Fast Fitness Japan Incorporated FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥9.98B
• Operating Income: ¥1.95B
• Net Income: ¥895M
• EPS: ¥64.63

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Fast Fitness Japan (FFJ) delivered a strong FY2026 Q2 performance under JGAAP on a consolidated basis, with revenue up 15.6% year over year to ¥9,985 million and operating income up 36.0% to ¥1,952 million, indicating notable operating leverage. Net income rose 35.2% to ¥1,211 million, with EPS reported at ¥64.63, underscoring robust earnings growth. Profitability expanded across the P&L: operating margin reached approximately 19.6% and net margin came in at 12.1%, supported by disciplined cost control and scale benefits. Gross margin of 38.2% suggests healthy unit economics for a gym-franchise model, while EBITDA of ¥2,401 million (24.0% margin) highlights solid cash earnings capacity before non-cash charges. Ordinary income exceeded operating income by ¥111 million, implying net positive non-operating items despite interest expense of only ¥14 million. The DuPont decomposition shows Net Margin 12.13%, Asset Turnover 0.448x, and Financial Leverage 1.52x, yielding an ROE of 8.25%, consistent with the reported figure. Liquidity appears comfortable with a current ratio of 201% and working capital of ¥5,403 million, indicating ample short-term headroom even with cash not disclosed. The capital structure is conservative: total liabilities are ¥8,021 million against equity of ¥14,672 million, implying leverage of roughly 0.55x on a liabilities-to-equity basis and an inferred equity ratio around 65.9% (despite the reported 0.0% equity ratio, which is undisclosed rather than zero). Interest coverage is extremely strong at 139x on an EBIT basis and roughly 69x on an OCF basis, reflecting minimal financial risk from debt service. Cash flow from operations was ¥971 million, at 0.80x of net income, indicating earnings are largely, though not fully, cash-backed; the shortfall vs. net income likely stems from working capital movements or tax timing. Investing cash flow and cash balances were not disclosed, limiting precision on free cash flow and liquidity buffers; accordingly, the reported FCF and dividend metrics (DPS and payout) are not usable as stated. Tax expense was ¥540 million; using net income plus tax implies a pre-tax profit of roughly ¥1,751 million and an effective tax rate near 30.8% (the provided 0.0% effective tax rate is not applicable due to missing pre-tax disclosure). Balance sheet strength, margin expansion, and positive OCF together support a constructive fundamental profile through the first half. Key sensitivities include new club rollout cadence, same-store trends, membership churn, and energy/occupancy cost inflation, which can swing margins. Overall, FFJ exhibits improving profitability, prudent leverage, and resilient cash generation, with the main analytical constraint being undisclosed cash, investing cash flows, and share-related data that cap the granularity of FCF and dividend assessments.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 12.13%
• asset_turnover: 0.448
• financial_leverage: 1.52
• calculated_ROE: 8.25%
• commentary: ROE is primarily driven by expanding margins and moderate asset turnover, with low leverage (1.52x) limiting amplification of returns—a conservative but stable profile. margin_quality:
• gross_margin: 38.2%
• operating_margin: 19.6%
• EBITDA_margin: 24.0%
• net_margin: 12.1%
• drivers: ['Scale benefits and cost discipline reduced SG&A burden (implied SG&A ~¥1,865m).', 'Positive non-operating contribution (ordinary income ¥2,063m vs. operating income ¥1,952m).', 'Low interest burden (¥14m) preserves net margins.']
• assessment: Margin expansion YoY (opex grew slower than revenue) indicates healthy operating leverage and good unit economics. operating_leverage:
• revenue_growth_YoY: 15.6%
• operating_income_growth_YoY: 36.0%
• implication: Operating income growth outpaced revenue growth by ~20pp, evidencing meaningful operating leverage likely from fixed-cost absorption and/or better club productivity.

Growth Assessment

revenue_sustainability: Top-line growth of 15.6% suggests healthy membership and/or footprint expansion; sustainability will hinge on new club openings, same-store sales, ARPU, and churn dynamics amid competitive intensity. profit_quality: Net income growth of 35.2% is backed by expanded operating margin, positive ordinary income, and minimal interest expense. OCF at 0.80x of net income indicates mostly cash-backed earnings with some working capital drag. outlook: Assuming continued club rollout and stable occupancy/utility costs, margins can remain elevated; risks include energy costs, wage inflation, and competitive pricing pressure. Continued improvement in asset turnover or selective leverage could lift ROE above the current 8.25%.

Financial Health

liquidity:

• current_ratio: 201.1%
• quick_ratio: 201.1%
• working_capital: ¥5,403m
• cash_position: Not disclosed; however, ample current assets vs. current liabilities suggest solid near-term liquidity. solvency:
• total_liabilities: ¥8,021m
• total_equity: ¥14,672m
• debt_to_equity: 0.55x (liabilities/equity)
• interest_coverage: 139.4x (EBIT/interest)
• equity_ratio_inferred: Approximately 65.9% (equity/assets), despite reported 0.0% due to non-disclosure
• assessment: Balance sheet is conservative with strong capacity to absorb shocks; financial risk from debt is low. capital_structure: Low reliance on debt financing with significant equity cushion; potential off-balance lease obligations (common in fitness) should be monitored, though not observable here.

Cash Flow Quality

earnings_quality:

• OCF_to_NI: 0.8
• interpretation: Earnings are largely cash-convertible; the sub-1.0x ratio suggests working capital build or timing effects (tax/receivables/payables). FCF_analysis:
• operating_CF: ¥971m
• investing_CF: Not disclosed
• free_cash_flow: Not estimable due to undisclosed investing cash flows/capex; EBITDA less D&A suggests ongoing maintenance and growth capex needs typical for gym expansion. working_capital:
• notes: Inventories are non-material or undisclosed (consistent with service model). Current asset build vs. current liabilities supports liquidity; detailed drivers (receivables/prepaids/contract liabilities) are not disclosed.

Dividend Sustainability

payout_ratio_assessment: Reported DPS and payout ratio are undisclosed (zeros represent missing data). With net income growth and positive OCF, capacity exists, but actual policy cannot be inferred here. FCF_coverage: Not assessable without capex; FCF coverage ratio is therefore indeterminable from provided data. policy_outlook: Absent disclosure, assume a balanced stance prioritizing growth investment (new clubs) and balance sheet strength; explicit guidance on payout targets would be needed for an informed view.

Risk Assessment

Business Risks:

• Membership volatility (churn, seasonality) affecting same-store sales and pricing.
• Competition from low-cost gyms and boutique fitness offerings intensifying pricing pressure.
• Cost inflation in rent, utilities, and labor compressing margins.
• Execution risk in new club openings (site selection, ramp-up, cannibalization).
• Brand/franchise dependency risks (royalty/marketing fee changes, franchise terms).

Financial Risks:

• Potential lease obligations not visible in reported liabilities under available data.
• Working capital swings impacting OCF conversion in growth phases.
• Interest rate and refinancing risk limited but present if expansion uses debt/leases.
• Tax rate variability (implied ~30.8%) affecting net income sensitivity.

Key Concerns:

• Undisclosed cash, investing cash flows, and share data limit FCF and per-share analysis.
• Sustainability of elevated operating margin amid cost inflation.
• Reliance on positive non-operating items to support ordinary income above operating income.

Investment Implications

Key Takeaways:

• Strong H1 topline (+15.6% YoY) with outsized operating profit growth (+36.0%) evidences operating leverage.
• Healthy margin structure (EBITDA 24.0%, operating ~19.6%, net 12.1%).
• Solid balance sheet: low leverage (0.55x liabilities/equity) and high inferred equity ratio (~65.9%).
• OCF at 0.80x of net income—mostly cash-backed earnings with some working capital impact.
• Interest coverage is robust (139x), indicating minimal debt-service risk.
• Inability to assess FCF and dividends due to undisclosed investing CF and DPS data.

Metrics to Watch:

• Same-store sales, membership growth, ARPU, and churn.
• New club openings and capex per club (to gauge FCF and growth ROI).
• SG&A ratio and occupancy/utility cost trends (margin sensitivity).
• OCF/NI and working capital movements (earnings quality).
• Asset turnover and ROE trajectory as the network scales.
• Gap between ordinary and operating income (quality of non-operating items).

Relative Positioning: Within the fitness/gym peer set, FFJ exhibits above-average operating margins and conservative leverage, yielding a mid-to-high single-digit ROE that could improve with continued scale and disciplined capital deployment.

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