8-K
GENCOR INDUSTRIES INC (GENC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENTREPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4, 2020
GENCOR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
5201 NorthOrange Blossom Trail, Orlando, Florida 32810
(Address of principal executive offices) (Zip Code)
(407) 290-6000
(Registrant’s telephone number, including area code)
| Delaware | 001-11703 | 59-0933147 |
|---|---|---|
| (State or other jurisdiction of<br><br><br>incorporated or organization) | Commission<br><br><br>File Number | (I.R.S. Employer<br><br><br>Identification No.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17<br>CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered or to be registered pursuant to Section 12(b) of the Act
| Title of Each Class | Trading<br><br><br>Symbol(s) | Name of Exchange<br><br><br>on which registered |
|---|---|---|
| Common Stock ($.10 Par Value) | GENC | NASDAQ Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 4, 2020 Gencor Industries, Inc. issued a press release announcing its financial results for the second quarter of fiscal 2020. A copy of the press release is attached as Exhibit 99.1.
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| 99.1 | Earnings Release dated May 4, 2020 |
|---|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GENCOR INDUSTRIES, INC. | ||
|---|---|---|
| May 4, 2020 | By: | /s/ John E. Elliott |
| John E. Elliott, Chief Executive Officer | ||
| May 4, 2020 | By: | /s/ Eric E. Mellen |
| Eric E. Mellen, Chief Financial Officer |
Index to Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Earnings Release dated May 4, 2020 |
EX-99.1
Exhibit 99.1
GENCOR RELEASES SECOND QUARTER FISCAL 2020 RESULTS
May 4, 2020 (PRIME NEWSWIRE)—Gencor Industries, Inc. (Nasdaq: GENC) announced today net revenues of $26.0 million for the quarter ended March 31, 2020 compared to $26.7 million for the quarter ended March 31, 2019. Gross margins for the quarter ended March 31, 2020 were 28.2% compared with 37.2% for the quarter ended March 31, 2019. The gross margins achieved in prior year’s quarter benefitted from an unusually strong pricing environment for plant and equipment sales. The current quarter’s gross margins of 28.2% reflect a more typical margin for the second quarter. Product engineering and development expenses decreased $134,000 to $689,000 for the quarter ended March 31, 2020. Selling, general and administrative (“SG&A”) expenses increased $87,000 to $2,561,000 for the quarter ended March 31, 2020. Increased headcount, higher travel and trade show expenses resulted in the increase in SG&A expenses. Operating income for the quarter ended March 31, 2020 declined by 38.2% to $4.1 million compared with $6.6 million for the quarter ended March 31, 2019.
For the quarter ended March 31, 2020, the Company had non-operating expense of $4.9 million compared to non-operating income of $2.7 million for the quarter ended March 31, 2019. Included in non-operating expense for the quarter ended March 31, 2020 were net realized and unrealized losses on marketable securities of $5.7 million, due to the decline in the domestic equity markets in March 2020. The effective income tax rate for the quarters ended March 31, 2020 and March 31, 2019 were 20%. Net loss for the quarter ended March 31, 2020 was $0.7 million, or $(0.04) per diluted share, compared with net income of $7.5 million, or $0.51 per diluted share for the quarter ended March 31, 2019.
For the six months ended March 31, 2020 the Company had net revenue of $44.0 million and net income of $1.8 million ($0.12 per diluted share) versus net revenue of $48.0 million and net income of $7.8 million ($0.53 per diluted share) for the six months ended March 31, 2019.
At March 31, 2020, the Company had $121.0 million of cash and marketable securities compared to $115.6 million at September 30, 2019. Net working capital was $149.6 million at March 31, 2020. The Company had no short-term or long-term debt outstanding at March 31, 2020.
The Company’s backlog was $24.5 million at March 31, 2020 compared to $24.2 million at March 31, 2019.
John Elliott, Gencor’s CEO, commented, “Second quarter revenues were moderately lower compared to the second quarter of fiscal 2019. Production and deliveries were minimally affected by COVID-19-related precautions in the quarter.
Although down from prior year, gross margins remained strong as the company benefited from solid productivity and slightly lower steel prices. In the quarter we made commitments with some of our steel suppliers to lock in pricing on steel plate and beam and more importantly to guarantee supply, to meet anticipated production needs for the remainder of the fiscal year.
Gencor continues to evaluate the risks to business activity related to the COVID-19 pandemic, including potential impacts on our employees, customers, suppliers and financial results. To date, there has been minimal impact to the Company’s operations and deliveries as a result of COVID-19. As the situation remains fluid, it is difficult to predict the duration of the pandemic and its impact on the Company’s business. We implemented actions to moderate our spending and more closely manage cash during this uncertain period, including prioritizing capital outlays. The Company has significant liquidity and no debt, which provides us the flexibility to proactively manage the business while we navigate through the uncertainty.
The ConExpo/ConAgg show in March was successful in spite of the global health and travel disruptions. Our show visitors expressed optimism with their workload for this year. We enjoyed significant attention, both domestic and international, and our new product introductions were well received.”
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 Operations
(Unaudited)
| For the Quarters Ended<br>March 31, | For the Six Months Ended<br>March 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||
| Net revenue | $ | 25,993,000 | $ | 26,670,000 | $ | 44,023,000 | $ | 47,997,000 | ||
| Costs and expenses: | ||||||||||
| Production costs | 18,655,000 | 16,759,000 | 32,365,000 | 33,169,000 | ||||||
| Product engineering and development | 689,000 | 823,000 | 1,455,000 | 1,546,000 | ||||||
| Selling, general and administrative | 2,561,000 | 2,474,000 | 4,943,000 | 4,664,000 | ||||||
| 21,905,000 | 20,056,000 | 38,763,000 | 39,379,000 | |||||||
| Operating income | 4,088,000 | 6,614,000 | 5,260,000 | 8,618,000 | ||||||
| Other income (expense), net: | ||||||||||
| Interest and dividend income, net of fees | 763,000 | 507,000 | 1,395,000 | 1,041,000 | ||||||
| Net realized and unrealized gains (losses) on marketable securities | (5,670,000 | ) | 2,204,000 | (4,353,000 | ) | 57,000 | ||||
| Other | — | — | (10,000 | ) | — | |||||
| (4,907,000 | ) | 2,711,000 | (2,968,000 | ) | 1,098,000 | |||||
| Income (loss) before income tax expense (benefit) | (819,000 | ) | 9,325,000 | 2,292,000 | 9,716,000 | |||||
| Income tax expense (benefit) | (164,000 | ) | 1,865,000 | 458,000 | 1,943,000 | |||||
| Net income (loss) | $ | (655,000 | ) | $ | 7,460,000 | $ | 1,834,000 | $ | 7,773,000 | |
| Basic Income (Loss) per Common Share: | ||||||||||
| Net income (loss) per share | $ | (0.04 | ) | $ | 0.51 | $ | 0.13 | $ | 0.53 | |
| Diluted Income (Loss) per Common Share: | ||||||||||
| Net income (loss) per share | $ | (0.04 | ) | $ | 0.51 | $ | 0.12 | $ | 0.53 |
GENCOR INDUSTRIES, INC.
Condensed Consolidated Balance Sheets
| September 30,2019 | |||
|---|---|---|---|
| ASSETS | |||
| Current Assets: | |||
| Cash and cash equivalents | 18,738,000 | $ | 10,302,000 |
| Marketable securities at fair value (cost 105,967,000 at March 31, 2020 and 104,176,000 at<br>September 30, 2019) | 102,275,000 | 105,322,000 | |
| Accounts receivable, less allowance for doubtful accounts of 474,000 at March 31, 2020 and<br>459,000 at September 30, 2019 | 2,366,000 | 1,603,000 | |
| Costs and estimated earnings in excess of billings | 8,792,000 | 13,838,000 | |
| Inventories, net | 27,063,000 | 25,366,000 | |
| Prepaid expenses and other current assets | 2,144,000 | 499,000 | |
| Total Current Assets | 161,378,000 | 156,930,000 | |
| Property and equipment, net | 8,276,000 | 8,389,000 | |
| Other assets | 53,000 | 53,000 | |
| Total Assets | 169,707,000 | $ | 165,372,000 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
| Current Liabilities: | |||
| Accounts payable | 4,380,000 | $ | 1,907,000 |
| Customer deposits | 4,713,000 | 1,918,000 | |
| Accrued expenses | 2,721,000 | 2,660,000 | |
| Total Current Liabilities | 11,814,000 | 6,485,000 | |
| Deferred and other income taxes | 509,000 | 3,372,000 | |
| Total Liabilities | 12,323,000 | 9,857,000 | |
| Commitments and contingencies | |||
| Shareholders’ Equity: | |||
| Preferred stock, par value .10 per share; 300,000 shares authorized;<br> none issued | — | — | |
| Common stock, par value .10 per share; 15,000,000 shares authorized; 12,277,337 shares issued and<br>outstanding at March 31, 2020 and September 30, 2019 | 1,228,000 | 1,228,000 | |
| Class B Stock, par value .10 per share; 6,000,000 shares authorized; 2,308,857 shares issued<br>and outstanding at March 31, 2020 and September 30, 2019 | 231,000 | 231,000 | |
| Capital in excess of par value | 12,194,000 | 12,159,000 | |
| Retained earnings | 143,731,000 | 141,897,000 | |
| Total Shareholders’ Equity | 157,384,000 | 155,515,000 | |
| Total Liabilities and Shareholders’ Equity | 169,707,000 | $ | 165,372,000 |
All values are in US Dollars.
Caution Concerning Forward Looking Statements—This press release and our other communications andstatements 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 uncertaintiesand 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 anduncertainties. 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 Form10-K for the year ended September 30, 2019; (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 statementsmade 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 Officer |
|---|
407-290-6000