MAX CO.,LTD. Q1 FY2026 earnings call

• Overall Performance: The first quarter achieved record-high revenue and all profit metrics across all previous first quarters, with all financial results exceeding the initially planned targets. Revenue grew 7.3% year-over-year to 24.24 billion yen, operating profit grew 22.7% year-over-year to 4.894 billion yen with an operating margin of 20.2%, ordinary profit grew 8.7% year-over-year to 4.968 billion yen, and net profit grew 7.6% year-over-year to 3.595 billion yen.
• Core Business (Rebar Tying Machines): Sales of tools for concrete structures (led by rebar tying machines, the company's most important core business) grew 13% year-over-year to 10.1 billion yen, with 28.1% progress against the full-year annual plan. The new extra-large diameter Twin Tier model was launched across Japan, Europe, and North America, and is already delivering steady incremental revenue.
• Regional Performance: In North America, both machinery and consumables sales grew, with pre-price-hike pull-forward demand related to Trump tariffs contributing to the strong result. In Europe, sales recovered in core Western European markets (Germany, Nordic countries) and grew in expanded Eastern/Southern European markets, with all regions performing steadily. In Japan, despite a weak operating environment with decreasing construction start floor space, both machinery and consumables performed steadily driven by new product expansion.
• Sub-Segment Performance: Within Industrial Equipment, the domestic living environment equipment business grew driven by replacement sales of its core Dry Fan product and price adjustments, with improved profitability. Within Office Equipment, domestic text display equipment (such as the popular Beepop label maker) grew to offset declining stationery sales; ASEAN stationery sales recovered, leading to overall flat year-over-year performance. HCR Equipment returned to black ink driven by product mix improvement, and the company will continue working to stabilize this segment as a consistent profitable business.
• Capital Policy: The board approved a new share repurchase program with an upper limit of 1 million shares or 5.5 billion yen, to be executed from August 1 to December 31, 2025, combining market purchases and ToSTNeT-3 purchases, to improve capital efficiency and enhance shareholder returns alongside dividends. The planned annual dividend per share remains 120 yen as initially guided.

1. Industrial Equipment Segment: Revenue was 18.117 billion yen, a 10.1% year-over-year increase. Segment profit was 5.141 billion yen, a 29.1% year-over-year increase, with a segment profit margin of 28.4%. This segment contributes 74.7% of total company revenue. 2. Office Equipment Segment: Revenue was 5.352 billion yen, a 0.6% year-over-year slight increase. Segment profit was 988 million yen, an 8.9% year-over-year decrease, with a segment profit margin of 18.5%. This segment contributes 22.1% of total company revenue. 3. HCR Equipment Segment: Revenue was 770 million yen, a 4.9% year-over-year decrease. Segment profit was 2 million yen, returning to black ink from a prior year loss. This segment contributes 3.2% of total company revenue. Overall company total revenue was 24.24 billion yen, with overseas revenue reaching 12.524 billion yen, accounting for 51.7% of total revenue.

• The company upward revised full-year 2026 March fiscal year guidance compared to the April initial plan: Full-year revenue is now guided to 95.2 billion yen (1.1 billion yen upward revision), representing 3.7% year-over-year growth. Operating profit is guided to 15.7 billion yen (1 billion yen upward revision), representing 8.5% year-over-year growth. Ordinary profit is guided to 15.8 billion yen (900 million yen upward revision), representing 6.7% year-over-year growth. Net profit is guided to 11.8 billion yen (500 million yen upward revision), representing 5.1% year-over-year growth. ROE is expected to reach 11.1% including the impact of the approved share repurchase.
• Interim (first half) guidance was also upward revised: Interim revenue is guided to 47.4 billion yen (1.04 billion yen upward revision), operating profit to 8.6 billion yen (1.27 billion yen upward revision), ordinary profit to 8.6 billion yen (1.2 billion yen upward revision), and net profit to 6.5 billion yen (730 million yen upward revision).
• The Industrial Equipment segment guidance was upward revised, while the Office Equipment and HCR Equipment segment guidance were slightly downward revised to reflect first quarter progress.
• Assumed exchange rates for the remainder of the fiscal year remain unchanged at 145 JPY per USD and 155 JPY per Euro.
• The expected pullback from first quarter pull-forward tariff-related demand has already been incorporated into the lower half of the fiscal year guidance, and management believes exceeding the revised full-year guidance is achievable through continued expansion of core product sales.

• Exchange rate volatility created a net 509 million yen negative impact on operating profit in the first quarter, and continued exchange rate fluctuations represent an ongoing risk to cost and profit levels.
• Raw material price increases raised total costs by 347 million yen in the first quarter, in line with plan, but continued raw material cost volatility remains a risk to profitability.
• Trump-related tariff changes in North America pushed up input costs, and the company has passed through most of the cost increase to prices, but future tariff policy changes could create additional unexpected cost pressures.
• First quarter North American performance included material pull-forward demand from distributors and end-users ahead of tariff-related price increases, which is expected to create a demand pullback in the second quarter and second half of the fiscal year, though this impact has already been incorporated into guidance.
• The domestic construction market (a core end market for the company's industrial tools) remains weak with declining construction starts, creating ongoing headwinds for domestic sales.

Q: What level of pull-forward demand from Trump tariffs occurred in 1Q, and how will it impact 2Q results? / A: While it is difficult to quantify the exact size, pull-forward demand existed at both the distribution and end-user levels ahead of August price increases tied to new tariffs. The expected demand decline after this pull-forward has already been fully incorporated into the 2Q and full-year guidance. Management will continue to monitor market trends closely in the coming months.

Q: What is the reasoning and size behind the new share repurchase program, and what is the future shareholder return policy? / A: The share repurchase is part of the company's ongoing mid-term capital policy to improve capital efficiency and enhance shareholder returns, following prior share repurchase and cancellation programs. The program is sized at up to 1 million shares or 5.5 billion yen, consistent with the company's goal of balancing growth investment and shareholder returns. The planned annual dividend per share remains unchanged at 120 yen, in line with prior guidance.

Q: What is driving the strong sales growth of industrial machinery in Europe, and what is the outlook for the region? / A: The growth comes from two main factors: a recovery in demand in our established core markets of Germany and the Nordic countries, and steady growth from our multi-year expansion into Eastern and Southern European markets. Currently, nearly all European regions are seeing steady performance, and the company will continue expanding marketing and distribution to drive further growth in the region.

Q: What are the details of the price increase for rebar tying machines in North America that started in August, and how is it being implemented? / A: The August price increase fully reflects the added cost from the new Trump tariffs, and the company has already communicated the change to all distributors and customers. The price adjustment was timed to align with the effective date of the tariff change to minimize market disruption, and management does not expect significant pushback given the pre-communication and pull-forward demand that already occurred in 1Q.