OOTOYA Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥17.75B
• Operating Income: ¥1.06B
• Net Income: ¥796M
• 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

Ootoya Holdings (TSE:2705) reported solid topline expansion in FY2026 Q2, with revenue of ¥17.75bn, up 17.9% YoY, reflecting strong recovery in dining demand and/or pricing actions. Gross profit reached ¥9.14bn, delivering a robust 51.5% gross margin, which indicates effective menu pricing and procurement discipline despite ongoing food inflation. Operating income rose 14.6% YoY to ¥1.06bn, translating to a 6.0% operating margin; this suggests operating leverage is positive but moderated by higher labor and utility costs typical for the sector. Ordinary income was ¥1.09bn, and net income came in at ¥0.67bn, down 13.6% YoY, implying non-operating and/or below-the-line items weighed on the bottom line despite improved operating performance. EPS printed at ¥92.85. The DuPont profile shows a net margin of 3.79%, asset turnover of 1.692x, and financial leverage of 2.81x, combining to an ROE of 18.0%, which is healthy for a casual dining operator. Cash generation was solid with operating cash flow of ¥0.84bn and an OCF/Net Income ratio of 1.25x, indicating earnings quality was better than accounting profit. Interest expense was minimal at ¥8m, with interest coverage of 132x, underscoring low interest burden. The balance sheet shows total assets of ¥10.49bn and equity of ¥3.74bn, implying liabilities/equity of 1.92x; leverage is meaningful but manageable given cash generation and coverage. Liquidity appears adequate with a current ratio of 132.5% and working capital of ¥1.55bn, supporting operational resilience. Financing cash flow was a net outflow of ¥1.85bn, likely reflecting debt repayment and/or lease- or equity-related cash uses; share data were not disclosed. Several line items are reported as zero (e.g., inventories, investing cash flow, equity ratio, cash & equivalents, DPS), which should be interpreted as unreported rather than true zeros; this limits precision in certain ratios (e.g., quick ratio, FCF). The effective tax rate shown as 0.0% is inconsistent with disclosed income tax of ¥129m; using ordinary income as a proxy for pre-tax suggests an implied tax rate near the low double digits. EBITDA was ¥1.30bn (7.3% margin), offering a buffer against fixed-cost inflation. Overall, the company shows improving operating momentum, healthy ROE, and good cash conversion, tempered by a weaker net income YoY and data gaps that cloud FCF and dividend assessments.

Profitability Analysis

ROE_decomposition: ROE 18.02% = Net Margin 3.79% × Asset Turnover 1.692× × Financial Leverage 2.81×. The improvement in operating income versus net income suggests operating profitability is the primary driver, with modest leverage magnifying returns. margin_quality: Gross margin at 51.5% indicates strong pricing/procurement. Operating margin at ~6.0% (¥1,058m/¥17,752m) reflects cost discipline but also ongoing wage/energy pressures. Net margin at 3.79% trails operating margin due to non-operating items and taxes; ordinary-to-operating spread is small (¥1,085m vs ¥1,058m), implying limited non-operating gains. operating_leverage: Revenue +17.9% YoY vs operating income +14.6% YoY suggests some cost headwinds offset scale benefits. EBITDA margin of 7.3% vs operating margin of 6.0% points to moderate D&A intensity (¥242m), typical for store assets. Further margin expansion likely depends on SSS growth and labor productivity gains.

Growth Assessment

revenue_sustainability: Topline growth of 17.9% YoY likely reflects a mix of recovery in dine-in traffic, menu price hikes, and store network normalization. Sustainability will hinge on maintaining same-store sales amid consumer price sensitivity and competitive promotions. profit_quality: Operating income growth (14.6% YoY) corroborates underlying profit momentum, but the net income decline (-13.6% YoY) signals below-the-line drags (taxes, minority interests, or special items). OCF/NI at 1.25x supports the quality of earnings. outlook: With strong gross margin and improving demand, near-term growth is achievable, but cost inflation and labor tightness could cap margin expansion. Focus on menu engineering, throughput, and digital channels should support steady mid-single-digit operating margin, barring macro shocks.

Financial Health

liquidity: Current ratio 132.5% and working capital ¥1.55bn indicate adequate short-term liquidity. Quick ratio equals current ratio due to inventory being unreported; interpret with caution. solvency: Liabilities-to-equity at 1.92x signals moderate leverage. Interest expense is low (¥8m) with coverage of 132x, indicating minimal near-term solvency risk. Equity ratio reported as 0.0% is not meaningful (unreported). capital_structure: Assets ¥10.49bn funded by equity ¥3.74bn and liabilities ¥7.16bn (A/E = 2.81×). Financing CF outflow of ¥1.85bn suggests deleveraging and/or lease/financing payments; absence of share data precludes assessment of buybacks or issuance.

Cash Flow Quality

earnings_quality: OCF ¥843m vs NI ¥673m (OCF/NI 1.25x) indicates solid cash conversion and limited accrual risk in the period. FCF_analysis: Investing CF is reported as 0 (unreported), preventing a reliable free cash flow estimate. Given positive OCF and typical maintenance capex needs in restaurants, underlying FCF is likely positive but unquantified. working_capital: Working capital is ¥1,547m, supportive of operations. Detailed components were not disclosed; zero inventory likely reflects non-disclosure, so changes in receivables/payables cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: Payout ratio reported at 0.0% appears to reflect non-disclosure rather than an actual zero payout. With EPS at ¥92.85 and positive OCF, capacity exists for dividends if policy permits, but no conclusion can be drawn without actual DPS. FCF_coverage: FCF coverage ratio is shown as 0.00x due to unreported investing cash flows; thus, dividend coverage cannot be assessed. policy_outlook: Dividend policy is not discernible from the provided data. If management prioritizes deleveraging (given ¥1.85bn financing outflow), distributions may be secondary to balance sheet strengthening.

Risk Assessment

Business Risks:

• Food input cost inflation impacting gross margin
• Labor cost pressures and staff shortages affecting operating margin
• Same-store sales volatility due to consumer sentiment and competition
• Execution risk in menu pricing and product mix
• Supply chain disruptions for key ingredients
• Store network optimization and lease renegotiation risks

Financial Risks:

• Moderate leverage (liabilities/equity 1.92x) heightens sensitivity to earnings shocks
• Potential lease liabilities and off-balance commitments typical in the restaurant sector
• Refinancing risk if credit conditions tighten, albeit current interest burden is low
• Tax and below-the-line variability contributing to NI volatility
• Data gaps (cash, investing CF) hinder precise FCF and liquidity assessment

Key Concerns:

• Net income decline (-13.6% YoY) despite higher operating income
• Unreported investing cash flows and cash balance obscure FCF and liquidity runway
• Reliance on maintaining traffic and pricing power amid consumer fatigue

Investment Implications

Key Takeaways:

• Revenue growth strong at +17.9% YoY with healthy 51.5% gross margin
• Operating margin ~6.0% and EBITDA margin 7.3% show improving operating leverage
• ROE at 18.0% underpinned by decent net margin, high asset turnover, and moderate leverage
• Cash conversion solid (OCF/NI 1.25x), supporting earnings quality
• Leverage moderate (1.92x liabilities/equity) with strong interest coverage (132x)
• Data limitations on cash, inventories, investing CF, and dividends constrain FCF/dividend analysis

Metrics to Watch:

• Same-store sales growth and traffic vs average check
• Operating margin progression and labor cost ratio
• EBITDA and OCF trends relative to capex (once disclosed)
• Net debt and lease liabilities; interest coverage durability
• Tax rate normalization and below-the-line items affecting NI
• Store openings/closures and capex intensity

Relative Positioning: Within Japan’s casual dining peers, Ootoya exhibits above-average ROE and strong cash conversion with moderate leverage; margin levels are mid-pack, with upside contingent on cost control and sustained SSS growth.

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
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