[10-Q] Gencor Industries, Inc. Quarterly Earnings Report

[10-Q] Gencor Industries, Inc. Quarterly Earnings Report

[10-Q] Gencor Industries, Inc. Quarterly Earnings Report

Insights

FAQ

Insights

FAQ

Insights

Financial Analyst neutral

Corporate Governance Expert negative

FAQ

Q: What is Gencor Industries' current cash position?

Q: Why is GENC out of compliance with NYSE American listing standards?

Q: What internal control issues did the company disclose?

Q: How has the backlog changed year over year?

Q: Did GENC generate positive operating cash flow?

How did GENC's Q2 FY25 revenue and earnings compare to last year?

What is Gencor Industries' current cash position?

Why is GENC out of compliance with NYSE American listing standards?

What internal control issues did the company disclose?

How has the backlog changed year over year?

Did GENC generate positive operating cash flow?

How did GENC's Q2 FY25 revenue and earnings compare to last year?

What is Gencor Industries' current cash position?

Why is GENC out of compliance with NYSE American listing standards?

What internal control issues did the company disclose?

How has the backlog changed year over year?

Did GENC generate positive operating cash flow?

NYSE:GENC

GENC Rankings

GENC Latest News

GENC Latest SEC Filings

GENC Stock Data

How did GENC's Q2 FY25 revenue and earnings compare to last year?

What is Gencor Industries' current cash position?

Why is GENC out of compliance with NYSE American listing standards?

What internal control issues did the company disclose?

How has the backlog changed year over year?

Did GENC generate positive operating cash flow?

NYSE:GENC

GENC Rankings

GENC Latest News

GENC Latest SEC Filings

GENC Stock Data

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As of 31-Mar-25, GENC held $52.3 m in cash and cash equivalents and remains debt-free.

Delayed 10-K and 10-Q filings caused by successive auditor changes triggered non-compliance; the NYSE granted an extension to 19-Aug-25.

Management reported material weaknesses in IT general controls, period-end close, and third-party oversight; remediation is ongoing.

Backlog dropped to $27.8 m from $50.4 m a year earlier, a 45 % decrease.

Yes, operating activities provided $27.2 m during the first six months of FY25.

Filing Impact

(Neutral)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

GENC Q2 FY25 (ended 31-Mar-25): Revenue slipped 6.1 % YoY to $38.2 m as point-in-time equipment shipments slowed; gross margin eased 60 bp to 29.7 %. Opex fell 7 %, yet operating income dropped 8.4 % to $6.5 m. Net income was $6.1 m ($0.42/sh), down 2 %.

Six-month view: Revenue rose 4.4 % to $69.6 m, but net income declined 6 % to $9.9 m ($0.68/sh) as marketable-securities gains moderated.

Balance sheet & liquidity: Cash more than doubled to $52.3 m and marketable securities reached $91.4 m; the company remains debt-free after generating $27.2 m operating cash. Inventories fell $8.7 m and working capital improved to $193 m; capex was a modest $0.5 m.

Demand signals: Order backlog contracted to $27.8 m versus $50.4 m a year earlier, indicating softer near-term visibility; two customers each exceeded 10 % of quarterly sales.

Key risks & events: Two auditor changes since Nov-24 led to delayed filings and NYSE American non-compliance, although an extension to 19-Aug-25 was granted. Management continues to report material weaknesses in IT controls, period-end close and third-party oversight; remediation efforts are under way. No significant litigation disclosed; macro inflation and geopolitical supply risks highlighted.

Positive

Cash balance doubled to $52.3 m with no debt, bolstering liquidity.
$27.2 m operating cash flow in six months supports self-funded growth.
Gross margin held near 30 % despite revenue softness, indicating pricing discipline.
Six-month revenue up 4.4 % YoY, showing underlying demand resilience.

Negative

Backlog fell 45 % YoY to $27.8 m, reducing revenue visibility.
Material weaknesses in internal controls remain unremediated.
Two auditor changes and late filings led to NYSE compliance extension.
Quarterly operating income down 8.4 % and net revenue down 6.1 %.
Customer concentration risk: individual customers >10 % of sales.

TL;DR: Strong cash generation offsets softer sales; outlook clouded by shrinking backlog.

Quarterly profitability remained healthy despite a 6 % revenue dip, demonstrating solid cost management and resilient 29-30 % gross margins. Operating cash flow of $27 m and a debt-free balance sheet give Gencor ample flexibility for working-capital swings or strategic spend. However, the 45 % YoY backlog decline and customer concentration heighten forecasting risk, especially amid seasonality. With EPS flat but book value climbing, shares may find support from liquidity, yet topline momentum must re-accelerate to justify upside. Impact: neutral.

TL;DR: Repeated auditor turnover and unresolved control weaknesses are red flags.

Management dismissed MSL, appointed Forvis Mazars, then replaced it with Berkowitz Pollack Brant within four months, triggering late filings and an NYSE compliance grace period. Combined with pervasive ITGC and close-process material weaknesses, stakeholders face elevated reporting-quality and delisting risk until remediation is proven. While cash strength cushions financial risk, governance concerns could pressure valuation multiples and increase oversight costs. Impact: negative.

07/25/2025 - 07:36 AM

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genc:SEGMENT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD: From

Commission File Number:

001-11703

GENCOR INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


Delaware		59-0933147
(State or other jurisdiction of incorporation or organization)		(IRS Employer 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)

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


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($.10 Par Value)	GENC	NYSE American LLC

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 Regulation

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, a

non-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 Rule

12b-2

of the Exchange Act.

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 Rule

12b-2

of the Exchange Act). 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 July 24, 2025
Common stock, $.10 par value				12,338,845 shares
Class B stock, $.10 par value				2,318,857 shares

GENCOR INDUSTRIES, INC.



Index			Page

Part I.	Financial Information

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets – March 31, 2025 (Unaudited) and September 30, 2024	5

		Condensed Consolidated Income Statements – Quarters and Six Months Ended March 31, 2025 and 2024 (Unaudited)	6

		Condensed Consolidated Statements of Shareholders’ Equity – Quarters and Six Months Ended March 31, 2025 and 2024 (Unaudited)	7

		Condensed Consolidated Statements of Cash Flows – Six Months Ended March 31, 2025 and 2024 (Unaudited)	8

		Notes to Condensed Consolidated Financial Statements (Unaudited)	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21

	Item 4.	Controls and Procedures	22

Part II.	Other Information

	Item 1.	Legal Proceedings	24

	Item 1A.	Risk Factors	24

	Item 5.	Other Information	24

	Item 6.	Exhibits	25

Signatures			26

EXPLANATORY NOTE

On November 1, 2024, we were notified that MSL, P.A. (“MSL”), our previous independent registered public accounting firm, entered into a transaction with Forvis Mazars, LLP (“Forvis Mazars”), whereby substantially all of the partners and employees of MSL joined Forvis Mazars. As a result, on the effective date of November 1, 2024, our Audit Committee dismissed MSL and appointed Forvis Mazars to serve as our independent registered public accounting firm. The change in our independent registered public accounting firm subsequent to our year-end resulted in the need for additional time for us to coordinate the completion of the audit of the financial statements for the year ended September 30, 2024 and the audit of internal control over financial reporting as of September 30, 2024 (the “2024 Audit”).

Due to the delay in the completion of the 2024 Audit we determined that we were unable to file our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (the “2024 Annual Report”) within the time period prescribed.

Additionally, we dismissed Forvis Mazars as our independent registered public accounting firm on February 13, 2025 and engaged Berkowitz Pollack Brant Advisors + CPAs (“BPB”) as our new independent registered public accounting firm on February 20, 2025. The engagement of BPB resulted in the need for additional time for the Company to coordinate the completion of the 2024 Audit, the 2024 Annual Report and the Quarterly Reports on Form 10-Q for the quarterly periods ended December 31, 2024 and March 31, 2025.

Due to the delays discussed above, we were unable to timely file our 2024 Annual Report and Quarterly Reports on Form 10-Q for the quarterly periods ended December 31, 2024 and March 31, 2025, as required under the NYSE American LLC (“NYSE American”) continued listing standards. NYSE Regulation (“NYSE”) informed us that, under the rules of the NYSE American, we have an initial six-month period from the 2024 Annual Report filing due date of December 31, 2024, to regain compliance with the NYSE American listing standards by filing all delinquent reports by June 30, 2025.

On June 10, 2025, we submitted an extension request to the NYSE, requesting additional time to regain compliance with the NYSE American continued listing standards. While we filed the 2024 Annual Report on June 27, 2025, within the initial six-month period granted by the initial delinquency notice, we requested the extension to allow the Company additional time to coordinate the completion of the Quarterly Reports on Form 10-Q for the quarterly periods ended December 31, 2024 and March 31, 2025. On June 24, 2025, the NYSE informed us that it accepted our extension request, allowing us to submit our delinquent reports, including this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, by August 19, 2025. We filed our Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2024 on July 25, 2025.

Caution Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”) and the Company’s other communications and statements may contain 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”), 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. The Company’s actual results may differ materially from those set forth in the Company’s forward-looking statements 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 and the timing and consequences of the delays in the Company’s regaining compliance with its SEC filing obligations. In addition, the impact of (i) the United States (“U.S.”) government’s recent tariff announcements, (ii) the invasion by Russia into Ukraine, and (iii) the conflict between Israel and Hamas, including hostilities involving Iran, as well as actions taken by other countries, including the U.S., in response to such tariff announcements and conflicts, could result in a disruption in our supply chain and higher costs of our products. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar expressions are intended to identify forward-looking statements.

For information concerning these factors and related matters, see the following sections of the Company’s Annual Report on Form 10-K for the year ended September 30, 2024: (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 of operations, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statement made by the Company herein speaks as of the date of this Quarterly Report. The Company does not undertake to update any forward-looking 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.

Part I. Financial Information

Item 1. Financial Statements

GENCOR INDUSTRIES, INC.

Condensed Consolidated Balance Sheets


	March 31, 2025 (Unaudited)		September 30, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	52,270,000	$	25,482,000
Marketable securities at fair value (cost of $90,481,000 at March 31, 2025 and $88,777,000 at September 30, 2024)		91,405,000		89,927,000
Accounts receivable, less allowance for credit losses of $498,000 at March 31, 2025 and $390,000 at September 30, 2024		5,155,000		1,980,000
Contract assets		4,380,000		9,339,000
Inventories, net		55,092,000		63,762,000
Prepaid expenses		841,000		2,352,000

Total current assets		209,143,000		192,842,000

Property and equipment, net		10,726,000		11,472,000
Deferred income taxes		3,483,000		3,424,000
Other long-term assets		575,000		383,000

Total Assets	$	223,927,000	$	208,121,000


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,552,000	$	2,001,000
Customer deposits		5,550,000		5,018,000
Contract liabilities		2,796,000		—
Accrued expenses		3,676,000		3,255,000
Current operating lease liabilities		366,000		330,000

Total current liabilities		15,940,000		10,604,000
Unrecognized tax benefits		1,778,000		1,376,000
Non-current operating lease liabilities		156,000		—

Total liabilities		17,874,000		11,980,000

Commitments and contingencies
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; 12,338,845 shares issued and outstanding at March 31, 2025 and September 30, 2024		1,234,000		1,234,000
Class B Stock, par value $.10 per share; 6,000,000 shares authorized; 2,318,857 shares issued and outstanding at March 31, 2025 and September 30, 2024		232,000		232,000
Capital in excess of par value		12,590,000		12,590,000
Retained earnings		191,997,000		182,085,000

Total shareholders’ equity		206,053,000		196,141,000

Total Liabilities and Shareholders’ Equity	$	223,927,000	$	208,121,000

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Contents

GENCOR INDUSTRIES, INC.

Condensed Consolidated Income Statements

(Unaudited)


	For the Quarters Ended March 31,				For the Six Months Ended March 31,
	2025		2024		2025		2024
Net revenue	$	38,204,000	$	40,676,000	$	69,620,000	$	66,694,000
Cost of goods sold		26,851,000		28,354,000		49,599,000		46,838,000

Gross profit		11,353,000		12,322,000		20,021,000		19,856,000
Operating expenses:
Product engineering and development		681,000		893,000		1,357,000		1,694,000
Selling, general and administrative		4,192,000		4,357,000		7,560,000		7,707,000

Total operating expenses		4,873,000		5,250,000		8,917,000		9,401,000

Operating income		6,480,000		7,072,000		11,104,000		10,455,000
Other income (expense), net:
Interest and dividend income, net of fees		1,158,000		803,000		2,147,000		1,519,000
Net realized and unrealized gains on marketable securities		598,000		205,000		143,000		1,724,000

Total other income (expense), net		1,756,000		1,008,000		2,290,000		3,243,000

Income before income tax expense		8,236,000		8,080,000		13,394,000		13,698,000
Income tax expense		2,141,000		1,858,000		3,482,000		3,150,000

Net income	$	6,095,000	$	6,222,000	$	9,912,000	$	10,548,000

Net income per common share – basic and diluted	$	0.42	$	0.42	$	0.68	$	0.72

See accompanying Notes to Condensed Consolidated Financial Statements

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GENCOR INDUSTRIES, INC.

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)


For the Quarter s and Six Months Ended March 31, 2025
	Common Stock				Class B Stock				Capital in Excess of		Retained		Total Shareholders’
	Shares		Amount		Shares		Amount		Par Value		Earnings		Equity
September 30, 2024		12,338,845	$	1,234,000		2,318,857	$	232,000	$	12,590,000	$	182,085,000	$	196,141,000
Net income		—		—		—		—		—		3,817,000		3,817,000

December 31, 2024		12,338,845	$	1,234,000		2,318,857	$	232,000	$	12,590,000	$	185,902,000	$	199,958,000
Net income		—		—		—		—		—		6,095,000		6,095,000

March 31, 2025		12,338,845	$	1,234,000		2,318,857	$	232,000	$	12,590,000	$	191,997,000	$	206,053,000


For the Quarters and Six Months Ended March 31, 2024
	Common Stock				Class B Stock				Capital in Excess of		Retained		Total Shareholders’
	Shares		Amount		Shares		Amount		Par Value		Earnings		Equity
September 30, 2023		12,338,845	$	1,234,000		2,318,857	$	232,000	$	12,590,000	$	167,527,000	$	181,583,000
Net income		—		—		—		—		—		4,326,000		4,326,000

December 31, 2023		12,338,845	$	1,234,000		2,318,857	$	232,000	$	12,590,000	$	171,853,000	$	185,909,000
Net income		—		—		—		—		—		6,222,000		6,222,000

March 31, 2024		12,338,845	$	1,234,000		2,318,857	$	232,000	$	12,590,000	$	178,075,000	$	192,131,000

See accompanying Notes to Condensed Consolidated Financial Statements

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GENCOR INDUSTRIES, INC.

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended March 31, 2025 and 2024

(Unaudited)


	2025			2024
Cash flows from operating activities:
Net income	$	9,912,000		$	10,548,000
Adjustments to reconcile net income to cash provided by operating activities:
Unrealized (gain) loss on marketable securities		225,000			(1,151,000	)
Deferred income taxes		(59,000	)		265,000
Unrecognized tax benefits		402,000			—
Depreciation and amortization		1,206,000			1,328,000
Changes in ope rating assets and liabilities:
Accounts receivable		(3,175,000	)		(3,291,000	)
Contract assets		4,959,000			(961,000	)
Marketable securities		(1,703,000	)		(1,491,000	)
Inventories		8,670,000			7,795,000
Prepaid expenses and other current assets		1,511,000			953,000
Accounts payable		1,551,000			(325,000	)
Contract liabilities		2,796,000			—
Customer deposits		532,000			1,130,000
Accrued expenses		421,000			(1,240,000	)

Total adjustments		17,336,000			3,012,000

Cash flows provided by operating activities		27,248,000			13,560,000

Cash flows from investing activities:
Capital expenditures		(460,000	)		(378,000	)

Cash flows used in investing activities		(460,000	)		(378,000	)

Net increase in cash and cash equivalents		26,788,000			13,182,000
Cash and cash equivalents at:
Beginning of period		25,482,000			17,031,000

End of period	$	52,270,000		$	30,213,000

Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	370,000		$	361,000

See accompanying Notes to Condensed Consolidated Financial Statements

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GENCOR INDUSTRIES, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 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 Form

10-Q

and Article 10 of Regulation

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 the six months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending September 30, 2025.

The accompanying condensed consolidated balance sheet at September 30, 2024 has been derived from the audited

consolidated

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.

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

for the year ended September 30, 2024 filed with the Securities and Exchange Commission on June 27, 2025.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07,

Segment Reporting (Topic 280): Improvements t

o Reportable Segment Disclosures,

(“ASU 2023-07”)

to enhance disclosures about significant segment expenses for public entities reporting segment information under Accounting Standards Codification Topic 280 (“ASC Topic 280”). The amendments require public entities to disclose significant expense categories for each reportable segment, other segment items, the title and position of the chief operating decision-maker, and interim disclosures of certain segment-related information previously required only on an annual basis. The amendments clarify that entities reporting single segments must disclose both the new and existing segment disclosures under ASC Topic 280, and a public entity is permitted to disclose multiple measures of segment profit or loss if certain criteria are met. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09,

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

, (“ASU 2023-09”) to enhance transparency into income tax disclosures. The amendments require annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The amendments also eliminate certain requirements relating to unrecognized tax benefits and certain deferred tax disclosure relating to subsidiaries and corporate joint ventures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03,

Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

(“ASU 2024-03”) which requires entities to (i) disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and, (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, (ii) include certain amounts that are already required to be disclosed under current U.S. GAAP in the same disclosures as other disaggregation requirements, (iii) disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated quantitatively, and (iv) disclose the total amount of selling expenses, in annual reporting periods, an entity’s definition of selling expense. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related disclosures.

No other 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.

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

Concerns over inflation, geopolitical issues and global financial markets 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. Russia’s invasion of Ukraine and related sanctions as well as the conflict between Israel and Iran have led to increased energy prices. Such sanctions and disruptions to the global economy may lead to additional inflation and may disrupt the global supply chain and could have a material adverse effect on our ability to secure supplies. The increased cost of oil, along with increased or prolonged periods of inflation, would likely increase our costs in the form of higher inflation on supplies necessary to operate our business. Additionally, the armed conflict involving Hamas and Israel, as well as further escalation of tensions among Israel, the U.S., and various countries in the Middle East, including hostilities involving Iran, and North Africa, may cause increased inflation in energy and logistics costs and could further cause general economic conditions in the U.S. or abroad to deteriorate. 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.

Reclassifications

Certain amounts in the March 31, 2024 condensed consolidated statement of cash flows have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported net income for the quarter and six months ended March 31, 2024.

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Note 2 - Marketable Securities and Fair Value Measurements

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 income statements. Net changes in unrealized gains and losses are reported in the condensed consolidated income statements in the period

presented

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 (stocks), mutual funds, exchange-traded funds, 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 are provided by the Company’s professional investment management firms. 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 March 31, 2025:


	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Exchange-Traded Funds	$	5,591,000	$	—	$	—	$	5,591,000
Mutual Funds		1,015,000		—		—		1,015,000
Corporate Bonds		—		31,762,000		—		31,762,000
Government Securities		52,821,000		—		—		52,821,000
Cash and Money Funds		216,000		—		—		216,000

Total	$	59,643,000	$	31,762,000	$	—	$	91,405,000

Net unrealized gains (losses) included in the condensed consolidated income statements for the quarter and six months ended March 31, 2025, were $342,000 and $(225,000), respectively.

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The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2024:


	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Exchange-Traded Funds	$	3,686,000	$	—	$	—	$	3,686,000
Corporate Bonds		—		34,294,000		—		34,294,000
Government Securities		50,111,000		—		—		50,111,000
Cash and Money Funds		1,836,000		—		—		1,836,000

Total	$	55,633,000	$	34,294,000	$	—	$	89,927,000

Net unrealized gains (losses) included in the condensed consolidated income statements for the quarter and six months ended March 31, 2024, were $(208,000) and $1,151,000, respectively

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.

Note 3 – Inventories

Inventories are valued at the lower of cost or net realizable value with cost being determined under the first in, first out method and net realizable value defined as the estimated selling price of goods less reasonable costs of completion and delivery. 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 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. 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.

Net inventories at March 31, 2025 and September 30, 2024 consist of the

following


	March 31, 2025		September 30, 2024
Raw materials	$	29,686,000	$	32,631,000
Work in process		12,898,000		18,740,000
Finished goods		12,508,000		12,391,000

	$	55,092,000	$	63,762,000

Slow-moving and obsolete inventory allowances were $14,250,000 and $13,331,000 at March 31, 2025 and September 30, 2024, respectively.

The increase in the slow-moving and obsolete inventory allowances of $919,000 from September 30, 2024, reflects primarily additional amounts charged to cost of sales to reduce the cost basis of inventories consistent with the Company’s policy on allowances for slow-moving and obsolete inventory. During the six months ended March 31, 2024, the slow-moving and obsolete inventory allowances increased $1,293,000.

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Note 4 – Contract Assets

and Liabilit

ies

Contract assets reflect costs and estimated earnings in excess of billings on uncompleted contracts as of March 31, 2025 and September 30, 2024,

consist of the following:


	March 31, 2025		September 30, 2024
Costs incurred on uncompleted contracts	$	5,023,000	$	14,508,000
Estimated earnings		1,776,000		6,977,000

		6,799,000		21,485,000
Billings to date		2,419,000		12,146,000

Contract assets	$	4,380,000	$	9,339,000

Contract liabilities reflect billings in excess of costs and estimated earnings on uncompleted contracts as of March 31, 2025, and consist of the following:


	March 31, 2025
Costs incurred on uncompleted contracts	$	32,169,000
Estimated earnings		15,106,000

		47,275,000
Billings to date		50,071,000

Contract liabilities	$	(2,796,000	)

Note 5 – Net Income per Common Share Data

The condensed consolidated financial statements include basic and diluted net income per common share information. The following table sets forth the computation of basic and diluted net income per common share for the quarters and six months ended March 31, 2025 and 2024:


	Quarter Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
Net Income	$	6,095,000	$	6,222,000	$	9,912,000	$	10,548,000
Weighted Average Common Shares Outstanding – basic and diluted		14,658,000		14,658,000		14,658,000		14,658,000

Net income per common share – basic and diluted	$	0.42	$	0.42	$	0.68	$	0.72

Basic net income per common share is based on the weighted-average number of shares outstanding. Diluted net income per common share is based on the sum of the weighted-average number of shares outstanding plus common stock equivalents. There were no equity compensation plans and arrangements previously approved by security holders as of March 31, 2025 and 2024 and thus no common stock equivalents as of March 31, 2025 and 2024.

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

During the quarter ended March 31, 2025, one customer accounted for 10.2% of net revenues and a second customer accounted for 12.0% of net revenues. During the six months ended March 31, 2025, the first customer noted above accounted for 10.5% of net revenues and a third customer accounted for 13.7% of net revenues.

During the quarter ended March 31, 2024, two customers accounted for 13.9% and 12.4%, respectively, of net revenues. During the six months ended March 31, 2024, the first customer noted above accounted for 11.0% of net revenues and a third customer accounted for 10.0% of net revenues.

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 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. 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 March 31, 2025 and September 30, 2024.

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Significant judgment is required in evaluating the Company’s uncertain tax position and determining the Company’s provision for taxes. Although the Company believes the reserves f

unrecognized tax benefits (“UTB’s”) are reasonable, no assurance can be given that the final outcome of these matters will not be different from that which is reflected in the Company’s historical income tax provision and accruals. The Company adjusts these reserves in light of changing facts and circumstances. As of March 31, 2025 and September 30, 2024, the Company had UTB’s of $1,778,000 and $1,376,000, respectively.

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 by

pre-tax

book income) from period to period. The Company’s effective tax rates for the quarters and six months ended March 31, 2025 and March 31, 2024 reflect income tax rates under the Tax Cuts and Jobs Act of 2017 which was signed into law on December 22, 2017.

Note 8 – Revenue Recognition and Related Costs

The Company recognizes revenue under Accounting Standards Update (“ASU”)

No. 2014-09,

Revenue from Contracts with Customers

(Topic 606). The following table disaggregates the Company’s net revenue by major source for the quarters and six months ended March 31, 2025 and 2024:


	Quarter Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
Equipment sales recognized over time	$	14,116,000	$	12,380,000	$	30,947,000	$	22,213,000
Equipment sales recognized at a point in time		12,121,000		17,394,000		19,709,000		24,575,000
Parts and component sales		8,874,000		8,591,000		15,025,000		16,387,000
Freight revenue		2,588,000		1,762,000		3,333,000		2,897,000
Other		505,000		549,000		606,000		622,000

Net revenue	$	38,204,000	$	40,676,000	$	69,620,000	$	66,694,000

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 $4,380,000 and $9,339,000 at March 31, 2025 and September 30, 2024, respectively, and are included in current assets on the Company’s condensed consolidated balance sheets. Contract liabilities (excluding customer deposits) under contracts with customers represent amounts billed in excess of revenue recognized on equipment sales recognized over time. These contract liabilities were $2,796,000 and zero at March 31, 2025 and September 30, 2024, respectively, and are included in current liabilities on the Company’s condensed consolidated balance sheets. The Company anticipates that all of the contract assets at March 31, 2025, 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 services are completed. Accounts receivable related to contracts with customers for equipment sales were $161,000 and $163,000 at March 31, 2025 and September 30, 2024, respectively.

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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 such contract liabilities at March 31, 2025 and September 30, 2024. Customer deposits related to contracts with customers were $5,550,000 and $5,018,000 at March 31, 2025 and September 30, 2024, 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. The cost of shipping and handling is classified as cost of goods sold concurrently with the revenue recognition.

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.

less-than-90-day

past due aging category. The measurement and recognition of credit losses involves judgment and represents the Company’s estimate of expected credit losses based on consideration of historical credit loss experience, the aging of account balances, customer credit worthiness, and current and expected economic, market and industry factors impacting the Company’s customers, including their financial condition. Account balances are charged off against the allowance for credit losses when they are determined to be uncollectible. Any recoveries of account balances previously considered in the allowance for credit losses reduce future additions to the allowance for credit losses. The allowance for credit losses also includes an estimate for returns and allowances. 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 known issues and historical experience.

Changes in the allowance for credit losses as of March 31, 2025 consisted of the following:


Balance, September 30, 2024	$	390,000
Provision for credit losses		—
Provision for estimated returns and allowances		275,000
Uncollectible accounts written off		(12,000	)
Returns and allowances issued		(155,000	)

Balance, March 31, 2025	$	498,000

Note 9 – Leases

The Company leases certain equipment under

non-cancelable

operating leases. Future minimum rental payments under these leases at March 31, 2025 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 was for the period from September 1, 2020 through August 31, 2023. In accordance with ASU

No.

2016-02,

the Company recorded a

right-of-use

(“ROU”) asset totaling $970,000 and related lease liabilities at inception. In March 2023, the Company extended the lease term through August 31, 2024. In accordance with ASU

No.

2016-02,

the Company recorded a ROU asset totaling $352,000 and related lease liabilities upon extension. In March 2024, the Company extended the lease term through August 31, 2025. In accordance with ASU

No.

2016-02,

the Company recorded a ROU asset totaling $361,000 and related lease liabilities upon extension. In March 2025, the Company extended the lease term through August 31, 2026. In accordance with ASU

No.

2016-02,

the Company recorded a ROU asset totaling $370,000 and related lease liabilities upon extension.

For the quarter and six months ended March 31, 2025, operating lease costs related to these operating leases were $112,000 and $224,000, respectively, and cash payments related to these operating leases were $112,000 and $193,000, respectively. For the quarter and six months ended March 31, 2024, operating lease costs and cash payments related to operating leases were $109,000 and $218,000, respectively.

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Other information concerning the Company’s operating leases accounted for under ASC 842 guidelines as of March 31, 2025 and September 30, 2024, is as follows:


	March 31, 2025			September 30, 2024
Operating lease ROU asset included in other long-term assets	$	522,000		$	330,000
Current operating lease liability		366,000			330,000
Non-current operating lease liability		156,000			—
Weighted average remaining lease term (in years)		0.83			0.92
Weighted average discount rate used in calculating ROU asset		4.8	%		5.0	%

Future annual minimum lease payments as of March 31, 2025 are as follows:


Fiscal Year	Annual Lease Payments
2025 (remaining six months)	$	185,000
2026		347,000

		532,000
Less interest		(10,000	)

Present value of lease liabilities	$	522,000

Note 10 – Segment Information

The Company has one reporting segment, equipment for the highway construction industry. Based on evaluation of the criteria of Accounting Standards Codification (“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 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.

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 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 litigation. 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, the performance of the investment portfolio and the demand for the Company’s products.

For information concerning these factors and related matters, see the following sections of the Company’s Annual Report on Form 10-K for the year ended September 30, 2024: (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 issuance of this Quarterly Report. The Company does not undertake to update any forward-looking statement, except as required by law.

Overview

Gencor is a leading manufacturer of heavy machinery used in the production of highway construction equipment and materials and environmental control equipment. The Company’s core products include asphalt pavers, hot mix asphalt plants, combustion systems, and fluid heat transfer systems. The Company’s products are manufactured at three 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 liquid asphalt, and a trend towards larger more efficient asphalt plants.

On November 15, 2021, President Biden signed into law a five-year, $1.2 trillion infrastructure bill, the Infrastructure Investment and Jobs Act (the “IIJ Act”), including $550 billion in new spending and reauthorization of $650 billion in previously allocated funds. The IIJ Act provides $110 billion for the nation’s highways, bridges and roads.

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 March 31, 2025 versus March 31, 2024

Net revenue for the quarter ended March 31, 2025 decreased $2,472,000, or 6.1%, to $38,204,000, from $40,676,000 for the quarter ended March 31, 2024. The decrease in net revenue was primarily in contract equipment sales recognized at a point in time, which resulted from the timing of shipments. As a percent of net revenue, gross profit margins decreased slightly to 29.7% in the quarter ended March 31, 2025, compared to 30.3% in the quarter ended March 31, 2024.

Product engineering and development expenses decreased $212,000 to $681,000 for the quarter ended March 31, 2025, as compared to $893,000 for the quarter ended March 31, 2024 on reduced headcount. Selling, general and administrative (“SG&A”) expenses decreased $165,000 to $4,192,000 for the quarter ended March 31, 2025, compared to $4,357,000 for the quarter ended March 31, 2024 on reduced commissions on lower sales.

Operating income decreased 8.4%, or $592,000, from $7,072,000 for the quarter ended March 31, 2024 to $6,480,000 for the quarter ended March 31, 2025, on reduced net revenue.

For the quarter ended March 31, 2025, the Company had net other income of $1,756,000, compared to $1,008,000 for the quarter ended March 31, 2024. Interest and dividend income, net of fees, was $1,158,000 in the quarter ended March 31, 2025 as compared to $803,000 in the quarter ended March 31, 2024. The increase was primarily due to higher rates earned on higher cash balances and fixed income investments. The net realized and unrealized gains on marketable securities were $598,000 for the quarter ended March 31, 2025, compared to $205,000 for the quarter ended March 31, 2024.

The effective income tax rates for the quarters ended March 31, 2025 and March 31, 2024, were 26.0% and 23.0%, respectively, based on the expected annual effective income tax rate.

Net income for the quarter ended March 31, 2025 decreased $127,000 or 2.0% to $6,095,000, or $0.42 basic and diluted net income per common share, from $6,222,000, or $0.42 basic and diluted net income per common share, for the quarter ended March 31, 2024. The slightly lower net income resulted primarily from the lower net revenues and higher taxes partially offset by increased net non-operating income.

Six Months Ended March 31, 2025 versus March 31, 2024

Net revenue for the six months ended March 31, 2025 and 2024 were $69,620,000 and $66,694,000, respectively, an increase of $2,926,000 or 4.4%. Increased revenues from contract equipment sales recognized over time were partially offset by lower contract equipment sales recognized at a point in time and lower parts and component sales and freight revenues.

Gross profit margins decreased to 28.8% for the six months ended March 31, 2025 from 29.8% for the six months ended March 31, 2024. The slightly lower margins were driven by the reduced parts and components sales which have a higher margin percentage compared to contract equipment sales.

Product engineering and development expenses decreased $337,000 to $1,357,000 for the six months ended March 31, 2025, compared to $1,694,000 for the six months ended March 31, 2024, due primarily to lower headcount. SG&A expenses decreased $147,000 to $7,560,000 for the six months ended March 31, 2025, compared to $7,707,000 the six months ended March 31, 2024.

The Company had operating income of $11,104,000 for the six months ended March 31, 2025, compared to $10,455,000 for the six months ended March 31, 2024. The increase in operating income was due primarily to the increased net revenue and lower product engineering and development expenses.

For the six months ended March 31, 2025, the Company had net other income of $2,290,000, compared to $3,243,000 for the six months ended March 31, 2024. Interest and dividend income, net of fees, was $2,147,000 for the six months ended March 31, 2025, as compared to $1,519,000 for the six months ended March 31, 2024. The increase in interest and dividend income, net of fees, for the six months ended March 31, 2025, was primarily due to higher rates earned on fixed income investments and higher cash balances. Net realized and unrealized gains on marketable securities were $143,000 for the six months ended March 31, 2025, compared to $1,724,000 for the six months ended March 31, 2024. Bond yields rose during the six months ended March 31, 2025, due to stronger economic data and higher inflation. The higher yields negatively impacted the value of our bond holdings.

The effective income tax rates for the six months ended March 31, 2025 and March 31, 2024 were 26.0% and 23.0%, respectively, based on the expected annual effective income tax rate. Net income for the six months ended March 31, 2025 was $9,912,000, or $0.68 basic and diluted net income per common share, compared to $10,548,000, or $0.72 basic and diluted net income per common share for the six months ended March 31, 2024. The lower net income and earnings per share resulted primarily from the reduced net non-operating income and higher tax rates.

Liquidity and Capital Resources

The Company generates capital resources through operations and returns on its investments. We believe these sources of capital will satisfy our liquidity needs in both the short and long term.

The Company had no long-term or short-term debt outstanding at March 31, 2025 or September 30, 2024. 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. The maximum amount that can be drawn by the beneficiary under the letter of credit is $150,000. The letter of credit expires in April 2026, unless terminated earlier, and can be extended, as provided by the agreement. The Company intends to renew the letter of credit for as long as the Company does business with the beneficiary insurance carrier. The letter is collateralized by restricted cash of the same amount on any outstanding drawings. To date, no amounts have been drawn under the letter of credit.

As of March 31, 2025, the Company had $52,270,000 in cash and cash equivalents, and $91,405,000 in marketable securities, including $31,762,000 in corporate bonds, $5,591,000 in exchange-traded funds, $1,015,000 in mutual funds, $52,821,000 in government securities, and $216,000 in cash and money funds. The marketable securities are invested through a professional investment management firm. These securities may be liquidated at any time into cash and cash equivalents.

The Company’s backlog was $27.8 million at March 31, 2025 compared to $50.4 million at March 31, 2024. The Company’s working capital (defined as current assets less current liabilities) was $193.2 million at March 31, 2025 and $182.2 million at September 30, 2024. Cash flows provided by operating activities during the six months ended March 31, 2025 was $27,248,000. Accounts receivable increased $3,175,000, due primarily to increased parts sales in the quarter ended March 31, 2025 compared to the quarter ended September 30, 2024. Contract assets decreased $4,959,000 and contract liabilities increased $2,796,000 with the timing of inventory build and percentage of completion recognition on plant sales where revenue is recognized over time. Inventories decreased $8,670,000 due to paver sales and the completion and shipment on several large contract orders where revenue is recognized at a point in time. Accounts payable increased $1,551,000 due to the timing of purchase order receipts.

Cash flows used in investing activities for the six months ended March 31, 2025 of $460,000 were related to capital expenditures, primarily for land improvements and handling equipment.

Seasonality

The Company’s primary business is the manufacture of asphalt plants and related components and asphalt pavers. These products typically experience a seasonal slowdown during the third and fourth quarters of the calendar year. This slowdown often results in lower reported sales and operating results during the first and fourth quarters of the fiscal year ended September 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 Form 10-K for the year ended September 30, 2024, “Nature of Operations and Summary of Significant Accounting 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

The Company recognizes revenue under ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

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

The allowance for credit losses 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. Account balances are charged off against the allowance for credit losses when they are determined to be uncollectible. Any recoveries of account balances previously considered in the allowance for credit losses reduce future additions to the allowance for credit losses. The allowance for credit losses also includes an estimate for returns and allowances. 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 known issues and historical experience.

Inventories

Inventories are valued at the lower of cost or net realizable value, with cost being determined under the first in, first out method and net realizable value defined as the estimated selling price of goods less reasonable costs of completion and delivery. 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 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. 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.

Marketable Securities and Fair Value Measurements

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. There were no impairment losses in the quarters and six months ended March 31, 2025 and March 31, 2024.

Off-Balance Sheet Arrangements

None.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s President (who is currently serving as the Company’s Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer) evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act) pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this Quarterly Report. Based upon that evaluation, the President and the Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report, the Company’s disclosure controls and procedures were not effective at the reasonable assurance level solely as a result of the material weaknesses management identified in our internal control over financial reporting, as described in our Annual Report on Form 10-K for the year ended September 30, 2024.

Because of inherent limitations, the Company’s disclosure controls and procedures, no matter how well 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 have been detected.

Material Weaknesses in Internal Control over Financial Reporting

As previously reported in our Annual Report on Form 10-K for the year ended September 30, 2024, management identified the following material weaknesses in internal control over financial reporting as of September 30, 2024, which were not remediated as of March 31, 2025:

•

Ineffective information technology general controls (ITGCs), particularly as such controls related to user access, program change management, security, and ineffective complementary user-organization controls, which limited management’s ability to rely on technology-dependent controls relevant to the preparation of the Company’s consolidated financial statements. As a result, information technology-dependent manual and automated controls that rely on the affected ITGCs, or information from the information technology systems with affected ITGCs, were also ineffective.

•

Ineffective design, implementation, and operation of controls over key third-party service provider System and Organizational Controls reports.

•

Ineffective controls over the period end close process, including over the review and approval process of journal entries, account reconciliations, and segregation of duties.

•

Inadequate documentation and design of controls related to various key financial statement accounts and assertions.

•

Inadequate risk assessment, control activities, information and communication, and monitoring components of the Company’s internal control framework such that internal control weaknesses were not detected, communicated, addressed with mitigating control activities, or remediated on a timely basis.

Management’s Plan of Remediation of Material Weaknesses

Management, with oversight by our Audit Committee, is actively engaged in the planning for, and implementation of, remediation efforts to address the material weaknesses previously described in our Annual Report on Form 10-K for the year ended September 30, 2024 and to improve our internal control over financial reporting.

In response to the material weaknesses previously described, we plan to continue efforts already underway to remediate the material weaknesses in internal control over financial reporting, including the following:

•

We are in the process of conducting a risk assessment over our internal control environment, and we are reviewing and prioritizing individual control deficiencies for remediation, including those which aggregated to the above material weaknesses.

•

We are in the process of documenting and executing remediation action items, including expansion of mitigating controls where appropriate.

Management and our Audit Committee will monitor these specific remedial measures and the effectiveness of our overall control environment. The identified material weaknesses in internal control over financial reporting will only be considered remediated when the relevant controls have operated effectively for a sufficient period of time for management to conclude that they have been remediated. We can provide no assurance as to when the remediation of these material weaknesses will be completed.

Changes in Internal Control over Financial Reporting

The Company’s management, including the President and Chief Financial Officer, has reviewed the Company’s internal control over financial reporting. Except for the remediation efforts described above in connection with the previously identified material weaknesses, there were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. Other Information

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

Our business, operations, and financial condition are subject to various risks and uncertainties. The risk factors described in Part I, Item 1A, “Risk Factors” contained in our Annual Report on Form

10-K

for the year ended September 30, 2024, as filed with the SEC on June 27, 2025, should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form

10-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 Form

10-Q.

During the six months ended March 31, 2025, there have been no material changes from the risk factors previously disclosed under Part I, Item 1A, “Risk Factors” in our Annual Report on Form

10-K,

for the year ended September 30, 2024.

Item 5. Other Information

Rule

10b5-1

Plan Adoptions, Modifications and Terminations

During the quarter ended March 31, 2025, none of the Company’s directors or officers adopted, modified or terminated a Rule

10b5-1

trading arrangement or a

non-Rule

10b5-1

trading arrangement (each as defined in Item 408 of Regulation

S-K

under the Exchange Act).

Item 6. Exhibits


Exhibit		Description

31.1		Certification of Principal Executive Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended

31.2		Certification of Chief Financial Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended

32		Certifications of Principal Executive Officer and Chief Financial Officer Pursuant to 18 U. S. C. Section 1350

101.1		Interactive Data File

101.INS		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		XBRL Schema Document

101.CAL		XBRL Calculation Linkbase Document

101.DEF		XBRL Definition Linkbase Document

101.LAB		XBRL Label Linkbase Document

101.PRE		XBRL Presentation Linkbase Document

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL (included in Exhibit 101)

SIGNATURES

Pursuant to the requirements 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.

/s/ Marc G. Elliott

Marc G. Elliott

President

(Principal Executive Officer)

July 25, 2025

/s/ Eric E. Mellen

Eric E. Mellen

Chief Financial Officer

(Principal Financial and Accounting Officer)

July 25, 2025

Source: View Original Filing on SEC EDGAR

Net revenue declined 6.1 % to $38.2 m and net income slipped 2 % to $6.1 m, or $0.42 per share.

As of 31-Mar-25, GENC held $52.3 m in cash and cash equivalents and remains debt-free.

Delayed 10-K and 10-Q filings caused by successive auditor changes triggered non-compliance; the NYSE granted an extension to 19-Aug-25.

Management reported material weaknesses in IT general controls, period-end close, and third-party oversight; remediation is ongoing.

Backlog dropped to $27.8 m from $50.4 m a year earlier, a 45 % decrease.

Yes, operating activities provided $27.2 m during the first six months of FY25.

Large accelerated filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company