IMV CORPORATION Q4 FY2025 earnings call

Overall Financial Performance

• Achieved 5 consecutive years of record revenue and profit, with operating profit of 2.315 billion yen and EBITDA of 2.991 billion yen, growing sharply from the prior year.
• Despite headwinds including rising component costs, US tariffs, and increased human capital costs, the company offset these pressures by winning high-margin, high-value-added projects and optimizing production processes, maintaining a stable high gross margin.
• Capital expenditure increased year-over-year to 1.498 billion yen, driven primarily by new test facility construction. R&D expenditure increased 58 million yen year-over-year to 792 million yen.
• Operating cash flow reached 3.848 billion yen, and free cash flow increased to 2.646 billion yen. The company maintains a strong balance sheet with 4.876 billion yen in cash and equivalents, 11.884 billion yen in equity, and low debt leverage.
• Announced a 30 yen per share dividend for the period, a 10 yen per share increase from the prior year, aligned with the company's profit-linked shareholder return policy.
• Ending order backlog reached a record high 15.463 billion yen, as incoming orders continued to outpace expanded production output.

Operational Initiatives

• Opened three new test facilities for TSS segment in Osaka (Japan), Iruma (Japan), and Ho Chi Minh City (Vietnam). The Osaka multi-purpose test facility and Iruma EMC test building have already seen very high utilization and booking rates from aerospace and defense customers.
• Launched the VD-unit condition monitoring unit for predictive maintenance in the MES segment, which enables simple vibration monitoring for production equipment to detect early degradation and failure signs, expected to improve customer productivity.
• Launched a co-branding marketing campaign with the popular Attack on Titan franchise, which generated strong social media and public engagement, with plans to continue expanding brand awareness to broader audiences.
• The company's "Premium Service" strategic initiative, a core mid-term plan priority, includes: (1) Proactive promotion of regular inspection and calibration services, which has tripled calibration volume and greatly reduced test interruptions from equipment failure; (2) Regular on-site and off-site technical training seminars for customers, which have been well received amid industry-wide technical skills transfer challenges from labor shortages; (3) Planned opening of a new US West Coast service hub in early 2026, to support the growing aerospace and defense customer base and improve response speed for North American clients.

DSS Segment Market Growth

• The DSS segment has seen strong growth in Western markets, especially the US, driven by expanded business with leading aerospace and defense firms. This market has three key characteristics: demand for large-scale testing equipment (the company's K-series, which supports up to 3-ton payloads, drove much of the segment's current period revenue, with most large unit orders coming from aerospace and defense), requirements for extremely high accuracy and stability (due to the high value and irreplaceable nature of test articles such as satellites), and strong backing from national government budgets (leading to larger project sizes and faster decision-making speeds).
• Growth in this high-end market is attributed to three core strengths: long-developed proprietary advanced vibration technology and knowledge paired with a strong track record of deliveries to major global test facilities, a global sales and service network enabling fast high-quality customer support, and a flexible supply chain model that partners with capable local suppliers instead of relying solely on Japanese sourcing.
• To meet rapidly rising demand for large units, the company expanded large equipment production capacity starting in February 2025, but order volumes have continued to grow beyond expanded capacity, so further production area expansion is planned.

1. DSS (core business): Revenue grew significantly year-over-year, driven by strong demand from EV, aerospace and defense end markets in Japan and Europe. DSS represented the majority of total company revenue, with domestic automotive and defense large-scale projects contributing heavily to domestic sales growth. 2. TSS: Revenue grew significantly year-over-year, aligned with broader post-COVID growth trends for the segment. 3. MES: Revenue decreased year-over-year due to sluggish growth in overseas seismograph sales. Geographically, domestic sales grew strongly year-over-year, while overseas sales also grew steadily, maintaining a 45% revenue contribution share (equal to the prior year) for international revenue. Total company revenue for the full year 2025 September period was 17.941 billion yen, up 17.0% year-over-year.

• For the 2026 September full year, management expects 11.5% year-over-year revenue growth to exceed 20 billion yen for the first time, based on the current record high order backlog and near-term order trends. The company forecasts 3.7% year-over-year operating profit growth to 2.4 billion yen, with a 12.0% forecast operating margin. A 30 yen per share dividend is planned, maintained at the 2025 September period level. Forecast ordinary profit and net income are projected to decline slightly, due to conservative assumptions around exchange rate impacts given the DSS segment's high overseas revenue share.
• Management upwardly revised all mid-term management plan targets following the strong 2025 performance and solid near-term order trends. The 2027 September (final mid-term plan year) revenue target was raised from 18 billion yen to 20.5 billion yen, while the EBITDA target was set at 3.6 billion yen and the EPS target was raised to 130.65 yen. From a 2024 September base, the company targets over 145% growth in both EBITDA and EPS over the full mid-term plan period.

• Rising input, transportation, and labor costs continue to put pressure on profit margins, though the company has so far offset these pressures through product mix optimization.
• The company's high DSS overseas revenue share exposes results to exchange rate volatility, which management accounted for with conservative assumptions in 2026 guidance.
• Demand for large DSS equipment has outpaced current expanded production capacity, creating pressure to further increase capital expenditure for capacity expansion.

No Q&A section was included in the provided earning call transcript.