Taylor Devices Q1: Profitable with $36.3M liquidity, but sales and margins slip

Taylor Devices, Inc. (NASDAQ: TAYD)
Quick read: quarter ended August 31, 2025 - company remains profitable and cash-rich, but sales and margins are slipping and working capital timing is worsening.

- Sales (three months ended Aug 31, 2025): $9,918,350 (down from $11,617,856; -15%).

- Net income: $2,190,084 (down from $2,666,655; -18%). Basic & diluted EPS: $0.70 vs $0.85.

- Gross profit: $4,438,744 (gross margin 45% vs 47% a year ago).

- Operating income: $2,245,267. Other income (investment interest): $383,817.

- Cash and cash equivalents: $2,153,006. Short-term investments: $34,151,464. Combined liquid assets ~$36.3M.

- Total assets: $70,291,344. Total stockholders' equity: $64,251,359 (treasury stock at cost: $(13,176,688)).

- Ending backlog (Aug 31, 2025): $27.9M (127 open orders). The filing also notes prior-year backlog of $28.4M (118 orders) and a $27.1M figure at the prior fiscal year-end.

- Working capital / cash flow: Net cash from operating activities: $483,628 (positive vs negative prior year). Net change in cash: $962,350. Investing generated $461,824 (mainly decrease in short-term investments).

- Accounts receivable: $4,523,521 (allowance for credit losses $484,000). Days sales outstanding (DSO) increased to 41 days from 32.

- Inventory: $8,504,958 (≈88% work-in-process). Inventory turnover annualized: 2.3 (vs 2.7 prior period).

- Costs and estimated earnings in excess of billings (CIEB): $4,704,141. Billings in excess of costs (BIEC): $2,864,793.

Positive takeaways

- Company remains profitable: net income $2.19M and positive operating income $2.25M for the quarter.

- Very strong liquid position: ~$36.3M in cash + short-term investments supports operations and planned capex.

- Controlled SG&A: selling, general & administrative fell to $2,112,660 (down $417k; -16%) helped preserve profitability.

- Backlog remains meaningful (~$27.9M) and management expects most to convert this fiscal year.

Negative / risks

- Revenue decline: net sales fell 15% YoY; long-term project revenues down 23% vs prior year - demand softness in certain markets.

- Margin pressure: gross margin slipped to 45% from 47%, driving lower operating income and EPS.

- Geographic concentration shift: U.S. revenue share rose to 83% while Asia fell to 9% (Asia sales down 44% YoY) - potential customer concentration and regional volatility.

- Working capital timing: DSO increased to 41 days; CIEB and BIEC both declined (CIEB -12%, BIEC -35%) - cash collection timing and project billing vary and could strain near-term cash flow if trends reverse.

- Inventory turnover slowed (2.3 annualized) and work-in-process is high (≈88% of inventory) - projects in progress are capital intensive and sensitive to cancellations/changes.

- Committed capital expenditures of $2,751,000 over the next 12 months - management is evaluating capacity expansion which will consume cash or require financing.

- Corporate note: the company states there will be no provision for profit sharing, dividends, or other benefits this fiscal year.

Bottom line: Taylor Devices (NASDAQ: TAYD) is generating profits and holds a strong investment portfolio, which cushions the business. The headline concern is a YoY drop in sales and modest margin compression driven by lower long-term project revenue and regional mix shifts. Watch collections (DSO), conversion of backlog to billed revenue, and execution on planned capex - those factors will determine whether margins and cash flow stabilize or deteriorate in coming quarters.

- Shares outstanding (reported Oct 1, 2025): 3,147,497.