Hurco CompaniesNASDAQ: HURC

Hurco Cos. Inc.'s stock HURC, -0.75% tumbled 12.8% early Friday, after the industrial technology company said it's suspending its quarterly dividend as it works to enhance its financial flexibility. “While it was a difficult decision, we believe that temporarily suspending the quarterly cash dividend on Hurco's common stock will provide near-term benefits to our cash flow management while also allowing us to enhance our balance sheet and more optimally allocate available capital among various strategies,” said Greg Volovic, chief executive of the Indianapolis-based company, in prepared remarks.

INDIANAPOLIS, June 14, 2024 (GLOBE NEWSWIRE) -- Hurco Companies, Inc. (Nasdaq Global Select Market: HURC) (“Hurco” or the “Company”), an international industrial technology company, announced today that its Board of Directors (the “Board”) elected to temporarily suspend the Company's regular quarterly cash dividend on its common stock, effective immediately. The decision comes as the Company seeks to enhance its financial flexibility and improve its ability to manage market volatility while focusing on strengthening its balance sheet, reinvesting in the Company's core business and research and development related to emerging technologies, and returning value to shareholders via the appropriate channels in both the near and long-term.

Hurco's (HURC) overall topline is dampened by revenue declines in all its geographic regions.

Hurco's fiscal Q4'23 results were surprisingly strong, but fiscal Q1'24 saw a sharp decline, reflecting the volatility of the business and still-weak trends across the manufacturing sector. Manufacturing activity remains challenged, with indicators like PMI and cutting tool consumption showing signs of stress, and election years often lead to postponed capex/expansion projects. While Hurco may have seen the worst and is priced as an attractive way to play a short-cycle recovery, uncertainties in the market and above-average risks should not be ignored.

Hurco's fiscal Q3 results were fairly stable relative to Q2, but the outlook is weaker, with a sharp decline in orders and a need to reduce inventories and realign production. Macro indicators in Hurco's major markets, such as manufacturing PMI and machine tool orders for the U.S. and Germany, are not good, indicating a weakening market. Despite the challenges, Hurco has the cash to weather the uncertainty and should benefit from reshoring-driven manufacturing capex investments in the future.