Gencor Releases First Quarter Fiscal 2019 Results
February 01 2019 - 7:00AM
Gencor Industries, Inc. (Nasdaq: GENC) announced today net revenues
of $21.3 million for the quarter ended December 31, 2018 compared
to $23.1 million for the quarter ended December 31, 2017.
Gross margins were 23.1% for the quarter ended December 31, 2018
compared to 22.0% for the quarter ended December 31, despite higher
raw material costs, as the Company continued to benefit from cost
management and operational improvements implemented over the past
few years. Product engineering and development expenses increased
slightly for the quarter ended December 31, 2018. Selling, general
and administrative (“SG&A”) expenses decreased $502,000 to
$2,190,000 for the quarter ended December 31, 2018. Reduced sales
commissions and advertising and trade show expenses resulted in the
decrease in SG&A expenses. Operating income for the
quarter ended December 31, 2018 increased 18.5% to $2.0 million
compared to $1.7 million for the quarter ended December 31, 2017.
For the quarter ended December 31, 2018, the Company had
non-operating expense of $1.6 million compared to non-operating
income of $0.5 million for the quarter ended December 31, 2017.
Included in non-operating expense for the quarter ended December
31, 2018 were net realized and unrealized losses on marketable
securities of $2,147,000, due to a weak domestic stock market from
October through December of 2018. The effective income tax
rate for the quarter ended December 31, 2018 was 19.9%, compared to
a benefit of (9.2%) for the quarter ended December 31, 2017. The
2017 tax benefit resulted from the adjustment to the net deferred
tax liability and applying the lower corporate tax rates to comply
with the recently enacted U.S. tax law, Tax Cuts and Jobs Act
(“TCJA”). Net income for the quarter ended December 31, 2018 was
$0.3 million, or $0.02 per basic and diluted share, compared to net
income of $2.3 million, or $0.16 per basic and diluted share for
the quarter ended December 31, 2017.
At December 31, 2018, the Company had $108.7 million of cash and
marketable securities, down from $112.1 million at September 30,
2018. Net working capital was $136.2 million at December 31,
2018. The Company had no short-term or long-term debt
outstanding at December 31, 2018.
The Company’s backlog was $34.8 million at December 31, 2018
compared to $50.2 million at December 31, 2017.
John Elliott, Gencor’s CEO, stated, “First quarter revenues of
$21.3 million reflect a moderate slowdown in order activity from
the prior year, when the company had record backlog and
revenues.
The Fixing America’s Surface Transportation Act, or FAST Act, is
in its fourth year of the five year bill. The bill has
provided confidence in Federal funding with moderate annual
increases over the five years. Gencor has benefited from the
FAST Act as many of its customers anticipated improvements in their
business and therefore made an increasing level of asphalt plant
and component purchases.
Gross profit margin for the first quarter was unfavorably
impacted by reduced volumes. However, this was more than
offset by improved efficiencies and realization of cost savings
initiatives resulting in a slight increase in the Company’s
quarterly gross profit margin. Steel prices have stabilized since
October. The Company successfully minimized the impact
of steel inflation over the past two years, but still absorbed a
36% overall increase.
Despite the decline in revenues, operating income and operating
margins increased as the Company continued to manage expenses.
Backlog of $34.8 million is 30% below the prior year backlog of
$50.2 million due to a lower number of large asphalt plants
orders. The Company anticipates a moderate level of order
activity to continue in 2019.
Gencor will be exhibiting at the 2019 World of Asphalt show in
February. Last year’s show brought a lot of interest in our
products.”
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
December 31, |
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
Net revenue |
$ |
21,327,000 |
|
|
$ |
23,122,000 |
|
Costs
and expenses: |
|
|
|
Production
costs |
|
16,410,000 |
|
|
|
18,039,000 |
|
Product
engineering and development |
|
723,000 |
|
|
|
700,000 |
|
Selling, general
and administrative |
|
2,190,000 |
|
|
|
2,692,000 |
|
|
|
19,323,000 |
|
|
|
21,431,000 |
|
|
|
|
|
Operating income |
|
2,004,000 |
|
|
|
1,691,000 |
|
|
|
|
|
Other income (expense),
net: |
|
|
|
Interest and
dividend income, net of fees |
|
534,000 |
|
|
|
293,000 |
|
Realized and
unrealized gains (losses) on marketable securities, net |
|
(2,147,000 |
) |
|
|
161,000 |
|
Other |
|
- |
|
|
|
4,000 |
|
|
|
(1,613,000 |
) |
|
|
458,000 |
|
|
|
|
|
Income before income
tax expense (benefit) |
|
391,000 |
|
|
|
2,149,000 |
|
Income tax expense
(benefit) |
|
78,000 |
|
|
|
(197,000 |
) |
Net income |
$ |
313,000 |
|
|
$ |
2,346,000 |
|
|
|
|
|
Basic Income per Common
Share: |
|
|
|
Net income per
share |
$ |
0.02 |
|
|
$ |
0.16 |
|
|
|
|
|
Diluted Income per
Common Share: |
|
|
|
Net income per
share |
$ |
0.02 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
GENCOR INDUSTRIES,
INC.Condensed Consolidated Balance
Sheets |
|
December 31, |
|
September 30, |
|
|
2018 |
|
|
2018 |
ASSETS |
(Unaudited) |
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
4,269,000 |
|
$ |
8,012,000 |
Marketable securities at fair value (cost $106,563,000 at December
31, 2018 and $103,751,000 at September 30, 2018) |
|
104,445,000 |
|
|
104,058,000 |
Accounts
receivable, less allowance for doubtful accounts of $278,000
at December 31, 2018 and $313,000 at September 30, 2018 |
|
1,500,000 |
|
|
993,000 |
Costs and
estimated earnings in excess of billings |
|
13,319,000 |
|
|
11,900,000 |
Inventories,
net |
|
20,229,000 |
|
|
18,214,000 |
Prepaid expenses
& other current assets |
|
1,582,000 |
|
|
1,904,000 |
Total Current Assets |
|
145,344,000 |
|
|
145,081,000 |
|
|
|
|
Property and equipment,
net |
|
8,164,000 |
|
|
7,889,000 |
Other assets |
|
53,000 |
|
|
53,000 |
Total Assets |
$ |
153,561,000 |
|
$ |
153,023,000 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Current
Liabilities: |
|
|
|
Accounts
payable |
$ |
3,593,000 |
|
$ |
1,838,000 |
Customer
deposits |
|
3,397,000 |
|
|
4,563,000 |
Accrued
expenses |
|
2,189,000 |
|
|
2,085,000 |
Total Current Liabilities |
|
9,179,000 |
|
|
8,486,000 |
|
|
|
|
Deferred and other
income taxes |
|
1,873,000 |
|
|
2,358,000 |
Total Liabilities |
|
11,052,000 |
|
|
10,844,000 |
|
|
|
|
Commitments and
contingencies |
|
|
|
Shareholders’
equity: |
|
|
|
Preferred stock,
par value $.10 per share; authorized 300,000 shares; none
issued |
|
- |
|
|
- |
Common stock,
par value $.10 per share; 15,000,000 shares authorized; |
|
|
|
12,252,337
shares issued and outstanding at December 31, 2018 and
September 30, 2018, respectively |
|
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 December 31, 2018 and September
30, 2018, respectively |
|
229,000 |
|
|
229,000 |
Capital in
excess of par value |
|
11,879,000 |
|
|
11,862,000 |
Retained
earnings |
|
129,176,000 |
|
|
128,863,000 |
Total Shareholders’ Equity |
|
142,509,000 |
|
|
142,179,000 |
Total Liabilities and Shareholders’ Equity |
$ |
153,561,000 |
|
$ |
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 Officer
407-290-6000
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