TECNISCO,LTD. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.02B
• Operating Income: ¥-100M
• Net Income: ¥-346M
• EPS: ¥-9.83

Income Statement

Balance Sheet

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

Technisco reported FY2026 Q1 consolidated results under JGAAP with top-line growth but persistent operating losses. Revenue rose 16.8% year on year to ¥1.018 billion, indicating solid demand momentum versus the prior-year quarter. Despite this, operating income remained a loss of approximately ¥100 million, unchanged YoY, highlighting limited operating leverage and a still-heavy fixed-cost burden. Gross profit is disclosed at ¥172 million, implying a gross margin of 16.9% based on the provided calculated metric; note there is an internal mismatch between the disclosed cost of sales figure and the calculated margin, so we anchor margin analysis to the provided calculated metric. Ordinary loss was ¥88 million, slightly better than operating loss, suggesting net non-operating gains partially offset interest expense of ¥8.2 million. Net loss was ¥90 million, with a negative effective tax (tax benefit) of ¥24.2 million supporting bottom-line loss mitigation. DuPont analysis indicates ROE of -5.68%, driven by a negative net margin (-8.84%), modest asset turnover (0.163), and relatively high financial leverage (equity multiplier 3.93x). Liquidity is adequate with a current ratio of 1.31x and a quick ratio of 1.21x, backed by working capital of approximately ¥976 million. The balance sheet shows total assets of ¥6.23 billion and total equity of ¥1.58 billion; while the reported equity ratio is shown as 0.0% (unreported), the implied equity ratio is roughly 25% based on assets and equity provided. Debt-to-equity stands at 3.12x, reflecting a leveraged capital structure that amplifies downside risk while losses persist. Cash flow statements are unreported (zeros), limiting assessment of operating cash generation and free cash flow; thus, cash-flow-based quality and coverage analysis is constrained. Dividend per share is zero, which is consistent with loss-making and a prudent capital preservation stance. EPS was -¥9.83; back-solving implies roughly 9.2 million shares outstanding, though share data are unreported in the dataset. Overall, the quarter shows improving sales traction but profitability remains negative, and interest coverage is weak, underscoring the need for margin improvement and cost discipline. Data limitations (notably CF and some line-item mismatches) warrant caution in interpretation, and monitoring of gross margin stabilization and operating expense control will be key for the coming quarters.

Profitability Analysis

ROE_decomposition: ROE (-5.68%) = Net Margin (-8.84%) × Asset Turnover (0.163x) × Financial Leverage (3.93x). The negative margin is the primary drag; turnover is modest and leverage magnifies the loss at the equity level. margin_quality: Gross margin appears to be 16.9% (based on provided calculated metric and gross profit figure), which is thin and leaves limited room to absorb SG&A and interest. Operating margin remains negative (~-9.8% if using -¥100m on ¥1.018b). There is a data inconsistency between reported cost of sales and the calculated gross margin; analysis relies on the calculated metric and disclosed gross profit. operating_leverage: Revenue grew 16.8% YoY while operating loss was flat at -¥100m, indicating limited operating leverage and an inflexible cost base. The inability to translate higher revenue into improved operating profit suggests either price/mix pressure, under-absorption, or elevated SG&A.

Growth Assessment

revenue_sustainability: Top-line growth of 16.8% YoY suggests demand recovery or successful business development. Sustainability will depend on order intake, backlog visibility, and customer end-market health. profit_quality: Ordinary loss (-¥88m) was slightly better than operating loss, implying non-operating support (potential FX/other income) partly offset interest. A tax benefit (-¥24m) cushioned net loss, which is non-recurring by nature and not indicative of underlying earning power. outlook: To convert growth to profits, the company needs gross margin enhancement (pricing, mix, productivity) and SG&A control. Near-term, margin recovery and capacity utilization will be more critical than pure volume growth.

Financial Health

liquidity: Current ratio 1.31x and quick ratio 1.21x indicate adequate short-term liquidity. Working capital stands at ~¥975.6m, with inventories of ¥303.3m supporting operations. solvency: Debt-to-equity is 3.12x, and the implied equity ratio is ~25% (equity ¥1.584b / assets ¥6.227b), indicating a leveraged capital structure. Interest coverage is negative (EBIT/interest ≈ -12.2x), reflecting weak debt service capacity from operations. capital_structure: Total liabilities ¥4.945b vs. equity ¥1.584b. Elevated leverage combined with operating losses heightens solvency risk if profitability does not improve.

Cash Flow Quality

earnings_quality: Cash flow statements are unreported this quarter, preventing direct OCF-to-net income cross-check. The presence of a tax benefit and non-operating items suggests reported net loss is influenced by non-cash effects, but quantification is not possible without CF data. FCF_analysis: OCF and FCF are unreported (shown as zero placeholders). Capex and depreciation are also unreported, preventing assessment of maintenance vs. growth investment needs. working_capital: Current assets ¥4.143b and current liabilities ¥3.167b indicate a working capital buffer of ~¥976m. Without CF data, we cannot assess cash conversion or inventory turns; however, the quick ratio of 1.21x suggests a moderate reliance on inventory.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio is 0%, consistent with a loss-making quarter (EPS -¥9.83) and capital preservation priority. FCF_coverage: FCF is unreported; thus, coverage cannot be evaluated. Given negative earnings and weak interest coverage, resumption of dividends would likely require a clear return to positive OCF. policy_outlook: With losses and leverage, a conservative dividend stance is likely to persist until sustained profitability and cash generation are established.

Risk Assessment

Business Risks:

• Thin gross margins (16.9%) leave limited buffer against cost inflation and pricing pressure.
• Execution risk in improving utilization and cost absorption to achieve operating break-even.
• Dependence on end-market demand cycles; revenue growth may not be linear.
• Potential FX volatility impacting non-operating income and cost base (materials or imports).

Financial Risks:

• Negative interest coverage (-12.2x) and ongoing operating losses.
• High leverage (D/E 3.12x) raising refinancing and covenant risk if performance weakens.
• Limited visibility on cash flows due to unreported CF statements, constraining liquidity assessment.
• Sensitivity to working capital swings, which could pressure liquidity in a downturn.

Key Concerns:

• Inability to translate 16.8% revenue growth into improved operating profit.
• Data mismatch between cost of sales and calculated gross margin complicates margin analysis.
• Sustained negative ROE (-5.68%) with leverage amplifying equity risk.

Investment Implications

Key Takeaways:

• Top-line growth strong at +16.8% YoY, but margins remain weak and operating loss persisted.
• Gross margin thin (~16.9%), leaving insufficient coverage for SG&A and interest.
• Leverage is elevated (D/E 3.12x) and interest coverage is negative, increasing financial risk.
• Liquidity is adequate near term (current 1.31x; quick 1.21x), but CF opacity is high.
• Non-operating items and tax benefits supported the bottom line; underlying operations remain loss-making.

Metrics to Watch:

• Order intake/backlog and book-to-bill for revenue visibility.
• Gross margin trend and SG&A-to-sales ratio for operating leverage.
• Operating cash flow and free cash flow; inventory turns and receivables collection.
• Interest coverage ratio and net debt-to-EBITDA (once EBITDA is reported).
• Equity ratio and debt maturity profile; any refinancing activity.

Relative Positioning: Within industrial components/manufacturing peers, Technisco currently exhibits weaker profitability and interest coverage but maintains acceptable liquidity; balance sheet leverage is on the high side, making margin recovery and cash generation more urgent relative to peers.

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