Hurco Companies - Case Study Example

Hurco Companies Introduction Hurco Companies are a company involved in the industrial technology industry based in Indianapolis, USA in which the company sells machine tools for computers and in the metal works industry. The company has a worldwide trading and sales network in which it also focuses on the service and distribution aspects of the company. In terms of management, the running of the organization is by a board of directors headed by the Chairman Mr. Doar Michael and the president of the company being Mr. Volovic Gregory S. Essentially, the board also consists of independent directors, the chief financial officer and a member that is in charge of the independent directors. On the other hand, the ownership structure of Hurco Companies involves the holding of shares in the company’s stocks, meaning that it is an institutionally owned industry. Some of the major shareholders of Hurco companies include Royce & Associates, LLC, FMR LLC, Dimensional Fund Advisors, among a list of over twenty five institutions that hold significant shares in the company. The total number of shareholders for the company stood at a hundred and sixty as at December 2013 i. Company history and mission statement As per the company’s website (2014), the company’s founders were Roch Gerald and the late Huston, Edward in which they established the company in 1968 as their main drive was the fact that they understand the connection between people and computers in order to increase work-related efficiency. With this, the founders of the company sought to promote work efficiency through technology and not increase task redundancy for those using machines. Therefore, the initial mission statement that the founders had when beginning the company over forty years ago still remains relevant to the modern-day Hurco Companies. ii. Mission statement The company’s mission statement states that Hurco intention is to provide innovative software that is unique and also producing controls that are able to influence the efficiency and productivity levels of their customers through the application of lesser time and enabling them to multi-task while executing tasks. 2. Products and markets I. Key products and services, important brand names and company competencies The computer machine tools that Hurco Company deals in are mainly lathes or turning centers and mills tat are also the vertical machine centers for the metal cutting industry. Other than product in the metal minting industry, Hurco also produces software that is essential in brake applications in which those that buy them install them onto existing machinery or onto new brakes. The software applications for brakes are sold in retrofit units as part of a production process that also includes the manufacture of control upgrades, replacement parts for metal production lines, and hardware accessories. The products that Hurco produces mainly target the transport, medical, automotive, aerospace, and energy industries through the TM/TMM, VMX and TMX product lines. II. Market and competitive trends for Hurco Company Hurco companies have three principle competitors that also have involvement in the manufacture of machine tools that are mainly Hardinge Inc., Haas Automation Inc, and the Giddings & Lewis Machine Tools LLC. However, one thing makes the company stand out from the other industry players, which is the fact that Hurco Company has operations across the globe meaning that it has roots in almost fifty countries. III. Interesting and informative recent events In a press release on March 2014 published by Reuters, the company’s chairman and CEO announced that the chief financial officer of Hurco Company Mr. Oblazney John G. had resigned so as to go pursue other personal interests. Mr. Oblazney had served for seven and a half years to which Mr. Doar credited his skills to the great performance of the company over the years. Other than this, Mr. Oblazney was also a chief contributor to Hurco’s success in conquering and developing the company’s international markets. According to Mr. Doar, his replacement was going to be McClelland Sonja K. who was formerly the principal accounting officer and corporate controller and was going to perform Mr. Oblazney’s duties on an interim capacity. 3. Financial Analysis of Hurco Companies through NASDAQ Stock info: The Hurco Company’s stock symbol is HURC Q1 (Jan 14) 2013 Net profit margin 4.65%, 4.25% Operating margin 6.51% 7.08% EBITD margin - 8.84% Return on average assets 4.47% 4.03% Return on average equity 6.19% 5.49% Employees 625 - CDP Score- - Range 26.50 - 27.16 52 weeks 23.52 - 31.61 Open 26.88 Vol / Avg. 19,516.00/21,868.00 Mkt cap 173.14M P/E 21.13 Div/yield 0.07/1.05 EPS 1.26 Shares 6.48M Beta 1.85 Inst. own 74% Latest financial reports For the year ending December 31, 2013, the revenue collected by Hurco Company stood at almost two million dollars with an estimated net income of 8.3 million dollars. The retail dividend earnings for the same year were also remarkable, which were at 0.22 per share, with an increase of 14, 022 in cash and cash equivalents. The short term debt increased has also increased from 2009 to 2013 with this liability standing at $3,665 in which most of this debt went into investments and the acquisition of assets for the Company. The implication of this is that the company’s turnover ration has been on an increase over the past few years with the estimates of retained earnings or the accumulated deficits standing at $98, 130 which is an increase from $69, 568 in 2009. 4. Financial Analysis 2 Presently, the total asset value of assets owned by Hurco Company stands at $211, 235 which is an increase from $144, 743 four years ago, which consist primarily of both tangible and intangible assets. Essentially, Hurco’s tangible assets include leasehold improvements, buildings, land, and other equipments while the intangible assets owned by the Company include software development, and other virtual systems. According to Mergent Online’s financial statement of Hurco Companies, the company’s auditor is the Ernst & Young LLP firm, which conducted Hurco’s audit in 2013 while the Company operates in a single market segment of industrial automation systems. Hurco Companies also adhere to the GAAP of accounting, which refers to the Generally Accepted Accounting Principles, which are the guidelines for financial accounting within a particular field that an industry operates in. Missing major items from the financial statement One of the key elements missing in the financial statement of Hurco Companies is that the company was the pioneer of microprocessor technology application when the industry began in 1968. This means that the company has been the leader in interactive control systems that rely on computers to execute their tasks (Hurco Website 2014). The products manufactured by Hurco do not require skills to operate them as any operator is able to instruct the machines that apply these computer controls so as to perform and accomplish complex tasks. Essentially, the financial statements of Hurco Companies only provide information concerning the Company’s financial performance and not in the ways that the products manufactured have influenced efficiency to those that use them in their industries. Most of this information is available on Hurco’s website (2014) in which the financial reports provide a link as to how an interested investor or party may access it. In addition, these statements also do not provide information on the distribution strategies used by the Company to deliver its products to a global market, which is one of the key areas in which an investor looks at before they can decide on whether to invest in the Company. Team decision about investing in the Hurco Company Most of the computer application tools produced by Hurco are patented, making it safe for investors to trust the investments that they make in the Companies. The Company also operates in an industry that has a ready market despite the fact that there is intense competition, meaning that it strives to meet the ever rising demands for the machine tools industry. Therefore, this guarantees investors of their return on investment because the stock market of Hurco has also been steady over the years, meaning that it is a lucrative company to invest in. As much as the Company operates in different countries, the organization operates as a team in that the operations are streamlined in all its subsidiaries hence illustrating that it has organizational unity. It does not have negative competition within itself as it only focuses on meeting the demands of its market and stay relevant in its area of practice. The audit systems that Hurco applies also make the Company to reputable because it communicates its progress and status to those interested in investing in the company, hence explaining why its list of investors is long. With this, manufacturing management operations from the headquarters down indicates that its relationship with its target market is a team effort as it focuses on increasing customer satisfaction rather than maximizing on its profit margins. 5. Appendix One of the key factors that make Hurco to operate with teamwork is that it has ventured in other countries that include China, Singapore, Italy, and France among a list of other nations worldwide. The company also values team work because Hurco’s distribution centers located in Venlo in Netherlands, California and Los Angeles in the USA while they also have another manufacturing plant in Taichung in Taiwan work together with the parent company in Indianapolis. Works cited Hurco - Investor Relations 2014 News Releases." Hurco - Investor Relations 2014 News Releases. N.p., n.d. Web. 27 Mar. 2014. Hurco Companies Website. http://www.hurco.com/en-us/about-hurco/investors/Pages/default.aspx Mergent Online. Hurco Companies detail. Web. 13 April 2014. NASDAQ: HURC. Hurco Companies, Inc. Web. 13 April 2014. Read More