PART I - FINANCIAL INFORMATION Presents unaudited condensed consolidated financial statements and management's discussion for the quarter ended August 31, 2025 Item 1. Financial Statements Presents unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flows, with detailed notes Condensed Consolidated Balance Sheets Provides a comparative overview of the company's financial position at August 31, 2025, and May 31, 2025 | Balance Sheet Item | August 31, 2025 ($) | May 31, 2025 ($) | Change (vs. May 31, 2025) ($) | Percentage Change (%) | | :----------------- | :-------------- | :----------- | :------------------------ | :---------------- | | Cash and cash equivalents | $2,153,006 | $1,190,656 | $962,350 | 80.8% | | Short-term investments | $34,151,464 | $34,799,367 | $(647,903) | -1.9% | | Total current assets | $55,627,907 | $56,282,839 | $(654,932) | -1.2% | | Total assets | $70,291,344 | $71,618,120 | $(1,326,776) | -1.9% | | Total current liabilities | $6,039,985 | $9,573,743 | $(3,533,758) | -36.9% | | Total stockholders' equity | $64,251,359 | $62,044,377 | $2,206,982 | 3.6% | Condensed Consolidated Statements of Income Presents the company's financial performance for the three months ended August 31, 2025, and 2024 | Income Statement Item | Three months ended August 31, 2025 ($) | Three months ended August 31, 2024 ($) | Change (YoY) ($) | Percentage Change (YoY) (%) | | :-------------------- | :--------------------------------- | :--------------------------------- | :----------- | :---------------------- | | Sales, net | $9,918,350 | $11,617,856 | $(1,699,506) | -14.6% | | Cost of goods sold | $5,479,606 | $6,114,226 | $(634,620) | -10.4% | | Gross profit | $4,438,744 | $5,503,630 | $(1,064,886) | -19.3% | | Operating income | $2,245,267 | $2,904,901 | $(659,634) | -22.7% | | Net income | $2,190,084 | $2,666,655 | $(476,571) | -17.9% | | Basic and diluted earnings per common share | $0.70 | $0.85 | $(0.15) | -17.6% | Condensed Consolidated Statements of Stockholders' Equity Details changes in stockholders' equity for the three months ended August 31, 2025, and 2024 | Stockholders' Equity Item | Three months ended August 31, 2025 ($) | Three months ended August 31, 2024 ($) | Change (YoY) ($) | | :------------------------ | :--------------------------------- | :--------------------------------- | :----------- | | Total stockholders' equity (End of period) | $64,251,359 | $53,924,354 | $10,326,995 | | Net income contribution | $2,190,084 | $2,666,655 | $(476,571) | | Treasury Stock (End of period) | $(13,176,688) | $(12,943,919) | $(232,769) | Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three months ended August 31, 2025 ($) | Three months ended August 31, 2024 ($) | Change (YoY) ($) | | :----------------- | :--------------------------------- | :--------------------------------- | :----------- | | Net operating activities | $483,628 | $(3,589,497) | $4,073,125 | | Net investing activities | $461,824 | $2,910,509 | $(2,448,685) | | Net financing activities | $16,898 | $11,013 | $5,885 | | Net change in cash and cash equivalents | $962,350 | $(667,975) | $1,629,325 | | Cash and cash equivalents - ending | $2,153,006 | $2,163,496 | $(10,490) | Notes to Condensed Consolidated Financial Statements Provides detailed accounting policies and significant financial disclosures supporting the statements - The financial statements are unaudited and prepared in accordance with GAAP for interim financial information, containing only normal recurring accruals19 - Short-term investments include money market funds, U.S. treasury securities, and corporate bonds valued at fair value, approximating cost15 Inventory Breakdown | Inventory Category | August 31, 2025 ($) | May 31, 2025 ($) | | :----------------- | :-------------- | :----------- | | Raw materials | $793,481 | $627,616 | | Work-in-process | $7,452,002 | $7,222,613 | | Finished goods | $266,475 | $286,092 | | Less allowance for obsolescence | $7,000 | $23,000 | | Total Inventory | $8,504,958 | $8,113,321 | - Revenue is recognized over time for contracts where the product has no alternative use and the company has enforceable rights to payment for progress, using costs incurred to date relative to total estimated costs. Other sales are recognized upon shipment21 - For the three months ended August 31, 2025, 55% of revenue was recognized over time, compared to 61% in the prior year, indicating a shift towards point-in-time recognition21 Accrued Expenses Breakdown | Accrued Expense Category | August 31, 2025 ($) | May 31, 2025 ($) | | :----------------------- | :-------------- | :----------- | | Customer deposits | $- | $104,825 | | Personnel costs | $1,376,087 | $3,214,157 | | Other | $767,082 | $753,454 | | Total Accrued Expenses | $2,143,169 | $4,072,436 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, condition, and key operational changes for the quarter ended August 31, 2025 Cautionary Statement Highlights forward-looking information and potential risks that could impact actual results - The report contains forward-looking statements subject to various factors, risks, and uncertainties that could cause actual results to differ materially from expectations26 - Key risks include reductions in customer capital budgets, changing product demand, increased competition, technological advances, and natural disasters26 Results of Operations Analyzes the company's sales, profitability, and expense trends for the reporting period Summary Comparison of Key Income Statement Items (YoY) | Item | Change (August 31, 2025 vs 2024) ($) | | :--------------------------------- | :------------------------------- | | Sales, net | $(1,700,000) | | Cost of goods sold | $(635,000) | | Research and development costs | $12,000 | | Selling, general and administrative expenses | $(417,000) | | Other income | $7,000 | | Income before provision for income taxes | $(653,000) | | Provision for income taxes | $(176,000) | | Net income | $(477,000) | - Consolidated net revenues decreased by 15% and net income decreased by 18% for the quarter ended August 31, 2025, compared to the prior year31 - Revenues from long-term projects were 23% lower, while other-than long-term projects saw a 2% decrease31 - Total sales within the U.S. decreased by 9%, and sales to Asia decreased by 44%, attributed to normal fluctuations in structural project activity3134 - Sales to aerospace/defense customers decreased by 26%, industrial customers by 19%, while sales to construction of buildings and bridges increased by 11%3132 - Gross profit as a percentage of net revenue decreased from 47% to 45% year-over-year3132 - Research and development costs increased by $12,000 (17%) to $81,00035 - Selling, general and administrative expenses decreased by 16% ($417,000) primarily due to lower employee incentive compensation accruals36 - Operating income decreased to $2,245,000, attributed to lower gross margin resulting from reduced revenue37 - Other income increased by 2% to $384,000, driven by short-term investment interest income38 - The company's backlog of open sales orders was $27.9 million at August 31, 2025, slightly down from $28.4 million at August 31, 20243349 Liquidity and Capital Resources Discusses the company's ability to meet short-term obligations and fund future operations - The company's primary liquidity source is excess cash flow from operations, with working capital consisting mainly of cash, short-term investments, inventory, and receivables/payables39 - Capital expenditures for the quarter were $185,000, down from $247,000 in the prior year, with commitments of $2,751,000 for the next twelve months40 Inventory and Maintenance Inventory Changes | Inventory Category | August 31, 2025 ($) | May 31, 2025 ($) | Increase/(Decrease) ($) | Percentage Change (%) | | :----------------- | :-------------- | :----------- | :------------------ | :---------------- | | Raw materials | $794,000 | $627,000 | $167,000 | 27% | | Work-in-process | $7,452,000 | $7,223,000 | $229,000 | 3% | | Finished goods | $259,000 | $263,000 | $(4,000) | -2% | | Inventory | $8,505,000 | $8,113,000 | $392,000 | 5% | | Maintenance and other inventory | $1,208,000 | $1,108,000 | $100,000 | 9% | | Total | $9,713,000 | $9,221,000 | $492,000 | 5% | - Inventory turnover was 2.3 (annualized) for the quarter ended August 31, 2025, compared to 2.7 at May 31, 202541 Accounts Receivable, CIEB, and BIEC Changes | Item | August 31, 2025 ($) | May 31, 2025 ($) | Increase/(Decrease) ($) | Percentage Change (%) | | :------------------------------------------------ | :-------------- | :----------- | :------------------ | :---------------- | | Accounts receivable | $4,524,000 | $5,600,000 | $(1,076,000) | -19% | | Costs and estimated earnings in excess of billings (CIEB) | $4,704,000 | $5,360,000 | $(656,000) | -12% | | Billings in excess of costs and estimated earnings (BIEC) | $2,865,000 | $4,382,000 | $(1,517,000) | -35% | | Net (Accounts receivable + CIEB - BIEC) | $6,363,000 | $6,578,000 | $(215,000) | -3% | | Days Sales Outstanding (DSO) | 41 days | 32 days | 9 days | 28.1% | - The decrease in accounts receivable allowance was due to collections against an overdue structural project balance, reducing it from $751,000 to $591,00045 - CIEB decreased by 12% due to the normal flow of long-term projects through production with billings to customers46 - BIEC decreased by 35%, fluctuating similarly to CIEB, with final product delivery expected within the next twelve months47 - Accounts payable decreased by 8%, and accrued expenses decreased by 47% due to the payout of fiscal year 2025 incentive compensation50 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Taylor Devices, Inc. is not required to provide market risk disclosures - Smaller reporting companies are exempt from providing quantitative and qualitative disclosures about market risk51 Item 4. Controls and Procedures Confirms effectiveness of disclosure controls and reports no material changes in internal control over financial reporting - The Company's chief executive officer and chief financial officer concluded that disclosure controls and procedures were effective as of August 31, 202552 - There have been no material changes in the Company's internal controls over financial reporting during the fiscal quarter ended August 31, 202552 PART II - OTHER INFORMATION Provides additional information not covered in financial statements, including legal proceedings and risk factors Item 1. Legal Proceedings Refers to the Company's Annual Report on Form 10-K for detailed information regarding legal proceedings - Information regarding legal proceedings is incorporated by reference from Note 17 of the Company's Form 10-K53 Item 1A. Risk Factors As a smaller reporting company, Taylor Devices, Inc. is not required to provide specific risk factor disclosures - Smaller reporting companies are not required to provide risk factor information in their quarterly reports54 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities or use of proceeds during the reporting period55 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities during the reporting period56 Item 4. Mine Safety Disclosures This item is not applicable to Taylor Devices, Inc - Mine Safety Disclosures are not applicable to the registrant57 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the period - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended August 31, 202558 Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - Exhibits include Restated Certificate of Incorporation, By-laws, Rights Agreement, Officer Certifications (Rule 13a-14(a) and Section 1350), and Inline XBRL Interactive Data Files60 SIGNATURES The report is officially signed by the registrant's Chief Financial Officer, certifying its submission - The report was signed by Paul Heary, Chief Financial Officer, on behalf of Taylor Devices, Inc. on October 1, 202563
Taylor Devices(TAYD) - 2026 Q1 - Quarterly Report