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Taylor Devices Inc. Reports Operating Results (10-Q)

January 12, 2012 | About:
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10qk

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Taylor Devices Inc. (TAYD) filed Quarterly Report for the period ended 2011-11-30.

Taylor Devices Inc. has a market cap of $24.9 million; its shares were traded at around $7.73 with a P/E ratio of 14.9 and P/S ratio of 1.2. Taylor Devices Inc. had an annual average earning growth of 5.2% over the past 5 years.

Highlight of Business Operations:

The Company's backlog, revenues, commission expense, gross margins, gross profits, and net income fluctuate from period to period. The changes in the current period, compared to the prior period, are not necessarily representative of future results.

Accounts receivable of $3,254,000 as of November 30, 2011 includes approximately $238,000 of amounts retained by customers on Projects. It also includes $42,000 of an allowance for doubtful accounts (“Allowance”). The accounts receivable balance as of May 31, 2011 of $2,137,000 included an Allowance of $42,000. The number of an average day's sales outstanding in accounts receivable (“DSO”) increased from 27 days at May 31, 2011 to 43 at November 30, 2011. 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 level of sales for an average day in the first quarter of the current year is only slightly less than in the fourth quarter of the prior year. The level of accounts receivable at the end of the current fiscal quarter is 52% more than at the end of the prior year. The combination of these two factors caused the DSO to increase from last year end to this. The Company expects to collect the net accounts receivable balance, including the retainage, 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, provisions such as this are often not possible. The $4,671,000 balance in this account at November 30, 2011 is 11% more than the prior year-end. The Company expects to bill the entire amount during the next twelve months. 35% of the CIEB balance as of the end of the last fiscal quarter, August 31, 2011, was billed to those customers in the current fiscal quarter ended November 30, 2011. The remainder will be billed as the Projects progress, in accordance with the terms specified in the various contracts.

As noted above, BIEC represents billings to customers in excess of revenues recognized. The $1,274,000 balance in this account at November 30, 2011 is up from the $153,000 balance at the end of the prior year. This significant increase is the result of a single sales order in which the Company received 67% of the order value upon receipt of the order. The balance in this account fluctuates in the same manner and for the same reasons as the account “costs and estimated earnings in excess of billings”, discussed above. Final delivery of product under these contracts is expected to occur during the next twelve months.

Accounts payable, at $1,687,000 as of November 30, 2011, is 31% more than the prior year-end. There is no specific reason for this fluctuation other than the normal payment cycle of vendor invoices. Commission expense on applicable sales orders is recognized at the time revenue is recognized. The commission is paid following receipt of payment from the customers. Accrued commissions as of November 30, 2011 are $941,000, up 117% from the $433,000 accrued at the prior year-end. The Company expects the current accrued amount to be paid during the next twelve months. Other current liabilities increased 17% from the prior year-end, to $1,560,000 primarily due to taxes accrued in the current period. Payments on these liabilities will take place as scheduled within the next twelve months.

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