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