MAX CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

The Company posted increases in both revenue and earnings for the quarter, driven by the expansion of its core Industrial Equipment business and the expanded scope of consolidation resulting from M&A. Revenue was ¥28.33B (up +16.9% YoY), Operating Income was ¥5.88B (up +20.1%), Ordinary Income was ¥6.02B (up +21.1%), and Net Income attributable to owners of the parent was ¥4.32B (up +20.2%), with all metrics recording double-digit growth. The Operating Income margin improved to 20.7% from 20.2% in the previous year, supported by an increase in the gross profit margin and disciplined SG&A management. The primary drivers of revenue growth were expanding demand in the core segment and the newly consolidated European and domestic companies, while earnings growth continued to outpace revenue growth.

Factors Affecting Performance

【Revenue】Revenue increased +16.9% YoY to ¥28.33B. By segment, Industrial Equipment led overall performance with revenue of ¥21.79B (76.9% of total, YoY +20.3%), supported by the newly consolidated European subsidiary Bo Fastening AB and Fuji Kogyo. Office Equipment maintained revenue growth at ¥5.78B (20.4% of total, YoY +8.1%), while HC Equipment posted a slight revenue decline to ¥0.76B (2.7% of total, YoY -1.3%).

【Profit and Loss】Operating Income was ¥5.88B (YoY +20.1%), and the Operating Income margin improved by +0.5pt to 20.7% from 20.2% in the previous year. The gross profit margin rose to 51.4% from 50.8%, with cost pass-through and an improved product mix contributing to the increase, while SG&A expenses increased to ¥8.68B (SG&A ratio: 30.6%) in line with revenue growth. Ordinary Income was ¥6.02B (YoY +21.1%), with non-operating income and expenses broadly balanced (dividend income of ¥0.11B and foreign exchange losses of ¥0.09B). Special profit of ¥0.29B, including a ¥0.22B gain on negative goodwill arising from the consolidation of Fuji Kogyo, and special losses of ¥0.21B were recorded. Their net contribution was minor, limiting the impact of temporary factors. Net Income attributable to owners of the parent was ¥4.32B (YoY +20.2%), resulting in increases in both revenue and earnings.

Segment Analysis

Industrial Equipment generated revenue of ¥21.79B (YoY +20.3%) and Operating Income of ¥6.25B (YoY +21.5%), with a margin of 28.7% (+0.3pt from 28.4% in the previous year), making it the core segment responsible for the majority of Company-wide earnings. Office Equipment recorded revenue of ¥5.78B (YoY +8.1%) and Operating Income of ¥1.03B (YoY +4.7%), while its margin declined slightly to 17.9% from 18.5% in the previous year (-0.6pt). HC Equipment posted revenue of ¥0.76B (YoY -1.3%) and an Operating Loss of ¥0.006B, turning from a small profit in the previous year to a loss. Company-wide expense adjustments were -¥1.39B ( -¥1.24B in the previous year), indicating an increased burden from general and administrative expenses outside the segments.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 20.7% from 20.2% in the previous year, while the Net Income margin improved to 15.3% from 14.8%; ROE was 3.8%. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥2.75B, representing only 0.64x Net Income of ¥4.32B, as increases in inventories and accounts receivable constrained cash conversion. 【Investment Efficiency】Capital expenditures of ¥0.73B were 0.78x depreciation and amortization of ¥0.93B, indicating a maintenance investment level, while total assets declined slightly from the previous year to ¥137.01B. 【Financial Soundness】The Equity Ratio was 82.4% (83.6% in the previous year), and the current ratio was 427.6% (current assets of ¥74.33B / current liabilities of ¥17.38B). Cash and deposits of ¥35.46B substantially exceeded short-term borrowings of ¥0.86B, indicating an extremely strong financial base.

Cash Flow Analysis

Operating Cash Flow was ¥2.75B, down -7.4% YoY, indicating that cash generation has not kept pace with Net Income growth. OCF before changes in working capital totaled ¥4.79B, but increases in inventories (-¥0.95B), increases in accounts receivable (-¥0.51B), a decrease in the provision for bonuses (-¥0.85B), and payments of income taxes and other taxes (-¥2.24B) collectively compressed OCF to ¥2.75B. Investing Cash Flow was -¥1.26B. In addition to capital expenditures of ¥0.73B, M&A-related expenditures of ¥1.87B, including the acquisition of shares in Fuji Kogyo, were recorded, while funds recovered from the withdrawal of time deposits and the sale of investment securities partially offset these outflows. Financing Cash Flow was -¥6.16B, primarily due to dividend payments of ¥6.03B, while share repurchases remained limited at ¥0.04B. Free Cash Flow was positive at ¥1.49B, and dividends and capital expenditures were sufficiently covered by cash on hand and internally generated funds.

Earnings Quality

The primary difference between Ordinary Income and Net Income was special gains and losses. Special profit of ¥0.29B, including a ¥0.22B gain on negative goodwill arising from the consolidation of Fuji Kogyo, and special losses of ¥0.21B resulted in only a minor net positive contribution, limiting the extent to which temporary factors boosted earnings. Non-operating income of ¥0.26B was primarily recurring in nature, centered on dividend income of ¥0.11B, while the principal variable factor within non-operating expenses of ¥0.12B was foreign exchange losses of ¥0.09B. Comprehensive Income was ¥5.22B, exceeding Net Income of ¥4.32B. It was boosted by foreign currency translation adjustments of +¥0.50B and valuation differences on securities of +¥0.65B, while adjustments related to retirement benefits made a negative contribution of -¥0.25B. Against OCF before changes in working capital of ¥4.79B, actual OCF was limited to ¥2.75B, indicating that the increase in accruals resulting from higher inventories and accounts receivable has been converted into cash more slowly than the pace of earnings growth.

Earnings Forecast and Guidance

The Q1 progress rates against the Full-Year earnings forecasts were 25.8% for Revenue (¥28.33B / ¥109.90B), 29.6% for Operating Income (¥5.88B / ¥19.90B), 30.2% for Ordinary Income (¥6.02B / ¥19.90B), and 28.7% for Net Income (¥4.32B / ¥15.05B), all exceeding the simple progress benchmark of 25%. The earnings forecast was marked as having been revised during the quarter (“Yes”), with the Full-Year plan projecting Revenue growth of YoY +10.3%, Operating Income growth of YoY +13.3%, and Ordinary Income growth of YoY +8.3%. Progress in Operating Income and Ordinary Income is ahead of progress in Revenue, indicating a strong start that is trending above a plan incorporating improved profitability.

Shareholder Returns

The Full-Year dividend forecast is ¥40 per share, with no revision to the dividend forecast during the quarter (“No”). Due to the 1-for-4 stock split effective April 1, 2026, the previous-year actual dividend of ¥148 per share (on a pre-split basis) is equivalent to ¥37 on a split-adjusted basis. Accordingly, the current-year forecast of ¥40 represents an effective dividend increase of +8.1%. The Payout Ratio is approximately 47.6%, calculated by dividing forecast total dividends of approximately ¥7.16B (¥40 × approximately 179M shares outstanding after deducting treasury shares) by forecast Net Income attributable to owners of the parent of ¥15.05B, representing a sustainable level. Share repurchases were limited to ¥0.04B during the quarter, and shareholder returns therefore remain centered on dividends.

Risk Factors

1. Segment concentration risk: Industrial Equipment accounts for 76.9% of Revenue and the majority of Operating Income, resulting in a high degree of dependence on a single segment. Demand fluctuations in this segment could have a relatively significant impact on Company-wide performance.

2. Declining working capital efficiency: Inventories increased to ¥13.27B (up +10.0% YoY), while accounts receivable increased to ¥15.40B (up +4.3% YoY). OCF was limited to 0.64x Net Income of ¥4.32B. Future trends in inventory levels and collection periods will influence cash-generating capacity.

3. M&A integration risk: Goodwill of ¥1.33B was recorded following the newly consolidated European company Bo Fastening AB and domestic company Fuji Kogyo. The realization of post-integration synergies and the retention of the customer base require close monitoring going forward.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Income margin and Net Income margin significantly exceed the industry median, placing the Company among the industry leaders in profitability.

Growth and Capital Efficiency

The Revenue growth rate also exceeds the industry median, demonstrating strong growth near the upper end of the IQR.

※Source: Compiled by the Company

Key Takeaways from the Earnings

1. The Operating Income margin of 20.7% and Net Income margin of 15.3% both significantly exceed the industry medians of 8.8% and 7.3%, respectively, with an improved product mix and cost pass-through supporting high profitability.

2. OCF was limited to 0.64x Net Income, and the increase in inventories and accounts receivable constrained cash conversion. This remains a key point to monitor regarding cash-generating capacity relative to the pace of earnings growth.

3. The gain on negative goodwill arising from the acquisition of shares in Fuji Kogyo is a temporary factor and should be evaluated separately from recurring earnings power. In addition, the high degree of dependence on Industrial Equipment warrants close attention to demand trends by segment.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥701–¥741 at ±1% for the cost of equity, and ¥719–¥724 at ±0.1 for ω.

Notes:

• ¥1.0 per share of amortization of goodwill has been added back to earnings (due to its non-cash nature and to enhance comparability with IFRS companies).
• Net assets as of the quarter-end have been used (there is a timing mismatch with the Full-Year forecast).

(Calculation model: Residual income model / Interest rate reference month: 2026-06 / This value does not predict or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional advisor where necessary.

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