LIFEDRINK COMPANY,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥28.67B
• Operating Income: ¥3.54B
• Net Income: ¥2.37B
• EPS: ¥45.26

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

Verdict: Solid top-line expansion with double-digit profit growth, but mild margin compression and capex-led negative free cash flow temper the otherwise strong quarter. Revenue rose 19.0% YoY to 286.68, with operating income up 15.5% to 35.37 and net income up 13.5% to 23.65. Gross profit reached 130.97, implying a robust gross margin of 45.7% for the half. Operating margin was 12.3% (35.37/286.68), down roughly 41 bps versus an estimated 12.75% in the prior period (based on reconstructed prior revenue and operating income). Net margin was 8.2% (8.25% by calculation), compressing by about 42 bps YoY on the same reconstruction. Ordinary income increased 13.6% to 34.73, with limited non-operating swing (non-op income 0.43 vs expenses 1.07) showing that performance was primarily operating-driven. Earnings quality looks strong: operating cash flow of 33.37 was 1.41x net income, comfortably above the 1.0x benchmark. However, capex was heavy at 54.59, resulting in analyst-derived negative free cash flow of about -21.22 for the period. Liquidity is tight but adequate: current ratio 106.7% and quick ratio 95.2%; leverage is at the upper end of comfort with D/E 1.49x, but interest coverage is very strong at 48.45x. ROE is healthy at 15.2%, supported by a 9.1% ROIC that exceeds typical 7–8% targets. Profit growth lagged revenue growth, suggesting mild negative operating leverage likely from SG&A and input cost pressures. Financing cash inflow of 31.22 and share repurchases of 4.91 point to continued balance sheet activity amid elevated investment. The effective tax rate was 31.2%, broadly in line with domestic norms. Dividend payout appears conservative at 26.5% (reported payout ratio metric), but disclosed DPS was not available; cash coverage appears manageable on OCF but not on period FCF due to capex timing. Forward-looking, successful pass-through of costs and normalization of capex intensity will be key to stabilize margins and restore positive FCF. Overall, growth momentum and cash conversion are solid, but liquidity tightness and capex cadence warrant close monitoring into 2H.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin 8.2% × Asset Turnover 0.741 × Financial Leverage 2.49x = ROE 15.2%. The most notable component shift versus last year appears to be a slight decline in margin: estimated operating margin compressed ~41 bps and net margin ~42 bps, while asset turnover remains reasonable for a manufacturing/beverage producer at 0.741 and leverage is stable-to-elevated at 2.49x. Business drivers: revenue outpaced operating income growth (19.0% vs 15.5%), implying negative operating leverage, likely due to higher SG&A ratio and/or cost inflation (materials, energy, logistics) partly offsetting scale benefits. Sustainability: the modest margin compression could be transient if pricing actions and mix continue to catch up to input costs; conversely, if energy/PET/logistics remain elevated or promotional intensity rises with retailers, margins could stay under pressure. Operating leverage: given SG&A of 95.60 (33.3% of sales), further sales growth should provide operating leverage if cost discipline holds; however, current evidence suggests expense growth kept pace or exceeded revenue growth in the period. Flags: profit growth below revenue growth is a mild concern; continued monitoring of gross margin resilience and SG&A intensity is warranted.

Growth Assessment

Revenue growth was strong at +19.0% YoY to 286.68, indicating solid volume and/or pricing traction. Operating income grew +15.5% to 35.37 and net income +13.5% to 23.65, both positive but lagging the top line, signaling some margin pressure. EBITDA reached 46.02 with a margin of 16.1%, supportive of cash generation capacity. The ordinary income increase (+13.6%) with minimal non-operating contribution confirms core operations as the growth engine. With ROIC at 9.1%, growth appears value-accretive relative to typical Japanese cost of capital. Sustainability hinges on continued demand for private label beverages and successful cost pass-through amid input volatility. The near-term outlook is constructive given momentum, but we expect a focus on cost control to arrest margin compression. Heavy capex implies capacity/efficiency investments that can support medium-term growth, though they weigh on near-term free cash flow. Absent detailed segment data, we assume growth is broadly distributed across SKUs, with retailer relationships remaining key.

Financial Health

Liquidity: current ratio 1.07 (just above 1.0) and quick ratio 0.95 (below 1.0) indicate tight but manageable liquidity; explicit warning thresholds are not breached for current ratio, but quick ratio is a watchpoint. Solvency/leverage: D/E is 1.49x, at the upper bound of a conservative range; interest coverage is very strong at 48.45x, mitigating near-term refinancing risk. Maturity profile: short-term loans of 63.06 compare with cash 40.13 and accounts receivable 61.79 (101.92 combined), suggesting limited maturity mismatch when including receivables, but reliance on working capital turnover is high; current liabilities (138.76) are largely covered by current assets (147.99). Long-term loans stand at 89.94, supporting capex funding. No off-balance sheet obligations were disclosed in the provided data. Equity base is 155.61, with retained earnings of 132.33 underpinning capital flexibility.

Cash Flow Quality

OCF was 33.37 versus net income of 23.65, yielding OCF/NI of 1.41x, which indicates high-quality earnings with healthy cash conversion. Capex was 54.59, resulting in an analyst-derived free cash flow of approximately -21.22 for the half (OCF - Capex), implying external funding needs during an investment-heavy phase. Financing cash inflow of 31.22, alongside share repurchases of 4.91, suggests debt draw or other financing activity to support capex and shareholder returns. Working capital details by line (delta AR/AP/inventory) were not disclosed; however, the strong OCF/NI ratio reduces immediate concerns over aggressive working capital tactics. Sustainability: if capex normalizes in 2H or yields efficiency gains, FCF should improve; otherwise, negative FCF could persist, requiring continued financing.

Dividend Sustainability

The reported payout ratio metric is 26.5%, indicating a conservative level relative to earnings capacity, though DPS and total dividends were not disclosed. On cash metrics, dividends appear covered by OCF but not by period free cash flow due to elevated capex in 1H. With ROE at 15.2% and strong interest coverage, balance sheet capacity exists to maintain a modest dividend even through investment cycles. Absent explicit dividend policy disclosure in the data, we assume a stable-to-gradual payout approach aligned with earnings growth and capex needs. Watchpoints include FCF normalization in 2H and maintenance of liquidity buffers.

Risk Assessment

Business Risks:

• Input cost volatility (PET resin, energy, packaging, logistics) pressuring margins
• Retailer pricing pressure and private label competitive intensity
• Potential concentration risk with large retail customers
• Execution risk on capacity/efficiency capex delivering expected cost savings
• Demand elasticity in value beverage categories if price hikes continue

Financial Risks:

• Tight liquidity (current ratio 1.07, quick ratio 0.95) amid high capex
• Negative period FCF requiring ongoing financing
• Leverage at the upper end of comfort (D/E 1.49x) though coverage is strong
• Interest rate risk on floating-rate debt exposure (not disclosed)

Key Concerns:

• Mild operating and net margin compression (~41–42 bps YoY by estimate)
• Working capital reliance to meet short-term obligations given short-term loans of 63.06
• Visibility limited by unreported line items (SG&A breakdown, DPS, investing CF details)

Investment Implications

Key Takeaways:

• Strong top-line growth (+19.0%) with double-digit profit expansion
• ROE 15.2% and ROIC 9.1% indicate value-accretive growth
• Margins compressed modestly despite scale, pointing to cost pressures
• High-quality earnings with OCF/NI at 1.41x
• Negative FCF on heavy capex; financing support evident
• Liquidity tight but manageable; coverage very strong

Metrics to Watch:

• Gross and operating margin trajectory (bps change QoQ/YoY)
• SG&A ratio and operating leverage vs revenue growth
• OCF/NI and FCF recovery as capex cadence evolves
• Debt/EBITDA and D/E trends alongside financing CF
• Working capital metrics (DSO, DPO, inventory days)
• Price pass-through to offset input cost volatility

Relative Positioning: Within domestic beverage and private-label peers, the company shows above-average ROIC (9.1%) and strong cash conversion, offset by tighter liquidity and recent margin compression; leverage is at the higher end but balanced by exceptional interest coverage.

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