Terminalcare Support Institute Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.51B
• Operating Income: ¥-26M
• Net Income: ¥78M
• EPS: ¥16.01

Income Statement

Balance Sheet

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 FY2025 Q3, 株式会社Ｔ．Ｓ．Ｉ delivered modest top-line growth with revenue of ¥3,509 million (+0.9% YoY), but profitability remained weak at the operating level. Gross profit of ¥463.6 million implies a gross margin of 13.2%, indicating thin pricing power and/or a cost base that has not fully flexed with revenue. Operating income was a loss of ¥26 million, translating to an operating margin of approximately -0.7%, signaling continued pressure in core operations. Despite the operating loss, ordinary income was positive at ¥51 million, suggesting material non-operating gains that offset operating weakness; this was achieved even after interest expense of ¥21.6 million. Net income was ¥24 million (-68.8% YoY), implying a net margin of 0.68%, and EPS was ¥16.01. DuPont decomposition indicates a low ROE of 1.77%, driven by a very thin net profit margin (0.68%), moderate asset turnover (0.621x), and elevated financial leverage (4.17x). Balance sheet data show total assets of ¥5,653 million and total equity of ¥1,357 million; on an analyst-calculated basis this implies an equity ratio near 24%, although the disclosed equity ratio field is not populated. Liquidity is tight with a current ratio of 94.7% and negative working capital of approximately ¥99 million, pointing to near-term funding pressure absent additional cash or credit headroom. Solvency risk appears non-trivial with a debt-to-equity ratio of 2.58x and negative interest coverage on an EBIT basis (-1.2x), underscoring dependence on non-operating income to sustain profitability. Cash flow disclosures are not available in the XBRL (OCF/FCF fields show zero as ‘not disclosed’), limiting assessment of earnings-to-cash conversion and dividend capacity. Dividend outflows are nil (DPS ¥0), consistent with a cautious stance given subdued earnings and constrained liquidity. Overall, the quarter reflects fragile operating fundamentals masked partially by non-operating gains, modest revenue growth without operating leverage, and a balance sheet that requires careful monitoring. The key to improving ROE will be restoring operating margin while containing leverage and finance costs. With many cash flow line items undisclosed, conclusions hinge on income statement and balance sheet signals, which collectively suggest a need for cost discipline and working capital optimization. Given the data gaps, especially in cash flows and share count, the analysis focuses on available non-zero fields and reasonable inferences under JGAAP conventions.

Profitability Analysis

ROE is 1.77% via DuPont: net profit margin 0.68% × asset turnover 0.621 × financial leverage 4.17. Gross margin is 13.2% (¥463.6m/¥3,509m), indicating limited pricing power and/or elevated direct costs. Operating margin is approximately -0.7% (¥-26m/¥3,509m), evidencing that cost of sales plus SG&A continue to outpace revenue. The bridge from operating to ordinary income (+¥77m swing from -¥26m to +¥51m) indicates meaningful non-operating gains (e.g., subsidies, investment income, or other non-core items) more than offset interest expense of ¥21.6m. Ordinary margin is about 1.5% (¥51m/¥3,509m), while net margin is 0.68% (¥24m/¥3,509m), implying a large tax and/or extraordinary items impact between ordinary and net results. Interest coverage on an EBIT basis is -1.2x, highlighting an inability to cover interest from core operations. Depreciation and EBITDA are not disclosed; therefore, true operating cash profitability cannot be inferred from EBITDA. Overall, profitability quality is weak: core operations are loss-making, margins are thin, and positive bottom-line depends on non-operating items.

Growth Assessment

Revenue grew 0.9% YoY to ¥3,509m, a modest expansion that suggests stable demand but limited momentum. Operating income was a loss of ¥26m with a reported YoY change of -22.1%, indicating that operating performance did not improve alongside revenue growth. Ordinary income of ¥51m remains positive, but reliance on non-operating gains to offset operating losses is not a sustainable growth driver. Net income declined 68.8% YoY to ¥24m, reflecting weaker earnings quality and likely higher tax/other below-the-line items. With gross margin at 13.2% and no evidence of operating leverage, incremental sales are not translating into proportional profit gains. The outlook will depend on management’s ability to improve gross-to-operating margin conversion via pricing, mix, and cost control, as well as discipline in SG&A. Given limited disclosure on segment drivers and the absence of cash flow data, revenue sustainability appears modest and profit quality remains fragile.

Financial Health

Total assets are ¥5,653m and total equity is ¥1,357m; this implies an analyst-calculated equity ratio of roughly 24% (equity/assets), though the disclosed equity ratio field is blank. Total liabilities are ¥3,494.9m; the capital structure shows leverage at 2.58x debt-to-equity (interest-bearing definition per provided metric), which is elevated for a low-margin business. Liquidity is tight: current assets ¥1,761.1m vs current liabilities ¥1,860.6m yields a current ratio of 94.7% and negative working capital of about ¥99m. The quick ratio equals the current ratio because inventories are not disclosed; actual quick liquidity may be lower if inventories exist. Interest coverage on an operating basis is negative (-1.2x), underscoring sensitivity to financing costs and the need for either margin recovery or balance sheet de-risking. Absent disclosed cash and cash equivalents, short-term funding capacity cannot be fully assessed, but the liability structure implies careful liquidity management is necessary.

Cash Flow Quality

Operating, investing, and financing cash flows are not disclosed (zero placeholders). As a result, OCF/Net Income, free cash flow (FCF), and working capital cash dynamics cannot be reliably evaluated from cash flow statements. Earnings quality therefore must be inferred from income statement patterns: operating loss alongside positive ordinary income suggests cash earnings from core activities may be weak unless non-operating gains are cash in nature. With negative working capital and tight liquidity, the company may be relying on payables and other short-term liabilities; if revenue grows, this could either support cash (through supplier financing) or pressure cash (through required inventory/receivable build), but inventories are undisclosed. Given interest expense of ¥21.6m and negative EBIT, internally generated cash from operations is likely limited absent non-operating cash inflows. Overall, cash flow quality is indeterminable due to disclosure gaps, with a cautious tilt given operating losses.

Dividend Sustainability

DPS is ¥0 and payout ratio is 0%, which aligns with the company’s limited earnings and liquidity headroom. With cash flows undisclosed, FCF coverage cannot be assessed; reported FCF coverage of 0.00x reflects non-disclosure rather than true zero. Given a net margin of 0.68% and negative operating margin, retaining earnings to stabilize the balance sheet and fund operations appears prudent. Any reinstatement of dividends would likely depend on restoring positive operating income and demonstrating consistent OCF generation.

Risk Assessment

Business Risks:

• Low gross margin (13.2%) and negative operating margin (-0.7%) indicate limited pricing power and cost pressure.
• Dependence on non-operating gains to achieve positive ordinary income, which may be volatile and non-recurring.
• Modest revenue growth (+0.9% YoY) with no evident operating leverage limits profit scalability.
• Potential tax and below-the-line volatility impacting net income (Net income ¥24m vs ordinary income ¥51m).
• Limited disclosure on segments and cash flows reduces visibility into drivers and sustainability.

Financial Risks:

• Tight liquidity with current ratio 94.7% and negative working capital (~¥99m).
• Elevated leverage: debt-to-equity 2.58x and analyst-calculated equity ratio ~24%, increasing sensitivity to earnings shocks.
• Negative interest coverage (-1.2x) on an operating basis, indicating inability to service interest from core operations.
• Potential refinancing and covenant risks if lenders emphasize operating profitability metrics.

Key Concerns:

• Core operating loss despite revenue growth.
• Reliance on non-operating income to remain profitable.
• Liquidity headroom and working capital management amid limited disclosure on cash.
• Sustainability of margins in a low-profit, leveraged context.

Investment Implications

Key Takeaways:

• Revenue grew modestly to ¥3,509m (+0.9% YoY), but operating income remained negative (¥-26m).
• Ordinary income of ¥51m and net income of ¥24m reflect support from non-operating items, not core operations.
• ROE is low at 1.77%, driven by a thin net margin (0.68%) and high leverage (4.17x financial leverage).
• Liquidity is tight (current ratio 94.7%, working capital -¥99m), and interest coverage is negative on an EBIT basis.
• Cash flow data are not disclosed, limiting assessment of earnings-to-cash conversion and dividend capacity.

Metrics to Watch:

• Trend in operating margin and SG&A-to-sales to confirm progress toward breakeven/profitability.
• Gross margin trajectory and pricing/mix initiatives to lift contribution.
• Non-operating income composition and recurrence, and net finance costs.
• Working capital days (receivables, payables, inventories) once disclosed; cash balance and undrawn facilities.
• Leverage metrics (net debt-to-equity, interest coverage) and any refinancing actions.

Relative Positioning: Within low-margin, labor- and service-intensive peers on the TSE, the company sits in the lower quadrant on operating profitability and liquidity resilience, with similar revenue stability but weaker core margin performance and higher leverage reliance than best-in-class operators.

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