Litalico Inc. · TSE:7366

Litalico — FY2022 Q4 Earnings Presentation

44 slides from Litalico's earnings presentation, May 8, 2023

  1. Slide 1: FY 2022 Q4 Earnings Presentation

    1 May 8, 2023 FY 2022 Q4 Earnings Presentation LITALICO Inc. [ TSE Code: 7366 ] ©2023 LITALICO Inc.

  2. Slide 2: Disclaimer

    DISCLAIMER 2 The information, future strategies, forecasts, management targets, and other forward- looking projections relating to LITALICO Inc. (“the Company”) is based on information available to the Company as of the date hereof, and is based on reasonable assumptions that may include various ris

  3. Slide 3: Agenda

    AGENDA 3 Growth Strategy ………….………………….……….….…… 4 Consolidated Financial Results ……….…..…………...…. 10 Financial Forecasts ……………………….………………… 14 Business Results ….………………………………………… 18 M&A Strategy……….………………………………………… 32 References ….………………………………………………… 38 ©2023 LITALICO Inc.

  4. Slide 4: Growth Strategy

    4 Growth Strategy ©2023 LITALICO Inc.

  5. Slide 5: LITALICO Philosophy and Vision

    STRATEGY LITALICO Philosophy and Vision 5 The name “LITALICO” is a combination of two Japanese words: ”利他 / Lita” (altruism) and “利己 / Lico” (individualism). We aim to create an inclusive world where both are achieved interdependently. Creating an Obstacle-free Society Obstacles are created by and w

  6. Slide 6: Rise in Mandated Employment Rate of Disabled Individuals

    STRATEGY Rise in Mandated Employment Rate of Disabled Individuals 6 • Legally mandated employment rate for disabled individuals is 2.3% • Rate is scheduled for step-wise increase to 2.7% over the next few years Employment of Individuals with Disabilities Legally Mandated Employment Rate (%) (thousan

  7. Slide 7: Business Environment: Welfare Service Users and Provider Facilities

    STRATEGY Business Environment 7 Number of Welfare Service Users and Provider Facilities (thousand) (thousand) 200 Welfare Service Facilities (left) 1,200 Welfare Service Users 1,000 150 800 100 600 400 50 200 0 0 2012 2013 2014 2015 2016 2017 2018 2019 Ref: MHLW ▶ Disability welfare service users an

  8. Slide 8: Services Across All Life Stages of Persons with Disabilities

    STRATEGY Services Across All Life Stages of Persons with Disabilities 8 • Services across all life stages provided through integration of BtoC facilities and the BtoB platform Education Vocation Lifestyle Retirement BtoC • Early detection and diagnosis • Social participation • Dwelling, medical care

  9. Slide 9: LITALICO's Bigger Picture

    STRATEGY LITALICO’s Bigger Picture 9 • Business expansion into adjacent industries that benefit from synergies with the disability industry Living Essentials Healthcare Disability Education Nursing Care ©2023 LITALICO Inc.

  10. Slide 10: Consolidated Financial Results

    10 Consolidated Financial Results ©2023 LITALICO Inc.

  11. Slide 11: FY2022 Consolidated and Segment Overview

    RESULTS FY2022 Consolidated and Segment Overview 11 CONSOLIDATED • 24.2 bln yen in sales (+23% YoY), 3.1 bln yen in operating profit (+28% YoY) • Forward looking investments continued despite COVID setbacks • 100 million yen in M&A fees expected to be recorded in Q4 LITALICO • 14 new site launches i

  12. Slide 12: Consolidated P&L

    RESULTS Consolidated P&L 12 • Profit increase even with aggressive investments • COVID induced decrease of approx. 120 million yen in sales and profits for the full year • M&A fees amounted to approx. 100 million yen for the full year (million yen) FY2021 FY2022 % YoY Sales 19,737 24,170 + 22.5% Ope

  13. Slide 13: Segment Income Statement

    RESULTS Segment Income Statement 13 • Sales and profit increased across all segments • Platform business profits increased approximately 5x YoY (million yen) FY2021 FY2022 % YoY Sales 8,556 9,484 + 10.8% LITALICO Works Profit 3,370 3,471 + 3.0% Sales 6,730 7,927 + 17.8% LITALICO Junior Profit 1,322

  14. Slide 14: Financial Forecasts

    14 Financial Forecasts ©2023 LITALICO Inc.

  15. Slide 15: Consolidated Annual Forecast

    FORECAST Consolidated Annual Forecast 15 [ Forecast Assumptions ] • Planned site launches: 16 LITALICO Works, 17 LITALICO Junior, 3 LITALICO Wonder • Majority of LITALICO Junior launches planned for H1, with possible cost concentration in Q1 • Marketing fortification for the Platform business to acc

  16. Slide 16: Consolidated Operating Profit Forecast Breakdown

    FORECAST Consolidated Operating Profit Forecast Breakdown 16 (billion yen) 1.47 0.25 4.34 0.28 0.08 0.23 Increase in indirect costs Product 3.75 SaaS development marketing New 3.12 fortification fortification business development Profit increase from business growth Upfront investment for future gro

  17. Slide 17: Financial Summary

    FORECAST Financial Summary 17 • Planning for 11 consecutive years of sales and profit increase SALES OPERATING PROFIT (million yen) (million yen) 3,750 LITALICO Works 30,000 30,000 LITALICO Junior 3,500 LITALICO Platform 3,121 Others 24,170 3,000 25,000 2,444 19,737 2,500 20,000 15,907 2,000 15,000

  18. Slide 18: Business Results

    18 Business Results ©2023 LITALICO Inc.

  19. Slide 19: LITALICO Segments

    RESULTS LITALICO Segments 19 LITALICO Works LITALICO Junior LITALICO Platform Others LITALICO Education Software ©2023 LITALICO Inc.

  20. Slide 20: LITALICO Segments

    RESULTS LITALICO Segments 20 LITALICO Works LITALICO Junior LITALICO Platform Others LITALICO Education Software ©2023 LITALICO Inc.

  21. Slide 21: LITALICO Works (Vocational Rehabilitation Welfare)

    RESULTS LITALICO Works (Vocational Rehabilitation Welfare) 21 • 120 facilities (+14 vs PFYend) • 16 total launches planned for FY23, with expected increase in pace Vocational rehabilitation for individuals with disabilities LITALICO Works Sales LITALICO Works Facilities 12,000 Demand in Tokyo 10,700

  22. Slide 22: LITALICO Works Employment Placement Track Record

    RESULTS LITALICO Works (Vocational Rehabilitation Welfare) 22 • 13,801 cumulative placements, 89.2% 6 months retention rate • Job placements largely increased to 1,921 service users (+12.2% YoY) • Continued technology utility such as AI and automated support systems Employment Placement Track Record

  23. Slide 23: LITALICO Segments

    RESULTS LITALICO Segments 23 LITALICO Works LITALICO Junior LITALICO Platform Others LITALICO Education Software ©2023 LITALICO Inc.

  24. Slide 24: LITALICO Junior (Welfare)

    RESULTS LITALICO Junior (Welfare) 24 • 128 facilities (+15 vs PFYend) • 17 total launches planned for FY2023, with expected increase in pace going forward • Majority of new site launches planned for Children’s social skills development H1, with possible cost concentration in Q1 and education classes

  25. Slide 25: LITALICO Segments

    RESULTS LITALICO Segments 25 LITALICO Works LITALICO Junior LITALICO Platform Others LITALICO Education Software ©2023 LITALICO Inc.

  26. Slide 26: LITALICO Platform

    RESULTS LITALICO Platform 26 • Sales +74% YoY • Launched a matching platform for service users and social workers, and a SaaS DX support business for facility operators • Sales team fortification expected to accelerate contract acquisition in FY23 SALES (million yen) 5,000 Information 4,100 Provisio

  27. Slide 27: LITALICO Platform Subscription Contracts

    RESULTS LITALICO Platform 27 • Steady increase and acceleration in contract acquisition • Fukushi-soft user drop-off remains low since pricing changes • Further fortification of nursing care SaaS business through consolidation of PlusOne Solutions LITALICO Platform Business Subscription Contracts Se

  28. Slide 28: Current Product Line-up and Forward Strategy

    RESULTS Current Product Line-up and Forward Strategy 28 • Current line-up services disability welfare facilities, schools & nurseries, and nursing care fields • Service pricing increased in Apr 2022 in line with functional product upgrades • Sequential expansion of product offerings with increasing

  29. Slide 29: LITALICO Segments

    RESULTS LITALICO Segments 29 LITALICO Works LITALICO Junior LITALICO Platform Others LITALICO Education Software ©2023 LITALICO Inc.

  30. Slide 30: Others

    RESULTS Others 30 • Sales +36% YoY • Active M&A execution Sales Trend Development classes designed for children under 18 with special needs, open to all irrespective of disability certification. 6,000 6,000 On-site and remote programming 5,000 classes for children designed to develop creativity thro

  31. Slide 31: Others (New Business): Inclusive Education within Schools

    RESULTS Others (New Business) 31 Inclusive Education within Schools • LITALICO Education Software digitalizes information exchange for teachers • Development of SaaS business to expand individualized special needs LITALICO education designed for special needs classes in schools Education Software Sa

  32. Slide 32: M&A Strategy

    32 M&A Strategy ©2023 LITALICO Inc.

  33. Slide 33: LITALICO M&A Strategy

    Ｍ&A LITALICO M&A Strategy 33 Objective M&A Potential Targets Potential Value Add • User acquisition and staffing Welfare service providers of fortification using brand and operating existing business lines • Accelerate increase in （vocational training, expertise Strategy number of service facilities

  34. Slide 34: Consolidation of Disability Welfare Company, Human Grow

    Ｍ&A Consolidation of Disability Welfare Company, Human Grow 34 Living Essentials ① Health Disability Educati Care on ② Nursing Care Company Overview • Sales: approx. 300 mil yen; Profit margin: approx. zero • Employees: 50 • Business: Employment Transition Support, Employment Continuation Support Ty

  35. Slide 35: Consolidation of Child Development Support Company, unico

    Ｍ&A Consolidation of Child Development Support Company, unico 35 Living Essentials ① Health Disability Educati Care on ② Nursing Care Company Overview • Sales: approx. 300 million yen; Profit margin: approx. zero • Employees: 108 • Business: After school daycare, child development support, consultin

  36. Slide 36: Consolidation of Disability Welfare and Healthcare Company, Amu

    Ｍ&A Consolidation of Disability Welfare and Healthcare Company, Amu 36 Living Essentials ① Health Educati Care Disability on ② Nursing Care Company Overview • Sales: approx. 200 mil yen; Profit margin: approx. 15% • Employees: 17 • Business: Home nursing care for psychologically disabled persons, gr

  37. Slide 37: Consolidation of Day Nursing Care Provider, nCS

    Ｍ&A Consolidation of Day Nursing Care Provider, nCS 37 Living Essentials ① Health Disability Educati Care on Disability Prevention Independence Support Terminal Care ② Light Disability & Severity Prevention Elderly Home Care Nursing Care Facilities: 100 Light ~ Moderate/Severe Disability Facilities:

  38. Slide 38: Reference

    38 Reference ©2023 LITALICO Inc.

  39. Slide 39: Number of LITALICO Service Provision Facilities

    FORECAST Number of LITALICO Service Provision Facilities 39 • Total 329 sites planned for FY2023 350 LITALICO Works 329 22 LITALICO Junior (Welfare) 300 293 26 LITALICO Junior (Private) 19 262 26 250 LITALICO Wonder 17 231 26 210 17 145 200 22 186 17 173 12 18 128 9 14 113 140 14 150 5 100 116 16 93

  40. Slide 40: LITALICO Business Environment (1)

    REFERENCE LITALICO Business Environment (1) 40 • Number of individuals with disabilities continue to increase, with more children attending special needs classes in addition to normal school Children with Developmental Disorders Number of All Individuals with Disabilities Receiving Special Needs Sch

  41. Slide 41: LITALICO Business Environment (2)

    REFERENCE LITALICO Business Environment (2) 41 • Welfare services and peripheral industry (medical, nursing care, etc.) markets continues to rise Disability Welfare Service Budget Disability Welfare Service Users and Facilities Government spending on disability welfare services, excluded fees paid b

  42. Slide 42: Publicly Funded Business Structure

    REFERENCE Publicly Funded Business Structure 42 LITALICO Works Pricing Employment Per person; 20 person limit Transition Support 1st Yr: ¥8,100 /session Government 2nd Yr: ¥8,100~9,400 /session Up to 6 mths into Reimbursement: employment 3rd Yr: ¥11,000 /session 90% (Claimed by LITALICO on Per perso

  43. Slide 43: Reimbursement Points Table

    REFERENCE Reimbursement Points Table 43 • Points are revised every three years; most recent update occurred in Apr 2021 • 1 unit = approx. 10 yen Employment Transition Support Employment Retention Support Reimbursement Points per Session Reimbursement Points per Session Based on 6 month retention of

  44. Slide 44: LITALICO Annual Fact Sheet

    REFERENCE LITALICO Annual Fact Sheet 44 LITALICO Works Assisted LITALICO Number of LITALICO Ratio of Employment Placements Employees by Segment Female Employees • As of Mar 2023 : 1,921 • LITALICO Works: 1,042 • Firm-wide: 64.9% • Historical cumulative: 13,801 • LITALICO Junior: 1,321 • Middle and U

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