Gencor Industries(GENC) - 2024 Q3 - Quarterly Results

Financial & Operational Highlights Gencor reported a decrease in third-quarter revenue and net income for fiscal 2024 compared to the prior year, primarily due to the timing of equipment shipments, while the nine-month period saw year-over-year growth, supported by a strong balance sheet and record backlog Third Quarter Fiscal 2024 Performance Gencor's Q3 FY2024 net revenues decreased to $25.6 million from $27.9 million year-over-year due to delayed shipments, resulting in reduced gross profit margin and lower operating and net income Q3 FY2024 vs Q3 FY2023 Financial Performance | Financial Metric | Q3 FY2024 ($) | Q3 FY2023 ($) | Change | | :--- | :--- | :--- | :--- | | Net Revenues | 25,551,000 | 27,877,000 | -8.3% | | Gross Profit | 6,107,000 | 7,512,000 | -18.7% | | Gross Margin | 23.9% | 26.9% | -3.0 p.p. | | Operating Income | 1,993,000 | 3,453,000 | -42.3% | | Net Income | 2,558,000 | 3,212,000 | -20.4% | | EPS (basic and diluted) | 0.17 | 0.22 | -22.7% | - The decrease in revenues was primarily due to the delayed timing of the shipment of orders for equipment sales and reduced parts sales[1] - Gross profit margins decreased from 26.9% to 23.9% due to lower absorption from reduced production and lower parts sales[1] Nine-Month Fiscal 2024 Performance For the nine months ended June 30, 2024, the company demonstrated strong year-over-year growth, with net revenues increasing to $92.2 million and net income rising to $13.1 million Nine Months Ended June 30, FY2024 vs FY2023 | Financial Metric | Nine Months FY2024 ($) | Nine Months FY2023 ($) | Change | | :--- | :--- | :--- | :--- | | Net Revenues | 92,245,000 | 84,204,000 | +9.5% | | Net Income | 13,106,000 | 11,561,000 | +13.4% | | EPS (basic and diluted) | 0.89 | 0.79 | +12.7% | Financial Position and Backlog As of June 30, 2024, Gencor reported a robust financial position with $116.6 million in cash and marketable securities, no debt, and a record-high backlog of $46.6 million, indicating strong future demand - The company had $116.59 million of cash and marketable securities at June 30, 2024, an increase from $101.28 million at September 30, 2023[4] - The company had no short-term or long-term debt outstanding at June 30, 2024[4] Order Backlog Comparison | Date | Backlog Amount ($) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2024 | 46,600,000 | +67% | | June 30, 2023 | 27,900,000 | | Management Commentary Gencor's President attributed the Q3 revenue dip to revenue recognition timing on nearly completed orders, emphasizing a positive outlook supported by a historically high backlog, strong nine-month performance, and sustained demand bolstered by robust highway funding - The third-quarter revenue dip is attributed to the timing of revenue recognition on orders nearing completion, which is positively reflected in the elevated backlog[4] - The backlog of $46.6 million represents a historic high for this time of year, marking a 67% increase over fiscal 2023[4] - Management is optimistic about the future, citing continued demand for equipment and a robust highway funding mechanism to sustain growth[5] Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated income statements for the three and nine months ended June 30, 2024, and the condensed consolidated balance sheets as of June 30, 2024, compared to September 30, 2023 Condensed Consolidated Income Statements The income statement details the company's financial performance, showing a year-over-year decline in net income for the third quarter but an increase for the nine-month period, with key changes including lower Q3 gross profit and higher nine-month SG&A expenses Income Statement Highlights - For the Quarters Ended June 30 | Account | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net revenue | 25,551,000 | 27,877,000 | | Gross profit | 6,107,000 | 7,512,000 | | Operating income | 1,993,000 | 3,453,000 | | Net income | 2,558,000 | 3,212,000 | Income Statement Highlights - For the Nine Months Ended June 30 | Account | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net revenue | 92,245,000 | 84,204,000 | | Gross profit | 25,963,000 | 22,424,000 | | Operating income | 12,448,000 | 10,733,000 | | Net income | 13,106,000 | 11,561,000 | Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2024, reflects a strong financial position with total assets growing to $201.8 million, total liabilities decreasing significantly to $7.1 million, and total shareholders' equity increasing to $194.7 million Balance Sheet Summary (As of) | Account | June 30, 2024 ($) | September 30, 2023 ($) | | :--- | :--- | :--- | | Total Current Assets | 185,971,000 | 178,954,000 | | Total Assets | 201,755,000 | 195,748,000 | | Total Current Liabilities | 7,005,000 | 14,165,000 | | Total Liabilities | 7,066,000 | 14,165,000 | | Total Shareholders' Equity | 194,689,000 | 181,583,000 | - Cash and cash equivalents increased to $28.8 million from $17.0 million, while marketable securities rose slightly to $87.8 million[7] - The decrease in current liabilities was mainly driven by a reduction in customer deposits (from $6.8 million to $2.6 million) and accrued expenses (from $3.8 million to $1.7 million)[7] Caution Concerning Forward-Looking Statements This section serves as a legal disclaimer, warning that the press release contains forward-looking statements subject to significant risks and uncertainties, noting that actual results may differ materially and directing readers to the company's Annual Report on Form 10-K for comprehensive risk factors - The press release contains "forward-looking statements" which are subject to significant risks, uncertainties, and are based on factors that may be beyond the company's control[8] - Potential disruptions from geopolitical conflicts, such as the invasion of Ukraine and the conflict between Israel and Hamas, could impact the supply chain and increase product costs[8] - For a detailed discussion of risk factors, the company refers readers to its Annual Report on Form 10-K for the year ended September 30, 2023[9]