Nakanishi (7716) Q3 2024 earnings summary

Executive summary

• Q3 FY2024 net sales rose 37.4% year-over-year to ¥56,621M, driven by M&A (notably DCI acquisition) and favorable forex, despite weak demand in Dental and Industrial segments; Surgical segment demand remained strong.

• EBITDA increased by 14.2% to ¥15,597M, mainly due to yen depreciation and M&A; excluding M&A, EBITDA was flat year-over-year.

• Operating profit declined 1.6% to ¥11,392M; ordinary profit fell 19.0% to ¥12,280M.

• Profit attributable to owners dropped 63.7% year-over-year due to a one-off gain in the prior year.

• Comprehensive income decreased 66.1% to ¥9,087M.

Financial highlights

• Net sales: ¥56,621M (+37.4% YoY); Gross profit: ¥32,925M (+25.8%); EBITDA: ¥15,597M (+14.2%).

• Operating profit: ¥11,392M (-1.6% YoY); Ordinary profit: ¥12,280M (-19.0%); Net profit: ¥8,079M (-63.7%).

• EPS: ¥95.42 (vs. ¥261.21 YoY); Gross margin declined to 58.1% from 63.5%.

• Total assets grew to ¥147,854M; net assets rose to ¥116,004M with an equity ratio of 78.2%.

• Cash and deposits increased by ¥7,476M; borrowings rose by ¥5,515M.

Outlook and guidance

• FY2024 net sales forecast at ¥75,208M (+26.0% YoY); profit attributable to owners forecast at ¥9,652M (+8.5%).

• EBITDA forecast at ¥19,013M (+7.2% YoY); EPS forecast at ¥113.85.

• Dividend forecast for FY2024 is ¥52.00 per share, up from ¥50.00 in FY2023.

• Assumed annual average forex rates: USD/JPY 146.00, EUR/JPY 159.00.