Cleanup Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥65.40B
• Operating Income: ¥1.35B
• Net Income: ¥256M
• EPS: ¥27.87

Income Statement

Balance Sheet

Cash Flow Statement

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

Cleanup Corporation (TSE:7955) delivered steady topline growth and a sharp earnings rebound in FY2026 Q2 (1H), with revenue of ¥65.4bn (+2.9% YoY) and operating income of ¥1.35bn (+256.5% YoY). Gross margin stood at 30.4%, indicating improved pricing and/or input cost normalization versus the prior year’s headwinds. Operating margin improved to 2.1%, reflecting better operating leverage as SG&A discipline allowed more of the gross profit gains to flow to EBIT. Ordinary income reached ¥1.66bn, supported by positive non-operating items (approx. +¥0.31bn vs. operating income), and net income rose to ¥1.01bn (+292.2% YoY). Net margin was 1.54%, still modest for the housing equipment category, but directionally improving. EBITDA was ¥3.92bn (6.0% margin), suggesting a healthier earnings base than EBIT implies, helped by ¥2.57bn of D&A. Cash generation was solid, with operating cash flow of ¥2.12bn and OCF/Net Income of 2.11x, indicating earnings quality and good cash conversion in the half. Liquidity is strong: current assets of ¥55.5bn versus current liabilities of ¥27.8bn yield a current ratio of 199% and quick ratio of 193%. The balance sheet appears conservative, with total liabilities of ¥33.4bn against equity of ¥58.0bn (implying an equity ratio around 64% and total liabilities-to-equity of 0.58x). Interest expense remains negligible at ¥22m, and EBIT interest coverage is robust at 61.4x. Reported DuPont metrics show a calculated ROE of 1.73% based on a 1.54% net margin, 0.725x asset turnover, and 1.55x financial leverage; while low in absolute terms, the sharp YoY earnings recovery suggests scope for improvement if margins continue to normalize. Working capital totaled ¥27.7bn, offering ample cushion to manage demand variability in the housing and renovation cycles. Dividend was not disclosed (DPS reported as ¥0.00 and payout 0.0%), consistent with limited dividend information for the period; policy clarity likely comes at year-end. Several items are not disclosed in XBRL (e.g., cash and equivalents, investing cash flow, equity ratio, share count), which constrains per-share and FCF coverage analysis. Overall, the quarter signals improving operating leverage and cash conversion, underpinned by a solid balance sheet, but profitability remains thin and sensitive to volume/mix and input costs.

Profitability Analysis

ROE_decomposition: DuPont (period basis): Net Profit Margin 1.54% x Asset Turnover 0.725x x Financial Leverage 1.55x = ROE 1.73% (reported). Low ROE is driven mainly by thin net margin, while asset turnover is reasonable and leverage is conservative. margin_quality: Gross margin 30.4% (GP ¥19.9bn on revenue ¥65.4bn) suggests improved input cost/pricing balance YoY. Operating margin is 2.1% (EBIT ¥1.35bn), indicating significant SG&A burden; implied SG&A is ~¥18.55bn (28.4% of sales). Ordinary margin 2.5% benefited from non-operating gains/interest income. Net margin at 1.54% remains modest for the sector. operating_leverage: YoY EBIT growth (+256.5%) far outpaced revenue growth (+2.9%), indicating positive operating leverage. With D&A at ¥2.57bn and EBITDA margin at 6.0%, incremental margins appear healthy; sustaining leverage depends on volume stability and SG&A control.

Growth Assessment

revenue_sustainability: Revenue grew 2.9% YoY to ¥65.4bn, consistent with a stable domestic renovation/housing demand backdrop and likely modest ASP support. Sustainability hinges on renovation demand, builder channel activity, and competitive pricing dynamics. profit_quality: The improvement in EBIT and net income is supported by better gross margin and non-operating contributions. OCF/Net Income of 2.11x indicates solid cash-backed earnings in the half, reducing concern of accrual-driven profits. outlook: Near-term outlook is cautiously positive if input cost pressures remain benign and demand holds. Margin normalization from prior-year lows could continue, but the current margin base (EBIT 2.1%) leaves limited buffer against shocks. Further mix upgrades and productivity gains are key to sustaining profit growth.

Financial Health

liquidity: Current assets ¥55.5bn vs. current liabilities ¥27.8bn: current ratio 199% and quick ratio 193%, indicating strong near-term liquidity. Working capital is ¥27.7bn. solvency: Total liabilities ¥33.4bn and equity ¥58.0bn imply a conservative capital structure (liabilities/equity 0.58x). Interest burden is minimal (¥22m) with EBIT interest coverage of 61.4x, suggesting low solvency risk. capital_structure: Implied equity ratio ~64% (equity/total assets), despite a reported 0.0% figure not disclosed in XBRL. Financial leverage in DuPont (1.55x) underscores a low-debt stance, providing flexibility for investment and downturns.

Cash Flow Quality

earnings_quality: OCF of ¥2.12bn vs. net income of ¥1.01bn (OCF/NI 2.11x) indicates high earnings cash conversion for the period. FCF_analysis: Investing cash flow is not disclosed (reported as 0). As such, Free Cash Flow cannot be reliably computed; the provided FCF figure of 0 likely reflects missing capex data rather than true zero. D&A of ¥2.57bn suggests ongoing capital intensity. working_capital: Working capital is ample at ¥27.7bn. Detailed drivers (receivables, payables, inventory turns) are not fully assessable due to limited disclosure; therefore, we refrain from interpreting inventory efficiency from the reported inventory figure.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are reported as 0.0%, indicating no disclosed interim dividend or missing data. With net income of ¥1.01bn and strong liquidity, capacity exists, but policy and timing are not provided. FCF_coverage: FCF data is not available due to undisclosed investing cash flows; therefore, dividend coverage by FCF cannot be assessed this quarter. policy_outlook: Given the conservative balance sheet and recovering earnings, a stable-to-cautious dividend stance is plausible, but concrete guidance requires year-end disclosures and capex visibility.

Risk Assessment

Business Risks:

• Exposure to domestic housing and renovation cycles (volume sensitivity).
• Raw material cost volatility (steel, resin, logistics) affecting gross margin.
• Competitive pricing pressure in system kitchens and related fixtures.
• Channel concentration risks with builders/distributors.
• Product mix and option uptake variability impacting margins.
• Execution risks on productivity and cost reduction programs.

Financial Risks:

• Thin operating margin (2.1%) leaves limited shock absorption.
• Potential working capital swings affecting short-term cash flow.
• Capex needs (implied by D&A of ¥2.57bn) could compress FCF if OCF moderates.
• Limited disclosure on cash balance and investing cash flows reduces visibility.
• Non-operating income reliance (difference between ordinary and operating) may be non-recurring.

Key Concerns:

• Sustainability of margin recovery amid competitive and cost pressures.
• Lack of disclosed investing cash flow and cash position, constraining FCF analysis.
• Low ROE (1.73%) despite healthy balance sheet, requiring margin/turnover improvement.

Investment Implications

Key Takeaways:

• Topline up 2.9% YoY to ¥65.4bn; demand appears stable.
• EBIT rebounded to ¥1.35bn (+256.5% YoY), evidencing positive operating leverage.
• Gross margin at 30.4% and EBITDA margin at 6.0% show margin normalization.
• OCF/NI of 2.11x signals solid earnings quality.
• Balance sheet conservative: liabilities/equity 0.58x; implied equity ratio ~64%.
• Interest burden negligible (interest expense ¥22m; EBIT coverage 61.4x).
• Net margin still thin at 1.54% and ROE low at 1.73%, leaving upside contingent on further margin gains.
• Dividend not disclosed; FCF unassessable this quarter due to missing investing cash flow.

Metrics to Watch:

• Gross margin and SG&A ratio trajectory.
• Order trends/backlog and renovation demand indicators.
• Input cost indices (steel, resin) and pricing actions.
• OCF and capex (to clarify FCF), plus working capital movements.
• Ordinary-to-operating income gap (quality and recurrence of non-operating gains).
• Asset turnover and ROE progression as margins recover.

Relative Positioning: Within Japan’s housing equipment/fixtures space, Cleanup exhibits a conservative balance sheet and improving operating leverage but remains smaller scale with thinner margins versus larger peers; continued focus on cost control, mix, and productivity is critical to narrow the profitability gap.

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