UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORMFORM 10-Q

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2019

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD: Fromto

FOR THE TRANSITION PERIOD: Fromto

Commission File Number:Number:  001-11703

 

 

GENCOR INDUSTRIES, INC.

 

 

 

Delaware 59-0933147

(State or other jurisdiction of

of incorporatedincorporation or organization)

 

(IRS Employer

Identification No.)

5201 North Orange Blossom Trail, Orlando, Florida 32810

(Address of principal executive offices) (Zip Code)

(407)(407) 290-6000

(Registrant’s telephone number, including area code)

Securities registered or to be registered pursuant to Section 12(b) of the Act

 

Title of Each Class

 

Trading

Symbol(s)

 

Name of Exchange

on which registered

Common Stock ($.10 Par Value) GENC NASDAQ Global Market

 

 

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 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  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in RuleRule 12b-2 of the Exchange Act.

 

Large Accelerated Fileraccelerated filer   Accelerated Filer 
Non-AcceleratedNon-accelerated Filer   Smaller Reporting Company 
Emerging Growth Company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in RuleRule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ☑    No  ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at January 30,May 1, 2020

Common stock, $.10 par value

 12,277,337 shares

Class B stock, $.10 par value

 2,308,857 shares

 

 

 


GENCOR INDUSTRIES, INC.

 

Index

  Page 

Part I.

 

Financial Information

Item 1.

FinancialStatements

  
 

Item 1.   Financial Statements

  Condensed Consolidated Balance Sheets – December 31, 2019 (Unaudited) and September 30, 20193
 

Condensed Consolidated Statements of IncomeBalance SheetsQuarters ended DecemberMarch  31, 20192020 (Unaudited) and 2018 (Unaudited)September 30, 2019

   4 
 

Condensed Consolidated Statements of Shareholders’ EquityOperations – Quarters ended Decemberand Six Months Ended March 31, 2020 and 2019 and 2018 (Unaudited)

   5 
 

Condensed Consolidated Statements of Cash FlowsShareholders’ EquityQuarters ended DecemberSix Months Ended March 31, 2020 and 2019 and 2018 (Unaudited)

   6 
 

Notes to Condensed Consolidated Financial Statements of Cash Flows – Six Months Ended March  31, 2020 and 2019 (Unaudited)

   7 

Notes to Condensed Consolidated Financial Statements (Unaudited)

8
 

Item  2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

   1314 
 

Item  3.

Quantitative and Qualitative Disclosures about Market Risk

   1820 
 

Item 4.

Controls and Procedures

   1820 

Part II.

 

Other Information

  

Item 1A.   Risk Factors

21
 

Item 6.

Exhibits

   1923

Signatures

   2024 

Introductory Note:

2


Caution Concerning Forward-Looking Statements

This Quarterly Report on FormForm 10-Q (this “Quarterly Report”) and the Company’s other communications and statements may contain certain “forward-looking statements,”statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements about the Company’s 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 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, demand for the Company’s products, the duration and scope of the coronavirus(“COVID-19”) pandemic, actions governments, and businesses take in response to theCOVID-19 pandemic, including mandatory business closures; the impact of the pandemic and actions taken on regional economies; the pace of recovery when theCOVID-19 pandemic subsides. 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. The Company’s actual future results may differ materially from those set forth in its forward-looking statements.

For information concerning these factors and related matters, see Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Part II, Item 1A, “Risk Factors” in this Quarterly Report, and the following sections of the Company’s Annual Report on FormForm 10-K for the year ended September 30, 2019: (a) Part I, Item 1A, “Risk Factors” inand (b) Part I, and (b)II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II.. However, other factors besides those referenced could adversely affect the Company’s 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 the Company herein speak as of the date of this Quarterly Report. The Company does not undertake to update any forward-looking statement,statements, except as required by law.

Unless the context otherwise indicates, all references in this Quarterly Report to the “Company,” “Gencor,” “we,” “us,” or “our,” or similar words are to Gencor Industries, Inc. and its subsidiaries.

3


Part I. Financial Information

GENCOR INDUSTRIES, INC.

Condensed Consolidated Balance Sheets

 

  

December 31,

2019

   

September 30,

2019

 
  (Unaudited)   

 

   

March 31,

2020

   September 30,
2019
 

ASSETS

      (Unaudited)   

 

 

Current assets:

    

Current Assets:

    

Cash and cash equivalents

  $14,343,000   $10,302,000   $18,738,000   $10,302,000 

Marketable securities at fair value (cost $104,896,000 at December 31, 2019 and $104,176,000 at September 30, 2019)

   107,232,000    105,322,000 

Accounts receivable, less allowance for doubtful accounts of $476,000 at December 31, 2019 and $459,000 at September 30, 2019

   1,662,000    1,603,000 

Marketable securities at fair value (cost $105,967,000 at March 31, 2020 and $104,176,000 at September 30, 2019)

   102,275,000    105,322,000 

Accounts receivable, less allowance for doubtful accounts of $474,000 at March 31, 2020 and $459,000 at September 30, 2019

   2,366,000    1,603,000 

Costs and estimated earnings in excess of billings

   13,383,000    13,838,000    8,792,000    13,838,000 

Inventories, net

   25,691,000    25,366,000    27,063,000    25,366,000 

Prepaid expenses & other current assets

   1,454,000    499,000 

Prepaid expenses and other current assets

   2,144,000    499,000 
  

 

   

 

   

 

   

 

 

Total Current Assets

   163,765,000    156,930,000    161,378,000    156,930,000 
  

 

   

 

   

 

   

 

 

Property and equipment, net

   7,977,000    8,389,000    8,276,000    8,389,000 

Other assets

   53,000    53,000    53,000    53,000 
  

 

   

 

   

 

   

 

 

Total Assets

  $171,795,000   $165,372,000   $169,707,000   $165,372,000 
  

 

   

 

 
  

 

   

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

        

Current Liabilities:

        

Accounts payable

  $2,714,000   $1,907,000   $4,380,000   $1,907,000 

Customer deposits

   4,921,000    1,918,000    4,713,000    1,918,000 

Accrued expenses

   4,423,000    2,660,000    2,721,000    2,660,000 
  

 

   

 

   

 

   

 

 

Total Current Liabilities

   12,058,000    6,485,000    11,814,000    6,485,000 
  

 

   

 

   

 

   

 

 

Deferred and other income taxes

   1,715,000    3,372,000    509,000    3,372,000 
  

 

   

 

   

 

   

 

 

Total Liabilities

   13,773,000    9,857,000    12,323,000    9,857,000 
  

 

   

 

   

 

   

 

 

Commitments and contingencies

        

Shareholders’ equity:

    

Preferred stock, par value $.10 per share; authorized 300,000 shares; none issued

   —      —   

Common stock, par value $.10 per share; 15,000,000 shares authorized; 12,277,337 shares issued and outstanding at December 31, 2019 and September 30, 2019, respectively

   1,228,000    1,228,000 

Class B Stock, par value $.10 per share; 6,000,000 shares authorized; 2,308,857 shares issued and outstanding at December 31, 2019 and September 30, 2019, respectively

   231,000    231,000 

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; 12,277,337 shares issued and outstanding at March 31, 2020 and September 30, 2019

   1,228,000    1,228,000 

Class B Stock, par value $.10 per share; 6,000,000 shares authorized; 2,308,857 shares issued and outstanding at March 31, 2020 and September 30, 2019

   231,000    231,000 

Capital in excess of par value

   12,177,000    12,159,000    12,194,000    12,159,000 

Retained earnings

   144,386,000    141,897,000    143,731,000    141,897,000 
  

 

   

 

   

 

   

 

 

Total Shareholders’ Equity

   158,022,000    155,515,000    157,384,000    155,515,000 
  

 

   

 

   

 

   

 

 

Total Liabilities and Shareholders’ Equity

  $171,795,000   $165,372,000   $169,707,000   $165,372,000 
  

 

   

 

   

 

   

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

4


GENCOR INDUSTRIES, INC.

Condensed Consolidated Statements of IncomeOperations

(Unaudited)

 

  For the Quarters Ended
December 31,
   For the Quarters Ended
March 31,
   For the Six Months Ended
March 31,
 
  2019 2018   2020 2019   2020 2019 

Net revenue

  $18,030,000  $21,327,000   $25,993,000  $26,670,000   $44,023,000  $47,997,000 

Costs and expenses:

         

Production costs

   13,710,000  16,410,000    18,655,000  16,759,000    32,365,000  33,169,000 

Product engineering and development

   766,000  723,000    689,000  823,000    1,455,000  1,546,000 

Selling, general and administrative

   2,382,000  2,190,000    2,561,000  2,474,000    4,943,000  4,664,000 
  

 

  

 

   

 

  

 

   

 

  

 

 
   16,858,000  19,323,000    21,905,000  20,056,000    38,763,000  39,379,000 
  

 

  

 

   

 

  

 

   

 

  

 

 

Operating income

   1,172,000  2,004,000    4,088,000  6,614,000    5,260,000  8,618,000 

Other income (expense), net:

         

Interest and dividend income, net of fees

   632,000  534,000    763,000  507,000    1,395,000  1,041,000 

Realized and unrealized gains (losses) on marketable securities, net

   1,317,000  (2,147,000

Net realized and unrealized gains (losses) on marketable securities

   (5,670,000 2,204,000    (4,353,000 57,000 

Other

   (10,000  —      —     —      (10,000  —   
  

 

  

 

   

 

  

 

   

 

  

 

 
   1,939,000  (1,613,000   (4,907,000 2,711,000    (2,968,000 1,098,000 
  

 

  

 

   

 

  

 

   

 

  

 

 

Income (loss) before income tax expense (benefit)

   (819,000 9,325,000    2,292,000  9,716,000 

Income tax expense (benefit)

   (164,000 1,865,000    458,000  1,943,000 
  

 

  

 

   

 

  

 

 

Income before income tax expense

   3,111,000  391,000 

Income tax expense

   622,000  78,000 

Net income (loss)

  $(655,000 $7,460,000   $1,834,000  $7,773,000 
  

 

  

 

   

 

  

 

   

 

  

 

 

Net income

  $2,489,000  $313,000 

Basic Income (Loss) per Common Share:

      

Net income (loss) per share

  $(0.04 $0.51   $0.13  $0.53 
  

 

  

 

   

 

  

 

   

 

  

 

 

Diluted Income (Loss) per Common Share:

      

Net income (loss) per share

  $(0.04 $0.51   $0.12  $0.53 
  

 

  

 

   

 

  

 

 

Basic Income per Common Share:

   

Net income per share

  $0.17  $0.02 
  

 

  

 

 

Diluted Income per Common Share:

   

Net income per share

  $0.17  $0.02 
  

 

  

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

5


GENCOR INDUSTRIES, INC.

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

For the QuarterSix Months Ended DecemberMarch 31, 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

   —      —      —      —      —      2,489,000   2,489,000 

Stock-based compensation

   —      —      —      —      18,000    —     18,000 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

December 31, 2019

   12,277,337   $1,228,000    2,308,857   $231,000   $12,177,000   $144,386,000  $158,022,000 

Net loss

   —      —      —      —      —      (655,000  (655,000

Stock-based compensation

   —      —      —      —      17,000    —     17,000 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

March 31, 2020

   12,277,337   $1,228,000    2,308,857   $231,000   $12,194,000   $143,731,000  $157,384,000 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

  

 

 

 

For the Six Months Ended March 31, 2019

 

   Common Stock   Class B Stock   Capital in
Excess of
Par Value
   Retained
Earnings
   Total
Shareholders’
Equity
 
   Shares   Amount   Shares   Amount 

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

   —      —      —      —      —      2,489,000    2,489,000 

Stock-based compensation

   —      —      —      —      18,000    —      18,000 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

December 31, 2019

   12,277,337   $1,228,000    2,308,857   $231,000   $12,177,000   $144,386,000   $158,022,000 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

For the Quarter Ended December 31, 2018

  Common Stock   Class B Stock   Capital in
Excess of
Par Value
   Retained
Earnings*
   Total
Shareholders’
Equity*
   Common Stock   Class B Stock   Capital in
Excess of
   Retained   Total
Shareholders’
 
  Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Par Value   Earnings *   Equity * 

September 30, 2018

   12,252,337   $1,225,000    2,288,857   $229,000   $11,862,000   $131,701,000   $145,017,000    12,252,337   $1,225,000    2,288,857   $229,000   $11,862,000   $131,701,000   $145,017,000 

Net income

   —      —      —      —      —      313,000    313,000    —      —      —      —      —      313,000    313,000 

Stock-based compensation

   —      —      —      —      17,000    —      17,000    —      —      —      —      17,000    —      17,000 
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

December 31, 2018

   12,252,337   $1,225,000    2,288,857   $229,000   $11,879,000   $132,014,000   $145,347,000    12,252,337    1,225,000    2,288,857    229,000    11,879,000    132,014,000    145,347,000 

Net income

   —      —      —      —      —      7,460,000    7,460,000 

Stock-based compensation

   —      —      —      —      18,000    —      18,000 
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

March 31, 2019

   12,252,337   $1,225,000    2,288,857   $229,000   $11,897,000   $139,474,000   $152,825,000 
   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

See accompanying Notes to Condensed Consolidated Financial Statements

 

*

The balances as of September 30, 2018, and December 31, 2018 and March 31, 2019, and the amounts for the quarter and six months ended DecemberMarch 31, 2018,2019, have been adjusted to reflect the change in inventory accounting method, as described in Note 3 to the Condensed Consolidated Financial Statements.

6


GENCOR INDUSTRIES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

  For the Quarters Ended
December 31,
   For the Six Months Ended
March 31,
 
  2019 2018   2020 2019 

Cash flows from operating activities:

   

Cash flows from operations:

   

Net income

  $2,489,000  $313,000   $1,834,000  $7,773,000 

Adjustments to reconcile net income to cash provided by (used in) operating activities:

   

Adjustments to reconcile net income to cash provided by operating activities:

   

Purchases of marketable securities

   (35,313,000 (68,444,000   (73,393,000 (112,663,000

Proceeds from sale and maturity of marketable securities

   34,659,000  65,998,000    72,181,000  113,767,000 

Change in fair value of marketable securities

   (1,256,000 2,059,000    4,259,000  (202,000

Deferred income taxes

   (1,657,000 (485,000   (2,863,000 (156,000

Depreciation and amortization

   418,000  386,000    831,000  783,000 

Provision for doubtful accounts

   —    25,000    25,000  50,000 

Stock-based compensation

   18,000  17,000    35,000  35,000 

Changes in assets and liabilities:

      

Accounts receivable

   (59,000 (532,000   (788,000 (1,469,000

Costs and estimated earnings in excess of billings

   455,000  (1,419,000   5,046,000  (2,113,000

Inventories

   (325,000 (2,015,000   (1,697,000 (1,925,000

Prepaid expenses & other current assets

   (955,000 322,000 

Prepaid expenses and other current assets

   (1,645,000 978,000 

Accounts payable

   807,000  1,755,000    2,473,000  317,000 

Customer deposits

   3,003,000  (1,166,000   2,795,000  (543,000

Accrued expenses

   1,763,000  104,000    61,000  202,000 
  

 

  

 

   

 

  

 

 

Total adjustments

   1,558,000  (3,395,000   7,320,000  (2,939,000
  

 

  

 

   

 

  

 

 

Cash flows provided by (used in) operating activities

   4,047,000  (3,082,000

Cash flows provided by operating activities

   9,154,000  4,834,000 
  

 

  

 

   

 

  

 

 

Cash flows from investing activities:

   

Cash flows used in investing activities:

   

Capital expenditures

   (6,000 (661,000   (718,000 (1,260,000
  

 

  

 

   

 

  

 

 

Cash flows used in investing activities

   (6,000 (661,000   (718,000 (1,260,000
  

 

  

 

   

 

  

 

 

Net increase (decrease) in cash and cash equivalents

   4,041,000  (3,743,000

Net increase in cash

   8,436,000  3,574,000 

Cash and cash equivalents at:

      

Beginning of period

   10,302,000  8,012,000    10,302,000  8,012,000 
  

 

  

 

   

 

  

 

 

End of period

  $14,343,000  $4,269,000   $18,738,000  $11,586,000 
  

 

  

 

   

 

  

 

 
 

See accompanying Notes to Condensed Consolidated Financial Statements

7


GENCOR INDUSTRIES, INC.

Notes to Condensed Consolidated Financial Statements

For the Quarter Ended December 31, 2019

(Unaudited)

Note 1 – 1—Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to FormForm 10-Q and Article 10 of RegulationRegulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter and six months ended DecemberMarch 31, 20192020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2020.

The accompanying Condensed Consolidated Balance Sheet at September 30, 2019 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and notes thereto included in the Gencor Industries, Inc. Annual Report on FormForm 10-K for the year ended September 30, 2019.

Recent Accounting Pronouncements and Policies

In May 2014, the FASB issued ASUNo. 2014-09,Revenue from Contracts with Customers (Topic 606) (“ASU(“ASU 2014-09”), 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. The Company adopted ASUASU 2014-09 in the first quarter of fiscal 2019. The Company elected to adopt the standard using the modified retrospective method. The adoption of ASUASU 2014-09 did not have a significant impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No.No. 2016-02, Leases (Topic 842) (“ASU(“ASU 2016-02”). With adoption of this standard, lessees will have to recognize most leases as aright-of-use asset and a lease liability on their balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will beis based on criteria that are similar to those applied in currentprior lease accounting. ASUASU 2016-02 must be applied on a modified retrospective basis and is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. The Company adopted ASUASU 2016-02 in the first quarter of fiscal 2020. The adoption of ASUASU 2016-02 did not have a significant impact on its consolidated financial statements.

In May 2017, the FASB issued ASU2017-09,Compensation—Stock Compensation (Topic 718):Scope of Modification Accounting (“ASU(“ASU 2017-09”). The new guidance clarifies when a change to the terms or conditions of a share based payment award must be accounted for as a modification. ASUASU 2017-09 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company adopted ASUASU 2017-09 in the first quarter of fiscal 2019. The adoption of ASUASU 2017-09 did not have a significant impact on its consolidated financial statements.

No other accounting pronouncements recently issued or newly effective have had, or are expected to have, a material impact on the Company’s consolidated financial statements.

8


COVID-19 Pandemic

The Company continues to monitor and evaluate the risks to public health and the slowdown in overall business activity related to theCOVID-19 pandemic, including potential impacts on our employees, customers, suppliers and financial results. To date, there have been no material impacts to the Company’s operations as a result ofCOVID-19. As the situation remains fluid, it is difficult to predict the duration and scope of the pandemic and its impact on the Company’s business. However, it may result in a material adverse impact to the Company’s financial position, operations and cash flows if conditions persist or worsen.

Note 2 – 2—Marketable Securities

Marketable debt and equity securities are categorized as trading securities and are thus marked to market and stated at fair value. Fair value is determined using the quoted closing or latest bid prices for Level 1 investments and market standard valuation methodologies for Level 2 investments. Realized gains and losses on investment transactions are determined by specific identification and are recognized as incurred in the condensed consolidated statements of income. Net unrealized gains and losses are reported in the condensed consolidated statements of income in the current period and represent the change in the fair value of investment holdings during the period.

Fair Value Measurements

The fair value of financial instruments is presented based upon a hierarchy of levels that prioritizes the inputs of valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The fair value of marketable equity securities, mutual funds, exchange-traded funds, corporate bonds, government securities and cash and money funds are substantially based on quoted market prices (Level 1). Corporate bonds are valued using market standard valuation methodologies, including: discounted cash flow methodologies, and matrix pricing or other similar techniques. The inputs to these market standard valuation methodologies include, but are not limited to: interest rates, credit standing of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, maturity, estimated duration and assumptions regarding liquidity and estimated future cash flows. In addition to bond characteristics, the valuation methodologies incorporate market data, such as actual trades completed, bids and actual dealer quotes, where such information is available. Accordingly, the estimated fair values are based on available market information and judgments about financial instruments (Level 2). Fair values of the Level 2 investments, if any, are provided by the Company’s professional investment management firm.

The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of DecemberMarch 31, 2019:2020:

 

                                                                                
  Fair Value Measurements   Fair Value Measurements 
  Level 1   Level 2   Level 3   Total   Level 1   Level 2   Level 3   Total 

Equities

  $14,070,000   $—     $—     $14,070,000   $12,458,000   $—     $—     $12,458,000 

Mutual Funds

   4,052,000    —      —      4,052,000    2,290,000    —      —      2,290,000 

Exchange-Traded Funds

   5,298,000    —      —      5,298,000    4,005,000    —      —      4,005,000 

Corporate Bonds

   —      42,474,000    —      42,474,000    —      39,721,000    —      39,721,000 

Government Securities

   40,005,000    —      —      40,005,000    40,315,000    —      —      40,315,000 

Cash and Money Funds

   1,333,000    —      —      1,333,000    3,486,000    —      —      3,486,000 
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

Total

  $64,758,000   $42,474,000   $—     $107,232,000   $62,554,000   $39,721,000   $—     $102,275,000 
  

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

Net unrealized gains recognized duringand (losses) included in the Condensed Consolidated Statements of Income for the quarter and six months ended DecemberMarch 31, 2019 on trading securities still held as of December 31, 20192020, were $1,190,000.$(6,029,000) and $(4,839,000), respectively. There were no transfers of investments between Level 1 and Level 2 during the quartersix months ended DecemberMarch 31, 2019.2020.

9


The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2019:

 

   Fair Value Measurements 
   Level 1   Level 2   Level 3   Total 

Equities

  $10,412,000   $—     $—     $10,412,000 

Mutual Funds

   3,987,000    —      —      3,987,000 

Exchange-Traded Funds

   5,163,000    —      —      5,163,000 

Corporate Bonds

   —      38,690,000    —      38,690,000 

Government Securities

   45,171,000    —      —      45,171,000 

Cash and Money Funds

   1,899,000    —      —      1,899,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $66,632,000   $38,690,000   $—     $105,322,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

Net unrealized losses recognized duringgains and (losses) included in the condensed consolidated statements of income for the quarter and six months ended DecemberMarch 31, 2018 on trading securities still held as of December 31, 20182019, were $(2,425,000).$1,645,000 and $(780,000), respectively. There were no transfers of investments between Level 1 and Level 2 during the quartersix months ended DecemberMarch 31, 2018. In the quarter ended December 31, 2018, the Company invested an additional $2.0 million of its operating cash in marketable securities.2019.

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these items.

Note 3 – 3—Inventories

Inventories are valued at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price of goods less reasonable costs of completion and delivery. During the fourth quarter of fiscal 2019, the Company changed its method for accounting for cost of inventories from thelast-in,first-out (“LIFO”) method to thefirst-in,first-out (“FIFO”) method. As required by accounting principles generally accepted in the United States of America (“GAAP”), the Company reflected this change in accounting principle on a retrospective basis, resulting in changes to the historical periods presented. The Company believes the FIFO method improves financial reporting by better reflecting the current value of inventory on the consolidated balance sheets, by more closely aligning the flow of physical inventory with the accounting for the inventory, and by providing better matching of revenues and expenses.

The fiscal 2018 consolidated financial statements have beenwere retrospectively adjusted to apply the new method of FIFO cost accounting for inventories. The cumulative effect of this change on periods prior to those presented herein resulted in an increase in retained earnings of $2,708,000. There was no material impact to the previously reported unaudited interim fiscal 2018 quarterly condensed consolidated results of operations or statements of income as a result of the retrospective application of the change in inventory accounting principle.

Appropriate consideration is given to obsolescence, excessive levels, deterioration, possible alternative uses and other factors in determining net realizable value. The cost of work in process and finished goods includes materials, direct labor, variable costs and overhead. The Company evaluates the need to record inventory adjustments on all inventories, including raw material, work in process, finished goods, spare parts and used equipment. Used equipment acquired by the Company ontrade-in from customers is carried at estimated net realizable value. Unless specific circumstances warrant different treatment regarding inventory obsolescence, the cost basis of inventories three to four years old are reduced by 50%, while the cost basis of inventories four to five years old are reduced by 75%, and the cost basis of inventories greater than five years old are reduced to zero. Inventory is typically reviewed for obsolescence on an annual basis computed as of September 30, the Company’s fiscal year end. If significant known changes in trends, technology or other specific circumstances that warrant consideration occur during the year, then the impact on obsolescence is considered at that time.

10


Net inventories at DecemberMarch 31, 20192020 and September 30, 2019 consist of the following:

 

  December 31, 2019   September 30, 2019   March 31, 2020   September 30, 2019 

Raw materials

  $14,389,000   $14,158,000   $15,155,000   $14,158,000 

Work in process

   1,877,000    1,397,000    3,092,000    1,397,000 

Finished goods

   9,425,000    9,811,000    8,776,000    9,811,000 

Used equipment

   40,000    —   
  

 

   

 

   

 

   

 

 
  $25,691,000   $25,366,000   $27,063,000   $25,366,000 
  

 

   

 

   

 

   

 

 

Slow-moving and obsolete inventory reserves were $4,467,000$4,518,000 and $4,700,000 at December 30, 2019March 31, 2020 and September 30, 2019, respectively.

Note 4 – 4—Costs and Estimated Earnings in Excess of Billings

Costs and estimated earnings in excess of billings on uncompleted contracts as of DecemberMarch 31, 20192020 and September 30, 2019 consist of the following:

 

  December 31, 2019   September 30, 2019   March 31, 2020   September 30, 2019 

Costs incurred on uncompleted contracts

  $22,503,000   $18,707,000   $17,950,000   $18,707,000 

Estimated earnings

   9,776,000    9,063,000    7,489,000    9,063,000 
  

 

   

 

   

 

   

 

 
   32,279,000    27,770,000    25,439,000    27,770,000 

Billings to date

   18,896,000    13,932,000    16,647,000    13,932,000 
  

 

   

 

   

 

   

 

 

Costs and estimated earnings in excess of billings

  $13,383,000   $13,838,000   $8,792,000   $13,838,000 
  

 

   

 

   

 

   

 

 

Note 5 – 5—Earnings per Share Data

The Condensed Consolidated Financial Statements include basic and diluted earnings per share information. The following table sets forth the computation of basic and diluted earnings per share for the quarters and six months ended DecemberMarch 31, 20192020 and 2018:2019:

 

   December 31, 2019   December 31, 2018 

Net income

  $2,489,000   $313,000 
  

 

 

   

 

 

 

Common Shares:

    

Weighted-average common shares outstanding

   14,586,000    14,541,000 

Effect of dilutive stock options

   134,000    158,000 
  

 

 

   

 

 

 

Weighted-average diluted shares outstanding

   14,720,000    14,699,000 
  

 

 

   

 

 

 

Basic:

    

Net income per share

  $0.17   $0.02 
  

 

 

   

 

 

 

Diluted:

    

Net income per share

  $0.17   $0.02 
  

 

 

   

 

 

 
   Quarter Ended March 31,   Six Months Ended March 31, 
   2020   2019   2020   2019 

Net Income (Loss)

  $(655,000  $7,460,000   $1,834,000   $7,773,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

Common Shares:

        

Weighted average common shares outstanding

   14,586,000    14,541,000    14,586,000    14,541,000 

Effect of dilutive stock options

   —      167,000    128,000    164,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted shares outstanding

   14,586,000    14,708,000    14,714,000    14,705,000 
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic:

        

Net earnings (loss) per share

  $(0.04  $0.51   $0.13   $0.53 
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted:

        

Net earnings (loss) per share

  $(0.04  $0.51   $0.12   $0.53 
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share is based on the weighted-average number of shares outstanding. Diluted earnings per share is based on the sum of the weighted-average number of shares outstanding plus common stock equivalents.

Weighted-averageFor the quarter ended March 31, 2020, there were no common stock equivalents included in the diluted earnings per share calculation. The weighted-average shares issuable upon the exercise of stock options included in the diluted earnings per share calculation for the six months ended March 31, 2020 were 260,000, which equates to 128,000 dilutive common stock equivalents. There were 30,000 weighted-average shares issuable upon the exercise of stock

11


options, which were not included in the diluted earnings per share calculation for the six months ended March 31, 2020 because they were anti-dilutive. The weighted-average shares issuable upon the exercise of stock options included in the diluted earnings per share calculation for the quarter and six months ended DecemberMarch 31, 2019 were 272,000,317,000 and 317,000, respectively, which equates to 134,000167,000 and 164,000 dilutive common stock equivalents. Weighted-averageequivalents, respectively. There were no anti-dilutive shares issuable upon the exercise of stock options included in the diluted earnings per share calculation for the quarter and six months ended DecemberMarch 31, 2018 were 317,000, which equated to 158,000 dilutive common stock equivalents. Weighted-average shares issuable upon the exercise of stock options, which were not included in the diluted earnings per share calculations because they were anti-dilutive, were zero for the quarters ended December 31, 2019 and 2018.2019.

Note 6 – 6—Customers with 10% (or greater) of Net Revenues

TwoDuring the quarter ended March 31, 2020, three customers accounted for 13.4%12.3%, 11.2% and 13.2%10.7% of net revenues. During the six months ended March 31, 2020, one of these three customers accounted for 10.4% of net revenues.

Two different customers accounted for 14.2% and 11.2% of net revenues respectively, for the quarter ended DecemberMarch 31, 2019. Net revenues for eachOne of these two customers were less than 1% during the prior year comparative periods.

Fourplus two other customers accounted for 24.7%13.9%, 22.9%, 14.8%13.9% and 13.7%11.8% of net revenues respectively, for the quartersix months ended DecemberMarch 31, 2018.2019.

Note 7 – 7—Income Taxes

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.

On the condensed consolidated balance sheet as of DecemberMarch 31, 2019,2020, deferred income taxes decreased $1.7 million and accrued expenses increased $1.8$2.9 million as compared to September 30, 2019. This change reflects the reclassification2019, reflecting payment of taxes payable from a long-term liability to a current liabilitydue of $1.9 million on the filing of the Company’s Form 3115 with the Internal Revenue Service to reflect the revenue recognition method change to the percentage of completion method for tax purposes pursuant to Internal Revenue Code Sections 460 and 451(b).

The Company’s income tax provision is based on management’s estimate of the effective tax rate for the full year. The tax provision in any period will be affected by, among other things, permanent, as well as temporary differences in the deductibility of certain items, in addition to changes in tax legislation. As a result, the Company may experience significant fluctuations in the effective book tax rate (that is, its tax expense divided bypre-tax book income) from period to period. The Company’s effective tax rates for the first quarterssix months of fiscal 2020 and 2019 reflect the impact of the reduced rates under the Tax Reform Act.

Note 8 – 8—Revenue Recognition and Related Costs

As discussed in Note 1, the Company adopted the provisions of ASUNo. 2014-09 and related amendments effective for the quarter ended December 31, 2018 using the modified retrospective method. The adoption of this standard did not have a material impact on the timing or amounts of revenues recognized by the Company, and, as such, no cumulative effect adjustment was recorded with the adoption of the standard.

The following table disaggregates the Company’s net revenue by major source for the quartersquarter and six months ended DecemberMarch 31, 20192020 and 2018:2019:

 

  Quarter Ended March 31,   Six Months Ended March 31, 
  December 31, 2019 December 31, 2018   2020   2019   2020   2019 

Equipment sales recognized over time

  $12,090,000  $16,353,000   $9,829,000   $12,006,000   $21,919,000   $28,359,000 

Equipment sales recognized at a point in time

   1,907,000  1,514,000    10,044,000    8,929,000    11,951,000    10,443,000 

Parts and component sales

   3,146,000  3,051,000    4,675,000    4,466,000    7,821,000    7,517,000 

Freight revenue

   903,000  402,000    1,201,000    1,030,000    2,104,000    1,432,000 

Other

   (16,000 7,000    244,000    239,000    228,000    246,000 
  

 

  

 

   

 

   

 

   

 

   

 

 

Net revenue

  $18,030,000  $21,327,000   $25,993,000   $26,670,000   $44,023,000   $47,997,000 
  

 

  

 

   

 

   

 

   

 

   

 

 

12


Revenues from contracts with customers for the design, manufacture and sale of custom equipment are recognized over time when the performance obligation is satisfied by transferring control of 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 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. All incremental costs related to obtaining a contract are expensed as incurred as the amortization period is less than one year. Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined.

Contract assets (excluding accounts receivable) under contracts with customers represent revenue recognized in excess of amounts billed on equipment sales recognized over time. These contract assets were $13,383,000$8,792,000 at DecemberMarch 31, 20192020 and $13,838,000 at September 30, 2019 and are included in current assets as costs and estimated earnings in excess of billings on the Company’s condensed consolidated balance sheets at DecemberMarch 31, 20192020 and September 30, 2019, respectively. The Company anticipates that all these contract assets at DecemberMarch 31, 2019,2020, will be billed and collected within one year.

Revenues from all other contracts for the design and manufacture of 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. Control of the goods or service typically transfers at time of shipment or upon completion of the service.

Payment for equipment under contract with customers is typically due prior to shipment. Payment for services under contract with customers is due as certain milestones are completed. Accounts receivable related to contracts with customers for equipment sales were $325,000was $247,000 at DecemberMarch 31, 20192020 and $301,000 at September 30, 2019.

Product warranty costs are estimated using historical experience and known issues and are charged to production costs as revenue is recognized. Provisions for estimated returns and allowances and other adjustments are provided for in the same period the related sales are recorded. Returns and allowances, which reduce product revenue, are estimated using historical experience.

Under certain contracts with customers, recognition of a portion of the consideration received may be deferred and recorded as a contract liability if the Company has to satisfy a future obligation, such as to provide installation assistance. There were no contract liabilities other than customer deposits at DecemberMarch 31, 20192020 and September 30, 2019. Customer deposits related to contracts with customers were $4,921,000$4,713,000 at DecemberMarch 31, 20192020 and $1,918,000 at September 30, 2019, and are included in current liabilities on the Company’s condensed consolidated balance sheets at DecemberMarch 31, 20192020 and September 30, 2019, respectively.

The Company records revenues earned for shipping and handling as freight revenue at the time of shipment, regardless of whether or not it is identified as a separate performance obligation. The cost of shipping and handling is classified as costproduction costs concurrently with the revenue recognition.

Note 9—Subsequent Events

In January 2020, the World Health Organization (the “WHO”) announced a global health emergency because of goods sold concurrently.a new strain of coronavirusCOVID-19 originating in Wuhan, China and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified theCOVID-19 outbreak as a pandemic based on the rapid increase in global exposure.

As of the date of issuance of these unaudited Condensed Consolidated Financial Statements, our operations have not been significantly impacted. However, the full impact of theCOVID-19 pandemic continues to evolve subsequent to the three and six months ended March 31, 2020 and as of the date these unaudited Condensed Consolidated Financial Statements are issued. As such, the full magnitude that theCOVID-19 pandemic will have on our financial condition and future results of operations is uncertain. Management is actively monitoring the situation on our financial condition, operations, suppliers, industry, customers, and workforce. As the spread ofCOVID-19 continues, our ability to meet customer demands for products may be impacted or our customers may experience adverse business consequences due toCOVID-19. Reduced demand for products or ability to meet customer demand (including as a result of disruptions at our suppliers and vendors) could have a material adverse effect on our business operations and financial performance.

13


Item 2.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

This Quarterly Report contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and 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. 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, demand for the Company’s products, the duration and scope of the coronavirus(“COVID-19”) pandemic, actions governments, businesses, and individuals take in response to theCOVID-19 pandemic, including mandatory business closures and restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when theCOVID-19 pandemic subsides; and general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth.

For information concerning these factors and related matters, see the Caution Regarding Forward-Looking Statements, this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Part II, Item 1A, “Risk Factors,” in this Quarterly Report and the following sections of the Company’s Annual Report on Form10-K for the year ended September 30, 2019: (a) Part I, Item 1A, “Risk Factors” and (b) Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. However, other factors besides those referenced could adversely affect the Company’s 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 the Company herein speak as of the date of this Quarterly Report. The Company does not undertake to update any forward-looking statements, except as required by law.

Overview

Gencor Industries, Inc. (the “Company”), is a leading manufacturer of heavy machinery used in the production of highway construction materials and environmental control equipment. The Company’s core products include asphalt plants, combustion systems and fluid heat transfer systems. The Company’s products are manufactured in two facilities in the United States.

Because the Company’s products are sold primarily to the highway construction industry, the business is seasonal in nature. Traditionally, the Company’s customers reduce their purchases of new equipment for shipment during the summer and fall months to avoid disrupting their peak season for highway construction and related repair work. The majority of orders for the Company’s products are thus received between October and February, with a significant volume of shipments occurring in the late winter and spring. The principal factors driving demand for the Company’s products are the overall economic conditions, the level of government funding for domestic highway construction and repair, Canadian infrastructure spending, the need for spare parts, fluctuations in the price of crude oil (liquid asphalt as well as fuel costs), and a trend towards larger more efficient asphalt plants.

On December 4, 2015, President Obama signed into law a five-year, $305 billion transportation bill, Fixing America’s Surface Transportation Act (the “FAST Act”). The FAST Act reauthorized 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 included spending of more than $205 billion on roads and highways over five years. The 2016 funding levels were approximately 5% above 2015 projected funding, with annual increases between 2.0% and 2.5% from 2016 through 2020. The FAST Act is scheduled to expire in September 2020.

California’s Senate Bill 1 (“SB1”), the Road Repair and Accountability Act of 2017, was signed into law on April 28, 2017. The legislative package invests $54 billion over the next decade to fix roads, freeways and bridges in communities across California and puts more dollars towards transit and safety. These funds will be allocated to state and local projects. Additionally, at least twentytwenty-five other states have taken steps to increase their gas tax revenues in recent years.

14


Fluctuations in the price of carbon steel, which is a significant cost and material used in the manufacturing of the Company’s equipment, may affect the Company’s financial performance. 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.

Also, a significant increase in the price of liquid asphalt could decrease demand for hot mix asphalt paving materials and certain of the Company’s products. Increases in oil prices also drive up the cost of gasoline and diesel, which results in increased freight costs. Where possible, the Company will pass increased freight costs on to its customers. However, the Company may not be able to recapture all of the higher costs and thus could have a negative impact on the Company’s financial performance.

The Company believes its strategy of continuing to invest in product engineering and development and its focus on delivering the highest quality products and superior service will strengthen the Company’s market position. The Company continues to review its internal processes to identify inefficiencies and cost-reduction opportunities. The Company will continue to scrutinize its relationships with suppliers to ensure it is achieving the highest quality materials and services at the most competitive cost.

Results of Operations

Quarter Ended DecemberMarch 31, 20192020 versus DecemberMarch 31, 20182019

Net revenues for the quartersquarter ended DecemberMarch 31, 2019 and December2020 decreased by $677,000 to $25,993,000, from $26,670,000, for the quarter ended March 31, 2018 were $18,030,000 and $21,327,000, respectively, a decrease of $3,297,000.2019. The decline in revenues reflects a slight slowdown in equipment orders from the prior year. As a percent of sales, gross profit margins were 28.2% in the quarter ended March 31, 2020, compared to 37.2% in the quarter ended March 31, 2019. The gross margin achieved in quarter ended March 31, 2019, benefitted from an unusually strong pricing environment for plant and equipment sales.

Product engineering and development expenses decreased $134,000 for the quarter ended March 31, 2020, compared to the quarter ended March 31, 2019. Selling, general and administrative (“SG&A”) expenses increased $87,000 in the quarter ended March 31, 2020, compared to the quarter ended March 31, 2019. Increased headcount, travel and trade show expenses resulted in the increase in SG&A expenses during the second quarter of fiscal 2020. As a percentage of net revenues, SG&A expenses were 9.8% in the quarter ended March 31, 2020, compared to 9.3% in the prior year.

The Company had operating income of $4,088,000 for the quarter ended March 31, 2020 versus $6,614,000 for the quarter ended March 31, 2019. Operating margins were 15.7% in the quarter ended March 31, 2020, compared to 24.8% in the quarter ended March 31, 2019. The decrease in operating margins was due primarily to lower gross margin.

For the quarter ended March 31, 2020, interest and dividend income, net of fees, from the investment portfolio was $763,000, compared to $507,000 for the quarter ended March 31, 2019. The increase was due to additional interest income from a larger investment in corporate bonds and higher average yield to maturities. Net realized and unrealized losses on marketable securities were $(5,670,000) for the quarter ended March 31, 2020, compared to net realized and unrealized gains of $2,204,000 for the quarter ended March 31, 2019. The current quarter investment losses reflect the decline in the domestic equity markets from the impact of theCOVID-19 pandemic.

The effective income tax rate for the quarter ended March 31, 2020 was a benefit of (20.0%) versus expense of 20.0% for the quarter ended March 31, 2019. Net loss for the quarter ended March 31, 2020 was $(655,000), or ($0.04) per diluted share, versus net income of $7,460,000, or $0.51 per diluted share, for the quarter ended March 31, 2019.

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Six Months Ended March 31, 2020 versus March 31, 2019

Net sales for the six months ended March 31, 2020 and 2019 were $44,023,000 and $47,997,000, respectively, a decrease of $3,974,000, reflecting a normalizing in order level from the significant growth in business over the past couple of years. Revenue from parts and component sales increased 3.1% over the comparative quarter in the prior year.

As a percent of sales, gross profit margins were 24.0% in the quarter ended December 31, 2019, compared to 23.1% in the quarter ended December 31, 2018. Gross profit margins increased slightly as a result ofdecreased to 26.5% in the increased percentage of total revenues of highersix months ended March 31, 2020 from 30.9% in the six months ended March 31, 2019. The gross margin partsachieved in quarter ended March 31, 2019, benefitted from an unusually strong pricing environment for plant and component sales compared to the prior year.equipment sales.

Product engineering and development expenses decreased $91,000 in the six months ended March 31, 2020, compared to the six months ended March 31, 2019. SG&A expenses increased slightly$279,000 in the six months ended March 31, 2020, compared to $766,000the six months ended March 31, 2019. As a percentage of net revenues, SG&A expenses were 11.2% for the quartersix months ended DecemberMarch 31, 2019 as2020, compared to $723,000 for9.7% in the quartersix months ended DecemberMarch 31, 2018,2019. The higher SG&A expenses in 2020 were due to increased headcount. Selling, generalheadcount, travel and administrative (“SG&A”) expenses increased by $192,000 to $2,382,000 for the quarter ended December 31, 2019, compared to the quarter ended December 31, 2018. Increased travel expenses and professional fees resulted in the increase in SG&Atrade show expenses during the first quartersix months of fiscal 2020.

OperatingThe Company had operating income decreased to $1,172,000of $5,260,000 for the quartersix months ended DecemberMarch 31, 2019, from $2,004,0002020 versus $8,618,000 for the quartersix months ended DecemberMarch 31, 2018, due2019. Operating margins were 11.9% for the six months ended March 31, 2020, compared to lower revenues and increased SG&A expenses.18.0% in the six months ended March 31, 2019.

For the quartersix months ended DecemberMarch 31, 2019,2020, interest and dividend income, net of fees, from the investment portfolio was $632,000$1,395,000, as compared to $534,000$1,041,000 for the six months ended March 31, 2019. The increase was due to additional interest income from a larger investment in corporate bonds and higher average yield to maturities. Net realized and unrealized losses on marketable securities were $(4,353,000) for the quartersix months ended DecemberMarch 31, 2018. The2020 versus net realized and unrealized gains on marketable securities were $1,317,000of $57,000 for the quartersix months ended DecemberMarch 31, 2019 versus net2019. The current year investment losses reflect the decline in the domestic equity markets from the impact of $(2,147,000) for the quarter ended December 31, 2018, due to a strong domestic stock market from October 2019 through December 2019.COVID-19 pandemic.

The effective income tax rate for the quartersix months ended DecemberMarch 31, 2020 and March 31, 2019 was 20.0%, compared to 19.9% for the quarter ended December 31, 2018.

. Net income for the quartersix months ended DecemberMarch 31, 20192020 was $2,489,000$1,834,000, or $0.17 basic and$0.12 per diluted earnings per share, versus net income of $313,000$7,773,000, or $0.02 basic and$0.53 per diluted earnings per share for the quartersix months ended DecemberMarch 31, 2018.2019.

COVID-19 pandemic

In March 2020, the WHO declared the outbreak ofCOVID-19 as a pandemic based on the rapid increase in global exposure.COVID-19 continues to spread throughout world, including the United States.    TheCOVID-19 pandemic continues to impact economic conditions, which could impact the short-term and long-term demand from our customers and, therefore, has the potential to negatively impact our results of operations, cash flows, and financial position in the future. Management continues to monitor the situation and any impact on our financial condition and results of operations.

Liquidity and Capital Resources

The Company generates capital resources through operations and returns on its investments.

The Company had no long-term or short-term debt outstanding at DecemberMarch 31, 20192020 or September 30, 2019. The Company does not currently require a credit facility. As of DecemberMarch 31, 2019,2020, the Company had funded $135,000$85,000 in cash deposits at insurance companies to cover related collateral needs.

As of DecemberMarch 31, 2019,2020, the Company had $14,343,000$18,738,000 in cash and cash equivalents, and $107,232,000$102,275,000 in marketable securities, including $40,005,000$40,315,000 in government securities, $42,474,000$39,721,000 in corporate bonds, $14,070,000$12,458,000 in equities, $4,052,000$4,005,000 in exchange-traded funds, $2,290,000 in mutual funds, $5,298,000 in exchange-traded funds and $1,333,000$3,486,000 in cash and money funds. The marketable securities are invested through two professional investment management firms. These securities may be liquidated at any time into cash and cash equivalents.

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The Company’s backlog was $30.9$24.5 million at DecemberMarch 31, 2019,2020, compared to $34.8$24.2 million at DecemberMarch 31, 2018.2019. The Company’s working capital (defined as current assets less current liabilities) was equal to $151.7$149.6 million at DecemberMarch 31, 20192020 and $150.4 million at September 30, 2019. Cash provided by operations during the six months ended March 31, 2020 was $9,154,000. The significant purchases, sales and maturities of marketable securities shown on the condensed consolidated statementsCondensed Consolidated Statements of cash flows reflectCash Flows primarily are from the recurring purchase and sale of United States treasury bills. Cash provided by operations during the quarter ended December 31, 2019 was $4,047,000.bills with very short durations. Deferred income taxes decreased $1.7 million and accrued expenses increased $1.8

$2.9 million reflecting the reclassificationpayments of taxes payable from a long-term liability to a current liabilitydue of $1.9 million on the filing of the Company’s Form 3115 with the Internal Revenue Service to reflect the revenue recognition method change to the percentage of completion method for tax purposes pursuant to Internal Revenue Code Sections 460 and 451(b). In addition, net deferred income tax liabilities were reduced due to the large unrealized losses on marketable equity securities. Accounts receivable increased $788,000 as parts sales increased during the quarter ended March 31, 2020, as compared to the quarter ended September 30, 2019. Costs and estimated earnings in excess of billings decreased $5,046,000, and customer deposits increased $2,795,000, reflecting the timing of revenue recognition and payments on customer contracts recognized over time, at March 31, 2020. Inventories increased $1,697,000 reflecting manufacturing progress on equipment sales recognized at a point in time at March 31, 2020. Prepaid expenses and other current assets increased $955,000$1,645,000 primarily related to payments on insurance policies which benefit the whole year, and expenses related to theCONEXPO-CON/AGG trade show in March 2020. Customer depositsAccounts payable increased $3.0 million reflecting$2,473,000 with the increased down payments against equipment bookings duringinventory and timing of payments.

Cash flows used in investing activities for the quarter.six months ended March 31, 2020 of $718,000 were related to capital expenditures, primarily for new machinery used for cutting raw materials and systems’ software.

Seasonality

The CompanyCompany’s primary business is concentrated in the manufacturingmanufacture and sale of asphalt plants and related components whichand is typically subject to a seasonal slow-down during the third and fourth quarters of the calendar year.

Forward-Looking Information

This Quarterly Report contains certain “forward-looking statements” withinslow-down often results in lower reported sales and operating results during the meaningfirst and fourth quarters of Section 27A of the Securities Act of 1933, as amended, and 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. 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 and demand for the Company’s products.

For information concerning these factors and related matters, see the following sections of the Company’s Annual Report onForm 10-K for theeach fiscal year ended September 30, 2019: (a) “Risk Factors” in Part I and (b) “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II. However, other factors besides those referenced could adversely affect the Company’s 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 the Company herein speak as of the date of this Report. The Company does not undertake to update any forward-looking statements, except as required by law.30.

Critical Accounting Policies, Estimates and Assumptions

The Company believes the following discussion addresses its most critical accounting policies, which are those that are most important to the portrayal of the financial condition and results of operations and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Accounting policies, in addition to the critical accounting policies referenced below, are presented in Note 1 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on FormForm 10-K for the year ended September 30, 2019, under the heading “Accounting Pronouncements and Policies.”

Estimates and Assumptions

In preparing the Condensed Consolidated Financial Statements, the Company uses certain estimates and assumptions that may affect reported amounts and disclosures. Estimates and assumptions are used, among other places, when accounting for certain revenue (e.g., contract accounting), expense, and asset and liability valuations. The Company believes that the estimates and assumptions made in preparing the Condensed Consolidated Financial Statements are reasonable, but are inherently uncertain. Assumptions may be incomplete or inaccurate and unanticipated events may occur. The Company is subject to risks and uncertainties that may cause actual results to differ from estimated results.

Revenues & Expenses

As discussed in Note 1 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on FormForm 10-K for the year ended September 30, 2019, under the heading “Accounting Pronouncements and Policies”, the Company adopted the provisions of ASUNo. 2014-09 and its related amendments effective for the quarter ended December 31, 2018 using the modified retrospective method. The adoption of this standard did not have a material impact on the timing or amounts of revenues recognized by the Company, and, as such, no cumulative effect adjustment was recorded with the adoption of the standard.

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Revenues from contracts with customers for the design, manufacture and sale of custom equipment are recognized over time when the performance obligation is satisfied by transferring control of 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 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. All incremental costs related to obtaining a contract are expensed as incurred, as the amortization period is less than one year. Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined.

Contract assets (excluding accounts receivable) under contracts with customers represent revenue recognized in excess of amounts billed on equipment sales recognized over time. These contract assets were $13,383,000$8,792,000 at DecemberMarch 31, 20192020 and $13,838,000 at September 30, 2019 and are included in current assets as costs and estimated earnings in excess of billings on the Company’s condensed consolidated balance sheets at DecemberMarch 31, 20192020 and September 30, 2019, respectively. The Company anticipates that all these contract assets at DecemberMarch 31, 2019,2020, will be billed and collected within one year.

Revenues from all other contracts for the design and manufacture of 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. Control of the goods or service typically transfers at time of shipment or upon completion of the service.

Payment for equipment under contract with customers is typically due prior to shipment. Payment for services under contract with customers is due as certain milestones are completed. Accounts receivable related to contracts with customers for equipment sales were $325,000$247,000 at DecemberMarch 31, 20192020 and $301,000 at September 30, 2019.

Product warranty costs are estimated using historical experience and known issues and are charged to production costs as revenue is recognized.

Under certain contracts with customers, recognition of a portion of the consideration received may be deferred and recorded as a contract liability if the Company has to satisfy a future obligation, such as to provide installation assistance. There were no contract liabilities other than customer deposits at DecemberMarch 31, 20192020 and September 30, 2019. Customer deposits related to contracts with customers were $4,921,000$4,713,000 at DecemberMarch 31, 20192020 and $1,918,000 at September 30, 2019, and are included in current liabilities on the Company’s condensed consolidated balance sheets at DecemberMarch 31, 20192020 and September 30, 2019, respectively.

The Company records revenues earned for shipping and handling as freight revenue at the time of shipment, regardless of whether or not it is identified as a separate performance obligation. The cost of shipping and handling is classified as cost of goods sold concurrently.

Provisions for estimated returns and allowances and other adjustments are provided for in the same period the related sales are recorded. Returns and allowances, which reduce product revenue, are estimated using historical experience.

All product engineering and development costs, and selling, general and administrative expenses are charged to operations as incurred. Provision is made for any anticipated contract losses in the period that the loss becomes evident.

The allowance for doubtful accounts is determined by performing a specific review of all account balances greater than 90 days past due and other higher risk amounts to determine collectability and also adjusting for any known customer payment issues with account balances in theless-than-90-day past due aging buckets. Account balances are charged off against the allowance for doubtful accounts when they are determined to be uncollectable. Any recoveries of account balances previously considered in the allowance for doubtful accounts reduce future additions to the allowance for doubtful accounts.

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Inventories

Inventories are valued at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price of goods less reasonable costs of completion and delivery. During the fourth quarter of fiscal 2019, the Company changed its method for accounting for cost of inventories from the LIFO method to the FIFO method. The Company believes the FIFO method improves financial reporting by better reflecting the current value of inventory on the consolidated balance sheets, by more closely aligning the flow of physical inventory with the accounting for the inventory, and by providing better matching of revenues and expenses. The change in accounting method will also require the Company to make a conforming change for U.S. income tax purposes.

As required by GAAP, the Company has reflected this change in accounting principle on a retrospective basis, resulting in changes to the historical periods presented. The retrospective application of the change resulted in an increase in the Company’s September 30, 2018 and September 30, 2017 retained earnings of $2,838,000 (net of $838,000 in taxes) and $2,708,000 (net of $792,000 in taxes) respectively, and an increase to the Company’s net income of $130,000 (net of $45,000 in taxes) for the year ended September 30, 2018. This change did not affect our previously reported cash flows from operating, investing or financing activities nor did it have a significant impact on the previously reported quarterly operating results for fiscal 2019.

All inventories are now valued at the lower of cost or net realizable value, with cost being determined under the FIFO method and net realizable value defined as the estimated selling price of goods less reasonable costs of completion and delivery (see Note 2 to Consolidated Financial Statements). Appropriate consideration is given to obsolescence, excessive levels, deterioration, possible alternative uses and other factors in determining net realizable value. The cost of work in process and finished goods includes materials, direct labor, variable costs and overhead. The Company evaluates the need to record inventory adjustments on all inventories, including raw materials, work in process, finished goods, spare parts and used equipment. Used equipment acquired by the Company ontrade-in from customers is carried at estimated net realizable value. Unless specific circumstances warrant different treatment regarding inventory obsolescence, the cost basis of inventories three to four years old are reduced by 50%, while the cost basis of inventories four to five years old are reduced by 75%, and the cost basis of inventories greater than five years old are reduced to zero. Inventory is typically reviewed for obsolescence on an annual basis computed as of September 30, the Company’s fiscal year end. If significant known changes in trends, technology or other specific circumstances that warrant consideration occur during the year, then the impact on obsolescence is considered at that time.

Investments

Marketable debt and equity securities are categorized as trading securities and are thus marked to market and stated at fair value. Fair value is determined using the quoted closing or latest bid prices for Level 1 investments and market standard valuation methodologies for Level 2 investments. Realized gains and losses on investment transactions are determined by specific identification and are recognized as incurred in the condensed consolidated statements of income. Net unrealized gains and losses are reported in the condensed consolidated statements of income in the current period and represent the change in the fair value of investment holdings during the period.

Long-Lived Asset Impairment

Property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess over its fair value of the asset’s carrying value. Fair value is generally determined using a discounted cash flow analysis.

Off-Balance Sheet Arrangements

None

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Item 3.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicableapplicable.

Item 4.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and ChiefPrincipal Financial and Accounting Officer evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in RuleRule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report. Based upon that evaluation, the Chief Executive Officer and the ChiefPrincipal Financial and Accounting Officer concluded that, as of the end of the period covered by this Quarterly Report, the Company’s disclosure controls and procedures are effective.

Because of inherent limitations, the Company’s disclosure controls and procedures, no matter how well designedwell-designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of such disclosure controls and procedures are met and no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within the Company hashave been detected.

Changes in Internal Control over Financial Reporting

The Company’s management, including the Chief Executive Officer and ChiefPrincipal Financial and Accounting Officer, has reviewed the Company’s internal control over financial reporting. There were no changes in the Company’s internal control over financial reporting during the quarter and six months ended DecemberMarch 31, 20192020 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. Other Information

ITEM 1.

LEGAL PROCEEDINGS

Item 1. Legal Proceedings

From time to time the Company is engaged in legal proceedings in the ordinary course of business. We do not believe any current legal proceedings are material to our business.

ITEM 1A.

RISK FACTORS

There have been no material changes in ourItem 1A. Risk Factors

Our business, operations, and financial condition are subject to various risks and uncertainties. The risk factors from those set forthdescribed in Part I, Item 1A, “Risk Factors” contained in our Annual Report on Form 10K for the periodyear ended September 30, 2019, as filed with the SEC on December 11, 2019.2019, should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form10-Q and in our other filings filed with the SEC in connection with evaluating us, our business, and the forward-looking statements contained in this Quarterly Report on Form10-Q. During the quarter ended March 31, 2020, there have been no material changes from the risk factors previously disclosed under Part I, Item 1A, “Risk Factors” in our Annual Report on Form10-K, for the year ended September 30, 2019, except as follows:

The Company’s business, results of operations, financial condition, cash flows, and the stock price of our common stock could be adversely affected by theCOVID-19 pandemic.

Our business, results of operations financial condition, cash flows, and the stock price of our common stock can be adversely affected by pandemics or other public health emergencies, such as the recent outbreak ofCOVID-19. In March 2020, the WHO declaredCOVID-19 as a pandemic. TheCOVID-19 pandemic has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including “stay at home” orders, travel restrictions, business curtailments, school closures, and other measures.

The outbreak ofCOVID-19 and any preventive or protective actions taken by governmental authorities may have a material adverse effect on our operations, supply chain, customers, and transportation networks, including business shutdown or disruptions. The extent to whichCOVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, depends upon the severity and duration of the outbreak and the effectiveness of actions taken globally to contain or mitigate its effect. Any resulting financial impact cannot be estimated reasonably at this time, but may materially adversely affect our business, results of operations, financial condition, and cash flows. Even after theCOVID-19 pandemic has subsided, we may experience materially adverse impacts to our business due to any resulting economic recession or depression. Additionally, concerns over the economic impact ofCOVID-19 have caused extreme volatility in financial and other capital markets, which has and may continue to adversely impact our stock price, our ability to access capital markets, and the value of our investment portfolio. To the extent theCOVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in our Annual Report on Form10-K for the year ended September 30, 2019, such as those relating to our products and financial performance.

The Company may suffer adverse consequences if it is deemed an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

Under Section 3(a)(1)(A) of the Investment Company Act, a company is deemed to be an investment company if it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities. We believe that we are not an investment company under Section 3(a)(1)(A) of the Investment Company Act because we do not hold ourselves out as being engaged primarily in the business of investing, reinvesting, or trading in securities. Rather, we have been a manufacturer of heavy equipment used in the production of asphalt for highway construction and environmental control equipment for over 50 years. Our core products include asphalt plants, combustion systems, and fluid heat transfer systems.

 

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Under Section 3(a)(1)(C) of the Investment Company Act, a company is deemed to be an investment company if it is engaged, or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis. As reflected on our balance sheet at March 31, 2020, we own a significant amount of marketable securities, which include cash, cash equivalents, government and corporate bonds, mutual funds, exchange-traded funds and equities. Section 3(a)(2) defines the term “investment securities”, as used in Section 3(a)(1)(C) to include all marketable securities except government securities and cash and cash equivalents. The value of the Company’s investment securities exceeds 40% of the value of our total assets (excluding government securities and cash items). Because of the value of our investment securities, we may be deemed an investment company. We believe that we are not an investment company under Section 3(a)(1)(C) of the Investment Company Act because we do not propose to engage in the business of investing, reinvesting, owning, holding, or trading in securities. In addition, even if we were deemed an investment company under Section 3(a)(1)(C), we believe that we qualify for an exemption from the definition of an investment company as we are primarily engaged in a business other than that of investing, reinvesting, owning, holding, or trading in securities. As noted above, we are primarily engaged in the manufacturing of heavy equipment. If the Securities and Exchange Commission (the “SEC”) or a court challenged our status as an operating company, we could incur significant legal expenses.

If we are deemed to be, and were required to register as, an investment company, we would be forced to comply with the legal requirements of the Investment Company Act that would regulate the manner in which we would be permitted to conduct our business activities. As an investment company, we would be (i) subjected to disclosure and accounting guidance geared toward investment, rather than operating, companies; (ii) significantly limited in our ability to borrow money, issue options, issue multiple classes of stock and debt, and engage in transactions with affiliates; and (iii) required to undertake significant costs and expenses to meet other disclosure, reporting, and regulatory requirements to which we would be subject as a registered investment company.

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ITEM

Item 6. Exhibits

EXHIBITS

(a)

Exhibits

 

  31.1*  Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)13a – 14(a) of the Securities Exchange Act of 1934, as amended
  31.2*  Certification of ChiefPrincipal Financial and Accounting Officer Pursuant to Rule 13a-14(a)13a – 14(a) of the Securities Exchange Act of 1934, as amended
  32*  Certifications of Chief Executive Officer and ChiefPrincipal Financial and Accounting Officer Pursuant to 18 U. S. C. Section 13501350.
101.INS*  XBRL Instance Document
101.SCH*  XBRL Taxonomy Extension Schema
101.CAL*  XBRL Taxonomy Extension Calculation Linkbase
101.DEF*  XBRL Taxonomy Extension Definition Linkbase
101.LAB*  XBRL Taxonomy Extension Label Linkbase
101.PRE*  XBRL Taxonomy Extension Presentation Linkbase

 

*

Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.

 

GENCOR INDUSTRIES, INC.
/s/ John E. Elliott

John E. Elliott

Chief Executive Officer

January 31,May 4, 2020
/s/ Eric E. Mellen

Eric E. Mellen

Chief Financial Officer

(Principal Financial and Accounting Officer)

January 31,May 4, 2020

 

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