FOR IMMEDIATE RELEASE:
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.
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, 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 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