AIRMAN CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥27.87B
• Operating Income: ¥3.45B
• Net Income: ¥2.37B
• EPS: ¥93.22

Income Statement

Balance Sheet

Cash Flow Statement

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

AIRMAn (63640) reported FY2026 Q2 consolidated results under JGAAP with modest topline growth and mixed profitability dynamics. Revenue grew 2.6% year over year to ¥27.87bn, while operating income declined 3.2% to ¥3.45bn, indicating some operating deleverage despite stable gross profitability. Gross profit was ¥7.34bn, implying a gross margin of 26.3%, broadly solid for industrial equipment, but operating margin compressed to 12.4% as selling and administrative costs outpaced sales growth. Ordinary income of ¥3.66bn exceeded operating income by ¥0.21bn, suggesting positive non-operating contributions (e.g., interest income or FX gains) more than offsetting the modest interest expense of ¥16.6m. Net income increased 8.5% to ¥2.56bn, implying lower effective tax or favorable non-operating items versus last year; based on ordinary income and reported tax, the implied tax rate is roughly 28–29%, even though the summary metric shows 0.0% (likely an undisclosed placeholder). DuPont decomposition points to a calculated ROE of 5.98%, driven by a 9.19% net margin, asset turnover of 0.427x, and financial leverage of 1.52x. The company maintains a robust balance sheet with total assets of ¥65.24bn, equity of ¥42.87bn, and liabilities of ¥23.16bn; this equates to an equity ratio around 65–66% despite the equity ratio field being undisclosed. Liquidity is very strong with a current ratio of 374% and quick ratio of 319%, supported by ¥47.51bn of current assets and ¥12.70bn of current liabilities. Working capital stands at a substantial ¥34.81bn, underscoring resilience but also tying up capital in operations, as indicated by soft operating cash conversion. Operating cash flow of ¥0.97bn equates to an OCF/Net Income ratio of 0.38, implying working capital absorption or timing effects; inventories are ¥7.05bn, but period-over-period movements are not disclosed. EBITDA was ¥3.98bn (14.3% margin), and interest coverage is exceptionally strong at 208x, reflecting low leverage and ample earnings buffer. Financing cash flow was a positive ¥6.48bn, suggesting increased borrowings or other financing activities; details are not disclosed in the data. The dividend line shows DPS at ¥0 and payout ratio at 0%, but given share data are undisclosed, this should be treated cautiously; EPS is ¥93.22, and back-solving implies roughly 27.5m shares outstanding on a weighted-average basis. Overall, the company exhibits healthy margins, low leverage, and strong liquidity, but near-term operating leverage is negative and cash conversion is weak. Data limitations exist for cash and cash equivalents, investing cash flows, share counts, and certain ratios that display as zero; analysis focuses on disclosed non-zero items and derived metrics.

Profitability Analysis

ROE is 5.98%, decomposed as Net Profit Margin 9.19% × Asset Turnover 0.427 × Financial Leverage 1.52. Operating margin is 12.4% (¥3.452bn/¥27.866bn), down YoY alongside a 2.6% revenue increase, indicating negative operating leverage and cost pressure in SG&A or product mix. Gross margin is 26.3%, suggesting stable manufacturing economics but limited ability to fully pass through costs or scale OPEX this quarter. EBITDA margin of 14.3% provides a cushion above operating income via non-cash D&A (¥528m), but not enough to prevent YoY operating margin compression. Ordinary income exceeds operating income by ¥209m, implying positive non-operating gains that supported bottom-line growth despite weaker operations. Interest burden is negligible (interest expense ¥16.6m), and interest coverage at 208x confirms minimal financial drag. ROA is approximately 3.9% (¥2.562bn/¥65.244bn), healthy for a capital-intensive industrial business, but there is room for improvement through better asset utilization (AT 0.427x). The net margin of 9.19% is solid for the sector and benefited from favorable non-operating results and a normalizing tax rate. Overall margin quality is mixed: production margins are adequate, but operating leverage was unfavorable in the period. Monitoring pricing power, cost control, and mix shift (e.g., higher value power generators or compressors) will be key to restoring operating margin expansion.

Growth Assessment

Revenue growth of 2.6% YoY reflects steady demand but not strong acceleration; it is consistent with a mature industrial cycle or mixed end-market conditions. Operating income declined 3.2% YoY, pointing to cost inflation, mix, or higher selling expenses offsetting the revenue gain. Net income rose 8.5% YoY, helped by non-operating gains and a normal tax load, signaling that bottom-line growth was not purely operational. With asset turnover at 0.427x, growth remains asset-intensive; improving utilization and throughput would be necessary for stronger growth without significant capital. The ordinary income uplift versus operating income suggests FX or financial income tailwinds that may not be structural. Without order/backlog data, sustainability of growth is unclear; stability at the topline is encouraging, but operating deleverage warrants caution. Medium-term outlook likely hinges on construction, civil engineering, rental fleet refresh, and overseas demand for compressors/generators; pricing initiatives and product mix upgrades could support margins. Given the strong balance sheet, the company has capacity to invest for growth; however, visibility is limited due to undisclosed investing cash flows and capex. Near-term, expect modest revenue growth with a focus on restoring operating leverage and cash conversion.

Financial Health

Liquidity is strong: current ratio 374% and quick ratio 319% reflect ample current assets (¥47.51bn) versus current liabilities (¥12.70bn). Working capital of ¥34.81bn indicates significant buffer, though it may weigh on cash conversion. Solvency is solid: total liabilities/total equity is 0.54x, and the equity ratio recalculates to approximately 65.7% (¥42.874bn/¥65.244bn). Interest coverage of 208x underscores low financial risk and comfortable service of obligations. Financing cash flow of +¥6.48bn indicates access to funding; absent detail, this could be net borrowing or other financing activities. Capital structure is conservative with low leverage and high equity, supporting resilience through cycles.

Cash Flow Quality

Operating cash flow was ¥973m versus net income of ¥2,562m (OCF/NI 0.38), indicating weak cash conversion in the period, likely due to working capital build or timing of collections/payables. EBITDA (¥3,980m) comfortably exceeds OCF, reinforcing the view that non-cash earnings quality is fine but cash realization lagged. Free cash flow is shown as 0 in the summary, but investing cash flows (including capex) are undisclosed; therefore, FCF cannot be assessed from the provided data. Inventories stand at ¥7.05bn; without prior-period data, we cannot quantify inventory swing, but elevated working capital is consistent with lower OCF. Depreciation of ¥528m suggests an ongoing capital base; capex requirements likely track at or above D&A in this asset-heavy business, but actual capex is not disclosed. Overall, earnings quality appears decent at the accrual level, but cash flow quality this half is soft, and improvements in collections and inventory turns would enhance sustainability.

Dividend Sustainability

The data show annual DPS at ¥0.00 and payout ratio at 0.0%, but share-related fields are undisclosed; thus, we cannot conclusively assess total dividends paid. EPS is ¥93.22, implying approximately 27.5 million weighted-average shares (2,562m/¥93.22), which, if DPS were truly zero, would indicate full earnings retention. Free cash flow is not determinable because investing cash flows are undisclosed, so FCF coverage of dividends cannot be assessed despite the summary showing 0.00x. Balance sheet strength and low leverage would support dividends if the company elects to pay or increase them; however, current policy cannot be inferred from the provided data. Absent confirmed DPS and FCF, we view dividend sustainability assessment as limited and contingent on cash conversion improving from the current OCF shortfall.

Risk Assessment

Business Risks:

• Cyclical demand in construction, civil engineering, and rental equipment markets affecting compressors and generators
• Raw material and component cost inflation pressuring gross and operating margins
• Product mix shifts (e.g., toward lower-margin models) reducing operating leverage
• Supply chain and logistics disruptions impacting deliveries and inventory levels
• Export exposure and FX volatility influencing pricing and ordinary income
• Competition from domestic and overseas manufacturers compressing pricing power
• Dependence on capital expenditure cycles of key customers and rental companies

Financial Risks:

• Weak cash conversion (OCF/NI 0.38) indicating working capital sensitivity
• Potential inventory buildup risk amid modest revenue growth
• Limited visibility on capex and investing cash flows complicates FCF assessment
• Positive financing cash flow suggests reliance on external funding in the period, though leverage remains low
• Tax rate variability and non-operating gains’ volatility driving bottom-line swings

Key Concerns:

• Negative operating leverage despite revenue growth
• Soft operating cash flow relative to net income
• Lack of disclosure on investing cash flows, cash balances, and share count
• Sustainability of non-operating gains that lifted ordinary and net income

Investment Implications

Key Takeaways:

• Topline grew 2.6% YoY, but operating income fell 3.2%, highlighting cost/mix headwinds
• Net income rose 8.5% aided by non-operating gains and a normal tax load
• ROE at 5.98% reflects solid margin but modest asset turnover and low leverage
• Balance sheet strength is a key positive: equity ratio ~66%, interest coverage 208x
• Cash conversion is the main weak spot (OCF/NI 0.38) amid large working capital
• Financing inflow (+¥6.48bn) improved liquidity, but its composition is undisclosed
• Dividend stance unclear; reported DPS is zero but disclosure is limited

Metrics to Watch:

• Order intake and backlog to gauge forward revenue visibility
• Gross and operating margin trends to assess pricing power and cost control
• OCF/NI ratio and working capital days (receivables, inventories, payables)
• Capex versus D&A and the trajectory of investing cash flows
• Asset turnover improvement and utilization rates
• Ordinary income components (FX gains/losses, interest) for earnings quality
• Equity ratio and net debt to monitor capital structure resilience
• Dividend announcements and policy updates

Relative Positioning: Within Japanese industrial machinery peers, AIRMAn presents a conservative balance sheet, solid mid-teens EBITDA margin, and strong interest coverage, offset by modest growth and weaker cash conversion this period; operational execution to restore positive operating leverage and improve working capital efficiency would enhance its competitive standing.

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