Taylor Devices' Net Income Jumps 13% on Strong Domestic Sales

TL;DR

**TAYD is flying high on domestic demand and short-term projects, but watch that shrinking backlog – it's a future revenue red flag.**

AI Summary

Taylor Devices, Inc. (TAYD) reported a strong financial performance for the six months ended November 30, 2025, with net income increasing by 13% to $4,198,708, up from $3,722,815 in the prior year. Net revenue also saw a 7% increase, reaching $21,521,822 compared to $20,166,737. This growth was primarily driven by a 34% increase in revenue from other-than long-term projects, despite a 9% decrease in revenue from long-term projects. Domestic sales surged by 15%, while international sales declined by 32%. Sales to aerospace/defense customers increased to 61% of total sales from 59%, and construction of buildings and bridges customers saw a 4% increase. However, the gross profit margin slightly decreased by one percentage point to 46% from 47%. The company's backlog decreased from $34.5 million across 156 open sales orders at November 30, 2024, to $25.1 million across 134 open sales orders at November 30, 2025, with the majority expected to be recognized in fiscal years 2026 and 2027.

Why It Matters

Taylor Devices' robust net income growth and increased domestic sales signal strong operational execution and demand within key sectors like aerospace/defense and construction, which could attract investor interest. The shift in sales concentration towards the U.S. market, coupled with a significant increase in other-than long-term projects, suggests adaptability in its business model. However, the declining backlog and international sales could pose future challenges, impacting long-term revenue visibility and competitive positioning against global rivals. Investors should weigh the current profitability against the reduced future order book.

Risk Assessment

Risk Level: medium — The company's backlog decreased significantly from $34.5 million at November 30, 2024, to $25.1 million at November 30, 2025, representing a 27.39% reduction. This decline in future orders, despite current strong performance, indicates potential revenue recognition challenges in fiscal years 2026 and 2027, increasing future revenue uncertainty.

Analyst Insight

Investors should consider TAYD's strong current profitability and increased domestic sales as positive indicators, but closely monitor future backlog reports. A declining backlog could signal a slowdown in future revenue growth, so investors should evaluate if the current valuation adequately accounts for this potential headwind.

Financial Highlights

revenue

$21.52M

total Assets

$72.84M

net Income

$4.20M

eps

$1.33

gross Margin

46%

cash Position

$1.96M

revenue Growth

+7%

Revenue Breakdown

Key Numbers

• $21.52M — Net Revenue (Increased 7% from $20.17M in the prior year period.)
• $4.20M — Net Income (Increased 13% from $3.72M in the prior year period.)
• 46% — Gross Profit as a percentage of net revenue (Decreased by 1 percentage point from 47% in the prior year period.)
• 15% — Increase in Total Sales within the U.S. (Compared to the same period last year.)
• 32% — Decrease in Total Sales outside the U.S. (Compared to the same period last year.)
• $25.1M — Backlog at November 30, 2025 (Decreased from $34.5M at November 30, 2024.)
• 61% — Sales to Aerospace / Defense (Increased from 59% in the prior year period.)
• 34% — Increase in revenue from other-than long-term projects (Compared to the prior year period.)
• 9% — Decrease in revenue from long-term projects (Compared to the prior year period.)
• $1.96M — Cash and cash equivalents (Increased from $1.19M at May 31, 2025.)

Key Players & Entities

• Taylor Devices, Inc. (company) — registrant
• Nasdaq Stock Market LLC (regulator) — exchange for common stock
• U.S. Securities and Exchange Commission (regulator) — filing authority
• Financial Accounting Standards Board (regulator) — issued accounting standards
• Private Securities Litigation Reform Act of 1995 (regulator) — provides safe harbor for forward-looking statements
• November 30, 2025 (date) — end of current reporting period
• November 30, 2024 (date) — end of prior reporting period
• May 31, 2025 (date) — end of previous fiscal year
• ASU 2023-09 (regulation) — Income Taxes (Topic 740): Improvements to Income Tax Disclosures
• ASU 2024-03 (regulation) — Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures

FAQ

Risk Factors

• Customer Budget Reductions [medium — market]: A significant risk is the reduction in capital budgets by current and potential customers. This can directly impact demand for Taylor Devices' products, as seen in the decrease in backlog.
• Changing Product Demand and Industry Capacity [medium — market]: Fluctuations in product demand and industry capacity pose a risk. The company experienced a 9% decrease in revenue from long-term projects, suggesting potential shifts in demand for certain product lines.
• Increased Competition and Pricing Pressures [medium — market]: The company faces risks from increased competition and pricing pressures. This could affect profit margins, as evidenced by the slight decrease in gross profit margin from 47% to 46%.
• Technological Advancements [low — market]: Advances in technology could reduce the demand for Taylor Devices' products. This is an ongoing risk in the technology-driven aerospace and defense sectors where the company has a significant presence.
• Natural Disasters [low — market]: The frequency and intensity of natural disasters can affect demand for the company's products. While not directly quantifiable in this report, it remains a stated risk factor.
• Backlog Reduction [high — financial]: The backlog decreased from $34.5 million to $25.1 million, representing a significant reduction in future contracted revenue. This indicates potential headwinds for future revenue streams.
• International Sales Decline [medium — financial]: A 32% decrease in international sales is a notable concern, potentially signaling geopolitical, economic, or market-specific challenges in foreign markets.
• Reliance on Aerospace/Defense [medium — operational]: The increasing reliance on the aerospace/defense sector (61% of sales) could concentrate risk if this sector experiences downturns or significant regulatory changes.

Industry Context

Taylor Devices operates in a specialized market, providing shock absorption and energy damping solutions. The company's performance is closely tied to capital expenditure cycles in industries like aerospace, defense, and construction. Increased competition and technological advancements are key trends influencing product demand and development.

Regulatory Implications

The company operates under general business regulations. Specific to its industry, compliance with aerospace and defense sector standards is critical. Changes in international trade policies or tariffs could also impact its global sales, as evidenced by the 32% decline in international revenue.

What Investors Should Do

1. Monitor backlog trends closely.
2. Analyze the drivers of international sales decline.
3. Assess the sustainability of growth from 'other-than long-term projects'.
4. Evaluate the impact of increased R&D spending.

Glossary

Backlog

The total value of confirmed customer orders that have not yet been fulfilled or recognized as revenue. (A key indicator of future revenue. Taylor Devices' backlog decreased from $34.5 million to $25.1 million, signaling potential future revenue challenges.)

Costs and estimated earnings in excess of billings

Represents revenue recognized on long-term contracts where the cumulative costs incurred and estimated earnings exceed the cumulative amounts billed to the customer. (This balance decreased significantly from $5.36 million to $2.42 million, suggesting a shift in contract revenue recognition or project completion status.)

Billings in excess of costs and estimated earnings

Represents revenue recognized on long-term contracts where the cumulative amounts billed to the customer exceed the cumulative costs incurred and estimated earnings. (This balance also decreased significantly from $4.38 million to $1.62 million, indicating a change in the billing cycle relative to project progress.)

Other-than long-term projects

Revenue generated from projects that are not classified as long-term contracts, likely shorter-cycle or standard product sales. (This segment saw a 34% increase in revenue, driving overall company growth despite a decline in long-term projects.)

Provision for income taxes

The amount of income tax expense recognized by the company for a given period. (The provision for income taxes increased by $273,000 for the six-month period, reflecting higher pre-tax income.)

Year-Over-Year Comparison

For the six months ended November 30, 2025, Taylor Devices reported a 7% increase in net revenue to $21.52 million and a 13% rise in net income to $4.20 million compared to the prior year. However, the gross profit margin slightly decreased by one percentage point to 46%. A significant concern is the 32% decline in international sales, contrasting with a strong 15% increase in domestic sales. The company's backlog also saw a substantial reduction from $34.5 million to $25.1 million.

Key Financial Figures

• $34.5 million — its backlog with a total sales value of $34.5 million. At November 30, 2025, the Company had
• $25.1 million — its backlog with a total sales value of $25.1 million. The Company expects to recognize reven
• $123,000 — esearch and development costs increased $123,000 from the same period in the prior year.
• $800,000 — on ("FASB ASC"). The Company recognized $800,000 (47,850 options granted) and $731,000 (
• $731,000 — d $800,000 (47,850 options granted) and $731,000 (46,800 options granted) of compensatio
• $4,475,000 — Operating Income Operating income was $4,475,000 for the six-month period ended November
• $3,849,000 — od ended November 30, 2025, higher than $3,849,000 in the same period of the prior year. T
• $808,000 — venue. Other Income Other income was $808,000 for the six-month period ended November

Filing Documents

• tayd-20251130_10q.htm (10-Q) — 396KB
• 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
• 0001376474-25-000988.txt ( ) — 1475KB
• tayd-20251130_cal.xml (EX-101.CAL) — 29KB
• tayd-20251130_def.xml (EX-101.DEF) — 25KB
• tayd-20251130_lab.xml (EX-101.LAB) — 89KB
• tayd-20251130_pre.xml (EX-101.PRE) — 65KB
• tayd-20251130.xsd (EX-101.SCH) — 8KB
• tayd-20251130_10q_htm.xml (XML) — 105KB

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets as of November 30, 2025 and May 31, 2025 4 Condensed Consolidated Statements of Income for the three and six months ended November 30, 2025 and November 30, 202 4 5 Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended November 30, 2025 and November 30, 202 4 6 Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2025 and November 30, 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 17 Item 4.

Controls and Procedures

Controls and Procedures 17 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 18 Item 1A.

Risk Factors

Risk Factors 18 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18 Item 3. Defaults Upon Senior Securities 18 Item 4. Mine Safety Disclosures 18 Item 5. Other Information 18 Item 6. Exhibits 19

– Financial Information

Part I – Financial Information

Financial Statements

Item 1. Financial Statements TAYLOR DEVICES, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets (Unaudited) November 30, May 31, 2025 2025 Assets Current assets: Cash and cash equivalents $ 1,956,030 $ 1,190,656 Short-term investments 38,787,922 34,799,367 Accounts receivable, net 5,180,955 5,599,785 Inventory 7,867,303 8,113,321 Costs and estimated earnings in excess of billings 2,424,165 5,360,499 Other current assets 1,712,737 1,219,211 Total current assets 57,929,112 56,282,839 Maintenance and other inventory, net 1,162,840 1,107,875 Property and equipment, net 12,659,629 12,074,172 Patents, net 259,258 270,370 Other assets 287,279 284,864 Deferred income taxes 546,000 1,598,000 $ 72,844,118 $ 71,618,120 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,616,645 $ 1,119,240 Accrued expenses 2,544,802 4,072,436 Billings in excess of costs and estimated earnings 1,621,647 4,382,067 Total current liabilities 5,783,094 9,573,743 Stockholders' equity: Common stock and additional paid-in capital 15,531,385 14,649,415 Retained earnings 64,738,862 60,540,154 80,270,247 75,189,569 Treasury stock - at cost ( 13,209,223 ) ( 13,145,192 ) Total stockholders' equity 67,061,024 62,044,377 $ 72,844,118 $ 71,618,120 See notes to condensed consolidated financial statements. 4 TAYLOR DEVICES, INC. AND SUBSIDIARY Condensed Consolidated Statements of Income (Unaudited) (Unaudited) For the three months ended For the six months ended November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024 Sales, net $ 11,603,472 $ 8,548,881 $ 21,521,822 $ 20,166,737 Cost of goods sold 6,144,121 4,662,781 11,623,727 10,777,007 Gross profit 5,459,351 3,886,100 9,898,095 9,389,730 Research and development costs 214,370 102,922 295,187 172,114 Selling, general and

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 include

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