Nihon Techno-Lab Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥169M
• Operating Income: ¥-101M
• Net Income: ¥-69M
• EPS: ¥-42.83

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

日本テクノ・ラボ (38490) reported FY2026 Q2 standalone results under JGAAP showing material top-line contraction and continued operating losses, offset by strong balance sheet liquidity and positive operating cash flow. Revenue was 169.0 million yen, down 43.6% YoY, indicating a sharp contraction in demand or project timing effects. Operating income was a loss of 101.0 million yen and net income was a loss of 69.0 million yen, consistent with the prior-year loss profile (+0.0% YoY change indicates no improvement). The DuPont framework shows ROE at -6.32%, driven primarily by a deeply negative net margin of -40.83% and low asset turnover of 0.132, with only modest financial leverage (assets/equity 1.18x). Despite reported cost of sales of 165.5 million yen, the company also reports gross profit of 134.8 million yen and a gross margin of 79.7%; these figures are internally inconsistent with the disclosed revenue and cost of sales, suggesting classification or disclosure differences. Given the instruction to analyze non-zero data points, we anchor profitability commentary on the reported gross profit and margin, while acknowledging the inconsistency. EBITDA was -91.1 million yen (margin -53.9%), illustrating that fixed cost absorption and operating cost intensity remain a challenge at the current revenue run-rate. Ordinary income was -100.0 million yen, with no interest expense disclosed, indicating low financial burden from debt. Notably, operating cash flow was positive at 59.3 million yen despite the net loss, implying supportive working capital movements and non-cash items (including 9.9 million yen in depreciation and a tax benefit of 12.1 million yen). The balance sheet is conservative: total assets of 1.284 billion yen against total liabilities of 168.5 million yen yield an implied equity ratio around 85% (despite a reported 0.0% equity ratio, which appears undisclosed), and liquidity is strong with a current ratio of 1,043% and quick ratio of 1,017%. Debt-to-equity is low at 0.15x and working capital is ample at 912.3 million yen, providing a substantial buffer to navigate losses. Dividends were not paid (DPS 0), which is appropriate given the loss and the need to preserve liquidity. Several items are undisclosed or presented as zero (cash and equivalents, equity ratio, share count, book value per share), limiting per-share and cash balance analysis; however, the large current asset base suggests ample liquidity. Overall, the earnings profile reflects demand softness and negative operating leverage, while the cash flow and balance sheet indicate resilience. Near-term outlook hinges on revenue stabilization, cost discipline, and project delivery cadence to restore operating breakeven.

Profitability Analysis

ROE is -6.32% per DuPont, decomposed into a net profit margin of -40.83%, asset turnover of 0.132x, and financial leverage of 1.18x. The primary driver is profitability, not leverage, as the balance sheet is conservatively capitalized. Reported gross profit of 134.8 million yen implies a gross margin of 79.7%, which would ordinarily suggest a high value-add mix; however, this conflicts with the disclosed cost of sales (165.5 million yen vs. revenue 169.0 million yen), so margin interpretation should be cautious. Operating income of -101.0 million yen and EBITDA of -91.1 million yen (margin -53.9%) indicate significant operating cost load relative to the current revenue base. The swing from gross profit to operating loss implies elevated SG&A and/or R&D spending; exact components are not disclosed, but the magnitude suggests negative operating leverage from the revenue decline. Ordinary income (-100.0 million yen) is close to operating loss, consistent with minimal non-operating drag, and interest expense is undisclosed (reported as zero), reflecting low financial gearing. Effective tax shows as 0% in the metrics, but income tax was a negative 12.1 million yen (tax benefit), cushioning net losses. Overall profitability quality is weak at current levels, with margin recovery dependent on revenue normalization and cost rationalization.

Growth Assessment

Revenue declined 43.6% YoY to 169.0 million yen, pointing to demand weakness, delayed project recognition, or contract churn. The depth of the decline suggests structural headwinds or a lumpy sales model, common in project-based or license-heavy businesses. Profitability did not improve, with operating and net losses flat YoY (+0.0%), indicating limited cost flexibility or a deliberate decision to sustain investment despite revenue headwinds. Given the negative EBITDA margin (-53.9%), the business currently lacks scale to absorb fixed costs; recovery requires either top-line reacceleration or material cost reset. Gross margin is reported at a high 79.7%, which, if accurate, supports a thesis of high value-add services or software-like economics; however, the cost of sales disclosure inconsistency means this should be treated cautiously. Near-term outlook hinges on order intake and backlog conversion; if the revenue dip was timing-related, H2 could show improvement, but no backlog data is provided. The tax benefit in the period could reflect loss carryforwards or temporary differences, not a driver of sustainable earnings. Absent visibility into bookings or pipeline, revenue sustainability is uncertain, and the company’s ability to return to operating breakeven will be primarily volume-driven.

Financial Health

Total assets are 1.284 billion yen and total equity is 1.092 billion yen, implying an equity ratio of roughly 85% (despite a reported 0.0% figure, likely undisclosed). Total liabilities are modest at 168.5 million yen, supporting a low debt-to-equity ratio of 0.15x. Liquidity is strong: current assets of 1,009.1 million yen versus current liabilities of 96.7 million yen result in a current ratio of 1,043% and a quick ratio of 1,017%, indicating a substantial short-term buffer. Working capital stands at 912.3 million yen, providing room to absorb ongoing cash burn if needed. No interest expense is reported, consistent with very low financial leverage and minimal refinancing risk. Cash and equivalents are undisclosed, but the magnitude of current assets suggests sufficient liquidity even if cash is only a portion of that. Overall solvency and liquidity are strong, and the capital structure is conservative, allowing time to execute on operational improvement.

Cash Flow Quality

Operating cash flow was positive at 59.3 million yen despite a net loss of 69.0 million yen, yielding an OCF/Net Income ratio of -0.86 (positive cash flow against negative earnings). This indicates favorable working capital movements and non-cash charges (including depreciation of 9.9 million yen and a non-cash tax credit of 12.1 million yen) supporting cash generation. EBITDA was -91.1 million yen, so the positive OCF likely reflects a significant release from receivables, contract assets, or other current assets, and/or increases in payables; exact components are not disclosed. Investing cash flow is undisclosed (reported as 0), so capex cannot be determined; accordingly, calculated free cash flow appearing as 0 should be treated as not disclosed rather than economically zero. Financing cash flow was -20.1 million yen, suggesting debt repayment, lease payments, or share repurchases/dividends are not detailed; with DPS at zero, this likely reflects other financing outflows. The positive OCF in a loss-making period is encouraging but potentially non-recurring if driven by working capital timing; sustainability depends on future revenue and billing cycles. Overall, earnings quality is mixed: accounting losses with positive cash conversion from working capital provide temporary support, but core cash profitability is not yet established.

Dividend Sustainability

The company paid no dividend (DPS 0; payout ratio 0%), which is prudent given negative net income and the need to preserve liquidity. With investing cash flows undisclosed and free cash flow shown as 0 (treated as not disclosed), FCF coverage of dividends cannot be reliably calculated. Balance sheet strength and very high liquidity would allow for flexibility once profitability is restored, but near-term distributions appear unlikely while EBITDA and operating income remain negative. Under a typical policy framework, resumption of dividends would require sustained operating profit recovery and clearer visibility on cash generation beyond working capital timing benefits. Given current losses, dividend sustainability is not an active issue; the focus should be on restoring earnings and maintaining cash discipline.

Risk Assessment

Business Risks:

• Revenue concentration or project timing risk leading to lumpy sales and volatility (43.6% YoY revenue decline).
• Negative operating leverage from a high fixed-cost base, resulting in significant losses at lower volumes.
• Potential competitive pressure in core markets affecting pricing and utilization.
• Execution risk in cost control and restructuring to realign expenses with current demand.
• Limited disclosure on backlog/pipeline, increasing forecasting uncertainty.

Financial Risks:

• Sustained operating losses could erode the equity base over time if not reversed.
• Positive OCF driven by working capital may be non-recurring, risking future cash burn.
• Undisclosed cash and equivalents complicate liquidity assessment, despite strong current assets.
• Potential variability in tax benefits (negative tax expense) affecting net income comparability.

Key Concerns:

• Severe top-line contraction (-43.6% YoY) with no improvement in operating or net losses.
• EBITDA margin at -53.9% indicates substantial cost pressure relative to scale.
• Inconsistency between reported gross profit/margin and cost of sales figures, limiting margin analysis precision.
• Dependence on working capital timing to generate positive OCF amid losses.

Investment Implications

Key Takeaways:

• ROE of -6.32% reflects a profitability-driven shortfall, not leverage-related issues.
• Liquidity and solvency are strong (current ratio ~1,043%, D/E 0.15x), providing runway.
• Revenue fell 43.6% YoY; recovery in order intake and delivery cadence is essential to return to breakeven.
• EBITDA of -91.1 million yen underscores the need for cost realignment or scale recovery.
• Positive OCF (59.3 million yen) is supportive but may be timing-related rather than structural.

Metrics to Watch:

• Order backlog and bookings growth (not disclosed) to gauge revenue recovery.
• Revenue run-rate and asset turnover (0.132x) as indicators of utilization and scale.
• EBITDA margin trajectory from -53.9% toward breakeven via cost control and mix.
• Working capital movements (receivables, contract assets/liabilities) to assess OCF sustainability.
• Capex and investing cash flows (currently undisclosed) to refine FCF outlook.

Relative Positioning: Relative to typical small-cap JASDAQ/Growth-market peers, the company currently exhibits weaker profitability and growth momentum but stronger balance sheet resilience, with low leverage and very high liquidity affording time to execute an operational turnaround.

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