INTERLIFE HOLDINGS CO.,LTD. Q4 FY2026 earnings call

Company Overview and Structure

• インターライフHD is a holding company for two core operating segments: interior construction (via 日商インターライフ) and audio/lighting equipment (via システムエンジニアリング and サンケンシステム), following post-COVID portfolio restructuring that reduced the group from 15 companies to 3 focused on construction.
• The company's mission is to create impressive, comfortable living and commercial spaces, leveraging unique combined strengths across its two core businesses.

2026年2月期 Full-Year Consolidated Results

• The company achieved consecutive record full-year profits: consolidated revenue fell 3.6% year-over-year to 16.336 billion yen (driven by the sale of former subsidiary 玉紘工業), but operating income jumped 33.3% year-over-year to 1.166 billion yen, with operating margin improving 1.9pp to 7.1%. ROE reached 18.6% and PBR increased to 1.8x.
• Completed portfolio restructuring: sold all shares of 玉紘工業 (facility maintenance business) and absorbed facility management operations into 日商インターライフ, achieving approximately 100 million yen in annual cost savings and building a high-margin two-segment business structure.
• Beat initial annual profitability targets, already exceeding the 5th Medium-Term Management Plan's original 1 billion yen operating profit target for the 2028 February full year in the plan's first year (2026).
• Strengthened shareholder returns: increased full-year dividend by 10 yen to 30 yen per share, implemented an interim dividend for the first time, conducted treasury share purchases and a secondary offering to improve market liquidity, raising PBR to 1.8x. The dividend payout ratio target was increased from 40%+ to 50%+, with 2026 full-year payout expected to hit 56%.
• Balance sheet and cash flow strengthened: net assets increased 462 million yen to 4.676 billion yen, operating cash flow reached +2.228 billion yen, and ending cash and cash equivalents increased 1.106 billion yen to 2.598 billion yen.

2027年2月期 Key Priority Initiatives

• Build new growth foundation: Expand capacity for larger project orders based on proven track record, strengthen the Osaka base to capture more Osaka IR-related construction, scale up patented new products (Atlas Board® sliding LED wall), expand into new high-growth areas (already secured a first large museum project, advancing arena and disaster prevention control center facility projects), and continue to evaluate M&A opportunities (not included in medium-term targets).
• Improve profitability further: Prioritize securing higher-margin large projects to sustain profit margins, implement strict cost controls to offset expected construction material price increases, push DX via adoption of generative AI to improve productivity, and train certified professional staff to lift technical capability and efficiency.
• Advance ESG and human capital initiatives: Address the industry-wide urgent labor shortage by expanding HR teams, investing in recruitment, training, retention and compensation improvement.
• Capital-conscious management: Expand IR engagement with institutional investors, continue individual investor briefings, and maintain a 50%+ dividend payout ratio to strengthen shareholder returns.

1. 内装工事事業: Revenue of 10.046 billion yen, a 5.1% decrease year-over-year. Segment profit was 653 million yen, a 17% increase year-over-year. This segment contributes approximately 60% of total company revenue. The revenue decline came after the completion of Osaka-Kansai Expo-related projects and fewer large-scale projects compared to the prior year, but growth in urban redevelopment, office and hotel projects, plus improved profitability and operational efficiency from absorption of facility management business drove profit growth. 2. 音響・照明設備事業: Revenue of 6.265 billion yen, an 8.3% increase year-over-year. Segment profit was 682 million yen, a 38% increase year-over-year. This segment contributes approximately 40% of total company revenue. Growth was driven by completion of high-margin large-scale projects for hotels and halls, increased new maintenance service orders, improved profit margins, and cross-business synergies between the two group companies operating in this segment. Overall, the two segments contribute roughly half of total group profit each.

• 2027年2月期 Full-Year Guidance: The company forecasts slight year-over-year revenue and operating profit growth, projecting 17 billion yen in consolidated revenue, 1.2 billion yen in operating profit, and 800 million yen in net income attributable to parent shareholders. Net income is expected to decline year-over-year because 2026 included a 70 million yen gain from the 玉紘工業 share sale that will not repeat in 2027. Current market uncertainties from geopolitical instability and raw material price volatility are not reflected in the guidance, but the current order book is already stronger than the prior year's at the same point.
• Updated Medium and Long-Term Targets: After exceeding the original 5th Medium-Term Management Plan's 1 billion yen operating profit and 10 billion yen market capitalization targets in the first year, the company updated its long-term targets to reflect faster-than-expected growth. It now targets 25 billion yen in revenue, 2 billion yen in operating profit, and 15 billion yen in market capitalization for the 2031 February full-year, aiming for 1.5x revenue growth over 5 years (consistent with the prior 5-year growth trajectory) powered by Osaka IR-related demand.
• Dividend Guidance for 2027年2月期: The company will maintain the 30 yen per share full-year dividend, split as 15 yen interim and 15 yen final dividend, to sustain high shareholder returns.

• Uncertainty from unstable global geopolitical conditions and volatile construction raw material price trends creates forecasting difficulty, and potential raw material price increases could pressure margins if not properly managed.
• The construction industry faces a widespread, urgent labor shortage, which the company expects will be a key challenge to achieve its medium-term sales growth targets.
• Short-term paint supply shortages have been reported in the industry, but the company states there is no material impact on its operations as of the call.
• The company's ability to secure large-scale new projects (including Osaka IR-related opportunities) depends on its existing track record and reputation, and growth into new market segments carries inherent execution risk.

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