Hurco Companies, Inc. (HURC) Cash Flow Statement

The quarterly OCF/NI ratio swings between roughly -2.4 and 1.6 across the ten quarters, which means the sign of cash generation frequently disagrees with reported earnings. Much of the positive OCF in periods of net losses appears driven by working capital release rather than durable operating earnings, so the 2026Q3 conversion should be treated as a single-quarter observation until it repeats. Investors should monitor whether conversion stabilizes once working capital movements normalize.

The 2025Q1 peak appears to be an outlier driven by a $11.3M working capital inflow rather than a repeatable margin level, which makes the average FCF margin a more meaningful reference than any single quarter. The recent run of positive FCF in 2025Q4 through 2026Q3 is encouraging but reflects only four quarters against a longer history of volatility. Further confirmation would require sustained positive FCF independent of working capital swings.

Because working capital inflows have been a recurring source of operating cash, the underlying cash generation capacity of the business is likely lower than headline OCF implies. The pattern suggests receivable collections or inventory reductions are doing much of the work in periods of accounting losses. Investors should monitor whether these inflows reverse, which would expose the true earnings base.

CapEx below D&A in most quarters may indicate that the asset base is being harvested rather than renewed, which can flatter near-term free cash flow. This low intensity is consistent with a business that is not investing heavily for growth, though it could also constrain competitiveness over time. Investors should monitor whether CapEx rises toward D&A levels as revenue recovers.