NPC Incorporated : Summary of Financial Results for the Third Quarter of Fiscal Year Ending August 31, 2022

July 13, 2022

Summary of Financial Results for the Third Quarter of Fiscal Year Ending August 31, 2022

(All financial information has been prepared in accordance with the Generally Accepted Accounting Principles in Japan)

Company name:	NPC Incorporated	Listing: Growth of TSE
Stock code:	6255	URL: https://www.npcgroup.net/eng/
Representative:	Masafumi Ito, President & CEO
Contact:	IR Group
	Tel: [phone]

Filing date of securities report:	July 15, 2022
Payment date of cash dividends:	-
Supplementary materials prepared for quarterly financial results:	None
Financial results meeting for institutional investors and	None
securities analysts:	(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Nine Months Ended May 31, 2022 (September 1, 2021 through May 31, 2022)

(1) Consolidated results of operations						(Percentages represent year-on-year changes)
											Net income
	Sales			Operating income	Ordinary income	attributable to
											owners of the parent
	Million yen		%	Million yen	%	Million yen	%	Million yen	%
9 months ended May 31, 2022	4,045		(43.7)		510	(60.9)	543	(57.7)	327	(64.1)
9 months ended May 31, 2021	7,181		-		1,305	-	1,284	-	912	-
	Earnings per share		Diluted earnings per share
			Yen				Yen
9 months ended May 31, 2022			15.21				-
9 months ended May 31, 2021			41.62				-

[Note] 1. The numbers parenthesized represent minus figures.

1. 2. From the beginning of FY2022, the Accounting Standard for Revenue Recognition and other related guidelines are applied. The Accounting Standard is retroactively applied to the numbers related to the nine months ended May 31, 2021. The change rate of the nine months ended May 31, 2021 from the corresponding period of previous year is not listed due to the retroactive revision.

2. Consolidated financial position

	Total assets	Net assets	Equity ratio
	Million yen	Million yen	%
As of May 31, 2022	11,218	7,027	62.6
As of August 31, 2021	10,004	6,986	69.8

[Reference] Shareholders' equity (million yen): May 31, 2022: 7,027August 31, 2021: 6,986

[Note] From the beginning of FY2022, the Accounting Standard for Revenue Recognition and other related guidelines are applied. The Accounting Standard is retroactively applied to the numbers related to FY2021.

2. Dividends

			Dividend per share
	1Q-end	2Q-end	3Q-end		Year-end	Annual
	Yen	Yen	Yen		Yen	Yen
Year ended August 31, 2021	-	0.00	-		2.00	2.00
Year ending August 31, 2022	-	0.00	-
Year ending August 31, 2022 (forecast)					2.00	2.00

[Notes] Revision of dividend forecast for FY2022 from the latest disclosure: None

3. Consolidated Forecast for the Fiscal Year Ending August 31, 2022 (September 1, 2021 through August 31, 2022)

(Percentages represent year-on-year changes)

								Net income		Earnings
	Sales		Operating income	Ordinary income	attributable to owners
		per share
								of the parent
	Million yen		%	Million yen	%	Million yen	%	Million yen		%	Yen
Full year of FY2022	4,454		-	368	-	387	-	165		-	7.66

[Note] 1. Revision of consolidated forecast for FY2022 from the latest disclosure: None

2. From the beginning of FY2022, the Accounting Standard for Revenue Recognition and other related guidelines are applied. The Consolidated Forecast shows the numbers after application of the Accounting Standard, and the increase/decrease rates year on year are not indicated.

4. Others

(1) Changes in significant subsidiaries during the period:

None

1. Adoption of simplified accounting methods and special accounting methods: None
2. Changes in accounting principles, procedures, and presentation methods

1)	Changes in accounting policies arising from revision of accounting standards:	Yes
2)	Other changes:	None
3)	Changes in accounting estimates:	None
4)	Restatement:	None

1. Number of shares outstanding (common shares)
2. 1. Number of shares outstanding (including treasury stock) at the end of the period

	May 31, 2022:	22,052,426 shares
	August 31, 2021:	22,052,426 shares
2)	Number of treasury stock at the end of the period
	May 31, 2022:	558,885 shares
	August 31, 2021:	135,348 shares
3)	Average number of shares during the period
	Nine months ended May 31, 2022:	2,150,187 shares
	Nine months ended May 31, 2021:	21,912829 shares

*This quarterly financial report is exempt from the quarterly review by certified public accountants or auditing firms.

*Appropriate use of the forecast of financial results and other matters:

Forward-looking statements in this report such as financial results forecasts are based on the information available to NPC Incorporated ("the Company") at the time when this report is prepared and the assumption that the forecasts are reasonable. The actual results may significantly differ from the forecast due to various factors. Please refer to the 1. (2) Explanation of consolidated forecasts and other forward-looking statements on page 2 for conditions of assumptions for the forecast and notes concerning on appropriate use of the forecast.

NPC Incorporated (6255) Financial Results for the Third Quarter of the Fiscal Year Ending August 31, 2022

Table of Contents of Attached Materials

1.	Qualitative Information Concerning Financial Results for the Third Quarter Ended May 31, 2022...................	2
	(1)	Explanation of results of operations ..........................................................................................................................	2
	(2) Explanation of consolidated forecast and other forward-looking statements ............................................................	2
2.	Consolidated Financial Statements for the Third Quarter Ended May 31, 2022 ...................................................	3
	(1)	Consolidated balance sheets......................................................................................................................................	3
	(2)	Consolidated statement of income ............................................................................................................................	5
3.	Other Information ........................................................................................................................................................	6
	(1)	Production, Orders, and Sales ...................................................................................................................................	6

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NPC Incorporated (6255) Financial Results for the Third Quarter of the Fiscal Year Ending August 31, 2022

1. Qualitative Information Concerning Financial Results for the Third Quarter Ended May 31, 2022

(1) Explanation of results of operations

During the nine months ended May 31, 2022, the spread of COVID-19 has been gradually subsiding after the convergence of a new variant, and signs of recovery in capital expenditures and corporate earnings were seen in the manufacturing industry in Japan. On the other hand, the entire Japanese economy has been affected by the record-breaking depreciation of yen. As for the global economy, a chronic shortage and longer delivery time of various products, which had started with semiconductor-related products, as well as price increase of raw materials and energy have impacted a wide range of industries.

Concerning the Machinery Business of NPC Group ("the Group"), the US solar photovoltaic (PV) industry, which is the targeted market of the business, the needs for solar energy are continuously increasing, backed by the necessity of transition to renewable energies. As a result, our main customer has received increasing orders, and made announcements on large deals one after another. As for automation machines for other industries, continuous capital expenditures are expected in strong sectors such as the electronic parts industry in Japan. Meanwhile, in the Machinery Business, the lead time of machines has become long due to the longer delivery time of parts, and costs have increased due to price raise by parts manufacturers.

As for the solar industry in Japan, to which the Environmental Business of the Group belongs, while FIP (feed-in premium) was introduced as a new incentive system, solar projects approved under FIT still have been continuously installed. These projects include large-sized solar power plants, which are the target of the Group's inspection service. Companies and local governments are also introducing solar systems for self-consumption through new schemes, such as power purchase agreements (PPA). Concerning solar panel recycling, the Japanese Ministry of the Environment has begun to consider mandating the recycling of end-of-life solar panels. The Governor of Tokyo also announced consideration to establish a solar panel recycling system, coupled with the obligation to install solar panels on newly built houses. Also, there is an increasing number of companies overseas that enter the solar panel recycling business in countries and areas such as Europe, the USA, and Australia.

Under such circumstances, the Group booked the sales almost as scheduled. The consolidated net sales were 4,045 million yen, 3,136 million yen decrease year on year. As for profits, operating income was 510 million yen, 795 million yen decrease year on year, and ordinary income was 543 million yen, 741 million yen decrease year on year. Net income attributable to owners of the parent was 327 million yen, 584 million yen decrease year on year.

Financial results by segment are as follows:

1. Machinery Business

In the Machinery Business, the Group implemented upgrading and expansion of the equipment of a US PV manufacturer, the Group's main customer. It also booked the sales of PV module manufacturing equipment for a Japanese PV manufacturer and the sales of automation machines for the Japanese automobile industry and electronic parts industry, in which the Group maintains stable business. As a result, the sales were 3,803million yen, 3,130 million yen decrease year on year, operating income was 945 million yen, 744 million yen decrease year on year.

1. Environmental Business
   In the Environmental Business, the Group booked the sales of inspection service of solar power plants as

scheduled, as well as the sales of reuse and recycling of solar panels, solar panel disassembly equipment, and plant factory business. As a result, the sales were 241 million yen, 5million yen decrease year on year, and operating loss was 1 million yen, compared with an operating income of 45 million yen in the same period of the previous fiscal year.

(2) Explanation of consolidated forecast and other forward-looking statements

The business forecasts for the full year are the same as the forecasts in the "Announcement on the Differences between Business Forecasts and Results for the First Half and Revision of Business Forecasts Both for FY2022" released on April 12, 2022.

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NPC Incorporated (6255) Financial Results for the Third Quarter of the Fiscal Year Ending August 31, 2022

2. Consolidated Financial Statements for the Third Quarter Ended May 31, 2022

(September 1, 2021 through May 31, 2022)

(1) Consolidated balance sheets

			(Thousand yen)
		As of August 31, 2021	As of May 31, 2022
Assets
Current assets
Cash and deposits	3,326,108	2,959,233
Notes and accounts receivable-trade and contracted assets	570,247	740,958
Electronically recorded monetary claims-operating	130,464	268,040
Work in progress	1,805,773	3,121,390
Raw materials and supplies	5,150	15,623
Other	117,058	440,742
Total current assets	5,945,803	7,545,988
Noncurrent assets
Property, plant and equipment
Buildings and structures	3,858,861	3,872,687
Accumulated depreciation	(1,880,190)	(2,001,557)
Accumulated impairment loss	(8,073)	(8,073)
Building and structures, net	1,970,597	1,863,057
Machinery and equipment	609,447	260,453
Accumulated depreciation	(154,790)	(136,520)
Accumulated impairment loss	(376,294)	(73,136)
Machinery and equipment, net
78,362	50,796
Land
1,548,050	1,548,050
Other	303,112	337,275
Accumulated depreciation	(226,400)	(248,659)
Accumulated impairment loss	(4,514)	(4,514)
Other, net	72,197	84,102
Construction in progress
2,400	-
Total property, plant and equipment	3,671,608	3,546,005
Intangible assets
Other	117,488	97,458
Total intangible assets
117,488	97,458
Investments and other assets
Deferred tax assets	203,134	-
Other	57,700	28,584
Total investments and other assets
260,834	28,584
Total noncurrent assets	4,049,931	3,672,049
Total assets	10,004,735	11,218,037

[Note] The numbers parenthesized represent minus figures.

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