Hurco Companies Inc reported QQ1 2024 results reflecting a softer demand environment for metal-cutting CNC machinery, with revenue of $45.059 million, down 17.6% year over year and 31.84% quarter over quarter. The company posted a gross profit of $9.889 million and a gross margin of 21.95%, but nonetheless posted an operating loss of $1.626 million and a net loss of $1.648 million, translating to an EPS of -$0.25. The weak current quarter contrasting with relatively strong liquidity highlights a company in a cyclically sensitive segment: cash and cash equivalents stood at $37.94 million, and net debt remained negative (net cash position of about $25.56 million) after debt of $12.38 million. Management commentary is not included in the provided data, so the assessment hinges on the disclosed numbers and implied trend signals.
Key profitability dynamics show that while gross margins are relatively stable versus prior periods, operating and net profitability deteriorated due to lower volumes and fixed-cost absorption. Cash flow from operations was negative at $2.57 million, with capital expenditures of $0.832 million and free cash flow of about -$3.40 million, underscoring working capital and volume pressures. The balance sheet remains healthy in aggregate: total assets of $290.06 million against $65.50 million of liabilities and $224.56 million of equity. A notably extended working-capital cycle is evident from inventory days outstanding of roughly 422 days and a cash conversion cycle around 417 days, suggesting inventory buildup or longer lead times in a more prototypical machine-tool environment.
From a market- and competitive-position perspective, Hurco’s gross margin sits in the mid-range relative to several peers, yet operating profitability lags peers who enjoy positive margins. The company carries a modest leverage profile with low debt and a robust equity base, but profitability is constrained by the operating environment. The QQ1 2024 period presents a cautious near-term outlook with a need to monitor demand stabilization, inventory management, and any potential cost containment efforts. The stock remains inexpensive on a price-to-book basis and holds a meaningful net cash position, which could support optionality should demand recover. Investors should weigh cyclicality risk against the company’s strong liquidity and conservatively levered balance sheet as catalysts for multi-quarter recovery depending on industrial activity and capex cycles.