GlobeNewswire Inc | Feb 12, 2021 07:00AM EST

February 12, 2021

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 Companys backlog was $32.1 million at December 31, 2020 compared to $30.9 million at December 31, 2019.

John Elliott, Gencors 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 StatementsFor 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 2,193,000 1,317,000 securities, netOther - (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 December 31, September 30,ASSETS 2020 2020 (Unaudited)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, 92,049,000 89,498,000 2020 and $89,514,000 at September 30, 2020)Accounts receivable, less allowance fordoubtful accounts of $360,000 at 2,764,000 1,992,000 December 31, 2020 and $442,000 at September30, 2020Costs and estimated earnings in excess of 4,709,000 6,405,000 billingsInventories, 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? EQUITYCurrent 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

1,128,000 746,000 Deferred and other income taxesNon-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 issuedCommon stock, par value $.10 per share; 15,000,000 shares authorized;12,287,337 shares issued and outstanding at 1,229,000 1,229,000 December 31, 2020 and September 30, 2020Class B Stock, par value $.10 per share; 6,000,000 shares authorized;2,318,857 shares issued and outstanding at 232,000 232,000 December 31, 2020 and September 30, 2020Capital 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) Managements 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