CSS HOLDINGS,LTD. Q2 FY2025 earnings call

General Financial Overview

• The first half of fiscal 2025 marks the first year of the company's new medium-term management plan, with management expecting strong revenue growth but planned profit investments to prepare for future expansion. Actual results outperformed expectations: revenue exceeded initial forecasts, and profit achieved a slight year-over-year increase instead of the planned 20% decline.

Steward Business Operational Highlights

• Won new contracts for Hotel Granvia Hiroshima South Gate and the first Japanese location of Time Out Market Osaka, implementing a centralized shared dishwashing model that improves overall productivity. Secured on-site dishwashing contracts for major industry events including ProWine Tokyo 2025 and FOODEX JAPAN.
• Rising demand for outsourced sustainable dishwashing aligned with SDG goals and labor shortage trends: the company operates a shared circular dishwashing facility in Tokyo with NISSHA, and receives increasing inquiries for event and reusable dishwashing services.
• Medium-term strategic focus: Automate and improve productivity of washing processes through adoption of robotics and technology, converting human workflow knowledge into automated systems to improve scalability.

Food Service Business Operational Highlights

• Started operating a health-focused employee cafeteria at Fancl's headquarters in Yokohama, which incorporates Fancl's health food products into menu offerings.
• Participated in EXPO 2025 Osaka Kansai as an operator for a major food manufacturer's restaurant booth, focusing on testing labor-saving, streamlined operational models aligned with the expo's sustainability focus.

Space Production Business Operational Highlights

• Toyo Media Links reached a basic business partnership agreement with VarioSecure, a listed cybersecurity BPO provider. The partnership will enable the company to offer unified, secure network construction for integrated audio/visual and security devices on shared IT infrastructure, addressing client security concerns and creating a new competitive advantage for future projects.

Human Resources Updates

• Welcomed 23 new graduate hires in April 2025, aligned with the company's target of 20-30 new hires per year, focusing on higher-quality selection.
• Completed the first international graduate hiring round, recruiting 7 new hires from Nepal (and 1 from India) who joined in May 2025. The company aims to develop diverse talent to meet the needs of foreign clients and expand global hospitality capabilities long-term.

1. Steward Business (core dishwashing service, stock-based business): Achieved year-over-year revenue and profit growth. It has secured 9 new contracts in the first half, with 7 more scheduled to start in the second half, for a full-year target of 16 new projects. This segment is the main driver of the group's overall profit growth and contributes the largest share of group profit. 2. Food Service Business (stock-based business covering hotel/restaurant breakfast catering, employee cafeteria outsourcing, senior care food services): Revenue grew steadily year-over-year, while profit growth flattened. Segment revenue breakdown: ~67% from hotel/restaurant catering, <30% from contract catering (employee cafeterias), <10% from care food services. It opened 8 new locations in the first half, with a full-year target of 15 new openings. 3. Space Production Business (mostly flow-based business covering audio/visual, environmental space design and construction, with some recurring maintenance revenue): Composed of 3 companies, with Toyo Media Links and Onkyo Tokki accounting for the majority of revenue. Toyo Media Links performed very well above historical averages in the first half, with strong growth in security camera and AV/ broadcasting system update projects. Onkyo Tokki's revenue and profitability declined slightly year-over-year due to lapping 2 very large high-margin projects in the prior year period; overall segment revenue was slightly down year-over-year and flat over three years, with profitability down year-to-date. Management expects a recovery in the second half.

• Full-year consolidated guidance was upgraded following the better-than-expected first half results. Management now expects full-year revenue to grow slightly less than 10% year-over-year, which is above the initial opening forecast.
• Full-year profit is now expected to increase by 10% or more year-over-year, an upward revision from the prior forecast.
• Dividend guidance is maintained at the initial opening forecast as of the second quarter; management will continue discussions on shareholder returns and potential adjustments based on full-year performance.

• Food Service Business: Rising food prices (led by rice) have put margin pressure, and price pass-through to clients has not fully caught up with cost increases, limiting profit growth.
• Steward Business: Growth is constrained by talent development speed; the company is expanding new projects gradually to match workforce growth, leading to slower growth compared to the post-COVID recovery period.
• Space Production Business: Unifying audio/visual and security devices on shared corporate IT infrastructure creates cybersecurity vulnerability risks that need to be managed to win client projects.
• Washing process workflow management remains heavily dependent on skilled human labor; full automation has not yet been achieved, limiting productivity improvement.

No Q&A section was included in the provided transcript.