Hurco Companies Inc. officials reported for its first fiscal quarter ended January 31, 2012, net income of $4,633,000, or $0.71 per diluted share, an increase of $3,087,000, or 200%, when compared to net income of $1,546,000, or $0.24 per diluted share, for the first quarter of fiscal 2011. The accelerated improvement in net income was due primarily to increased sales and the resulting leveraging of fixed costs across those sales.
Sales and service fees for the first quarter of fiscal 2012 totaled $51,126,000, an increase of $11,446,000, or 29%, from the first quarter of fiscal 2011, reflecting the continued improvement in demand the company has experienced since the beginning of fiscal 2011. The effect of a stronger U.S. dollar when translating foreign sales to U.S. dollars for financial reporting purposes had an unfavorable impact of approximately 1%, or $385,000, on the period-to-period comparison.
The increase in sales was driven by higher customer demand, particularly in Europe, as a result of the rebound in industrial manufacturing activity that began during the first quarter of fiscal 2011. Compared to the prior year period, unit shipments for the first quarter of fiscal 2012 increased in North America by 4%, in Europe by 25%, and in the Asia Pacific sales region by 26%.
Orders for the first quarter of fiscal 2012 were $48.9 million, an increase of $4.6 million, or 10%, from the corresponding period in fiscal 2011. The impact of currency translation on orders was consistent with the impact on sales. Unit orders for the first quarter of fiscal 2012 increased 3% in North America, but decreased 4% in Europe and 13% in the Asia Pacific region compared to the prior year period. During the first and second quarters of fiscal 2011, the company experienced a significant upturn in business, reflected in unit orders for those quarters. While unit orders for the first quarter of fiscal 2012 did not outpace the rebound in orders the company experienced during the first two quarters of fiscal 2011, unit orders for the quarter did outpace the last two consecutive quarters by 20% and 22%, respectively. This was primarily due to increased demand in North America and Europe where industrial markets continue to experience recoveries.
Gross profit for the first quarter of fiscal 2012 was $16,484,000, or 32% of sales, compared to $11,691,000, or 29% of sales, for the prior year period. The increase in gross profit was primarily the result of increased sales in Europe and North America and the resulting leveraging of fixed costs across those sales.
Selling, general, and administrative expenses were $9,730,000 for the first quarter of fiscal 2012, an increase of $900,000, or 10%, from the first quarter of fiscal 2011. The increase is primarily related to higher sales commissions and sales and marketing expenses. Despite the dollar increase, selling, general, and administrative expenses were 19% of sales and service fees during the first quarter of fiscal 2012 compared to 22% for the first quarter of fiscal 2011 because of the resulting leveraging of operating costs across higher sales.
Cash and cash equivalents totaled $42,667,000 as of January 31, 2012, compared to $44,961,000 as of October 31, 2011. Working capital, excluding cash, was $70,659,000 as of January 31, 2012, compared to $61,885,000 as of October 31, 2011. The increase in working capital, excluding cash, was primarily due to an increase in accounts receivable and a decrease in accounts payable and accrued expenses during the first quarter of fiscal 2012. Accounts receivable increased due to the higher volume of sales, while accounts payable and accrued expenses decreased due to the timing of vendor payments and payments of employee bonuses for fiscal 2011 performance. Inventory levels were relatively unchanged from October 31, 2011 to January 31, 2012.
Michael Doar, chairman, chief executive officer, and president, states, "The first quarter of fiscal 2012 proved successful with a 29% increase in sales. The performance of each division was impressive as North America reported record sales; Europe continued its strong performance despite the European debt situation; and the Asia Pacific region reported their second highest sales figures in Hurco's history. The sales growth in Asia was particularly impressive considering that our first quarter included the Chinese New Year, which is the longest and most important holiday in the region. It is exciting to see that more customers around the world are relying on Hurco technology to keep their businesses competitive and profitable."