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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



FOR THE PERIOD ENDED March 31, 2005



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 0-3821



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GENCOR INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)



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|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                      |  | 59-0933147                          
|(State or other jurisdiction of incorporated or organization) |  | (I.R.S. 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)



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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 and 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  x    No ̈



Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange Act.)    Yes ̈No  x



Indicate number of shares outstanding of each of the issuers classes of common stock as of the latest practicable date.



|                              |  |                           
|----------------------------- |  | --------------------------
|Class                         |  | Outstanding at May 4, 2005
|Common stock, $.10 par value  |  | 7,046,070 shares          
|Class B stock, $.10 par value |  | 1,798,398 shares          



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##### Table of Contents

GENCOR INDUSTRIES, INC.



Index



|           |  |                       |  |                                                                                                                  |  |     
|---------- |  | --------------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                       |  |                                                                                                                  |  | Page
|Part I.    |  | Financial Information |  |                                                                                                                 
|           |  |                       | 
|           |  | Item 1.               |  | Financial Statements                                                                                             |  |     
|           |  |                       | 
|           |  |                       |  | Condensed consolidated balance sheets  March 31, 2005 (Unaudited) and September 30, 2004                        |  | 3   
|           |  |                       | 
|           |  |                       |  | Unaudited condensed consolidated statements of operations  Three- and Six- months ended March 31, 2005 and 2004 |  | 4   
|           |  |                       | 
|           |  |                       |  | Unaudited condensed consolidated statements of cash flows  Six- months ended March 31, 2005 and 2004            |  | 5   
|           |  |                       | 
|           |  |                       |  | Notes to condensed consolidated financial statements                                                             |  | 6   
|           |  |                       | 
|           |  | Item 2.               |  | Managements Discussion and Analysis of Financial Position and Results of Operations                             |  | 8   
|           |  |                       | 
|           |  | Item 3.               |  | Quantitative and Qualitative Disclosure About Market Risk                                                        |  | 10  
|           |  |                       | 
|           |  | Item 4.               |  | Controls and Procedures                                                                                          |  | 11  
|           |  |                      
|Part II.   |  | Other Information     |  |                                                                                                                 
|           |  |                       | 
|           |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                                                 |  | 12  
|           | 
|Signatures |  | 13                   



2



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##### Table of Contents

Part I. Financial Information



Item 1. Financial Statements



GENCOR INDUSTRIES, INC.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)



|                                                                                                                                                                          |  |              |        |   |                   |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------ | - | ----------------- | - | ------ | -
|                                                                                                                                                                          |  | March 312005 |        |   | September 30,2004 |  
|                                                                                                                                                                          |  | (Unaudited)  |        |   |                   |  
|ASSETS                                                                                                                                                                    |  |              |        |   |                   |   |        |  
|Current assets:                                                                                                                                                           |  |              |        |   |                   |   |        |  
|Cash and cash equivalents                                                                                                                                                 |  | $            | 5,173  |   |                   | $ | 550    |  
|Marketable securities at market value (Cost $18,000)                                                                                                                      |  |              | 17,877 |   |                   |   |       |  
|Accounts receivable, less allowance for doubtful accounts of $1,258 ($1,214 at September 30, 2004)                                                                        |  |              | 3,305  |   |                   |   | 2,401  |  
|Other receivables                                                                                                                                                         |  |              | 187    |   |                   |   | 120    |  
|Inventories, net                                                                                                                                                          |  |              | 17,796 |   |                   |   | 16,944 |  
|Deferred income taxes                                                                                                                                                     |  |              | 602    |   |                   |   | 602    |  
|Prepaid expenses                                                                                                                                                          |  |              | 1,278  |   |                   |   | 1,578  |  
|                                                                                                                                                                          |  |              |        |   |                   |   |        |  
|Total current assets                                                                                                                                                      |  |              | 46,218 |   |                   |   | 22,195 |  
|Property and equipment, net                                                                                                                                               |  |              | 11,849 |   |                   |   | 11,317 |  
|Assets held for sale                                                                                                                                                      |  |              | 5,401  |   |                   |   | 5,449  |  
|Other assets                                                                                                                                                              |  |              | 3,767  |   |                   |   | 3,851  |  
|                                                                                                                                                                          |  |              |        |   |                   |   |        |  
|Total assets                                                                                                                                                              |  | $            | 67,235 |   |                   | $ | 42,812 |  
|                                                                                                                                                                          |  |              |        |   |                   |   |        |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                      |  |              |        |   |                   |   |        |  
|Current liabilities:                                                                                                                                                      |  |              |        |   |                   |   |        |  
|Accounts payable                                                                                                                                                          |  | $            | 5,327  |   |                   | $ | 3,477  |  
|Customer deposits                                                                                                                                                         |  |              | 2,431  |   |                   |   | 1,099  |  
|Income and other taxes payable                                                                                                                                            |  |              | 3,129  |   |                   |   | 4,372  |  
|Accrued expenses                                                                                                                                                          |  |              | 8,913  |   |                   |   | 9,489  |  
|                                                                                                                                                                          |  |              |        |   |                   |   |        |  
|Total current liabilities                                                                                                                                                 |  |              | 19,800 |   |                   |   | 18,437 |  
|Long-term debt                                                                                                                                                            |  |              |       |   |                   |   | 5,701  |  
|Deferred income taxes                                                                                                                                                     |  |              | 9,928  |   |                   |   | 71     |  
|Other liabilities                                                                                                                                                         |  |              | 3,309  |   |                   |   | 3,309  |  
|                                                                                                                                                                          |  |              |        |   |                   |   |        |  
|Total liabilities                                                                                                                                                         |  |              | 33,037 |   |                   |   | 27,518 |  
|                                                                                                                                                                          |  |              |        |   |                   |   |        |  
|Commitments and contingencies                                                                                                                                             |  |              |        |   |                   |   |        |  
|                                                                                                                                                                          |  |             
|Shareholders equity:                                                                                                                                                     |  |              |        |   |                   |   |        |  
|Preferred stock, par value $.10 per share; authorized 300,000 shares; none issued                                                                                         |  |              |       |   |                   |   |       |  
|Common stock, par value $.10 per share; 15,000,000 shares authorized; 7,133,470 shares and 7,093,470 shares issued at March 31, 2005 and
September 30, 2004, respectively |  |              | 713    |   |                   |   | 709    |  
|Class B stock, par value $.10 per share; 6,000,000 shares authorized; 1,878,398 shares issued at March 31, 2005 and September 30,
2004                                    |  |              | 188    |   |                   |   | 188    |  
|Capital in excess of par value                                                                                                                                            |  |              | 11,765 |   |                   |   | 11,467 |  
|Retained earnings                                                                                                                                                         |  |              | 29,235 |   |                   |   | 10,747 |  
|Accumulated other comprehensive income (loss)                                                                                                                             |  |              | (5,904 | ) |                   |   | (6,018 | )
|Subscription receivable from officer                                                                                                                                      |  |              | (95    | ) |                   |   | (95    | )
|Common stock in treasury, 179,400 shares at cost                                                                                                                          |  |              | (1,704 | ) |                   |   | (1,704 | )
|                                                                                                                                                                          |  |              |        |   |                   |   |        |  
|Total shareholders equity                                                                                                                                                |  |              | 34,198 |   |                   |   | 15,294 |  
|                                                                                                                                                                          |  |              |        |   |                   |   |        |  
|                                                                                                                                                                          |  | $            | 67,235 |   |                   | $ | 42,812 |  
|                                                                                                                                                                          |  |              |        |   |                   |   |        |  



See notes to
condensed consolidated financial statements.



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##### Table of Contents

GENCOR INDUSTRIES, INC.

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)



|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|-------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                             |  | Three Months EndedMarch 31, |        |   | Six Months EndedMarch 31, |  
|                                             |  | 2005                        |        |   | 2004                      |   |        | 2005 |  |   | 2004   |  
|Net revenue                                  |  | $                           | 15,948 |   |                           | $ | 18,489 |      |  | $ | 25,056 |   |  | $ | 30,409 |  
|                                             |  |                             |        |  
|Costs and expenses:                          |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Production costs                             |  |                             | 11,863 |   |                           |   | 12,684 |      |  |   | 18,684 |   |  |   | 21,191 |  
|Product engineering and development          |  |                             | 518    |   |                           |   | 467    |      |  |   | 1,013  |   |  |   | 958    |  
|Selling, general and administrative          |  |                             | 2,311  |   |                           |   | 2,558  |      |  |   | 4,480  |   |  |   | 5,071  |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|                                             |  |                             | 14,692 |   |                           |   | 15,709 |      |  |   | 24,177 |   |  |   | 27,220 |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Operating income                             |  |                             | 1,256  |   |                           |   | 2,780  |      |  |   | 879    |   |  |   | 3,189  |  
|                                             |  |                             |        |  
|Other income (expense):                      |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Interest income                              |  |                             | 52     |   |                           |   | 3      |      |  |   | 55     |   |  |   | 10     |  
|Interest expense                             |  |                             | (32    | ) |                           |   | (45    | )    |  |   | (122   | ) |  |   | (102   | )
|Income from Investees                        |  |                             | 27,382 |   |                           |   |       |      |  |   | 27,382 |   |  |   |       |  
|Miscellaneous                                |  |                             | (88    | ) |                           |   | 33     |      |  |   | (86    | ) |  |   | 119    |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|                                             |  |                             | 27,314 |   |                           |   | (9     | )    |  |   | 27,229 |   |  |   | 27     |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Income before income taxes                   |  |                             | 28,570 |   |                           |   | 2,771  |      |  |   | 28,108 |   |  |   | 3,216  |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Income taxes                                 |  |                             | 9,738  |   |                           |   | 1,031  |      |  |   | 9,619  |   |  |   | 1,228  |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Net income                                   |  | $                           | 18,832 |   |                           | $ | 1,740  |      |  | $ | 18,489 |   |  | $ | 1,988  |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Basic and diluted earnings per common share: |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Basic earnings per share                     |  | $                           | 2.14   |   |                           | $ | .20    |      |  | $ | 2.10   |   |  | $ | .23    |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  
|Diluted earnings per share                   |  | $                           | 1.89   |   |                           | $ | .18    |      |  | $ | 1.86   |   |  | $ | .21    |  
|                                             |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   |        |  



See notes to
condensed consolidated financial statements.



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GENCOR INDUSTRIES, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

In Thousands



|                                                                           |  |                           |         |   |      |   |        |  
|-------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------ | -
|                                                                           |  | Six Months EndedMarch 31, |        
|                                                                           |  | 2005                      |         |   | 2004 |  
|Cash flows from operations:                                                |  |                           |         |   |      |   |        |  
|Net income                                                                 |  | $                         | 18,489  |   |      | $ | 1,988  |  
|Adjustments to reconcile net income to cash provided (used) by operations: |  |                           |         |   |      |   |        |  
|Marketable securities                                                      |  |                           | (17,877 | ) |      |   |       |  
|Deferred income taxes                                                      |  |                           | 9,857   |   |      |   |       |  
|Depreciation and amortization                                              |  |                           | 410     |   |      |   | 413    |  
|Income from investees                                                      |  |                           | (27,382 | ) |      |   |       |  
|Provision for allowance for doubtful accounts                              |  |                           | 44      |   |      |   | 200    |  
|Change in assets and liabilities:                                          |  |                           |         |   |      |   |        |  
|Accounts receivable                                                        |  |                           | (948    | ) |      |   | (2,685 | )
|Other receivables                                                          |  |                           | (67     | ) |      |   |       |  
|Inventories                                                                |  |                           | (852    | ) |      |   | (653   | )
|Prepaid expenses                                                           |  |                           | 300     |   |      |   | 246    |  
|Other assets                                                               |  |                           |        |   |      |   | 28     |  
|Accounts payable                                                           |  |                           | 1,850   |   |      |   | 1,194  |  
|Customer deposits                                                          |  |                           | 1,332   |   |      |   | 982    |  
|Income and other taxes payable                                             |  |                           | (1,243  | ) |      |   | (478   | )
|Accrued expenses                                                           |  |                           | (576    | ) |      |   | 958    |  
|                                                                           |  |                           |         |   |      |   |        |  
|Total adjustments                                                          |  |                           | (35,152 | ) |      |   | 205    |  
|                                                                           |  |                           |         |   |      |   |        |  
|Cash provided by (used for) operations                                     |  |                           | (16,663 | ) |      |   | 2,193  |  
|                                                                           |  |                           |         |   |      |   |        |  
|Cash flows from (used for) investing activities:                           |  |                           |         |   |      |   |        |  
|Stock options exercised                                                    |  |                           | 301     |   |      |   |       |  
|Distributions from unconsolidated investees                                |  |                           | 27,382  |   |      |   |       |  
|Capital expenditures                                                       |  |                           | (858    | ) |      |   | (206   | )
|Proceeds from assets held for sale                                         |  |                           | 48      |   |      |   |       |  
|                                                                           |  |                           |         |   |      |   |        |  
|Cash from (used for) investing activities                                  |  |                           | 26,873  |   |      |   | (206   | )
|                                                                           |  |                           |         |   |      |   |        |  
|Cash flows used for financing activities:                                  |  |                           |         |   |      |   |        |  
|Net repayment of debt                                                      |  |                           | (5,701  | ) |      |   | (1,927 | )
|                                                                           |  |                           |         |   |      |   |        |  
|Cash provided (used) for financing activities                              |  |                           | (5,701  | ) |      |   | (1,927 | )
|                                                                           |  |                           |         |   |      |   |        |  
|Effect of exchange rate changes on cash                                    |  |                           | 114     |   |      |   | 56     |  
|                                                                           |  |                           |         |   |      |   |        |  
|Net increase (decrease) in cash                                            |  |                           | 4,623   |   |      |   | 116    |  
|Cash and cash equivalents at:                                              |  |                           |         |   |      |   |        |  
|Beginning of period                                                        |  |                           | 550     |   |      |   | 734    |  
|                                                                           |  |                           |         |   |      |   |        |  
|End of period                                                              |  | $                         | 5,173   |   |      | $ | 850    |  
|                                                                           |  |                           |         |   |      |   |        |  



See notes to
condensed consolidated financial statements.



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##### Table of Contents

GENCOR INDUSTRIES, INC.



Notes
to Condensed Consolidated Financial Statements

All amounts in thousands, except per share amounts



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 footnotes 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 three- and six- months ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ending September 30, 2005.



The balance sheet at September 30, 2004 has been derived from the audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles for complete financial statements.



For further information, refer to the consolidated financial statements and footnotes thereto included in the Gencor Industries, Inc. Annual Report on Form 10-K for the
year ended September 30, 2004.



Note 2  Inventories



The components of inventory consist of the following:



|                |  |               |        |                   |   |       
|--------------- |  | ------------- | ------ | ----------------- | - | ------
|                |  | March 31,2005 |        | September 30,2004
|Raw materials   |  | $             | 7,624  |                   | $ | 7,294 
|Work in process |  |               | 3,942  |                   |   | 4,574 
|Finished goods  |  |               | 4,919  |                   |   | 4,083 
|Used equipment  |  |               | 1,311  |                   |   | 993   
|                |  |               |        |                   |   |       
|                |  | $             | 17,796 |                   | $ | 16,944
|                |  |               |        |                   |   |       



Note 3  Earnings Per Share
Data



The following table sets forth the computation of basic and diluted
earnings per share for the periods indicated.



|                                        |  |                             |        |                           |   |       |  |      |        |  |   |      
|--------------------------------------- |  | --------------------------- | ------ | ------------------------- | - | ----- |  | ---- | ------ |  | - | -----
|                                        |  | Three Months EndedMarch 31, |        | Six Months EndedMarch 31,
|                                        |  | 2005                        |        | 2004                      |   | 2005  |  | 2004
|Net income                              |  | $                           | 18,832 |                           | $ | 1,740 |  | $    | 18,489 |  | $ | 1,988
|                                        |  |                             |        |                           |   |       |  |      |        |  |   |      
|Denominator (shares in thousands):      |  |                             |        |                           |   |       |  |      |        |  |   |      
|Weighted average shares outstanding     |  | $                           | 8,814  |                           | $ | 8,862 |  | $    | 8,805  |  | $ | 8,682
|Effect of dilutive stock options        |  |                             | 1,128  |                           |   | 730   |  |      | 1,128  |  |   | 614  
|                                        |  |                             |        |                           |   |       |  |      |        |  |   |      
|Denominator for diluted EPS computation |  | $                           | 9,942  |                           | $ | 9,412 |  | $    | 9,933  |  | $ | 9,296
|                                        |  |                             |        |                           |   |       |  |      |        |  |   |      
|Per common share:                       |  |                             |        |                           |   |       |  |      |        |  |   |      
|Basic:                                  |  |                             |        |                           |   |       |  |      |        |  |   |      
|Net income                              |  | $                           | 2.14   |                           | $ | 0.20  |  | $    | 2.10   |  | $ | 0.23 
|                                        |  |                             |        |                           |   |       |  |      |        |  |   |      
|Diluted:                                |  |                             |        |                           |   |       |  |      |        |  |   |      
|Net income                              |  | $                           | 1.89   |                           | $ | 0.18  |  | $    | 1.86   |  | $ | 0.21 
|                                        |  |                             |        |                           |   |       |  |      |        |  |   |      



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Note 4  Comprehensive Income (Loss)



The total comprehensive income (loss) for the three-and six- months ended March 31, 2005 was $18,820 and $18,603, respectively, compared to
the total comprehensive income for the three- and six-months ended March 31, 2004 of $1,765 and $2,035, respectively. Total comprehensive income (loss) differs from net income (loss) due to gains and losses resulting from foreign currency
translation, which are reflected separately in the shareholders equity section of the balance sheet under the caption Accumulated other comprehensive loss. Gains and losses resulting from foreign currency transactions are included
in income.



Note 5  Income From Investees



The Company owns a 45% interest in Carbontronics LLC and a 25% interest in Carbontronics
Fuels LLC and Carbontronics II LLC. These interests were earned as part of the value of risk on contracts to build four synthetic fuel production plants during 1998. The Company has no basis in these equity investments or requirement to provide
future funding. Any income arising from these investments is dependent upon tax credits (adjusted for operating losses at the fuel plants) being generated as a result of synthetic fuel production, which will be recorded as received. The Company
received no distributions in fiscal 2004, nor the quarter ended December 31, 2004, and did receive distributions of $13,428 and $1,526, during 2003 and 2002 respectively.



In 2003, the Company was notified by its investee General Partner that the income tax returns for its synthetic fuel producing partnership
are being audited. As previously reported, the Limited Partners may declare a Tax Event and suspend further distributions indefinitely. The Company was informed that the Limited Partners have declared a Tax Event and
therefore future distributions had ceased.



On January 5, 2005, the Company was
informed that the IRS had concluded its examination of the investees with no material adverse findings. As a result, distributions suspended since August of 2003 resumed and the Company received distributions totaling $27,382 during the second
quarter in fiscal 2005. These distributions are subject to state and Federal income taxes.



Future benefits from our synthetic fuel investments depend on whether the production from these plants will continue to qualify for tax credits under Section 29 of the Internal Revenue Code; and the ability to
economically produce and market the synthetic fuel produced by these plants; future IRS reviews, and as well the world price of crude oil, as per the provisions of the SEC 29 IRS Code, if the average price of crude oil reaches a certain level the
tax credits will terminate. Any one of the above eventualities may interrupt, reduce, or terminate further distributions.



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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



Results of Operations



Net sales for the quarters ended March 31, 2005 and 2004 were $15.9 million and $18.5 million, respectively. Domestic sales during the second quarter of fiscal 2005 were $15.6 million reflecting a decrease of $2.5
million from year ago levels. Domestic sales were lower than the prior years quarter due to the timing of finalizing certain orders and delays in customers obtaining required permits. The Companys revenues are concentrated in the
asphalt-related business and subject to a seasonal slow-down during the third and fourth quarters of the calendar year. Foreign sales were unchanged from the prior year.



Gross margins as a percent of net sales decreased by 4.9% during the six-months ended March 31, 2005 from year ago levels due to lower sales
volumes, lower margins on several sales and a LIFO adjustment of $.2 million in the quarter.



Product engineering and development costs combined with selling and administrative expenses have decreased from year ago levels. Selling and administrative expense decreased due to lower sales commission on lower
volume.



Other Income (Expense)



Interest expense for the three- and six- month period of fiscal 2005 decreased by $13 and
increased by $20, respectively from the previous year, reflecting an increase in interest rates, an increase in debt balance as of December 31, 2004 and a lower balance during the second quarter.



Income tax expense increased by $8.7 million and $8.4 for the three- and six- month period,
respectively from the previous year, reflecting the increase in pre-tax income. Deferred taxes are a result of Income from Investees which is deferred for income tax purposes until the next fiscal year.



The Company received no distributions in fiscal 2004, nor the quarter ended December 31, 2004
from its interest in Carbontronics LLC, Carbontronics Fuels LLC and Carbontronics II LLC. Distributions suspended since August 2003 resumed and the Company received distributions totaling $27,382 during the second quarter in fiscal 2005.Future distributions from these partnerships depend upon the production of these operations continuing to qualify for tax credits under Section 29 of the Internal Revenue Code and the ability to economically produce and market synthetic fuel
produced by the plants.



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Liquidity and Capital Resources



On August 1, 2003, the Company entered into a Revolving Credit and Security Agreement with PNC Bank, N.A. The Agreement established a three
year revolving $20 million credit facility. The facility provides for advances based on accounts receivable, inventory and real estate. As of March 31, 2005, the Company had no monies borrowed on the facility. The facility includes a $2 million
limit on letters of credit. At March 31, 2005, the Company had $.3 million of letters of credit outstanding. The interest rate at March 31, 2005, is at prime less .25% (5.50%) and subject to change based upon the Fixed Charge Coverage Ratio. The
Company is required to maintain a Fixed Charge Coverage Ratio of 1.1:1. There are no required repayments as long as there are no defaults and there is adequate eligible collateral. Substantially all of Companys assets are pledged as security
under the Agreement.



Long term bank debt was paid in full and the Company
invested $18 million in marketable securities as a result of the positive cash flow for the quarter ended March 31, 2005.



Seasonality



The Company is concentrated in the asphalt-related business and is subject to a seasonal slow-down during the third and fourth quarters of the calendar year. Traditionally, the Companys 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 Companys fiscal year ended September 30.



Forward-Looking Information



This Form 10-Q contains certain
forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (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. 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 and demand for the Companys products.



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Item 3. Quantitative and Qualitative Disclosures About Market Risk



The Company operates manufacturing facilities and sales offices principally located in the United States and the United Kingdom. The Company is subject to business risks inherent in non-U.S. activities, including
political and economic uncertainty, import and export limitations, and market risk related to changes in interest rates and foreign currency exchange rates. The Companys principal currency exposure against the U.S. dollar is the British pound.
Periodically, the Company has used derivative financial instruments consisting primarily of interest rate hedge agreements to manage exposures to interest rate changes. The Companys objective in managing its exposure to changes in interest
rates on its variable rate debt is to limit the impact of such changes on earnings and cash flow and to reduce its overall borrowing costs.



At March 31, 2005, the Company had no debt outstanding. Under the Credit Agreement, the Companys borrowings will bear interest at variable rates based upon the
prime rate.



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Item 4. Controls and Procedures



The Companys Chairman and Chief Financial Officer evaluated the Companys disclosure controls and procedures within 90 days of the filing date of this quarterly report. Based upon this evaluation, the Companys President and
Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective in ensuring that material information required to be disclosed is included in the reports that it files with the Securities and Exchange
Commission.



There were no significant changes in the
Companys internal controls or, to the knowledge of the management of the Company, in other factors that could significantly affect internal controls subsequent to the evaluation date.



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Part II. Other Information



Item 6. Exhibits and Reports on Form 8-K



|(a) | Exhibits
|--- | --------



|     |  |                                                                                                                                 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                             
|     | 
|31.2 |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                             
|     | 
|32   |  | Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



|(b) | Reports on Form 8-K.
|--- | --------------------



January 6, 2005- Anticipation of Cash Distributions from Investees



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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.
|             |  |                        
|May 13, 2005 |  | By:                     |  | /s/ E.J. Elliott                                  
|             |  |                         |  | E.J. Elliott, Chairman and Chief Executive Officer
|             |  |                        
|May 13, 2005 |  | By:                     |  | /s/ Scott W. Runkel                               
|             |  |                         |  | Scott W. Runkel, Chief Financial Officer          



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