YAMADA SERVICER SYNTHETIC OFFICE FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.41B
• Operating Income: ¥-161M
• Net Income: ¥22M
• EPS: ¥-36.63

Income Statement

Balance Sheet

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

For FY2025 Q3 (consolidated, JGAAP), 株式会社山田再生系債権回収総合事務所 reported revenue of ¥1,413 million, down 19.1% YoY, indicating a meaningful top-line contraction against a likely soft operating environment and/or lower collections volumes. Despite the revenue decline, the reported gross profit of ¥474 million implies a gross margin of 33.5%, which suggests some resilience in unit economics even as activity slowed. Operating income was a loss of ¥161 million, with the YoY change marked as +483.3%, indicating a large swing versus the prior-year period (likely from a smaller loss into a larger loss or vice versa due to sign effects). Ordinary income and net income remained negative at ¥149 million and ¥156 million, respectively, translating to a net margin of -11.0%. Interest expense was ¥28.1 million, producing an interest coverage ratio of -5.7x on operating loss, highlighting earnings pressure relative to fixed financial costs. DuPont analysis shows ROE at -4.90%, decomposed into net margin of -11.04%, asset turnover of 0.241x, and financial leverage of 1.84x, pointing to profitability as the core drag on equity returns rather than excessive leverage or asset inefficiency. Balance sheet data are mixed: total assets are ¥5,851 million and total equity is ¥3,186 million, implying an equity ratio of roughly 54.5% (versus the reported 0.0%, likely a disclosure/rounding artifact), and a debt-to-equity ratio of 1.05x, suggesting moderate leverage. Liquidity appears strong as reported with a current ratio of 267% and working capital of ¥3,733 million, indicating good short-term solvency capacity. The reported decline in revenue and negative operating income signal that operating leverage is currently unfavorable, with fixed costs not fully covered by gross profit. The ordinary income loss slightly narrower than operating loss suggests limited non-operating relief, while the presence of ¥47.6 million in income tax despite a net loss likely reflects tax-effect accounting or non-cash tax items. Cash flow figures (operating, investing, financing) and cash balances are unreported in the dataset, limiting our ability to triangulate earnings quality and free cash flow coverage; zeros should be interpreted as undisclosed rather than actual zero. Dividend distributions are reported as nil, which is appropriate given negative earnings and uncertain cash flow visibility. Overall, the company exhibits adequate balance sheet strength and liquidity but faces profitability headwinds amid a shrinking top line. The ROE profile is primarily constrained by margin weakness, with asset turnover reasonable for the business model. Near-term focus should be on stabilizing revenue, improving collection efficiency, and containing operating costs to restore positive operating leverage. Given the limited cash flow disclosure, monitoring interim filings for OCF recovery will be crucial to assess earnings quality and dividend capacity going forward.

Profitability Analysis

ROE_decomposition: ROE -4.90% = Net margin (-11.04%) × Asset turnover (0.241x) × Financial leverage (1.84x). The negative net margin is the decisive driver of the negative ROE; asset turnover is moderate for the sector, and leverage is not excessive. margin_quality: Gross margin is 33.5% (gross profit ¥473.99m on revenue ¥1,413m), indicating reasonable unit economics. Operating margin is -11.4% (operating loss ¥161m), reflecting cost base rigidity. Net margin at -11.0% (net loss ¥156m) shows minimal non-operating relief. Note: reported cost of sales and gross profit figures do not arithmetically reconcile to revenue; analysis relies on the provided gross margin metric. operating_leverage: Revenue fell 19.1% YoY with operating income at -¥161m, implying negative operating leverage as fixed/semi-fixed costs were not flexed down sufficiently. Interest expense of ¥28.1m further pressures coverage (ICR -5.7x). Priority should be on cost rationalization and efficiency gains in recovery operations.

Growth Assessment

revenue_sustainability: Revenue decreased to ¥1,413m (-19.1% YoY). This suggests softer recovery volumes/fees or delayed collections; sustaining revenue will likely depend on pipeline quality, macro credit cycles, and fee realization. profit_quality: With operating loss of ¥161m and net loss of ¥156m, earnings quality is weak near term. Ordinary income (-¥149m) being close to operating income indicates limited reliance on non-operating gains, but tax expense (¥47.6m) despite losses suggests non-cash/timing effects. outlook: Near-term growth hinges on stabilizing claim recovery activity and improving fee yields while managing fixed costs. If activity normalizes and cost control measures take hold, margins can mean-revert; otherwise, continued top-line pressure would keep ROE negative.

Financial Health

liquidity: Current ratio 267% and working capital ¥3,733m indicate strong short-term liquidity. Quick ratio mirrors current ratio (267%), implying low inventory dependence. solvency: Total liabilities ¥3,336m vs equity ¥3,186m yields debt-to-equity 1.05x; leverage is moderate. Interest expense ¥28.1m against negative EBIT results in an interest coverage of -5.7x, signaling stressed coverage from earnings but manageable if liquidity is robust. capital_structure: Assets ¥5,851m and equity ¥3,186m imply an equity ratio around 54.5% (versus the reported 0.0%). Financial leverage in DuPont (1.84x) aligns with this and is not excessive for the business profile.

Cash Flow Quality

earnings_quality: Operating cash flow data are unreported; hence, OCF/NI and FCF cannot be validated. With operating losses, earnings quality cannot be corroborated by cash generation in this dataset. FCF_analysis: Free cash flow is unreported. Without OCF and capex, coverage of obligations and potential distributions cannot be assessed from cash flows. working_capital: Working capital of ¥3,733m supports operations and buffers volatility. However, without cash flow details, the cash conversion and timing of receivable recoveries remain unclear.

Dividend Sustainability

payout_ratio_assessment: Annual DPS reported at ¥0 with payout ratio 0.0%, consistent with negative earnings (EPS -¥36.63). Initiating or increasing dividends would require restored profitability and demonstrable OCF. FCF_coverage: FCF coverage is unreported; cannot assess dividend coverage from cash flows. Given current losses, internal coverage would likely be insufficient absent a turnaround. policy_outlook: Given negative ROE and earnings pressure, a conservative distribution stance is prudent until operating profitability and cash generation normalize. Future policy may align with profitability recovery and capital needs of the portfolio.

Risk Assessment

Business Risks:

• Revenue volatility tied to recovery volumes, success rates, and fee structures in the receivables recovery business.
• Operating leverage risk from a relatively fixed cost base amid fluctuating case inflows.
• Regulatory and compliance risks inherent to debt collection and servicing activities in Japan.
• Macroeconomic sensitivity: credit cycles affect claim inflows and recovery timing.
• Client concentration or project timing risk impacting quarterly revenue.

Financial Risks:

• Negative interest coverage (-5.7x) due to operating losses.
• Potential cash flow shortfalls not assessable due to unreported OCF/FCF data.
• Leverage at 1.05x D/E could constrain flexibility if losses persist.
• Tax expense despite losses may continue to create cash/timing mismatches.

Key Concerns:

• Top-line decline of 19.1% YoY with negative operating leverage.
• Sustained operating and net losses pressuring ROE (-4.90%).
• Limited visibility on cash generation due to unreported cash flow statements.
• Data inconsistencies (e.g., equity ratio reporting, gross profit reconciliation) complicate precision and require cautious interpretation.

Investment Implications

Key Takeaways:

• Revenue contraction to ¥1,413m and net margin of -11.0% drive negative ROE (-4.90%).
• Gross margin remains reasonable at 33.5%, but fixed costs weigh on operating profit (-¥161m).
• Liquidity is strong (current ratio 267%, working capital ¥3,733m), providing runway.
• Leverage is moderate (D/E 1.05x; DuPont leverage 1.84x), but coverage is weak.
• Cash flow disclosure is insufficient to validate earnings quality or dividend capacity.

Metrics to Watch:

• Quarterly revenue trajectory and case/collection volumes.
• Operating margin improvement and cost-to-revenue ratio.
• Interest coverage and ordinary income trends.
• Operating cash flow and free cash flow once disclosed.
• Equity ratio and leverage stability as profitability recovers.

Relative Positioning: Within Japanese receivables recovery/servicing peers, the company currently shows weaker profitability and ROE but comparatively solid liquidity and moderate leverage, suggesting capacity to navigate a near-term earnings trough if revenue and operating efficiency stabilize.

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