# Taylor Devices, Inc.: Form 10-Q for the period ended Feb 28, 2025

- Company: [Taylor Devices, Inc.](/companies/tayd.md) (CIK 96536)
- Form: 10-Q
- Filed: 2025-03-28
- Accepted by EDGAR: Mar 28, 2025, 12:53 ET
- Period: 2025-02-28
- Accession: 0001376474-25-000293
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/96536/000137647425000293/tayd-20250228.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/96536/000137647425000293/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-02-28.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-12-01 to 2025-02-28 | $10.6m | us-gaap:Revenues |
| Revenue | 9 months, 2024-06-01 to 2025-02-28 | $30.7m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2024-12-01 to 2025-02-28 | $6.0m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-06-01 to 2025-02-28 | $16.8m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-12-01 to 2025-02-28 | $4.5m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-06-01 to 2025-02-28 | $13.9m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-12-01 to 2025-02-28 | $146.7k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-06-01 to 2025-02-28 | $318.9k | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-12-01 to 2025-02-28 | $2.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-06-01 to 2025-02-28 | $7.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-12-01 to 2025-02-28 | $2.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-06-01 to 2025-02-28 | $5.9m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-12-01 to 2025-02-28 | $343.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-06-01 to 2025-02-28 | $1.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-12-01 to 2025-02-28 | $2.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-06-01 to 2025-02-28 | $5.7m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2024-12-01 to 2025-02-28 | $0.64 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-06-01 to 2025-02-28 | $1.83 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 9 months, 2024-06-01 to 2025-02-28 | $5.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-06-01 to 2025-02-28 | $1.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-02-28 | $2.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-02-28 | $56.4m | us-gaap:AssetsCurrent |
| Total assets | at 2025-02-28 | $70.1m | us-gaap:Assets |
| Current liabilities | at 2025-02-28 | $12.3m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2025-02-28 | $57.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 20,251 characters.

### Cautionary Statement

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Information in this Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Form 10-Q that does not consist of historical facts, are "forward-looking statements." Statements accompanied or qualified by, or containing, words such as "may," "will," "should," "believes," "expects," "intends," "plans," "projects," "estimates," "predicts," "potential," "outlook," "forecast," "anticipates," "presume," and "assume" constitute forward-looking statements and, as such, are not a guarantee of future performance. These statements involve factors, risks and uncertainties, the impact or occurrence of which can cause actual results to differ materially from the expected results described in such statements. Risks and uncertainties can include, among others: reductions in capital budgets by our customers and potential customers; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology that can reduce the demand for the Company's products; the kind, frequency and intensity of natural disasters that affect demand for the Company’s products; and other factors, many or all of which are beyond the Company's control. Consequently, investors should not place undue reliance on forward-looking statements as predictive of future results. Except as may be required by law, the Company disclaims any obligation to release publicly any updates or revisions to the forward-looking statements herein to reflect any change in the Company's expectations with regard thereto, or any changes in events, conditions or circumstances on which any such statement is based.

### Results of Operations

A summary of the period-to-period changes in the principal items included in the condensed consolidated statements of income is shown below:

| Summary comparison of the nine months ended February 28, 2025 and February 29, 2024 | Increase / (Decrease) |
| --- | ---: |
| Sales, net | $(1,786,000) |
| Cost of goods sold | $(757,000) |
| Research and development costs | $(2,000) |
| Selling, general and administrative expenses | $71,000 |
| Other income | $(112,000) |
| Income before provision for income taxes | $(1,210,000) |
| Provision for income taxes | $(409,000) |
| Net income | $(801,000) |

Sales under certain fixed-price contracts, in which the product has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date, inclusive of profit, are recognized over time whereby revenues are based on estimates of completion prepared on a ratio of cost to total estimated cost basis. Costs include all material and direct and indirect charges related to specific contracts.

Adjustments to cost estimates are made periodically and any losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined. However, any profits expected on contracts in progress are recognized over the life of the contract.

For financial statement presentation purposes, the Company nets progress billings against the total costs incurred and estimated earnings recognized on uncompleted contracts. The asset, "costs and estimated earnings in excess of billings," represents revenues recognized in excess of amounts billed. The liability, "billings in excess of costs and estimated earnings," represents billings in excess of revenues recognized.

**For the nine months ended February 28, 2025** (All figures discussed are for the nine months ended February 28, 2025, as compared to the nine months ended February 29, 2024).

|  | Nine months ended February 28, 2025 | February 29, 2024 | Change Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| Net Revenue | $30,732,000 | $32,518,000 | $(1,786,000) | -5% |
| Cost of goods sold | 16,813,000 | 17,570,000 | (757,000) | -4% |
| Gross profit | $13,919,000 | $14,948,000 | $(1,029,000) | -7% |
| … as a percentage of net revenues | 45% | 46% |  |  |

The Company's consolidated results of operations showed a 5% decrease in net revenues and a 12% decrease in net income. Revenues recorded in the nine-month period ended February 28, 2025 for long-term projects (“Projects”) were 2% higher than the level recorded in the prior year. The Company had 31 Projects in process during the nine-month period ended February 28, 2025 as compared to 34 during the same period last year. Revenues recorded in the nine-month period ended February 28, 2025 for other-than long-term projects (non-projects) were 16% lower than the level recorded in the prior year. Total sales within the U.S. during the nine-month period ended February 28, 2025 decreased 13% from the same period last year. Total sales outside the U.S. during the nine-month period ended February 28, 2025 increased 61% from the same period of the prior year. The shift in domestic and international sales concentration from the prior year is attributable to normal changes in structural project activity. Sales increases were recorded over the same period last year to industrial customers (36%) with decreases to customers involved in construction of buildings and bridges (-8%) and aerospace / defense (-10%). The decrease in sales from the prior year was attributed to differences in the timing of backlog conversion to revenue.

The gross profit as a percentage of net revenue of 45% in the nine-month period ended February 28, 2025 is one percentage point lower than the same period of the prior year (46%).

Sales of the Company’s products are made to three general groups of customers: industrial, structural and aerospace / defense. A breakdown of sales to the three general groups of customers is as follows:

|  | Nine months ended February 28, 2025 | February 29, 2024 |
| --- | ---: | ---: |
| Industrial | 11% | 8% |
| Structural | 31% | 31% |
| Aerospace / Defense | 58% | 61% |

At February 29, 2024, the Company had 131 open sales orders in our backlog with a total sales value of $30.2 million. At February 28, 2025, the Company had 146 open sales orders in our backlog with a total sales value of $33.3 million. The Company expects to recognize revenue for the majority of the backlog during fiscal years 2025 and 2026.

The Company's backlog, revenues, gross profits, and net income fluctuate from period to period. The changes in the nine-month period ended February 28, 2025, compared to the same period in the prior year, are not necessarily representative of future results.

Net revenue by geographic region, as a percentage of total net revenue for the nine-month periods ended February 28, 2025 and February 29, 2024, is as follows:

|  | Nine months ended February 28, 2025 | February 29, 2024 |
| --- | ---: | ---: |
| U.S. | 83% | 90% |
| Asia | 10% | 5% |
| Other | 7% | 5% |

11

#### Research and Development Costs

|  | Nine months ended February 28, 2025 | February 29, 2024 | Change Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| R & D | $ 319,000 | $ 321,000 | $ (2,000) | -1% |
| … as a percentage of net revenues | 1.0% | 1.0% |  |  |

Research and development costs declined $2,000 from the same period in the prior year.

#### Selling, General and Administrative Expenses

|  | Nine months ended February 28, 2025 | February 29, 2024 | Change Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| S G & A | $ 7,731,000 | $ 7,660,000 | $ 71,000 | 1% |
| … as a percentage of net revenues | 25% | 24% |  |  |

Selling, general and administrative expenses during the nine-month period ended February 28, 2025 increased by 1% from the same period in the prior year. The Company expenses stock options using the fair value recognition provisions of the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”). The Company recognized $731,000 (46,800 options granted) and $301,000 (42,000 options granted) of compensation cost for the nine-month periods ended February 28, 2025 and February 29, 2024, respectively.

#### Operating Income

Operating income was $5,869,000 for the nine-month period ended February 28, 2025, lower than the $6,966,000 in the same period of the prior year. The decrease in operating income was attributed to lower gross margin associated with reduced revenue.

#### Other Income

Other income was $1,010,000 for the nine-month period ended February 28, 2025, a 10% decrease from the same period of the prior year. This decrease was driven by short-term investment interest income.

| Summary comparison of the three months ended February 28, 2025 and February 29, 2024 | Increase / (Decrease) |
| --- | ---: |
| Sales, net | $(1,689,000) |
| Cost of goods sold | $(465,000) |
| Research and development costs | $39,000 |
| Selling, general and administrative expenses | $(289,000) |
| Other income | $(37,000) |
| Income before provision for income taxes | $(1,011,000) |
| Provision for income taxes | $(316,000) |
| Net income | $(695,000) |

12

**For the three months ended February 28, 2025** (All figures discussed are for the three months ended February 28, 2025 as compared to the three months ended February 29, 2024).

|  | Three months ended February 28, 2025 | February 29, 2024 | Change Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| Net Revenue | $10,565,000 | $12,254,000 | $(1,689,000) | -14% |
| Cost of goods sold | 6,036,000 | 6,501,000 | (465,000) | -7% |
| Gross profit | $4,529,000 | $5,753,000 | $(1,224,000) | -21% |
| … as a percentage of net revenues | 43% | 47% |  |  |

The Company's consolidated results of operations showed a 14% decrease in net revenues and 26% decrease in net income. Revenues recorded in the quarter ended February 28, 2025 for Projects were 11% lower than the level recorded in the prior year. The Company had 21 Projects in process during the quarter ended February 28, 2025 as compared to 16 during the same period last year. Revenues recorded in the quarter ended February 28, 2025 for other-than long-term projects (non-projects) were 18% lower than the level recorded in the prior year. Total sales within the U.S. during the quarter ended February 28, 2025 decreased 23% from the same period last year. Total sales outside the U.S. during the quarter ended February 28, 2025 increased 115% from the same period of the prior year. The shift in domestic and international sales concentration from the prior year is attributable to normal changes in structural project activity. Sales decreases were recorded over the same period last year to customers in aerospace / defense (-25%), customers involved in construction of buildings and bridges (-1%) with sales increases to industrial customers (24%). The decrease in sales from the prior year was attributed to differences in the timing of backlog conversion to revenue.

The gross profit as a percentage of net revenue of 43% in the quarter ended February 28, 2025 is four percentage points lower than the same period of the prior year (47%).

Sales of the Company’s products are made to three general groups of customers: industrial, structural and aerospace / defense. A breakdown of sales to the three general groups of customers is as follows:

|  | Three months ended February 28, 2025 | February 29, 2024 |
| --- | ---: | ---: |
| Industrial | 12% | 8% |
| Structural | 33% | 29% |
| Aerospace / Defense | 55% | 63% |

Net revenue by geographic region, as a percentage of total net revenue for the three-month periods ended February 28, 2025 and February 29, 2024, is as follows:

|  | Three months ended February 28, 2025 | February 29, 2024 |
| --- | ---: | ---: |
| U.S. | 84% | 94% |
| Asia | 9% | 0% |
| Other | 7% | 6% |

13

#### Research and Development Costs

|  | Three months ended February 28, 2025 | February 29, 2024 | Change Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| R & D | $ 147,000 | $ 108,000 | $ 39,000 | 36% |
| … as a percentage of net revenues | 1.4% | 0.9% |  |  |

Research and development costs increased $39,000 from the prior year.

#### Selling, General and Administrative Expenses

|  | Three months ended February 28, 2025 | February 29, 2024 | Change Amount | Percent |
| --- | ---: | ---: | ---: | ---: |
| S G & A | $ 2,362,000 | $ 2,651,000 | $ (289,000) | -11% |
| … as a percentage of net revenues | 22% | 22% |  |  |

Selling, general and administrative expenses during the quarter ended February 28, 2025 decreased 11% from the same period in the prior year. This change is primarily due to lower incentive compensation expense.

#### Operating Income

Operating income was $2,020,000 for the three months ended February 28, 2025, lower than the $2,993,000 in the same period of the prior year. The decrease in operating income was attributed to lower revenue and shift in sales mix.

#### Other Income

Other income was $326,000 for the three months ended February 28, 2025, a 10% decrease from the same period of the prior year. This decrease was driven by short-term investment interest income.

### Liquidity and Capital Resources

The Company’s primary liquidity requirements depend on its working capital needs. Working capital consists primarily of cash and short-term investments, inventory, accounts receivable, costs and estimated earnings in excess of billings, accounts payable, accrued expenses and billings in excess of costs and estimated earnings. The Company’s primary source of liquidity has been excess cash flow from operations.

Capital expenditures for the nine-month period ended February 28, 2025 were $1,158,000 compared to $755,000 in the same period of the prior year. As of February 28, 2025, the Company has commitments for capital expenditures totaling $2,017,000 during the next twelve months.

### Inventory and Maintenance Inventory

|  | February 28, 2025 |  | May 31, 2024 |  | Increase /(Decrease) |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Raw materials | $994,000 |  | $887,000 |  | $107,000 | 12 % |
| Work-in-process | 7,653,000 |  | 6,412,000 |  | 1,241,000 | 19 % |
| Finished goods | 158,000 |  | 213,000 |  | (55,000) | -26 % |
| Inventory | 8,805,000 | 88% | 7,512,000 | 83% | 1,293,000 | 17 % |
| Maintenance and other inventory | 1,231,000 | 12% | 1,580,000 | 17% | (349,000) | -22 % |
| Total | $10,036,000 | 100% | $9,092,000 | 100% | $944,000 | 10 % |
| Inventory turnover | 2.3 |  | 3.0 |  |  |  |

NOTE: Inventory turnover is annualized for the nine-month period ended February 28, 2025.

Inventory, at $8,805,000 as of February 28, 2025, is $1,293,000 more than the prior year-end level of $7,512,000. As of February 28, 2025, approximately 87% of the inventory was work-in-process, 2% was finished goods, and 11% was raw materials.

Maintenance and other inventory represent stock that is estimated to have a product life cycle in excess of twelve months. This stock represents certain items the Company is required to maintain for service of products sold and items that are generally subject to spontaneous ordering. This inventory is particularly sensitive to technological obsolescence in the near term due to its use in industries characterized by the continuous introduction of new product lines, rapid technological advances and product obsolescence. Management of the Company has recorded an allowance for potential inventory obsolescence. The provision for potential inventory obsolescence was zero and $369,000 for the nine-month periods ended February 28, 2025 and February 29, 2024, respectively.

### Accounts Receivable, Costs and Estimated Earnings in Excess of Billings (“CIEB"), and Billings in Excess of Costs and Estimated Earnings ("BIEC")

|  | February 28, 2025 | May 31, 2024 | Increase /(Decrease) |  |
| --- | ---: | ---: | ---: | ---: |
| Accounts receivable | $6,717,000 | $5,212,000 | $1,505,000 | 29% |
| CIEB | 3,230,000 | 4,357,000 | (1,127,000) | -26% |
| Less: BIEC | 3,233,000 | 5,601,000 | (2,368,000) | -42% |
| Net | $6,714,000 | $3,968,000 | $2,746,000 | 69% |
| Number of an average day’s sales outstanding in accounts receivable | 57 | 39 |  |  |

The Company combines the totals of accounts receivable, the current asset, CIEB, and the current liability, BIEC, to determine how much cash the Company will eventually realize from revenue recorded to date. As the accounts receivable figure rises in relation to the other two figures, the Company can anticipate increased cash receipts within the ensuing 30-60 days.

Accounts receivable of $6,717,000 as of February 28, 2025 includes $124,000 of an allowance for estimated credit losses (“Allowance”). The accounts receivable balance as of May 31, 2024 of $5,212,000 included an Allowance of $29,000. The number of an average day's sales outstanding in accounts receivable (“DSO”) increased from 39 days at May 31, 2024 to 57 days at February 28, 2025. The Accounts Receivable and DSO increase were the result of delayed collections for structural project invoices. The DSO is a function of (1) the level of sales for an average day (for example, total sales for the past three months divided by 90 days) and (2) the level of accounts receivable at the balance sheet date. The Company expects to collect the net accounts receivable balance during the next twelve months.

As noted above, CIEB represents revenues recognized in excess of amounts billed. Whenever possible, the Company negotiates a provision in sales contracts to allow the Company to bill, and collect from the customer, payments in advance of shipments. Unfortunately, such provisions are often not possible. The $3,230,000 balance in this account at February 28, 2025 is 26% lower than the prior year-end balance. This decrease is the result of normal flow of the Projects through production with billings to the customers as permitted in the related contracts. 77% of the CIEB balance as of the end of the last fiscal quarter, November 30, 2024, was billed to those customers in the fiscal quarter ended February 28, 2025. The remainder will be billed as the Projects progress, in accordance with the terms specified in the various contracts.

The balances in this account are comprised of the following components:

|  | February 28, 2025 | May 31, 2024 |
| --- | ---: | ---: |
| Costs | $4,298,000 | $9,644,000 |
| Estimated Earnings | 5,991,000 | 9,782,000 |
| Less: Billings to customers | 7,059,000 | 15,069,000 |
| CIEB | $3,230,000 | $4,357,000 |
| Number of Projects in progress | 9 | 14 |

15

As noted above, BIEC represents billings to customers in excess of revenues recognized. The $3,233,000 balance in this account at February 28, 2025 is down 42% from the $5,601,000 balance at the end of the prior year. The balance in this account fluctuates in the same manner and for the same reasons as the CIEB, discussed above. Final delivery of product under these contracts is expected to occur during the next twelve months.

The balances in this account are comprised of the following components:

|  | February 28, 2025 | May 31, 2024 |
| --- | ---: | ---: |
| Billings to customers | $8,796,000 | $7,211,000 |
| Less: Costs | 3,287,000 | 933,000 |
| Less: Estimated Earnings | 2,276,000 | 677,000 |
| BIEC | $3,233,000 | $5,601,000 |
| Number of Projects in progress | 9 | 5 |

Summary of factors affecting the balances in CIEB and BIEC:

|  | February 28, 2025 | May 31, 2024 |
| --- | ---: | ---: |
| Number of Projects in progress | 18 | 19 |
| Aggregate percent complete | 49% | 53% |
| Average total sales value of Projects in progress | $1,619,000 | $2,089,000 |
| Percentage of total value invoiced to customer | 54% | 56% |

The Company's backlog of sales orders at February 28, 2025 is $33.3 million, up from $33.1 million at the end of the prior year. $13.3 million of the Company’s backlog as of February 28, 2025 was for Projects already in progress.

### Other Balance Sheet Items

Accounts payable, at $1,115,000 as of February 28, 2025, is 23% lower than the prior year-end. Accrued expenses increased 71% from the prior year-end, to $7,997,000 due to the receipt of prepayments for a project not started. The Company expects the accrued amounts to be paid or applied during the next twelve months.

## Controls and procedures

As filed, 1,276 characters.

(a) *Evaluation of disclosure controls and procedures.*

The Company's chief executive officer (its principal executive officer) and chief financial officer (its principal financial officer) have evaluated the Company's disclosure controls and procedures as of February 28, 2025 and have concluded that as of the evaluation date, the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

(b) *Changes in internal control over financial reporting.*

There have been no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter ended February 28, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's control over financial reporting.

Filed Mar 28, 2025.
Source: SEC EDGAR, the filing index for accession 0001376474-25-000293. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.