Gencor Industries, Inc., (NASDAQ: GENC) announced today net revenue
for the quarter ended September 30, 2020 decreased 27.8% to $10.5
million compared to $14.5 million for the quarter ended September
30, 2019. The decrease in revenues reflects a decline in orders
from prior year as the impact of the Fixing America’s Surface
Transportation Act (the “FAST Act”), which was set to expire at the
end of September 2020, has slowed. On the eve of its expiration, a
one-year extension to the FAST Act was passed and signed into law.
The one-year extension maintains current funding levels under the
FAST Act through September 2021. Gross profit as a percentage of
net revenue decreased to 18.3% for the quarter ended September 30,
2020 from 19.6% for the quarter ended September 30, 2019. Gross
profit in the fourth quarter of fiscal 2020 was negatively impacted
due to the lower net revenues and reduced overhead
absorption.
Operating loss for the quarter ended September
30, 2020 was ($1.7) million compared to an operating loss of $(0.5)
million for the quarter ended September 30, 2019. The Company had
non-operating income of $0.7 million for the quarter ended
September 30, 2020 compared to $0.6 million for the quarter ended
September 30, 2019. The Company’s tax benefit was $(0.4) million
for the quarter ended September 30, 2020 compared to tax expense of
$0.1 million for the quarter ended September 30, 2019. Net loss for
the quarter ended September 30, 2020 was $(0.6) million compared to
breakeven for the quarter ended September 30, 2019.
Net revenue for the year ended September 30,
2020 decreased 4.8% to $77.4 million compared to $81.3 million for
the year ended September 30, 2019. Gross profit as a percentage of
net revenue decreased to 24.5% for the year ended September 30,
2020 from 27.6% for the year ended September 30, 2019. The Company
had operating income for the year ended September 30, 2020 of $5.5
million compared to $9.5 million for the year ended September 30,
2019. The Company had non-operating income of $1.1 million for the
year ended September 30, 2020 compared to $3.4 million for the year
ended September 30, 2019.
The effective income tax rate for fiscal 2020
was 17.2% versus 20.5% in fiscal 2019.
Net income for the year ended September 30, 2020
was $5.5 million ($0.38 per basic and diluted share) versus net
income of $10.2 million ($0.70 per basic share and $0.69 per
diluted share) for the year ended September 30, 2019. The decrease
in net income was primarily due to the lower net revenues, higher
SG&A expenses and lower investment income.
At September 30, 2020, the Company had $125.1
million in cash and marketable securities, an increase of $9.5
million over the September 30, 2019 balance of $115.6 million. The
Company’s working capital was $153.2 million at September 30,
2020 versus $150.4 million at September 30, 2019. The Company
has no short- or long-term debt.
The Company’s backlog, which includes orders received through
the date of this filing, was $24.9 million at December 1, 2020
compared to $27.3 million at December 1, 2019.
On October 1, 2020, the Company acquired the
Blaw-Knox paver business and associated assets, including
inventory, fixed assets and related intellectual property, from
Volvo Construction Equipment North America, LLC (“Volvo CE”). The
acquisition was accounted for as a business combination under ASC
805, “Business Combinations.” The purchase price of
approximately $14.4 million, which is subject to post-closing
adjustments, was funded by cash on hand. This acquisition provides
the Company entry into the hot mix paver segment of the asphalt
industry.
John E. Elliott, Gencor’s CEO, commented,
“Fiscal 2020 was a challenging year that demonstrated Gencor’s
resiliency and ability to manage through uncertainty. We
quickly adjusted to changes to our customers’ schedules and
availability of purchased parts from our vendors. We were able to
react to customer and market needs in spite of domestic and
international closures and interruptions although, increased sales
volume that Gencor experienced in the third quarter did not carry
over into the fourth quarter. The domestic highway
construction industry continues to remain cautious on 2021 state
budgets and long-term federal funding after the expiration of the
FAST Act, even though a one year extension was approved.
To date the Company has not been materially
impacted by the novel coronavirus “COVID-19” pandemic.
Manufacturing experienced minor production challenges as some
employees were required to quarantine. Currently, there is
minimal workforce impact and production is operating as
scheduled. Gencor continues to closely monitor impacts of the
COVID-19 pandemic on its employees, operations, financial results,
and supply chain. Visibility into 2021 is challenging due to the
uncertainty related to the COVID-19 pandemic and a change in the
Presidency which may bring increased focus on the need for
incremental domestic infrastructure investment.
After the fiscal year ended, Gencor successfully
closed on its acquisition of the Blaw-Knox paver business and
associated assets from Volvo CE. The Company is in the
process of transferring the paver manufacturing to a separate
facility. We plan to continue to invest in the engineering,
new product development, production and marketing of the Blaw-Knox
product line.”
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.Consolidated Income
StatementsFor the Years Ended September 30, 2020
and 2019 |
|
|
2020 |
|
|
2019 |
|
|
|
Net revenue |
$77,420,000 |
|
$81,329,000 |
Cost of goods sold |
|
58,467,000 |
|
|
58,917,000 |
Gross profit |
|
18,953,000 |
|
|
22,412,000 |
Operating expenses: |
|
|
Product engineering and development |
|
3,061,000 |
|
|
3,295,000 |
Selling, general and administrative |
|
10,356,000 |
|
|
9,647,000 |
Total operating expenses |
|
13,417,000 |
|
|
12,942,000 |
|
|
|
Operating income |
|
5,536,000 |
|
|
9,470,000 |
|
|
|
Other income (expense), net: |
|
|
Interest and dividend income, net of fees |
|
2,321,000 |
|
|
2,307,000 |
Realized and unrealized gains (losses) on marketable securities,
net |
|
(1,160,000) |
|
|
1,047,000 |
Other |
|
(16,000) |
|
|
- |
|
|
1,145,000 |
|
|
3,354,000 |
|
|
|
Income before income tax
expense |
|
6,681,000 |
|
|
12,824,000 |
Income tax expense |
|
1,150,000 |
|
|
2,628,000 |
Net income |
$5,531,000 |
|
$10,196,000 |
|
|
|
|
|
|
Basic earnings per common
share |
$0.38 |
|
$0.70 |
|
|
|
Diluted earnings per common
share |
$0.38 |
|
$0.69 |
|
|
|
GENCOR INDUSTRIES, INC.Consolidated
Balance SheetsAs of September 30, 2020 and
2019 |
ASSETS |
|
2020 |
|
|
2019 |
Current assets: |
|
|
|
Cash and cash equivalents |
$35,584,000 |
|
$10,302,000 |
Marketable securities at fair value (cost of $89,514,000 at
September 30, 2020 and $104,176,000 at September 30, 2019) |
|
89,498,000 |
|
|
105,322,000 |
Accounts receivable, less allowance for doubtful accounts of
$442,000 at September 30, 2020 and $459,000 at September 30,
2019 |
|
1,992,000 |
|
|
1,603,000 |
Costs and estimated earnings in excess of billings |
|
6,405,000 |
|
|
13,838,000 |
Inventories, net |
|
27,090,000 |
|
|
25,366,000 |
Prepaid expenses |
|
1,189,000 |
|
|
499,000 |
Total current assets |
|
161,758,000 |
|
|
156,930,000 |
Property and equipment, net |
|
8,341,000 |
|
|
8,389,000 |
Other long-term assets |
|
995,000 |
|
|
53,000 |
Total Assets |
$171,094,000 |
|
$165,372,000 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$1,728,000 |
|
$1,907,000 |
Customer deposits |
|
3,853,000 |
|
|
1,918,000 |
Accrued expenses |
|
2,605,000 |
|
|
2,660,000 |
Current operating lease liabilities |
|
328,000 |
|
|
- |
Total current liabilities |
|
8,514,000 |
|
|
6,485,000 |
Deferred and other income
taxes |
|
746,000 |
|
|
3,372,000 |
Non-current operating lease
liabilities |
|
614,000 |
|
|
- |
Total liabilities |
|
9,874,000 |
|
|
9,857,000 |
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; |
|
|
|
12,287,337 shares and 12,277,337 shares issued and outstanding at
September 30, 2020 and 2019, respectively |
|
1,229,000 |
|
|
1,228,000 |
Class B Stock, par value $.10 per share; 6,000,000 shares
authorized; |
|
|
|
2,318,857 shares and 2,308,857 shares issued and outstanding at
September 30, 2020 and 2019, respectively |
|
232,000 |
|
|
231,000 |
Capital in excess of par value |
|
12,331,000 |
|
|
12,159,000 |
Retained earnings |
|
147,428,000 |
|
|
141,897,000 |
Total shareholders’ equity |
|
161,220,000 |
|
|
155,515,000 |
Total Liabilities and
Shareholders’ Equity |
$171,094,000 |
|
$165,372,000 |
|
|
|
|
Caution Concerning Forward Looking Statements - This press
release and our other communications and statements may contain
certain “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), including statements about the Company’s 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 the Company’s control. Actual results may
differ materially depending on a variety of important factors,
including the financial condition of the Company’s customers,
changes in the economic and competitive environments, demand for
the Company’s products, the duration and scope of the coronavirus
(“COVID-19”) pandemic, actions governments, and businesses take in
response to the COVID-19 pandemic, including mandatory business
closures; the impact of the pandemic and actions taken on regional
economies; the pace of recovery when the COVID-19 pandemic
subsides. The words “may,” “could,” “should,” “would,” “believe,”
“anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,”
“goal,” and similar expressions are intended to identify
forward-looking statements.
For information concerning these factors and related matters,
see the following sections of the Company’s Annual Report on Form
10-K for the year ended September 30, 2020: (a) Part I, Item 1A,
“Risk Factors” and (b) Part II, Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations”.
However, other factors besides those referenced could adversely
affect the Company’s 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 the Company
herein speak as of the date of this press release. The Company does
not undertake to update any forward-looking statements, except as
required by law.
Unless the context otherwise indicates, all references in this
press release to the “Company,” “Gencor,” “we,” “us,” or “our,” or
similar words are to Gencor Industries, Inc. and its
subsidiaries.
Contact: Eric Mellen, Chief Financial
Officer407-290-6000
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