• Annual net income surged to $14.7 million in fiscal 2023 from a net loss in the previous year.

• Gross profit margin improved significantly year-over-year, reaching 27.6% in fiscal 2023.

• Company's backlog increased to $57.8 million, indicating robust demand for Gencor's products.

• Operating income for fiscal 2023 rose to $13.4 million, a substantial increase from $4.2 million in fiscal 2022.

• Warning! GuruFocus has detected 5 Warning Signs with GENC.

On December 13, 2023, Gencor Industries Inc (GENC) released its 8-K filing, detailing the financial results for the fourth quarter and fiscal year ended September 30, 2023. Despite a slight decrease in net revenue for the fourth quarter, GENC reported a robust fiscal year with significant improvements in net income and gross profit margins.

Fiscal Year 2023 Performance Highlights

GENC's net revenue for the year increased modestly to $105.1 million from $103.5 million in the previous year. The company's gross profit margin saw a notable rise to 27.6% in fiscal 2023, up from 19.9% in fiscal 2022, attributed to increased parts sales, improved efficiency, and favorable price realization.

Operating expenses saw a mixed trend, with product engineering and development expenses decreasing by $0.9 million due to reduced headcount and improved efficiency. However, selling, general, and administrative expenses increased slightly, primarily due to trade show-related costs, offset by reduced professional fees.

GENC's operating income for fiscal 2023 was $13.4 million, a significant increase from $4.2 million in the previous year. This improvement was driven by higher gross profit margins and reduced operating expenses. Net non-operating income also contributed positively, with $5.4 million reported for the year, a stark contrast to the net non-operating expense of $(5.9) million in fiscal 2022. This change was largely due to higher interest income from fixed income investments and net realized and unrealized gains on marketable securities, which amounted to $3.2 million compared to losses of $(7.0) million in the prior year.

The effective income tax rate for fiscal 2023 was 21.9%, compared to (78.0%) in fiscal 2022. GENC's net income for the year stood at $14.7 million, or $1.00 per basic and diluted share, a significant recovery from a net loss of $(0.4) million, or $(0.03) per basic and diluted share, in the previous year.

Balance Sheet and Cash Flow Insights

As of September 30, 2023, GENC's balance sheet reflected $101.3 million in cash and marketable securities, an increase from the previous year's balance of $98.9 million. The company's working capital also grew to $164.8 million from $150.1 million. Notably, GENC carries no short-term or long-term debt, maintaining a strong liquidity position.