OOTOYA Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥17.75B
• Operating Income: ¥1.06B
• Net Income: ¥694M
• EPS: ¥92.85

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

Verdict: Solid top-line growth and resilient operating profit, but net income declined due to a higher tax burden and marginal operating margin compression. Revenue rose 17.9% YoY to 177.52, with gross profit up to 100.53 and gross margin at 56.6%, indicating healthy pricing/mix and cost pass-through. Operating income increased 14.6% YoY to 10.58, implying an operating margin of 5.96% versus roughly 6.13% a year ago (about 17 bps compression). Ordinary income climbed 13.8% YoY to 10.85, supported by modest non-operating gains (0.45) and low interest costs (0.16). Net income fell 13.6% YoY to 6.73, with net margin at 3.8% (down from about 5.2% last year), driven primarily by a high effective tax rate of 40.2%. Cash flow quality was strong: operating cash flow of 14.53 exceeded net income (OCF/NI 2.16x), underpinned by favorable working capital and earnings conversion. Capex was 10.57; approximated FCF before other investing stood near 3.96 (OCF minus capex), positive despite active capital returns. Financing cash flow was -19.37, mainly from 15.12 in share repurchases, signaling confidence but tightening near-term liquidity. The balance sheet shows Total Assets of 104.90 and Total Equity of 37.35, implying a D/E (liabilities/equity) of 1.81x; interest coverage remains very strong at 66.1x given small interest expense. Liquidity is a watch point: current assets 46.30 versus current liabilities 46.94 yields a current ratio of 0.99 and slightly negative working capital (-0.64). ROE is a robust 18.0%, driven by solid asset turnover (1.692x) and moderate net margin, amplified by leverage (2.81x). EPS (basic) was 92.85 yen and diluted 103.33 yen; BVPS calculated at 514.58 yen. SG&A at 89.95 equates to 50.7% of sales, consistent with labor- and rent-intensive retail dining; detailed SG&A drivers were not disclosed. Forward-looking, margin protection will hinge on managing food and wage inflation while sustaining volume gains from traffic recovery and menu mix. The combination of strong OCF, disciplined capex, and buybacks is shareholder-friendly, but low current ratio and elevated tax rate temper the near-term earnings-to-cash conversion outlook. Overall, execution is improving, but liquidity discipline and tax normalization are key to stabilizing net margins.

Profitability Analysis

Step 1 (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 3.8% × 1.692 × 2.81 ≈ 18.0%. Step 2: The most influential driver is asset turnover at 1.692x, while net margin is modest at 3.8% and leverage is meaningful at 2.81x. Step 3: The business reason is a high-throughput casual dining model recovering volumes, lifting revenue relative to the asset base, while cost pressures (food, utilities, wages) and a high tax rate cap net margin expansion. Step 4: Sustainability: asset turnover at this level is plausible if sales recovery persists; net margin could normalize upward if input inflation subsides and tax rate moderates, but wage pressures are sticky; leverage is stable given low interest burden. Step 5: Margin dynamics: operating margin was 5.96%, down ~17 bps YoY; net margin compressed by about 138 bps as the effective tax rate rose to 40.2%. SG&A growth vs revenue growth cannot be directly compared due to lack of prior SG&A disclosure; however, SG&A at 50.7% of sales suggests tight operating leverage despite higher sales.

Growth Assessment

Top-line growth of 17.9% to 177.52 indicates robust demand recovery, likely from traffic normalization and menu pricing/mix optimization. Gross margin at 56.6% shows effective cost pass-through versus cost of sales of 76.98, but operating margin slipped to 5.96% due to SG&A intensity typical of the format. Operating income growth of 14.6% lagged revenue growth, indicating limited operating leverage in the quarter. Ordinary income rose 13.8%, consistent with core operations; non-operating contributions (0.45) were minor and not a key driver. Net income declined 13.6% due to a high 40.2% tax rate; if the tax rate normalizes closer to the statutory effective level, net profit could rebound. EBITDA reached 13.53 (7.6% margin), providing a cushion for capex and maintenance needs. Near-term outlook: sustaining double-digit sales growth may be challenging as comps normalize; expect growth to moderate with focus shifting to labor productivity, menu engineering, and store portfolio optimization to defend margins. Pricing power appears adequate, but wage inflation and utilities remain headwinds. Absent disclosure on new store openings/closures, we assume growth was a mix of same-store and modest footprint effects.

Financial Health

Liquidity: Current assets 46.30 vs current liabilities 46.94 imply a current ratio of 0.99 (warning: below 1.0) and working capital of -0.64. Quick ratio is also 0.99 (inventories not disclosed), indicating tight near-term liquidity. Maturity mismatch: cash 26.02 plus receivables 12.28 total 38.30, below current liabilities, suggesting reliance on ongoing operating cash generation and other current assets to meet near-term obligations. Solvency: Total liabilities 67.54 vs equity 37.35 yield a D/E (liabilities/equity) of 1.81x, above our conservative benchmark (1.5x) but supported by strong interest coverage (66.1x) and modest reported loans (long-term 7.00; other interest-bearing debt not disclosed). No off-balance sheet obligations were disclosed; note that operating lease commitments may exist under JGAAP but are not recognized as debt here. Equity base is 37.35 with retained earnings of 4.11, indicating rebuilding of equity and capacity for reinvestment is ongoing.

Cash Flow Quality

OCF/Net Income is 2.16x (14.53 vs 6.73), signaling high-quality earnings and favorable working capital dynamics. Capex was 10.57; approximated FCF (OCF minus capex) is about 3.96, positive and sufficient to cover maintenance needs, though full investing cash flows were not disclosed. Financing CF was -19.37, driven mainly by share repurchases of 15.12, exceeding estimated FCF and thus funded by cash on hand or balance sheet capacity. No signs of aggressive working capital manipulation are evident from the limited data; however, inventories and detailed payables/receivables turnover were not provided, limiting depth of analysis. With a current ratio under 1.0, sustaining buybacks at this pace may pressure liquidity absent continued strong OCF.

Dividend Sustainability

Dividend data (DPS, total dividends paid) are not disclosed; a calculated payout ratio of 10.8% suggests low cash distribution relative to earnings, implying ample room for dividends if maintained. On estimated FCF of ~3.96, modest dividends would be covered, but actual FCF is uncertain due to unreported investing cash flows beyond capex. Given recent share repurchases of 15.12, the capital return tilt favors buybacks; ongoing sustainability will depend on preserving positive OCF after capex and maintaining liquidity above a 1.0 current ratio. Policy outlook: if earnings stabilize and tax rate normalizes, there is room to maintain or slightly increase shareholder returns, but we would expect management to prioritize liquidity normalization first.

Risk Assessment

Business Risks:

• Food cost and utilities inflation compressing margins despite pricing actions
• Labor shortages and wage inflation impacting SG&A and service quality
• Same-store sales volatility as post-pandemic normalization fades
• Execution risk in menu engineering and store productivity improvements
• Brand and customer traffic sensitivity to pricing and value perception

Financial Risks:

• Current ratio below 1.0 indicating tight liquidity
• D/E of 1.81x (liabilities/equity) above conservative benchmark
• High effective tax rate (40.2%) depressing net profit and cash available for returns
• Potential off-balance sheet lease commitments under JGAAP not captured in reported debt
• Capital returns (buybacks) exceeding estimated FCF, drawing down cash

Key Concerns:

• Net income decline (-13.6% YoY) despite operating growth
• Operating margin compression (~17 bps) in the face of cost pressures
• Dependence on continued strong OCF to bridge near-term liquidity gap
• Lack of detailed SG&A and investing cash flow disclosure limits visibility
• Effective tax rate volatility

Investment Implications

Key Takeaways:

• Strong sales growth (+17.9%) with resilient gross margin (56.6%)
• Operating income growth (+14.6%) but mild margin compression
• Net income down (-13.6%) on a high 40.2% tax rate
• High-quality earnings with OCF/NI at 2.16x; estimated FCF positive (~3.96)
• Liquidity tight: current ratio 0.99; D/E elevated at 1.81x but interest burden is light
• Active capital return via 15.12 in buybacks; sustainability depends on cash generation
• ROE robust at 18.0%, driven by asset turnover and leverage

Metrics to Watch:

• Same-store sales and traffic trends vs pricing/mix contributions
• Operating margin trajectory and SG&A ratio
• Effective tax rate normalization
• OCF sustainability and working capital movements
• Current ratio recovery above 1.0 and cash balance trends
• Capex intensity and store portfolio actions (openings/closures/renovations)

Relative Positioning: Within Japan’s casual dining sector, the company demonstrates strong cash conversion and ROE with solid sales momentum, but it operates with tighter liquidity and higher tax drag than ideal; margin defense and liquidity normalization will be differentiators versus peers focusing on labor productivity and selective pricing.

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