Lib Work Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥2.08B
• Operating Income: ¥-390M
• Net Income: ¥-126M
• EPS: ¥-12.88

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Lib Work (14310) reported FY2026 Q1 consolidated results under JGAAP showing a sharp top-line contraction and a swing to operating losses. Revenue declined 32.7% YoY to ¥2.079bn, highlighting a weak order conversion and/or delivery timing in the quarter. Gross profit is reported at ¥714.8m, implying a gross margin of 34.4%, but the disclosed cost of sales of ¥2.376bn is inconsistent with that gross profit figure; for analysis we rely on the reported gross profit and margin while acknowledging the inconsistency. Operating income deteriorated to a loss of ¥390m (operating margin -18.8%), indicating that SG&A outlays significantly exceeded gross profit. Using the reported figures, implied SG&A and other operating costs were approximately ¥1.105bn (about 53.1% of sales), suggesting elevated fixed-cost absorption pressure amid lower volumes. Ordinary loss was ¥403m, only slightly worse than operating loss, indicating limited non-operating drag beyond interest and minor items. Net loss was ¥299m (net margin -14.4%), with a tax benefit of ¥23.0m reflecting loss-making status. Interest expense was modest at ¥7.94m, but coverage is negative due to operating losses (about -49x), underscoring the sensitivity to sustained earnings pressure. Balance sheet scale remains meaningful with total assets of ¥12.483bn and equity of ¥4.377bn, implying financial leverage (assets/equity) of 2.85x. Liquidity appears adequate on the disclosed data, with current assets of ¥9.304bn and current liabilities of ¥4.866bn, yielding a current ratio of 191% and working capital of ¥4.438bn. DuPont metrics show a net margin of -14.38%, asset turnover of 0.167, and financial leverage of 2.85, combining to a calculated ROE of -6.83% for the quarter. Cash flow statements are unreported this quarter (values shown as 0 indicate non-disclosure), limiting our ability to triangulate earnings quality via OCF and FCF. Dividend remains suspended (DPS ¥0), which is consistent with loss-making conditions and prudent capital preservation. The drop in revenue and negative operating leverage are the primary drivers of the earnings deterioration. Key watchpoints are order intake, backlog visibility, build cycle and delivery timing, and SG&A discipline to restore operating breakeven at lower volumes. Overall, Q1 reflects cyclical and execution pressures in a high-fixed-cost business model; balance sheet liquidity offers some buffer, but sustained recovery in orders and margin is needed to stabilize ROE.

Profitability Analysis

ROE_decomposition: Reported DuPont: Net margin -14.38% x Asset turnover 0.167 x Leverage 2.85 = ROE -6.83%. The negative ROE is primarily margin-driven, compounded by low turnover typical of a Q1 snapshot. margin_quality: Gross profit ¥714.8m implies GPM 34.4%, but disclosed cost of sales (¥2.376bn) conflicts with the gross profit figure. Using gross profit as reported, the operating margin is -18.8% and net margin -14.4%. The implied SG&A-to-sales ratio is ~53.1%, indicating cost base rigidity and negative operating leverage. operating_leverage: Revenue fell 32.7% YoY while operating income deteriorated to -¥390m, consistent with high fixed overhead. A ~34% gross margin could absorb volume declines under normal conditions, but SG&A of ~¥1.105bn exceeded gross profit, pushing the business into loss.

Growth Assessment

revenue_sustainability: Revenue of ¥2.079bn declined 32.7% YoY, signaling weaker order intake, slower site progress/deliveries, or a tougher housing demand backdrop. Sustainability hinges on order backlog and conversion, which are not disclosed here. profit_quality: Ordinary loss (¥403m) is close to operating loss (¥390m), implying limited distortion from non-operating items; the tax benefit (-¥23m) is consistent with losses. Lack of cash flow disclosure prevents corroboration of earnings quality. outlook: With high fixed costs and lower volumes, near-term profits remain sensitive to order timing and cost control. Stabilization would require recovering orders, improved delivery throughput, and SG&A normalization. Housing-related input costs and interest rate trends will influence affordability and demand.

Financial Health

liquidity: Current assets ¥9.304bn vs current liabilities ¥4.866bn yields a current ratio of 191% and working capital of ¥4.438bn, indicating a solid near-term buffer. Quick ratio is shown as 191%, but inventories are unreported, so true quick liquidity may be lower in practice for a homebuilding model. solvency: Total liabilities ¥6.809bn vs equity ¥4.377bn implies a debt-to-equity ratio of 1.56x and financial leverage of 2.85x. Interest expense is modest (¥7.94m for the quarter), but losses render coverage negative, increasing solvency risk if losses persist. capital_structure: Leverage is moderate for an asset-heavy, project-cycle business. The reported equity ratio of 0.0% is likely not disclosed rather than truly zero; based on balance sheet figures, equity/asset ratio approximates 35%.

Cash Flow Quality

earnings_quality: Operating CF and investing/financing CF are not disclosed this quarter (shown as 0). Consequently, we cannot validate accruals, working capital consumption, or cash conversion against earnings. FCF_analysis: Free cash flow is not computable given missing OCF and capex data. Given the business model, swings in WIP/land and receivables typically drive OCF volatility; these line items are not available. working_capital: Working capital is reported at ¥4.438bn, but inventories are unreported. In this sector, inventory/WIP and advances are critical to cash dynamics; lack of disclosure limits assessment of cash conversion cycle.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 with a net loss of ¥299m, implying no distribution and a de facto payout ratio of 0%. This is consistent with capital preservation during a loss-making period. FCF_coverage: FCF coverage cannot be assessed due to unreported OCF and capex; however, given negative earnings, internal coverage of dividends would have been weak even if cash flow were positive. policy_outlook: Resumption of dividends would likely require sustained profitability, improved visibility on orders/backlog, and positive, stable OCF. Current quarter metrics do not support near-term reinstatement.

Risk Assessment

Business Risks:

• Order intake volatility and delivery timing affecting quarterly revenue recognition
• High fixed-cost base leading to negative operating leverage in down cycles
• Housing demand sensitivity to mortgage rate trends and consumer confidence
• Input cost and subcontractor availability risks (materials/labor)
• Land procurement and work-in-process management risk
• Project cancellation and change-order risk
• Geographic concentration risk if sales are regionally skewed
• Reliance on digital marketing effectiveness for lead generation and conversion

Financial Risks:

• Sustained operating losses driving negative interest coverage
• Potential working capital outflows tied to WIP/receivables (not disclosed this quarter)
• Refinancing and covenant headroom risk if losses persist
• Sensitivity of equity ratio and borrowing capacity to asset revaluations and backlog quality

Key Concerns:

• Revenue down 32.7% YoY to ¥2.079bn
• Operating loss of ¥390m with implied SG&A ~¥1.105bn (~53% of sales)
• Negative interest coverage (~-49x) despite low absolute interest expense
• Cash flow statements and inventories not disclosed, limiting visibility on liquidity dynamics
• Inconsistency between reported gross profit and cost of sales figures

Investment Implications

Key Takeaways:

• Sharp top-line decline and negative operating leverage drove a ¥390m operating loss
• Gross margin reported at 34.4%, but cost of sales disclosure conflicts; we rely on the reported gross profit
• Liquidity appears adequate (current ratio ~191%, working capital ¥4.44bn), offering near-term buffer
• Leverage moderate (D/E 1.56x; financial leverage 2.85x), but losses pressure coverage metrics
• Cash flow data absent; ability to fund operations from OCF cannot be verified
• Dividend remains suspended; reinstatement contingent on sustained profitability

Metrics to Watch:

• Quarterly orders received and backlog (units and value)
• SG&A run-rate and cost actions to reduce breakeven sales level
• Gross margin drivers (pricing, mix, build cost inflation, discounting)
• Cash conversion: OCF, WIP/inventory levels, advances from customers
• Interest coverage and debt maturity profile
• Cancellation rates and lead-to-contract conversion from digital channels

Relative Positioning: Compared to domestic custom-home peers, Lib Work currently shows higher revenue volatility and negative operating leverage in Q1, offset by a moderate leverage profile and seemingly adequate current liquidity; near-term positioning hinges on restoring order momentum and tightening SG&A control.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis