GlobeNewswire Inc | Aug 6, 2020 07:00AM EDT

August 06, 2020

ORLANDO, Fla., Aug. 06, 2020 (GLOBE NEWSWIRE) -- Gencor Industries, Inc. (Nasdaq: GENC) announced today net revenues of $22.9 million for the quarter ended June 30, 2020 compared to $18.8 million for the quarter ended June 30, 2019. Gross margins were 23.5% for the quarter ended June 30, 2020 compared to 25.2% for the quarter ended June 30, 2019, as the gross profit margins achieved in the current quarter were impacted by a higher percentage of revenues generated from plant and equipment sales compared with parts sales, which have a higher gross margin. Product engineering and development expenses decreased $32,000 to $849,000 for the quarter ended June 30, 2020, on reduced travel expenses. Selling, general and administrative (SG&A) expenses increased $51,000 to $2,522,000 for the quarter ended June 30, 2020. Increases in sales headcount resulted in the increased SG&A expenses. Operating income for the quarter ended June 30, 2020 increased 44.1% to $2.0 million compared with $1.4 million for the quarter ended June 30, 2019, on higher revenues and production volumes.

For the quarter ended June 30, 2020, the Company had non-operating income of $3.4 million compared to non-operating income of $1.7 million for the quarter ended June 30, 2019. Included in non-operating income for the quarter ended June 30, 2020 were net realized and unrealized gains on marketable securities of $2.9 million, due to recovery in the domestic equity markets after the initial declines from the impact of the COVID-19 pandemic in the prior quarter. The effective income tax rate for the quarters ended June 30, 2020 and 2019 was 20.0%. Net income for the quarter ended June 30, 2020 was $4.3 million, or $0.29 per diluted share, compared with net income of $2.4 million, or $0.17 per diluted share for the quarter ended June 30, 2019.

For the nine months ended June 30, 2020 the Company reported net revenue of $67.0 million and net income of $6.2 million ($0.42 per diluted share) versus net revenue of $66.8 million and net income of $10.2 million ($0.69 per diluted share) for the nine months ended June 30, 2019. Compared to the prior year, lower gross profit margins and net realized and unrealized losses on marketable securities contributed to the lower net income in the nine months ended June 30, 2020.

At June 30, 2020, the Company had $124.2 million of cash and marketable securities compared to $115.6 million at September 30, 2019. Net working capital was $154.7 million at June 30, 2020. The Company had no short-term or long-term debt outstanding at June 30, 2020.

The Companys backlog was $11.7 million at June 30, 2020 compared to $11.9 million at June 30, 2019.

John Elliott, Gencors CEO, stated, Gencor performed well in this challenging market environment associated with the COVID-19 pandemic. We continue to demonstrate the operating durability of our business as well as our ability to achieve solid profitability and cash flow. While there is still significant uncertainty around demand, the shape of the economic recovery and the continued impact of the pandemic, we are encouraged by the results we have achieved in the first six months of the calendar year.

Third quarter fiscal 2020 revenues were well above third quarter of fiscal 2019. Production and deliveries were minimally affected by COVID-19-related precautions in the current quarter.

The FAST Act is scheduled to expire in September 2020. Currently there is no replacement or extension of the FAST Act. While the economic outlook remains uncertain, by producing in line with customer demand and aggressively managing costs, I am confident Gencor will successfully navigate these challenging times.

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 For the Nine Months Ended June 30, June 30, 2020 2019 2020 2019 Net revenue $22,940,000 $18,848,000 $66,963,000 $66,845,000Costs and expenses:Production 17,555,000 14,098,000 49,920,000 47,267,000costsProductengineering 849,000 881,000 2,304,000 2,427,000anddevelopmentSelling,general and 2,522,000 2,471,000 7,465,000 7,135,000administrative 20,926,000 17,450,000 59,689,000 56,829,000 Operating 2,014,000 1,398,000 7,274,000 10,016,000income Other income(expense), net:Interest anddividend 512,000 567,000 1,907,000 1,608,000income, net offeesNet realizedand unrealizedgains (losses) 2,888,000 1,090,000 (1,465,000) 1,147,000on marketablesecuritiesOther (10,000) - (20,000) - 3,390,000 1,657,000 422,000 2,755,000 Income beforeincome tax 5,404,000 3,055,000 7,696,000 12,771,000expenseIncome tax 1,082,000 611,000 1,540,000 2,554,000expenseNet income $4,322,000 $2,444,000 $6,156,000 $10,217,000 Basic Incomeper Common Share:Net income per $0.30 $0.17 $0.42 $0.70share Diluted Incomeper Common Share:Net income per $0.29 $0.17 $0.42 $0.69share

GENCOR INDUSTRIES, INC.Condensed Consolidated Balance Sheets June 30, September 30, 2020 2019ASSETS (Unaudited) Current Assets: Cash and cash equivalents $18,564,000 $10,302,000Marketable securities at fair value (cost$105,388,000 at June 30, 2020 105,675,000 105,322,000 and $104,176,000 at September 30, 2019)Accounts receivable, less allowance for doubtfulaccounts of $419,000 at 1,609,000 1,603,000 June 30, 2020 and $459,000 at September 30,2019Costs and estimated earnings in excess of 10,064,000 13,838,000billingsInventories, net 24,562,000 25,366,000Prepaid expenses and other current assets 1,649,000 499,000Total Current Assets 162,123,000 156,930,000 Property and equipment, net 8,391,000 8,389,000Other assets 53,000 53,000Total Assets $170,567,000 $165,372,000LIABILITIES AND SHAREHOLDERS? EQUITY Current Liabilities: Accounts payable $2,089,000 $1,907,000Customer deposits 2,651,000 1,918,000Accrued expenses and other current liabilities 2,694,000 2,660,000Total Current Liabilities 7,434,000 6,485,000 Deferred and other income taxes 1,306,000 3,372,000Total Liabilities 8,740,000 9,857,000 Commitments and contingencies Shareholders? equity: Preferred stock, par value $.10 per share;300,000 shares authorized; - - none issuedCommon stock, par value $.10 per share; 15,000,000 shares authorized;12,287,337 shares issued and outstanding at June30, 2020 and 1,229,000 1,228,000 12,277,337 shares issued and outstanding atSeptember 30, 2019Class B Stock, par value $.10 per share; 6,000,000 shares authorized;2,318,857 shares issued and outstanding at June30, 2020 and 232,000 231,000 2,308,857 shares issued and outstanding atSeptember 30, 2019Capital in excess of par value 12,313,000 12,159,000Retained earnings 148,053,000 141,897,000Total Shareholders? Equity 161,827,000 155,515,000Total Liabilities and Shareholders? Equity $170,567,000 $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 Companys 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 Companys control. Actual results may differ materially depending on a variety of important factors, including the financial condition of the Companys customers, changes in the economic and competitive environments, demand for the Companys 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 Part I, Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, in the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, and Part II, Item 1A, Risk Factors in the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and the following sections of the Companys Annual Report on Form 10-K for the year ended September 30, 2019: (a) Part I, Item 1A, Risk Factors and (b) Part II, Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations. However, other factors besides those referenced could adversely affect the Companys 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