6294.T

Core Business Operations

• Under the long-term vision "VISION 30", the company focuses on increasing production and strengthening production capacity to meet solid domestic demand for demolition and infrastructure construction, while improving productivity. It has strengthened sales structures in existing overseas hubs (North America, Europe, Asia and other regions) to drive sustainable growth.
• Core crusher product order backlogs have stabilized after temporary surges from post-pandemic component shortages, with production capacity expansions normalizing delivery times; overall demand remains solid.
• Capital expenditure in the half-year focused on facility expansion: including relocation/construction costs for the Kansai branch, new construction for the Tokyo head office and North Kanto sales office, and purchase of the previously leased head office land. Depreciation expense remained flat year-over-year.

Dividend Policy

• The company targets progressive dividends and a payout ratio of at least 30%. It maintained its 16th consecutive year of dividend increases, with a planned full-year dividend of 75 yen per share for FY2026 March, up 1 yen from the prior year.

Business Partnership and Capital Raising with AP社 (Advantedge Partners)

• The company entered a business partnership and raised 3.76 billion yen in total equity funding (1.51 billion yen via convertible bonds, 2.25 billion yen via share warrants) from an AP社-managed fund, with the partnership starting December 10, 2025.
• Key strategic priorities from the partnership: strengthen company-wide QCD (Quality, Cost, Delivery), accelerate globalization in North America and Europe, and enhance solution provision via after-sales maintenance and repair, to establish global market leadership, increase product value, and build a resilient business model with AP社's management support.
• Capital allocation breakdown: 1) Globalization promotion: human resource investment to strengthen sales coverage of North American rental companies and dealers, product line expansion, new domestic crusher market development, and after-sales service facility investment. 2) Growth acceleration: domestic pricing strategy development based on crusher market share, agency network expansion to stabilize repair and parts revenue, product development for labor saving and safety, DX investment for attachment operation monitoring and customer profit management systems, and system development to improve productivity and reduce overhead. 3) M&A reserve: the 2.25 billion yen from share warrants will be used for strategic M&A (domestic and overseas) to expand product lines and strengthen production/maintenance capabilities, with AP社 supporting deal sourcing and execution.
• Timeline: The partnership is expected to last at least 3 years, with AP社 targeting an exit within 5 years after the partnership delivers results and lifts the share price.

Market Outlook

• Japanese demolition attachment market: Expected to grow ~4% annually, with the crusher segment growing 4.2%.
• U.S. demolition attachment market: High volatility from post-pandemic boom-bust inventory cycles, but expected to enter a 3-year recovery driven by ongoing infrastructure investment, then stabilize at ~4% annual growth; the company views current timing as ideal for market expansion.

• Full-year FY2026 March financial guidance is maintained unchanged from prior guidance. Revenue progress for the first half missed the 50% full-year target, but operating profit, ordinary profit, and net profit are in line with budget.
• The VISION 30 2030 target of 30 billion yen in total revenue is nearly on track for achievement, while the 30 billion yen market capitalization target remains unmet and the plan is under mid-term review.
• Management expects the U.S. demolition attachment market to maintain a recovery trend over the next 3 years before entering stable 4% annual growth, and targets outgrowing this market growth rate to gain share.

1. Domestic Segment: Total net sales decreased by 8 million yen year-over-year. Solid demand for core crusher products was offset by project delays, postponed demolition work during Expo, weak excavator sales, soft demand for grapples and forestry machinery, and lower aftermarket parts sales that offset growth in repair revenue. Only large environmental machinery achieved revenue growth from replacement promotion activities. The domestic segment contributes ~76% of total company revenue. 2. Overseas Segment: Total net sales decreased by 168 million yen year-over-year, accounting for 23.9% of total company revenue. Region details: - North America: Revenue of 2.107 billion yen, down 11.1% YoY, due to sales declines at Okada Midwest and ongoing inventory adjustment; accounts for 69% of total overseas revenue. - Europe: Revenue of 534 million yen, up 6.6% YoY; accounts for 17% of total overseas revenue. - Asia and other regions: Revenue of 435 million yen, up 16.1% YoY; accounts for 14% of total overseas revenue. 3. Product Segment: Demolition and environment attachment products increased revenue share to 51% of total company revenue due to growth. Overall company results: Total revenue was 12.89 billion yen, down 1.4% YoY; operating profit was 1.25 billion yen, up 7.4% YoY; ordinary profit was 1.253 billion yen, up 13.7% YoY; net profit was 849 million yen, up 16.2% YoY. Profit growth was driven by price adjustments and cost reduction.

• Macroeconomic risks: Rising uncertainty from U.S. tariff and protectionist policies, volatile resource and energy prices, and geopolitical risks that could dampen global economic growth.
• U.S. market volatility: The U.S. demolition attachment market has experienced larger-than-expected volatility, driven by post-pandemic swings and larger-than-expected rental sector inventory adjustments that led to larger-than-forecast sales declines.
• Dilution risk: Maximum shareholder dilution is 24% (based on the 1,700 yen minimum conversion price), with voting rights dilution reaching just under 25%.
• U.S. tariff risk: U.S. tariffs are already pressuring margins, and potential further policy changes (including post-election policy shifts) create uncertainty that could impact future results.
• Foreign exchange risk: While the first half net impact of yen appreciation was positive, ongoing exchange rate volatility can create swings in overseas profit translation and input costs.

Q: Why did the company choose equity funding via convertible bonds and warrants instead of bank borrowing, and why did it reject a simple third-party allotment? / A: The company recognizes that incremental equity increases dividend pressure under its progressive dividend policy, but it judges that large-scale funding over the next 3-5 years (totaling 4-5 billion yen) for growth investments (including new sales offices, head office and factory reconstruction, and overseas expansion) is necessary to move to the next growth stage, and this is the right timing. A simple third-party allotment was rejected after the 2018 experience, where a simple allotment led to excessive share price declines that reduced net proceeds and harmed existing shareholders. The current structure with AP partnership was chosen to enable co-development of new growth areas.

Q: What is the expected dilution from the capital raising, and what is management's view? / A: At the initial 2,038 yen conversion price, dilution reaches 21.96% of outstanding shares (22.94% on a voting rights basis). At the minimum 1,700 yen conversion price, dilution reaches 23.71% of outstanding shares (24.77% voting rights), or just under 25% maximum dilution. Management is targeting profit and share price growth to offset this dilution for existing shareholders.

Q: What benefits does AP bring for overseas expansion, and can the company manage acquired overseas firms? / A: AP has a track record of supporting around 40 listed companies, and the company values its structured process of building data-driven hypotheses and project-based support. While AP does not have specific construction machinery industry expertise, management expects it to draw out unutilized internal ideas and support the process, and it will help source M&A targets. For any M&A, the company will only target firms it can manage, will add personnel if needed, and will only pursue deals that clearly contribute to growth, with no bias towards completing acquisitions regardless of fit.

Q: Why did Okada choose AP for this capital raising, and how long did the process take? / A: The company started evaluating options in February-March 2025. It was initially cautious of a private equity fund, but AP's structure means it is a minority investor that only generates returns if the company grows, aligning incentives as growth partners. After comparing multiple potential providers, AP was selected for its stronger commitment to the company's business strategy.