Faber Company Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥2.56B
• Operating Income: ¥376M
• Net Income: ¥219M
• EPS: ¥96.57

Income Statement

Balance Sheet

Cash Flow Statement

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

Faber Company delivered solid topline and profit growth in FY2025 Q4 on a consolidated JGAAP basis, with revenue up 10.5% YoY to ¥2,560m and operating income up 12.4% YoY to ¥376m. Net income increased 20.4% YoY to ¥263m, indicating positive operating leverage and some efficiency gains below the operating line. Profitability remains healthy: gross margin is high at 61.9%, operating margin is 14.7%, and net margin is 10.3%. The DuPont decomposition points to an ROE of 11.05%, driven primarily by solid margins, moderate asset turnover (0.889x), and low financial leverage (assets/equity ~1.21x). Liquidity is strong with a current ratio of 5.48x and working capital of approximately ¥2,070m; total liabilities appear to be entirely current, with no long-term debt disclosed. Balance sheet strength is notable, with an implied equity ratio of about 82.7% (equity ¥2,381m / assets ¥2,879m), despite the reported equity ratio field showing 0.0% (undisclosed). Cash flow quality is mixed: OCF of ¥206m is 78% of net income, suggesting working capital absorption, while investing outflows of ¥378m result in negative FCF of ¥172m. Financing inflows of ¥268m covered the FCF shortfall, indicating reliance on external funding for growth capex/strategic investments during the period. Depreciation and amortization are minimal at ¥2.4m, indicating a relatively asset-light base or predominance of intangible investments expensed as investing cash flows. Interest expense was undisclosed/zero, consistent with low leverage; the slight gap between operating and ordinary income suggests non-operating items are not a major driver. While the dashboard shows an effective tax rate of 0.0%, the disclosed income tax of ¥75.8m vs ordinary income of ¥379m implies an approximate effective tax rate near 20%. The company did not pay dividends (DPS ¥0, payout 0%), consistent with reinvestment and negative FCF. Overall, the quarter reflects a profitable, cash-investing growth profile with robust balance sheet capacity, though sustainability hinges on translating revenue growth into stronger cash conversion. Several data points are undisclosed (e.g., cash balance, equity ratio, share count), so conclusions rely on the available figures and derived estimates.

Profitability Analysis

ROE_decomposition: ROE 11.05% = Net margin 10.27% × Asset turnover 0.889 × Financial leverage 1.21. Margin strength is the primary driver of ROE; leverage is low and contributes modestly. margin_quality: Gross margin 61.9% indicates strong value-add or software/service mix. Operating margin 14.7% reflects disciplined OPEX. Net margin 10.3% benefits from minimal interest burden and a moderate tax rate (~20% inferred). The small spread between operating (¥376m) and ordinary income (¥379m) implies limited non-operating noise. operating_leverage: Operating income grew 12.4% vs 10.5% revenue growth, indicating positive operating leverage. EBITDA margin is 14.8% (EBITDA ¥378.4m), nearly in line with operating margin given minimal D&A, reinforcing an asset-light model.

Growth Assessment

revenue_sustainability: Revenue grew 10.5% YoY to ¥2,560m, a healthy double-digit pace. High gross margins suggest pricing power or a scalable service platform, which can support continued growth if demand remains firm. profit_quality: Net income rose 20.4% YoY to ¥263m, outpacing revenue growth. Profit growth quality appears decent given limited reliance on non-operating items and a moderate tax rate. However, OCF/NI of 0.78 indicates earnings did not fully convert to cash, likely due to working capital investment. outlook: With strong liquidity and low leverage, the company is positioned to continue investing for growth. Near-term growth durability will depend on client demand, retention, and the pace of investment returns; improving cash conversion will be key to sustaining reinvestment without increased external financing.

Financial Health

liquidity: Current assets ¥2,532m vs current liabilities ¥462m yields a current ratio of 5.48x and quick ratio of 5.48x (inventories undisclosed). Working capital is approximately ¥2,070m, indicating ample short-term headroom. solvency: Total liabilities are ¥462m with no long-term debt disclosed; debt-to-equity is ~0.19x. Implied equity ratio is ~82.7% (equity ¥2,381m / assets ¥2,879m), despite the reported 0.0% field. capital_structure: Low leverage with negligible interest burden (interest expense undisclosed/zero). Ordinary income slightly exceeds operating income, suggesting non-operating contributions are minor. The balance sheet can support ongoing investment, but continued negative FCF would increase dependence on financing inflows.

Cash Flow Quality

earnings_quality: OCF of ¥206m is 78% of net income (¥263m), pointing to some working capital drag. Given minimal D&A (¥2.4m), accrual intensity appears moderate; the gap is likely driven by receivables or other current asset build. FCF_analysis: FCF is negative at -¥172m (OCF ¥206m less investing CF -¥378m). Investing outflows are sizable relative to OCF, consistent with growth investments (capex/intangibles/strategic). Financing CF of ¥268m offset the FCF deficit. working_capital: Current assets are large relative to current liabilities; with inventories undisclosed, the drag likely stems from receivables or other current assets. Monitoring collection cycles and deferred revenue (if applicable) will be important to improve OCF/NI.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0; payout ratio is 0%. Given negative FCF in the period and active investment, a conservative stance on distributions appears aligned with reinvestment priorities. FCF_coverage: With FCF at -¥172m, coverage of any potential dividend would be inadequate absent financing or improved cash generation. policy_outlook: The strong equity base and liquidity could support future distributions once FCF turns sustainably positive. Near-term focus likely remains on funding growth and strengthening cash conversion.

Risk Assessment

Business Risks:

• Demand cyclicality affecting client budgets and new bookings
• Customer concentration or churn risk impacting recurring revenue and utilization
• Pricing pressure and competitive intensity compressing gross margins
• Talent acquisition/retention and wage inflation increasing OPEX
• Execution risk on growth investments and product roadmap
• Regulatory or technology shifts that could alter service economics

Financial Risks:

• Negative FCF requiring continued external financing if OCF does not improve
• Working capital swings (receivables build) pressuring cash conversion
• Potential impairment risk if heavy investing does not yield expected returns
• Limited visibility due to undisclosed cash balance and equity ratio fields
• Currency exposure if costs or clients are partially non-JPY (if applicable)

Key Concerns:

• OCF/NI at 0.78 indicates below-ideal cash conversion
• Sizable investing outflows (-¥378m) driving negative FCF
• Reliance on financing inflows (¥268m) to fund investments
• Data gaps (cash, equity ratio, share count) constrain precision of analysis

Investment Implications

Key Takeaways:

• Double-digit revenue growth with operating income outpacing sales indicates healthy operating leverage
• High gross margin (61.9%) and mid-teens operating margin underscore solid unit economics
• ROE of 11.05% is primarily margin-driven with low leverage contribution
• Liquidity is strong (current ratio 5.48x) and balance sheet conservative (implied equity ratio ~82.7%)
• Cash conversion lag (OCF/NI 0.78) and heavy investing outflows resulted in negative FCF
• Financing inflows bridged the FCF gap, highlighting the importance of future OCF improvement

Metrics to Watch:

• OCF/Net Income ratio and trend in receivables days
• Capex/intangible additions and payback (link to Investing CF)
• Gross and operating margin stability amid growth
• Revenue growth rate and client retention/churn indicators
• Equity ratio and any emergence of interest-bearing debt
• Free cash flow trajectory and reliance on external financing

Relative Positioning: Compared to domestic digital/service-oriented peers, Faber Company exhibits above-average gross margins, prudent leverage, and solid ROE, but currently lags on FCF due to elevated investment intensity and working capital consumption.

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