Tenox Corporation · TSE:1905

Tenox — FY2022 Earnings Presentation

50 slides from Tenox's earnings presentation, May 29, 2023

1. Slide 1: Financial Results Briefing for the Fiscal Year Ended March 31, 2023

   Financial Results Briefing for the Fiscal Year Ended March 31, 2023 May 29, 2023 TENOX CORPORATION Securities Code: 1905

2. Slide 2: Today’s Topics

   Today’s Topics TENOX CORPORATION 1. Results for the Fiscal Year Ended March 31, 2023 2. Earnings Forecast for the Fiscal Year Ending March 31, 2024 3. Progress of Medium-term Management Plan (from FY 2021 to FY 2023) 4. Aiming to Be a Sustainable Company (Contribute to a Sustainable Society) 5. Refe

3. Slide 3: 1. Results for the Fiscal Year Ended March 31, 2023

   1 ． R e s u l t s f o r t h e F i s c a l Ye a r E n d e d March 31, 2023 3 Copyright © 2023 TENOX CORPORATION All rights reserved.

4. Slide 4: Key points for the financial results

   Key points for the financial results TENOX CORPORATION Net sales increased by 3,500 million yen (up 24%) from the previous fiscal year to 18,317 million yen  For civil engineering piling work, the increase was due to large-scale projects such as the Ichinowatari Viaduct, which is the first phase of

5. Slide 5: Outline of financial results

   Outline of financial results TENOX CORPORATION  Revenue increased due to major contributions from civil engineering piling work such as the Ichinowatari Viaduct for the Hokkaido Shinkansen and projects related to infrastructure in Kansai, as well as due to large-scale factories in conjunction with

6. Slide 6: Major completed projects and order backlog

   Major completed projects and order TENOX CORPORATION backlog Construction method Name of construction work Date of completion (Construction site) Completed project Ground improvement Construction of Cell 8, Ono Plant of IBIDEN CO., LTD. (Ono Town, Gifu March 2023 Prefecture) Civil engineering piling

7. Slide 7: Business segments

   Business segments TENOX CORPORATION Construction business In Japan, the Company, Tenox Giken Co., Ltd. and Hiroshimagumi Co., Ltd. and Ohmishima Bussan Co., Ltd. are engaged in construction projects specializing in foundation work. TENOX ASIA COMPANY LIMITED is engaged in overseas business. General

8. Slide 8: By segment

   By segment TENOX CORPORATION  In the construction business, revenue increased mainly due to piling work for expressways, railway viaducts, etc., and to ground improvement work for private factories. Profit increased due to increase revenue, and due to the impact of delays in construction of large-s

9. Slide 9: Factors affecting changes in net sales

   Factors affecting changes in net sales TENOX CORPORATION  For civil engineering piling work, the increase was due to large-scale projects such as the Ichinowatari Viaduct, which is the first phase of the elevated section of the extension project for the Hokkaido Shinkansen, and projects related to

10. Slide 10: Factors affecting changes in operating profit

    Factors affecting changes in operating TENOX CORPORATION profit  Profit increased due to increased revenue, to the impact of delays in construction of large-scale projects due to record-breaking cold weather in civil engineering piling work being less than expected, and to increased profitability a

11. Slide 11: Factors affecting changes in cash flows

    Factors affecting changes in cash flows TENOX CORPORATION  Operating C/F resulted in an increase in cash due to profit before income taxes, an increase in trade payables, and depreciation, despite a decrease in cash mainly due to an increase in trade receivables, etc.  Investment C/F decreased due

12. Slide 12: 2. Earnings Forecast for the Fiscal Year Ending March 31, 2024

    2．Earnings Forecast for the Fiscal Ye a r E n d i n g M a r c h 3 1 , 2 0 2 4 12 Copyright © 2023 TENOX CORPORATION All rights reserved.

13. Slide 13: Earnings forecast

    Earnings forecast TENOX CORPORATION  We expect net sales to increase by 15.7% due to continued healthy demand for projects related to Kansai infrastructure and the start of main work for the extension project for the Hokkaido Shinkansen in the civil engineering business, and to continued constructi

14. Slide 14: 3. Progress of Medium-term Management Plan

    3．Progress of Medium-term Management Plan (from FY 2021 to FY 2023) 14 Copyright © 2023 TENOX CORPORATION All rights reserved.

15. Slide 15: Long-term vision and Medium-term Management Plan

    Long-term vision and TENOX CORPORATION Medium-term Management Plan Long-term vision (our future goals) Create new value and markets by aggressively implementing technological innovation to address variable social needs Be a provider of “peace of mind” and “safety” through engaging in Long-term found

16. Slide 16: Position and slogans of the Medium-term Management Plan

    Position and slogans of TENOX CORPORATION the Medium-term Management Plan Flexibly respond to changes in construction demand and VUCA(*), in pursuit of high added value to build a foundation for the next 50 years Phase1 Phase2 Phase3 From FY 2018 to FY 2020 From FY 2021 to FY 2023 From FY 2024 Sloga

17. Slide 17: Three basic strategies

    Three basic strategies TENOX CORPORATION Provide solutions based on three basic strategies to challenges, changes in the management environment, and needs that were inherited from the previous Medium-term Management Plan Intensified Decreasing Developmental disasters demand Sales and strategy constr

18. Slide 18: Three basic strategies (1)

    Three basic strategies (1) TENOX CORPORATION Developmental strategy Important points ・・・ In progress Results Materiality Action plan Progress Efforts introduced on Increase strength of improved ground, establish construction method Currently under verification Began development of the industry’s fir

19. Slide 19: Three basic strategies (2)

    Three basic strategies (2) TENOX CORPORATION Sales and construction strategy Important points ・・・ In progress Results Materiality Action plan Progress Efforts introduced on Extension of Hokkaido Shinkansen Sale of one project completed → Forecasted orders and sales for FY 2023 P.43 (1) Railway devel

20. Slide 20: Three basic strategies (3)

    Three basic strategies (3) TENOX CORPORATION ESG strategy Important points ・・・ In progress Results Materiality Action plan Progress Efforts introduced on Began development of the industry’s first small motorized pile driver P.25 Reduce CO2 emissions Currently using GTL fuel for pile drivers for firs

21. Slide 21: Numerical management targets (from FY 2021 to FY 2023)

    Numerical management targets TENOX CORPORATION (from FY 2021 to FY 2023) ROE(%) Ordinary profit ratio (%) 6.6 5.7 3.5(Plan 3.9) 4.0(Plan 6.0) 4.6(Forecast) (Plan 8.0) 6.3 2.1 4.9 3.8(Plan 5.0) 4.0(Forecast) (Plan 6.8) 3.0 (Plan 4.0) 25,000 1.5 2,500 (millions of yen) (millions of yen) Planned net sa

22. Slide 22: Progress of investment plan

    Progress of investment plan TENOX CORPORATION Investment plan: 3,500 million yen (3 years)  Equipment will be purchased mainly to increase construction capacity and improve construction quality control.  Development will mainly be conducted in the form of joint research with railway research insti

23. Slide 23: Progress of shareholder return policy

    Progress of shareholder return policy TENOX CORPORATION  Taking into account the medium-term outlook, we aim to achieve a stable dividend payout ratio of around 30% on a consolidated basis.  Implement flexible purchase of treasury shares 450 Total amount of treasury shares purchased 140% (millions

24. Slide 24: 4. Aiming to Be a Sustainable Company

    4．Aiming to Be a Sustainable Company (Contribute to a Sustainable Society) (1) Response to climate (2) Contribute to improving social infrastructure through engaging in foundation construction (3) Personnel capital (4) Efforts to improve corporate value 24 Copyright © 2023 TENOX CORPORATION All righ

25. Slide 25: Response to climate

    Response to climate TENOX CORPORATION Began development of foundation construction industry’s first motorized small pile driver  In April 2023, the Company entered into a joint development agreement with NIPPON SHARYO, LTD. for motorization of a small pile driver and began development.  By changin

26. Slide 26: Contribute to improving social infrastructure through foundation construction

    Contribute to improving social infrastructure through engaging in foundation construction TENOX CORPORATION TENOX’s business activities themselves are the SDGs ～ Supporting a sustainable society and the global environment through foundation construction ～ Construction Year of Main construction durin

27. Slide 27: Personnel capital

    Personnel capital TENOX CORPORATION In addition to the chronic labor shortage and aging of engineers, in order to respond to the construction industry’s upper limit on overtime work that will be implemented in April 2024, we must increase the number of employees, with a focus on young employees in t

28. Slide 28: Efforts to improve corporate value

    Efforts to improve corporate value TENOX CORPORATION Stock price trend (from April 2013 to May 2023) 1,400 November 10, 2017 35,000 (Yen) 1,322 (Yen) 1,200 30,000 TENOX (left scale) Nikkei Stock Average (right scale) 1,000 25,000 800 20,000 1,012 yen as of May 24 600 15,000 (Reference value) Dividen

29. Slide 29: Efforts to improve corporate value

    Efforts to improve corporate value TENOX CORPORATION Current status 0.62 0.58 0.55 0.51 0.52 0.45 0.48 0.44 PBR 0.41 0.41 13.2% 10.0% 8.5% 6.6% 6.6% 5.7% ROE 4.8% 4.0% 3.0% 1.5% 1,850.63yen 1,781.85yen 1,742.11yen 1,748.57yen BPS 1,668.33yen 1,591.14yen 1,548.68yen 1,457.74yen 1,301.71yen 1,194.30ye

30. Slide 30: Efforts to improve corporate value

    Efforts to improve corporate value TENOX CORPORATION Increase in corporate value = Increase in PBR = Expansion of equity spread (ROE - equity cost) Increasing ROE is an essential prerequisite for increasing PBR ROE target for the current Medium-term ⇒ Forecasted ROE for FY 2023 results Management Pl

31. Slide 31: Reference Material

    TENOX CORPORATION TENOX CORPORATION 4．Reference Material 31 Copyright © 2023 TENOX CORPORATION All rights reserved.

32. Slide 32: Company profile

    Company profile TENOX CORPORATION We provide “safety” and “peace of mind” by engaging in foundation work to all people who use various structures around us, including houses, commercial facilities, hospitals, warehouses, factories, railways, and roads. Power plant Airport Factory Harbor Office and W

33. Slide 33: Company profile

    Company profile TENOX CORPORATION Company name TENOX CORPORATION Location of head 5-25-11 Shiba, Minato-ku, Tokyo office Foundation July 8, 1970 Paid-in capital 1,710,900,000 yen Masayuki Sato, President and Representative Representative Director • Sale of concrete piles and steel pipe piles and con

34. Slide 34: Business segment: Construction business

    Business segment : TENOX CORPORATION Construction business Engages in construction business specializing in foundation work, making intensive effort to reduce environmental burden Ground improvement Piling method method Characterized by having two categories of different construction methods 34 Copy

35. Slide 35: Introduction of major technology

    Business segment: Construction business TENOX CORPORATION - Introduction of major technology - Gantetsu Pile Method (Piling) Tenocolumn Method (Ground Improvement) A construction method jointly developed with NIPPON STEEL CORPORATION and Patented in 1984. A pioneering foundation construction method

36. Slide 36: Business model and characteristics

    Business model and characteristics TENOX CORPORATION Realized a high-quality through a consistent system from design to construction TENOX Group (Design consultant and (1) Inquiry Integrated Geotechnology Design companies Institute Limited design offices Technology Orderer (customer) (2) Design Head

37. Slide 37: Earnings trend

    Earnings trend TENOX CORPORATION (net sales, ordinary profit, ordinary profit ratio, and ROE)  Included Tenox Kyushu Corporation, a former consolidated subsidiary company, as an equity method affiliate company in the fiscal year ended March 2016. Excluded the company from equity method affiliates i

38. Slide 38: Breakdown of net sales

    Breakdown of net sales TENOX CORPORATION (reference on page 9)  For civil engineering piling work in the fiscal year ended March 31, 2023, net sales were due to large-scale projects such as the Ichinowatari Viaduct, which is the first phase of the elevated section of the extension project for the H

39. Slide 39: Trends in dividends and dividend payout ratio

    Trends in dividends and dividend payout TENOX CORPORATION ratio  The dividend payout ratio has been set at 30% as a guide since the previous Medium-term Management Plan that started in the fiscal year ended March 2019.  The dividend for the fiscal year ended March 2021 includes a commemorative div

40. Slide 40: Trends in investments

    Trends in investments TENOX CORPORATION  Made strategic investments for future growth by leveraging cash on hand and treasury shares, and issuing corporate bonds and borrowing funds when necessary 900 (millions of yen) M&A, etc. 800 R&D and education 150 Capital investment (mainly for improving con

41. Slide 41: Medium-term Plan progress: (1) Expansion of sales area

    Initiatives and progress of the Medium-term TENOX CORPORATION Management Plan (Previously announced portion) (1) Expansion of sales area ➡ Towards realization of a one-stop service  Shallow-mixing processing method, “TENO Q-be” • Sales started from May 2020. To date, ten projects have been ordered,

42. Slide 42: Medium-term Plan progress: (2) National resilience and redundancy projects

    Initiatives and progress of the Medium-term TENOX CORPORATION Management Plan (Previously announced portion) (2) Contribute to enhancing national resilience and redundancy(*) projects  Received order of “Ichinowatari Viaduct, etc., of Hokkaido Shinkansen” the first phase construction for the elevat

43. Slide 43: Medium-term Plan progress: (3) GTL fuel

    Initiatives and progress of the Medium-term TENOX CORPORATION Management Plan (Previously announced portion) (3) First case in the foundation construction industry Start introducing GTL fuel at construction sites NETIS New Technology Information System (Ministry of Land, Infrastructure, Transport an

44. Slide 44: Medium-term Plan progress: (4) Application at existing pile sites

    Initiatives and progress of the Medium-term TENOX CORPORATION Management Plan (Previously announced portion) (4) Possible application of construction technology to a site where existing piles are pulled up  When demolishing an existing building, inappropriate backfilling treatment of pile holes aft

45. Slide 45: Medium-term Plan progress: (5) Diversity & Inclusion

    Initiatives and progress of the Medium-term TENOX CORPORATION Management Plan (Previously announced portion) (5) Diversity & Inclusion  On June 29, 2022, the Company appointed its first female Outside Director Ratio of female officers 12.5% (one out of eight) Ratio of female officers across 3,795 l

46. Slide 46: Medium-term Plan progress: (6) Healthcare-oriented management

    Initiatives and progress of the Medium-term TENOX CORPORATION Management Plan (Previously announced portion) (6) Enhance healthcare-oriented management  Wellbeing management  Implemented measures to support each employee both mentally and physically • Implemented measures to prevent heatstroke of

47. Slide 47: Medium-term Plan progress: (7) Work environment with high job satisfaction

    Initiatives and progress of the Medium-term TENOX CORPORATION Management Plan (Previously announced portion) (7) Establish work environment with high job satisfaction  Renovated the offices of the Tokyo Equipment Center and Tenox Giken Co., Ltd. (completed in October 2021) for the purpose of promot

48. Slide 48: Medium-term Plan progress: (8) Risk Management Committee

    Initiatives and progress of the Medium-term TENOX CORPORATION Management Plan (Previously announced portion) (8) Establishment of the Risk Management Committee  On September 20, 2022, we established the Risk Management Committee, chaired by the President and Representative Director  The Risk Manag

49. Slide 49: Contact for inquiries

    Contact for inquiries TENOX CORPORATION IR Inquiries  IR Contact Budget and IR Group, Planning Information Promotion Department  E-mail [email protected]  URL https://www.tenox.co.jp/contact/contact_ir/  Corporate website https://www.tenox.co.jp/ The forward-looking statements including earnings fo

50. Slide 50: Thank you for reading the material.

    Thank you for reading the material. 50 Copyright © 2023 TENOX CORPORATION All rights reserved.

Tenox — FY2022 Earnings Presentation on 6ix