FY11/2022
Second Quarter
Supplementary Material
on Financial Results

July 14th, 2022

T&S inc.
TSE Growth: 4055

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Table of Contents

FY11/2022 Second QuarterHighlights

p. 3

Financial Results Overview

p. 4

Operating Profit

p. 6

Net Sales by Categoryp. 7

Net Sales by Customer

p. 8

Net Sales by Quarterp. 9

Business environment

p. 10

Status of increase in engineers

p. 11Statements of Income

p. 12

Balance Sheets

p. 13

FY Earnings Forecast

p. 14Topics

p. 16

Shareholder Returns

p. 19

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2

Highlights (FY2022/2Q)(Theme of current term)

Accelerated Growth
１

Record-high revenues achieved (Compared to the previous same quarter)
Net sales
Operating profit
Ordinary profit
Profit２: 1,567 million yen: 286 million yen: 294 million yen: 205 million yen(Up 21.8%↑, + 281 million yen)(Up 66.5%↑, + 114 million yen)(Up 65.3%↑, + 116 million yen)(Up 64.7%↑, + 80 million yen)

(YoY)
(ditto)(ditto)(ditto)Advanced Technology Solution made a breakthrough.
Other categories also performed well.
➢ Sales in the Advanced Technology Solution category increased 74.5% year-on-year. Sales grew as aresult of stable orders for development support projects from existing clients as well as solid orders
from new clients.
➢ Sales in the Solution category increased 17.2% year-on-year. Sales increased due to the continuationof large-scale development projects that began in the second half of the previous fiscal year.
➢ Sales in the Semiconductor category increased 25.2% year-on-year. Sales increased as a result of anincrease in the number of engineers dispatched to semiconductor factories.

３

2Q cumulative sales progress rate exceeded previous years,and performance-linked bonuses were also allocated.
➢ The company achieved a progress rate of 50.6% toward the full-year forecast for the current fiscal
year, compared to 47.1% in the 2Q cumulative sales ratio of the previous fiscal year.
➢ Following the previous year, a portion of operating profit was returned to employees, and despite therecording of 49 million yen in performance-linked bonuses for 2Q, the company achieved an operating
profit rate of 18.3% (an increase of 4.9 points from the previous same quarter).

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3

Financial Results Overview
FY11/2022 Second Quarter

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4

Financial Results Overview (FY2022/2Q)

Record-high revenues achieved (Compared to the previous same quarter)
Net sales
Operating profit
Ordinary profit
Profit: 1,567 million yen: 286 million yen: 294 million yen: 205 million yen

Net Sales(million yen)

(Up 21.8%↑, + 281 million yen)(Up 66.5%↑, + 114 million yen)(Up 65.3%↑, + 116 million yen)(Up 64.7%↑, + 80 million yen)(million yen)

(YoY)
(ditto)(ditto)(ditto)Operating Profit

500

2,000

Up
21.8%

1,567

400

1,500

Up
66.5%

1,286
300

286 ※

1,000
200
500

172

10000

FY2021/2Q

FY2022/2Q

FY2021/2Q

FY2022/2Q※ In view of the strong performance, the Company
performance-linked bonuses for employees
allocated 49 million yen in FY2022/2Q and 25
million yen in FY2021/2Q.

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5

Operating Profit (FY2022/2Q)

Absorbed performance-linked bonuses andincreased operating profit by 114 million yen.
Increase(million yen)

Decrease(YoY)

Operating
営業利益profit

In addition to the regular bonus,
a performance-linked bonus wasgiven to the employees ※Operatingprofit rate
18.3%
Operatingprofit rate
13.4%

Increase in labor andsubcontracting costs
mainly due to increasein number of engineers

FY2021/2Q
OperatingprofitIncreased
sales

Provisionfor bonusesin cost ofsales

Other
increase incost ofsales

Provisionfor bonusesin SG&A
expenses

Other
decrease inSG&A
expenses

FY2022/2Q
Operatingprofit※ The Company has recorded 49 million yen in FY2022/2Q and 25 million yen in FY2021/2Q.

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6

Net Sales by Category (FY2022/2Q)

Sales increase in all categories
Up 74.5% Advanced Technology Solution Category(YoY)

Net Sales (by category)(million yen)

Solution

+169

986

FY2021/2Q

Up

1,156

FY2022/2Q
900

1,000

1,100

17.2%

226+57

FY2022/2Q

Up

283

200

25.2%

72

283mil yen
18.1%

FY2022/2Q
1,567mil yen

Solution+54Up

74.5%

127

FY2022/2Q
0127mil yen
8.1%

300

Advanced Technology Solution
FY2021/2Q

AdvancedTechnologySolution

Semiconductor

1,200Semiconductor
FY2021/2Q

Sales proportion (by category)100

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200

1,156 mil yen
73.8%(Note) Our business segment is a single segment.
Only net sales are calculated by category.

7

Net Sales by Customer (FY2022/2Q)

Toshiba G, Hitachi G, Kioxia G

Major customers maintaining steady level
Sales to Kioxia G significantly increased（Up 47.3% （YoY） 24.3% of the total)

Sales proposition (by customer)

Net Sales (by customer) (million yen)
412

FY2021/2Q

ToshibaG
東芝G

461

FY2022/2Q

Up
11.9%
OthersHitachi
G日立G

FY2021/2Q
FY2022/2Q

Up
15.2%

289
332

25.0%

ToshibaG
29.4%

FY2022/2Q
Kioxia G
キオクシアGFY2021/2Q

Up
47.3%

259
381

FY2022/2Q

KioxiaG
24.3%

Others
その他

100

391

FY2022/2Q

200

Up
20.1%

326

FY2021/2Q

300

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400

500

HitachiG
21.2%

600

8

Net Sales by Quarter (FY2022/2Q)

2Q cumulative Net Sales: 1,567 million yen
Increase:＋281 million yen 21.8% increase(YoY)(million yen)

Progress rate: 50.6%(Percentage of progress toward full-year forecast)

3,500

3,100mil yen+367mil yen

3,000

2,732mil yen+13.4%
2,500

4Q

757mil yen
27.7%

3Q

688mil yen
25.2%

2,000
Netsales

1,500

Progressrate+21.8%
1,000

2Q

700mil yen
25.6%

1Q

586mil yen
21.5%

500

02021/11（actual）
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50.6%+281mil yen

2Q

1Q

834mil yen
26.9%
733mil yen
23.6%
2022/11（forecast）*There are slight seasonal
fluctuations in theCompany's performancedue to the increase in thenumber of engineers andproject delivery dates.

9Business environment – Trend of Major Customers

Trend of our Major Customers (As of July 14, 2022)
Our orders continue to be strong, and our major customers as a whole are also doing well.
Although each company has been overcoming the effects of the impact of COVID-19, theresponse to geopolitical risks remains a challenge.

Toshiba G

Hitachi G

Kioxia G

OthersOrders increased significantly YoY, mainly in the semi-conductors forautomotive and HDD for data centers. The Energy System solutions segment
which is included in the power plants system has been also performing well.
Our company sees the medium-term management plan centered on
infrastructure and device-related businesses in its favor.
The recovery in market conditions and the reorganization of groupcompanies have led to consecutive high profits. The IT and Energy segments
has been performing well and capital investment related to our operations isexpected to increase, reversing the trend of restrained investment during
the pandemic (COVID-19).
Strong demand for semiconductors has led to strong sales demand for data
center SSDs and enterprise SSDs. In addition to the construction of a new
manufacturing building at the Yokkaichi Plant, construction of a new
manufacturing building at the Kitakami Plant has begun, which is expected toincrease orders for our company.
In the field of R&D for AI algorithm development, automotive-relatedmanufacturers, precision machinery manufacturers, and telecommunication
infrastructure companies have a strong will to invest in research. In addition,
the trend towards DX and labor saving is accelerating from the pandemic(COVID-19), and business inquiries to our company are expanding.
(Compiled from each company's published data and newspaper reports)

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10

Status of increase in engineers

Personnel increase rate

104% ※

Recruitment policy ca. 10% of total engineers(number of engineers)

372

400
338

350
300

305
+29 people

274

250
200
150

248277288※

100500FY11/20202020年11月期

FY11/2021
2021年11月期

FY11/2022
2022年11月期
actual
実績

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FY11/2023
2023年11月期
goal目標FY11/2024
2024年11月期※As of May 31, 2022

11

Statements of Income (FY2022/2Q)

Statements of Income (FY2022/2Q)(thousand yen)

FY2021/2Q

FY2022/2Q+/- amount+/- %1,286,741

1,567,800

281,059

21.8%

Cost of sales

916,680

1,080,574

163,894※17.9%

Gross profit

370,060

487,226

117,165

31.7%

SG&A expenses

197,868

200,544

Operating profit

172,192

286,681（Operating profit rate）（13.4%）（18.3%）

Ordinary profit

177,985

294,155（Ordinary profit rate）（13.8%）（18.8%）

Quarterly profit

124,877

205,717（9.7%）（13.1%）Net sales（Quarterly profit rate）

2,676※

1.4%

114,489

66.5%

116,169

65.3%

80,84064.7%※ Includes performance-linked bonuses of 49,000 thousand yen in FY2022/2Q and 25,000 thousand yen in
FY2021/2Q for employees due to good performance.

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12Balance Sheets (FY2022/2Q)

Balance Sheets (FY2022/2Q)(thousand yen)2021/11 End

FY2022/2Q End+/- amount

1,869,946

1,848,880△ 21,066

117,500

162,391

44,8901,987,447

2,011,272

23,824440,851411,394△ 29,456

51,51345,742△ 5,771492,364

457,136△ 35,228

Total shareholders’ equity

1,495,082

1,554,135

59,053

Total net assets

1,495,082

1,554,135

59,053

Total liabilities & net assets

1,987,447

2,011,272

23,824Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

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13

FY Earnings Forecast
FY11/2022 Full-year

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FY Earnings Forecast

Steady progress against full-year forecasts(No change in the full-year forecast)(million yen)

FY11/2021（actual）

2,732

Net sales

Operating profit

412

Ordinary profit

419

Current (Quarterly)
profit294

FY11/2022（forecast）

FY11/2022
2Q (actual）

3,100(Compared to previous period ratio:
increase 13.4%)

550(Compared to previous period ratio:
increase 33.2%)

557(Compared to previous period ratio:
increase 32.9%)

391(Compared to previous period ratio:
increase 32.7%)

Progress rate

1,567

50.6%

286

52.1%

29452.8%

205

52.6%

Company

Sales increased 21.8% YoY. Sales were strong in all categories. Development projects from major clients suchas Toshiba G, Hitachi G, and Kioxia G were strong. Cumulative 2Q sales were 50.6% of the full-year forecast.
The company is increasing its use of outsourcing to compensate for its engineer resources, and the shift tomore profitable projects has also been successful, resulting in a gross profit margin of 31.1%. Absorbing a 49
million yen provision for performance-linked bonuses, operating profit rose 66.5% YoY to 286 million yen.
Operating profit rate was 18.3%.

Solution

Sales increased 17.2% YoY. Sales increased due to the continuation of large-scale development projects thatbegan in the second half of the previous fiscal year.

Semiconductor

Sales increased 25.2% YoY. The number of engineers dispatched to semiconductor factories increased 14.9%
YoY, and revenue increased accordingly. In addition to regular requests from semiconductor factories toincrease the number of engineers, contract terms and conditions are being revised as needed, contributing tothe increase in sales and profit.

AdvancedTechnologySolution

The company made a leap forward with a 74.5% increase YoY. Orders from NEC remained strong as in theprevious term. Development and support with projects from existing clients were also stable, and this category
accounted for 8.1% of total company sales, up from 5.7% compared to the same period of the previous year.

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15

Topics

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16

Topic 1: Kumamoto office opened

Opened our 5th office in Kumamoto City.
In July 2022, we opened an office in Kumamoto City, Kumamoto Prefecture.
•••

Kyushu area is one of the regions where supply chains related to semiconductor
manufacturing are concentrated
Kumamoto Prefecture is the location of many production bases of major
semiconductor-related company groups in Japan
A major global semiconductor company will begin manufacturing at the end of2024

Targeting such customer base, we will aim to receive system development,maintenance and operation services.
Outline of Business Location(1) Name: T&S inc. Kumamoto office(2) Address: 1-28 Shinshigai, Chuo-ku,
Kumamoto City, Kumamoto Prefecture(3) Date of establishment : July 1, 2022

(Source: Created based on CraftMAP white map)

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17

Topic 2: Execution of commitment line

To secure flexible financing for
future growth investments and M&A
Outline of the Agreement(1) Type of contract: Bilateral method commitment(2) Contracting party: Resona Bank, Ltd.

(3) Amount borrowed: 500 million yen(4) Date of contract: May 31, 2022

(5) Contract term

: 3 years(6) Use of funds: Working capital(7) Security: Unsecured/non-guaranteed(8) Purpose: To secure stable working capital for future businessactivities and to respond quickly to sudden demand

for funds

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18

Shareholder Returns

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19

Shareholder Returns

Total return ratio for the FY11/2022
is expected to be a maximum of 70.5%.
Basic Policy on Dividends
The Company considers it an important management task to increase corporate value throughinvestment in the acquisition of new technologies in fields where future growth is expected,
and believes that the return of profits to shareholders is the key to achieving this goal.
Our basic policy for profit distribution is to continue to pay appropriate dividends inconsideration of business performance, while giving priority to securing the internal reserves
necessary to improve our corporate value.
As for FY11/2022, the Company plans to pay a dividend of 5.00 yen per share ( up 1.00 yen inreal terms), aiming for a dividend payout ratio of around 10%, in line with the above policy.
In addition to this, the Company has been repurchasing its own shares since January 2022 (upto 250 million yen).
The financial indicators after taking into account the above measures are as follows.
Dividend per share
FY11/2022（Forecast）

5.00 yen

Total return ratio（※）

Return on equity
(ROE)

70.5%

25.1%

※ The above figures are based on the assumption that the maximum number of shares to be repurchased has been reached.

The status of treasury shares repurchases as of June 30, 2022 is as follows
Total number ofshares acquired

121,300 shares

Total acquisition
price of shares

Acquisition period (contract basis)

162,190,200 yen

January 14, 2022 - June 30, 2022

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20ContactT&S inc.
Corporate Administration Dept.
Email / pr@tecsvc.co.jp
URL / https://www.tecsvc.co.jp/

Information contained in this material includes those related to prospects. Such information is based on thoseavailable to us at the present moment and certain assumptions that may be considered reasonable. Therefore
we do not guarantee any realization thereof and any future business performance. Various factors such aschanges in the economic climate, industries in general, customers' needs, and legislative changes may bringabout some situations substantially different from the current forecasts. In the future, even if some new
information and some event occur, we have no obligation to carry out any update or revision concerning any
information about the future contained in this material.

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21