29 unchanged sentences
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’.
−Removed: COVID-19 Pandemic
−Removed: The Company continues to monitor and evaluate the risks to public health and the overall business activity related to the COVID-19 pandemic, including impacts on its employees, customers, suppliers and financial results.
−Removed: As of the date of issuance of this Annual Report, the Company’s operations have not been significantly impacted.
−Removed: However, the full impact of the COVID-19 pandemic continues to evolve subsequent to the year ended September 30, 2022 and as of the date this Annual Report is issued.
−Removed: 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.
−Removed: Management continues to monitor the Company’s financial condition, operations, suppliers, industry, customers, and workforce.
−Removed: As the spread of COVID-19 and its variants 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 and its variants.
−Removed: 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.
Results of Operations
Year ended September 30, 2023 compared with the year ended September 30, 2022
−Removed: Net revenue for the year ended September 30, 2022 increased 21.3% to $103,479,000 from $85,278,000 for the year ended September 30, 2021.
−Removed: Net revenue for the fourth quarter of fiscal 2022 increased 15.5% to $23,072,000 compared to $20,043,000 for the quarter ended September 30, 2021.
−Removed: The higher revenues in fiscal 2022 reflect increased shipments and progress on large contract orders where revenue is recognized over time.
−Removed: Gross profit margins decreased to 19.9% in fiscal 2022 from 21.3% in fiscal 2021.
−Removed: Higher manufacturing costs associated with wages, steel, and OEM (Original Equipment Manufacturer) purchased parts had a negative impact on the Company’s operating results in fiscal 2022.
−Removed: Product engineering and development (“PED”) expense in fiscal 2022 increased by $47,000 to $4,325,000 from $4,278,000 in fiscal 2021.
−Removed: Higher payroll costs in PED expenses in fiscal 2022 were mostly offset by reduced headcount.
−Removed: Selling, general and administrative (“SG&A”) expenses in fiscal 2022 decreased $1,147,000 to $12,052,000 from $13,199,000 in fiscal 2021.
−Removed: The higher SG&A expenses in fiscal 2021 were primarily related to the acquisition of the paver line and professional fees to support business development efforts.
−Removed: Higher payroll costs in SG&A expenses in fiscal 2022 were also mostly offset by reduced headcount.
+Added: Net revenue for the year ended September 30, 2023 increased slightly to $105,075,000 from $103,479,000 for the year ended September 30, 2022.
+Added: Net revenue for the fourth quarter of fiscal 2023 decreased 9.5% to $20,871,000 compared to $23,072,000 for the quarter ended September 30, 2022.
+Added: As a percent of sales, gross profit margins increased to 27.6% in fiscal 2023 from 19.9% in fiscal 2022 on increased parts sales at higher margins, and improved efficiency, absorption and favorable price realization.
+Added: Product engineering and development (“PED”) expense in fiscal 2023 decreased $867,000 to $3,458,000 from $4,325,000 in fiscal 2022 due to reduced headcount and improved efficiency.
+Added: Selling, general and administrative (“SG&A”) expenses in fiscal 2023 increased $102,000 to $12,154,000 from $12,052,000 in fiscal 2022.
Fiscal 2023 had operating income of $13,425,000 versus $4,167,000 in fiscal 2022.
−Removed: The increase in operating income was due to the higher sales and reduced SG&A expenses.
−Removed: On October 1, 2020, the Company acquired the Blaw-Knox assets, including inventory, fixed assets and related intellectual property, from Volvo Construction Equipment North America, LLC (“Volvo CE”).
−Removed: The acquisition provided the Company entry into the asphalt paver sector of the asphalt industry.
−Removed: 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.
−Removed: 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.
−Removed: There were no liabilities assumed.
−Removed: The accompanying consolidated financial statements as of and for the years ended September 30, 2022 and September 30, 2021, include the assets, liabilities and operating results of the paver line.
−Removed: There was no paver equipment revenue during the quarter ended December 31, 2020, as the facility was being readied for production which began in the quarter ended March 31, 2021.
+Added: The increase in operating income was due to improved gross profit margins and reduced operating expenses.
As of September 30, 2023 and 2022, the cost basis of the investment portfolio was $85,514,000 and $94,879,000, respectively.
−Removed: For the year ended September 30, 2022, interest and dividend income, net of fees, from the investment portfolio was $1,305,000, as compared to $1,306,000 for year ended September 30, 2021.
−Removed: Interest income for the year ended September 30, 2021, also included $456,000 of interest collected from a customer.
−Removed: Net realized and unrealized losses on marketable securities were $(7,009,000) for the year ended September 30, 2022 versus net realized and unrealized gains of $4,171,000 for the year ended September 30, 2021.
−Removed: The fiscal 2022 investment losses reflect the general decline in global equity and bond markets.
−Removed: The total cash, cash equivalents and investments balance at September 30, 2022 was $98,881,000, compared to $118,208,000 at September 30, 2021, a decrease of $19,327,000, reflecting the investment losses and increased inventory.
−Removed: The effective income tax rate for fiscal 2022 was a benefit of (78.0%) versus expense of 12.5% in fiscal 2021.
+Added: $10,000,000 was transferred from the investment portfolio to cash to fund operating needs of the business during fiscal 2023.
+Added: For the year ended September 30, 2023, interest and dividend income, net of fees, was $2,108,000, as compared to $1,305,000 for year ended September 30, 2022.
+Added: Interest income for the year ended September 30, 2023 as compared to the prior year increased due to higher rates earned on fixed income investments coupled with the Company reallocating a majority of its holdings in equities to fixed income in January 2023.
+Added: Net realized and unrealized gains on marketable securities were $3,243,000 for the year ended September 30, 2023 versus net realized and unrealized losses of $(7,009,000) for the year ended September 30, 2022.
+Added: The higher gains in fiscal 2023 were due to a stronger domestic stock market.
+Added: The fiscal 2022 investment losses reflect the general decline in global equity and bond markets in the prior year.
+Added: The total cash, cash equivalents and investments balance at September 30, 2023 was $101,283,000, compared to $98,881,000 at September 30, 2022, an increase of $2,402,000.
+Added: The effective income tax rate for fiscal 2023 was 21.9% versus (78.0%) in fiscal 2022.
The income tax benefit for fiscal 2022 reflects the impact of book to tax timing differences in the deductibility of certain items, the benefit from research and development tax refunds and credits, and other adjustments.
In fiscal 2022, the Company generated $475,000 of federal research and development tax credits (“R&D Credits”), all of which were used in fiscal 2022.
−Removed: In fiscal 2021, the Company generated $335,000 of R&D Credits, all of which were used in fiscal 2021.
−Removed: There were no R&D Credits carryforwards as of September 30, 2022 or September 30, 2021.
−Removed: Net loss for the year ended September 30, 2022 was $(372,000) or $(0.03) per diluted share versus net income of $5,805,000 or $0.39 per diluted share for the year ended September 30, 2021.
+Added: There were no R&D Credits generated in fiscal 2023 and there were no carryforwards of R&D Credits as of September 30, 2023 or September 30, 2022.
+Added: Net income for the year ended September 30, 2023 was $14,666,000 or $1.00 per diluted share versus net loss of $(372,000) or $(0.03) per diluted share for the year ended September 30, 2022.
Liquidity and Capital Resources
1 unchanged sentence
The Company had no long-term debt outstanding at September 30, 2023 or 2022.
−Removed: As of September 30, 2022, the Company has funded $85,000 in cash deposits at insurance companies to cover collateral needs.
In April 2020, a financial institution issued an irrevocable standby letter of credit (“letter of credit”) on behalf of the Company for the benefit of one of the Company’s insurance carriers.
10 unchanged sentences
The significant purchases, sales and maturities of marketable securities shown on the consolidated statements of cash flows typically reflect the frequent purchase and sale of United States treasury bills.
−Removed: In the fourth quarter of fiscal 2020, the Company liquidated approximately $17.0 million of its investments.
−Removed: The cash was primarily used to fund the October 2020 acquisition of the Blaw-Knox assets.
Year ended September 30, 2023 compared with the year ended September 30, 2022
+Added: Cash flows provided by operations in fiscal 2023 were $10,196,000 primarily resulting from net income and sale of marketable securities, and partially offset by increased inventory.
+Added: The significant purchases, sales and maturities of marketable securities shown on the consolidated statements of cash flows reflect purchases and sales of United States treasury bills and notes.
+Added: Inventories increased by $15,712,000 primarily due to progress on several large contract orders where revenue is recognized at a point in time, the impact of the inflationary environment on raw material and wage price increases, and stock build to adjust for the increasing lead times from suppliers.
Cash flows used in operations in fiscal 2022 was $9,135,000 primarily resulting from increased inventory.
−Removed: The significant purchases, sales and maturities of marketable securities shown on the consolidated statements of cash flows reflect the recurring purchases and sales of United States treasury bills.
+Added: The significant purchases, sales and maturities of marketable securities shown on the consolidated statements of cash flows reflect purchases and sales of United States treasury bills and notes.
Inventories increased by $13,927,000 primarily due to progress on several large contract orders where revenue is recognized at a point in time, the impact of the inflationary environment on raw material and wage price increases, and some stock build to adjust for the increasing lead times from suppliers.
Accounts payable increased by $1,146,000 due primarily to the additional payables related to the increase in inventory.
−Removed: Cash provided by operations in fiscal 2021 was $3,820,000, primarily resulting from net income.
−Removed: The significant purchases, sales and maturities of marketable securities shown on the consolidated statements of cash flows reflect the recurring purchases and sales of United States treasury bills.
−Removed: The decrease in costs and estimated earnings in excess of billings of $4,502,000 reflects the completion and shipment of several large contracts with revenues recognized over time during the year ended September 30, 2021.
−Removed: Excluding the impact of the Blaw-Knox acquisition, inventories increased by $4,413,000 primarily due to progress on several large contract orders where revenue is recognized at a point in time and some stock build to compensate for the longer lead times from suppliers.
−Removed: Accounts payable increased by $1,377,000 due to the additional payables related to the Blaw-Knox business along with the increase in inventory.
−Removed: Customer deposits increased $1,391,000, reflecting the down payments on contract jobs, including several recent orders where revenues are recognized over time but work is yet to begin.
−Removed: Cash flows used in investing activities for the year ended September 30, 2022 of $4,516,000 were related to the capital expenditures primarily for manufacturing processing and finishing equipment.
−Removed: Cash flows used in investing activities for the year ended September 30, 2021 of $16,436,000 were primarily related to the acquisition of the Blaw-Knox paver line and subsequent capital expenditures, primarily for systems software and leasehold improvements for the paver line’s manufacturing facility.
−Removed: Cash provided by financing activities of $264,000 for the year ended September 30, 2021, related to proceeds from the exercise of stock options.
+Added: Cash flows used in investing activities for the years ended September 30, 2023 and September 30, 2022, were $2,746,000 and $4,516,000, respectively, and were primarily related to the capital expenditures for manufacturing processing and finishing equipment.
Critical Accounting Policies, Estimates and Assumptions
40 unchanged sentences
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.
−Removed: Used equipment acquired by the Company on trade-in from
−Removed: customers is carried at estimated net realizable value.
+Added: Used equipment acquired by the Company on trade-in from customers is carried at estimated net realizable value.
Unless specific circumstances warrant different treatment regarding inventory obsolescence, an allowance is established to reduce the cost basis of inventories three to four years old by 50%, the cost basis of inventories four to five years old by 75%, and the cost basis of inventories greater than five years old to zero.
21 unchanged sentences
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 business.
−Removed: The lease term is for the period September 1, 2020 through August 31, 2023.
+Added: The lease term was for the period September 1, 2020 through August 31, 2023.
+Added: In March 2023, the Company extended the lease term through August 31, 2024.
On October 9, 2020, the Company entered into an operating lease for additional warehousing space for paver inventory.
4 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.