MAX CO.,LTD. Q3 FY2025 earnings call

• Overall Company Performance

  • 3Q cumulative total sales revenue hit an all-time high at 69.01 billion yen, +5.6% year-over-year. Operating profit was 11.477 billion yen (+16.2% YoY), ordinary profit 12.145 billion yen (+16.1% YoY), and net profit attributable to parent company shareholders 9.109 billion yen (+14.0% YoY). The standalone 3Q quarter revenue of 24.128 billion yen is also a record high for a single quarter.
  • Profit growth came from both external (net 1.13 billion yen positive impact from foreign exchange) and internal factors: 1.173 billion yen gain from volume and product mix improvements (driven by rebar tying machine expansion and product mix optimization), 1.177 billion yen net gain from price increases that fully offset 309 million yen of cost increases. A 1.573 billion yen increase in SG&A included 545 million yen of growth-focused investment in sales promotion and personnel.
  • A 497 million yen special gain was recorded from the sale of cross-held policy shares, which the company will continue reducing to free up cash for growth investment and shareholder returns. Foreign exchange sensitivity is 200 million yen of sales per 1 yen movement in USD, 80 million yen of sales per 1 yen movement in EUR; for operating profit, it is 50 million yen per 1 yen USD movement, 80 million yen per 1 yen EUR movement.

• Key Business Segment Updates

  • Industrial Equipment: Domestic business continues prioritizing rebar tying machines, with air tools for wooden construction seeing mild weakness due to lower new housing starts. Overseas business sees steady growth in North America; the overall European region has returned to growth driven by recovery in Germany and expanded sales in Southern/Eastern Europe, despite slow recovery in Nordic markets. Living environment products are performing steadily.
  • Office Equipment: Domestic business sees expected declines in stationery, offset by growth in focus area label/character display equipment (such as the

1. Industrial Equipment Segment: Revenue of 50.134 billion yen, +6.1% year-over-year; segment profit of 11.563 billion yen, +16.5% year-over-year; segment profit margin of 23.1%. This segment contributes ~72.6% of total consolidated revenue. 2. Office Equipment Segment: Revenue of 16.363 billion yen, +4.6% year-over-year; segment profit of 3.297 billion yen, +13.6% year-over-year; segment profit margin of 20.2%. This segment contributes ~23.7% of total consolidated revenue. 3. HCR Equipment Segment: Revenue of 2.511 billion yen, +2.4% year-over-year; reported a segment loss of 67 million yen. This segment contributes ~3.6% of total consolidated revenue.

• Full-year FY2025 financial guidance has been upward revised: total revenue increased 1 billion yen to 91.3 billion yen; operating profit increased 200 million yen to 13.8 billion yen; ordinary profit increased 360 million yen to 14.1 billion yen; net profit increased 240 million yen to 10.6 billion yen; projected ROE is 10.3%.
• Annual dividend per share guidance is upward revised 4 yen to 112 yen, representing an 11 yen increase from the prior fiscal year.
• The 4Q full-year profit projection looks relatively muted, driven by two main factors: management assumes yen appreciation to 150 JPY/USD and 160 JPY/EUR through year-end, and delayed budget execution for growth-focused spending that will be recognized in 4Q, primarily impacting the Industrial Equipment segment. The underlying business remains on solid trajectory.
• The company's medium-term management plan for FY2027 targets 50% overseas revenue share, which the company expects to exceed earlier than planned as of 3Q, with cumulative overseas revenue already reaching 48.9% of total revenue.

• Raw material price inflation and foreign exchange volatility continue to create upward pressure on procurement costs, which the company has managed through systematic price pass-through but remains an ongoing headwind, particularly for the HCR Equipment segment which reported a loss this quarter driven by yen depreciation higher input costs.
• Domestic new housing construction declines have created weakness for wooden construction focused air tool sales in the domestic Industrial Equipment segment.
• The auto-stapler business for copier manufacturers, which has outperformed expectations this year, is expected to see a gradual sales decline from next fiscal year onward, requiring ongoing profitability management.
• The newly developed autonomous mobile rebar-tying robot and fixed rebar-tying terminal still need to resolve technical challenges around weather resistance and durability before commercialization, with no fixed timeline for market launch.

Q: The Q2 saw a sales dip from old to new rebar tying machine transition in North America. Is the transition complete now, and why did Q3 sales look flat year-over-year? / A: The transition to new products was almost fully completed by autumn, after parallel sales through summer. The flat YoY appearance is partially due to differing promotional timing year-over-year. The new 2024 May product has been well received for its faster tying speed, and sales remain solid even without the large step-up impact of the earlier single-to-twin wire upgrade.

Q: How is MAX optimizing its business portfolio, particularly for shrinking or underperforming businesses? / A: Portfolio optimization refers first to shifting product mix within each segment: domestic office business is shifting from stationery to growing label display equipment, and domestic industrial business is shifting focus to rebar tying machines while gradually scaling back low-margin products. At the corporate level, management prioritizes allocating resources to the high-growth rebar tying machine business, and enforces disciplined fixed cost management for all other business lines.

Q: What is the timeline for commercialization of the autonomous rebar-tying robot and large-diameter rebar tying machine displayed at WOC, and what market size does the large-diameter segment offer? / A: The autonomous robot and fixed terminal are still in R&D; multiple technical hurdles around weather and durability remain, so no specific commercial launch date can be provided. The large-diameter rebar tying machine and rebar cutter will launch across Japan, Europe, and North America between this fiscal year and next. This product will allow MAX to cover nearly all rebar-tying use cases, expanding the overall addressable market. While specific size projections are not disclosed, clear customer demand exists for this product, and MAX expects it to deliver meaningful sales.

Q: Why is European rebar tying machine business recovering strongly, and what is driving the growth? / A: Recovery comes from two factors: first, the core German market has recovered back to prior-year sales levels after a weak 2024, and second, MAX's own focused expansion into Southern and Eastern Europe has delivered additional incremental growth, combining for overall year-over-year expansion for the region.