EPS of $0.85 increased by 63.5% from previous year
Gross margin of 47.4%
Net income of 2.67M
"N/A" - N/A
Taylor Devices Inc (TAYD) QQ1 2025 Earnings Analysis: Solid Profitability and Liquidity Strength with Near-Term Cash Flow Headwinds
Executive Summary
Taylor Devices reported QQ1 2025 results that demonstrate robust profitability metrics alongside meaningful working-capital-driven cash flow headwinds. Revenue of $11.62 million represented a 17.1% year-over-year increase but a 3.7% quarter-over-quarter decline. Gross profit rose 25.5% year over year to $5.50 million, delivering a gross margin of 47.37%, while operating income expanded 51.3% year over year to $2.90 million (operating margin ~25.0%). Net income reached $2.67 million, up 44.3% year over year, with earnings per share of $0.85, up 63.5% from the prior year period. Despite strong profitability, operating cash flow was negative at $(3.59) million and free cash flow was $(3.84) million due largely to a substantial working capital unwind: a large negative change in working capital totaling $(6.64) million, including sizable receivables and other working capital outflows. The balance sheet remains liquidity-rich with no debt, cash and short-term investments of approximately $27.1 million, and total stockholders’ equity of about $53.9 million. The company carries a solid liquidity profile (current ratio ~6.0, quick ratio ~5.0) but faces near-term cash-flow headwinds that may need operating-cash-flow normalization or working-capital management to sustain dividend and capex plans. The company’s earnings quality is supported by a strong gross and operating margin, but investors should monitor the pace of working-capital improvements and any incremental capex needs as Taylor continues to scale its shock-absorption and energy-storage product lines.
Key Performance Indicators
Revenue
11.62M
QoQ: -3.71% | YoY:17.07%
Gross Profit
5.50M
47.37% margin
QoQ: -6.58% | YoY:25.52%
Operating Income
2.90M
QoQ: 15.59% | YoY:51.33%
Net Income
2.67M
QoQ: 7.85% | YoY:44.31%
EPS
0.85
QoQ: 44.07% | YoY:63.46%
Revenue Trend
Margin Analysis
Key Insights
Balance Sheet: Total assets $61.9m; Total liabilities $7.97m; Shareholders’ equity $53.92m; No long-term debt. Cash & short-term investments: $27.14m (cash $2.16m). Working capital remains substantial with current ratio 6.02 and quick ratio 5.00.
- Cash Flow: Net income $2.67m; Operating cash flow $(3.59)m; Capital expenditure $(0.25)m; Free cash flow $(3.84)m. Net change in cash $(0.67)m; cash at period end $2.16m; cash equivalents and investments total $27.14m.
Financial Highlights
Revenue: $11.6179m (+17.07% YoY, -3.71% QoQ). Gross Profit: $5.5036m (+25.52% YoY, -6.58% QoQ). Operating Income: $2.9049m (+51.33% YoY, +15.59% QoQ). Net Income: $2.6667m (+44.31% YoY, +7.85% QoQ). EPS: $0.85 (+63.46% YoY, +44.07% QoQ). Gross Margin: 47.37%; Operating Margin: 25.00%; Net Margin: 22.95%. EBITDA: $3.2906m. Tax Rate (effective): ~18.7%.
- Balance Sheet: Total assets $61.9m; Total liabilities $7.97m; Shareholders’ equity $53.92m; No long-term debt. Cash & short-term investments: $27.14m (cash $2.16m). Working capital remains substantial with current ratio 6.02 and quick ratio 5.00.
- Cash Flow: Net income $2.67m; Operating cash flow $(3.59)m; Capital expenditure $(0.25)m; Free cash flow $(3.84)m. Net change in cash $(0.67)m; cash at period end $2.16m; cash equivalents and investments total $27.14m.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
11.62M
17.07%
-3.71%
Gross Profit
5.50M
25.52%
-6.58%
Operating Income
2.90M
51.33%
15.59%
Net Income
2.67M
44.31%
7.85%
EPS
0.85
63.46%
44.07%
Key Financial Ratios
currentRatio
6.02
grossProfitMargin
47.4%
operatingProfitMargin
25%
netProfitMargin
23%
returnOnAssets
4.31%
returnOnEquity
4.95%
operatingCashFlowPerShare
$-1.15
freeCashFlowPerShare
$-1.23
priceToBookRatio
3.31
priceEarningsRatio
16.73
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data were provided in the supplied information. As a result, there are no management quotes or thematically grouped transcript highlights to cite. If a transcript becomes available, we will extract themes by: strategy (growth channels and product roadmap), operations (production efficiency and supply chain), and market conditions (defense/aerospace/industrial demand) with direct quotes and context.
N/A
— N/A
N/A
— N/A
Forward Guidance
There is no formal forward guidance disclosed in the data provided. Given the QQ1 2025 results, management would likely be focused on converting working-capital-driven headwinds into cash flow improvements while maintaining high gross and operating margins. Key factors for the outlook include: (1) stabilization and reduction of working capital drains (receivables, other current assets, and other working capital), (2) continued demand for seismic dampers, fluidicshoks, and crane/industrial buffers in aerospace/defense and industrial applications, (3) ongoing capex alignment with manufacturing capacity expansions, and (4) the absence of debt providing optionality for selective growth investments. Investors should monitor management commentary on backlog progression, order visibility, and any guidance around capital allocation or dividends, should they be provided in future releases.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
TAYD Focus
47.37%
25.00%
4.95%
16.73%
SXI
41.10%
14.10%
2.77%
29.60%
THR
40.90%
14.00%
1.79%
29.49%
NPO
41.20%
12.50%
0.09%
663.33%
GHM
23.90%
6.19%
2.74%
26.19%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Taylor Devices exhibits a favorable profitability profile supported by strong margins and zero debt, which provides financial resilience. The primary near-term concern is working-capital-driven cash-flow headwinds, which could limit funding for growth initiatives or shareholder returns unless cash conversion improves. If management can stabilize working capital and sustain the high-margin business, the company could deliver compelling earnings leverage. The absence of debt affords optionality for targeted capex or strategic acquisitions if growth opportunities arise. Investors should monitor cash-flow normalization, receivables aging, and inventory management, along with any forward-looking guidance from management in subsequent quarters. Relative valuations imply premium earnings power given the high margins and niche market positioning, but the cash-flow risk warrants a cautious, upside-oriented stance until improvement in operating cash flow is demonstrated.
Key Investment Factors
Growth Potential
Untapped and expanding addressable markets in seismic damping and shock-absorption solutions, with potential gains from defense/aerospace applications and international markets. The company’s high-margin product mix supports earnings resilience as volume scales. Potential growth catalysts include product line expansion (self-adjusting shock absorbers, energy storage components) and possible partnerships to broaden distribution in rapidly developing regions.
Profitability Risk
Key risks include near-term working-capital volatility that suppresses free cash flow despite strong profitability, potential cyclicality in industrial equipment demand, reliance on defense/aerospace and heavy machinery end-markets, limited disclosure of forward guidance, and competitive pricing pressures in a fragmented niche market. Absence of long-term debt reduces financial flexibility for aggressive expansion if required.
Financial Position
Very solid liquidity with cash and short-term investments totaling roughly $27.1 million and no debt. Current ratio (~6.02) and quick ratio (~5.00) indicate ample liquidity to weather short-term disruptions. However, negative operating cash flow and negative free cash flow in QQ1 2025 highlight a need to monitor working-capital efficiency and potential capex alignment to ensure cash-generating capacity supports ongoing shareholder returns and future growth.
SWOT Analysis
Strengths
Strong gross margin (47.37%) and operating margin (25.00%) indicating a high-margin product mix and pricing discipline.
No long-term debt, contributing to a robust balance sheet and financial flexibility.
Healthy liquidity with cash and short-term investments of approximately $27.14 million and substantial equity base.
Established niche in shock absorption, seismic damping, fluidics, and industrial buffers with diversified end-markets (aerospace/defense, tooling, cranes).
Weaknesses
Negative operating cash flow and negative free cash flow in QQ1 2025 driven by significant working-capital changes, raising liquidity concerns if not addressed.
High reliance on a specialized, potentially cyclic market; limited disclosed visibility on backlog and order timing.
Limited disclosure of selling, general, and administrative expense breakdown beyond available data, hindering trend analysis for SG&A efficiency.
Opportunities
Expansion of defense/aerospace applications and international deployments could lift volumes and leverage high-margin products.
Potential to optimize working capital (receivables, payables, and other current assets) to convert earnings into cash flow.
R&D and product line extensions (self-adjusting shock absorbers, energy storage devices) may broaden addressable markets.
Threats
Macro volatility in industrial machinery demand and defense budget cycles could impact order flow.
Competitive dynamics in a specialized niche could pressure pricing and margins over the cycles.
Reliance on external manufacturing inputs and regional supply-chain constraints could affect timely delivery and costs.