TSE Prime Market｜1961

Financial Results Presentation for theFirst Quarter of FY2024
August 9, 2024

Contents01

Business description

P. 302

Summary of Q1 FY2024 results

P. 403

Performance by segment

P. 1004

Earnings forecast

P. 1405

Shareholder returns

P. 16

©2024

SANKI ENGINEERING CO., LTD.

2

01− Business description

The Group aims to be the“Company of Choice” forall stakeholders as itprepares for its 100th
anniversary in 2025
Since 1925

Facilities Construction
Business

Sales composition ratio

The business includes HVAC andPlumbing for Buildings, Industrial
HVAC centered on air-conditioningsystems for factories, Electrical
Systems, and Facility Systems

83%

Machinery Systems
Business

Sales composition ratio(Q1 FY2024)

The business mainly comprises
conveyance systems andmanufacturing and sales business
related to transportation equipment

Environmental
Systems Business

5%
Sales composition ratio(Q1 FY2024)

The business comprises operations
related to water supply / sewage
treatment facilities and waste
treatment facilities

Real Estate Business
The business is involved in leasing
operations for real estate holdings
and building management©2024(Q1 FY2024)

11%
Sales composition ratio(Q1 FY2024)

1%

SANKI ENGINEERING CO., LTD.

3

02− Summary of Q1 FY2024 results

Financial Summary (Consolidated)
Performance remained strong, supported by robust capital investment appetite in the private sector that continued fromthe previous fiscal year.

■ Net sales, profit, and orders received all reaching record highs* on a Q1
(Millions of yen)standalone basis.
75,000Net sales

Increased due to steady progress in the projects carried

Net sales

forwardOrders received+19.2% YoY

48.5 billion¥Gross profit margin

7.1 billion (14.8%)

15%

48,52711.8%

10%33,450improved profit margin¥20%

40,727 12.8%

Increased significantly due to higher net sales and+37.2% YoY

14.8%

52,631

46,97450,000Grossprofit(margin)

70,73225,0005%

Increased due to orders received for multiple

Ordersreceivedlarge-scale projects+34.4% YoY

70.7 billion¥

00%

Q1 FY2022

Q1 FY2023

Q1 FY2024* Since FY2008 when disclosure of quarterly financial statements was started©2024

SANKI ENGINEERING CO., LTD.

4

02− Summary of Q1 FY2024 results

Consolidated Results (P/L, Orders Received)⚫ Net sales increased due to steady progress notably in large-scale projects carried forward⚫ Profit increased significantly due to higher net sales and to continued improvement in profit margin in Facilities
Construction, at the time of order intake and also of works in progress⚫ Orders received increased significantly, reflecting contracts awarded for multiple large-scale projects. Sales areexpected to be recorded in FY2024 for approximately 65% of the orders carried forward.
(Millions of yen)
FY2023
Q1

Net sales

FY2024
Q1

Rate of Change(%)

YoY

40,727

48,5277,800

19.2

Completed construction contracts

40,08947,880

7,790

19.4

Real estate business and other

637

646

9

1.5

5,231

7,178

1,946

37.2

Completed construction contracts

4,966

6,893

1,927

38.8

Real estate business and other

265

284

19

7.3

Gross profit margin (%)

12.8

14.8

2.0pt.

―

Selling, general and administrative expenses

5,250

5,637

386

7.4

Operating profit (loss)

(18)

1,540

1,559

―

Ordinary profit

359

2,087

1,728

481.4

Profit attributable to owners of parent

339

1,345

1,006

296.9

Orders received

52,63170,732

18,10034.4

Orders carried forward

200,330

221,106

20,776

10.4

Gross profit©2024

SANKI ENGINEERING CO., LTD.

5

02− Summary of Q1 FY2024 results

Quarterly Changes in Net Sales and Ordinary Profit⚫ Despite the seasonality of the first quarter when the progress in net sales and profit tends to be low against full-year
performance, significant increases were recorded in both net sales and profit in the first quarter under review due
largely to progress in highly profitable large-scale projects carried forward as well as improvement in profit margin
Net sales (left axis)(Millions of yen)

Ordinary profit (right axis)

72,30975,000(Millions of yen)

7,500

65,15260,152

57,46652,20351,652

48,73245,33250,00040,72740,05938,73733,4504,233

5,770 48,527
5,102

2,087

4,310

4,272

25,000

2,500

2,688
1,324

5,000

359

109

1,519

00(13)(860)▲ 25,000△ 2,500

Q1Q2Q3

FY2021

Q4Q1

Q2

Q3

FY2022

Q4

Q1

Q2

Q3

Q4

Q1
FY2024FY2023©2024

SANKI ENGINEERING CO., LTD.

6

02− Summary of Q1 FY2024 results

Balance Sheets (B/S)(Millions of yen)March 31, 2024

FY2024
Q1

Change131,564

116,330(15,233)

Cash and deposits

23,50029,1405,640

Securities

1,000

5,999

4,999

Trade receivable*

97,54970,200(27,348)

70,596

66,979(3,617)40,53937,319(3,219)Total assets

202,161

183,310(18,850)

Current liabilities

81,59766,603(14,994)

40,99233,095(7,896)

Non-current liabilities

15,941

15,592(349)

Net assets

104,621

101,114(3,506)

Retained earnings

75,76974,460(1,308)Valuation difference on
available-for-sale securities

19,646

17,413(2,233)

Total liabilities and net assets

202,161

183,310(18,850)

Net assets per share (yen)1,967.03

1,900.64(66.39)Equity ratio (%)

51.7

55.1

3.4pt.

Borrowings

8,760

7,891

(868)

Current assets

Non-current assets
Investment securities

Accounts payable forconstruction contracts* Trade receivable: notes receivable - trade, electronically recorded monetary claims - operating,accounts receivable from completed construction contracts and other, and contract assets

Trade receivable
Decrease due to seasonal
fluctuations

Accounts payable forconstruction contractsDecrease due to seasonal
fluctuations
Retained earnings
Decreased due to dividend
payments
Valuation difference on
available-for-salesecurities
Decreased due to a decline
in market value©2024

SANKI ENGINEERING CO., LTD.

7

02− Summary of Q1 FY2024 results

Cash flows
Balance of cash and cash equivalents increased from March 31, 2024
⚫ Cash flows from operating activities increased due mainly to progress in collection of tradereceivables⚫ Cash flows from investing activities increased due mainly to maturity of insurance funds⚫ Cash flows from financing activities decreased due mainly to dividend payments based on
financial and capital policies(Millions of yen)March 31, 2024

Q1 FY2024

Q1 FY2023

Cash flows from operating
activities

1,285

13,9105,599

Cash flows from investing
activities

3,174

207

6

Cash flows from financing
activities(6,069)(3,554)(3,278)Cash and cash equivalents atend of period

23,50034,13927,310©2024

SANKI ENGINEERING CO., LTD.

8

02− Summary of Q1 FY2024 results

Main Large-Scale Projects Received and Large-Scale Completed Construction
Projects⚫ Large-Scale Contracts Awarded
Item of construction

Type ofconstruction

Location

Daiichi Sankyo Biotech Co., Ltd. / Emergency Power Generator Installation
ProjectElectrical and HVAC systems

Renewal/Renovation

SaitamaTakara Bio Center for Gene and Cell Processing Building No. 3 (1H Building)construction

HVAC and plumbing systems

Newconstruction
work

Shiga

Toyota Sports Center First Gymnasium Reconstruction

HVAC, plumbing, and electricalsystems

Reconstruction

Aichi

Namboku Line Minami Rail Yard Plant Building Reconstruction and otherworks

HVAC and plumbing systems

Newconstruction
work

Hokkaido

Morigasaki Water Reclamation Center Digestion Gas Power Generation
Project design and construction

Water supply / sewage treatment
facilities

Newconstruction
work

Tokyo

Item of construction

Type ofconstruction

Location

HVAC systems

Newconstruction
work

Osaka

Property name⚫ Large-Scale Completed Construction Projects
Property nameUrbannet Midosuji Building

5 other projects* Property names are the names used by the Company and may differ from the names stated on the construction contracts.
©2024

SANKI ENGINEERING CO., LTD.

903− Performance by segment

Orders Received by Segment (Consolidated)
Facilities
Construction
Business
Plant & Machinery
Systems Business

Increased significantly reflecting large-scale contracts awarded for gymnasium, pharmaceutical factoryand other projects
Increased as a result notably of contract awarded in the Environmental
Systems business for the large-scale construction work (digestion gas powergeneration project) in a water supply and sewerage facility
FY2023Q1

FY2024
Q1

Orders received

Orders received

HVAC and Plumbing forBuildings

12,902

18,023

5,120

39.7

Industrial HVAC

14,15522,408

8,252

58.3

Electrical Systems

7,721

13,053

5,331

69.0

Facility Systems

4,203

3,376(827)(19.7)

YoY
Change% change(Millions of yen)
HVAC and Plumbing for Buildings
Industrial HVACElectrical Systems
Facility Systems
Machinery Systems
Environmental Systems
Real Estate

18,023

12,902

Total of Facilities
Construction Business

38,98356,861

17,877

45.9

Machinery Systems

3,508

2,496

(1,012)(28.8)

Environmental Systems

9,572

11,126

1,554

16.2

Total of Plant & Machinery
Systems Business

13,081

13,623

542

4.1

7,721

Real Estate

618

639

20

3.3

4,203
3,508

Others

150

162

118.0

Adjustments*
Total(202)

(553)

(350)

―52,63170,732

18,10034.4* Internal transactions included in each segment are eliminated with “Adjustments”

22,40814,1559,572
Q1 FY2023©2024

13,053
3,376
2,496
618

11,126639

Q1 FY2024

SANKI ENGINEERING CO., LTD.

10

03− Performance by segment

Net Sales by Segment (Consolidated)
Facilities
Construction
Business

Increased due partly to steady progress in large-scale projects carried forward
Decreased in Facility Systems as a reaction to the completion of a large-scale relocation project in the same period of theprevious fiscal year

Plant & Machinery
Systems Business

Increased in both Environmental Systems and Machinery Systems due to progressin projects carried forward
FY2023Q1

FY2024
Q1

Net sales

Net sales

YoYChange% change(Millions of yen)
HVAC and Plumbing for Buildings
Industrial HVACElectrical Systems
Facility Systems
Machinery Systems
Environmental Systems
Real Estate

HVAC and Plumbing for
Buildings

10,242

13,788

3,545

34.6

Industrial HVAC

16,24318,198

1,954

12.0

Electrical Systems

4,089

5,787

1,697

41.5

Facility Systems

3,523

2,366

(1,157)(32.9)

Total of Facilities
Construction Business

34,09840,139

6,041

17.7

Machinery Systems

1,788

2,395

606

33.9

Environmental Systems

4,226

5,413

1,187

28.1

Total of Plant & Machinery
Systems Business

6,014

7,809

1,794

29.8

Real Estate

618

639

20

3.3

4,089

Others

131

156

25

19.7

Adjustments*

(136)

(217)

(80)

―

3,523
1,788
4,226

40,727

48,527

7,800

19.2

Total

* Internal transactions included in each segment are eliminated with “Adjustments”

13,788
10,242

18,19816,243Q1 FY2023
©2024

5,787
2,366
2,395
618

5,413

639

Q1 FY2024

SANKI ENGINEERING CO., LTD.

11

03− Performance by segment

Gross Profit by Segment (Consolidated)
Facilities
Construction
BusinessIncreased due to higher net sales in HVAC and Plumbing for Buildings, Industrial HVAC and Electrical Systems, as well as
improvement in profit margin at the time of order intake and also of works in progress
Decreased significantly in Facility Systems due to lower net sales and occurrence of unprofitable project

Plant & Machinery
Systems Business

Increased in Machinery Systems although profitability remained low
Increased in Environmental Systems due to higher net sales

FY2023Q1

FY2024
Q1

Change% change

3,726

12.2

5,994

15.9

2,267

3.7

60.9

534

15.2

49

2.1

(485)

(13.1)(90.7)

4,261

12.5

6,043

15.1

1,782

2.6

41.8

Machinery Systems

147

8.2

159

6.7

12(1.5)

8.4

Environmental Systems

662

15.7

805

14.9

142

(0.8)

21.5

Total of Plant &Machinery Systems
Business

809

13.5

964

12.4

154

(1.1)

19.1

Real Estate

249

40.4

280

43.9

30

3.5

12.3

2

1.8

12

8.1

10

6.3

426.6

(91)

ー(123)

ー(32)

ー

―

5,231

12.8

7,178

14.8

1,946

2.0

37.2

Facility Systems
Total of Facilities
Construction BusinessOthers
Adjustments
Total

HVAC and Plumbing for Buildings/Industrial HVAC/Electrical Systems
FacilitySystems
MachinerySystems
Environmental
Systems
RealEstate

YoY

Gross profit Margin in % Gross profit Margin in %HVAC and Plumbing for
Buildings/Industrial
HVAC/Electrical Systems(Millions of yen)

5,994
3,726

49

534
147
662

805

249

280

Q1 FY2023

Q1 FY2024©2024

SANKI ENGINEERING CO., LTD.

159

12

03− Performance by segment

Ordinary Profit by Segment (Consolidated)
FY2023
Q1
Ordinary profit(Millions of yen)

FY2024
Q1
Ordinary profit

YoY
Change% change

Facilities Construction Business

360

1,925

1,565

434.5

Machinery Systems(297)

(319)

(21)

―

Environmental Systems

(224)

(119)

105

―

Total of Plant & Machinery
Systems Business(522)

(438)

83

―

Real Estate

243

271

28

11.7

Others

(14)

(0)

13

―

Adjustments

292

329

37

12.7

Total

359

2,087

1,728

481.4

Reference: factors behind changes in ordinary profit

Increase
Decrease
Total

Change in gross profit due to change in net sales

Change in gross profit due to change in profit margin©2024

SANKI ENGINEERING CO., LTD.

13

04− Earnings forecast

FY2024 Forecast (Consolidated)⚫ Earnings forecast announced on May 10, 2024, remains unchanged in light of such factors as the anticipatedincrease in SG&A expenses due to increase in personnel expenses and other causes, although gross profit isexpected to increase due to improvement in the profitability of projects carried forward.
(Millions of yen)

FY2022 actual

FY2023 actualA

FY2024 forecast
B% change
B-A

Net sales

190,865

221,920

225,000

1.4

Gross profit

27,012

34,64236,5005.4

Gross profit margin (%)

14.2

15.6

16.2

―Operating profit

5,409

11,586

12,500

7.9

Ordinary profit

6,247

12,75013,0002.0

Profit attributableto owners of parent

4,750

8,951

8,800(1.7)

Orders received

228,554

232,396

210,000(9.6)

Orders carried forward

188,426

198,902

183,902

(7.5)

©2024

SANKI ENGINEERING CO., LTD.

14

04− Earnings forecast

Forecast of Orders Received and Net Sales by Segment (Consolidated)⚫ Forecast of orders received and net sales was amended for some segments in line with theprogress in the Q1 results(Millions of yen)
Initial forecast
announced
on May 10 (A)Orders received

Interim forecast
announced
on Aug. 9 (B)Orders received

Initial forecast
announcedon May 10 (A)Net salesInterim forecast
announced on
Aug. 9 (B)Net sales

HVAC and Plumbing for
Buildings

64,00060,000(4,000)67,00067,000―Industrial HVAC

70,00072,0002,000

76,00076,000―Electrical Systems

25,00027,0002,000

25,00025,000―

Facility Systems

13,00013,000―13,00013,000―Total of Facilities
Construction Business

172,000

172,000―

181,000

181,000―

Machinery Systems

13,00013,000―14,00013,000(1,000)

Environmental Systems

23,00023,000―28,00029,0001,000

36,00036,000―42,00042,000―Real Estate Business

2,5002,500―

2,500

2,500―

Others600

600―

600600―(1,100)(1,100)―(1,100)(1,100)―210,000

210,000―

225,000

225,000―

Total of Plant & Machinery
Systems Business

Adjustments
Total

B-A
Change©2024

B-A
ChangeSANKI ENGINEERING CO., LTD.

15

05− Shareholder returns

Status of Shareholder Returns⚫ Provided stable returns to shareholders in line with the shareholder return policy set forth in the mediumterm management plan “Century 2025” Phase 3⚫ Planning for annual dividend of 85 yen and dividend payout ratio of 51.3%⚫ Planning to purchase 1,500 thousand treasury shares by March 31, 2025, and cancel 2,000 thousand treasury
shares on August 19, 2024.
Interimdividend

Year-end
dividend

Dividend payout ratio(right axis)(yen)

Dividends
paid

Treasury sharespurchased

Total return ratio(right axis)(Millions of yen)

100

100%

10,000

160%

87.4%

85.0
75.0

75

50

40.0

50%
51.3%

25
35.0

35.0

42.5

95.7%
6,000

42.5

50.0
51.3%

35.0

8,000
75%

73.8%
50.0

136.4%

85.0

85.0

25%

1,438

4,050
2,347

96.7%

4,773

4,132

4,560

4,457

2022

2023

2024

000%
2021

2022

2023

80%

79.4%

4,000
2,000

2,549

120%

40%

0%
2021

2024

(forecast)(forecast)

Shareholder return
policyDividend payout ratio of 50% or higher, annual dividend per share of 70 yen or more
Approx. 5,000 thousand treasury shares to be purchased** Cumulative total over the period of the medium-term management plan (FY2022 to FY2025)©2024

SANKI ENGINEERING CO., LTD.

16

Disclaimer
Forward-looking statements, including forecast of financial results, contained in this document reflect themanagement’s judgment based on the information available as of August 9, 2024. Actual results may differ fromthe figures contained herein due to a number of factors.

For IR inquiries, please contact

Corporate Communications Department,
Management Planning Office, Corporate Division,
SANKI ENGINEERING CO., LTD.
TEL

+81-3-6367-7041