Taylor Devices makes a living designing and manufacturing sophisticated components for industrial machinery and equipment, including rate control, energy storage and shock absorption devices. The Company is particularly recognized for its seismic dampers used to reduce the effects of earthquakes on structures. Customers span a range of sectors, including aerospace, defense, tool and die, ship building and heavy machinery among others.
The Company reported $40.2 million in total sales in the twelve months ending February 2024, producing $9.0 million in operating income. This represents an operating margin of 22.5%. We also note that Taylor converted 32.5% of sales to operating cash flow or $13.0 million. The capacity to generate internal capital has helped keep Taylor’s use of leverage to a minimum. The debt-to-equity ratio was 0.15 at the end of February 2024.
Taylor’s strong financial performance has helped drive return on invested capital to 19.0%. This compares well to an estimated cost of capital near 9.5%. In our view, this is a compelling reward for stakeholders. The stock price has tracked the Company’s financial performance and we expect continued growth and profit will drive future price appreciation.
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