Nakanishi Inc. · TSE:7716

Nakanishi — FY2023 Earnings Presentation

60 slides from Nakanishi's earnings presentation, 2024

  1. Slide 1: Presentation Material for the year ended Dec. 31, 2023

    Presentation Material for the year ended Dec. 31, 2023 Disclaimer The information presented in these materials contains forward-looking statements about future business performance. These statements by definition involve risks and uncertainties and are not intended to guarantee future performance. A

  2. Slide 2: Change the performance indicator starting from FY2023Q1

    Change the performance indicator «starting from FY2023Q1 Financial Strategy Accounting Standards Weare aggressively investing in capital and We will continue to amortize goodwill in strategic investments, including M&A, in accordance with JGAAP to reduce the order to achieve sustainable growth. risk

  3. Slide 3: Consolidated financial result for FY2023

    NSK Consolidated financial result for FY2023 © 2024 NAKANISHI INC. y

  4. Slide 4: Performance highlights of FY2023

    Performance highlights of FY2023 N et sales and EBITDA achieved record-high performance due to Jaeger, DCI and Refine acquisitions and the depreciation of yen. Increase in amortization of goodwill resulted in a decrease in operating profit. The record net profit was attributed to an extraordinary in

  5. Slide 5: FY2023 results vs FY2022 and forecast

    M of JPY FY2023 FY2022 YoY Comparison FY2023 Forecast Actual Actual Amount Ratio Revision on Nov. 10 vs. Forecast Ratio to net sales Margin Ratio to net sales Ratio to net sales Ratio to net sales JPY 5

  6. Slide 6: Net sales FY2022 to FY2023

    M of JPY 36,000 31,000 + 18.1% 26,000 + 19.3% + 65.4% 21,000 16,000 + 22.6% 11,000 6,000 FY2022 FY2023 Actual Actual 6

  7. Slide 7: Net sales by region

    36,000 +6.6 % 31,000 +24.0 % 26,000 +29.2 % +24.9 % 21,000 +28.0 % 16,000 +22.6 % 11,000 6,000 7

  8. Slide 8: EBITDA FY2022 to FY2023 adjusted

    FY2022 Average FY2023 Average USD → EUR → 7,500 7,000 -451 6,500 +863 -33 -454 -13 6,000 +892 -520 5,500 5,000 4,500 4,000 3,500 3,000 FY2022 Adjusted FY2023 EBITDA EBITDA EBITDA 8

  9. Slide 9: Operating profit FY2022 to FY2023

    M of JPY 8,300 7,800 +2.8 % 7,300 6,800 +22.3 % 6,300 -6.4 % 5,800 5,300 4,800 +1.6 % 4,300 3,800 3,300 FY2022 FY2023 Actual Actual 9

  10. Slide 10: Non-operating and extraordinary items

    interest income 591 Foreign exchange gain 2,088 Share of loss of entities accounted for using equity method 100 Gain on sales of investment securities 201 Gain on step acquisitions 11,497 Expense on scrapping fixed assets 100 500 2,500 4,500 6,500 8,500 10,500 12,500 14,500 16,500 18,500 20,500 10

  11. Slide 11: Balance sheet changes

    M of JPY +38,076 Buildings and structures +2,959 Cash and deposits -3,274 Inventories +7,457 Merchandise and finished goods +4,976 Goodwill +20,452 Work in process +994 Raw materials and supplies +1,486 +15,898 Deferred tax liabilities +4,022 Loans payable +11,187 Short-term borrowing +11,738 Foreig

  12. Slide 12: Cash flows

    M of JPY 40,000 35,000 30,000 25,000 Profit before income taxes +28,808 20,000 Depreciation +2,929 Gain on step Acquisitions -11,497 15,000 Income taxes paid -5,990 Purchase of non-current Dividends paid -4,082 assets -5,952 Purchase of 10,000 Purchase of investments treasury shares -2,999 in subsid

  13. Slide 13: Topics of Sustainability

    Topics of Sustainability -nvironment Nov.2023 Acquisition of third-party certification of Scope 1 and 2 carbon neutrality at headquarters, A1 Factory, and A1+ Factory. * SOCOTEC Certification Japan Rating MSCI ESG Ratings 4 pen 4 pp of BR . . . . . 2022 2021 2020 Sustainalytics ESG Risk Rating 2023

  14. Slide 14: Consolidated financial forecast for FY2024

    NSK Consolidated financial forecast for FY2024 7

  15. Slide 15: Consolidated financial forecast for FY2024

    NSK Consolidated financial f Mof PY FY2024 FY2023 Change Note Forecast Actual Amount Ratio Net sales 74,432 59,692 +14,740 +24.7% Gross profit 41,324 36,124 +5200 +14.4% Ratio to net sales 55.5% 60.5% -5.0 pt = EBITDA* 17,770 17,775 4 -0.0% Margin 23.9% 29.8% -5.9 pt = Operating profit 12,652 14,296

  16. Slide 16: FY2024 forecast changes

    M of JPY +312 +0.6% -574 -1.6% -1.4 pt — -1,164 -6.6% -2.3 pt — -1,368 -9.2% -2.6 pt — -4,054 -22.5% -7.5 pt — -2,130 -17.7% -4.0 pt — -5.54 — -2.27 — 16

  17. Slide 17: Net sales FY2023 to FY2024 forecast

    M of JPY 48,000 43,000 +30.8% 38,000 +5.9% 33,000 -4.8% 28,000 23,000 +24.7% 18,000 13,000 8,000 FY2023 FY2024 Actual Forecast 17

  18. Slide 18: EBITDA FY2023 to FY2024 adjusted

    FY2023 Average FY2024 Average USD → EUR → 7,000 6,500 +384 -303 -175 6,000 5,500 +1,409 -1,289 5,000 -455 +425 4,500 4,000 3,500 3,000 FY2023 Adjusted FY2024 EBITDA EBITDA EBITDA 18

  19. Slide 19: Changes in reporting segments

    Changes in reporting segments Dental Business Surgical Business Industrial Business 19

  20. Slide 20: NSK Product lineup

    NSK Product lineup Dental Business Oral hygiene system Clinical micro motor DCI Business Surgical Business Industrial Business Controller Spindle Micro grinder Ultrasonic grinder 4 NAKANISHI INC. 20

  21. Slide 21: Shareholder return

    Shareholder return © 2024 NAKANISHI INC. 7

  22. Slide 22: Revision of shareholder return standard

    Revision of shareholder return standard Variable factors without cashflow arose to net profit, a standard of dividend, due to extraordinary income of DCI acquisition. [ temporary profit increase factor ] [ continuous profit decrease factor ] Gain on step acquisions Amortization of goodwill (Extraorg

  23. Slide 23: Dividend and payout trend

    M of JPY ❚ ❚ 20,000 18,000 16,000 14,000 12,000 10,000 ➀ 8,000 6,000 4,000 2,000 0 23

  24. Slide 24: ❚ ❚

    ❚ ❚ 80 70 70 60 60 50 50 40 40 30 30 20 20 10 0 10 24

  25. Slide 25: Basic M&A Policy and Overview of Recent Acquisitions

    NSK Basic M&A Policy and Overview of Recent Acquisitions © 2024 NAKANISHI INC. y

  26. Slide 26: Basic M&A Policy

    NSK Basic M&A Policy Pursue M&A based on the below policy while maintaining the "Dental, Surgical and Industrial” business domains 1. Acquisitions of core technologies and peripheral fields for the growth of existing businesses >>> DCland JAEGER 2. Acquisitions aimed at complementing resources and c

  27. Slide 27: Criteria for M&A

    K Criteria for M&A No intention of becoming a conglomerate. The most important criterion is whether we can strengthen our existing businesses. Strengthen Expand core technologies ? business ? ~~ @ ~~ Enhance distribution capabilities ? ~~ @ Distribution network Grinding technology Product lineup 1.

  28. Slide 28: M&A Track Record

    JAEGER Acquisition completed in Dec. 2022 &A Track Reco DCI Acquisition completed in Aug. 2023 REFINE Acquisition completed in Nov. 2023 Company name Nakanishi Jaeger GmbH DCI International, LLC Guilin Refine Medical Instrument Co., Ltd. Founded 1967 1983 2017 Location Ober-Moerlen, Hessen, Germany

  29. Slide 29: Product Lineup of Acquired Companies

    Product Lineup of Acquired Companies JAEGER DCI High-frequency spindles, etc. Dental chairs, etc. © 2024 NAKANISHI INC. REFINE Ultrasonic scalers, etc. 29

  30. Slide 30: Overview of Acquisitions

    NSK Overview of Acquisitions JAEGER DCI REFINE Acquisition completed in Dec. 2022 Acquisition completed in Aug. 2023 Acquisition completed in Nov. 2023 (i) 33% stake acquired in Oct. 2020 $25.0M (2,587M JPY) in cash (ii) 16% stake acquired in Dec. 2021 12.1M (1,483M JPY) i h Acquisition cost osoeey)

  31. Slide 31: Outline of PPA

    Outline of PPA JAEGER DCI REFINE Acquisition completed in Dec. 2022 Acquisition completed in Aug. 2023 Acquisition completed in Nov. 2023 Before PPA completion Before PPA completion Before PPA completion Goodwill: 2,706 M of JPY Goodwill: 31,009 M of JPY Goodwill:PA 2,425 M of JPY (1 EUR = 137.90 JP

  32. Slide 32: Overviews of each segment and future initiatives

    Overviews of each segment and future initiatives © 2024 NAKANISHI INC. y

  33. Slide 33: Sales increased in all regions thanks to weaker JPY and M&A

    B of JPY Sales increased in all regions thanks to weaker JPY and M&A Excluding effects of exchange rates and acquisitions, net sales remained the same level as the previous FY *Industrial Business includes JAEGER. *Dental Business includes DCI. YoY Dental Surgical Industrial YoY YoY Dental Surgical

  34. Slide 34: Progress of Mid Term Management Plan NV2025+

    NSK Progress of Mid Term Management Plan “NV2025+" NAKANISHI’s Dental, Surgical and Industrial Businesses steadily grew in the global market. Acquisition of JAEGER, DCI and REFINE enhanced the Group's overall capabilities. Mid Term Management Plan Rolling Plan NV2025+ Progress in FY2023 Basic Policy

  35. Slide 35: Expansion of market share

    market share NSK Expansion o Unprecedented Power Air Turbine Ti-Max Z z990L /z890L. Ti-Max Z990L / Z890L Bf The U.S.: Trends in market shares of air turbines with lights ugh new product introduction (%) Launch of Z990L mS 40 { ° ' Company A 35 ——_,—_ ' 1 36% (2023 all), 38% (2023 Q4) 1 1 30 I I 1 1

  36. Slide 36: New product: Implant motors for emerging markets

    New product: Implant motors for emerging markets Equipment for oral surgery Su rg ic AP2 Launched in Dec. 2023 \ New product tailored for emerging markets: Enhanced cost competitiveness through simplified functionality while maintaining reliability > Equipped with a micro motor that is smaller and l

  37. Slide 37: Construction plan of new factory M1

    NSK Const on plan of new factory “M1” t | 1 New assembly factory, parts and finished goods warehouse, and after-sales service center The first section (assembly factory) is scheduled to start operations in May of this year. M1 factory Total floor area: Approx. 20,000m2 P First section (assembly fact

  38. Slide 38: Forecast of market trends and basic strategy

    Forecast of market trends and basic strategy Forecast of market trends in 2024 Dental Business: Global increase in demand that has persisted since the onset of the COVID-19 pandemicis expected to plateau. Surgical Business: Demand is expected to remain robust against the backdrop of continued recove

  39. Slide 39: Dental business: Japan and Europe

    Japan Overview of Measures for FY2023 FY2024 Sep. 29-Oct. 1, 2023 World Dental Show Europe Overview of Measures for FY2023 FY2024 Nov. 15-17, 2023 Swedish Dental Expo © 2024 NAKANISHI INC. 39

  40. Slide 40: Dental business: North America and DCI

    North Overview of Measures for America FY2023 FY2024 Nov. 26-29, 2023 GreaterNew York 2023 DCI Overview of Measures for FY2023 (Oct.-Dec.) FY2024 Nov. 26-29, 2023 GreaterNew York 2023 © 2024 NAKANISHI INC. 40

  41. Slide 41: Dental business: Asia

    Asia Overview of Measures for FY2023 FY2024 Jun. 9-12, 2023 Sino-Dental 2023 © 2024 NAKANISHI INC. 41

  42. Slide 42: Dental business: Others

    Others Overview of Measures for FY2023 FY2024 Middle East Jan. 25-28, 2023 CIOSP2023 (Brazil) South America Russia Australia Feb. 7-9, 2023 AEEDC Dubai 2023 (UAE) © 2024 NAKANISHI INC. 42

  43. Slide 43: Surgical business outline

    gical business outline Overview of FY2023 Achieved a double-digit increase in sales due to successful promotional activities both in Japan and overseas. In particular, sales of burs grew significantly. A Japan Sales of consoles grew due to replacement and addition, and sales of burs, whose productio

  44. Slide 44: Training course in progress

    Training course in progress ”Primado2” held in the right hand © 2024 NAKANISHI INC. 44

  45. Slide 45: YoY YoY YoY

    YoY YoY YoY YoY YoY YoY YoY YoY © 2024 NAKANISHI INC. 45

  46. Slide 46: Industrial business topics

    NSK Industrial business topics MECT 2023 Promote collaboration with system integrators October 18 to 21, 2023 at Port Messe Nagoya Create demand with application appeals im © 2024 NAKANISHI INC 46

  47. Slide 47: Growth Strategy of Nakanishi Including the Three Acquired Companies

    NSK Growth Strategy of Nakanishi Including the Three Acquired Companies y

  48. Slide 48: Growth strategy for Dental Business toward 2030

    Growth strategy for Dental Business toward 2030 1. Expansion of global share for handpiece (28% >>» 35%) 2. Expansion of share for implant motors (40% >>» 50%) 3. Expansion of share for Oral hygiene system 4. Enhanced product lineup of Mobile dentistry equipment © 2024 NAKANISHI INC. y

  49. Slide 49: Growth Strategy for Dental Business

    Growth Strategy for Dental Business Expansion of global share for handpiece 28% mmr 35% Capturing the U.S. and Chinese markets is essential Largest size & 1.4 billion people High growth market with high prospects growth potential © 2024 NAKANISHI INC. y

  50. Slide 50: U.S. market and Chinese market

    U.S. market Chinese market ~ /— > (— Dental school (U.S.) 68 Dental school 258 (Canada) 1 1 Dentists per (U.S.) 54 Dentists per 1 6 100,000 people 100,000 people peop (Canada) 6 2 peop ee pulation: Be TSAIC GTA CEA een *Dentists: 230,000 / Population: 1,420 million Dental schools 11 Dental schools 4

  51. Slide 51: Capturing the U.S. Market

    Capturing the U.S. Market I Expansion of product lineup I Deepen NSK & DCI collaboratieyy) BETTER TOGETHER DCledge + NSK 4 Ti-Max Z Turbine 4 Ti-Max Z Contra aNLZ 4 Bundling of DCI chairs and NSK drills (air-driven) (electric motor-driven) (electric micromotor) Dental Service Organizations y © 2024

  52. Slide 52: NSK x DCI Synergy

    NSK x DCI Synergy > Added value provided by NSK to DCI - NSK’'s high-performance “dental micromotors” are built into DCI’s dental chairs. - NSK’s dental drills, which boast the world’s top market share, are bundled with DCl’s dental chairs. > Added value provided by DCI to NSK - Genuinitems for dent

  53. Slide 53: Capturing the Chinese Market

    Capturing the Chinese Market Knockdown productiomof handpieces began at the Sichuan Factory »» Adaptation to the “Buy China” policy Acquisition of Refime, an\Up-aid+coming dental equipment manufacturer »» Competing with rising Chinese manufacturers Business environment Business environme: Business e

  54. Slide 54: NSK x REFINE Synergy

    NSK x REFINE Synergy > Capture the low-end market in China - Capturing ultrasonic scalers and endodontics motors market, which is almost exclusively dominated by Chinese manufacturers > Roll out low-end products to developing countries (Asia, South America, Middle East) - Deterring Chinese manufactu

  55. Slide 55: Growth Strategy for Industrial Business

    Growth Strategy for Industrial Business 1. Expand global market share with ultra-precision and ultra-high-speed spindles 2. Collaborate with robot manufacturers 3. Strengthen product lineup and expand customer base JAEGER’'s spindles JAEGER’s customer base in Europe © 2024 NAKANISHI INC.

  56. Slide 56: Nakanishi x JAEGER Synergy

    Nakanishi x JAEGER Synergy Promote cross-selling. Capitalize on each other's mutual strengths. Nakanishi JAEGER Automobile, Smart Phone, Medical Application b Equipment, PCB, Robot, etc. Py u Dental CAD/CAM, PCB, Robot, etc. Di. ter of mai © 20-®50mm eee © 30-0 150mm 1,200 watts Maximum power 20,000

  57. Slide 57: Growth Strategy for Surgical Business

    Growth Strategy for Surgical Business 1. Expand global market share with brain surgeon drills . Collaborate with surgica ane robot manufacturer > possibility of M&A 3. Expand business of surgical device in new categories © 2024 NAKANISHI INC. y

  58. Slide 58: Collaboration with surgical support robot manufacturers

    Collaboration with surgical support robot manufacturers Existing (Dealer) NAKANISHI Medical Surgical Business Institution New focus (Dealer) 58

  59. Slide 59: Growth Strategies of Three Acquired Companies

    Growth Strategies of Three Acquired Companies © 2024 NAKANISHI INC.

  60. Slide 60: NSK

    NSK

Nakanishi — FY2023 Earnings Presentation on 6ix