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

October 11, 2012 | About:

Taylor Devices Inc. (NASDAQ:TAYD) filed Quarterly Report for the period ended 2012-08-31.

Taylor Devices, Inc. has a market cap of $29.2 million; its shares were traded at around $8.4 with a P/E ratio of 13.1 and P/S ratio of 1. Taylor Devices, Inc. had an annual average earning growth of 16.6% over the past 10 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 $8,357,000 as of August 31, 2012 includes approximately $3,385,000 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, 2012 of $5,610,000 included an Allowance of $42,000. The number of an average day's sales outstanding in accounts receivable (“DSO”) increased from 52 days at May 31, 2012 to 103 at August 31, 2012. 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 approximately 24% less than in the fourth quarter of the prior year when the Company recorded record high level of sales. The level of accounts receivable at the end of the current fiscal quarter is 49% 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 quarter-end. The $2,747,000 increase in accounts receivable is primarily due to a 137% increase in the retained amounts by customers on construction Projects. The retained amounts are high at this time due to the recent completion or near completion of several Projects. It is expected that the retained amounts will be released in the normal course of the business in accordance with the related contracts. 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 $3,863,000 balance in this account at August 31, 2012 is 30% less than the prior year-end. The Company expects to bill the entire amount during the next twelve months. 59% of the CIEB balance as of the end of the last fiscal quarter, May 31, 2012, was billed to those customers in the current fiscal quarter ended August 31, 2012. 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 $236,000 balance in this account at August 31, 2012 is down from the $669,000 balance at the end of the prior year. This decrease is the result of normal flow of the projects through production with billings to the customers as permitted in the related contracts. 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 $1,843,000 as of August 31, 2012, is 45% less than the prior year-end. The volume of purchases is lower to support the decrease in sales volume from the final quarter of fiscal 2012. 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 August 31, 2012 are $700,000, up 11% from the $631,000 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 only slightly from the prior year-end, to $2,285,000. Payments on these liabilities will take place as scheduled within the next twelve months.

Read the The complete Report

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