TB GROUP INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.24B
• Operating Income: ¥-27M
• Net Income: ¥-129M
• EPS: ¥-10.12

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

TB Group reported FY2026 Q2 consolidated results under JGAAP showing a mixed picture: double-digit top-line growth alongside continued operating and net losses. Revenue rose 10.5% YoY to 1,243 million yen, indicating demand resilience or improved execution in sales. Gross profit reached 659.9 million yen, translating into a strong gross margin of 53.1%, which suggests healthy pricing power and/or a revenue mix skewed to higher-margin offerings. Despite this, the company posted an operating loss of 27 million yen (operating margin -2.2%), unchanged YoY, implying that higher revenue did not translate into operating leverage due to elevated SG&A or increased growth investments. Ordinary income was also -27 million yen, indicating limited non-operating income to offset operating losses. Net income was -139 million yen, a net margin of -11.18%, which reflects additional non-operating and tax effects beyond the ordinary level. The DuPont decomposition yields an ROE of -26.08%, driven by a negative margin (-11.18%), moderate asset turnover (0.806x), and relatively high financial leverage (2.89x). Liquidity appears adequate with a current ratio of 180.4% and a quick ratio of 128.9%, underpinned by 1,146.4 million yen in current assets; inventories comprise 327.7 million yen (28.6% of current assets), which bears watching for working capital efficiency. Operating cash flow was negative at -116.4 million yen, broadly consistent with the net loss (OCF/Net income = 0.84), suggesting losses are largely reflective of cash realities rather than purely accounting items. EBITDA was slightly negative at -11.1 million yen, indicating that core cash earnings remain weak even before depreciation and amortization. Interest expense was 3.0 million yen with an interest coverage ratio of -8.9x on EBIT, highlighting limited headroom should borrowing costs rise. The balance sheet shows total assets of 1,542 million yen and total equity of 533 million yen, implying financial leverage of 2.89x; the reported “equity ratio 0.0%” is treated as unreported and not as an actual zero. No dividends were paid (DPS 0), which is consistent with the current loss-making and negative OCF situation. Shares outstanding and cash balances are shown as 0 in the dataset, which we interpret as unreported rather than actual zero; thus, per-share or cash liquidity assessments are constrained by disclosure limitations. Overall, the quarter demonstrates good gross margin resilience and top-line momentum, but insufficient SG&A control or scale to restore operating profitability, ongoing cash burn at the operating level, and leverage that amplifies negative ROE.

Profitability Analysis

ROE decomposition: ROE -26.08% = Net margin (-11.18%) × Asset turnover (0.806x) × Financial leverage (2.89x). The negative ROE is primarily margin-driven; turnover is modest and leverage amplifies the loss. margin_quality: Gross margin is high at 53.1% (gross profit 659.9m on revenue 1,243.0m), indicating solid unit economics or favorable mix. However, operating margin is -2.2% (operating income -27m), suggesting SG&A and other operating costs outweighed the gross margin expansion. Ordinary margin matches operating margin, indicating minimal cushioning from non-operating items. Net margin of -11.18% reflects additional below-ordinary impacts including tax and non-operating items. operating_leverage: Revenue grew +10.5% YoY, yet operating income remained at -27m YoY, pointing to weak drop-through and limited operating leverage in the period. EBITDA is slightly negative (-11.1m) despite 15.9m in D&A, reinforcing that fixed cost absorption did not improve sufficiently with higher sales.

Growth Assessment

revenue_sustainability: Top-line growth of +10.5% to 1,243m yen indicates positive demand trends and/or effective sales execution. With gross margin at 53.1%, revenue growth appears to be quality accretive; however, sustainability depends on mix, pricing retention, and competitive dynamics, which are not disclosed here. profit_quality: Stable operating loss despite revenue growth suggests incremental sales are not yet covering incremental operating costs. The alignment of OCF (-116.4m) with net loss (-139.0m) indicates earnings reflect cash performance and are not driven by aggressive accruals in this period. outlook: Path to profitability hinges on SG&A efficiency and scaling benefits. If revenue momentum continues and cost discipline improves, operating break-even could be achievable; however, current negative EBITDA and interest coverage constraints imply limited buffer. Lack of detailed segment and backlog data tempers visibility.

Financial Health

liquidity: Current ratio 180.4% and quick ratio 128.9% suggest short-term liquidity is adequate. Working capital stands at 511.1m yen. Cash and equivalents are unreported (shown as 0), so near-term cash cushion cannot be precisely assessed from the provided figures. solvency: Debt-to-equity (using total liabilities as proxy) is 1.80x (957.7m / 533.0m), indicating moderate-to-high leverage for a loss-making profile. Interest expense is modest at 3.0m yen, but negative EBIT results in an interest coverage of -8.9x. capital_structure: Total assets 1,542m yen versus equity 533m yen implies financial leverage of 2.89x. The reported equity ratio of 0.0% is assumed to be unreported; using available figures, equity/asset ratio approximates 34.6%.

Cash Flow Quality

earnings_quality: OCF/Net income is 0.84, indicating that the accounting loss is largely supported by cash outflows, with limited evidence of accrual-driven distortion in this period. FCF_analysis: Operating CF was -116.4m yen. Investing CF is reported as 0 (treated as unreported); capex details are not available, so true free cash flow cannot be derived. EBITDA of -11.1m and D&A of 15.9m suggest limited internal funding capacity without working capital release. working_capital: Current assets are 1,146.4m yen, including inventories of 327.7m yen (28.6% of current assets). Without receivables/payables granularity, the specific drivers of OCF weakness cannot be isolated, but inventory and receivable timing are likely contributors.

Dividend Sustainability

payout_ratio_assessment: DPS is 0 and payout ratio is 0%, appropriately conservative given the net loss (-139m) and negative OCF (-116m). FCF_coverage: FCF is not determinable due to unreported investing cash flows; reported FCF coverage of 0.00x aligns with no dividend being paid. policy_outlook: Given ongoing losses and negative operating cash flow, a continued stance of dividend restraint appears likely until sustainable profitability and positive OCF are restored. No explicit policy disclosure is available in the provided data.

Risk Assessment

Business Risks:

• Inability to convert revenue growth into operating profits due to persistent SG&A pressure
• Margin compression risk if pricing power or favorable mix weakens
• Execution risk around cost control and operating leverage realization
• Potential demand volatility without disclosed backlog or customer concentration detail
• Supply chain and inventory management risks affecting working capital and gross margin

Financial Risks:

• Negative EBITDA and EBIT limiting interest coverage (-8.9x) and reducing financial flexibility
• Moderate-to-high leverage (liabilities/equity 1.80x) amplifying losses into ROE
• Sustained negative operating cash flow (-116.4m) necessitating external funding or working capital drawdown
• Limited visibility on cash balances and capex due to unreported items
• Tax and non-operating charges contributing to deeper net losses despite ordinary-level loss

Key Concerns:

• Operating loss unchanged YoY despite +10.5% revenue growth, indicating weak operating leverage
• Negative OCF closely tracking net loss, suggesting ongoing cash burn
• High inventories relative to current assets (28.6%) amid loss-making operations
• Interest coverage is negative, leaving little buffer against rate or financing cost increases
• Data limitations (cash, capex, share count) constrain precision of per-share and FCF analyses

Investment Implications

Key Takeaways:

• Strong gross margin (53.1%) but insufficient SG&A control keeps operating margin at -2.2%
• Revenue growth (+10.5% YoY) has not translated into profit improvement (operating income -27m, flat YoY)
• ROE is -26.08% due to negative margins and meaningful leverage (2.89x)
• Liquidity appears adequate (current ratio 180.4%, quick ratio 128.9%) but OCF is negative (-116.4m)
• Limited non-operating support (ordinary loss equals operating loss) and negative interest coverage (-8.9x)

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio for signs of operating leverage
• EBITDA trajectory and interest coverage improvement
• Operating cash flow and working capital movements (inventories and receivables)
• Revenue mix and gross margin stability
• Leverage (liabilities/equity) and any financing inflows or refinancings

Relative Positioning: Within small-cap Japanese industrial/technology peers, TB Group shows above-average gross margins but weaker operating leverage and cash conversion, paired with moderate-to-high leverage that exacerbates negative ROE.

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