TOSHO CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥13.84B
• Operating Income: ¥3.68B
• Net Income: ¥1.91B
• EPS: ¥44.75

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

TOSHO Co., Ltd. (8920) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability despite flat top-line. Revenue was 13,842 million yen, down 0.3% YoY, but operating income rose sharply to 3,682 million yen, up 27.8% YoY, indicating strong margin expansion and cost discipline. Gross profit reached 3,990.6 million yen with a gross margin of 28.8%, while the operating margin expanded to 26.6%, a notable improvement given the near-flat sales. Ordinary income was 3,696 million yen, and net income rose 26.1% YoY to 1,701 million yen, yielding a net margin of 12.29%. Depreciation and amortization totaled 1,301 million yen, supporting an EBITDA of 4,983 million yen and an EBITDA margin of 36.0%, suggesting healthy operating leverage. Interest expense remained modest at 56 million yen, with interest coverage at a comfortable 65.1x, indicating low financial strain from debt service. The DuPont decomposition implies a calculated ROE of 3.88% (net margin 12.29% × asset turnover 0.190 × financial leverage 1.66), consistent with the reported figure; however, as this is a half-year period, interpretability versus annual ROE is limited. Asset turnover of 0.19x reflects a relatively asset-intensive model and/or early-cycle utilization normalizing, while leverage at 1.66x suggests a conservative balance sheet. Operating cash flow was solid at 2,348 million yen, exceeding net income (OCF/NI of 1.38), pointing to decent earnings quality for the period. Current ratio stands at 155.2% and working capital at 7,977 million yen, highlighting adequate liquidity. Total assets were 72,960 million yen and total equity 43,876 million yen; total liabilities were 29,912 million yen. The company reported zero DPS and a payout ratio of 0.0%, implying earnings are being retained; FCF and cash balances were not disclosed in the XBRL and therefore show as zero placeholders. Several items (equity ratio, investing CF, cash and equivalents, inventories, share count) appear undisclosed rather than truly zero, constraining precision in leverage, liquidity, and per-share analyses. Still, the combination of margin expansion, strong cash conversion relative to earnings, and ample interest coverage indicates improved operating momentum into 2H. Key watchpoints include the sustainability of cost efficiencies, normalization of asset turnover as capacity utilization improves, and visibility on capex and capital allocation once investing cash flows are disclosed.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 12.29%
• asset_turnover: 0.19
• financial_leverage: 1.66
• calculated_ROE: 3.88%
• notes: ROE is derived from half-year figures; interpret cautiously vs annualized metrics. margin_quality:
• gross_margin: 28.8%
• operating_margin: 26.6%
• ordinary_margin: 26.7%
• EBITDA_margin: 36.0%
• drivers: ['Operating income up 27.8% YoY on flat revenue implies material cost control and/or mix improvement.', 'Low interest burden (56 million yen) supports ordinary margin near operating margin.']
• tax_rate_comment: Income tax expense was 1,038 million yen versus ordinary income of 3,696 million yen, implying an effective tax rate near the high-20s; the displayed 0.0% effective tax rate is an artifact of undisclosed items. operating_leverage:
• assessment: Positive operating leverage evident as operating profit growth (+27.8% YoY) outpaced revenue (-0.3% YoY).
• indicators: ['EBITDA growth implied by higher operating profit and stable D&A.', 'Fixed-cost absorption likely improved; need segment detail for confirmation.']

Growth Assessment

revenue_sustainability: Top-line declined slightly (-0.3% YoY), suggesting a stable but not expanding demand environment; sustainability hinges on same-store performance and new openings (details not disclosed). profit_quality: Profit expansion stems primarily from margin improvement. With D&A at 1,301 million yen and modest interest, underlying operating efficiency appears to be the main driver. outlook: Maintaining higher operating margins into 2H is key. If cost efficiencies hold and utilization improves, full-year profit growth can outpace sales. However, visibility is constrained by lack of disclosed investing CF and inventory metrics.

Financial Health

liquidity:

• current_assets: 22430939000
• current_liabilities: 14453444000
• current_ratio: 155.2%
• quick_ratio: 155.2%
• working_capital_yen: 7977495000
• notes: Inventories not disclosed; quick ratio equals current ratio by construction. solvency:
• total_assets: 72960000000
• total_liabilities: 29912045000
• total_equity: 43876000000
• debt_to_equity: 0.68x (as provided)
• interest_coverage: 65.1x
• financial_leverage: 1.66
• comment: Low interest burden and moderate leverage indicate sound solvency; exact net debt unknown due to undisclosed cash. capital_structure: Equity-heavy balance sheet (assets/equity 1.66x). Positive financing CF suggests net borrowing or other financing inflows in the period; detail on interest-bearing debt and cash balances is not disclosed.

Cash Flow Quality

earnings_quality:

• OCF: 2348196000
• net_income: 1701000000
• OCF_to_NI: 1.38
• comment: OCF exceeds net income, indicating healthy cash conversion in the half-year. FCF_analysis:
• investing_CF: 0
• free_cash_flow: 0
• notes: Investing CF not disclosed; FCF shown as zero is a placeholder. True FCF cannot be assessed accurately without capex/asset acquisition data. working_capital:
• observations: ['Current assets of 22,431 million yen vs current liabilities of 14,453 million yen underpin positive working capital.', 'Line-item WC movements are not available; OCF strength suggests no major adverse WC build this period.']

Dividend Sustainability

payout_ratio_assessment: Payout ratio is 0.0% with DPS at 0, indicating full earnings retention in the period. FCF_coverage: Not assessable due to undisclosed investing CF; displayed 0.00x is a placeholder. policy_outlook: With improved profitability and strong interest coverage, capacity for distributions exists, but management appears to prioritize reinvestment or balance sheet flexibility based on the period’s retention and positive financing CF. Formal dividend policy detail is not provided.

Risk Assessment

Business Risks:

• Demand softness evidenced by slight revenue decline (-0.3% YoY).
• Execution risk in sustaining cost efficiencies that drove margin expansion.
• Potential competitive pressure affecting pricing and utilization (segment details not disclosed).
• Macroeconomic sensitivity of discretionary spending affecting service usage (if fitness/hospitality mix is material).
• Regulatory or health-related disruptions that could affect facility operations.

Financial Risks:

• Limited transparency on cash and investing flows hampers assessment of true FCF and net debt.
• Positive financing CF suggests reliance on external funding this period; terms and maturities not disclosed.
• Potential interest rate risk if variable-rate borrowings are present (not disclosed).
• Asset intensity and low asset turnover (0.19x) could pressure ROE if margins normalize.

Key Concerns:

• Sustainability of elevated operating margin (26.6%) amid flat sales.
• Lack of disclosed investing cash flows and cash balance obscures liquidity runway and capex needs.
• Low computed ROE (3.88%) for the half-year despite strong margins, reflecting asset turnover constraints.

Investment Implications

Key Takeaways:

• Strong operating leverage: operating income +27.8% YoY on -0.3% revenue.
• Healthy margins: EBITDA margin 36.0%, operating margin 26.6%.
• Solid cash conversion: OCF/NI at 1.38 despite limited disclosure on WC details.
• Conservative leverage: interest coverage 65.1x; financial leverage 1.66x.
• ROE constrained at 3.88% by low asset turnover (0.19x).
• Capital allocation unclear: DPS 0, investing CF undisclosed, financing CF positive.

Metrics to Watch:

• Revenue trajectory (same-store growth and new openings) into 2H.
• Operating margin sustainability and cost base trends (labor, utilities, rents).
• Capex and investing CF disclosure to gauge FCF and growth reinvestment.
• Cash and equivalents and net debt to clarify liquidity and leverage.
• Asset turnover improvement as utilization normalizes.
• Effective tax rate normalization versus statutory benchmarks.

Relative Positioning: Operationally improving with strong margin dynamics and robust interest coverage, but with lower apparent ROE due to asset intensity and limited disclosure on cash and investment flows compared to more transparent 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
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