Nakanishi : Flash Report for 2nd quarter Ended Jun. 30, 2023

Flash Report for 2nd quarter Ended June 30, 2023

(on a consolidated basis) [Japan GAAP]

Aug 7, 2023

Name: Nakanishi Inc. Stock listing: Tokyo Stock Exchange : Standard Market

Code Number: 7716 URL: http://www.nsk-nakanishi.co.jp

Representative: Eiichi Nakanishi, President and Group CEO

Inquiries: Daisuke Suzuki, Corporate Vice President, Finance & Accounting Tel: [phone]

Scheduled date to submit Securities Report: Aug 8, 2023

Scheduled date to begin dividend payments: Sep 14, 2023

Supplementary materials to quarterly financial statements: Applicable

Quarterly earnings results briefing: Applicable (for institutional investors and securities analysts)

(All amounts are rounded down to the nearest million yen.)

1. Consolidated financial results for 2nd quarter period (January 1 to June 30, 2023)

(1) Operating Results

			Millions of yen
	Net sales	EBITDA	Operating income
2nd quarter ended June 30, 2023	28,259	15.5%	9,595	5.7%	8,247	1.4%
2nd quarter ended June 30, 2022	24,462	6.3%	9,075	－	8,129	6.3%
			Millions of yen
			Income attributable	Earnings	Diluted
	Ordinary income	per share
	to owners of parent	EPS (yen)
					(yen)
2nd quarter ended June 30, 2023	11,247	18.5%	8,103	20.0%	95.28	94.97
2nd quarter ended June 30, 2022	9,490	27.8%	6,750	25.8%	78.52	78.33

Notes: 1. Percentage figures for net sales, operating income, ordinary income and net income represent year-on-year comparisons.

2. Comprehensive income for reporting period:

2nd quarter ended June 30, 2023	10,971 million (21.9%)
2nd quarter ended June 30, 2022	9,000 million (45.4%)

1. 3. EBITDA (Operating income + Depreciation + Goodwill amortization)

2. Financial Position

		Millions of yen
		Total assets	Net assets	Equity ratio
As of June 30, 2023	111,560	99,477	88.9%
As of December 31, 2022	102,154	91,022	88.8%
Note: Ownersʼ equity As of June 30, 2023	99,137 million

As of December 31, 2022 90,737 million

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2. Dividends

		Cash dividends per share (yen)
	1st quarter	2nd quarter	3rd quarter	Year-end	Annual
Year ending December 31, 2022	̶	22.00	̶	24.00		46.00
Year ending December 31, 2023	̶	24.00
Year ending December 31, 2023			̶	26.00		50.00
(forecast)

Notes: 1. Revisions to dividend payment forecasts during the period: Applicable

3. Business Performance Forecasts for the Current Term (January 1 to December 31, 2023) Millions of yen

					Income	Earnings per
		Operating		attributable to
			share (yen)
	Net sales	income		Ordinary income	owners of parent
Full year	56,638 16.4	15,972	3.8	19,506 10.5	13,842 11.0	162.77
Notes: 1.	Percentage figures represent year-on-year comparisons.

2. Revisions to performance forecasts during the period: Applicable

4. Others

1. Changes in the scope of consolidation during the period Inclusion: None
   Exclusion: None
2. Application of special accounting methods in the preparation of quarterly consolidated financial statements: Not applicable
3. Changes in accounting principles, accounting estimates, and restatement
4. 1. Changes in accounting principles due to revision of accounting standards, etc.: Not applicable
   2. Changes in accounting principles other than 1: Not applicable
   3. Changes in accounting estimates: Not applicable
   4. Restatement: Not applicable
5. Number of ordinary shares outstanding at the end of the period (including treasury stock)

As of June 30, 2023:	94,259,400 shares
As of December 31, 2022:	94,259,400 shares

Number of shares of treasury stock at the end of the period

As of June 30, 2023:	9,282,284 shares
As of December 31, 2022:	9,105,053 shares

Average number of shares during the period

2nd quarter ended June 30, 2023: 85,045,065 shares

2nd quarter ended June 30, 2022: 85,980,048 shares

* This quarterly flash report is out of scope of quarterly review.

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Table of Contents
1. Qualitative Information on Quarterly Financial Results	4
(1)	Explanation of Results of Operations	4
(2)	Explanation of Financial Position	4
(3)	Explanation of Cash flows	5
(4)	Explanation of Forecast of Consolidated Financial Results and Other Forward-Looking	5
Information
2. Consolidated Quarterly Financial Statements and Principal Notes	6
(1)	Consolidated Quarterly Balance Sheets	6
(2)	Consolidated Quarterly Statements of Income and Comprehensive Income	8
	(Consolidated Quarterly Statements of Income)	8
	(Consolidated Quarterly Statements of Comprehensive Income)	9
(3)	Consolidated Statements of Cash Flows	10
(4)	Notes to Consolidated Quarterly Financial Statements	12
	(Notes to Going Concern Assumption)	12
	(Notes to Significant Changes in the Amount of Shareholdersʼ Equity)	12
	(Changes in the scope of consolidation during the period)	12
	(Segment Information）	13

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1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Results of Operations

In the world economy during 2nd quarter, inflation is almost getting to the peak but CPI is still high. There are some uneasy due to the bankrupt of Silicon Valley Bank and the acquisition of Credit Suisse. So uncertainty for the future is increasing.

In Japanese economy, capital investments keep steady about manufacturing industry. About non- manufacturing industry, demands on outdoor business are increasing thanks to recovery from COVID- 19 pandemic. However, there is shortage of manpower.

Under these circumstances, all 3 segments sales increased. EBITDA increased as well.

As a result, the Group sales were ¥28,259,425 thousand (+15.5% year on year), EBITDA 9,595,521 thousand (+5.7%), operating income was ¥8,247,200 thousand (+1.4%), ordinary income was 11,247,938 thousand (+18.5%) and income attributable to owners of parent for the quarter was ¥8,103,010 thousand (+20.0%).

The following is a breakdown of business performance by segment. （Dental segment）

In Dental segment, North America sales decreased but Domestic, Europe and Asia sales increased. Segment EBITDA and segment operating income increased as well.

As a result, sales were 22,448,932 thousand (+9.3%), segment EBITDA was 9,820,469 thousand (+5.5%) and segment operating income was 9,051,671 thousand (+4.4％).

(Surgical segment)

In Surgical segment, North America and Europe sales decreased but Domestic and Asia sales increased. Total sales increased. Segment EBITDA and segment operating income were almost the same of year on year.

As a result, sales were 1,779,394 thousand (+5.8%), segment EBITDA was 928,439 thousand (+0.8%) and segment operating income was 888,937 thousand (+0.4％).

（Industrial segment）

In Industrial segment, Europe sales increased by 5 times because our company acquired Alfred Jäger GmbH shares at the end of 2022. And Asia sales increased as well but Domestic and North America sales were flat. Total sales increased. Segment EBITDA and segment operating income increased as well.

As a result, sales were 4,031,098 thousand (+79.1%), segment EBITDA was 1,147,705 thousand (+35.9%) and segment operating income was 878,716 thousand (+13.5％)

1. Explanation of Financial Position (Assets, liabilities and net asset)
   Total assets at the end of 2nd quarter were 111,560,527 thousand and increased by 9,406,067 thousand compared with the end of the previous fiscal year. The main reasons were that Cash and deposits increased by 5,267,163 thousand and Construction in progress increased by 2,179,438 thousand.
   Total liabilities were 12,082,919 thousand and increased by 951,115 thousand compared with the end of the previous fiscal year. The main reason was that Short-term borrowings increased by 2,000,000 thousand.
   Net asset was 99,477,607 thousand and increased by 8,454,951 thousand compared with the end of the previous fiscal year. The main reasons were that Retained earnings increased by ¥ 6,025,138 thousand and Foreign currency translation adjustment by ¥ 2,996,341 thousand.
2. • 4 －

(3) Explanation of Cash flows

The balance of cash and cash equivalents on a consolidated basis as of the end of 2nd quarter was ¥35,006,105 thousand, up ¥3,274,767 thousand from the previous term-end.

Net cash provided by operating activities was ¥4,102,962 thousand, compared with ¥2,805,211 thousand a year earlier. The main factor here was an increase of cash due to the recording of income before income taxes and minority interests of ¥11,149,976 thousand, which outweighed income taxes paid of ¥3,277,738 thousand.

Net cash provided by investing activities was ¥-2,290,437 thousand, compared with ¥-3,363,793 thousand a year earlier. The main expenditure was Purchase of tangible fixed assets ¥2,989,215 thousand.

Net cash provided used in financing activities was ¥-946,067 thousand, compared with ¥-2,800,225 thousand a year earlier. The main expenditure was Cash dividends paid ¥2,043,463 thousand. The main income was Proceeds from short-term borrowings ¥2,000,000 thousand.

1. Explanation of Forecast of Consolidated Financial Results and Other Forward-Looking Information Our company will revise our business performance forecasts it released on February 9, 2023. The following table shows our forecasts of business performance for the fiscal year 2023.

Full year

	The amount	%
Sales	56,638 million	16.4
EBITDA	18,616 million	6.4
Operating income	15,972 million	3.8
Ordinary profit	19,506 million	10.5
Net income attributable to	13,842 million	11.0
owners of parent

(Note) Percentage figures represent year-on-year comparisons.

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