Taylor Devices, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended February 28, 2022. Although the request metadata says 2021 Q3, the filing reports fiscal 2022 Q3.
Business context and financial performance
Taylor Devices manufactures products sold to industrial, structural, and aerospace/defense customers. Revenue comes from long-term projects recognized over time and other sales generally recognized upon shipment. In the nine months, 63% of revenue was recognized over time, versus 39% a year earlier.
| Metric | Three months ended Feb. 28, 2022 | Nine months ended Feb. 28, 2022 |
|---|---|---|
| Sales | $6.14 million; up 29% | $21.21 million; up 39% |
| Gross profit / margin | $1.17 million / 19%; prior-year margin 8% | $5.15 million / 24%; prior-year margin 17% |
| Operating income (loss) | $(191,000); prior-year loss $(820,000) | $707,000; prior-year loss $(1.30 million) |
| Net income (loss) | $(117,000); prior-year income $182,000 | $724,000; down 28% from $1.00 million |
| EPS, basic and diluted | $(0.03); prior-year $0.05 | $0.21; prior-year $0.29 |
| Operating cash flow | Not reported separately for the quarter | $388,000; prior-year $2.02 million |
Quarterly revenue growth and improved gross margin did not prevent a net loss, partly because SG&A rose 12% to $1.36 million. Nine-month SG&A increased 16% to $4.45 million, primarily due to personnel costs. The filing does not present a separate debt balance; reported liabilities are current, with no long-term debt shown.
Liquidity, cash flow, and balance sheet
At February 28, 2022, cash and cash equivalents were $20.25 million, short-term investments $1.10 million, total current assets $34.74 million, and current liabilities $4.51 million. Working capital was approximately $30.23 million. Total assets were $46.17 million and stockholders’ equity $41.66 million.
Nine-month investing cash outflow was $730,000, including $722,000 of capital expenditures; financing provided $12,000. Cash declined $330,000 from May 31, 2021. The company had $1.7 million of capital expenditure commitments for the next 12 months. Management said operating cash flows should fund operations and capital improvements for that period.
Changes, outlook, and risks
- Nine-month sales growth was driven largely by structural customers and long-term construction projects; U.S. sales rose 55%. Structural customers represented 58% of nine-month sales, versus 44% a year earlier. Aerospace/defense represented 34%, versus 46%.
- The prior-year nine-month results included $2.096 million of federal pandemic assistance: $1.462 million from PPP loan forgiveness and $634,000 of Employee Retention Credit income. The prior-year quarter included $634,000 of Employee Retention Credit income. This makes earnings comparisons less representative of underlying operating performance.
- Backlog was $17.4 million at February 28, 2022, versus $18.8 million a year earlier and $22.0 million at May 31, 2021. There were 140 open orders, compared with 146 a year earlier; $4.1 million of current backlog was on projects already in progress.
- Receivables rose to $5.27 million, and days sales outstanding increased to 77 from 42 at fiscal year-end. Management expects collection within 12 months. Net receivables, contract assets and contract liabilities together increased to $5.88 million from $3.52 million.
- Management reported no significant supply-chain delays to date and said it was prepared to process existing and new orders. It cautioned that a prolonged economic downturn could harm operations and liquidity. Other cited risks include customer capital-budget reductions, demand shifts, competition and pricing pressure, technology changes, and natural disasters.
- The filing provides no quantified revenue or earnings guidance. Results may fluctuate and interim results are not necessarily indicative of the full year. No profit sharing, dividends, or other benefits were planned for the fiscal year.
The interim financial statements were reviewed by the independent accounting firm, not audited. The company reported effective disclosure controls, no material changes in internal control, and no legal proceedings other than routine litigation.
Important facts for investors to verify
- Whether higher structural-project revenue and gross margins can persist as backlog has declined.
- Collection timing and quality of receivables, including the increase in days sales outstanding.
- Project cost estimates and progress-billing assumptions underlying revenue recognized over time.
- Effects of personnel-cost growth, capital spending commitments, and supply-chain or broader economic risks on future margins and cash flow.
- The filing’s reporting-period discrepancy with the request metadata: it covers the quarter ended February 28, 2022.