February 12, 2021
GENCOR RELEASES FIRST QUARTER FISCAL 2021 RESULTS
FOR IMMEDIATE RELEASE:
February 12, 2021 (PRIME 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.
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.
Contact: Eric Mellen, Chief Financial Officer