☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Incorporated in the IRS Employer Identification Delaware 59-0933147)
Title of Class | Trading Symbol(s) | Name of Exchange on | ||
Common Stock ($.10 Par Value) | GENC | NASDAQ Global Market |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to thisForm 10-K. ☒
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |||
Non-Accelerated Filer | ☒ | Smaller Reporting Company | ☒ | |||
Emerging Growth Company | ☐ |
The
quarter: $141,285,000.
Common Stock ($.10 par value): | 12,338,845 shares | |
Class B Stock ($.10 par value): | 2,318,857 shares |
ITEM 1 | BUSINESS |
two facilities in the United States. The Company’s products areStates and sold through a combination of Company sales representatives and independent dealers and agents located throughout the world.Kingdom (the “UK”).Kingdom.2
equipment.
3
representatives and independent dealers.
4
5
ITEM 1A | RISK FACTORS |
If the Company had customers that accounted for a significant portion of its net revenues, then the loss of any of those customers, or a significant reduction in sales to any such customer, could adversely affect the Company’s revenues and, consequently, its business. on Form10-K should be carefully considered. The risks and uncertainties described below are not the only ones the Company faces. Additional risks and uncertainties not presently known to the Company, or that the Company presently deems less significant, may also impair the Company’s operations. If any of the following risks actually occur, the Company’s business operating results and financial condition could be materially adversely affected. The order of these risk factors does not reflect their relative importance or likelihood of occurrence. and service is dependent on general economic conditions and more specifically, the commercial highway construction industry.Federal and state funding for highways and roads. Adverse economic conditions may cause customers to forego or delay new purchases and rely more on repairing existing equipment thus negatively impacting the Company’s sales and profits. Rising oil prices, volatile steel prices and shortage of qualified workers may have adverse effects on the Company. Market conditions could limit the Company’s ability to raise selling prices to offset increases in material and/or labor costs.foreign,provincial, state and local agencies for highway, transit and infrastructure programs. Future legislation may increase or decrease government spending, which, if decreased, could have a negative effect on the Company’s financial condition or results of operations. Federal and/or state funding allocated to infrastructure may be decreaseddecrease in the future.thisany relationship with a large customer, or a significant downturn in the business or financial condition of any such customer, could have adverse consequences on the Company’s future business.The percentage of the Company’s net revenue that was derived from sales to its largest customer in recent years was 3% in fiscal 2018, 13% in fiscal 2017 and 14% in fiscal 2016. 20182021 or 2020 revenues.2018.2021. See Item 9A – Controls and Procedures – Management’s Annual Report on Internal Control over Financial Reporting. Although the Company concluded that its internal control over financial reporting was effective as of September 30, 2018,2021, in future fiscal years, the Company may encounter unanticipated delays or problems in assessing its internal control over financial reporting as effective or in completing its assessments by the required dates. In addition, the Company cannot assure yoube assured that, if required, its independent registered public accountants will attest that internal control over financial reporting is effective in future fiscal years. If the Company cannot assess its internal control over financial reporting as effective, investor confidence and share value may be negatively impacted.6
on which it useswhere revenues are recognized over time.percentage-of-completion accounting method.The Company records revenues design, manufacture and profits on manysale of its contracts usingcustom equipment are recognized over time when thepercentage-of-completion method performance obligation is satisfied by transferring control of accounting.the equipment. Control of the equipment transfers over time as the equipment is unique to the specific contract and thus does not create an asset with an alternative use. Revenues and costs are recognized in proportion to actual labor costs incurred, as compared with total estimated labor costs expected to be incurred during the entire contract. As a result, revisions made to the estimates of revenues and profits are recorded in the period in which the conditions that require such revisions become known and can be estimated. Although the Company believes that its profit margins are fairly stated and that adequate provisions for losses for its fixed-price contracts are recorded in the financial statements, as required under U.S.by accounting principles generally accepted accounting principlesin the United States of America (“GAAP”), the Company cannot assure you that its estimated contract profit margins will not decrease or its estimated loss provisions will not increase materially in the future.future acquisitionsacquisition. Although the Company periodically considers possible acquisitions, no specific acquisitions are probable as of the date of this Report on Form10-K.Demand for the Company’s products is cyclical in nature.Demand for the Company’s products depends, in part, upon the level of capital and maintenance expenditures by companies in the highway construction industry. The highway construction industry historically has been cyclical and vulnerable to downturns in the economy. Decreases in industry spending could have a material adverse effect upon demand for the Company’s products and negatively impact its business, financial condition, results of operations and the market price of its common stock.Theacquisitioa professional investment management firmfirms and are subject to various risks, such as interest rates, markets, and creditlarger contracts with customers for the design, manufacture and sale of custom equipment are recognized usingover time when thepercentage-of-completion method performance obligation is satisfied by transferring control of accounting. The Company recognizes product revenues upon shipmentthe equipment. Revenues from all other contracts for the design and manufacture of its products.equipment, for service and for parts sales, net of any discounts and return allowances, are recorded at a point in time when control of the goods or services has been transferred. The Company’s asphalt production equipment operations are subject to seasonal fluctuations, which may lower revenues and result in possible quarterly operating losses.
7
uncertai
making it vulnerable to supply shortages and price increases
8
The
9
For the foreseeable future, the
ITEM 1B | UNRESOLVED STAFF COMMENTS |
ITEM 2 | PROPERTIES |
Location | Owned Acreage | Building Square Footage | Principal Function | |||||||
Marquette, Iowa | 72.0 | 137,000 | Offices and manufacturing | |||||||
Orlando, Florida | 27.0 | 215,000 | Corporate offices and manufacturing |
Location | Acreage | Building Square Footage | Principal Function | |||||||
Marquette, Iowa | 72.0 | 137,000 | Owned offices and manufacturing—Gencor | |||||||
Orlando, Florida | 27.0 | 215,000 | Owned corporate offices and manufacturing—Gencor | |||||||
Chambersburg, Pennsylvania | 7.4 | 101,500 | Leased offices and manufacturing – Blaw-Knox |
ITEM 3 | LEGAL PROCEEDINGS |
ITEM 4 | MINE SAFETY DISCLOSURES |
11
ITEM 5 | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Plan | Number of Securities to be Issued upon Exercise of Outstanding Options | Weighted-Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans | |||||||||
2009 Incentive Compensation Plan | 317,492 | $ | 5.984 | 582,000 | * |
|
12
Plan | Number of Securities to be Issued upon Exercise of Outstanding Options | Weighted-Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans | |||||||||
2009 Incentive Compensation Plan | 30,000 | $ | 11.380 | — |
ITEM 7 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
roads.Form10-KAnnual Report contains certain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act, of 1934, as amended (the “Exchange Act”), which represent the Company’s expectations and beliefs, including, but not limited to, statements concerning gross margins, sales of the Company’s products and future financing plans, income from investees and litigation. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the Company’s control. Actual results may differ materially depending on a variety of important factors, including the financial condition of the Company’s customers, changes in the economic and competitive environments, the performance of the investment portfolio and the demand for the Company’s products. Industries, Inc. (the “Company”), is a leading manufacturer of heavy machinery used in the production of highway construction equipment and materials and environmental control equipment. The Company’s core products include asphalt pavers, hot mix asphalt plants, combustion systems, and fluid heat transfer systems.systems and asphalt pavers. The Company’s products are manufactured in twoat three facilities in the United States.crude oil (liquid asphalt),liquid asphalt, and a trend towards larger more efficient largerasphalt plants.July 6, 2012,November 15, 2021, President Obama signed a $118 billion transportation bill, Moving Ahead for Progress in the 21st Century Act(“MAP-21”).MAP-21 included a final three-month extension of the previousSAFETEA-LU bill at then current spending levels combined with a newtwo-year, $105 billion authorization of the federal highway, transit, and safety programs effective October 1, 2012. The bill provided states with two years of funding to build roads, bridges, and transit systems. On August 8, 2014, President Obama signed a $10.8 billionten-month bill to fund Federal highway and mass-transit programs through May 31, 2015. On May 29, 2015,MAP-21 was extended through July 31, 2015. On July 31, 2015, President Obama signed a three-month extension ofMAP-21, which provided $8 billion in funding for the Highway Trust Fund from August 1, 2015 through October 29, 2015. Two additional short-term extensions were approved between October 29, 2015 and December 4, 2015.On December 4, 2015, President ObamaBiden signed into law a five-year, $305 billion transportation$1.2 trillion infrastructure bill, Fixing America’s Surface Transportationthe Infrastructure Investment and Jobs Act (the “FAST“IIJ Act”)., including $550 billion in new spending and reauthorization of $650 billion in previously allocated funds. The FASTIIJ Act reauthorizedprovides $110 billion for the collection of the 18.4 cents per gallon gas tax that is typically used to pay for transportation projects. It also included $70 billion from other areas of the federal budget to close a $16 billion annual funding deficit. The bill includes spending of more than $205 billion on roadsnation’s highways, bridges and highways over five years. The 2016 funding levels are approximately 5% above 2015 projected funding, with annual increases between 2.0% and 2.5% from 2016 through 2020.13Index Additionally, numerous other states have taken steps to Financial Statements
In addition to government funding and overall economic conditions, fluctuations
Steel is a major component used in manufacturing the Company’s equipment. The Company is subject to fluctuations in market prices for raw materials, such as steel. If the Company is unable to purchase materials it requires or is unable to pass on price increases to its customers or otherwise reduce its cost of goods sold, its business results of operations and financial condition may be adversely affected.
2020
Gross profit for fiscal 2018 was 27.0%year ended September 30, 2021 were negatively impacted by approximately $4.6 million of net revenue versus 26.2% of net revenueunabsorbed manufacturing labor and overhead expenses related to the paver line. In addition, increases in fiscal 2017. The Company faced significant inflationary pressures fromlabor rates and steel and related purchasedOEM parts but was ableprices contributed to improve itsthe lower overall gross margins through higher net revenues, cost management and operational improvements implemented overduring the past few years.
year ended September 30, 2021.
support business development efforts.
$3.4 million in fixed assets. There were no liabilities assumed. The accompanying consolidated financial statements as of and for the year ended September 30, 2021, include the assets, liabilities and operating results of the paver line. There were no paver equipment revenues during the quarter ended December 31, 2020, as the facility was being readied for production which began in the quarter ended March 31, 2021.
On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law by President Donald Trump. The Tax Reform Act significantly lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018, while also repealing the deduction for domestic production activities, implementing a territorial tax system and imposing repatriation tax on deemed repatriated earnings of foreign subsidiaries. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. As a result of the Tax Reform Act, the Company recorded a tax benefit of $0.7 million due tore-measurement of its deferred tax liability, during the first quarter of fiscal 2018. The Company recorded an additional $0.1 million of tax benefits related to the Tax Reform Act in the fourth quarter of fiscal 2018.
14
As of September 30, 2017,2020.
As of2021 or September 30, 2017, the Company had $155,000 in Florida state research and development tax credits (“Florida R&D Credits”) carryforwards. The Company received additional Florida R&D Credits of $25,000 in fiscal 2018 and used $93,000, leaving $87,000 of Florida R&D Credits carryforwards as of September 30, 2018. The $87,000 of Florida R&D Credits, which are included in net deferred and other income tax liabilities of $(2,358,000) at September 30, 2018, expire in fiscal 2022.
2020.
2020.
In April 2020, a financial institution issued an irrevocable standby letter of credit (“letter of credit”) on behalf of the Company for the benefit of one of the Company’s insurance carriers. The maximum amount that can be drawn by the beneficiary under the letter of credit is $150,000. The letter of credit expires in April 2022, unless terminated earlier, and can be extended, as provided by the agreement. The Company intends to renew the letter of credit for as long as the Company does business with the beneficiary insurance carrier. The letter is collateralized by restricted cash of the same amount on any outstanding drawings. To date, no amounts have been drawn under the letter of credit.
2020.
Year ended September 30, 2018 compared with the year ended September 30, 2017
Cash used in operations in fiscal 2018 of $(11,995,000) was primarily due to investing an additional $15.0 million of operating cash in marketable equity securities. The increasedecrease in costs and estimated earnings in excess of billings of $5.1$4.5 million reflects significantthe completion and shipment of several large contracts with revenues recognized over time during the year ended September 30, 2021. Excluding the impact of the Blaw-Knox acquisition, inventories increased by $4.4 million primarily due to progress on several largepercentage-of-completion jobs prior contract orders where revenue is recognized at a point in time and some stock build to final billing and payment of amountscompensate for the longer lead times from suppliers. Accounts payable increased by $1.4 million due to the additional payables related to the Blaw-Knox business along with the increase in advance of shipment. Similarly, customerinventory. Customer deposits decreased $4.1increased $1.4 million, reflecting the application of down payments on these jobs.
contract jobs, including several recent orders where revenues are recognized over time but work is yet to begin.
the Blaw-Knox paver line and subsequent capital expenditures, primarily for systems software and leasehold improvements for the paver line’s manufacturing facility. Cash provided by financing activities of $264,000 for the year ended September 30, 2021, related to proceeds from the exercise of stock options.
15
In May 2014, the FASB issued ASUNo. 2014-09,Revenue from Contracts with Customers: (Topic 606) (“ASU2014-09”), amending its accounting guidance related to revenue recognition. Under this ASU and subsequently issued amendments, revenue is recognized to depict the transfer of goods or services has been transferred. Control of the goods or service typically transfers at time of shipment or upon completion of the service.
goods sold concurrently.
Product warranty All product engineering and development costs, are estimated using historical experience and known issuesselling, general and are charged to production costs as revenue is recognized.
All PED and SG&Aadministrative expenses are charged to operations as incurred. Provision is made for any anticipated contract losses in the period that the loss becomes evident.
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There were no outstanding borrowings or long-term contractual obligations at September 30, 2018.
2021.
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ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
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In our opinion, the consolidated financial statements Opinions and Internal Control over Financial Reporting20182021 and 2017,2020, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in thetwo-year period ended September 30, 2018,2021 and 2020, and the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of September 30, 2018, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).referred to in the first paragraph present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 20182021 and 2017,2020, and the consolidated results of its operations and its cash flows for each of the years in thetwo-year period ended September 30, 2018,2021 and 2020, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2018, based on criteria established inInternal Control – Integrated Framework (2013) issued by COSO.The Company’s management is responsible for thesefor maintaining effective internal control over financial reporting, and for its assessmentare the responsibility of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting.Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.auditsaudit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effectivefraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, was maintained in all material respects.Our auditsbut not for the purpose of expressing an opinion on the effectiveness of the consolidatedCompany’s internal control over financial statementsreporting. Accordingly, we express no such opinion.Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definitionopinion.Limitationsthat: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of Internalcritical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
A company’s internal control over financial reportingtime, as the equipment is a process designedunique to provide reasonable assurance regarding the reliabilityspecific contract and thus does not create an asset with an alternative use to the Company. Revenues and costs are recognized in proportion to actual labor costs incurred, as compared with total estimated labor costs expected to be incurred, during the entire contract. Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined. The Company recorded approximately $24,093,000 in revenue from custom equipment sales contracts during the year ended September 30, 2021.
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recorded as necessarysignificant assumptions involved in estimating total labor costs to permit preparation ofcomplete.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
MOORE STEPHENS LOVELACE,completed contracts.
We
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2018 | 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 8,012,000 | $ | 22,933,000 | ||||
Marketable securities at fair value (cost of $103,751,000 at September 30, 2018 and $86,967,000 at September 30, 2017) | 104,058,000 | 87,886,000 | ||||||
Accounts receivable, less allowance for doubtful accounts of $313,000 at September 30, 2018 and $207,000 at September 30, 2017 | 993,000 | 1,184,000 | ||||||
Costs and estimated earnings in excess of billings | 11,900,000 | 6,768,000 | ||||||
Inventories, net | 18,214,000 | 16,687,000 | ||||||
Prepaid expenses | 1,904,000 | 1,660,000 | ||||||
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Total current assets | 145,081,000 | 137,118,000 | ||||||
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Property and equipment, net | 7,889,000 | 5,722,000 | ||||||
Other assets | 53,000 | 53,000 | ||||||
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Total Assets | $ | 153,023,000 | $ | 142,893,000 | ||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,838,000 | $ | 1,320,000 | ||||
Customer deposits | 4,563,000 | 8,628,000 | ||||||
Accrued expenses | 2,085,000 | 2,426,000 | ||||||
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Total current liabilities | 8,486,000 | 12,374,000 | ||||||
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Deferred and other income taxes | 2,358,000 | 1,601,000 | ||||||
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Total liabilities | 10,844,000 | 13,975,000 | ||||||
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Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock, par value $.10 per share; 300,000 shares authorized; none issued | — | — | ||||||
Common stock, par value $.10 per share; 15,000,000 shares authorized; 12,252,337 shares and 12,154,829 shares issued and outstanding at September 30, 2018 and 2017, respectively | 1,225,000 | 1,215,000 | ||||||
Class B Stock, par value $.10 per share; 6,000,000 shares authorized; 2,288,857 shares and 2,263857 shares issued and outstanding at September 30, 2018 and 2017, respectively | 229,000 | 226,000 | ||||||
Capital in excess of par value | 11,862,000 | 11,178,000 | ||||||
Retained earnings | 128,863,000 | 116,299,000 | ||||||
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Total shareholders’ equity | 142,179,000 | 128,918,000 | ||||||
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Total Liabilities and Shareholders’ Equity | $ | 153,023,000 | $ | 142,893,000 | ||||
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2020
2021 | 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 23,232,000 | $ | 35,584,000 | ||||
Marketable securities at fair value (cost of $93,690,000 at September 30, 2021 and $89,514,000 at September 30, 2020) | 94,976,000 | 89,498,000 | ||||||
Accounts receivable, less allowance for doubtful accounts of $321,000 at September 30, 2021 and $442,000 at September 30, 2020 | 2,622,000 | 1,992,000 | ||||||
Costs and estimated earnings in excess of billings | 1,903,000 | 6,405,000 | ||||||
Inventories, net | 41,888,000 | 27,090,000 | ||||||
Prepaid expenses | 2,202,000 | 1,189,000 | ||||||
Total current assets | 166,823,000 | 161,758,000 | ||||||
Property and equipment, net | 11,801,000 | 8,341,000 | ||||||
Other long-term assets | 838,000 | 995,000 | ||||||
Total Assets | $ | 179,462,000 | $ | 171,094,000 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,105,000 | $ | 1,728,000 | ||||
Customer deposits | 5,244,000 | 3,853,000 | ||||||
Accrued expenses | 2,645,000 | 2,605,000 | ||||||
Current operating lease liabilities | 393,000 | 328,000 | ||||||
Total current liabilities | 11,387,000 | 8,514,000 | ||||||
Deferred and other income taxes | 394,000 | 746,000 | ||||||
Non-current operating lease liabilities | 392,000 | 614,000 | ||||||
Total liabilities | 12,173,000 | 9,874,000 | ||||||
Commitments and contingencies | 0 | 0 | ||||||
Shareholders’ equity: | ||||||||
Preferred stock, par value $.10 per share; 300,000 shares authorized; NaN issued | 0 | 0 | ||||||
Common stock, par value $.10 per share; 15,000,000 shares authorized; 12,338,845 shares and 12,287,337 shares issued and outstanding at September 30, 2021 and 2020, respectively | 1,234,000 | 1,229,000 | ||||||
Class B Stock, par value $.10 per share; 6,000,000 shares authorized; 2,318,857 shares issued and outstanding at September 30, 2021 and 2020 | 232,000 | 232,000 | ||||||
Capital in excess of par value | 12,590,000 | 12,331,000 | ||||||
Retained earnings | 153,233,000 | 147,428,000 | ||||||
Total shareholders’ equity | 167,289,000 | 161,220,000 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 179,462,000 | $ | 171,094,000 | ||||
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2018 | 2017 | |||||||
Net revenue | $ | 98,614,000 | $ | 80,608,000 | ||||
Cost of goods sold | 71,993,000 | 59,449,000 | ||||||
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Gross profit | 26,621,000 | 21,159,000 | ||||||
Operating expenses: | ||||||||
Product engineering and development | 2,915,000 | 2,147,000 | ||||||
Selling, general and administrative | 9,991,000 | 8,776,000 | ||||||
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Total operating expenses | 12,906,000 | 10,923,000 | ||||||
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Operating income | 13,715,000 | 10,236,000 | ||||||
Other income (expense), net: | ||||||||
Interest and dividend income, net of fees | 1,535,000 | 650,000 | ||||||
Realized and unrealized gains (losses) on marketable securities, net | (363,000 | ) | 1,297,000 | |||||
Other | 2,000 | (5,000 | ) | |||||
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1,174,000 | 1,942,000 | |||||||
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Income before income tax expense | 14,889,000 | 12,178,000 | ||||||
Income tax expense | 2,325,000 | 3,760,000 | ||||||
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Net income | $ | 12,564,000 | $ | 8,418,000 | ||||
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Basic earnings per common share | $ | 0.87 | $ | 0.58 | ||||
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Diluted earnings per common share | $ | 0.85 | $ | 0.57 | ||||
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2020
2021 | 2020 | |||||||
Net revenue | $ | 85,278,000 | $ | 77,420,000 | ||||
Cost of goods sold | 67,100,000 | 58,467,000 | ||||||
Gross profit | 18,178,000 | 18,953,000 | ||||||
Operating expenses: | ||||||||
Product engineering and development | 4,278,000 | 3,061,000 | ||||||
Selling, general and administrative | 13,199,000 | 10,356,000 | ||||||
Total operating expenses | 17,477,000 | 13,417,000 | ||||||
Operating income | 701,000 | 5,536,000 | ||||||
Other income (expense), net: | ||||||||
Interest and dividend income, net of fees | 1,762,000 | 2,321,000 | ||||||
Realized and unrealized gains (losses) on marketable securities, net | 4,171,000 | (1,160,000 | ) | |||||
Other | 0 | (16,000 | ) | |||||
5,933,000 | 1,145,000 | |||||||
Income before income tax expense | 6,634,000 | 6,681,000 | ||||||
Income tax expense | 829,000 | 1,150,000 | ||||||
Net income | $ | 5,805,000 | $ | 5,531,000 | ||||
Basic earnings per common share | $ | 0.40 | $ | 0.38 | ||||
Diluted earnings per common share | $ | 0.39 | $ | 0.38 | ||||
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Common Stock | Class B Stock | Capital in Excess of | Retained | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Par Value | Earnings | Equity | ||||||||||||||||||||||
September 30, 2016 | 12,111,079 | $ | 1,211,000 | 2,263,857 | $ | 226,000 | $ | 10,887,000 | $ | 107,881,000 | $ | 120,205,000 | ||||||||||||||||
Net income | — | — | — | — | — | 8,418,000 | 8,418,000 | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | 71,000 | — | 71,000 | |||||||||||||||||||||
Stock options exercised | 43,750 | 4,000 | — | — | 220,000 | — | 224,000 | |||||||||||||||||||||
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September 30, 2017 | 12,154,829 | 1,215,000 | 2,263,857 | 226,000 | 11,178,000 | 116,299,000 | 128,918,000 | |||||||||||||||||||||
Net income | — | — | — | — | — | 12,564,000 | 12,564,000 | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | 71,000 | — | 71,000 | |||||||||||||||||||||
Stock options exercised | 97,508 | 10,000 | 25,000 | 3,000 | 613,000 | — | 626,000 | |||||||||||||||||||||
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September 30, 2018 | 12,252,337 | $ | 1,225,000 | 2,288,857 | $ | 229,000 | $ | 11,862,000 | $ | 128,863,000 | $ | 142,179,000 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
Common Stock | Class B Stock | Capital in Excess of | Retained | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Par Value | Earnings | Equity | ||||||||||||||||||||||
September 30, 2019 | 12,277,337 | $ | 1,228,000 | 2,308,857 | $ | 231,000 | $ | 12,159,000 | $ | 141,897,000 | $ | 155,515,000 | ||||||||||||||||
Net income | — | — | — | — | — | 5,531,000 | 5,531,000 | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | 71,000 | — | 71,000 | |||||||||||||||||||||
Stock options exercised | 10,000 | 1,000 | 10,000 | 1,000 | 101,000 | — | 103,000 | |||||||||||||||||||||
September 30, 2020 | 12,287,337 | $ | 1,229,000 | 2,318,857 | $ | 232,000 | $ | 12,331,000 | $ | 147,428,000 | $ | 161,220,000 | ||||||||||||||||
Net income | — | — | — | — | — | 5,805,000 | 5,805,000 | |||||||||||||||||||||
Stock options exercised | 51,508 | 5,000 | 0 | 0 | 259,000 | — | 264,000 | |||||||||||||||||||||
September 30, 2021 | 12,338,845 | $ | 1,234,000 | 2,318,857 | $ | 232,000 | $ | 12,590,000 | $ | 153,233,000 | $ | 167,289,000 | ||||||||||||||||
23
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 12,564,000 | $ | 8,418,000 | ||||
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||||||
Purchase of marketable securities | (256,124,000 | ) | (492,674,000 | ) | ||||
Proceeds from sale and maturity of marketable securities | 239,462,000 | 491,852,000 | ||||||
Change in value of marketable securities | 490,000 | (1,126,000 | ) | |||||
Deferred and other income taxes | 757,000 | 1,285,000 | ||||||
Depreciation and amortization | 1,380,000 | 1,128,000 | ||||||
Provision for doubtful accounts | 210,000 | 115,000 | ||||||
Loss on disposal of assets | 3,000 | 7,000 | ||||||
Stock-based compensation | 71,000 | 71,000 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (19,000 | ) | (189,000 | ) | ||||
Costs and estimated earnings in excess of billings | (5,132,000 | ) | (1,847,000 | ) | ||||
Inventories | (1,527,000 | ) | (5,053,000 | ) | ||||
Prepaid expenses | (244,000 | ) | (62,000 | ) | ||||
Accounts payable | 518,000 | (123,000 | ) | |||||
Customer deposits | (4,065,000 | ) | 4,144,000 | |||||
Accrued expenses | (341,000 | ) | 162,000 | |||||
|
|
|
| |||||
Total adjustments | (9,561,000 | ) | (2,310,000 | ) | ||||
|
|
|
| |||||
Cash flows provided by (used in) operating activities | (11,997,000 | ) | 6,108,000 | |||||
|
|
|
| |||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (3,550,000 | ) | (1,624,000 | ) | ||||
Proceeds from sale of property and equipment | — | 7,000 | ||||||
|
|
|
| |||||
Cash flows used in investing activities | (3,550,000 | ) | (1,617,000 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities: | ||||||||
Proceeds from stock option exercises | 626,000 | 223,000 | ||||||
|
|
|
| |||||
Cash flows provided by financing activities | 626,000 | 223,000 | ||||||
|
|
|
| |||||
Net increase (decrease) in cash and cash equivalents | (14,921,000 | ) | 4,714,000 | |||||
Cash and cash equivalents at: | ||||||||
Beginning of year | 22,933,000 | 18,219,000 | ||||||
|
|
|
| |||||
End of year | $ | 8,012,000 | $ | 22,933,000 | ||||
|
|
|
|
2020
2021 | 2020 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 5,805,000 | $ | 5,531,000 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Purchase of marketable securities | (136,651,000 | ) | (131,635,000 | ) | ||||
Proceeds from sale and maturity of marketable securities | 134,866,000 | 146,122,000 | ||||||
Change in value of marketable securities | (3,693,000 | ) | 1,337,000 | |||||
Deferred and other income taxes | (451,000 | ) | (2,626,000 | ) | ||||
Depreciation and amortization | 2,591,000 | 1,643,000 | ||||||
Provision for doubtful accounts | 50,000 | 50,000 | ||||||
Stock-based compensation | 71,000 | |||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (680,000 | ) | (439,000 | ) | ||||
Costs and estimated earnings in excess of billings | 4,502,000 | 7,433,000 | ||||||
Inventories | (4,413,000 | ) | (1,724,000 | ) | ||||
Prepaid expenses | (1,013,000 | ) | (690,000 | ) | ||||
Accounts payable | 1,377,000 | (179,000 | ) | |||||
Customer deposits | 1,391,000 | 1,935,000 | ||||||
Accrued expenses | 139,000 | (55,000 | ) | |||||
Total adjustments | (1,985,000 | ) | 21,243,000 | |||||
Cash flows provided by operating activities | 3,820,000 | 26,774,000 | ||||||
Cash flows used in investing activities: | ||||||||
Acquisition of Blaw-Knox assets | (13,777,000 | ) | — | |||||
Capital expenditures | (2,659,000 | (1,595,000 | ) | |||||
Cash flows used in investing activities | (16,436,000 | ) | (1,595,000 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from stock option exercises | 264,000 | 103,000 | ||||||
Cash flows provided by financing activities | 264,000 | 103,000 | ||||||
Net increase (decrease) in cash and cash equivalents | (12,352,000 | ) | 25,282,000 | |||||
Cash and cash equivalents at: | ||||||||
Beginning of year | 35,584,000 | 10,302,000 | ||||||
End of year | $ | 23,232,000 | $ | 35,584,000 | ||||
Non-cash investing and financing activities: | ||||||||
Operating lease right-of-use | $ | 248,000 | $ | 942,000 | ||||
Operating lease liabilities | $ | 248,000 | $ | 942,000 |
24
The Company’s core products include asphalt plants, combustion systems, fluid heat transfer systems and asphalt pavers. The Company’s products are manufactured at three facilities in the United States.
In May 2014, the FASB issued ASUNo. 2014-09,Revenue from Contracts with Customers (Topic 606) (“ASU2014-09”), amending its accounting guidance related to revenue recognition. Under this ASU and subsequently issued amendments, revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. ASU 2014-09 is effective for the Company starting in the first quarter of its fiscal 2019. The Company elected to adopt the standard using the modified retrospective method. The Company has substantially completed its analysis of the impact of the adoption, and expects that the adoption of this guidance will not have a material impact on its consolidated financial statements.
statements.
our disclosures.
25
7,000 in 2020.
2018 | 2017 | |||||||||||||||||||||||
Net Income | Shares | EPS | Net Income | Shares | EPS | |||||||||||||||||||
Basic EPS | $ | 12,564,000 | 14,492,000 | $ | 0.87 | $ | 8,418,000 | 14,396,000 | $ | 0.58 | ||||||||||||||
Common stock equivalents | 231,000 | 284,000 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Diluted EPS | $ | 12,564,000 | 14,723,000 | $ | 0.85 | $ | 8,418,000 | 14,680,000 | $ | 0.57 | ||||||||||||||
|
|
|
|
2020:
2021 | 2020 | |||||||||||||||||||||||
Net Income | Shares | EPS | Net Income | Shares | EPS | |||||||||||||||||||
Basic EPS | $ | 5,805,000 | 14,614,000 | $ | 0.40 | $ | 5,531,000 | 14,595,000 | $ | 0.38 | ||||||||||||||
Common stock equivalents | 116,000 | 125,000 | ||||||||||||||||||||||
Diluted EPS | $ | 5,805,000 | 14,730,000 | $ | 0.39 | $ | 5,531,000 | 14,720,000 | $ | 0.38 | ||||||||||||||
and Fair Value Measurements
26
Fair Value Measurements | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equities | $ | 14,734,000 | $ | — | $ | — | $ | 14,734,000 | ||||||||
Mutual Funds | 10,357,000 | — | — | 10,357,000 | ||||||||||||
Exchange-Traded Funds | 9,458,000 | — | — | 9,458,000 | ||||||||||||
Corporate Bonds | — | 24,853,000 | — | 24,853,000 | ||||||||||||
Government Securities | 30,999,000 | — | — | 30,999,000 | ||||||||||||
Cash and Money Funds | 4,575,000 | — | — | 4,575,000 | ||||||||||||
Total | $ | 70,123,000 | $ | 24,853,000 | $ | — | $ | 94,976,000 | ||||||||
Fair Value Measurements | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equities | $ | 11,768,000 | $ | — | $ | — | $ | 11,768,000 | ||||||||
Mutual Funds | 3,811,000 | — | — | 3,811,000 | ||||||||||||
Exchange-Traded Funds | 4,148,000 | — | — | 4,148,000 | ||||||||||||
Corporate Bonds | — | 29,884,000 | — | 29,884,000 | ||||||||||||
Government Securities | 53,883,000 | — | — | 53,883,000 | ||||||||||||
Cash and Money Funds | 564,000 | — | — | 564,000 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 74,174,000 | $ | 29,884,000 | $ | — | $ | 104,058,000 | ||||||||
|
|
|
|
|
|
|
|
2020:
Fair Value Measurements | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equities | $ | 11,949,000 | $ | — | $ | — | $ | 11,949,000 | ||||||||
Mutual Funds | 9,595,000 | — | — | 9,595,000 | ||||||||||||
Exchange-Traded Funds | 10,344,000 | — | — | 10,344,000 | ||||||||||||
Corporate Bonds | — | 27,877,000 | — | 27,877,000 | ||||||||||||
Government Securities | 16,147,000 | — | — | 16,147,000 | ||||||||||||
Cash and Money Funds | 13,586,000 | — | — | 13,586,000 | ||||||||||||
Total | $ | 61,621,000 | $ | 27,877,000 | $ | — | $ | 89,498,000 | ||||||||
The following table sets forth by level, withinwas primarily used to fund the fair value hierarchy,acquisition of the Company’sBlaw-Knox assets, measured at fair value as of September 30, 2017:
Fair Value Measurements | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equities | $ | 11,338,000 | $ | — | $ | — | $ | 11,338,000 | ||||||||
Mutual Funds | 7,155,000 | — | — | 7,155,000 | ||||||||||||
Exchange-Traded Funds | 3,417,000 | — | — | 3,417,000 | ||||||||||||
Corporate Bonds | — �� | 7,196,000 | — | 7,196,000 | ||||||||||||
Government Securities | 54,542,000 | — | — | 54,542,000 | ||||||||||||
Cash and Money Funds | 4,238,000 | — | — | 4,238,000 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 80,690,000 | $ | 7,196,000 | $ | — | $ | 87,886,000 | ||||||||
|
|
|
|
|
|
|
|
Net unrealized gains reported during fiscal 2017 on trading securities still held as of September 30, 2017, were $1,183,000. There were no transfers of investments between Level 1including inventory, fixed assets and Level 2 during the year ended September 30, 2017.
related intellectual property, from Volvo CE.
27
2018 | 2017 | |||||||
Balance, beginning of year | $ | 3,826,000 | $ | 3,869,000 | ||||
Charged to cost of sales | 262,000 | 77,000 | ||||||
Disposal of inventory, net of recoveries | (315,000 | ) | (120,000 | ) | ||||
|
|
|
| |||||
Balance, end of year | $ | 3,773,000 | $ | 3,826,000 | ||||
|
|
|
|
2021 | 2020 | |||||||
Balance, beginning of year | $ | 4,617,000 | $ | 4,700,000 | ||||
Charged to cost of sales | 1,355,000 | 401,000 | ||||||
Disposal of inventory, net of recoveries | (575,000 | ) | (484,000 | ) | ||||
Balance, end of year | $ | 5,397,000 | $ | 4,617,000 | ||||
Years | ||
Land improvements | 15 | |
Buildings & improvements | 6-40 | |
Equipment | 2-10 |
28
Impairments
2020.
2021 | 2020 | |||||||
Equipment sales recognized over time | $ | 24,093,000 | $ | 35,579,000 | ||||
Equipment sales recognized at a point in time | 36,671,000 | 23,642,000 | ||||||
Parts and component sales | 21,017,000 | 13,896,000 | ||||||
Freight revenue | 3,497,000 | 3,983,000 | ||||||
Other | — | 320,000 | ||||||
Net revenue | $ | 85,278,000 | $ | 77,420,000 | ||||
$223,000 at September 30, 2021 and September 30, 2020, respectively.
2018 | 2017 | |||||||
Balance, beginning of year | $ | 412,000 | $ | 401,000 | ||||
Warranties issued | 225,000 | 400,000 | ||||||
Warranties settled | (237,000 | ) | (389,000 | ) | ||||
|
|
|
| |||||
Balance, end of year | $ | 400,000 | $ | 412,000 | ||||
|
|
|
|
2021 | 2020 | |||||||
Balance, beginning of year | $ | 299,000 | $ | 277,000 | ||||
Warranties issued | 280,000 | 375,000 | ||||||
Warranties settled | (288,000 | ) | (353,000 | ) | ||||
Balance, end of year | 291,000 | $ | 299,000 | |||||
29
2018 | 2017 | |||||||
Balance, beginning of year | $ | 207,000 | $ | 195,000 | ||||
Provision for doubtful accounts | 210,000 | 115,000 | ||||||
Provision for estimated returns and allowances | 265,000 | 385,000 | ||||||
Uncollectible accountswritten-off | (76,000 | ) | (16,000 | ) | ||||
Returns and allowances issued | (293,000 | ) | (472,000 | ) | ||||
|
|
|
| |||||
Balance, end of year | $ | 313,000 | $ | 207,000 | ||||
|
|
|
|
2021 | 2020 | |||||||
Balance, beginning of year | $ | 442,000 | $ | 459,000 | ||||
Provision for doubtful accounts | 50,000 | 50,000 | ||||||
Provision for estimated returns and allowances | 175,000 | 205,000 | ||||||
Uncollectible accounts written off | (60,000 | ) | (5,000 | ) | ||||
Returns and allowances issued | (286,000 | ) | (267,000 | ) | ||||
Balance, end of year | $ | 321,000 | $ | 442,000 | ||||
On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law by President Donald Trump. The Tax Reform Act significantly lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018, while also repealing the deduction for domestic production activities for tax years beginning after December 31, 2017, implementing a territorial tax system and imposing repatriation tax on deemed repatriated earnings of foreign subsidiaries. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. As a result of the Tax Reform Act, the Company recorded a tax benefit of $0.7 million due tore-measurement of its deferred tax liability, in the three months ended December 31, 2017. The Company recorded an additional $0.1 million of tax benefits related to the Tax Reform Act in the fourth quarter of fiscal 2018.
2020.
Act”) which was signed into law on December 22, 2017.
30
Approximately 3% of total net revenue in the year ended September 30, 2018 and 13% of total net revenue for the year ended September 30, 2017, was from one or more separate U.S. entities owned by a foreign-based global company.
One other customer accounted for approximately 10% of net revenue for the year ended September 30, 2017.
revenues.
disclosure herein.
September 30, | ||||||||
2018 | 2017 | |||||||
Raw materials | $ | 11,254,000 | $ | 9,407,000 | ||||
Work in process | 1,020,000 | 3,098,000 | ||||||
Finished goods | 5,924,000 | 4,166,000 | ||||||
Used equipment | 16,000 | 16,000 | ||||||
|
|
|
| |||||
$ | 18,214,000 | $ | 16,687,000 | |||||
|
|
|
|
At September 30, 2018 and 2017, cost is determined by the LIFO method for inventories. The estimated current cost of inventories exceeded their LIFO basis by approximately $4,446,000 and $4,250,000 at September 30, 2018 and 2017, respectively. Slow moving
September 30, | ||||||||
2021 | 2020 | |||||||
Raw materials | $ | 25,858,000 | $ | 14,607,000 | ||||
Work in process | 6,280,000 | 3,633,000 | ||||||
Finished goods | 9,730,000 | 8,810,000 | ||||||
Used equipment | 20,000 | 40,000 | ||||||
Inventories, net | $ | 41,888,000 | $ | 27,090,000 | ||||
September 30, | ||||||||
2018 | 2017 | |||||||
Costs incurred on uncompleted contracts | $ | 17,437,000 | $ | 10,250,000 | ||||
Estimated earnings | 7,335,000 | 3,161,000 | ||||||
|
|
|
| |||||
24,772,000 | 13,411,000 | |||||||
Billings to date | 12,872,000 | 6,643,000 | ||||||
|
|
|
| |||||
Costs and estimated earnings in excess of billings | $ | 11,900,000 | $ | 6,768,000 | ||||
|
|
|
|
31
September 30, | ||||||||
2021 | 2020 | |||||||
Costs incurred on uncompleted contracts | $ | 11,483,000 | $ | 10,390,000 | ||||
Estimated earnings | 4,395,000 | 4,680,000 | ||||||
15,878,000 | 15,070,000 | |||||||
Billings to date | 13,975,000 | 8,665,000 | ||||||
Costs and estimated earnings in excess of billings | $ | 1,903,000 | $ | 6,405,000 | ||||
September 30, | ||||||||
2018 | 2017 | |||||||
Land and improvements | $ | 3,323,000 | $ | 3,323,000 | ||||
Buildings and improvements | 13,350,000 | 12,935,000 | ||||||
Equipment | 12,966,000 | 9,943,000 | ||||||
|
|
|
| |||||
29,639,000 | 26,201,000 | |||||||
Less: Accumulated depreciation and amortization | (21,750,000 | ) | (20,479,000 | ) | ||||
|
|
|
| |||||
Property and equipment, net | $ | 7,889,000 | $ | 5,722,000 | ||||
|
|
|
|
2020:
September 30, | ||||||||
2021 | 2020 | |||||||
Land and improvements | $ | 3,329,000 | $ | 3,323,000 | ||||
Buildings and improvements | 13,830,000 | 13,547,000 | ||||||
Equipment | 21,765,000 | 16,305,000 | ||||||
38,924,000 | 33,175,000 | |||||||
Less: Accumulated depreciation and amortization | (27,123,000 | ) | (24,834,000 | ) | ||||
Property and equipment, net | $ | 11,801,000 | $ | 8,341,000 | ||||
September 30, | ||||||||
2018 | 2017 | |||||||
Payroll and related accruals | $ | 1,371,000 | $ | 1,374,000 | ||||
Warranty and related accruals | 400,000 | 412,000 | ||||||
Professional fees | 118,000 | 158,000 | ||||||
Other | 196,000 | 482,000 | ||||||
|
|
|
| |||||
Accrued expenses | $ | 2,085,000 | $ | 2,426,000 | ||||
|
|
|
|
2020:
September 30, | ||||||||
2021 | 2020 | |||||||
Payroll and related accruals | $ | 1,735,000 | $ | 1,608,000 | ||||
Warranty and related accruals | 291,000 | 299,000 | ||||||
Property tax accruals | 223,000 | 180,000 | ||||||
Income tax accruals | 224,000 | 225,000 | ||||||
Professional fees | 105,000 | 247,000 | ||||||
Other | 67,000 | 46,000 | ||||||
Accrued expenses | $ | 2,645,000 | $ | 2,605,000 | ||||
Year Ended September 30, | ||||||||
2018 | 2017 | |||||||
Current: | ||||||||
Federal | $ | 1,441,000 | $ | 2,381,000 | ||||
State | 127,000 | 50,000 | ||||||
|
|
|
| |||||
Total current | 1,568,000 | 2,431,000 | ||||||
|
|
|
| |||||
Deferred: | ||||||||
Federal | 631,000 | 1,238,000 | ||||||
State | 126,000 | 91,000 | ||||||
|
|
|
| |||||
Total deferred | 757,000 | 1,329,000 | ||||||
|
|
|
| |||||
Income tax expense | $ | 2,325,000 | $ | 3,760,000 | ||||
|
|
|
|
32
Year Ended September 30, | ||||||||
2021 | 2020 | |||||||
Current: | ||||||||
Federal | $ | 992,000 | $ | 3,430,000 | ||||
State | 189,000 | 346,000 | ||||||
Total current | 1,181,000 | 3,776,000 | ||||||
Deferred: | ||||||||
Federal | (269,000 | ) | (2,436,000 | ) | ||||
State | (83,000 | ) | (190,000 | ) | ||||
Total deferred | (352,000 | ) | (2,626,000 | ) | ||||
Income tax expense | $ | 829,000 | $ | 1,150,000 | ||||
Year Ended September 30, | ||||||||
2018 | 2017 | |||||||
Federal income taxes computed at the statutory rate | 24.3 | % | 34.0 | % | ||||
State income taxes, net of federal benefit | 1.4 | % | 1.2 | % | ||||
Change in current tax rate | (3.0 | %) | — | |||||
Change in deferred tax rate | (2.3 | %) | — | |||||
Research & development tax refunds & credits | (1.8 | %) | (2.1 | %) | ||||
Dividend received deduction | (0.9 | %) | (0.9 | %) | ||||
Domestic production activities deduction | (1.2 | %) | (2.8 | %) | ||||
Incentive stock options | (1.0 | %) | — | |||||
Other, net | 0.1 | % | 1.5 | % | ||||
|
|
|
| |||||
Effective income tax rate | 15.6 | % | 30.9 | % | ||||
|
|
|
|
Year Ended September 30, | ||||||||
2021 | 2020 | |||||||
Federal income taxes computed at the statutory rate | 21.0 | % | 21.0 | % | ||||
State income taxes, net of federal benefit | 1.6 | % | 1.3 | % | ||||
Research & development tax refunds & credits | (5.1 | %) | (6.3 | %) | ||||
Dividend received deduction | (1.9 | %) | (1.2 | %) | ||||
Other, net | (3.1 | %) | 2.4 | % | ||||
Effective income tax rate | 12.5 | % | 17.2 | % | ||||
September 30, | ||||||||
2018 | 2017 | |||||||
Deferred Tax Assets: | ||||||||
Accrued liabilities and reserves | $ | 218,000 | $ | 351,000 | ||||
Allowance for doubtful accounts | 71,000 | 73,000 | ||||||
Inventory | 494,000 | 778,000 | ||||||
R&D tax credits carryforwards | 87,000 | 155,000 | ||||||
Stock-based compensation | 104,000 | 95,000 | ||||||
Net operating losses carryforwards | 57,000 | 58,000 | ||||||
Other | — | 48,000 | ||||||
|
|
|
| |||||
Gross Deferred Income Tax Assets | 1,031,000 | 1,558,000 | ||||||
|
|
|
| |||||
Deferred and Other Tax Liabilities: | ||||||||
Domestic international sales corporation | (543,000 | ) | (839,000 | ) | ||||
Percentage of completion | (1,717,000 | ) | (1,114,000 | ) | ||||
Property and equipment | (904,000 | ) | (694,000 | ) | ||||
Unrealized gain on investments | (75,000 | ) | (332,000 | ) | ||||
Unrecognized tax benefits | (150,000 | ) | (150,000 | ) | ||||
Other | — | (30,000 | ) | |||||
|
|
|
| |||||
Gross Deferred and Other Income Tax Liabilities | (3,389,000 | ) | (3,159,000 | ) | ||||
|
|
|
| |||||
Net Deferred and Other Income Tax Assets (Liabilities) | $ | (2,358,000 | ) | $ | (1,601,000 | ) | ||
|
|
|
|
September 30, | ||||||||
2021 | 2020 | |||||||
Deferred Tax Assets: | ||||||||
Accrued liabilities and reserves | $ | 276,000 | $ | 340,000 | ||||
Allowance for doubtful accounts | 72,000 | 98,000 | ||||||
Inventory | 1,783,000 | 369,000 | ||||||
Stock-based compensation | 79,000 | 81,000 | ||||||
Net operating losses carryforwards | 20,000 | 5,000 | ||||||
Gross Deferred Income Tax Assets | 2,230,000 | 893,000 | ||||||
Deferred and Other Tax Liabilities: | ||||||||
Domestic international sales corporation | (236,000 | ) | (329,000 | ) | ||||
Property and equipment | (1,943,000 | ) | (1,158,000 | ) | ||||
Unrealized gain on investments | (295,000 | ) | (2,000 | ) | ||||
Unrecognized tax benefits | (150,000 | ) | (150,000 | ) | ||||
Gross Deferred and Other Income Tax Liabilities | (2,624,000 | ) | (1,639,000 | ) | ||||
Net Deferred and Other Income Tax Assets (Liabilities) | $ | (394,000 | ) | $ | (746,000 | ) | ||
Accounting principles generally accepted in The fiscal 2020 income taxes p
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reflected in the Company’s historical income tax provision and accruals. The Company adjusts these reserves in light of changing facts and circumstances. As of September 30, 20182021 and 2017,2020, the Company had UTB’s of $150,000. There were no0 additional accruals of UTB’s during fiscal years ended September 30, 20182021 and 2017.
2020.
As of September 30, 2017,2020.
As of2021 or September 30, 2017, the Company had $155,000 in Florida state research and development tax credits (“Florida R&D Credits”) carryforwards. The Company received additional Florida R&D Credits of $25,000 in fiscal 2018 and used $93,000, leaving $87,000 of Florida R&D Credits carryforwards as of September 30, 2018. The $87,000 of Florida R&D Credits, which are included in net deferred and other income tax liabilities of $(2,358,000) at September 30, 2018, expire in fiscal 2022.
2020.
AND ARRANGEMENTS WITH FINANCIAL INSTITUTIONS
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September 30, 2021 | September 30, 2020 | |||||||
Operating lease ROU asset included in other long-term assets | $ | 785,000 | $ | 942,000 | ||||
Current operating lease liability | 393,000 | 328,000 | ||||||
Non-current operating lease liability | 392,000 | 614,000 | ||||||
Weighted average remaining lease term (in years) | 2.00 | 2.92 | ||||||
Weighted average discount rate used in calculating ROU asset | 4.0 | % | 4.0 | % |
Fiscal Year | Annual Lease Payments | |||
2022 | $ | 417,000 | ||
2023 | 394,000 | |||
2024 | 6,000 | |||
Total | 817,000 | |||
Less interest | (32,000 | ) | ||
Present value of lease liabilities | $ | 785,000 | ||
Leases
The Company leases certain equipment undernon-cancelable operating leases. Future minimum rental commitments under these leases at September 30, 2018 are immaterial. Total rental expense for the fiscal years ended September 30, 2018 and 2017 was $38,000 and $179,000, respectively.
AND STOCK-BASED COMPENSATION
NOTE 11 – STOCK-BASED COMPENSATION
The Company maintains a stock-based compensation plan, which provides for the issuance of Company stock to certain directors, officers, key employees and affiliates.
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Number of Shares | Average Exercise Price Per Share | |||||||
Options outstanding at September 30, 2016 | 483,750 | $ | 5.684 | |||||
Options exercised during fiscal 2017 | (43,750 | ) | $ | 5.126 | ||||
|
| |||||||
Options outstanding at September 30, 2017 | 440,000 | $ | 5.739 | |||||
Options exercised during fiscal 2018 | (122,508 | ) | $ | 5.104 | ||||
|
| |||||||
Options outstanding at September 30, 2018 | 317,492 | $ | 5.984 | |||||
|
|
No
Number of Shares | Average Exercise Price Per Share | |||||||
Options outstanding at September 30, 2019 | 272,492 | $ | 6.126 | |||||
Options exercised during fiscal 2020 | (20,000 | ) | $ | 5.126 | ||||
Options outstanding at September 30, 2020 | 252,492 | $ | 6.205 | |||||
Options exercised during fiscal 2021 | (51,508 | ) | $ | 5.126 | ||||
Options expired on September 30, 2021 | (170,984 | ) | $ | 5.623 | ||||
Options outstanding at September 30, 2021 | 30,000 | $ | 11.380 | |||||
NOTE 12 - RELATED PARTY TRANSACTIONS
Marcar Leasing Corporation (“Marcar”) was engaged in leasing vehiclesPlan (however, refer to
36
ITEM 9 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A | CONTROLS AND PROCEDURES |
2021.
2021
37
ITEM 9B | OTHER INFORMATION |
ITEM 10 | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11 | EXECUTIVE COMPENSATION |
ITEM 12 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14 | PRINCIPAL ACCOUNTING FEES AND SERVICES |
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ITEM 15 | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a) | A listing of financial statements and financial statement schedules filed as part of this Annual Report and which financial statements and schedules are incorporated into this report by reference, is set forth in the “Index to Financial Statements and Financial Statement Schedules” in Item 8 hereof. |
(b) | Exhibit Index |
EXHIBIT NUMBER | DESCRIPTION | FILED HEREWITH | ||||
3.1 | Restated Certificate of Incorporation of Company, incorporated by reference to Exhibit 3.1 to Registration No. 33-627(P) | |||||
3.2 | ||||||
3.3 | Certificate of Amendment, changing name of Mechtron International Corporation to Gencor Industries, Inc. and adding a “twelfth” article regarding director liability limitation, incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1987(P) | |||||
4.1 | Form of Common Stock certificate, incorporated by reference to Exhibit 4.1 to Registration No. 33-627(P) | |||||
4.2 | X | |||||
10.1 | ||||||
Form of Agreement for Nonqualified Stock Options granted in 1986, incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1986(P) | ||||||
First Amendment to the Stock Option Plan Agreement incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form10-Q for the quarter ended June 30, | ||||||
21.1 | X | |||||
23.1 | X | |||||
31.1 | X | |||||
31.2 | X |
EXHIBIT NUMBER | DESCRIPTION | FILED HEREWITH | ||||
32.1 | X |
39
EXHIBIT NUMBER | DESCRIPTION | FILED HEREWITH | ||||||
101.INS | XBRL Instance Document | X | ||||||
101.SCH | XBRL Taxonomy Extension Schema | X | ||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | X | ||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | X | ||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | X | ||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | X |
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ITEM 16 | FORM 10-K SUMMARY |
Dated: December | GENCOR INDUSTRIES, INC. | |||||
(Registrant) | ||||||
/s/ | ||||||
/s/ E.J. Elliott | /s/ | |||||||||
E.J. Elliott | December | Marc G. Elliott | December | |||||||
Chairman | President & Director | |||||||||
(Principal Executive Officer) | ||||||||||
/s/ |
| |||||||||
Eric E. Mellen | December | |||||||||
Chief Financial Officer | ||||||||||
(Principal Financial and Accounting Officer) | ||||||||||
/s/ | /s/ | Walter A. Ketcham | ||||||||
December | Walter A. Ketcham | December | ||||||||
Director | Director | |||||||||
/s/ | ||||||||||
December | ||||||||||
Director |
41