MAX CO.,LTD. Q4 FY2025 earnings call

Overall Company Performance

• Full-year 2025 March fiscal year total revenue was 91.839 billion yen, a 6.0% year-over-year increase; operating profit was 14.468 billion yen, a 14.8% year-over-year increase; ROE reached 10.9%. All metrics beat plan and hit all-time record highs.
• Weak yen boosted revenue by 2.214 billion yen, but raised costs by 1.179 billion yen, for a net positive impact. Volume changes contributed a 1.997 billion yen profit increase, price increases contributed a 1.374 billion yen profit increase.
• Overseas revenue hit 48.4% of total full-year revenue; Q4 overseas revenue exceeded 10 billion yen, a 11.2% year-over-year increase, maintaining a high level.

Core Business Progress

• Industrial Equipment: Rebar tying machine consumable sales grew across North America (driven by strong non-residential infrastructure construction spending), Europe (recovery in Germany, growth in Southern/Eastern Europe), and domestic markets. New product launches at the Las Vegas trade show received positive customer feedback.
• Office Equipment: Auto stapler orders have maintained a recovery trend since H2 2024, though gradual long-term decline from paperless trends is expected. Beepop label makers grew on expanded application outreach.
• HCR Equipment: Overseas wheelchair sales centered on the Chinese rental market remained solid, but domestic order sluggishness and currency impacts pushed the segment to a net loss.

Mid-Term Strategy Progress

• Business Strategy: Overseas business growth is on track. For domestic business, new tools for wood construction have been launched to gain market share amid weak housing starts; HCR profitability remains a key priority to achieve stable positive returns. The new tool subscription/rental service "Rentool" is growing in awareness, with national expansion planned, and new pipeline projects are progressing.
• Management Base Strengthening: Active mid-career hiring has strengthened human capital for sustainability; digital transformation (DX) is progressing on plan. Capital expenditure execution hit 72.4% of plan, delayed by tooling input delays, but investment and R&D for expanding Taiwire (rebar tying machine consumable) production capacity continues.
• Growth Investment: Investments focused on expanding the overseas rebar tying machine business, with M&A actively under consideration. R&D investment is progressing on plan.

Capital Allocation and Shareholder Returns

• The 3-year mid-term plan projected 54 billion yen total cash inflow, with 19.3 billion yen achieved in the first year. Capital outlay: 3 billion yen for management base strengthening, 4.3 billion yen for R&D.
• A 2.3 billion yen share repurchase was executed in connection with a 2024 November share offering. The full year dividend was raised to 114 yen per share, up 13 yen from the prior year and 2 yen from the prior plan, with a payout ratio of 47.1% and equity yield of 5.1%. Market capitalization grew 1.3x year-over-year on improved performance.

1. Industrial Equipment Segment: Total segment revenue was 66.706 billion yen (representing 72.6% of total company revenue), with segment profit of 14.595 billion yen, a 15% year-over-year increase, and a segment profit margin of 21.9%. The sub-segment performance is: Domestic Industrial Tools: 21.227 billion yen, 1.4% year-over-year decrease; Overseas Industrial Tools: 33.284 billion yen, 13.6% year-over-year increase; Living Environment Equipment: 12.195 billion yen, 5.6% year-over-year increase. Concrete structure tools (led by rebar tying machines) hit 34.8 billion yen, 14% year-over-year increase, hitting 109% of annual target.
2. Office Equipment Segment: Total segment revenue was 21.876 billion yen (representing 23.8% of total company revenue), with segment profit of 4.477 billion yen, a 12.9% year-over-year increase, and a segment profit margin of 20.5%. The sub-segment performance is: Domestic Office Business: 7.634 billion yen, 0.1% year-over-year increase; Overseas Office Business: 5.786 billion yen, 0.2% year-over-year decrease; Auto Stapler Business: 8.456 billion yen, 11.5% year-over-year increase.
3. HCR (Healthcare) Equipment Segment: Total segment revenue was 3.253 billion yen (representing 3.6% of total company revenue), with a segment loss of 0.082 billion yen, a result of increased revenue but decreased profit year-over-year, with a segment profit margin of -2.5%.

• The 2024 published mid-term management plan for the 2025-2027 March fiscal years has been upward revised, with the 2027 March fiscal year (final year of the plan) now targeting 98.1 billion yen revenue, 15.5 billion yen operating profit, 15.8% operating margin, and 11.0% ROE. The long-term 2030 target of ROE 11% and PBR 2x remains unchanged.
• For the 2026 March fiscal year, the company plans 2.5% nominal revenue growth, which equals ~5% real growth after factoring in projected yen appreciation impacts. The plan assumes exchange rates of 1 USD = 145 JPY, 1 EUR = 155 JPY.
• Segment targets for 2027 March fiscal year: Industrial Equipment to 72.1 billion yen, Office Equipment maintained at 22.2 billion yen, HCR Equipment to 3.8 billion yen with a return to positive operating profit.
• Concrete structure tools (centered on rebar tying machines) are targeted to reach 36.0 billion yen revenue in 2026 March fiscal year and 39.0 billion yen in 2027 March fiscal year, up from 34.8 billion yen actual in 2025. The estimated total market size for the business was revised upward from 80 billion yen to 90 billion yen after adding Middle East and Southeast Asian markets to the calculation.
• The 2026 March fiscal year annual dividend is planned at 120 yen per share, a further 6 yen increase from the 2025 revised dividend.
• The 2026-2027 plan does not include any impact from potential Trump administration tariff measures; management will respond timely to maintain planned profit levels if changes occur.

• Slow housing starts in Japan have reduced sales of tools for wooden construction, dragging on domestic industrial tool performance.
• Persistent domestic order weakness in the HCR equipment segment has resulted in an operating loss for the segment, and achieving stable profitability remains a key challenge.
• Projected yen appreciation will create downward pressure on reported revenue and profit for the overseas-focused business.
• Capital expenditure execution missed the full-year plan, hitting only 72.4% of target due to delays in mold and tooling input.
• Long-term paperless trends are expected to drive gradual demand decline for paper-related office equipment products.
• Potential new US tariff measures under the Trump administration create unpriced uncertainty for overseas business profit.

Q: Why did North American Industrial Equipment segment revenue decline in Q4 2025 compared to the prior three quarters of the fiscal year? / A: The Q4 decline is primarily driven by three temporary factors: the company accrued provisions for after-sales maintenance costs for living environment products, incurred higher selling and administrative expenses for the January 2025 Las Vegas industry trade show participation, and year-over-year yen appreciation reduced translated value of North American denominated sales. The underlying demand for rebar tying machines and their consumables in North America non-residential infrastructure remains solid, aligned with the performance seen in earlier quarters. No material sustained slowdown in core regional demand has occurred.

Q: What is driving the outlook for continued growth in concrete structure tool sales under the revised mid-term plan? / A: The growth outlook is supported by multiple factors: the installed base of rebar tying machines is growing across all core regions, which drives steady recurring growth in high-margin consumable (Taiwire) sales, the company is expanding its product line-up with new models including the extra-large Twin Tie and mesh bar cutters launching in 2025 to capture new market segments, and the company is conducting market exploration in high-growth new regions including the Middle East and ASEAN to lay the groundwork for future expansion, with the total addressable market revised up 12.5% from adding these regions.