Gencor Industries, Inc. (Nasdaq: GENC) announced today net revenues
of $26.7 million for the quarter ended March 31, 2019 compared to
$30.8 million for the quarter ended March 31, 2018. Gross
margins increased 880 basis points to 37.2% for the quarter ended
March 31, 2019 from 28.4% for the quarter ended March 31, 2018, as
a result of the Company’s cost management and operational
improvements implemented over the past few years, along with an
improved pricing environment and an increase in parts sales.
Product engineering and development expenses increased $65,000 to
$823,000 for the quarter ended March 31, 2019. Selling, general and
administrative (“SG&A”) expenses decreased $447,000 to
$2,474,000 for the quarter ended March 31, 2019. Reduced sales
commissions and advertising and trade show expenses resulted in the
decrease in SG&A expenses. Operating income for the
quarter ended March 31, 2019 was up 30% to $6.6 million compared
with $5.1 million for the quarter ended March 31, 2018.
For the quarter ended March 31, 2019, the Company had
non-operating income of $2.7 million compared to non-operating
expense of $0.3 million for the quarter ended March 31, 2018.
Included in non-operating income for the quarter ended March 31,
2019 were net realized and unrealized gains on marketable
securities of $2,204,000, due to the increase in the domestic
equity markets in the second quarter of fiscal 2019. The
effective income tax rate for the quarter ended March 31, 2019 was
20.0% versus 20.9% for the quarter ended March 31, 2018 reflecting
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 March 31, 2019 was up 98% to $7.5 million, or $0.51
per diluted share, compared with net income of $3.8 million, or
$0.26 per diluted share for the quarter ended March 31, 2018.
For the six months ended March 31, 2019 the
Company had net revenue of $48.0 million and net income of $7.8
million ($0.53 per diluted share) versus net revenue of $54.0
million and net income of $6.1 million ($0.41 per diluted share)
for the six months ended March 31, 2018.
At March 31, 2019, the Company had $114.7 million of cash and
marketable securities compared to $112.1 million at September 30,
2018. Net working capital was $143.8 million at March 31,
2019. The Company had no short-term or long-term debt
outstanding at March 31, 2019.
The Company’s backlog was $24.2 million at March 31, 2019
compared to $45.6 million at March 31, 2018.
John Elliott, Gencor’s CEO, commented, “Second quarter activity
levels were moderately lower compared to the second quarter of
fiscal 2018, when we realized record quarterly revenues of $30.8
million. Although revenues were lower, we were able to
achieve record gross margins and operating margins in the quarter
and first half of fiscal 2019.
Our profit improvement was the result of a favorable pricing
environment, stable steel prices, solid execution in production,
and continued effective cost management.
Gencor’s business has normalized from the record volumes in
fiscal 2018. Our customers are busy and benefitting from both
the FAST Act and the numerous states that have increased their
infrastructure funding and spending. We anticipate asphalt plant
orders to follow the seasonal pattern of prior years where a
majority of the plant sales occurred in the fall and winter
months.
Gencor received a higher than normal level of interest at the
World of Asphalt show in February. We expect to close a
couple of the quotes in the next few months.
We have been developing a new product line which should expand
our customer base and geographic reach in the future. I am proud of
the hard work and dedication of our Gencor employees that delivered
these solid results. We continue to identify opportunities to
improve our execution and remain focused on delivering strong
performance.”
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 March
31, |
|
For the Six Months Ended March
31, |
|
2019 |
|
2018 |
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Net revenue |
$ |
26,670,000 |
|
$ |
30,829,000 |
|
|
$ |
47,997,000 |
|
$ |
53,951,000 |
|
Costs
and expenses: |
|
|
|
|
|
|
|
Production
costs |
|
16,759,000 |
|
|
22,059,000 |
|
|
|
33,169,000 |
|
|
40,098,000 |
|
Product
engineering and development |
|
823,000 |
|
|
758,000 |
|
|
|
1,546,000 |
|
|
1,458,000 |
|
Selling,
general and administrative |
|
2,474,000 |
|
|
2,921,000 |
|
|
|
4,664,000 |
|
|
5,613,000 |
|
|
|
20,056,000 |
|
|
25,738,000 |
|
|
|
39,379,000 |
|
|
47,169,000 |
|
|
|
|
|
|
|
|
|
Operating income |
|
6,614,000 |
|
|
5,091,000 |
|
|
|
8,618,000 |
|
|
6,782,000 |
|
|
|
|
|
|
|
|
|
Other income (expense),
net: |
|
|
|
|
|
|
|
Interest and
dividend income, net of fees |
|
507,000 |
|
|
383,000 |
|
|
|
1,041,000 |
|
|
676,000 |
|
Net realized
and unrealized gains (losses) on marketable securities |
|
2,204,000 |
|
|
(719,000 |
) |
|
|
57,000 |
|
|
(558,000 |
) |
Other |
|
- |
|
|
3,000 |
|
|
|
- |
|
|
7,000 |
|
|
|
2,711,000 |
|
|
(333,000 |
) |
|
|
1,098,000 |
|
|
125,000 |
|
|
|
|
|
|
|
|
|
Income before income tax
expense |
|
9,325,000 |
|
|
4,758,000 |
|
|
|
9,716,000 |
|
|
6,907,000 |
|
Income tax expense |
|
1,865,000 |
|
|
994,000 |
|
|
|
1,943,000 |
|
|
797,000 |
|
Net
income |
$ |
7,460,000 |
|
$ |
3,764,000 |
|
|
$ |
7,773,000 |
|
$ |
6,110,000 |
|
|
|
|
|
|
|
|
|
Basic Income per Common
Share: |
|
|
|
|
|
|
|
Net income
per share |
$ |
0.51 |
|
$ |
0.26 |
|
|
$ |
0.53 |
|
$ |
0.42 |
|
|
|
|
|
|
|
|
|
Diluted Income per Common
Share: |
|
|
|
|
|
|
|
Net income
per share |
$ |
0.51 |
|
$ |
0.26 |
|
|
$ |
0.53 |
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
|
GENCOR INDUSTRIES, INC.Condensed
Consolidated Balance Sheets |
|
|
|
|
|
March 31, |
|
September 30, |
|
2019 |
|
2018 |
ASSETS |
(Unaudited) |
|
|
Current Assets: |
|
|
|
Cash and cash
equivalents |
$ |
11,586,000 |
|
$ |
8,012,000 |
Marketable
securities at fair value (cost $103,629,000 at March 31,
2019 and $103,751,000 at September 30, 2018) |
|
103,156,000 |
|
|
104,058,000 |
Accounts
receivable, less allowance for doubtful accounts of $285,000 at
March 31, 2019 and $313,000 at September 30, 2018 |
|
2,412,000 |
|
|
993,000 |
Costs and
estimated earnings in excess of billings |
|
14,013,000 |
|
|
11,900,000 |
Inventories,
net |
|
20,139,000 |
|
|
18,214,000 |
Prepaid
expenses and other current assets |
|
926,000 |
|
|
1,904,000 |
Total
Current Assets |
|
152,232,000 |
|
|
145,081,000 |
|
|
|
|
Property and equipment,
net |
|
8,366,000 |
|
|
7,889,000 |
Other assets |
|
53,000 |
|
|
53,000 |
Total
Assets |
$ |
160,651,000 |
|
$ |
153,023,000 |
LIABILITIES
AND SHAREHOLDERS’ EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Accounts
payable |
$ |
2,155,000 |
|
$ |
1,838,000 |
Customer
deposits |
|
4,020,000 |
|
|
4,563,000 |
Accrued
expenses |
|
2,287,000 |
|
|
2,085,000 |
Total
Current Liabilities |
|
8,462,000 |
|
|
8,486,000 |
|
|
|
|
Deferred and other income
taxes |
|
2,202,000 |
|
|
2,358,000 |
Total
Liabilities |
|
10,664,000 |
|
|
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 March 31, 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 March 31, 2019 and September 30,
2018 |
|
229,000 |
|
|
229,000 |
Capital in
excess of par value |
|
11,897,000 |
|
|
11,862,000 |
Retained
earnings |
|
136,636,000 |
|
|
128,863,000 |
Total
Shareholders’ Equity |
|
149,987,000 |
|
|
142,179,000 |
Total
Liabilities and Shareholders’ Equity |
$ |
160,651,000 |
|
$ |
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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