Gencor Releases First Quarter Fiscal 2018 Results
February 02 2018 - 8:00AM
Gencor Industries, Inc. (Nasdaq:GENC) announced
today net revenues increased 46% to $23.1 million for the quarter
ended December 31, 2017 compared to $15.8 million for the quarter
ended December 31, 2016. Gross margins were 22.0% for the
quarter ended December 31, 2017 compared to 26.3% for the quarter
ended December 31, 2016 as the Company increased its manufacturing
overhead to support the significantly higher production, as annual
revenues have doubled over the past two years. Product engineering
and development expenses increased $284,000 to $700,000 for the
quarter ended December 31, 2017 due to increased staffing to meet
the higher demands for our engineered products. Selling, general
and administrative (“SG&A”) expenses increased $502,000 to
$2,692,000 for the quarter ended December 31, 2017. Headcount
additions, higher sales commissions and increased advertising and
trade show expenses to capitalize on the renewed optimism within
the highway construction industry contributed to most of the
increase in SG&A expenses. Operating income for the quarter
ended December 31, 2017 was $1.7 million compared to $1.5 million
for the quarter ended December 31, 2016.
For the quarter ended December 31, 2017, the Company had
non-operating income of $0.5 million compared to non-operating
income of $0.4 million for the quarter ended December 31,
2016. 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, 2017 was $2.3 million, or $0.16 per basic and diluted share,
compared to net income of $1.4 million, or $0.10 per basic and
diluted share for the quarter ended December 31, 2016.
At December 31, 2017, the Company had $113.2 million of cash and
marketable securities, an increase of $2.4 million over the
September 30, 2017 balance of $110.8 million. Net working capital
was $125.0 million at December 31, 2017. The Company had no
short-term or long-term debt outstanding at December 31, 2017.
The Company’s backlog was $50.2 million at December 31, 2017
compared to $40.8 million at December 31, 2016.
John Elliott, Gencor’s CEO, commented, “First quarter revenues
of $23.1 million represent the best start to our fiscal year in
over twenty years. We have a positive outlook which is
supported by favorable market conditions and the recently enacted
U.S. tax law legislation: Tax Cuts and Jobs Act. The Fixing
America’s Surface Transportation Act (FAST Act) and plans to
increase domestic infrastructure spending at the Federal level have
resulted in an increase in asphalt plant orders and quoting
activity. We also anticipate being a beneficiary of lower
corporate tax rates and the accelerated tax deduction on capital
purchases as a domestic manufacturer and purchaser of capital
equipment.
We are pleased with our 46% sales increase in the first quarter,
which is traditionally our lowest revenue quarter. Our customers
continue to place large orders as domestic highway construction
spending remains strong. Net income in the quarter was enhanced by
the changes to U.S. tax legislation, specifically a reduction in
corporate tax rates on deferred tax liabilities and acceleration of
tax depreciation on capital expenditures.
In the first quarter gross margins declined as the company
increased its manufacturing overhead to support the significantly
higher production, as revenues have doubled over the past two
years. The company also accelerated its capital purchases in
the first quarter to maximize the tax benefit due to anticipated
lower future tax rates. Gencor will continue to invest in its
operations to improve efficiencies and meet the strong demand for
its products.
Backlog of $50.2 million is 23% higher than the prior year and
represents continued optimism from highway contractors that the
Federal government and many states are once again focused on
investing in America’s infrastructure. We look forward to growth
and continue to evaluate opportunities to expand our existing
businesses.
In March we will be exhibiting at the 2018 World of Asphalt show
where we anticipate significant 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, |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
Net revenue |
$ |
23,122,000 |
|
|
$ |
15,783,000 |
|
|
|
|
|
|
|
Costs
and expenses: |
|
|
|
Production
costs |
|
18,039,000 |
|
|
|
11,633,000 |
Product
engineering and development |
|
700,000 |
|
|
|
416,000 |
Selling, general
and administrative |
|
2,692,000 |
|
|
|
2,190,000 |
|
|
21,431,000 |
|
|
|
14,239,000 |
|
|
|
|
Operating income |
|
1,691,000 |
|
|
|
1,544,000 |
|
|
|
|
Other income (expense),
net: |
|
|
|
Interest and
dividend income, net of fees |
|
293,000 |
|
|
|
41,000 |
Realized and
unrealized gains on marketable securities, net |
|
161,000 |
|
|
|
407,000 |
Other |
|
4,000 |
|
|
|
- |
|
|
458,000 |
|
|
|
448,000 |
|
|
|
|
Income before income
tax expense (benefit) |
|
2,149,000 |
|
|
|
1,992,000 |
Income tax expense
(benefit) |
|
(197,000 |
) |
|
|
598,000 |
Net income |
$ |
2,346,000 |
|
|
$ |
1,394,000 |
|
|
|
|
Basic Income per Common
Share: |
|
|
|
Net income per
share |
$ |
0.16 |
|
|
$ |
0.10 |
|
|
|
|
Diluted Income per
Common Share: |
|
|
|
Net income per
share |
$ |
0.16 |
|
|
$ |
0.10 |
|
|
|
|
|
GENCOR INDUSTRIES, INC. |
Condensed Consolidated Balance
Sheets |
|
|
December 31, |
|
September 30, |
|
|
2017 |
|
|
2017 |
ASSETS |
(Unaudited) |
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
24,863,000 |
|
$ |
22,933,000 |
Marketable
securities at fair value (cost $87,605,000 at December 31,
2017 and $86,967,000 at September 30, 2017) |
|
88,340,000 |
|
|
87,886,000 |
Accounts
receivable, less allowance for doubtful accounts of $240,000
at December 31, 2017 and $207,000 at September 30, 2017 |
|
1,317,000 |
|
|
1,184,000 |
Costs and
estimated earnings in excess of billings |
|
5,727,000 |
|
|
6,768,000 |
Inventories,
net |
|
16,925,000 |
|
|
16,687,000 |
Prepaid expenses
& other current assets |
|
1,250,000 |
|
|
1,660,000 |
Total Current Assets |
|
138,422,000 |
|
|
137,118,000 |
|
|
|
|
Property and equipment,
net of accumulated depreciation |
|
7,376,000 |
|
|
5,722,000 |
Other assets |
|
53,000 |
|
|
53,000 |
Total Assets |
$ |
145,851,000 |
|
$ |
142,893,000 |
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current
Liabilities: |
|
|
|
Accounts
payable |
$ |
3,315,000 |
|
$ |
1,320,000 |
Customer
deposits |
|
7,313,000 |
|
|
8,628,000 |
Accrued
expenses |
|
2,799,000 |
|
|
2,426,000 |
Total Current Liabilities |
|
13,427,000 |
|
|
12,374,000 |
|
|
|
|
Deferred and other
income taxes |
|
875,000 |
|
|
1,601,000 |
Total Liabilities |
|
14,302,000 |
|
|
13,975,000 |
|
|
|
|
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; |
|
|
|
12,181,837 shares and 12,154,829 shares issued and outstanding
at December 31, 2017 and September 30, 2017, respectively |
|
1,218,000 |
|
|
1,215,000 |
Class B Stock,
par value $.10 per share; 6,000,000 shares authorized; |
|
|
|
2,288,857
and 2,263,857 shares issued and outstanding at December
31, 2017 and September 30, 2017, respectively |
|
229,000 |
|
|
226,000 |
Capital in
excess of par value |
|
11,457,000 |
|
|
11,178,000 |
Retained
earnings |
|
118,645,000 |
|
|
116,299,000 |
Total Shareholders’ Equity |
|
131,549,000 |
|
|
128,918,000 |
Total Liabilities and Shareholders’ Equity |
$ |
145,851,000 |
|
$ |
142,893,000 |
|
|
|
|
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, 2017; (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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