Caulis Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.03B
• Operating Income: ¥328M
• Net Income: ¥218M
• EPS: ¥34.02

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

FY2025 Q3 single-entity results for Kaulis (153A) were solid, with strong top-line growth translating into double-digit profit expansion and a healthy ROE. Revenue rose 14.7% YoY to 10.27 (100M JPY), while operating income increased 9.1% YoY to 3.28 and net income climbed 27.2% YoY to 2.18. Gross profit reached 5.64, implying a gross margin of 54.9%, and operating margin stood at 31.9%. Based on YoY math, operating margin likely compressed by roughly 170 bps, as revenue growth outpaced operating profit growth. Conversely, net margin improved by about 214 bps to 21.2%, helped by below-the-line dynamics despite non-operating expenses of 0.27. Ordinary income of 3.29 suggests an ordinary margin of ~32.0% and implies positive underlying operations offset later by an extraordinary loss, given profit before tax is lower at 2.75. Effective tax rate is elevated at 37.5%, a potential headwind if it persists. ROE is a healthy 13.7%, driven primarily by high net margin (21.2%) and modest leverage (1.35x), offset by low asset turnover (0.48x) due to a cash-heavy balance sheet. Liquidity is very strong with a current ratio of 300% and cash and deposits of 17.33 against current liabilities of 6.09. Interest burden is negligible (interest expense 0.02), with interest coverage of 134x. Cash flow statements were not disclosed, so earnings quality via OCF reconciliation cannot be assessed this quarter. Dividend information is also unreported, limiting payout and policy analysis; however, the net cash position suggests capacity. A quality alert flags an anomalous ROIC metric (-454.8%), which likely reflects a mechanical denominator issue (excess cash/minimal invested capital on a standalone JGAAP basis) rather than true value destruction. Looking ahead, the company’s high margins and ample liquidity provide resilience, but sustaining growth will depend on maintaining demand momentum and managing any extraordinary items and tax normalization.

Profitability Analysis

ROE decomposition (DuPont): ROE 13.7% = Net Profit Margin 21.2% × Asset Turnover 0.481 × Financial Leverage 1.35x. The largest change component versus last year appears to be net margin expansion (estimated +214 bps YoY), while operating margin likely compressed ~170 bps as operating profit (+9.1%) lagged revenue (+14.7%). The business drivers suggest stronger below-the-line factors (e.g., ordinary profit up ~20% YoY) and limited interest burden offsetting non-operating expenses and an extraordinary loss (ordinary income 3.29 vs PBT 2.75 implies ~0.54 of extraordinary loss). Sustainability: high net margin is supported by a 54.9% gross margin and lean SG&A relative to sales (SG&A 2.63 or ~25.6% of sales), but persistence will hinge on stabilizing non-operating/extraordinary items and tax rate. Concerning trend watch: operating leverage appears mixed—revenues outpaced operating profit, implying some cost pressure or mix shift; we lack SG&A YoY detail to confirm if SG&A growth exceeded revenue growth.

Growth Assessment

Revenue growth of 14.7% YoY indicates healthy demand or customer expansion. Operating income growth of 9.1% lagged revenue, pointing to modest operating margin compression likely from higher cost of sales or increased operating costs. Net income growth of 27.2% outpaced revenue, supported by better ordinary income cadence and very low interest costs, despite non-operating expenses and an implied extraordinary loss before tax. Gross margin at 54.9% remains strong, indicating pricing power/value-add. With asset turnover at 0.48x, incremental growth could be achieved without immediate balance-sheet expansion given large cash reserves, though improving working capital efficiency would help. Outlook: maintaining double-digit growth will depend on continued topline momentum and reinvestment discipline; given the standalone nature and cash-rich position, bolt-on investments or product expansion could be catalysts. Risks to the growth trajectory include potential normalization of tax rate (37.5% currently), recurrence of extraordinary losses, and any deterioration in cost discipline.

Financial Health

Liquidity is robust: current ratio 300.4% and quick ratio 300.4%, comfortably above benchmarks; no warning on current ratio. Balance sheet strength is underpinned by cash and deposits of 17.33 versus current liabilities of 6.09, resulting in significant net cash. Solvency is conservative with total liabilities to equity (D/E) at 0.45x, well below the 1.5x benchmark; no warning on D/E. Interest-bearing debt detail is limited, but noncurrent loans are 1.00, and interest expense is minimal (0.02), indicating low leverage. Maturity mismatch risk appears low given cash levels relative to current liabilities and small long-term loans. No off-balance sheet obligations are disclosed in the data provided.

Cash Flow Quality

Operating cash flow, investing cash flow, and financing cash flow are unreported, so OCF/Net Income and FCF cannot be evaluated this quarter. As such, we cannot verify accrual quality, working capital drag, or conversion of earnings to cash. The high cash balance relative to liabilities provides a cushion, but without OCF data we cannot assess sustainability of cash generation or detect working capital management tactics (e.g., receivables stretch or payables management). Monitoring future disclosures for OCF/NI ratio (>1.0 preferred) will be important.

Dividend Sustainability

Dividend data (DPS, payout, total dividends paid) are unreported; therefore, payout policy and coverage cannot be assessed this quarter. From a capacity standpoint, current profitability (net income 2.18) and strong net cash suggest room to fund dividends if policy prioritizes returns. Without FCF data, we cannot confirm coverage of dividends plus capex; future assessment should align payout with normalized FCF and any planned growth investments.

Risk Assessment

Business Risks:

• Margin pressure risk: operating margin compressed ~170 bps YoY as operating profit lagged revenue.
• Execution risk around cost control and mix, given SG&A details are undisclosed.
• Potential extraordinary losses recurring (PBT below ordinary income by ~0.54).
• Tax rate risk: elevated effective tax rate at 37.5% could persist and dilute net margins.

Financial Risks:

• Cash flow visibility risk due to unreported OCF/FCF, limiting earnings quality assessment.
• ROIC metric flagged (-454.8%) likely reflects denominator distortion from excess cash/minimal invested capital on a standalone basis; metric may not reflect economic returns.
• Concentration risk in liquid assets: low asset turnover (0.48x) depresses capital efficiency if cash is not redeployed.

Key Concerns:

• Data gaps in cash flow and dividend disclosures constrain assessment of sustainability.
• Non-operating and extraordinary items introduce volatility between operating profit and net income.
• If revenue growth slows, operating deleverage could further compress margins.

Investment Implications

Key Takeaways:

• Top-line growth (+14.7% YoY) with double-digit ordinary (+20%) and net income (+27.2%) growth.
• Operating margin at 31.9% is high but compressed YoY; net margin improved to 21.2%.
• ROE is solid at 13.7%, driven by high net margin and modest leverage, despite low asset turnover.
• Balance sheet is cash-rich (17.33 cash vs 6.09 current liabilities) with low leverage (D/E 0.45x).
• Cash flow and dividend data are missing; confirm cash conversion and capital return policy in subsequent disclosures.
• Anomalous ROIC alert likely technical; prioritize an adjusted ROIC excluding excess cash when data allow.

Metrics to Watch:

• Operating cash flow/Net income ratio (target >1.0).
• Operating margin trajectory and SG&A as a percentage of sales.
• Extraordinary gains/losses and non-operating expense line items.
• Effective tax rate normalization trend.
• Asset turnover improvements via working capital efficiency.
• Capital allocation of excess cash (capex, M&A, dividends/repurchases).

Relative Positioning: Versus typical small-cap JGAAP peers, Kaulis shows stronger-than-average margins and ROE with a notably conservative, cash-heavy balance sheet; the main relative gaps are lower asset turnover and limited visibility on cash flow conversion and capital return policy.

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