Supplementary Explanatory Materials for the First Quarter Financial Results for the Fiscal Year Ending March 2027 | KNC Laboratories Co.,Ltd. (6568) timely disclosure

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Mixed performance

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Scale

% (year-on-year increase in full-year sales)

Wording

Conditional

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Contents of this document

Supplementary materials to the earnings reportFirst quarter of the fiscal year ending March 20279 items taken from the company’s own explanation

Financial Results Figures (The key points of this material are explained below)

Net Sales¥2,118 million+25.0%

Operating profit¥51 million

Ordinary income¥48 million

Net income¥41 million

Results for the three months of the current quarter

Net Sales

¥2,118 million

Operating profit

¥51 million

Ordinary income

¥48 million

Net income

¥41 million

Adjusted EBITDA

¥352 million

Adjusted EBITDA margin

16.6 %

Full-year earnings forecast

Net Sales

¥10,000 million

Functional Materials

¥3,300 million

Pharmaceuticals

¥4,100 million

Bio

¥2,600 million

Operating profit

¥910 million

Ordinary income

¥890 million

Net income

¥640 million

Adjusted EBITDA

¥2,210 million

Adjusted EBITDA margin

22.1 %

What the company explained in this material

Self-assessment against the planThe company's self-assessment against its own plan.

Sales exceeded the initial forecast, while EBITDA was slightly below the initial forecast

Breakdown of Factors Affecting the ChangeReasons cited by the Company for the change in the figures.

Impact of higher revenue¥1.7 100 million
Strategic expenses required to win future projects¥-0.7 100 million
Costs to address raw-material procurement risks¥-0.1 100 million
FP-4 depreciation¥-1.1 100 million
Depreciation¥-1 100 million
Personnel expenses¥-0.2 100 million

Assumptions Underlying the Business OutlookThe assumptions used by the company in preparing its forecast.

The procurement environment for crude oil and other materials is stabilizing as imports from regions outside the Middle East increase. However, prices remain elevated, and uncertainty remains over passing higher raw-material costs on to customers. Numerical assumptions: Not disclosed

New initiatives

Full-scale operation of the new building (Building D) from the start of the fiscal year
Investment in strategic expenses to win recurring projects

Key KPIsA metric the company considers important as a management benchmark.

New orders¥40.6 100 million
Order backlog¥83.4 100 million
Remaining order lead time13.1 Month
Year on year against the same period last yearRecord high
Equity ratio66.4 %

Segment results

Functional Materials
Sales¥894 million
Year-on-year (%)18.4
Pharmaceuticals
Sales¥579 million
Year-on-year (%)-20.7
Bio
Sales¥643 million
Year-on-year (%)208.1

Medium-term management plan targets

Net Sales

¥12,000 million

Target fiscal yearFiscal year ending March 2028

Adjusted EBITDA margin

30 %

Target fiscal yearFiscal year ending March 2028

Comparison with actual resultsSales are progressing steadily, while adjusted EBITDA margin is expected to be 7.9 percentage points below the target

Orders received and order backlog

New orders

¥40.6 100 million

Order backlog

¥83.4 100 million

Annual Dividend

Annual

¥33 per share

Interim

¥16 per share

End of period

¥17 per share

Contents of this document
Item	Details
Document type	Supplementary materials to the earnings report
Fiscal Period Covered	First quarter of the fiscal year ending March 2027
Net Sales	¥2,118 million (YoY +25.0%)
Operating profit	¥51 million
Ordinary income	¥48 million
Net income	¥41 million
Results for the three months of the current quarter	Net Sales ¥2,118 million / Operating profit ¥51 million / Ordinary income ¥48 million / Net income ¥41 million / Adjusted EBITDA ¥352 million / Adjusted EBITDA margin 16.6 %
Full-year earnings forecast	Net Sales ¥10,000 million / Functional Materials ¥3,300 million / Pharmaceuticals ¥4,100 million / Bio ¥2,600 million / Operating profit ¥910 million / Ordinary income ¥890 million / Net income ¥640 million / Adjusted EBITDA ¥2,210 million / Adjusted EBITDA margin 22.1 %
Self-assessment against the plan	Sales exceeded the initial forecast, while EBITDA was slightly below the initial forecast
Segment results	Segment Functional Materials / Sales ¥894 million / Year-on-year (%) 18.4, Segment Pharmaceuticals / Sales ¥579 million / Year-on-year (%) -20.7, Segment Bio / Sales ¥643 million / Year-on-year (%) 208.1
Breakdown of Factors Affecting the Change	Factors Impact of higher revenue / Amount ¥1.7 100 million, Factors Strategic expenses required to win future projects / Amount ¥-0.7 100 million, Factors Costs to address raw-material procurement risks / Amount ¥-0.1 100 million, Factors FP-4 depreciation / Amount ¥-1.1 100 million, Factors Depreciation / Amount ¥-1 100 million, Factors Personnel expenses / Amount ¥-0.2 100 million
Key KPIs	Indicator name New orders / Value ¥40.6 100 million / Year on year against the same period last year Not disclosed, Indicator name Order backlog / Value ¥83.4 100 million / Year on year against the same period last year Not disclosed, Indicator name Remaining order lead time / Value 13.1 Month / Year on year against the same period last year Record high, Indicator name Equity ratio / Value 66.4 % / Year on year against the same period last year Not disclosed
Assumptions Underlying the Business Outlook	The procurement environment for crude oil and other materials is stabilizing as imports from regions outside the Middle East increase. However, prices remain elevated, and uncertainty remains over passing higher raw-material costs on to customers. Numerical assumptions: Not disclosed
Medium-term management plan targets	Net Sales ¥12,000 million / Adjusted EBITDA margin 30 % / Comparison with actual results Sales are progressing steadily, while adjusted EBITDA margin is expected to be 7.9 percentage points below the target
Annual Dividend	Annual ¥33 per share / Interim ¥16 per share / End of period ¥17 per share
Orders received and order backlog	New orders ¥40.6 100 million / Order backlog ¥83.4 100 million
New initiatives	Full-scale operation of the new building (Building D) from the start of the fiscal year, Investment in strategic expenses to win recurring projects

Items this document does not state (14)

Gross Profit MarginOperating profit marginSelling, general and administrative expensesProgress against full-year forecastUnit price and quantity metricsNumber of stores and locationsNumber of employeesRisk amount incorporated into the outlookFinancial targetsPayout ratioAcquisition of treasury sharesCapital expendituresMarket Size / ShareKey points of the Q&A

These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.

The reasons the company gives

The company's own explanation, not something inferred from the numbers.

Sales are expected to increase, driven by the start-up of the new building, growing demand for semiconductor-related materials and strong orders. Operating income and other measures are expected to decline because upfront costs, including depreciation of the new FP-4 building, personnel expenses, higher raw-material costs and costs to address the situation in the Middle East, are expected to outweigh the benefit of higher sales.

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