Gencor Industries Inc. has a market cap of $55 million; its shares were traded at around $6.84 with a P/E ratio of 9.7 and P/S ratio of 1.
Highlight of Business Operations:The Company is concentrated in the asphalt-related business and subject to a seasonal slow-down during the third and fourth quarters of the calendar year. Traditionally, the Companys customers do not purchase new equipment for shipment during the summer and fall months to avoid disrupting their peak season for highway construction and repair work. This slow-down often results in lower reported sales and earnings and/or losses during the first and fourth quarters of the Companys fiscal year.
The Companys manufacturing processes allow for a relatively short turnaround from the order date to shipment date of usually less than ninety days. Therefore, the size of the Companys backlog should not be viewed as an indicator of the Companys annualized revenues or future financial results. The Companys backlog was approximately $18.6 million and $11.4 million as of December 1, 2011 and December 1, 2010, respectively.
The Companys operating results historically have fluctuated from quarter to quarter as a result of a number of factors, including the value, timing and shipment of individual orders and the mix of products sold. Revenues from certain large contracts are recognized using the percentage of completion method of accounting. The Company recognizes product revenues upon shipment for the rest of its products. The Companys asphalt production equipment operations are subject to seasonal fluctuation, which may lower revenues and result in possible losses in the first and fourth fiscal quarters of each year. Traditionally, asphalt producers do not purchase new equipment for shipment during the summer and fall months to avoid disruption of their activities during peak periods of highway construction.
Net revenues for the year ended September 30, 2011 increased $4.1 million to $59.7 million from $55.6 million for the year ended September 30, 2010. The Companys revenues are concentrated in the asphalt-related business and are subject to a seasonal slow-down during the third and fourth quarters of the calendar year. Due to the late start in customer orders in fiscal 2011, and as compared to fiscal 2010, the Company experienced lower shipments in the first and second quarters of fiscal 2011 but improved shipments in its third and fourth quarters as compared to 2010.
The Companys backlog was $6.5 million at September 30, 2011 versus $7.8 million at September 30, 2010. The Companys working capital (defined as current assets less current liabilities) was $89.8 million at September 30, 2011 and $92.9 million at September 30, 2010. Costs and estimated earnings in excess of billings increased $3.9 million primarily due to the increased number of projects in progress at September 30, 2011 as compared to September 30, 2010. Inventories were reduced $4.5 million as the Company continued its effort to drive down its investment in inventory to match the lower level of operations and produce cash in the slow economy.
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