If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
1
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The number of shares of the registrant’s common stock outstanding as of September 27, 2024 was 3,128,463.
2
TAYLOR DEVICES, INC.
Index to Form 10-Q
3
TAYLOR DEVICES, INC. AND SUBSIDIARY
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Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
| (Unaudited)
|
|
|
| August 31,
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| May 31,
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| 2024
|
| 2024
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|
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Assets
|
|
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Current assets:
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|
|
|
Cash and cash equivalents
| $2,163,496
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| $2,831,471
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Short-term investments
| 24,972,695
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| 28,131,279
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Accounts and other receivables, net
| 6,779,579
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| 5,212,408
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Inventory
| 8,154,045
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| 7,512,052
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Costs and estimated earnings in excess of billings
| 4,333,098
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| 4,356,565
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Other current assets
| 1,617,897
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| 725,506
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Total current assets
| 48,020,810
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| 48,769,281
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|
|
|
|
Maintenance and other inventory, net
| 1,283,527
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| 1,579,829
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Property and equipment, net
| 11,047,717
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| 11,180,933
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Patents, net
| 287,037
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| 292,593
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Other assets
| 243,280
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| 242,167
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Deferred income taxes
| 1,012,615
|
| 1,012,615
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| $61,894,986
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| $63,077,418
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Liabilities and Stockholders' Equity
|
|
|
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Current liabilities:
|
|
|
|
Accounts payable
| $1,847,922
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| $1,438,847
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Accrued expenses
| 2,396,249
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| 4,664,463
|
Billings in excess of costs and estimated earnings
| 2,984,361
|
| 5,601,274
|
Accrued income taxes
| 742,100
|
| 126,148
|
Total current liabilities
| 7,970,632
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| 11,830,732
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|
|
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|
Stockholders' Equity:
|
|
|
|
Common stock and additional paid-in capital
| 13,074,600
|
| 13,063,587
|
Retained earnings
| 53,793,673
|
| 51,127,018
|
| 66,868,273
|
| 64,190,605
|
Treasury stock - at cost
| (12,943,919)
|
| (12,943,919)
|
Total stockholders’ equity
| 53,924,354
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| 51,246,686
|
| $61,894,986
|
| $63,077,418
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|
See notes to condensed consolidated financial statements.
4
TAYLOR DEVICES, INC. AND SUBSIDIARY
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Condensed Consolidated Statements of Income
| (Unaudited)
|
| For the three months ended August 31,
|
| 2024
|
|
2023
|
|
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|
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Sales, net
| $11,617,856
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| $9,923,628
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|
|
|
|
Cost of goods sold
| 6,114,226
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| 5,539,052
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|
|
|
|
Gross profit
| 5,503,630
|
| 4,384,576
|
|
|
|
|
Research and development costs
| 69,192
|
| 129,074
|
Selling, general and administrative expenses
| 2,529,537
|
| 2,335,957
|
|
|
|
|
Operating income
| 2,904,901
|
| 1,919,545
|
|
|
|
|
Other income
| 376,754
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| 361,318
|
|
|
|
|
Income before provision for income taxes
| 3,281,655
|
| 2,280,863
|
|
|
|
|
Provision for income taxes
| 615,000
|
| 433,000
|
|
|
|
|
Net income
| $2,666,655
|
| $1,847,863
|
|
|
|
|
Basic and diluted earnings per common share
| $0.85
|
| $0.52
|
|
|
|
|
See notes to condensed consolidated financial statements.
5
TAYLOR DEVICES, INC. AND SUBSIDIARY
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Condensed Consolidated Statements of Stockholders’ Equity
|
|
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| (Unaudited)
|
| For the three months ended August 31,
|
| 2024
|
| 2023
|
|
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|
Common Stock
|
|
|
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|
Beginning of period
| $104,056
|
| $102,127
|
|
Issuance of shares for employee stock purchase plan
| 1
|
| 3
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|
Issuance of shares for employee stock option plan
| 19
|
| 38
|
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End of period
| 104,076
|
| 102,168
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|
Paid-in Capital
|
|
|
|
|
Beginning of period
| 12,959,531
|
| 10,947,089
|
|
Issuance of shares for employee stock purchase plan
| 2,426
|
| 2,880
|
|
Issuance of shares for employee stock option plan
| 8,567
|
| 15,761
|
|
End of period
| 12,970,524
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| 10,965,730
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|
Retained Earnings
|
|
|
|
|
Beginning of period
| 51,127,018
|
| 42,128,256
|
|
Net income
| 2,666,655
|
| 1,847,863
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|
End of period
| 53,793,673
|
| 43,976,119
|
|
Treasury Stock
|
|
|
|
|
Beginning of period
| (12,943,919)
|
| (3,084,742)
|
|
Issuance of shares for employee stock option plan
| -
|
| (15,799)
|
|
End of period
| (12,943,919)
|
| (3,100,541)
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|
Total stockholders' equity
| $53,924,354
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| $51,943,476
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|
See notes to condensed consolidated financial statements.
6
TAYLOR DEVICES, INC. AND SUBSIDIARY
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Condensed Consolidated Statements of Cash Flows
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| (Unaudited)
|
| For the three months ended
August 31,
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| 2024
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| 2023
|
|
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Operating activities:
|
|
|
|
Net income
| $2,666,655
|
| $1,847,863
|
Adjustments to reconcile net income to net cash flows from operating activities:
|
|
|
|
Depreciation
| 380,178
|
| 455,478
|
Amortization
| 5,556
|
| -
|
Changes in other assets and liabilities:
|
|
|
|
Accounts and other receivables, net
| (1,567,171)
|
| 149,754
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Inventory
| (345,691)
|
| (918,507)
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Costs and estimated earnings in excess of billings
| 23,467
|
| 735,211
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Other current assets
| (892,391)
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| 229,533
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Accounts payable
| 409,075
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| (666,200)
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Accrued expenses
| (1,652,262)
|
| (1,615,575)
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Billings in excess of costs and estimated earnings
| (2,616,913)
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| 2,820,563
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Net operating activities
| (3,589,497)
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| 3,038,120
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|
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Investing activities:
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Acquisition of property and equipment
| (246,962)
|
| (427,652)
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Purchase of short-term investments
| (341,416)
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| (3,297,983)
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Proceeds from sale of short-term investments
| 3,500,000
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| -
|
Other investing activities
| (1,113)
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| (1,128)
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Net investing activities
| 2,910,509
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| (3,726,763)
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Financing activities:
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Proceeds from issuance of common stock, net
| 11,013
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| 18,682
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Acquisition of treasury stock
| -
|
| (15,799)
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Net financing activities
| 11,013
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| 2,883
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Net change in cash and cash equivalents
| (667,975)
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| (685,760)
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Cash and cash equivalents - beginning
| 2,831,471
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| 3,575,219
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Cash and cash equivalents - ending
| $2,163,496
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| $2,889,459
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|
See notes to condensed consolidated financial statements.
7
TAYLOR DEVICES, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
1.The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of August 31, 2024 and May 31, 2024, the results of operations for the three months ended August 31, 2024 and 2023, and cash flows for the three months ended August 31, 2024 and 2023. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended May 31, 2024, filed with the U.S. Securities and Exchange Commission (“SEC”) on August 15, 2024 (the “Form 10-K”).
2.The Company has evaluated events and transactions for potential recognition or disclosure in the financial statements through the date the financial statements were issued.
3.There is no provision nor shall there be any provisions for profit sharing, dividends, or any other benefits of any nature at any time for this fiscal year.
4.For the three-month periods ended August 31, 2024 and 2023, the net income was divided by 3,118,975 and 3,520,910, respectively, which is net of the Treasury shares, to calculate the net income per share.
5.The results of operations for the three-month period ended August 31, 2024 are not necessarily indicative of the results to be expected for the full year.
6.Recently issued Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) guidance has either been implemented or is not significant to the Company.
7.Short-term Investments:
At times, the Company invests excess funds in liquid interest earning instruments. Short-term investments at August 31, 2024 and May 31, 2024 include money market funds, U.S. treasury securities and corporate bonds stated at fair value, which approximates cost. The short-term investments mature on various dates, ranging from September 2024 to August 2027. Unrealized holding gains and losses would be presented as a separate component of accumulated other comprehensive income, net of deferred income taxes. Realized gains and losses on the sale of investments are determined using the specific identification method.
The short-term investments are valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings.
8.Inventory:
| August 31, 2024
|
| May 31, 2024
|
Raw materials
| $911,532
|
| $886,947
|
Work-in-process
| 7,008,921
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| 6,412,497
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Finished goods
| 292,592
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| 271,608
|
| 8,213,045
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| 7,571,052
|
Less allowance for obsolescence
| 59,000
|
| 59,000
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| $8,154,045
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| $7,512,052
|
9.Revenue Recognition:
Revenue is recognized (generally at fixed prices) when, or as, the Company transfers control of promised products or services to a customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products or services.
8
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts which are, therefore, not distinct. Promised goods or services that are immaterial in the context of the contract are not separately assessed as performance obligations.
For contracts with customers in which the Company satisfies a promise to the customer to provide a product that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company satisfies the performance obligation and recognizes revenue over time (generally less than one year) using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material and overhead. Adjustments to cost estimates are made periodically, and losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined. Other sales to customers are recognized upon shipment to the customer based on contract prices and terms. In the three months ended August 31, 2024, 61% of revenue was recorded for contracts in which revenue was recognized over time while 39% was recognized at a point in time. In the three months ended August 31, 2023, 55% of revenue was recorded for contracts in which revenue was recognized over time while 45% was recognized at a point in time.
Progress payments are typically negotiated for longer term projects. Payments are otherwise due once performance obligations are complete (generally at shipment and transfer of title). 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.
If applicable, the Company recognizes an asset for the incremental, material costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year and the costs are expected to be recovered. As of August 31, 2024 and May 31, 2024, the Company does not have material incremental costs on any open contracts with an original expected duration of greater than one year, and therefore such costs are expensed as incurred. These incremental costs include, but are not limited to, sales commissions incurred to obtain a contract with a customer.
10.Accrued Expenses:
| August 31, 2024
|
| May 31, 2024
|
Customer deposits
| $28,563
|
| $285,689
|
Personnel costs
| 1,830,290
|
| 3,763,777
|
Other
| 537,396
|
| 614,997
|
| $2,396,249
|
| $4,664,463
|
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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 three months ended August 31, 2024 and 2023
|
|
| Increase /
|
|
|
| (Decrease)
|
|
Sales, net
|
| $1,694,000
|
|
Cost of goods sold
|
| $575,000
|
|
Research and development costs
|
| $(60,000)
|
|
Selling, general and administrative expenses
|
| $194,000
|
|
Other income
|
| $16,000
|
|
Income before provision for income taxes
|
| $1,001,000
|
|
Provision for income taxes
|
| $182,000
|
|
Net income
|
| $819,000
|
|
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 accounted for under the percentage-of-completion method of accounting whereby revenues are recognized 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.
10
For the three months ended August 31, 2024 (All figures discussed are for the three months ended August 31, 2024 as compared to the three months ended August 31, 2023).
| Three months ended August 31
| Change
|
| 2024
| 2023
| Amount
|
| Percent
|
Sales, net
| $11,618,000
| $9,924,000
| $1,694,000
|
| 17%
|
Cost of goods sold
| 6,114,000
| 5,539,000
| 575,000
|
| 10%
|
Gross profit
| $5,504,000
| $4,385,000
| $1,119,000
|
| 26%
|
… as a percentage of net revenues
| 47%
| 44%
|
|
|
|
The Company's consolidated results of operations showed a 17% increase in net revenues and $0.8 million increase in net income. Revenues recorded in the quarter ended August 31, 2024 for Projects were 30% higher than the level recorded in the prior year. The Company had 23 Projects in process during the quarter ended August 31, 2024 as compared to 22 during the same period last year. Revenues recorded in the quarter ended August 31, 2024 for other-than long-term projects (non-projects) were 2% higher than the level recorded in the prior year. Total sales within the U.S. during the quarter ended August 31, 2024 increased 10% from the same period last year. Total sales to Asia during the quarter ended August 31, 2024 increased 38% from the same period of the prior year. Sales increases were recorded over the same period last year to customers in aerospace / defense (20%) and industrial customers (111%) with a decrease to customers involved in construction of buildings and bridges (-5%). The increase in aerospace / defense sales is due, in part, to a combination of providing production hardware on several legacy programs and new development programs.
The gross profit as a percentage of net revenue of 47% in the quarter ended August 31, 2024 is three percentage points higher than the same period of the prior year (44%). The Company has been able to increase sales prices to recover more of the increased costs for materials and labor that were incurred over the past year. Management continues to work with suppliers to obtain more visibility of conditions affecting their respective markets. These actions combined with benefits from the Company’s continuous improvement initiatives and increased volume have helped to improve the gross margin as a percentage of revenue over the prior year.
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 August 31
|
| 2024
| 2023
|
Industrial
| 12%
| 7%
|
Structural
| 29%
| 35%
|
Aerospace / Defense
| 59%
| 58%
|
At August 31, 2023, the Company had 131 open sales orders in our backlog with a total sales value of $28.3 million. At August 31, 2024, the Company has 118 open sales orders in our backlog, and the total sales value is $28.4 million. The Company expects to recognize revenue for the majority of the backlog during the current fiscal year.
The Company's backlog, revenues, gross profits, and net income fluctuate from period to period. The changes in the quarter ended August 31, 2024 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 three-month periods ended August 31, 2024 and 2023, is as follows:
| Three months ended August 31
|
| 2024
| 2023
|
US
| 78%
| 83%
|
Asia
| 14%
| 12%
|
Other
| 8%
| 5%
|
11
Research and Development Costs
| Three months ended August 31
| Change
|
| 2024
| 2023
| Amount
|
| Percent
|
R & D
| $ 69,000
| $ 129,000
| $ (60,000)
|
| -47%
|
… as a percentage of net revenues
| 0.6%
| 1.3%
|
|
|
|
Research and development costs declined $60,000 during the quarter ended August 31, 2024, from the same period in the prior year, due to a change in the mix of engineering resource driven projects, inclusive of customer funded development.
Selling, General and Administrative Expenses
| Three months ended August 31
| Change
|
| 2024
| 2023
| Amount
|
| Percent
|
S G & A
| $ 2,530,000
| $ 2,336,000
| $ 194,000
|
| 8%
|
… as a percentage of net revenues
| 22%
| 24%
|
|
|
|
Selling, general and administrative expenses during the quarter ended August 31, 2024 increased 8% from the same period in the prior year. This change is primarily due to increased employee compensation costs including incentive compensation.
Operating Income
Operating income was $2,905,000 for the three months ended August 31, 2024, better than the $1,920,000 in the same period of the prior year. The increase in Operating income was attributed to increased gross margin from higher levels of sales.
Other Income
Other income was $377,000 for the three months ended August 31, 2024, a 4% increase from the same period of the prior year. This increase 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 three months ended August 31, 2024 were $247,000 compared to $428,000 in the same period of the prior year. As of August 31, 2024, the Company has commitments for capital expenditures totaling $1,264,000 during the next twelve months. The Board of Directors is evaluating additional capital expenditures to expand capacity.
Inventory and Maintenance Inventory
| August 31, 2024
| May 31, 2024
| Increase /(Decrease)
|
Raw materials
| $912,000
|
| $887,000
|
| $25,000
|
| 3%
|
Work-in-process
| 7,009,000
|
| 6,412,000
|
| 597,000
|
| 9%
|
Finished goods
| 233,000
|
| 213,000
|
| 20,000
|
| 9%
|
Inventory
| 8,154,000
| 86%
| 7,512,000
| 83%
| 642,000
|
| 9%
|
Maintenance and other inventory
| 1,284,000
| 14%
| 1,580,000
| 17%
| (296,000)
|
| -19%
|
Total
| $9,438,000
| 100%
| $9,092,000
| 100%
| $346,000
|
| 4%
|
|
|
|
|
|
|
|
|
Inventory turnover
| 2.6
|
| 3.0
|
|
|
|
|
NOTE: Inventory turnover is annualized for the three-month period ended August 31, 2024.
Inventory, at $8,154,000 as of August 31, 2024, is $642,000 more than the prior year-end level of $7,512,000. Approximately 86% of the inventory as of August 31, 2024 was work in process, 3% was finished goods, and 11% was raw materials.
12
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 $0 and $144,000 for the three-month periods ended August 31, 2024 and 2023, respectively.
Accounts Receivable, Costs and Estimated Earnings in Excess of Billings (“CIEB"), and Billings in Excess of Costs and Estimated Earnings ("BIEC")
| August 31, 2024
| May 31, 2024
| Increase /(Decrease)
|
Accounts receivable
| $6,780,000
|
| $5,212,000
|
| $1,568,000
|
| 30%
|
CIEB
| 4,333,000
|
| 4,357,000
|
| (24,000)
|
| -1%
|
Less: BIEC
| 2,984,000
|
| 5,601,000
|
| (2,617,000)
|
| -47%
|
Net
| $8,129,000
|
| $3,968,000
|
| $4,161,000
|
| 105%
|
|
|
|
|
|
|
|
|
Number of an average day’s sales
outstanding in accounts receivable
| 53
|
| 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 $6,780,000 as of August 31, 2024 includes $29,000 of an allowance for doubtful accounts (“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 53 days at August 31, 2024. 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 $4,333,000 balance in this account at August 31, 2024 is 1% 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. 34% of the CIEB balance as of the end of the last fiscal quarter, May 31, 2024, was billed to those customers in the quarter ended August 31, 2024. 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:
| August 31, 2024
| May 31, 2024
|
Costs
| $ 8,945,000
|
| $ 9,644,000
|
Estimated Earnings
| 9,107,000
|
| 9,782,000
|
Less: Billings to customers
| 13,719,000
|
| 15,069,000
|
CIEB
| $ 4,333,000
|
| $ 4,357,000
|
Number of Projects in progress
| 15
|
| 14
|
As noted above, BIEC represents billings to customers in excess of revenues recognized. The $2,984,000 balance in this account at August 31, 2024 is down 47% 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.
13
The balances in this account are comprised of the following components:
| August 31, 2024
| May 31, 2024
|
Billings to customers
| $9,093,000
|
| $7,211,000
|
Less: Costs
| 3,013,000
|
| 933,000
|
Less: Estimated Earnings
| 3,096,000
|
| 677,000
|
BIEC
| $2,984,000
|
| $5,601,000
|
Number of Projects in progress
| 5
|
| 5
|
Summary of factors affecting the balances in CIEB and BIEC:
| August 31, 2024
| May 31, 2024
|
Number of Projects in progress
| 20
|
| 19
|
Aggregate percent complete
| 58%
|
| 53%
|
Average total sales value of Projects in progress
| $2,043,000
|
| $2,089,000
|
Percentage of total value invoiced to customer
| 56%
|
| 56%
|
The Company's backlog of sales orders at August 31, 2024 is $28.4 million, down from $33.1 million at the end of the prior year. $17.6 million of the Company’s backlog as of August 31, 2024 was on Projects already in progress.
Other Balance Sheet Items
Accounts payable, at $1,848,000 as of August 31, 2024, is 28% higher than the prior year-end. Accrued expenses decreased 49% from the prior year-end, to $2,396,000, due to the payout of fiscal year 2024 incentive compensation. The Company expects the accrued amounts to be paid or applied during the next twelve months.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Smaller reporting companies are not required to provide the information called for by this item.
Item 4. Controls and Procedures
(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 August 31, 2024 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 August 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's control over financial reporting.
14
Part II - Other Information
Item 1. Legal Proceedings
Refer to Note 17, “Legal Proceedings,” to the Consolidated Financial Statements in the Company’s Form 10-K for information regarding the Company’s legal proceedings, which is incorporated by reference into this Item 1.
Item 1A. Risk Factors
Smaller reporting companies are not required to provide the information called for by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Trading Plans
During the three months ended August 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
15
Item 6. Exhibits
|
| 3
(i)
| Articles of incorporation and by-laws.
Restated Certificate of Incorporation, as amended, incorporated by reference to Exhibit (3)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2024, filed August 15, 2024.
|
|
| (ii)
4
(i)
(ii)
31
| By-laws, incorporated by reference to Exhibit 3(v) to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2022, filed January 6, 2023.
Instruments defining the rights of security holders.
Rights Agreement by and between the Registrant and Computershare Trust Company, N.A., incorporated by reference to Exhibit 4 to the Registrant’s Registration Statement on Form 8-A, filed October 5, 2018.
Letter to Holders of the Registrant’s Common Stock, incorporated by reference to Exhibit 20 to the Registrant’s Registration Statement on Form 8-A, filed October 5, 2018.
Officer certifications.
|
|
| (i)
| Rule 13a-14(a) Certification of Chief Executive Officer.*
|
|
| (ii)
32
| Rule 13a-14(a) Certification of Chief Financial Officer.*
Officer certifications
|
|
| (i)
| Section 1350 Certification of Chief Executive Officer.**
|
|
| (ii)
| Section 1350 Certification of Chief Financial Officer.**
|
|
|
101
101.SCH
|
Inline XBRL Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.
Inline XBRL Taxonomy Extension Schema Document
|
|
| 101.CAL
| Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
| 101.DEF
| Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
| 101.LAB
| Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
| 101.PRE
| Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
| 104
| Cover Page Interactive Data File – the cover page Inline XBRL tags are embedded within the Inline XBRL document and are contained within Exhibit 101
|
* Exhibit filed with this report.
**Exhibit furnished with this report.
16
TAYLOR DEVICES, INC.
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.
Exhibit 31(i)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Timothy J. Sopko, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Taylor Devices, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: September 27, 2024
| /s/ Timothy J. Sopko
|
| Timothy J. Sopko
Chief Executive Officer
|
Exhibit 31(ii)
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul Heary, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Taylor Devices, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: September 27, 2024
| /s/ Paul Heary
|
| Paul Heary
Chief Financial Officer
|