What changed in this filing

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Item 1. Financial Statements

2023-02-10 compared with 2022-08-12 · 86 added, 121 removed, 225 unchanged (48% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

June 30, 2022

September 30,

1 unchanged sentence

Cash and cash equivalents

Marketable securities at fair value (cost of $ 95,216,000 at June 30, 2022 and $ 93,690,000 at September 30, 2021)

Accounts receivable, less allowance for doubtful accounts of $ 353,000 at June 30, 2022 and $ 321,000 at September 30, 2021

Marketable securities at fair value (cost of $ 94,965,000 at December 31, 2022 and $ 94,879,000 at September 30,

Accounts receivable, less allowance for doubtful accounts of $ 442,000

at December 31, 2022 and $ 370,000 at September 30, 2022

Costs and estimated earnings in excess of billings

12 unchanged sentences

Total current liabilities

Deferred and other income taxes

operating lease liabilities

6 unchanged sentences

15,000,000 shares authorized;

12,338,845 shares issued and outstanding at June 30, 2022 and September 30, 2021

12,338,845 shares issued and outstanding at December 31, 2022 and September 30, 2022

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

6,000,000 shares authorized;

2,318,857 shares issued and outstanding at June 30, 2022 and September 30, 2021

2,318,857 shares issued and outstanding at

December 31, 2022 and September 30, 2022

Capital in excess of par value

5 unchanged sentences

Condensed Consolidated Statements of Operations

For the Quarters Ended

For the Nine Months Ended

For the Quarters Ended December 31, 2022 and 2021

Cost of goods sold

3 unchanged sentences

Total operating expenses

Operating income

Other income (expense), net:

Operating income (loss)

Other income, net:

Interest and dividend income, net of fees

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

Total other income (expense), net

Realized and unrealized gains on marketable securities, net

Income (loss) before income tax expense (benefit)

2 unchanged sentences

Basic income (loss) per common share

Net income (loss) per share

Diluted income (loss) per common share

Net income (loss) per share

See accompanying Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity

For the Nine Months Ended June 30, 2022

For the Quarter Ended December 31, 2022

Class B Stock

2 unchanged sentences

December 31, 2022

March 31, 2022

June 30, 2022

See accompanying Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended June 30, 2021

For the Quarter Ended December 31, 2021

Class B Stock

2 unchanged sentences

December 31, 2021

Stock options exercised

March 31, 2021

June 30, 2021

See accompanying Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended June 30, 2022 and 2021

For the Quarters Ended December 31, 2022 and 2021

Cash flows from operating activities:

Net income (loss)

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

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

Purchase of marketable securities

( 101,913,000

( 101,040,000

Proceeds from sale and maturity of marketable securities

3 unchanged sentences

Provision for doubtful accounts

Changes in assets and liabilities, excluding the initial effects of business acquisitions:

Loss on disposal of assets

Changes in assets and liabilities:

Accounts receivable

3 unchanged sentences

Customer deposits

Accrued expenses and other current liabilities

Accrued expenses and other

Total adjustments

Cash flows (used in) provided by operating activities

Cash flows used in operating activities

Cash flows from investing activities:

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 decrease in cash and cash equivalents

13 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 and nine months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending September 30, 2022.

Operating results for the quarter ended December 31, 2022 are not necessarily indicative of the results that may be expected for the year ending September 30, 2023.

The accompanying Condensed Consolidated Balance Sheet at September 30, 2022 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 line and associated assets, including inventory, fixed assets and related intellectual property, from Volvo CE.

The acquisition provided 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 was subject to post-closing adjustments, was funded by cash on hand.

After post-closing adjustments transacted during the 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 June 30, 2022 and September 30, 2021, and for the quarters and nine months ended June 30, 2022 and 2021, include the assets, liabilities and operating results of the paver line as of and for the periods then ended.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K

1 unchanged sentence

Recent Accounting Pronouncements

There were no accounting pronouncements recently issued or newly effective that 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 overall business activity related to the COVID-19

No accounting pronouncements recently issued or newly effective have had, or are expected to have, a material impact on the Company’s condensed 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

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 June 30, 2022 and as of the date this Quarterly Report is issued.

As such, the full magnitude that the COVID-19

pandemic continues to evolve subsequent to the quarter ended December 31, 2022 and as of the date this Quarterly Report is issued.

As such, the full magnitude of the effect that the COVID-19

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

5 unchanged sentences

Global, market and economic conditions may negatively impact our business, financial condition and share price

Concerns over inflation, geopolitical issues, global financial markets and the COVID-19

pandemic have led to increased economic instability and expectations of slower global economic growth.

Concerns over inflation, geopolitical issues, global financial markets and the COVID-19 pandemic have led to increased economic instability and expectations of slower global economic growth.

Our business may be adversely affected by any such economic instability or unpredictability.

3 unchanged sentences

There is a risk that one or more of our suppliers could be negatively affected by global economic instability, which could adversely affect our ability to operate efficiently and timely complete our operational goals.

As of the date of issuance of this Quarterly Report, the Company’s operations have not been significantly impacted.

Note 2 - Marketable Securities and Fair Value Measurements

2 unchanged sentences

Realized gains and losses on investment transactions are determined by specific identification and are recognized as incurred in the condensed consolidated statements of operations.

Net changes in unrealized

gains and losses are reporte

d in the condensed consolidated statements of operations in the current period.

Net changes in unrealized gains and losses are reported in the condensed consolidated statements of operations in the current 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).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets fo

r 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.

8 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 June 30, 2022:

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, 2022:

Fair Value Measurements

3 unchanged sentences

Cash and Money Funds

Net unrealized losses reported during the quarter and nine months ended June 30, 2022, were $( 3,855,000 ) and $( 5,386,000 ), respectively.

There were no transfers of investments between Level 1 and Level 2 during the nine months ended June 30, 2022.

The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2021:

Net unrealized gains recognized during the quarter ended December 31, 2022 on trading securities still held as

of December 31, 2022 were $ 2,332,000 .

The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at

fair value as of September 30, 2022:

Fair Value Measurements

3 unchanged sentences

Cash and Money Funds

Net unrealized gains and (losses) reported during the quarter and nine months ended June 30, 2021, were $( 219,000 ) and $ 2,284,000 , respectively.

There were no transfers of investments between Level 1 and Level 2 during the nine months ended June 30, 2021.

Net unrealized gains recognized during the quarter ended December 31, 2021 on trading securities still held as of December 31, 2021 were $ 67,000 .

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.

3 unchanged sentences

The cost of work in process and finished goods includes materials, direct labor, variable costs and overhead.

evaluates the need to record inventory adjustments on all inventories, including raw material, work in process, finished goods, spare parts and used equipment.

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 on trade-in

2 unchanged sentences

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

Net inventories at June 30, 2022 and September 30, 2021 consist of the following:

June 30, 2022

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, 2022 and September 30, 2022 consist of the following:

December 31, 2022

September 30, 2022

2 unchanged sentences

Finished goods

Used equipment

Slow-moving and obsolete inventory allowances were $ 7,975,000 and $ 5,397,000 at June 30, 2022 and September 30, 2021, respectively.

Slow-moving and obsolete inventory reserves were

$ 8,352,000 and $ 8,192,000 at December 31, 2022 and September 30, 2022,

respectively.

Note 4 – Costs and Estimated Earnings in Excess of Billings

Costs and estimated earnings in excess of billings on uncompleted contracts as of June 30, 2022 and September 30, 2021 consist of the following:

June 30, 2022

Costs and estimated earnings in excess of billings on uncompleted contracts as of December 31, 2022 and September 30, 2022 consist of the following:

December 31, 2022

September 30, 2022

4 unchanged sentences

Note 5 – Earnings (Loss) per Share Data

The condensed consolidated financial statements include basic and diluted earnings (loss) per share information.

The following table sets forth the computation of basic and diluted earnings (loss) per share for the quarters and nine months ended June 30, 2022 and 2021:

Quarter Ended June 30,

Nine Months Ended June 30,

The following table sets forth the computation of basic and diluted income (loss) per share for the quarters ended December 31, 2022 and 2021:

Quarter Ended December 31,

Net Income (loss)

1 unchanged sentence

Weighted average common shares outstanding

Effect of dilutive stock options

Effect of dilutive stock options (none)

Diluted shares outstanding

1 unchanged sentence

Net income (loss) per share

Basic earnings (loss) 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.

As of September 30, 2021, no options were available for granting of awards under the 2009 Incentive Compensation Plan (the “2009 Plan”) and as of November 1, 2021, there were no outstanding stock options under the 2009 Plan.

For the quarter and nine months ended June 30, 2022, 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 quarter and nine months ended June 30, 2021 were 252,000 and 252,000 , respectively, which equates to 132,000 and 129,000 dilutive common stock equivalents, respectively.

There were no anti-dilutive shares for the quarter and nine months ended June 30, 2022 and June 30, 2021.

The Company’s 2009 Incentive Compensation Plan expired on October 1, 2021 and as of November 1, 2021 there were no outstanding stock options under the 2009 Plan.

There were no

other existing equity compensation plans and arrangements previously approved by security holders as of December 31, 2022 and 2021.

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

During the quarter ended June 30, 2022, two customers accounted for 15.2 % and 14.5 % of net revenues, respectively.

During the nine months ended June 30, 2022, no customer accounted for 10 % or greater of net revenues.

During the quarter ended June 30, 2021, one customer accounted for 17.5 % of net revenues.

During the nine months ended June 30, 2021, no customer accounted for 10 % or more of net revenues.

During the quarter ended December 31, 2022, two customers accounted for 13.4 % and 12.5 % of net revenues, respectively.

During the quarter ended December 31, 2021, three customers accounted for 13.2 %, 12.4 % and 10.2 % of net revenues, respectively.

Note 7 – Income Taxes

Income taxes are provided for the tax effects of transactions reported in the condensed consolidated financial statements and primarily consist of taxes currently due, plus deferred taxes.

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns using current tax rates.

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns using current tax rates.

The Company and its domestic subsidiaries file a consolidated federal income tax return.

Deferred tax assets and liabilities are measured using the rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse and the credits are expected to be used.

tax assets and liabilities are measured using the rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse and the credits are expected to be used.

The effect on deferred tax assets and liabilities of the change in tax rates is recognized in income in the period that includes the enactment date.

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 June 30, 2022 and September 30, 2021.

No such valuation allowances were recorded as of December 31, 2022 and September 30, 2022.

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 and nine months ended June 30, 2022 and June 30, 2021 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.

The Company’s effective tax rates for the quarters ended December 31, 2022 and December 31, 2021 reflect income tax rates under the Tax Cuts and Jobs Act of 2017 (the “TCJA”).

Beginning in 2022, the TCJA eliminated the option of expensing all research and development expenditures in the current year, instead requiring amortization over five years pursuant to IRC Section 174.

In the future, Congress may consider legislation that would eliminate the capitalization and amortization requirement.

There is no assurance that the requirement will be deferred, repealed or otherwise modified.

The requirement is effective for the Company’s fiscal year 2023, beginning October 1, 2022.

The Company will continue to make additional estimated federal tax payments based on the current Section 174 tax law.

The impact of Section 174 on the Company’s cash from operations depends primarily on the amount of research and development expenditures incurred and whether the IRS issues guidance on the provision which differs from the Company’s current interpretation.

Note 8 – Revenue Recognition and Related Costs

1 unchanged sentence

Revenue from Contracts with Customers

The following table disaggregates the Company’s net revenue by major source for the quarters and nine months ended June 30, 2022 and 2021:

Quarter Ended June 30,

Nine Months Ended June 30,

The following table disaggregates the Company’s net revenue by major source for the quarters ended December 31, 2022 and 2021:

Quarter Ended December 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 $ 1,366,000 at June 30, 2022 and $ 1,903,000 at September 30, 2021, and are included in current assets as costs and estimated earnings in excess of billings on the Company’s condensed consolidated balance sheets.

The Company anticipates that all of the contract assets at June 30, 2022, 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.

These contract assets were $ 4,950,000 and $ 2,118,000 at December 31, 2022 and September 30, 2022, respectively, and are included in current assets as costs and estimated earnings in excess of billings on the Company’s condensed consolidated balance sheets.

The Company anticipates that all of the contract assets at December 31, 2022, will be billed and collected within one year

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.

1 unchanged sentence

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

Accounts receivable related to contracts with customers for equipment sales were $ 79,000 and $ 210,000 at June 30, 2022 and September 30, 2021, respectively.

Accounts receivable related to contracts with customers for equipment sales were $ 133,000 and $ 142,000 at December 31, 2022 and September 30, 2022, respectively.

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 June 30, 2022 and September 30, 2021.

Customer deposits related to contracts with customers were $ 7,436,000 and $ 5,244,000 at June 30, 2022 and September 30, 2021, 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.

There were no contract liabilities other than customer deposits at December 31, 2022 and September 30, 2022.

Customer deposits related to contracts with customers were $ 8,387,000 and $ 5,864,000 at December 31, 2022 and September 30, 2022, respectively, and are included in current liabilities on the Company’s condensed consolidated balance sheets.

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 with the revenue recognition.

11 unchanged sentences

operating leases.

Future minimum rental payments under these leases at June 30, 2022 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 December 31, 2022 were immaterial.

On August 28, 2020, the Company entered into a three-year operating lease for property related to manufacturing and warehousing.

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.

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

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

2 unchanged sentences

An additional $ 39,000 was recorded as a ROU asset and related lease liability in October 2021 to reflect the impact of the lease renewal.

In March 2022, the ROU asset and related liability was reduced by $ 39,000 to reflect the impact of a reduction in the square footage being leased.

For the quarter and nine months ended June 30, 2022, operating lease costs were $ 99,000

and $ 301,000

, respectively, and cash payments related to these operating leases were $ 104,000

and $ 320,000

, respectively.

For the quarter and nine months ended June 30, 2021, operating lease costs were $ 106,000

and $ 301,000

, respectively, and cash payments related to these operating leases were $ 105,000

and $ 349,000

, respectively.

Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines as of June 30, 2022 and September 30, 2021, is as follows:

June 30, 2022

the quarter ended December 31, 2022, operating lease costs were $ 107,000 and cash payments related to these operating leases were $ 133,000 .

For the quarter ended December 31, 2021, operating lease costs were $ 101,000 and cash payments related to these operating leases were $ 109,000 .

Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines as of December 31, 2022 and September 30, 2022, is as follows:

December 31, 2022

September 30, 2022

4 unchanged sentences

Weighted average discount rate used in calculating ROU asset

Future annual minimum lease payments as of June 30, 2022 are as follows:

Future annual minimum lease payments as of December 31, 2022 are as follows:

Annual Lease Payments

2022 (remaining 3 months)

2023 (remaining nine months)

Less interest

1 unchanged sentence

Note 10 – Segment Information

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.

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

, the type of customers and the methods used

distribute products and services, the Company determined that its operating segments meet the requirements for aggregation.

The Company designs, manufactures and sells asphalt plants and pavers, combustion systems and fluid heat transfer systems, for the highway construction industry and environmental and petrochemical markets.

The Company’s products are manufactured at three facilities in the United States.

The Company also services and sells parts for its equipment.

Note 11 - Subsequent Events

On July 19, 2022, the Company announced that it was transferring the listing of its common stock, $ 0.10

per share par value (“Common Stock”), to the NYSE American LLC (“NYSE American”) from the NASDAQ Global Market (“NASDAQ”).

Listing and trading of the Company’s Common Stock on NASDAQ ended at market close on July 29, 2022 and listing and trading of its Common Stock on the NYSE American commenced at market open on August 1, 2022 under its current ticker

symbol ‘GENC’.

services and sells spare parts for its equipment.

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