CSS HOLDINGS,LTD. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥19.50B
• Operating Income: ¥717M
• Net Income: ¥429M
• EPS: ¥117.37

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

CSS Holdings reported FY2025 Q4 (consolidated, JGAAP) results showing solid top-line growth with improving profitability. Revenue grew 10.6% YoY to ¥19.50bn, reflecting steady demand and likely successful pricing and/or volume initiatives in its services portfolio. Operating income rose 20.4% YoY to ¥717m, indicating positive operating leverage as cost growth lagged sales. Net income advanced 36.8% YoY to ¥587m, outpacing operating profit on lower financial costs and disciplined expenses. Gross margin stood at 14.7%, consistent with a labor-intensive, service-oriented model and suggesting a focus on volume and asset turnover rather than high unit margins. Operating margin improved to 3.7%, up from the prior year implied by the faster operating profit growth versus revenue. DuPont analysis indicates ROE of 19.0%, driven by a modest net margin of 3.01%, high asset turnover of 3.09x, and moderate financial leverage of 2.04x. The balance sheet remains conservative with total assets of ¥6.32bn and total equity of ¥3.09bn; the implied equity ratio is approximately 48.9% (computed from the provided balance sheet, as the reported 0.0% equity ratio is an unreported field). Liquidity is adequate with a current ratio of 128.6% and a quick ratio of 109.5%, supported by positive working capital of ¥817m. Cash generation was strong: operating cash flow reached ¥708m and free cash flow ¥650m, comfortably exceeding net income (OCF/NI of 1.21x), underscoring good earnings quality. Interest coverage was robust at 82.2x, reflecting low financial risk. Financing cash outflows of ¥418m suggest debt repayments or other financing activities; dividend data appear unreported (DPS shows 0.00), so capital returns cannot be confirmed. EPS printed at ¥117.37 despite share data being unreported, indicating solid per-share profitability. While the effective tax rate is shown as 0.0% in metrics, a direct calculation from disclosed tax expense and net income implies roughly 25–26%, consistent with Japan’s statutory range after adjustments. Overall, performance trends are favorable: the company is leveraging volume growth and efficiency gains to drive earnings, while maintaining prudent leverage and healthy cash conversion. Data limitations exist for certain ratios and share-related items (zeros indicate unreported), but available non-zero data points support the assessment of improving fundamentals.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.01%
• asset_turnover: 3.087
• financial_leverage: 2.04
• calculated_ROE: 19.0%
• commentary: ROE of 19% is achieved through high asset turnover typical of an asset-light service model and moderate leverage; margin expansion is incremental but combined with scale drives strong equity returns. margin_quality:
• gross_margin: 14.7%
• operating_margin: 3.68%
• ordinary_margin: 3.81%
• net_margin: 3.01%
• commentary: Margins remain thin but improved YoY, indicating better cost discipline and/or pricing. The gap from gross to operating margin highlights SG&A intensity inherent in the business. operating_leverage:
• revenue_growth_yoy: 10.6%
• operating_income_growth_yoy: 20.4%
• assessment: Positive operating leverage evident as operating income growth outpaced revenue growth.
• interest_coverage: 82.2x

Growth Assessment

revenue_sustainability: Double-digit revenue growth suggests healthy demand and execution; asset turnover at 3.09x indicates efficient utilization supporting scale. Sustainability will depend on contract renewals, pricing power against wage inflation, and client acquisition. profit_quality: Net income growth (+36.8% YoY) exceeded operating income growth, aided by low interest burden and controlled below-the-line items. OCF/NI at 1.21x and OCF/EBITDA around 0.90x support the quality of earnings. outlook: With a strengthened operating base and disciplined costs, mid-single-digit to low-double-digit top-line growth could continue if macro conditions and labor availability remain supportive. Margin expansion opportunities exist via utilization gains and mix/pricing, though structural margins are likely to remain modest.

Financial Health

liquidity:

• current_ratio: 128.6%
• quick_ratio: 109.5%
• working_capital: ¥817,144,000
• commentary: Near-term obligations appear well covered; quick ratio above 100% indicates resilience without relying on inventories. solvency:
• total_assets: ¥6,317,000,000
• total_liabilities: ¥3,256,169,000
• total_equity: ¥3,089,000,000
• equity_ratio_implied: 48.9%
• debt_to_equity: 1.05x
• commentary: Moderate leverage with roughly half of the asset base funded by equity. Strong interest coverage reduces refinancing risk. capital_structure: Financing cash outflows (¥418m) suggest deleveraging or other financing activities. With D/E at 1.05x and robust coverage, the balance sheet can support selective growth investments.

Cash Flow Quality

earnings_quality: OCF of ¥708m exceeds net income of ¥587m (1.21x), indicating healthy accruals and cash conversion. free_cash_flow:

• ocf: ¥708,000,000
• investing_cf: ¥-58,000,000
• fcf: ¥650,000,000
• commentary: Investing outflows are modest; FCF comfortably positive, supporting balance sheet flexibility. working_capital: Inventories are limited at ¥545m; with quick ratio >100%, receivables and payables management likely contributed to cash generation. Detailed DSO/DPO not disclosed, but OCF/EBITDA near 0.9x suggests manageable working capital drag.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio fields show zero due to non-disclosure; actual policy cannot be inferred from the provided dataset. fcf_coverage: FCF of ¥650m would provide ample coverage for modest dividends if paid; however, absence of disclosed DPS prevents a conclusive assessment. policy_outlook: Given strong ROE and positive FCF, the company has capacity for shareholder returns or reinvestment. Actual policy will depend on growth opportunities and management’s capital allocation stance.

Risk Assessment

Business Risks:

• Thin structural margins in a labor-intensive services model limit shock absorption.
• Wage inflation and labor availability could pressure gross margins and service delivery.
• Pricing pressure and competitive bidding on contracts may compress margins.
• Client concentration or contract renewal risk could affect revenue visibility.
• Execution risk in scaling operations while maintaining service quality and utilization.

Financial Risks:

• Working capital swings could impact near-term cash flows despite current strength.
• Exposure to short-term liabilities (current ratio 1.29x) requires disciplined cash management.
• Potential refinancing risk if credit conditions tighten, albeit mitigated by high interest coverage.

Key Concerns:

• Sustaining operating margin improvements in the face of wage and cost inflation.
• Maintaining asset turnover without sacrificing pricing.
• Limited disclosure on dividends and share metrics constrains assessment of capital return policy.

Investment Implications

Key Takeaways:

• Double-digit revenue growth with stronger operating profit growth demonstrates positive operating leverage.
• ROE of 19% is underpinned by high asset turnover and moderate leverage.
• Cash generation is robust: OCF > net income and FCF of ¥650m.
• Balance sheet is sound with an implied equity ratio of ~49% and interest coverage of 82x.
• Margins remain thin; sustaining improvements is the key driver of earnings trajectory.

Metrics to Watch:

• Gross and operating margin progression (cost discipline vs. wage inflation).
• Asset turnover and utilization indicators.
• OCF/NI and OCF/EBITDA to monitor earnings quality.
• Working capital metrics (DSO/DPO/DIO) and cash conversion cycle.
• Leverage (D/E) and interest coverage amid financing activities.
• Contract renewals, pricing trends, and headcount/labor availability.

Relative Positioning: Within Japan’s asset-light business services cohort, the company exhibits above-peer ROE driven by efficient asset use and conservative leverage, albeit with structurally lower margins typical of the segment.

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