ATOMIX CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.94B
• Operating Income: ¥262M
• Net Income: ¥59M
• EPS: ¥36.07

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

Atomix Co., Ltd. (TSE: 4625) delivered solid topline growth and a sharp rebound in profitability in FY2026 Q2 under JGAAP on a consolidated basis. Revenue grew 2.5% year over year to ¥5,941 million, while operating income rose 150.3% YoY to ¥262 million, signaling powerful operating leverage and improved cost control. Net income increased 222.6% YoY to ¥191 million, supported by modest non-operating gains and negligible interest burden. Gross profit of ¥1,532.6 million implies a gross margin of 25.8%, reflecting improved mix and/or input cost normalization relative to last year. Operating margin reached 4.4%, a notable recovery given the modest revenue growth, suggesting fixed-cost absorption and disciplined SG&A management. Ordinary income of ¥277 million exceeded operating income, indicating positive net non-operating items more than offsetting minimal interest expense (¥0.3 million). The implied effective tax rate is around 20% (¥48.0 million tax on approximately ¥239 million pre-tax income), consistent with a normalized domestic tax environment. Cash generation was strong, with operating cash flow of ¥546.4 million, 2.86x reported net income, implying robust earnings quality and likely working-capital tailwinds. The balance sheet is conservative: total assets of ¥14,974 million against total liabilities of ¥4,673 million implies low leverage (D/E ~0.45x; assets/equity 1.43x). Liquidity is ample, with a current ratio of 2.15x and working capital of ¥4,656 million, providing resilience against short-term shocks. Inventory stood at ¥1,250 million; relative to period COGS, this suggests healthy turnover for a coatings/chemicals business, though average inventory levels are not disclosed. EBITDA totaled ¥450.2 million (margin 7.6%), with interest coverage extraordinarily high at ~882x given minimal financial debt costs. Ordinary income outpacing operating income suggests financial income or other non-operating gains contributed to the bottom line. Investment cash flows were not disclosed (reported as zero), limiting free cash flow analysis and capex visibility. Dividend data were also not disclosed (DPS and payout shown as zeros are placeholders), so policy assessment requires caution. Overall, the company exhibits improving profitability, strong cash conversion, and a sturdy balance sheet, with the main limitations being missing disclosures on cash balances, capex, and dividends in this period.

Profitability Analysis

ROE decomposition (DuPont): Net margin 3.21% × asset turnover 0.397 × financial leverage 1.43 yields ROE of 1.82%, aligning with the provided calculation. The net margin of 3.21% reflects meaningful recovery from last year given the triple-digit YoY growth in earnings on modest sales growth. Gross margin of 25.8% and operating margin of 4.4% indicate improved margin quality, likely from easing raw material costs and better pricing/mix; non-operating items added modestly (ordinary income > operating income by ~¥15 million). Operating leverage was strong: +2.5% revenue growth translated into +150.3% operating income growth, implying substantial fixed-cost absorption and tight SG&A control. EBITDA margin of 7.6% and D&A of ¥188.2 million suggest capital intensity is moderate; OCF exceeding EBITDA indicates favorable working-capital dynamics this half.

Growth Assessment

Revenue grew 2.5% YoY to ¥5,941 million, a steady performance likely supported by stable end-demand in infrastructure/industrial coatings and road marking segments. Profit growth was outsized versus sales, indicating cyclical recovery in margins, potentially from input cost normalization (resins, solvents, energy) and price carry-over. The sustainability of margin gains hinges on maintaining pricing discipline and avoiding renewed raw material inflation. Ordinary income’s positive delta to operating income implies non-operating tailwinds; these may not be repeatable, so core operating margin trajectory is the key metric. With OCF at ¥546 million versus net income of ¥191 million, earnings quality appears strong, supporting the quality of growth. Outlook-wise, low financial leverage and strong liquidity provide capacity to invest in growth (R&D, capacity, or M&A), though capex is not disclosed this period. Absent signs of demand contraction, we view revenue growth as stable to modest, with profit trajectory more sensitive to input costs and operating efficiency. Non-disclosure of backlog/order trends limits visibility on second-half run-rate. For the full year, sustaining mid-20s gross margin and 4–5% operating margin would underpin improved earnings versus the prior year.

Financial Health

Liquidity is robust: current assets of ¥8,709 million versus current liabilities of ¥4,053 million yield a current ratio of 2.15x and a quick ratio of 1.84x (per provided metric). Working capital is ¥4,656 million, offering ample cushion for seasonality and procurement cycles. Solvency is strong: total liabilities of ¥4,673 million vs equity of ¥10,469 million translate to D/E of ~0.45x and assets/equity of 1.43x, indicating conservative leverage. Implied equity ratio (equity/asset) is approximately 70%, signaling a solid capital base (the reported 0.0% equity ratio appears undisclosed rather than zero). Interest expense is de minimis at ¥0.3 million, and interest coverage is ~882x, minimizing refinancing risk. The balance sheet structure supports continued operations and selective investment without stressing liquidity.

Cash Flow Quality

Earnings quality is high: OCF of ¥546.4 million is 2.86x net income (¥191 million), indicating strong cash conversion, likely from favorable working-capital movements and non-cash charges (D&A ¥188.2 million). EBITDA of ¥450.2 million versus OCF implies cash generation exceeded operating profitability, a positive but potentially non-recurring working-capital benefit. Free cash flow cannot be reliably assessed because investing cash flow is undisclosed (reported as zero), and cash & equivalents were not provided; thus, FCF and cash balance analysis are constrained. Inventory of ¥1,250 million against period COGS suggests healthy turns, but without receivables/payables details we cannot triangulate full working-capital efficiency. Overall, cash flow quality appears solid this half, but sustainability will depend on maintaining margins and stable working-capital needs.

Dividend Sustainability

Dividend data are not disclosed for the period (DPS and payout shown as zeros are placeholders). With net income of ¥191 million and strong OCF of ¥546 million, internal capacity to fund distributions appears adequate, but without capex and cash balance disclosure, FCF coverage cannot be determined. Historically, small-cap chemicals firms balance dividends with capex for compliance and efficiency; in the absence of disclosed capex and policy guidance, we cannot assess payout sustainability quantitatively. The low leverage and ample liquidity support potential distributions, but visibility is limited until full-year results and capital allocation plans are provided.

Risk Assessment

Business Risks:

• Raw material price volatility (resins, solvents, pigments) affecting gross margin
• Energy and logistics cost fluctuations impacting cost base
• Demand cyclicality tied to construction, infrastructure, and industrial activity
• Project/order timing and seasonality leading to earnings volatility between halves
• Competitive pricing pressure in coatings/road marking markets
• Regulatory and environmental compliance costs (VOC, waste disposal, safety)
• Product quality and warranty risk on applied coatings/markings
• FX exposure on imported materials (yen depreciation raising input costs)

Financial Risks:

• Working-capital swings (inventory and receivables) affecting OCF sustainability
• Limited disclosure on capex and investing cash flows constraining FCF visibility
• Potential inventory obsolescence if demand slows or specifications change
• Concentration risk if reliant on public sector/infrastructure budgets
• Low but present interest rate and credit counterparty risks

Key Concerns:

• Durability of margin recovery given modest topline growth
• Lack of capex and cash balance disclosure impeding FCF and dividend analysis
• Sensitivity to raw material and FX-driven cost inflation

Investment Implications

Key Takeaways:

• Material profit rebound on modest sales growth highlights strong operating leverage
• Gross and operating margins improved; non-operating gains modestly supportive
• Cash conversion is robust with OCF > EBITDA and >2.8x net income
• Balance sheet is conservative with low leverage and strong liquidity
• Limited visibility on capex, cash balance, and dividend policy this period

Metrics to Watch:

• Gross margin and operating margin trajectory in H2
• OCF to net income ratio and working-capital turns (inventory and receivables days)
• Raw material input price indices and yen FX trends
• Capex outlays and investing cash flows (once disclosed)
• Order intake/backlog or end-market demand indicators
• Ordinary vs operating income mix (sustainability of non-operating gains)

Relative Positioning: Within Japan small-cap chemicals/coatings peers, Atomix exhibits a conservative capital structure, improving profitability, and strong cash conversion, though disclosure gaps on capex and dividends limit clarity on capital allocation versus peers with more comprehensive reporting.

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