Slide 1: Consolidated Results of Operations, Third Quarter FY ending March 2021
Consolidated Results of Operations The Third Quarter, Fiscal Year Ending March 31, 2021 USS Co., Ltd. February 2021 1
Slide 2: Results of Operations Third Quarter
Results of Operations Third Quarter Fiscal Year Ending March 2021 2
Slide 3: Highlights of 1-3Q FY3/2021
Highlights of 1-3Q FY3/2021 ◼ Net sales ¥53.9 billion (down 7.3% YoY) Operating profit ¥25.7 billion (down 3.7% YoY) • The downturn in auto auctions ended in 1Q and performance started 1-3Q recovering in 2Q. FY3/21 • The number of used car exports decreased due to COVID-19. Results • Supported by hi
Slide 4: 1-3Q FY3/2021 – Summary of Consolidated Results of Operations
1-3Q FY3/2021 – Summary of Consolidated Results of Operations ◼ Sales decreased 7.3% YoY to ¥53.96 billion, operating profit was down 3.7% to ¥25.75 billion, and profit attributable to owners of parent decreased 3.0% to ¥17.71 billion. ◼ Although COVID-19 reduced the number of vehicles consigned, a
Slide 5: 3Q FY3/2021 – Summary of Consolidated Results of Operations
3Q FY3/2021 – Summary of Consolidated Results of Operations ◼ Record-high net sales, operating profit, ordinary profit and profit attributable to owners of parent in the 3Q (Oct.- Dec.) (Million yen) 3Q FY3/19 3Q FY3/20 3Q FY3/21 Year on year Net sales 19,496 19,391 19,686 101.5% Cost of sales 7,710
Slide 6: 1-3Q FY3/2021 – Reasons for Change in Operating Profit (Actual)
1-3Q FY3/2021 – Reasons for Change in Operating Profit (Actual) Net sales Cost of sales SG&A expenses Increase in fee rates 1.30bn Decrease in cost of goods sold 1.69bn Decrease in goodwill amortization 0.16bn Decrease in vehicles consigned ▲4.28bn Decrease in employee salaries and bonuses 0.21bn De
Slide 7: 3Q FY3/2021 – Reasons for Change in Operating Profit (Actual)
3Q FY3/2021 – Reasons for Change in Operating Profit (Actual) Net sales Cost of sales SG&A expenses Increase in contract completion rate 0.59bn Decrease in purchases 0.21bn Decrease in goodwill amortization 0.05bn Increase in fee rates 0.42bn Decrease in cost of goods sold 0.21bn Decrease in employe
Slide 8: FY3/2021 – Business Segment Quarterly Performance
FY3/2021 – Business Segment Quarterly Performance (Year-on-year change) Consolidated Performance Auto Auction Segment Sales Operating profit Sales Operating profit (Million yen) (Million yen) 19,861 18,931 19,391 19,686 18,221 16,056 16,358 15,415 15,359 15,864 14,944 13,302 9,184 9,167 9,856 9,535
Slide 9: Consolidated Balance Sheets and Statements of Cash Flows
Consolidated Balance Sheets and Statements of Cash Flows ◼ Cash used in investing activities increased due to the construction of a multi-level parking structure at the R-Nagoya auction site and other projects. ◼ The primary use of cash in financing activities was dividends paid. ◼ Equity ratio: 85.
Slide 10: Automobile Market
Automobile Market New Car Registrations and YoY Changes Used Car Registrations and YoY Changes (Thousand vehicles) (Thousand vehicles) 3,000 40% 3,000 30% 20% 14.6% 20% 1,963 1,967 1,908 6.4% 10% 2.8% 1,648 1,673 1,609 1,704 1,672 1,720 1,627 1,705 1,694 -1.7%1,540-1.1% 1,528 1,396 1,557 1,500 1,371
Slide 11: Auto Auction Segment (1)
Auto Auction Segment (1) ◼ Vehicles consigned decreased 11.3% YoY to 1,923 thousand; contract completions decreased 8.7% YoY to 1,204 thousand (contract completion rate: 62.6% against 60.9% in the previous fiscal year) ◼ Auction fees decreased primarily because of decreases in vehicles consigned. Au
Slide 12: Auto Auction Segment (2) Monthly Data
Auto Auction Segment (2) Monthly Data Vehicles consigned Vehicles contracted Contract completion rate (Thousand vehicles) 400 80% 71.0% 69.4% 69.6% 327 65.7% 66.7% 64.5% 63.6% 60.8%61.5% 61.6%62.6% 61.9% 61.8%62.8% 293 61.4% 59.2%60.5%59.5% 58.7%58.7% 55.9% 60% 262 60.4% 265 257 249 53.3% 248 252 25
Slide 13: Auto Auction Segment (3)
Auto Auction Segment (3) No. of Vehicles Consigned and Contract Completion Rate Vehicles Contracted Vehicles consigned Vehicles contracted USS Industry's average (excl. USS) (Thousand vehicles) 1,000 80% 784 752 814 771 756 72.0% 703 664 699 689 706 685 68.4% 68.9% 631 605 70% 67.0% 66.3%65.9%66.4%
Slide 14: Auto Auction Segment (4) No. of Members and Off-site Ratio
Auto Auction Segment (4) Total Consignment Fees and Total Contract Completion Fees and Consignment Fee per Vehicle Contract Completion Fee per Vehicle Total consignment fees Fee per vehicle Total contract completion fees Fee per vehicle (Million yen) (yen) (Million yen) (yen) 5,000 5,394 5,509 6,000
Slide 15: Auto Auction Segment (5)
Auto Auction Segment (5) From April 1, 2020 to December 31, 2020 (Number of auctions held, Vehicles) Number of auctions Number of consigned vehicles Number of contract completions Contract completion rate 1-3Q FY3/21 1-3Q FY3/20 1-3Q FY3/21 1-3Q FY3/20 YoY change 1-3Q FY3/21 1-3Q FY3/20 YoY change 1
Slide 16: Auto Auction Segment (6)
Auto Auction Segment (6) (Vehicles, %) Apr. May Jun. Jul. Aug. Sep. First Half Oct. Nov. Dec. Jan. Feb. Mar. Second Half Fiscal Year FY3/19 266,046 232,114 254,075 224,212 206,245 234,019 1,416,711 234,741 257,451 207,046 224,051 262,464 327,663 1,513,416 2,930,127 YoY 13.5 26.4 16.1 14.4 21.6 11.5
Slide 17: Used Vehicle Purchasing and Selling Segment
Used Vehicle Purchasing and Selling Segment ◼ At Rabbit, which purchases used vehicles, the sales volume decreased, but after the declaration of a state of emergency was lifted, gross profit per vehicle improved due to higher auction prices, resulted lower sales but higher profits. (Net sales decrea
Slide 18: Other Segment
Other Segment ◼ In the recycle business, sales and earnings were down as the negative effect of a lower volume of materials handled outweighed the benefit of a recovery in the price of ferrous scrap. (Net sales decreased 10.9% YoY to ¥3,504 million, Operating profit decreased 30.1% to ¥186 million)
Slide 19: Consolidated Forecast for FY3/2021
Consolidated Forecast for FY3/2021 19
Slide 20: FY3/2021 – Consolidated Forecast
FY3/2021 – Consolidated Forecast ◼ No revisions to the FY3/21 forecast announced on November 9, 2020. (Million yen) FY3/21 Initial plan FY3/21 Revised plan Revised plan vs FY3/20 (Actual) Change (Aug 3, 2020) (Nov. 9, 2020) FY3/20 Net sales 78,143 67,300 3,900 71,200 91.1% Gross profit 47,188 37,870
Slide 21: 2H FY3/2021 – Reasons for Change in Operating Profit (Forecast)
2H FY3/2021 – Reasons for Change in Operating Profit (Forecast) Net sales Cost of sales SG&A expenses Increase in contract completion rate 1.25bn Decrease in cost of goods sold 0.45bn Decrease in goodwill amortization 0.13bn Decrease in vehicles consigned ▲2.99bn Decrease in purchases 0.23bn Decreas
Slide 22: FY3/2021 – Reasons for Change in Operating Profit (Forecast)
FY3/2021 – Reasons for Change in Operating Profit (Forecast) Net sales Cost of sales SG&A expenses Increase in contract completion rate 1.35bn Decrease in cost of goods sold 1.93bn Decrease in goodwill amortization 0.24bn Decrease in vehicles consigned ▲6.91bn Decrease in outsourcing expense 0.29bn
Slide 23: FY3/2021 – Forecast by Business Segment
FY3/2021 – Forecast by Business Segment (Million yen) FY3/21 Initial plan FY3/21 Revised plan Revised plan vs FY3/20 (Actual) Change (Aug 3, 2020) (Nov. 9, 2020) FY3/20 Net sales Auto auction 63,350 54,020 4,097 58,117 91.7% Used vehicle purchasing and selling 9,099 7,821 70 7,892 86.7% Other 5,692
Slide 24: Market Overview, Strategy for Creating Value Over the Medium Term
Market Overview Strategy for Creating Value Over the Medium Term 24
Slide 25: Used Car Auction Market and USS Market Share
Used Car Auction Market and USS Market Share ◼ Maintained higher market shares and profit in the period of sluggish markets following the financial crisis of 2008-2009. ◼ The JAA acquisition significantly raised the USS Group’s market share 1990(CY) market share 2000(CY) market share 2020(CY) market
Slide 26: Basic Policy on Finance and Shareholder Distributions
Basic Policy on Finance and Shareholder Distributions Increase shareholder distributions while continuing investment for growth ◼Consolidated dividend payout ratio: Over 55% from FY3/2020 Consolidated dividend payout ratio 67.0% 70% Policy Actual 60% 51.5% 50.1% 50.1% 45.1% 45.1% 47.0% 50% 43.1% 44.
Slide 27: Earnings Distributions – Dividend Policy
Earnings Distributions – Dividend Policy ◼Increased the consolidated payout ratio (50% to 55%) from FY3/2020 ◼Plan to pay 55.5 yen dividend per share for FY3/2021 (up 0.1 yen) ◼Forecasting 21 consecutive years of dividend growth since listing DPS Consolidated payout ratio (Yen) 60 80% 55.4 55.5 50.4
Slide 28: Earnings Distributions – Total Payout Ratio
Earnings Distributions – Total Payout Ratio ◼Flexible stock repurchases while maintaining stable dividend. Dividend Paid Stock Repurchased Total Payout Ratio (Million yen) 30,000 120% 117.6% 111.4% 103.5% 104.0% 84.2% 20,000 80% 76.8% 59.3% 53.8% 50.1% 45.1% 52.1% 10,000 45.1% 40% 33.0% 16.7% 11.9%
Slide 29: Earnings Distributions – Return on Equity (ROE)
Earnings Distributions – Return on Equity (ROE) ◼No change in the medium-term ROE target of at least 15%. ROE 25% 19.5% 18.2% 16.5% 15.9% 15.8% 15.5% 15.3% 15.1% 14.5% 14.2% 14.7% 14.8% 14.5% 15% 16.0% 14.1% 13.7% 15.0% 10.9% 11.7% 11.9% 11.3% 10.4% 5% FY3/00 FY3/01 FY3/02 FY3/03 FY3/04 FY3/05 FY3/0
Slide 30: Cycle of Rising Corporate Value Driven by Business Growth and Shareholder Distributions
Cycle of Rising Corporate Value Driven by Business Growth and Shareholder Distributions ◼Aim at increasing shareholder value by a two-pronged strategy of solid investments in growth and active shareholder distributions Leveraged Internet Increase in number of and IT members – users Rise in contract
Slide 31: Auto Auction Segment – New initiatives (1)
Auto Auction Segment – New initiatives (1) ◼ Started using new systems for vehicle inspections in order to find defects that are not readily visible Underbody imaging system Inspections using on-board This system is used to inspect underneath diagnostic system scans vehicles, including tires and whe
Slide 32: Auto Auction Segment – New initiatives (2)
Auto Auction Segment – New initiatives (2) ◼ Started work on the digitalization of the auction sheet (entry form). Commenced test operations at the Nagoya and other sites with the aim of launching full-scale operations by the close of the fiscal year ending in March 2022. Digitization will lead to m
Slide 33: Contact Information
Contact Information Notes General Affairs Department, • This document has been translated from the Supervisory Office, original Japanese as a guide for non-Japanese USS Co., Ltd. investors. • Forward-looking statements in this material are based on information available to management at TEL : +81-52
Slide 34: Reference
Reference 34
Slide 35: History of USS Long-term Growth
History of USS Long-term Growth Before 2000 1982: Held the first auction with only 255 vehicles consigned 1988: Expanded the Nagoya Auction Site. The number of POS seats was 570 (the largest in Japan). Early nineties: Opened Kyushu and Tokyo Auction Sites 2017: Late nineties: Opened Okayama, Shizuok
Slide 36: Business Models for USS
Business Models for USS Used Ferrous vehicles Rabbit scrap End (Used vehicle ARBIZ Steel users purchases) makers Payment for Payments vehicles Payment Payments for vehicles Used Used vehicles vehicles Members Members submitting consigning vehicles Auto Auction successful bids (buyer) (seller） • • Us
Slide 37: Automobile Market and USS Revenue
Automobile Market and USS Revenue ◼ The number of vehicles consigned is correlated through trade-ins to (1) New car registrations and (2) Used car registrations ◼ Total demand comprises domestic demand (2) and overseas demand (3). In recent years, total demand has been driven mainly by overseas dema
Slide 38: New/Used Car Registrations and Auto Auction Market
New/Used Car Registrations and Auto Auction Market ◼ The auction market continued to expand till 2000 as the share of used vehicles sold through the auction market increased as a share of the total used vehicle market. Starting in the mid-2000s, older vehicles and vehicles with high mileage which wo
Slide 39: Corporate Governance
Corporate Governance ◼ The company’s governance organization has been improved in order to work toward the goal of increasing corporate value through continuing business growth ◼ Adopted the outside director system in FY3/2007 ◼ Strengthened the executive officer system in FY3/2013 ◼ Established vol