TAUNS Laboratories,Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥2.37B
• Operating Income: ¥547M
• Net Income: ¥357M
• EPS: ¥3.47

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

For FY2026 Q1 (JGAAP, non-consolidated), the company posted revenue of ¥2,368m, down 63.1% YoY, with operating income of ¥547m (-85.4% YoY) and net income of ¥357m (-86.7% YoY). Despite the sharp top-line contraction, reported operating income remained positive, supported by a very high reported gross profit of ¥4,811m, which exceeds revenue and yields a gross margin of 203.2%. This atypical margin profile suggests meaningful contributions from non-standard gross profit components (e.g., inventory remeasurement, reclassification of other operating income, or offsetting credits) under JGAAP presentation, rather than pure product gross margin expansion. The DuPont decomposition indicates ROE of 2.30%, driven by a 15.08% net margin, low asset turnover of 0.061, and financial leverage of 2.52x. Operating margin was 23.1%, but sustainability is uncertain given the magnitude of the YoY decline and the extraordinary nature implied by the gross margin. Interest coverage is strong at 34.7x (operating income/interest expense), indicating limited near-term pressure from financial costs. The balance sheet shows total assets of ¥39,084m, liabilities of ¥19,098m, and equity of ¥15,518m, implying an equity ratio of about 39.7% (our calculation from the provided balance sheet), and a debt-to-equity ratio of 1.23x. Liquidity appears adequate, with a current ratio of 162.4% and a quick ratio of 130.5%, supported by working capital of ¥5,947m. Cash flow data were unreported (zeros in the cash flow section denote missing disclosure, not zero cash flow), limiting assessment of earnings-to-cash conversion and free cash flow. The company reported ¥1,059m in income taxes alongside ordinary income of ¥505m and net income of ¥357m; taken at face value, these line items reflect presentation or timing differences under JGAAP rather than a standard effective tax computation (the provided effective tax rate metric of 0.0% is not informative here). No dividends were disclosed for the period (DPS = ¥0.00), and payout ratios/FCF coverage based on unreported cash flow are not meaningful. Overall profitability compressed materially YoY, leverage is manageable, and liquidity is sound; however, visibility on cash generation and the quality/sustainability of the reported gross profit is limited based on the available data. Revenue trajectory and any normalization of operating profit in subsequent quarters will be key to assessing whether this quarter reflects a transitory shock or a more structural step-down. Given the gaps in cash flow disclosure and unusual margin presentation, we emphasize caution in extrapolating this quarter’s margin structure. Our analysis focuses strictly on the disclosed non-zero items and calculated metrics provided.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 15.08% (¥357m / ¥2,368m)
• asset_turnover: 0.061 (Revenue ¥2,368m / Assets ¥39,084m)
• financial_leverage: 2.52x (Assets ¥39,084m / Equity ¥15,518m)
• calculated_ROE: 2.30% (matches provided DuPont result) margin_quality: Reported gross margin of 203.2% (¥4,811m gross profit vs. ¥2,368m revenue) indicates non-standard composition of gross profit under JGAAP presentation (e.g., other operating credits or reclassification), rather than operational margin strength alone. Operating margin is 23.1% (¥547m/¥2,368m), but its sustainability is uncertain given the pronounced YoY contraction and the atypical gross profit construct. operating_leverage: YoY declines of -63.1% in revenue and -85.4% in operating income suggest negative operating leverage in the quarter. The steep drop in EBIT versus sales indicates a high sensitivity of profit to volume/mix and reduced absorption of fixed costs. Interest expense of ¥15.8m is modest, with coverage at 34.7x, so financial leverage did not drive profit volatility.

Growth Assessment

revenue_sustainability: Revenue declined 63.1% YoY to ¥2,368m, implying significant demand weakness, pricing pressure, or order timing effects. Without segment disclosure, sustainability is unclear; recovery depends on order intake and backlog conversion in subsequent quarters. profit_quality: Net margin of 15.08% appears supported by non-standard gross profit presentation. Ordinary income (¥505m) and net income (¥357m) both dropped over 85% YoY, signaling underlying profit erosion. The disparity between reported income tax and net/ordinary income suggests timing/presentation factors; thus, normalized earnings power cannot be inferred from this quarter alone. outlook: Key to outlook will be stabilization of revenue run-rate, normalization of gross profit composition, and visibility on orders. If revenue recovers modestly and gross profit reverts to a more standard level, operating income could improve due to fixed cost absorption; conversely, sustained weak demand would keep EBIT compressed.

Financial Health

liquidity: Current ratio 162.4% (¥15,476.6m/¥9,529.9m) and quick ratio 130.5% (ex-inventory) indicate solid short-term coverage. Working capital of ¥5,947m provides a cushion against volatility. solvency: Debt-to-equity ratio is 1.23x (liabilities/equity), implying moderate leverage. Interest coverage at 34.7x suggests ample capacity to service interest with current operating income. capital_structure: Equity ratio is approximately 39.7% by our calculation (¥15,518m/¥39,084m), indicating a balanced structure with room for cyclical stress, although lower profits reduce internal capital generation.

Cash Flow Quality

earnings_quality: Cash flow from operations was not disclosed this quarter (zeros represent unreported figures). As a result, OCF/Net Income and accruals cannot be assessed, and earnings-to-cash conversion remains unknown. FCF_analysis: Investing and financing cash flows were also unreported. Free cash flow therefore cannot be evaluated for the period based on available data. working_capital: Inventories of ¥3,043m within current assets of ¥15,477m appear manageable. Without cash flow detail, the magnitude and direction of working capital movements (receivables, payables, inventory turns) cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: DPS reported as ¥0.00 for the period and payout ratio 0.0%. With quarterly profits under pressure and no dividend disclosed, near-term payout policy appears conservative. FCF_coverage: Free cash flow is unreported; therefore, dividend coverage by FCF cannot be determined for this quarter. policy_outlook: Given significant YoY earnings decline and absent cash flow disclosure, a cautious stance on distributions is likely until revenue and operating income stabilize and cash generation is clarified.

Risk Assessment

Business Risks:

• Demand volatility leading to large swings in revenue (-63.1% YoY this quarter).
• Potential pricing pressure or adverse mix impacting operating leverage.
• Reliance on non-standard gross profit items, raising sustainability questions for margins.
• Supply chain or procurement variability affecting costs and delivery timing.
• Customer concentration risk (not disclosed but a common driver of such volatility).

Financial Risks:

• Earnings compression reduces internal capital generation and buffers.
• Limited visibility on operating cash flow and FCF due to unreported cash flow statements.
• Moderate leverage (D/E 1.23x) could become more constraining if profits remain weak.
• Tax and accounting presentation differences create uncertainty around normalized earnings.

Key Concerns:

• Sustainability of the reported 203.2% gross margin and its drivers.
• Recovery path for revenue after a 63.1% YoY decline.
• Lack of cash flow disclosure impeding assessment of earnings quality and FCF.
• Potential for continued negative operating leverage if volumes do not recover.

Investment Implications

Key Takeaways:

• Severe YoY contraction in revenue and profits, but operating income remains positive.
• ROE of 2.30% reflects low asset turnover; leverage is moderate at 2.52x assets/equity.
• Liquidity is solid (current ratio 162%, quick ratio 131%) with working capital headroom.
• Interest burden is low with coverage of 34.7x, limiting near-term financial stress.
• Margin presentation is atypical; gross profit exceeds revenue, implying non-standard components.
• Cash flow metrics are unavailable this quarter, limiting visibility on cash conversion and FCF.

Metrics to Watch:

• Quarterly revenue run-rate and order intake/backlog indicators.
• Normalization of gross margin and operating margin to more typical levels.
• Disclosure of operating cash flow and free cash flow in subsequent filings.
• Working capital trends: receivables, payables, and inventory turnover.
• Interest coverage and debt/EBITDA (once D&A/EBITDA are disclosed).
• Tax expense trajectory and reconciliation to pretax income.

Relative Positioning: Based on the provided accounting metrics alone (sector not specified), the company currently exhibits weaker growth and profitability momentum versus a typical TSE peer set, but maintains comparatively sound liquidity and manageable leverage; visibility on cash generation and normalized margins is the key differentiator to refine positioning.

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