TriIs Incorporated FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.37B
• Operating Income: ¥2M
• Net Income: ¥121M
• EPS: ¥28.78

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

Triis Co., Ltd. (TSE: 4840) reported FY2025 Q3 (cumulative) consolidated results under JGAAP showing a sharp topline expansion but thin core profitability and a heavy reliance on non-operating items. Revenue rose 155.9% year over year to ¥1,368.0 million, yet operating income was just ¥2.0 million, essentially flat, yielding a razor-thin operating margin of approximately 0.15%. Gross profit was ¥274.7 million, implying a gross margin of 20.1%, which is modest and suggests price pressure or low-margin mix despite the large revenue increase. Ordinary income reached ¥177.0 million, indicating substantial non-operating gains or income that offset weak operating performance. Net income totaled ¥224.0 million (up 85.7% YoY), resulting in a net margin of 16.37%, again underscoring the role of non-core items and/or extraordinary factors. DuPont analysis points to ROE of 4.28%, driven by a high net margin (on a reported basis), low asset turnover of 0.232x, and low financial leverage of 1.13x. The operating leverage appears unfavorable: revenue surged, but operating profit did not expand, implying SG&A step-ups or cost pass-through limitations. Liquidity is very strong with a current ratio of 18.2x and quick ratio of 17.7x; working capital is sizable at ¥3,599.6 million. The balance sheet is conservative, with total liabilities of ¥446.1 million versus total assets of ¥5,896.0 million; by simple calculation, equity represents roughly 88.8% of assets, despite the reported equity ratio field showing 0% (likely undisclosed in XBRL). Interest expense was ¥5.1 million, and operating interest coverage is weak at 0.4x on EBIT, highlighting that core operations alone do not comfortably service interest. Cash flow statements were not disclosed (values shown as zero indicate unreported items), so operating cash flow, capex, and free cash flow cannot be assessed this quarter. Dividend distributions were not indicated (DPS reported as 0 due to non-disclosure), and payout metrics are therefore not meaningful. Overall, the quarter’s quality of earnings is mixed: strong reported net income contrasts with minimal operating income. Sustainability depends on whether non-operating contributions can be maintained and whether gross-to-operating margin conversion improves. Key watch points include margin normalization, the persistence of non-operating gains, and recovery of operating cash flow disclosure. Given limited cash flow data and some unreported items, conclusions should be treated with caution.

Profitability Analysis

ROE_decomposition: Reported DuPont: Net margin 16.37% x Asset turnover 0.232 x Financial leverage 1.13 = ROE 4.28%. The ROE is modest because very low turnover and very low leverage offset a high reported net margin that appears supported by non-operating/extraordinary items. margin_quality: Gross margin is 20.1% (¥274.7m GP on ¥1,368.0m revenue), indicating limited pricing power or low-margin mix. Operating margin is ~0.15% (¥2.0m OI), showing minimal conversion of gross profit after SG&A. Ordinary income margin is ~12.9% (¥177.0m / ¥1,368.0m), implying sizeable non-operating gains. Net margin at 16.37% outpaces operating performance, suggesting tax/extraordinary effects or investment-related income. operating_leverage: Revenue grew +155.9% YoY while operating income was flat at ¥2.0m, indicating negative operating leverage in the period. This points to elevated fixed costs, increased SG&A, or project timing effects that prevented scale benefits from translating into operating profit.

Growth Assessment

revenue_sustainability: The +155.9% YoY revenue surge appears project- or segment-mix-driven; sustainability is uncertain without additional backlog or order book disclosure. profit_quality: Core profit quality is weak as operating income (¥2.0m) contributes minimally to earnings; the gap between operating and ordinary/net income signals reliance on non-operating drivers. outlook: Near-term outlook hinges on improving gross-to-operating margin conversion, stabilizing SG&A, and the repeatability of non-operating gains. Continued topline momentum without cost control will not enhance core profitability.

Financial Health

liquidity: Current assets ¥3,809.3m vs current liabilities ¥209.7m yields a current ratio of 18.2x and quick ratio of 17.7x; working capital is ¥3,599.6m. Inventories are modest at ¥90.8m, supporting low working capital risk from stock obsolescence. solvency: Total liabilities ¥446.1m vs equity ¥5,234.0m implies a liabilities-to-equity ratio of ~0.09x and an equity share of assets of roughly 88.8% by calculation (equity/total assets). Financial leverage is low (1.13x in DuPont), indicating a conservative capital structure. capital_structure: Interest expense is modest at ¥5.1m, but operating coverage is only ~0.4x given ¥2.0m operating income, showing core earnings do not comfortably cover interest. However, low absolute debt/liability levels mitigate near-term balance-sheet risk.

Cash Flow Quality

earnings_quality: With OCF unreported this quarter, OCF/Net income cannot be assessed. The divergence between operating income (¥2.0m) and net income (¥224.0m) raises questions about the sustainability and cash conversion of earnings. FCF_analysis: Investing and financing cash flows were not disclosed; free cash flow cannot be computed. Capex and working capital absorption are unknown. working_capital: Large positive working capital (¥3,599.6m) and low inventories suggest liquidity strength, but without OCF we cannot determine whether receivables expanded or collections slowed.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio fields are unreported this quarter (displayed as zero). Given modest ROE (4.28%) and uncertain cash generation, a conservative payout stance would be consistent with fundamentals, but no policy details are available. FCF_coverage: FCF is unreported; therefore, dividend coverage by free cash flow cannot be assessed. policy_outlook: Without disclosed dividend guidance or cash flow data, the outlook hinges on improving core profitability and restoring visibility into OCF/FCF.

Risk Assessment

Business Risks:

• Low operating margin (~0.15%) and negative operating leverage despite strong revenue growth
• Dependence on non-operating income to achieve ordinary/net profit
• Potential project timing/volatility affecting revenue recognition and margin mix
• Pricing pressure and/or high SG&A intensity suppressing margin conversion
• Limited disclosure on cash flows impedes assessment of cash conversion

Financial Risks:

• Operating interest coverage of ~0.4x indicates core earnings sensitivity to even modest finance costs
• Low asset turnover (0.232x) depresses ROE and could reflect underutilized assets
• Concentration risk if revenue growth is driven by a small number of large projects
• Potential mismatch between accounting profits and cash generation (OCF unreported)

Key Concerns:

• Sustainability of non-operating gains supporting ordinary and net income
• Path to improving operating margin from 0.15% toward a sustainable level
• Visibility on OCF and FCF to validate earnings quality

Investment Implications

Key Takeaways:

• Topline up +155.9% YoY to ¥1,368.0m, but operating income flat at ¥2.0m
• Gross margin 20.1% with limited conversion to operating profit
• Ordinary income ¥177.0m and net income ¥224.0m indicate material non-operating contributions
• ROE 4.28% driven by high reported net margin but offset by low turnover and leverage
• Balance sheet is equity-heavy with liabilities/equity ~0.09x and strong liquidity
• Operating interest coverage weak (~0.4x), highlighting core earnings fragility
• Cash flow metrics unreported; FCF and OCF quality cannot be confirmed

Metrics to Watch:

• Operating margin trajectory and SG&A ratio versus sales
• Composition of non-operating income and recurrence
• Order intake/backlog and revenue visibility for subsequent quarters
• OCF/Net income and free cash flow once disclosed
• Asset turnover improvement and utilization of balance sheet
• Interest coverage using EBIT and EBITDA (once D&A is disclosed)

Relative Positioning: Financially conservative balance sheet with strong liquidity but weaker core profitability versus peers that convert gross profit to operating income more effectively; earnings quality appears more volatile due to reliance on non-operating items.

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