Hurco : 2022 Annual Report

ANNUAL REPORT

Gregory S. Volovic

President and Chief Executive Officer

Sonja McClelland

Executive Vice President, Treasurer, and

Chief Financial Officer

Michael Doar

Executive Chairman

LEADERSHIP TEAM

REPORT TO SHAREHOLDERS

Fiscal year 2022 reaffirmed Hurco's investments in multi-axis milling, turning, and automation, which drove a considerable increase in demand within these product segments. It was a year we realized tangible success from our culture of innovation and continuous research and development. It was also a year of opportunity where we once again reconnected in person with our customers at the International Manufacturing Technology Show (IMTS) in Chicago.

We improved our profitability despite the many obstacles our industry has faced since 2020. Our revenue in fiscal year 2022 would have been the second highest in the company's history, excluding the impact of foreign currency. Over the past two years, we have been particularly focused on growth for the future, launching new offerings that expand our product portfolio and market reach and evaluating accretive opportunities.

Hurco's 2019 acquisition of ProCobots, a business focused on automation technologies, has led to innovation that has added to our intellectual property portfolio. With several new patents pending, the automation software capabilities we invented and implemented this year for the complete and seamless integration between Hurco CNC machines and the ProCobots automated robotic machine tending systems are an example of ground-breaking,out-of-the-box innovation that is practical, accessible, and affordable for our customers. The seamless interoperability of Hurco automation powered by ProCobots allows our customers to increase their productivity and efficiency while helping to offset the impact of labor shortages so many manufacturers are facing today.

Fiscal year 2022 was a year we experienced a breakthrough in demand for our advanced multi-axis machines. Our long- term investments in LCM Precision Technology, S.r.l. ("LCM"), which is solely focused on the design and manufacture of state-of-the-artmulti-axiselectro-mechanical components and subassemblies, facilitated the advancement of our high- end multi-axis machines; in fiscal year 2022, we experienced breakthrough demand for these products.

Across all three of our machine tool brands, we have expanded our product portfolio in both our value and performance market segments. We have improved machine capacity, capabilities, and throughput with faster speeds, increased torque, and larger travels across numerous models.

All Hurco CNCs received design enhancements for control processing speed and graphics performance. New 3D solid model programming functionality was introduced that exploits these new computing capabilities. In addition, the new control reduces our component footprint, which, going forward, further secures our supply chain resilience.

Productivity improvements have always been forefront in our commitment to add value for our customers. During IMTS, we introduced our new Extended Shop Floor IoT platform with advanced tools for productivity and OEE monitoring featuring

unique functionality only available from the Hurco control due to our proprietary vertical ownership of the entire CNC machine and control product technologies.

It was exciting for us to share our inventions, new technologies, and products at IMTS with our customers and distributors. It provided a time for us to reconnect, collaborate, and energize our customers and industry partners. While we are proud to have customers who are well-known Fortune 500 companies, such as Boeing, Caterpillar, Cummins, Eli Lilly, GM, Lockheed Martin, and others, we take pride that many of our customers are also small businesses, often family-owned, who count on us to deliver products equipped with technologies uniquely engineered to meet their requirements. Our customers are pragmatic, smart, resilient, and hard-working. We want our products to be an integral part of their success.

Hurco's core competencies include software and product innovation; efficient design and manufacturing of machine tools with a well-developed supply chain; targeted and continual expansion of products and markets; and strategic acquisitions. Our ability to provide customers with high performing machine tools equipped with industry leading control technology is our key differentiator. Customers rely on our technology to simplify complex processes with the user-friendly attributes of our control systems and integrated automation.

We are committed to the continuous investment in new and advanced technologies and research & development projects to grow our pipeline of new products. We will maintain our persistent pursuit of a balanced capital allocation strategy that prioritizes a strong balance sheet and liquidity position while recognizing the importance of accretive growth and returning value to shareholders. While we evaluated potential strategic acquisitions during fiscal year 2022, the volatility in the macroeconomic environment in the end proved unfavorable. We remain committed to evaluate future acquisition opportunities accretive to our businesses. The ability to return value to shareholders, even during periods of economic uncertainty, is a testament to the company's fiscally responsible culture.

On behalf of everyone here at Hurco, I would like to thank our shareholders for the trust you bestow on us to be principled stewards of your investment. I also want to thank our Board of Directors for their insight, guidance, and encouragement. We extend sincere appreciation to our customers for their loyalty and continued support and a special thank you to our employees for their dedication, commitment, and ability to execute. As a global public company, we pledge to continue our strategic initiatives - to innovate, automate, and bring simplicity to that which is complex - in our pursuit to create value for those who produce not only what is needed for the world today but also tomorrow.

Gregory S. Volovic

President and Chief Executive Officer

HURCO - MIND OVER METAL®

Hurco CNC machines are powered by proprietary technology that increases customer productivity and profitability. We provide customers with reliable machine tools equipped with sophisticated technologies that simplify complex processes. The integrated Hurco control is the most versatile in the industry, supporting both industry standard programming and conversational programming.

HASSLE-FREE CNC

MILLTRONICS - HASSLE-FREE CNC™

Milltronics CNC machines are equipped with an interactive computer control system that is compatible with G-codes and M-codes generated from CAD/CAM software and conversational visual-aid programming. The Milltronics brand includes seven product lines of general purpose CNC mills and lathes. The Milltronics line is designed for excellent value with more standard features for the price versus other market leaders.

When precision matters.

TAKUMI - WHEN PRECISION MATTERS™

Takumi CNC machines are designed and built for high efficiency milling and high level precision. Equipped with control systems such as Fanuc ®, Siemens ®, Mitsubishi ®, and Heidenhain ®.

LCM PRECISION TECHNOLOGY

LCM designs and manufactures advanced components for machine tools, such as rotary tables, tilt tables, swivel heads, and electro-mechanical spindles.