JB Eleven Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.36B
• Operating Income: ¥2M
• Net Income: ¥22M
• EPS: ¥-4.74

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

JB Eleven (3066) delivered solid top-line growth in FY2026 Q2 with revenue of ¥4.362bn, up 11.3% YoY, but profitability deteriorated markedly. Gross profit was ¥2.646bn, implying a high gross margin of 60.7%, yet operating income fell to just ¥2m (-95.1% YoY), signaling severe SG&A cost pressure and/or operational inefficiencies. Ordinary income was ¥1m, and the company posted a net loss of ¥44m (EPS -¥4.74), pointing to additional below-the-line headwinds, including taxes and possibly non-operating/extraordinary items. Despite near-breakeven ordinary income, income tax expense was ¥15.96m, which likely reflects non-deductible items, prior-period adjustments, or local tax minimums typical under JGAAP. EBITDA totaled ¥141.18m (3.2% margin), indicating some cash earnings capacity, but operating leverage was unfavorable in the period. The interest expense of ¥9.23m exceeded operating income, resulting in weak interest coverage of roughly 0.2x on an EBIT basis. However, on an EBITDA basis, interest coverage is materially better (~15x), highlighting that depreciation is a significant non-cash expense. The DuPont bridge shows a net margin of -1.01%, asset turnover of 0.806x, and leverage of 2.69x, yielding a calculated ROE of -2.19%. Liquidity appears adequate with a current ratio of 150.4% and working capital of ¥693m, though some current asset details (e.g., inventories, cash) are undisclosed in the XBRL. The balance sheet shows total assets of ¥5.411bn and equity of ¥2.008bn (implying an equity ratio around the high-30% range using disclosed totals, despite the presented 0.0% indicator). Operating cash flow was negative at -¥43.98m, consistent with the small net loss and indicating pressure from working capital and/or weaker cash conversion. Financing cash flow was positive at ¥204.80m, suggesting reliance on external funding while operating cash generation is soft. No dividends were paid (DPS ¥0), which is appropriate given the loss and negative OCF. Overall, revenue momentum is encouraging, but cost inflation, elevated labor/utility expenses, and possibly higher rents or promotional intensity have eroded operating margins. Near-term focus should be on recovering operating margin, improving cash conversion, and maintaining covenant headroom given low EBIT-based coverage. Data limitations (e.g., cash, inventories, investing CF, shares outstanding) constrain precision, but available metrics point to a business in the midst of profit stabilization efforts amid a high-cost environment.

Profitability Analysis

ROE_decomposition: DuPont: Net margin -1.01% × Asset turnover 0.806 × Leverage 2.69 = ROE -2.19%. The negative net margin is the primary drag; asset utilization is moderate, while leverage amplifies losses. margin_quality: Gross margin of 60.7% is high for food service, implying strong menu pricing/mix or classification effects, but SG&A intensity effectively consumed nearly all gross profit (operating profit ¥2m vs. gross profit ¥2,645.9m), indicating elevated labor, utilities, rent, and store costs. EBITDA margin of 3.2% is thin and below typical mid-single-digit levels needed to absorb interest and taxes. operating_leverage: Revenue grew 11.3% YoY, yet operating income declined 95.1%, demonstrating negative operating leverage in the half. Cost pressures and potentially higher promotional spending outpaced sales growth. Restoring fixed-cost absorption and labor productivity is essential to re-establish leverage to sales.

Growth Assessment

revenue_sustainability: Top-line growth of +11.3% YoY suggests volume recovery, price increases, or store network expansion. Without same-store and store-count disclosures, sustainability is uncertain, but momentum appears intact through Q2. profit_quality: Ordinary income (¥1m) and net loss (¥44m) indicate weak profit quality. Tax expense of ¥15.96m despite minimal pre-tax profit implies structural or one-off items impacting the bottom line. EBITDA remains positive but thin, reflecting squeezed unit economics. outlook: Short-term outlook hinges on cost normalization (food input, utilities), labor productivity, and rent negotiations. If revenue momentum persists and cost actions take hold, EBITDA should improve first, followed by operating income. Absent visible cost relief, margin recovery may be gradual.

Financial Health

liquidity: Current assets ¥2,070.3m vs. current liabilities ¥1,376.9m yield a current ratio of 150.4% and working capital of ¥693.4m, indicating adequate near-term liquidity. Quick ratio equals current ratio due to undisclosed inventories. solvency: Total liabilities ¥3,137.5m vs. equity ¥2,008.0m imply leverage is meaningful; debt-to-equity is 1.56x. Using disclosed totals, the implied equity ratio is roughly 37% (2,008/5,411), despite the reported 0.0% placeholder. capital_structure: Interest expense of ¥9.23m with EBIT of ¥2m drives weak EBIT interest coverage (~0.2x). On EBITDA, coverage improves to ~15x, but reliance on depreciation add-backs underscores the need to lift operating income to protect covenant headroom.

Cash Flow Quality

earnings_quality: OCF of -¥43.98m versus net income of -¥44.0m produces an OCF/NI ratio near 1.0, indicating limited accrual distortion this period. However, negative OCF in a growth quarter signals working capital drag or cash cost inflation. FCF_analysis: Free cash flow was not disclosed (placeholder 0). With OCF negative and investing CF undisclosed, true FCF cannot be determined; however, FCF likely negative absent asset sales or reduced capex. working_capital: Current asset/liability mix is partly undisclosed (e.g., inventories, cash). The negative OCF suggests either higher receivables, lower payables, or inventory build (not disclosed), alongside timing effects typical of restaurant procurement and payments.

Dividend Sustainability

payout_ratio_assessment: No dividend (DPS ¥0; payout 0%) aligns with a net loss and negative OCF. With ROE at -2.19% and weak EBIT coverage, distributions would not be prudent at this stage. FCF_coverage: FCF coverage is not assessable due to missing investing cash flows; given negative OCF, coverage would be strained if dividends were contemplated. policy_outlook: Resumption of dividends would likely require sustained positive OCF, EBIT interest coverage comfortably >1x, and visible operating margin recovery.

Risk Assessment

Business Risks:

• Input cost inflation (food commodities, utilities) pressuring margins
• Labor shortages and wage inflation reducing store-level profitability
• Higher rent/occupancy costs and fixed-cost burden creating negative operating leverage
• Demand volatility due to consumer sentiment and competitive pricing dynamics
• Execution risk in menu pricing, mix, and promotional strategy

Financial Risks:

• Low EBIT-based interest coverage (~0.2x) increasing covenant and refinancing risk if profits do not recover
• Negative operating cash flow and reliance on financing inflows (¥204.8m) in the period
• Leverage at 1.56x debt-to-equity constraining flexibility if earnings remain weak
• Potential tax charges despite low pre-tax profit impacting bottom line

Key Concerns:

• Operating margin compression despite double-digit revenue growth
• Sustainability of revenue growth absent disclosed same-store metrics
• Working capital drag contributing to negative OCF
• Limited disclosure on cash, inventories, investing cash flows, and share count

Investment Implications

Key Takeaways:

• Revenue growth strong at +11.3% YoY, but profits collapsed (OP ¥2m; -95.1% YoY)
• Gross margin high (60.7%), yet SG&A pressure erased operating profitability
• EBITDA positive (¥141.2m; 3.2% margin) but thin; EBIT-based interest coverage ~0.2x
• Liquidity adequate (current ratio 150.4%), leverage meaningful (D/E 1.56x)
• OCF negative (-¥44.0m); financing inflow of ¥204.8m supports cash needs
• ROE -2.19% driven by negative net margin; asset turnover and leverage neutral-to-mixed

Metrics to Watch:

• Same-store sales growth and average ticket
• Operating margin (OPM) and SG&A as a percentage of sales
• EBIT and EBITDA interest coverage
• OCF and working capital swings (payables, receivables, inventory days)
• Commodity and utility cost trends; labor cost per sales
• Store openings/closures and rent/occupancy cost ratio

Relative Positioning: Within Japan’s restaurant sector, JB Eleven shows competitive top-line momentum but underperforms on profitability and cash conversion this period, with elevated cost headwinds and weaker EBIT coverage relative to peers targeting mid-single-digit operating margins.

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