Gencor Releases Third Quarter Fiscal 2019 Results
August 02 2019 - 7:00AM
Gencor Industries, Inc. (Nasdaq: GENC) announced today net revenues
of $18.8 million for the quarter ended June 30, 2019 compared to
$24.1 million for the quarter ended June 30, 2018. Gross
margins were 25.2% for the quarter ended June 30, 2019 compared to
26.6% for the quarter ended June 30, 2018, as the benefit from the
Company’s cost management and operational improvements were offset
by lower production levels. Product engineering and development
expenses increased $100,000 to $881,000 for the quarter ended June
30, 2019, due to higher headcount and salaries. Selling, general
and administrative (“SG&A”) expenses increased $292,000 to
$2,471,000 for the quarter ended June 30, 2019. Increases in sales
headcount and related travel expenses resulted in the increased
SG&A expenses. Operating income for the quarter ended
June 30, 2019 was down 59.5% to $1.4 million compared with $3.5
million for the quarter ended June 30, 2018.
For the quarter ended June 30, 2019, the Company had
non-operating income of $1.7 million compared to non-operating
expense of $0.1 million for the quarter ended June 30, 2018.
Included in non-operating income for the quarter ended June 30,
2019 were net realized and unrealized gains on marketable
securities of $1.1 million, due to the increase in the domestic
equity markets in the third quarter of fiscal 2019. The
effective income tax rate for the quarters ended June 30, 2019 and
2018 was 20.0%. Net income for the quarter ended June 30, 2019 was
$2.4 million, or $0.17 per diluted share, compared with net income
of $2.7 million, or $0.18 per diluted share for the quarter ended
June 30, 2018.
For the nine months ended June 30, 2019 the
Company had net revenue of $66.8 million and net income of $10.2
million ($0.69 per diluted share) versus net revenue of $78.1
million and net income of $8.8 million ($0.60 per diluted share)
for the nine months ended June 30, 2018.
At June 30, 2019, the Company had $111.2 million of cash and
marketable securities compared to $112.1 million at September 30,
2018. Net working capital was $146.4 million at June 30,
2019. The Company had no short-term or long-term debt
outstanding at June 30, 2019.
The Company’s backlog was $11.9 million at June 30, 2019
compared to $29.3 million at June 30, 2018.
John Elliott, Gencor’s CEO, stated, “Gencor experienced a
slowdown in orders from the prior year, as customers have focused
on their late project starts and have delayed capital
purchases. Historically, orders have been strong in the early
and middle years of a multi-year Federal highway bill and then
moderate in the later years. The Fixing America’s Surface
Transportation (FAST) Act enacted in December 2015 is set to expire
in October of 2020. Currently, there is no long-term bill in
place that will replace the FAST Act. Bipartisan political
support for domestic infrastructure is a positive sign that the
nation will continue to receive long-term Federal funding, which
will ultimately benefit our industry.
Third quarter bookings were below our expectations as permitting
issues and delays resulted in deferred customer purchases. We
expect this to be more of a timing issue as our sales pipeline
remains strong. Our customers are busy improving the
infrastructure of our country and are generally positive about
their business outlook. We continue to invest in plant, personnel
and R&D to expand our product lines and geographic reach.
We see growth opportunities in new markets to position Gencor for
continued success.
We have taken advantage of the available capacity and pre-built
equipment that will assist us during the busy fall and winter
months to shorten our delivery cycles. The Company is well
positioned going forward to take full advantage of all
opportunities in the marketplace and our industry over the coming
year.”
Gencor Industries is a diversified heavy machinery manufacturer
for the production of highway construction materials, synthetic
fuels and environmental control machinery and equipment used in a
variety of applications.
GENCOR INDUSTRIES, INC.Condensed
Consolidated Statements of Income(Unaudited) |
|
For the Quarters Ended June
30, |
|
For the Nine Months Ended June
30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
Net revenue |
$ |
18,848,000 |
|
$ |
24,118,000 |
|
|
$ |
66,845,000 |
|
$ |
78,069,000 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Production costs |
|
14,098,000 |
|
|
17,702,000 |
|
|
|
47,267,000 |
|
|
57,800,000 |
|
Product engineering and development |
|
881,000 |
|
|
781,000 |
|
|
|
2,427,000 |
|
|
2,239,000 |
|
Selling, general and administrative |
|
2,471,000 |
|
|
2,179,000 |
|
|
|
7,135,000 |
|
|
7,792,000 |
|
|
|
17,450,000 |
|
|
20,662,000 |
|
|
|
56,829,000 |
|
|
67,831,000 |
|
|
|
|
|
|
|
|
|
Operating income |
|
1,398,000 |
|
|
3,456,000 |
|
|
|
10,016,000 |
|
|
10,238,000 |
|
|
|
|
|
|
|
|
|
Other income (expense),
net: |
|
|
|
|
|
|
|
Interest and dividend income, net of fees |
|
567,000 |
|
|
399,000 |
|
|
|
1,608,000 |
|
|
1,075,000 |
|
Net realized and unrealized gains (losses) on marketable
securities |
|
1,090,000 |
|
|
(503,000 |
) |
|
|
1,147,000 |
|
|
(1,061,000 |
) |
Other |
|
- |
|
|
- |
|
|
|
- |
|
|
7,000 |
|
|
|
1,657,000 |
|
|
(104,000 |
) |
|
|
2,755,000 |
|
|
21,000 |
|
|
|
|
|
|
|
|
|
Income before income tax
expense |
|
3,055,000 |
|
|
3,352,000 |
|
|
|
12,771,000 |
|
|
10,259,000 |
|
Income tax expense |
|
611,000 |
|
|
670,000 |
|
|
|
2,554,000 |
|
|
1,468,000 |
|
Net income |
$ |
2,444,000 |
|
$ |
2,682,000 |
|
|
$ |
10,217,000 |
|
$ |
8,791,000 |
|
|
|
|
|
|
|
|
|
Basic Income per Common
Share: |
|
|
|
|
|
|
|
Net income per share |
$ |
0.17 |
|
$ |
0.19 |
|
|
$ |
0.70 |
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
Diluted Income per Common
Share: |
|
|
|
|
|
|
|
Net income per share |
$ |
0.17 |
|
$ |
0.18 |
|
|
$ |
0.69 |
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
GENCOR INDUSTRIES, INC.Condensed
Consolidated Balance Sheets |
|
June 30, |
|
September 30, |
|
2019 |
|
2018 |
ASSETS |
(Unaudited) |
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
6,435,000 |
|
$ |
8,012,000 |
Marketable securities at fair value (cost $104,556,000 at June 30,
2019 and $103,751,000 at September 30, 2018) |
|
104,767,000 |
|
|
104,058,000 |
Accounts receivable, less allowance for doubtful accounts of
$341,000 at June 30, 2019 and $313,000 at September 30, 2018 |
|
1,482,000 |
|
|
993,000 |
Costs and estimated earnings in excess of billings |
|
20,522,000 |
|
|
11,900,000 |
Inventories, net |
|
19,995,000 |
|
|
18,214,000 |
Prepaid expenses and other current assets |
|
945,000 |
|
|
1,904,000 |
Total Current Assets |
|
154,146,000 |
|
|
145,081,000 |
|
|
|
|
Property and equipment,
net |
|
8,301,000 |
|
|
7,889,000 |
Other assets |
|
53,000 |
|
|
53,000 |
Total Assets |
$ |
162,500,000 |
|
$ |
153,023,000 |
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
2,594,000 |
|
$ |
1,838,000 |
Customer deposits |
|
2,462,000 |
|
|
4,563,000 |
Accrued expenses and other current liabilities |
|
2,662,000 |
|
|
2,085,000 |
Total Current Liabilities |
|
7,718,000 |
|
|
8,486,000 |
|
|
|
|
Deferred and other income
taxes |
|
2,333,000 |
|
|
2,358,000 |
Total Liabilities |
|
10,051,000 |
|
|
10,844,000 |
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
Preferred stock, par value $.10 per share; 300,000 shares
authorized; none issued |
|
- |
|
|
- |
Common stock, par value $.10 per share; 15,000,000 shares
authorized; |
|
|
|
12,252,337 shares issued and outstanding at June 30, 2019 and
September 30, 2018 |
|
1,225,000 |
|
|
1,225,000 |
Class B Stock, par value $.10 per share; 6,000,000 shares
authorized; |
|
|
|
2,288,857 shares issued and outstanding at June 30, 2019 and
September 30, 2018 |
|
229,000 |
|
|
229,000 |
Capital in excess of par value |
|
11,915,000 |
|
|
11,862,000 |
Retained earnings |
|
139,080,000 |
|
|
128,863,000 |
Total Shareholders’ Equity |
|
152,449,000 |
|
|
142,179,000 |
Total Liabilities and Shareholders’ Equity |
$ |
162,500,000 |
|
$ |
153,023,000 |
|
|
|
|
Caution Concerning Forward Looking Statements - This press
release and our other communications and statements may contain
“forward-looking statements,” including statements about our
beliefs, plans, objectives, goals, expectations, estimates,
projections and intentions. These statements are subject to
significant risks and uncertainties and are subject to change based
on various factors, many of which are beyond our control. The
words “may,” “could,” “should,” “would,” “believe,” “anticipate,”
“estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and
similar expressions are intended to identify forward-looking
statements. All forward-looking statements, by their nature,
are subject to risks and uncertainties. Our actual future
results may differ materially from those set forth in our
forward-looking statements. For information concerning these
factors and related matters, see our Annual Report on Form 10-K for
the year ended September 30, 2018; (a) “Risk Factors” in Part I,
Item 1A and (b) “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Part II, Item
7. However, other factors besides those referenced could
adversely affect our results, and you should not consider any such
list of factors to be a complete set of all potential risks or
uncertainties. Any forward-looking statements made by us
herein speak as of the date of this press release. We do not
undertake to update any forward-looking statement, except as
required by law.
Contact:
Eric Mellen, Chief Financial Officer407-290-6000
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