BCC (7376) FY2026 Q1 Earnings Report

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Executive Summary

The key point of these financial results is that, while the core IT Sales Outsourcing Business secured profitability, consolidated results posted an operating loss due to the burden of company-wide expenses. Revenue was ¥4.4B, Operating Income was ¥△0.4B, Ordinary Income was ¥△0.5B, and Net Income attributable to owners of the parent was ¥△0.5B. SG&A expenses at 43.9% of revenue exceeded the gross profit margin of 34.1%, directly causing the operating loss.

Factors Affecting Performance

【Revenue】Of total revenue of ¥4.4B, the IT Sales Outsourcing Business accounted for ¥3.9B (87.9% of total), consisting of the Sales Outsourcing Business at ¥2.8B, the Solutions Business at ¥0.6B, and the Engineering Business at ¥0.5B. The Healthcare Business generated ¥0.5B and comprises the Healthcare Support Business and the Recreation Business. Progress against the full-year forecast of ¥18.5B was 23.7%, slightly below the standard quarterly progress rate of 25%.

【Profit and Loss】The IT Sales Outsourcing Business was profitable, posting segment profit of ¥0.4B (9.9% margin), while the Healthcare Business posted a loss of ¥△0.04B and Other Businesses posted a loss of ¥△0.17B. Against total segment profit of ¥0.16B, company-wide expenses of ¥0.62B were deducted, resulting in a consolidated operating loss of ¥0.43B. After adding non-operating expenses of ¥0.1B (mainly payment fees), the ordinary loss widened to ¥0.52B, and the net loss after deducting income taxes of ¥0.01B was ¥0.53B. The gap between the ordinary loss and net loss was small, with no distortion from temporary extraordinary gains or losses. Although revenue did not decline, the Company is in a phase of declining profit due to insufficient profitability in its core operations, resulting in the structure of revenue growth and profit decline (with the operating loss continuing).

Segment Analysis

The IT Sales Outsourcing Business is the core of consolidated earnings, with revenue of ¥3.9B, segment profit of ¥0.4B, and a profit margin of 9.9%. The Healthcare Business generated revenue of ¥0.5B, a segment loss of ¥0.04B, and a profit margin of △8.4%, indicating that expansion in scale has not yet led to a shift into profitability. Other Segments generated revenue of ¥0.04B against a loss of ¥0.17B, reflecting a heavy fixed-cost burden relative to their small sales base. After deducting company-wide expenses of ¥0.62B, which are not allocated to individual segments, from total segment profit of ¥0.16B, consolidated operating loss was ¥0.43B. Insufficient absorption of indirect costs is therefore the primary cause of the consolidated deficit. In addition, Good Digital Co., Ltd. and Robotus Net Co., Ltd. were newly consolidated in Q1, resulting in total goodwill of ¥0.86B.

Key Financial Indicators

【Profitability】The operating margin was △9.8% and the net profit margin was △12.1%, with both remaining negative. SG&A expenses at 43.9% of revenue exceeded the gross profit margin of 34.1%, indicating that the cost structure is the primary cause of deteriorating profitability.【Cash Quality】The gap between the ordinary loss of ¥0.52B and the net loss of ¥0.53B was small, and no significant distortion from extraordinary gains or losses was observed. The Company held accounts receivable of ¥2.0B and inventories of ¥0.2B, and their collection and turnover conditions will influence working capital trends going forward.【Investment Efficiency】ROE was △19.2%, reflecting losses against net assets of ¥11.0B. The annualized total asset turnover ratio was 1.079x and financial leverage was 1.47x, neither of which represents an excessive level; the decline in profitability is the primary cause of weak ROE.【Financial Soundness】The equity ratio was 68.0%, while the current ratio was equivalent to 371.6%, both high levels. Long-term borrowings were limited to ¥1.5B, and the Debt/Capital ratio was low, indicating a conservative financial structure.

Cash Flow Analysis

As cash flow statement data was not disclosed, cash trends are assessed based on the balance sheet. Cash and deposits were ¥10.8B, accounting for 66.5% of total assets, indicating that the Company held cash on a scale substantially exceeding current liabilities of ¥3.7B. While the Company recorded a net loss of ¥0.53B, it also held working capital items consisting of accounts receivable of ¥2.0B and inventories of ¥0.2B; the speed of collection and turnover of these items will affect future cash generation. Long-term borrowings were ¥1.5B, of which the amount due for repayment within one year was limited to ¥0.5B, indicating a limited repayment burden relative to cash and deposits. As losses continue, it will be necessary to monitor trends in cash consumption associated with business operations and the integration costs of acquired companies consolidated into the Group.

Earnings Quality

Against an operating loss of ¥0.43B, non-operating income was only ¥0.0B, while non-operating expenses of ¥0.1B (mainly payment fees) caused the ordinary loss to widen to ¥0.52B. The difference between the loss before tax of ¥0.53B and the net loss of ¥0.53B was limited to income taxes of ¥0.01B, and no significant distortion from extraordinary gains or losses was identified. Comprehensive income was ¥△0.53B, almost equal to net income, with little divergence caused by other comprehensive income components. Accordingly, the focus in assessing earnings quality is not temporary factors but the structural issue of the gap between the gross profit margin and the SG&A expense ratio at the operating level.

Performance Forecast and Guidance

Against the full-year revenue forecast of ¥18.5B, Q1 revenue of ¥4.4B represented progress of 23.7%, slightly below the standard rate of 25%. Against the full-year operating loss forecast of ¥1.9B, the Q1 operating loss of ¥0.4B represented progress of 22.2%, 2.8pt below the standard level, indicating that loss progression is somewhat slower. Meanwhile, against the full-year net loss forecast of ¥1.35B, the Q1 net loss of ¥0.53B represented progress of 39.3%, 14.3pt above the standard level, leaving downside risk including non-operating income and expenses and the tax burden. While revenue and operating profit/loss are generally progressing in line with the Company’s plan, improvement in net profit/loss will need to be confirmed during the remaining period.

Shareholder Returns

The Company’s forecast annual dividend is ¥0 per share, and the dividend paid in the same period of the previous year was also ¥0. As a full-year net loss is forecast, the payout ratio is not applicable. Under the no-dividend policy, cash is expected to be allocated to business operations, the integration of newly consolidated subsidiaries, and measures to improve profitability.

Risk Factors

1. Insufficient absorption of fixed costs due to company-wide expenses: Company-wide expenses were ¥0.62B, accounting for 14.1% of revenue and exceeding total segment profit of ¥0.16B. Compression of indirect costs or revenue growth will be necessary for the profitability of the core business to translate into consolidated profit.

2. Delayed improvement in the profitability of the Healthcare and Other Businesses: The Healthcare Business recorded a loss of ¥0.04B, while Other Businesses recorded a loss of ¥0.17B. In particular, Other Businesses bear a large loss burden relative to their small sales base, and delays in expanding business scale or optimizing costs could pressure consolidated earnings.

3. Integration and goodwill value of the acquired companies (Good Digital and Robotus Net): The consolidation of the two companies resulted in total goodwill of ¥0.86B. The purchase price allocation is provisional, and if integration benefits or earnings contributions fall short of plan, impairment losses may arise in the future.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the operating margin and net profit margin are significantly below the industry median, placing profitability at the lower end of the industry.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The IT Sales Outsourcing Business secured revenue of ¥3.9B, segment profit of ¥0.4B, and a profit margin of 9.9%, serving as the core of consolidated earnings. However, company-wide expenses of ¥0.62B exceeded this profit and were a factor behind the consolidated deficit.

2. Financial soundness, including an equivalent current ratio of 371.6% and an equity ratio of 68.0%, provides a buffer against the weakness in profitability represented by the operating margin of △9.8%.

3. Total goodwill of ¥0.86B was recognized in connection with the two companies newly consolidated during Q1, and the progress of integration and realization of earnings contributions will influence the earnings structure going forward.

Theoretical Share Price (For Reference)

Sensitivity: ¥478–¥505 at Cost of Equity ±1%, and ¥483–¥497 at ω±0.1.

Notes:

• Because forecast ROE is below the Cost of Equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a time lag relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated using only publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict 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. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional advisor as necessary.

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