($0.58) N/AN/A
Note: Consensus estimates unavailable from S&P Global for Q3 2025 at time of this report.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q3 2025None providedNone providedMaintained (no formal guidance)
Gross MarginFY/Q3 2025None providedNone providedMaintained (no formal guidance)
SG&AFY/Q3 2025None providedNone providedMaintained (no formal guidance)
DividendFY 2025FY 2024 paid $0.32 for nine months Evaluating reinstatement upon return to profitabilityPolicy under review
Share RepurchaseThrough Nov 10, 2026$25M authorization$19.682M remaining; $1.9998M repurchased in Q3Ongoing

Earnings Call Themes & Trends

Note: No earnings call transcript was found for Q3 2025; themes below reflect management commentary from quarterly press releases.

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Macro uncertainty impacting demandU.S. customers delaying capital investments; diversified portfolio and strong cash cited “Significant uncertainty” across global markets, forecasting challenges Cautious capital purchases amid macro uncertainty Persistent headwind
Regional sales mixAmericas +9%, APAC +18%; Europe -5% on lower VMX/lathes Broad declines: Americas -9%, Europe -5%, APAC -29% Americas +10%, APAC +48%; Europe flat Improving mix Q3
Orders trajectoryTotal orders -20% YoY; Americas -30%, Europe -18% Total orders -1% YoY; APAC +74% Total orders -22% YoY; Europe -28%, Americas -12% Worsened YoY in Q3
Margin driversGM down YoY on lower VMX mix and lower volumes GM slightly up on higher Europe mix and reduced overhead GM up to 20% on mix and lower fixed overhead Improving sequentially
Cost disciplineSG&A reduced YoY; lower discretionary, commissions, health costs SG&A reduced YoY; continued cost actions SG&A QoQ increase from FX; YTD down vs prior year Ongoing discipline
Tax valuation allowances$2.385M valuation allowance; no tax benefit recorded for losses $1.270M valuation allowance in Q2; full U.S./Italy allowance $1.639M valuation allowance; full U.S./China/Italy allowance Continuing constraint
Capital allocationStrong cash, optimize working capital Strengthened cash; focus on return to profitability Cash $44.5M; $2.0M buybacks; evaluating dividend reinstatement Supportive

Management Commentary

  • Prepared remarks (Q3 2025 CEO): “We increased our gross profit and reduced our operating costs… We delivered 10% sales growth in the Americas and nearly 50% growth in Asia Pacific… With a healthy cash position and ongoing investments in technology, we believe Hurco is well positioned to return to profitability and deliver long‑term value” .
  • Prepared remarks (Q2 2025 CEO): “We are all navigating a period of significant uncertainty… We’ve taken deliberate steps to strengthen cash flow and reduce costs… Hurco is fully committed to investing in our product development initiatives…” .
  • Prepared remarks (Q1 2025 CEO): “Strong demand for… competitively priced Hurco (VM) machines, Milltronics toolroom lathes… and Takumi horizontal machines… commitment to financial discipline and optimizing operations and working capital…” .
  • Capital allocation outlook (Q3 2025 CFO/Company): Repurchased $1.9998M in Q3; $19.682M authorization remaining; evaluating reinstating dividend upon profitability; ongoing R&D and M&A evaluation with fiscal prudence .

Q&A Highlights

  • No public Q3 2025 earnings call transcript was available; no Q&A disclosures were found in filings. Management’s commentary from press releases forms the basis of themes and outlook .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q3 2025 EPS and revenue were unavailable; no # of estimates reported. As such, no beat/miss determination versus consensus can be made at this time. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Sequential improvement in margins and narrowing losses alongside stronger Americas and APAC sales suggests operating leverage when demand normalizes; watch mix (Europe share) and overhead control as drivers of gross margin .
  • Order softness (‑22% YoY) is the primary near‑term caution flag; weakness concentrated in Europe and the Americas (industrial capex hesitancy), which may pressure Q4 trajectory despite improved sales mix .
  • Balance sheet resilience (cash $44.5M, no debt disclosed in capitalization) and continued buybacks provide downside support and optionality for M&A/technology investment; dividend reinstatement contingent on profitability .
  • Tax valuation allowances continue to suppress reported net results; a return to profitability and changes in geographic mix could reduce ETR volatility over time .
  • Product positioning remains a relative strength: competitiveness at the lower price points (Hurco VM, Milltronics) and APAC-driven Takumi demand offer diversified levers across cycles .
  • Trading lens: near term, the stock may be sensitive to order trends and European demand signals; medium term, margin trajectory, cash deployment (buybacks/dividends), and mix shift are likely catalysts for rerating .