Gencor Industries(GENC) - 2023 Q4 - Annual Report

Financial Performance - Net revenue for the year ended September 30, 2023, was $105,075,000, a 1.5% increase from $103,479,000 in 2022[152]. - Gross profit increased to $29,037,000 in 2023, compared to $20,544,000 in 2022, reflecting a significant improvement in profitability[152]. - Operating income rose to $13,425,000 in 2023, up from $4,167,000 in the previous year, indicating enhanced operational efficiency[152]. - Net income for 2023 was $14,666,000, a substantial recovery from a net loss of $372,000 in 2022[152]. - Basic and diluted earnings per share for 2023 were both $1.00, compared to a loss of $0.03 per share in 2022[163]. - Cash flows provided by operating activities were $10,196,000 in 2023, a turnaround from cash used in operations of $9,135,000 in 2022[156]. Assets and Liabilities - As of September 30, 2023, the Company reported total assets of $195,748,000, an increase from $179,313,000 in 2022, reflecting a growth of approximately 9.5%[150]. - Total current liabilities increased to $14,165,000 from $12,390,000, reflecting a rise of approximately 14.3%[150]. - Shareholders' equity rose to $181,583,000 from $166,917,000, an increase of about 8.8%[150]. - The balance of accrued expenses increased significantly to $3,753,000 in 2023 from $1,885,000 in 2022, a rise of 99%[206]. - The provision for doubtful accounts increased to $290,000 in 2023 from $194,000 in 2022, a growth of 49.5%[191]. Inventory and Supply Chain - Inventories increased significantly to $71,527,000 from $55,815,000, marking a rise of approximately 28.2%[150]. - The allowance for slow-moving and obsolete inventories was estimated at approximately $9,813,000 as of September 30, 2023[141]. - The allowance for slow-moving and obsolete inventories rose to $9,813,000 in 2023 from $8,192,000 in 2022, an increase of 19.8%[203]. - The principal raw material used is carbon steel, and any supply interruptions or price increases could materially affect production and results[51]. Customer Concentration - One customer accounted for 14.8% of net revenue for the year ended September 30, 2023, while no customer accounted for 10% or more of net revenue in the previous year[40]. - Revenue from custom equipment sales contracts for the year ended September 30, 2023, was approximately $34,150,000[145]. - Equipment sales recognized over time decreased to $34,150,000 in 2023 from $37,572,000 in 2022, a decline of 6.4%[181]. Employment and Workforce - The Company has a total of 314 full-time and 3 part-time employees as of September 30, 2023[33]. - The Company faces challenges in hiring skilled production workers, which could adversely impact its financial objectives[76]. - The Company relies on key personnel for its success, and the loss of such employees could adversely affect operations[46]. Environmental Compliance - The Company is subject to various federal, state, local, and foreign environmental laws and regulations, and believes it is in compliance with all applicable regulations[32]. - The Company is subject to extensive environmental laws and regulations, which could lead to significant compliance costs in the future[50]. Competition and Market Conditions - Competition in the industry may reduce revenue and market share, as competitors may have greater resources[64]. - Global economic instability, including inflation and geopolitical issues, may adversely impact the Company's business and financial condition[69]. Acquisitions and Business Strategy - The Company has engaged in a series of acquisitions since 1985 to expand its business, including the acquisition of asphalt paver assets from Volvo in 2020[16]. - The Company acquired Blaw-Knox paver assets on October 1, 2020, with ongoing integration challenges that may affect future performance[73]. Taxation - The company's effective income tax rate for 2023 was 21.9%, compared to a negative rate of 78.0% in 2022[207]. - The Company accrued unrecognized tax benefits (UTBs) of $176,000 in 2023, up from $131,000 in 2022[210]. - Total income taxes paid in fiscal 2023 were $2,300,000, compared to $2,839,000 in fiscal 2022[208]. Cash and Investments - The Company recorded cash and cash equivalents of $17,031,000, up from $9,581,000 in the previous year, representing an increase of approximately 77.5%[150]. - The company maintained a strong cash position with cash and cash equivalents increasing to $17,031,000 at the end of 2023, up from $9,581,000 at the end of 2022[156]. - The Company reported marketable securities valued at $84,252,000, a decrease from $89,300,000 in 2022, indicating a decline of about 5.8%[150]. - Total assets measured at fair value as of September 30, 2023, amounted to $84,252,000, with significant holdings in government securities and corporate bonds[168]. - The company reported net unrealized gains of $4,316,000 on trading securities still held as of September 30, 2023[168]. Capital Expenditures - Capital expenditures for 2023 were $2,746,000, down from $4,516,000 in 2022, indicating a more conservative investment approach[156].