Litalico Inc. · TSE:7366

Litalico — Q1 FY2024 Earnings Presentation

46 slides from Litalico's earnings presentation, Jul 30, 2024

Slide 1: FY 2024 Q1 Earnings Presentation
1 July 30, 2024 FY 2024 Q1 Earnings Presentation LITALICO Inc. [ TSE Code: 7366 ] ©2024 LITALICO Inc.
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
Slide 4: Creating an Obstacle-free Society
STRATEGY LITALICO Philosophy and Vision 4 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
Slide 5: Rise in Mandated Employment Rate of Disabled Individuals
STRATEGY Rise in Mandated Employment Rate of Disabled Individuals 5 • Legally mandated employment rate for disabled individuals is 2.5% • Rate is scheduled for step-wise increase to 2.7% over the next couple of years Employment of Individuals with Disabilities Legally Mandated Employment Rate 10x in
Slide 6: Business Environment
STRATEGY Business Environment 6 Number of Welfare Service Users and Provider Facilities (thousand) (thousand) 200 Welfare Service Facilities (left) 1,400 Welfare Service Users 1,200 150 1,000 800 100 600 50 400 200 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Ref: MHLW ▶ Disability wel
Slide 7: Services Across All Life Stages of Persons with Disabilities
STRATEGY Services Across All Life Stages of Persons with Disabilities 7 Services across all life stages provided through integration of B-C facilities and the B-B platform Education Vocation Lifestyle Retirement U.S. BtoC • Early detection and diagnosis • Social participation • Dwelling, medical car
Slide 9: Consolidated P&L
RESULTS Consolidated P&L 9 IFRS (million yen) FY2023 Q1 FY2024 Q1 % YoY Sales 7,059 7,724 + 9.4% Operating Profit 593 329 - 44.4% Profit Attributable to 1,444 155 - 89.3% Owners of Parent ©2024 LITALICO Inc.
Slide 10: Segment Income Statement
RESULTS Segment Income Statement 10 IFRS (million yen) FY2023 Q1 FY2024 Q1 % YoY Sales 2,584 3,074 + 19.0% Vocational Welfare Profit 864 1,139 + 31.8% Sales 2,141 1,980 - 7.5% Child Welfare Profit 143 -310 - Sales 985 1,122 + 13.9% Platform Profit 420 405 - 3.5% Sales 1,349 1,548 + 14.7% Others Prof
Slide 11: Q1 Segment Overview
RESULTS Q1 Segment Overview 11 • 7.7 bln yen in sales (+9% YoY), 330 mln yen in operating profit (-44% YoY), 160 mln yen in quarterly CONSOLIDATED profit attributable to owners of the parent (-89% YoY) • 150 mln yen in DDCN M&A related fees occurred in Q1, pressuring profits lower • 1.0 bln yen in g
Slide 12: Reasons Behind Child Welfare Segment Lag
RESULTS Reasons Behind Child Welfare Segment Lag 12 Q1 Outlook Departure of some users as a result of New service program is well accepted so Facility service program changes far with steady inflow of new users. Operation Operation rate expected to improve going Rates forward. Temporarily lower oper
Slide 14: Consolidated Annual Forecast (IFRS)
FORECAST Consolidated Annual Forecast (IFRS) 14 Forecast Assumptions • Planned site launches: 20 LITALICO Works (vs 16 PY), 21 LITALICO Junior (vs 18 PY) • Reimbursement revisions impacting positively for LITALICO Works, negatively for LITALICO Junior • LITALICO Junior expected to post negative prof
Slide 15: Impact of DDCN Consolidation and Warrant Issuance
FORECAST Impact of DDCN Consolidation and Warrant Issuance 15 Topics Impact ① M&A Fees • Approx. 150 million yen has been accounted for in Q1 • Expecting to consolidate DDCN’s July results in to ② DDCN Consolidation Timing LITALICO’s July results • Currently under examination • DDCN business expecte
Slide 16: Financial Summary
FORECAST Financial Summary 16 • Planning for 12 consecutive years of sales and profit increase SALES OPERATING PROFIT (million yen) (million yen) 35,000 4,500 4,500 35,000 4,000 3,715 29,792 30,000 3,500 25,000 24,170 2,928 3,000 2,444 19,737 20,000 2,500 15,907 13,866 2,000 15,000 1,678 12,127 10,3
Slide 18: LITALICO Segments
RESULTS LITALICO Segments 18 Vocational Welfare HumanGrow Child Welfare Platform (Billing Software) (Nursing Care Software) Others ©2024 LITALICO Inc.
Slide 19: LITALICO Segments
RESULTS LITALICO Segments 19 Vocational Welfare HumanGrow Child Welfare Platform (Billing Software) (Nursing Care Software) Others ©2024 LITALICO Inc.
Slide 20: Vocational Welfare
RESULTS Vocational Welfare 20 • 1 new site launch completed in Q1 • 144 facilities (LW: 137, HG: 7) • 716 job placements in Q1, pace remains elevated HumanGrow • 20 total launches planned for FY24, with expected increase in pace Vocational rehabilitation for • Sales expected to grow 25% with contrib
Slide 21: LITALICO Segments
RESULTS LITALICO Segments 21 Vocational Welfare HumanGrow Child Welfare Platform (Billing Software) (Nursing Care Software) Others ©2024 LITALICO Inc.
Slide 22: Child Welfare
RESULTS Child Welfare 22 • 1 new site launched in Q1 • 160 facilities (LJ: 147, U: 13)* • 21 total launches planned for FY24, with expected increase in pace Children’s social skills development • Costs related to reimbursement revisions and education classes expected produce negative profit growth *
Slide 23: LITALICO Segments
RESULTS LITALICO Segments 23 Vocational Welfare HumanGrow Child Welfare Platform (Billing Software) (Nursing Care Software) Others ©2024 LITALICO Inc.
Slide 24: Current Product Line-up and Forward Strategy
RESULTS Current Product Line-up and Forward Strategy 24 • Matching media for service users and providers, DX support SaaS services for facilities • Current line-up services disability welfare facilities, schools & nurseries, and nursing care fields • Sequential expansion of product offerings with in
Slide 25: Platform
RESULTS Platform 25 • Contribution from previous investment in marketing and sales team expected to accelerate sales growth to +26% for FY2024 • 50% increase in marketing and sales staff in Q1 • 27,300 facilities contracted as of Q1 end • New contract acquisition steady aside from loss of a major co
Slide 26: LITALICO Segments
RESULTS LITALICO Segments 26 Vocational Welfare HumanGrow Child Welfare Platform (Billing Software) (Nursing Care Software) Others ©2024 LITALICO Inc.
Slide 27: Others
RESULTS Others 27 • Sales +15% YoY • Active M&A execution Others Sales Development classes designed for children under 18 with special needs, (million) open to all irrespective of disability 7,000 certification. 6,500 6,000 On-site and remote programming 5838 classes for children designed to 5,000 d
Slide 28: Group Home LITALICO Residence Launch
RESIDENCE Group Home “LITALICO Residence” Launch 28 • “LITALICO Residence Inogashira-koen,” a group home for individuals with severe disabilities, is scheduled to open in April 2025 • Shortage of group homes persists especially for individuals with severe disabilities in metropolitan areas due to di
Slide 30: Consolidation of DDCN in the U.S.
M&A Consolidation of DDCN in the U.S. 30 LITALICO’s Strategy Abroad • As we have done in Japan, the objective is to become a provider of comprehensive B-to-C services for users and their families • Consolidation of DDCN, one of the largest developmental disabilities service provider in Nebraska with
Slide 31: DDCN Overview
M&A DDCN Overview 31 • Fortifying solid positioning with consistent growth as one of the largest service providers for individuals with severe disabilities in Nebraska • Stable B-to-C service with high demand from individuals in need of long-term support • Spending increases on developmental disabil
Slide 32: M&A Financing Overview
M&A Financing Overview 32 • The acquisition of DDCN spurred the following equity financing (Targeted Strike Stock Warrant) • Financing will be sequentially realized over a three year period contingent upon exceeding the exercise price(s) below, and differs from public offerings which issue new share
Slide 33: M&A Frequently Asked Questions
M&A Frequently Asked Questions 33 Topics Answers • Spending on services within the severe behavior disorders arena continues to increase in the U.S. • Many individuals require consistent long-term services ① Why DDCN • Founder to remain and continue to run operations • Appropriate pricing for busine
Slide 35: Number of LITALICO Service Provision Facilities
REFERENCE Number of LITALICO Service Provision Facilities 35 • Total of over 400 sites planned for FY2024 500 450 434 390 400 91 338 350 88 300 83 262 250 231 180 210 43 159 200 186 39 173 35 128 26 140 23 113 150 116 100 21 93 92 20 84 86 100 73 60 57 18 43 143 163 39 13 30 127 50 5 22 106 15 15 82
Slide 36: Midterm Facilities Launch Outlook for Vocational Welfare
REFERENCE Midterm Facilities Launch Outlook for Vocational Welfare 36 • Number of new launches doubled to 16, from 8 four years ago • Planning to maintain this pace of increase, with a launch of 32 new sites four years from now, in order to meet societal demand 247 250 215 32 NEW LAUNCHES 200 187 28
Slide 37: Midterm Facilities Launch Outlook for Child Welfare
REFERENCE Midterm Facilities Launch Outlook for Child Welfare 37 • Number of new launches increased 2.6x to 18, from 7 four years ago • Planning to continue the increase in annual launches, with a launch of 36 new sites four 350 years from now, in order to meet societal demand 300 271 NEW 250 235 36
Slide 38: LITALICO Works and Junior Competitive Advantages
REFERENCE LITALICO Works and Junior Competitive Advantages 38 Powerful Hiring and Training Program • Over 1,000 annual new hires (out of roughly 30,000 applicants) • Continuous educational and skill acquisition structure • High retention rate with many seasoned staff (9.4% turn over as of Mar 2024)
Slide 39: Welfare Reimbursement Revision Impact
REFERENCE Welfare Reimbursement Revision Impact 39 Vocational Welfare Child Welfare • Service reimbursement fee scale overhaul for • Incorporation of service session duration- Key overall increase based fee scale Revisions • Greater increase rate for providers with higher • Stricter requirements for
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
Slide 41: LITALICO Business Environment (2)
REFERENCE LITALICO Business Environment (2) 41 • Welfare service spending, service providers, and service users all continue to rise Disability Welfare Service Budget Disability Welfare Service Users and Facilities Government spending on disability welfare services, excluded fees paid by municipalit
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: ¥8,800 /session Government 2nd Yr: ¥8,800~10,000 /session Up to 6 mths into Reimbursement: employment 3rd Yr: ¥12,000 /session 90% (Claimed by LITALICO on Per pers
Slide 43: Reimbursement Calculation Method
REFERENCE Reimbursement Calculation Method 43 Reimbursement Unit Price Evaluation Method Vocational Training Business Example Results Based Reimbursement Vocational Training Basic Reimbursement Scale C. Job Retention Rate D. Basic Reimbursement Units Specific KPIs (such as job retention rates) defin
Slide 44: U.S Disability Welfare Industry
REFERENCE U.S Disability Welfare Industry 44 • The 2022 U.S. census estimates more than 45 million individuals with hearing, vision, cognitive, ambulatory, self-care, and independent living difficulties • Spending on services for Intellectual or Development Disabilities (IDD) alone has continued to
Slide 45: DDCN Within the US Disability Welfare Structure
REFERENCE DDCN Within the US Disability Welfare Structure 45 Administration Insurance Federal Audit Funding Medicaid Commercial Private State Government Medicare (Mixed, Corporates) (Out-of- Government pocket) (Public) Authorization & Reimbursement Audit Application Claims Service Providers & Report
Slide 46: LITALICO Annual Fact Sheet as of June 2024
REFERENCE LITALICO Annual Fact Sheet as of June 2024 46 Vocational Training Child Welfare LITALICO Wonder • Job Placements: 716 • Service Users: 9,202 • Service Users : 4,865 Number of Employee NPS Scores1 (As of March 2024) • Vocational Welfare Segment: 1,264 • LITALICO Works: 14.0 NPS: Net Promote

LITALICO — Q1 FY2024 Earnings Presentation on 6ix

Litalico — Q1 FY2024 Earnings Presentation

Slide 1: FY 2024 Q1 Earnings Presentation

Slide 2: Disclaimer

Slide 3: Growth Strategy

Slide 4: Creating an Obstacle-free Society

Slide 5: Rise in Mandated Employment Rate of Disabled Individuals

Slide 6: Business Environment

Slide 7: Services Across All Life Stages of Persons with Disabilities

Slide 8: Consolidated Financial Results

Slide 9: Consolidated P&L

Slide 10: Segment Income Statement

Slide 11: Q1 Segment Overview

Slide 12: Reasons Behind Child Welfare Segment Lag

Slide 13: Financial Forecasts

Slide 14: Consolidated Annual Forecast (IFRS)

Slide 15: Impact of DDCN Consolidation and Warrant Issuance

Slide 16: Financial Summary

Slide 17: Business Results

Slide 18: LITALICO Segments

Slide 19: LITALICO Segments

Slide 20: Vocational Welfare

Slide 21: LITALICO Segments

Slide 22: Child Welfare

Slide 23: LITALICO Segments

Slide 24: Current Product Line-up and Forward Strategy

Slide 25: Platform

Slide 26: LITALICO Segments

Slide 27: Others

Slide 28: Group Home LITALICO Residence Launch

Slide 29: DDCN Consolidation and Financing

Slide 30: Consolidation of DDCN in the U.S.

Slide 31: DDCN Overview

Slide 32: M&A Financing Overview

Slide 33: M&A Frequently Asked Questions

Slide 34: Reference Material

Slide 35: Number of LITALICO Service Provision Facilities

Slide 36: Midterm Facilities Launch Outlook for Vocational Welfare

Slide 37: Midterm Facilities Launch Outlook for Child Welfare

Slide 38: LITALICO Works and Junior Competitive Advantages

Slide 39: Welfare Reimbursement Revision Impact

Slide 40: LITALICO Business Environment (1)

Slide 41: LITALICO Business Environment (2)

Slide 42: Publicly Funded Business Structure

Slide 43: Reimbursement Calculation Method

Slide 44: U.S Disability Welfare Industry

Slide 45: DDCN Within the US Disability Welfare Structure

Slide 46: LITALICO Annual Fact Sheet as of June 2024