NIX,INC. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥4.40B
• Operating Income: ¥213M
• Net Income: ¥64M
• EPS: ¥83.56

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

Verdict: A resilient but mixed quarter with flat revenue, slight operating margin compression, and stronger ordinary/net earnings supported by non-operating gains and solid cash generation. Revenue was 44.03, up 0.4% YoY, while operating income was 2.13, down 1.5% YoY, implying modest operating softness. Ordinary income rose to 2.50 (+20.9% YoY), aided by higher non-operating income of 0.46 (notably interest and other items), lifting the ordinary margin. Net income improved to 1.94 (+6.5% YoY), with EPS at 83.56 yen and an effective tax rate of 22.6%. Gross profit of 18.92 translated to a 43.0% gross margin, indicating solid value-add despite sluggish top-line growth. Operating margin was approximately 4.8%, down about 9 bps YoY (prior ~4.9%), reflecting SG&A pressure against modest growth. In contrast, ordinary income margin expanded by about 96 bps YoY (to ~5.7%), and net margin expanded by roughly 26 bps (to ~4.4%), thanks to non-operating tailwinds. Earnings quality was sound: operating cash flow of 2.91 covered net income 1.5x, although free cash flow was slightly negative at -0.44 due to capex and investing outflows. Liquidity is a standout positive, with cash and deposits at 21.10, a current ratio of 421%, and interest coverage at 141x, underscoring low financial risk. Balance sheet strength is high with total equity of 44.70 (equity ratio calculated at ~74.7%) and modest long-term loans of 0.75. ROE printed at 4.3% via net margin 4.4%, asset turnover 0.736x, and leverage 1.34x, indicating a conservative capital structure and moderate efficiency. ROIC at 6.8% is slightly below common 7–8% targets, signaling room for improvement in capital productivity. Dividend affordability appears fine on a profit basis (calculated payout ~24%), but current-year FCF did not fully cover payouts; the ample cash position mitigates near-term risk. Forward-looking, sustaining earnings will depend on restoring operating leverage (SG&A discipline), improving asset turnover, and ensuring non-operating gains are not a one-off support. Near-term priorities include stabilizing margins against input cost/mix pressures and maintaining disciplined capex to lift ROIC above 7–8%. Overall, the company exits FY2025 with strong liquidity and acceptable earnings quality, but needs better operating traction to drive higher returns.

Profitability Analysis

ROE decomposition (DuPont): ROE 4.3% = Net Profit Margin (4.4%) × Asset Turnover (0.736x) × Financial Leverage (1.34x). The most notable movement this period was in the margin layer: operating margin compressed slightly (~9 bps), while ordinary and net margins expanded (+96 bps and +26 bps respectively) due to improved non-operating income. Business drivers likely include stable gross margin (43.0%) offset by SG&A intensity, with interest and other non-operating items supporting below-the-line metrics. The non-operating contribution appears partly cyclical (higher interest income and other items), suggesting some one-time or non-core support; sustainability is less certain than core operating gains. Asset turnover at 0.736x remains modest, consistent with a cash-rich, low-leverage balance sheet; leverage at 1.34x is conservative and unlikely to be a driver of ROE without balance sheet optimization. Concerning trends: operating income declined (-1.5% YoY) despite revenue growth (+0.4% YoY), implying SG&A growth outpaced revenue or that operating mix worsened; monitoring SG&A control versus revenue growth is warranted.

Growth Assessment

Top-line growth was essentially flat (+0.4% YoY to 44.03), indicating limited volume/price expansion. Operating income slipped (-1.5% YoY to 2.13), showing weak operating leverage. Ordinary income rose +20.9% (to 2.50), implying reliance on non-operating gains (non-operating income 0.46, including interest income 0.02 and other items), which may not be fully recurring. Net income increased +6.5% (to 1.94), helped by lower comparative non-operating burden and a normalized tax rate (22.6%). EBITDA of 4.19 (9.5% margin) underscores moderate earnings capacity for reinvestment. Equity method income was small at 0.04, so affiliate contributions are not a major swing factor. ROIC at 6.8% is slightly below the common 7–8% target range, suggesting incremental improvements in margin and asset turnover are needed to enhance value creation. Capex of 1.71 and investing CF of -3.35 indicate continued reinvestment; ensuring returns exceed WACC is key. Outlook: with liquidity strong, the company can prioritize targeted capex and process improvements, but near-term profit growth will likely hinge on SG&A discipline and maintaining gross margin amid input cost and demand variability.

Financial Health

Liquidity is very strong: current ratio 421.1% and quick ratio 381.2%, with working capital of 29.67 and cash/deposits of 21.10. No warning on current ratio (>>1.0) and no maturity mismatch risk evident: current assets 38.91 comfortably exceed current liabilities 9.24. Solvency is conservative: total liabilities 15.17 vs equity 44.70 (calculated equity ratio ~74.7%); D/E ratio reported at 0.34x; long-term loans are minimal at 0.75. Interest coverage is excellent at 140.69x, reflecting low interest burden (interest expense 0.02). No explicit off-balance sheet obligations were disclosed in the provided data. Overall capital structure leaves ample headroom for investment or shareholder returns if warranted.

Cash Flow Quality

OCF/Net Income is 1.50x, indicating good earnings quality with cash conversion above 1.0x. Free cash flow was slightly negative at -0.44 due to capex of -1.71 and broader investing CF of -3.35, suggesting growth or maintenance investments. Working capital appears well-managed given strong cash generation versus modest revenue growth; no apparent signs of aggressive working capital manipulation in the provided data. While FCF did not cover dividends on a strict current-year basis (FCF coverage -0.95x), the large cash balance provides flexibility. Sustainability: with EBITDA of 4.19 and low interest burden, the company can support ongoing capex, but maintaining positive FCF will require either higher OCF or moderated investment pacing.

Dividend Sustainability

The calculated payout ratio is 23.9%, comfortably below the 60% benchmark, suggesting room for continuity under normal conditions. Using net income of 1.94, implied dividends are roughly 0.46; however, DPS and total dividends paid were not disclosed. FCF coverage is -0.95x this year, indicating dividends were not covered by free cash flow, but the cash and deposits of 21.10 offer a significant buffer. Policy outlook: absent explicit guidance, a stable-to-modestly progressive dividend appears feasible if OCF remains robust and capex stays disciplined; any step-up should be aligned with lifting ROIC above 7–8% and securing sustainable FCF.

Risk Assessment

Business Risks:

• Operating margin compression amid flat revenue, indicating limited operating leverage
• Dependence on non-operating gains to lift ordinary and net income this period
• Potential input cost volatility (materials/energy) pressuring gross margins
• Demand softness in end markets leading to sluggish top-line growth

Financial Risks:

• Negative FCF in the period due to elevated investing outflows
• ROIC at 6.8% below typical 7–8% targets, implying execution risk on returns
• Exposure to interest rate changes on cash yields and potential FX on financial items (if applicable)

Key Concerns:

• SG&A growth likely outpacing revenue, weighing on operating income
• Sustainability of non-operating income contributions (26% of profit sources)
• Potential for continued capex to suppress near-term FCF if OCF does not rise

Investment Implications

Key Takeaways:

• Core operations showed slight margin pressure; operating income down despite higher sales
• Ordinary and net income growth were achieved via non-operating support; quality of earnings is acceptable given strong OCF
• Balance sheet strength (equity ratio ~74.7%, cash-rich) materially reduces financial risk
• ROE at 4.3% and ROIC at 6.8% point to conservative leverage and moderate efficiency; upside hinges on operating improvement
• FCF was negative due to capex; careful capital discipline needed to sustain dividends and raise ROIC

Metrics to Watch:

• Operating margin and SG&A growth versus revenue
• OCF/Net income and working capital turns
• ROIC progression relative to 7–8% threshold
• Asset turnover improvements (sales growth vs asset base)
• Scale and mix of non-operating income (interest/other) and its sustainability
• Capex intensity and resultant FCF
• Cash balance deployment (debt, capex, M&A, shareholder returns)

Relative Positioning: Relative to small-cap industrial peers, the company exhibits superior liquidity and very low financial risk, but trails on operating leverage and capital efficiency, with returns slightly below common target ranges; improving core margins and asset utilization would enhance competitiveness.

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