BML,INC. FY2026 FY Earnings Report

Financial Highlights

• Net Sales: ¥150.26B
• Operating Income: ¥10.42B
• Net Income: ¥7.10B
• EPS: ¥203.54

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

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AI Financial Analysis

Executive Summary

BML delivered a solid FY2026, with revenue up 4.9% to 1,502.6 and operating income up 11.3% to 104.2, resulting in double-digit profit growth and margin expansion. Gross profit increased to 486.9 with gross margin at 32.4%, up about 40 bps year over year. Operating margin improved to 6.9% from 6.5% (+40 bps), reflecting positive operating leverage as SG&A growth tracked slightly below revenue growth. Ordinary income rose 10.5% to 110.1, supported by modest net non-operating income (7.64 vs 1.71 in expenses). Net income attributable to owners of parent climbed 23.7% to 77.5, lifting net margin to 5.2% from approximately 4.4% (+80 bps). DuPont ROE improved to 5.9% (vs ~4.9% last year), driven primarily by higher net margin and a small uptick in asset turnover to 0.82. Earnings quality was strong: operating cash flow of 207.2 was 2.67x net income, cash conversion (OCF/EBITDA) was 1.06x, and the accruals ratio was -7.1%. Free cash flow after capex was robust at 130.3, easily funding dividends and internal investment. Extraordinary gains (notably 12.01 from fixed asset sales and 1.35 from securities), partly offset by 3.72 of impairment, contributed a meaningful one-time uplift to bottom-line results. The balance sheet remains conservative with a current ratio of 249% and Debt/EBITDA of 0.05x, while cash and deposits of 680.3 far exceed short-term loans of 9.0. Dividend policy remains shareholder-friendly: DPS totaled ¥125 with a dividends-only payout ratio around the mid-60% level and FCF coverage of 2.56x; including buybacks, the total return ratio was about 130%. Guidance was effectively met or exceeded: against full-year forecasts, actual sales achieved ~96.9%, operating income ~99.3%, ordinary income ~100.1%, and profit attributable to owners ~110.7%. Forward-looking, steady top-line growth, firm operating discipline, and strong cash generation support continued investment and stable dividends, although reliance on one-time gains this year should be normalized in assessing run-rate earnings. DSO at 65 days and the all short-term structure of debt require monitoring, but are well mitigated by ample liquidity. Overall, the company enters the new fiscal year with improved profitability, high-quality cash flows, and a fortress balance sheet that can absorb operational or pricing shocks.

Profitability Analysis

ROE rose to 5.9%, decomposed as Net Profit Margin 5.2% × Asset Turnover 0.82 × Financial Leverage 1.39x. The largest driver of the ROE improvement was the higher net margin (approx. +80 bps YoY), aided by operating margin expansion (+40 bps) and a modest net boost from one-time items in extraordinary income. Asset turnover ticked up (approx. 0.78 to 0.82), reflecting better utilization of the asset base as revenue outpaced balance sheet growth. Financial leverage was broadly stable at ~1.39x. The margin improvement appears largely operational, with gross margin up ~40 bps and SG&A growth (+4.8%) roughly in line with revenue (+4.9%), indicating balanced cost control; the incremental lift from extraordinary gains is non-recurring and should be stripped out for run-rate assessment. Sustainability: underlying operating leverage looks maintainable assuming stable test volumes and pricing, while extraordinary gains are one-time in nature. Watchpoints include maintaining SG&A discipline and monitoring whether revenue growth continues to outpace fixed-cost inflation.

Growth Assessment

Revenue grew 4.9% YoY to 1,502.6, consistent with steady expansion in the testing business. Operating income grew 11.3% to 104.2, outpacing sales and demonstrating positive operating leverage. Ordinary income increased 10.5% to 110.1, supported by slightly higher non-operating income. Net income attributable to owners rose 23.7% to 77.5, benefiting from both core margin improvement and non-recurring gains. EBITDA expanded to 195.4, with a 13.0% margin, providing ample capacity for reinvestment. Capex was 87.5 (Capex/Depreciation ~0.96x), indicating near-maintenance investment after a heavy prior year. Cash generation improved, with OCF up to 207.2, enabling FCF of 130.3 and funding for shareholder returns. Outlook: with guidance essentially achieved or exceeded, a stable growth trajectory is plausible if hospital and clinic demand remains resilient and cost discipline continues. Key sensitivities are reimbursement pricing and macro-driven test volume fluctuations.

Financial Health

Liquidity is strong: current ratio 248.8% and quick ratio 247.9% reflect substantial near-term coverage, supported by cash and deposits of 680.3. Solvency is conservative: Debt/EBITDA 0.05x, EBITDA interest coverage 164x, and Debt/Capital 0.7%. The D/E ratio of 0.39x indicates a low-leverage posture. Maturity profile: short-term loans account for 100% of interest-bearing debt, but refinancing risk is minimal given Cash/Short-term Debt of 75.6x and sizeable working capital of 608.2. No off-balance sheet obligations were noted beyond standard lease obligations recognized on balance sheet. Notable working capital items include accounts payable (trade) of 2,022.9 and deposits received of 775.0, both manageable within the liquidity envelope.

Notable B/S Changes

Inventories: +0.82 (+32.5%) - Replenishment of finished goods and WIP; small absolute size, minimal balance sheet risk. Construction in Progress: +25.15 (+76.9%) - Ongoing facility/equipment projects; supports capacity and service capability, monitor execution risk. Deposits Received: +43.96 (+131%) - Higher customer/deferred-related balances; supportive for near-term liquidity. Accounts Payable (Other): +24.75 (+30.1%) - Higher accrued expenses/payables in line with activity; watch for normalization.

Cash Flow Quality

OCF/Net Income of 2.67x signals high earnings quality. Cash conversion (OCF/EBITDA) at 1.06x is excellent, underscoring strong monetization of earnings. Free cash flow of 130.3 after 87.5 of capex comfortably supports dividends and routine investments. Capex/Depreciation of 0.96x suggests current investment is aligned with maintenance plus selective upgrades following a heavier prior-year capex cycle. Working capital trends were benign; receivables were broadly flat while payables modestly increased, with no signs of aggressive working capital management. Extraordinary gains were backed by cash proceeds (proceeds from sales of PPE 21.98), reducing concerns about non-cash earnings inflation.

Dividend Sustainability

DPS totaled ¥125 (interim ¥60, year-end ¥65), implying a dividends-only payout ratio of approximately 65.7% against EPS of ¥203.54. FCF coverage is strong at 2.56x, indicating ample capacity to maintain the dividend under current operating conditions. Including share repurchases of 53.82, the total return ratio was ~130% of net income, exceeding the sustainable benchmark and effectively distributing more than earnings; this is supported by the large cash balance but is not indefinitely repeatable without continued robust FCF. The company retains flexibility to balance shareholder returns with capex given low leverage and strong liquidity.

Risk Assessment

Business risks include Reimbursement/pricing pressure in clinical testing impacting margins, Volume volatility tied to hospital/clinic demand and public health trends, Competition in outsourced testing potentially pressuring prices and mix, Technology and equipment upgrade cycles affecting cost base and service quality.

Financial risks include Receivables collection risk with DSO at 65 days, High proportion of short-term debt (100%) despite strong cash coverage, Elevated shareholder returns (dividends + buybacks ~130% of NI) increasing cash outflows.

Key concerns include One-time items materially boosted earnings; normalization could reduce reported EPS, Tax burden (0.646) below the 0.70 benchmark, limiting net margin uplift, Potential wage and utility cost inflation challenging SG&A discipline.

Investment Implications

Key takeaways include Core profitability improved with operating margin +40 bps to 6.9% and net margin +80 bps to 5.2%, High-quality cash generation (OCF/NI 2.67x, OCF/EBITDA 1.06x) underpins balance sheet strength, ROE improved to 5.9% on better margins and slightly higher asset turnover, Extraordinary gains provided a notable, non-recurring boost to net income, Total return ratio (~130%) exceeded earnings, funded by strong FCF and cash reserves.

Metrics to watch include DSO trend and receivables quality, Operating margin trajectory versus pricing and input costs, Capex/Depreciation to gauge reinvestment cadence, Extraordinary and non-operating items’ contribution to earnings, Cash balance versus cumulative shareholder returns.

Regarding relative positioning, Within Japan’s clinical testing peers, BML exhibits conservative leverage, strong liquidity, and solid cash conversion, with margins in the mid-single digits. This positions the company as a stable cash generator, albeit with ROE below high-growth benchmarks and some reliance on non-recurring gains in the period.