NPC Incorporated : Presentation material for the financial results for the six months ended Feb. 29, 2024 （1122kb)

April 11, 2024 at 11:11 pm EDT

Business Information

NPC Incorporated (TSE Growth 6255) April 12, 2024

INDEX

Business Results for 1st Half of FY2024
Revision of Business Forecasts for FY2024 Full Year
Company Actions

Business Results for 1st Half of FY2024

	Business Results for 1st Half of FY2024
	Consolidated Statement of Income						(Million yen)


		FY2023 1st Half			FY2024 1st Half

		Results (A)	Initial forecast		Results
		(As of Oct. 11, 2023）(B)

		Amount	Vs. Sales (%)	Amount	Vs. Sales (%)	Amount	Vs. Sales (%)	Vs. (A) (%)	Vs. (B) (%)

	Sales	4,241	100.0	3,329	100.0	3,506	100.0	(17.3)	5.3

	Gross profit	690	16.3	877	26.3	1,173	33.5	70.0	33.8

	SG&A expenses	466	11.0	514	15.4	516	14.7	10.7	0.4

	Operating income	224	5.3	363	10.9	656	18.7	192.9	80.7

	Non-operating income	7	0.2	1	0.0	8	0.2	14.3	700.0

	Non-operating expenses	1	0.0	2	0.1	1	0.0	0.0	(50.0)

	Ordinary income	230	5.4	363	10.9	662	18.9	187.8	82.4

	Extraordinary income	-	-	-		-	-	-	-

	Extraordinary loss	-	-	-		-	-	-	-

	Net income before tax	230	5.4	363	10.9	662	18.9	187.8	82.4

	Net income attribute to	182	4.3	250	7.5	484	13.8	165.9	93.6
	owners of the parent

Note: Percentages at vs. (A) and (B) represent increase/decrease rate.

Business Results for 1st Half of FY2024:

Details of the differences between the initial forecast and the results

Sales

Slightly exceeded the initial forecast.

-Booked the sales of large-scale project of PV module manufacturing equipment as planned. -Parts sales surpassed the initial plan. (170 million yen increase from the initial plan）

Gross profit

Gross profit rate increased by 7.2 percentage points from the initial forecast. (forecast: 26.3%→result: 33.5%) -Cost reduction led by the reduction of purchasing price and on-site optimization of operation expense -Profit rate improved by strong parts sales

SG&A expenses

Almost as expected though there were some increase or decrease depending on the category. -Increase factor: provision for bonuses

-Decrease factor: payroll and allowances (deviation from the personnel plan), R&D expenses (delayed procurement of prototype), travel and transportation expenses

Operating income, Ordinary income, and Net income attributable to owners of the parent

Income in each stages largely exceeded the initial forecast due to an increase of sales and profit rate.

Business Results for 1st Half of FY2024:

Machinery Business							(Million yen)


		FY2023 1st Half			FY2024 1st Half

		Results (A)	Initial forecast		Results
		(As of Oct. 11, 2023) (B)

		Amount	Vs. Sales (%)	Amount	Vs. Sales (%)	Amount	Vs. Sales (%)	Vs. (A) (%)	Vs. (B) (%)

	Sales	3,996	100.0	3,128	100.0	3,329	100.0	(16.7)	6.4
	Gross profit	634	15.9	831	26.6	1,131	34.0	78.4	36.1
	SG&A expenses	123	3.1	145	4.6	135	4.1	9.8	(6.9)
	Operating income	511	12.8	686	21.9	995	29.9	94.7	45.0

Note: There are company-wide expenses not included in the table above. Also, percentages at vs. (A) and (B) represent increase/decrease rate.

■Sales

The main business was with First Solar.

-Booked the sales of machines for additional installation (No.6.5) at First Solar's manufacturing facility in Ohio

-Alteration/upgrade of existing factory line executed

-Parts sales were strong due to high plant working rate and increase in amount of equipment.

■Gross profit

High profit rate was secured by cost reduction and increase in parts sales.

Sales breakdown

Automation

machines

Parts

PV module

manufacturing

equipment

Business Results for 1st Half of FY2024:

Environmental Business

								(Million yen)

	FY2023 1st Half			FY2024 1st Half
	Results (A)	Initial forecast		Results

	(As of Oct. 11, 2023) (B)

	Amount	Vs. Sales (%)	Amount	Vs. Sales (%)	Amount	Vs. Sales (%)	Vs. (A) (%)	Vs. (B) (%)

Sales	245	100.0	200	100.0	176	100.0	(28.2)	(12.0)
Gross profit	55	22.4	46	23.0	41	23.3	(25.5)	(10.9)
SG&A expenses	32	13.1	33	16.5	38	21.6	18.8	15.2
Operating income	23	9.4	12	6.0	3	1.7	(87.0)	(75.0)

Note: There are company-wide expenses not included in the table above. Also, percentages at vs. (A) and (B) represent increase/decrease rate.

■Sales

-Solar power inspection service:

Continued to provide services mainly to the existing customers. -Solar panel disassembly equipment:

Booked the sales of frame & J-Box separator to 3 domestic customers. Sales planned

to the overseas customers were pushed back to FY2024 2nd half due to customer reason. -Panel reuse and recycling

Booked the sales as planned but remained low. -Plant factory business:

The factory is in full production and almost all the products were sold out.

■Gross profit

The profit rate was as expected, however, the gross profit decreased since the sales target was not achieved.

Sales breakdown

Plant factory business

Solar power plant inspection service

Solar panel disassembly equipment

Reuse and recycling of solar panels (intermediate treatment)

Business Results for 1st Half of FY2024:

Orders / Order Backlog

(Million yen)

Machinery business

Environmental business

Total

FY2023 1st half

Orders received	Order backlog

8,057	12,005
261	500
8,318	12,506

	FY2024 1st half
Orders received	Year-on-year	Order backlog	Year-on-year
ratio(%)	ratio(%)

6,777	(15.9)	13,401	11.6
324	24.1	469	(6.2)
7,102	14.6	13,870	10.9
	Note: Percentages represent increase/decrease rate.

Machinery business

Orders were solid for FY2025.

-PV module manufacturing equipment for First Solar's Louisiana factory (No.9) -Additional equipment for First Solar's existing factory line (No.6, 7, 8)

-Delayed order of automation machines for new factory of domestic electronic components industry was received. -Alteration project for domestic PV manufacturer -Automation machines for domestic and US automobile industry

Environmental business

-Stably received orders for solar panel inspection service and plant factory business from existing customers.

-Orders for panel disassembly equipment was steady. Panel disassembly line: 2 lines (Czech Republic, Japan)

Frame & J-Box separator: 2 sets (France, Japan)

Orders Breakdown

Machinery business

AutomationParts machines

PV module manufacturing equipment

Environmental
business	Solar panel

Plant factory	inspection service

business

Reuse/recycling of

Solar panel disassembly solar panels

equipment(intermediate treatment)

Business Results for 1st Half of FY2024:

Balance Sheet									(Million yen)


				2023.8E	2024.2E					2023.8E	2024.2E

Assets	13,611	14,177		Liabilities	5,537	5,711
	Current assets		9,963	10,623				Current liabilities	5,463	5,632

									Accounts payable-trade
	Cash and deposits	4,880	4,662				/electronically recorded obligations-	2,445	1,797
									operating
	Notes and accounts receivable-trade

	/electronically recorded monetary claims-	1,262	1,159				Advances received	2,474	3,305
	operating

	Work in progress		3,578	4,452				Provisions	155	147

	Raw materials and supplies	11	23				Other	389	383
	Other	232	325				Noncurrent liabilities	73	79

	Noncurrent assets	3,647	3,553		Net assets	8,074	8,465

	Property, plant and equipment (net)	1,630	1,552				Capital stock, capital surplus	5,547	5,550
	Land	1,548	1,548				Retained earnings	2,739	3,095
	Other	469	453				Treasury stock	(320)	(306)
									Other	108	126

Factors for changes and financial soundness

-Net assets remained at a high level due to expansion of business

-Work in progress is increasing as the production is progressing towards sales booking for 2nd half of FY2024 -Advances for booked sales were certainly received.

-Equity ratio: 59.7%

Revision of Business Forecasts for FY2024 Full Year

Consolidated Statement of Income

(Million yen)

	FY 2023				FY 2024
	Results (A)		Initial forecast	Revised forecast (As of April 10, 2024）
		(As of Oct. 11, 2023) (B)

	Amount		Vs. Sales	Amount	Vs. Sales (%)	Amount	Vs. Sales (%)	Vs. (A) (%)	Vs. (B) (%)
		(%)

Sales	9,320		100.0	10,384	100.0	10,995	100.0	18.0	5.9
Gross profit	1,944		20.9	2,615	25.2	3,270	29.7	68.2	25.0
SG&A expenses	967		10.4	1,030	9.9	1,121	10.2	15.9	8.8
Operating income	976		10.5	1,584	15.3	2,149	19.5	120.2	35.7
Non-operating income	6		0.1	3	0.0	10	0.1	66.7	233.3
Non-operating expenses	20		0.2	4	0.0	3	0.0	△85.0	△25.0
Ordinary income	963		10.3	1,584	15.3	2,155	19.6	123.8	36.0
Extraordinary income	-		-	-	-	-	-	-	-

Extraordinary loss	-		-	-	-	-	-	-	-

Net income before tax	963		10.3	1,584	15.3	2,155	19.6	123.8	36.0
Net income attribute to	993		10.7	1,081	10.4	1,471	13.4	48.1	36.1
owners of the parent

Note: Percentages at vs. (A) and (B) represent increase/decrease rate.

Revision of Business Forecasts for FY2024 Full Year:

Summary

Sales

10,384 million yen→10,995 million yen

-Have already received the orders for most of the sales expected for the 2nd half, except for parts sales.

-A part of sales of automation machines to domestic electronic components industry is expected to be pushed forward to FY2024 from FY2025, according to the customer's request.

-Parts sales are strong; expecting briefly the same amount of sales with FY2023. (757 million yen)

-Expecting to book sales of equipment for First Solar's Alabama manufacturing facility (No.8) in FY2024 Q4.

Gross profit

2,615 million yen→3,270 million yen, gross profit rate: 25.2%→29.7% -Increase of profit due to increase of sales.

- Profit rate is improving due to the cost reduction of purchasing cost and on-site operation expense, and to an increase of parts sales.

SG&A expenses

1,030 million yen→1,121 million yen

-Provision for bonuses is increased along with the increase of profit.

-Welfare expenses, R&D expenses, commission expenses, etc. are expected to increase.

Operating income, Ordinary income, and Net income attributable to owners of the parent

-Each income is expected to largely surpass the initial forecast due to an increase of gross profit , despite an expected increase in SG&A expenses

- Net income attribute to owners of the parent: 1,081 million yen→1,471 million yen (390 million yen increase)

Company Actions

Machinery Business 1. PV Module Manufacturing Equipment:

PV Market

Generation cost of solar power generation in the world

-Generation cost of solar power generation has largely decreased in the past 12 years.

-In 2022, generation cost of solar power generation went below that of fossil fuel generation by marking the minimum of $0.049/kWh, while fossil fuel generation was at the minimum of $0.069/kWh.

Source: IRENA (2023) Renewable power generation costs in 2022.

		Changes in the Cost of
($/KWh)	Solar Power Generation in the World

0.5
	0.445

0.4

0.3					0.244

0.2
	Cost range of fossil fuel
0.1		generation

				0.069

0			0.049			(CY)

	2010	2022

Generation cost of solar power generation in the US

($/MWh)

Minimum Generation Cost in the US

-Minimum generation cost (without subsidy) of utility-scale solar power

in the US is $24/MWh ($0.024/kWh).

-On the other hand, coal-fired power generation costs

$68/MWh ($0.068/kWh).

Source: LAZARD (2023) 2023 Levelized Cost of Energy+.

80	68
70

60
50
40	24
30
20
10
0

Solar power generation

Coal-fired power generation

Machinery Business 1. PV Module Manufacturing Equipment:

PV Market

Non-federal solar power initiatives in the US

-12states and 3 districts* have legislated to transit to 100% clean energy by 2050 at the latest. (Includes 5 states and districts that will transit to 100% renewable energy.)

-Many of the major corporations in the US invests or own solar power plants or use PV panels on the rooftop of their properties.

100% renewable: Hawaii, Rhode Island, Washington DC, Guam, Puerto Rico

100% clean: California, Connecticut, Illinois, Maine, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Virginia, Washington

Meta:

By 2025, 86 Meta-supported wind and solar projects in the U.S. will add 9.8 GW of renewable energy to local grids across 24 states.

Costco Wholesale

Costco owns and operates more than 100 on-site solar systems, with the intention to expand on-site solar operations where feasible.

Source: Meta. 'Energy'.
Source: Environment + Energy Leader (2023) 'Costco Is Cutting Its CO2 Footprint By Greening Its Energy
Supply and Using Energy Efficiency'.
Source: National Conference of State Legislatures (2021) 'State Renewable Portfolio Standards and Goals'.
出典/Environment America (2022) 'States can lead the way toward a future powered by 100% clean,	PV panels used for the car port, Costco, Maui Island, Hawaii
renewable energy'.

Copyright Ⓒ 2024 NPC Incorporated. All rights reserved.	14

Machinery Business 1. PV Module Manufacturing Equipment:

Current Status of First Solar

Current status of First Solar

	2022	2023	2024E	Order backlog	80.1 GW
Sales (USD)	2.6 bill.	3.3 bill.	4.4～4.6 bill.	In negotiation	66.5 GW

Operating income (USD)	△0.02 bill.	0.85 bill.	1.5～1.6 bill.

Total	146.6 GW

Shipment (GW)	9.3	14.5	15.6～16.3

First Solar's capital investment

(GW)	First Solar's Nameplate Manufacturing Capacity
30
	25.2

25	21.2	22.5

16.6

2023A

2024E

2025E

2026E

Source: First Solar (2024) First Solar Q4'23 Earnings and 2024 Guidance Call.

Source: Fist Solar (2023) First Solar Breaks Ground on $1.1 Billion, 3.5 GW Louisiana Manufacturing Facility.

Ground-breaking at the new manufacturing facility in Louisiana (No.9)

Source: Fujio, T. (2024) 'The president of Sekisui Chemical talks, "make investment decision within 2 years" about flexible solar panel', The Nikkei, March 13.

Source: (2024) ' "Perovskite PV module" achieving 20 years of durability, Sekisui Chemical commercializing in 2025', Newswitch, January 11.

Machinery Business 1. PV Module Manufacturing Equipment:

Business with First Solar

■New equipment (equipment for new manufacturing facilities, R&D equipment)

Factory	Location	Production capacity（GW）	Start operation	Business
				Equipment already installed
0-5 (existing)	Ohio, Malaysia, Vietnam	9.8	In operation	Continuous business of
				upgrading and expansion

6 (existing)	Ohio	3.3	In operation	Sales booked (FY2023 2Q)

7 (existing)	India	3.3	In operation	Sales booked (FY2023 4Q)
6.5（expansion）	Ohio	0.9	2024	Sales booked (FY2024 2Q)
8	Alabama	3.5	2024	Order received (FY2023 1Q)
Sales scheduled (FY2024 4Q)

R&D Center	Ohio	Silicone and thin-film tandem	2024	Order received (FY2023 2Q)
module R&D line	Sales scheduled (FY2024 3Q)

R&D Center	Ohio	Perovskite development	2025	Order received (FY2023 4Q)
equipment	Sales scheduled (1st half of FY2025)


9	Louisiana	3.5	2026	Order received (FY2024 1Q)
Sales scheduled (2nd half of FY2025)

■Alteration/upgrade of installed equipment

-Continuing businesses such as alterations of the equipment due to change of design of the products, upgrading equipment to improve production yields by automating processes or adding inspection processes, in all the manufacturing facilities.

■Parts Sales

-Dealings of consumable parts and spare parts for equipment.

-Sales are on the rise since the equipment and modification/upgrade is increasing and plant working rate is high.
-FY2022：454 million yen	FY2023：746 million yen	FY2024 (forecast)：745 million yen
		Copyright Ⓒ 2024 NPC Incorporated. All rights reserved.	16

Machinery Business 1. PV Module Manufacturing Equipment:

Perovskite PV module

Demands for perovskite and future prospects

Backgrounds of demand

-Acquisition of installation sites are necessary because Japan does not have many flat lands.

-Can utilize iodine without depending on other countries.

-Prime minister Kishida has announced that the government is "aiming to start practical use in 2025". Development budget have risen to 64.8 billion yen.

■Future prospects

-Solving the issue of durability

→Sekisui Chemical has announced that it is targeting to

achieve durability around 20 years by 2025. -Mass production plan

→Sekisui Chemical has also announced that it is planning to mass

(KW/㎢)	PV capacity per square meter of land area
426
450

400


350

300

250
		184
200

150

100				63	26	24

50					11	10

0
	Japan Germany	UK	France	China	India	US

produce several hundred thousand square meters annually. It will Source: Ministry of Trade, Economy and Industry (2021) 'The state of energy policy toward 2030'.

clarify the amount of production within 2 years.

Our Approach

Our strength: we can utilize the experience of producing thin film solar panel manufacturing equipment (electrode formation process, sheet layering process, lamination process, etc.)

-Received order of equipment from First Solar for pursuing R&D of perovskite PV module which they acquired knowledge though M&A -Received total order of several billion yen from multiple domestic companies.

Machinery Business

2. Automation Machines

Current status of automation machines

(Million yen)	Orders				(Million yen)		Sales

1,500						1,500

1,000						1,000


500						500


0						0

2021	2022	2023	2024E	2021	2022	2023	2024E

Sales for FY2024 decreased due to the back push of the sales of the equipment for the new factory of the domestic electronic component manufacturer being affected by the situation of semiconductor market. It is forecasted to recover from FY2025 onwards.

Acquirement of regular customer in the US

■Market environment

-Demand for automation machines is high in the US due to issues such as labor cost. -We compete with local manufacturers on cost and customer support.

■Our actions

-Strengthen sales mainly to automobile related companies from our subsidiary

in Michigan.

-Support sales by dispatching engineers from Matsuyama factory.

Machinery Business

3. Production System and Status of Matsuyama Factory

Breakdown of consolidated employees (As of

August 31, 2023)

Administration Development/

37design

Inspection, etc.

8 Manufacturuing

Approximately 3/4 work as

technical staff

■Production System

It is possible to outsource the assembly process since we are producing equipment with cell production system.

We can be flexible about the production system depending on the amount of orders.

-Continuously having business with mainly 3 subcontracting companies, have multiple other companies we can outsource.

-Final adjustments are done at the Matsuyama factory after equipment is assembled at subcontracting companies, and shipped to the customers. (In some cases, we ship directly to customers.)

■Personnel organization

-51 technicians are responsible for assembly and wiring in equipment manufacturing

-42 designers (mechanical, electrical, and software) on staff, with plans to increase the number of designers in the future

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Disclaimer

NPC Inc. published this content on 12 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 April 2024 03:10:05 UTC.

Market Closed - Japan Exchange Other stock markets 02:00:00 2024-04-30 am EDT			5-day change	1st Jan Change
866 ^JPY	+0.12%		-4.84%	+15.78%

Apr. 10	NPC Incorporated Revises Consolidated and Non-Consolidated Earnings Guidance for Full Year Ending August 31, 2024	CI
Jan. 11	NPC Incorporated Provides Dividend Guidance for the Fiscal Year Ending August 31, 2024	CI

NPC Incorporated Revises Consolidated and Non-Consolidated Earnings Guidance for Full Year Ending August 31, 2024	Apr. 10	CI
NPC Incorporated Provides Dividend Guidance for the Fiscal Year Ending August 31, 2024	Jan. 11	CI
NPC Issues 23,165 Treasury Shares as Restricted Stock Compensation	Dec. 26	MT
Npc Incorporated Announces Year End Dividend for the Year Ended August 31, 2023, Payable on November 30, 2023, Provides Year End Dividend Guidance for the Year Ending August 31, 2024	23-10-11	CI
NPC Incorporated Provides Consolidated and Non-Consolidated Earnings Guidance for the First Half Ending February 29, 2024 and Year Ending August 31, 2024	23-10-11	CI
NPC Incorporated Revises Consolidated and Non-Consolidated Financial Guidance for the Fiscal Year Ending August 31, 2023	23-08-30	CI
NPC Incorporated Provides Consolidated Earnings Guidance for the Fiscal Year Ending August 31, 2023	23-07-12	CI
Npc Incorporated Provides Dividend Guidance for the Year Ending August 31, 2023	23-07-12	CI
NPC Incorporated Provides Year End Dividend Guidance for the Full Year Ending August 31, 2023	23-04-12	CI
NPC Incorporated Revises Consolidated and Non-Consolidated Earnings Guidance for the Year Ending August 31, 2023	23-04-12	CI
NPC Hands Out Restricted Stock Remuneration	23-01-25	MT
NPC Incorporated Provides Consolidated Earnings Guidance for the First Half and Fiscal Year Ending August 31, 2023	23-01-11	CI
NPC Incorporated Provides Year End Dividend Guidance for the Full Year Ending August 31, 2023	23-01-11	CI
NPC Schedules Restricted Stock Remuneration in January 2023	22-12-27	MT
NPC Incorporated Announces Dividend for the Fiscal Year Ended August 31, 2022, Payable on November 30, 2022; Provides Dividend Guidance for the Year Ending August 31, 2023	22-10-12	CI
NPC Incorporated Announces Consolidated and Non-Consolidated Earnings Guidance for the First Half and Full Year of 2023 and Earnings Target for Fiscal Year 2024 and 2025	22-10-12	CI
NPC Retains FY22 Guidance Even as Attributable Net Income Plunges 64% in Fiscal Nine Months; Shares Up 12%	22-07-14	MT
Npc Incorporated Provides Consolidated Earnings Guidance for Year Ending August 31, 2022	22-07-13	CI
Npc Incorporated Announces Dividend Guidance for the Year Ending August 31, 2022	22-07-13	CI
NPC Sinks to Loss in Fiscal H1 on 73% Decline in Sales; Slashes FY22 Outlook	22-04-13	MT
NPC Incorporated Provides Year-End Dividend Guidance for the Fiscal Year Ending August 31, 2022	22-04-12	CI
NPC Incorporated Revises Consolidated and Non-Consolidated Earnings Guidance for the Fiscal Year Ending August 31, 2022	22-04-12	CI
NPC Completes Restricted Stock Remuneration	22-01-24	MT
NPC Incorporated Provides Dividend Guidance for the Fiscal Year Ending August 31, 2022	22-01-13	CI
NPC Incorporated Provides Consolidated Earnings Guidance for the First Half and Full Year of Fiscal Ending August 31, 2022	22-01-13	CI

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NORDSON CORPORATION	-0.63%	15.01B
HAITIAN INTERNATIONAL HOLDINGS LIMITED	+33.02%	4.87B
WUXI LEAD INTELLIGENT EQUIPMENT CO.,LTD.	-11.13%	4.89B
VALMET OYJ	-9.77%	4.68B
KRONES AG	+12.16%	4.25B
SUZHOU MAXWELL TECHNOLOGIES CO., LTD.	-8.60%	4.56B
TOMRA SYSTEMS ASA	+10.57%	3.67B
IHI CORPORATION	+37.16%	3.44B
KADANT INC.	+2.44%	3.37B

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NPC Incorporated : Presentation material for the financial results for the six months ended Feb. 29, 2024 （1122kb)

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