SILVER LIFE CO.,LTD. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥4.03B
• Operating Income: ¥198M
• Net Income: ¥142M
• EPS: ¥13.07

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

Silver Life Co., Ltd. (TSE: 9262) reported solid FY2026 Q1 results under JGAAP (non‑consolidated), highlighted by double‑digit top‑line growth and operating leverage. Revenue rose 11.2% YoY to 40.30, with gross profit of 12.15 and a gross margin of 30.2%, indicating stable product and service unit economics. Operating income increased 14.4% YoY to 1.98, outpacing sales and suggesting SG&A discipline and/or scale benefits. The SG&A ratio was 25.9% (10.42/40.30), leaving an operating margin of 4.9%, which appears modest but improving given operating income growth exceeded revenue growth. Ordinary income was 2.40 (+13.9% YoY), supported by non‑operating income of 0.64, including interest income of 0.03, implying non‑operating items provided roughly 1.6 percentage points of ordinary income margin. Net income rose 9.3% YoY to 1.42, with a net margin of 3.5%, partially weighed by an effective tax rate of 38.1%. Balance sheet quality remains conservative: equity of 69.40 represents 67.1% of total assets (calculated), and long‑term loans of 13.42 are comfortably covered by cash and deposits of 15.99, implying a modest net cash position. Liquidity is strong with a current ratio of 206.5% and working capital of 21.17, supporting operations and growth investment. The DuPont‑based ROE for the quarter is 2.0%, decomposed into a 3.5% net margin, 0.390x asset turnover, and 1.49x financial leverage; on a simple annualized view, this implies a mid‑single‑digit to high‑single‑digit ROE, but seasonality must be considered. Interest coverage is robust at 90.74x, reflecting limited financial risk from debt servicing. Reported payout ratio is 122.9%, but annual DPS is unreported; this ratio likely references prior dividend levels relative to current earnings run‑rate and may not be indicative for the full year. Cash flow statements were not disclosed for the quarter, limiting assessment of earnings‑to‑cash conversion and free cash flow. Inventories (3.90) and receivables (14.34) are moderate relative to sales, but without period‑over‑period movements, working capital efficiency trends cannot be confirmed. Overall, the company demonstrates healthy growth, improving operating efficiency, and a conservative balance sheet, with data gaps mainly around cash flow and dividend details. These results position the company to pursue growth while maintaining financial resilience, though monitoring margin trajectory and the sustainability of non‑operating contributions remains important.

Profitability Analysis

ROE (DuPont) for the quarter is 2.0%, driven by a 3.5% net margin, 0.390x asset turnover, and 1.49x leverage. Gross margin is 30.2% (12.15/40.30), indicating stable unit economics and acceptable input cost pass‑through. Operating margin is 4.9% (1.98/40.30); operating income growth (+14.4% YoY) exceeded sales growth (+11.2% YoY), evidencing operating leverage as SG&A grew slower than gross profit. Ordinary income margin is 6.0% (2.40/40.30), with non‑operating income (0.64) augmenting profitability; reliance on non‑operating items is not excessive but should be monitored. Net margin is 3.5%, constrained by a relatively high tax rate (38.1%). Interest burden is minimal (interest expense 0.02) with interest coverage at 90.74x, supporting earnings resilience. Profit mix quality is primarily operating‑driven but modestly enhanced by non‑operating income (interest and other items not disclosed). On an annualized basis, the quarterly ROE would suggest roughly high‑single‑digit ROE assuming seasonality is neutral; however, without full‑year data this is indicative only. Overall margin quality is steady to improving, with demonstrated cost control in SG&A against a rising revenue base.

Growth Assessment

Revenue grew 11.2% YoY to 40.30, reflecting healthy demand and possible market share gains or improved capacity utilization. Operating income increased 14.4% YoY to 1.98, indicating operating leverage as fixed costs were diluted over a larger revenue base. Ordinary income (+13.9% YoY) benefited from non‑operating income (0.64), while net income rose 9.3% YoY, slightly slower due to tax rate effects. Gross profit of 12.15 implies a stable gross margin of 30.2%, supporting the sustainability of top‑line growth from a profitability standpoint. The growth profile appears organic; no goodwill or investment securities are reported, suggesting limited M&A contribution this quarter. With noncurrent assets at 63.48 and long‑term loans of 13.42, the asset base supports continued expansion, though capex data is not disclosed. Outlook hinges on maintaining SG&A efficiency and sustaining gross margins amid input cost and wage pressures typical in the sector. Given the non‑operating contribution to ordinary income, future growth should prioritize operating profit expansion to ensure quality. Absent cash flow data, we cannot validate growth funding via internal cash generation; however, the balance sheet provides capacity to support growth near term. Overall, growth appears sustainable in the near term, contingent on margin stability and efficient working capital management.

Financial Health

Total assets are 103.42, with equity of 69.40 (equity ratio approximately 67.1% calculated), indicating a strong capital base. Liabilities total 34.81, comprising current liabilities of 19.88 and noncurrent liabilities of 14.93. Long‑term loans are 13.42, while cash and deposits are 15.99, implying a small net cash position on a simple cash‑minus‑loans basis. Liquidity is strong: current ratio 206.5% and quick ratio 186.9% (reported), and working capital of 21.17 supports operational flexibility. The reported debt‑to‑equity ratio of 0.50x appears to reflect total liabilities to equity (34.81/69.40), while interest‑bearing debt data is unreported; based on disclosed long‑term loans, leverage is modest. Interest coverage is 90.74x, indicating minimal refinancing or interest rate risk impact on earnings at present. Asset structure shows 41.05 in current assets and 63.48 in noncurrent assets, implying a stable operating asset base. No goodwill is reported, limiting impairment risk. Overall solvency and liquidity are robust, with ample capacity to absorb shocks and fund operations.

Cash Flow Quality

Operating cash flow, investing cash flow, and free cash flow were not disclosed, preventing direct assessment of earnings‑to‑cash conversion. Earnings quality must be inferred from the income statement and balance sheet: net income of 1.42 is supported by operating income of 1.98 and limited interest expense (0.02), suggesting low financial engineering. Receivables (14.34) and inventories (3.90) appear reasonable relative to quarterly sales of 40.30, but without prior period balances we cannot evaluate working capital inflows or outflows. Depreciation and amortization are unreported, so EBITDA and non‑cash earnings contributions cannot be assessed. Capex is unreported, so FCF cannot be calculated, and capital intensity trends are unknown. The OCF/Net Income ratio and FCF coverage are not calculable due to missing data. Overall, while accrual earnings appear conservative given minimal non‑operating distortions, lack of cash flow disclosure is a key limitation for assessing cash conversion.

Dividend Sustainability

Annual DPS and total dividends paid are unreported for the quarter, limiting direct assessment. The calculated payout ratio of 122.9% suggests dividends may exceed current period earnings on a run‑rate basis, but the basis for this ratio is unclear given DPS is unreported; it may reference prior year dividends versus current earnings or company guidance. Without operating cash flow and capex data, FCF coverage of dividends cannot be evaluated. Balance sheet strength (equity ratio ~67% and net cash position relative to long‑term loans) provides some buffer for distributions even if earnings are temporarily below dividends. However, sustainable dividends over the full year will depend on maintaining operating margins and cash generation. Policy outlook cannot be confirmed from disclosures; historically, companies in this profile target steady or progressive dividends, but evidence here is insufficient. Monitor any updates to dividend policy, interim DPS announcements, and full‑year earnings guidance.

Risk Assessment

Business Risks:

• Gross margin sensitivity to input cost inflation (raw materials, logistics) given a 30.2% gross margin base.
• Labor cost pressures potentially lifting SG&A and diluting operating leverage.
• Demand variability or customer concentration risks typical in the prepared foods/meal services domain (sectoral assumption).
• Regulatory and reimbursement changes affecting elderly care and related service demand in Japan.
• Execution risk in scaling operations while maintaining quality and compliance.

Financial Risks:

• Limited transparency on cash flows and capex impedes assessment of free cash flow sustainability.
• Potential reliance on non‑operating income (0.64) to support ordinary income margin.
• Interest rate risk is modest but present due to 13.42 in long‑term loans.
• Working capital swings could pressure cash in growth phases (receivables 14.34, inventories 3.90).

Key Concerns:

• Missing cash flow data (OCF, FCF, capex), constraining earnings quality analysis.
• Uncertain dividend capacity given unreported DPS and a calculated payout ratio of 122.9% with unclear basis.
• Net margin at 3.5% leaves limited buffer if costs rise or demand softens.

Investment Implications

Key Takeaways:

• Top‑line growth (+11.2% YoY) with operating leverage (+14.4% YoY OP) indicates improving efficiency.
• Margins are modest but stable: gross 30.2%, operating 4.9%, net 3.5%.
• Balance sheet is conservative with an estimated ~67% equity ratio and cash (15.99) exceeding long‑term loans (13.42).
• Interest coverage is strong at 90.74x, implying low near‑term financial risk.
• Non‑operating income contributes to ordinary income; sustainability should be monitored.
• Cash flow disclosure gaps limit assessment of FCF and dividend coverage.

Metrics to Watch:

• Operating margin trajectory and SG&A ratio versus revenue growth.
• Gross margin resilience amid input cost and wage trends.
• Working capital efficiency (DSO/DOH) once cash flow and turnover details are disclosed.
• Capex and depreciation to gauge capital intensity and maintenance investment needs.
• Updates on DPS, payout policy, and full‑year earnings guidance.
• Proportion and sources of non‑operating income going forward.

Relative Positioning: Within Japan small/mid‑cap consumer and services peers, Silver Life appears financially conservative with above‑trend revenue growth and improving operating leverage, but with lower net margins and limited cash flow transparency compared to best‑in‑class operators.

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