Gencor Releases First Quarter Fiscal 2021 Results

Orlando, Florida, UNITED STATES


ORLANDO, Fla., Feb. 12, 2021 (GLOBE NEWSWIRE) -- Gencor Industries, Inc. (Nasdaq: GENC) announced today net revenues of $19.0 million for the quarter ended December 31, 2020 compared to $18.0 million for the quarter ended December 31, 2019.  There were no revenues generated by the Blaw-Knox paver product line during the quarter ended December 31, 2020, as the facility was being readied to begin production. Gross margins were 15.7% for the quarter ended December 31, 2020 compared to 24.0% for the quarter ended December 31, 2019. The gross profit margins for the quarter ended December 31, 2020 were negatively impacted by unabsorbed manufacturing labor and overhead expenses related to the Blaw-Knox paver product line. Excluding these Blaw-Knox expenses, the gross profit margin for the quarter ended December 31, 2020, would have been 23.5%, with increases in steel prices contributing to the lower overall gross margins.

Product engineering and development expenses increased $79,000 to $845,000 for the quarter ended December 31, 2020, as compared to $766,000 for the quarter ended December 31, 2019, due primarily to engineering wages and benefits related to the Blaw-Knox paver product line. Selling, general and administrative (“SG&A”) expenses increased by $812,000 to $3,194,000 for the quarter ended December 31, 2020, compared to the quarter ended December 31, 2019. The increase in SG&A expenses was primarily due to professional fees, salaries, travel and other acquisition related expenses. In addition, increased advertising expenses contributed to the higher SG&A expenses during the first quarter of fiscal 2021.

Operating income decreased from $1,172,000 for the quarter ended December 31, 2019 to an operating loss of $(1,058,000) for the quarter ended December 31, 2020, due primarily to the operational start-up costs related to the Blaw-Knox acquisition.

For the quarter ended December 31, 2020, the Company had non-operating income of $3.0 million compared to non-operating income of $1.9 million for the quarter ended December 31, 2019. Interest income for the quarter ended December 31, 2020, included $456,000 collected from a customer due to permitting delays. Included in non-operating income for the quarter ended December 31, 2020 were net realized and unrealized gains on marketable securities of $2.2 million, due to a strong domestic stock market during the quarter ended December 31, 2020.

The effective income tax rate for the quarters ended December 31, 2020 and December 31, 2019 was 20.0%. Net income for the quarter ended December 31, 2020 was $1.6 million, or $0.11 per basic and diluted share, compared to net income of $2.5 million, or $0.17 per basic and diluted share for the quarter ended December 31, 2019.

At December 31, 2020, the Company had $116.0 million of cash and marketable securities compared to $125.1 million at September 30, 2020. The Company acquired the Blaw-Knox paver product line in October 2020 with cash on hand. Net working capital was $151.3 million at December 31, 2020.  The Company had no short-term or long-term debt outstanding at December 31, 2020.

The Company’s backlog was $32.1 million at December 31, 2020 compared to $30.9 million at December 31, 2019.

John Elliott, Gencor’s CEO, commented, “First quarter revenues of $19 million reflect a moderate increase from the prior year even though some customers delayed placing equipment orders.  Sales activity improved later in the quarter and reflected a typical first quarter level. 

Gross profit margin in the first quarter of fiscal 2021 declined as steel prices increased throughout the quarter.  We have experienced a further increase in steel prices in January and February 2021.  The company closely monitors steel prices and from time to time has locked in prices with key suppliers for six to twelve months.   

As expected, we closed the Blaw-Knox acquisition and have been in the process of transferring the fixed assets and inventory purchased to a leased facility.  During the quarter, we prepared the facility for production.  We incurred typical start-up costs, including IT hardware and software, capex, IT and other professional fees, and hiring of key personnel.

We begin calendar 2021 with some optimism that the new administration will receive bipartisan support to successfully approve and fund a Federal infrastructure bill, a portion of which would be used for highways.  Prior administrations have proposed smaller infrastructure bills with little bipartisan support and success.  Barring incremental Federal funding for infrastructure, we anticipate sales to be at historical norms for the remainder of fiscal 2021.”

Gencor Industries is a leading manufacturer of heavy machinery used in the production and application of highway construction materials and environmental control equipment.

GENCOR INDUSTRIES, INC.
Condensed Consolidated Income Statements
For the Quarters Ended December 31, 2020 and 2019
(Unaudited)
  2020  2019 
   
Net revenue$18,964,000 $18,030,000 
Cost of goods sold 15,983,000  13,710,000 
Gross profit 2,981,000  4,320,000 
   
Operating expenses:  
Product engineering and development 845,000  766,000 
Selling, general and administrative 3,194,000  2,382,000 
Total operating expenses 4,039,000  3,148,000 
   
Operating income (loss) (1,058,000) 1,172,000 
   
Other income (expense), net:  
Interest and dividend income, net of fees 804,000  632,000 
Realized and unrealized gains on marketable securities, net 2,193,000  1,317,000 
Other -  (10,000)
  2,997,000  1,939,000 
   
Income before income tax expense 1,939,000  3,111,000 
Income tax expense 388,000  622,000 
Net income$1,551,000 $2,489,000 
   
   
Basic earnings per common share$0.11 $0.17 
   
Diluted earnings per common share$0.11 $0.17 
   


GENCOR INDUSTRIES, INC.
Condensed Consolidated Balance Sheets 
ASSETSDecember 31,
2020

(Unaudited)
  September 30,
2020
Current assets:   
Cash and cash equivalents$23,957,000 $35,584,000 
Marketable securities at fair value (cost of $90,158,000 at December 31,
   2020 and $89,514,000 at September 30, 2020)
 92,049,000  89,498,000 
Accounts receivable, less allowance for doubtful accounts of $360,000 at
   December 31, 2020 and $442,000 at September 30, 2020
 2,764,000  1,992,000 
Costs and estimated earnings in excess of billings 4,709,000  6,405,000 
Inventories, net 35,473,000  27,090,000 
Prepaid expenses 1,114,000  1,189,000 
Total current assets 160,066,000  161,758,000 
Property and equipment, net 12,087,000  8,341,000 
Other long-term assets 1,159,000  995,000 
Total Assets$173,312,000 $171,094,000 


LIABILITIES AND SHAREHOLDERS’ EQUITY
   
Current liabilities:   
Accounts payable$3,224,000 $1,728,000 
Customer deposits 2,697,000  3,853,000 
Accrued expenses 2,386,000  2,605,000 
Current operating lease liabilities 420,000  328,000 
Total current liabilities 8,727,000  8,514,000 


Deferred and other income taxes
 1,128,000  746,000 
Non-current operating lease liabilities 686,000  614,000 
Total liabilities 10,541,000  9,874,000 
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 issued and outstanding at
December 31, 2020 and September 30, 2020
 1,229,000  1,229,000 
Class B Stock, par value $.10 per share; 6,000,000 shares authorized;   
2,318,857 shares issued and outstanding at
December 31, 2020 and September 30, 2020
 232,000  232,000 
Capital in excess of par value 12,331,000  12,331,000 
Retained earnings 148,979,000  147,428,000 
Total shareholders’ equity 162,771,000  161,220,000 
Total Liabilities and Shareholders’ Equity$173,312,000 $171,094,000 
    

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, 2020; (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.

 

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