Taylor Devices, Inc. — Form 10-Q Summary
Reporting period: Three months ended August 31, 2026 (the first quarter of fiscal 2027); comparisons are with the three months ended August 31, 2025. Balance-sheet comparisons are with May 31, 2026. The company reports sales across industrial, structural, and aerospace/defense customer groups.
Financial performance
| Metric | Quarter ended Aug. 31, 2026 | Prior-year quarter | Change |
|---|---|---|---|
| Net sales | $7.30 million | $9.92 million | Down 26% |
| Gross profit / margin | $2.16 million / 30% | $4.44 million / 45% | Down 51%; margin down 15 percentage points |
| Operating income | $38,454 | $2.25 million | Down 98.3% |
| Other income | $418,479 | $383,817 | Up 9%, mainly from investment interest |
| Income before taxes | $456,933 | $2.63 million | Down $2.17 million |
| Income tax provision | $0 | $439,000 | Down $439,000 |
| Net income / diluted EPS | $456,933 / $0.14 | $2.19 million / $0.70 | Net income down 79% |
| Net cash from operations | $7.79 million | $484,000 | Up $7.30 million |
| Capital expenditures | $242,000 | $185,000 | Up $57,000 |
Liquidity and balance sheet
- At August 31, cash and cash equivalents were $3.60 million and short-term investments were $45.48 million, together about $49.08 million. Total current assets were $66.07 million versus current liabilities of $7.63 million.
- Total assets were $80.99 million and stockholders’ equity was $73.37 million. The balance sheet lists no debt balance; the filing does not provide a separate debt discussion.
- Operating cash flow was substantially higher than net income, driven in part by a $5.70 million decrease in costs and estimated earnings in excess of billings and a $3.17 million increase in billings in excess of costs and estimated earnings. Inventory growth partly offset these sources.
- Inventory rose 24% from fiscal year-end to $9.36 million, primarily due to work-in-process. Inventory turnover was 2.1, versus 2.6 at May 31, 2026.
- Capital expenditure commitments totaled $1.93 million for the next 12 months. The company is evaluating additional spending to expand capacity.
Material changes and operating trends
- Management attributed lower sales to the timing of bookings and backlog conversion. Long-term project revenue fell 33% year over year; other-than-long-term project revenue fell 18%. The company had 24 long-term projects in process, versus 25 a year earlier.
- Sales declined 20% in the U.S. and 31% in Asia. By customer group, aerospace/defense sales fell 17%, structural sales fell 49%, and industrial sales rose 8%. Customer mix shifted: aerospace/defense represented 58% of sales, structural 26%, and industrial 16%.
- Gross margin contracted as lower revenue and a less favorable sales mix reduced gross profit. SG&A declined 7%, primarily due to lower employee incentive compensation accruals; R&D expense increased 88% to $152,000.
- Backlog was $55.2 million across 151 open orders at August 31, 2026, versus $27.9 million and 127 orders at August 31, 2025. Management also reports backlog of $52.8 million at May 31, 2026. A $19.0 million non-project order is scheduled for delivery over fiscal 2027–2030.
- Accounts receivable were $3.37 million; days sales outstanding increased to 42 from 40 at fiscal year-end. Contract assets (costs and estimated earnings in excess of billings) fell to $2.33 million, while contract liabilities (billings in excess) rose to $4.54 million.
Outlook, risks, and other matters
- The company expects to recognize revenue for most of its remaining backlog during the current fiscal year, with the balance expected during the fiscal year ending May 31, 2028. It expects final delivery on contracts underlying the August 31 billings-in-excess balance during the next 12 months.
- Management cautions that quarterly backlog, revenue, gross profit, and net income fluctuate and that the quarter’s results are not necessarily indicative of full-year results. No specific earnings or revenue guidance is provided.
- Forward-looking statement risks include economic and business-cycle changes, timing and amount of customer orders, product demand and industry capacity, competition and pricing pressure, and technological advances that could reduce demand.
- The filing states that there are no provisions for profit sharing, dividends, or other benefits during the fiscal year. Management concluded disclosure controls were effective and reported no material change in internal controls. Legal proceedings are cross-referenced to the fiscal 2026 Form 10-K; details are not included in this filing excerpt.
Important facts for investors to verify
- Whether the large backlog converts to sales on the expected schedule, especially the $19.0 million non-project order and its multi-year delivery plan.
- Whether sales recovery and product mix improve gross margin after the sharp year-over-year decline.
- Whether elevated work-in-process inventory and contract cost estimates convert into profitable deliveries, and whether project timing affects cash flow.
- The reason for the $0 income tax provision despite positive pretax income; the filing text does not provide a clear explanation.
- How the $1.93 million committed capital spending and any additional capacity expansion will be funded and affect liquidity.