USS : 2Q FY3/2024 Consolidated Results of Operations（1.3 MB）

Q2 FY223

Consolidated Results of Operations

USS Co., Ltd.

November 2023

FY2023 (FY3/2024) : from April 1, 2023 to March 31, 2024

Contents

Ⅰ ：1H FY2023 Results of Operations	P.3		Ⅲ：Market Overview and Strategy for Creating Value Over the Medium-term	P.22
1.	Highlights of 1H FY2023		1.	Used Car Auction Market and USS Market Share
2.	1H FY2023 Summary of Consolidated Results of Operations		2.	Long-term Growth Vision
3.	Net Sales and Operating Profit by Business Segment		3.	Medium-term Business Plan and Raising the ROE
4.	1H FY2023 Reasons for Change in Operating Profit (Actual)		4.	Basic Policy on Finance and Shareholder Distributions
5.	Consolidated Balance Sheets and Statements of Cash Flows		5.	Share Repurchase
6.	Automobile Market		6.	Earnings Distributions - Dividend Policy
7.	Auto Auction Segment		7.	Earnings Distributions - Total Payout Ratio
8.	Used Vehicle Purchasing and Selling Segment		8.	Cycle of Rising Corporate Value Driven by Business Growth and
9.	Recycling Segment				Shareholder Distributions

10. TOPICS A New Automobile Loan Product Using a Tie-up with GMS

Ⅱ：FY2023 Consolidated Forecast	P.17		Ⅳ： Reference	P.35
1.	FY2023 Consolidated Forecast			1.	Business Models for USS
2.	2H FY2023 Reasons for Change in Operating Profit (Forecast)			2.	Automobile Market and USS Revenue
3.	FY2023	Reasons for Change in Operating Profit (Forecast)			3.	New/Used Car Registrations and Auto Auction Market
4.	FY2023	Forecast by Business Segment			4.	Appendix

Copyright＠ 2023 USS Co., Ltd. All Rights Reserved.

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1H FY2023

Results of Operations

Copyright＠ 2023 USS Co., Ltd. All Rights Reserved.

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Highlights of 1H FY2023

1H FY23 Results

• Net sales ¥48.0 billion

(up 13.3% YoY)

• Operating profit

¥23.7 billion

(up 12.1% YoY)

• USS Auto Auction result in 1H FY2023: vehicles consigned was 1.53 million (up 13.1% YoY), contract completions was 0.95 million (up 4.6% YoY), contract completion rate was 62.0%
• In the used vehicle purchasing and selling segment, sales increased and earnings were down as the number of vehicles sold increased but the gross profit per vehicle was lower.
• In the recycle segment, sales and earning increased because of the larger number of orders for large demolition projects.

FY23 Forecast

• Revisions to the FY2023 plan
• • Revised upward the FY2023 plan to reflect higher-than-forecasted first half results.
• Net sales ¥95.4 billion
• • 3.2% higher than the initial forecast
  • The current plan for FY2023 is 3.07 million vehicles consigned at auctions, 2.6% above the previous plan, 1.91 million contracted vehicles, 1.9% above the previous plan, and a contract completion ratio of 62.3% compared with the previous plan of 62.7%.
• Operating profit ¥47.1 billion
• • 4.0% above the previous plan

Earnings Distributions

• FY2023 dividend forecast has been raised from ¥69.4 to

¥73.1

This will be the 24th consecutive year of dividend increases.

• • In FY2019, the basic policy for dividends was revised as consolidated payout ratio guideline increased to at least 55%.
• Repurchase of stock
• • USS repurchased 5 million shares of stock at a cost of ¥11.8 billion on June 21, 2023.

Copyright＠ 2023 USS Co., Ltd. All Rights Reserved.

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1H FY2023 Summary of Consolidated Results of Operations

• Sales was up 13.3% YoY to ¥48.09 billion, operating profit was up 12.1% to ¥23.77 billion, and profit attributable to owners of parent up 10.6% to ¥16.16 billion.

• Record-highsales, operating profit, ordinary profit and profit attributable to owners of parent

1H FY22	(per sales)	1H FY23	(per sales)	Year on year	Initial plan	(per sales)
(May 9, 2023)

(Million yen)

VS. Plan

Net sales	42,429			48,093			113.3%	45,100		106.6%
Cost of sales	16,467	38.8%		19,115	39.7%		116.1%	17,963	39.8%	106.4%
Gross profit	25,962	61.2%		28,978	60.3%		111.6%	27,136	60.2%	106.8%
Selling, general and	4,741	11.2%		5,198	10.8%		109.6%	4,936	10.9%	105.3%
administrative expenses
Operating profit	21,220	50.0%		23,779	49.4%		112.1%	22,200	49.2%	107.1%
Ordinary profit	21,586	50.9%		24,131	50.2%		111.8%	22,540	50.0%	107.1%
Profit attributable to	14,614	34.4%		16,164	33.6%		110.6%	15,200	33.7%	106.3%
owners of parent
			Copyright＠ 2023 USS Co., Ltd. All Rights Reserved.				5

Net Sales and Operating Profit by Business Segment

										(Million yen)
Net sales	1H FY21		1H FY22		1H FY23			Year on year
	Auto auction		31,929		33,168		36,468			109.9%
	Used vehicle purchasing and selling		4,229		5,049		5,314			105.2%
	Recycling		3,579		4,162		6,149			147.7%
	Other		46		48		161			333.1%
Total		39,784		42,429		48,093			113.3%
Operating profit (operating margin)	1H FY21		1H FY22		1H FY23			Year on year
	Auto auction	19,852	(61.9%)	20,434	(61.4%)	22,807	(62.3%)			111.6%
	Used vehicle purchasing and selling	85	(2.0%)	211	(4.2%)	144	(2.7%)			68.4%
	Recycling	589	(16.5%)	527	(12.7%)	854	(13.9%)			161.9%
	Other	32	(70.2%)	36	(75.4%)	-41	(-)			-
	Adjustment	9	(-)	9	(-)	14	(-)			143.0%
Total	20,570	(51.7%)	21,220	(50.0%)	23,779	(49.4%)			112.1%
*1	Net sales are sales to external customers and operating profit is based on business segment earnings. Operating margins (shown % in parenthesis) are calculated by dividing segment profit by segment sales.	6
*2	Beginning with Q2 FY2022, the recycle business, which was previously included in "other," is a reportable segment. Figures for "recycling" and "other" have been revised to conform with this change.

1H FY2023 Reasons for Change in Operating Profit (Actual)

(Billion yen)

30

15

0

Net sales

Cost of sales

SG&A expenses

Rise in vehicles consigned

3.51bn

Increase in purchases

-1.48bn

Increase in welfare expenses

-0.10bn

Rise in recycling

1.98bn

Increase in cost of goods sold

-0.68bn

Increase in sales commission

-0.05bn

Increase in fee rates

0.94bn

Increase in outsourcing expenses

-0.25bn

Increase in fees paid

-0.05bn

Increase in used vehicle purchasing

Increase in employee salaries and

Increase in depreciation

-0.04bn

and selling

0.26bn

bonuses

-0.08bn

Decline in contract completion rate

-1.63bn

-2.64-0.45 5.66

21.22	23.77

1H FY2022	1H FY2023
Copyright＠ 2023 USS Co., Ltd. All Rights Reserved.	7

Consolidated Balance Sheets and Statements of Cash Flows

• Increase in purchase of property, plant and equipment and purchase of intangible assets were the primary uses of cash for investing activities.
• The primary use of cash in financing activities was purchase of treasury shares and dividends paid.
• Equity ratio : 74.8%

Consolidated balance sheets (summary)		(Million yen)
	FY22	End of			FY22	End of
	Q2 FY23			Q2 FY23
Current assets	116,057	125,185		Current liabilities	39,273	49,979
Cash and				Payables due to
92,692	93,086		member dealers	22,595	33,651
deposits
			at auction
Other	23,365	32,098		Other	16,678	16,328
Non-current	126,295	124,940		Non-current	8,925	9,724
assets		liabilities
Property, plant	100,604	99,938		Total liabilities	48,198	59,704
and equipment
Other	25,690	25,002		Total net assets	194,154	190,422
Total assets	242,352	250,126		Total liabilities	242,352	250,126
	and net assets

Consolidated statements of cash flows (summary)	(Million yen)
	1H FY21	1H FY22	1H FY23	Changes
Net cash provided by (used	14,982	20,051	21,324	1,273
in) operating activities
Net cash provided by (used	-914	-4,150	-1,254	2,896
in) investing activities
Free cash flow	14,067	15,901	20,070	4,169
Net cash provided by (used	-6,453	-8,653	-19,676	-11,022
in) financing activities
Capital expenditures	927	1,201	1,260	58
(terms of cash flows)
Depreciation	2,446	2,249	2,238	-11

Copyright＠ 2023 USS Co., Ltd. All Rights Reserved.

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Automobile Market

New car registrations and YoY changes

Used car registrations and YoY changes

(Thousand vehicles)					(Thousand vehicles)
3,000	2,621				40%	4,000
		2,028	2,050		2,225
		1,923	20%
					15.7%
1,500	5.6%				0%	2,000
		1.1%
				-6.2%
					-20%
		-22.6%
0					-40%	0
	1H FY19	1H FY20	1H FY21	1H FY22	1H FY23

				40%
3,393	3,263	3,221		3,088
	3,032
				20%
3.4%				0%
	-1.3%		1.8%
	-3.8%
	-5.9%
				-20%
				-40%
1H FY19	1H FY20	1H FY21	1H FY22	1H FY23

Used car exports and YoY changes

AA market: vehicles consigned and contracted and YoY changes

(Thousand vehicles)					(Thousand vehicles)
900				802	50%	4,000
		42.3%
649		650	616		25%
			30.1%
	457
450					0%	2,000
-3.7%			-5.2%
					-25%
	-29.6%
0					-50%	0
1H FY19	1H FY20	1H FY21	1H FY22	1H FY23

Vehicles consigned	Vehicles contracted	YoY(consigned)	YoY(contracted)	40%
			3,519
	3,382	3,345	3,939
3,802
				17.8%
			11.5%		20%
4.5%
				-2.5%	11.1%	0%
		-11.0%
3.6%		4.1%
				-5.0%
		-12.0%				-20%
2,432		2,139	2,384	2,324	2,583
						-40%
1H FY19		1H FY20	1H FY21	1H FY22	1H FY23

• Vehicles consigned and contracted in 1H FY21 have been revised to reflect revisions to data announced by USEDCAR Co., Ltd.

Copyright＠ 2023 USS Co., Ltd. All Rights Reserved.

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Auto Auction Segment (1) Overview

• Sales and earnings increased mainly due to increase in number of vehicles consigned and contracted and increase in fee income from higher auction fees.

	Net sales and YoY changes
(Million yen)
40,000		36,468	30%
31,773	31,929	33,168
	28,246

No. of vehicles

consigned

1.533million

up 13.1% YoY

No. of contract

completions

0.950million

up 4.6% YoY

Contract

completion rate

62.0％

67.0% (in 1H FY22)

					15%
			13.0%		9.9%
20,000				3.9%	0%
	0.7%
		-11.1%			-15%
0						-30%

Auto auction segment performance in 1H

1H FY21

1H FY22

1H FY23 Year on year

Net sales	31,929	33,168	36,468	109.9%
Consignment fees	7,538	7,595	8,669	114.1%
Contract completion fees	7,394	7,619	8,329	109.3%
Successful bid fees	11,367	11,653	12,693	108.9%
Other	5,629	6,300	6,775	107.5%
Operating profit	19,852	20,434	22,807	111.6%
Operating margin	61.9%	61.4%	62.3%	-

1H FY19

1H FY20

1H FY21

1H FY22

1H FY23

	Operating profit and YoY changes
(Million yen)
30,000						60%
			19,852		22,807
			20,434		30%
	17,524	15,698	26.5%
15,000				2.9%	11.6%	0%
	-0.5%
		-10.4%				-30%
0	1H FY19	1H FY20	1H FY21	1H FY22	1H FY23	-60%

* Net sales are sales to external customers and operating profit is based on business segment earnings. Operating margins are calculated by dividing segment profit by segment sales.

Copyright＠ 2023 USS Co., Ltd. All Rights Reserved.

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