Gencor Industries Inc 10-Q for FY2026 Q2
Gencor Industries Inc (GENC)
About this 10-Q
Gencor Industries Inc filed this 10-Q on June 12, 2026, covering the quarter ended March 31, 2026 (FY2026 Q2).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $33.8M
- down 11.5% from $38.2M a year earlier
- Net income
- $3.84M
- down 36.9% from net income of $6.1M a year earlier
- Diluted EPS
- $0.26
- down 38.1% from $0.42 a year earlier
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES THE QUARTERLY PERIOD ENDED |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD: From |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
Title of Each Class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Large accelerated filer | ☐ | ☒ | ||||
| Non-accelerated Filer | ☐ | Smaller Reporting Company | ||||
| Emerging Growth Company | ||||||
Class |
Outstanding at June 10, 2026 | |
| Common stock, $.10 par value | ||
| Class B stock, $.10 par value |
GENCOR INDUSTRIES, INC.
| Index | Page | |||||||
| Part I. | Financial Information | |||||||
| Item 1. | ||||||||
| Condensed Consolidated Balance Sheets – March 31, 2026 (Unaudited) and September 30, 2025 |
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| 5 | ||||||||
| 6 | ||||||||
| 7 | ||||||||
| Notes to Condensed Consolidated Financial Statements (Unaudited) |
8 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 | ||||||
| Item 3. | 21 | |||||||
| Item 4. | 21 | |||||||
| Part II. | Other Information | |||||||
| Item 1. | 23 | |||||||
| Item 1A. | 23 | |||||||
| Item 5. | 23 | |||||||
| Item 6. | 24 | |||||||
| Signatures | 25 | |||||||
2
Introductory Note: Caution Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Quarterly Report”) and the Company’s 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. The Company’s actual results may differ materially from those set forth in the Company’s forward-looking statements depending on a variety of important factors, including the financial condition of the Company’s customers, changes in the economic and competitive environments, and demand for the Company’s products. In addition, the impact of (i) the United States (“U.S.”) government’s tariff announcements, (ii) the ongoing conflicts and/or tensions involving Russia, Ukraine, Israel, Iran, the U.S., and various other countries, and (iii) any actions taken by the U.S. or other countries in response to such tariff announcements, conflicts and/or tensions, could result in a disruption in our supply chain and higher costs of our products. 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, 2025: (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 of operations, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statement made by the Company herein speaks as of the date of this Quarterly Report. 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 Quarterly Report to the “Company,” “Gencor,” “we,” “us,” or “our,” or similar words are to Gencor Industries, Inc. and its subsidiaries.
3
March 31, 2026 (Unaudited) |
September 30, 2025 |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | $ | ||||||
| Marketable securities at fair value (cost of $ |
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| Accounts receivable, less allowance for credit losses of $ |
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| Contract assets |
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| Inventories, net |
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| Prepaid expenses and other current assets |
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| Total current assets |
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| Property and equipment, net |
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| Deferred income taxes |
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| Other long-term assets |
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| Total Assets |
$ | $ | ||||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ | $ | ||||||
| Customer deposits |
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| Contract liabilities |
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| Accrued expenses |
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| Current operating lease liabilities |
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| Total current liabilities |
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| Unrecognized tax benefits |
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| Total liabilities |
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| Commitments and contingencies |
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| Shareholders’ equity: |
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| Preferred stock, par value $. |
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| Common stock, par value $. |
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| Class B Stock, par value $. |
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| Capital in excess of par value |
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| Retained earnings |
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| Total shareholders’ equity |
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| Total Liabilities and Shareholders’ Equity |
$ | $ | ||||||
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For the Quarters Ended March 31, |
For the Six Months Ended March 31, |
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2026 |
2025 |
2026 |
2025 |
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Net revenue |
$ | $ | $ | $ | ||||||||||||
Cost of goods sold |
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Gross profit |
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Operating expenses: |
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Product engineering and development |
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Selling, general and administrative |
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Total operating expenses |
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Operating income |
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Other income (expense), net: |
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Interest and dividend income, net of fees |
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Net realized and unrealized gains (losses) on marketable securities |
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Total other income, net |
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Income before income tax expense |
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Income tax expense |
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Net income |
$ | $ | $ | $ | ||||||||||||
Net income per common share – basic and diluted |
$ | $ | $ | $ | ||||||||||||
For the Quarters and Six Months Ended March 31, 2026 |
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| Common Stock | Class B Stock | Capital in Excess of Par Value |
Retained Earnings |
Total Shareholders’ Equity |
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| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| September 30, 2025 |
$ | $ | $ | $ | $ | |||||||||||||||||||||||
| Net income |
— | — | — | — | — | |||||||||||||||||||||||
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| December 31, 2025 |
$ | $ | $ | $ | $ | |||||||||||||||||||||||
| Net income |
— | — | — | — | — | |||||||||||||||||||||||
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| March 31, 2026 |
$ | $ | $ | $ | $ | |||||||||||||||||||||||
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For the Quarters and Six Months Ended March 31, 2025 |
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| Common Stock | Class B Stock | Capital in Excess of Par Value |
Retained Earnings |
Total Shareholders’ Equity |
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| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| September 30, 2024 |
$ | $ | $ | $ | $ | |||||||||||||||||||||||
| Net income |
— | — | — | — | — | |||||||||||||||||||||||
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| December 31, 2024 |
$ | $ | $ | $ | $ | |||||||||||||||||||||||
| Net income |
— | — | — | — | — | |||||||||||||||||||||||
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| March 31, 2025 |
$ | $ | $ | $ | $ | |||||||||||||||||||||||
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2026 |
2025 |
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| Cash flows from operating activities: |
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| Net income |
$ | $ | ||||||
| Adjustments to reconcile net income to cash provided by operating activities: |
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| Unrealized loss on marketable securities |
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| Deferred income taxes |
( |
) | ( |
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| Unrecognized tax benefits |
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| Depreciation and amortization |
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| Provision for credit losses |
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| Loss on disposal of fixed asset |
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| Changes in operating assets and liabilities: |
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| Accounts receivable |
( |
) | ( |
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| Contract assets |
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| Marketable securities |
( |
) | ( |
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| Inventories |
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| Prepaid expenses and other current assets |
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| Accounts payable |
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| Contract liabilities |
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| Customer deposits |
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| Accrued expenses |
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| Total adjustments |
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| Cash flows provided by operating activities |
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| Cash flows from investing activities: |
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| Capital expenditures |
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| Cash flows used in investing activities |
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| Net increase in cash and cash equivalents |
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| Cash and cash equivalents at: |
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| Beginning of period |
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| End of period |
$ | $ | ||||||
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| Supplemental Cash Flow Information |
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| Cash paid for income taxes, net |
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$ | |
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$ | | ||
| Supplemental Disclosures of Non-Cash Financing Activities |
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| Right-of-use |
$ | $ | ||||||
| Fair Value Measurements | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equities |
$ | $ | — | $ | — | $ | ||||||||||
| Mutual funds |
— | — | ||||||||||||||
| Exchange-Traded Funds |
— | — | ||||||||||||||
| Corporate Bonds |
— | — | ||||||||||||||
| Government Securities |
— | — | ||||||||||||||
| Cash and Money Funds |
— | — | ||||||||||||||
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| Total |
$ | $ | $ | — | $ | |||||||||||
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| Fair Value Measurements | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equities |
$ | $ | — | $ | — | $ | ||||||||||
| Mutual funds |
— | — | ||||||||||||||
| Exchange-Traded Funds |
— | — | ||||||||||||||
| Corporate Bonds |
— | — | ||||||||||||||
| Government Securities |
— | — | ||||||||||||||
| Cash and Money Funds |
— | — | ||||||||||||||
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| Total |
$ | $ | $ | — | $ | |||||||||||
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| March 31, 2026 | September 30, 2025 | |||||||
| Raw materials |
$ | $ | ||||||
| Work in process |
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| Costs incurred on uncompleted contracts |
$ | $ | ||||||
| Estimated earnings |
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| Billings to date |
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| Contract assets |
$ | $ | ||||||
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| March 31, 2026 | ||||
| Costs incurred on uncompleted contracts |
$ | |||
| Estimated earnings |
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| Billings to date |
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| Contract liabilities |
$ | ( |
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| Quarter Ended March 31, | Six Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net Income |
$ | $ | $ | $ | ||||||||||||
| Weighted Average Common Shares Outstanding – basic and diluted |
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| Net income per common share – basic and diluted |
$ | $ | $ | $ | ||||||||||||
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| Quarter Ended March 31, | Six Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Equipment sales recognized over time |
$ | $ | $ | $ | ||||||||||||
| Equipment sales recognized at a point in time |
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| Parts and component sales |
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| Freight revenue |
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| Other |
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| Net revenue |
$ | $ | $ | $ | ||||||||||||
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Quarter Ended March 31 |
Six Months Ended March 31, |
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2026 |
2025 |
2026 |
2025 |
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Balance, beginning of period |
$ |
$ |
$ |
$ |
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Provision for credit losses |
( |
) |
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Provision for estimated returns and allowances |
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Uncollectible accounts written off |
( |
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Returns and allowances issued |
( |
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( |
) |
( |
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( |
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Balance, end of period |
$ |
$ |
$ |
$ |
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| March 31, 2026 | September 30, 2025 | |||||||
Operating lease ROU asset included in other long-term assets |
$ | $ | ||||||
Current operating lease liability |
$ | $ | ||||||
Weighted average remaining lease term (in years) |
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Weighted average discount rate used in calculating ROU asset |
% | % | ||||||
Fiscal Year |
Annual Lease Payments | |||
2026 |
$ | |||
Less interest |
( |
) | ||
Present value of lease liabilities |
$ | |||
| Quarters Ended March 31, | Six Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
United States |
$ | $ | $ | $ | ||||||||||||
Canada |
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All other foreign countries |
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Net revenue |
$ | $ | $ | $ | ||||||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
This Quarterly Report contains certain “forward-looking statements” within the meaning of the Exchange Act, which represent the Company’s expectations and beliefs, including, but not limited to, statements concerning gross margins, sales of the Company’s products and litigation. These statements by their nature involve substantial risks and uncertainties, certain 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, the performance of the investment portfolio and the demand for the Company’s products.
For information concerning these factors and related matters, see the following sections of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025: (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 Quarterly Report. The Company does not undertake to update any forward-looking statement, except as required by law.
Overview
Gencor is a leading manufacturer of heavy machinery used in the production of highway construction equipment and materials and environmental control equipment. The Company’s core products include asphalt pavers, hot mix asphalt plants, combustion systems, fluid heat transfer systems, and asphalt pavers. The Company’s products are manufactured at three facilities in the United States.
Because the Company’s products are sold primarily to the highway construction industry, the business is seasonal in nature. Traditionally, the Company’s customers reduce their purchases of new equipment for shipment during the summer and fall months to avoid disrupting their peak season for highway construction and related repair work. The majority of orders for the Company’s products are thus received between October and February, with a significant volume of shipments occurring in the late winter and spring. The principal factors driving demand for the Company’s products are the overall economic conditions, the level of government funding for domestic highway construction and repair, Canadian infrastructure spending, the need for spare parts, fluctuations in the price of liquid asphalt, and a trend towards larger more efficient asphalt plants.
On November 15, 2021, President Biden signed into law a five-year, $1.2 trillion infrastructure bill, the Infrastructure Investment and Jobs Act (the “IIJA”), including $550 billion in new spending and reauthorization of $650 billion in previously allocated funds. The IIJA provides $110 billion for the nation’s highways, bridges and roads. The IIJA is scheduled to expire on September 30, 2026. If Congress does not reauthorize or fully fund the IIJA when it expires at the end of fiscal year 2026, demand for our products could decline.
Fluctuations in the price of carbon steel, which is a significant cost and material used in the manufacturing of the Company’s equipment, may affect the Company’s financial performance. The Company is subject to fluctuations in market prices for raw materials, such as copper and steel. If the Company is unable to purchase materials it requires or is unable to pass on price increases to its customers or otherwise reduce its cost of goods sold, its results of operations and financial condition may be adversely affected.
The Company monitors the prices it charges for its products and services on an ongoing basis and has historically been able to adjust its prices to take into account changes in the rate of inflation.
Also, a significant increase in the price of liquid asphalt could decrease demand for hot mix asphalt paving materials and certain of the Company’s products. Increases in oil prices also drive up the cost of gasoline and diesel, which results in increased freight costs. Where possible, the Company will pass increased freight costs on to its customers, however, the Company may not be able to recapture all of the higher costs, which could have a negative impact on the Company’s financial performance.
16
We manufacture our equipment domestically with a fraction of our sales exported to neighboring countries. The current U.S. administration has implemented tariffs on countries to which the Company has sales and has threatened tariffs on a variety of other counties. Also, some of the parts we procure are sourced from countries subject to the recent tariffs. It is not known whether any additional costs will be passed onto customers. If we cannot pass additional costs onto customers, then this could negatively affect our revenues, cash flows, and financial position.
In February 2026, the U.S. Supreme Court issued a ruling invalidating tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). As a result of this ruling, the U.S. Court of International Trade issued an order directing the U.S. Customs and Border Protection (“CBP”) agency to begin formalizing a process for refunds. The CBP launched an online portal that can be used to submit IEEPA tariff refund requests. The ultimate recoverability, timing and amount of any potential refunds of IEEPA tariffs remains uncertain and subject to further legal, regulatory and administrative developments. As of March 31, 2026, the Company has not recorded any potential impact associated with such refunds, but will continue to monitor these developments and their potential impact.
The Company believes its strategy of continuing to invest in product engineering and development and its focus on delivering the highest quality products and superior service will strengthen the Company’s market position. The Company continues to review its internal processes to identify inefficiencies and cost-reduction opportunities. The Company will continue to scrutinize its relationships with suppliers to ensure it is achieving the highest quality materials and services at the most competitive cost.
Concerns over inflation, geopolitical issues and global financial markets have led to increased economic instability and expectations of slower economic growth. Our business may be adversely affected by any such economic instability or unpredictability. Sanctions and disruptions to the global economy may lead to additional inflation and may disrupt the global supply chain and could have a material adverse effect on our ability to secure supplies. Prolonged periods of inflation would likely increase our costs in the form of higher wages, and increased cost of supplies and equipment necessary to operate our business. Additionally, conflicts and/or tensions involving Russia, Ukraine, Israel, Iran, the U.S., and various countries, may cause increased inflation in energy and logistics costs and could further cause general economic conditions in the U.S. or abroad to deteriorate. There is a risk that one or more of our suppliers could be negatively affected by global economic instability, which could adversely affect our ability to operate efficiently and timely complete our operational goals. As of the date of this Quarterly Report, the Company’s operations have not been significantly impacted.
Results of Operations
Quarter Ended March 31, 2026 versus March 31, 2025
Net revenue for the quarter ended March 31, 2026 was $33,799,000 compared with $38,204,000 net revenue for the quarter ended March 31, 2025. The decrease in net revenue was primarily due to lower contract equipment revenues recognized over time and associated freight revenue, which resulted from the timing of orders and shipments. As a percentage of net revenue, gross profit margins increased 200 basis points to 31.7% in the quarter ended March 31, 2026, compared to 29.7% in the quarter ended March 31, 2025.
Product engineering and development expenses decreased $52,000 to $629,000 for the quarter ended March 31, 2026, as compared to $681,000 for the quarter ended March 31, 2025 primarily due to lower headcount. Selling, general and administrative (“SG&A”) expenses increased $1,651,000 to $5,843,000 for the quarter ended March 31, 2026, compared to $4,192,000 for the quarter ended March 31, 2025 due to higher trade show expenses. In the quarter ended March 31, 2026 Gencor incurred trade show expenses of $3,525,000 compared with $345,000 in the quarter ended March 31, 2025.
Operating income decreased 34.6%, or $2,244,000, from $6,480,000 for the quarter ended March 31, 2025 compared with $4,236,000 for the quarter ended March 31, 2026, due to higher trade show expenses. Operating margin was 12.5% for the quarter ended March 31, 2026 compared with 17.0% for the quarter ended March 31, 2025.
For the quarter ended March 31, 2026, the Company had net other income of $937,000, compared to $1,756,000 for the quarter ended March 31, 2025. Interest and dividend income, net of fees, was $1,111,000 in the quarter ended March 31, 2026, compared to $1,158,000 in the quarter ended March 31, 2025. The net realized and unrealized losses on marketable securities were $174,000 for the quarter ended March 31, 2026, compared to net realized and unrealized gains of $598,000 for the quarter ended March 31, 2025. The decline in net realized and unrealized gains was due to slightly higher interest rates on longer duration bonds that caused a decline in value.
17
The effective income tax rate for both the quarters ended March 31, 2026 and March 31, 2025 was 26% based on the expected annual effective income tax rate.
Net income for the quarter ended March 31, 2026 decreased $2,252,000 or 37.0% to $3,843,000, or $0.26 basic and diluted net income per common share, from $6,095,000, or $0.42 basic and diluted net income per common share, for the quarter ended March 31, 2025. The lower net income resulted primarily from the higher trade show expenses, lower net revenues and net non-operating income, partially offset by improved gross margins.
Six Months Ended March 31, 2026 versus March 31, 2025
Net revenue for the six months ended March 31, 2026 and 2025 was $57,376,000 and $69,620,000, respectively, a decrease of $12,244,000 or 17.6%. The decrease was primarily in contract equipment sales and was due primarily to uncertainty around replacement of the current Federal infrastructure spending bill which is scheduled to expire on September 30, 2026.
Gross profit margins increased to 30.4% for the six months ended March 31, 2026 from 28.8% for the six months ended March 31, 2025.
Product engineering and development expenses increased $30,000 to $1,387,000 for the six months ended March 31, 2026, compared to $1,357,000 for the six months ended March 31, 2025. SG&A expenses increased $1,179,000 to $8,739,000 for the six months ended March 31, 2026, compared to $7,560,000 the six months ended March 31, 2025, increased trade show expenses.
The Company had operating income of $7,337,000 for the six months ended March 31, 2026, compared to $11,104,000 for the six months ended March 31, 2025. The decrease in operating income was primarily due to higher trade show expenses, lower net revenue, partially offset by increased gross margins.
For the six months ended March 31, 2026, the Company had net other income of $2,487,000, compared to $2,290,000 for the six months ended March 31, 2025. Interest and dividend income, net of fees, was $2,288,000 for the six months ended March 31, 2026, as compared to $2,147,000 for the six months ended March 31, 2025. The increase in interest and dividend income, net of fees, for the six months ended March 31, 2026, was primarily due to higher rates earned on fixed income investments and higher cash balances. Net realized and unrealized gains on marketable securities were $199,000 for the six months ended March 31, 2026, compared to $143,000 for the six months ended March 31, 2025.
The effective income tax rate for both the six month periods ended March 31, 2026 and March 31, 2025 was 26% based on the expected annual effective income tax rate. Net income for the six months ended March 31, 2026 was $7,285,000, or $0.50 basic and diluted net income per common share, compared to $9,912,000, or $0.68 basic and diluted net income per common share for the six months ended March 31, 2025. The lower net income and earnings per share resulted primarily from higher trade show expenses and lower net revenue.
Liquidity and Capital Resources
The Company generates capital resources through operations and returns on its investments. We believe these sources of capital will satisfy our liquidity needs in both the short and long term.
The Company had no long-term or short-term debt outstanding at March 31, 2026 or September 30, 2025. In April 2020, a financial institution issued an irrevocable standby letter of credit (“letter of credit”) on behalf of the Company for the benefit of one of the Company’s insurance carriers. The maximum amount that can be drawn by the beneficiary under the letter of credit is $150,000. The letter of credit expires in March 2027, unless terminated earlier, and can be extended, as provided by the agreement. The Company intends to renew the letter of credit for as long as the Company does business with the beneficiary insurance carrier. The letter is collateralized by restricted cash of the same amount on any outstanding drawings. To date, no amounts have been drawn under the letter of credit.
As of March 31, 2026, the Company had $43,464,000 in cash and cash equivalents, and $111,670,000 in marketable securities, including $5,849,000 in equities, $28,960,000 in corporate bonds, $12,137,000 in exchange-traded funds, $4,150,000 in mutual funds, $54,636,000 in government securities, and $5,938,000 in cash and money funds. The marketable securities are invested through a professional investment management firm. These securities may be liquidated at any time into cash and cash equivalents.
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The Company’s backlog was $60.5 million at March 31, 2026 compared to $27.8 million at March 31, 2025. The Company’s net working capital (defined as current assets less current liabilities) was $205.2 million at March 31, 2026 and $197.7 million at September 30, 2025. Cash flows provided by operating activities during the six months ended March 31, 2026 was $18,029,000. Contract assets decreased $4,656,000 and contract liabilities increased $1,233,000 with the timing of inventory build, customer payments and percentage of completion recognition on plant sales where revenue is recognized over time. Marketable securities increased $1,956,000 due to net unrealized losses of $340,000, and net realized gains and interest earned on corporate bonds and U.S. treasuries of $2,296,000. Inventories decreased $2,432,000 due to paver sales and the completion and shipment on contract orders. Prepaid expenses increased $1,768,000 reflecting prepayments of insurance premiums to be amortized over fiscal 2026 and prepaid income taxes. Accounts payable increased $2,992,000 reflecting primarily open payables related to the March 2026 ConExpo Con/Agg trade show and the timing of purchase order receipts. Customer deposits increased $3,216,000 reflecting progress payments on contract equipment sales where revenues are recognized at a point in time that have not yet shipped as well as initial deposits on contract equipment sales where revenues are recognized overtime but manufacturing is yet to begin.
Cash flows used in investing activities for the six months ended March 31, 2026 of $1,152,000 were related to capital expenditures, primarily for building additions and improvements, and capital equipment.
Seasonality
The Company’s primary business is the manufacture of asphalt plants and related components and asphalt pavers. These products typically experience a seasonal slowdown during the third and fourth quarters of the calendar year. This slowdown often results in lower reported sales and operating results during the first and fourth quarters of the fiscal year ended September 30.
Critical Accounting Policies, Estimates and Assumptions
The Company believes the following discussion addresses its most critical accounting policies, which are those that are most important to the portrayal of the financial condition and results of operations and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Accounting policies, in addition to the critical accounting policies referenced below, are presented in Note 1 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025, “Nature of Operations and Summary of Significant Accounting Policies.” There were no material changes to the accounting policies during the six months ended March 31, 2026.
Estimates and Assumptions
In preparing the condensed consolidated financial statements, the Company uses certain estimates and assumptions that may affect reported amounts and disclosures. Estimates and assumptions are used, among other places, when accounting for certain revenue (e.g., contract accounting), expense, and asset and liability valuations. The Company believes that the estimates and assumptions made in preparing the condensed consolidated financial statements are reasonable, but are inherently uncertain. Assumptions may be incomplete or inaccurate and unanticipated events may occur. The Company is subject to risks and uncertainties that may cause actual results to differ from estimated results.
Revenues & Expenses
The Company recognizes revenue under ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Revenues from contracts with customers for the design, manufacture and sale of custom equipment are recognized over time when the performance obligation is satisfied by transferring control of the equipment. Control of the equipment transfers over time, as the equipment is unique to the specific contract and thus does not create an asset with an alternative use to the Company. Revenues and costs are recognized in proportion to actual labor costs
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incurred, as compared with total estimated labor costs expected to be incurred, during the entire contract. All incremental costs related to obtaining a contract are expensed as incurred, as the amortization period is less than one year. Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined.
Contract assets (excluding accounts receivable) under contracts with customers represent revenue recognized in excess of amounts billed on equipment sales recognized over time. These contract assets were $7,552,000 and $12,208,000 at March 31, 2026 and September 30, 2025, respectively, and are included in current assets on the Company’s condensed consolidated balance sheets. Contract liabilities (excluding customer deposits) under contracts with customers represent amounts billed in excess of revenue recognized on equipment sales recognized over time. These contract liabilities were $1,233,000 and zero at March 31, 2026 and September 30, 2025, respectively, and are included in current liabilities on the Company’s condensed consolidated balance sheets. The Company anticipates that all of the contract assets at March 31, 2026, will be billed and collected within one year.
Revenues from all other contracts for the design and manufacture of equipment, for service and for parts sales, net of any discounts and return allowances, are recorded at a point in time when control of the goods or services has been transferred. Control of the goods or service typically transfers at time of shipment or upon completion of the service.
Payment for equipment under contract with customers is typically due prior to shipment. Payment for services under contract with customers is due as services are completed. Accounts receivable related to contracts with customers for equipment sales were $126,000 and $80,000 at March 31, 2026 and September 30, 2025, respectively.
Product warranty costs are estimated using historical experience and known issues and are charged to production costs as revenue is recognized.
Under certain contracts with customers, recognition of a portion of the consideration received may be deferred and recorded as a contract liability if the Company has to satisfy a future obligation, such as to provide installation assistance. There were no such contract liabilities at March 31, 2026 and September 30, 2025. Customer deposits related to contracts with customers were $7,105,000 and $3,889,000 at March 31, 2026 and September 30, 2025, respectively, and are included in current liabilities on the Company’s condensed consolidated balance sheets.
The Company records revenues earned for shipping and handling as freight revenue at the time of shipment. The cost of shipping and handling is recorded as cost of goods sold concurrently with the revenue recognition.
All product engineering and development costs, and selling, general and administrative expenses are charged to operations as incurred. Provision is made for any anticipated contract losses in the period that the loss becomes evident.
The allowance for credit losses is determined by performing a specific review of all account balances greater than 90 days past due and other higher risk amounts to determine collectability, and also adjusting for any known customer payment issues with account balances in the less-than-90-day past due aging category. Account balances are charged off against the allowance for credit losses when they are determined to be uncollectible. Any recoveries of account balances previously considered in the allowance for credit losses reduce future additions to the allowance for credit losses. The allowance for credit losses also includes an estimate for returns and allowances. Provisions for estimated returns and allowances and other adjustments, are provided for in the same period the related sales are recorded. Returns and allowances, which reduce product revenue, are estimated using known issues and historical experience.
Inventories
Inventories are valued at the lower of cost or net realizable value, with cost being determined under the first in, first out method and net realizable value defined as the estimated selling price of goods less reasonable costs of completion and delivery. Appropriate consideration is given to obsolescence, excessive levels, deterioration, possible alternative uses and other factors in determining net realizable value. The cost of work in process and
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finished goods includes materials, direct labor, variable costs and overhead. The Company evaluates the need to record inventory adjustments on all inventories, including raw materials, work in process, finished goods, spare parts and used equipment. Used equipment acquired by the Company on trade-in from customers is carried at estimated net realizable value. Unless specific circumstances warrant different treatment regarding inventory obsolescence, an allowance is established to reduce the cost basis of inventories three to four years old by 50%, the cost basis of inventories four to five years old by 75%, and the cost basis of inventories greater than five years old to zero. Inventory is typically reviewed for obsolescence on an annual basis computed as of September 30, the Company’s fiscal year end. If significant known changes in trends, technology or other specific circumstances that warrant consideration occur during the year, then the impact on obsolescence is considered at that time.
Marketable Securities and Fair Value Measurements
Marketable debt and equity securities are categorized as trading securities and are thus marked to market and stated at fair value. Fair value is determined using the quoted closing or latest bid prices for Level 1 investments and market standard valuation methodologies for Level 2 investments. Realized gains and (losses) on investment transactions are determined by specific identification and are recognized as incurred in the condensed consolidated income statements. Net unrealized gains and (losses) are reported in the condensed consolidated income statements in the current period and represent the change in the fair value of investment holdings during the period.
Long-Lived Asset Impairment
Property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess over its fair value of the asset’s carrying value. Fair value is generally determined using a discounted cash flow analysis. There were no impairment losses in the six months ended March 31, 2026 and March 31, 2025.
Off-Balance Sheet Arrangements
None.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s President and Chairman of the Board (Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer) evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act) pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this Quarterly Report (March 31, 2026). Based upon that evaluation, the President and the Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report, the Company’s disclosure controls and procedures were not effective at the reasonable assurance level solely as a result of the material weaknesses management identified in our internal control over financial reporting, as described in our Annual Report on Form 10-K for the year ended September 30, 2025.
Because of inherent limitations, the Company’s disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of such disclosure controls and procedures are met, and no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
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Material Weaknesses in Internal Control over Financial Reporting
As previously reported in our Annual Report on Form 10-K for the year ended September 30, 2025, management identified the following material weaknesses in internal control over financial reporting as of September 30, 2025, which were not remediated as of March 31, 2026:
| • | Ineffective information technology general controls (ITGCs), particularly as such controls related to user access, program change management, and ineffective complementary user-organization controls, which limited management’s ability to rely on technology-dependent controls relevant to the preparation of the Company’s condensed consolidated financial statements. As a result, information technology-dependent manual and automated controls that rely on the affected ITGCs were also ineffective. The information from the information technology systems with affected ITGCs and the period end close process, including the review and approval process of journal entries, account reconciliations and segregation of duties were also ineffective. |
| • | Inadequate risk assessment, control activities, information and communication, and monitoring components of the Company’s internal control framework such that internal control weaknesses were not detected, communicated, addressed with mitigating control activities, or remediated on a timely basis. |
Management’s Plan of Remediation of Material Weaknesses
Management, with oversight by our Audit Committee, is actively engaged in the planning for, and implementation of remediation efforts to address the ongoing material weaknesses described above and to improve our internal control over financial reporting.
To address the material weaknesses described above, the Company has implemented new and enhanced controls designed to ensure that access to information technology applications and data are adequately restricted to appropriate personnel, ensure segregation of duties, and appropriately monitor the activities of the individuals with access to modify data. We believe the actions described above will be sufficient to remediate the identified material weaknesses and strengthen our internal control over financial reporting. However, the new and enhanced controls have not operated for a sufficient period of time to conclude that the material weaknesses have been remediated. Management and our Audit Committee will continue to monitor these specific remedial measures and the effectiveness of these controls on our overall control environment and will make any further changes management determines to be appropriate. We can provide no assurance as to when the remediation of these material weaknesses will be completed.
Changes in Internal Control over Financial Reporting
The Company’s management, including the President and Chief Financial Officer, has reviewed the Company’s internal control over financial reporting. Except for the changes in the internal controls designed to remediate material weaknesses and other changes as part of our plans to improve our internal controls over financial reporting as discussed above, there were no changes in the Company’s internal control over financial reporting during the three months ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. However, as noted above, we will be continuing to implement changes to our internal control over financial reporting to address the material weaknesses described above.
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Item 6. Exhibits
| Exhibit |
Description | |
| 31.1 | Certification of Principal Executive Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended | |
| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended | |
| 32 | Certifications of Principal Executive Officer and Chief Financial Officer Pursuant to 18 U. S. C. Section 1350 | |
| 101.1 | Interactive Data File | |
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
| 101.SCH | XBRL Schema Document | |
| 101.CAL | XBRL Calculation Linkbase Document | |
| 101.DEF | XBRL Definition Linkbase Document | |
| 101.LAB | XBRL Label Linkbase Document | |
| 101.PRE | XBRL Presentation Linkbase Document | |
| 104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline XBRL (included in Exhibit 101) | |
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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 thereunto duly authorized.
| GENCOR INDUSTRIES, INC. |
| /s/ Marc G. Elliott |
| Marc G. Elliott |
| President and Chairman of the Board |
| (Principal Executive Officer) |
| June 12, 2026 |
| /s/ Raymond Cole |
| Raymond Cole |
| Interim Chief Financial Officer |
| (Principal Financial and Accounting Officer) |
| June 12, 2026 |
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Exhibit 31.1
CERTIFICATIONS
I, Mr. Marc G. Elliott, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Gencor Industries, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: June 12, 2026 | ||||||
| /s/ Marc G. Elliott | ||||||
| Marc G. Elliott | ||||||
| President and Chairman of the Board | ||||||
| (Principal Executive Officer) | ||||||
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Exhibit 31.2
CERTIFICATIONS
I, Mr. Raymond Cole, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Gencor Industries, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: June 12, 2026 |
||||||
| /s/ Raymond Cole | ||||||
| Raymond Cole | ||||||
| Interim Chief Financial Officer | ||||||
| (Principal Financial and Accounting Officer) | ||||||
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Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Gencor Industries, Inc. (the “Company”) for the period ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), Marc G. Elliott, as Principal Executive Officer of the Company, and Raymond Cole, as Principal Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Marc G. Elliott |
| Marc G. Elliott |
| President and Chairman of the Board |
| (Principal Executive Officer) |
| June 12, 2026 |
| /s/ Raymond Cole |
| Raymond Cole |
| Interim Chief Financial Officer |
| (Principal Financial and Accounting Officer) |
| June 12, 2026 |
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