<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-3821
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GENCOR INDUSTRIES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 59-0933147
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(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
5201 North Orange Blossom Trail, Orlando, Florida 32810
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(Address of principal executive offices) (Zip Code)
(407) 290-6000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.
Class Outstanding at July 17, 1996
- ---- ----------------------------
Common stock, $.10 par value 1,338,832 shares
Class B stock, $.10 par value 441,532 shares
1
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Gencor Industries, Inc.
Form 10-Q for the Quarter Ended June 30, 1996
Index
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Page
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Part I. Financial Information - Unaudited
Item 1. Financial Statements
a) Consolidated Balance Sheet -
June 30, 1996 and
September 30, 1995 3
b) Consolidated Income Statement -
Three and Nine Months Ended
June 30, 1996 and 1995 4
c) Consolidated Statement of Cash Flows -
Nine Months Ended
June 30, 1996 and 1995 5
d) Notes to Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Position and Results of Operations 7
Part II. Other Information 9
2
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PART I. FINANCIAL INFORMATION
ITEM 1.
- -------
GENCOR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
---------- ------------
(Unaudited) (Audited)
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $ 490 $ 416
Income taxes receivable 29 -
Accounts and notes receivable, less allowance
for doubtful accounts of $1,951 and $2,555 9,257 7,185
Inventories:
Raw materials 8,728 7,583
Work-in-progress 3,185 3,275
Finished goods 5,624 3,856
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17,537 14,714
Prepaid expenses, including deferred income taxes
of $1,362 and $1,462 1,615 2,002
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Total current assets 28,928 24,317
Property and equipment, net 10,649 10,453
Other assets 349 361
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$ 39,926 $ 35,131
========== ===========
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Notes payable $ 480 $ 913
Current portion of long-term debt 655 632
Accounts payable 6,825 7,169
Customer deposits 995 448
Accrued expenses 3,586 3,368
Income taxes payable 853 740
---------- -----------
Total current liabilities 13,394 13,270
Long-term debt 14,156 11,708
Deferred income taxes 629 511
Shareholders' equity:
Preferred stock, par value $0.10 per share; authorized
300,000 shares, none issued - -
Common stock, par value $0.10 per share; authorized
5,000,000 shares; 1,605,267 shares issued 161 161
Class B stock, par value $0.10 per share; authorized
3,000,000 shares; 441,532 and 434,032 shares issued,
respectively 44 43
Capital in excess of par value 7,797 7,741
Retained earnings 4,398 2,329
Cumulative translation adjustment 298 319
---------- -----------
12,698 10,593
Subscription receivable from officer (95) (95)
Less common stock in treasury, at cost 266,435 shares (856) (856)
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11,747 9,642
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$ 39,926 $ 35,131
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</TABLE>
See accompanying notes to consolidated financial statements.
3
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GENCOR INDUSTRIES, INC.
CONSOLIATED INCOME STATEMENT
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net revenue $21,722 $16,550 $47,416 $46,694
Costs and expenses:
Production costs 15,922 12,779 34,576 33,937
Product engineering and development 531 519 1,697 1,461
Selling, general and administrative 2,350 2,636 6,706 7,693
------- ------- ------- -------
18,803 15,934 42,979 43,091
------- ------- ------- -------
Operating income 2,919 616 4,437 3,603
Other income (expense):
Interest income - 8 - 18
Interest expense (319) (279) (1,030) (786)
Miscellaneous 4 40 62 286
------- ------- ------- -------
Income before income taxes 2,604 385 3,469 3,121
Provision for income taxes 1,025 89 1,313 1,174
------- ------- ------- -------
Net income $ 1,579 $ 296 $ 2,156 $ 1,947
------- ------- ------- -------
Income per common share $ 0.89 $ 0.17 $ 1.21 $ 1.13
------- ------- ------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
4
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GENCOR INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1996 1995
-----------------------
<S> <C> <C>
Net income
Adjustments to reconcile net income to cash $ 2,156 $ 1,947
used for operations:
Depreciation and amortization 532 593
Loss (gain) on equipment disposal (53) 3
Loss on foreign exchange 1 -
Change in assets and liabilities:
Increase in income tax receivable (29) -
Increase in receivables (2,087) (1,036)
Increase in inventories (2,826) (5,636)
Decrease in prepaid expenses 386 353
Increase (decrease) in deferred income taxes 118 (98)
Increase in accounts payable and customer deposits 220 4,433
Increase in accrued expenses 221 91
Increase (decrease) in income taxes payable 112 (928)
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Total adjustments (3,405) (2,225)
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Cash used for operations (1,249) (278)
Cash flows from investing activities:
Capital expenditures (1,089) (328)
Other, net 403 8
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Cash used for investing activities (686) (320)
Cash flows from financing activities:
Net reduction under lines of credit and notes payable (430) (1,879)
Net borrowings of debt 2,470 -
Dividends paid (87) -
Other, net 56 (2)
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Cash provided by (used for) financing activities 2,009 (1,881)
Effect of exchange rate changes on cash - (2)
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Net increase (decrease) in cash 74 (2,481)
Cash and cash equivalents at:
beginning of period 416 3,925
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end of period $ 490 $ 1,444
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Supplemental cash flow information:
- -----------------------------------
Cash paid during the period for:
Interest $ 910 $ 735
------- -------
Income taxes $ 1,571 $ 2,179
------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
5
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Gencor Industries, Inc.
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The accompanying unaudited interim consolidated financial statements and related
notes should be read in conjunction with the financial statements and related
notes included in the Company's 1995 Annual Report on Form 10-K. In the opinion
of management, all material adjustments, consisting of normal recurring
adjustments, considered necessary for a fair presentation have been included in
the accompanying unaudited interim consolidated financial statements. Operating
results for the nine months ended June 30, 1996, are not necessarily indicative
of the results that may be expected for the year ending September 30, 1996.
NOTE 2 - CASH DIVIDEND
- ----------------------
On December 1, 1995, the Company declared a cash dividend of $0.05 per share,
paid on January 5, 1996, to shareholders of record as of December 18, 1995.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------- OF OPERATIONS
A. Consolidated Results of Operations
----------------------------------
Results of operations for the quarter ended June 30, 1996, as compared to the
quarter ended June 30, 1995:
Total net revenue for the quarter ended June 30, 1996 was $21,722,000 versus
$16,550,000 for the same period of 1995, an increase of $5,172,000 or 31.3%.
The increase in net revenue reflects higher asphalt plant revenues relative to
the same period of fiscal 1995, while revenues from used equipment and parts
were lower.
Production costs were $15,922,000 or 73.3% of net revenue in the third quarter
of fiscal 1996 versus $12,779,000 or 77.2% of net revenue in the same period in
fiscal 1995. The increase in production cost dollars is a direct result of the
increase in net revenue. The lower production costs percentage is due to fixed
indirect production costs being spread over higher revenues.
Product engineering and development costs increased $12,000 or 2.3% primarily as
a result of higher personnel costs to handle increasing volume and new product
development.
Selling, general and administrative expenses decreased in the third quarter of
fiscal 1996 to $2,350,000 from $2,636,000 in the same period of fiscal 1995 due
primarily to lower bad debt expense, legal and personnel costs.
The change in interest expense reflects higher average borrowings at lower
average interest rates.
Net income in the third quarter of fiscal 1996 amounted to $1,579,000, a
$1,283,000 increase over the third quarter of fiscal 1995 net income of $296,000
as a result of the above factors.
Results of operations for the nine months ended June 30, 1996, as compared to
the nine months ended June 30, 1995:
Total net revenue for the nine months ended June 30, 1996 was $47,416,000 versus
$46,694,000 for the same period of 1995, an increase of $722,000 or 1.5%. The
increase in net revenues reflects higher asphalt plant revenues relative to the
same period of fiscal 1995, while revenues from used equipment and parts were
lower.
Production costs were $34,576,000 or 72.9% of net revenue in the first nine
months of fiscal 1996 versus $33,937,000 or 72.7% of net revenue in the same
period in fiscal 1995.
Product engineering and development costs increased $236,000 or 16.2% primarily
as a result of higher personnel costs to handle increasing volume and new
product development.
Selling, general, and administrative expenses decreased in the first nine months
of fiscal 1996 to $6,706,000 from $7,693,000 in the same period of fiscal 1995,
due primarily to lower bad debt expense, legal and personnel costs.
The change in interest expense reflects higher average borrowings at slightly
lower average interest rates.
7
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Net income increased in the first nine months of fiscal 1996 to $2,156,000, from
$1,947,000 in the first nine months of fiscal 1995 as a result of the above
factors.
Liquidity and Capital Resources
- -------------------------------
The Company had working capital at June 30, 1996 of $15,534,000 as compared with
working capital of $11,047,000 as of September 30, 1995. The increase in
working capital resulted from an increase in inventory and accounts receivable,
and a reduction in notes payable and accounts payable, partially offset by a
decrease in prepaid expenses and an increase in customer deposits, accrued
expenses and income taxes payable.
The Company's asphalt production equipment operations are subject to seasonal
fluctuations, often resulting in lower sales in the first and fourth fiscal
quarters of each year and much lower earnings or losses during such quarters.
Traditionally, asphalt producers do not purchase new equipment or replace old
equipment during the summer and fall months, thereby avoiding disruption of
their activities during such peak periods of highway construction.
During the nine months ended June 30, 1996, the Company's total debt increased
$2,038,000 as a result of increased borrowings, partially offset by scheduled
principal repayments.
The Company owns several real estate properties which are regarded as excess and
are unused as a result of having built more efficient, modern facilities and
consolidation. The proceeds of these sales will be used primarily to reduce
bank debt. The Company cannot predict when it will sell these parcels of
property.
The Company believes that, based on the present conditions and banking
arrangements, it will be able to meet its working capital needs during fiscal
1996 through operations.
B. Financial Condition as of June 30, 1996
---------------------------------------
There are no material changes in the Company's financial condition from that
reported as of September 30, 1995.
8
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PART II. OTHER INFORMATION
ITEM 3. DEFAULTS
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None
ITEM 5. OTHER INFORMATION
- --------------------------
On April 26, 1996, the Company's shares commenced trading on the American Stock
Exchange under the symbol "GX" and, as of the same date, are no longer traded on
the NASDAQ stock market.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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A. Exhibits:
(11) Statement regarding computation of earnings per share.
(27) Financial Data Schedule
B. Reports on Form 8-K:
None
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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.
Date: July 31,1996 /s/ Russell R. Lee III
-----------------------
Russell R. Lee III
Treasurer
10
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EXHIBIT 11
GENCOR INDUSTRIES, INC.
COMPUTATIONS OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------ ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Earnings per share
- ------------------
Net income $1,579,000 $ 296,000 $2,156,000 $1,947,000
---------- ---------- ---------- ----------
Average number of shares outstanding 1,780,364 1,772,864 1,779,105 1,719,199
---------- ---------- ---------- ----------
Net income per share $ 0.89 $ 0.17 $ 1.21 $ 1.13
---------- ---------- ---------- ----------
Additional primary computation
- ------------------------------
Average number of shares outstanding 1,780,364 1,772,864 1,779,105 1,719,199
Add dilutive effect of outstanding options
(as determined by the application of the
treasury stock method) 10,368 17,301 10,008 27,713
---------- ---------- ---------- ----------
Average number of shares outstanding,
as adjusted 1,790,732 1,790,165 1,789,113 1,746,912
---------- ---------- ---------- ----------
Net income per share $ 0.88(A) $ 0.17(A) $ 1.21(A) $ 1.11(A)
---------- ---------- ---------- ----------
Additional fully diluted computation
- ------------------------------------
Average number of shares outstanding 1,780,364 1,772,864 1,779,105 1,719,199
Add dilutive effect of outstanding options
(as determined by the application of the
treasury stock method) 10,368 17,301 10,543 24,866
---------- ---------- ---------- ----------
Average number of shares outstanding,
as adjusted 1,790,732 1,790,165 1,789,648 1,744,065
---------- ---------- ---------- ----------
Net income per share $ 0.88(A) $ 0.17(A) $ 1.20(A) $ 1.12(A)
---------- ---------- ---------- ----------
</TABLE>
(A) This calculation is submitted in accordance with Regulations S-K Item 601
(b)(11), although it is not required by footnote to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1996
<PERIOD-START> APR-01-1996 OCT-01-1995
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 490,000 490,000
<SECURITIES> 0 0
<RECEIVABLES> 11,208,000 11,208,000
<ALLOWANCES> 1,951,000 1,951,000
<INVENTORY> 17,537,000 17,537,000
<CURRENT-ASSETS> 28,928,000 28,928,000
<PP&E> 19,400,000 19,400,000
<DEPRECIATION> 8,751,000 8,751,000
<TOTAL-ASSETS> 39,926,000 39,926,000
<CURRENT-LIABILITIES> 13,394,000 13,394,000
<BONDS> 0 0
0 0
0 0
<COMMON> 205,000 205,000
<OTHER-SE> 11,542,000 11,542,000
<TOTAL-LIABILITY-AND-EQUITY> 39,926,000 39,926,000
<SALES> 21,722,000 47,416,000
<TOTAL-REVENUES> 21,722,000 47,416,000
<CGS> 15,922,000 34,576,000
<TOTAL-COSTS> 18,803,000 42,979,000
<OTHER-EXPENSES> (4,000) (62,000)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 319,000 1,030,000
<INCOME-PRETAX> 2,604,000 3,469,000
<INCOME-TAX> 1,025,000 1,313,000
<INCOME-CONTINUING> 1,579,000 2,156,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,579,000 2,156,000
<EPS-PRIMARY> .89 1.21
<EPS-DILUTED> .88 1.20
</TABLE>
