FY11/2023 Second Quarter
Supplementary Material
on Financial Results
T&S inc.
TSE Growth: 4055
July 14, 2023

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Table of Contents
FY11/2023 Second QuarterHighlights

p. 3

Financial Results Overview

p. 4

Operating profit

p. 6

Net sales by Categoryp. 7

Net sales by Customer

p. 8

Quarterly Net sales and Operating profit

p. 9

Business Environment

p. 10

Status of Engineers

p. 11Statement of Income

p. 12

Balance Sheets

p. 13Topics

p. 14

FY Earnings Forecast

p. 16

Shareholder Returns

p. 18

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2

Highlights (FY2023/2Q)(Theme of current term)

Sustainable Growth
１

Record-high revenues continues
Net ｓales
Operating profit
Ordinary profit
Quarterly profit

２(Compared to the previous same quarter): 1,708 million yen （Up 8.9%↑、 + 140 million yen）:
316 million yen （Up 10.5%↑、 + 29 million yen）:
321 million yen （Up 9.3%↑、 + 27 million yen）:
225 million yen （Up 9.5%↑、 + 19 million yen）

(YoY)
(ditto)(ditto)(ditto)The semiconductor category did well.
As well as the solution category.
➢ Sales in the semiconductor category increased 21.5% compared to the previous same quarter,
the market remained resilient despite the overall downturn, demonstrating a positive andfavorable trend.
➢ Sales in the solutions category increased 9.8% compared to the previous same quarter. Orders
for contracted development projects from major customers remain strong. Other than the majorclients, sales increased.
➢ Sales in the advanced technology solutions category declined 26.3% compared to the previoussame quarter. Despite the decrease in Net sales caused by the repercussions of a large project
recorded in the previous period, the ongoing development of the visual inspection system has
been progressing well. As a result, the reduction in Net sales compared to the same quarter ofthe previous year has improved when compared to 1Q.

３Provision for Performance-linked bonus➢ The progress rate towards the full-year forecast by 2Q reached 46.2%, following the typicalseasonal fluctuations.
➢ The company will continue its policy of sharing a portion of the Operating profit with employees.
Despite setting aside 20 million yen in performance-linked bonuses for the first half-year, thecompany achieved an operating income rate of 18.5% (which is 0.2 percentage points higher
than the same quarter of the previous year).

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3

Financial Results Overview
FY11/2023 Second Quarter

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4

Financial Results Overview (FY2023/2Q)
Record-high revenues continues (Compared to the previous same quarter)
Net ｓales
Operating profit
Ordinary profit
Quarterly profit: 1,708 million yen （Up 8.9%↑、 + 140 million yen）
:316 million yen （Up 10.5%↑、 + 29 million yen）:
321 million yen （Up 9.3%↑、 + 27 million yen）:
225 million yen （Up 9.5%↑、 + 19 million yen）

Net sales(Million yen)
2,000

1,567

(Million yen)

(YoY)
(ditto)(ditto)(ditto)Operating profit

500

Up
8.9%

1,708
400

1,500

286

Up
10.5%

316

300
1,000200
500

10000
FY2022/2Q

FY2023/2Q

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FY2022/2Q

FY2023/2Q

5

Operating ｐrofit (FY2023/2Q)

Increased Operating profit by 29 million yen(Compared to the previous same quarter)(Unit: million yen)

Increase

Decrease

Operating profit

Operatingｐrofit rate
18.5%

Operatingprofit rate
18.3%

FY2022/2Q
OperatingprofitIncreasedsales

Copyright ⓒ 2023 T&S inc. All rights reserved.

Increase in
Cost ofsales

Increase in
SG&A
expenses

FY2023/2Q
Operatingprofit6

Net ｓales by Category (FY2023/2Q)
Solutions’ businesses remain strong with a 9.8% increase.
(compared to the previous same quarter)

Semiconductors’ business remain strong with an increase of 21.5%.
(compared to the previous same quarter)

Advanced Technology Solutions’ business decreased by 26.3% in response to(compared to the previous same quarter)

the large-scale projects in the previous period.

Net ｓales (by category)Sales proportion (by category)(Million yen)

Solution
1,156

FY2022/2Q+112

Up
9.8%

1,269

FY2023/2Q

AdvancedTechnologySolution

93
mil yen

5.5%
900

1,000

1,100

1,200

1,300

1,400

Semi
conductor

Semiconductor
283

FY2022/2Q+60

Up
21.5%

344

FY2023/2Q
200

250

300

350

344 mil yen
２0.2%

FY2023/2Q
1,708 mil yen

400

Advanced Technology Solution
127

FY2022/2Q
93

FY2023/2Q
050100

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Down
26.3%

△33150200Solution
1,269 mil yen
74.3%(Note) Our business segment is a single segment. Only Net sales arecalculated by category7

Net ｓales by Customer (FY2023/2Q)
Toshiba G, Hitachi G, Kioxia G

Major customers maintaining steady level
Sales to Hitachi G and Others significantly increased(Up 15.0%）(Up 16.0%）（compared to the previous same quarter）

Net ｓales (by customer)
Toshiba
G東芝GHitachiG日立G

Kioxia G
キオクシアGOthers
その他

FY2023/2Q

332382

FY2022/2Q

381

FY2022/2Q(Note)

Up
15.0%

530

FY2023/2Q

454

FY2023/2Q

300

400

500

Up
39.1%
Up
16.0%

391

FY2022/2Q

Sales proposition(by customer)

Down
26.4%

339

FY2023/２Q

200(unit: million yen)

461

FY2022/2Q

100（compared to the previous same quarter）

600

Others26.6%

ToshibaG
19.9%

FY2023/2Q

KioxiaG
31.1%

HitachiG
22.4%

700

Due to the restructuring of Toshiba Group, the Net sales of the former Chubu Toshiba Engineering Co., Ltd. (currently known
as Kioxia Engineering Co., Ltd.) are aggregated under Kioxia Group starting from Q3 of the previous fiscal year. Taking this intoaccount, sales to Toshiba Group increased by 0.3%.

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8Quarterly Net sales and Operating profit (FY2023/2Q)
2Q cumulative Net sales: 1,708 million yen
Increase: +140 million yen, Up 8.9%(compared to the previous same quarter)

2Q cumulative Operating profit :316 million yen
Increase: + 29 million yen, Up 10.5%(compared to the previous same quarter)(Unit: million yen)

4,000Net sales+443 mil yen13.6%up

Operating profit(Unit: million yen)

3,700 Mil yen

800+82 mil yen
13.3%up

3,256 Mil yen

2,000

4Q

3Q

918 Mil yen
28.2%
770 Mil yen +140 mil yen
23.7% 8.9%up

2Q 834 Mil yen
1,000
25.6%
733 Mil yen
1Q 22.5%
02Q

902 Mil yen

24.4%

Operating profit

Net sales

3,000

21.8%

2022/112023/11(Actual)(Forecast)

4Q

194 Mil yen
31.5%

3Q

136 Mil yen +29 mil yen
22.1% 10.5%up

2Q

160 Mil yen
25.9%400806 Mil yen

1Q

617 Mil yen

6002000700 Mil yen

126 Mil yen
1Q20.5%

2Q173 Mil yen
24.８%

1Q

143 Mil yen
20.5%

2022/112023/11(Actual)(Forecast)※ Some seasonal fluctuations can be observed in the company's performancedue to the number of engineers and project delivery dates.

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9

Business Environment - Trend of Major Clients(Overall) Trend of Major Customers(As of July 14 ,2023）

The business environment surrounding our company in the heavy electrical and infrastructure
sectors remains positive. Despite the subdued conditions in the semiconductor market, we
anticipate long-term demand growth and observe strong investment enthusiasm fromsemiconductor manufacturers. However, we continue to face challenges in addressing
geopolitical risks, such as global inflation and the prolonged conflict between Russia andUkraine.

Toshiba G

Hitachi G

Kioxia G

Other

The transformation towards delisting is steadily progressing. We anticipate an expansion
in facility investments, particularly in the energy system solution segment related topower plants, which is an area where our company is involved in system development.
This is seen as a tailwind for our company.
Orders remain strong, particularly in the digital systems & services and clean energy &mobility sectors. As the group restructuring nears completion, They are focusing theirmanagement resources on supporting digital transformation (DX) initiatives andtransitioning to a strategy aimed at growth centered around the digital field. We
anticipate a continued increase in inquiries and opportunities for our company.
We plan to continue implementing production reduction measures in response to theweakened demand for semiconductors. The maintenance and operation of the factory
systems we are involved in have limited dependence on production levels, but we expect
potential effects from cost cooperation and other factors. Although the short-term
outlook presents challenges, we observe a market trend towards investment, indicating apromising long-term perspective. Consequently, we anticipate a growth in orders forsystem development.
In addition to the national strategy to strengthen the semiconductor industry, there is a
growing trend of increased investment in facilitation across all industrial sectors.
Particularly, there is an accelerated flow of investment aimed at digitalization and laborsaving measures in response to automation. This trend has also led to an expansion ininquiries and interest towards our company.
(Compiled from publicly available information and media reports by the respective companies)

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10

Status of Engineers
Securing Engineering Resources through BP(※1)
Capabilities
Changes in the number ofBP orders

Changes in Number ofEmployees(Unit: no. of people)(Unit: no. of orders)

400

150

300

267

296

304

310

191921100

19200

248

277

285

289

50

100

0118

117

Nov/2022

May/2023

9061

FY11/2020

FY11/2021

エンジニア

FY11/20220FY11/2023※2Nov/2020

Nov/2021

スタッフ※1 BP...Business partner. Engineers engaged in our business in the form of outsourcing etc.
※2 as of July 14, 2023

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11Statement of Income (FY2023/2Q)
Statement of Income (FY2023/2Q)
Unit: thousand yen

FY2022/2Q

FY2023/2Q+/- amount+/- %Net sales

1,567,800

1,708,065

140,264

8.9%

Cost of sales

1,080,574

1,182,041※

101,467

9.4%

Gross profit

487,226

526,023

38,797

8.0%

SG&A expenses

200,544

209,348※

8,803

4.4%

Operating profit

286,681316,674

29,993

10.5%（Operating profit rate）（18.3%）（18.5%）

Ordinary profit

294,155

321,494

27,3399.3%（Ordinary profit rate）（18.8%）（18.8%）

Quarterly profit

205,717

225,181

19,463

9.5%（Quarterly profit rate）（13.1%）（13.2%）※ Includes 20,000 thousand yen of performance-linked bonuses to employees due to good performance.

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12Balance sheets (FY2023/2Q)

Balance sheets (FY2023/2Q)
Unit: thousand yen

FY2022

FY2023/2Q+/- amount

2,110,767

2,204,244

93,476

170,732

158,980△11,752

2,281,500

2,363,224

81,724498,233

394,350△103,882

49,76354,412

4,649

547,996448,762△99,233

Total shareholders’ equity

1,733,503

1,914,461

180,958

Total net assets

1,733,503

1,914,461

180,958

Total liabilities & net assets

2,281,500

2,363,224

81,724Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

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13Topics

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14

Topics: Implementation of Image Recognition AI Algorithm in Visual
Inspection Devices

Our proposal for the image recognition AI algorithm has
been adopted by major domestic precision equipment
manufacturer for their visual inspection devices.
Our client, a major domestic precision equipment manufacturer, has agreed toadopt our advanced technology solution category's proprietary, image recognition
AI algorithm for their visual inspection devices.

High-precision component positioning
We have proposed and evaluated the latest image recognition AI algorithm to ourclients, demonstrating its technical effectiveness. As a result, we have achieved
higher precision in component positioning compared to conventional methods.

Future Outlook
Since the launch of our AI technology services, we have conducted numerous
research, implementation, and evaluation, accumulating a database of the latest AI
technology information. Moving forward, we will continue to leverage our proprietary
AI technology database and advanced software techniques to provide ourcustomers with proposals for cutting-edge technology, research and development
support, and product development assistance.
（Announced on April 18, 2023）

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15

FY Earnings Forecast
FY11/2023 Second Quarter

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16

FY Earnings Forecast
Steady Progress Towards Full-Year Forecast(No Changes to Full-Year Performance Forecast)

Unit: million yen

FY11/2022（Actual）

Net sales

FY11/2023（Forecast）

FY11/2023
2Q（Actual）

Percentage
of progress

3,256

3,700

1,708

46.2%

Operating profit

617700316

45.2%

Ordinary profit

626703321

45.7%

Net profit (quarterly)

440495225

45.5%

CompanyNet sales increased by 8.9% compared to the previous same quarter. Stable orders frommajor clients and additionally we had increase of orders from other clients.Cumulative Net
sales for 2Q reached 46.2% progress towards the full-year forecast, following the seasonal
fluctuations typically observed due to factors such as the hiring of engineers and customer
delivery schedules. To supplement the engineering resources, the utilization of business
partners (BPs) has been increased since the previous period, the shift towards profitableprojects has been successful, resulting in a gross profit margin of 30.8%. The allocation of
20 million yen for performance-based bonuses has been absorbed, and Operating profit
increased by 10.5% to 316 million yen compared to the same period of the previous year.
The Operating profit rate is 18.5%.

Solution

Net sales increased by 9.8% compared to the previous same quarter. This increase wasdriven by a rise in orders for major system development projects from major clients, as wellas an expansion in orders for contracted development projects from other clients.

Semiconductor

AdvancedTechnology
Solution

Net sales increased by 21.5% compared to the previous same quarter. The maintenance andoperation of the factory system, which our company is involved in, are not closely related tothe operational rate of the plants, the company still managed to secure increased revenue
and maintain a strong performance, despite the challenges posed by cost cooperation andother factors.
Net sales decreased by 26.3% compared to the previous same quarter. This decline in Net
sales for the current quarter, following a decrease in 1Q, is because of the impact of a large
project in progress during the previous period. However, due to the smooth progress of thedevelopment of the visual inspection system, the decrease in Net sales has been controlled
compared to 1Q.

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17

Shareholder Returns

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18

Shareholder Returns
Dividend ratio for FY11/2023 is targeted at 10%
Basic Policy on dividends
The Company considers it an important management task to increase corporate
value through investment 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
in consideration of business performance, while giving priority to securing theinternal reserves necessary to improve our corporate value.
As for FY11/2023, the Company plans to pay a dividend of 6.55 yen per share (up 0.55
yen in real terms), aiming for a dividend payout ratio of around 10%, in line with the above
policy.
The financial indicators that take into account the above measures are as follows.

Dividend per share

Dividend ratio

Return on equity（ROE）

FY11/2022 (Actual)

6.00yen

10.3%

27.3%

FY11/2023（Forecast）

6.55yen

10.0％

25.3%

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19

ContactT&S inc.
Corporate Planning and IR 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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20