Power Solutions,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥6.04B
• Operating Income: ¥598M
• Net Income: ¥205M
• EPS: ¥105.72

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

Power Solutions Co., Ltd. (44500) delivered strong FY2025 Q3 (cumulative) results with broad-based top-line and profit growth. Revenue rose 23.7% YoY to 6,042 million yen, while operating income surged 69.5% YoY to 598 million yen, evidencing meaningful operating leverage. Gross profit reached 1,616 million yen, implying a gross margin of 26.7%, and operating margin expanded to 9.9%, a notable improvement versus revenue growth. Ordinary income was 587 million yen, slightly below operating income, reflecting modest net non-operating costs including 3.3 million yen of interest expense. Net income increased 56.4% YoY to 319 million yen, translating to a net margin of 5.28% and EPS of 105.72 yen. DuPont metrics indicate ROE of 8.78%, driven by asset turnover of 1.03x and moderate financial leverage of 1.62x, with margin expansion the key contributor in the period. The balance sheet appears healthy: total assets are 5,879 million yen against total equity of 3,632 million yen and total liabilities of 2,409 million yen, implying a conservative capital structure (debt-to-equity 0.66x). Liquidity is strong with a current ratio of 221% and a quick ratio of 219%, supported by low inventories (39 million yen) consistent with a services-centric model. Interest coverage is very comfortable at 183x, highlighting limited financial risk from leverage. Tax expense of 125 million yen suggests an effective tax rate around low-20% on an ordinary-income basis, though the disclosed calculated figure shows 0.0% due to data mapping limitations. Cash flow statements were not disclosed (zeros indicate unreported), so operating cash flow and free cash flow cannot be assessed from this dataset; the reported OCF/NI and FCF metrics of 0 should be treated as unavailable. Dividend information is also undisclosed (DPS and payout shown as 0), so capital return policy cannot be evaluated from the provided data. Notwithstanding disclosure gaps, the quality of earnings looks solid given the sizable operating leverage and high interest coverage. Overall, the company demonstrates accelerating profitability on robust revenue growth and maintains ample liquidity, with moderate leverage and a sustainable ROE profile. Key uncertainties include the sustainability of current growth, visibility on cash conversion, and the absence of dividend/cash data. Monitoring order momentum, utilization, and working-capital trends will be important to gauge durability into FY2025 Q4 and beyond.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.28% (319m / 6,042m)
• asset_turnover: 1.03x (6,042m / 5,879m)
• financial_leverage: 1.62x (Assets/Equity = 5,879m / 3,632m)
• calculated_ROE: 8.78% (matches reported DuPont)
• commentary: ROE is primarily supported by improved margins and steady asset turnover; leverage is moderate and not a dominant driver. margin_quality:
• gross_margin: 26.7% (1,616m / 6,042m)
• operating_margin: 9.9% (598m / 6,042m)
• net_margin: 5.28%
• SG&A_estimate: ≈1,018m (Gross profit 1,616m − Operating income 598m), indicating disciplined overhead relative to revenue growth.
• observations: Margin expansion outpaced revenue growth, pointing to positive mix, utilization, and/or pricing. Ordinary income slightly below operating income due to small non-operating costs. operating_leverage: High in the period: +23.7% revenue drove +69.5% operating income, implying fixed-cost dilution and improved utilization. Sustaining this will depend on order intake and staffing efficiency.

Growth Assessment

revenue_sustainability: Top-line growth of +23.7% YoY is robust; the low inventory footprint suggests a services-heavy or project-based mix. Sustainability depends on backlog, order wins, customer budgets, and delivery capacity. profit_quality: Operating margin at 9.9% and interest coverage of 183x indicate quality earnings with limited drag from financing costs. Tax expense of ~125m suggests a normalized effective tax rate in the low-20% range on ordinary income. outlook: Momentum is favorable given operating leverage, but visibility is constrained by absent order/backlog disclosures and cash flow data. Watch for seasonality into Q4, hiring costs, and pricing environment.

Financial Health

liquidity:

• current_ratio: 220.7% (4,110m / 1,862m)
• quick_ratio: 218.6% ((4,110m − 39m) / 1,862m)
• working_capital: 2,247.9m
• commentary: Strong short-term liquidity; low inventories reduce obsolescence risk and suggest receivables/cash are key current assets. solvency:
• debt_to_equity: 0.66x (2,409m / 3,632m)
• interest_expense: 3.27m with interest coverage ~183x
• equity_ratio_inferred: ≈61.8% (Equity/Assets), despite a reported 0.0% due to disclosure mapping. Capital structure is conservative. capital_structure: Leverage is modest with ample equity buffer; limited reliance on interest-bearing debt implied by very low interest expense.

Cash Flow Quality

earnings_quality: Profitability metrics are strong, but absence of cash flow disclosures prevents assessment of cash conversion, accruals, or working capital drag. FCF_analysis: Free cash flow cannot be computed (Operating and Investing CF unreported). Treat the displayed FCF of 0 as unavailable, not actual zero. working_capital: Balance-sheet data imply receivables are likely the dominant current asset; monitoring DSO and project billing will be key for cash conversion.

Dividend Sustainability

payout_ratio_assessment: Payout ratio shown as 0.0% and DPS 0.00 are undisclosed items. Based on EPS of 105.72 yen, the company appears to have capacity, but policy cannot be inferred. FCF_coverage: Not assessable due to unreported OCF/FCF. Any coverage ratio shown as 0.00x should be treated as unavailable. policy_outlook: No explicit guidance. Future dividends depend on cash generation, growth investments, and balance-sheet priorities; current leverage and liquidity would accommodate a distribution policy if adopted.

Risk Assessment

Business Risks:

• Revenue visibility: potential volatility from project-based or services-driven sales and timing of large contracts.
• Client concentration: dependency on key customers could amplify revenue swings if budgets shift.
• Utilization and staffing: wage inflation, hiring bottlenecks, and subcontractor rates can pressure margins.
• Pricing and competitive intensity in solutions/IT services markets.
• Execution risk on fixed-price projects (scope creep, delivery delays).

Financial Risks:

• Working-capital risk from receivables collection and milestone billing timing.
• Limited disclosure on cash flows obscures cash conversion and FCF volatility.
• Potential tax rate variability; effective tax inferred near low-20% but not fully disclosed.
• Small-cap market liquidity and share price volatility (implied by limited disclosure breadth).

Key Concerns:

• Lack of cash flow statement data for OCF/FCF assessment.
• No disclosed dividend policy or DPS/payout information.
• Sustainability of operating leverage as growth normalizes.

Investment Implications

Key Takeaways:

• Strong topline growth (+23.7% YoY) with outsized operating profit growth (+69.5% YoY).
• Healthy margins (gross 26.7%, operating 9.9%) and disciplined SG&A.
• ROE at 8.78% with moderate leverage (1.62x) and solid asset turnover (1.03x).
• Robust liquidity (current ratio 221%, quick ratio 219%) and minimal interest burden (183x coverage).
• Data gaps on cash flows and dividends limit visibility on cash conversion and capital returns.

Metrics to Watch:

• Order backlog and new bookings to gauge revenue durability.
• Utilization rate, headcount growth, and subcontracting ratio for margin trajectory.
• DSO/receivables trends and operating cash flow conversion.
• SG&A ratio and wage/subcontractor cost inflation.
• Capex intensity and any shift in depreciation (currently undisclosed).
• Effective tax rate normalization versus inferred ~21–22% on ordinary income.

Relative Positioning: Within Japan’s mid-sized solutions/services peer set, the company exhibits above-peer growth this quarter and solid profitability with conservative leverage; disclosure on cash generation and capital returns trails best-in-class 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