Table of Contents
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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
,
2023
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.
 
 
 
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 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 4, 2023
 
Common stock, $.10 par value   
 
 12,338,845 shares
 
Class B stock, $.10 par value   
 
 2,318,857 shares
 

 
 

Table of Contents

GENCOR INDUSTRIES, INC.

 

Index             Page  

Part I.

   Financial Information   
  Item 1.    Financial Statements      4  
     Condensed Consolidated Balance Sheets – June 30, 2023 (Unaudited) and September 30, 2022      4  
     Condensed Consolidated Statements of Operations – Quarters and Nine Months Ended June 30, 2023 and 2022 (Unaudited)      5  
     Condensed Consolidated Statements of Shareholders’ Equity – Nine Months Ended June 30, 2023 and 2022 (Unaudited)      6  
     Condensed Consolidated Statements of Cash Flows – Quarters and Nine Months Ended June 30, 2023 and 2022 (Unaudited)      7  
     Notes to Condensed Consolidated Financial Statements (Unaudited)      8  
  Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations      15  
  Item 3.    Quantitative and Qualitative Disclosures about Market Risk      21  
  Item 4.    Controls and Procedures      21  

Part II.

   Other Information   
  Item 1.    Legal Proceedings      22  
  Item 1A.    Risk Factors      22  
  Item 6.    Exhibits      23  

Signatures

      24  

 

 

2

Table of Contents

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. All forward-looking statements, by their nature, 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 future 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, central bank interest rate increases and inflation, changes in the economic and competitive environments, demand for the Company’s products, the duration and scope of the coronavirus (“COVID-19”) pandemic and its variants, actions government entities and businesses have taken in response to the COVID-19 pandemic, including mandatory business closures, the impact of the pandemic and actions taken on regional economies, and the pace of recovery as the COVID-19 pandemic subsides. Additionally, on February 24, 2022, Russian military forces invaded Ukraine. The impact to Ukraine as well as actions taken by other countries, including new and stricter sanctions imposed by the U.S. and other countries and companies against officials, individuals, regions, and industries in Russia, and actions taken by Russia and certain other countries in response to such sanctions, 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, 2022: (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 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

Table of Contents
P3YP4Y
Part I. Financial Information
Item 1. Financial Statements
GENCOR INDUSTRIES, INC.
Condensed Consolidated Balance Sheets

    
June 30, 2023

(Unaudited)
     
September 30,
2022
  
ASSETS
                  
Current assets:
                  
Cash and cash equivalents
   
$
 6,206,000      $ 9,581,000  
Marketable securities at fair value (cost of $
89,502,000
at June 30, 2023 and $
94,879,000
at September 30,
2022)
      88,413,000        89,300,000  
Accounts receivable, less allowance for doubtful accounts of $
598,000
at June 30, 2023 and $
370,000
at September 30, 2022
      3,477,000        2,996,000  
Costs and estimated earnings in excess of billings
      6,913,000        2,118,000  
Inventories, net
      66,791,000        55,815,000  
Prepaid expenses and other current assets
      2,995,000        2,669,000  
    
 
 
     
 
 
  
Total current assets
      174,795,000        162,479,000  
    
 
 
     
 
 
  
Property and equipment, net
      12,969,000        13,491,000  
Deferred and other income taxes
      1,872,000        2,893,000  
Other long-term assets
      488,000        450,000  
    
 
 
     
 
 
  
Total Assets
   
$
 190,124,000      $ 179,313,000  
    
 
 
     
 
 
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                  
Current liabilities:
                  
Accounts payable
   
$

 3,400,000      $ 4,251,000  
Customer deposits
      5,834,000        5,864,000  
Accrued expenses
      1,976,000        1,885,000  
Current operating lease liabilities
      376,000        390,000  
    
 
 
     
 
 
  
Total current liabilities
      11,586,000        12,390,000  
Non-current
operating lease liabilities
      60,000        6,000  
    
 
 
     
 
 
  
Total liabilities
      11,646,000        12,396,000  
    
 
 
     
 
 
  
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, 2023 and September 30, 2022
      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 June 30, 2023 and September 30, 2022
      232,000        232,000  
Capital in excess of par value
      12,590,000        12,590,000  
Retained earnings
      164,422,000        152,861,000  
    
 
 
     
 
 
  
Total shareholders’ equity
      178,478,000        166,917,000  
    
 
 
     
 
 
  
Total Liabilities and Shareholders’ Equity
   
$
 190,124,000      $ 179,313,000  
    
 
 
     
 
 
  
See accompanying Notes to Condensed Consolidated Financial
Statements
 
4
GENCOR INDUSTRIES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)

 
 
  
For the Quarters Ended

June 30,
 
 
For the Nine Months Ended

June 30,
 
 
  
2023
 
  
2022
 
 
2023
 
  
2022
 
Net revenue
   
$
 27,877,000      $ 29,647,000    
$
 84,204,000      $ 80,407,000  
Cost of goods sold
      20,365,000        23,968,000       61,780,000        64,831,000  
    
 
 
     
 
 
    
 
 
     
 
 
  
Gross profit
      7,512,000        5,679,000       22,424,000        15,576,000  
Operating expenses:
                                   
Product engineering and development
      845,000        951,000       2,616,000        3,219,000  
Selling, general and administrative
      3,214,000        2,577,000       9,075,000        9,340,000  
    
 
 
     
 
 
    
 
 
     
 
 
  
Total operating expenses
      4,059,000        3,528,000       11,691,000        12,559,000  
    
 
 
     
 
 
    
 
 
     
 
 
  
Operating income
      3,453,000        2,151,000       10,733,000        3,017,000  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense), net:
                                   
Interest and dividend income, net of fees
      673,000        304,000       1,731,000        877,000  
Net realized and unrealized gains (losses) on marketable securities, net
      46,000        (3,693,000 )      2,700,000        (4,758,000 ) 
Other
      —        (1,000 )     
       (139,000 ) 
    
 
 
     
 
 
    
 
 
     
 
 
  
Total other income (expense), net
      719,000        (3,390,000 )      4,431,000        (4,020,000 ) 
    
 
 
     
 
 
    
 
 
     
 
 
  
Income (loss) before income tax expense (benefit)
      4,172,000        (1,239,000 )      15,164,000        (1,003,000 ) 
Income tax expense (benefit)
      960,000        (224,000 )      3,603,000        (153,000 ) 
    
 
 
     
 
 
    
 
 
     
 
 
  
Net income (loss)
   
$
 3,212,000      $ (1,015,000 )   
$
 11,561,000      $ (850,000 ) 
    
 
 
     
 
 
    
 
 
     
 
 
  
Basic and diluted income (loss) per common share
   
$
 0.22      $ (0.07 )   
$

 0.79      $ (0.06 ) 
    
 
 
     
 
 
    
 
 
     
 
 
  
See accompanying Notes to Condensed Consolidated
Fi
nancial Statements
 
5
GENCOR INDUSTRIES, INC.
Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited)
 
 
  
For the Quarters and Nine Months Ended June 30, 2023
 
  
 
 
  
 
 
 
  
Common Stock
 
  
Class B Stock
 
  
Capital in
Excess of

Par Value
 
  
Retained

Earnings
 
  
Total
Shareholders’

Equity
 
 
  
Shares
 
  
Amount
 
  
Shares
 
  
Amount
 
September 30, 2022
      12,338,845      $ 1,234,000        2,318,857      $ 232,000      $ 12,590,000      $ 152,861,000     $ 166,917,000  
Net income
      —          —          —          —          —          3,476,000       3,476,000  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
December 31, 2022
      12,338,845      $ 1,234,000        2,318,857      $ 232,000      $ 12,590,000      $ 156,337,000     $ 170,393,000  
Net income
      —          —          —          —          —          4,873,000       4,873,000  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
March 31, 2023
      12,338,845      $ 1,234,000        2,318,857      $ 232,000      $ 12,590,000      $ 161,210,000     $ 175,266,000  
Net income
      —          —          —          —          —         
3,212,000		      
3,212,000		  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
June 30, 2023
      12,338,845      $ 1,234,000        2,318,857      $ 232,000      $ 12,590,000      $
164,422,000		     $
178,478,000		  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
 
 
  
For the Quarters and Nine Months Ended June 30, 2022
 
  
 
 
 
 
 
 
  
Common Stock
 
  
Class B Stock
 
  
Capital in
Excess of

Par Value
 
  
Retained

Earnings
 
 
Total
Shareholders’

Equity
 
 
  
Shares
 
  
Amount
 
  
Shares
 
  
Amount
 
September 30, 2021
      12,338,845      $ 1,234,000        2,318,857      $ 232,000      $ 12,590,000      $ 153,233,000     $ 167,289,000  
Net loss
      —          —          —          —          —          (274,000 )      (274,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
December 31, 2021
      12,338,845      $ 1,234,000        2,318,857      $ 232,000      $ 12,590,000      $ 152,959,000     $ 167,015,000  
Net income
      —          —          —          —          —          439,000       439,000  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
March 31, 2022
      12,338,845      $ 1,234,000        2,318,857      $ 232,000      $ 12,590,000      $ 153,398,000     $ 167,454,000  
Net loss
      —          —          —          —          —          (1,015,000 )      (1,015,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
June 30, 2022
      12,338,845      $ 1,234,000        2,318,857      $ 232,000      $ 12,590,000      $ 152,383,000     $ 166,439,000  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
See accompanying Notes to Condensed Consolidated
Finan
cial Statements
 
6
GENCOR INDUSTRIES, INC.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended June 30,
2
023 and 2022
(Unaudited)
 
 
 
  
2023
 
 
2022
 
Cash flows from operating activities:
  
 
Net income (loss)
   
$
 11,561,000      $ (850,000 ) 
Adjustments to reconcile net income (loss) to cash used in operating activities:
                  
Purchase of marketable securities
      (118,867,000 )      (101,913,000 ) 
Proceeds from sale and maturity of marketable securities
      122,282,000        100,705,000  
Change in value of marketable securities
      (2,528,000 )      5,068,000  
Deferred and other income taxes
      1,021,000        (1,177,000 ) 
Depreciation and amortization
      2,091,000        2,063,000  
Provision for doubtful accounts
      290,000        140,000  
Loss on disposal of assets
      157,000        —    
Changes in assets and liabilities:
                  
Accounts receivable
      (771,000 )      (1,716,000 ) 
Costs and estimated earnings in excess of billings
      (4,795,000 )      537,000  
Inventories
      (10,976,000 )      (6,356,000 ) 
Prepaid expenses and other current assets
      (326,000 )      (1,518,000 ) 
Accounts payable
      (851,000 )      1,896,000  
Customer deposits
      (30,000 )      2,192,000  
Accrued expenses
      93,000        (645,000 ) 
    
 
 
     
 
 
  
Total adjustments
      (13,210,000 )      (724,000 ) 
    
 
 
     
 
 
  
Cash flows used in operating activities
      (1,649,000 )      (1,574,000 ) 
    
 
 
     
 
 
  
Cash flows from investing activities:
                  
Capital expenditures
      (1,726,000 )      (2,184,000 ) 
    
 
 
     
 
 
  
Cash flows used in investing activities
      (1,726,000 )      (2,184,000 ) 
    
 
 
     
 
 
  
Net decrease in cash and cash equivalents
      (3,375,000 )      (3,758,000 ) 
Cash and cash equivalents at:
                  
Beginning of period
      9,581,000        23,232,000  
    
 
 
     
 
 
  
End of period
   
$
 6,206,000      $ 19,474,000  
    
 
 
     
 
 
  
Non-cash
investing and financing activities:
                  
Operating lease
right-of-use
assets
    $ 352,000      $ —    
Operating lease liabilities
    $ 352,000      $ —    
See accompanying Notes to Condensed Consolidated Financial Statements
 
7
GENCOR INDUSTRIES, INC.
Notes to Condensed Consolidated Financial
S
tatements
(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, 2023 are not necessarily indicative of the results that may be expected for the year ending September 30, 2023.
The accompanying Condensed Consolidated Balance Sheet at September 30, 2022 has been derived from the audited 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, 2022 filed with the Securities and Exchange Commission on December 16, 2022.
Recent Accounting Pronouncements
There were no 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 has 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 wages, further inflation on supplies and equipment necessary to operate our business. 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.
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 Statements of Operations. Net changes in unrealized gains and losses are reported in the Condensed Consolidated Statements of Operations in the current period.
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.
 
8
Th
e 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 June 30, 2023:
 
     Fair Value Measurements  
     Level 1      Level 2      Level 3      Total  
Exchange-Traded Funds
    $ 3,345,000      $ —        $ —        $ 3,345,000  
Corporate Bonds
      —          34,635,000        —          34,635,000  
Government Securities
      50,331,000        —          —          50,331,000  
Cash and Money Funds
      102,000        —          —          102,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 53,778,000      $ 34,635,000      $ —        $ 88,413,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net unrealized gains and (losses) included in the Condensed Consolidated Statements of Operations for the quarter and nine months ended June 30, 2023, were $46,000 and $4,490,000, respectively.
The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2022:
 
     Fair Value Measurements  
     Level 1      Level 2      Level 3      Total  
Equities
    $ 12,149,000      $ —        $ —        $ 12,149,000  
Mutual Funds
      5,337,000        —          —          5,337,000  
Exchange-Traded Funds
      4,794,000        —          —          4,794,000  
Corporate Bonds
      —          37,339,000        —          37,339,000  
Government Securities
      29,327,000        —          —          29,327,000  
Cash and Money Funds
      354,000        —          —          354,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 51,961,000      $ 37,339,000      $ —        $ 89,300,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net unrealized gains and (losses) included in the Condensed Consolidated Statements of Operations for the quarter and nine months ended June 30, 2022, were $(3,855,000) and $(5,386,000), 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.


9
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 June 30, 2023 and September 30, 2022 consist of the following:
 
 
  
June 30, 2023
 
  
September 30, 2022
 
Raw materials
   
$
36,672,000
 
  
$
31,975,000
 
Work in process
   
 
17,976,000
 
  
 
13,903,000
 
Finished goods
   
 
12,143,000
 
  
 
9,937,000
 
    
 
 
    
 
 
  
    
$
66,791,000
 
  
$
55,815,000
 
    
 
 
    
 
 
  
Slow-moving and obsolete inventory allowances were $9,551,000 and $8,192,000 at June 30, 2023 and September 30, 2022, respectively.
Note 4 – Costs and Estimated Earnings in Excess of Billings
Costs and estimated earnings in excess of billings on uncompleted contracts as of June 30, 2023 and September 30, 2022 consist of the following:
 
 
  
June 30, 2023
 
  
September 30, 2022
 
Costs incurred on uncompleted contracts
  
$
19,400,000
 
  
$
12,660,000
 
Estimated earnings
  
 
7,143,000
 
  
 
4,780,000
 
    
 
 
       
 
 
  
    
 
26,543,000
 
  
 
17,440,000
 
Billings to date
   
 
19,630,000
 
  
 
15,322,000
 
    
 
 
       
 
 
  
Costs and estimated earnings in excess of billings
   
$
6,913,000
 
  
$
2,118,000
 
    
 
 
       
 
 
  
Note 5 – Earnings (Loss) per Share Data
The condensed consolidated financial statements include basic and diluted earnings (loss) per share information. The following table sets forth the computation of basic and diluted earnings (loss) per share for the quarters and nine months ended June 30, 2023 and 2022:
 
 
  
Quarter Ended June 30,
 
  
Nine Months Ended June 30,
 
 
  
2023
 
  
2022
 
  
2023
 
  
2022
 
Net income (loss)
   
$
 3,212,000      $ (1,015,000 )    
$
 11,561,000      $ (850,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Common Shares:
                                    
Weighted average common shares outstanding
      14,658,000        14,658,000        14,658,000       14,658,000  
Effect of dilutive stock options
      —          —          —          —    
    
 
 
     
 
 
     
 
 
     
 
 
  
Diluted shares outstanding
      14,658,000        14,658,000        14,658,000        14,658,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Basic and diluted income (loss) per common share
   
$
 0.22      $ (0.07 )    
$
 0.79      $ (0.06 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
10
The Company’s 2009 Incentive Compensation Plan expired on October 1, 2021 and as of November 1, 2021 there were no outstanding stock options under the 2009 Plan. There were no other existing equity compensation plans and arrangements previously approved by security holders as of June 30, 2023 and 2022.
Note 6 – Customers with 10% (or greater) of Net Revenues
During the quarter ended June 30, 2023,
three
customers accounted for 27.7%, 14.8% and 13.8%, respectively, of net revenues. During the nine months ended June 30, 2023,
 
on
e
 of these three customers
accounted for 11.9% of net revenues.
During the quarter ended June 30, 2022, two customers accounted for 15.2% and 14.5%, respectively, of net revenues. During the nine months ended June 30, 2022, no customer accounted for 10% or greater 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 June 30, 2023 and September 30, 2022.
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, 2023 and June 30, 2022 reflect income tax rates under the Tax Cuts and Jobs Act of 2017 (the “TCJA”).
Beginning in 2022, the TCJA eliminated the option of expensing all research and development expenditures in the current year, instead requiring amortization over five years pursuant to IRC Section 174. In the future, Congress may consider legislation that would eliminate the capitalization and amortization requirement. There is no assurance that the requirement will be deferred, repealed or otherwise modified. The requirement is effective for the Company’s fiscal year 2023, beginning October 1, 2022. The Company will continue to make additional estimated federal tax payments based on the current Section 174 tax law. The impact of Section 174 on the Company’s cash from operations depends primarily on the amount of research and development expenditures incurred and whether the IRS issues guidance on the provision which differs from the Company’s current interpretation.
 
11
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, 2023 and 2022:
 
 
  
Quarter Ended June 30,
 
  
Nine Months Ended June 30,
 
 
  
2023
 
  
2022
 
  
2023
 
  
2022
 
Equipment sales recognized over time
   
$
 11,309,000      $ 9,248,000     
$
 23,022,000      $ 30,020,000  
Equipment sales recognized at a point in time
      9,012,000        13,729,000        37,105,000        28,402,000  
Parts and component sales
      6,317,000        5,419,000        19,445,000        18,243,000  
Freight revenue
      1,141,000        972,000        4,141,000        3,050,000  
Other
      98,000        279,000        491,000        692,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net revenue
   
$
 27,877,000      $ 29,647,000     
$
 84,204,000      $ 80,407,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
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 $6,913,000 at June 30, 2023 and $2,118,000 at September 30, 2022. Contract assets are included in current assets as costs and estimated earnings in excess of billings on the Company’s condensed consolidated balance sheet at June 30, 2023 and September 30, 2022. The Company anticipates that all of the contract assets at June 30, 2023, 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 $73,000 and $142,000 at June 30, 2023 and September 30, 2022, 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, 2023 and September 30, 2022. Customer deposits related to contracts with customers were $5,834,000 and $5,864,000 at June 30, 2023 and September 30, 2022, 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.
 
12
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 doubtful accounts 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 doubtful accounts when they are determined to be uncollectible. Any recoveries of account balances previously considered in the allowance for doubtful accounts reduce future additions to the allowance for doubtful accounts. The allowance for doubtful accounts 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.
Note 9 – Leases
The Company leases certain equipment under
non-cancelable
operating leases. Future minimum rental payments under these leases at June 30, 2023 were immaterial.
On August 28, 2020, the Company entered into a three-year operating lease for property related to the manufacturing and warehousing of the paver line. The lease term is for the period from September 1, 2020 through August 31, 2023. In accordance with ASU
2016-02,
the Company recorded a 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.
On October 9, 2020, the Company entered into an operating lease for additional warehousing space. The original lease term was for one year beginning November 2020 with automatic
one-year
renewals. In accordance with ASU
2016-02,
the Company recorded a ROU asset totaling $254,000 and related lease liabilities at inception. An additional $39,000 was recorded as a ROU asset and related lease liability in October 2021 to reflect the impact of the lease renewal. In March 2022, the ROU asset and related liability was reduced by $39,000 to reflect the impact of a reduction in the square footage being leased.
For the quarter and nine months ended June 30, 2023, operating lease costs were $101,000 and $315,000, respectively, and cash payments related to these operating leases were $101,000 and $344,000, respectively. For the quarter and nine months ended June 30, 2022, operating lease costs were $99,000 and $301,000, respectively, and cash payments related to these operating leases were $104,000 and $320,000, respectively.
Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines as of June 30, 2023 and September 30, 2022, is as follows:
 
     June 30, 2023     September 30, 2022  
Operating lease ROU asset included in other long-term assets
    $ 436,000     $ 396,000  
Current operating lease liability
    $ 376,000     $ 390,000  
Non-current
operating lease liability
    $ 60,000     $ 6,000  
Weighted average remaining lease term (in years)
      0.50       1.00  
Weighted average discount rate used in calculating ROU asset
      4.3 %      4.0 % 
 
13
Future annual minimum lease payments as of June 30, 2023 are as follows:
 
Fiscal Year
    Annual Lease Payments  
2023 (remaining 3 months)
    $ 114,000  
2024
      330,000  
    
 
 
  
Total
      444,000  
Less interest
      (8,000 ) 
    
 
 
  
Present value of lease liabilities
    $ 436,000  
    
 
 
  
Note 10 – Segment Information
The Company has one reporting segment, equipment for the highway construction industry. Based on evaluation of the criteria of 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.
 
14

Table of Contents

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 future financing plans, income from investees 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, 2022: (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 designs, manufactures and sells hot mix asphalt plants, combustion systems, fluid heat transfer systems and pavers for the highway construction industry and environmental and petrochemical markets. 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.

On July 19, 2022, the Company announced that it was transferring the listing of its common stock, $0.10 per share par value (“Common Stock”), to the NYSE American LLC (“NYSE American”) from the NASDAQ Global Market (“NASDAQ”). Listing and trading of the Company’s Common Stock on NASDAQ ended at market close on July 29, 2022 and listing and trading of its Common Stock on the NYSE American commenced at market open on August 1, 2022 under its current ticker symbol ‘GENC’.

 

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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 has 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 wages, further inflation on supplies and equipment necessary to operate our business. 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.

Beginning in 2022, the TCJA eliminated the option of expensing all research and development expenditures in the current year, instead requiring amortization over five years pursuant to IRC Section 174. In the future, Congress may consider legislation that would eliminate the capitalization and amortization requirement. There is no assurance that the requirement will be deferred, repealed or otherwise modified. The requirement is effective for the Company’s fiscal year 2023, beginning October 1, 2022. The Company will continue to make additional estimated federal tax payments based on the current Section 174 tax law. The impact of Section 174 on the Company’s cash from operations depends primarily on the amount of research and development expenditures incurred and whether the IRS issues guidance on the provision which differs from our current interpretation.

Results of Operations

Quarter Ended June 30, 2023 versus June 30, 2022

Net revenues for the quarter ended June 30, 2023 decreased $1,770,000 to $27,877,000, from $29,647,000 for the quarter ended June 30, 2022. The decrease in revenues was due to lower equipment sales.

As a percent of sales, gross profit margins increased to 26.9% in the quarter ended June 30, 2023, compared to 19.2% in the quarter ended June 30, 2022, on increased efficiency, absorption and favorable price realization.

Product engineering and development expenses decreased by $106,000 to $845,000 for the quarter ended June 30, 2023, as compared to $951,000 for the quarter ended June 30, 2022 due primarily to reduced headcount.

Selling, general and administrative (“SG&A”) expenses increased by $637,000 to $3,214,000 for the quarter ended June 30, 2023, compared to $2,577,000 for the quarter ended June 30, 2022. The increase in SG&A expenses was primarily due to trade show expenses.

Operating income increased from $2,151,000 for the quarter ended June 30, 2022 to $3,453,000 for the quarter ended June 30, 2023, due to improved gross profit margins partially offset by increased operating expenses.

For the quarter ended June 30, 2023, the Company had net other income of $719,000 compared to net other expense of $(3,390,000) for the quarter ended June 30, 2022. Interest and dividend income, net of fees, was $673,000 for the quarter ended June 30, 2023 as compared to $304,000 in the quarter ended June 30, 2022. Interest income for the quarter ended June 30, 2023 as compared to the prior year increased due to higher rates earned on fixed income investments coupled with the Company reallocating its holdings in equities to fixed income in January 2023. The net realized and unrealized gains on marketable securities were $46,000 for the quarter ended June 30, 2023 versus net realized and unrealized losses of $(3,693,000) for the quarter ended June 30, 2022. The fiscal 2022 investment losses were reflective of higher interest rates, inflation, market volatility and tightening of the Federal Reserve’s monetary policy.

 

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The effective income tax rate for the quarter ended June 30, 2023 was an expense of 23.0% versus a benefit of 18.1% for the quarter ended June 30, 2022, based on the expected annual effective income tax rate.

Net income for the quarter ended June 30, 2023 was $3,212,000, or $0.22 per basic and diluted share, versus a net loss of $(1,015,000), or $(0.07) per basic and diluted share, for the quarter ended June 30, 2022.

Nine Months Ended June 30, 2023 versus June 30, 2022

Net revenues for the nine months ended June 30, 2023 and 2022 were $84,204,000 and $80,407,000, respectively, an increase of $3,797,000. The improved revenues were primarily due to higher equipment and parts sales.

Gross profit margins increased to 26.6% for the nine months ended June 30, 2023 from 19.4% for the nine months ended June 30, 2022. The improved gross profit margins were due to increased efficiency, absorption and favorable price realization.

Product engineering and development expenses decreased $603,000 to $2,616,000 for the nine months ended June 30, 2023, compared to $3,219,000 for the nine months ended June 30, 2022 due to reduced headcount and improved efficiency. SG&A expenses decreased $265,000 to $9,075,000 for the nine months ended June 30, 2023, compared to $9,340,000 the nine months ended June 30, 2022. The decrease in SG&A expenses was primarily due to lower headcount and reduced professional expenses partially offset by an increase in trade show expenses.

The Company had operating income of $10,733,000 for the nine months ended June 30, 2023 versus $3,017,000 for the nine months ended June 30, 2022. The increase in operating income was due primarily to the improved gross profit margins and reduced operating expenses.

For the nine months ended June 30, 2023, the Company had net other income of $4,431,000 compared to net other expense of $(4,020,000) for the nine months ended June 30, 2022. Interest and dividend income, net of fees, was $1,731,000 for the nine months ended June 30, 2023 as compared to $877,000 for the nine months ended June 30, 2022. Interest income for the nine months ended June 30, 2023 as compared to the prior year increased due to higher rates earned on fixed income investments coupled with the Company reallocating its holdings in equities to fixed income in January 2023. Net realized and unrealized gains on marketable securities were $2,700,000 for the nine months ended June 30, 2023 versus net realized and unrealized losses of $(4,758,000) for the nine months ended June 30, 2022. The higher gains in fiscal 2023 were due to a stronger domestic stock market.

The effective income tax rate for the nine months ended June 30, 2023 was an expense of 23.8% versus a benefit of 15.3% for the nine months ended June 30, 2022, based on the expected annual effective income tax rate. Net income for the nine months ended June 30, 2023 was $11,561,000, or $0.79 per basic and diluted share, versus a net loss of $(850,000), or $(0.06) per basic and diluted share for the nine months ended June 30, 2022.

Liquidity and Capital Resources

The Company generates capital resources through operations and returns on its investments.

The Company had no long-term or short-term debt outstanding at June 30, 2023 or September 30, 2022. 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 2024, 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.

 

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As of June 30, 2023, the Company had $6,206,000 in cash and cash equivalents, and $88,413,000 in marketable securities, including $34,635,000 in corporate bonds, $3,345,000 in exchange-traded funds, $50,331,000 in government securities, and $102,000 in cash and money funds. The marketable securities are invested through a professional investment management firm. These securities may be liquidated into cash at any time.

The Company’s backlog was $27.9 million at June 30, 2023 compared to $40.2 million at June 30, 2022. The Company’s working capital (defined as current assets less current liabilities) was $163.2 million at June 30, 2023 and $150.1 million at September 30, 2022. Cash flows used in operating activities during the nine months ended June 30, 2023 were $1,649,000. The significant purchases, sales and maturities of marketable securities shown on the condensed consolidated statements of cash flows reflect the recurring purchases and sales of United States treasury bills, including the reallocation of investments in equities and mutual funds to United States treasury bills in January 2023. Costs and estimated earnings in excess of billings increased $4,795,000 with the timing of inventory build and percentage of completion recognition on sales where revenue is recognized over time. Inventories increased by $10,976,000 due to progress on several large sales orders where revenue is recognized at a point in time and some stock build to compensate for the increasing lead times from suppliers.

Cash flows used in investing activities for the nine months ended June 30, 2023 of $1,726,000 were related to capital expenditures, primarily for manufacturing processing and finishing equipment.

Seasonality

The Company’s primary business is the manufacture of asphalt plants, pavers 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, 2022, “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).

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 $6,913,000 at June 30, 2023 and $2,118,000 at September 30, 2022. Contract assets are included in current assets as costs and estimated earnings in excess of billings on the Company’s condensed consolidated balance sheet at June 30, 2023 and September 30, 2022. The Company anticipates that all of the contract assets at June 30, 2023, 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 $73,000 and $142,000 at June 30, 2023 and September 30, 2022, 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, 2023 and September 30, 2022. Customer deposits related to contracts with customers were $5,834,000 and $5,864,000 at June 30, 2023 and September 30, 2022, 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 doubtful accounts 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 doubtful accounts when they are determined to be uncollectible. Any recoveries of account balances previously considered in the allowance for doubtful accounts reduce future additions to the allowance for doubtful accounts. The allowance for doubtful accounts 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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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.

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 (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) 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 are effective.

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.

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. There were no changes in the Company’s internal control over financial reporting during the quarter and nine months ended June 30, 2023 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, 2022, as filed with the SEC on December 16, 2022, 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, 2023, 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, 2022, other than the addition of the following risk factor:

Changes in our tax rates or exposure to additional tax liabilities could adversely affect our earnings and financial condition

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option of expensing all research and development expenditures in the current year, instead requiring amortization over five years pursuant to IRC Section 174. In the future, Congress may consider legislation that would eliminate the capitalization and amortization requirement. There is no assurance that the requirement will be deferred, repealed or otherwise modified. The requirement is effective for the Company’s fiscal year 2023, beginning October 1, 2022. The Company will continue to make additional estimated federal tax payments based on the current Section 174 tax law. The impact of Section 174 on the Company’s cash from operations depends primarily on the amount of research and development expenditures incurred and whether the IRS issues guidance on the provision which differs from the Company’s current interpretation.

 

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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, 2023, 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 9, 2023

/s/ Eric E. Mellen

Eric E. Mellen
Chief Financial Officer
(Principal Financial and Accounting Officer)
August 9, 2023

 

24

Exhibit 31.1

CERTIFICATIONS

I, Mr. Marc G. Elliott, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Gencor Industries, Inc.

 

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4.

The registrant’s other certifying officer and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 

  b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and;

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 9, 2023      

/s/ Marc G. Elliott

      Marc G. Elliott
      President
      (Principal Executive Officer)

 

Exhibit 31.2

CERTIFICATIONS

I, Mr. Eric E. Mellen, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Gencor Industries, Inc.

 

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4.

The registrant’s other certifying officer and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 

  b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and;

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 9, 2023      

/s/ Eric E. Mellen

      Eric E. Mellen
      Chief Financial Officer
      (Principal Financial and Accounting Officer)

 

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Gencor Industries, Inc. (the “Company”) on Form 10-Q for the quarter and nine months ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Marc G. Elliott

Marc G. Elliott
President
(Principal Executive Officer)
August 9, 2023

/s/ Eric E. Mellen

Eric E. Mellen
Chief Financial Officer
(Principal Financial and Accounting Officer)
August 9, 2023
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Entity Filer Category Non-accelerated Filer  
Entity Interactive Data Current Yes  
City Area Code 407  
Local Phone Number 290-6000  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Address, Address Line One 5201 North Orange Blossom Trail  
Entity Shell Company false  
Title of 12(b) Security Common Stock  
Security Exchange Name NYSEAMER  
Entity Address, State or Province FL  
Entity Address, City or Town Orlando  
Entity Address, Postal Zip Code 32810  
Entity Incorporation, State or Country Code DE  
Common Stock [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   12,338,845
Class B Stock [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   2,318,857
v3.23.2
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2023
Sep. 30, 2022
Current assets:    
Cash and cash equivalents $ 6,206,000 $ 9,581,000
Marketable securities at fair value (cost of $89,502,000 at June 30, 2023 and $94,879,000 at September 30, 2022) 88,413,000 89,300,000
Accounts receivable, less allowance for doubtful accounts of $456,000 at June 30, 2023 and $370,000 at September 30, 2022 3,477,000 2,996,000
Costs and estimated earnings in excess of billings 6,913,000 2,118,000
Inventories, net 66,791,000 55,815,000
Prepaid expenses and other current assets 2,995,000 2,669,000
Total current assets 174,795,000 162,479,000
Property and equipment, net 12,969,000 13,491,000
Deferred and other income taxes 1,872,000 2,893,000
Other long-term assets 488,000 450,000
Total Assets 190,124,000 179,313,000
Current liabilities:    
Accounts payable 3,400,000 4,251,000
Customer deposits 5,834,000 5,864,000
Accrued expenses 1,976,000 1,885,000
Current operating lease liabilities 376,000 390,000
Total current liabilities 11,586,000 12,390,000
Non-current operating lease liabilities 60,000 6,000
Total liabilities 11,646,000 12,396,000
Commitments and contingencies
Shareholders' equity:    
Preferred stock, par value $.10 per share; 300,000 shares authorized; none issued
Capital in excess of par value 12,590,000 12,590,000
Retained earnings 164,422,000 152,861,000
Total shareholders' equity 178,478,000 166,917,000
Total Liabilities and Shareholders' Equity 190,124,000 179,313,000
Common Stock [Member]    
Shareholders' equity:    
Common stock 1,234,000 1,234,000
Class B Stock [Member]    
Shareholders' equity:    
Common stock $ 232,000 $ 232,000
v3.23.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Jun. 30, 2023
Sep. 30, 2022
Marketable securities, cost $ 89,502,000 $ 94,879,000
Accounts receivable, allowance for doubtful accounts $ 598,000 $ 370,000
Preferred stock, par value $ 0.10 $ 0.10
Preferred stock, shares authorized 300,000 300,000
Preferred stock, shares issued 0 0
Common Stock [Member]    
Common stock, par value $ 0.10 $ 0.10
Common stock, shares authorized 15,000,000 15,000,000
Common stock, shares issued 12,338,845 12,338,845
Common stock, shares outstanding 12,338,845 12,338,845
Class B Stock [Member]    
Common stock, par value $ 0.10 $ 0.10
Common stock, shares authorized 6,000,000 6,000,000
Common stock, shares issued 2,318,857 2,318,857
Common stock, shares outstanding 2,318,857 2,318,857
v3.23.2
Condensed Consolidated Statements of Operations - USD ($)
 3 Months Ended 9 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Income Statement [Abstract]        
Net revenue $ 27,877,000 $ 29,647,000 $ 84,204,000 $ 80,407,000
Cost of goods sold 20,365,000 23,968,000 61,780,000 64,831,000
Gross profit 7,512,000 5,679,000 22,424,000 15,576,000
Operating expenses:        
Product engineering and development 845,000 951,000 2,616,000 3,219,000
Selling, general and administrative 3,214,000 2,577,000 9,075,000 9,340,000
Total operating expenses 4,059,000 3,528,000 11,691,000 12,559,000
Operating income 3,453,000 2,151,000 10,733,000 3,017,000
Other income (expense), net:        
Interest and dividend income, net of fees 673,000 304,000 1,731,000 877,000
Net realized and unrealized gains (losses) on marketable securities, net 46,000 (3,693,000) 2,700,000 (4,758,000)
Other 0 (1,000)   (139,000)
Total other income (expense), net 719,000 (3,390,000) 4,431,000 (4,020,000)
Income (loss) before income tax expense (benefit) 4,172,000 (1,239,000) 15,164,000 (1,003,000)
Income tax expense (benefit) 960,000 (224,000) 3,603,000 (153,000)
Net income (loss) $ 3,212,000 $ (1,015,000) $ 11,561,000 $ (850,000)
Basic income (loss) per common share $ 0.22 $ (0.07) $ 0.79 $ (0.06)
Diluted income (loss) per common share $ 0.22 $ (0.07) $ 0.79 $ (0.06)
v3.23.2
Condensed Consolidated Statements of Shareholders' Equity - USD ($)
Total
Common Stock [Member]
Capital in Excess of Par Value [Member]
Retained Earnings [Member]
Class B Stock [Member]
Common Stock [Member]
Beginning balance at Sep. 30, 2021 $ 167,289,000 $ 1,234,000 $ 12,590,000 $ 153,233,000 $ 232,000
Beginning balance, shares at Sep. 30, 2021   12,338,845     2,318,857
Net income (loss) (274,000)     (274,000)  
Ending balance at Dec. 31, 2021 167,015,000 $ 1,234,000 12,590,000 152,959,000 $ 232,000
Ending balance, shares at Dec. 31, 2021   12,338,845     2,318,857
Beginning balance at Sep. 30, 2021 167,289,000 $ 1,234,000 12,590,000 153,233,000 $ 232,000
Beginning balance, shares at Sep. 30, 2021   12,338,845     2,318,857
Net income (loss) (850,000)        
Ending balance at Jun. 30, 2022 166,439,000 $ 1,234,000 12,590,000 152,383,000 $ 232,000
Ending balance, shares at Jun. 30, 2022   12,338,845     2,318,857
Beginning balance at Dec. 31, 2021 167,015,000 $ 1,234,000 12,590,000 152,959,000 $ 232,000
Beginning balance, shares at Dec. 31, 2021   12,338,845     2,318,857
Net income (loss) 439,000     439,000  
Ending balance at Mar. 31, 2022 167,454,000 $ 1,234,000 12,590,000 153,398,000 $ 232,000
Ending balance, shares at Mar. 31, 2022   12,338,845     2,318,857
Net income (loss) (1,015,000)     (1,015,000)  
Ending balance at Jun. 30, 2022 166,439,000 $ 1,234,000 12,590,000 152,383,000 $ 232,000
Ending balance, shares at Jun. 30, 2022   12,338,845     2,318,857
Beginning balance at Sep. 30, 2022 166,917,000 $ 1,234,000 12,590,000 152,861,000 $ 232,000
Beginning balance, shares at Sep. 30, 2022   12,338,845     2,318,857
Net income (loss) 3,476,000     3,476,000  
Ending balance at Dec. 31, 2022 170,393,000 $ 1,234,000 12,590,000 156,337,000 $ 232,000
Ending balance, shares at Dec. 31, 2022   12,338,845     2,318,857
Beginning balance at Sep. 30, 2022 166,917,000 $ 1,234,000 12,590,000 152,861,000 $ 232,000
Beginning balance, shares at Sep. 30, 2022   12,338,845     2,318,857
Net income (loss) 11,561,000        
Ending balance at Jun. 30, 2023 178,478,000 $ 1,234,000 12,590,000 164,422,000 $ 232,000
Ending balance, shares at Jun. 30, 2023   12,338,845     2,318,857
Beginning balance at Dec. 31, 2022 170,393,000 $ 1,234,000 12,590,000 156,337,000 $ 232,000
Beginning balance, shares at Dec. 31, 2022   12,338,845     2,318,857
Net income (loss) 4,873,000     4,873,000  
Ending balance at Mar. 31, 2023 175,266,000 $ 1,234,000 12,590,000 161,210,000 $ 232,000
Ending balance, shares at Mar. 31, 2023   12,338,845     2,318,857
Net income (loss) 3,212,000     3,212,000  
Ending balance at Jun. 30, 2023 $ 178,478,000 $ 1,234,000 $ 12,590,000 $ 164,422,000 $ 232,000
Ending balance, shares at Jun. 30, 2023   12,338,845     2,318,857
v3.23.2
Condensed Consolidated Statements of Cash Flows - USD ($)
 9 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Cash flows from operating activities:    
Net income (loss) $ 11,561,000 $ (850,000)
Adjustments to reconcile net income (loss) to cash used in operating activities:    
Purchase of marketable securities (118,867,000) (101,913,000)
Proceeds from sale and maturity of marketable securities 122,282,000 100,705,000
Change in value of marketable securities (2,528,000) 5,068,000
Deferred and other income taxes 1,021,000 (1,177,000)
Depreciation and amortization 2,091,000 2,063,000
Provision for doubtful accounts 290,000 140,000
Loss on disposal of assets 157,000 0
Changes in assets and liabilities:    
Accounts receivable (771,000) (1,716,000)
Costs and estimated earnings in excess of billings (4,795,000) 537,000
Inventories (10,976,000) (6,356,000)
Prepaid expenses and other current assets (326,000) (1,518,000)
Accounts payable (851,000) 1,896,000
Customer deposits (30,000) 2,192,000
Accrued expenses 93,000 (645,000)
Total adjustments (13,210,000) (724,000)
Cash flows used in operating activities (1,649,000) (1,574,000)
Cash flows from investing activities:    
Capital expenditures (1,726,000) (2,184,000)
Cash flows used in investing activities (1,726,000) (2,184,000)
Net decrease in cash and cash equivalents (3,375,000) (3,758,000)
Cash and cash equivalents at:    
Beginning of period 9,581,000 23,232,000
End of period 6,206,000 19,474,000
Non-cash investing and financing activities:    
Operating lease right-of-use assets 352,000 0
Operating lease liabilities $ 352,000 $ 0
v3.23.2
Basis of Presentation
 9 Months Ended
Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
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, 2023 are not necessarily indicative of the results that may be expected for the year ending September 30, 2023.
The accompanying Condensed Consolidated Balance Sheet at September 30, 2022 has been derived from the audited 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, 2022 filed with the Securities and Exchange Commission on December 16, 2022.
Recent Accounting Pronouncements
There were no 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 has 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 wages, further inflation on supplies and equipment necessary to operate our business. 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.
v3.23.2
Marketable Securities and Fair Value Measurements
 9 Months Ended
Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
Marketable Securities and Fair Value Measurements
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 Statements of Operations. Net changes in unrealized gains and losses are reported in the Condensed Consolidated Statements of Operations in the current period.
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.
 
Th
e 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 June 30, 2023:
 
     Fair Value Measurements  
     Level 1      Level 2      Level 3      Total  
Exchange-Traded Funds
    $ 3,345,000      $ —        $ —        $ 3,345,000  
Corporate Bonds
      —          34,635,000        —          34,635,000  
Government Securities
      50,331,000        —          —          50,331,000  
Cash and Money Funds
      102,000        —          —          102,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 53,778,000      $ 34,635,000      $ —        $ 88,413,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net unrealized gains and (losses) included in the Condensed Consolidated Statements of Operations for the quarter and nine months ended June 30, 2023, were $46,000 and $4,490,000, respectively.
The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2022:
 
     Fair Value Measurements  
     Level 1      Level 2      Level 3      Total  
Equities
    $ 12,149,000      $ —        $ —        $ 12,149,000  
Mutual Funds
      5,337,000        —          —          5,337,000  
Exchange-Traded Funds
      4,794,000        —          —          4,794,000  
Corporate Bonds
      —          37,339,000        —          37,339,000  
Government Securities
      29,327,000        —          —          29,327,000  
Cash and Money Funds
      354,000        —          —          354,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 51,961,000      $ 37,339,000      $ —        $ 89,300,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net unrealized gains and (losses) included in the Condensed Consolidated Statements of Operations for the quarter and nine months ended June 30, 2022, were $(3,855,000) and $(5,386,000), 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.


v3.23.2
Inventories
 9 Months Ended
Jun. 30, 2023
Inventory Disclosure [Abstract]  
Inventories
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 June 30, 2023 and September 30, 2022 consist of the following:
 
 
  
June 30, 2023
 
  
September 30, 2022
 
Raw materials
   
$
36,672,000
 
  
$
31,975,000
 
Work in process
   
 
17,976,000
 
  
 
13,903,000
 
Finished goods
   
 
12,143,000
 
  
 
9,937,000
 
    
 
 
    
 
 
  
    
$
66,791,000
 
  
$
55,815,000
 
    
 
 
    
 
 
  
Slow-moving and obsolete inventory allowances were $9,551,000 and $8,192,000 at June 30, 2023 and September 30, 2022, respectively.
v3.23.2
Costs and Estimated Earnings in Excess of Billings
 9 Months Ended
Jun. 30, 2023
Text Block [Abstract]  
Costs and Estimated Earnings in Excess of Billings
Note 4 – Costs and Estimated Earnings in Excess of Billings
Costs and estimated earnings in excess of billings on uncompleted contracts as of June 30, 2023 and September 30, 2022 consist of the following:
 
 
  
June 30, 2023
 
  
September 30, 2022
 
Costs incurred on uncompleted contracts
  
$
19,400,000
 
  
$
12,660,000
 
Estimated earnings
  
 
7,143,000
 
  
 
4,780,000
 
    
 
 
       
 
 
  
    
 
26,543,000
 
  
 
17,440,000
 
Billings to date
   
 
19,630,000
 
  
 
15,322,000
 
    
 
 
       
 
 
  
Costs and estimated earnings in excess of billings
   
$
6,913,000
 
  
$
2,118,000
 
    
 
 
       
 
 
  
v3.23.2
Earnings (Loss) per Share Data
 9 Months Ended
Jun. 30, 2023
Earnings Per Share [Abstract]  
Earnings (Loss) per Share Data
Note 5 – Earnings (Loss) per Share Data
The condensed consolidated financial statements include basic and diluted earnings (loss) per share information. The following table sets forth the computation of basic and diluted earnings (loss) per share for the quarters and nine months ended June 30, 2023 and 2022:
 
 
  
Quarter Ended June 30,
 
  
Nine Months Ended June 30,
 
 
  
2023
 
  
2022
 
  
2023
 
  
2022
 
Net income (loss)
   
$
 3,212,000      $ (1,015,000 )    
$
 11,561,000      $ (850,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Common Shares:
                                    
Weighted average common shares outstanding
      14,658,000        14,658,000        14,658,000       14,658,000  
Effect of dilutive stock options
      —          —          —          —    
    
 
 
     
 
 
     
 
 
     
 
 
  
Diluted shares outstanding
      14,658,000        14,658,000        14,658,000        14,658,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Basic and diluted income (loss) per common share
   
$
 0.22      $ (0.07 )    
$
 0.79      $ (0.06 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
The Company’s 2009 Incentive Compensation Plan expired on October 1, 2021 and as of November 1, 2021 there were no outstanding stock options under the 2009 Plan. There were no other existing equity compensation plans and arrangements previously approved by security holders as of June 30, 2023 and 2022.
v3.23.2
Customers with 10% (or greater) of Net Revenues
 9 Months Ended
Jun. 30, 2023
Risks and Uncertainties [Abstract]  
Customers with 10% (or greater) of Net Revenues
Note 6 – Customers with 10% (or greater) of Net Revenues
During the quarter ended June 30, 2023,
three
customers accounted for 27.7%, 14.8% and 13.8%, respectively, of net revenues. During the nine months ended June 30, 2023,
 
on
e
 of these three customers
accounted for 11.9% of net revenues.
During the quarter ended June 30, 2022, two customers accounted for 15.2% and 14.5%, respectively, of net revenues. During the nine months ended June 30, 2022, no customer accounted for 10% or greater of net revenues.
v3.23.2
Income Taxes
 9 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
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, 2023 and September 30, 2022.
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, 2023 and June 30, 2022 reflect income tax rates under the Tax Cuts and Jobs Act of 2017 (the “TCJA”).
Beginning in 2022, the TCJA eliminated the option of expensing all research and development expenditures in the current year, instead requiring amortization over five years pursuant to IRC Section 174. In the future, Congress may consider legislation that would eliminate the capitalization and amortization requirement. There is no assurance that the requirement will be deferred, repealed or otherwise modified. The requirement is effective for the Company’s fiscal year 2023, beginning October 1, 2022. The Company will continue to make additional estimated federal tax payments based on the current Section 174 tax law. The impact of Section 174 on the Company’s cash from operations depends primarily on the amount of research and development expenditures incurred and whether the IRS issues guidance on the provision which differs from the Company’s current interpretation.
 
v3.23.2
Revenue Recognition and Related Costs
 9 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition and Related Costs
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, 2023 and 2022:
 
 
  
Quarter Ended June 30,
 
  
Nine Months Ended June 30,
 
 
  
2023
 
  
2022
 
  
2023
 
  
2022
 
Equipment sales recognized over time
   
$
 11,309,000      $ 9,248,000     
$
 23,022,000      $ 30,020,000  
Equipment sales recognized at a point in time
      9,012,000        13,729,000        37,105,000        28,402,000  
Parts and component sales
      6,317,000        5,419,000        19,445,000        18,243,000  
Freight revenue
      1,141,000        972,000        4,141,000        3,050,000  
Other
      98,000        279,000        491,000        692,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net revenue
   
$
 27,877,000      $ 29,647,000     
$
 84,204,000      $ 80,407,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
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 $6,913,000 at June 30, 2023 and $2,118,000 at September 30, 2022. Contract assets are included in current assets as costs and estimated earnings in excess of billings on the Company’s condensed consolidated balance sheet at June 30, 2023 and September 30, 2022. The Company anticipates that all of the contract assets at June 30, 2023, 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 $73,000 and $142,000 at June 30, 2023 and September 30, 2022, 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, 2023 and September 30, 2022. Customer deposits related to contracts with customers were $5,834,000 and $5,864,000 at June 30, 2023 and September 30, 2022, 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 doubtful accounts 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 doubtful accounts when they are determined to be uncollectible. Any recoveries of account balances previously considered in the allowance for doubtful accounts reduce future additions to the allowance for doubtful accounts. The allowance for doubtful accounts 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.
v3.23.2
Leases
 9 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Leases
Note 9 – Leases
The Company leases certain equipment under
non-cancelable
operating leases. Future minimum rental payments under these leases at June 30, 2023 were immaterial.
On August 28, 2020, the Company entered into a three-year operating lease for property related to the manufacturing and warehousing of the paver line. The lease term is for the period from September 1, 2020 through August 31, 2023. In accordance with ASU
2016-02,
the Company recorded a 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.
On October 9, 2020, the Company entered into an operating lease for additional warehousing space. The original lease term was for one year beginning November 2020 with automatic
one-year
renewals. In accordance with ASU
2016-02,
the Company recorded a ROU asset totaling $254,000 and related lease liabilities at inception. An additional $39,000 was recorded as a ROU asset and related lease liability in October 2021 to reflect the impact of the lease renewal. In March 2022, the ROU asset and related liability was reduced by $39,000 to reflect the impact of a reduction in the square footage being leased.
For the quarter and nine months ended June 30, 2023, operating lease costs were $101,000 and $315,000, respectively, and cash payments related to these operating leases were $101,000 and $344,000, respectively. For the quarter and nine months ended June 30, 2022, operating lease costs were $99,000 and $301,000, respectively, and cash payments related to these operating leases were $104,000 and $320,000, respectively.
Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines as of June 30, 2023 and September 30, 2022, is as follows:
 
     June 30, 2023     September 30, 2022  
Operating lease ROU asset included in other long-term assets
    $ 436,000     $ 396,000  
Current operating lease liability
    $ 376,000     $ 390,000  
Non-current
operating lease liability
    $ 60,000     $ 6,000  
Weighted average remaining lease term (in years)
      0.50       1.00  
Weighted average discount rate used in calculating ROU asset
      4.3 %      4.0 % 
 
Future annual minimum lease payments as of June 30, 2023 are as follows:
 
Fiscal Year
    Annual Lease Payments  
2023 (remaining 3 months)
    $ 114,000  
2024
      330,000  
    
 
 
  
Total
      444,000  
Less interest
      (8,000 ) 
    
 
 
  
Present value of lease liabilities
    $ 436,000  
    
 
 
  
v3.23.2
Segment Information
 9 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Segment Information
Note 10 – Segment Information
The Company has one reporting segment, equipment for the highway construction industry. Based on evaluation of the criteria of 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.
v3.23.2
Basis of Presentation (Policies)
 9 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Recent Accounting Pronouncements
Recent Accounting Pronouncements
There were no 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.
Marketable Securities
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 Operations. Net changes in unrealized gains and losses are reported in the Condensed Consolidated Statements of Operations in the current period.
Fair Value Measurements
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.
 
Th
e 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 June 30, 2023:
 
     Fair Value Measurements  
     Level 1      Level 2      Level 3      Total  
Exchange-Traded Funds
    $ 3,345,000      $ —        $ —        $ 3,345,000  
Corporate Bonds
      —          34,635,000        —          34,635,000  
Government Securities
      50,331,000        —          —          50,331,000  
Cash and Money Funds
      102,000        —          —          102,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 53,778,000      $ 34,635,000      $ —        $ 88,413,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net unrealized gains and (losses) included in the Condensed Consolidated Statements of Operations for the quarter and nine months ended June 30, 2023, were $46,000 and $4,490,000, respectively.
The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2022:
 
     Fair Value Measurements  
     Level 1      Level 2      Level 3      Total  
Equities
    $ 12,149,000      $ —        $ —        $ 12,149,000  
Mutual Funds
      5,337,000        —          —          5,337,000  
Exchange-Traded Funds
      4,794,000        —          —          4,794,000  
Corporate Bonds
      —          37,339,000        —          37,339,000  
Government Securities
      29,327,000        —          —          29,327,000  
Cash and Money Funds
      354,000        —          —          354,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 51,961,000      $ 37,339,000      $ —        $ 89,300,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net unrealized gains and (losses) included in the Condensed Consolidated Statements of Operations for the quarter and nine months ended June 30, 2022, were $(3,855,000) and $(5,386,000), 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.


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.
Earnings per Share
The condensed consolidated financial statements include basic and diluted earnings (loss) per share information. The following table sets forth the computation of basic and diluted earnings (loss) per share for the quarters and nine months ended June 30, 2023 and 2022:
 
 
  
Quarter Ended June 30,
 
  
Nine Months Ended June 30,
 
 
  
2023
 
  
2022
 
  
2023
 
  
2022
 
Net income (loss)
   
$
 3,212,000      $ (1,015,000 )    
$
 11,561,000      $ (850,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Common Shares:
                                    
Weighted average common shares outstanding
      14,658,000        14,658,000        14,658,000       14,658,000  
Effect of dilutive stock options
      —          —          —          —    
    
 
 
     
 
 
     
 
 
     
 
 
  
Diluted shares outstanding
      14,658,000        14,658,000        14,658,000        14,658,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Basic and diluted income (loss) per common share
   
$
 0.22      $ (0.07 )    
$
 0.79      $ (0.06 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
The Company’s 2009 Incentive Compensation Plan expired on October 1, 2021 and as of November 1, 2021 there were no outstanding stock options under the 2009 Plan. There were no other existing equity compensation plans and arrangements previously approved by security holders as of June 30, 2023 and 2022.
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, 2023 and September 30, 2022.
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, 2023 and June 30, 2022 reflect income tax rates under the Tax Cuts and Jobs Act of 2017 (the “TCJA”).
Beginning in 2022, the TCJA eliminated the option of expensing all research and development expenditures in the current year, instead requiring amortization over five years pursuant to IRC Section 174. In the future, Congress may consider legislation that would eliminate the capitalization and amortization requirement. There is no assurance that the requirement will be deferred, repealed or otherwise modified. The requirement is effective for the Company’s fiscal year 2023, beginning October 1, 2022. The Company will continue to make additional estimated federal tax payments based on the current Section 174 tax law. The impact of Section 174 on the Company’s cash from operations depends primarily on the amount of research and development expenditures incurred and whether the IRS issues guidance on the provision which differs from the Company’s current interpretation.
 
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, 2023 and 2022:
 
 
  
Quarter Ended June 30,
 
  
Nine Months Ended June 30,
 
 
  
2023
 
  
2022
 
  
2023
 
  
2022
 
Equipment sales recognized over time
   
$
 11,309,000      $ 9,248,000     
$
 23,022,000      $ 30,020,000  
Equipment sales recognized at a point in time
      9,012,000        13,729,000        37,105,000        28,402,000  
Parts and component sales
      6,317,000        5,419,000        19,445,000        18,243,000  
Freight revenue
      1,141,000        972,000        4,141,000        3,050,000  
Other
      98,000        279,000        491,000        692,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net revenue
   
$
 27,877,000      $ 29,647,000     
$
 84,204,000      $ 80,407,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
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 $6,913,000 at June 30, 2023 and $2,118,000 at September 30, 2022. Contract assets are included in current assets as costs and estimated earnings in excess of billings on the Company’s condensed consolidated balance sheet at June 30, 2023 and September 30, 2022. The Company anticipates that all of the contract assets at June 30, 2023, 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 $73,000 and $142,000 at June 30, 2023 and September 30, 2022, 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, 2023 and September 30, 2022. Customer deposits related to contracts with customers were $5,834,000 and $5,864,000 at June 30, 2023 and September 30, 2022, 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 doubtful accounts 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 doubtful accounts when they are determined to be uncollectible. Any recoveries of account balances previously considered in the allowance for doubtful accounts reduce future additions to the allowance for doubtful accounts. The allowance for doubtful accounts 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.
Leases
The Company leases certain equipment under
non-cancelable
operating leases. Future minimum rental payments under these leases at June 30, 2023 were immaterial.
On August 28, 2020, the Company entered into a three-year operating lease for property related to the manufacturing and warehousing of the paver line. The lease term is for the period from September 1, 2020 through August 31, 2023. In accordance with ASU
2016-02,
the Company recorded a 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.
On October 9, 2020, the Company entered into an operating lease for additional warehousing space. The original lease term was for one year beginning November 2020 with automatic
one-year
renewals. In accordance with ASU
2016-02,
the Company recorded a ROU asset totaling $254,000 and related lease liabilities at inception. An additional $39,000 was recorded as a ROU asset and related lease liability in October 2021 to reflect the impact of the lease renewal. In March 2022, the ROU asset and related liability was reduced by $39,000 to reflect the impact of a reduction in the square footage being leased.
For the quarter and nine months ended June 30, 2023, operating lease costs were $101,000 and $315,000, respectively, and cash payments related to these operating leases were $101,000 and $344,000, respectively. For the quarter and nine months ended June 30, 2022, operating lease costs were $99,000 and $301,000, respectively, and cash payments related to these operating leases were $104,000 and $320,000, respectively.
Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines as of June 30, 2023 and September 30, 2022, is as follows:
 
     June 30, 2023     September 30, 2022  
Operating lease ROU asset included in other long-term assets
    $ 436,000     $ 396,000  
Current operating lease liability
    $ 376,000     $ 390,000  
Non-current
operating lease liability
    $ 60,000     $ 6,000  
Weighted average remaining lease term (in years)
      0.50       1.00  
Weighted average discount rate used in calculating ROU asset
      4.3 %      4.0 % 
 
Future annual minimum lease payments as of June 30, 2023 are as follows:
 
Fiscal Year
    Annual Lease Payments  
2023 (remaining 3 months)
    $ 114,000  
2024
      330,000  
    
 
 
  
Total
      444,000  
Less interest
      (8,000 ) 
    
 
 
  
Present value of lease liabilities
    $ 436,000  
    
 
 
  
v3.23.2
Marketable Securities and Fair Value Measurements (Tables)
 9 Months Ended
Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
Company's Marketable Securities Measured at Fair Value
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, 2023:
 
     Fair Value Measurements  
     Level 1      Level 2      Level 3      Total  
Exchange-Traded Funds
    $ 3,345,000      $ —        $ —        $ 3,345,000  
Corporate Bonds
      —          34,635,000        —          34,635,000  
Government Securities
      50,331,000        —          —          50,331,000  
Cash and Money Funds
      102,000        —          —          102,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 53,778,000      $ 34,635,000      $ —        $ 88,413,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2022:
 
     Fair Value Measurements  
     Level 1      Level 2      Level 3      Total  
Equities
    $ 12,149,000      $ —        $ —        $ 12,149,000  
Mutual Funds
      5,337,000        —          —          5,337,000  
Exchange-Traded Funds
      4,794,000        —          —          4,794,000  
Corporate Bonds
      —          37,339,000        —          37,339,000  
Government Securities
      29,327,000        —          —          29,327,000  
Cash and Money Funds
      354,000        —          —          354,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 51,961,000      $ 37,339,000      $ —        $ 89,300,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
v3.23.2
Inventories (Tables)
 9 Months Ended
Jun. 30, 2023
Inventory Disclosure [Abstract]  
Net Inventories
Net inventories at June 30, 2023 and September 30, 2022 consist of the following:
 
 
  
June 30, 2023
 
  
September 30, 2022
 
Raw materials
   
$
36,672,000
 
  
$
31,975,000
 
Work in process
   
 
17,976,000
 
  
 
13,903,000
 
Finished goods
   
 
12,143,000
 
  
 
9,937,000
 
    
 
 
    
 
 
  
    
$
66,791,000
 
  
$
55,815,000
 
    
 
 
    
 
 
  
v3.23.2
Costs and Estimated Earnings in Excess of Billings (Tables)
 9 Months Ended
Jun. 30, 2023
Text Block [Abstract]  
Costs and Estimated Earnings in Excess of Billings
Costs and estimated earnings in excess of billings on uncompleted contracts as of June 30, 2023 and September 30, 2022 consist of the following:
 
 
  
June 30, 2023
 
  
September 30, 2022
 
Costs incurred on uncompleted contracts
  
$
19,400,000
 
  
$
12,660,000
 
Estimated earnings
  
 
7,143,000
 
  
 
4,780,000
 
    
 
 
       
 
 
  
    
 
26,543,000
 
  
 
17,440,000
 
Billings to date
   
 
19,630,000
 
  
 
15,322,000
 
    
 
 
       
 
 
  
Costs and estimated earnings in excess of billings
   
$
6,913,000
 
  
$
2,118,000
 
    
 
 
       
 
 
  
v3.23.2
Earnings (Loss) per Share Data (Tables)
 9 Months Ended
Jun. 30, 2023
Earnings Per Share [Abstract]  
Basic and Diluted Earnings (Loss) Per Share The following table sets forth the computation of basic and diluted earnings (loss) per share for the quarters and nine months ended June 30, 2023 and 2022:
 
 
  
Quarter Ended June 30,
 
  
Nine Months Ended June 30,
 
 
  
2023
 
  
2022
 
  
2023
 
  
2022
 
Net income (loss)
   
$
 3,212,000      $ (1,015,000 )    
$
 11,561,000      $ (850,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Common Shares:
                                    
Weighted average common shares outstanding
      14,658,000        14,658,000        14,658,000       14,658,000  
Effect of dilutive stock options
      —          —          —          —    
    
 
 
     
 
 
     
 
 
     
 
 
  
Diluted shares outstanding
      14,658,000        14,658,000        14,658,000        14,658,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Basic and diluted income (loss) per common share
   
$
 0.22      $ (0.07 )    
$
 0.79      $ (0.06 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
v3.23.2
Revenue Recognition and Related Costs (Tables)
 9 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
Disaggregation of Company's Net Revenue by Major Source
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, 2023 and 2022:
 
 
  
Quarter Ended June 30,
 
  
Nine Months Ended June 30,
 
 
  
2023
 
  
2022
 
  
2023
 
  
2022
 
Equipment sales recognized over time
   
$
 11,309,000      $ 9,248,000     
$
 23,022,000      $ 30,020,000  
Equipment sales recognized at a point in time
      9,012,000        13,729,000        37,105,000        28,402,000  
Parts and component sales
      6,317,000        5,419,000        19,445,000        18,243,000  
Freight revenue
      1,141,000        972,000        4,141,000        3,050,000  
Other
      98,000        279,000        491,000        692,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Net revenue
   
$
 27,877,000      $ 29,647,000     
$
 84,204,000      $ 80,407,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
v3.23.2
Leases (Tables)
 9 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Summary of Other Information Concerning the Company's Operating Lease
Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines as of June 30, 2023 and September 30, 2022, is as follows:
 
     June 30, 2023     September 30, 2022  
Operating lease ROU asset included in other long-term assets
    $ 436,000     $ 396,000  
Current operating lease liability
    $ 376,000     $ 390,000  
Non-current
operating lease liability
    $ 60,000     $ 6,000  
Weighted average remaining lease term (in years)
      0.50       1.00  
Weighted average discount rate used in calculating ROU asset
      4.3 %      4.0 % 
Summary of Future Annual Minimum Lease Payments
Future annual minimum lease payments as of June 30, 2023 are as follows:
 
Fiscal Year
    Annual Lease Payments  
2023 (remaining 3 months)
    $ 114,000  
2024
      330,000  
    
 
 
  
Total
      444,000  
Less interest
      (8,000 ) 
    
 
 
  
Present value of lease liabilities
    $ 436,000  
    
 
 
  
v3.23.2
Marketable Securities and Fair Value Measurements - Additional Information (Detail) - USD ($)
 3 Months Ended 9 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Marketable Securities [Line Items]        
Net unrealized gains (losses) $ 46,000 $ (3,855,000) $ 4,490,000 $ (5,386,000)
v3.23.2
Marketable Securities and Fair Value Measurements - Company's Assets Measured at Fair Value (Detail) - USD ($)
Jun. 30, 2023
Sep. 30, 2022
Investment Holdings [Line Items]    
Total $ 88,413,000 $ 89,300,000
Equities [Member]    
Investment Holdings [Line Items]    
Total   12,149,000
Mutual Funds [Member]    
Investment Holdings [Line Items]    
Total   5,337,000
Exchange Traded Funds [Member]    
Investment Holdings [Line Items]    
Total 3,345,000 4,794,000
Corporate Bonds [Member]    
Investment Holdings [Line Items]    
Total 34,635,000 37,339,000
Government Securities [Member]    
Investment Holdings [Line Items]    
Total 50,331,000 29,327,000
Cash and Money Funds [Member]    
Investment Holdings [Line Items]    
Total 102,000 354,000
Level 1 [Member]    
Investment Holdings [Line Items]    
Total 53,778,000 51,961,000
Level 1 [Member] | Equities [Member]    
Investment Holdings [Line Items]    
Total   12,149,000
Level 1 [Member] | Mutual Funds [Member]    
Investment Holdings [Line Items]    
Total   5,337,000
Level 1 [Member] | Exchange Traded Funds [Member]    
Investment Holdings [Line Items]    
Total 3,345,000 4,794,000
Level 1 [Member] | Corporate Bonds [Member]    
Investment Holdings [Line Items]    
Total 0 0
Level 1 [Member] | Government Securities [Member]    
Investment Holdings [Line Items]    
Total 50,331,000 29,327,000
Level 1 [Member] | Cash and Money Funds [Member]    
Investment Holdings [Line Items]    
Total 102,000 354,000
Level 2 [Member]    
Investment Holdings [Line Items]    
Total 34,635,000 37,339,000
Level 2 [Member] | Equities [Member]    
Investment Holdings [Line Items]    
Total   0
Level 2 [Member] | Mutual Funds [Member]    
Investment Holdings [Line Items]    
Total   0
Level 2 [Member] | Exchange Traded Funds [Member]    
Investment Holdings [Line Items]    
Total 0 0
Level 2 [Member] | Corporate Bonds [Member]    
Investment Holdings [Line Items]    
Total 34,635,000 37,339,000
Level 2 [Member] | Government Securities [Member]    
Investment Holdings [Line Items]    
Total 0 0
Level 2 [Member] | Cash and Money Funds [Member]    
Investment Holdings [Line Items]    
Total 0 0
Level 3 [Member]    
Investment Holdings [Line Items]    
Total 0 0
Level 3 [Member] | Equities [Member]    
Investment Holdings [Line Items]    
Total   0
Level 3 [Member] | Mutual Funds [Member]    
Investment Holdings [Line Items]    
Total   0
Level 3 [Member] | Exchange Traded Funds [Member]    
Investment Holdings [Line Items]    
Total 0 0
Level 3 [Member] | Corporate Bonds [Member]    
Investment Holdings [Line Items]    
Total 0 0
Level 3 [Member] | Government Securities [Member]    
Investment Holdings [Line Items]    
Total 0 0
Level 3 [Member] | Cash and Money Funds [Member]    
Investment Holdings [Line Items]    
Total $ 0 $ 0
v3.23.2
Inventories - Net Inventories (Detail) - USD ($)
Jun. 30, 2023
Sep. 30, 2022
Inventory, Net [Abstract]    
Raw materials $ 36,672,000 $ 31,975,000
Work in process 17,976,000 13,903,000
Finished goods 12,143,000 9,937,000
Inventories, net $ 66,791,000 $ 55,815,000
v3.23.2
Inventories - Additional Information (Detail) - USD ($)
 9 Months Ended
Jun. 30, 2023
Sep. 30, 2022
Inventory [Line Items]    
Slow moving and obsolete inventory reserve $ 9,551,000 $ 8,192,000
Three to Four Years Old Inventory [Member]    
Inventory [Line Items]    
Cost basis reduction in inventory, percentage 50.00%  
Inventory, minimum time period on the shelf, years 3 years  
Inventory, maximum time period on the shelf, years 4 years  
Four to Five Years Old Inventory [Member]    
Inventory [Line Items]    
Cost basis reduction in inventory, percentage 75.00%  
Inventory, minimum time period on the shelf, years 4 years  
Inventory, maximum time period on the shelf, years 5 years  
Greater Than Five Years Old Inventory [Member]    
Inventory [Line Items]    
Inventory, minimum time period on the shelf, years 5 years  
Inventory valuation estimate $ 0  
v3.23.2
Costs and Estimated Earnings in Excess of Billings - Costs and Estimated Earnings in Excess of Billings (Detail) - USD ($)
Jun. 30, 2023
Sep. 30, 2022
Costs in Excess of Billings on Uncompleted Contracts or Programs [Abstract]    
Costs incurred on uncompleted contracts $ 19,400,000 $ 12,660,000
Estimated earnings 7,143,000 4,780,000
Costs and estimated earnings on uncompleted contracts 26,543,000 17,440,000
Billings to date 19,630,000 15,322,000
Costs and estimated earnings in excess of billings $ 6,913,000 $ 2,118,000
v3.23.2
Earnings (Loss) per Share Data - Basic and Diluted Earnings (Loss) Per Share (Detail) - USD ($)
 3 Months Ended 9 Months Ended
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Jun. 30, 2022
Mar. 31, 2022
Dec. 31, 2021
Jun. 30, 2023
Jun. 30, 2022
Earnings Per Share [Abstract]                
Net Income (loss) $ 3,212,000 $ 4,873,000 $ 3,476,000 $ (1,015,000) $ 439,000 $ (274,000) $ 11,561,000 $ (850,000)
Common Shares:                
Weighted average common shares outstanding 14,658,000     14,658,000     14,658,000 14,658,000
Effect of dilutive stock options 0     0     0 0
Diluted shares outstanding 14,658,000     14,658,000     14,658,000 14,658,000
Basic income (loss) per common share $ 0.22     $ (0.07)     $ 0.79 $ (0.06)
Diluted income (loss) per common share $ 0.22     $ (0.07)     $ 0.79 $ (0.06)
v3.23.2
Earnings (Loss) per Share Data - Additional Information (Detail) - 2009 Plan - shares
 9 Months Ended
Jun. 30, 2023
Nov. 01, 2021
Number of shares, options outstanding   0
Share based payments, options, expiration date Oct. 01, 2021  
v3.23.2
Customers with 10% (or greater) of Net Revenues - Additional information (Detail) - Revenue [Member] - Customer Concentration Risk [Member]
 3 Months Ended 9 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Customer One [Member]        
Percentage of concentration 27.70% 15.20% 11.90%  
Customer Two [Member]        
Percentage of concentration 14.80% 14.50%    
Customer Three [Member]        
Percentage of concentration 13.80%      
No Customer [Member]        
Percentage of concentration       10.00%
v3.23.2
Income Taxes - Additional Information (Detail) - USD ($)
Jun. 30, 2023
Sep. 30, 2022
IncomeTaxes [Line Items]    
Valuation Allowance $ 0 $ 0
v3.23.2
Revenue Recognition and Related Costs - Disaggregation of Company's Net Revenue by Major Source (Detail) - USD ($)
 3 Months Ended 9 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Disaggregation of Revenue [Line Items]        
Net revenue $ 27,877,000 $ 29,647,000 $ 84,204,000 $ 80,407,000
Equipment Sales [Member] | Transferred over Time [Member]        
Disaggregation of Revenue [Line Items]        
Net revenue 11,309,000 9,248,000 23,022,000 30,020,000
Equipment Sales [Member] | Transferred at Point in Time [Member]        
Disaggregation of Revenue [Line Items]        
Net revenue 9,012,000 13,729,000 37,105,000 28,402,000
Parts and Component Sales [Member]        
Disaggregation of Revenue [Line Items]        
Net revenue 6,317,000 5,419,000 19,445,000 18,243,000
Freight Revenue [Member]        
Disaggregation of Revenue [Line Items]        
Net revenue 1,141,000 972,000 4,141,000 3,050,000
Other [Member]        
Disaggregation of Revenue [Line Items]        
Net revenue $ 98,000 $ 279,000 $ 491,000 $ 692,000
v3.23.2
Revenue Recognition and Related Costs - Additional Information (Detail) - USD ($)
 9 Months Ended
Jun. 30, 2023
Sep. 30, 2022
Disaggregation of Revenue [Line Items]    
Amortization period for incremental costs 1 year  
Costs and estimated earnings in excess of billings $ 6,913,000 $ 2,118,000
Contract assets collection period 1 year  
Accounts receivable related to contracts with customers $ 73,000 142,000
Current Liabilities [Member]    
Disaggregation of Revenue [Line Items]    
Customer deposits related to contracts with customers $ 5,834,000 $ 5,864,000
v3.23.2
Leases - Summary of Other Information Concerning the Company's Operating Lease (Detail) - USD ($)
Jun. 30, 2023
Sep. 30, 2022
Oct. 09, 2020
Sep. 30, 2020
Aug. 28, 2020
Lessee, Lease, Description [Line Items]          
Current operating lease liability $ 376,000 $ 390,000      
Non-current operating lease liability 60,000 6,000      
New Lease Agreement [Member]          
Lessee, Lease, Description [Line Items]          
Operating lease ROU asset included in other long-term assets 436,000 396,000 $ 254,000 $ 970,000 $ 352,000
Blaw Knox Product Line From Volvo CE [Member] | New Lease Agreement [Member]          
Lessee, Lease, Description [Line Items]          
Current operating lease liability 376,000 390,000      
Non-current operating lease liability $ 60,000 $ 6,000      
Weighted average remaining lease term (in years) 6 months 1 year      
Weighted average discount rate used in calculating ROU asset 4.30% 4.00%      
v3.23.2
Leases - Summary of Future Annual Minimum Lease Payments (Detail)
Jun. 30, 2023
USD ($)
Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity [Abstract]  
2023 (remaining 3 months) $ 114,000
2024 330,000
Total 444,000
Less interest (8,000)
Present value of lease liabilities $ 436,000
v3.23.2
Leases - Additional Information (Detail) - USD ($)
 3 Months Ended 9 Months Ended
Aug. 28, 2020
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Sep. 30, 2022
Oct. 31, 2021
Oct. 09, 2020
Sep. 30, 2020
Lessee, Lease, Description [Line Items]                  
Operating Lease, Expense   $ 101,000 $ 99,000 $ 315,000 $ 301,000        
Operating lease term 3 years                
Operating leases paid in cash   101,000 $ 104,000 344,000 $ 320,000        
New Lease Agreement [Member]                  
Lessee, Lease, Description [Line Items]                  
Assets $ 352,000 $ 436,000   436,000   $ 396,000   $ 254,000 $ 970,000
New Lease Agreement [Member] | Renewal Event [Member]                  
Lessee, Lease, Description [Line Items]                  
Assets             $ 39,000    
New Lease Agreement [Member] | Square Footage Leased Event [Member]                  
Lessee, Lease, Description [Line Items]                  
Decrease In Leasing Arrangements Right Of Use Asset And Lease Liability       $ 39,000          
Blaw Knox Product Line From Volvo CE [Member] | New Lease Agreement [Member]                  
Lessee, Lease, Description [Line Items]                  
Operating lease term               1 year  
Operating lease liability date of expiry Aug. 31, 2023                
v3.23.2
Segment Information - Additional Information (Detail)
 9 Months Ended
Jun. 30, 2023
Segment
Segment Reporting [Abstract]  
Number of repotable segments 1
Gencor Industries (AMEX:GENC)
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