Briefing Materialfor 2nd quarter ended Jun. 30, 2021

Aug. 20, 2021
NAKANISHI INC.

Disclaimer
The information presented in these materials contains forward-looking statements about futurebusiness performance. These statements by definition involve risks and uncertainties and are
not intended to guarantee future performance. Actual results in the future may differ fromexpectations and the projections presented in these materials due to changes in the global
economy and fluctuations in foreign currency exchange rates and so on. NSKNSKNSKNSKNSKContents

Consolidated Financial Results for FY2021 Q2

3

Consolidated Financial Forecast for FY2021
Revised on August 6th

11

Overviews of Each Segments and Future Initiative

14© 2021 NAKANISHI INC.

2

FY2021 Q2
Consolidated Financial Results© 2021 NAKANISHI INC.

3

Consolidated Performance
FY2021 Q2ActualFY2020 Q2
ActualYoY
Comparison

FY2021
Forecast

Ratio to the
Forecast

Net sales

23,014

13,689+68.1 %

19,792+16.3 %

Gross Profits

13,914

7,846+77.3 %

11,895+17.0 %

60.5 %

57.3 %+3.2 pt60.1 %+0.4 pt

7,646

2,392

+219.6 %5,685+34.5 %

33.2 %

17.5 %+15.7 pt

28.7 %+4.5 pt

7,423

2,490

+198.1 %6,183+20.1 %

Ratio to net sales

32.3 %

18.2 %+14.1 pt31.2 %+1.0 pt

Profit attributable to owners

5,366

1,858

+188.7 %4,579+17.2 %

Ratio to net sales

23.3 %

13.6 %+9.7 pt

23.1 %+0.2 pt

JPY

61.93

21.45

Against the US dollar JPY

107.74108.43-0.69

105.00+2.74

Against the EURO129.96119.85+10.11123.00+6.96

M of JPY

Ratio to net sales

Operating Income
Ratio to net sales

Ordinary Incomeof parents

E

P

S

Upward revision
on May 7th

52.85

Currency rate

Forex impact:

JPY

Net sales +668M of JPY

vs FY2020 Q2 Actual, +1,115M of JPY

vs FY2021 Q2 Forecast

Forex sensibility: Fluctuations in annual sales due to the depreciation of the yen (per one yen)
Against USD: Increase of 80M of JPY
Against EURO: Increase of 78M of JPY© 2021 NAKANISHI INC.

4

Change in net sales by business segment

19,000

M of JPY

23,01417,000+151+668

Industrial Others+21.1%+24.6%

Forex
impact+296

Net sales by business segment

15,000

FY2020 Q2
ActualFY2021 Q2ActualChangeDental11,666

19,874+8,207

Industrial

1,406

1,702

+296

Others

616

768

+151

Forex
impact

-

+668

+668

13,68923,014+9,32413,000+8,207

11,000

9,000

7,000

13,689Dental+70.3%

Total

5,000

Based on forex as of FY2020 Q2
3,000

FY20 Q2
Net sales

FY21 Q2
Net sales© 2021 NAKANISHI INC.

5

Dental segment ; Change in net sales by region
M of JPY
16,50020,53014,500Net sales of Dental segment by region+656+1,145
12,500+1,013 Others
Asia+62.9%+1,818 +52.1%

10,500N.America+2,324 +122.9%

8,500

Japan

6,500

11,666 +1,905 +101.2%
Europe4,500

FY2020 Q2
ActualFY2021 Q2ActualChangeEurope

4,123

6,029

+1,905

Japan

2,296

4,621

+2,324

North
America

1,479

3,298

+1,818

Asia

1,944

2,958

+1,013

Others

1,821

2,966

+1,145Forex
impact

-

+656

+656

11,666

20,530+8,864Forex
impact+46.2%
Based on forex as of FY2020 Q2

Total

2,500

FY20 Q2
DentalNet
sales

FY21 Q2
DentalNet
sales© 2021 NAKANISHI INC.

6

Industrial segment ; Change in net sales by region
M of JPY
1,100

+ 15

1,000

+77

Europe
+7.4%

+2

1,699

-2

Net sales of Industrial segment by region

Others Forex

impact900

N.America

FY2020 Q2

FY2021 Q2ActualActualChange

Japan

505

544

+39

Asia

330

490

+160

North
America

355

433

+77

Europe

214

230

+15

Others

0

3

+2

Forex
impact

-

-2

-2

1,406

1,699

+293

+21.9%

+160
800

1,406

+39

700

Japan

Asia
+48.5%+7.8%
600

Based on forex as of FY2020 Q2

Total
500

FY20 Q2
Industrial
Net sales

FY21 Q2
Industrial
Net sales© 2021 NAKANISHI INC.

7

Change in operating income
M of JPY< Exchange rate >USD : 108.43JPY → 107.74JPY
EURO : 119.85JPY → 129.96JPY

8,700

7,646

-274

7,700

+438
Product
mix

6,700

5,700

Increasein selling
expenses-454
Increasein personal
expenses

+ 61

+522

Decreasein otherexpenses

Forex
impact+4,960

4,700

3,700

2,700

2,392
Increasein demand

1,700

Based on forex as of FY2020 Q2700

FY20 Q2
OP income

FY21 Q2
OP income© 2021 NAKANISHI INC.

8

Consolidated Balance Sheet
As ofJune 30, 2021

As of
Dec.31, 2020

Change89,93382,470+7,462

5,791

5,158

+633

- Inventories

10,503

10,604-100

Liabilities

8,727

6,198

+2,528100

100

Net assets

81,20676,272+4,934- Retained earnings

81,50277,435+4,067Return on equity

13.0 %

8.7 %+4.3 Pt

FY2020 Q2: 5.1

Return on assets

17.7 %

10.8 %+6.9 Pt

FY2020 Q2: 6.4

FY2021 Q2

FY2020 Q2

ActualActualChangeCapital Investments

575

611

-36

Depreciation
Expenses

853

838

+14

M of JPY

Total assets- Notes and accounts
receivable-trade- Loans payable© 2021 NAKANISHI INC.

Note
Cash and deposits

Merchandise and finished goods
Work in process
Raw materials and supplies
Accounts payable-trade
Other current liabilities+6,461

+269
-141
-227
+377
+1,887Note

9

FY2021 Q2 Net sales figure
M of JPY

DentalJapan

Export
sub total

EuropeNorth
America

Asia

OthersTotal

FY2020 Q2 Actual

2,296

9,370

4,123

1,479

1,944

1,821

11,666FY2021 Q2 Actual

4,621

15,909

6,496

3,287

3,130

2,995

20,530

Amount+2,324+6,539+2,372+1,807+1,185+1,173+8,864+69.8%+57.5%+122.1%+61.0%+64.4%+76.0%

YoY

Industrial+101.2

505

901

214

355

330

0

1,406

FY2021 Q2 Actual

544

1,155

230

430

490

3

1,699

Amount

+39

+254

+15

+75

+160

+2

+293

Ratio

+7.8%

+28.2%+7.4%+21.1%+48.5%+296.0%+20.9%FY2020 Q2 Actual

394

222

64

95

56

5

616

FY2021 Q2 Actual

438

345

132

122

77

11

783

Amount

+43

+122

+68

+26

+21

+6

+166

Ratio

+11.1%+55.3%+106.0%+27.9%+38.8%+106.9%+27.0%FY2020 Q2 Actual

3,196

10,493

4,402

1,931

2,331

1,828

13,689FY2021 Q2 Actual

5,604

17,409

6,859

3,840

3,698

3,010

23,014

Amount+2,408+6,916+2,457+1,909+1,367+1,182+9,324

Ratio+75.3%+65.9%+55.8%+98.9%+58.7%+64.7%+68.1%

YoY

Total

Ratio

FY2020 Q2 Actual

YoY

Others(Including Forex impact

YoY© 2021 NAKANISHI INC.

10

Consolidated Financial Forecast
for FY2021© 2021 NAKANISHI INC.

11

Consolidated Financial Forecast for FY2021
FY2021
Forecast

M of JPY

FY2020
ActualChangeRevised on Aug. 6
Note

Upward revision on Aug. 6th.

Net Sales

41,66133,055+26.0 %

Gross Profits

25,597

19,731+29.7 %

61.4 %

59.7 %+1.8 Pt

13,001

8,542+52.2 %

31.2 %

25.8 %+5.4 pt

12,9888,627+50.5 %

Ratio to net sales

31.2 %

26.1 %+5.1 pt

Profit attributable to ownersof parents

9,338

6,455

+44.7 %

22.4%

19.5 %+2.9 pt

108.52

74.49

Capital Investments

2,250

1,163

+1,087

Depreciation Expenses

1,781

1,759

+22

Against the US dollar JPY

105.00106.67-1.67 (Stronger JPY)

Forex sensibility: Annual net sales canfluctuate 54M of JPY per one JPY.

Against the EURO

125.00122.01+2.99 (Weaker JPY)

Forex sensibility: Annual net sales canfluctuate 86M of JPY per one JPY.

Ratio to net sales

Operating Income
Ratio to net sales

Ordinary Income

Ratio to net sales

E

P

S

JPY

Assumed Currency rate

JPY

© 2021 NAKANISHI INC.

12

Shareholder Return Policy and Transition
Shareholder return policy
We position the return of profits to our shareholders as one of the important management
issues; therefore, we plan to enhance business foundation and promote investment in growthareas properly and proactively, as well as to return profits to shareholders in a well-balancedmanner.
We endeavor to perform flexible acquisition of treasury stock and stable and continuous
dividend increase with considering retained earnings required for future growth investment,
and setting the standard for medium-term profit return as a total return ratio of 50%.
100

Total payout ratio
60%
Medium-term standards

90

50%

Transition of shareholder return
Total amount of treasury stock acquisition 100M of JPY

80

Total annual dividend

70Total payout ratio
60
50

40%
35%

33%

50%

100M of JPY

37%
33%

35%

37%

Treasury stockacquisition

31%

Maximum

40

1,200,000,000 JPY 30%
22%

30
20
10
0

40%

0.0
9.8

8.4

9.8

0.0

0.0

14.5

13.0

17.3

5.8

3.5
7.0

2012

2013

2014

2015

2016

22.5

26.8

25.9

25.9

2017

2018

2019

2020

© 2021 NAKANISHI INC.

Total annual
dividend Forecast
34 JPY per share
2021
Forecast

20%

10%
13

Overviews of Each Segments
and Future Initiative© 2021 NAKANISHI INC.

14

History of Consolidated Net Sales
A baseline of global sales rose due to expansion of global market share and needs for infection
prevention measures (purchase of sterilizers and additional handpieces) in the field of dental practices.

Q1

Q2

11.3B of JPY

11.6B of JPY

YoY

YoY

4.0B of JPY

5.2B of JPY

6,000

5,000

4,000 FY2021

3,000 FY2020

2,000

1,000

FY2019

Jan

Feb

Mar

Apr

May

Jun

Jul

© 2021 NAKANISHI INC.

Aug

Sep

Oct

Nov

Dec
15

Global Trend of Net Sales
Q1

Increased in sales due to domestic special demand by subsidy and sales
expansion in the European market.

Q2

Increased in sales due to the continuous strong European market andsales recovery in North America and developing countries.

Net sales by regions ( VS FY2020 Actual for each quarter )Unit : 100M of JPY

Q1: +11.2
Q2: +13.3
Q1: +2.7
Q2: +16.3

Q1: +18.6
Q2: +5.4
Q1: +6.8
Q2: +6.8

South America / Middle East / Russia / Australia etc.

Q1: +0.9
Q2: +10.8© 2021 NAKANISHI INC.

16

Basic Strategy of FY2021

Trend of dental products market
Growing needs for
infection prevention
measures worldwide

Demand recovery for
implant treatment andpreventive dentistry

Basic strategy of FY2021
Expand sales of main
product handpieces
and sterilizers

Expand sales of
preventive dentistry
products and implant
treatment devices© 2021 NAKANISHI INC.

17

Construction of New Plant A1
Increase production aiming at net salesof 50 billion JPY as stated in our Med
term Management Plan “NV2025”

A1: Current Production Plant

12,000A1- Start construction (schedule) November 2021
- Completion (schedule) June 2022
- Total amount of investment: About 1.8 billion JPY: New Production Plant

5,500

Dental Business Market Status 1/3

Overview of 1st half

Net sales

6.49B JPY
EuropeYoY+57.5%Net sales

4.62B JPY
Japan

YoY

+101.2%

Although activity restrictions
continued, sales of local
subsidiaries increased significantly
capturing strong demand at most.

Measures for 2nd halfMarketoutlook

Expand sales of “Surgic
Pro2”, which is a new
device for implant
treatment, to each
European countries, as wellas our main producthandpieces.

MarketoutlookA reactional decline indemand from 2H is assumed
since the subsidies from thegovernment has ended.

OEM Business also recovered
significantly.

The sales decrease expected after
April was eased since a part of thesubsidy for preventing the spreadof infection was extended.
The recovery of OEM businessbecame clear and it contributed
to a significant increase in sales inthis term.

© 2021 NAKANISHI INC.

Expand sales of sterilizers
and our main producthandpieces for dentistry.

19

Dental Business Market Status 2/3

Overview of 1st half

Net sales
North
America

3.28B JPY
YoY

+122.1%

Net sales

3.13B JPY
Asia
YoY

+61.0%

Sales of own brand were strong,which led significant growth innet sales of local subsidiaries.

Measures for 2nd halfMarketoutlookEnhance approaching todental universities andDSO, and promote
expanding market share.

Inventory adjustments by major
OEMs have progressed, andorders have recovered steadily.

-Sales of Chinese subsidiary grewsteadily and sales increased
significantly due to the end of the
COVID-19 pandemic.
-Sales of Korean subsidiary grewsteadily.

Sales recovered by capturing
reactionary demand from refraining
from buying although the influence of
the COVID-19 pandemic remains
in Asian countries.

© 2021 NAKANISHI INC.

Capture demand of shifting
to the electric motors at
most.

MarketoutlookFurther enhancements of thesales system of Chinese
subsidiary, and promote
developing and expanding
the agency network.

Assume the market remains
to be severe condition in the
Asian countries due to the
spread of the Delta variant.

20

Dental Business Market Status 3/3

Overview of 1st half

Measures for 2nd half

MiddleEast

Sales increased due to additional
orders from the acquired bid andcapturing rebound demand fromrefraining from buying.

MarketoutlookSome dental exhibitions areto be resumed. Attend themwhile keep performing
online activities.

South
Net sales
America

Increased advantages of the brandin the local market due to withdrawalof competitors. Sales recovered
significantly due to the first purchaseby new agents.

Marketoutlook

Promote sales expansion of
our main producthandpieces and implant
related products.

The dental market has beennormalized and sales increased
although the impact of the
COVID-19 pandemic remained.

Marketoutlook

Solidify the No. 1 share in
the region by localizing
Moscow office andenhancing after-sales
service.

2.99B JPY
YoY

RussiaAustralia+64.4%The government's tax incentives havebeen successful, and the willingness
to make capital investment in dental
clinics has increased. Sales increasedby capturing those demands.

© 2021 NAKANISHI INC.

Marketoutlook

Promote sales expansion ofhandpieces, sterilizers, andimplant related products.

21

Dental Business Topics
Aim for further expand of market shareby expanding sales of highly competitive new products
Surgical micromoter system

Surgic Pro2

Dental handpiece
On salein Europe

Ti-Max Z micro

Available in Sep.
in Europe*New product: world-class implant treatment device*Improved functionality and safety with smaller andlighter design*Start full promotion, marketing and sales in Europe*This is a flagship model of titanium body*Realizes high torque with it’s small head
*Also equipped with our original infection
prevention systems “Clean Head System”

This product is a flagship product, and dominates the top
sales in the product lineup. It is planned to be promoted inother regions than Europe.

It is planned to be launched in September for European
market.

© 2021 NAKANISHI INC.

22

Industrial Business Outline
Demand in the manufacturing industry recovered,
メディカル事業and sales
grew after April

Overview of FY2021 1H
Strong orders from Asian markets, especially from China
Capital investment in 5G-related area and automobile industry is strong
Market conditions have improved except from China after April, and sales
have increased in all regions, including Japan, North America, and Europe etc.

Measures for FY2021 2H
Develop sales activities proactively towards mainly manufacturing industry,where the willingness for making capital investments is recovering
Launch new products “CTS-3030” and “Sonic Cutter ZERO”© 2021 NAKANISHI INC.

23

Industrial Business Topics

New
Products
メディカル事業
Coolant Through Spindle

CTS-3030

Ultrasonic cutter
Launched
on Jul.

A new product of a compact and high-speed rotary
spindle, which can eject coolant from the tip of adrill during processing.
Time required for drilling process can be reduced
significantly with a spindle motor unit that can bemounted on a small CNC lathe.

Sonic Cutter ZERO

Launchedon Aug.

A new product of high-performance cutter thatutilizes the amplitude of ultrasonic waves.

It exhibits its power when cutting, forming awindow, and deburring of various thin materials
such as cloth, plastic, and urethane.

© 2021 NAKANISHI INC.

24

Medical Business Outline

Medical business is included in Dental segment

Market conditions have improved significantly,
although the effectsメディカル事業of the COVID-19 pandemic remain

Overview of FY2021 1H
Japan

Double-digit increase in sales compared to the same period of the previous year due to thesuccess of sales promotion of existing customers and strengthening of sales to orthopedics.

EuropeThe recovery of especially Italy and Spain were remarkable. Sales of both unit body anddisposables increased.

N. America Acquisition of large-scale project by strengthening customer relations such as holding
hands-on course. Sales reached more than triple than that one from the same period of theprevious year.
Asia

Sales was recovered by capturing rebound demand from refraining from buying while theimpact of the COVID-19 pandemic remained.

Measures for FY2021 2H
Japan

Promote customer development with the popular new product "P300 Attachment“.

EuropePromote sales activities with a view to full-scale recovery in each European marketwith
keeping close communication with local agents.

N. America Aim for further expansion of sales by enhancing sales activities to general hospitals anddeveloping sales partners.

Asia

Aim for sales expansion with especially sales activities of new products although demand
recovery remain to be slow except for China.
© 2021 NAKANISHI INC.

25

Medical Business Topics

Enhance customer contact
through product training sessions

Hands-on course at
The University of Kansas in the U.S.A.

Endoscopic spine surgery Cadaver Workshop at
Khoo Tech Puat Hospital in Singapore© 2021 NAKANISHI INC.

26

Sustainability Report

We have issued "Sustainability Report 2021”.
Please refer to our ESG initiatives.
https://en.nakanishi-inc.jp/sustainability/report/