ULVAC, Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥52.73B
• Operating Income: ¥2.28B
• Net Income: ¥4.00B
• EPS: ¥33.76

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 Q1, ULVAC (6728) reported revenue of ¥52.7bn, down 13.6% YoY, reflecting a cyclical slowdown in core markets such as semiconductor and display equipment. Gross profit was ¥19.1bn, yielding a solid gross margin of 36.3%, but operating income declined 60.4% YoY to ¥2.3bn as operating leverage turned adverse on lower volumes and mix. EBITDA was ¥4.86bn (9.2% margin), indicating that depreciation (¥2.58bn) remains a meaningful cost component relative to reduced operating profit. Ordinary income was ¥2.48bn, and net income was ¥1.66bn, down 55.4% YoY, producing an EPS of ¥33.76. The DuPont decomposition shows a modest net margin of 3.15%, low asset turnover of 0.142x, and financial leverage of 1.66x, resulting in a quarterly ROE of 0.74%. Despite weaker earnings, operating cash flow was strong at ¥11.4bn, about 6.9x net income, implying a favorable working-capital swing or strong collections versus revenue. The balance sheet appears conservative: total assets are ¥371.9bn and total equity ¥224.5bn, implying an equity ratio of roughly 60.3% (calculated), and total liabilities stand at ¥144.0bn (D/E ≈ 0.64x). Liquidity is robust with a current ratio of 268% and a quick ratio of 263%, supported by low reported inventories of ¥5.19bn relative to current assets. Interest expense was ¥146m and interest coverage a healthy 15.6x, indicating manageable financial risk. The reported income tax expense of ¥2.88bn is high relative to ordinary income, suggesting tax effects and/or non-operating/extraordinary items influenced the bottom line in the quarter. Annual DPS is noted as ¥0.00 and payout ratio 0.0%, so dividend visibility is limited this quarter. Investing cash flow and cash balances were not disclosed in the provided dataset, limiting visibility on capex and net cash. Overall, the quarter demonstrates resilient gross profitability but significant operating degear on lower sales, with cash generation cushioning the earnings decline. The company’s strong liquidity and moderate leverage provide flexibility to navigate a cyclical trough. Data limitations (notably equity ratio, cash, investing CF, shares outstanding) necessitate caution in trend extrapolation and dividend analysis.

Profitability Analysis

ROE is 0.74% for the quarter, decomposed into a 3.15% net margin, 0.142x asset turnover, and 1.66x financial leverage. The net margin compressed alongside a 60.4% YoY decline in operating income, evidencing negative operating leverage as fixed costs weighed on lower revenue. Gross margin at 36.3% remains respectable, implying pricing/production cost control, but the EBITDA margin at 9.2% and operating margin at 4.3% (¥2.284bn/¥52.729bn) highlight margin pressure below gross profit. Depreciation of ¥2.575bn is sizable versus EBIT, indicating capital intensity that amplifies earnings sensitivity to volume. Interest expense is modest at ¥146m with 15.6x coverage, so financial costs are not the margin constraint. The discrepancy between ordinary income (¥2.48bn) and net income (¥1.66bn) in the presence of reported tax expense of ¥2.88bn suggests tax/extraordinary influences; hence after-tax profitability appears more volatile than operating results suggest. Overall, profitability is subdued due to volume and mix, with operating leverage currently unfavorable but capable of reversing with revenue recovery.

Growth Assessment

Revenue declined 13.6% YoY to ¥52.7bn, consistent with a cyclical downturn in key end-markets. The sharper YoY contraction in operating income (-60.4%) relative to revenue reflects negative operating leverage, implying the current cost base is calibrated for higher volumes. Gross margin resilience (36.3%) indicates product and service pricing or cost management held relatively firm, but SG&A and fixed manufacturing costs weighed on operating margin. Net income fell 55.4% YoY to ¥1.66bn, with tax/extraordinary factors likely exacerbating the drop beyond the operating level. Sustainability of revenue near-term depends on order intake and capex cycles in semiconductors, vacuum equipment, and display markets; these datapoints were not provided, limiting forward visibility. The strong OCF in the quarter (¥11.4bn) suggests solid collections or working-capital normalization, which may not be repeatable each quarter. Absent investing CF disclosure, we cannot assess growth capex commitments or capacity expansion. Outlook hinges on order recovery, backlog conversion, and mix improvements; monitoring book-to-bill, backlog, and regional demand (especially China/US) will be key.

Financial Health

Total assets are ¥371.9bn and equity is ¥224.5bn, implying an equity ratio of roughly 60.3% (calculated from disclosed balances). Total liabilities are ¥144.0bn, resulting in a total-liabilities-to-equity ratio of 0.64x, indicating moderate leverage. Liquidity is strong: current assets ¥270.1bn vs. current liabilities ¥100.7bn yields a current ratio of 268%, and the quick ratio of 263% suggests limited reliance on inventory for liquidity. Reported inventories are ¥5.19bn, unusually low relative to current assets for a capital equipment maker, which may reflect classification differences (e.g., work-in-process recorded under other current assets) rather than low operational inventory. Interest coverage is 15.6x, and interest expense is modest, implying low near-term solvency risk. Cash and equivalents were not disclosed in the dataset, so net cash/debt cannot be determined. Overall, the balance sheet appears conservative and liquid, supporting operational flexibility.

Cash Flow Quality

Operating cash flow of ¥11.4bn is 6.87x net income, indicating cash earnings exceeded accounting profits this quarter, likely driven by working-capital release (e.g., receivables collection, advances from customers) and non-cash charges (¥2.58bn depreciation). EBITDA of ¥4.86bn provides baseline cash generation capacity, with OCF exceeding EBITDA implying favorable working-capital timing. Investing cash flow was not disclosed, preventing assessment of capital expenditure intensity or calculation of true free cash flow. The provided FCF value is shown as 0, which should be treated as unreported rather than zero. Financing cash flow was a ¥10.1bn outflow, consistent with debt repayment, dividends, or buybacks; however, DPS is shown as ¥0.00, so the outflow likely reflects debt or other financing uses, but details are unavailable. Working capital is ample at ¥169.4bn, and the quick ratio suggests liquidity is not dependent on inventory liquidation. Overall cash flow quality appears strong for the quarter, but persistence is uncertain without investing CF detail and a breakdown of working-capital drivers.

Dividend Sustainability

Annual DPS is listed as ¥0.00 with a payout ratio of 0.0%; thus, no dividend distribution is observable from the provided data. Given the strong liquidity profile (current ratio 268%, equity ratio ~60%) and positive OCF, the capacity to fund dividends exists, but policy intent cannot be inferred from this dataset. FCF coverage cannot be evaluated because investing CF is not disclosed; the shown FCF value of 0 should be treated as unreported. Financing CF outflow of ¥10.1bn could indicate competing capital allocation priorities (e.g., debt repayment or buybacks), but specifics are not provided. In the absence of dividend guidance and with earnings under pressure in a cyclical downturn, dividend sustainability assessment is inconclusive based solely on this quarter. Monitoring full-year earnings, capex, and board policy updates will be essential.

Risk Assessment

Business Risks:

• Cyclical demand in semiconductor/display vacuum equipment causing order and revenue volatility
• Customer concentration and large-project timing risk affecting quarterly results
• Technology transition risk (e.g., node/process changes, materials) impacting product competitiveness
• Export controls and geopolitical restrictions, especially related to China/US trade
• Supply chain constraints or component lead times affecting deliveries and cost
• FX volatility (JPY vs. USD/CNY/KRW) influencing margins and pricing
• Pricing pressure and competitive intensity across global peers

Financial Risks:

• Earnings sensitivity to volume due to high fixed-cost base and depreciation
• Potential volatility in effective tax rate and extraordinary items impacting net income
• Limited visibility on cash and investing cash flows, constraining assessment of capex and net cash
• Dependence on working-capital timing for cash generation in down cycles
• Exposure to contingent liabilities or guarantees not detailed in the dataset

Key Concerns:

• Sharp YoY decline in operating income (-60.4%) signaling adverse operating leverage
• Low asset turnover (0.142x) suppressing ROE during demand slowdown
• High reported tax expense relative to ordinary income contributing to net profit compression
• Lack of disclosure on investing CF and cash balances limiting FCF and liquidity analysis
• Potential mismatch between reported inventories and operational needs due to classification

Investment Implications

Key Takeaways:

• Revenue down 13.6% YoY to ¥52.7bn with operating income down 60.4% YoY to ¥2.3bn, highlighting negative operating leverage
• Gross margin resilient at 36.3%, but EBITDA margin at 9.2% indicates pressure below gross profit
• ROE of 0.74% reflects low asset turnover and compressed margins despite moderate leverage (1.66x)
• OCF strong at ¥11.4bn (6.9x net income), implying favorable working-capital dynamics this quarter
• Balance sheet conservative with calculated equity ratio ~60% and current ratio 268%
• Interest coverage healthy at 15.6x; financial risk appears manageable
• Dividend visibility is limited (DPS reported as ¥0.00); capital allocation leaned to financing outflows (¥10.1bn) this quarter

Metrics to Watch:

• Orders, book-to-bill, and backlog conversion
• Gross margin trajectory and cost absorption as volumes recover
• Operating margin/EBITDA margin and operating leverage sensitivity
• Working capital movements (receivables, advances, inventory) and OCF sustainability
• Investing cash flow/capex and capacity plans
• FX rates and hedging impacts on revenue and margins
• Effective tax rate and presence of extraordinary/non-operating items

Relative Positioning: ULVAC exhibits solid gross-margin resilience and strong liquidity versus typical capital equipment cyclicality, but near-term profitability lags due to negative operating leverage and low asset turnover; visibility on capex and cash balances is limited in this dataset.

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