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

Rhea-AI Filing Summary

Gencor Industries (GENC) reported a solid fiscal Q3 2025 (quarter ended 6/30/25):

• Revenue rose 5.6% YoY to $26.99 m, driven by higher point-in-time equipment and parts sales.
• Gross margin expanded to 26.5% (23.9% p/y) on a more profitable mix and lower manufacturing costs.
• Operating income jumped 58% to $3.14 m as operating expenses fell 2%.
• Net income increased 49.6% to $3.83 m; EPS improved to $0.26 vs $0.17.
• Year-to-date (9 mo) revenue rose 4.7% to $96.6 m and EPS grew 5.6% to $0.94.

Balance sheet strength remains exceptional: cash & marketable securities climbed to $136.0 m (62% of total assets) with no debt; equity rose to $209.9 m. Inventories fell $10.9 m while slow-moving allowances increased $1.6 m.

Cash flow: Operating cash shrank to $3.3 m (vs $12.5 m p/y) due mainly to a $17.6 m shift of cash into the investment portfolio and higher contract assets.

Key watch-points:

• Backlog fell to $26.2 m from $46.6 m YoY, signalling softer forward demand.
• Customer concentration: one customer represented 17.7% of quarterly revenue.
• Internal control material weaknesses (ITGCs, period-end close, third-party SOC report review) remain unremediated.

Overall, stronger margins and earnings highlight effective cost control and investment income, but backlog erosion, weakening operating cash flow and unresolved control issues temper the outlook.

Positive

• Revenue up 5.6% YoY with improved product mix.
• Gross margin expanded 260 bp, lifting operating income 58%.
• EPS rose to $0.26 (up 53%); nine-month EPS up 6%.
• Net cash position of $136 m and zero debt provide financial flexibility.
• Inventories reduced by $10.9 m, easing working-capital needs.

Negative

• Backlog dropped to $26.2 m, down 44% YoY, hinting at weaker future sales.
• Operating cash flow fell 73% to $3.3 m year-to-date.
• Material weaknesses in internal controls remain unresolved.
• Customer concentration risk: one customer contributed 17.7% of quarterly revenue.
• Marketable-securities gains softened YTD, reducing other income growth.

Insights

Equity Analyst

TL;DR: Earnings beat, margins up, cash rich; falling backlog and control issues limit upside.

Quarterly revenue and EPS growth outpaced industry peers, and the 260 bp margin expansion underscores disciplined pricing and a higher-margin parts mix. Net cash of $136 m (≈$8.90 per share) provides strategic flexibility for buybacks or acquisitions. However, the 44% YoY backlog decline signals potential revenue softness in FY 2026 unless order intake rebounds. Operating cash conversion slipped to 23% of net income, mostly from portfolio reallocations, but should normalise once investment flows stabilise. Valuation will hinge on management’s ability to rebuild backlog while resolving the persistent ITGC weaknesses that elevate audit risk.

Risk & Governance Specialist

TL;DR: Strong liquidity offset by governance gaps and customer concentration.

The company’s fortress balance sheet mitigates solvency risk, yet repeated disclosure of material weaknesses—spanning IT access, change management, SOC report oversight and period-end close—suggests an under-resourced control environment. Until remediation is validated, investors face heightened risk of reporting errors. Concentration risk is rising: a single customer drove 17.7% of Q3 revenue, and backlog compression may force more competitive pricing. While no legal or regulatory actions are noted, these governance deficiencies could weigh on valuation multiples.

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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 JUNE 30, 2025

OR

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

FOR THE TRANSITION PERIOD: From       to      

Commission File Number: 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.

Large accelerated filer		☐		Accelerated Filer		☒
Non-accelerated Filer		☐		Smaller Reporting Company		☒
Emerging Growth Company		☐

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 August 7, 2025
Common stock, $.10 par value		12,338,845 shares
Class B common 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 – June 30, 2025 (Unaudited) and September 30, 2024			4
		Condensed Consolidated Income Statements – Quarters and Nine Months Ended June 30, 2025 and 2024 (Unaudited)			5
		Condensed Consolidated Statements of Shareholders’ Equity – Quarters and Nine Months Ended June 30, 2025 and 2024 (Unaudited)			6
		Condensed Consolidated Statements of Cash Flows – Nine Months Ended June 30, 2025 and 2024 (Unaudited)			7
		Notes to Condensed Consolidated Financial Statements (Unaudited)			8
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3.		Quantitative and Qualitative Disclosures about Market Risk			22
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

2

Cautionary Note Regarding 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 and demand for the Company’s products. 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.

3

P3YP4Y

Part I. Financial Information

Item 1. Financial Statements

GENCOR INDUSTRIES, INC.

Condensed Consolidated Balance Sheets

ASSETS		June 30, 2025 (Unaudited)				September 30, 2024
Current assets:
Cash and cash equivalents		$	27,874,000			$	25,482,000
Marketable securities at fair value (cost of $106,365,000 at June 30, 2025 and $88,777,000 at September 30, 2024)			108,097,000				89,927,000
Accounts receivable, less allowance for credit losses of $480,000 at June 30, 2025 and $390,000 at September 30, 2024			3,157,000				1,980,000
Contract assets			12,226,000				9,339,000
Inventories, net			52,872,000				63,762,000
Prepaid expenses and other current assets			1,106,000				2,352,000
Total current assets			205,332,000				192,842,000
Property and equipment, net			10,641,000				11,472,000
Deferred income taxes			3,698,000				3,424,000
Other long-term assets			485,000				383,000
Total Assets		$	220,156,000			$	208,121,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	2,539,000			$	2,001,000
Customer deposits			2,427,000				5,018,000
Accrued expenses			2,944,000				3,255,000
Current operating lease liabilities			369,000				330,000
Total current liabilities			8,279,000				10,604,000
Unrecognized tax benefits			1,933,000				1,376,000
Non-current operating lease liabilities			63,000				—
Total liabilities			10,275,000				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 June 30, 2025 and September 30, 2024			1,234,000				1,234,000
Class B common stock, par value $.10 per share; 6,000,000 shares authorized; 2,318,857 shares issued and outstanding at June 30, 2025 and September 30, 2024			232,000				232,000
Capital in excess of par value			12,590,000				12,590,000
Retained earnings			195,825,000				182,085,000
Total shareholders’ equity			209,881,000				196,141,000
Total Liabilities and Shareholders’ Equity		$	220,156,000			$	208,121,000

See accompanying Notes to Condensed Consolidated Financial Statements

4

Table of Contents

GENCOR INDUSTRIES, INC.

Condensed Consolidated Income Statements

(Unaudited)

		For the Quarters Ended June 30,								For the Nine Months Ended June 30,
		2025				2024				2025				2024
Net revenue		$	26,986,000			$	25,551,000			$	96,606,000			$	92,245,000
Cost of goods sold			19,843,000				19,444,000				69,442,000				66,282,000
Gross profit			7,143,000				6,107,000				27,164,000				25,963,000
Operating expenses:
Product engineering and development			741,000				824,000				2,099,000				2,518,000
Selling, general and administrative			3,265,000				3,290,000				10,824,000				10,997,000
Total operating expenses			4,006,000				4,114,000				12,923,000				13,515,000
Operating income			3,137,000				1,993,000				14,241,000				12,448,000
Other income (expense), net:
Interest and dividend income, net of fees			1,142,000				966,000				3,289,000				2,485,000
Net realized and unrealized gains on marketable securities			894,000				363,000				1,037,000				2,087,000
Total other income (expense), net			2,036,000				1,329,000				4,326,000				4,572,000
Income before income tax expense			5,173,000				3,322,000				18,567,000				17,020,000
Income tax expense			1,345,000				764,000				4,827,000				3,914,000
Net income		$	3,828,000			$	2,558,000			$	13,740,000			$	13,106,000
Net income per common share - basic and diluted		$	0.26			$	0.17			$	0.94			$	0.89

See accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

GENCOR INDUSTRIES, INC.

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

		For the Quarters and Nine Months Ended June 30, 2025
		Common Stock								Class B Common 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
Net income			—				—				—				—				—				3,828,000				3,828,000
June 30, 2025			12,338,845			$	1,234,000				2,318,857			$	232,000			$	12,590,000			$	195,825,000			$	209,881,000

		For the Quarters and Nine Months Ended June 30, 2024
		Common Stock								Class B Common 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
Net income			—				—				—				—				—				2,558,000				2,558,000
June 30, 2024			12,338,845			$	1,234,000				2,318,857			$	232,000			$	12,590,000			$	180,633,000			$	194,689,000

See accompanying Notes to Condensed Consolidated Financial Statements

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GENCOR INDUSTRIES, INC. Condensed Consolidated Statements of Cash Flows For the Nine Months Ended June 30, 2025 and 2024 (Unaudited)
		2025				2024
Cash flows from operating activities:
Net income		$	13,740,000			$	13,106,000
Adjustments to reconcile net income to net cash provided by operating activities:
Net unrealized gains on marketable securities			(582,000	)			(1,346,000	)
Deferred income taxes			(274,000	)			(106,000	)
Unrecognized tax benefits			557,000				—
Depreciation and amortization			1,782,000				1,971,000
Changes in operating assets and liabilities:
Accounts receivable			(1,177,000	)			(456,000	)
Contract assets			(2,887,000	)			(1,192,000	)
Marketable securities			(17,588,000	)			(2,207,000	)
Inventories			10,890,000				8,295,000
Prepaid expenses and other current assets			1,246,000				1,638,000
Accounts payable			538,000				(923,000	)
Customer deposits			(2,591,000	)			(4,255,000	)
Accrued expenses			(311,000	)			(2,013,000	)
Total adjustments			(10,397,000	)			(594,000	)
Net cash provided by operating activities			3,343,000				12,512,000
Cash flows from investing activities:
Capital expenditures			(951,000	)			(763,000	)
Cash used in investing activities			(951,000	)			(763,000	)
Net increase in cash and cash equivalents			2,392,000				11,749,000
Cash and cash equivalents at:
Beginning of period			25,482,000				17,031,000
End of period		$	27,874,000			$	28,780,000
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease liabilities		$	370,000			$	361,000
Income taxes paid		$	2,826,000			$	6,210,000

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 nine months ended June 30, 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 to 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,

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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 this Quarterly Report, the Company’s operations have not been significantly impacted.

Reclassifications

Certain amounts in the June 30, 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 nine months ended June 30, 2024.

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 periods 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.

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The following table sets forth, by level, within the fair value hierarchy, the Company’s marketable securities measured at fair value as of June 30, 2025:

		Fair Value Measurements
		Level 1				Level 2				Level 3				Total
Equities		$	3,018,000			$	—			$	—			$	3,018,000
Exchange-Traded Funds			7,856,000				—				—				7,856,000
Mutual Funds			4,010,000				—				—				4,010,000
Corporate Bonds			—				30,871,000				—				30,871,000
Government Securities			62,134,000				—				—				62,134,000
Cash and Money Funds			208,000				—				—				208,000
Total		$	77,226,000			$	30,871,000			$	—			$	108,097,000

Net unrealized gains included in the condensed consolidated income statements for the quarter and nine months ended June 30, 2025, were $808,000 and $582,000, respectively. During the quarter ended June 30, 2025, $15,000,000 was transferred from the Company’s operating cash account to the investment portfolio.

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 included in the condensed consolidated income statements for the quarter and nine months ended June 30, 2024, were $195,000 and $1,346,000, 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 materials, 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.

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Net inventories at June 30, 2025 and September 30, 2024 consist of the following:

		June 30, 2025				September 30, 2024
Raw materials		$	29,303,000			$	32,631,000
Work in process			11,036,000				18,740,000
Finished goods			12,533,000				12,391,000
		$	52,872,000			$	63,762,000

Slow-moving and obsolete inventory allowances were $14,968,000 and $13,331,000 at June 30, 2025 and September 30, 2024, respectively. The increase in the slow-moving and obsolete inventory allowances of $1,637,000 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 nine months ended June 30, 2024, the slow-moving and obsolete inventory allowances increased $1,809,000.

Note 4 – Contract Assets

Contract assets reflect costs and estimated earnings in excess of billings on uncompleted contracts as of June 30, 2025 and September 30, 2024, and consist of the following:

		June 30, 2025				September 30, 2024
Costs incurred on uncompleted contracts		$	12,625,000			$	14,508,000
Estimated earnings			4,244,000				6,977,000
			16,869,000				21,485,000
Billings to date			4,643,000				12,146,000
Contract assets		$	12,226,000			$	9,339,000

Note 5 – Net Income per Common Share Data

The condensed consolidated financial statements include basic and diluted net income per common share information. The weighted-average number of shares outstanding includes both common stock and Class B common stock. The following table sets forth the computation of basic and diluted net income per common share for the quarters and nine months ended June 30, 2025 and 2024:

		Quarter Ended June 30,								Nine Months Ended June 30,
		2025				2024				2025				2024
Net income		$	3,828,000			$	2,558,000			$	13,740,000			$	13,106,000
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		$	0.26			$	0.17			$	0.94			$	0.89

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 June 30, 2025 and 2024 and thus no common stock equivalents as of June 30, 2025 and 2024.

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

During the quarter ended June 30, 2025, one customer accounted for 17.7% of net revenue. During the nine months ended June 30, 2025, a different customer accounted for 11.2% of net revenue.

During the quarter ended June 30, 2024, three customers accounted for 20.0%, 11.9% and 11.5%, respectively, of net revenue. During the nine months ended June 30, 2024, no customer accounted for 10% or more of net revenue.

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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 June 30, 2025 and September 30, 2024.

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 for unrecognized tax benefits (“UTBs”) 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 June 30, 2025 and September 30, 2024, the Company had UTBs of $1,933,000 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 nine months ended June 30, 2025 and June 30, 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 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 nine months ended June 30, 2025 and 2024:

		Quarter Ended June 30,								Nine Months Ended June 30,
		2025				2024				2025				2024
Equipment sales recognized over time		$	10,420,000			$	11,624,000			$	41,367,000			$	33,837,000
Equipment sales recognized at a point in time			8,583,000				6,958,000				28,292,000				31,533,000
Parts and component sales			6,109,000				5,208,000				21,134,000				21,595,000
Freight revenue			1,652,000				1,597,000				4,986,000				4,494,000
Other			222,000				164,000				827,000				786,000
Net revenue		$	26,986,000			$	25,551,000			$	96,606,000			$	92,245,000

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.

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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 $12,226,000 at June 30, 2025 and $9,339,000 at September 30, 2024, and are included in current assets on the Company’s condensed consolidated balance sheets at June 30, 2025 and September 30, 2024. The Company anticipates that all of the contract assets at June 30, 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 recognized at a point in time were $426,000 and $163,000 at June 30, 2025 and September 30, 2024, respectively.

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

Under certain contracts with customers, recognition of a portion of the consideration received may be deferred and recorded as a contract liability if the Company has to satisfy a future obligation, such as to provide installation assistance. There were no contract liabilities other than customer deposits at June 30, 2025 and September 30, 2024. Customer deposits related to contracts with customers were $2,427,000 and $5,018,000 at June 30, 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.

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. The measurement and recognition of credit losses involves judgment and represents the Company’s estimate of expected credit losses based on a number of considerations, including 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.

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Changes in the allowance for credit losses as of June 30, 2025 consisted of the following:

Balance, September 30, 2024		$	390,000
Provision for credit losses			—
Provision for estimated returns and allowances			395,000
Uncollectible accounts written off			(12,000	)
Returns and allowances issued			(293,000	)
Balance, June 30, 2025		$	480,000

Note 9 – Leases

The Company leases certain equipment under non-cancelable operating leases. Future minimum rental payments under these leases at June 30, 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 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 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 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 2016-02, the Company recorded a ROU asset totaling $370,000 and related lease liabilities upon extension.

For the quarter and nine months ended June 30, 2025, operating lease costs were $112,000 and $305,000, respectively, and cash payments related to these operating leases were $112,000 and $336,000, respectively. For the quarter and nine months ended June 30, 2024, operating lease costs and cash payments related to operating leases were $109,000 and $328,000, respectively.

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

		June 30, 2025				September 30, 2024
Operating lease ROU asset included in other long-term assets		$	432,000			$	330,000
Current operating lease liability			369,000				330,000
Non-current operating lease liability			63,000				—
Weighted average remaining lease term (in years)			0.67				0.92
Weighted average discount rate used in calculating ROU asset			4.8	%			5.0	%

Future annual minimum lease payments as of June 30, 2025 are as follows:

Fiscal Year		Annual Lease Payments
2025 (remaining 3 months)		$	93,000
2026			347,000
Total			440,000
Less interest			(8,000	)
Present value of lease liabilities		$	432,000

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Note 10 – Segment Information

The Company has one reporting segment, equipment for the highway construction industry. Based on evaluation of the criteria of ASC Topic 280, 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.

Note 11 – Subsequent Events

The Company has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued for potential recognition and disclosure. The Company did not identify any subsequent events that would have required adjustment to or disclosure in the condensed consolidated financial statements.

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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 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 funding of $110 billion for the nation’s highways, bridges and roads through September 2026.

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.

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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 this Quarterly Report, the Company’s operations have not been significantly impacted.

Results of Operations

Quarter Ended June 30, 2025 versus June 30, 2024

Net revenue for the quarter ended June 30, 2025 increased $1,435,000, or 5.6%, to $26,986,000, from $25,551,000 for the quarter ended June 30, 2024. The increase in revenues was primarily due to higher equipment sales recognized at a point in time, increased parts and component sales and freight revenues.

As a percent of sales, gross profit margins increased to 26.5% in the quarter ended June 30, 2025, compared to 23.9% in the quarter ended June 30, 2024, from improved profitability on certain contract sales and increased parts sales which have a higher margin compared to other sources of revenue.

Product engineering and development expenses decreased by $83,000 to $741,000 for the quarter ended June 30, 2025, as compared to $824,000 for the quarter ended June 30, 2024 due to lower headcount. Selling, general and administrative (“SG&A”) expenses decreased by $25,000 to $3,265,000 for the quarter ended June 30, 2025, compared to $3,290,000 for the quarter ended June 30, 2024.

Operating income increased from $1,993,000 for the quarter ended June 30, 2024 to $3,137,000 for the quarter ended June 30, 2025, due primarily to higher net revenue and improved gross profit margins.

For the quarter ended June 30, 2025, the Company had net other income of $2,036,000 compared to $1,329,000 for the quarter ended June 30, 2024. Interest and dividend income, net of fees, was $1,142,000 for the quarter ended June 30, 2025 as compared to $966,000 in the quarter ended June 30, 2024. The increase was primarily due to higher interest rates earned on increased cash balances and fixed income investments. The net realized and unrealized gains on marketable securities were $894,000 for the quarter ended June 30, 2025 compared to $363,000 for the quarter ended June 30, 2024, due to gains in fixed income and equity in investments.

The effective income tax rates for the quarters ended June 30, 2025 and June 30, 2024 were 26.0% and 23.0%, respectively, based on the expected annual effective income tax rate.

Net income for the quarter ended June 30, 2025 was $3,828,000, or $0.26 per basic and diluted common share, compared to net income of $2,558,000, or $0.17 per basic and diluted common share, for the quarter ended June 30, 2024.

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Nine Months Ended June 30, 2025 versus June 30, 2024

Net revenues for the nine months ended June 30, 2025 and 2024 were $96,606,000 and $92,245,000, respectively, an increase of $4,361,000, or 4.7%. The improved net revenue was primarily from equipment sales recognized over time. Gross profit margins were 28.1% for both the nine months ended June 30, 2025 and June 30, 2024.

Product engineering and development expenses decreased $419,000 to $2,099,000 for the nine months ended June 30, 2025, compared to $2,518,000 for the nine months ended June 30, 2024 due primarily to reduced headcount. SG&A expenses decreased slightly by $173,000 to $10,824,000 for the nine months ended June 30, 2025, compared to $10,997,000 the nine months ended June 30, 2024.

The Company had operating income of $14,241,000 for the nine months ended June 30, 2025 compared to $12,448,000 for the nine months ended June 30, 2024. The increase in operating income was due primarily to the increased net revenue and reduced product engineering and development expenses.

For the nine months ended June 30, 2025, the Company had net other income of $4,326,000 compared to $4,572,000 for the nine months ended June 30, 2024. Interest and dividend income, net of fees, was $3,289,000 for the nine months ended June 30, 2025 as compared to $2,485,000 for the nine months ended June 30, 2024. The increase in interest and dividend income, net of fees, for the nine months ended June 30, 2025, was primarily due to increased cash balances and fixed income investments. Net realized and unrealized gains on marketable securities were $1,037,000 for the nine months ended June 30, 2025 compared to $2,087,000 for the nine months ended June 30, 2024. During the first nine months of fiscal 2025, bond yields rose due to stronger economic data and higher than anticipated inflation. The higher yields negatively impacted the value of our bond holdings.

The effective income tax rates for the nine months ended June 30, 2025 and June 30, 2024 were 26.0% and 23.0%, respectively, based on the expected annual effective income tax rate. Net income for the nine months ended June 30, 2025 was $13,740,000, or $0.94 per basic and diluted common share, compared to net income of $13,106,000, or $0.89 per basic and diluted common share, for the nine months ended June 30, 2024.

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 June 30, 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 June 30, 2025, the Company had $27,874,000 in cash and cash equivalents, and $108,097,000 in marketable securities, including $3,018,000 in equities, $30,871,000 in corporate bonds, $7,856,000 in exchange-traded funds, $4,010,000 in mutual funds, $62,134,000 in government securities, and $208,000 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 $26.2 million at June 30, 2025 compared to $46.6 million at June 30, 2024. The Company’s working capital (defined as current assets less current liabilities) was $197.1 million at June 30, 2025 and $182.2 million at September 30, 2024. Cash flows provided by operating activities during the nine months ended June 30, 2025 were $3,343,000. Accounts receivable increased $1,177,000 during the nine months ended June 30, 2025, due to the increase in parts and component sales in the quarter ended June 30, 2025, compared to parts and component sales in the quarter ended September 30, 2024. Contract assets increased $2,887,000 during the nine months ended June 30, 2025, with the timing of inventory build and percentage of completion recognition on sales where

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revenue is recognized over time. Inventories decreased by $10,890,000 during the nine months ended June 30, 2025, due to paver sales and the completion and shipment on several large contract orders where revenue is recognized at a point in time. Prepaid expenses decreased $1,246,000 during the nine months ended June 30, 2025, due primarily to income tax overpayments at September 30, 2024 being applied to fiscal 2025 income tax liability. Customer deposits decreased $2,591,000 during the nine months ended June 30, 2025, reflecting down payments and final payments on contract jobs that shipped complete during the nine months ended June 30, 2025.

Cash flows used in investing activities for the nine months ended June 30, 2025 of $951,000 were related to capital expenditures, primarily for land and building improvements and handling equipment.

Seasonality

The Company’s primary business is the manufacture of asphalt pavers, asphalt plants and related components. 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.” There were no changes in the Company’s accounting policies during the nine months ended June 30, 2025.

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). 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 $12,226,000 at June 30, 2025 and $9,339,000 at September 30, 2024, and are included in current assets on the Company’s condensed consolidated balance sheets at June 30, 2025 and September 30, 2024. The Company anticipates that all of the contract assets at June 30, 2025, will be billed and collected within one year.

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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 recognized at a point in time were $426,000 and $163,000 at June 30, 2025 and September 30, 2024, respectively.

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

Under certain contracts with customers, recognition of a portion of the consideration received may be deferred and recorded as a contract liability if the Company has to satisfy a future obligation, such as to provide installation assistance. There were no contract liabilities other than customer deposits at June 30, 2025 and September 30, 2024. Customer deposits related to contracts with customers were $2,427,000 and $5,018,000 at June 30, 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.

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. The measurement and recognition of credit losses involves judgment and represents the Company’s estimate of expected credit losses based on a number of considerations, including 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.

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 materials, 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.

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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 nine month periods ended June 30, 2025 and June 30, 2024.

Off-Balance Sheet Arrangements

None.

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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 (June 30, 2025). Based upon that evaluation, the President and the Chief Financial Officer concluded that, as of June 30, 2025, 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 June 30, 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.

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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 June 30, 2025 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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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 nine months ended June 30, 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 June 30, 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).

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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 June 30, 2025, formatted in Inline XBRL (included in Exhibit 101)

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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)

August 8, 2025

/s/ Eric E. Mellen

Eric E. Mellen

Chief Financial Officer

(Principal Financial and Accounting Officer)

August 8, 2025

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FAQ

How did GENC’s revenue perform in Q3 2025?

Net revenue rose 5.6% to $26.99 million versus Q3 2024, driven by higher equipment and parts sales.

What is Gencor’s earnings per share for the latest quarter?

Q3 2025 EPS was $0.26, up from $0.17 in the prior-year quarter.

How strong is GENC’s balance sheet?

The company holds $27.9 m cash and $108.1 m marketable securities with no outstanding debt.

Why did operating cash flow decrease in FY 2025 to date?

Cash flow fell to $3.3 m mainly because $17.6 m of cash was shifted into the investment portfolio and contract assets grew.

What material weaknesses did auditors identify?

Weak IT general controls, inadequate review of SOC reports, period-end close issues, and insufficient documentation of key controls remain unresolved.

What is the current order backlog?

Backlog at June 30 2025 was $26.2 million, down from $46.6 million a year earlier.