Gencor Industries Inc (GENC) Reports Increased Annual Net Income and Strong Backlog Growth
Annual net income surged to $14.7 million in fiscal 2023 from a net loss in the previous year.
Gross profit margin improved significantly year-over-year, reaching 27.6% in fiscal 2023.
Company's backlog increased to $57.8 million, indicating robust demand for Gencor's products.
Operating income for fiscal 2023 rose to $13.4 million, a substantial increase from $4.2 million in fiscal 2022.
On December 13, 2023, Gencor Industries Inc (GENC) released its 8-K filing, detailing the financial results for the fourth quarter and fiscal year ended September 30, 2023. Despite a slight decrease in net revenue for the fourth quarter, GENC reported a robust fiscal year with significant improvements in net income and gross profit margins.
Fiscal Year 2023 Performance Highlights
GENC's net revenue for the year increased modestly to $105.1 million from $103.5 million in the previous year. The company's gross profit margin saw a notable rise to 27.6% in fiscal 2023, up from 19.9% in fiscal 2022, attributed to increased parts sales, improved efficiency, and favorable price realization.
Operating expenses saw a mixed trend, with product engineering and development expenses decreasing by $0.9 million due to reduced headcount and improved efficiency. However, selling, general, and administrative expenses increased slightly, primarily due to trade show-related costs, offset by reduced professional fees.
GENC's operating income for fiscal 2023 was $13.4 million, a significant increase from $4.2 million in the previous year. This improvement was driven by higher gross profit margins and reduced operating expenses. Net non-operating income also contributed positively, with $5.4 million reported for the year, a stark contrast to the net non-operating expense of $(5.9) million in fiscal 2022. This change was largely due to higher interest income from fixed income investments and net realized and unrealized gains on marketable securities, which amounted to $3.2 million compared to losses of $(7.0) million in the prior year.
The effective income tax rate for fiscal 2023 was 21.9%, compared to (78.0%) in fiscal 2022. GENC's net income for the year stood at $14.7 million, or $1.00 per basic and diluted share, a significant recovery from a net loss of $(0.4) million, or $(0.03) per basic and diluted share, in the previous year.
Balance Sheet and Cash Flow Insights
As of September 30, 2023, GENC's balance sheet reflected $101.3 million in cash and marketable securities, an increase from the previous year's balance of $98.9 million. The company's working capital also grew to $164.8 million from $150.1 million. Notably, GENC carries no short-term or long-term debt, maintaining a strong liquidity position.
The company's backlog as of December 1, 2023, was $57.8 million, up from $43.2 million at the same time in the previous year, indicating a healthy demand for GENC's products and services.
Management's Outlook
Marc Elliott, Gencors President, commented on the results, stating,
We kicked-off our fiscal 2024 selling season with very strong demand and sales of our equipment which have remained steady. As a result, our backlog has increased well above historic norms and sales inquiries continue to be elevated, giving confidence that we should continue to benefit from incremental U.S. government infrastructure funding."
He also expressed optimism for the remainder of fiscal 2024, emphasizing the company's commitment to delivering high-quality products and services.
In summary, GENC's financial results for fiscal 2023 demonstrate resilience and growth potential, with improved profitability and a strong order backlog setting a positive tone for the upcoming fiscal year.
Explore the complete 8-K earnings release (here) from Gencor Industries Inc for further details.
This article first appeared on GuruFocus.
