UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

⌧ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended ~~July~~January 31, ~~2025~~2026 or

◻ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________ to _________.

Commission File No. 0-9143

HURCO COMPANIES, INC.

(Exact name of registrant as specified in its charter)

Indiana		35-1150732
(State or other jurisdiction of		(I.R.S. Employer Identification Number)
incorporation or organization)
One Technology Way
Indianapolis, Indiana		46268
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code (317) 293-5309

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	HURC	The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ◻	Accelerated filer ⌧
Non-accelerated filer ◻	Smaller reporting company ⌧
Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No ⌧

The number of shares of the Registrant’s common stock outstanding as of ~~August~~February 3128, ~~2025~~2026 was 6,~~402~~446,~~396~~454.

Table of Contents

HURCO COMPANIES, INC.

Form 10-Q Quarterly Report for Fiscal Quarter Ended ~~July~~January 31, ~~2025~~2026

Table of Contents

Part I - Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Statements of Operations Three and Nine Months Ended July 31, 2025 and 2024	3
	Condensed Consolidated Statements of Operations Three Months Ended January 31, 2026 and 2025	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) Three and Nine Months Ended July 31, 2025 and 2024	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) Three Months Ended January 31, 2026 and 2025	4

	Condensed Consolidated Balance Sheets as of July 31, 2025 and October 31, 2024	5
	Condensed Consolidated Balance Sheets as of January 31, 2026 and October 31, 2025	5

	Condensed Consolidated Statements of Cash Flows Three and Nine Months Ended July 31, 2025 and 2024	6
	Condensed Consolidated Statements of Cash Flows Three Months Ended January 31, 2026 and 2025	6

	Condensed Consolidated Statements of Changes in Shareholders’ Equity Three and Nine Months Ended July 31, 2025 and 2024	7
	Condensed Consolidated Statements of Changes in Shareholders’ Equity Three Months Ended January 31, 2026 and 2025	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2019

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2926

Item 4.	Controls and Procedures	3027

Part II - Other Information

Item 1.	Legal Proceedings	3128

Item 1A.	Risk Factors	3128

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3128

Item 5.	Other Information	3228

Item 6.	Exhibits	3229

Signatures		3330

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

HURCO COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended

~~Nine Months Ended~~

~~July~~January 31,

~~July 31,~~

~~2025~~2026

~~2024~~2025

~~2025~~

~~2024~~

(unaudited)

~~(unaudited)~~

Sales and service fees

4542,~~806~~868

4246,~~651~~414

~~133,087~~

~~132,882~~

Cost of sales and service

3634,~~694~~930

3438,~~808~~124

~~107,856~~

~~107,325~~

Gross profit

97,~~112~~938

78,~~843~~290

~~25,231~~

~~25,557~~

Selling, general and administrative expenses

1011,~~762~~108

10,~~376~~382

~~32,041~~

~~33,352~~

Operating (loss) income

(13,~~650~~170)

(2,~~533~~092)

~~(6,810)~~

~~(7,795)~~

Interest expense

~~159~~58

~~426~~

Interest income

5842

~~172~~94

~~239~~

~~492~~

Investment income, net

13105

59161

~~186~~

~~126~~

Other (expense) income, net

(1,543)

(136)

(2,499)

(1,125)

Other income (expense), net

(384)

(Loss) income before income taxes

(3,~~126~~007)

(2,~~597~~279)

~~(8,950)~~

~~(8,728)~~

Provision (benefit) for income taxes

~~567~~461

62,~~999~~041

~~3,126~~

~~6,438~~

Net (loss) income

(3,~~693~~468)

(94,~~596~~320)

~~(12,076)~~

~~(15,166)~~

(Loss) income per common share

Basic

(0.5854)

(10.4767)

~~(1.87)~~

~~(2.33)~~

Diluted

(0.5854)

(10.4767)

~~(1.87)~~

~~(2.33)~~

Weighted average common shares outstanding

Basic

6,~~463~~425

6,~~513~~459

~~6,474~~

~~6,505~~

Diluted

6,~~463~~425

6,~~513~~459

~~6,474~~

~~6,505~~

Dividends paid per share

—

0.32

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

HURCO COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Three Months Ended

~~Nine Months Ended~~

~~July~~January 31,

~~July 31,~~

~~2025~~2026

~~2024~~2025

~~2025~~

~~2024~~

(unaudited)

~~(unaudited)~~

Net (loss) income

(3,~~693~~468)

(94,~~596~~320)

~~(12,076)~~

~~(15,166)~~

Other comprehensive (loss) income:

Translation (loss) gain of foreign currency financial statements

~~5,462~~178

1(5,~~085~~394)

~~8,129~~

~~1,601~~

(Gain) / loss on derivative instruments reclassified into operations, net of tax (expense)/ benefit of $91, $112, $333 and $297, respectively

304

373

1,111

992

(Gain) / loss on derivative instruments reclassified into operations, net of tax (expense) / benefit of $43 and $156, respectively

142

522

Gain / (loss) on derivative instruments, net of tax expense (benefit) of $163, ($74), $11 and ($261), respectively

544

(248)

(870)

Gain / (loss) on derivative instruments, net of tax expense (benefit) of $(219) and ($29), respectively

(731)

(96)

Total other comprehensive (loss) income

~~6,310~~(411)

1(4,~~210~~968)

~~9,277~~

~~1,723~~

Comprehensive (loss) income

2(3,~~617~~879)

(89,~~386~~288)

~~(2,799)~~

~~(13,443)~~

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

HURCO COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	~~July~~January 31,		October 31,
	~~2025~~2026		~~2024~~2025
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	4448,~~494~~011	$	3348,~~330~~713
Accounts receivable, net		2725,~~645~~832		3627,~~678~~928
Inventories		~~147~~141,~~538~~735		~~153~~142,~~037~~931
Derivative assets		~~2,782~~82		~~323~~263
Prepaid and other assets		57,~~835~~064		5,~~209~~243
Total current assets		~~228~~222,~~294~~724		~~228~~225,~~577~~078
Property and equipment:
Land		1,046		1,046
Building		7,381		7,381
Machinery and equipment		2625,~~919~~967		2826,~~106~~061
Leasehold improvements		4,~~644~~543		4,~~667~~569
		3938,~~990~~937		4139,~~200~~057
Less accumulated depreciation and amortization		(31,~~671~~294)		(3231,~~404~~083)
Total property and equipment, net		87,~~319~~643		87,~~796~~974
Non–current assets:
Software development costs, less accumulated amortization		78,~~684~~438		78,~~044~~090
Intangible assets, net		~~663~~415		~~763~~627
Operating lease - right of use assets, net		11,~~929~~171		11,~~313~~560
Deferred income taxes		~~641~~792		~~1,349~~794
Investments		89,~~821~~111		89,~~216~~005
Other assets		21,~~737~~241		21,~~585~~170
Total non–current assets		3231,~~475~~168		31,~~270~~246
Total assets	$	~~269~~261,~~088~~535	$	~~268~~264,~~643~~298
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	27,~~343~~577	$	2426,~~951~~074
Customer deposits		45,~~453~~430		4,~~308~~788
Derivative liabilities		23,~~038~~134		~~705~~3,084
Operating lease liabilities		4,~~190~~381		34,~~829~~374
Accrued payroll and employee benefits		6,~~819~~266		7,~~786~~474
Accrued income taxes		1,~~622~~682		~~866~~1,472
Accrued expenses		43,~~113~~786		43,~~258~~790
Accrued warranty expenses		~~961~~962		~~1,086~~967
Total current liabilities		5153,~~539~~218		4752,~~789~~023
Non–current liabilities:
Deferred income taxes		4732		5338
Accrued tax liability		29—		~~537~~—
Operating lease liabilities		87,~~116~~181		7,~~852~~560
Deferred credits and other		56,~~685~~073		5,~~240~~890
Total non–current liabilities		13,~~877~~286		13,~~682~~488
Commitment and contingencies		—		—
Shareholders’ equity:
Preferred stock: no par value per share, 1,000,000 shares authorized; no shares issued		—		—
Common stock: no par value, $.10 stated value per share, 12,500,000 shares authorized; 6,569,682 and 6,548,838 shares issued and 6,402,396 and 6,435,624 shares outstanding, as of July 31, 2025 and October 31, 2024, respectively		640		644
Common stock: no par value, $.10 stated value per share, 12,500,000 shares authorized; 6,637,605 and 6,569,224 shares issued and 6,446,454 and 6,402,396 shares outstanding, as of January 31, 2026 and October 31, 2025, respectively		645		640
Additional paid-in capital		6061,~~781~~165		6160,~~500~~850
Retained earnings		~~149~~142,~~346~~837		~~161~~146,~~422~~305
Accumulated other comprehensive loss		(79,~~095~~616)		(169,~~394~~008)
Total shareholders’ equity		~~203~~195,~~672~~031		~~207~~198,~~172~~787
Total liabilities and shareholders’ equity	$	~~269~~261,~~088~~535	$	~~268~~264,~~643~~298

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

HURCO COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three Months Ended

~~Nine Months Ended~~

~~July~~January 31,

~~July 31,~~

~~2025~~2026

~~2024~~2025

~~2025~~

~~2024~~

(unaudited)

~~(unaudited)~~

Cash flows from operating activities:

Net (loss) income

(3,~~693~~468)

(94,~~596~~320)

~~(12,076)~~

~~(15,166)~~

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Adjustments to reconcile net (loss) income to net cash provided by (used for) operating activities:

Provision for doubtful accounts

(~~125~~71)

20(9)

~~(134)~~

~~(40)~~

Deferred income taxes

(1,~~623~~168)

(31,~~395~~090)

~~(4,000)~~

~~(3,536)~~

Deferred income tax valuation allowances

1,639

8,158

5,294

8,158

Deferred income tax valuation allowance

1,142

2,385

Equity in loss (income) of affiliates

179

(181)

(268)

Equity in (income) loss of affiliates

(110)

(87)

Foreign currency (gain) loss

3(1,~~099~~624)

(~~571~~199)

~~2,552~~

~~(1,177)~~

Unrealized (gain) loss on derivatives

(~~813~~316)

~~(418)~~1,054

~~(914)~~

~~821~~

Depreciation and amortization

~~642~~569

~~888~~710

~~2,000~~

~~2,678~~

Stock–based compensation

~~578~~591

~~269~~584

~~1,629~~

~~1,080~~

Change in assets and liabilities:

(Increase) decrease in accounts receivable

(1,~~638)~~658

27,~~141~~537

~~9,754~~

~~15,377~~

(Increase) decrease in inventories

13,~~467~~061

19,~~386~~261

~~11,099~~

~~(2,357)~~

(Increase) decrease in prepaid expenses

185

1,344

(1,182)

(1,068)

(Increase) decrease in prepaid and other assets

(2,005)

(1,636)

Increase (decrease) in accounts payable

21,~~489~~895

(~~524~~1,894)

~~1,104~~

~~(2,860)~~

Increase (decrease) in customer deposits

~~820~~706

~~1,049~~(959)

~~1,442~~

Increase (decrease) in accrued expenses

(~~288~~123)

~~(484)~~84

~~(461)~~

~~(3)~~

Increase (decrease) in accrued payroll and employee benefits

(~~145~~1,204)

~~393~~(1,520)

~~(967)~~

~~(1,865)~~

Increase (decrease) in accrued income tax

~~(244)~~211

~~(365)~~605

~~726~~

~~(909)~~

Increase (decrease) in accrued tax liability

—

4—

~~(508)~~

~~(591)~~

Net change in deferred tax assets and liabilities

47124

~~(46)~~78

~~172~~

~~(57)~~

Net change in derivative assets and liabilities

~~171~~(161)

~~(527)~~38

~~(63)~~

~~(633)~~

Other

(~~209~~323)

(~~167~~285)

~~(281)~~

~~(338)~~

Net cash provided by (used for) operating activities

~~2,538~~(616)

~~(622)~~10,337

~~13,872~~

~~(1,312)~~

Cash flows from investing activities:

Proceeds from sale of property and equipment

69—

1176

~~245~~

Purchase of property and equipment

(~~470~~71)

(~~219~~93)

~~(871)~~

~~(793)~~

Software development costs

(~~462~~539)

(~~516~~463)

~~(1,417)~~

~~(1,253)~~

Other investments

118

—

118

117

Cash received from sale of a business

1,165

—

Net cash provided by (used for) investing activities

~~(745)~~555

(~~734~~380)

~~(1,925)~~

~~(1,903)~~

Cash flows from financing activities:

Dividends paid

—

(2,093)

Taxes paid related to net settlement of restricted shares

(271)

(352)

Stock repurchases

(2,000)

(508)

(2,000)

(508)

Net cash provided by (used for) financing activities

(271)

(352)

Taxes paid related to net settlement of restricted shares

—

(352)

(315)

Net cash provided by (used for) financing activities

(2,000)

(508)

(2,352)

(2,916)

Effect of exchange rate changes on cash and cash equivalents

(370)

(1,115)

Effect of exchange rate changes on cash and cash equivalents

894

376

1,569

401

Net increase (decrease) in cash and cash equivalents

(702)

8,490

Net increase (decrease) in cash and cash equivalents

687

(1,488)

11,164

(5,730)

Cash and cash equivalents at beginning of period

48,713

33,330

Cash and cash equivalents at beginning of period

43,807

37,542

33,330

41,784

Cash and cash equivalents at end of period

48,011

41,820

Cash and cash equivalents at end of period

44,494

36,054

44,494

36,054

Supplemental disclosures:

Cash paid for:

Interest

—

Income taxes, net

315

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

HURCO COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands, except shares outstanding)


	Three Months Ended ~~July~~January 31, ~~2025~~2026 and ~~2024~~2025
	(unaudited)
								Accumulated
	Common Stock			Additional				Other
	Shares			Paid–in		Retained		Comprehensive
(unaudited)	Outstanding	Amount		Capital		Earnings		Income (Loss)		Total
Balances, April 30, 2024	6,523,259	$	652	$	62,155	$	172,461	$	(19,691)	$	215,577
Balances, October 31, 2024	6,435,624	$	644	$	61,500	$	161,422	$	(16,394)	$	207,172
Net income (loss)	—		—		—		(94,~~596~~320)		—		(94,~~596~~320)
Other comprehensive income (loss)	—		—		—		—		1(4,~~210~~968)		1(4,~~210~~968)
Deferred income tax valuation allowances	—		—		—		—		~~(327)~~27		~~(327)~~27
Stock–based compensation expense, net of taxes withheld for vested restricted shares	—48,366		—4		~~269~~228		—		—		~~269~~232
Stock repurchases	(29,413)		(3)		(505)		—		—		(508)
Balances, January 31, 2025	6,483,990	$	648	$	61,728	$	157,102	$	(21,335)	$	198,143
Balances, July 31, 2024	6,493,846	$	649	$	61,919	$	162,865	$	(18,808)	$	206,625

Balances, April 30, 2025	6,506,868	$	651	$	62,192	$	153,039	$	(13,602)	$	202,280
Balances, October 31, 2025	6,402,396	$	640	$	60,850	$	146,305	$	(9,008)	$	198,787
Net income (loss)	—	0	—	0	—	0	(3,~~693~~468)		—		(3,~~693~~468)
Other comprehensive income (loss)	—	0	—	0	—	0	—		~~6,310~~(411)		~~6,310~~(411)
Deferred income tax valuation allowances	—	0	—	0	—	0	—		(197)		(197)
Stock–based compensation expense, net of taxes withheld for vested restricted shares	—44,058	0	—5	0	~~578~~315	0	—		—		~~578~~320
Stock repurchases	(104,472)	0	(11)	0	(1,989)	0	—		—		(2,000)
Balances, January 31, 2026	6,446,454	$	645	$	61,165	$	142,837	$	(9,616)	$	195,031
Balances, July 31, 2025	6,402,396	$	640	$	60,781	$	149,346	$	(7,095)	$	203,672


	Nine Months Ended July 31, 2025 and 2024
	(unaudited)
								Accumulated
	Common Stock			Additional				Other
	Shares			Paid–in		Retained		Comprehensive
	Outstanding	Amount		Capital		Earnings		Income (Loss)		Total
Balances, October 31, 2023	6,462,138	$	646	$	61,665	$	180,124	$	(20,204)	$	222,231
Net income (loss)	—		—		—		(15,166)		—		(15,166)
Other comprehensive income (loss)	—		—		—		—		1,723		1,723
Deferred income tax valuation allowances	—		—		—		—		(327)		(327)
Stock–based compensation expense, net of taxes withheld for vested restricted shares	61,121		6		759		—		—		765
Stock repurchases	(29,413)		(3)		(505)		—		—		(508)
Dividends paid	—		—		—		(2,093)		—		(2,093)
Balances, July 31, 2024	6,493,846	$	649	$	61,919	$	162,865	$	(18,808)	$	206,625

Balances, October 31, 2024	6,435,624	$	644	$	61,500	$	161,422	$	(16,394)	$	207,172
Net income (loss)	—		—		—		(12,076)		—		(12,076)
Other comprehensive income (loss)	—		—		—		—		9,277		9,277
Deferred income tax valuation allowances	—		—		—		—		22		22
Stock–based compensation expense, net of taxes withheld for vested restricted shares	71,244		7		1,270		—		—		1,277
Stock repurchases	(104,472)		(11)		(1,989)		—		—		(2,000)
Balances, July 31, 2025	6,402,396	$	640	$	60,781	$	149,346	$	(7,095)	$	203,672

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.GENERAL

The unaudited Condensed Consolidated Financial Statements include the accounts of Hurco Companies, Inc. and its consolidated subsidiaries. As used in this report, the words “we”, “us”, “our”, “Hurco” and the “Company” refer to Hurco Companies, Inc. and its consolidated subsidiaries.

We design, manufacture, and sell computerized (i.e., Computer Numeric Control (“CNC”)) machine tools, consisting primarily of vertical machining centers (mills) and turning centers (lathes), to companies in the metal cutting industry through a worldwide sales, service, and distribution network. Although most of our computer control systems and software products are proprietary, they predominantly use industry standard personal computer components. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, automation integration equipment and solutions for job shops, software options, control upgrades, accessories and replacement parts for our products, as well as customer service, training, and applications support.

The condensed consolidated financial information as of ~~July~~January 31, ~~2025~~2026, and for the three ~~and nine~~ months ended ~~July~~January 31, ~~2025~~2026, and ~~July~~January 31, ~~2024~~2025, is unaudited. However, in our opinion, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, results of operations, changes in shareholders’ equity and cash flows for and at the end of the interim periods. We suggest that you read these Condensed Consolidated Financial Statements in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended October 31, ~~2024~~2025.

2. REVENUE RECOGNITION

We design, manufacture, and sell computerized machine tools. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, automation integration equipment and solutions for job shops, software options, control upgrades, accessories, and replacement parts for our products, as well as customer service, training, and applications support.

We recognize revenues from the sale of machine tools, components and accessories and services, and reflect the consideration to which we expect to be entitled. We record revenues based on a five-step model in accordance with Financial Accounting Standards Board (“FASB”) guidance codified in Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). In accordance with ASC 606, we have defined contracts as agreements with our customers and distributors in the form of purchase orders, packing or shipping documents, invoices, and, periodically, verbal requests for components and accessories. For each contract, we identify our performance obligations, which are delivering goods or services, determine the transaction price, allocate the contract transaction price to each of the performance obligations (when applicable), and recognize the revenue when (or as) the performance obligation to the customer is fulfilled. A good or service is transferred when the customer obtains control of that good or service. Our computerized machine tools are general purpose computer-controlled machine tools that are typically used in stand–alone operations. Prior to shipment, we test each machine to ensure the machine’s compliance with standard operating specifications. We deem that the customer obtains control upon delivery of the product and that obtaining control is not contingent upon contractual customer acceptance. Therefore, we recognize revenue from sales of our machine tool systems upon delivery of the product to the customer or distributor, which is normally at the time of shipment.

Depending upon geographic location, after shipment, a machine may be installed at the customer’s facility by a distributor, independent contractor, or by one of our service technicians. In most instances where a machine is sold through a distributor, we have no installation involvement. If sales are direct or through sales agents, we will typically complete the machine installation, which consists of the reassembly of certain parts that were removed for shipping and the re-testing of the machine to ensure that it is performing within the standard specifications. We consider the machine installation process for our 3-axis machines to be inconsequential and immaterial within the context of the contract. For our 5-axis machines that we install, we estimate the fair value of the installation performance obligation and recognize that installation revenue on a prorata basis over the period of the installation process.

Table of Contents

From time to time, and depending upon geographic location, we may provide training or freight services. We consider these services to be immaterial within the context of the contract, as the value of these services typically does not rise to a material level as a component of the total contract value. Service fees from maintenance contracts are deferred and recognized in earnings on a prorata basis over the term of the contract and are generally sold on a stand-alone basis. Customer discounts and estimated product returns are recorded as a reduction of revenue in the same period that the related sales are recorded. We have reviewed the overall sales transactions for variable consideration and have determined that these amounts are not material.

3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to certain market risks relating to our ongoing business operations, including foreign currency risk, interest rate risk and credit risk. We manage our exposure to these and other market risks through regular operating and financing activities. Currently, the only risk that we manage through the use of derivative instruments is foreign currency risk, for which we enter into derivative instruments in the form of foreign currency forward exchange contracts with a major financial institution.

We enter into these forward exchange contracts to reduce the potential effects of foreign exchange rate movements on our net equity investment in one of our foreign subsidiaries, to reduce the impact on gross profit and net earnings from sales and purchases denominated in foreign currencies, and to reduce the impact on our net earnings of foreign currency fluctuations on receivables and payables denominated in foreign currencies that are different than the subsidiaries’ functional currency. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Pounds Sterling, Indian Rupee, Singapore Dollars, Chinese Yuan, Polish Zloty, and New Taiwan Dollars. We record all derivative instruments as assets or liabilities at fair value.

Derivatives Designated as Hedging Instruments

We enter into foreign currency forward exchange contracts periodically to hedge certain forecasted inter-company sales and purchases denominated in the following foreign currencies: the Pound Sterling, Euro and New Taiwan Dollar. The purpose of these instruments is to mitigate the risk that the U.S. dollar net cash inflows and outflows resulting from sales and purchases denominated in foreign currencies will be adversely affected by changes in exchange rates. These forward contracts have been designated as cash flow hedge instruments and are recorded in the Condensed Consolidated Balance Sheets at fair value in Derivative assets and Derivative liabilities. The effective portion of the gains and losses resulting from the changes in the fair value of these hedge contracts is deferred in Accumulated other comprehensive loss and recognized as an adjustment to Cost of sales and service in the period that the corresponding inventory sold that is the subject of the related hedge contract is recognized, thereby providing an offsetting economic impact against the corresponding change in the U.S. dollar value of the inter-company sale or purchase being hedged. The ineffective portion of gains and losses resulting from the changes in the fair value of these hedge contracts is immediately reported in Other income (expense), net. We perform quarterly assessments of hedge effectiveness by verifying and documenting the critical terms of the hedge instrument and determining that forecasted transactions have not changed significantly. We also assess on a quarterly basis whether there have been adverse developments regarding the risk of a counterparty default.

We had forward contracts outstanding as of ~~July~~January 31, ~~2025~~2026, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from ~~August~~February ~~2025~~2026 through ~~July~~January ~~2026~~2027. The contract amounts, expressed at forward rates in U.S. dollars at ~~July~~January 31, ~~2025~~2026, were $57.85 million for Euros, $34.90 million for Pounds Sterling, and $1619.61 million for New Taiwan Dollars. At ~~July~~January 31, ~~2025~~2026, we had an$0.7 ~~immaterial~~million ~~amount~~ of realized ~~gain~~loss, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Included in this amount was $0.19 million of unrealized ~~gain~~loss, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred gains will be recorded as an adjustment to Cost of sales and service in periods through ~~August~~January ~~2026~~2027, when the corresponding inventory that is the subject of the related hedge contracts is sold, as described above.

We are also exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we entered into a forward contract with a notional amount of €3.0 million in November ~~2024~~2025. We designated this forward contract as a hedge of our net investment in Euro denominated assets. We selected the forward method under FASB guidance related to the accounting for derivative instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment in Accumulated other comprehensive loss, net of tax, in the same manner as the underlying hedged net assets. This forward contract matures in November ~~2025~~2026. As of ~~July~~January 31, ~~2025~~2026, we had a realized gain of $1.20 million and an unrealized loss of $0.1 million, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss related to this forward contract.

Table of Contents

Derivatives Not Designated as Hedging Instruments

We also enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on inter-company receivables, payables and loans denominated in foreign currencies. These derivative instruments are not designated as hedges under FASB guidance and, as a result, changes in their fair value are reported currently in Other income (expense) ~~income~~, net in the Condensed Consolidated Statements of Operations consistent with the transaction gain or loss on the related receivables and payables denominated in foreign currencies.

Fair Value of Derivative Instruments

We recognize the fair value of derivative instruments as assets and liabilities on a gross basis on our Condensed Consolidated Balance Sheets. As of ~~July~~January 31, ~~2025~~2026, and October 31, ~~2024~~2025, all derivative instruments were recorded at fair value on our Condensed Consolidated Balance Sheets as follows (in thousands):


	~~July~~January 31, ~~2025~~2026			October 31, ~~2024~~2025
	Balance Sheet	Fair		Balance Sheet	Fair
Derivatives	Location	Value		Location	Value
Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	~~612~~19	Derivative assets	$	~~165~~215
Foreign exchange forward contracts	Derivative liabilities	$	~~669~~1,288	Derivative liabilities	$	~~430~~945

Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Derivative assets	$	~~2,170~~63	Derivative assets	$	~~158~~48
Foreign exchange forward contracts	Derivative liabilities	$	1,~~369~~846	Derivative liabilities	$	~~275~~2,139

Effect of Derivative Instruments on the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity and Condensed Consolidated Statements of Operations

Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity, and Condensed Consolidated Statements of Operations, net of tax, during the three months ended ~~July~~January 31, ~~2025~~2026 and ~~2024~~2025 (in thousands):

Location of Gain

Amount of Gain

Amount of Gain (Loss)

(Loss) Reclassified

Recognized in Other

from Other

Comprehensive

Derivatives

Income (Loss)

Three Months Ended

January 31,

 

2026

2025

2026

2025

Designated as Hedging Instruments:

(Effective portion)

Foreign exchange forward contracts
– Intercompany sales/purchases

(731)

(96)

Cost of sales and service

(142)

(522)

Foreign exchange forward contract
– Net investment

(69)

106


					Location of Gain	Amount of Gain
	Amount of Gain (Loss)				(Loss) Reclassified	(Loss) Reclassified
	Recognized in Other				from Other	from Other
	Comprehensive				Comprehensive	Comprehensive
Derivatives	Income (Loss)				Income (Loss)	Income (Loss)
	Three Months Ended					Three Months Ended
	July 31,					July 31,
	2025		2024			2025		2024
Designated as Hedging Instruments:
(Effective portion)
Foreign exchange forward contracts– Intercompany sales/purchases	$	544	$	(248)	Cost of sales and service	$	(304)	$	(373)
Foreign exchange forward contract– Net investment	$	(5)	$	(20)

Table of Contents

We did not recognize any gains or losses as a result of hedges deemed ineffective for either of the three months ended ~~July~~January 31, ~~2025~~2026 or ~~2024~~2025. We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the three months ended ~~July~~January 31, ~~2025~~2026 and ~~2024~~2025, on derivative instruments not designated as hedging instruments (in thousands):


	Location of Gain
	(Loss) Recognized	Amount of Gain (Loss)
Derivatives	in Operations	Recognized in Operations
		Three Months Ended
		~~July~~January 31,
		~~2025~~2026		~~2024~~2025
Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Other income (expense) ~~income~~, net	$	2(1,~~395~~551)	$	(~~632~~1,093)

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended ~~July~~January 31, ~~2025~~2026 (in thousands):


	Foreign Currency		Cash Flow
	Translation		Hedges		Total
Balance, April 30, 2025	$	(11,844)	$	(1,758)	$	(13,602)
Balance, October 31, 2025	$	(8,234)	$	(774)	$	(9,008)
Other comprehensive income (loss) before reclassifications		~~5,462~~178		~~544~~(731)		~~6,006~~(553)
Reclassifications		—		~~304~~142		~~304~~142
Deferred income tax valuation allowances		—		(197)		(197)
Balance, July 31, 2025	$	(6,382)	$	(713)	$	(7,095)
Balance, January 31, 2026	$	(8,056)	$	(1,560)	$	(9,616)

Derivative instruments had the following effects on our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Changes in Shareholders’ Equity, and Condensed Consolidated Statements of Operations, net of tax, during the nine months ended July 31, 2025 and 2024 (in thousands):


					Location of Gain	Amount of Gain
	Amount of Gain (Loss)				(Loss) Reclassified	(Loss) Reclassified
	Recognized in Other				from Other	from Other
	Comprehensive				Comprehensive	Comprehensive
	Income (Loss)				Income (Loss)	Income (Loss)
	Nine Months Ended					Nine Months Ended
	July 31,					July 31,
Derivatives	2025		2024			2025		2024
Designated as Hedging Instruments:
(Effective Portion)
Foreign exchange forward contracts– Intercompany sales/purchases	$	37	$	(870)	Cost of sales and service	$	(1,111)	$	(992)
Foreign exchange forward contract– Net investment	$	(101)	$	(29)

Table of Contents

We did not recognize any gains or losses as a result of hedges deemed ineffective for either of the nine months ended July 31, 2025 or 2024. We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the nine months ended July 31, 2025 and 2024 on derivative instruments not designated as hedging instruments (in thousands):


	Location of Gain
	(Loss) Recognized	Amount of Gain (Loss)
Derivatives	in Operations	Recognized in Operations
		Nine Months Ended
		July 31,
Derivatives		2025		2024
Not Designated as Hedging Instruments:
Foreign exchange forward contracts	Other (expense) income, net	$	618	$	(2,042)

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the nine months ended July 31, 2025 (in thousands):


	Foreign		Cash
	Currency		Flow
	Translation		Hedges		Total
Balance, October 31, 2024	$	(14,511)	$	(1,883)	$	(16,394)
Other comprehensive income (loss) before reclassifications		8,129		37		8,166
Reclassifications		—		1,111		1,111
Deferred income tax valuation allowances		—		22		22
Balance, July 31, 2025	$	(6,382)	$	(713)	$	(7,095)

4. EQUITY INCENTIVE PLAN

In March 2016, we adopted the Hurco Companies, Inc. 2016 Equity Incentive Plan (as amended, the “2016 Equity Plan”), which allows us to grant awards of stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards. The 2016 Equity Plan replaced the Hurco Companies, Inc. 2008 Equity Incentive Plan (the “2008 Equity Plan”) and is the only active plan under which equity awards may be made by us to our employees and non-employee directors. No further awards will be made under our 2008 Equity Plan. The total number of shares of our common stock that may be issued pursuant to awards under the 2016 Equity Plan was initially 856,048, which included 386,048 shares that remained available for future grants under the 2008 Equity Plan as of March 10, 2016, the date our shareholders approved the 2016 Equity Plan. On March 10, 2022, our shareholders approved the Amended and Restated Hurco Companies, Inc. 2016 Equity Incentive Plan, which, among other items, increased the aggregate number of shares that may be issued under the 2016 Equity Plan by 850,000 shares. On March 13, 2025, our shareholders approved an amendment to the 2016 Equity Plan, which, ~~once again,~~ increased ~~by 850,000~~ the aggregate number of shares that may be issued thereunder by an additional 850,000 shares.

The Compensation Committee of our Board of Directors has the authority to determine the officers, directors, and key employees who will be granted awards under the 2016 Equity Plan; designate the number of shares subject to each award; determine the terms and conditions upon which awards will be granted; and prescribe the form and terms of award agreements. We have granted restricted shares and performance stock units under the 2016 Equity Plan that are currently outstanding. The market value of a share of our common stock, for purposes of the 2016 Equity Plan, is the closing sale price as reported by the Nasdaq Global Select Market on the date in question or, if not a trading day, on the last preceding trading date.

On ~~March~~January 136, ~~2025~~2026, the Compensation Committee ~~granted~~approved a ~~total~~long-term ofincentive ~~29,868~~compensation ~~shares~~arrangement offor ~~time-based~~our ~~restricted~~executive ~~stock~~officers toin ~~our~~the ~~non-employee~~form ~~directors.~~of ~~The~~time-based restricted shares ~~vest~~and inperformance ~~full~~stock ~~one~~units ~~year~~(“PSUs”), ~~from~~which ~~the~~will ~~date~~be ofpayable ~~grant~~in ~~provided~~shares ~~the~~of ~~recipient~~our ~~remains~~common onstock ~~the~~if ~~board~~earned ofand ~~directors through that date~~vested. The ~~grant~~awards ~~date~~were ~~fair~~approximately ~~value~~45% oftime-based ~~the~~vesting ~~restricted~~and ~~shares~~approximately ~~was~~55% performance-based onvesting. ~~the~~The ~~closing~~three-year ~~sales~~performance ~~price~~period offor ~~our~~the ~~common~~PSUs ~~stock~~is onfiscal ~~the~~year ~~grant~~2026 ~~date,~~through ~~which~~fiscal ~~was~~year ~~$16~~2028.~~07 per share.~~

12On that date, the Compensation Committee granted a total of 66,491 shares of time-based restricted stock to our executive officers. The restricted shares vest in thirds over three years from the date of grant provided the recipient continues service with the company through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant, which was $16.29 per share.

Table of Contents

On January 76, ~~2025~~2026, the Compensation Committee ~~approved~~also granted a total target number of 44,327 PSUs to our executive officers designated as “PSU – NI”. These PSUs were weighted as approximately 30% of the overall 2026 executive long-term incentive compensation arrangement ~~for~~and ~~our~~will ~~executive~~vest ~~officers~~and inbe paid based upon the ~~form~~achievement of ~~time~~pre-~~based~~established ~~restricted~~goals ~~shares~~related ~~and~~to ~~performance~~our ~~stock~~average ~~units~~net ~~(“PSUs”),~~income ~~which~~over the three-year period of fiscal years 2026-2028. Participants will behave ~~payable~~the inability ~~shares~~to earn between 50% of ~~our~~the ~~common~~target ~~stock~~number ifof ~~earned~~the ~~and~~PSUs ~~vested.~~– ~~The~~NI ~~awards~~for ~~were~~achieving ~~approximately~~threshold 45performance and 200% ~~time-based~~of ~~vesting~~the ~~and~~target ~~approximately~~number ~~55%~~of ~~performance-based~~the ~~vesting~~PSUs – NI for achieving maximum performance. The ~~three-year~~grant ~~performance~~date ~~period~~fair ~~for~~value of the PSUs is– ~~fiscal~~NI ~~year~~was ~~2025~~based ~~through~~on ~~fiscal~~the ~~year~~closing ~~2027~~sales price of our common stock on the grant date, which was $16.29 per PSU.

On ~~that~~January ~~date~~6, 2026, the Compensation Committee also granted a total oftarget ~~75,119~~number ~~shares~~ of ~~time-based~~36,940 ~~restricted~~PSUs ~~stock~~ to our executive officers designated as “PSU – FCF”. ~~The~~ ~~restricted~~These ~~shares~~PSUs were weighted as approximately 25% of the overall 2026 executive long-term incentive compensation arrangement and will vest inand ~~thirds~~be paid based upon the achievement of pre-established goals related to our average free cash flow over the three-year period of fiscal years ~~from~~2026-2028. Participants will have the ~~date~~ability to earn between 50% of ~~grant~~the ~~provided~~target number of the ~~recipient~~PSUs ~~remains~~– ~~employed~~FCF ~~through~~for ~~that~~achieving ~~date~~threshold performance and 200% of the target number of the PSUs – FCF for achieving maximum performance. The grant date fair value of the ~~restricted~~PSUs ~~shares~~– FCF was based ~~upon~~on the closing sales price of our common stock on the ~~date of~~ grant date, which was $1916.8129 per ~~share~~PSU.

On ~~January~~November 712, 2025, the Compensation Committee ~~also~~ granted a total ~~target number~~ of 5020,~~078~~260 ~~PSUs~~shares ~~to our executive officers designated as “PSU – NI”. These PSUs were weighted as approximately 30%~~ of ~~the overall 2025 executive long~~time-~~term incentive compensation arrangement and will vest and be paid~~ based ~~upon~~restricted ~~the~~stock ~~achievement~~to ofour ~~pre~~non-~~established~~executive ~~goals~~employees. ~~related~~The torestricted ~~our~~shares ~~average~~vest ~~net~~in ~~income~~thirds over ~~the~~ three~~-year~~ ~~period of fiscal~~ years ~~2025-2027.~~from ~~Participants will have~~ the ~~ability~~date ~~to earn between 50%~~ of ~~the~~grant ~~target~~provided ~~number of~~ the ~~PSUs~~recipient –continues NIservice ~~for~~with ~~achieving threshold performance and 200% of~~ the ~~target~~company ~~number~~through ofthat ~~the PSUs – NI for achieving maximum performance~~date. The grant date fair value of the ~~PSUs~~restricted –shares NI was based onupon the closing sales price of our common stock on the ~~grant~~ date of grant, which was $1916.8165 per ~~PSU~~share.

OnA ~~January~~reconciliation ~~7, 2025, the Compensation Committee also granted a total target number~~ of ~~41,735 PSUs to~~ our ~~executive~~restricted ~~officers~~stock ~~designated~~and ~~as “~~PSU ~~–FCF”.~~activity ~~These PSUs were weighted as approximately 25% of the overall 2025 executive long-term incentive compensation arrangement~~ and ~~will vest and be paid based upon the achievement of pre-established goals~~ related toinformation ~~our~~for ~~average free cash flow over~~ the three-~~year~~month period ofended ~~fiscal~~January years 2025-2027. Participants will have the ability to earn between 50% of the target number of the PSUs – FCF for achieving threshold performance and 200% of the target number of the PSUs – FCF for achieving maximum performance. The grant date fair value of the PSUs – FCF was based on the closing sales price of our common stock on the grant date31, ~~which~~2026 ~~was~~is ~~$19.81~~as ~~per PSU.~~follows:

On November 13, 2024, the Compensation Committee granted a total of 13,525 shares of time-based restricted stock to our non-executive employees. The restricted shares vest in thirds over three years from the date of grant provided the recipient remains employed through that date. The grant date fair value of the restricted shares was based upon the closing sales price of our common stock on the date of grant, which was $21.80 per share.


		Weighted Average Grant
	Number of Shares	Date Fair Value
Unvested at October 31, 2025	456,496	$	21.58
Shares or units granted	168,018		16.33
Shares or units vested	(44,058)		21.64
Shares or units cancelled	(89,983)		26.24
Shares withheld	(16,516)		21.70
Unvested at January 31, 2026	473,957	$	18.82

ADuring ~~reconciliation~~the first quarter of ~~our~~each ~~restricted~~of ~~stock~~fiscal years 2026 and ~~PSU~~2025, ~~activity~~we ~~and~~recorded approximately $0.6 million of stock-based compensation expense related ~~information~~to ~~for~~grants under the ~~nine-month~~2016 ~~period~~Equity ~~ended~~Plan. ~~July~~As of January 31, ~~2025~~2026, isthere aswas ~~follows:~~an estimated $4.6 million of total unrecognized stock-based compensation cost that we expect to recognize by the end of the first quarter of fiscal year 2029.


		Weighted Average Grant
	Number of Shares	Date Fair Value
Unvested at October 31, 2024	378,092	$	24.97
Shares or units granted	210,325		19.41
Shares or units vested	(71,244)		25.80
Shares or units cancelled	(42,472)		31.06
Shares withheld	(17,748)		28.51
Unvested at July 31, 2025	456,953	$	21.58

Table of Contents

During the nine months of fiscal 2025 and 2024, we recorded approximately $1.6 million and $1.1 million, respectively, of stock-based compensation expense related to grants under the 2016 Equity Plan. As of July 31, 2025, there was an estimated $3.5 million of total unrecognized stock-based compensation cost that we expect to recognize by the end of the first quarter of fiscal year 2028.

5. EARNINGS (LOSS) PER SHARE

Per share results have been computed based on the average number of common shares outstanding over the period in question. The computation of basic and diluted net income (loss) per share is determined using net income (loss) applicable to common shareholders as the numerator and the number of shares outstanding as the denominator as follows (in thousands, except per share amounts):


	Three Months Ended
	January 31,
	2026				2025
	Basic		Diluted		Basic		Diluted
Net (loss) income	$	(3,468)	$	(3,468)	$	(4,320)	$	(4,320)
Undistributed earnings allocated to participating shares		—		—		—		—
Net (loss) income applicable to common shareholders	$	(3,468)	$	(3,468)	$	(4,320)	$	(4,320)

Weighted average shares outstanding		6,425		6,425		6,459		6,459
Stock options and contingently issuable securities		—		—		—		—
		6,425		6,425		6,459		6,459
(Loss) income per share	$	(0.54)	$	(0.54)	$	(0.67)	$	(0.67)

Table of Contents


	Three Months Ended								Nine Months Ended
	July 31,								July 31,
	2025				2024				2025				2024
	Basic		Diluted		Basic		Diluted		Basic		Diluted		Basic		Diluted
Net (loss) income	$	(3,693)	$	(3,693)	$	(9,596)	$	(9,596)	$	(12,076)	$	(12,076)	$	(15,166)	$	(15,166)
Undistributed earnings allocated to participating shares		—		—		—		—		—		—		—		—
Net (loss) income applicable to common shareholders	$	(3,693)	$	(3,693)	$	(9,596)	$	(9,596)	$	(12,076)	$	(12,076)	$	(15,166)	$	(15,166)

Weighted average shares outstanding		6,463		6,463		6,513		6,513		6,474		6,474		6,505		6,505
Stock options and contingently issuable securities		—		—		—		—		—		—		—		—
		6,463		6,463		6,513		6,513		6,474		6,474		6,505		6,505
(Loss) income per share	$	(0.58)	$	(0.58)	$	(1.47)	$	(1.47)	$	(1.87)	$	(1.87)	$	(2.33)	$	(2.33)

For the three ~~and nine~~ months ended ~~July~~January 31, ~~2025~~2026 and ~~July~~January 31, ~~2024~~2025, there were an immaterial number of stock options and contingently issuable securities that were excluded from the diluted loss per share calculation because they were anti-dilutive due to the net loss in the periods.

6. ACCOUNTS RECEIVABLE

Accounts receivable is net of provision for credit losses of $1.32 million ~~and~~as ~~$1.5~~of ~~million~~each as of ~~July~~January 31, ~~2025~~2026, and October 31, ~~2024, respectively~~2025.

7. INVENTORIES

Inventories, priced at the lower of cost (first-in, first-out method) or net realizable value, are summarized below (in thousands):


	~~July~~January 31,		October 31,
	~~2025~~2026		~~2024~~2025
Purchased parts and sub–assemblies	$	3734,~~122~~163	$	35,~~385~~346
Work–in–process		11,~~476~~286		1311,~~428~~172
Finished goods		9896,~~940~~286		~~104~~96,~~224~~413
Inventories	$	~~147~~141,~~538~~735	$	~~153~~142,~~037~~931

8. LEASES

Our lease portfolio includes leased production and assembly facilities, warehouses and distribution centers, office space, vehicles, material handling equipment utilized in our production and assembly facilities, laptops and other information technology equipment, as well as other miscellaneous leased equipment. Most of the leased production and assembly facilities have lease terms ranging from two to five years, although the terms and conditions of our leases can vary significantly from lease to lease. We have assessed the specific terms and conditions of each lease to determine the amount of the lease payments and the length of the lease term, which includes the minimum period over which lease payments are required plus any renewal options that are both within our control to exercise and reasonably certain of being exercised upon lease commencement. In determining whether or not a renewal option is reasonably certain of being exercised, we assessed all relevant factors to determine if sufficient incentives exist as of lease commencement to conclude renewal is reasonably certain. There are no material residual value guarantees provided by us, nor any restrictions or covenants imposed by the leases to which we are a party. In determining the lease liability, we utilize our incremental borrowing rate to discount the future lease payments over the lease term to present value.

We record a right-of-use asset and lease liability on our Condensed Consolidated Balance Sheets for all leases that, at the commencement date, have a lease term of more than 12 months and are classified as leases under ASC 842.

1413

Table of Contents

We recorded total operating lease expense of $1.3 million for each of the three months ended ~~July~~January 31, ~~2025~~2026 and ~~2024, respectively, and $4.0 million and $4.1 million for the nine months ended July 31,~~ 2025 ~~and 2024~~, ~~respectively,~~ which is classified within Cost of sales and service and Selling, general and administrative expenses within the Condensed Consolidated Statements of Operations. Operating lease expense includes short-term leases and variable lease payments, which are immaterial. There were no lease costs capitalized on the Condensed Consolidated Balance Sheets as of ~~July~~January 31, ~~2025~~2026.

The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for the three ~~and nine~~ months ended ~~July~~January 31, ~~2025~~2026 and ~~2024~~2025 (in thousands):


		Three Months Ended ~~July~~January 31,				~~Nine Months Ended July 31,~~
		~~2025~~2026		~~2024~~2025		~~2025~~		~~2024~~
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	1,298	$	1,202	$	3,831	$	3,500
Cash paid for amounts included in the measurement of lease liabilities	$	1,262	$	1,210
Non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,621	$	1,676	$	3,903	$	4,278
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,035	$	1,909

The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of ~~July~~January 31, ~~2025~~2026 (in thousands):


Remainder of 2025	$	1,228
Remainder of 2026	$	3,623
2026		4,360
2027		4,010
2027		3,517
2028		2,745
2028		2,303
2029		869
2029		772
2030		469
2030 and thereafter		926
2031 and thereafter		560
Total		1312,~~106~~276
Less: Imputed interest		(~~800~~714)
Present value of operating lease liabilities	$	1211,~~306~~562

As of ~~July~~January 31, ~~2025~~2026, the weighted-average remaining term of our lease portfolio was approximately 3.52 years and the weighted-average discount rate was approximately 3.4%.

9. SEGMENT INFORMATION

We ~~operate~~are inorganized and managed as a single operating and reportable segment: industrial automation equipment. We design, manufacture, and sell computerized (i.e., Computer Numeric Control) machine tools, consisting primarily of vertical machining centers (mills) and turning centers (lathes), to companies in the metal cutting industry through a worldwide sales, service, and distribution network. Although most of our computer control systems and software products are proprietary, they predominantly use industry standard personal computer components. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, automation integration equipment and solutions for job shops, software options, control upgrades, accessories, and replacement parts for our products, as well as customer service, training, and applications support.

15Our chief operating decision maker ("CODM") is the President and Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated sales and service fees, gross profit, operating (loss) income and net (loss) income, as shown on the Consolidated Statements of Operations, to assess financial performance and allocate resources. The consolidated financial metrics are used by the CODM to make key operating decisions, such as the allocation of capital between reinvestment in the business, the payment of dividends, and acquisitions. While the CODM receives some additional detailed financial information related to operating expenses, consolidated selling, general and administrative expenses is the significant expense he uses to manage operations. The measure of segment assets is reported on the balance sheet as total consolidated assets.

Table of Contents

The following table sets forth sales and service fees by product group and services for the three ~~and nine~~ months ended ~~July~~January 31, ~~2025~~2026 and ~~2024~~2025 (in thousands):

~~Three Months Ended July 31,~~

Three Months Ended January 31,

~~Nine Months Ended July 31,~~

~~2025~~

2026

~~2024~~

2025

~~2025~~

~~2024~~

Computerized Machine Tools

~~36,889~~$

33,540

~~33,191~~$

37,802

~~106,347~~

~~104,176~~

Computer Control Systems and Software †

~~530~~

452

~~697~~

656

~~1,843~~

~~1,866~~

Service Parts

~~6,309~~

6,863

~~6,535~~

5,864

~~18,404~~

~~20,389~~

Service Fees

~~2,078~~

2,013

~~2,228~~

2,092

~~6,493~~

~~6,451~~

Total

~~45,806~~$

42,868

~~42,651~~$

46,414

~~133,087~~

~~132,882~~

† Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine ~~tools~~systems.

10. GUARANTEES AND PRODUCT WARRANTIES

From time to time, our subsidiaries guarantee third party payment obligations in connection with the sale of machines to customers that use financing. We follow FASB guidance for accounting for guarantees (codified in ASC 460 ~~Guarantees~~). As of ~~July~~January 31, ~~2025~~2026, we had four outstanding third party payment guarantees totaling approximately $0.4 million. The terms of these guarantees are consistent with the underlying customer financing terms. Upon shipment of a machine, the customer assumes the risk of ownership. The customer does not obtain title, however, until it has paid for the machine. A retention of title clause allows us to recover the machine if the customer defaults on the financing. We accrue liabilities under these guarantees at fair value, which amounts are insignificant.

We provide warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year for machines and shorter periods for service parts. We recognize an estimated liability with respect to this obligation at the time of product sale, with subsequent warranty claims recorded against the estimated liability. The amount of the warranty estimated liability is determined based on historical trend experience and any known warranty issues that could cause future warranty costs to differ from historical experience.

A reconciliation of the changes in our warranty estimated liability is as follows (in thousands):


	~~Nine~~Three Months Ended
	~~July~~January 31,
	~~2025~~2026		~~2024~~2025
Balance, beginning of period	$	~~1,086~~967	$	1,~~294~~086
Provision for warranties during the period		~~1,747~~367		~~1,629~~492
Charges to the estimated liability		(~~1,890~~382)		(~~1,861~~565)
Impact of foreign currency translation		1810		14(27)
Balance, end of period	$	~~961~~962	$	~~1,076~~986

The year-over-year decrease in our warranty estimated liability was primarily due to a lower sales volume of ~~more complex, higher-performance~~ machines.

11. DEBT AGREEMENTS

On December 31, 2018, we and our subsidiary Hurco B.V. entered into a credit agreement with Bank of America, N.A., as the lender, which was subsequently amended on each of March 13, 2020, December 23, 2020, December 17, 2021, January 4, 2023, and December 19, 2023 (as amended, the “2018 Credit Agreement”). The 2018 Credit Agreement ~~provides~~provided for an unsecured revolving credit and letter of credit facility in a maximum aggregate amount of $40.0 million. The 2018 Credit Agreement ~~provides~~provided that the maximum amount of outstanding letters of credit at any one time ~~may~~could not exceed $10.0 million, the maximum amount of outstanding loans made to our subsidiary Hurco B.V. at any one time ~~may~~could not exceed $20.0 million, and the maximum amount of all outstanding loans denominated in alternative currencies at any one time ~~may~~could not exceed $20.0 million. ~~Under~~The scheduled maturity date of the 2018 Credit Agreement, wewas ~~and~~December ~~Hurco~~31, ~~B.V. are borrowers~~2025, and ~~certain~~on ofthat ~~our other subsidiaries are guarantors. The scheduled maturity~~ date, of the 2018 Credit Agreement isterminated ~~December~~in ~~31,~~accordance ~~2025~~with its terms.

1615

Table of Contents

~~Borrowings~~In ~~under~~March ~~the~~2019, ~~2018~~our ~~Credit~~wholly-owned ~~Agreement~~subsidiaries ~~bear~~in ~~interest~~Taiwan at(Hurco ~~floating~~Manufacturing ~~rates~~Limited ~~based on, at our option, either~~ (i“HML”)) aand ~~rate~~China ~~based~~(Ningbo ~~upon~~Hurco ~~the~~Machine ~~secured~~Tool, ~~overnight~~Ltd. ~~financing rate~~ (“~~SOFR~~NHML”),) ~~the~~closed ~~Sterling~~on ~~Overnight~~uncommitted ~~Index~~revolving ~~Average~~credit ~~Reference~~facilities ~~Rate,~~with ~~the~~maximum ~~Euro~~aggregate ~~Interbank~~amounts ~~Offering~~of ~~Rate,~~150 ormillion ~~another~~New ~~alternative~~Taiwan ~~currency-based~~Dollars ~~rate~~and ~~approved~~32.5 bymillion ~~the~~Chinese ~~lender~~Yuan, ~~depending~~respectively. As onuncommitted ~~the~~facilities, ~~term~~both of the ~~loan~~Taiwan and ~~the~~China ~~currency~~credit infacilities ~~which~~were ~~such~~subject ~~loan~~to isreview ~~denominated,~~and ~~plus~~termination ~~1.00%~~by ~~per~~the ~~annum,~~respective orunderlying ~~(ii)~~lending ainstitution ~~base~~from ~~rate~~time ~~(which~~to istime. ~~the~~On ~~highest~~December of31, ~~(a)~~2025, the ~~federal~~150 ~~funds~~million ~~rate~~New ~~plus~~Taiwan ~~0.50%,~~Dollars ~~(b)~~Taiwan ~~the~~credit ~~prime~~facility ~~rate~~and ~~or (c)~~ the ~~one month SOFR-based rate plus 1~~32.~~00%),~~5 ~~plus~~million ~~0.00%~~Chinese ~~per~~Yuan ~~annum.~~China ~~Outstanding letters of~~ credit ~~will~~facility ~~carry~~terminated anin ~~annual~~accordance ~~rate~~with oftheir 1terms.~~00%.~~

~~The~~On ~~2018~~January ~~Credit~~5, ~~Agreement~~2026, ~~contains~~we ~~customary~~entered ~~affirmative~~into ~~and~~a ~~negative~~new ~~covenants~~credit ~~and~~agreement ~~events~~with Bank of ~~default~~America, ~~including covenants (1) restricting us from making certain investments~~N.A., ~~loans,~~as ~~advances~~the ~~and~~lender ~~acquisitions~~ (~~but~~the ~~permitting~~“2026 usCredit ~~to make investments in subsidiaries of up to $10~~Agreement”).0 ~~million);~~The ~~(2)~~2026 ~~restricting~~Credit usAgreement ~~from~~provides ~~making~~for ~~certain payments, including (~~a) ~~cash~~secured ~~dividends,~~revolving ~~except~~credit ~~that~~and weletter ~~may~~of ~~pay~~credit ~~cash~~facility ~~dividends~~in asa ~~long~~maximum asaggregate ~~immediately~~amount ~~before~~of ~~and~~$20.0 ~~after~~million. ~~giving~~The ~~effect~~2026 toCredit ~~such~~Agreement ~~payment,~~provides ~~the~~that ~~sum of~~ the ~~unused~~maximum amount of ~~the~~outstanding ~~commitments~~letters ~~under~~of ~~the~~credit ~~2018~~at ~~Credit~~any ~~Agreement~~one ~~plus~~time ~~our~~may ~~cash on hand is~~ not ~~less~~exceed ~~than~~ $10.0 million, and asthe ~~long~~maximum asamount weof ~~are~~all ~~not~~outstanding inloans ~~default~~denominated ~~before~~in ~~and~~alternative ~~after~~currencies ~~giving~~at ~~effect~~any toone ~~such~~time ~~dividend~~may ~~payments~~not ~~and~~exceed ~~(b)~~$20.0 ~~payments~~million. ~~made~~Under tothe ~~repurchase~~2026 ~~shares~~Credit ~~of our common stock~~Agreement, ~~except~~we ~~that~~are wethe ~~may~~borrower, ~~repurchase~~and ~~shares~~certain of our ~~common~~subsidiaries ~~stock as long as we~~ are ~~not~~guarantors. inOur ~~default~~obligations ~~before~~under ~~and after giving effect to such repurchases and~~ the ~~aggregate~~2026 ~~amount~~Credit ofAgreement ~~payments~~are ~~made~~secured by usa ~~for~~security ~~all~~interest ~~such~~in ~~repurchases~~substantially ~~during~~all ~~any~~of ~~fiscal~~our ~~year~~personal ~~does~~property ~~not~~and ~~exceed~~substantially ~~$25.0~~all ~~million;~~of ~~(3)~~the ~~requiring~~personal ~~that~~property weof ~~maintain~~each asubsidiary ~~minimum working capital of $125~~guarantor.0 ~~million;~~The ~~and~~scheduled ~~(4)~~maturity ~~requiring~~date ~~that we maintain a minimum tangible net worth~~ of ~~$176.5 million. We may use~~ the ~~proceeds~~2026 ~~from advances under the 2018~~ Credit Agreement ~~for~~is ~~general~~December ~~corporate~~31, ~~purposes~~2026.

InBorrowings ~~March~~under ~~2019,~~the ~~our~~2026 ~~wholly-owned~~Credit ~~subsidiaries~~Agreement inbear ~~Taiwan~~interest ~~(Hurco~~at ~~Manufacturing~~floating ~~Limited~~rates based on, at our option, either (~~“HML”~~i)) ~~and~~a ~~China~~rate ~~(Ningbo~~based ~~Hurco~~upon ~~Machine~~the ~~Tool,~~secured ~~Ltd.~~overnight financing rate (“~~NHML~~SOFR”)), ~~closed~~the onSterling ~~uncommitted~~Overnight ~~revolving~~Index ~~credit~~Average ~~facilities~~Reference ~~with~~Rate, ~~maximum~~the ~~aggregate~~Euro ~~amounts~~Interbank ofOffering ~~150~~Rate, ~~million~~or ~~New~~another ~~Taiwan~~alternative ~~Dollars~~currency-based ~~and~~rate ~~32.5~~approved ~~million~~by ~~Chinese~~the ~~Yuan~~lender, ~~respectively. As~~depending ~~uncommitted~~on ~~facilities,~~the ~~both~~term of the ~~Taiwan~~loan and ~~China~~the ~~credit~~currency ~~facilities~~in ~~are~~which ~~subject~~such toloan ~~review~~is ~~and~~denominated, ~~termination~~plus by2.50% ~~the~~per ~~respective~~annum, ~~underlying~~or ~~lending~~(ii) ~~institution~~a ~~from~~base ~~time~~rate to(which ~~time. In~~is ~~February~~the ~~and~~highest ~~December~~of ~~2023,~~(a) ~~NHML~~the ~~and~~federal ~~HML,~~funds ~~respectively~~rate plus 0.50%, ~~renewed~~(b) the ~~above~~prime rate or (c) the one month SOFR-~~referenced~~based ~~credit~~rate ~~facilities~~plus on1.00%), ~~substantially~~plus ~~similar~~1.50% ~~terms~~per ~~and~~annum. ~~identical~~Outstanding ~~maximum~~letters ~~aggregate~~of ~~limits~~credit will carry an annual rate of 2.50%.

AsThe 2026 Credit Agreement contains customary affirmative and negative covenants and events of ~~July~~default, 31including covenants (1) restricting us from making certain investments, ~~2025~~loans, ~~our~~advances ~~existing~~and ~~credit~~acquisitions ~~facilities~~(but ~~consisted~~permitting us to make investments in subsidiaries of aup €1to $10.50 million); ~~revolving~~(2) ~~credit~~restricting ~~facility~~us infrom ~~Germany~~making certain payments, ~~the~~including ~~150~~(a) ~~million~~cash ~~New~~dividends, ~~Taiwan~~except ~~Dollars~~that ~~Taiwan~~we ~~credit~~may ~~facility~~pay cash dividends as long as immediately before and after giving effect to such payment, the 32sum of the unused amount of the commitments under the 2026 Credit Agreement plus our cash on hand is not less than $10.50 million, ~~Chinese~~we ~~Yuan~~are ~~China~~in ~~credit~~pro ~~facility~~forma compliance with the maximum consolidated leverage ratio covenant as described below, and we are not in default before and after giving effect to such dividend payments; and (b) payments made to repurchase shares of our common stock, except that we may repurchase shares of our common stock as long as we are not in default before and after giving effect to such repurchases and the aggregate amount of payments made by us for all such repurchases during any fiscal year does not exceed $4010.0 million; ~~revolving~~and ~~credit~~(3) ~~facility~~requiring that we maintain a maximum consolidated leverage ratio of total debt to EBITDA no greater than 2.00 to 1.00, with EBITDA defined as the greater of (i) consolidated EBITDA for the most recently completed measurement period and (ii) $1.00. We may use the proceeds from advances under the ~~2018~~2026 Credit Agreement. for general corporate purposes.

AsThe ofmaximum ~~July~~consolidated ~~31,~~leverage ~~2025,~~ratio ~~there~~covenant ~~were~~effectively noprohibits ~~borrowings~~us ~~under~~from borrowing any ofamounts under the 2026 Credit Agreement when our ~~credit~~consolidated ~~facilities~~EBITDA ~~and~~for ~~there~~the ~~was~~most ~~approximately~~recently ~~$51~~completed measurement period is negative.2 ~~million~~As of ~~available~~the ~~borrowing~~date ~~capacity~~of ~~thereunder. There~~this ~~were~~report, ~~also~~the nomost ~~borrowings~~recently ~~under~~completed ~~any~~measurement ofperiod was our ~~credit~~first ~~facilities~~fiscal asquarter ofended ~~October~~January 31, ~~2024~~2026, during which our consolidated EBITDA was negative. In order to borrow in compliance with the maximum consolidated leverage ratio covenant set forth above, we are effectively prohibited from borrowing under the 2026 Credit Agreement until we have positive consolidated EBITDA for our most recently completed four fiscal quarters.

As of January 31, 2026, our credit facilities consisted of a €1.5 million revolving credit facility in Germany and the $20.0 million secured revolving credit and letter of credit facility. We had no debt or borrowings outstanding under any of our credit facilities as of January 31, 2026.

12. INCOME TAXES

Our provision for income taxes and effective tax rate is affected by the geographic composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates, and other events that are not consistent from period to period, such as changes in income tax laws.

We recorded income tax expense during the nine months of fiscal 2025 of $3.1 million compared to $6.4 million for the same period in fiscal 2024. Our effective tax rate for the nine months of fiscal 2025 was (35%), compared to (74%) in the corresponding prior year period. The year-over-year change in income tax expense was due mainly to a lower valuation allowance recorded against our U.S. deferred tax assets, as well as changes in geographic mix of income and loss that include jurisdictions with differing tax rates, partially offset by an increase in valuation allowance recorded against our Italian deferred tax assets. We recorded a valuation allowance of $5.3 million for the nine months of fiscal year 2025, compared to $8.2 million recorded for the corresponding prior year period. Because we have a $4.0 million valuation allowance recorded against our U.S., Chinese and Italian deferred tax assets, we did not record a tax benefit of $4.0 million for our U.S., Chinese and Italian net losses for the nine months of fiscal 2025. The valuation allowance recorded in the nine months of fiscal year 2025 reflected a full valuation allowance of our U.S., Chinese and Italian deferred tax assets and was recorded based on our conclusion that the deferred tax assets were not more likely than not going to be realized. 16

Our unrecognized tax benefits were $29,000 as of July 31, 2025, and $28,000 as of October 31, 2024, and in each case included accrued interest.

Table of Contents

We ~~recognize~~recorded ~~accrued~~income ~~interest~~tax ~~and~~expense ~~penalties~~during ~~related~~the tofirst ~~unrecognized~~three ~~tax~~months ~~benefits~~of asfiscal ~~components~~year 2026 of ~~income~~$0.5 ~~tax~~million, ~~expense~~compared to $2.0 Asmillion offor ~~July~~the ~~31,~~corresponding ~~2025,~~prior year period. Our effective tax rate for the ~~gross~~first ~~amount~~three months of ~~interest~~fiscal ~~accrued~~year 2026 was (15%), ~~reported~~compared to (90%) in ~~Accrued~~the ~~expenses,~~corresponding prior year period. The year-over-year change was ~~approximately~~primarily due to a $81.2 million valuation allowance recorded during the first quarter of 2025 on our Italian deferred tax assets and changes in geographic mix of income and loss that includes jurisdictions with differing tax rates. A full valuation allowance has been recorded against our Italian,~~000~~ U.S., ~~which~~and ~~did~~Chinese ~~not~~deferred ~~include~~tax assets as of January 31, 2026, based on our conclusion that the ~~federal~~deferred tax ~~benefit~~assets ofwere ~~interest~~not ~~deductions~~more likely than not to be realized.

OnThe ~~July~~Budget 4,Reconciliation ~~2025,~~Act ~~the United States Congress passed budget reconciliation bill~~ (H.R. 1) ~~referred~~(“OBBB”) towas assigned ~~the~~into ~~One~~law ~~Big~~on ~~Beautiful~~July ~~Bill~~4, ~~("OBBB")~~2025. The OBBB ~~contains~~did ~~several~~not ~~changes~~have toa ~~corporate~~material ~~taxation~~impact ~~including~~on ~~modifications~~our tocondensed ~~capitalization~~consolidated offinancial ~~research~~statements and ~~development~~related ~~expenses,~~disclosures ~~limitations~~as onof ~~deductions~~and for ~~interest~~the ~~expense,~~three ~~and~~months ~~accelerated~~ended ~~fixed~~January ~~asset~~31, ~~depreciation~~2026. WeWhile ~~are~~further ~~still~~evaluation ~~evaluating~~is ~~the~~ongoing, ~~impact of~~ the OBBB, ~~but~~is wenot ~~expect~~expected ~~that~~to ~~the legislation will likely not~~ have a material impact on our consolidated financial statements and related disclosures in future years.

We file U.S. federal and state income tax returns, as well as tax returns in several foreign jurisdictions. ~~The~~Currently ~~statutes~~our ofmanufacturing ~~limitations~~subsidiary ~~with~~in ~~respect~~Italy tois ~~unrecognized~~under tax ~~benefits~~inspection ~~will~~for ~~expire this~~ fiscal year. October 31, 2021.

Currently our manufacturing subsidiary in Italy is under tax inspection for fiscal year October 31, 2021.

13. FINANCIAL INSTRUMENTS

FASB fair value guidance establishes a three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exist, therefore requiring an entity to develop its own assumptions.

The carrying amounts for cash and cash equivalents approximate their fair values due to the short maturity of these instruments, and such instruments meet the Level 1 criteria of the three–tier fair value hierarchy discussed above. The carrying amount of short-term debt approximates fair value due to the variable rate of the interest and the short-term nature of the instrument.

In accordance with this guidance, the following table represents the fair value hierarchy for our financial assets and liabilities measured at fair value as of ~~July~~January 31, ~~2025~~2026, and October 31, ~~2024~~2025 (in thousands):


	Assets				Liabilities
	~~Assets~~January 31, 2026		October 31, 2025		~~Liabilities~~January 31, 2026		October 31, 2025
	July 31, 2025		October 31, 2024		July 31, 2025		October 31, 2024
Level 1
Level 1
Mutual Funds	$	3,587	$	3,489	$	—	$	—
Mutual Funds	$	3,282	$	2,942	$	—	$	—


Level 2
Level 2
Derivatives	$	82	$	263	$	3,134	$	3,084
Derivatives	$	2,782	$	323	$	2,038	$	705

Included in Level 1 assets are mutual fund investments under a nonqualified deferred compensation plan. We estimate the fair value of these investments on a recurring basis using market prices that are readily available.

Included in Level 2 fair value measurements are derivative assets and liabilities related to gains and losses on foreign currency forward exchange contracts entered into with a third party. We estimate the fair value of these derivatives on a recurring basis using foreign currency exchange rates obtained from active markets. Derivative instruments are reported in the accompanying Condensed Consolidated Financial Statements at fair value. We have derivative financial instruments in the form of foreign currency forward exchange contracts as described in Note 3 of Notes to Condensed Consolidated Financial Statements. The U.S. dollar equivalent notional amounts of these contracts were $8992.16 million and $8591.10 million at ~~July~~January 31, ~~2025~~2026, and October 31, ~~2024~~2025, respectively.

The fair value of our foreign currency forward exchange contracts and the related currency positions are subject to offsetting market risk resulting from foreign currency exchange rate volatility. The counterparties to the forward exchange contracts are substantial and creditworthy financial institutions. We do not consider either the risk of counterparties’ non-performance or the economic consequences of counterparties’ non-performance to be material risks.

1817

Table of Contents

14. CONTINGENCIES AND LITIGATION

From time to time, we are involved in various claims and lawsuits arising in the normal course of business. Pursuant to applicable accounting rules, we accrue the minimum liability for each known claim when the estimated outcome is a range of possible loss and no one amount within that range is more likely than another. We maintain insurance policies for such matters, and we record insurance recoveries when we determine such recovery to be probable. We do not expect any of these claims, individually or in the aggregate, to have a material adverse effect on our consolidated financial position or results of operations. We believe that the ultimate resolution of claims for any losses will not exceed our insurance policy coverages.

15. NEW ACCOUNTING PRONOUNCEMENTS

~~New~~In December 2023, the FASB issued Accounting ~~Pronouncements~~Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to enhance the transparency and usefulness of income tax disclosures by providing incremental and disaggregated income tax disclosures pertaining to the effective tax rate reconciliation and income taxes paid by jurisdiction. This standard is effective for fiscal years beginning after December 31, 2024, with early adoption permitted. The standard allows for prospective or retrospective application upon adoption. We are currently assessing the impact this new accounting guidance will have on our consolidated financial statements and disclosures.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This update will be effective for our fiscal year 2025 annual reporting and subsequent interim periods. We are currently assessing the impact this new accounting guidance will have on our consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to income tax disclosures, which aims to improve disclosures and presentation requirements to the transparency of the income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments will be effective for our fiscal year 2026, with the option to early adopt at any time prior to the effective date. We are currently assessing the impact this new accounting guidance will have on our consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires companies to disclose disaggregated information about any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. This update will be effective for our fiscal year 2028 annual reporting. Early adoption is permitted. We are currently assessing the impact this new accounting guidance will have on our consolidated financial statements and disclosures.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which enables entities to apply hedge accounting to a greater number of highly effective economic hedges in the following five areas: (1) similar risk assessment for cash flow hedges, (2) hedging forecasted interest payments on choose-your-rate debt instruments, (3) cash flow hedges of nonfinancial forecasted transactions, (4) net written options as hedging instruments, and (5) foreign-currency-denominated debt instrument as hedging instrument and hedged item (dual hedge). This ASU is effective for fiscal year 2028. Early adoption is permitted. We are currently assessing the impact this new accounting guidance will have on our consolidated financial statements and disclosures.

1918

Table of Contents

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains information intended to help provide an understanding of our financial condition and other related matters, including our liquidity, capital resources, and results of operations. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited financial statements and the notes accompanying our unaudited financial statements appearing elsewhere in this report, as well as our audited financial statements, the accompanying notes and the MD&A included in our Annual Report on Form 10-K for the year ended October 31, ~~2024~~2025.

EXECUTIVE OVERVIEW

Hurco Companies, Inc. is an international, industrial technology company operating in a single segment. We design, manufacture, and sell computerized (i.e., CNC) machine tools, consisting primarily of vertical machining centers (mills) and turning centers (lathes), to companies in the metal cutting industry through a worldwide sales, service, and distribution network. Although most of our computer control systems and software products are proprietary, they predominantly use industry standard personal computer components. Our computer control systems and software products are primarily sold as integral components of our computerized machine tool products. We also provide machine tool components, automation integration equipment and solutions for job shops, software options, control upgrades, accessories, and replacement parts for our products, as well as customer service and training and applications support.

The following overview is intended to provide a brief explanation of the principal factors that have contributed to our recent financial performance. This overview is intended to be read in conjunction with the more detailed information included in our financial statements and notes thereto, that appear elsewhere in this report.

The market for machine tools is international in scope. We have both significant foreign sales and significant foreign manufacturing operations. During the ~~nine~~first three months of fiscal ~~2025~~2026, approximately 5148% of our revenues were attributable to customers in Europe, where we typically sell more of our higher-performance, higher-priced VMX series machines. Additionally, approximately 1113% of our revenues were attributable to customers in the Asia Pacific region, where we encounter greater pricing pressures. We operate in a cyclical industry where sales and order trends often change periodically and can vary from region to region. ~~Changes~~During ina ~~trade~~time ~~policies,~~of ~~tariffs~~global uncertainty and lower sales volumes experienced recently, we have turned our attention to adjusting overhead expenses and ~~other~~operating ~~import/export~~expenses ~~regulations~~to help minimize the impact of the Ulower volumes of sales on operating income.S. We implemented cost reductions in fiscal years 2024 and ~~other~~2025, ~~nations~~adjusted ~~did~~and ~~not~~managed ~~have~~inventories a(excluding ~~material~~the impact onof foreign currency), and suspended our ~~financial~~regular ~~results~~quarterly ~~for~~cash ~~the~~dividend. ~~three~~We ~~and~~used ~~nine~~that ~~months~~cashflow ~~ended~~to ~~July~~manage 31our capital allocation strategies to continue investing in new technologies, ~~2025.~~product ~~However~~development, and necessary capital expenditures to maximize cashflows without incurring any significant indebtedness as we docontinue ~~have~~to ~~sales~~seek new acquisitions and other growth opportunities. The cyclicality of our business requires that we exercise discipline in, managing through unexpected changes in the markets and ~~purchases~~industries ~~from,~~in ~~foreign~~which ~~countries~~we operate. We believe that ~~could~~our belong ~~negatively~~history ~~impacted~~of byprofitability ~~recent~~and orthe ~~future~~strength ~~tariff~~of ~~actions~~our balance sheet can provide us with stability to manage through these business cycles, and we rely on our past experience in making measured decisions for the long-term success of our business.

Sales and service fees in the ~~nine~~first three months of fiscal ~~2025~~2026 ~~increased~~decreased ~~slightly~~by 8%, compared to the same period in fiscal ~~2024~~2025. The ~~increase~~decrease in sales was due primarily to ~~increased~~decreased ~~sales~~shipments of ~~Hurco~~Milltronics vertical milling and ~~Milltronics~~toolroom machines in the Americas, ~~Takumi machines in Asia Pacific,~~ and Hurco machines in the United Kingdom, ~~and Italy~~Germany, ~~partially~~China ~~offset by a decrease in Hurco~~ and ~~Takumi machine sales in France and Germany~~India, as well as a decreased volume of shipments of electro-mechanical components and accessories manufactured by ~~our wholly-owned subsidiary in Italy,~~ LCM ~~Precision Technology S~~.~~r.l.~~ ~~(“LCM”).~~ Orders in the ~~nine~~first three months of fiscal ~~2025~~2026 ~~decreased~~increased by 155%, ~~from~~compared to the same period in fiscal ~~2024~~2025, reflecting aan ~~decrease~~increase in ~~orders~~customer demand for Hurco and Takumi machines in the Americas and ~~European regions~~India, partially offset by andecreased ~~increase~~customer indemand ~~orders~~for Hurco and Takumi machines in ~~the~~Europe ~~Asian~~and ~~Pacific~~Hurco ~~region~~machines in China.

We have three brands of CNC machine tools in our product portfolio: Hurco is the technology innovation brand for customers who want to increase productivity and profitability by selecting a brand with the latest software and motion technology. Milltronics is the value-based brand for shops that want easy-to-use machines at competitive prices. The Takumi brand is for customers that need very high speed, high efficiency performance, such as that required in the production, die and mold, aerospace, and medical industries. Takumi machines are equipped with industry standard controls instead of the proprietary controls found on Hurco and Milltronics machines. These three brands of CNC machine tools are responsible for the vast majority of our revenue. However, we have added other non-Hurco branded products to our product portfolio that have contributed product diversity and market penetration opportunity. These non-Hurco branded products are sold by our wholly-owned distributors and are comprised primarily of other general-purpose vertical milling centers and lathes, laser cutting machines, waterjet cutting machines, CNC grinders, compact horizontal machines, metal cutting saws and CNC swill lathes. ProCobots LLC is our wholly-owned subsidiary that provides automation solutions. In addition, through LCM, we produce high value machine tool components and accessories. 19

Table of Contents

We ~~principally~~have ~~sell~~three ~~our~~CNC ~~products~~machine ~~through~~tool ~~approximately~~brands ~~180~~in ~~independent~~our ~~agents~~product ~~and~~portfolio. ~~distributors~~Hurco ~~throughout~~is the ~~Americas,~~technology ~~Europe,~~innovation brand for customers who want to increase productivity and ~~Asia.~~profitability ~~Although~~by ~~some~~selecting ~~distributors~~a ~~carry~~brand ~~competitive~~with ~~products,~~the welatest ~~are~~software and motion technology. Milltronics is the ~~primary~~value-based ~~line~~brand for ~~the~~shops ~~majority~~that ofwant ~~our~~easy-to-use ~~distributors~~machines ~~globally.~~at Wecompetitive ~~also~~prices. ~~have~~The ~~our~~Takumi ~~own~~brand ~~direct~~is ~~sales~~for ~~and~~customers ~~service~~that ~~organizations~~need invery ~~China,~~high ~~France~~speed, ~~Germany,~~high ~~India,~~efficiency ~~Italy~~performance, such as that required in the ~~Netherlands~~production, ~~Poland,~~die ~~Singapore~~and mold, ~~Taiwan~~aerospace, ~~the~~and ~~United~~medical ~~Kingdom,~~industries. Takumi ~~and~~machines ~~certain~~are ~~parts~~equipped with industry standard controls instead of the ~~United~~proprietary ~~States,~~controls ~~which~~found ~~are~~on ~~among~~Hurco ~~the~~and ~~world’s~~Milltronics ~~principal~~machines. These three brands of CNC machine ~~tool~~tools ~~consuming~~are ~~markets.~~responsible ~~The~~for the vast majority of our ~~machine~~revenue. ~~tools~~However, ~~are~~we ~~manufactured~~have ~~and~~added ~~assembled~~other non-Hurco branded products to our ~~specifications~~product ~~primarily~~portfolio bythat ~~our~~have ~~wholly-owned~~contributed ~~subsidiary~~product indiversity ~~Taiwan,~~and ~~HML~~market penetration opportunity. ~~Components~~These tonon-Hurco ~~support~~branded products are sold by our ~~SRT~~wholly-owned ~~line~~distributors and are comprised primarily of ~~five~~other general-~~axis~~purpose ~~machining~~vertical milling centers, ~~such~~and aslathes, ~~the~~laser ~~direct~~cutting ~~drive~~machines, ~~spindle~~CNC grinders, ~~swivel~~compact ~~head~~horizontal machines, metal cutting saws and ~~rotary~~CNC ~~table,~~lathes. ~~are~~ProCobots ~~manufactured~~LLC byis our wholly-owned subsidiary inthat ~~Italy~~provides automation solutions. In addition, through LCM, we produce high value machine tool components and accessories.

We principally sell our products through approximately 160 independent agents and distributors throughout the Americas, Europe, and Asia. Although some distributors carry competitive products, we are the primary line for the majority of our distributors globally. We also have our own direct sales and service organizations in China, the Czech Republic, France, Germany, India, Italy, the Netherlands, Poland, Singapore, Taiwan, the United Kingdom, and certain parts of the United States, which are among the world’s principal machine tool consuming markets. The vast majority of our machine tools are manufactured and assembled to our specifications primarily by our wholly-owned subsidiary in Taiwan, HML. Components to support our SRT line of five-axis machining centers, such as the direct drive spindle, swivel head, and rotary table, are manufactured by our wholly-owned subsidiary in Italy, LCM.

Our sales to foreign customers are denominated, and payments by those customers are made, in the prevailing currencies in the countries in which those customers are located (primarily the Euro, Pound Sterling, and Chinese Yuan). Our product costs are incurred and paid primarily in the New Taiwan Dollar and the U.S. dollar. Changes in currency exchange rates may have a material effect on our operating results and consolidated financial statements as reported under U.S. Generally Accepted Accounting Principles. For example, when the U.S. dollar weakens in value relative to a foreign currency, sales made, and expenses incurred, in that currency when translated to U.S. dollars for reporting in our financial statements, are higher than would be the case when the U.S. dollar is stronger. In the comparison of our period-to-period results, we discuss the effect of currency translation on those results, which reflect translation to U.S. dollars at exchange rates prevailing during the period covered by those financial statements.

Our high levels of foreign manufacturing and sales also expose us to cash flow risks due to fluctuating currency exchange rates. We seek to mitigate those risks through the use of derivative instruments – principally foreign currency forward exchange contracts.

RESULTS OF OPERATIONS

Three Months Ended ~~July~~January 31, ~~2025~~2026 Compared to Three Months Ended ~~July~~January 31, ~~2024~~2025

Sales and Service Fees. Sales and service fees for the ~~third~~first quarter of fiscal year ~~2025~~2026 were $4542.89 million, ana ~~increase~~decrease of $3.25 million, or 78%, compared to the corresponding prior year period, and included a favorable currency impact of $1.48 million, or 34%, when translating foreign sales to U.S. dollars for financial reporting purposes.

Sales and Service Fees by Geographic Region

The following table sets forth net sales and service fees by geographic region for the ~~third~~first fiscal quarter ended ~~July~~January 31, ~~2025~~2026 and ~~2024~~2025 (dollars in thousands):


	Three Months Ended
	~~July~~January 31,
	~~2025~~2026				~~2024~~2025				$ Change		% Change
Americas	$	16,~~901~~656	3739	%	$	1518,~~389~~108	3639	%	$	(1,~~512~~452)	10(8)	%
Europe		2420,~~166~~547	5348	%		2421,~~068~~614	5647	%		98(1,067)	0(5)	%
Asia Pacific		45,~~739~~665	1013	%		36,~~194~~692	814	%		(1,~~545~~027)	48(15)	%
Total	$	4542,~~806~~868	100	%	$	4246,~~651~~414	100	%	$	(3,~~155~~546)	7(8)	%

Sales in the Americas for the ~~third~~first quarter of fiscal year ~~2025~~2026 ~~increased~~decreased by 108%, compared to the corresponding period in fiscal year ~~2024~~2025, primarily due to ~~increased~~a ~~shipments~~decreased volume of ~~Hurco and Milltronics machines. The increase in Hurco and Milltronics machine sales was primarily attributable to increased~~ shipments of ~~lathes,~~Milltronics ~~tool~~vertical ~~room~~milling ~~machines~~ and ~~vertical~~toolroom ~~machining centers~~machines.

European sales for the third quarter of fiscal year 2025 increased by less than 1%, compared to the corresponding period in fiscal year 2024, and included a favorable currency impact of 5%, when translating foreign sales to U.S. dollars for financial reporting purposes. The year-over-year increase in European sales was primarily attributable to increased sales of Hurco machines in the United Kingdom and Italy, as well as the favorable impact of currency translation of foreign sales to U.S. dollars for financial reporting purposes, offset by decreased volume of shipments of Hurco and Takumi machines in France and Germany, as well as a decreased volume of shipments of electro-mechanical components and accessories manufactured by LCM

Table of Contents

~~Asian~~European ~~Pacific~~ sales for the ~~third~~first quarter of fiscal year ~~2025~~2026 ~~increased~~decreased by 485%, compared to the corresponding ~~prior~~period in fiscal year ~~period~~2025, and included a favorable currency impact of 48%, when translating foreign sales to U.S. dollars for financial reporting purposes. The ~~year-over-year~~decrease ~~increase~~ in ~~Asian~~European ~~Pacific~~ sales for the first quarter of fiscal year 2026 was primarily ~~due~~attributable to ~~increased~~a ~~sales~~decreased volume of ~~Takumi~~shipments ~~vertical,~~of ~~bridge~~Hurco ~~mill,~~VM ~~horizontal,~~machines and ~~5-axis~~lathes ~~machines~~ in the ~~Asian~~UK ~~Pacific~~and ~~region~~Germany. In addition to the decreased machine sales for the quarter, European sales also reflected a decline in shipment of accessories manufactured by LCM.

Asian Pacific sales for the first quarter of fiscal year 2026 decreased by 15%, compared to the corresponding period in fiscal year 2025, and included a favorable currency impact of 2%, when translating foreign sales to U.S. dollars for financial reporting purposes. The decrease in Asian Pacific sales primarily resulted from a lower volume of shipments of Hurco machines in China and India.

Sales and Service Fees by Product Category

The following table sets forth sales and service fees by product group and services for the ~~third~~first fiscal quarter ended ~~July~~January 31, ~~2025~~2026 and ~~2024~~2025 (dollars in thousands):


	Three Months Ended
	~~July~~January 31,
	~~2025~~2026				~~2024~~2025				$ Change		% Change
Computerized Machine Tools	$	3633,~~889~~540	8078	%	$	3337,~~191~~802	7881	%	$	3(4,~~698~~262)	(11)	%
Computer Control Systems and Software †		~~530~~452	1	%		~~697~~656	21	%		(~~167~~204)	(2431)	%
Service Parts		6,~~309~~863	1416	%		65,~~535~~864	1513	%		~~(226)~~999	~~(3)~~17	%
Service Fees		2,~~078~~013	5	%		2,~~228~~092	5	%		(~~150~~79)	(74)	%
Total	$	4542,~~806~~868	100	%	$	4246,~~651~~414	100	%	$	(3,~~155~~546)	7(8)	%

^† Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine tools.

Sales of computerized machine tools for the ~~third~~first quarter of fiscal year ~~2025~~2026 ~~increased~~decreased by 11%, compared to the corresponding prior year period, primarily due to ~~increased~~a ~~sales~~decreased volume of ~~Hurco~~shipments of Milltronics machines in the Americas, ~~Takumi machines in Asia Pacific,~~ and of Hurco machines in the United Kingdom, ~~and Italy~~Germany, ~~partially~~China ~~offset by a decrease in Hurco~~ and ~~Takumi machine sales in Germany and France~~India. Sales of computer control systems and software for the ~~third~~first quarter of fiscal year ~~2025~~2026 decreased by 2431%, compared to the corresponding prior year period, due mainly to decreased software sales in the Americas and European regions. Sales of service parts for the ~~third~~first quarter of fiscal year ~~2025~~2026 ~~decreased~~increased by 317%, compared to the corresponding prior year period, primarily due to ~~decreases~~increases in aftermarket ~~service~~ parts sales of ~~Hurco~~Takumi ~~products in the Americas~~ and ~~France,~~Hurco ~~partially offset by increases in aftermarket service parts sales of Milltronics~~ products in the ~~Americas~~European and ~~Hurco~~Asian ~~and Takumi products in Asia~~ Pacific regions. Service fees for the ~~third~~first quarter of fiscal year ~~2025~~2026 decreased by 74%, compared to the corresponding prior year period, primarily due to decreased aftermarket service fees in the Americas, ~~and~~partially ~~European~~offset ~~regions~~by increased aftermarket service fees in the United Kingdom and France. Sales for all product lines included a favorable currency impact of 34% when translating foreign sales to U.S. dollars for financial reporting purposes.

Orders. Orders for the ~~third~~first quarter of fiscal year ~~2025~~2026 were $4142.0 million, aan ~~decrease~~increase of $111.89 million, or 225%, compared to the corresponding period in fiscal year ~~2024~~2025, and included a favorable currency impact of $1.25 million, or 24%, when translating foreign orders to U.S. dollars.

The following table sets forth new orders booked by geographic region for the ~~third~~first fiscal quarter ended ~~July~~January 31, ~~2025~~2026 and ~~2024~~2025 (dollars in thousands):


	Three Months Ended
	July 31,
	2025				2024				$ Change		% Change
Americas	$	15,557	38	%	$	17,625	33	%	$	(2,068)	(12)	%
Europe		20,274	49	%		28,349	54	%		(8,075)	(28)	%
Asia Pacific		5,165	13	%		6,841	13	%		(1,676)	(24)	%
Total	$	40,996	100	%	$	52,815	100	%	$	(11,819)	(22)	%

Orders in the Americas for the third quarter of fiscal year 2025 decreased by 12%, compared to the corresponding period in fiscal year 2024, primarily due to reduced demand for Hurco and Milltronics machines.


		Three Months Ended
		January 31,
		2026					2025					$ Change			% Change
Americas		$	17,301		41	%	$	14,643		37	%	$	2,658		18	%
Europe			18,966		45	%		19,370		48	%		(404)		(2)	%
Asia Pacific			5,713		14	%		6,072		15	%		(359)		(6)	%
Total		$	41,980		100	%	$	40,085		100	%	$	1,895		5	%

~~European~~Orders ~~orders~~in the Americas for the ~~third~~first quarter of fiscal year ~~2025~~2026 ~~decreased~~increased by 2818%, compared to the corresponding ~~prior year~~ period, ~~and~~in ~~included~~fiscal ayear ~~favorable currency impact of 4%~~2025, ~~when~~primarily ~~translating~~due ~~foreign orders~~ to ~~U.S.~~increased ~~dollars. The year-over-year decrease in orders was driven primarily by decreased~~ customer demand for Hurco and Takumi machines ~~in Germany, the United Kingdom and France, as well as for accessories manufactured by LCM~~.

2221

Table of Contents

~~Asian~~European ~~Pacific~~ orders for the ~~third~~first quarter of fiscal year ~~2025~~2026 decreased by 242%, compared to the corresponding prior year period, and included a favorable currency impact of 18%, when translating foreign orders to U.S. dollars. The decrease in orders was driven primarily ~~due~~by todecreased acustomer ~~reduced~~demand ~~volume~~for of Hurco ~~machine~~and ~~orders~~Takumi machines in ~~China~~Germany, France, Italy and the UK, partially offset by increased customer demand for electro-mechanical components and accessories manufactured by LCM.

~~Gross~~Asian ~~Profit.~~Pacific ~~Gross~~orders ~~profit~~ for the ~~third~~first quarter of fiscal year ~~2025~~2026 ~~was~~decreased ~~$9.1~~by ~~million~~6%, orcompared ~~20%~~to ofthe ~~sales~~corresponding prior year period, ~~compared~~and toincluded ~~$7.8~~an ~~million,~~unfavorable orcurrency ~~18%~~impact of ~~sales~~less than 1%, ~~for~~when ~~the~~translating ~~corresponding~~foreign ~~prior~~orders ~~year~~to ~~period~~U.S. dollars. The ~~quarter-over-quarter~~decrease ~~increase~~ in ~~gross~~Asian ~~profit~~Pacific asorders ~~a percentage of sales~~ was driven primarily ~~due~~by to a ~~higher~~decrease ~~concentration~~in ofcustomer ~~machine~~demand ~~sales~~for inHurco ~~Europe~~machines ~~and~~in ~~lower~~China, ~~fixed~~partially ~~costs~~offset ~~allocated~~by toincreased ~~overhead~~customer ~~related~~demand tofor ~~cost~~Hurco ~~savings~~and ~~implemented~~Takumi machines in ~~the last twelve months~~India.

~~Operating~~Gross ~~Expenses~~Profit. ~~Selling,~~Gross ~~general,~~profit ~~and administrative expenses~~ for the ~~third~~first quarter of fiscal year ~~2025~~2026 ~~were~~was $107.89 million, or 2319% of sales, compared to $108.43 million, or 2418% of sales, infor the corresponding ~~fiscal~~prior year ~~2024~~ period~~, and included an unfavorable currency impact of $0~~.3 ~~million, or 3%, when translating foreign expenses to U.S. dollars for financial reporting purposes.~~ The year-over-year increase in ~~selling,~~gross ~~general,~~profit ~~and~~as ~~administrative~~a ~~expenses~~percentage of sales was primarily due ~~mainly~~ to ~~the~~a ~~unfavorable~~greater ~~impact~~sales mix of ~~currency~~Hurco ~~when~~and ~~translating~~Takumi ~~foreign~~higher-performance ~~expenses~~machines toand ~~U.S.~~improved ~~dollars~~leverage ~~for~~of ~~financial~~fixed ~~reporting~~costs ~~purposes.~~allocated to sales and production volumes.

Operating ~~Income/Loss~~Expenses. ~~Operating~~Selling, ~~loss~~general, and administrative expenses for the ~~third~~first quarter of fiscal year ~~2025~~2026 ~~was~~were $111.71 million, or 26% of sales, compared to $210.54 million, ~~for~~or ~~the~~22% ~~corresponding~~of ~~period~~sales, in the corresponding fiscal year ~~2024.~~2025 ~~The~~period, ~~year-over-year~~and ~~reduction~~included inan ~~operating~~unfavorable ~~loss~~currency ~~was~~impact ~~primarily~~of ~~due~~$0.4 million, when translating foreign expenses to aU.S. ~~higher~~dollars ~~concentration~~for offinancial ~~machine~~reporting ~~sales~~purposes. The year-over-year increase in ~~Europe~~selling, general, and ~~lower~~administrative ~~fixed~~expenses ~~costs~~for ~~allocated~~the toquarter ~~overhead~~reflected ~~related~~the tounfavorable ~~cost~~currency ~~savings~~impact ~~implemented~~and inincreased ~~the~~employee ~~last~~benefits ~~twelve months~~costs.

~~Other~~Operating ~~(Expense)~~ Income, ~~Net~~(Loss). ~~Other~~Operating ~~expense,~~loss ~~net~~ for the ~~third~~first quarter of fiscal year ~~2025~~2026 was $13.52 million, compared to $02.1 million for the corresponding period in fiscal year ~~2024~~2025. The year-over-year increase in ~~other~~operating ~~expense,~~loss ~~net~~ was primarily due ~~mainly~~ to ana ~~increase~~decreased involume ~~foreign~~of ~~currency~~shipments ~~exchange~~of ~~loss~~Hurco and aMilltronics ~~decrease in income from our equity investment~~machines.

Other Income ~~Taxes~~(Expense), Net. ~~Income~~Other ~~tax~~income, ~~expense~~net for the ~~third~~first quarter of fiscal year ~~2025~~2026 was less than $0.61 million, compared to ~~$7.0~~other ~~million for the corresponding prior year period. The year-over-year reduction in income tax~~ expense ~~was due mainly to a lower valuation allowance recorded against our U.S. deferred tax assets~~, asnet ~~well as changes in geographic mix~~ of ~~income and loss that include jurisdictions with differing tax rates. We recorded a valuation allowance of~~ $10.64 million for the ~~third~~corresponding ~~quarter~~period ofin fiscal year 2025~~, compared to $8~~.2 million for the corresponding prior year period. Because we have a valuation allowance recorded against our U.S. and Chinese deferred tax assets, we did not record a tax benefit for our U.S. and Chinese net losses for the third quarter of fiscal 2025. The ~~valuation allowance recorded in the third quarter of fiscal~~ year-over-year ~~2025~~change ~~reflected a full valuation allowance of our U.S. and Chinese deferred tax assets and~~ was ~~recorded~~due ~~after~~mainly ~~evaluating changes~~ to ~~tax~~gains ~~laws,~~from ~~statutory~~sale ~~tax~~of ~~rates,~~an ~~and~~business ~~our cumulative three-year income (loss) levels for the U.S.~~ and ~~China~~a ~~for~~decrease ~~the~~in ~~nine~~foreign ~~months~~currency ofexchange ~~fiscal year 2025~~loss.

~~Nine~~Income ~~Months~~Taxes. ~~Ended~~Income ~~July~~tax 31expense for the first quarter of fiscal year 2026 was $0.5 million, compared to $2.0 million for the corresponding prior year period. The year-over-year change was primarily due to a $1.2 million valuation allowance recorded during the first quarter of 2025 on our Italian deferred tax assets and changes in geographic mix of income and loss that includes jurisdictions with differing tax rates. A full valuation allowance has been recorded against our Italian, ~~Compared~~U.S., toand ~~Nine~~Chinese ~~Months~~deferred ~~Ended~~tax ~~July~~assets as of January 31, ~~2024~~2026 based on our conclusion that the deferred tax assets were not more likely than not to be recognized.

Sales and Service Fees. Sales and service fees for the nine months of fiscal year 2025 were $133.1 million, an increase of $0.2 million, or less than 1%, compared to the corresponding prior year period, and included a favorable currency impact of $1.2 million, or less than 1%, when translating foreign sales to U.S. dollars for financial reporting purposes.

Sales and Service Fees by Geographic Region

The following table sets forth sales and service fees by geographic region for the nine months ended July 31, 2025 and 2024 (dollars in thousands):


	Nine Months Ended
	July 31,
	2025				2024				$ Change		% Change
Americas	$	50,370	38	%	$	48,986	37	%	$	1,384	3	%
Europe		67,388	51	%		69,538	52	%		(2,150)	(3)	%
Asia Pacific		15,329	11	%		14,358	11	%		971	7	%
Total	$	133,087	100	%	$	132,882	100	%	$	205	0	%

LIQUIDITY AND CAPITAL RESOURCES

23At January 31, 2026, we had cash and cash equivalents of $48.0 million, compared to $48.7 million at October 31, 2025. Approximately 19% of the $48.0 million of cash and cash equivalents was denominated in U.S. dollars. The balance was attributable to our foreign operations and is held in the local currencies of our various foreign entities, subject to fluctuations in currency exchange rates. We do not believe that the indefinite reinvestment of these funds offshore impairs our ability to meet our domestic working capital needs.

Table of Contents

Sales in the Americas for the nine months of fiscal year 2025 increased by 3%, compared to the corresponding period in fiscal year 2024, primarily due to increased shipments of Hurco and Milltronics machines. The increase in Hurco and Milltronics machine sales was primarily attributable to increased shipments of lathes, tool room machines and vertical machining centers.

~~European~~Working ~~sales~~capital ~~for~~was ~~the~~$169.5 ~~nine~~million ~~months~~at ofJanuary ~~fiscal~~31, ~~year 2025 decreased by 3%~~2026, compared to ~~the~~$173.1 ~~corresponding~~million ~~period~~at inOctober ~~fiscal year 2024~~31, ~~and included a favorable currency impact of 2%, when translating foreign sales to U~~2025.S. ~~dollars for financial reporting purposes.~~ The ~~year-over-year~~ decrease in ~~European~~working ~~sales~~capital ~~in the nine month period~~ was primarily ~~attributable~~driven toby aan ~~decreased~~increase ~~volume~~in ofaccounts ~~shipments~~payable ~~of Hurco~~ and ~~Takumi machines in France and Germany, as well as~~ a ~~decreased~~decrease ~~volume of shipments of electro-mechanical components and accessories manufactured by LCM, partially offset by increased sales of Hurco machines~~ in ~~the United Kingdom and Italy as well as the favorable impact of currency translation of foreign sales to U~~inventories.~~S. dollars for financial reporting purposes.~~

~~Asian~~Capital ~~Pacific~~expenditures ~~sales for the nine months~~ of ~~fiscal~~$0.6 ~~year~~million ~~2025~~during ~~increased by 7%, compared to~~ the ~~corresponding~~first ~~prior~~three ~~year~~months ~~period, and included an unfavorable currency impact~~ of ~~less~~fiscal ~~than~~year ~~1%,~~2026 ~~when~~were ~~translating~~primarily ~~foreign sales to U.S. dollars~~ for ~~financial~~software ~~reporting~~development ~~purposes.~~costs ~~The~~and ~~year-over-year~~capital ~~increase~~improvements in ~~Asian~~existing ~~Pacific~~facilities. ~~sales~~We ~~was~~funded ~~primarily~~these ~~due~~expenditures towith ~~increased~~cash ~~sales~~on ~~of Takumi vertical, bridge mill, horizontal, and 5-axis machines in the Asian Pacific region~~hand.

~~Sales~~On January 6, 2023, we announced approval of a share repurchase program in an aggregate amount of up to $25.0 million and ~~Service~~later ~~Fees~~extended bythis ~~Product~~program ~~Category~~through November 10, 2026. Repurchases under the program may be made in the open market or through privately negotiated transactions from time to time, subject to applicable laws, regulations and contractual provisions. We did not repurchase any shares of our common stock during the first quarter of fiscal 2026. As of January 31, 2026, we had repurchased $5.3 million, or 259,620 common shares, under this program since inception, leaving $19.7 million available for future repurchases thereunder.

The following table sets forth sales and service fees by product group and services for the nine months ended July 31, 2025 and 2024 (dollars in thousands):


	Nine Months Ended
	July 31,
	2025				2024				$ Change		% Change
Computerized Machine Tools	$	106,347	80	%	$	104,176	79	%	$	2,171	2	%
Computer Control Systems and Software †		1,843	1	%		1,866	1	%		(23)	(1)	%
Service Parts		18,404	14	%		20,389	15	%		(1,985)	(10)	%
Service Fees		6,493	5	%		6,451	5	%		42	1	%
Total	$	133,087	100	%	$	132,882	100	%	$	205	0	%

† Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine tools.

Sales of computerized machine tools for the nine months of fiscal year 2025 increased by 2%, compared to the corresponding prior year period, primarily due to increased sales of Hurco and Milltronics machines in the Americas, Takumi machines in Asia Pacific, and Hurco machines in the United Kingdom and Italy, partially offset by a decrease in Hurco and Takumi machine sales in Germany and France. Sales of computer control systems and software for the nine months of fiscal year 2025 decreased by 1%, compared to the corresponding prior year period, due mainly to decreased software sales in Germany and the United Kingdom, partially offset by increased software sales in the Americas. Sales of service parts for the nine months of fiscal year 2025 decreased by 10%, compared to the corresponding prior year period, primarily due to decreases in aftermarket service parts sales in the Americas and Europe. Service fees for the nine months of fiscal year 2025 increased by 1%, compared to the corresponding prior year period, primarily due to increased aftermarket service fees in the Americas and Asia Pacific, partially offset by decreased aftermarket service fees in Europe. Sales for all product lines included a favorable currency impact of less than 1% when translating foreign sales to U.S. dollars for financial reporting purposes.

Orders. Orders for the nine months of fiscal year 2025 were $124.8 million, a decrease of $22.4 million, or 15%, compared to the corresponding period in fiscal year 2024, and included a favorable currency impact of $0.9 million, or less than 1%, when translating foreign orders to U.S. dollars.

The following table sets forth new orders booked by geographic region for the nine months ended July 31, 2025, and 2024 (dollars in thousands):

Table of Contents


	Nine Months Ended
	July 31,
	2025				2024				$ Change		% Change
Americas	$	47,145	38	%	$	55,490	38	%	$	(8,345)	(15)	%
Europe		60,730	49	%		75,757	51	%		(15,027)	(20)	%
Asia Pacific		16,906	13	%		15,978	11	%		928	6	%
Total	$	124,781	100	%	$	147,225	100	%	$	(22,444)	(15)	%

On June 14, 2024, we announced a suspension of our regular quarterly cash dividend as we seek to enhance our financial flexibility and improve our ability to manage market volatility while focusing on strengthening our balance sheet, reinvesting in our 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. Future dividends are subject to approval of our Board of Directors and will depend upon many factors, including our results of operations, financial condition, capital requirements, regulatory and contractual restrictions, our business strategy, and other factors deemed relevant by our Board of Directors from time to time.

~~Orders~~On inDecember ~~the~~31, ~~Americas~~2018, ~~for~~we and our subsidiary Hurco B.V. entered into a credit agreement with Bank of America, N.A., as the ~~nine~~lender, ~~months~~which was subsequently amended on each of ~~fiscal~~March ~~year~~13, ~~2025~~2020, ~~decreased~~December by23, ~~15%~~2020, ~~compared~~December to17, 2021, January 4, 2023, and December 19, 2023 (as amended, the ~~corresponding~~“2018 ~~period~~Credit Agreement”). The 2018 Credit Agreement provided for an unsecured revolving credit and letter of credit facility in ~~fiscal~~a ~~year~~maximum ~~2024~~aggregate amount of $40.0 million. The 2018 Credit Agreement provided that the maximum amount of outstanding letters of credit at any one time could not exceed $10.0 million, ~~primarily~~the ~~due~~maximum toamount ~~decreased~~of ~~customer~~outstanding ~~demand~~loans ~~for~~made to our subsidiary Hurco B.V. at any one time could not exceed $20.0 million, and ~~Takumi~~the ~~machines~~maximum amount of all outstanding loans denominated in alternative currencies at any one time could not exceed $20.0 million. The scheduled maturity date of the 2018 Credit Agreement was December 31, as2025, ~~well~~and ason ~~reduced~~that ~~demand~~date, ~~for~~the ~~OEM~~2018 ~~machines~~Credit ~~sold~~Agreement byterminated ~~our~~in ~~wholly-owned~~accordance ~~domestic~~with ~~distributors~~its terms.

~~European~~In ~~orders~~March ~~for~~2019, ~~the~~our ~~nine~~wholly-owned ~~months~~subsidiaries ofin ~~fiscal~~Taiwan, ~~year~~HML, ~~2025~~and ~~decreased~~China, ~~by 20%~~NHML, ~~compared~~closed toon ~~the~~uncommitted ~~corresponding~~revolving ~~prior~~credit ~~year~~facilities ~~period,~~with ~~and~~maximum ~~included~~aggregate aamounts ~~favorable~~of ~~currency~~150 ~~impact~~million ofNew ~~1%,~~Taiwan ~~when~~Dollars ~~translating~~and ~~foreign~~32.5 ~~orders~~million toChinese ~~U.S.~~Yuan, ~~dollars~~respectively. ~~The~~As ~~year-over-year~~uncommitted ~~decrease~~facilities, inboth ~~orders~~the ~~was~~Taiwan ~~driven~~and ~~primarily~~China bycredit ~~decreased~~facilities ~~customer~~were ~~demand~~subject ~~for~~to ~~Hurco~~review and ~~Takumi~~termination ~~machines~~by inthe ~~Germany~~respective underlying lending institution from time to time. On December 31, 2025, the ~~United~~150 ~~Kingdom~~million New Taiwan Dollars Taiwan credit facility and ~~France,~~the as32.5 ~~well~~million asChinese ~~for~~Yuan ~~accessories~~China ~~manufactured~~credit byfacility ~~LCM~~terminated in accordance with their terms.

~~Asian~~On ~~Pacific~~January ~~orders~~5, ~~for~~2026, ~~the~~we ~~nine~~entered ~~months~~into ofa ~~fiscal~~credit ~~year~~agreement ~~2025~~with ~~increased~~Bank byof 6%America, ~~compared~~N.A., toas the ~~corresponding~~lender ~~prior~~(the ~~year~~“2026 ~~period,~~Credit ~~and~~Agreement”). ~~included~~The an2026 ~~unfavorable~~Credit ~~currency~~Agreement ~~impact~~provides for a secured revolving credit and letter of ~~less~~credit ~~than~~facility ~~1%,~~in ~~when~~a ~~translating~~maximum ~~foreign~~aggregate ~~orders~~amount toof U$20.S.0 ~~dollars~~million. The ~~increase~~2026 inCredit ~~orders~~Agreement ~~was~~provides ~~due~~that ~~mainly~~the tomaximum anamount ~~increased~~of ~~volume~~outstanding letters of ~~Takumi~~credit ~~machine~~at ~~orders~~any ~~throughout~~one time may not exceed $10.0 million and the ~~Asian~~maximum ~~Pacific~~amount ~~region~~of ~~where~~all ~~our~~outstanding ~~customers~~loans denominated in alternative currencies at any one time may not exceed $20.0 million. Under the 2026 Credit Agreement, we are ~~located~~the borrower, ~~partially~~and ~~offset~~certain byof ~~decreased~~our ~~Hurco~~subsidiaries ~~machine~~are ~~orders~~guarantors. Our obligations under the 2026 Credit Agreement are secured by a security interest in ~~China~~substantially all of our personal property and substantially all of the personal property of each subsidiary guarantor. The scheduled maturity date of the 2026 Credit Agreement is December 31, 2026.

~~Gross~~Borrowings ~~Profit.~~under ~~Gross~~the ~~profit~~2026 ~~for~~Credit Agreement bear interest at floating rates based on, at our option, either (i) a rate based upon the ~~nine~~SOFR, ~~months~~the ofSterling ~~fiscal~~Overnight ~~year~~Index ~~2025~~Average ~~was~~Reference ~~$25.2~~Rate, ~~million~~the Euro Interbank Offering Rate, or ~~19%~~another ofalternative ~~sales~~currency-based rate approved by the lender, ~~compared~~depending toon ~~$25~~the term of the loan and the currency in which such loan is denominated, plus 2.650% ~~million~~per annum, or ~~19%~~(ii) a base rate (which is the highest of ~~sales~~(a) the federal funds rate plus 0.50%, ~~for~~(b) the ~~corresponding~~prime ~~prior~~rate ~~year~~or ~~period~~(c) the one month SOFR-based rate plus 1.00%), plus 1.50% per annum. Outstanding letters of credit will carry an annual rate of 2.50%.

~~Operating~~The ~~Expenses.~~2026 ~~Selling~~Credit Agreement contains customary affirmative and negative covenants and events of default, ~~general~~including covenants (1) restricting us from making certain investments, loans, advances and ~~administrative~~acquisitions ~~expenses~~(but ~~for~~permitting ~~the~~us ~~nine~~to ~~months~~make ofinvestments ~~fiscal~~in ~~year~~subsidiaries ~~2025~~of ~~were~~up to $3210.0 million); (2) restricting us from making certain payments, orincluding ~~24%~~(a) ofcash ~~sales~~dividends, ~~compared~~except that we may pay cash dividends as long as immediately before and after giving effect to ~~$33.4~~such ~~million~~payment, orthe ~~25%~~sum of ~~sales~~the unused amount of the commitments under the 2026 Credit Agreement plus our cash on hand is not less than $10.0 million, we are in pro forma compliance with the ~~corresponding~~maximum ~~fiscal~~consolidated ~~year~~leverage ~~2024~~ratio ~~period~~covenant as described below, and ~~included~~we anare ~~unfavorable~~not ~~currency~~in ~~impact~~default before and after giving effect to such dividend payments and (b) payments made to repurchase shares of ~~$0.2~~our ~~million~~common stock, orexcept ~~less~~that ~~than~~we ~~1%,~~may ~~when~~repurchase ~~translating~~shares ~~foreign~~of ~~expenses~~our common stock as long as we are not in default before and after giving effect to ~~U.S.~~such ~~dollars~~repurchases and the aggregate amount of payments made by us for ~~financial~~all ~~reporting~~such ~~purposes.~~repurchases ~~The~~during any fiscal year~~-over-year~~ ~~reduction~~does innot ~~selling,~~exceed ~~general,~~$10.0 million; and ~~administrative~~(3) ~~expenses~~requiring that we maintain a maximum consolidated leverage ratio of total debt to EBITDA no greater than 2.00 to 1.00, ~~reflected~~with ~~lower~~EBITDA ~~levels~~defined as the greater of ~~discretionary~~(i) ~~spending~~consolidated EBITDA for the most recently completed measurement period and ~~reduced~~(ii) ~~employee~~$1.00. ~~health~~We ~~insurance~~may ~~costs~~use the proceeds from advances under the 2026 Credit Agreement for general corporate purposes.

Operating Income/Loss. Operating loss for the nine months of fiscal year 2025 was $6.8 million, compared to $7.8 million for the corresponding period in fiscal year 2024. The year-over-year reduction in operating loss was primarily due to lower fixed costs allocated to overhead related to cost savings implemented in the last twelve months, lower levels of discretionary spending, and reduced employee health insurance costs.23

Other (Expense) Income, Net. Other expense, net for the nine months of fiscal year 2025 was $2.5 million compared to $1.1 million for the corresponding period in fiscal year 2024. The year-over-year increase in other expense, net was due mainly to an increase in foreign currency exchange loss and a decrease in income from our equity investment.

Income Taxes. Income tax expense for the nine months of fiscal year 2025 was $3.1 million, compared to $6.4 million for the corresponding prior year period. The year-over-year reduction in income tax expense was due mainly to a lower valuation allowance recorded against our U.S. deferred tax assets, as well as changes in geographic mix of income and loss that include jurisdictions with differing tax rates, partially offset by an increase in valuation allowance recorded against our Italian deferred tax assets. We recorded a valuation allowance of $5.3 million for the nine months of fiscal year 2025, compared to $8.2 million recorded for the corresponding prior year period. Because we have a valuation allowance recorded against our U.S., Chinese and Italian deferred tax assets, we did not record a tax benefit for our U.S., Chinese and Italian net losses for the nine months of fiscal 2025. The valuation allowance recorded in the nine months of fiscal year 2025 reflected a full valuation allowance of our U.S., Chinese and Italian deferred tax assets and was recorded after evaluating changes to tax laws, statutory tax rates, and our cumulative three-year income (loss) levels for the U.S., China and Italy for the nine months of fiscal year 2025.

Table of Contents

~~LIQUIDITY~~The ~~AND~~maximum ~~CAPITAL~~consolidated ~~RESOURCES~~leverage ratio covenant effectively prohibits us from borrowing any amounts under the 2026 Credit Agreement when our consolidated EBITDA for the most recently completed measurement period is negative. As of the date of this report, the most recently completed measurement period was our first quarter ended January 31, 2026, during which our consolidated EBITDA was negative. In order to borrow in compliance with the maximum consolidated leverage ratio covenant set forth above, we are effectively prohibited from borrowing under the 2026 Credit Agreement until we have positive consolidated EBITDA for our most recently completed four fiscal quarters.

AtAs ~~July~~of January 31, ~~2025~~2026, weour ~~had~~credit ~~cash~~facilities ~~and~~consisted ~~cash equivalents~~ of ~~$44~~a €1.5 million, ~~compared~~revolving tocredit ~~$33.3~~facility ~~million~~in atGermany ~~October~~and ~~31, 2024. Approximately 21% of~~ the $4420.50 million ofsecured ~~cash~~revolving ~~and~~credit ~~cash equivalents was denominated in U.S. dollars. The balance was attributable to our foreign operations~~ and isletter ~~held in the local currencies~~ of ~~our~~credit ~~various foreign entities, subject to fluctuations in currency exchange rates~~facility. We dohad ~~not~~no ~~believe~~debt ~~that~~or ~~the~~borrowings ~~indefinite~~outstanding ~~reinvestment~~under any of ~~these funds offshore impairs~~ our ~~ability~~credit tofacilities ~~meet~~as ~~our~~of ~~domestic~~January ~~working~~31, ~~capital needs~~2026.

~~Working~~We ~~capital~~also ~~was~~have ~~$176.8~~an ~~million~~international atcash ~~July~~pooling ~~31,~~strategy ~~2025,~~that ~~compared~~generally toprovides ~~$180.8~~access ~~million~~to atavailable ~~October~~cash ~~31,~~deposits ~~2024.~~and ~~The~~credit ~~decrease~~facilities inwhen ~~working~~needed ~~capital was primarily driven by decreases~~ in ~~accounts~~the ~~receivable~~U.S., ~~net and inventories and increases in accounts payable and derivative liabilities~~Europe, ~~partially~~or ~~offset~~Asia ~~by increases in cash and cash equivalents and derivative assets~~Pacific.

~~Capital~~We ~~expenditures~~have ofborrowed only $21.36 million during the ~~nine~~fiscal ~~months~~years ofended ~~fiscal~~2015-2018 ~~year~~to ~~2025~~fund ~~were~~start-up ~~primarily~~costs ~~for~~related ~~software~~to ~~development~~expansion ~~costs~~in China and ~~capital~~have ~~improvements~~not inhad ~~existing~~any borrowings under any of our previous debt facilities at any other time over the previous ten fiscal years, even during prolonged recessionary industry cycles. WeWhile ~~funded~~we ~~these~~are ~~expenditures~~currently in the process of evaluating a longer-term global credit solution that aligns with our best interest, we believe our current cash on hand., expected cash flow from operations, access to cash pooling and our current credit facilities provide adequate liquidity to fund our global operations over the next twelve months and beyond, and allow us to remain committed to our strategic plan of product innovation, acquisitions, targeted penetration of developing markets, and a balanced capital allocation program.

On January 6, 2023, we announced approval of a share repurchase program in an aggregate amount of up to $25.0 million and later extended this program through November 10, 2026. Repurchases under the program may be made in the open market or through privately negotiated transactions from time to time, subject to applicable laws, regulations and contractual provisions. During the third quarter of fiscal 2025, we repurchased $2.0 million, or 104,472 common shares, under this program. As of July 31, 2025, we had repurchased $5.3 million, or 259,620 common shares, under this program since inception, leaving $19.7 million available for future repurchases thereunder.

On June 14, 2024, we announced a temporary suspension of our regular quarterly cash dividend as we seek to enhance our financial flexibility and improve our ability to manage market volatility while focusing on strengthening our balance sheet, reinvesting in our 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. Future dividends are subject to approval of our Board of Directors and will depend upon many factors, including our results of operations, financial condition, capital requirements, regulatory and contractual restrictions, our business strategy, and other factors deemed relevant by our Board of Directors from time to time.

On December 31, 2018, we and our subsidiary Hurco B.V. entered into the 2018 Credit Agreement with Bank of America, N.A., as the lender, which was subsequently amended on each of March 13, 2020, December 23, 2020, December 17, 2021, January 4, 2023 and December 19, 2023. The 2018 Credit Agreement provides for an unsecured revolving credit and letter of credit facility in a maximum aggregate amount of $40.0 million. The 2018 Credit Agreement provides that the maximum amount of outstanding letters of credit at any one time may not exceed $10.0 million, the maximum amount of outstanding loans made to our subsidiary Hurco B.V. at any one time may not exceed $20.0 million, and the maximum amount of all outstanding loans denominated in alternative currencies at any one time may not exceed $20.0 million. Under the 2018 Credit Agreement, we and Hurco B.V. are borrowers, and certain of our other subsidiaries are guarantors. The scheduled maturity date of the 2018 Credit Agreement is December 31, 2025.

Borrowings under the 2018 Credit Agreement bear interest at floating rates based on, at our option, either (i) a rate based upon the SOFR, the Sterling Overnight Index Average Reference Rate, the Euro Interbank Offering Rate, or another alternative currency-based rate approved by the lender, depending on the term of the loan and the currency in which such loan is denominated, plus 1.00% per annum, or (ii) a base rate (which is the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate or (c) the one month SOFR-based rate plus 1.00%), plus 0.00% per annum. Outstanding letters of credit will carry an annual rate of 1.00%.

The 2018 Credit Agreement contains customary affirmative and negative covenants and events of default, including covenants (1) restricting us from making certain investments, loans, advances and acquisitions (but permitting us to make investments in subsidiaries of up to $10.0 million); (2) restricting us from making certain payments, including (a) cash dividends, except that we may pay cash dividends as long as immediately before and after giving effect to such payment, the sum of the unused amount of the commitments under the 2018 Credit Agreement plus our cash on hand is not less than $10.0 million, and as long as we are not in default before and after giving effect to such dividend payments and (b) payments made to repurchase shares of our common stock, except that we may repurchase shares of our common stock as long as we are not in default before and after giving effect to such repurchases and the aggregate amount of payments made by us for all such repurchases during any fiscal year does not exceed $25.0 million; (3) requiring that we maintain a minimum working capital of $125.0 million; and (4) requiring that we maintain a minimum tangible net worth of $176.5 million. We may use the proceeds from advances under the 2018 Credit Agreement for general corporate purposes.

Table of Contents

In March 2019, our wholly-owned subsidiaries in Taiwan, HML, and China, NHML, closed on uncommitted revolving credit facilities with maximum aggregate amounts of 150 million New Taiwan Dollars and 32.5 million Chinese Yuan, respectively. As uncommitted facilities, both the Taiwan and China credit facilities are subject to review and termination by the respective underlying lending institution from time to time. In February and December 2023, NHML and HML, respectively, renewed the above-referenced credit facilities on substantially similar terms and identical maximum aggregate limits.

As of July 31, 2025, our existing credit facilities consisted of a €1.5 million revolving credit facility in Germany, the 150 million New Taiwan Dollars Taiwan credit facility, the 32.5 million Chinese Yuan China credit facility and the $40.0 million revolving credit facility under the 2018 Credit Agreement. We had no debt or borrowings under any of our credit facilities at July 31, 2025.

At July 31, 2025, we had an aggregate of approximately $51.2 million available for borrowing under our credit facilities and were in compliance with all covenants relating thereto.

We have an international cash pooling strategy that generally provides access to available cash deposits and credit facilities when needed in the U.S., Europe, or Asia Pacific. We believe our access to cash pooling and our borrowing capacity under our credit facilities provide adequate liquidity to fund our global operations over the next twelve months and beyond, and allow us to remain committed to our strategic plan of product innovation, acquisitions, targeted penetration of developing markets, and a balanced capital allocation program.

We continue to receive and review information on businesses and assets for potential acquisition, including intellectual property assets that are available for purchase.

CRITICAL ACCOUNTING ESTIMATES

Our MD&A is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles. The preparation of financial statements in conformity with those accounting principles requires us to make judgments and estimates that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Those judgments and estimates have a significant effect on the financial statements because they result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Actual results could differ from those estimates. Our critical accounting estimates, which are described in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2024~~2025, are frequently evaluated as our judgment and estimates are based upon historical experience and on various other assumptions that we believe to be reasonable under the circumstances. During the ~~nine~~first three months of fiscal year ~~2025~~2026, there were no material changes to our critical accounting estimates as described in the MD&A included in our Annual Report on Form 10-K for the year ended October 31, ~~2024~~2025.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

There have been no material changes related to our contractual obligations and commitments from the information provided in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2024~~2025.

OFF BALANCE SHEET ARRANGEMENTS

From time to time, our subsidiaries guarantee third party payment obligations in connection with the sale of machines to customers that use financing. We follow FASB guidance for accounting for guarantees (codified in ASC 460). As of ~~July~~January 31, ~~2025~~2026, we had four outstanding third party payment guarantees totaling approximately $0.4 million. The terms of these guarantees are consistent with the underlying customer financing terms. Upon shipment of a machine, the customer assumes the risk of ownership. The customer does not obtain title, however, until the customer has paid for the machine. A retention of title clause allows us to recover the machine if the customer defaults on the financing. We accrue liabilities under these guarantees at fair value, which amounts are insignificant.

Table of Contents

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements made in this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the statements.

Table of Contents

These risks, uncertainties and other factors include, but are not limited to:

•The cyclical nature of the machine tool industry;

•Uncertain economic conditions, which may adversely affect overall demand, in the Americas, Europe and Asia Pacific markets;

•The risks of our international operations;

•	Governmental actions, initiatives and regulations, including import and export restrictions, duties and tariffs and changes to tax laws;

•The effects of changes in currency exchange rates;

•Competition with larger companies that have greater financial resources;

•Our dependence on new product development;

•The need and/or ability to protect our intellectual property assets;

•The limited number of our manufacturing and supply chain sources;

•Increases in the prices of raw materials, especially steel and iron products;

•The effect of the loss of members of senior management and key personnel;

•Our ability to integrate acquisitions;

•Acquisitions that could disrupt our operations and affect operating results;

•Failure to comply with data privacy and security regulations;

•Breaches of our network and system security measures;

•Possible obsolescence of our technology and the need to make technological advances;

•Impairment of our assets;

•Negative or unforeseen tax consequences;

•Uncertainty concerning our ability to use tax loss carryforwards;

•Changes in the SOFR rate; and

•	The impact of the COVID-19 pandemic and other public health epidemics and pandemics on the global economy, our business and operations, our employees and the business, operations and economies of our customers and suppliers.

We discuss these and other important risks and uncertainties that may affect our future operations in Part I, Item 1A – Risk Factors in our most recent Annual Report on Form 10K and may update that discussion in Part II, Item 1A – Risk Factors in this report or in a Quarterly Report on Form 10 Q we file hereafter.

Readers are cautioned not to place undue reliance on these forward-looking statements. While we believe the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This cautionary statement is applicable to all forward-looking statements contained in this report.

2825

Table of Contents

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Interest on borrowings under our bank credit agreements are tied to prevailing domestic and foreign interest rates. At ~~July~~January 31, ~~2025~~2026, we had no borrowings outstanding under any of our credit facilities.

Foreign Currency Exchange Risk

In the ~~nine~~first three months of fiscal year ~~2025~~2026, we derived approximately 6261% of our revenues from customers located outside of the Americas, where we invoiced and received payments in several foreign currencies. All of our computerized machine tools and computer control systems, as well as certain proprietary service parts, are sourced by our U.S.-based engineering and manufacturing division and re-invoiced to our foreign sales and service subsidiaries, primarily in their functional currencies.

Our products are sourced from foreign suppliers or built to our specifications by either our wholly-owned subsidiaries in Taiwan, the U.S., and Italy or an affiliated contract manufacturer in Taiwan. Our purchases are predominantly in foreign currencies and in some cases our arrangements with these suppliers include foreign currency risk sharing agreements, which reduce (but do not eliminate) the effects of currency fluctuations on product costs. The predominant portion of the exchange rate risk associated with our product purchases relates to the New Taiwan Dollar and the Euro.

We enter into foreign currency forward exchange contracts from time to time to hedge the cash flow risk related to forecasted inter-company sales and purchases denominated in, or based on, foreign currencies (primarily the Euro, Pound Sterling, and New Taiwan Dollar). We also enter into foreign currency forward exchange contracts to protect against the effects of foreign currency fluctuations on inter-company receivables, payables, and loans denominated in foreign currencies. We do not speculate in the financial markets and, therefore, do not enter into these contracts for trading purposes.

Forward contracts for the sale or purchase of foreign currencies as of ~~July~~January 31, ~~2025~~2026, which are designated as cash flow hedges under FASB guidance related to accounting for derivative instruments and hedging activities, were as follows (in thousands, except weighted average forward rates):


				Contract Amount at
	Notional	Weighted		Forward Rates in
	Amount	Avg.		U.S. Dollars
Forward	in Foreign	Forward		Contract	~~July~~January 31,
Contracts	Currency	Rate		Date	~~2025~~2026	Maturity Dates
Sale Contracts:
Euro	56,~~000~~300	1.~~1071~~1659		57,~~535~~345	57,~~763~~541	~~Aug~~Feb ~~2025~~2026 - ~~Jul~~Jan ~~2026~~2027
Sterling	2,~~950~~900	1.~~2883~~3395		3,~~801~~885	3,~~908~~975	~~Aug~~Feb ~~2025~~2026 - ~~Jul~~Jan ~~2026~~2027

Purchase Contracts:
New Taiwan Dollar	~~485~~600,000	3029.~~0091~~9820	*	1620,~~162~~012	1619,~~587~~117	~~Aug~~Feb ~~2025~~2026 - ~~Jul~~Jan ~~2026~~2027

* New Taiwan Dollars per U.S. dollar

Forward contracts for the sale or purchase of foreign currencies as of July 31, 2025, which were entered into to protect against the effects of foreign currency fluctuations on receivables and payables denominated in foreign currencies and are not designated as hedges under FASB guidance, were as follows (in thousands, except weighted average forward rates):26

Table of Contents


				Contract Amount at
	Notional	Weighted		Forward Rates in
	Amount	Avg.		U.S. Dollars
Forward	in Foreign	Forward		Contract	July 31,
Contracts	Currency	Rate		Date	2025	Maturity Dates
Sale Contracts:
Euro	14,397	1.0851		15,622	16,575	Aug 2025 - Dec 2025

Purchase Contracts:
New Taiwan Dollar	1,378,415	30.8336	*	44,705	46,442	Aug 2025 - Mar 2026

Forward contracts for the sale or purchase of foreign currencies as of January 31, 2026, which were entered into to protect against the effects of foreign currency fluctuations on receivables and payables denominated in foreign currencies and are not designated as hedges under FASB guidance, were as follows (in thousands, except weighted average forward rates):


				Contract Amount at
	Notional	Weighted		Forward Rates in
	Amount	Avg.		U.S. Dollars
Forward	in Foreign	Forward		Contract	January 31,
Contracts	Currency	Rate		Date	2026	Maturity Dates
Sale Contracts:
Euro	9,404	1.1821		11,117	11,242	Feb 2026 - Jul 2026

Purchase Contracts:
New Taiwan Dollar	1,411,672	30.2379	*	46,686	45,029	Feb 2026 - Sep 2026

* New Taiwan Dollars per U.S. dollar

We are also exposed to foreign currency exchange risk related to our investment in net assets in foreign countries. To manage this risk, we have maintained a forward contract with a notional amount of €3.0 million. We designated this forward contract as a hedge of our net investment in Euro-denominated assets. We selected the forward method under FASB guidance related to the accounting for derivative instruments and hedging activities. The forward method requires all changes in the fair value of the contract to be reported as a cumulative translation adjustment in Accumulated other comprehensive loss, net of tax, in the same manner as the underlying hedged net assets. This forward contract matures in November ~~2025~~2026. As of ~~July~~January 31, ~~2025~~2026, we had a realized gain of $1.20 million and an unrealized loss of $0.1 million, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss related to the hedging of our net investment in Euro-denominated assets. Forward contracts for the sale or purchase of foreign currencies as of ~~July~~January 31, ~~2025~~2026, which are designated as net investment hedges under this guidance, were as follows (in thousands, except weighted average forward rates):



	Notional	Weighted	Contract Amount at Forward Rates in
	Amount	Avg.	U.S. Dollars
Forward	in Foreign	Forward	Contract	~~July~~January 31,	Maturity
Contracts	Currency	Rate	Date	~~2025~~2026	Date
Sale Contracts:
Euro	3,000	1.~~1005~~1723	3,~~302~~517	3,~~448~~605	Nov ~~2025~~2026

Item 4. CONTROLS AND PROCEDURES

We conducted an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~July~~January 31, ~~2025~~2026, pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of the evaluation date.

There were no changes in our internal control over financial reporting during the three months ended ~~July~~January 31, ~~2025~~2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3027

Table of Contents

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Item 1A. RISK FACTORS

~~Except~~There ~~as set forth below, there~~ have been no material changes from the risk factors disclosed in Part I, Item 1A – Risk Factors in our Annual Report on Form 10- K for the year ended October 31, ~~2024~~2025. ~~The following new risk factor is added:~~

Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business, financial condition, and results of operations.

The U.S. government has adopted new approaches to trade policy, and in some cases may renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. The U.S. government has also imposed tariffs on most foreign goods and has raised the possibility of imposing significant tariff increases or expanding the tariffs to capture other countries and types of goods. Tariffs on imports from nations from whom we procure products or materials and components used in our manufacturing process could increase our operating costs and/or require us to incur significant costs to transition to alternative manufacturers or suppliers. Future tariff increases, expanding the tariffs to cover other countries or other changes in U.S. trade policy could exacerbate these challenges.

In addition, in response to these tariffs, other countries have threatened, announced or implemented retaliatory tariffs on U.S. goods. Political tensions and uncertainty as a result of trade policies and ongoing judicial challenges to such policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets, which could in turn have a material adverse impact on our business, financial condition and results of operations.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

OnWe ~~January~~did 6, 2023, we announced a share repurchase program in an aggregate amount of up to $25.0 million. Repurchases under the program may be made in the open market or through privately negotiated transactions from time to time through November 10, 2026, subject to applicable laws, regulations, and contractual provisions. The program may be amended, suspended, or discontinued at any time and does not ~~commit us to~~ repurchase any shares of our common stock. ~~During~~in the ~~three~~first ~~months~~quarter ~~ended July 31, 2025, we repurchased $2.0 million, or 104,472 shares, under that program, and $19.7 million remained available under the program as~~ of ~~that~~fiscal ~~date.~~year ~~The table below summarizes the repurchase of our common stock made by us during the three months ended July 31, 2025~~2026.


							Approximate
					Total Number of		Dollar Value of
					Shares		Shares that
					Purchased as		May Yet Be
					Part of Publicly		Purchased
	Total Number		Average Price		Announced		Under Plans or
	of Shares		Paid per		Plans or		Programs
	Purchased		Share		Programs(1)		($ in thousands)
May 1-31, 2025	—	$	—		—	$	21,688
June 1-30, 2025	36,275	$	18.16	(1)	36,275	$	21,029
July 1-31, 2025	68,197	$	19.74	(1)	68,197	$	19,682
Total	104,472				104,472

(1) Reflects the average weighted price of the shares repurchased as part of the publicly announced programs and includes commissions paid related to our repurchase of shares of common stock.

Table of Contents

Item 5. OTHER INFORMATION

During the period covered by this report, the Audit Committee of our Board of Directors engaged our independent registered public accounting firm to perform non-audit, tax planning services. This disclosure is made pursuant to Section 10A(i)(2) of the Exchange Act, as added by Section 202 of the Sarbanes-Oxley Act of 2002.

During the three months ended ~~July~~January 31, ~~2025~~2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in the Securities and Exchange Commission’s rules).

Table of Contents

Item 6. EXHIBITS

EXHIBIT INDEX

3.1		Amended and Restated Articles of Incorporation of the Registrant, as amended effective March 15, 2024, incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10 -Q for the quarter ended April 30, 2024.
3.2		Amended and Restated By-Laws of the Registrant, as amended through March 15, 2024, incorporated by reference to Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2024.

10.1		Credit Agreement, dated as of January 5, 2026, among Hurco Companies, Inc., as the Borrower, certain subsidiaries party thereto, as the Guarantors, the Lenders party thereto and Bank of America, N.A., as the Administrative Agent, incorporated by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
31.1		Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
31.2		Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
32.1		Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended ~~July~~January 31, ~~2025~~2026, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Changes in Shareholders’ Equity; (vi) Notes to Condensed Consolidated Financial Statements; and (vii) information regarding trading arrangements set forth in Part II, Item 5.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

3229

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HURCO COMPANIES, INC.


	By:	/s/ Sonja K. McClelland
		Sonja K. McClelland
		Executive Vice President, Treasurer & Chief Financial Officer
		~~September~~March 56, ~~2025~~2026

3330

Filing Compare · HURCO COMPANIES INC