atect corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.63B
• Operating Income: ¥97M
• Net Income: ¥24M
• EPS: ¥18.73

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

Atect Inc. (TSE: 4241) reported FY2026 Q2 consolidated results under JGAAP with modest topline softness but sharp profit recovery. Revenue was ¥1,631 million, down 1.3% YoY, while operating income more than doubled to ¥97 million (+107.1% YoY), evidencing effective cost control and/or product mix improvement. Gross profit was ¥664.7 million, yielding a strong gross margin of 40.8%, which supported the rebound in operating margin to roughly 5.9%. Ordinary income of ¥103 million exceeded operating profit by about ¥6 million, indicating a small net non-operating gain net of interest costs. Net income rose to ¥82 million (+240.7% YoY), with a net margin of 5.03%, reflecting improved profitability across the P&L. Interest expense was ¥6.9 million, implying healthy interest coverage of approximately 14x based on operating profit. Using reported net income and tax expense, the effective tax rate is roughly 14–15% (82 / (82 + 14.1)), despite a zero figure presented in the summary metrics (zeros indicate non-disclosure, not actual zeros). On the balance sheet, total assets were ¥4,713 million and equity ¥1,773 million, implying an equity ratio near 37.6% (internally calculated), even though an equity ratio of 0.0% was listed due to non-disclosure formatting. Current assets were ¥1,521 million against current liabilities of ¥1,612 million, leaving a current ratio of 94.4% and negative working capital of about ¥91 million. Debt-to-equity stands at 1.68x, consistent with liabilities of ¥2,972 million versus equity of ¥1,773 million. DuPont analysis indicates ROE of 4.62%, composed of a 5.03% net margin, 0.346x asset turnover, and 2.66x financial leverage. This translates to an ROA of roughly 1.7%, demonstrating that leverage is a meaningful contributor to ROE. Cash flow statements, D&A, EBITDA, and cash balance are not disclosed (shown as zero), limiting direct assessment of earnings quality and free cash flow. Dividend per share is undisclosed (shown as zero), implying no payout information for the period, and payout ratios based on FCF are not available. Overall, Atect’s quarter shows improving profitability on a slightly lower revenue base, balanced by tight liquidity and moderate leverage; the lack of cash flow disclosure remains a key analytical limitation.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.03%
• asset_turnover: 0.346
• financial_leverage: 2.66
• calculated_ROE: 4.62%
• ROA_implied: ≈1.74% margin_quality:
• gross_margin: 40.8%
• operating_margin: ≈5.9% (97 / 1,631)
• ordinary_margin: ≈6.3% (103 / 1,631)
• net_margin: 5.03%
• comments: Materially improved operating and net margins YoY despite a 1.3% revenue decline, indicating effective SG&A control and/or favorable product mix. SG&A is inferred at ~¥568 million (~34.8% of sales). operating_leverage: High: a small revenue decline accompanied an outsized increase in operating income (+107% YoY), suggesting strong operating leverage and cost discipline. Interest burden is low (operating to pretax margin ratio near 1), and tax burden is moderate (~85%).

Growth Assessment

revenue_sustainability: Revenue decreased 1.3% YoY to ¥1,631 million, implying soft end-demand or mix effects. Given Atect’s exposure to electronics/industrial components, cyclical dynamics (e.g., semiconductors, precision parts) likely influenced volumes. profit_quality: Ordinary income exceeded operating income by ~¥6 million after ¥6.9 million interest expense, implying small net non-operating gains. Effective tax rate is ~14–15%, consistent with recognized tax expense. Absence of D&A disclosure limits assessment of underlying EBITDA and non-cash earnings. outlook: If mix and cost improvements persist, margins could remain resilient even under tepid sales. However, sustaining profit growth likely requires stabilization/improvement in end-market demand and careful control of SG&A and input costs.

Financial Health

liquidity:

• current_ratio: 94.4% (1,521 / 1,612)
• quick_ratio: 80.0% (implied)
• working_capital: ¥-90.5 million
• comment: Below-1.0x current ratio and negative working capital signal tight near-term liquidity; cash balance not disclosed, limiting visibility on immediate funding headroom. solvency:
• equity_ratio_internal_calc: ≈37.6% (1,773 / 4,713)
• debt_to_equity: 1.68x (liabilities/equity)
• interest_coverage: ≈14.0x (operating income/interest expense)
• comment: Moderate leverage with adequate interest coverage. Solvency appears acceptable, but absence of cash and maturity profile data tempers confidence. capital_structure: Liabilities of ¥2,972 million versus equity of ¥1,773 million. Net debt cannot be determined due to undisclosed cash; interest expense suggests some interest-bearing debt is in place.

Cash Flow Quality

earnings_quality: Undeterminable from reported CFs; OCF, capex, and D&A are undisclosed (shown as zero). Stronger margins support earnings quality, but lack of CF data prevents validation against cash generation. FCF_analysis: Free cash flow not calculable. Without OCF and investing cash flows, FCF coverage of dividends or debt service cannot be assessed. working_capital: Negative working capital (¥-90.5m) and a sub-1.0 current ratio point to tight cash conversion needs; inventory is ¥231.4m (~15% of current assets). Turnover metrics cannot be assessed without period averages and COGS by quarter.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are undisclosed for the period (displayed as zero). With NI of ¥82m and unknown OCF, coverage analysis is not possible. FCF_coverage: Not assessable due to unreported OCF and capex. policy_outlook: Given tight liquidity (current ratio <1.0) and moderate leverage, a conservative stance on distributions would be consistent until cash generation and balance sheet visibility improve; however, no explicit policy is provided.

Risk Assessment

Business Risks:

• End-market cyclicality in electronics/semiconductors and industrial components
• Raw material cost volatility (resins, ceramics inputs) impacting gross margin
• Customer concentration risk with major electronics manufacturers
• Supply chain disruptions and lead time variability
• Product mix shifts affecting pricing power and utilization
• Technology obsolescence and need for ongoing process innovation

Financial Risks:

• Tight liquidity (current ratio 0.94x; negative working capital)
• Refinancing and interest rate risk given interest-bearing debt (interest expense ¥6.9m)
• Limited transparency on cash balances and cash flow generation
• Potential capex funding needs if demand recovers (without clear CF support)
• FX exposure if procurement or sales are internationally linked (not disclosed)

Key Concerns:

• Absence of operating, investing, and financing cash flow disclosure
• Below-1.0 current ratio and negative working capital
• Dependence on operating leverage to sustain profit amid flat-to-down sales

Investment Implications

Key Takeaways:

• Profitability rebounded materially despite slight revenue decline; operating margin ~5.9%
• ROE 4.62% driven primarily by leverage and modest ROA (~1.7%)
• Interest coverage is healthy at ~14x, but liquidity remains tight
• Balance sheet leverage is moderate (D/E 1.68x) with an internally calculated equity ratio ~38%
• Cash flow and D&A not disclosed, limiting visibility on earnings quality and FCF

Metrics to Watch:

• Order trends and revenue growth trajectory into 2H
• Gross and operating margin sustainability (input costs, mix, utilization)
• Operating cash flow and capex once disclosed; FCF conversion
• Working capital dynamics (receivables, payables, inventory turnover)
• Debt maturity profile, interest costs, and cash balance
• Customer concentration and exposure to semiconductor/electronics cycles

Relative Positioning: Operational efficiency appears to be improving relative to a soft demand environment, with margins recovering more than peers might on similar sales declines; however, the company’s tighter liquidity and limited cash flow disclosure place it at a transparency and near-term funding disadvantage versus better-capitalized and more fully disclosed 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