What changed in this filing

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Item 1. Financial Statements

2021-05-14 compared with 2021-02-12 · 102 added, 85 removed, 245 unchanged (43% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

March 31, 2021

September 30,

1 unchanged sentence

Cash and cash equivalents

Marketable securities at fair value (cost of $ 90,158,000 at December 31, 2020 and $ 89,514,000 at September 30, 2020)

Accounts receivable, less allowance for doubtful accounts of $ 360,000 at December 31, 2020 and $ 442,000 at September 30, 2020

Marketable securities at fair value (cost of $ 91,159,000 at March 31, 2021 and $ 89,514,000 at September 30, 2020)

Accounts receivable, less allowance for doubtful accounts of $ 373,000 at March 31, 2021 and $ 442,000 at September 30, 2020

Costs and estimated earnings in excess of billings

16 unchanged sentences

Shareholders’ equity:

Preferred stock, par value $ .10 per share;

Preferred stock, par value $ .

10 per share;

300,000 shares authorized;

Common stock, par value $ .10 per share;

Common stock, par value $ .

10 per share;

15,000,000 shares authorized;

12,287,337 shares issued and outstanding at December 31, 2020 and September 30, 2020

Class B Stock, par value $ .10 per share;

12,298,337 shares and 12,287,337 shares issued and outstanding at March 31, 2021 and September 30, 2020, respectively

Class B Stock, par value $ .

10 per share;

6,000,000 shares authorized;

2,318,857 shares issued and outstanding at December 31, 2020 and September 30, 2020

2,318,857 shares issued and outstanding at March 31, 2021 and September 30, 2020

Capital in excess of par value

4 unchanged sentences

GENCOR INDUSTRIES, INC.

Consolidated Income Statements

For the Quarters Ended December 31, 2020 and 2019

Condensed Consolidated Statements of Operations

For the Quarters Ended

For the Six Months Ended

Cost of goods sold

6 unchanged sentences

Interest and dividend income, net of fees

Realized and unrealized gains on marketable securities, net

Income before income tax expense

Income tax expense

Basic earnings per common share

Diluted earnings per common share

Net realized and unrealized gains (losses) on marketable securities, net

Income (loss) before income tax expense (benefit)

Income tax expense (benefit)

Net income (loss)

Basic Income (Loss) per Common Share

Diluted Income (Loss) per Common Share

See accompanying Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity

For the Quarter Ended December 31, 2020

For the Six Months Ended March 31, 2021

Class B Stock

2 unchanged sentences

December 31, 2020

For the Quarter Ended December 31, 2019

Stock options exercised

March 31, 2021

For the Six Months Ended March 31, 2020

Class B Stock

3 unchanged sentences

December 31, 2019

Stock-based compensation

March 31, 2020

See accompanying Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the Quarters Ended December 31, 2020 and 2019

For the Six Months Ended March 31, 2021 and 2020

Cash flows from operating activities:

5 unchanged sentences

Depreciation and amortization

Provision for doubtful accounts

Stock-based compensation

10 unchanged sentences

Cash flows from investing activities:

Acquisition of Blaw-Knox

Acquisition of Blaw- Knox assets

Capital expenditures

Cash flows used in investing activities

Cash flows from financing activities:

Proceeds from stock option exercises

Cash flows provided by financing activities

Net increase (decrease) in cash and cash equivalents

4 unchanged sentences

Operating lease liabilities

See accompanying Notes to Condensed

Consolidated Financial Statements

See accompanying Notes to Condensed Consolidated Financial Statements

GENCOR INDUSTRIES, INC.

5 unchanged sentences

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 ended December 31, 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021.

Operating results for the quarter and six months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021.

The accompanying Condensed Consolidated Balance Sheet at September 30, 2020 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.

On October 1, 2020, the Company acquired the Blaw-Knox paver product line and associated assets, including inventory, fixed assets and related intellectual property, from Volvo Construction Equipment North America, LLC (“Volvo CE”).

On October 1, 2020, the Company acquired the Blaw-Knox paver line and associated assets, including inventory, fixed assets and related intellectual property, from Volvo Construction Equipment North America, LLC (“Volvo CE”).

The acquisition provides the Company entry into the asphalt paver sector of the asphalt industry.

The acquisition was accounted for as a business combination under ASC 805, “Business Combinations.” The initial purchase price of approximately

$ 14.4 million, which is subject to post-closing adjustments, was funded by cash on hand.

The initial accounting for the business combination included $ 11.0 million in inventory and $ 3.4 million in fixed assets.

Due to COVID-19

constraints, the Company is in the process of finalizing the post-closing adjustments.

The acquisition was accounted for as a business combination under ASC 805, “Business Combinations.” The initial purchase price of approximately $ 14.4 million, which was subject to post-closing adjustments, was funded by cash on hand.

After post-closing adjustments transacted during quarter ended March 31, 2021, the final purchase price was $ 13.8 million, including $ 10.4 million in inventory and $ 3.4 million in fixed assets.

There were no liabilities assumed.

The accompanying condensed consolidated financial statements as of December 31, 2020, include the assets, liabilities and operating results of Blaw-Knox for the quarter then ended.

There were no revenues generated by Blaw-Knox during the quarter ended December 31, 2020, as the facility is being readied to begin production.

The accompanying condensed consolidated financial statements as of March 31, 2021, include the assets, liabilities and operating results of the paver line for the quarter and six months then ended.

There were no paver equipment revenues during the quarter ended December 31, 2020, as the facility was being readied for production which began in the quarter ended March 31, 2021.

For further information, refer to the consolidated financial statements and notes thereto included in the Gencor Industries, Inc.

12 unchanged sentences

did not have a significant impact on its consolidated financial statements.

During the fourth quarter of fiscal 2020, the Company entered into a three-year operating lease for property related to the manufacturing and warehousing of the Blaw-Knox paver product line which resulted in reporting a right-of-use

During the fourth quarter of fiscal 2020, the Company entered into a three-year operating lease for property related to the manufacturing and warehousing of the paver line which resulted in reporting a right-of-use

(“ROU”) asset and related lease liabilities of approximately $ 970,000 .

On October 9, 2020, the Company entered into a second operating lease for additional warehousing space for the Blaw-Knox inventory.

The lease term is

for one year beginning November 2020 with automatic one-year renewals.

On October 9, 2020, the Company entered into a second operating lease for additional warehousing space for the p a

The lease term is for one year beginning November 2020 with automatic one-year

In accordance with ASU 2016-02,

5 unchanged sentences

The Company adopted ASU 2018-13

for the quarter ended December 31, 2020.

during the quarter ended December 31, 2020.

The application of this guidance did not have a material effect on our disclosures.

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.

The Company continues to monitor and evaluate the risks to public health and the slowdown in overall business activity related to the COVID-19

The Company continues to monitor and evaluate the risks related to the COVID-19

pandemic, including impacts on its employees, customers, suppliers and financial results.

1 unchanged sentence

However, the full impact of the COVID-19

pandemic continues to evolve subsequent to the quarter ended December 31, 2020 and as of the date these Condensed Consolidated Financial Statements are issued.

pandemic continues to evolve subsequent to the quarter ended March 31, 2021 and as of the date these Condensed Consolidated Financial Statements are issued.

As such, the full magnitude that the COVID-19

pandemic will have on the Company’s financial condition and future results of operations is uncertain.

Management is actively monitoring the situation on the Company’s financial condition, operations, suppliers, industry, customers, and workforce.

As the spread of COVID-19

continues, the Company’s ability to meet customer demands for products may be impacted or its customers may experience adverse business consequences due to COVID-19.

Reduced demand for products or ability to meet customer demand (including as a result of disruptions at the Company’s suppliers) could have a material adverse effect on its business operations and financial performance.

Management is actively monitoring the Company’s financial condition, operations, suppliers, industry, customers, and workforce.

As the COVID-19

pandemic continues, the Company’s ability to meet customer demands for products may be impacted or its customers may experience adverse business consequences due to COVID-19.

Reduced demand for products or ability to meet customer demand (including as a result of disruptions from the Company’s suppliers) could have a material adverse effect on its business operations and financial performance.

Note 2 - Marketable Securities and Fair Value Measurements

16 unchanged sentences

From time to time the Company may transfer cash between its marketable securities portfolio and operating cash and cash equivalents.

The following table sets forth, by level, within the fair value hierarchy, the Company’s marketable securities measured at fair value as of December 31, 2020:

The following table sets forth, by level, within the fair value hierarchy, the Company’s marketable securities measured at fair value as of March 31, 2021:

Fair Value Measurements

3 unchanged sentences

Cash and Money Funds

Net unrealized gains recognized during the quarter ended December 31, 2020 on trading securities still held as of December 31, 2020 were $ 1,908,000 .

Net unrealized gains and (losses) included in the Condensed Consolidated Statements of Operations for the quarter and six months ended March 31, 2021, were $ 596,000 and $ 2,503,000 , respectively.

The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2020:

4 unchanged sentences

Cash and Money Funds

Net unrealized gains recognized during the quarter ended December 31, 2019 on trading securities still held as of December 31, 2019 were $ 1,190,000 .

In the fourth quarter of fiscal 2020, the Company liquidated approximately $ 17.0

million of its investments.

The cash was used to fund the acquisition of the Blaw-Knox paver product line and associated assets, including inventory, fixed assets and related intellectual property, from Volvo CE, as well as pay for capital expenditures and other startup costs to get the leased manufacturing facility ready for production.

Net unrealized gains and (losses) included in the Condensed Consolidated Statements of Operations for the quarter and six months ended March 31, 2020, were $( 6,029,000 ) and $( 4,839,000 ), respectively.

In the fourth quarter of fiscal 2020, the Company liquidated approximately $ 17.0 million of its investments.

The cash was used to fund the acquisition of the Blaw-Knox paver line and associated assets, including inventory, fixed assets and related intellectual property, from Volvo CE, as well as pay for capital expenditures and other startup costs to get the paver line’s manufacturing facility ready for production.

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

10 unchanged sentences

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.

Net inventories at December 31, 2020 and September 30, 2020 consist of the following:

December 31, 2020

Net inventories at March 31, 2021 and September 30, 2020 consist of the following:

September 30,

3 unchanged sentences

Used equipment

Included in raw materials at December 31, 2020 was approximately

million of inventory acquired in the Blaw-Know acquisition.

Slow-moving and obsolete inventory allowances were $ 4,966,000 and $ 4,617,000 at December 31, 2020 and September 30, 2020, respectively.

Included in raw materials at March 31, 2021 was approximately $ 10.4 million of inventory acquired in the Blaw-Know acquisition.

Slow-moving and obsolete inventory allowances were $ 5,049,000 and $ 4,617,000 at March 31, 2021 and September 30, 2020, respectively.

Note 4 – Costs and Estimated Earnings in Excess of Billings

Costs and estimated earnings in excess of billings on uncompleted contracts as of December 31, 2020 and September 30, 2020 consist of the following:

December 31, 2020

Costs and estimated earnings in excess of billings on uncompleted contracts as of March 31, 2021 and September 30, 2020 consist of the following:

September 30,

4 unchanged sentences

Note 5 – Earnings per Share Data

The following table sets forth the computation of basic and diluted earnings per share for the quarters ended December 31, 2020 and 2019:

Quarter Ended December 31,

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 March 31, 202 1

Quarter Ended March 31,

Six Months Ended March 31,

Net Income (Loss)

Common Shares:

2 unchanged sentences

Diluted shares outstanding

Net earnings per share

Net income (loss) per share

Basic earnings per share are based on the weighted-average number of shares outstanding.

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

The weighted-average shares issuable upon the exercise of stock options included in the diluted earnings per share calculation for the quarter ended December 31, 2020 were 252,000 , which equates to 123,000 dilutive common stock equivalents.

The weighted-average shares issuable upon the exercise of stock options included in the diluted earnings per share calculation for the quarter ended December 31, 2019 were 272,000 , which equates to 134,000 dilutive common stock equivalents.

There were no anti-dilutive shares for the quarters ended December 31, 2020 and December 31, 2019.

The weighted-average shares issuable upon the exercise of stock options included in the diluted earnings per share calculation for the quarter ended March 31, 2021 were 252,000 , which equates to 133,000 dilutive common stock equivalents.

For the quarter ended March 31, 2020, there were no common stock equivalents included in the diluted earnings per share calculation

as their impact would be anti-dilutive.

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, 2021

were 252,000 , which equat e

129,000 dilutive common stock equivalents.

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 options, which were not included in the diluted earnings per share calculation for the six months ended March 31, 2020 becaus e

they were anti-dilutive.

There were no anti-dilutive shares for the quarter and six months ended March 31, 2021.

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

During the quarter ended December 31, 2020, three customers accounted for 15.5 %, 12.0 % and 10.5 %

of net revenues, respectively.

Two other customers accounted for 13.4 % and 13.2 % of net revenues, respectively, for the quarter ended December 31, 2019.

During the quarter ended March 31, 2021, one customer accounted for 12.0 % of net revenues.

During the six months ended March 31, 2021, no customer accounted for 10 % or greater of net revenues.

Three other customers accounted for 12.3 %, 11.2 % and 10.7 % of net revenues, respectively, for the quarter ended March 31, 2020.

During the six months ended March 31, 2020, one of these three customers accounted for 10.4 % of net revenues.

Note 7 – Income Taxes

5 unchanged sentences

All available evidence, both positive and negative, is considered to determine whether, based on the weight of that evidence, the Company is more likely than not to realize the benefit of a deferred tax asset and whether a valuation allowance is needed for some portion or all of a deferred tax asset.

No such valuation allowances were recorded as of December 31, 2020 and September 30, 2020.

No such valuation allowances were recorded as of March 31, 2021 and September 30, 2020.

The Company’s income tax provision is based on management’s estimate of the effective tax rate for the full year.

2 unchanged sentences

book income) from period to period.

The Company’s effective tax rates for the quarters ended December 31, 2020 and December 31, 2019 reflect the impact of the reduced rates under the U.S.

The Company’s effective tax rates for the quarters and six months ended March 31, 2021 and March 31, 2020 reflect the impact of the reduced rates under the U.S.

Tax Cuts and Jobs Act (the “Tax Reform Act) which was signed into law on December 22, 2017.

2 unchanged sentences

Revenue from Contracts with Customers

The following table disaggregates the Company’s net revenue by major source for the quarters ended December 31, 2020 and 2019:

Quarter Ended December 31,

The following table disaggregates the Company’s net revenue by major source for the quarters and six months ended March 31, 2021 and 2020:

Quarter Ended March 31,

Six Months Ended March 31,

Equipment sales recognized over time

8 unchanged sentences

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 $ 4,709,000 and $ 6,405,000 at December 31, 2020 and September 30, 2020, respectively, and are included in current assets as costs and estimated earnings in excess of billings on the Company’s

consolidated balance sheets.

The Company anticipates that all of the contract assets at December 31, 2020, will be billed and collected within one year .

There were no contract assets at March 31, 2021 and

in contract assets at September 30, 2020.

These contract assets are included in current assets as costs and estimated earnings in excess of billings on the Company’s condensed consolidated balance sheets.

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.

2 unchanged sentences

Payment for services under contract with customers is due as services are completed.

Accounts receivable related to contracts with customers for equipment sales were $ 346,000 and $ 223,000 at December 31, 2020 and September 30, 2020, respectively.

Accounts receivable related to contracts with customers for equipment sales were $ 298,000 and $ 223,000 at March 31, 2021 and September 30, 2020, respectively.

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

2 unchanged sentences

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 December 31, 2020 and September 30, 2020.

Customer deposits related to contracts with customers were $ 2,697,000 and $ 3,853,000 at December 31, 2020 and September 30, 2020, respectively, and are included in current liabilities on the Company’s

consolidated balance sheets.

There were no contract liabilities other than customer deposits at March 31, 2021 and September 30, 2020.

Customer deposits related to contracts with customers were $ 6,026,000 and $ 3,853,000 at March 31, 2021 and September 30, 2020, respectively, and are included in current liabilities on the Company’s condensed consolidated balance sheets.

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.

2 unchanged sentences

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 the less-than-90-day past due aging category.

past due aging category.

Account balances are charged off against the allowance for doubtful accounts when they are determined to be uncollectible.

6 unchanged sentences

operating leases.

Future minimum rental payments under these leases at December 31, 2020 were immaterial.

On August 28, 2020, the Company entered into a three -year operating lease for property related to the manufacturing and warehousing of the Blaw-Knox paver product line which was acquired on October 1, 2020.

Future minimum rental payments under these leases at March 31, 2021 were immaterial.

On August 28, 2020, the Company entered into a three -year operating lease for property related to the manufacturing and warehousing of the paver line which was acquired on October 1, 2020.

The lease term is for the period beginning on September 1, 2020 through August 31, 2023.

1 unchanged sentence

the Company recorded a ROU asset totaling $ 970,000 and related lease liabilities at inception.

On October 9, 2020, the Company entered into an operating lease for additional warehousing space for Blaw-Knox inventory.

The lease term is for one year beginning November 2020 with automatic one -

On October 9, 2020, the Company entered into an operating lease for additional warehousing space for p a

The lease term is for one year beginning November 2020 with automatic one-year

In accordance with ASU 2016-02,

the Company recorded a ROU asset totaling $ 254,000 and related lease liabilities at inception.

For the quarter ended December 31, 2020, operating lease costs were $ 89,000 and cash payments related to these operating leases were $ 116,000 .

Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines as of December 31, 2020 and September 30, 2020, is as follows:

December 31, 2020

For the quarter and six months ended March 31, 2021, operating lease costs were $ 105,000 and $ 194,000 , respectively, and cash payments related to these operating leases were $ 116,000 and $ 232,000 , respectively.

Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines as of March 31, 2021 and September 30, 2020, is as follows:

September 30,

4 unchanged sentences

Weighted average discount rate used in calculating ROU asset

Future annual minimum lease payments as of December 31, 2020 are as follows:

Annual Lease Payments

Future annual minimum lease payments as of March 31, 2021 are as follows:

2021 (remaining 6 months)

Less interest

1 unchanged sentence

Note 10 – Segment Information

The Company has one reporting segment, equipment for the highway construction industry.

The Company has one

reporting segment, equipment for the highway construction industry.

Based on evaluation of the criteria of ASC 280 – Segment Reporting, including the nature of products and services, the nature of the production processes, the type of customers and the methods used to distribute products and services, the Company determined that its operating segments meet the requirements for aggregation.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements