Mario's fund - Teton Westwood owns 350,000 shares of GENC. Looks like he has owned it for a few years. This is the first time I think he has mentioned Gencor on CNBC. I like that he has his money where his mouth is.
Today, Gencor delivered on my predictions. Indeed, it beat even what I could ever expect, in terms of improvement.
Better still, there already clues that make it likely the next quarter will be good as well.
In a recent article on Gencor (NASDAQ:GENC) titled "Gencor Industries: At The Very Beginning Of Substantial Growth And Earnings Improvement", I explained my bullish thesis on the name. This thesis was based on 3 main factors:
• The catalyst brought about by lower crude prices, which made asphalt more competitive versus concrete.
• The catalyst brought about by the new Highway Bill.
• And GENC's valuation, where nearly all of the market capitalization was backed by cash.
I explained that due to the catalysts at hand, Gencor would, in the very short-term, start delivering a significant improvement in revenues and earnings.
Today, we got the first taste of what constitutes Gencor's delivery on my predictions. Gencor released Q1 FY2016 earnings, and these brought the following developments:
• Revenues increased 111% year-on-year.
• Gross margins increased from 5.5% of revenues to 24.8% of revenues, a massive improvement which exceeded anything I could ever expect.
• The company turned from an operating loss during Q1 FY2015, to $1 million in operating income for Q1 FY2016.
Also, while it can seem less relevant, GENC continued increasing its cash even in spite of the massive growth it's experiencing now (which consumes some cash). Once this growth stabilizes at more reasonable levels, it's likely that the cash balances will increase further still.
Gencor Will Keep On Delivering
As important as Gencor delivering on my thesis, is the fact that it's likely things will continue to improve even more. We have a couple of clues pointing that way.
Gencor had already ended Q4 FY2015 with a large increase in backlog (to $20.3 million). Well, during Q1 FY2016 this increased further still:....