TOCALO : Supplementary Briefing Material of Financial Results for the First Quarter Ended June 30, 2023

(TSE Prime Market Code 3433)

New possibilities for a bright future

Financial Summary

(1Q FY2023)

7/31/2023

Overview of Consolidated Results 1Q FY2023

• Revenue decreased due to the semiconductor market entering an adjustment phase from the second half of the previous fiscal year
• Ordinary profit decreased by 19.3% year-on-year (ordinary profit ratio decreased to 20.2%) due to decreased revenue in the semiconductor field, increased labor costs, and rising raw material prices and power costs

(JPY Million)	1Q FY2022/3	1Q FY2023/3	Change
	Result	Ratio	Result	Ratio	Amount	%
Net Sales	11,906	100.0%	11,787	100.0%	-119		-1.0%
Operating Profit	2,724	22.9%	2,268	19.2%	-455		-16.7%
Ordinary Profit	2,948	24.8%	2,380	20.2%	-568		-19.3%
Net Income Attributed to	1,912	16.1%	1,539	13.1%	-372		-19.5%
Owners of Parent
Earnings Per Share (EPS)	31.44JPY	ー	25.35JPY	ー	-6.09JPY		ー

Copyright (c) TOCALO Co., Ltd. All rights reserved.

2

1Q FY2023 Sales (by Segment)

• Thermal Spray (TOCALO), the largest segment, decreased due to a decline in the Semiconductor & FPD field
• Other segments performed well, including domestic subsidiaries, where orders recovered due to improved automobile production

(JPY Million)	1Q FY2022/3	1Q FY2023/3	Change
	Result	Ratio	Result	Ratio	Amount	%
Net Sales	11,906	100.0%	11,787	100.0%	-119	-1.0%
■ Thermal Spray (TOCALO)	9,010	75.7%	8,797	74.6%	-213	-2.4%
Semicon & FPD	5,891	49.5%	5,052	42.9%	-838	-14.2%
Industrial Parts	994	8.3%	1,107	9.4%	113	11.4%
Iron & Steel	755	6.3%	844	7.2%	88	11.7%
Others	1,369	11.6%	1,792	15.1%	422	30.9%
■ Other Surface Modif.	697	5.8%	745	6.4%	47	6.8%
■ Domestic Sub.	591	5.0%	623	5.3%	31	5.3%
■ Overseas Sub.	1,577	13.3%	1,607	13.6%	29	1.9%
Royalty Income	29	0.2%	14	0.1%	-15	-51.4%

Copyright (c) TOCALO Co., Ltd. All rights reserved.

3

Analysis of Ordinary P/L Change

■ Decreased orders for Thermal Spray (TOCALO)	■ Increase in processing material costs and
outsourced processing costs, etc.
■ Partially compensated for by increased sale price	■ Changes in order composition
	(decrease in Semiconductor & FPD fields)

■ Yen depreciation boosted profits in the previous fiscal year

Sales	Variable
decrease	cost ratio
	increase
-109		Labor costs	Depreciation	Exchange
		increase	Other
	-280		decrease	effect
	-169	＋14
	-108	＋85

(JPY（Million)百万円）

	■ Implemented wage
2,948	increases
■ Increase in full-time

employees

■ Reduced overtime work

• No major changes in the capital investment plan for the current fiscal year

• Decreased inventory write-downs
• Increased R&D costs
• Increased electricity costs

2,380

-568 Million JPY	-19.3%
2023/3期 1Q	2024/3期 1Q
1Q 2023/3	1Q 2024/3
経常利益	経常利益
Ordinary Profit	Ordinary Profit

Copyright (c) TOCALO Co., Ltd. All rights reserved.

4

Segment Information

• For Thermal Spray (TOCALO), profits significantly decreased due to a decrease in sales in the semiconductor field
• At Domestic Subsidiaries, profits grew due to a recovery in orders for mainstay cutting tools
• At Overseas Subsidiaries, semiconductor-related sales were sluggish and profit margins declined

						Change
(JPY Million)	1Q FY2022/3	1Q FY2023/3	Net Sales	Segment P/L
	Net Sales	P/L	Net Sales	P/L	Amount	%	Amount	%
■ Thermal Spray	9,010	2,278	8,797	1,787	-213	-2.4%	-490	-21.5%
(TOCALO)
■ Domestic Sub.	591	85	623	114	31	5.3%	28	33.4%
■ Overseas Sub.	1,577	437	1,607	376	29	1.9%	-61	-13.9%
■ Other Surface	697	122	745	130	47	6.8%	7	6.5%
Modif.
Total	11,877	2,924	11,772	2,410	-104	-0.9%	-514	-17.6%

(Note) Royalty Income is not included in the Segment Net Sales.

Copyright (c) TOCALO Co., Ltd. All rights reserved.

5