Precision System Science Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.32B
• Operating Income: ¥55M
• Net Income: ¥-79M
• EPS: ¥2.00

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

Precision System Science (PSS) delivered a solid topline in FY2026 Q1 with revenue of ¥1.317bn, up 22.1% YoY, while profit growth was flat at the operating and net levels. Operating income was ¥55m (operating margin ~4.2%), ordinary income ¥58m, and net income ¥54m (net margin 4.1%), indicating that incremental revenue did not fully translate into incremental operating profit this quarter. The reported gross profit margin is 26.9%, which, together with the modest operating margin, suggests a relatively thin value-add after cost of goods and operating expenses. Interest expense was ¥5.0m with interest coverage of 10.9x, indicating manageable financial costs relative to operating earnings. DuPont decomposition shows ROE of 1.42% for the quarter, built from a 4.10% net margin, 0.255x asset turnover, and 1.35x financial leverage; the low ROE is primarily a function of limited asset turnover and slim margins rather than balance-sheet leverage. Balance sheet quality appears strong: total assets are ¥5.157bn, equity ¥3.811bn, and liabilities ¥1.177bn, implying a high equity ratio on a computed basis (~74%), despite the disclosed equity ratio showing as 0.0% (likely undisclosed in XBRL). Liquidity is robust with a current ratio of 2.94x and quick ratio of 2.40x, supported by working capital of ¥2.221bn. Inventory stands at ¥612m, a notable portion of current assets, which warrants monitoring alongside the revenue ramp to avoid working-capital drag. The company appears conservatively financed with a debt-to-equity ratio of 0.31x (using total liabilities as a proxy), which supports solvency and cushions near-term macro or demand volatility. EPS is ¥2.00 for the quarter; however, shares outstanding were not disclosed in this dataset, limiting per-share balance sheet analytics. Cash flow statements are not disclosed in this snapshot (all zeros indicate unreported), so we cannot corroborate earnings with operating cash flow or assess free cash flow conversion. Depreciation and amortization are also unreported here, preventing an assessment of EBITDA and non-cash earnings components. Dividend distribution remains suspended (DPS = ¥0, payout ratio 0%), consistent with a focus on balance sheet strength and reinvestment or stabilization. Overall, PSS shows improving sales momentum but limited operating leverage in Q1, solid liquidity and solvency, and low near-term shareholder distributions; confirmation from cash flows and subsequent quarters will be important to judge the durability of the recovery.

Profitability Analysis

ROE_decomposition: Net profit margin 4.10% x asset turnover 0.255x x financial leverage 1.35x = ROE 1.42% (quarterly basis). The dominant constraints on ROE are modest margins and low asset turnover rather than leverage. margin_quality: - Gross margin: 26.9% suggests limited pricing power or product mix with substantial materials/component costs. Note: reported gross profit and cost of sales lines appear inconsistent with the margin metric; we rely on the provided 26.9% gross margin as the best indicator in this dataset.

• Operating margin: ~4.2% (¥55m / ¥1,317m) indicates limited operating leverage this quarter despite 22.1% revenue growth.
• Net margin: 4.1% reflects modest non-operating burden; ordinary income (¥58m) is close to operating income, and interest expense is contained. operating_leverage: Revenue grew 22.1% YoY while operating income was flat YoY, implying negative operating leverage in Q1 (incremental margin compressed by higher opex or gross margin pressure). Sustained revenue growth will need tighter opex control and/or improved gross margins to drive earnings expansion.

Growth Assessment

revenue_sustainability: Double-digit YoY growth in Q1 (22.1%) is encouraging, but sustainability depends on order visibility in core automation/diagnostics systems and consumables, and on normalization of customer capex cycles. profit_quality: Ordinary income close to operating income indicates limited reliance on non-operating gains; however, the lack of cash flow disclosure prevents verification of earnings-to-cash conversion and working-capital intensity. outlook: If PSS can stabilize gross margins and rationalize SG&A/R&D intensity relative to sales, operating leverage could recover in subsequent quarters. Watch pricing, product mix (systems vs. consumables/services), and utilization to support margins.

Financial Health

liquidity: Current ratio 293.7% and quick ratio 240.3% demonstrate strong short-term liquidity. Working capital is ¥2,220,561k. Inventories at ¥611,632k should be monitored relative to sales to avoid build-ups. solvency: Total liabilities ¥1,176,789k vs. equity ¥3,811,000k implies a computed equity ratio of ~73.9% and low leverage. Interest coverage of 10.9x suggests comfortable debt service capacity at current earnings levels. capital_structure: Debt-to-equity of 0.31x (total liabilities proxy) indicates conservative funding. The asset base of ¥5,157,000k against equity of ¥3,811,000k yields financial leverage of 1.35x.

Cash Flow Quality

earnings_quality: Unable to assess due to undisclosed cash flow statement and depreciation/amortization (zeros indicate not reported). Reported EBITDA is also unreported here, so accrual intensity cannot be judged. FCF_analysis: Free cash flow not available in this dataset. Capex and working capital movements are unknown, limiting visibility on reinvestment needs and cash generation. working_capital: Balance sheet shows ample working capital (¥2.22bn). Inventory at ~45% of quarterly gross profit (using reported GP) warrants tracking for turnover and potential obsolescence risk.

Dividend Sustainability

payout_ratio_assessment: No dividend declared (DPS ¥0; payout ratio 0%). With modest profitability and focus on strengthening operations, a conservative stance is consistent. FCF_coverage: Not assessable due to unreported OCF/FCF; any payout reinstatement would need evidence of positive, recurring FCF. policy_outlook: Absent clear FCF and given early-stage earnings recovery, policy likely remains cautious until cash generation and earnings visibility improve.

Risk Assessment

Business Risks:

• Gross margin pressure from component costs, pricing, and product mix in systems vs. consumables
• Demand cyclicality tied to lab automation, diagnostics, and customer capex cycles
• Inventory management risk (build-up amid uneven orders or new product ramps)
• Supply chain and lead-time variability affecting deliveries and costs
• Regulatory and quality assurance compliance in life-science/medical-related markets
• Foreign exchange exposure on imported components and overseas revenues

Financial Risks:

• Operating leverage risk if opex growth outpaces sales
• Potential working-capital consumption (receivables/inventory) in growth periods
• Interest rate changes modestly affecting borrowing costs (though coverage is currently adequate)
• Limited cash flow visibility due to unreported OCF/FCF in this snapshot

Key Concerns:

• Negative operating leverage in Q1 despite strong sales growth
• Inability to validate earnings quality without cash flow data
• Apparent discrepancy between reported gross profit margin and line-item cost of sales

Investment Implications

Key Takeaways:

• Revenue growth rebounded to +22.1% YoY, but operating income was flat, indicating margin compression.
• Balance sheet is strong with low leverage and high liquidity (current ratio 2.94x; computed equity ratio ~74%).
• Interest coverage is healthy (10.9x), limiting near-term solvency concerns.
• Cash flow and depreciation data are unreported; earnings quality and FCF conversion remain unverified.
• Inventory is sizeable and should be aligned with sales cadence to avoid working-capital drag.

Metrics to Watch:

• Gross margin trajectory and product mix (systems vs. consumables/services)
• SG&A and R&D as a percentage of sales for operating leverage recovery
• Order backlog and book-to-bill to gauge sustainability of growth
• Inventory turns and receivables days to monitor working capital
• Operating cash flow and capex once disclosed to assess FCF generation
• FX impacts on cost of materials and export sales

Relative Positioning: Within Japanese small-cap diagnostics/automation peers, PSS exhibits stronger balance sheet conservatism and liquidity but currently shows weaker operating leverage. Confirmation of cash generation and margin stabilization would be needed to close the gap with more consistently profitable peers.

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