HURCO COMPANIES INC 10-Q

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 31, ​ July 31, ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ (unaudited) ​ ​ (unaudited) Sales and service fees ​ $ 47,289 ​ $ 45,806 ​ $ 137,775 ​ $ 133,087 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales and service ​ 34,106 ​ ​ 36,694 ​ 106,323 ​ ​ 107,856 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ 13,183 ​ ​ 9,112 ​ 31,452 ​ ​ 25,231 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative expenses ​ 10,889 ​ ​ 10,762 ​ 33,127 ​ ​ 32,041 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income (loss) ​ 2,294 ​ ​ ( 1,650 ) ​ ( 1,675 ) ​ ​ ( 6,810 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ 25 ​ ​ 4 ​ 61 ​ ​ 66 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 86 ​ ​ 58 ​ 199 ​ ​ 239 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment income ​ 95 ​ ​ 13 ​ 204 ​ ​ 186 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense), net ​ 296 ​ ​ ( 1,543 ) ​ ( 525 ) ​ ​ ( 2,499 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) before taxes ​ 2,746 ​ ​ ( 3,126 ) ​ ( 1,858 ) ​ ​ ( 8,950 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 432 ​ ​ 567 ​ 1,668 ​ ​ 3,126 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 2,314 ​ $ ( 3,693 ) ​ $ ( 3,526 ) ​ $ ( 12,076 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) per common share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.35 ​ $ ( 0.58 ) ​ $ ( 0.55 ) ​ $ ( 1.87 ) Diluted ​ $ 0.35 ​ $ ( 0.58 ) ​ $ ( 0.55 ) ​ $ ( 1.87 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 6,476 ​ ​ 6,463 ​ ​ 6,456 ​ ​ 6,474 Diluted ​ ​ 6,497 ​ ​ 6,463 ​ ​ 6,456 ​ ​ 6,474 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of the condensed consolidated financial statements. ​ 3 Table of Contents HURCO COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ July 31, ​ July 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ (unaudited) ​ ​ (unaudited) Net income (loss) ​ $ 2,314 ​ $ ( 3,693 ) ​ $ ( 3,526 ) ​ $ ( 12,076 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Translation (loss) gain of foreign currency financial statements ​ ( 2,901 ) ​ ​ 5,462 ​ ( 3,448 ) ​ ​ 8,129 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Gain) / loss on derivative instruments reclassified into operations, net of tax (expense) / benefit of $ 10 , $ 91 , $ 108 and $ 333 , respectively ​ 34 ​ ​ 304 ​ 362 ​ ​ 1,111 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain / (loss) on derivative instruments, net of tax expense / (benefit) of ($ 38 ), $ 163 , ($ 314 ) and $ 11 , respectively ​ ( 129 ) ​ ​ 544 ​ ( 1,049 ) ​ ​ 37 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total other comprehensive income (loss) ​ ( 2,996 ) ​ ​ 6,310 ​ ( 4,135 ) ​ ​ 9,277 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive income (loss) ​ $ ( 682 ) ​ $ 2,617 ​ $ ( 7,661 ) ​ $ ( 2,799 ) ​ The accompanying notes are an integral part of the condensed consolidated financial statements. ​ 4 Table of Contents HURCO COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, ​ October 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ASSETS ​ (unaudited) ​ ​ ​ Current assets: ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 52,087 ​ $ 48,713 Accounts receivable, net ​ 26,845 ​ ​ 27,928 Inventories ​ 136,616 ​ ​ 142,931 Derivative assets ​ 251 ​ ​ 263 Prepaid and other assets ​ 6,905 ​ ​ 5,243 Total current assets ​ 222,704 ​ ​ 225,078 Property and equipment: ​ ​ ​ ​ ​ Land ​ 1,046 ​ ​ 1,046 Building ​ 7,381 ​ ​ 7,381 Machinery and equipment ​ 23,993 ​ ​ 26,061 Leasehold improvements ​ 4,273 ​ ​ 4,569 ​ ​ 36,693 ​ ​ 39,057 Less accumulated depreciation and amortization ​ ( 29,536 ) ​ ​ ( 31,083 ) Total property and equipment, net ​ 7,157 ​ ​ 7,974 Non–current assets: ​ ​ ​ ​ ​ Software development costs, less accumulated amortization ​ 9,393 ​ ​ 8,090 Intangible assets, net ​ 346 ​ ​ 627 Operating lease - right of use assets, net ​ ​ 9,455 ​ ​ 11,560 Deferred income taxes ​ 744 ​ ​ 794 Investments ​ 9,037 ​ ​ 9,005 Other assets ​ 1,184 ​ ​ 1,170 Total non–current assets ​ 30,159 ​ ​ 31,246 Total assets ​ $ 260,020 ​ $ 264,298 LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accounts payable ​ $ 29,207 ​ $ 26,074 Customer deposits ​ ​ 7,537 ​ ​ 4,788 Derivative liabilities ​ ​ 1,818 ​ ​ 3,084 Operating lease liabilities ​ ​ 4,124 ​ ​ 4,374 Accrued payroll and employee benefits ​ 7,467 ​ ​ 7,474 Accrued income taxes ​ 989 ​ ​ 1,472 Accrued expenses ​ 3,774 ​ ​ 3,790 Accrued warranty expenses ​ 1,071 ​ ​ 967 Total current liabilities ​ 55,987 ​ ​ 52,023 Non–current liabilities: ​ ​ ​ ​ ​ Deferred income taxes ​ 37 ​ ​ 38 Operating lease liabilities ​ ​ 5,716 ​ ​ 7,560 Deferred credits and other ​ ​ 5,991 ​ ​ 5,890 Total non–current liabilities ​ ​ 11,744 ​ ​ 13,488 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; 6,675,629 and 6,569,224 shares issued and 6,476,322 and 6,402,396 shares outstanding, as of July 31, 2026 and October 31, 2025, respectively ​ ​ 648 ​ ​ 640 Additional paid-in capital ​ 62,213 ​ ​ 60,850 Retained earnings ​ 142,779 ​ ​ 146,305 Accumulated other comprehensive loss ​ ( 13,351 ) ​ ​ ( 9,008 ) Total shareholders’ equity ​ 192,289 ​ ​ 198,787 Total liabilities and shareholders’ equity ​ $ 260,020 ​ $ 264,298 ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of the condensed consolidated financial statements. 5 Table of Contents HURCO COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ July 31, ​ July 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ (unaudited) ​ (unaudited) Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 2,314 ​ $ ( 3,693 ) ​ $ ( 3,526 ) ​ $ ( 12,076 ) Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for doubtful accounts ​ ( 9 ) ​ ​ ( 125 ) ​ 10 ​ ​ ( 134 ) Deferred income taxes ​ ( 226 ) ​ ​ ( 1,623 ) ​ ( 2,412 ) ​ ​ ( 4,000 ) Deferred income tax valuation allowance ​ ​ 161 ​ ​ 1,639 ​ ​ 2,283 ​ ​ 5,294 Equity in (income) loss of affiliates ​ ( 35 ) ​ ​ 179 ​ ( 165 ) ​ ​ 48 Foreign currency (gain) loss ​ ​ ( 1,009 ) ​ ​ 3,099 ​ ​ ( 2,601 ) ​ ​ 2,552 Unrealized (gain) loss on derivatives ​ ( 654 ) ​ ​ ( 813 ) ​ ( 1,258 ) ​ ​ ( 914 ) Depreciation and amortization ​ 484 ​ ​ 642 ​ 1,570 ​ ​ 2,000 Stock–based compensation ​ 576 ​ ​ 578 ​ 1,642 ​ ​ 1,629 Change in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Increase) decrease in accounts receivable ​ 463 ​ ​ ( 1,638 ) ​ 184 ​ ​ 9,754 (Increase) decrease in inventories ​ ( 1,373 ) ​ ​ 1,467 ​ 4,821 ​ ​ 11,099 (Increase) decrease in prepaid and other assets ​ ( 702 ) ​ ​ 185 ​ ( 2,187 ) ​ ​ ( 1,182 ) Increase (decrease) in accounts payable ​ 3,062 ​ ​ 2,489 ​ 3,991 ​ ​ 1,104 Increase (decrease) in customer deposits ​ ( 181 ) ​ ​ 820 ​ 2,900 ​ ​ 80 Increase (decrease) in accrued expenses ​ 237 ​ ​ ( 288 ) ​ 35 ​ ​ ( 461 ) Increase (decrease) in accrued payroll and employee benefits ​ ​ 157 ​ ​ ( 145 ) ​ ​ ( 3 ) ​ ​ ( 967 ) Increase (decrease) in accrued income tax ​ ​ ( 37 ) ​ ​ ( 244 ) ​ ​ ( 458 ) ​ ​ 726 Net change in deferred tax assets and liabilities ​ 365 ​ ​ 47 ​ 631 ​ ​ 172 Net change in derivative assets and liabilities ​ ​ 78 ​ ​ 171 ​ ​ ( 202 ) ​ ​ ( 63 ) Other ​ 134 ​ ​ ( 209 ) ​ 72 ​ ​ ( 789 ) Net cash provided by (used for) operating activities ​ 3,805 ​ ​ 2,538 ​ 5,327 ​ ​ 13,872 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from sale of property and equipment ​ — ​ ​ 69 ​ 151 ​ ​ 245 Purchase of property and equipment ​ ( 331 ) ​ ​ ( 470 ) ​ ( 580 ) ​ ​ ( 871 ) Software development costs ​ ​ ( 703 ) ​ ​ ( 462 ) ​ ( 1,792 ) ​ ​ ( 1,417 ) Cash received from sale of a business ​ ​ — ​ ​ — ​ ​ 1,165 ​ ​ — Other investments ​ — ​ ​ 118 ​ — ​ ​ 118 Net cash provided by (used for) investing activities ​ ( 1,034 ) ​ ​ ( 745 ) ​ ( 1,056 ) ​ ​ ( 1,925 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock repurchases ​ ​ — ​ ​ ( 2,000 ) ​ ​ — ​ ​ ( 2,000 ) Taxes paid related to net settlement of restricted shares ​ — ​ ​ — ​ ( 271 ) ​ ​ ( 352 ) Net cash provided by (used for) financing activities ​ — ​ ​ ( 2,000 ) ​ ( 271 ) ​ ​ ( 2,352 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ ( 739 ) ​ ​ 894 ​ ( 626 ) ​ ​ 1,569 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase (decrease) in cash and cash equivalents ​ 2,032 ​ ​ 687 ​ 3,374 ​ ​ 11,164 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents at beginning of period ​ 50,055 ​ ​ 43,807 ​ 48,713 ​ ​ 33,330 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents at end of period ​ $ 52,087 ​ $ 44,494 ​ $ 52,087 ​ $ 44,494 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest ​ $ — ​ $ — ​ $ — ​ $ — Income taxes, net ​ $ 543 ​ $ 813 ​ $ 1,406 ​ $ 1,586 ​ The accompanying notes are an integral part of the condensed consolidated financial statements. ​ 6 Table of Contents HURCO COMPANIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In thousands, except shares outstanding) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended July 31, 2026 and 2025 ​ ​ (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ Paid–in ​ Retained ​ Comprehensive ​ ​ ​ (unaudited) ​ ​ ​ Outstanding ​ ​ ​ Amount ​ ​ ​ Capital ​ ​ ​ Earnings ​ ​ ​ Income (Loss) ​ ​ ​ Total Balances, April 30, 2025 ​ 6,506,868 ​ $ 651 ​ $ 62,192 ​ $ 153,039 ​ $ ( 13,602 ) ​ $ 202,280 Net income (loss) ​ — ​ ​ — ​ ​ — ​ ​ ( 3,693 ) ​ — ​ ​ ( 3,693 ) Other comprehensive income (loss) ​ — ​ ​ — ​ ​ — ​ ​ — ​ 6,310 ​ ​ 6,310 Deferred income tax valuation allowances ​ — ​ ​ — ​ ​ — ​ ​ — ​ 197 ​ ​ 197 Stock–based compensation expense, net of taxes withheld for vested restricted shares ​ — ​ ​ — ​ ​ 578 ​ ​ — ​ — ​ ​ 578 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances, April 30, 2026 ​ 6,484,478 ​ $ 648 ​ $ 61,637 ​ $ 140,465 ​ $ ( 10,331 ) ​ $ 192,419 Net income (loss) ​ — ​ ​ — ​ ​ — ​ ​ 2,314 ​ ​ — ​ ​ 2,314 Other comprehensive income (loss) ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,996 ) ​ ​ ( 2,996 ) Deferred income tax valuation allowances ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 24 ) ​ ​ ( 24 ) Stock–based compensation expense, net of taxes withheld for vested restricted shares ​ ( 8,156 ) ​ ​ — ​ ​ 576 ​ ​ — ​ ​ — ​ ​ 576 Balances, July 31, 2026 ​ 6,476,322 ​ $ 648 ​ $ 62,213 ​ $ 142,779 ​ $ ( 13,351 ) ​ $ 192,289 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended July 31, 2026 and 2025 ​ ​ (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ Paid–in ​ Retained ​ Comprehensive ​ ​ ​ ​ ​ ​ ​ Outstanding ​ ​ ​ Amount ​ ​ ​ Capital ​ ​ ​ Earnings ​ ​ ​ Income (Loss) ​ ​ ​ Total 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances, October 31, 2025 ​ 6,402,396 ​ $ 640 ​ $ 60,850 ​ $ 146,305 ​ $ ( 9,008 ) ​ $ 198,787 Net income (loss) ​ — ​ ​ — ​ ​ — ​ ​ ( 3,526 ) ​ ​ — ​ ​ ( 3,526 ) Other comprehensive income (loss) ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 4,135 ) ​ ​ ( 4,135 ) Deferred income tax valuation allowances ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 208 ) ​ ​ ( 208 ) Stock–based compensation expense, net of taxes withheld for vested restricted shares ​ 73,926 ​ ​ 8 ​ ​ 1,363 ​ ​ — ​ ​ — ​ ​ 1,371 Balances, July 31, 2026 ​ 6,476,322 ​ $ 648 ​ $ 62,213 ​ $ 142,779 ​ $ ( 13,351 ) ​ $ 192,289 The accompanying notes are an integral part of the condensed consolidated financial statements. ​ 7 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 31, 2026, and for the three and nine months ended July 31, 2026, and July 31, 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, 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. ​ 8 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 intercompany 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 intercompany 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 31, 2026, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from August 2026 through July 2027 . The contract amounts, expressed at forward rates in U.S. dollars at July 31, 2026, were $ 8.0 million for Euros, $ 7.4 million for Pounds Sterling, and $ 20.7 million for New Taiwan Dollars. At July 31, 2026, we had $ 1.0 million of realized loss, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive loss. Included in this amount was $ 0.6 million of unrealized loss, net of tax, related to cash flow hedge instruments that remain subject to currency fluctuation risk. The majority of these deferred losses will be recorded as an adjustment to Cost of sales and service in periods through July 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 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 2026 . As of July 31, 2026, we had a realized gain of $ 1.0 million and an unrealized gain of less than $ 0.1 million, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss related to this forward contract. ​ 9 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 intercompany prepayments, 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), 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. ​ We had forward contracts outstanding as of July 31, 2026, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from August 2026 through June 2027 . The contract amounts, expressed at forward rates in U.S. dollars at July 31, 2026, totaled $ 51.2 million. ​ 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 31, 2026, and October 31, 2025, all derivative instruments were recorded at fair value on our Condensed Consolidated Balance Sheets as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, 2026 ​ October 31, 2025 ​ ​ Balance Sheet ​ Fair ​ Balance Sheet ​ Fair Derivatives ​ ​ ​ Location ​ ​ ​ Value ​ ​ ​ Location ​ ​ ​ Value Designated as Hedging Instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange forward contracts ​ Derivative assets ​ $ 167 ​ Derivative assets ​ $ 215 Foreign exchange forward contracts ​ Derivative liabilities ​ $ 895 ​ Derivative liabilities ​ $ 945 ​ ​ ​ ​ ​ ​ ​ ​ ​ Not Designated as Hedging Instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange forward contracts ​ Derivative assets ​ $ 84 ​ Derivative assets ​ $ 48 Foreign exchange forward contracts ​ Derivative liabilities ​ $ 923 ​ Derivative liabilities ​ $ 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 31, 2026 and 2025 (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 Derivatives ​ Income (Loss) ​ Income (Loss) ​ Income (Loss) ​ ​ Three Months Ended ​ ​ ​ Three Months Ended ​ ​ July 31, ​ ​ ​ July 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Designated as Hedging Instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Effective portion) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange forward contracts – Intercompany sales/purchases ​ $ ( 129 ) ​ $ 544 ​ Cost of sales and service ​ $ ( 34 ) $ ( 304 ) Foreign exchange forward contract – Net investment ​ $ 58 ​ $ ( 5 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ 10 Table of Contents We did no t recognize any gains or losses as a result of hedges deemed ineffective for either of the three months ended July 31, 2026 or 2025. We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the three months ended July 31, 2026 and 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 31, ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Not Designated as Hedging Instruments: ​ ​ ​ ​ ​ Foreign exchange forward contracts Other income (expense), net ​ $ 27 $ 2,395 ​ The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended July 31, 2026 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign Currency ​ Cash Flow ​ ​ ​ ​ ​ ​ ​ Translation ​ Hedges ​ ​ ​ Total Balance, April 30, 2026 ​ $ ( 8,781 ) ​ $ ( 1,550 ) ​ $ ( 10,331 ) Other comprehensive income (loss) before reclassifications ​ ( 2,901 ) ​ ​ ( 129 ) ​ ( 3,030 ) Reclassifications ​ — ​ ​ 34 ​ 34 Deferred income tax valuation allowances ​ — ​ ​ ( 24 ) ​ ( 24 ) Balance, July 31, 2026 ​ $ ( 11,682 ) ​ $ ( 1,669 ) ​ $ ( 13,351 ) ​ 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, 2026 and 2025 (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 ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Designated as Hedging Instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Effective Portion) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange forward contracts – Intercompany sales/purchases ​ $ ( 1,049 ) ​ $ 37 ​ Cost of sales and service ​ $ ( 362 ) $ ( 1,111 ) ​ Foreign exchange forward contract – Net investment ​ $ 37 ​ $ ( 101 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 11 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, 2026 or 2025. We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the nine months ended July 31, 2026 and 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 ​ ​ ​ ​ ​ Nine Months Ended ​ ​ ​ ​ ​ July 31, ​ Derivatives ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Not Designated as Hedging Instruments: ​ ​ ​ ​ ​ Foreign exchange forward contracts Other income (expense), net ​ $ ( 2,286 ) $ 618 ​ The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the nine months ended July 31, 2026 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ Cash ​ ​ ​ ​ ​ Currency ​ Flow ​ ​ ​ ​ ​ ​ ​ Translation ​ ​ ​ Hedges ​ ​ ​ Total Balance, October 31, 2025 ​ $ ( 8,234 ) ​ $ ( 774 ) ​ $ ( 9,008 ) Other comprehensive income (loss) before reclassifications ​ ( 3,448 ) ​ ( 1,049 ) ​ ( 4,497 ) Reclassifications ​ — ​ 362 ​ 362 Deferred income tax valuation allowances ​ — ​ ( 208 ) ​ ( 208 ) Balance, July 31, 2026 ​ $ ( 11,682 ) ​ $ ( 1,669 ) ​ $ ( 13,351 ) ​ ​ ​ ​ ​ ​ 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 increased 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 12, 2026, the Compensation Committee granted a total of 38,024 shares of time-based restricted stock to our non-employee directors. The restricted shares vest in full one year from the date of grant provided the recipient remains on the board of directors through that date. The grant date fair value of the restricted shares was based on the closing sales price of our common stock on the grant date, which was $ 14.725 per share. ​ 12 Table of Contents On January 6, 2026, the Compensation Committee approved a long-term incentive compensation arrangement for our executive officers in the form of time-based restricted shares and performance stock units (“PSUs”), which will be payable in shares of our common stock if earned and vested. The awards were approximately 45 % time-based vesting and approximately 55 % performance-based vesting. The three-year performance period for the PSUs is fiscal year 2026 through fiscal year 2028. ​ On 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. ​ On January 6, 2026, the Compensation Committee 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 and will vest and be paid based upon the achievement of pre-established goals related to our average net income over the three-year period of fiscal years 2026-2028. Participants will have the ability to earn between 50 % of the target number of the PSUs – NI for achieving threshold performance and 200 % of the target number of the PSUs – NI for achieving maximum performance. The grant date fair value of the PSUs – NI was based on the closing sales price of our common stock on the grant date, which was $ 16.29 per PSU. ​ On January 6, 2026, the Compensation Committee also granted a total target number of 36,940 PSUs to our executive officers designated as “PSU – FCF”. These PSUs were weighted as approximately 25 % of the overall 2026 executive long-term incentive compensation arrangement and will vest and 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 2026-2028. 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 date, which was $ 16.29 per PSU. ​ On November 12, 2025, the Compensation Committee granted a total of 20,260 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 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 $ 16.65 per share. ​ A reconciliation of our restricted stock and PSU activity and related information for the nine-month period ended July 31, 2026 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Grant ​ ​ ​ ​ Number of Shares ​ ​ ​ Date Fair Value Unvested at October 31, 2025 456,496 ​ $ 21.58 Shares or units granted 206,042 ​ ​ 16.04 Shares or units vested ( 73,926 ) ​ ​ 19.39 Shares or units cancelled ( 89,983 ) ​ ​ 26.24 Shares withheld ( 16,516 ) ​ ​ 21.70 Unvested at July 31, 2026 482,113 ​ $ 18.67 ​ During the first nine months of each of fiscal years 2026 and 2025, we recorded approximately $ 1.6 million of stock-based compensation expense related to grants under the 2016 Equity Plan. As of July 31, 2026, there was an estimated $ 3.0 million of total unrecognized stock-based compensation cost that we expect to recognize by the end of the first quarter of fiscal year 2029. ​ 13 Table of Contents 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 weighted average number of shares outstanding as the denominator as follows (in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ July 31, ​ July 31, ​ ​ 2026 ​ 2025 ​ 2026 ​ 2025 ​ ​ ​ ​ Basic ​ ​ ​ Diluted ​ ​ ​ Basic ​ ​ ​ Diluted ​ ​ ​ Basic ​ ​ ​ Diluted ​ ​ ​ Basic ​ ​ ​ Diluted Net income (loss) ​ $ 2,314 ​ $ 2,314 ​ $ ( 3,693 ) ​ $ ( 3,693 ) ​ $ ( 3,526 ) ​ $ ( 3,526 ) ​ $ ( 12,076 ) ​ $ ( 12,076 ) Undistributed earnings allocated to participating shares ​ ( 69 ) ​ ( 69 ) ​ — ​ — ​ — ​ — ​ — ​ — Net income (loss) applicable to common shareholders ​ $ 2,245 ​ $ 2,245 ​ $ ( 3,693 ) ​ $ ( 3,693 ) ​ $ ( 3,526 ) ​ $ ( 3,526 ) ​ $ ( 12,076 ) ​ $ ( 12,076 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding ​ 6,476 ​ 6,476 ​ 6,463 ​ 6,463 ​ 6,456 ​ 6,456 ​ 6,474 ​ 6,474 Contingently issuable securities ​ — ​ 21 ​ — ​ — ​ — ​ — ​ — ​ — ​ ​ 6,476 ​ 6,497 ​ 6,463 ​ 6,463 ​ 6,456 ​ 6,456 ​ 6,474 ​ 6,474 Income (loss) per share ​ $ 0.35 ​ $ 0.35 ​ $ ( 0.58 ) ​ $ ( 0.58 ) ​ $ ( 0.55 ) ​ $ ( 0.55 ) ​ $ ( 1.87 ) ​ $ ( 1.87 ) ​ For the three months ended July 31, 2025 and nine months ended July 31, 2026 and July 31, 2025, there were an immaterial number of contingently issuable securities that were excluded from the diluted loss per share calculation because they were anti-dilutive due to the net loss in those periods. ​ ​ ​ ​ 6. ACCOUNTS RECEIVABLE Accounts receivable is net of provision for credit losses of $ 1.2 million as of each of July 31, 2026, and October 31, 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 31, ​ ​ ​ October 31, ​ ​ 2026 ​ 2025 Purchased parts and sub–assemblies ​ $ 36,209 ​ $ 35,346 Work–in–process ​ 10,598 ​ 11,172 Finished goods ​ 89,809 ​ 96,413 Inventories ​ $ 136,616 ​ $ 142,931 ​ ​ 14 Table of Contents 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. ​ We recorded total operating lease expense of $ 1.2 million and $ 1.3 million for the three months ended July 31, 2026 and 2025, respectively, and $ 3.8 million and $ 4.0 million for the nine months ended July 31, 2026 and 2025, 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 31, 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 31, 2026 and 2025 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended July 31, ​ ​ Nine Months Ended July 31, ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ ​ 2025 ​ ​ 2026 ​ ​ ​ ​ 2025 ​ Operating cash flow information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​Cash paid for amounts included in the measurement of lease liabilities ​ $ 1,192 ​ $ 1,298 ​ $ 3,693 ​ $ 3,831 ​ Non-cash information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​Right-of-use assets obtained in exchange for new operating lease liabilities ​ $ 417 ​ $ 1,621 ​ $ 1,814 ​ $ 3,903 ​ ​ The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of July 31, 2026 (in thousands): ​ ​ ​ ​ ​ Remainder of 2026 ​ ​ ​ $ 1,193 2027 4,166 2028 3,057 2029 959 2030 ​ ​ 473 2031 and thereafter 551 Total 10,399 Less: Imputed interest ​ ​ ( 559 ) Present value of operating lease liabilities ​ $ 9,840 ​ As of July 31, 2026, the weighted-average remaining term of our lease portfolio was approximately 3.0 years and the weighted-average discount rate was approximately 3.5 %. ​ 15 Table of Contents 9. SEGMENT INFORMATION We are organized 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. ​ Our 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 condensed consolidated balance sheets as total consolidated assets. ​ The following table sets forth sales and service fees by product group and services for the three and nine months ended July 31, 2026 and 2025 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended July 31, ​ Nine Months Ended July 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ 2026 ​ ​ ​ 2025 Computerized Machine Tools ​ $ 38,008 ​ $ 36,889 ​ $ 110,094 ​ $ 106,347 Computer Control Systems and Software † ​ 523 ​ 530 ​ 1,491 ​ 1,843 Service Parts ​ 6,706 ​ 6,309 ​ 19,815 ​ 18,404 Service Fees ​ 2,052 ​ 2,078 ​ 6,375 ​ 6,493 Total ​ $ 47,289 ​ $ 45,806 ​ $ 137,775 ​ $ 133,087 † Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine 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). As of July 31, 2026, we had four outstanding third party payment guarantees totaling approximately $ 0.3 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 range from one to three years 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. ​ 16 Table of Contents A reconciliation of the changes in our warranty estimated liability is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ July 31, ​ ​ 2026 ​ 2025 Balance, beginning of period ​ $ 967 ​ $ 1,086 Provision for warranties during the period ​ 1,700 ​ 1,747 Charges to the estimated liability ​ ( 1,593 ) ​ ( 1,890 ) Impact of foreign currency translation ​ ( 3 ) ​ 18 Balance, end of period ​ $ 1,071 ​ $ 961 ​ The year-over-year increase in our warranty estimated liability was primarily due to increased shipments of 5-axis and larger, higher- performance vertical milling machines, as well as an increase in warranty terms from approximately one year to three years for Hurco and Takumi products sold throughout the Americas. ​ 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 provided for an unsecured revolving credit and letter of credit facility in a maximum 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, the maximum amount of outstanding loans made to our subsidiary Hurco B.V. at any one time could not exceed $ 20.0 million, and the 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, 2025 , and on that date, the 2018 Credit Agreement terminated in accordance with its terms. ​ In March 2019, our wholly-owned subsidiaries in Taiwan (Hurco Manufacturing Limited (“HML”)) and China (Ningbo Hurco Machine Tool, Ltd. (“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 were subject to review and termination by the respective underlying lending institution from time to time. On December 31, 2025, the 150 million New Taiwan Dollars Taiwan credit facility and the 32.5 million Chinese Yuan China credit facility terminated in accordance with their terms. ​ On January 5, 2026, we entered into a new credit agreement with Bank of America, N.A., as the lender (the “2026 Credit Agreement”). The 2026 Credit Agreement provides for a secured revolving credit and letter of credit facility in a maximum aggregate amount of $ 20.0 million. The 2026 Credit Agreement provides that the maximum amount of outstanding letters of credit at any one time may not exceed $ 10.0 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 2026 Credit Agreement, we are the borrower, and certain of our subsidiaries are guarantors. Our obligations under the 2026 Credit Agreement are secured by a security interest in 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. ​ Borrowings under the 2026 Credit Agreement bear interest at floating rates based on, at our option, either (i) a rate based upon the secured overnight financing rate (“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 2.50 % 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 1.50 % per annum. Any outstanding letters of credit carry an annual rate of 2.50 %. ​ 17 Table of Contents The 2026 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 2026 Credit Agreement plus our cash on hand is not less than $ 10.0 million, we are in pro 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 $ 10.0 million; and (3) 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 2026 Credit Agreement for general corporate purposes. ​ The maximum consolidated 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 twelve months ended July 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. ​ As of July 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 July 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 first nine months of fiscal year 2026 of $ 1.7 million, compared to $ 3.1 million for the corresponding prior year period. Our effective tax rate for the first nine months of fiscal year 2026 was ( 90 %), compared to ( 35 %) in 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, U.S., and Chinese deferred tax assets as of July 31, 2026, based on our conclusion that the deferred tax assets were not more likely than not to be realized. ​ The Budget Reconciliation Act (H.R. 1) (“OBBB”) was signed into law on July 4, 2025. The OBBB did not have a material impact on our condensed consolidated financial statements and related disclosures as of and for the three and nine months ended July 31, 2026. While further evaluation is ongoing, the OBBB is not expected to have a material impact on our consolidated financial statements and related disclosures in future periods. ​ We file U.S. federal and state income tax returns, as well as tax returns in several foreign jurisdictions. We are currently under audit by the Internal Revenue Service (IRS) for our federal income tax return for fiscal year 2024 and our manufacturing subsidiary in Italy is under tax inspection for the fiscal year ended October 31, 2021. ​ 18 Table of Contents 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 31, 2026, and October 31, 2025 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ Liabilities ​ ​ ​ ​ July 31, 2026 ​ ​ ​ October 31, 2025 ​ ​ ​ July 31, 2026 ​ ​ ​ October 31, 2025 Level 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mutual Funds ​ $ 3,529 ​ $ 3,489 $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level 2 ​ ​ ​ ​ ​ ​ Derivatives ​ $ 251 ​ $ 263 $ 1,818 ​ $ 3,084 ​ 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 $ 90.9 million and $ 91.0 million at July 31, 2026, and October 31, 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. ​ 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 ​ In December 2023, the FASB issued Accounting 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. 19 Table of Contents 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 will be effective for 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. ​ 20 Table of Contents