ATOM CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥15.00B
• Operating Income: ¥-185M
• Net Income: ¥-340M
• EPS: ¥-1.81

Income Statement

Balance Sheet

Cash Flow Statement

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

Kabushiki Kaisha Atom (TSE: 7412, standalone, JGAAP) reported FY2026 Q2 revenue of ¥14.996bn, down 17.6% YoY, indicating a meaningful top-line contraction. Despite the revenue decline, operating loss was ¥185m, essentially flat YoY, suggesting some cost flexibility or one-off cost offsets. Ordinary loss widened slightly to ¥215m, reflecting modest non-operating headwinds relative to operating results. Net loss was ¥340m, with EPS of -¥1.81; the reported YoY change (-99.4%) indicates a sharp deterioration versus the prior period’s near-breakeven or positive base. Gross profit is reported at ¥11.753bn with a gross margin of 78.4%, while cost of sales is ¥6.437bn; given the unusual combination, we rely on the provided gross margin metric but note potential categorization differences under JGAAP line items. EBITDA was ¥284m (1.9% margin), and D&A totaled ¥469m, highlighting a sizable non-cash expense burden that swings EBITDA to operating loss. Asset turnover was 0.916x and financial leverage 3.37x, yielding a calculated and reported ROE of -7.0%, driven primarily by a negative net margin of -2.27%. Liquidity remains adequate with a current ratio of 112.2% and a quick ratio of 108.6%, supported by positive working capital of ¥935m. The capital structure is leveraged with total liabilities/total equity at 2.40x, which amplifies earnings volatility. Operating cash flow was positive at ¥105m despite the net loss, implying working capital release and non-cash add-backs (notably D&A), though OCF was modest relative to losses (OCF/NI = -0.31 given the negative numerator/denominator sign convention). Investing cash flow and cash/equivalents were not disclosed in the XBRL (zeros indicate unreported), constraining free cash flow assessment. The company paid no dividends (DPS ¥0), consistent with the net loss and absent FCF disclosure. Overall, the quarter reflects pressured demand or store traffic (top-line decline), partial cost adjustments, and continued operating softness, but with sufficient near-term liquidity. The absence of consolidated data, certain cash flow details, and share data limits depth of per-share and FCF analyses. Looking ahead, stabilization of revenue, tighter cost control, and maintenance of liquidity will be key to arresting ROE erosion.

Profitability Analysis

ROE_decomposition: ROE (-7.0%) = Net margin (-2.27%) x Asset turnover (0.916x) x Financial leverage (3.37x). The negative net margin is the main driver of negative ROE; turnover is moderate for the format, while leverage magnifies losses. margin_quality: Reported gross margin is 78.4%; however, cost of sales and gross profit lines suggest possible classification differences under JGAAP. EBITDA margin is 1.9%, turning to an operating margin of -1.2% (Operating income -¥185m / Revenue ¥14,996m). Ordinary margin is -1.4% and net margin -2.27%, indicating incremental pressure below operating line (taxes/non-operating items). operating_leverage: Revenue fell 17.6% YoY, yet operating loss was essentially unchanged, implying some fixed cost absorption improvement or cost flexing. D&A (¥469m) is sizable, so cash operating performance (EBITDA) remained positive, but not enough to cover all fixed costs. Further revenue softness risks disproportionate earnings impact given fixed cost base.

Growth Assessment

revenue_sustainability: Top-line declined 17.6% YoY to ¥14.996bn, pointing to demand weakness (likely lower same-store sales or reduced customer traffic). Without segment detail, sustainability is uncertain; stabilization of comps and footfall recovery are critical. profit_quality: EBITDA of ¥284m versus operating loss indicates heavy non-cash charges. Net loss was aggravated by a reported income tax expense of ¥166m despite losses, suggesting non-income tax items or timing differences. Ordinary loss (-¥215m) shows limited non-operating drag beyond interest. outlook: Near-term recovery hinges on traffic normalization, pricing, and cost containment. If revenue stabilizes and the company continues to flex costs, a return to operating breakeven is plausible; however, further top-line declines would pressure margins given the fixed cost base.

Financial Health

liquidity: Current ratio 112.2% and quick ratio 108.6% indicate adequate short-term coverage. Working capital stands at ¥935m, providing a buffer for operations. solvency: Debt-to-equity (proxy via total liabilities/equity) is 2.40x, reflecting elevated leverage that amplifies earnings volatility. Interest expense is ¥33m; EBIT-based interest coverage is negative (-5.6x), while EBITDA/interest is approximately 8.6x (¥284m/¥33m), indicating cash earnings can service interest but not depreciation-heavy fixed costs. capital_structure: Assets ¥16.378bn vs equity ¥4.860bn implies financial leverage of 3.37x. The reported equity ratio is unavailable (0% placeholder), so we infer moderate-to-high balance sheet leverage from the liabilities/equity relationship.

Cash Flow Quality

earnings_quality: OCF was ¥105m while net income was -¥340m (OCF/NI = -0.31), reflecting that non-cash D&A and working capital adjustments partly offset the accounting loss. However, OCF is modest relative to revenue, pointing to weak cash conversion under current conditions. FCF_analysis: Investing cash flow is unreported (0 placeholder), so FCF cannot be reliably calculated. Given OCF of ¥105m, modest maintenance capex would likely consume a significant portion, suggesting limited discretionary FCF in the period. working_capital: Positive OCF despite losses implies a working capital release or tight inventory/receivables management; inventories are ¥274m (low relative to revenue), but without detail on receivables/payables, the durability of this benefit is unclear.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 with a reported payout ratio of 0%. Given the net loss and limited OCF, a no-dividend stance is consistent with capital preservation. FCF_coverage: FCF coverage cannot be assessed due to unreported investing cash flows (reported 0 is a placeholder). On available data, sustainable coverage is unlikely until operating profitability improves. policy_outlook: Resumption of dividends would likely require sustained positive operating income, improved OCF, and clearer visibility on capex needs; near-term priority appears to be balance sheet stability.

Risk Assessment

Business Risks:

• Demand volatility and traffic sensitivity impacting same-store sales
• Fixed cost intensity leading to operating leverage in downturns
• Pricing power constraints amid consumer weakness or competition
• Supply cost fluctuations affecting margins
• Execution risk in cost control and store productivity improvements

Financial Risks:

• Elevated leverage (liabilities/equity 2.40x) magnifying earnings swings
• Negative EBIT interest coverage (-5.6x), exposing the firm to earnings shocks
• Limited OCF relative to revenue, constraining internal funding
• Potential tax/timing items causing losses to translate into larger net losses
• Data gaps (cash, capex) limiting visibility on liquidity runway

Key Concerns:

• Sustained top-line decline (-17.6% YoY) without clear stabilization
• Negative ROE (-7.0%) driven by persistent net losses
• Inadequate disclosure on cash, investing cash flows, and capex impeding FCF assessment

Investment Implications

Key Takeaways:

• Revenue contracted 17.6% YoY; demand stabilization is a prerequisite for earnings recovery
• Operating loss was contained at -¥185m, supported by cost controls and non-cash D&A add-backs
• EBITDA positive (¥284m) but insufficient to cover depreciation-heavy cost base
• Liquidity is adequate (current ratio 112%) though leverage is elevated (2.40x)
• OCF modest at ¥105m; FCF indeterminable due to missing investing data
• ROE at -7.0% reflects negative margin; leverage amplifies equity returns in either direction

Metrics to Watch:

• Same-store sales/traffic and price-mix trends
• Operating margin progression and EBITDA margin
• OCF and capex (to derive true FCF)
• Interest coverage (EBIT and EBITDA basis)
• Working capital movements (receivables, payables turnover)
• Leverage ratio (liabilities/equity) and any refinancing activity

Relative Positioning: Within Japanese casual dining/restaurant operators, the company currently exhibits weaker top-line momentum and negative EBIT relative to peers with stable comps, but maintains adequate liquidity; leverage is on the higher side, increasing sensitivity to operating recovery.

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