LINTEC Corporation Q4 FY2026 earnings call

Company Overview & Historical Development

• Lintec is a leading Japanese manufacturer of adhesive products and specialty paper, headquartered in Itabashi, Tokyo, with ~5,300 consolidated employees and 40 consolidated subsidiaries (3 domestic, 37 overseas focused on North America and Asia).
• The company entered the semiconductor sector in 1986 with the world's first UV-curable dicing tape, completed a three-way merger to form the current Lintec Corporation in 1990, and has pursued global expansion under a "made-in-market" local production for local demand strategy. It acquired the third-largest North American label material manufacturer MacTac America in 2016, followed by three additional M&A deals in North America through 2024, growing MacTac America's full-year revenue to ~88 billion yen in FY2025.
• 2025 March fiscal year achieved record-high revenue and operating profit, marking continued profitability without operating deficits even through past economic crises and the COVID-19 pandemic.

Growth Drivers & Core Strengths

• Diverse product portfolio spanning consumer goods to semiconductors reduces exposure to single-industry market cycles, enabling stable earnings. The company has an integrated production system for adhesive products, combining in-house release liner/film manufacturing and capability to supply both materials and application equipment.
• The Advanced Materials Division is the current growth driver, with strong demand for all three core product lines (semiconductor adhesive tapes, manufacturing equipment, capacitor-related tapes), driven by AI-related and high-end smartphone demand. Lintec holds the top global market share for UV-curable dicing tape and very high share for semiconductor surface protection tape.
• Growing demand for anti-crime window films: U.S. state subsidies for school safety have driven strong sales growth of Lintec subsidiary Madico's safety films in North America, while anti-crime window films have also gained attention in Japan amid rising organized robbery incidents.

Capital Returns & IR Activities

• Dividend policy targets no dividend cuts through FY2027 March, with a target payout ratio of 40%+ or 3% return on equity. The company has not cut dividends for over 10 years, increased the FY2025 full-year dividend to 100 yen from the initial 88 yen forecast, and plans a second consecutive 10 yen increase to 110 yen for FY2026, for an expected payout ratio of 41.2%.
• Completed a share repurchase program of up to 10 billion yen (3 million shares) by June 2025. The company is targeting to improve PBR above 1.0x through improved profitability, capital efficiency and enhanced IR engagement, as share price has remained soft below 1.0x PBR since October 2024.
• The number of individual meetings with analysts and institutional investors increased to 311 in FY2025 from 221 in the prior year, with 20% of meetings with overseas investors, and analyst coverage increased by 2 to 6 firms. Growing interest is driven by the rising AI demand trend for Lintec's semiconductor-related products.

New Product Development

• Successfully developed CNT pellicles for EUV lithography machines, a new product for the semiconductor front-end process, and is currently working to establish mass production capabilities. The company is also developing gas barrier films for next-generation solar cells, and expanding plastic-replacement specialty functional paper to meet growing demand for de-plasticization.

Lintec organizes its business into 3 main segments with 6 sub-segments, all figures are for the 2025 March fiscal year:

1. Printing Information Materials Division (Printing Materials & Industrial Processing segment): 146.7 billion yen, 46.4% of total consolidated revenue. It holds ~30% domestic market share for food/retail label adhesive paper and ~60% domestic share for automotive/electronics adhesive film, with 71.6% of division revenue coming from overseas.
2. Industrial Materials Division (Printing Materials & Industrial Processing segment): 38.0 billion yen, 12% of total consolidated revenue. It produces window films, outdoor sign films, interior decorative films and labeling machines, with 52.6% of division revenue from overseas.
3. Advanced Materials Division (Electronics & Optics segment): 85.0 billion yen, 26.9% of total consolidated revenue. It produces semiconductor manufacturing tapes, equipment and multilayer ceramic capacitor related products, with 74.5% of division revenue from overseas.
4. Optical Materials Division (Electronics & Optics segment): 11.3 billion yen, 3.6% of total consolidated revenue. It produces adhesive products for displays and automotive touch panels.
5. Paper Division (Paper & Processing Materials segment): 14.9 billion yen, 4.7% of total consolidated revenue. It produces specialty paper products including color envelope paper and art paper.
6. Processing Materials Division (Paper & Processing Materials segment): 20.1 billion yen, 6.4% of total consolidated revenue. It produces release liners, release films and process paper for composite material manufacturing. Total consolidated revenue for the 2025 March fiscal year is approximately 300 billion yen, with overseas revenue reaching 201.8 billion yen, accounting for 64% of total revenue.

• For the 2026 March fiscal year, Lintec forecasts an increase in revenue and a decrease in profit, while maintaining a high earnings level broadly similar to the prior record year.
• The primary driver of the expected profit decline is a planned forex assumption of 145 JPY per USD, 7 JPY higher (more yen appreciation) than the prior year actual rate, which will reduce the yen-converted value of overseas subsidiary earnings.
• Expected headwinds to profit also include rising fixed costs from higher labor costs and depreciation for new production equipment, as well as continued increases in raw material fuel and transportation costs. Lintec will pursue company-wide cost reduction efforts to offset these pressures.
• The company expects mass production of EUV CNT pellicles to be established in calendar 2025, with initial revenue contribution expected from FY2027 March onward if development proceeds as planned.

• The operating environment faces high uncertainty from impacts of U.S. trade policy on the global economy, rising geopolitical risk, exchange rate volatility from global monetary policy shifts, and rising raw material, energy and logistics costs.
• The large goodwill from the 2016 MacTac America acquisition (30 billion yen, amortized over 10 years) has created a significant ongoing amortization burden, though only 2 years of amortization remain.
• The specialty paper business faces severe market pressure from digitalization, paperless trends and rising postage costs.
• The company's share price has remained soft, with PBR persistently below 1.0x since October 2024.

Q: What is the strategic rationale for the large 30 billion yen goodwill associated with the MacTac America acquisition, and why was the deal worth pursuing despite the high goodwill?

A: Lintec had long sought an entry into the large, growing North American label market, and MacTac had an established market position with unique adhesive and coating technology. Management confirms the goodwill amortization burden is significant, but only 2 years of amortization remain. North America has more room for market growth than Japan, and management expects MacTac will achieve solid profitability once amortization is complete. The three subsequent add-on acquisitions in North America were for targeted goals: Duramark added new production capacity, Spinnaker expanded the product portfolio, and Label Supply expanded distribution into Canada.

Q: Will growing semiconductor demand from AI and auto driving translate to higher sales of Lintec's semiconductor products?

A: This expectation is correct. Lintec's core strength is its UV adhesion control technology, and as silicon wafers get thinner and more prone to cracking with advancing semiconductor miniaturization, demand for protective surface and dicing tapes increases. Lintec products are predominantly used for high-end semiconductors, so they are well positioned to capture growing demand from AI and high-end electronics trends, which will drive continued growth for the segment.

Q: When can we expect EUV CNT pellicles to contribute to revenue, and how large will the contribution be?

A: Lintec is targeting to establish mass production capability for the product in FY2025. The company is currently supplying samples to customers for performance evaluation. If development proceeds successfully, first revenue is expected after FY2026. Management does not disclose a specific forecast for the revenue contribution at this stage of development.

Q: Why have institutional investor meeting volumes increased so much recently?

A: Meeting volumes rose from 221 in the prior year to 311 in FY2025. The primary driver is growing investor attention to Lintec's semiconductor-related product lines amid the global boom in generative AI demand. Approximately 20% of meetings are with overseas investors, and analyst coverage increased by 2 new analysts to 6 total over the period, which also increases exposure to institutional investors.