| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥1020.4B | ¥987.1B | +3.4% |
| Operating Income | ¥39.6B | ¥21.2B | +86.5% |
| Ordinary Income | ¥44.0B | ¥25.0B | +76.1% |
| Net Income | ¥30.8B | ¥15.9B | +93.0% |
| ROE | 5.2% | 2.8% | - |
FY2026 Q3 consolidated results show Revenue of 102.0B yen (YoY +3.4%), Operating Income of 4.0B yen (YoY +86.5%), Ordinary Income of 4.4B yen (YoY +76.1%), and Net Income of 3.1B yen (YoY +93.7%). The substantial improvement in profitability metrics reflects gross margin expansion to 33.2% combined with controlled selling, general and administrative expense growth. Operating cash flow of 4.0B yen generated 1.30 times net income, while free cash flow reached 2.2B yen. Total assets increased to 97.1B yen from 90.5B yen, and total equity strengthened to 59.5B yen from 57.1B yen. The full-year forecast anticipates revenue of 134.5B yen (+3.5% YoY), operating income of 3.2B yen (+54.5% YoY), and net income of 2.5B yen, with Q3 progress tracking favorably against these targets.
[Profitability] ROE of 5.2% improved from prior year and aligns with the manufacturing industry median of 5.0% for 2025-Q3. Operating margin expanded to 3.9%, representing substantial improvement from 2.1% in the prior year, though this remains below the industry median of 8.3%. Net profit margin reached 3.0%, compared to the industry median of 6.3%, indicating room for further efficiency gains. The DuPont analysis reveals ROE composition of 3.0% net profit margin, 1.051 asset turnover, and 1.63 financial leverage. EBIT margin of 3.9% reflects operational improvements driven by gross margin enhancement and SGA expense control. Interest coverage ratio stands at approximately 90 times based on operating income of 4.0B yen against interest expense of 0.04B yen. [Cash Quality] Cash and equivalents total 21.8B yen, providing 6.98 times coverage of short-term debt of 3.1B yen. Operating cash flow to net income ratio of 1.30 indicates cash-backed earnings quality. Cash conversion ratio of 0.55 times EBITDA suggests extended working capital cycles impacting cash realization efficiency. [Investment Efficiency] Asset turnover of 1.051 exceeds the industry median of 0.58, demonstrating effective asset utilization. Capital expenditure of 1.4B yen against depreciation of 3.4B yen yields a ratio of 0.41, significantly below the industry median of 1.44, signaling potential underinvestment in facility renewal and capacity expansion. Return on assets of 3.2% approaches the industry median of 3.3%. [Financial Health] Equity ratio of 61.3% compares favorably to the industry median of 63.8%. Current ratio of 218.1% substantially exceeds the industry median of 2.84 times, reflecting strong liquidity position. Debt-to-equity ratio of 0.63 and net debt to EBITDA of 1.12 indicate conservative financial leverage well within the industry range. Long-term borrowings increased 177.9% YoY to 5.1B yen while short-term borrowings decreased 25.2% to 3.1B yen, representing a shift toward longer-maturity debt structure.
Operating cash flow of 4.0B yen represents 1.30 times net income of 3.1B yen, confirming cash generation quality exceeds accounting profits. The cash conversion ratio of 0.55 relative to EBITDA indicates working capital absorption, primarily attributable to accounts receivable reaching 17.3B yen with days sales outstanding of approximately 62 days, which exceeds the manufacturing industry median of 83 days but suggests extended collection cycles relative to the company's historical pattern. Investing cash flow of negative 1.8B yen was directed toward capital expenditures of 1.4B yen, yielding free cash flow of 2.2B yen. The CapEx-to-depreciation ratio of 0.41 falls substantially short of the industry median of 1.44, indicating capital investment intensity remains below levels typical for asset renewal and growth. Financing cash flow of positive 0.9B yen reflects the net effect of long-term borrowing increases offsetting short-term debt reduction. Cash and deposits increased 0.7B yen YoY to 21.8B yen, supported by operating profit growth and working capital efficiency adjustments including accounts payable management. The liquidity cushion provides 6.98 times coverage of short-term obligations, ensuring adequate financial flexibility for operational needs and planned dividend distributions.
Ordinary income of 4.4B yen versus operating income of 4.0B yen reflects non-operating net contribution of approximately 0.4B yen, comprising primarily equity method investment gains and financial income. Non-operating income represents 0.4% of revenue, consisting of interest and dividend income alongside foreign exchange gains. Investment securities sale gains of 0.19B yen contributed to non-operating results, representing a non-recurring element. The proportion of non-operating items relative to total profitability remains modest, with operating activities driving 90% of ordinary income, indicating earnings are primarily anchored in core business performance. Operating cash flow exceeding net income demonstrates healthy earnings quality with cash realization supporting reported profits. The operating CF to net income ratio of 1.30 confirms that accruals are converting to cash, though the cash conversion ratio of 0.55 relative to EBITDA points to working capital absorption through receivables expansion. Accounts receivable of 17.3B yen including electronically recorded monetary claims of 17.5B yen constitute significant operating assets requiring monitoring for collection risk. Depreciation of 3.4B yen represents a substantial non-cash charge, and when combined with minimal capital expenditure relative to depreciation, suggests potential accounting conservatism in asset valuation or deferred capital programs.
Working capital management pressure as evidenced by days sales outstanding of approximately 62 days and receivables representing 17.0% of total assets. Accounts receivable growth outpacing revenue expansion raises collection risk and ties up operating cash that could otherwise support growth investments or shareholder returns. The electronically recorded monetary claims of 17.5B yen require continued vigilance regarding customer creditworthiness and payment term adherence.
Operating margin sustainability concerns given the 3.9% EBIT margin remaining below the manufacturing industry median of 8.3%. Despite substantial YoY improvement from 2.1%, the company remains exposed to competitive pricing pressure and cost inflation that could compress margins. Revenue growth of 3.4% lags portions of the industry distribution, and maintaining profitability gains depends on continued gross margin discipline and operational efficiency.
Capital investment insufficiency with CapEx to depreciation ratio of 0.41 well below the industry median of 1.44 and absolute capital expenditure of 1.4B yen representing only 1.4% of revenue. Prolonged underinvestment relative to asset depreciation may result in facility aging, production inefficiency, and limited capacity to capture growth opportunities. The 5.1B yen long-term borrowing increase suggests potential funding preparation, but deployment into productive assets remains to be demonstrated.
[Industry Position] (Reference - Proprietary Analysis)
Cleanup Corporation's financial metrics demonstrate mixed positioning within the manufacturing sector based on FY2025-Q3 industry data compiled from proprietary analysis.
Profitability: ROE of 5.2% aligns closely with the industry median of 5.0%, placing the company at the midpoint of sector performance. Operating margin of 3.9% falls below the industry median of 8.3% (IQR: 4.8%-12.6%), indicating operational efficiency trails typical manufacturers. Net profit margin of 3.0% compares to the industry median of 6.3%, reflecting pricing power or cost structure challenges relative to peers.
Financial Health: Equity ratio of 61.3% approximates the industry median of 63.8% (IQR: 49.5%-74.7%), confirming solid capitalization. Current ratio of 218.1% substantially exceeds the industry median of 2.84 times, demonstrating superior liquidity management. Net debt to EBITDA of 1.12 compares favorably against the industry median of negative 1.11, though positive net debt positions the company with moderate leverage while many peers maintain net cash positions.
Efficiency: Asset turnover of 1.051 significantly outperforms the industry median of 0.58, indicating effective revenue generation from deployed assets. Days sales outstanding approximating 62 days compares well to the industry median of 83 days, though recent growth warrants monitoring. CapEx to depreciation of 0.41 falls markedly short of the industry median of 1.44, signaling underinvestment relative to sector norms.
※ Industry: Manufacturing (98 companies for most metrics), Comparison: FY2025-Q3 period, Source: Proprietary analysis
Profitability inflection point achieved with operating income growth of 86.5% and net income growth of 93.7% substantially outpacing revenue growth of 3.4%, driven by gross margin expansion to 33.2% and disciplined expense management. The operating margin improvement from 2.1% to 3.9% represents meaningful operational progress, though the absolute level remains below manufacturing industry standards. Sustainability of this margin trajectory depends on maintaining pricing discipline and controlling input costs while addressing the gap to industry median performance.
Working capital dynamics require attention as evidenced by cash conversion ratio of 0.55 lagging the industry median of 1.24, with receivables buildup absorbing operating cash generation. The 62-day DSO and substantial electronically recorded monetary claims of 17.5B yen indicate extended customer payment terms that, while potentially strategic for market positioning, constrain cash availability for reinvestment. Improving working capital efficiency toward industry norms could unlock significant cash generation capacity beyond current levels.
Capital allocation strategy reflects conservative positioning with strong liquidity of 21.8B yen in cash against total debt of 8.2B yen, yet capital expenditure intensity of 0.41 times depreciation signals potential underinvestment in productive capacity. The 177.9% increase in long-term borrowings to 5.1B yen suggests financial preparation for future deployment, with shareholders monitoring whether this funding supports growth investments that can elevate returns toward or above industry benchmarks. The dividend payout ratio of approximately 37.7% based on current run-rate appears sustainable given FCF coverage of 1.88 times, though balancing shareholder returns with necessary capital investment will be a key management priority.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.