Yokota Manufacturing Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥863M
• Operating Income: ¥124M
• Net Income: ¥82M
• EPS: ¥44.47

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

For FY2026 Q2 (standalone, JGAAP), Yokota Seisakusho posted revenue of ¥863.0 million, down 3.4% YoY, with operating income of ¥124.0 million (-3.6% YoY) and net income of ¥82.0 million (-9.1% YoY). Profitability remained resilient: gross margin was a solid 46.8%, operating margin was 14.4%, ordinary margin 14.6%, and net margin 9.5%. EBITDA was ¥147.6 million, yielding a 17.1% EBITDA margin, indicating healthy cost discipline and a light depreciation load (D&A ¥23.6 million, ~2.7% of sales). DuPont decomposition points to a modest ROE of 2.83%, driven by net margin 9.5%, asset turnover 0.261x, and low financial leverage of 1.14x. Liquidity appears very strong with a current ratio of 4.75x and a quick ratio of 4.73x, supported by large current assets (¥2,816.8 million) versus current liabilities (¥593.0 million). Balance sheet leverage is low: total liabilities of ¥707.0 million against equity of ¥2,899.0 million implies a debt-to-equity of ~0.24x and assets-to-equity of ~1.14x. Despite solid earnings, operating cash flow was negative at -¥98.0 million, resulting in an OCF/Net Income ratio of -1.19 and OCF/EBITDA of -0.66, indicating working capital outflows or timing effects. Cash and equivalents were not disclosed (reported as 0), and investing cash flow was also not disclosed (reported as 0), limiting free cash flow assessment. The reported equity ratio of 0.0% is a non-disclosure artifact; based on provided totals, the economic equity ratio is approximately 87.7% (equity ¥2,899.0 million / assets ¥3,308.0 million). Interest expense was reported as 0 (likely not disclosed rather than truly zero), but ordinary income visibility and low leverage suggest limited financial risk. The effective tax rate metric shown as 0.0% is inconsistent with available figures; using income tax of ¥40.8 million on ordinary income of ¥126.0 million implies a tax rate near 32–33%. No dividends were declared (DPS ¥0, payout 0%), and financing cash outflows of -¥93.3 million likely relate to debt repayment or other financing uses, not dividends. Overall, the company exhibits strong margins and a robust balance sheet but faces near-term cash conversion weakness and slight top-line contraction, warranting close monitoring of receivables and other working capital components. Data limitations (notably cash, capex, and share data) constrain precision and certain ratio interpretations. The underlying fundamentals appear conservative with room to fund operations internally, assuming cash conversion normalizes in subsequent quarters.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 9.5%
• asset_turnover: 0.261x
• financial_leverage: 1.14x (Assets/Equity)
• calculated_ROE: 2.83%
• commentary: Low leverage and moderate asset turnover constrain ROE despite healthy margins; improvement hinges more on utilization/turnover than incremental leverage. margin_quality:
• gross_margin: 46.8%
• operating_margin: 14.4% (124.0 / 863.0)
• ordinary_margin: 14.6% (126.0 / 863.0)
• net_margin: 9.5% (82.0 / 863.0)
• EBITDA_margin: 17.1%
• tax_rate_observation: Implied effective tax rate ~32.4% (40.839 / 126.0), despite the reported 0.0% metric.
• assessment: Margins are robust for a small-cap industrial maker, indicating good pricing and cost control. Low D&A burden supports EBITDA conversion potential once working capital normalizes. operating_leverage:
• YoY_revenue_change: -3.4%
• YoY_operating_income_change: -3.6%
• assessment: Operating income moved roughly in line with revenue, suggesting neutral operating leverage in the period; fixed-cost absorption appears stable.

Growth Assessment

revenue_sustainability: Revenue declined 3.4% YoY to ¥863.0 million, indicating softness in demand or delivery timing. With minimal inventories (¥12.0 million), the model likely emphasizes make-to-order, making revenue timing sensitive to order intake and shipment schedules. profit_quality: Despite lower sales, gross and operating margins remained strong, pointing to resilient pricing/mix and disciplined costs. However, the negative OCF vs. positive earnings indicates weaker cash realization, likely from receivables or other working capital items. outlook: Short-term outlook is stable-to-cautious: sustaining mid-teens operating margins is plausible if pricing holds, but revenue recovery and cash conversion are key. Absence of disclosed capex prevents assessment of capacity-driven growth; order backlog and customer concentration will be critical external indicators.

Financial Health

liquidity:

• current_ratio: 475.1%
• quick_ratio: 473.0%
• working_capital: ¥2,223.9 million
• commentary: Substantial current asset buffer vs. current liabilities. The negative OCF implies that part of current assets may be tied up in receivables/other current items. solvency:
• debt_to_equity: 0.24x (Total liabilities ¥707.0m / Equity ¥2,899.0m)
• assets_to_equity: 1.14x
• equity_ratio_note: Reported equity ratio 0.0% is a non-disclosure artifact; calculated equity ratio is ~87.7%.
• interest_coverage: Not meaningful given interest expense not disclosed; operational earnings are sufficient to cover typical modest financing costs given low leverage. capital_structure: Balance sheet is equity-heavy with limited financial debt implied. Low leverage provides resilience and optionality for investment or shareholder returns if cash flows support.

Cash Flow Quality

earnings_quality:

• OCF_to_NI: -1.19x (OCF -¥98.0m vs. NI ¥82.0m)
• OCF_to_EBITDA: -0.66x
• assessment: Earnings did not convert to cash in the period, pointing to working capital consumption or timing effects. This detracts from earnings quality near-term. FCF_analysis:
• reported_FCF: 0 (capex undisclosed; investing CF reported as 0 indicates non-disclosure)
• commentary: True free cash flow cannot be determined without capex. If OCF normalizes positive and capex remains modest (consistent with low D&A), FCF potential is intact; current data insufficient to confirm. working_capital: Inventories are low (¥12.0m), suggesting the OCF shortfall is more likely receivables or other current items. Monitoring collection cycles and advance payments is essential.

Dividend Sustainability

payout_ratio_assessment: No dividend (DPS ¥0, payout 0%) despite positive EPS of ¥44.47. With modest ROE and negative OCF, retention is conservative and prudent near-term. FCF_coverage: Not assessable due to undisclosed capex; reported FCF coverage of 0.00x is not meaningful. policy_outlook: Given strong equity base and low leverage, the company has future capacity to initiate or raise dividends if cash conversion improves. Near-term policy likely prioritizes liquidity and reinvestment until OCF normalizes.

Risk Assessment

Business Risks:

• Demand cyclicality in capital goods/industrial customers impacting order intake and shipment timing.
• Customer concentration risk typical of specialized manufacturers (data not disclosed, but a common structural factor).
• Pricing pressure from larger competitors and input cost volatility affecting gross margin.
• Execution risk in project timing given low inventories and make-to-order characteristics.
• Supply chain constraints potentially impacting lead times and deliveries.

Financial Risks:

• Negative operating cash flow despite positive earnings, indicating working capital strain.
• Limited visibility on cash and capex due to non-disclosure, constraining FCF assessment.
• Potential FX exposure if sourcing or sales include foreign currency (not disclosed).
• Small scale of operations may magnify volatility in margins and cash flows.

Key Concerns:

• Cash conversion: OCF/NI at -1.19x and OCF/EBITDA at -0.66x.
• Top-line softness: revenue -3.4% YoY.
• Data gaps in cash, capex, and share metrics limit precision of coverage ratios and per-share analysis.

Investment Implications

Key Takeaways:

• Resilient profitability with 46.8% gross margin and 14.4% operating margin despite revenue decline.
• Low leverage and high calculated equity ratio (~87.7%) support balance sheet strength.
• ROE at 2.83% is constrained by low asset turnover and minimal leverage.
• Operating cash flow shortfall (-¥98.0m) is the primary near-term weakness.
• No dividend currently; capital allocation appears conservative pending cash flow normalization.

Metrics to Watch:

• OCF trajectory and receivables turnover/DSO to confirm working capital normalization.
• Order intake/backlog (not disclosed) as leading indicators of revenue recovery.
• Capex levels and maintenance vs. growth split once disclosed to evaluate FCF.
• Gross and operating margin stability amid input cost and pricing dynamics.
• Asset turnover improvements as a lever for ROE enhancement.

Relative Positioning: Versus TSE small-cap machinery/industrial peers, the company exhibits stronger-than-average margins and a notably conservative balance sheet, offset by weaker cash conversion this quarter and limited disclosure on cash/capex.

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