My guess is that the C-suite doesn’t think like a growing public company but rather a small business, and that 16mm represents safety to them. They could also think sales are going to ‘ramp up’ and that they will need the working capital (if the military starts ordering chances are they will be pulling bigger volume purchase orders than they’ve seen in the past).
They do have board members who come from a finance background, who I would like to think would be able to tell that the business is over capitalized and suggest they action some of the cash.
I think my first thought is the most likely however, that the status quo is to just keep grinding out a margin and let it hit cash. They’ve been through a rocky few years with waiting for budget, trade disputes, applying for navy approved vendor status and then the pandemic; chances are they are just super conservative. Maybe they don’t even know what the best option is, but as an investor, I would caution recommending a special dividend when they have an S4 shelf sitting out there.
Best case is the increase in volume and pouring that cash into inventory.
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