Taylor Devices' Q1 Sales Plunge 15%, Net Income Down 18%

TL;DR

**TAYD's Q1 numbers are a red flag; revenue and profit drops signal a tough road ahead, sell into any bounce.**

AI Summary

Taylor Devices, Inc. (TAYD) reported a significant decline in financial performance for the three months ended August 31, 2025, with net sales decreasing by 15% to $9,918,350 from $11,617,856 in the prior year. Net income also fell by 18% to $2,190,084, down from $2,666,655. This led to a basic and diluted earnings per common share of $0.70, a decrease from $0.85. The gross profit margin contracted by two percentage points, from 47% to 45%. The decline in sales was broad-based, with aerospace/defense sales down 26% and industrial sales down 19%, while structural sales increased by 11%. Geographically, sales to Asia plummeted by 44%, though U.S. sales only decreased by 9%. Despite the revenue decline, the company's cash and cash equivalents increased to $2,153,006 from $1,190,656 at May 31, 2025, primarily due to a decrease in short-term investments and positive net operating cash flow of $483,628. The backlog remained relatively stable at $27.9 million across 127 open sales orders as of August 31, 2025, compared to $28.4 million across 118 orders in the prior year.

Why It Matters

This filing reveals a concerning trend for Taylor Devices, Inc., with significant declines in both top-line revenue and bottom-line profit. For investors, the 18% drop in net income and reduced EPS signals potential headwinds, especially given the contraction in gross profit margin. The shift in sales mix, with a sharp decline in aerospace/defense and Asian markets, could indicate competitive pressures or changing market dynamics that impact future growth. Employees might face pressure if these trends continue, while customers could see shifts in product availability or pricing. The broader market will watch if this is an isolated event or indicative of a slowdown in the specialized shock and vibration control sector.

Risk Assessment

Risk Level: medium — The company experienced a 15% decrease in net sales and an 18% decrease in net income for the quarter ended August 31, 2025, compared to the prior year. This significant decline, coupled with a 44% drop in sales to Asia and a 26% decrease in aerospace/defense sales, indicates substantial operational challenges and market concentration risks. While cash increased, the underlying business performance is deteriorating.

Analyst Insight

Investors should exercise caution and consider a 'hold' or 'reduce' position on TAYD. The significant declines in sales and net income, particularly in key segments and geographies, warrant a closer look at the company's ability to reverse these trends. Monitor future filings for signs of stabilization in revenue and profit, and pay close attention to backlog conversion rates and new order intake.

Financial Highlights

revenue

$9,918,350

operating Margin

22.6%

total Assets

$70,291,344

net Income

$2,190,084

eps

$0.70

gross Margin

45%

cash Position

$2,153,006

revenue Growth

-15%

Revenue Breakdown

Key Numbers

• $9.9M — Net Sales (Decreased 15% from $11.6M in Q1 2024)
• $2.19M — Net Income (Decreased 18% from $2.67M in Q1 2024)
• $0.70 — EPS (Decreased from $0.85 in Q1 2024)
• 45% — Gross Profit Margin (Decreased 2 percentage points from 47% in Q1 2024)
• -44% — Sales to Asia (Significant decrease from Q1 2024)
• -26% — Aerospace/Defense Sales (Significant decrease from Q1 2024)
• $2.15M — Cash and Cash Equivalents (Increased from $1.19M at May 31, 2025)
• $27.9M — Backlog (Slight decrease from $28.4M in Q1 2024)

Key Players & Entities

• Taylor Devices, Inc. (company) — registrant
• $9,918,350 (dollar_amount) — net sales for Q1 2025
• $11,617,856 (dollar_amount) — net sales for Q1 2024
• $2,190,084 (dollar_amount) — net income for Q1 2025
• $2,666,655 (dollar_amount) — net income for Q1 2024
• $0.70 (dollar_amount) — basic and diluted EPS for Q1 2025
• $0.85 (dollar_amount) — basic and diluted EPS for Q1 2024
• $2,153,006 (dollar_amount) — cash and cash equivalents as of August 31, 2025
• $27.9 million (dollar_amount) — total sales value of backlog as of August 31, 2025
• Nasdaq Stock Market LLC (regulator) — exchange where TAYD is listed

FAQ

Risk Factors

• Customer Capital Budget Reductions [medium — market]: Reductions in capital budgets by customers and potential customers can negatively impact demand for TAYD's products. This is a recurring risk that can lead to decreased sales and revenue.
• Changing Product Demand and Industry Capacity [medium — market]: Fluctuations in product demand and industry capacity create uncertainty. If demand shifts away from TAYD's offerings or if industry overcapacity arises, it could pressure sales and profitability.
• Increased Competition and Pricing Pressures [medium — market]: The company faces competition that can lead to pricing pressures. This could erode gross margins and impact overall financial performance, as seen in the recent 2-percentage point decline in gross margin.
• Technological Advancements [low — market]: Advances in technology could reduce the demand for TAYD's existing products. The company must innovate to stay competitive and mitigate the risk of obsolescence.
• Natural Disasters [low — market]: The frequency and intensity of natural disasters can affect demand for TAYD's products. While unpredictable, these events can cause significant swings in customer needs.
• Supply Chain and Production Disruptions [medium — operational]: While not explicitly detailed as a risk factor in the provided text, operational risks such as supply chain disruptions or production issues could impact the company's ability to meet demand and maintain margins.
• Revenue Decline and Margin Contraction [high — financial]: The recent 15% decrease in net sales and 2-percentage point drop in gross margin highlight financial performance risks. Continued declines could strain profitability and cash flow.
• Geopolitical and Regional Instability [medium — market]: The significant 44% drop in sales to Asia suggests that geopolitical factors or regional economic downturns can have a material impact on specific markets.

Industry Context

Taylor Devices, Inc. operates in specialized markets, including aerospace/defense and industrial sectors, which are often sensitive to global economic conditions and capital spending cycles. The company's products are critical components, meaning demand is tied to larger manufacturing and defense programs. Competition exists, and technological advancements can disrupt demand, requiring continuous innovation. The recent broad-based sales decline, particularly in aerospace/defense and industrial segments, suggests a challenging market environment.

Regulatory Implications

The company operates under standard financial reporting regulations (SEC filings like the 10-Q) and may be subject to industry-specific regulations depending on its customer base (e.g., aerospace certifications). The 'safe harbor' statement for forward-looking statements is a standard regulatory disclosure to manage investor expectations regarding future performance projections.

What Investors Should Do

1. Monitor Aerospace/Defense and Industrial Segment Performance
2. Analyze Gross Margin Trends
3. Evaluate Geographic Sales Diversification
4. Assess Cash Flow Generation and Liquidity
5. Review Backlog Stability

Key Dates

• 2025-08-31: End of Fiscal Q2 2025 — Reporting period for the 10-Q, showing a decline in sales and net income.
• 2025-05-31: End of Fiscal Q1 2025 — Comparison point for cash and cash equivalents, which increased from $1,190,656 to $2,153,006.
• 2024-08-31: End of Fiscal Q2 2024 — Prior year comparison period for sales, net income, and EPS, showing significant year-over-year declines.

Glossary

Backlog

The total value of orders received but not yet fulfilled. It represents future revenue potential. (TAYD's backlog remained stable at $27.9 million, indicating a consistent level of future business despite current sales declines.)

Gross Profit Margin

The percentage of revenue that exceeds the cost of goods sold. It indicates the profitability of the core production process. (The contraction from 47% to 45% suggests increased cost of goods sold relative to sales, impacting overall profitability.)

Earnings Per Common Share (EPS)

The portion of a company's profit allocated to each outstanding share of common stock. (The decrease from $0.85 to $0.70 reflects the lower net income available to shareholders.)

Cash and Cash Equivalents

Highly liquid financial instruments with original maturities of three months or less. This represents readily available funds. (The increase to $2,153,006 from $1,190,656 is a positive sign, driven by operating cash flow and reduced short-term investments.)

Short-term Investments

Investments with maturities between three months and one year. These are less liquid than cash equivalents. (A decrease in short-term investments contributed to the increase in cash and cash equivalents.)

Costs and estimated earnings in excess of billings

A balance sheet account used in long-term contract accounting, representing revenue recognized on contracts that has not yet been billed to the customer. (This account decreased from $5,360,499 to $4,704,141, indicating a shift in billing or revenue recognition patterns.)

Billings in excess of costs and estimated earnings

A balance sheet account used in long-term contract accounting, representing amounts billed to customers that exceed the revenue recognized to date. (This account decreased from $4,382,067 to $2,864,793, suggesting that billings are catching up to recognized revenue or vice versa.)

Operating Income

Profitability from a company's core business operations before interest and taxes. (Decreased by $659,634 to $2,245,267, reflecting the impact of lower sales and higher R&D costs.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Taylor Devices, Inc. (TAYD) experienced a significant downturn in financial performance. Net sales decreased by 15% to $9.9 million, and net income fell by 18% to $2.19 million, resulting in lower EPS of $0.70 from $0.85. The gross profit margin contracted by two percentage points to 45%, indicating increased cost of goods sold relative to revenue. While cash and cash equivalents saw a substantial increase, driven by operating cash flow and reduced short-term investments, the broad-based decline across key segments like aerospace/defense and industrial, coupled with a sharp drop in Asian sales, presents a concerning trend.

Key Financial Figures

• $28.4 million — our backlog with a total sales value of $28.4 million. At August 31, 2025, the Company had 12
• $27.9 million — ur backlog, with a total sales value of $27.9 million. The Company expects to recognize reven
• $12,000 — esearch and development costs increased $12,000 during the quarter ended August 31, 202
• $2,245,000 — Operating Income Operating income was $2,245,000 for the three-month period ended August
• $2,905,000 — d ended August 31, 2025, lower than the $2,905,000 in the same period of the prior year. T
• $384,000 — enue. Other Income Other income was $384,000 for the three-month period ended August
• $185,000 — three months ended August 31, 2025 were $185,000 compared to $247,000 in the same period
• $247,000 — gust 31, 2025 were $185,000 compared to $247,000 in the same period of the prior year. A
• $2,751,000 — ments for capital expenditures totaling $2,751,000 during the next twelve months. The Comp
• $8,505,000 — ended August 31, 2025. Inventory, at $8,505,000 as of August 31, 2025, is $392,000 high
• $392,000 — at $8,505,000 as of August 31, 2025, is $392,000 higher than the prior year-end level of
• $8,113,000 — higher than the prior year-end level of $8,113,000. Approximately 88% of the inventory as
• $4,524,000 — ng 30-60 days. Accounts receivable of $4,524,000 as of August 31, 2025 includes $484,000
• $484,000 — ,524,000 as of August 31, 2025 includes $484,000 of an allowance for estimated credit lo
• $5,600,000 — eceivable balance as of May 31, 2025 of $5,600,000 included an Allowance of $564,000. The

Filing Documents

• tayd-20250831_10q.htm (10-Q) — 307KB
• td_ex31z1.htm (EX-31.1) — 7KB
• td_ex31z2.htm (EX-31.2) — 7KB
• td_ex32z1.htm (EX-32.1) — 4KB
• td_ex32z2.htm (EX-32.2) — 4KB
• 0001376474-25-000835.txt ( ) — 1335KB
• tayd-20250831_cal.xml (EX-101.CAL) — 29KB
• tayd-20250831_def.xml (EX-101.DEF) — 25KB
• tayd-20250831_lab.xml (EX-101.LAB) — 87KB
• tayd-20250831_pre.xml (EX-101.PRE) — 64KB
• tayd-20250831.xsd (EX-101.SCH) — 8KB
• tayd-20250831_10q_htm.xml (XML) — 83KB

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets as of August 31, 2025 and May 31, 2025 4 Condensed Consolidated Statements of Income for the three months ended August 31, 2025 and 202 4 5 Condensed Consolidated Statements of Stockholders' Equity for the three months ended August 31, 2025 and 202 4 6 Condensed Consolidated Statements of Cash Flows for the three months ended August 31, 2025 and 202 4 7 Notes to Condensed Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 14 Item 4.

Controls and Procedures

Controls and Procedures 14 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 15 Item 1A.

Risk Factors

Risk Factors 15 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Mine Safety Disclosures 15 Item 5. Other Information 15 Item 6. Exhibits 16

SIGNATURES

SIGNATURES 17 3 TAYLOR DEVICES, INC. AND SUBSIDIARY

- Financial Information

Part I - Financial Information

Financial Statements

Item 1. Financial Statements Condensed Consolidated Balance Sheets (Unaudited) August 31, May 31, 2025 2025 Assets Current assets: Cash and cash equivalents $ 2,153,006 $ 1,190,656 Short-term investments 34,151,464 34,799,367 Accounts and other receivables, net 4,523,521 5,599,785 Inventory 8,504,958 8,113,321 Costs and estimated earnings in excess of billings 4,704,141 5,360,499 Other current assets 1,590,817 1,219,211 Total current assets 55,627,907 56,282,839 Maintenance and other inventory, net 1,208,346 1,107,875 Property and equipment, net 11,806,321 12,074,172 Patents, net 264,814 270,370 Other assets 285,956 284,864 Deferred income taxes 1,098,000 1,598,000 $ 70,291,344 $ 71,618,120 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,032,023 $ 1,119,240 Accrued expenses 2,143,169 4,072,436 Billings in excess of costs and estimated earnings 2,864,793 4,382,067 Total current liabilities 6,039,985 9,573,743 Stockholders' equity: Common stock and additional paid-in capital 14,697,809 14,649,415 Retained earnings 62,730,238 60,540,154 77,428,047 75,189,569 Treasury stock - at cost ( 13,176,688 ) ( 13,145,192 ) Total stockholders' equity 64,251,359 62,044,377 $ 70,291,344 $ 71,618,120 See notes to condensed consolidated financial statements. 4 TAYLOR DEVICES, INC. AND SUBSIDIARY Condensed Consolidated Statements of Income (Unaudited) For the three months ended August 31, 2025 2024 Sales, net $ 9,918,350 $ 11,617,856 Cost of goods sold 5,479,606 6,114,226 Gross profit 4,438,744 5,503,630 Research and development costs 80,817 69,192 Selling, general and administrative expenses 2,112,660 2,529,537 Operating income 2,245,267 2,904,901 Other income 383,817 376,754 Income before provision for income taxes 2,629,084 3,281,655 Provision for income taxes 43

Management's Discussion and Analysis of Financial Condition and Results of Operations

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 includ

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