Casa Inc. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥9.54B
• Operating Income: ¥-197M
• Net Income: ¥-364M
• EPS: ¥0.23

Income Statement

Balance Sheet

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

Casa (TSE:7196) reported FY2026 Q3 (cumulative) revenue of 95.39, up 5.4% YoY, indicating modest top-line growth despite a soft profit profile. Gross profit was 44.20, yielding a gross margin of 46.3%, but SG&A of 45.16 exceeded gross profit, driving an operating loss of -1.97 (operating margin -2.1%). Non-operating income of 2.21 and non-operating expenses of 0.04 should arithmetically imply positive ordinary income, yet the company reports ordinary income of -1.24 (down 77.8% YoY), suggesting classification differences or other non-disclosed line items; we rely on the reported ordinary income figure. Profit before tax was -2.46, and net income was slightly positive at 0.02, implying unusual below-ordinary items and/or tax effects; the reported effective tax rate is -48.2%, consistent with atypical tax dynamics in a loss context. DuPont metrics indicate a near-zero ROE: net margin ≈ 0.02%, asset turnover 0.609x, and financial leverage 2.43x, producing an implied ROE near 0.03% (reported ROE shown as 0.0%), i.e., effectively flat. Liquidity is adequate with a current ratio of 113.7% and working capital of 11.02, supported by cash and deposits of 29.90; short-term loans are 6.00 and long-term loans 1.50, suggesting a net cash position versus disclosed borrowings. Capital structure is balanced with equity of 64.34 and total assets of 156.60 (equity ratio ≈ 41.1%), but current liabilities are heavy at 80.53, typical for guarantee-related businesses yet a watch-point for near-term funding needs. Intangibles are sizable at 33.59 (including goodwill of 25.18), amounting to roughly 52% of equity and raising medium-term impairment risk if profitability remains weak. Interest coverage is negative based on operating loss (approximately -109x per provided metric), though absolute interest expense is small (0.02). With operating CF and dividend data unreported, cash flow quality and dividend sustainability cannot be robustly assessed; any payout would be poorly covered by current earnings given near-zero EPS (0.23 JPY). The business achieved revenue growth but experienced margin compression and a swing to operating loss, implying adverse operating leverage and/or rising cost pressure. The ordinary income decline (-77.8% YoY) underscores deteriorating core profitability despite non-operating support. Data limitations (notably cash flow, SG&A detail, and extraordinary items) constrain precision, but available figures point to the need for cost discipline and stabilization of core earnings. Near-term monitoring should focus on SG&A efficiency, loss ratios inherent to the guarantee model, and any signs of goodwill impairment pressure. Overall, Casa remains liquid with moderate leverage, but core profit weakness and large intangibles elevate execution risk.

Profitability Analysis

ROE_decomposition: - Net profit margin ≈ 0.02 / 95.39 = 0.021% (rounded, reported as 0.0%). Asset turnover = 95.39 / 156.60 = 0.609x. Financial leverage = 156.60 / 64.34 = 2.43x. Implied ROE ≈ 0.021% × 0.609 × 2.43 ≈ 0.03% (effectively flat). margin_quality: - Gross margin: 46.3% (44.20 / 95.39), healthy at the gross level. SG&A ratio: 47.3% (45.16 / 95.39), exceeding gross profit and driving an operating margin of -2.1%. Ordinary income margin using reported figure: -1.30% (-1.24 / 95.39). Net margin ≈ 0.02%. Margin structure indicates good gross economics offset by elevated operating costs and/or unfavorable mix. operating_leverage: - Revenue grew 5.4% YoY, yet ordinary income fell sharply (-77.8% YoY) and operating income turned negative, evidencing adverse operating leverage. Cost base appears insufficiently variable; incremental gross profit did not cover higher SG&A. Non-operating income (2.21) is large versus operating loss, masking core weakness. notes: There is a discrepancy between operating income (-1.97), non-operating net (+2.17), and reported ordinary income (-1.24). We rely on the reported ordinary income, acknowledging possible classification/extraordinary items not disclosed in detail.

Growth Assessment

revenue_sustainability: - Revenue +5.4% YoY to 95.39 indicates steady demand in the rent guarantee/related services domain. Asset turnover of 0.609x suggests moderate utilization for the business model. profit_quality: - Core profitability deteriorated: operating loss (-1.97) and ordinary loss (-1.24) despite higher revenue. The reliance on non-operating gains to offset operating losses weakens earnings quality. outlook: - Near-term outlook hinges on SG&A containment and potential fee/pricing adjustments. If cost pressure persists, operating margins may remain negative despite top-line growth. Intangible-heavy balance sheet increases the sensitivity to sustained underperformance via potential impairment.

Financial Health

liquidity: - Current ratio: 113.7% (91.55 / 80.53). Quick ratio identical given no inventories reported. Working capital: 11.02. Cash and deposits: 29.90 provide a buffer against 80.53 of current liabilities. solvency: - Total liabilities: 82.57; total equity: 64.34; D/E (total liabilities to equity) ≈ 1.28x. Equity ratio ≈ 41.1% (64.34 / 156.60). Interest-bearing loans disclosed: 7.50 (ST 6.00, LT 1.50). Net cash vs disclosed debt ≈ 22.4 (29.90 - 7.50). capital_structure: - Leverage is moderate with financial leverage at 2.43x. Current liabilities dominate (80.53 vs 2.04 noncurrent), typical for businesses with guarantee deposits/short-duration obligations; rollover and liquidity management remain key. intangibles: - Intangible assets 33.59 (incl. goodwill 25.18) equal ~21% of total assets and ~52% of equity; goodwill alone is ~39% of equity, highlighting impairment risk if profitability does not recover.

Cash Flow Quality

earnings_quality: - Net income is near zero (0.02) while operating income is negative, indicating weak core earnings. Non-operating income played a significant role in avoiding a deeper bottom-line loss. FCF_analysis: N/A (Operating CF, Investing CF, and Capex not disclosed). working_capital: - Current assets 91.55 vs current liabilities 80.53 indicate positive working capital. Detailed drivers (receivables, payables timing, guarantee reserves) are not fully disclosed, limiting assessment of cash conversion. notes: OCF/NI and FCF coverage cannot be calculated due to unreported CF statements. Conclusions on cash flow quality are therefore tentative.

Dividend Sustainability

payout_ratio_assessment: - DPS and dividends paid are unreported. The calculated payout ratio of 18,436% is not reliable given unreported DPS and near-zero EPS; this figure should not be used for assessment. FCF_coverage: N/A (OCF and Capex not disclosed). policy_outlook: - With earnings effectively breakeven and operating loss at Q3, dividend capacity (if any) would need to be justified by cash reserves and future profit recovery rather than current earnings. Formal guidance/policy disclosure would be required for a firm view.

Risk Assessment

Business Risks:

• Adverse operating leverage: SG&A above gross profit leading to operating losses.
• Industry cyclicality tied to rental housing demand and tenant credit conditions.
• Potential increase in claim rates/defaults in guarantee operations amid macro slowdown.
• Pricing pressure and competitive intensity in rent guarantee services.
• Regulatory changes affecting guarantor practices and consumer protection standards.
• Reputational risk from collection practices or dispute resolution.

Financial Risks:

• High proportion of current liabilities necessitating careful liquidity management.
• Large goodwill/intangibles (goodwill ≈ 39% of equity) heighten impairment risk.
• Negative operating margin and negative interest coverage (approx. -109x) despite low absolute interest.
• Tax volatility evidenced by a negative effective tax rate amid losses.
• Data gaps in cash flows impede monitoring of OCF sufficiency and FCF.

Key Concerns:

• Sustained ordinary loss (-1.24) despite revenue growth points to core profitability issues.
• Discrepancies between operating/non-operating lines and reported ordinary income complicate transparency.
• Margin pressure from SG&A intensity; need for cost control to restore operating margin.
• Potential impairment if performance does not improve given sizeable goodwill.
• Dependence on non-operating income to offset operating loss is not a durable earnings driver.

Investment Implications

Key Takeaways:

• Top-line resilience (+5.4% YoY) but core earnings deteriorated; operating loss at Q3.
• Gross margin healthy, but SG&A ratio too high, resulting in negative operating margin.
• Ordinary income down 77.8% YoY, signaling weaker core profit trajectory.
• Liquidity acceptable with net cash vs disclosed debt; leverage moderate (equity ratio ~41%).
• Intangibles significant relative to equity, creating medium-term impairment sensitivity.
• Cash flow and dividend data are unreported, limiting visibility on cash generation and distributions.

Metrics to Watch:

• SG&A-to-sales ratio and operating margin recovery toward breakeven/positive.
• Ordinary income margin and interest coverage excluding non-operating tailwinds.
• Cash and deposits versus short-term borrowings; trend in current liabilities composition.
• Loss/claim ratios and collection performance within guarantee operations.
• Any goodwill impairment testing outcomes and changes in intangible balances.
• Disclosure of OCF/FCF and DPS to reassess cash flow quality and payout capacity.

Relative Positioning: Within Japan’s rent guarantee and related financial services peers, Casa shows steady revenue but weaker core profitability in the current period. Balance sheet strength (cash and moderate leverage) is a relative positive, while elevated SG&A intensity and high intangibles weigh on risk-adjusted positioning until margin normalization is evident.

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
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