Japan Investment Adviser (7172) FY2026 Q2 Earnings Report

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Executive Summary

The quarter was characterized by higher revenue and earnings, with an improvement in gross margin resulting from a decrease in cost of sales serving to drive the earnings growth rate higher. Revenue was ¥227.2B (+9.4% YoY), Operating Income was ¥125.7B (+10.4%), Ordinary Income was ¥116.1B (+22.3%), and Net Income (profit attributable to owners of the parent; hereinafter the same) was ¥78.7B (+28.0%). As cost of sales decreased 10.8% YoY, the gross margin improved by +4.2pt to 81.3% (77.1% in the previous year), absorbing the increase in the SG&A ratio (22.3%→26.0%) and expanding the Operating Income margin to 55.3%. At the Ordinary Income level, although interest expense and equity-method investment losses increased, the burden of net non-operating expenses decreased from the previous year, resulting in a growth rate exceeding that of Operating Income. The absence in the current period of the ¥0.7B impairment loss on investment securities recorded in the previous period was also a factor driving the higher Net Income growth rate.

Factors Affecting Business Performance

【Revenue】Revenue was ¥227.2B, representing a 9.4% YoY increase. Although segment disclosures are not provided, an overall expansion of the earnings base can be confirmed.

【Profit and Loss】Cost of sales was ¥42.4B, down 10.8% YoY, causing the cost ratio to decline from 22.9% to 18.7% and the gross margin to improve by +4.2pt to 81.3% (77.1% in the previous year). Meanwhile, SG&A expenses increased 27.5% YoY to ¥59.1B, and the SG&A ratio rose from 22.3% to 26.0%; however, the effect of the gross margin improvement exceeded this increase, resulting in Operating Income of ¥125.7B (+10.4%) and an Operating Income margin of 55.3% (54.8% in the previous year). In non-operating items, interest expense of ¥13.1B (+30.1% YoY) and equity-method investment losses of ¥4.9B (+119.9%) were recorded as expenses. However, net non-operating expenses declined to ¥9.5B from ¥18.8B in the previous year, resulting in Ordinary Income of ¥116.1B (+22.3%), a growth rate exceeding that of Operating Income. The ¥0.7B impairment loss on investment securities recorded in the previous period did not recur in the current period, allowing Net Income to achieve an even higher growth rate of ¥78.7B (+28.0%). In conclusion, both revenue and earnings increased.

Key Financial Metrics

【Profitability】The Operating Income margin was 55.3%, improving by +0.5pt from 54.8% in the previous year, while the Net Income margin (on a basis attributable to owners of the parent) expanded by +5.1pt to 34.7% from 29.6% in the previous year. ROE was 8.9% (based on consolidated Net Income). 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥380.8B, equivalent to 4.8 times Net Income (attributable to owners of the parent), indicating strong cash backing for earnings. 【Investment Efficiency】Against total assets of ¥2,685.4B, Revenue was only ¥227.2B, indicating a low level of asset turnover relative to the asset base. 【Financial Soundness】The Equity Ratio improved to 33.2% from 27.4% in the previous year; however, short-term borrowings of ¥1,346.0B account for the majority of liabilities, and the funding structure requires attention relative to cash and deposits of ¥590.4B.

Cash Flow Analysis

Operating Cash Flow was ¥380.8B, a significant increase from ¥54.4B in the previous year. Investing Cash Flow was -¥217.9B, primarily because the execution of short-term loans (-¥258.7B) exceeded collections (+¥19.1B) and proceeds from the sale of securities (+¥39.6B). Financing Cash Flow was -¥225.3B, as the net decrease in short-term borrowings (-¥229.4B) and dividend payments (-¥26.6B) exceeded proceeds from the disposal of treasury shares (+¥12.8B). Free Cash Flow was ¥162.9B, substantially exceeding dividend payments, indicating strong cash-generation capacity.

Earnings Quality

There were no extraordinary gains or losses recorded in the current period, and the comparison with the ¥0.7B impairment loss on investment securities recorded in the previous period has contributed to the higher Net Income growth rate. Non-operating income of ¥13.9B included interest income of ¥3.4B and foreign exchange gains of ¥1.7B, while non-operating expenses of ¥23.4B included interest expense of ¥13.1B and equity-method investment losses of ¥4.9B, indicating a structure in which fluctuations in the performance of equity-method affiliates affect Ordinary Income. Operating Cash Flow of ¥380.8B reached 4.8 times Net Income (attributable to owners of the parent) of ¥78.7B, and the divergence between earnings and cash flow was small, supporting an assessment that earnings quality was high. Comprehensive income was ¥82.1B, with the difference from Net Income (attributable to owners of the parent) of ¥78.7B limited to ¥3.4B, as foreign currency translation adjustments of +¥6.0B and valuation difference on available-for-sale securities of -¥3.6B offset each other.

Earnings Forecast and Guidance

Progress against the Full-Year forecast was 46.4% for Revenue (forecast: ¥489.6B), 53.3% for Operating Income (forecast: ¥235.8B), 59.0% for Ordinary Income (forecast: ¥196.7B), and 60.5% for Net Income (attributable to owners of the parent; forecast: ¥130.0B). While the profit items were progressing at rates exceeding 50%, ahead of plan, Revenue progress was somewhat slower at 46.4%, suggesting that a higher proportion of revenue may be recognized in the second half. Neither the earnings forecast nor the dividend forecast was revised this time.

Shareholder Returns

The interim dividend was ¥54 per share, representing a 25.6% increase from the previous year’s interim dividend of ¥43. The interim Payout Ratio (interim dividend of ¥54 ÷ interim EPS of ¥129.55) was 41.7%. Under the Full-Year forecast, the annual dividend is ¥108, and the Payout Ratio based on forecast EPS of ¥209.34 is 51.6%. Free Cash Flow of ¥162.9B substantially exceeded dividend payments of ¥26.6B, indicating that the current dividend level is supported by Operating Cash Flow.

Risk Factors

1. Dependence on short-term funding and refinancing risk: Short-term borrowings of ¥1,346.0B account for the majority of liabilities. Relative to cash and deposits of ¥590.4B, the Company’s immediate coverage capacity through cash on hand is limited, and changes in the funding environment could affect financial management.

2. Increased interest burden due to rising interest rates: Interest expense increased 30.1% YoY to ¥13.1B. If interest rates rise further, this could place pressure on Ordinary Income.

3. Fluctuations in equity-method investment income and losses: Equity-method investment losses increased to ¥4.9B from ¥2.2B in the previous year, and could create volatility in future Ordinary Income depending on the performance of equity-method affiliates.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (utilities)

Profitability and Returns

These are reference data indicating the Company’s profitability level; comparative median data has not yet been established.

Growth and Capital Efficiency

These are reference data indicating the Company’s growth rate; comparative median data has not yet been established.

※Source: Compiled by the Company

Key Points in the Financial Results

1. The improvement of the gross margin by +4.2pt, primarily due to the decrease in cost of sales (-10.8%), absorbed the increase in the SG&A ratio (+3.7pt) and expanded the Operating Income margin. This is noteworthy as a qualitative change in the cost structure.

2. Operating Cash Flow reached 4.8 times Net Income (attributable to owners of the parent), and Free Cash Flow of ¥162.9B was secured, indicating a high degree of consistency between earnings and cash flow.

3. While Full-Year progress exceeded 50% for the profit items and was ahead of schedule, the financial structure’s high dependence on short-term borrowings is a monitoring point in terms of sensitivity to changes in funding costs.

Theoretical Share Price (Reference Value)

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

Sensitivity: ¥1,656–¥1,751 at Cost of Equity ±1%; ¥1,696–¥1,712 at ω±0.1.

Notes:

• Goodwill amortization of ¥0.9 per share has been added back to earnings (to account for a non-cash expense and comparability with IFRS companies).
• Since Net Income progress against the Full-Year forecast (61%) exceeds the standard level (50%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies ahead of schedule in terms of progress tend to exceed their forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Net assets as of the end of the quarter have been used (there is a timing difference from the Full-Year forecast).
• Since net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual income model / Interest rate reference month: 2026-06 / This value does not forecast 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. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and after consulting with a professional as necessary.

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AI Financial Analysis

Executive Summary

FY2026 Q2 performance was strong, with higher revenue, wider gross margin and faster growth in ordinary and net income, while the funding structure and working-capital profile remain the principal constraints. Revenue increased 9.4% year on year to ¥22.72bn. Operating income rose 10.4% to ¥12.57bn, maintaining an exceptionally high 55.3% operating margin. Ordinary income grew 22.3% to ¥11.61bn and profit attributable to owners increased 28.0% to ¥7.87bn. The gross margin expanded by approximately 420bp year on year to 81.3%, as cost of sales fell 10.2% despite revenue growth. The operating margin improved by approximately 50bp from 54.8% in the prior-year period to 55.3%. The attributable net margin expanded by approximately 500bp from 29.6% to 34.6%, supported by operating growth and a materially smaller net non-operating burden. Interest expense rose to ¥1.31bn from ¥1.01bn, but interest coverage remained sound at 9.59x on an interim annualized basis. Operating cash flow was exceptionally strong at ¥38.08bn, equal to 4.84x net income. This cash generation was substantially supported by working-capital releases, notably a ¥6.59bn decline in contract liabilities and a ¥6.26bn decline in advances paid, so it should not be treated as fully recurring earnings cash conversion. Reported free cash flow was ¥16.29bn and covered the Q2 dividend cash requirement comfortably. The balance sheet has improved in absolute debt terms from the prior-year period, but short-term loans still account for ¥134.60bn, or 95.7% of interest-bearing debt. The current ratio of 147.5% and quick ratio of 143.7% indicate that current assets exceed current obligations, although cash alone covers only 0.44x of short-term debt. The reported annualized ROE of 17.6% is excellent, but is materially assisted by 3.01x financial leverage. Management retained its full-year forecast and dividend plan, implying confidence in second-half execution. Q2 progress is ahead of a standard 50% run rate for operating income, ordinary income and net income, while revenue progress is slightly below the midpoint. This combination implies lower expected profitability in the second half rather than a revenue shortfall, and execution against the funding, transaction and asset-realization pipeline will determine whether the earnings outperformance converts into full-year upside.

Profitability Analysis

The reported annualized DuPont ROE is 17.6%, decomposed into a 34.6% net profit margin, 0.169x asset turnover and 3.01x financial leverage. The standout component is the net margin, which improved by roughly 500bp year on year, while leverage remains a substantial amplifier of shareholder returns. Gross margin rose to 81.3% from approximately 77.1%, demonstrating favorable transaction economics and/or business mix, with gross profit increasing 15.4% to ¥18.48bn. Operating income grew slightly faster than revenue, producing a 50bp operating-margin improvement to 55.3%. EBITDA was ¥12.96bn and EBITDA margin was 57.1%, confirming that the high operating profitability is not driven by a large depreciation add-back. Under JGAAP, goodwill amortization was only ¥0.28bn, or approximately 0.2% of EBITDA, and therefore does not materially distort comparison of EBITDA and net income. SG&A increased 27.5% to ¥5.91bn, substantially faster than the 9.4% increase in revenue. This is the primary operating-leverage item to monitor: the current gross-margin gain absorbed the higher overhead, but continuation of this cost-growth differential would constrain future margin expansion. The five-factor bridge indicates a 67.8% tax burden and 92.4% interest burden, with the latter showing that financing costs reduce EBIT by a manageable, though meaningful, 7.6% before tax. Interest expense increased 30.1% year on year, faster than EBIT, consistent with the importance of debt pricing and funding volumes to future earnings. The effective tax rate was 31.3%, broadly consistent with the reported tax burden. Asset turnover is relatively low because the business carries a substantial asset base associated with investment and finance activities; consequently, reported annualized ROE depends more on high margins and leverage than on balance-sheet turnover. The profitability profile is strong, but its sustainability depends on maintaining gross-profit conversion while containing SG&A growth and refinancing costs.

Growth Assessment

Revenue growth of 9.4% to ¥22.72bn was accompanied by 10.4% operating-income growth, 22.3% ordinary-income growth and 28.0% growth in profit attributable to owners. The widening gross margin indicates that growth was higher quality at the gross-profit level, with gross profit rising 15.4%. The stronger growth below operating income reflects the reduction in the net non-operating expense burden: non-operating income increased to ¥1.39bn, including ¥0.34bn of interest income and ¥0.17bn of foreign-exchange gains, while non-operating expenses fell to ¥2.34bn. Full-year guidance calls for revenue of ¥48.96bn, operating income of ¥23.58bn, ordinary income of ¥19.67bn and attributable net income of ¥13.00bn. Q2 cumulative progress against guidance is 46.4% for revenue, 53.3% for operating income, 59.0% for ordinary income and 60.5% for attributable net income. Revenue is 3.6 percentage points below a standard first-half 50% run rate, but operating profit, ordinary income and net income are ahead by 3.3, 9.0 and 10.5 percentage points, respectively. The net-income progress rate exceeds the standard midpoint by more than 10 percentage points, indicating that the full-year plan assumes a meaningfully softer second half in profitability or a more back-end-weighted revenue and expense profile. No guidance revision was announced. Funding-dependent investment and advisory businesses can experience material period-to-period variability depending on transaction closing, asset sales, aircraft or other operating-lease investment activity, and financing availability. Therefore, the first-half margin strength is encouraging but should not be extrapolated mechanically to the full year.

Financial Health

Liquidity is adequate on broad current-asset measures: current assets of ¥245.73bn exceed current liabilities of ¥166.59bn, producing a 147.5% current ratio, and the 143.7% quick ratio indicates limited reliance on inventories for coverage. Working capital was ¥79.14bn. However, the maturity profile is aggressive because ¥134.60bn of short-term loans represent 95.7% of ¥140.71bn total interest-bearing debt. Cash and deposits of ¥59.04bn cover only 0.44x short-term debt, explicitly indicating liquidity and refinancing sensitivity even though the current ratio remains above 1.0. Debt-to-equity is 2.01x, slightly above the 2.0x high-leverage warning threshold, and debt-to-capital is 61.2%, also above the 60% concern benchmark. Debt/EBITDA is 10.86x, well above the 4.0x high-yield benchmark; this is the most material solvency risk despite EBITDA interest coverage of 9.89x. The quality alert for high leverage reflects a balance sheet that requires dependable access to bank and capital-market funding rather than an immediate inability to service interest. The refinancing-risk alert is warranted because the short-term debt share of 96% creates a maturity mismatch risk: current assets provide aggregate coverage, but a portion consists of finance-related receivables, advances and other assets rather than immediately deployable cash. The liquidity-stress alert is similarly warranted because cash alone does not cover near-term borrowings; the impact is higher vulnerability to tighter credit conditions, counterparties' payment delays or reduced transaction liquidity. Compared with the prior-year period, total interest-bearing debt declined by approximately ¥22.2bn, or 13.6%, driven by lower short-term loans, while total equity increased 10.9% to ¥89.23bn. This deleveraging is constructive, but it has not yet reduced leverage ratios to conservative levels. Capital stock increased by ¥11.88bn and capital surplus increased by ¥11.88bn, consistent with strengthening the equity base. Retained earnings rose ¥4.98bn to ¥42.73bn, supported by profitable operations and reinforcing internal capital generation. Treasury stock moved from negative ¥1.28bn to negative ¥0.06bn, a ¥1.28bn reduction associated with treasury-share disposal; this partly supported capital resources but is not a recurring funding source. Accounts payable increased 37.0% to ¥0.25bn, but remains immaterial relative to the balance sheet and does not alter the liquidity conclusion. Contract liabilities declined 32.9% year on year to ¥13.32bn, which contributed to operating-cash-flow movements and should be monitored as a source of transaction-related funding.

Notable B/S Changes

Capital stock: +¥11.88bn (+70.4%) to ¥18.08bn - a substantial equity-base increase that supports funding capacity and partially offsets leverage. Capital surplus: +¥11.88bn (+70.9%) to ¥18.02bn - consistent with capital strengthening and improved loss-absorption capacity. Short-term loans: -¥22.74bn (-14.5%) to ¥134.60bn - constructive absolute deleveraging, but short-term borrowing remains 50.1% of total assets and dominates the maturity profile. Total assets: -¥25.09bn (-8.5%) to ¥268.54bn - the balance-sheet contraction, together with lower debt and higher equity, improved capitalization, although leverage remains high. Contract liabilities: -¥6.53bn (-32.9%) to ¥13.32bn - a significant reduction that contributed to first-half operating cash flow but reduces this source of balance-sheet funding. Advances paid: +¥6.21bn (+159.4%) to ¥10.10bn - indicates greater capital committed in advance and should be monitored alongside the long cash conversion cycle. Short-term loans receivable: +¥20.45bn (+121.1%) to ¥37.34bn - expands finance-related asset exposure and increases the importance of collection performance and matching funding maturity. Treasury stock: +¥1.28bn (+99.5%) to negative ¥0.06bn - reflects a material reduction in treasury shares, supporting capital resources, but this is not a recurring operating cash-flow source.

Cash Flow Quality

Operating cash flow of ¥38.08bn was very strong relative to ¥7.87bn of profit attributable to owners, producing an OCF/net-income ratio of 4.84x and exceeding the 0.8x earnings-quality threshold by a wide margin. The reported accruals ratio of negative 11.2% is also consistent with cash generation exceeding accounting earnings in the period. Cash conversion, measured as OCF/EBITDA, was 2.94x. Nevertheless, the source of cash flow is important: operating cash flow included a ¥6.59bn decrease in contract liabilities and a ¥6.26bn decrease in advances paid, as well as other working-capital movements. These releases enhance current-period cash but may reverse as transactions are originated, settled or renewed, so the 4.84x OCF/net-income ratio is not a normalized recurring conversion rate. Trade receivables increased by ¥0.44bn in cash-flow terms, and the reported DSO alert of 74 days is above the 60-day benchmark. This raises collection and counterparty-monitoring requirements, especially in a finance and investment-oriented business. The reported inventory-days alert of 270 days and cash-conversion-cycle alert of 334 days indicate capital can remain tied up for extended periods before monetization. Such long cycles are a material operational feature because they increase dependence on funding availability and accurate asset valuation. Investing cash flow was negative ¥21.79bn, principally reflecting ¥25.87bn of payments of loans receivable, partly offset by collections and securities proceeds. Financing cash flow was negative ¥22.53bn, reflecting substantial gross short-term borrowing and repayment activity, dividends, and long-term debt movements. Net cash declined ¥5.89bn to cash and cash equivalents of ¥58.87bn. Reported free cash flow was ¥16.29bn, and capital expenditures were modest at ¥0.30bn. Capex/depreciation was 0.76x, indicating capital expenditure modestly below depreciation; this is not central to the business model, whose cash intensity is driven more by financial investments and receivables than by fixed assets. Overall cash flow was strong in the period, but quality should be assessed through sustainability of working-capital movements, receivable collections, asset turnover and continued funding access rather than through the headline OCF alone.

Dividend Sustainability

The Q2 dividend was ¥54 per share, and the unchanged full-year dividend plan is ¥108 per share. The calculated dividend payout ratio is 42.6%, below the 60% sustainability benchmark. The full-year dividend represents approximately 51.6% of forecast EPS of ¥209.34, also indicating a moderate planned distribution burden. Reported free-cash-flow coverage of the Q2 dividend was 4.86x, providing ample period cash coverage. The balance sheet nevertheless warrants a more conservative interpretation than the payout ratio alone suggests because debt/EBITDA is 10.86x, D/E is 2.01x and 95.7% of debt is short term. Dividend capacity is supported by high operating profitability, a ¥42.73bn retained-earnings balance and positive reported free cash flow. However, a significant part of first-half operating cash flow arose from working-capital releases, meaning dividend coverage should be monitored alongside normalized operating cash flow rather than only the current-period cash-flow result. No dividend revision was announced. On reported information, the dividend policy appears sustainable, provided the company retains dependable refinancing access and converts finance-related assets and receivables into cash as planned.

Risk Assessment

Business risks include Transaction and asset-realization timing risk: the business can be sensitive to the timing of investment, advisory and leasing-related transactions, making quarterly revenue, margins and cash flows potentially uneven., Working-capital-cycle risk: reported DSO of 74 days, DIO of 270 days and a 334-day cash conversion cycle indicate extended capital lock-up and reliance on timely monetization., Counterparty and collection risk: the increase in trade receivables in cash-flow terms and elevated DSO increase exposure to delayed settlement or weaker counterparties., Industry-specific aviation and operating-lease investment risk: airline credit conditions, aircraft residual values, maintenance obligations, utilization rates and global travel demand can affect asset values, transaction appetite and exit proceeds., Foreign-exchange risk: the period included ¥0.17bn of FX gains and positive translation adjustments, indicating reported earnings and equity can be affected by currency movements..

Financial risks include High leverage: D/E of 2.01x is above the 2.0x alert threshold, while debt/EBITDA of 10.86x is substantially above the 4.0x high-yield benchmark. The root cause is a debt-funded finance and investment asset base. The impact is heightened sensitivity of equity returns and distributable cash flow to funding costs and asset monetization., Refinancing risk: 95.7% of interest-bearing debt is short term. This maturity concentration is unusually high and requires regular rollover of borrowings. The impact is vulnerability to tighter bank credit, higher spreads or funding-market disruptions., Liquidity stress: cash/short-term debt is 0.44x, below the 0.5x warning threshold. Current and quick ratios remain above 1.0, providing mitigating aggregate asset coverage, but non-cash current assets may not be immediately convertible at carrying values., Interest-rate risk: interest expense increased 30.1% year on year to ¥1.31bn. Interest coverage remains strong at 9.59x, but debt pricing or refinancing-rate increases could reduce ordinary-income growth., Capital structure risk: debt/capital of 61.2% is above the 60% concern benchmark, leaving less balance-sheet flexibility if operating assets require additional funding or decline in value..

Key concerns include The first-half OCF/net-income ratio of 4.84x is positive, but is materially influenced by working-capital releases and should not be extrapolated as normalized cash conversion., SG&A rose 27.5% year on year, materially faster than revenue growth of 9.4%; sustained divergence would erode operating leverage., Q2 net-income progress reached 60.5% of full-year guidance, more than 10 percentage points ahead of a standard first-half pace, indicating a potentially more challenging or lower-margin second half embedded in guidance., The combination of high leverage, short debt maturities and a long cash conversion cycle is the highest-priority risk cluster because a disruption in asset turnover or borrowing rollovers could have a compounded impact..

Investment Implications

Key takeaways include First-half earnings momentum was strong: revenue grew 9.4%, operating income 10.4%, ordinary income 22.3% and attributable profit 28.0%., Profitability is exceptional, with 81.3% gross margin, 55.3% operating margin, 57.1% EBITDA margin and reported annualized ROE of 17.6%., The reported annualized ROE is driven by both high net margin and 3.01x financial leverage; therefore, it should be evaluated together with funding-risk metrics rather than in isolation., Balance-sheet debt decreased year on year and equity increased, but debt/EBITDA of 10.86x and a 95.7% short-term debt ratio keep refinancing exposure elevated., Reported free cash flow and dividend coverage are strong, though first-half cash generation was boosted by working-capital releases., No change to full-year earnings or dividend guidance leaves second-half execution, asset turnover and financing conditions as the key determinants of the full-year outcome..

Metrics to watch include Short-term debt rollovers, borrowing rates and cash/short-term debt coverage, Debt/EBITDA, D/E and debt/capital trends, Operating cash flow excluding movements in contract liabilities and advances paid, DSO, inventory days, cash conversion cycle and receivable collections, SG&A growth relative to revenue growth, Gross margin and operating margin progression in the second half, Progress versus full-year revenue, operating-income, ordinary-income and net-income guidance, Aircraft and operating-lease asset values, airline counterparty credit conditions and foreign-exchange movements.

Regarding relative positioning, The company combines unusually high reported margins and a strong reported annualized ROE with a capital-intensive, short-term-funded balance sheet. Relative to asset-light advisory businesses, its leverage and refinancing dependence are materially higher; relative to finance and leasing-oriented platforms, the relevant differentiators are its ability to sustain transaction margins, manage long working-capital cycles and maintain reliable funding access. JGAAP goodwill amortization is immaterial at ¥0.28bn, so earnings are not meaningfully depressed by acquisition-accounting amortization.