What changed in this filing

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Item 1. Financial Statements

2024-09-06 compared with 2024-06-07 · 87 added, 73 removed, 460 unchanged (26% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Sales and service fees

7 unchanged sentences

(Loss) income before income taxes

Provision (benefit) for income taxes

Provision for income taxes

Net (loss) income

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net (loss) income

51 unchanged sentences

no par value, $ .10 stated value per share, 12,500,000 shares authorized;

6,636,473 and 6,553,673 shares issued and 6,523,259 and 6,462,138 shares outstanding, as of April 30, 2024 and October 31, 2023, respectively

6,607,060 and 6,553,673 shares issued and 6,493,846 and 6,462,138 shares outstanding, as of July 31, 2024 and October 31, 2023, respectively

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

3 unchanged sentences

Deferred income taxes

Deferred income tax valuation allowance

Equity in (income) loss of affiliates

35 unchanged sentences

(In thousands, except shares outstanding)

Three Months Ended April 30, 2024 and 2023

Three Months Ended July 31, 2024 and 2023

Comprehensive

Income (Loss)

Balances, January 31, 2023

Balances, April 30, 2023

Net income (loss)

1 unchanged sentence

Stock–based compensation expense, net of taxes withheld for vested restricted shares

Exercise of common stock options

Stock repurchases

Dividends paid

Balances, July 31, 2023

Balances, April 30, 2024

Balances, January 31, 2024

Net income (loss)

Other comprehensive income (loss)

Deferred income tax valuation allowances

Stock–based compensation expense, net of taxes withheld for vested restricted shares

Dividends paid

Balances, April 30, 2024

Six Months Ended April 30, 2024 and 2023

Stock repurchases

Balances, July 31, 2024

Nine Months Ended July 31, 2024 and 2023

Comprehensive

7 unchanged sentences

Dividends paid

Balances, April 30, 2023

Balances, July 31, 2023

Balances, October 31, 2023

1 unchanged sentence

Other comprehensive income (loss)

Deferred income tax valuation allowances

Stock–based compensation expense, net of taxes withheld for vested restricted shares

Stock repurchases

Dividends paid

Balances, April 30, 2024

Balances, July 31, 2024

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

8 unchanged sentences

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 April 30, 2024 and for the three and six months ended April 30, 2024 and April 30, 2023 is unaudited.

The condensed consolidated financial information as of July 31, 2024 and for the three and nine months ended July 31, 2024 and July 31, 2023 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.

41 unchanged sentences

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 April 30, 2024, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from May 2024 through April 2025.

We had forward contracts outstanding as of July 31, 2024, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from August 2024 through July 2025.

The contract amounts, expressed at forward rates in U.S.

dollars at April 30, 2024, were $ 8.7 million for Euros, $ 4.4 million for Pounds Sterling, and $ 16.8 million for New Taiwan Dollars.

At April 30, 2024, we had $ 0.6 million of loss, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive income (loss).

dollars at July 31, 2024, were $ 7.5 million for Euros, $ 4.5 million for Pounds Sterling, and $ 14.6 million for New Taiwan Dollars.

At July 31, 2024, we had $ 0.9 million of loss, net of tax, related to cash flow hedges deferred in Accumulated other comprehensive income (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 gains will be recorded as an adjustment to Cost of sales and service in periods through April 2025, when the corresponding inventory that is the subject of the related hedge contracts is sold, as described above.

The majority of these deferred gains will be recorded as an adjustment to Cost of sales and service in periods through July 2025, 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.

4 unchanged sentences

This forward contract matures in November 2024.

As of April 30, 2024, we had a realized gain of $ 1.2 million and an immaterial amount of unrealized gain, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss related to this forward contract.

As of July 31, 2024, we had a realized gain of $ 1.2 million and an immaterial amount of unrealized loss, net of tax, recorded as cumulative translation adjustments in Accumulated other comprehensive loss related to this forward contract.

Derivatives Not Designated as Hedging Instruments

1 unchanged sentence

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 (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.

We had forward contracts outstanding as of April 30, 2024, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from May 2024 through October 2024.

We had forward contracts outstanding as of July 31, 2024, denominated in Euros, Pounds Sterling, and New Taiwan Dollars with set maturity dates ranging from August 2024 through February 2025.

The contract amounts, expressed at forward rates in U.S.

dollars at April 30, 2024, totaled $ 54.1 million.

dollars at July 31, 2024, totaled $ 52.9 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 April 30, 2024 and October 31, 2023, all derivative instruments were recorded at fair value on our Condensed Consolidated Balance Sheets as follows (in thousands):

April 30, 2024

As of July 31, 2024 and October 31, 2023, all derivative instruments were recorded at fair value on our Condensed Consolidated Balance Sheets as follows (in thousands):

July 31, 2024

October 31, 2023

16 unchanged sentences

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 April 30, 2024 and 2023 (in thousands):

Location of Gain

19 unchanged sentences

– Net investment

We did no t recognize any gains or losses as a result of hedges deemed ineffective for either of the three months ended April 30, 2024 or 2023.

We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the three months ended April 30, 2024 and 2023 on derivative instruments not designated as hedging instruments (in thousands):

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, 2024 or 2023.

We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the three months ended July 31, 2024 and 2023 on derivative instruments not designated as hedging instruments (in thousands):

Location of Gain

7 unchanged sentences

Other (expense) income, net

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended April 30, 2024 (in thousands):

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended July 31, 2024 (in thousands):

Foreign Currency

Balance, January 31, 2024

Balance, April 30, 2024

Other comprehensive income (loss) before reclassifications

Reclassifications

Balance, April 30, 2024

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 six months ended April 30, 2024 and 2023 (in thousands):

Deferred income tax valuation allowances

Balance, July 31, 2024

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, 2024 and 2023 (in thousands):

Location of Gain

10 unchanged sentences

Income (Loss)

Six Months Ended

Nine Months Ended

Designated as Hedging Instruments:

5 unchanged sentences

– Net investment

We did no t recognize any gains or losses as a result of hedges deemed ineffective for either of the six months ended April 30, 2024 or 2023.

We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the six months ended April 30, 2024 and 2023 on derivative instruments not designated as hedging instruments (in thousands):

We did no t recognize any gains or losses as a result of hedges deemed ineffective for either of the nine months ended July 31, 2024 or 2023.

We recognized the following gains and losses in our Condensed Consolidated Statements of Operations during the nine months ended July 31, 2024 and 2023 on derivative instruments not designated as hedging instruments (in thousands):

Location of Gain

3 unchanged sentences

Recognized in Operations

Six Months Ended

Nine Months Ended

Not Designated as Hedging Instruments:

1 unchanged sentence

Other (expense) income, net

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the six months ended April 30, 2024 (in thousands):

The following table presents the changes in the components of Accumulated other comprehensive loss, net of tax, for the nine months ended July 31, 2024 (in thousands):

Balance, October 31, 2023

1 unchanged sentence

Reclassifications

Balance, April 30, 2024

Deferred income tax valuation allowances

Balance, July 31, 2024

EQUITY INCENTIVE PLAN

13 unchanged sentences

We previously granted stock options under the 2008 Equity Plan.

No stock options remained outstanding as of April 30, 2024.

No stock options remained outstanding as of July 31, 2024.

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.

19 unchanged sentences

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 $ 19.78 per share.

A reconciliation of our restricted stock and PSU activity and related information for the six-month period ended April 30, 2024 is as follows:

A reconciliation of our restricted stock and PSU activity and related information for the nine-month period ended July 31, 2024 is as follows:

Weighted Average Grant

6 unchanged sentences

Shares withheld

Unvested at April 30, 2024

During the first six months of fiscal 2024 and 2023, we recorded approximately $ 0.8 million and $ 1.5 million, respectively, of stock-based compensation expense, related to grants under the 2016 Equity Plan.

As of April 30, 2024, there was an estimated $ 3.7 million of total unrecognized stock-based compensation cost that we expect to recognize by the end of the first quarter of fiscal year 2027.

Unvested at July 31, 2024

During the nine months of fiscal 2024 and 2023, we recorded approximately $ 1.1 million and $ 2.3 million, respectively, of stock-based compensation expense, related to grants under the 2016 Equity Plan.

As of July 31, 2024, there was an estimated $ 2.8 million of total unrecognized stock-based compensation cost that we expect to recognize by the end of the first quarter of fiscal year 2027.

EARNINGS PER SHARE

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net (loss) income

5 unchanged sentences

ACCOUNTS RECEIVABLE

Accounts receivable is net of provision for credit losses of $ 1.5 million as of each of April 30, 2024 and October 31, 2023.

Accounts receivable is net of provision for credit losses of $ 1.5 million as of each of July 31, 2024 and October 31, 2023.

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

10 unchanged sentences

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 operating leases.

We recorded total operating lease expenses of $ 1.5 million and $ 1.3 million for the three months ended April 30, 2024 and 2023, respectively and $ 2.8 million and $ 2.6 million for the six months ended April 30, 2024 and 2023, respectively, which are classified within Cost of sales and service and Selling, general and administrative expenses within the Condensed Consolidated Statements of Operations.

We recorded total operating lease expenses of $ 1.3 million for each of the three months ended July 31, 2024 and 2023, and $ 4.1 million and $ 3.9 million for the nine months ended July 31, 2024 and 2023, respectively, which are 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 that are immaterial.

There have been no lease costs capitalized on the Condensed Consolidated Balance Sheets as of April 30, 2024.

The following table summarizes supplemental cash flow information and non-cash activity related to operating leases for the three and six months ended April 30, 2024 and 2023 (in thousands):

There have been no lease costs capitalized on the Condensed Consolidated Balance Sheets as of July 31, 2024.

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, 2024 and 2023 (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

Operating cash flow information:

2 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities

The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of April 30, 2024 (in thousands):

The following table summarizes the maturities of undiscounted cash flows of lease commitments reconciled to the total lease liability as of July 31, 2024 (in thousands):

Remainder of 2024

2 unchanged sentences

Present value of operating lease liabilities

As of April 30, 2024, the weighted-average remaining term of our lease portfolio was approximately 4.3 years and the weighted-average discount rate was approximately 3.5 %.

As of July 31, 2024, the weighted-average remaining term of our lease portfolio was approximately 4.1 years and the weighted-average discount rate was approximately 3.5 %.

SEGMENT INFORMATION

5 unchanged sentences

The following table sets forth sales and service fees by product group and services for the three and six months ended April 30, 2024 and 2023 (in thousands):

Three Months Ended April 30,

Six Months Ended April 30,

The following table sets forth sales and service fees by product group and services for the three and nine months ended July 31, 2024 and 2023 (in thousands):

Three Months Ended July 31,

Nine Months Ended July 31,

Computerized Machine Tools

5 unchanged sentences

We follow FASB guidance for accounting for guarantees (codified in ASC 460, Guarantees ).

As of April 30, 2024, we had nine outstanding third party payment guarantees totaling approximately $ 0.9 million.

As of July 31, 2024, we had nine outstanding third party payment guarantees totaling approximately $ 0.9 million.

The terms of these guarantees are consistent with the underlying customer financing terms.

8 unchanged sentences

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

Six Months Ended

Nine Months Ended

Balance, beginning of period

24 unchanged sentences

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 April 30, 2024, 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.

As of April 30, 2024, there were no borrowings under any of our credit facilities and there was approximately $ 50.7 million of available borrowing capacity thereunder.

As of July 31, 2024, 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.

As of July 31, 2024, there were no borrowings under any of our credit facilities and there was approximately $ 50.7 million of available borrowing capacity thereunder.

There were also no borrowings under any of our credit facilities as of October 31, 2023.

Our provision for income taxes and effective tax rate is affected by the geographical 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 an income tax benefit during the first six months of fiscal 2024 of $ 0.6 million compared to income tax expense of $ 0.9 million for the same period in 2023.

Our effective tax rate for the first six months of fiscal 2024 was 9 %, compared to 35 % in the corresponding prior year period.

The year-over-year decrease in the effective tax rate was primarily due to changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, a discrete item related to stock compensation, and the impact of valuation allowances on an overall lower level of income before taxes.

Our unrecognized tax benefits were $ 189,000 as of April 30, 2024 and $ 182,000 as of October 31, 2023, and in each case included accrued interest.

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 an income tax expense during the first nine months of fiscal 2024 of $ 6.4 million compared to $ 1.3 million for the same period in fiscal 2023.

Our effective tax rate for the first nine months of fiscal 2024 was ( 74 %), compared to 40 % in the corresponding prior year period.

The year-over-year increase in income tax expense for the nine months of fiscal 2024 was primarily due to an $8.2 million non-cash valuation allowance on U.S.

deferred tax assets, changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, and discrete items related to unvested stock compensation.

Because we have a valuation allowance recorded against our U.S.

deferred tax assets, we did not record a tax benefit for our U.S.

net losses for the nine months ended July 31, 2024.

The valuation allowance recorded during the third quarter of fiscal 2024 reflects a full valuation allowance of the U.S.

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.

Our unrecognized tax benefits were $ 192,000 as of July 31, 2024, and $ 182,000 as of October 31, 2023, and in each case included accrued interest.

We recognize accrued interest and penalties related to unrecognized tax benefits as components of income tax expense.

As of April 30, 2024, the gross amount of interest accrued, reported in Accrued expenses, was approximately $ 51,000 , which did not include the federal tax benefit of interest deductions.

As of July 31, 2024, the gross amount of interest accrued, reported in Accrued expenses, was approximately $ 54,000 , which did not include the federal tax benefit of interest deductions.

federal and state income tax returns, as well as tax returns in several foreign jurisdictions.

8 unchanged sentences

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 April 30, 2024 and October 31, 2023 (in thousands):

April 30, 2024

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, 2024 and October 31, 2023 (in thousands):

July 31, 2024

October 31, 2023

April 30, 2024

July 31, 2024

October 31, 2023

1 unchanged sentence

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.

Included in Level 2 fair value measurements are derivative assets and liabilities related to gains and losses on foreign currency forward exchange contracts, as described in Note 3 of Notes to the Condensed Consolidated Financial Statements, 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 the Condensed Consolidated Financial Statements.

dollar equivalent notional amounts of these contracts were $ 90.0 million and $ 97.8 million at April 30, 2024 and October 31, 2023, respectively.

dollar equivalent notional amounts of these contracts were $ 84.3 million and $ 97.8 million at July 31, 2024 and October 31, 2023, 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.

9 unchanged sentences

New Accounting Pronouncements:

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No.

In November 2023, the FASB issued A ccounting 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, with the option to early adopt.

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):

2 unchanged sentences

We are currently assessing the impact this new accounting guidance will have on our consolidated financial statements and disclosures.

There have been no other significant changes in the Company’s critical accounting policies and estimates during the six months ended April 30, 2024.

There have been no other significant changes in the Company’s critical accounting policies and estimates during the nine months ended July 31, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements