Shares of Hurco Companies, Inc. HURC have lost 10.5% since the company reported its earnings for the quarter ended Jan. 31, 2025. This compares to the S&P 500 Index’s 2.3% decline over the same time frame. Over the past month, the stock lost 28.9% compared with the S&P 500’s 7.5% decline.

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Financial Performance

Hurco reported a net loss of $4.3 million, or $0.67 per diluted share, for the first quarter of fiscal 2025. This marked a wider loss than the $1.6 million net loss, or $0.25 per diluted share, recorded in the prior-year period. The latest results included a $2.4 million non-cash tax valuation allowance related to deferred tax assets in the United States, Italy, and China.

Sales and service fees rose 3% year over year to $46.4 million from $45.1 million in the prior-year period, despite a $0.4 million unfavorable currency impact. Growth was primarily driven by increased sales in the Americas (up 8.8%) and the Asia Pacific region (up 18.3%), offset by a 4.9% decline in European sales. By product category, sales of computerized machine tools increased 5.7%, while sales of service parts declined 11.7%.

Gross profit decreased 14.5% to $8.3 million from $9.7 million in the prior-year quarter, with gross margin contracting to 18% from 22%. The decline was attributed to lower sales volumes of high-margin vertical milling machines in the Americas and Europe, as well as the impact of fixed cost allocations on lower-margin sales and lower production volumes. Selling, general, and administrative expenses declined 9.8% to $10.4 million (22% of sales) from $11.5 million (26% of sales) in the prior-year period, reflecting reduced discretionary spending, lower sales commissions, and decreased employee health insurance costs.

Operating loss widened to $2.1 million from $1.8 million in the previous year. The company also recorded a $0.4 million net other expense, largely due to foreign currency fluctuations.

Orders Decline Amid Economic Uncertainty

Hurco’s order volume declined 20.2% year over year to $40.1 million from $50.2 million in the prior-year period, including a $0.4 million unfavorable currency impact. The decline was driven by a sharp 29.6% drop in orders from the Americas and a 17.7% decline in Europe. The decrease in the Americas was linked to reduced demand for Hurco and Milltronics machines, particularly higher-performance VMX models. 

In Europe, lower orders were attributed to reduced demand for Hurco and Takumi machines, especially in France and Italy, as well as decreased demand for electro-mechanical components and accessories produced by the company’s subsidiary, LCM. The Asia Pacific region showed resilience, with a modest 3.1% increase in orders, driven by higher demand for Hurco machines in China.

Other Key Business Metrics

Hurco ended the quarter with $41.8 million in cash and cash equivalents, up from $33.3 million at the end of fiscal 2024. Working capital decreased to $172.6 million as of Jan. 31, 2025, from $180.8 million as of Oct. 31, 2024, primarily due to lower inventory and accounts receivable balances. The company had no outstanding debt.

Management Commentary

CEO Greg Volovic acknowledged the softer order volume, particularly in the United States, where customers appeared to delay capital investments amid broader economic uncertainty. He highlighted the company’s efforts to optimize working capital and manage inventory levels efficiently. Volovic emphasized Hurco’s financial strength, diverse product portfolio, and global reach as key factors that position the company to navigate market cycles.

Guidance and Outlook

Hurco did not provide explicit forward-looking guidance but acknowledged the challenges posed by market uncertainty and shifting demand dynamics. The company remains focused on financial discipline, inventory management, and leveraging its global footprint to capitalize on emerging opportunities.

Other Developments

The previously announced $25 million share repurchase program remains in effect, with $21.7 million available for future repurchases. However, no buybacks occurred during the quarter. Additionally, Hurco continues to suspend its quarterly dividend, a measure implemented in mid-2024 to preserve financial flexibility.

Hurco did not announce any acquisitions, divestitures, or significant business restructuring during the quarter. The company continues to emphasize operational efficiency and working capital management as it navigates the current business environment.

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