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Hurco Companies Inc. Message Board

  • algo41 algo41 Mar 6, 2013 6:20 PM Flag

    inventory

    does anyone know why they carry so much inventory? cost of goods sold was 31 mil and inventory was 91 million.

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    • Inventory may be higher at the end of the quarter due to the timing issue of some deliveries to Europe, per the company's press release:
      "The decrease in net income was primarily due to a 14% reduction in reported sales, resulting from a shift in the timing of shipments between quarters, particularly in Europe. However, orders during the first quarter of fiscal 2013 were 5% higher than in the corresponding period of fiscal 2012."

    • I wonder if a better way to look at it is the cost of sales for the year (2012 was $140 million) compared to the relatively constant $90 million in inventories. The long lead time on the machines may be the driving factor.

    • Good question. I went back and looked at a few report from as far back as 2007. Inventories were all at pretty high ratios to cost of sales, but this Q seems larger even that usual. They were mostly in the $50 to $60 million range. Just a guess, but I think some of the factors would be the cost of the machines ($50,000 to over $500,000), the fact they are manufactured in China and shipped around the world, etc. I am also wondering if the inventories are higher than usual now because they anticipate improved sales and are getting more inventory to meet hoped for sales. I would assume the lead time on a $500,000 machine could be 6 months if you were starting from scratch. Haven't found any info yet on whether this number is machines in progress or completed machines. Anyone else have insight on this? Thanks.

 
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