Gencor Industries : 2020 Annual Report

Annual Report

ONE COMPANY • ONE SOURCE • ONE SOLUTION

Message to Our Shareholders

Message to Our Shareholders

Fiscal year 2020 will be remembered for many reasons, including a year when companies had to adapt to unprecedented challenging and changing conditions.

We started the fiscal year with a solid backlog and an active sales pipeline. ConExpo occurred in mid- March 2020, just as the pandemic was rapidly creating business uncertainty and closures. Fortunately for us, our Company adjusted to the changing business environment and managed its operations and production effectively and undisturbed through the remainder of the year. We continued to manage undisturbed our supply chain, and manufacture our products with minimal production delays while meeting our customer expectations, and our obligations.

We have stated repeatedly that to meet our objectives for continued growth, and to maintain our above average profitability, we look to make acquisitions that fit well within our Company. In August 2020 we announced the acquisition of the famous and respected Blaw-Knox paver line from Volvo CE, and closed on the transaction in October 2020. This provided us with an immediate entry into the hot mix paver segment with the oldest and well-known and respected brand.

During fiscal year 2020 we have remained disciplined on expenditures and cash flow, including the purchase of Blaw-Knox which was funded with ready cash on hand. As a matter of fact, we ended our fiscal year with a near record level of cash and cash equivalents.

In the future, we envision our markets will remain steady with modest growth, and our resulting performance improved with additional market share increases. We intend to continue our growth and success through continuing improvement of performance of our existing operations, broadening our product lines, as well as diversifying through organic growth and acquisitions into other strategic areas and products.

The funding challenges that affect the domestic road building industry will continue in spite of an urgent need for bridge, highway, and other infrastructure upgrades and repairs. The FAST Act which expired in September 2020 was extended for twelve months. Congressional action is still needed for long-term federal funding gaps that exist. Nevertheless, history shows that notwithstanding all the national issues, highways and bridges virtually always receive the attention and funding required.

With the continued loyalty, dedication, and support of our employees, customers and shareholders, we are confident that we will continue to produce long term growth and profitability while expanding in attractive opportunities.

JohnEE. .Elliott

ChiefExecutiveOfficerOfficer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 - K

1. ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended September 30, 2020

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Commission File No. 001-11703
	GENCOR INDUSTRIES, INC.
	(Exact name of registrant as specified in its charter)
Delaware	59-0933147
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
	5201 North Orange Blossom Trail
	Orlando, Florida 32810
	(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: [phone]

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Class	Trading Symbol(s)	Name of Exchange on which Registered
Common Stock ($.10 Par Value)	GENC	NASDAQ Global Market

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

[ ] Yes[√] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act

[ ] Yes

[√] No

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 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. [ ]

1 1

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by

the registered public accounting firm that prepared or issued its audit report.

[ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes [√] No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most

recently completed second fiscal quarter:

$109,937,000.

Indicate the number of shares outstanding of each of the registrant's classes of Common Stock, as of the latest practicable date. As of December 11, 2020:

Common Stock ($.10 par value):	12,287,337 shares
Class B Stock ($.10 par value):	2,318,857 shares

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Form 10-K is incorporated by reference from the Registrant's 2021 Proxy Statement for the Annual Meeting of the Stockholders.

Introductory Note: Caution Concerning Forward-Looking Statements

This Annual Report on Form 10-K (this "Annual Report") and the Company's other communications and statements may contain "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, changes in the economic and competitive environments, demand for the Company's products, the duration and scope of the coronavirus ("COVID- 19") pandemic, actions government entities and businesses take 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 when the COVID-19 pandemic subsides. 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 "Risk Factors" in Part I, Item 1A in this Annual Report, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 in this Annual Report. 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 Annual Report. The Company does not undertake to update any forward-looking statement, except as required by law.

2 2

PART I

ITEM 1

BUSINESS

General

Gencor Industries, Inc. and its subsidiaries (the "Company," "Gencor," "we," "us" or "our") is a leading manufacturer of heavy machinery used in the production of highway construction materials and environmental control equipment. The Company's products are manufactured in the United States. The Company's products are sold through a combination of Company sales representatives and independent dealers and agents located throughout the world.

The Company designs, manufactures and sells machinery and related equipment used primarily for the production of asphalt and highway construction materials. The Company's principal core products include asphalt plants, combustion systems and fluid heat transfer systems. The Company believes that its technical and design capabilities and environmentally friendly process technology have enabled it to become a leading producer of hot mix asphalt plants and related components in North America. The Company believes it has the largest installed base of asphalt plants in the United States.

Because the Company's products are sold primarily to companies in the highway construction industry, its business has historically been seasonal. Traditionally, the Company's customers do not purchase new equipment during the summer and fall months to avoid disrupting their peak season for highway construction and repair work. The majority of orders for the Company's asphalt plants are typically received between October and February, with a significant volume of shipments occurring prior to June. The principal factors driving demand for the Company's products are the level of federal and state funding for domestic highway construction and repair, the replacement of existing plants, and a trend towards efficient, larger plants.

In 1968, the Company was formed by the merger of Mechtron Corporation with General Combustion, Inc. ("General Combustion") and Genco Manufacturing, Inc. The new entity reincorporated in Delaware in 1969 and adopted the name Mechtron International Corporation in 1970. In 1985, the Company began a series of acquisitions into related fields starting with the Beverley Group Ltd. ("Beverley") in the United Kingdom (the "UK"). Hy-Way Heat Company, Inc. ("Hy-Way Heat") and the Bituma Group were acquired in 1986. In 1987, the Company changed its name to Gencor Industries, Inc. and acquired Davis Line Inc. and its subsidiaries in 1988.

In 1998, the Company entered into agreements with Carbontronics, LLC ("CLLC") pursuant to which the Company designed, manufactured, sold and installed four synthetic fuel production plants. In addition to payment for the plants, the Company received membership interests in two synthetic fuel entities. These derived significant cash flows from the sale of synthetic fuel and tax credits (Internal Revenue Code, Section 29) and, consequently, distributed significant cash to the Company from 2001 to 2010.

The tax credit legislation expired at the end of calendar year 2007. Consequently, the four synthetic fuel plants were decommissioned. The plants were sold or transferred to site owners in exchange for a release of all contracted liabilities related to the removal of plants from the sites. Gencor's ownership in the two synthetic fuel entities ended in 2013.

In October 2020, the Company acquired the Blaw-Knox paver business from Volvo Construction Equipment North America, LLC ("Volvo CE"). The acquisition expands the Company's product offerings by adding highway class asphalt pavers to its asphalt plant and related equipment products. Operations will continue with Blaw-Knox's in place management and workforce.

Products

Asphalt Plants. The Company manufactures and produces hot-mix asphalt plants used in the production of asphalt paving materials. The Company also manufactures related asphalt plant equipment, including hot-mix storage silos, fabric filtration systems, cold feed bins and other plant components. The Company's H&B (Hetherington and Berner) product line is the world's oldest asphalt plant line, first manufactured in 1894. The Company's subsidiary, Bituma Corporation, formerly known as Boeing Construction Company, developed the first continuous process for asphalt production. Gencor developed and patented the first counter flow drum mix technology, several adaptations of which

3 3