MAYS J W INC

MAYS J W INC Annual Report - Plain English Investor Summary

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Key Wins & Challenges

✅ What Went Well:

• Losses Cut Dramatically: Operating losses dropped 75% (-$154K vs. -$620K last year) → Loss per share improved to $0.08 from $0.31.
• Debt Reduced: Lowered total debt by 18% ($3.9M → $3.2M).
• Tax Savings Stockpiled: Saved $2.35M in operating loss credits (+10%) and $1.09M in state/local tax credits (+14%) to offset future profits.
• Cost Control: Trimmed cybersecurity/IT spending by 3% ($5.17M → $5.04M).

🚩 What’s Concerning:

• Tax Time Bomb: $14.4M in future tax bills from property investments (nearly unchanged from last year).
• Deferred Tax Liability: Still owe $4.03M to the IRS – like a $4 tax bill for every $10 in future profits.
• Cash Drain: 96% of operating cash ($2.4M/$2.5M) goes to property upgrades. The company didn’t share occupancy rates, making it hard to tell if these upgrades are paying off.

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Top Risks to Know

• Tax Traps:
  • $7.4M property tax bill looming (up 8.8% from last year).
  • $6.65M lease-related tax credit could disappear if tenants leave. MAYS didn’t provide tenant renewal rates, so stability here is unclear.
• Hidden Lease Costs:
  • Every $1 in lease income creates $0.46 in future taxes.
  • Tenant upgrades trigger tax bills 2-3 years before generating income.
• Aging Properties:
  • Tech systems need replacing every 3-5 years → constant upgrade costs.
  • Some properties are severely underwater (e.g., Jamaica Ave: $4.58M debt on a $1.89M property).

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Bottom Line for Investors

MAYS is making progress shrinking losses and debt, but major risks remain:

1. Tax Juggling Act: They’ve stockpiled $3.45M in credits to offset future profits (+12%), but $14.4M in locked-in tax bills could erase gains.
2. Cash Flow Crunch: 96% of operating cash goes to property fixes – a red flag if occupancy isn’t improving (data missing).
3. Debt Dangers: Some properties are worth far less than their loans, creating refinancing risks if interest rates rise.

The Big Question: Can MAYS turn profitable before deferred taxes and upgrade costs drain their resources? Their growing tax credits could save ~$800K/year if they’re profitable by 2026.

Transparency Note: MAYS didn’t disclose occupancy rates or tenant renewal stats – key metrics for assessing property health. This lack of detail may concern investors seeking clarity.

Final Takeaway: Cautious optimism. The 75% loss reduction shows turnaround potential, but the heavy debt load and tax liabilities make this a high-risk, high-reward play. Only suitable for investors comfortable with uncertainty.