MAX CO.,LTD. Q3 FY2026 earnings call

Overall Company Performance

• Cumulative third quarter total revenue hit 74.323 billion yen, 7.7% year-over-year increase, marking a new all-time high for cumulative third quarter revenue and all profit metrics.
• Operating profit reached 13.77 billion yen, 20% year-over-year increase, with operating profit margin improving 1.9 percentage points to 18.5% year-over-year.
• Ordinary profit was 14.507 billion yen, 19.5% year-over-year increase; Net income attributable to parent company shareholders was 10.902 billion yen, 19.7% year-over-year increase.
• All financial metrics are ahead of the previously upwardly revised full-year plan targets.
• Standalone third quarter revenue was 25.635 billion yen, a new all-time high for a single quarter.

Key Business Highlights

• The core rebar tying machine business (included in concrete structure tools) posted cumulative revenue of 31.9 billion yen, 20% year-over-year increase, reaching 89% progress against the full-year plan of 36 billion yen, and is on track to exceed the full-year target. The 39 billion yen full-year target for the mid-term plan's final year (FY2027) is now expected to be achieved one year ahead of schedule.
• New products including the extra-large diameter model of Twin Tier, the Mesh Bar Cutter, and the fully remodeled large diameter model have been launched across Japan, Europe, and North America, and new product introduction activities are also driving expanded sales of the core standard model.
• In North America, despite weak housing market conditions, the concrete structure market remains solid, with steady new customer acquisition and repeat purchases driving strong sales of both machines and consumables. There was almost no noticeable pull-forward demand or post-demand reaction from Trump tariffs that management previously worried about.
• In Europe, sales in core markets of Germany and Nordic countries have recovered, and sales in the newly expanded Eastern European region have also grown, resulting in solid overall performance. New product demand has been stronger than expected in Europe, especially for the Mesh Bar Cutter.
• In Japan, despite declining construction starts, new product expansion and productivity-focused on-site activities have delivered steady sales of both machines and consumables.
• Overseas cumulative revenue reached 38.899 billion yen, increasing the overseas revenue share to 52.3% of total company revenue, the highest level in company history.

Capital and Shareholder Return Policies

• A 1-for-4 stock split has been approved, effective April 1, 2026, with a record date of March 31, 2026. The split aims to lower the per-unit investment amount, improve share liquidity, and expand the investor base.
• Full-year annual dividend per share (pre-split basis) is planned at 132 yen, an 18 yen increase from the previous year, in line with strong business performance.
• Between August and November 2025, the company repurchased 996,300 own shares for 5.499897 billion yen, and will continue to consider flexible own share repurchases alongside dividend payments going forward.
• The company will continue to pursue a balanced capital policy centered on growth investment for business expansion and shareholder return via dividends and repurchases.

• Industrial Equipment Segment: Revenue of 56.097 billion yen, 11.9% year-over-year increase; Segment profit of 14.621 billion yen, 26.4% year-over-year increase; Segment profit margin of 26.1%; Revenue contribution to total company revenue is approximately 75.5%.
• Office Equipment Segment: Revenue of 15.936 billion yen, 2.6% year-over-year decrease; Segment profit of 2.735 billion yen, 17.1% year-over-year decrease; Segment profit margin of 17.2%; Revenue contribution to total company revenue is approximately 21.4%.
• HCR Equipment Segment: Revenue of 2.29 billion yen, 8.8% year-over-year decrease; Cumulative segment result is a 9 million yen loss; Revenue contribution to total company revenue is approximately 3.1%. However, the 3-month period of the third quarter turned to net profit.

• Full-year 2026 March fiscal year guidance is maintained at the level of the previous upward revision from the half-year result announcement. The company expects to achieve a fourth consecutive year of record full-year revenue and profit, and all profit metrics and return on equity (ROE) are on track to hit the FY2027 mid-term plan targets one year ahead of schedule.
• The assumed foreign exchange rates for Q4 are set at a conservative 145 yen per USD and 165 yen per yen per EUR, in response to recent exchange rate volatility. Actual performance could fluctuate based on future exchange rate movements.
• While maintaining the full-year company-level guidance, minor adjustments have been made to segment and sub-segment outlooks based on current progress.
• The company expects Q4 orders from the major e-commerce partner that experienced system issues to recover, and will expand sales of label making products such as Beepop across domestic and overseas markets to secure segment profit for the Office Equipment segment.
• The HCR Equipment segment will continue to work on improving marginal profit and optimizing fixed costs to establish a stable profitable business, while expanding sales of high value-added products to grow revenue.
• Management will continue to push for expanded sales in Q4 and target full-year results that exceed the current guidance.

• Foreign exchange rate volatility creates uncertainty for full-year performance, as exchange rate movements are outside of the company's control and can cause actual results to deviate from guidance. The company's foreign exchange sensitivity is currently higher than the initial full-year plan estimate, which increases this exposure.
• In the Industrial Equipment segment's domestic business, both residential and non-residential construction market conditions remain challenging, which creates ongoing headwinds for domestic sales growth.
• The Office Equipment segment's Auto Stapler business is expected to continue declining gradually, and the segment saw a larger-than-expected year-over-year revenue decrease in Q3 due to the combination of the expected Auto Stapler decline and an unplanned system outage at a major domestic e-commerce partner.
• The HCR Equipment segment's core wheelchair business faces a challenging domestic business environment, and the segment is still in the process of turning to stable profitability, with only a small quarterly net profit achieved in Q3.
• The core rebar tying machine business in North America faces ongoing cost pressure from Trump tariffs, though the company has already implemented two rounds of price pass-through to mitigate this impact.

Q: Regarding North America, I understand you implemented price increases ahead of consuming pre-tariff increase local inventory, which led to higher gross margin in the first half. Is it correct to understand the Q3 result reflects your underlying performance without this dynamic?

A: That is correct. We implemented price increases for tariff impact starting May 1, and a second round on September 1. Q1 was almost entirely sold from pre-tariff old cost inventory, and new tariff-inclusive cost started being applied partway through Q2. While a small portion of old cost inventory remained in Q3, Q3 and beyond are almost entirely on new tariff-inclusive cost. The cost and price increase levels are now aligned as you noted.

Q: Is there still room for further price increases going forward?

A: Our rebar tying machines already have very strong product competitiveness and are sold at a fairly high price point. The quick market acceptance of our recent tariff-related price increases is entirely due to the strong product power of the Twin Tier rebar tying machine. For the foreseeable future, we will prioritize increasing sales volume at the current price point, as both the machines and consumables have very high profit margins, so volume growth directly translates to profit growth. We will not rule out future price increases, but we will assess timing based on market conditions if needed.

Q: Have you also increased prices for the wire consumables?

A: Yes, we implemented price increases for the wire consumables at the same time as the machines.

Q: Regarding new product launches for rebar tying machines in the US: is the extra-large diameter model already launched, and what new products are planned going forward?

A: We currently offer three models: standard, large diameter, and extra-large diameter. We have already launched the new extra-large diameter model across Japan, Europe, and North America. We launched the fully remodeled large diameter model first in the Japanese market last October, and we plan to launch this remodeled model in the European and North American markets very soon.

Q: Is that launch within the next few months, or will it be next fiscal year? Also, is the large diameter model more widely usable than the extra-large diameter model?

A: We expect the launch in 2 to 3 months from now. Looking at total market demand, the standard model covers 80% of use cases, and the remaining 20% is split between large diameter and extra-large diameter. Within that 20%, the large diameter model has a higher market share than the extra-large diameter model.

Q: Has the Mesh Bar Cutter been launched overseas yet?

A: We launched the Mesh Bar Cutter almost simultaneously across Japan, Europe, and North America last year, with Europe launching slightly earlier. It is a rebar tying-related product and has had a very strong start. We expected the strongest demand in Europe, and actual results in Europe have exceeded our expectations, so it is off to a very smooth start.

Q: Is the strong performance in Europe driven by new product effects?

A: That is correct. New product launches from last year have contributed to the strong performance in both Europe and North America. While the domestic market still faces a tough external environment, new product effects and expanded sales activities have delivered steady performance there as well.

Q: I understand depreciation expense is planned to increase starting in Q4 this fiscal year. Could you share details on this increase?

A: The annual depreciation plan was set at the start of the year, and currently capex progress is at 55.6% against plan. It is uncertain whether depreciation will hit the planned full-year amount, and we think there is a good chance that full-year depreciation will come in below the initial plan. There are no extremely large individual items driving the depreciation plan, all capex is proceeding according to the original plan. However, there are some timing delays related to new product launches that have pushed back capex implementation, so depreciation recognition is also expected to be slightly lower than the original plan as a result.

Q: Could you provide an update on the timeline for launching the robotic rebar tying machine?

A: We showed the product as a reference exhibit at last year's World of Concrete. We still have issues to resolve with durability and weather resistance, and R&D is actively working to solve these issues to commercialize and launch the product. We do have an internal timeline for launch, but we cannot share details publicly at this time. The project is progressing as planned and we intend to launch the product commercially, so we appreciate your patience.

Q: After the recent price adjustment for rebar tying machines, the new prices have been well received by the market. Given the current price gap with competitors, do you see room for further price adjustments going forward?

A: We implemented price increases in connection with the Trump tariffs. Currently, we do not see any direct competitor to our Twin Tier model in the US market. While other rebar tying products exist, they are one generation older than our current product. While we will not share specific pricing, our product is still priced at a significant premium to competing products, and sales remain strong thanks to our product competitiveness. Given that the current price point is already well accepted by customers, we want to focus on getting our product into the hands of more customers rather than pursuing additional price increases. We will assess future price adjustments if needed based on changes in overall price levels or new tariff changes.

Q: You mentioned you have been expanding into Eastern Europe recently. If the Russia-Ukraine conflict ends and Ukrainian reconstruction demand emerges, are you well positioned to reach that demand?

A: We originally built our business in Europe around Germany and the Nordic countries, but sales volume in Eastern Europe has grown significantly in recent years. We already have strong results in Poland, which shares a border with Ukraine. We expect Poland to be the key hub for meeting any Ukrainian reconstruction demand, and we are already reviewing and adjusting our channel strategy now to prepare for that potential future demand.

Q: Could you quantify the impact of the major e-commerce partner's system outage on the Office Equipment segment's Q3 performance? Also, can you shift sales to other e-commerce channels to offset the impact, resulting in no net change to overall sales?

A: Cumulative Q3 domestic office business revenue was 5.358 billion yen, down from 5.576 billion yen year-over-year, a 200 million yen total year-over-year decrease. More than half of this decrease is attributable to the system outage at the major e-commerce partner. While we do have supply relationships with other e-commerce companies and we did attempt to shift sales, other channels were not able to cover even half of the sales lost from the affected partner, so the outage remains a net negative impact on Q3 revenue.