PILLAR Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥28.16B
• Operating Income: ¥5.61B
• Net Income: ¥3.89B
• EPS: ¥174.69

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

For FY2026 Q2 (cumulative), PILLAR reported revenue of ¥28,161 million, down 1.3% YoY, indicating a mild top-line contraction amid what appears to be a relatively resilient demand backdrop. Gross profit was ¥11,259 million, translating to a solid gross margin of 40.0%, which underscores healthy pricing power and/or product mix. Operating income declined 3.8% YoY to ¥5,605 million, implying some negative operating leverage as the modest revenue decline translated into a larger drop in operating profit. Nevertheless, ordinary income reached ¥5,776 million and net income grew 4.1% YoY to ¥4,048 million, suggesting below-the-line items were supportive and that cost discipline and non-operating balance were favorable. EPS was ¥174.69, though the outstanding share count is not disclosed, limiting per-share benchmarking. DuPont analysis points to a net margin of 14.37%, asset turnover of 0.285x, and financial leverage of 1.32x, yielding an ROE of 5.40%, which is moderate for an industrial-type business. Operating cash flow was strong at ¥7,778 million, producing an OCF/Net Income ratio of 1.92, a positive indicator of earnings quality and cash conversion. Liquidity is robust with a current ratio of 481% and quick ratio of 464%, highlighting substantial current asset buffers versus short-term obligations. The company’s balance sheet appears conservative with total liabilities of ¥24,196 million against total equity of ¥74,979 million, and interest expense was low at ¥72 million, resulting in an excellent interest coverage of 77.8x. EBITDA was ¥7,195 million, implying an EBITDA margin of 25.5% and providing ample headroom for reinvestment and potential shareholder returns. Working capital stood at ¥40,408 million, reinforcing financial flexibility to manage inventory and receivables through cycles. Reported effective tax rate in the metrics section shows 0.0%; however, the presence of ¥1,824 million in income tax suggests an effective tax rate closer to low-30% if referenced to pre-tax profit, indicating the 0.0% figure is likely not representative. Several items, including investing cash flow, cash and equivalents, dividends, and share count, are shown as zero and should be treated as undisclosed rather than actual zero values. As such, free cash flow and capital allocation conclusions are constrained by missing capex and dividend detail. Overall, PILLAR demonstrates strong margins, cash generation, and balance sheet strength, offset by modest top-line pressure and only moderate asset turnover, resulting in mid-single-digit ROE at this stage.

Profitability Analysis

ROE_decomposition: ROE 5.40% = Net Margin 14.37% × Asset Turnover 0.285 × Financial Leverage 1.32. The margin is the primary driver, while asset turnover is modest and leverage is conservative. margin_quality: Gross margin of 40.0% and EBITDA margin of 25.5% indicate solid contribution after COGS and manageable operating expenses. Net margin at 14.37% is healthy and benefited from low interest burden (¥72m). Tax expense of ¥1,824m implies a normalized effective tax rate likely in the low-30% range based on ordinary income, despite the reported 0.0% metric. No explicit one-off gains/losses are disclosed. operating_leverage: Revenue declined 1.3% YoY while operating income fell 3.8% YoY, evidencing negative operating leverage. Cost base appears relatively fixed; maintaining or growing revenue is important to defend operating margin (~19.9%).

Growth Assessment

revenue_sustainability: Top line contracted 1.3% YoY to ¥28,161m. With gross margin stable at 40.0%, pricing/mix appears resilient, but volume or project timing could be soft. profit_quality: Net income grew 4.1% YoY to ¥4,048m despite the revenue decline, supported by operating discipline and very low interest expense. OCF/NI of 1.92 indicates robust cash realization of earnings. outlook: Given modest asset turnover (0.285x) and evidence of negative operating leverage, sustaining growth will likely require either volume recovery, improved utilization, or incremental mix/pricing gains. Absent disclosed backlog/orders or segment data, the near-term outlook is cautiously stable with sensitivity to demand normalization.

Financial Health

liquidity: Current assets ¥51,008m vs current liabilities ¥10,600m yields a current ratio of 481% and quick ratio of 464%, indicating abundant short-term liquidity. Working capital is ¥40,408m. solvency: Total liabilities of ¥24,196m vs equity of ¥74,979m reflect a conservative capital structure. Interest coverage is 77.8x, and leverage is modest (Debt-to-Equity 0.32x as provided). capital_structure: Financial leverage in DuPont at 1.32x suggests low balance sheet gearing. The equity ratio is shown as 0.0% in the dataset but should be treated as undisclosed rather than zero; based on totals, the implied equity ratio would be high.

Cash Flow Quality

earnings_quality: OCF of ¥7,778m versus net income of ¥4,048m results in OCF/NI of 1.92, a strong indicator of cash-backed earnings and potential working capital release or efficient collections. FCF_analysis: Free cash flow is not computable due to undisclosed investing cash flows (investing CF shown as 0). With D&A at ¥1,590m and strong OCF, underlying capacity to fund capex appears solid, but capex magnitude is unknown. working_capital: Working capital of ¥40,408m provides a cushion to support operations. Inventories are ¥1,796m, relatively small versus current assets, suggesting low inventory risk; receivables/cash details are undisclosed.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0.00 and 0.0%, which should be treated as undisclosed. Based on earnings and strong OCF, capacity for dividends appears present, but actual policy cannot be inferred. FCF_coverage: FCF coverage cannot be assessed because investing CF/capex are not disclosed; reported FCF is 0 by placeholder. policy_outlook: Without dividend policy guidance or historical DPS, no conclusions on trajectory can be drawn. Balance sheet strength and cash generation would generally support distributions if aligned with management policy and investment needs.

Risk Assessment

Business Risks:

• Demand softness evidenced by a 1.3% YoY revenue decline and negative operating leverage.
• Potential project timing or mix shifts that could affect margins despite stable gross margin currently.
• Exposure to input cost volatility that could pressure the 40.0% gross margin if pricing power weakens.
• Limited disclosure on segment/backlog limits visibility into growth sustainability.
• Possible FX sensitivity if export or imported components are material (not disclosed).

Financial Risks:

• Undisclosed investing cash flows and cash balances limit assessment of liquidity buffers beyond working capital.
• Moderate asset turnover (0.285x) constrains ROE unless margins expand or assets are optimized.
• Dependence on low interest expense; while coverage is very strong, rising rates could incrementally elevate finance costs.
• Tax rate variability; metrics show 0.0% but actual taxes paid are material, introducing potential volatility.

Key Concerns:

• Top-line softness with operating income declining faster than revenue.
• Incomplete disclosures (investing CF, cash, dividends, shares) constrain full capital allocation analysis.
• ROE at 5.40% is only moderate relative to peers with higher asset efficiency.

Investment Implications

Key Takeaways:

• Margins are solid (GP 40.0%, EBITDA 25.5%, net 14.37%).
• Cash conversion is strong (OCF/NI 1.92) and interest coverage is excellent (77.8x).
• Balance sheet is conservative with ample liquidity (current ratio 481%).
• Revenue down 1.3% YoY and operating income down 3.8% indicate negative operating leverage.
• ROE is moderate at 5.40%, constrained by low asset turnover (0.285x).
• Several key data points are undisclosed (investing CF, cash, dividends, equity ratio, shares), limiting precision of FCF/dividend analysis.

Metrics to Watch:

• Revenue trajectory and order intake/backlog (to gauge operating leverage direction).
• Asset turnover and working capital turns (receivables and inventory days).
• Capex and investing cash flows (to derive FCF and reinvestment needs).
• Gross and operating margins (pricing power vs input costs).
• Effective tax rate normalization vs reported metrics.
• Interest-bearing debt levels and cost of debt.

Relative Positioning: Within Japanese industrials/manufacturing peers, PILLAR appears financially conservative with strong margins and cash conversion but exhibits modest growth and asset efficiency, resulting in mid-single-digit ROE; its liquidity and coverage metrics compare favorably, while growth momentum and turnover lag.

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