Quarterly trends and results

Quarterly results

Cumulative		FY12/21				FY12/22				FY12/22
(JPYmn)		Q1	Q1-Q2	Q1-Q3	Q1-Q4	Q1	Q1-Q2	Q1-Q3	Q1-Q4	% of forecast	FY Est.
Revenue		1,159	2,272	3,471	4,696	1,179	2,379	3,588		74.0%	4,848
	YoY	14.9%	10.6%	10.0%	7.2%	1.7%	4.7%	3.4%			3.2%
Gross profit		354	697	1,114	1,462	305	605	930
	YoY	-10.8%	-3.3%	4.7%	-0.2%	-13.8%	-13.2%	-16.5%
	Gross profit margin	30.5%	30.7%	32.1%	31.1%	25.9%	25.4%	25.9%
SG&A expenses		252	491	757	1,025	282	561	859
	YoY	3.2%	-4.6%	-1.5%	0.1%	11.8%	14.4%	13.6%
	SG&A ratio	21.8%	21.6%	21.8%	21.8%	23.9%	23.6%	24.0%
Operating profit		102	206	357	438	23	43	71		56.6%	125
	YoY	-33.3%	0.0%	21.0%	-0.9%	-77.5%	-78.9%	-80.2%			-71.5%
	Operating profit margin	8.8%	9.1%	10.3%	9.3%	1.9%	1.8%	2.0%			2.6%
Recurring profit		105	187	320	371	38	85	174		85.2%	204
	YoY	-44.6%	-25.0%	-3.4%	-20.3%	-63.9%	-54.7%	-45.6%			-45.0%
	Recurring profit margin	9.0%	8.2%	9.2%	7.9%	3.2%	3.6%	4.8%			4.2%
Net income		57	95	175	658	34	159	228		82.7%	276
	YoY	-57.9%	-44.7%	-18.1%	50.2%	-40.2%	67.7%	30.4%			-58.1%
	Net margin	4.9%	4.2%	5.0%	14.0%	2.9%	6.7%	6.4%			5.7%
Quarterly performance		FY12/21				FY12/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue		1,159	1,113	1,200	1,225	1,179	1,200	1,210
	YoY	14.9%	6.4%	9.1%	-0.1%	1.7%	7.8%	0.8%
Gross profit		354	343	417	349	305	300	325
	YoY	-10.8%	6.0%	21.5%	-13.3%	-13.8%	-12.6%	-22.0%
	Gross profit margin	30.5%	30.8%	34.7%	28.5%	25.9%	25.0%	26.9%
SG&A expenses		252	239	266	268	282	279	298
	YoY	3.2%	-11.6%	4.7%	4.9%	11.8%	17.1%	12.0%
	SG&A ratio	21.8%	21.4%	22.2%	21.9%	23.9%	23.3%	24.6%
Operating profit		102	104	151	81	23	20	27
	YoY	-33.3%	95.3%	69.5%	-45.0%	-77.5%	-80.4%	-81.9%
	Operating profit margin	8.8%	9.4%	12.6%	6.6%	1.9%	1.7%	2.3%
Recurring profit		105	82	133	51	38	47	89
	YoY	-44.6%	36.3%	62.6%	-61.9%	-63.9%	-43.1%	-32.8%
	Recurring profit margin	9.0%	7.4%	11.1%	4.2%	3.2%	3.9%	7.4%
Net income		57	38	80	483	34	125	69
	YoY	-57.9%	3.7%	89.7%	115.3%	-40.2%	227.5%	-13.7%
	Net margin	4.9%	3.4%	6.7%	39.4%	2.9%	10.4%	5.7%

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Results by segment

Cumulative			FY12/21			FY12/22			FY12/22
(JPYmn)			Q1	Q1-Q2	Q1-Q3	Q1	Q1-Q2	Q1-Q3	% of forecast	FY Est.
Revenue			1,159	2,272	3,471	1,179	2,379	3,588	74.0%	4,848
	YoY		14.9%	10.6%	10.0%	1.7%	4.7%	3.4%		3.2%
	Design Service		535	1,124	1,712	505	1,068	1,583	74.2%	2,132
		YoY	-	-	-	-5.7%	-4.9%	-7.6%		-
	Maintenance Service		408	780	1,200	430	864	1,300	74.3%	1,750
		YoY	-	-	-	5.5%	10.8%	8.3%		-
	Energy Saving Service		216	368	560	244	447	706	73.2%	965
		YoY	-	-	-	13.1%	21.3%	26.2%		-
Operating profit(Segment profit)			102	206	357	23	43	71	56.6%	125
	YoY		-33.3%	0.0%	21.0%	-77.5%	-78.9%	-80.2%		-71.5%
	Net income margin		8.8%	9.1%	10.3%	1.9%	1.8%	2.0%		2.6%
	Design Service		113	257	409	48	97	150
		YoY	-	-	-	-57.8%	-62.2%	-63.4%
		Net income margin	21.1%	22.9%	23.9%	9.4%	9.1%	9.5%
	Maintenance Service		69	112	188	57	118	184
		YoY	-	-	-	-17.3%	4.9%	-2.6%
		Net income margin	16.9%	14.4%	15.7%	13.2%	13.6%	14.1%
	Energy Saving Service		9	6	12	15	17	33
		YoY	-	-	-	65.8%	176.7%	175.9%
		Net income margin	4.1%	1.7%	2.2%	6.0%	3.9%	4.7%
Recurring profit			105	187	320	38	85	174	85.2%	204
	YoY		-44.6%	-25.0%	-3.4%	-63.9%	-54.7%	-45.6%		-45.0%
	Net income margin		9.0%	8.2%	9.2%	3.2%	3.6%	4.8%		4.2%
	Design Service		120	270	428	56	117	173	89.6%	193
		YoY	-	-	-	-53.3%	-56.7%	-59.6%		-
		Net income margin	22.4%	24.0%	25.0%	11.1%	11.0%	10.9%		9.1%
	Maintenance Service		68	112	188	55	110	169	63.1%	268
		YoY	-	-	-	-19.1%	-1.8%	-10.1%		-
		Net income margin	16.7%	14.4%	15.7%	12.8%	12.7%	13.0%		15.3%
	Energy Saving Service		2	-31	-52	16	23	85	101.2%	84
		YoY	-	-	-	700.0%	-	-		-
		Net income margin	0.9%	-	-	6.5%	5.1%	12.0%		8.7%
	Adjustments		-89	-170	-253	-96	-189	-296
Quarterly			FY12/21			FY12/22
(JPYmn)			Q1	Q2	Q3	Q1	Q2	Q3
Revenue			1,159	1,113	1,200	1,179	1,200	1,210
	YoY		14.9%	6.4%	9.1%	1.7%	7.8%	0.8%
	Design Service		535	588	589	505	564	514
		YoY	-	-	-	-5.7%	-4.2%	-12.6%
	Maintenance Service		408	372	420	430	434	436
		YoY	-	-	-	5.5%	16.6%	3.8%
	Energy Saving Service		216	152	191	244	202	259
		YoY	-	-	-	13.1%	32.9%	35.6%
Operating profit(Segment profit)			102	104	151	23	20	27
	YoY		-33.3%	95.3%	69.5%	-77.5%	-80.4%	-81.9%
	Net income margin		8.8%	9.4%	12.6%	1.9%	1.7%	2.3%
	Design Service		113	145	152	48	50	52
		YoY	-	-	-	-57.8%	-65.6%	-65.4%
		Net income margin	21.1%	24.6%	25.8%	9.4%	8.8%	10.2%
	Maintenance Service		69	43	76	57	61	66
		YoY	-	-	-	-17.3%	40.1%	-13.5%
		Net income margin	16.9%	11.7%	18.2%	13.2%	14.0%	15.1%
	Energy Saving Service		9	-3	6	15	2	16
		YoY	-	-	-	65.8%	-191.9%	175.1%
		Net income margin	4.1%	-	3.0%	6.0%	1.2%	6.2%
	Adjustments		-89	-81	-83	-96	-93	-107
Recurring profit			105	82	133	38	47	89
	YoY		-44.6%	36.3%	62.6%	-63.9%	-43.1%	-32.8%
	Net income margin		9.0%	7.4%	11.1%	3.2%	3.9%	7.4%
	Design Service		120	150	158	56	61	56
		YoY	-	-	-	-53.3%	-59.3%	-64.6%
		Net income margin	22.4%	25.5%	26.8%	11.1%	10.8%	10.9%
	Maintenance Service		68	44	76	55	55	59
		YoY	-	-	-	-19.1%	25.0%	-22.4%
		Net income margin	16.7%	11.8%	18.1%	12.8%	12.7%	13.5%
	Energy Saving Service		2	-33	-21	16	7	62
		YoY	-	-	-	700.0%	-	-
		Net income margin	0.9%	-	-	6.5%	3.5%	23.9%

Source: Shared Research based on company data
Notes: Figures may differ from company data due to differences in rounding methods.
The company changed its segmentation in Q1 FY12/22, integrating the System Development business into the House Management (H– M) business and changing the names of the D– TECH, H– M, and E– Saving businesses to Design Service, Maintenance Service, and Energy Saving Service, respectively. Figures in this table are based on the revised segmentation.

Design Service business

Cumulative			FY12/21			FY12/22
(JPYmn)			Q1	Q1-Q2	Q1-Q3	Q1	Q1-Q2	Q1-Q3
Revenue			535	1,123	1,712	505	1,068	1,583
	YoY		-	-	-	-5.7%	-4.9%	-7.6%
	Existing business		527	1,111	1,694	487	1,036	1,546
		YoY	-	-	-	-7.6%	-6.8%	-8.7%
	BIM related (new business)		8	12	17	17	32	35
		YoY	-	-	-	112.5%	166.7%	105.9%
Operating profit			113	257	409	48	97	150
	YoY		-	-	-	-57.8%	-62.2%	-63.4%
	Net income margin		21.1%	22.9%	23.9%	9.4%	9.1%	9.5%
	Existing business		152	330		96
		YoY	-	-	-	-36.8%		-
		Net income margin	28.8%	29.7%	-	19.7%		-
	BIM related (new business)		-39	-72		-47
		YoY	-	-	-	-		-
		Net income margin	-	-	-	-		-
Quarterly			FY12/21			FY12/22
(JPYmn)			Q1	Q2	Q3	Q1	Q2	Q3
Revenue			535	588	589	505	564	514
	YoY		-	-	-	-5.7%	-4.1%	-12.7%
	Existing business		527	584	583	487	549	510
		YoY	-	-	-	-7.6%	-6.0%	-12.5%
	BIM related (new business)		8	4	5	17	15	3
		YoY	-	-	-	112.5%	275.0%	-40.0%
Operating profit			113	145	152	48	50	52
	YoY		-	-	-	-57.8%	-65.6%	-65.4%
	Net income margin		21.1%	24.6%	25.7%	9.4%	8.8%	10.2%
	Existing business		152	178		96
		YoY	-	-		-36.8%
		Net income margin	28.8%	30.5%		19.7%
	BIM related (new business)		-39	-33		-47
		YoY	-	-		-
		Net income margin	-	-		-

Source: Shared Research based on company data
Note: Figures may differ from company data due to differences in rounding methods.

Maintenance Service business

Cumulative			FY12/21			FY12/22
(JPYmn)			Q1	Q1-Q2	Q1-Q3	Q1	Q1-Q2	Q1-Q3
Revenue			408	779	1,199	430	864	1,299
	YoY		-	-	-	5.5%	10.9%	8.3%
	House builders		307	609	944	325	658	989
		YoY	-	-	-	5.9%	8.0%	4.8%
	Energy companies		100	169	254	104	205	310
		YoY	-	-	-	4.0%	21.3%	22.0%
Costs			339	667	1,011	373	746	1,115
	YoY		-	-		10.1%	11.9%	10.3%
Operating profit			69	112	188	57	118	184
	YoY		-	-	-	-17.3%	4.9%	-2.3%
	Operating profit margin		16.9%	14.4%	15.7%	13.2%	13.6%	14.1%
Quarterly			FY12/21			FY12/22
(JPYmn)			Q1	Q2	Q3	Q1	Q2	Q3
Revenue			408	371	419	430	434	435
	YoY		-	-	-	5.5%	16.8%	3.9%
	House builders		307	302	335	325	333	331
		YoY	-	-	-	5.9%	10.3%	-1.2%
	Energy companies		100	69	84	104	101	105
		YoY	-	-	-	4.0%	46.4%	25.0%
Costs			339	328	343	373	373	369
	YoY		-	-	-	10.1%	13.7%	7.6%
Operating profit			69	43	76	57	61	66
	YoY		-	-	-	-17.3%	40.1%	-13.0%
	Operating profit margin		16.9%	11.7%	18.1%	13.2%	14.0%	15.2%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Cumulative Q3 FY12/22 results

Revenue increased JPY117mn (+3.4%) YoY. While revenue fell in the Design Service business, revenue rose in the Energy Saving Service and Maintenance Service businesses.

Operating profit fell JPY286mn (-80.2%) YoY, mainly due to lower profit in the Design Service business.

Growth in revenue was 4.7% YoY in 1H, but 3.4% YoY in cumulative Q3, showing a deceleration in the growth rate.

Operating profit fell 78.9% YoY in 1H, and 80.2% YoY in cumulative Q3, showing the decline accelerated.

The company made no changes to its full-year FY012/22 earnings forecast as of the time of the Q3 results announcement.

Versus the full-year FY12/22 company forecast (revised in July 2022), revenue reached 74.0% (72.8% in cumulative Q3 FY02/21 versus full-year FY12/21 results), operating profit reached 56.6% (75.3%), recurring profit reached 85.2% (61.2%), and net income attributable to owners of the parent reached 82.7% (48.9%).

Performance was as follows at businesses with a relatively large impact on earnings.

Segment change
The company changed its segmentation in Q1 FY12/22, integrating the System Development business into the H-M business and changing the names of the D-TECH, H-M, and E-Saving businesses to Design Service, Maintenance Service, and Energy Saving Service respectively. YoY comparisons are based on FY12/21 results adjusted to the new segmentation.

Design Service business

Revenue: JPY1.6bn (-7.6% YoY)
Operating profit: JPY149mn (-63.4% YoY)

Revenue was down YoY. Housing starts for owner-occupied homes, the company's main business area, declined 9.8% YoY, and the number of the company's design contracts also declined.

Operating profit decreased YoY. Expenses grew as the company continued to invest in a business model using building information modeling (BIM). For example, it increased the number of design personnel in Japan and China (Shenzhen). Meanwhile, yen depreciation increased design expenses in China.

Maintenance Service business

Revenue: JPY1.3bn (+8.3% YoY)
Operating profit: JPY183mn (-2.6% YoY)

Revenue was up YoY. Revenue in the Maintenance Service business increased due to high number of customers from existing business partners and the number of calls to the call center. In addition, the number of projects commissioned by energy-related companies such as TEPCO HomeTech (joint venture of EPCO and TEPCO Energy Partner, Inc.) increased.

Operating profit decreased YoY due to system investments for opening the Kanazawa Operation Center, developing new services and increasing operational efficiency.

Energy Saving Service business

Revenue: JPY705mn (+26.2% YoY)
Operating profit: JPY33mn (+175.9% YoY)

Orders for installation work of solar power equipment and storage batteries increased as TEPCO HomeTech and the company formed sales tie-up for a consolidated subsidiary ENE's.

EPCO 2311