NISHIO HOLDINGS CO.,LTD. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥214.95B
• Operating Income: ¥19.60B
• Net Income: ¥11.71B
• EPS: ¥436.19

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

Nishio Holdings (9699) delivered solid FY2025 Q4 (full-year) consolidated results under JGAAP, with revenue of ¥214.95bn (+8.0% YoY) and operating income of ¥19.60bn (+8.6% YoY), indicating modest positive operating leverage. Net income reached ¥12.11bn (+4.4% YoY), with EPS of ¥436.19, reflecting resilient bottom-line performance despite higher financing costs. Gross profit was ¥80.90bn, implying a gross margin of 37.6%, a robust level for an equipment and services-oriented model. Operating margin stood at 9.1%, supported by scale benefits and cost control, while EBITDA was ¥53.02bn (24.7% margin), providing ample coverage of interest and maintenance investments. Ordinary income of ¥18.83bn slightly trailed operating income due to net financial expenses (interest expense ¥1.54bn), but interest coverage remained strong at 12.7x (EBIT/interest). Cash generation was a highlight: operating cash flow (OCF) of ¥31.81bn equated to 2.63x net income, and free cash flow (FCF) was a healthy ¥27.60bn, suggesting high earnings quality. The balance sheet appears sound: total assets were ¥297.26bn and total equity ¥140.29bn, implying an estimated equity ratio near 47.2% (the reported 0.0% equity ratio is undisclosed, not zero) and financial leverage around 2.12x assets/equity. Liquidity was adequate with a current ratio of 130% and quick ratio of 124%, backed by ¥26.10bn of working capital, though cash and equivalents were not disclosed. DuPont decomposition indicates ROE of 8.63% from a 5.63% net margin, 0.723x asset turnover, and 2.12x leverage—suggesting return is balanced between profitability and asset efficiency with moderate leverage. The effective tax rate shown as 0.0% is not reflective of disclosures; using income tax and bottom-line data, we estimate an effective tax rate around the low 30% range, consistent with Japan’s statutory levels. Investing cash outflow of ¥4.21bn was modest relative to depreciation (¥33.42bn), implying net capex below D&A this year—this could reflect disciplined capital allocation, disposals offsetting capex, or timing effects typical in rental-heavy businesses. Financing cash outflow of ¥15.18bn points to debt reduction and/or shareholder returns, but dividend data were not disclosed, limiting payout analysis. Overall, the company combines steady top-line growth, robust EBITDA margins, strong cash conversion, and manageable leverage, positioning it well to fund organic investments while preserving balance sheet flexibility. Key caveats include missing disclosures (equity ratio, cash balance, share count, dividend), which constrain precision on per-share and payout metrics. Despite these gaps, the available non-zero data indicate healthy fundamentals and good cash flow quality entering the next fiscal year.

Profitability Analysis

ROE of 8.63% aligns with DuPont components: net profit margin 5.63% × asset turnover 0.723 × financial leverage 2.12. Operating margin is approximately 9.1% (¥19.60bn / ¥214.95bn), indicating decent operating efficiency. Gross margin of 37.6% suggests solid pricing and asset utilization for an equipment/services model. EBITDA margin of 24.7% underscores healthy operating cash earnings, providing headroom for maintenance capex and financing. The YoY comparison shows revenue +8.0% and operating income +8.6%, indicating slight positive operating leverage; cost growth was contained relative to sales. Ordinary income trails operating income due to interest expense (¥1.54bn), but with EBIT/interest at 12.7x, the interest burden is manageable. The tax burden in the extended DuPont chain appears normalizing; while effective tax rate was shown as 0.0% (undisclosed), a proxy using income tax (¥5.87bn) and implied pre-tax income suggests c. 30–33%, consistent with typical levels. Net margin of 5.63% is respectable given depreciation intensity (¥33.42bn), highlighting the role of scale and fleet efficiency. Overall margin quality appears robust, supported by a recurring rental/services mix and disciplined cost control.

Growth Assessment

Top-line growth of 8.0% YoY to ¥214.95bn reflects healthy demand and/or pricing in core segments. Operating income outpaced sales slightly (+8.6%), evidencing modest operating leverage and cost discipline. Net income growth of 4.4% lagged operating profit growth, likely due to higher net financial costs and normalized taxes. Asset turnover of 0.723 indicates efficient use of a sizable asset base; stability here will be important for sustaining ROE without incremental leverage. Profit quality is strong, with OCF/NI at 2.63x and FCF of ¥27.60bn, suggesting growth is supported by cash and not merely accruals. Depreciation (¥33.42bn) remains high versus investing cash outflow (¥4.21bn), implying net capex below depreciation this year; growth has not been capex-heavy in this period, or disposals offset capex. Outlook will depend on fleet utilization, pricing discipline, and macro-sensitive end markets (construction/civil engineering, plant maintenance), with current metrics indicating capacity to fund growth internally. Given interest coverage of 12.7x and moderate leverage, financial constraints are unlikely to impede growth plans near term.

Financial Health

Liquidity is sound: current ratio 130.1% and quick ratio 124.3% (current assets ¥112.73bn; inventories ¥5.07bn; current liabilities ¥86.63bn), with working capital of ¥26.10bn. Cash and equivalents were undisclosed (reported as 0), but liquidity appears adequate given the quick ratio and OCF strength. Solvency is comfortable: total liabilities ¥156.37bn vs total equity ¥140.29bn; debt-to-equity 1.11x, and estimated equity ratio ~47.2% (computed from period-end balances; the reported 0.0% is undisclosed). Financial leverage of 2.12x (assets/equity) is moderate for an asset-intensive model. Interest coverage at 12.7x indicates resilience against rate increases or profit variability. No major short-term refinancing risk is evident from the provided data, but detailed debt maturity and cash balances were not disclosed.

Cash Flow Quality

Earnings quality is strong: OCF of ¥31.81bn is 2.63x net income, indicating robust cash conversion and supportive working capital dynamics. Free cash flow was ¥27.60bn (OCF ¥31.81bn plus investing CF -¥4.21bn), comfortably positive after investment needs disclosed this year. Depreciation of ¥33.42bn versus relatively small net investing cash outflow suggests net capex below depreciation, potentially due to disciplined fleet additions, higher disposals, or timing; sustainability should be monitored given the capital intensity of rental assets. Working capital appears well-managed, with inventory modest at ¥5.07bn relative to sales and quick ratio at 124%. Financing outflows of ¥15.18bn imply debt reduction and/or shareholder returns; absent cash balance disclosure, liquidity inference relies on ratios and OCF.

Dividend Sustainability

Dividend data were not disclosed (annual DPS reported as 0.00 and payout ratio 0.0% should be treated as undisclosed per data note). With EPS at ¥436.19 and FCF of ¥27.60bn, internal capacity for distributions appears strong in principle, but without DPS and share count we cannot compute payout or FCF coverage precisely. From a coverage standpoint, even a moderate payout ratio would likely be covered by both earnings and FCF given current profitability and cash generation, but this remains a hypothetical assessment. Policy insight (target payout ratio, DOE, or stability commitment) was not provided, limiting our view on sustainability and trajectory.

Risk Assessment

Business Risks:

• Demand cyclicality tied to construction, civil engineering, and industrial maintenance
• Utilization rate and pricing pressure in equipment rental/fleet businesses
• Input cost inflation (parts, maintenance, fuel) affecting margins
• Residual value risk on rental assets and used equipment sales
• Project delays or public works budget shifts impacting order flow
• Labor availability and safety/compliance requirements

Financial Risks:

• Interest rate risk despite current 12.7x coverage; higher rates could lift interest expense
• Refinancing and liquidity visibility constrained by undisclosed cash balance
• Potential capex upcycle could raise leverage if OCF dips
• Tax normalization (estimated low-30% effective rate) could weigh on net margins
• Working capital swings in growth periods affecting OCF

Key Concerns:

• Several key metrics undisclosed (cash, equity ratio, dividends, share count), limiting precision
• Investing CF significantly below depreciation this year—monitor for catch-up capex needs
• Ordinary income below operating income underscores sensitivity to financial costs

Investment Implications

Key Takeaways:

• Top-line growth of 8.0% with operating income up 8.6% indicates modest positive operating leverage
• EBITDA margin of 24.7% and strong OCF/NI of 2.63x highlight high-quality earnings
• Balance sheet is solid with estimated equity ratio ~47% and debt-to-equity 1.11x
• Interest coverage of 12.7x provides cushion against rate and cycle risks
• FCF of ¥27.60bn affords flexibility for capex, debt reduction, and potential shareholder returns

Metrics to Watch:

• Fleet utilization, pricing, and asset turnover (currently 0.723)
• Net capex versus depreciation (¥33.42bn D&A) to gauge reinvestment intensity
• Interest expense trend and coverage amid rate environment (currently 12.7x)
• Working capital movements and OCF/NI ratio sustainability (2.63x this year)
• Effective tax rate normalization (estimated low-30% range) and impact on net margin

Relative Positioning: Within Japan’s equipment rental/services peers, Nishio exhibits above-average cash conversion, healthy EBITDA margins, and moderate leverage, positioning it competitively to fund growth and maintain balance sheet resilience.

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