Litalico Inc. · TSE:7366
Litalico — H1 FY2024 Earnings Presentation
42 slides from Litalico's earnings presentation, Oct 28, 2024
Slide 1: FY 2024 H1 Earnings Presentation
1 October 28, 2024 FY 2024 H1 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 3: Financial Forecast Revision
3 Financial Forecast Revision ©2024 LITALICO Inc.
Slide 4: Revision of Consolidated Annual Forecast (IFRS)
FORECAST Revision of Consolidated Annual Forecast (IFRS) 4 Reasons for the Revision Impact on operating profit (1) Temporary decrease of operation rate in the child welfare segment - 1.5 billion yen (2) Impact of DDCN’s contribution to business performance + 600 million yen (3) Changes made to the e
Slide 5: Revision of model change in FY2024
Major Cause of Revision Change of LITALICO Junior model 5 Revision of “model change in FY2024” ❶ FY2024 challenge: Change of support models from “focus on short-duration private support” to “focus on long-duration team support”. ❷ Interim progress: In FY2024, we expected a full-year profit of 1.3 bi
Slide 6: Effect of DDCN's Performance
Major Cause of Revision Effect of DDCN’s Performance 6 ・In June 2024, DDCN, a service provider in Nebraska, U.S. for persons with severe behavioral disorders, became a consolidated subsidiary of LITALICO. ・Consolidation began from July 2024. ❶ M&A Fees • Approx. 150 million yen has been accounted fo
Slide 7: Forecast Financial Summary
FORECAST Financial Summary 7 • Planning for sales increase and profit decrease in FY2024 vs previous year. • Planning for sales and profit increase in next FY, by continuous expansion of the major businesses (vocational welfare and platform businesses), and recovering the child welfare business, whi
Slide 8: Consolidated Financial Results
8 Consolidated Financial Results ©2024 LITALICO Inc.
Slide 9: Consolidated P&L
RESULTS Consolidated P&L 9 IFRS (million yen) FY2023 FY2024 % YoY H1 H1 Sales 14,392 16,624 + 15.5% Operating Profit 1,352 1,137 - 15.9% Profit Attributable to 1,867 627 - 66.4% Owners of Parent ©2024 LITALICO Inc.
Slide 10: Segment Income Statement
RESULTS Segment Income Statement 10 IFRS (million yen) FY2023 FY2024 % YoY H1 H1 Sales 5,215 6,216 + 19.2% Vocational Welfare Profit 1,696 2,294 + 35.2% Sales 4,508 4,145 - 8.0% Child Welfare Profit 533 (515) - Sales 1,899 2,163 + 13.9% Platform Profit 728 753 + 3.5% Sales - 960 - Overseas Profit -
Slide 11: Segment Overview for FY2024H1
RESULTS Segment Overview for FY2024H1 11 • 16.6 bln yen in sales (+16% YoY), 1.14 bln yen in operating profit (-16.0% YoY), 630 mln yen in quarterly CONSOLIDATED profit attributable to owners of the parent (-66% YoY). • 150 mln yen in DDCN M&A related fees occurred in Q1 (pressuring this FY’s operat
Slide 12: Growth Strategy
12 Growth Strategy ©2024 LITALICO Inc.
Slide 13: LITALICO Philosophy and Vision
STRATEGY LITALICO Philosophy and Vision 13 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
Slide 14: Rise in Mandated Employment Rate of Disabled Individuals
STRATEGY Rise in Mandated Employment Rate of Disabled Individuals 14 • 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 i
Slide 15: Business Environment
STRATEGY Business Environment 15 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 we
Slide 16: Services Across All Life Stages of Persons with Disabilities
STRATEGY Services Across All Life Stages of Persons with Disabilities 16 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 ca
Slide 17: Business Results
17 Business Results ©2024 LITALICO Inc.
Slide 18: LITALICO Segments
RESULTS LITALICO Segments 18 Vocational Welfare HumanGrow Child Welfare Platform (Billing Software) (Nursing Care Software) Overseas Others ©2024 LITALICO Inc.
Slide 19: LITALICO Segments
RESULTS LITALICO Segments 19 Vocational Welfare HumanGrow Child Welfare (スタンダードコース) Platform Overseas Others (パーソナルコース) ©2024 LITALICO Inc.
Slide 20: Vocational Welfare
RESULTS Vocational Welfare 20 • 7 new sites launch completed in H1 • 150 facilities (LW: 143, HG: 7) • 1,177 job placements in H1, pace remains elevated HumanGrow • 20 total launches planned for FY24, with expected increase in pace Vocational rehabilitation for * LW = LITALICO Works, HG = HumanGrow
Slide 21: LITALICO Segments
RESULTS LITALICO Segments 21 Vocational Welfare Child Welfare Platform Overseas Others (パーソナルコース) ©2024 LITALICO Inc.
Slide 22: Child Welfare
RESULTS Child Welfare 22 • 16 new sites launched in H1 • 175 facilities (LJ: 162, U: 13)* • 21 total launches planned for FY24 • Costs related to reimbursement revisions and decrease in facility operation rate due to change in support program are expected produce negative profit growth. Children’s s
Slide 23: LITALICO Segments
RESULTS LITALICO Segments 23 Vocational Welfare Child Welfare Platform Overseas Others (パーソナルコース) ©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 • 50% increase in marketing and sales staff in Q1 • 28,200 facilities contracted as of Q2 end. New contract acquisition steady aside from loss of a major contract from a party that filed for bankruptcy. (Billing Software) (Nursing Care Software) Platform Business Subscription Con
Slide 26: LITALICO Segments
RESULTS LITALICO Segments 26 Vocational Welfare Child Welfare Platform Overseas Others (パーソナルコース) ©2024 LITALICO Inc.
Slide 27: Consolidation of DDCN: LITALICO's strategy in the U.S.
M&A Consolidation of DDCN 27 LITALICO’s strategy in the U.S. • As we have done in Japan, the objective is to become a provider of comprehensive B-to-C services for users and their families • In June 2024, we have consolidated DDCN, one of the largest developmental disabilities service provider in Ne
Slide 28: DDCN Overview
M&A DDCN Overview 28 • 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 29: LITALICO Segments
RESULTS LITALICO Segments 29 Vocational Welfare Child Welfare Platform Overseas Others ©2024 LITALICO Inc.
Slide 30: Others
RESULTS Others 30 • Sales +13% YoY • Active M&A execution Development classes designed for children Others Sales under 18 with special needs, open to all irrespective of disability certification. (million) Provides intensive sessions with generous guidance. 2 facilities are opening in FY2024. 7,000
Slide 31: Reference Material
31 Reference Material ©2024 LITALICO Inc.
Slide 32: Number of LITALICO Service Provision Facilities
REFERENCE Number of LITALICO Service Provision Facilities 32 • 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 33: Midterm Facilities Launch Outlook for Vocational Welfare
REFERENCE Midterm Facilities Launch Outlook for Vocational Welfare 33 • 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 34: Midterm Facilities Launch Outlook for Child Welfare
REFERENCE Midterm Facilities Launch Outlook for Child Welfare 34 • 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 35: LITALICO Works and Junior Competitive Advantages
REFERENCE LITALICO Works and Junior Competitive Advantages 35 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 36: LITALICO Business Environment (1)
REFERENCE LITALICO Business Environment (1) 36 • 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 37: LITALICO Business Environment (2)
REFERENCE LITALICO Business Environment (2) 37 • The market size of disability welfare service and adjacent industry (medical, nursing care, etc.) is increasing yearly. Disability Welfare Service Budget Disability Welfare Service Users and Facilities Government spending on disability welfare service
Slide 38: Publicly Funded Business Structure
REFERENCE Publicly Funded Business Structure 38 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 39: Reimbursement Calculation Method
REFERENCE Reimbursement Calculation Method 39 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 40: U.S. Disability Welfare Industry
REFERENCE U.S Disability Welfare Industry 40 • 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 41: DDCN Within the U.S. Disability Welfare Structure
REFERENCE DDCN Within the U.S. Disability Welfare Structure 41 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 & Repo
Slide 42: LITALICO Annual Fact Sheet as of September 30, 2024
REFERENCE LITALICO Annual Fact Sheet as of September 30, 2024 42 Vocational Training Child Welfare LITALICO Wonder • Job Placements: 1,177 • Service Users: 10,442 • Service Users : 5,054 Number of Employee NPS Scores1 (As of March 2024) • Vocational Welfare Segment: 1,291 • LITALICO Works: 14.0 NPS: