BML,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥75.63B
• Operating Income: ¥5.92B
• Net Income: ¥4.36B
• EPS: ¥109.38

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: Solid Q2 FY2026 with healthy top-line growth and stronger operating leverage, translating into double-digit profit growth and robust cash generation. Revenue rose 6.0% YoY to 756.3, while operating income climbed 14.4% YoY to 59.1 and ordinary income increased 14.2% YoY to 61.2. Net income advanced 23.1% YoY to 42.2, benefitting from margin improvement and disciplined cost control. Operating margin stands at 7.82% (59.15/756.28), ordinary margin at 8.09% (61.18/756.28), and net margin at 5.58% (42.19/756.28). Based on back-calculations from growth rates, operating margin expanded by approximately 58 bps YoY and net margin by about 78 bps YoY. Gross margin is 33.3%, and EBITDA margin is 13.5%, indicating sound unit economics in clinical testing operations. Earnings quality is high: operating cash flow of 115.2 is 2.73x net income, pointing to strong cash conversion with likely favorable working capital dynamics. The balance sheet is conservative with equity of 1,300.1 (equity ratio ~74.8% by calculation) and ample liquidity (cash 650.0; current ratio 261%). Interest coverage is 100x, reflecting minimal financial risk. Shareholder returns were sizable, with share repurchases of 53.8 and financing cash outflows of 92.0, implying elevated distributions relative to period earnings. Capex of 45.9 is slightly above D&A (43.3), consistent with maintenance plus selective growth investments. ROE is modest at 3.2% (DuPont: NPM 5.6% × AT 0.435 × Leverage 1.34x), constrained by low leverage and moderate asset turnover. Reported payout ratio (calculated) of 115.9% flags potential over-distribution, though DPS is unreported and cash reserves provide a buffer. Forward-looking, sustained volume/mix growth and cost discipline could support margins, while wage inflation and reimbursement pressures remain key watch items. With ROIC at 6.0% (below the 7–8% target range), continued focus on productivity, automation, and mix improvement will be needed to lift capital efficiency.

Profitability Analysis

ROE decomposition (DuPont): ROE 3.2% = Net Profit Margin 5.6% × Asset Turnover 0.435 × Financial Leverage 1.34x. The component that changed the most appears to be the margin, as operating income (+14.4% YoY) and net income (+23.1%) outpaced revenue (+6.0%), implying margin expansion of ~58 bps at operating level and ~78 bps at net level. Business drivers likely include improved test mix/pricing and operating leverage from volume growth, partially offset by SG&A pressures (SG&A detail YoY not disclosed). Non-operating items were small (net +2.03), suggesting core operations were the primary profit driver. Sustainability: improvements tied to mix and efficiency are more durable than one-off items; continued wage pressure and reimbursement changes could temper further gains. Operating leverage was positive this quarter (OP growth > sales growth), indicating better cost absorption; however, absent SG&A YoY data we cannot confirm whether fixed-cost containment or gross margin drove the majority of the improvement. No evidence of aggressive non-operating boosts (dividend income only 0.75), so quality of margin expansion looks sound.

Growth Assessment

Top-line grew 6.0% YoY to 756.3, consistent with steady demand in clinical testing. Profit growth outpaced sales: OP +14.4%, OI +14.2%, NI +23.1%, reflecting operating leverage and benign non-operating items. EBITDA rose to 102.4 (13.5% margin), and D&A of 43.3 highlights ongoing asset base refresh. Revenue sustainability appears supported by recurring testing volumes; key sensitivities include seasonality and public/private payer reimbursement levels. Profit quality is strong given minimal reliance on non-operating gains and a normal effective tax rate (34.2%). Outlook: with capex (45.9) running slightly above D&A (43.3), BML seems to be investing to sustain capacity and automation, which should aid medium-term margin efficiency. Risks to growth include labor cost inflation, competitive pricing, and potential policy-driven reimbursement revisions. Near-term, high cash balances and low leverage provide flexibility to pursue selective growth initiatives.

Financial Health

Liquidity is strong: current ratio 261.3% and quick ratio 260.3%; no warnings (Current Ratio well above 1.0). Solvency is conservative with total liabilities of 438.0 vs equity of 1,300.1 (calculated equity ratio ~74.8%) and reported D/E of 0.34x (well below the 2.0 warning threshold). Interest coverage is 100.25x, indicating minimal pressure from financing costs. Maturity mismatch risk appears low: current assets (988.6) comfortably exceed current liabilities (378.4), with cash (650.0) alone covering all current liabilities. Interest-bearing debt specifics are unreported, but low interest expense and strong cash suggest net cash position. No off-balance sheet obligations are mentioned in the provided data. Working capital is ample at 610.2, aided by substantial cash and manageable receivables (275.2). Overall balance sheet capacity to absorb shocks or fund investment is high.

Cash Flow Quality

OCF/Net Income is 2.73x, indicating high-quality earnings with robust cash conversion, likely aided by timely collections and stable payables. Reported OCF was 115.2 against capex of 45.9, implying an OCF-minus-capex proxy of ~69.2; however, full investing cash flows are unreported, so free cash flow cannot be definitively calculated. Financing CF was -92.0, driven by share repurchases (-53.8) and other unreported items (likely dividends), indicating shareholder returns exceeded the OCF-minus-capex proxy this period. No clear signs of working capital manipulation are evident from the limited disclosures; the high OCF relative to NI appears consistent with a receivables-driven business converting earnings to cash. Sustainability: recurring OCF looks solid, but sustaining outsized shareholder distributions will depend on ongoing cash generation and the sizable cash balance.

Dividend Sustainability

Dividend disclosures (DPS and total dividend paid) are unreported, but the calculated payout ratio is shown as 115.9%, implying distributions in excess of period earnings on a run-rate basis. Given OCF of 115.2 and capex of 45.9, the OCF-minus-capex proxy (~69.2) may not fully cover combined dividends and buybacks (buybacks alone were 53.8; total financing outflows were 92.0). Near-term sustainability is supported by a strong net cash balance (cash 650.0) and low leverage; however, sustaining a payout >100% would rely on balance sheet drawdown or continued robust cash generation. Policy outlook: with ROE at 3.2% and ROIC at 6.0%, management may balance distributions with reinvestment to lift capital efficiency. Visibility is limited without DPS and full dividend data; monitoring the upcoming guidance and year-end dividend announcement is necessary.

Risk Assessment

Business Risks:

• Reimbursement/pricing pressure on clinical tests impacting margins
• Labor cost inflation (technicians, logistics) eroding operating leverage
• Volume volatility from epidemiological trends and seasonality
• Competitive dynamics in clinical testing (price-based competition, tender outcomes)

Financial Risks:

• Potential over-distribution (calculated payout >100%) relative to OCF-minus-capex proxy
• Receivables concentration and collection timing affecting cash flow
• Execution risk on capex programs to maintain automation/capacity

Key Concerns:

• ROIC at 6.0% below the 7–8% target benchmark, indicating room to improve capital efficiency
• Net margin improvement partly contingent on sustaining operating leverage amid wage and utility cost pressures
• Limited disclosure on investing cash flows and dividends reduces clarity on FCF coverage

Investment Implications

Key Takeaways:

• Healthy Q2: revenue +6.0% YoY, OP +14.4% YoY, NI +23.1% YoY
• Margin expansion: operating margin ~7.82% (+~58 bps YoY), net margin ~5.58% (+~78 bps YoY)
• High earnings quality: OCF/NI 2.73x; strong liquidity (cash 650.0; current ratio 261%)
• Capital discipline: capex 45.9 roughly in line with D&A 43.3; EBITDA margin 13.5%
• Low financial risk: interest coverage 100x; equity ratio ~75%
• ROE 3.2% constrained by low leverage and moderate asset turnover; ROIC 6.0% below target range
• Shareholder returns elevated (buybacks 53.8; financing CF -92.0) vs OCF-minus-capex proxy
• Data gaps remain for DPS and full investing CF, tempering visibility on FCF coverage

Metrics to Watch:

• Test volume growth and price/mix by segment
• SG&A trajectory vs revenue (wage and logistics costs)
• Receivables days and cash conversion cycle
• Capex pipeline and automation ROI (ROIC trend)
• Regulatory/reimbursement updates affecting unit pricing
• Pace of buybacks and forthcoming DPS guidance
• Operating margin and EBITDA margin sustainability

Relative Positioning: Within Japanese clinical testing peers, BML exhibits a conservative balance sheet, strong cash generation, and disciplined operating execution, but capital efficiency (ROE/ROIC) remains moderate, suggesting focus on productivity and mix to close the gap with best-in-class operators.

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