Avant : Presentation for the third quarter of the fiscal year ending June 30, 2023

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Avant Group Corporation

Financial Results Presentation

for the third quarter of Fiscal Year June 2023

April 28, 2023

©2023 AVANT GROUP CORPORATION. All Rights Reserved.

Executive Summary

• Summary of financial results for the third quarter of FY June 2023
• • Q3 (3 month) net sales increased YoY in all segments and rose 12.5% YoY overall. On the other hand, operating income declined 1.1% YoY, mainly due to deteriorating profit margins caused by a decline in gross profit margin.
  • The decline in gross profit margin was mainly due to reorganization costs, an increase in headcount for growth, and outsourcing costs to meet strong demand.
  • Cumulative Q3 net sales and operating income increased 17.4% and 11.4% YoY, respectively.
• Earnings and Dividend Forecasts
• • We expect to maintain the pace of sales growth, but we maintain our earnings forecasts because we will continue to increase the number of employees needed for growth and conduct full-scale product strategy reviews and subsequent implementation in Q4, and estimate the total amount of expenses associated with these changes to the greatest extent possible.
  • Dividend per share for the fiscal year ending June 2023 is forecast at 15 yen per share, in line with the target of the Medium Term Management Plan.
• Actions to Realize our Materiality
• • Three actions are underway to realize our materiality: business reorganization, upgrading group management, and visualization of corporate value mechanisms.

©2023 AVANT GROUP CORPORATION. All Rights Reserved.

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INDEX

Ⅰ . Summary of financial results for the third quarter of FY June 2023 Ⅱ. Earnings and Dividend Forecast

Ⅲ. Actions to Realize our Materiality

• Figures in this presentation are rounded down to the unit of display.

The information contained in this material regarding the business outlook and other forecasts and strategies etc. are forward-looking statements and are determined within the range that could normally be predicted based on the information reasonably available to the Company at the time of preparation of this material. Investors should be aware of the risks, however, that actual results may differ from the business prospects described in the material due to the occurrence of extraordinary circumstances that cannot usually be predicted or the occurrence of results that cannot usually be predicted. The Company will proactively disclose information that is considered material to investors, but investors should be advised not to make judgment based entirely on only the business prospects described in this material. This material should not be copied or transferred for any purpose without permission of the Company.

©2023 AVANT GROUP CORPORATION. All Rights Reserved.

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I. Summary of financial results for the third quarter of FY June 2023

©2023 AVANT GROUP CORPORATION. All Rights Reserved.

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Results Highlights

• All segments saw strong demand growth, but the third quarter alone with sales up 12.5% YoY fell short of the 20% growth level. Cumulative sales growth was up 17.4% YoY.
• A decline in the gross profit margin caused by growth related increases in personnel and reorganization costs, led to a decline in gross profit and was only partially offset by a decline in the ratio of SG&A expenses, leading to a 2.8pt deterioration in operating margins, and a decline in operating income. While operating income increased on a cumulative basis, the operating income margin declined.

	FY6/23	YoY Variance
	Q3	Yr earlier	% chg
Net Sales	5,664	5,035	12.5%
Cost of Sales	3,174	2,492	27.4%
Gross Profit	2,489	2,542	-2.1%
GPM	44.0%	50.5%	-6.5pt
SG&A	1,362	1,401	-2.8%
Operating Income	1,127	1,140	-1.1%
OPM	19.9%	22.7%	-2.8pt
Net Income	729	706	3.3%
NPM	12.9%	14.0%	-1.2pt
EBITDA	1,255	1,254	0.1%
EBITDA margin	22.2%	24.9%	-2.8pt

	(Millions of yen)
FY6/23	YoY Variance
Q1-Q3	Yr earlier	% chg
16,187	13,786	17.4%
8,855	7,095	24.8%
7,332	6,690	9.6%
45.3%	48.5%	-3.2pt
4,411	4,067	8.5%
2,920	2,622	11.4%
18.0%	19.0%	-1.0pt
1,871	1,572	19.0%
11.6%	11.4%	0.2pt
3,244	2,871	13.0%
20.0%	20.8%	-0.8pt

©2023 AVANT GROUP CORPORATION. All Rights Reserved.

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