Striders Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.91B
• Operating Income: ¥98M
• Net Income: ¥-45M
• EPS: ¥6.95

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

Striders reported FY2026 Q2 consolidated results under JGAAP with moderate top-line growth and a sharp rebound in profitability from a low base. Revenue was ¥3,909 million, up 2.5% YoY, while operating income surged 257% YoY to ¥98 million, indicating strong operating leverage and improved cost control. Gross profit reached ¥976 million with a gross margin of roughly 25.0%, suggesting stable pricing and input cost dynamics. Operating margin expanded to about 2.5%, a material improvement from the implied sub-1% level last year. Ordinary income was ¥119 million, exceeding operating income, driven by net non-operating gains; however, the gap between ordinary income and implied pre-tax income suggests possible extraordinary losses or other adjustments. Net income came in at ¥59 million (+129.9% YoY), with EPS of 6.95. Depreciation and amortization totaled ¥63 million, taking EBITDA to ¥161 million and an EBITDA margin of about 4.1%. Liquidity appears strong: current assets were ¥3,497 million versus current liabilities of ¥1,044 million, yielding a current ratio of 335% and quick ratio of 329%. The capital structure looks balanced with total liabilities of ¥3,035 million against equity of ¥2,665 million (debt-to-equity 1.14x) and an implied equity ratio of approximately 46.5% based on reported assets and equity. DuPont analysis shows a net margin of 1.51%, asset turnover of 0.682x, and financial leverage of 2.15x, resulting in a calculated ROE of 2.21%. Interest expense was modest at ¥6.3 million, with interest coverage of about 15.5x, indicating adequate capacity to service debt. Cash flow from operations was negative at ¥-49.9 million despite positive earnings, pointing to working capital outflows or other timing factors; investing cash flow was not disclosed, and financing cash flow was an outflow of ¥-266.1 million, likely reflecting debt repayments or other financing uses. The company paid no dividends (DPS ¥0.00; payout ratio 0%), consistent with a focus on balance sheet stability and reinvestment. Reported metrics that appear as zero (e.g., equity ratio, cash and equivalents, investing cash flow, outstanding shares) should be treated as unreported rather than actual zeros. Overall, the quarter indicates improved profitability and solid solvency, tempered by negative operating cash flow and limited disclosure on investing activity and cash balances.

Profitability Analysis

ROE of 2.21% is decomposed into a 1.51% net margin, 0.682x asset turnover, and 2.15x financial leverage. The net margin of 1.51% reflects meaningful improvement but remains modest, leaving room for further operating efficiency gains. Gross margin at roughly 25.0% appears stable; the sizable YoY operating income jump (+257%) relative to revenue growth (+2.5%) implies material operating leverage and lower SG&A intensity versus last year. Operating margin is approximately 2.5% (¥98 million OI / ¥3,909 million revenue), up from an implied ~0.7% a year ago, suggesting improved mix, pricing, or cost discipline. Ordinary income of ¥119 million versus operating income of ¥98 million indicates positive net non-operating contributions (e.g., interest income, investment income), but the implied pre-tax income (net income plus taxes) of roughly ¥77 million suggests potential extraordinary losses or adjustments not disclosed. EBITDA of ¥161 million and an EBITDA margin of 4.1% provide additional cushion, with D&A at ¥63 million representing about 1.6% of revenue. Interest expense was low at ¥6.3 million, and EBIT/interest coverage of ~15.5x evidences limited financial drag on profitability. Overall profitability is recovering off a low base, with margin momentum evident but still at absolute levels that leave sensitivity to cost inflation and volume fluctuations.

Growth Assessment

Revenue growth of 2.5% YoY to ¥3,909 million suggests steady but modest expansion, likely driven by organic growth rather than acquisitions given the limited disclosure on investing activity. The outsized improvement in operating income (+257% YoY) points to operating leverage and improved cost controls rather than purely top-line drivers. With gross margin at ~25% and operating margin at ~2.5%, the quality of growth appears to stem from efficiency gains and non-operating support (ordinary income exceeding operating income). The implied presence of extraordinary items (ordinary income above implied pre-tax income) introduces noise in YoY comparisons, but core operating trends are directionally positive. Net income increased 129.9% to ¥59 million, though the persistence of this growth hinges on sustaining margin gains and stabilizing working capital. Given the negative operating cash flow in the period, some of the reported profit growth may not have fully translated into cash. Outlook hinges on maintaining SG&A discipline, managing input costs to preserve gross margin near 25%, and preventing reversals in non-operating contributions. Without disclosure of segment mix or backlog, revenue sustainability is assessed as moderate, supported by stable margins but constrained by modest top-line growth. Future growth visibility would improve with details on pipeline, capex/investment plans, and segment performance, which are not provided here.

Financial Health

Liquidity is strong: current assets of ¥3,497 million and current liabilities of ¥1,044 million yield a current ratio of 335% and a quick ratio of 329%, implying ample short-term coverage even after excluding inventories (¥68 million). Working capital stands at ¥2,453 million, providing a significant buffer for operations. Solvency appears solid with total liabilities of ¥3,035 million and equity of ¥2,665 million, resulting in a debt-to-equity ratio of 1.14x and an implied equity ratio of roughly 46.5% (equity/total assets), despite the equity ratio being shown as 0% due to non-disclosure in the XBRL label. Interest coverage is robust at ~15.5x, reflecting low interest burden and adequate operating profitability. Total assets are ¥5,728 million, and asset turnover of 0.682x suggests moderate efficiency. Financing cash outflows of ¥-266 million indicate deleveraging or other financing uses, which, combined with strong liquidity ratios, suggest a conservative stance on leverage. Cash and equivalents are shown as zero in the dataset (unreported), so absolute cash buffers cannot be assessed; however, the liquidity ratios imply sufficient current resources. Overall, the balance sheet supports ongoing operations with room to absorb shocks, though visibility on cash balances and debt maturity profile is limited.

Cash Flow Quality

Operating cash flow was negative at ¥-49.9 million, versus net income of ¥59.0 million, yielding an OCF/Net Income ratio of -0.85, which indicates weak conversion in the period. The negative OCF likely reflects working capital build (e.g., increases in receivables or other current assets) or timing effects, but the specific drivers are not disclosed. EBITDA of ¥161 million suggests the core cash generation capacity before working capital and interest/taxes is positive; however, working capital movements more than offset this in the reported period. Investing cash flow is shown as zero (unreported), limiting assessment of maintenance versus growth capex and making free cash flow (FCF) calculation unreliable; the provided FCF figure of zero should be treated as not available rather than an economic zero. Financing cash flow of ¥-266 million suggests repayments of interest-bearing debt or other financing uses, which, together with negative OCF, would have reduced cash balances unless offset by opening cash or undrawn facilities. Interest expense was low at ¥6.3 million, so financing outflows likely reflect principal repayments or other financing activities rather than interest costs. The divergence between earnings and cash flow warrants monitoring, especially if driven by sustained receivable growth or inventory accumulation (inventories are modest at ¥68 million, pointing more to receivables or other current assets as potential drivers). Overall cash flow quality this quarter is weak due to negative OCF despite positive earnings, but may normalize if working capital reverses in subsequent periods.

Dividend Sustainability

The company did not pay a dividend (DPS ¥0.00) and reports a payout ratio of 0.0%, indicating an earnings-retention stance. With operating cash flow negative and investing cash flows unreported, there is insufficient evidence to support near-term dividend initiation without clearer cash generation. Financing outflows of ¥-266 million further limit near-term flexibility for distributions. Given net income of ¥59 million and the absence of disclosed free cash flow, dividend coverage cannot be reliably calculated; the reported FCF coverage metric of 0.00x should be interpreted as not available. Policy-wise, the focus appears to be on strengthening the balance sheet and reinvesting, which is prudent given current cash conversion and disclosure limitations. Any future dividends would require sustained positive OCF, visibility on maintenance capex, and stable leverage.

Risk Assessment

Business Risks:

• Low absolute operating margin (~2.5%) leaves earnings sensitive to cost inflation and volume softness.
• Negative operating cash flow despite positive earnings indicates working capital risk and timing volatility.
• Dependence on non-operating contributions (ordinary income > operating income) may introduce earnings volatility.
• Potential extraordinary losses or adjustments implied by the gap between ordinary income and pre-tax income.
• Limited disclosure on segment performance and investment plans constrains visibility into growth drivers.
• Modest revenue growth (+2.5% YoY) heightens reliance on margin gains for profit expansion.

Financial Risks:

• Unreported cash balance and investing cash flows reduce transparency on liquidity buffers and capex needs.
• Financing cash outflows (¥-266 million) amidst negative OCF could pressure cash if sustained.
• Working capital expansion risk could continue to suppress cash generation.
• ROE at 2.21% is modest, limiting internal capital generation if margins stall.
• Exposure to interest rate or refinancing risk cannot be fully assessed without debt maturity disclosure.

Key Concerns:

• Sustained negative OCF would undermine earnings quality and balance sheet flexibility.
• Earnings reliance on non-operating items and potential extraordinary losses could obscure core performance.
• Data gaps (cash, investing CF, equity ratio, share count) limit precision of valuation and payout assessments.

Investment Implications

Key Takeaways:

• Profitability inflected sharply: operating income +257% YoY with operating margin ~2.5% vs. sub-1% last year.
• Balance sheet appears solid with implied equity ratio ~46.5% and strong liquidity (current ratio 335%).
• Interest burden is light (¥6.3m) with robust coverage (~15.5x).
• Cash conversion is weak (OCF/NI -0.85), pointing to working capital headwinds.
• Ordinary income exceeds operating income, suggesting reliance on non-operating items; underlying sustainability should be monitored.
• Financing outflow of ¥-266m implies deleveraging or other uses; combined with negative OCF, this could constrain cash.

Metrics to Watch:

• Operating cash flow trend and OCF/Net Income ratio (target: sustained positive conversion >1.0x).
• Operating margin and SG&A ratio to revenue (sustainability of margin gains).
• Composition of non-operating and extraordinary items (volatility risk to ordinary vs. pre-tax income).
• Working capital metrics (receivables days, payables days, inventory days) when disclosed.
• Debt levels and maturity profile; interest coverage stability amid rate changes.
• Capex/investing cash flows to gauge maintenance vs. growth spending.

Relative Positioning: Within small-cap Japan peers, Striders shows improving margin momentum and healthy liquidity/solvency, but trails on cash conversion and maintains modest ROE, placing it in a recovering-but-still-cautious category pending clearer evidence of sustained operating cash generation and reduced reliance on non-operating items.

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