LENT Co., Ltd. FYE May 2026 Earnings & Growth Strategy Deep Dive Report

Based on the financial results for the fiscal year ended May 2026 for LENT Co., Ltd. (Securities Code: 372A) , a company primarily engaged in the rental of industrial and construction machinery, this report provides a comprehensive analysis of its performance highlights, detailed trends by region and customer segment, the high-value-added model supporting profitability, and the earnings outlook and growth strategy for the fiscal year ending May 2027.

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1. Performance Highlights: Revenue and Profits Exceed Targets

In the fiscal year ended May 2026, LENT achieved growth in both revenue and profit, recording net sales of 52.945 billion yen (+7.9% YoY) , operating profit of 4.382 billion yen (+12.2% YoY) , ordinary profit of 3.946 billion yen (+14.6% YoY) , and net profit attributable to owners of the parent of 2.901 billion yen (+16.1% YoY) .

While the progress rate against the initial revenue forecast was 98.0%, slightly missing the target, the company significantly outperformed in terms of profitability, with operating profit at 101.9% , ordinary profit at 105.2% , and net profit at 111.6% of the initial projections.

Analysis of Profit Structure and Significance of this Slide

The slide above (P.6) is critical as it clearly illustrates the overall performance for the fiscal year ended May 2026, the achievement rate against initial forecasts, and the factors contributing to profit growth.

Although revenue fell slightly short of expectations due to delays in the start of certain construction projects and revisions to investment plans, the outperformance in profit was driven by a combination of the following factors:

1. Promotion of volume discounts in rental asset procurement
2. Cost reductions through improved loading efficiency and consolidation of delivery shipments
3. Unspent costs due to delays in certain capital investments
4. Positive impacts from foreign exchange fluctuations and tax credits

As a result, the operating profit margin improved by 0.3 percentage points from 8.0% to 8.3% , and the EBITDA margin remained high at 39.4% .

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2. Detailed Trends by Region and Customer Segment

Breaking down performance by region and customer industry clarifies the areas driving growth and the challenges ahead.

Analysis of Revenue Fluctuations by Region

The slide above (P.8) shows the revenue trends for the company's four major domestic regions as well as overseas and other segments. Demand trends vary significantly by region, making this data essential for evaluating the success of regional strategies.

• Tokyo/Kanagawa Area (15.27 billion yen / +13.4% YoY) : Strong demand related to redevelopment projects, data centers, and logistics warehouses, combined with successful acquisition of local construction and facility work demand, strongly drove overall revenue growth.
• Kansai/Kyushu Area (9.06 billion yen / +8.1% YoY) : Captured demand from automotive, plant, and power generation sectors, as well as local construction, showing steady expansion.
• Tokai Area (18.48 billion yen / +3.3% YoY) : While this remains the company's largest revenue source (34.9% of total), growth was sluggish due to the impact of declining EV-related demand, despite being offset by demand in power transmission and plant sectors.
• North Kanto/Tohoku Area (4.36 billion yen / -5.9% YoY) : Experienced a revenue decline due to the temporary contraction of semiconductor-related investments, though it is currently showing signs of recovery through the acquisition of plant-related and local construction projects.
• Overseas Area (3.58 billion yen / +16.3% YoY) : Success in expanding market share in the ASEAN region has led to double-digit growth.

Characteristics of Customer Composition (Strength in Industrial Machinery)

A key feature of LENT's business portfolio, unlike typical construction machinery rental companies, is its high dependency on and strength in the industrial machinery (manufacturing, plant, logistics, etc.) sector . Out of the 48.589 billion yen in non-consolidated sales, sales to the industrial machinery sector account for 61% (+7.5% YoY) , growing at a faster pace than the 39% share from the civil engineering and construction sector (+5.1% YoY) .

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3. High-Value-Added Strategy: "Value Plus Service" and Unit Price Escalation Mechanism

The core concept supporting LENT's sustainable growth and improved profit margins is the "Value Plus Service." Rather than simply renting out equipment, the company provides value-added services that support environmental protection, accident prevention, operational efficiency, and regulatory compliance.

Significance of "Value Plus Service" and Data Implications

The slide above (P.20) demonstrates the structural background of the company's shift toward a high-profitability model. Revenue from these services reached 7.702 billion yen (+11.2% YoY) , and its share of non-consolidated sales expanded to 15.9% (continuously rising from 13.5% in the fiscal year ended May 2022). The Compound Annual Growth Rate (CAGR) is an impressive +12.7% .

Specific examples include:

• Clean Room Compatible Services : Providing precision cleaning and packaging of equipment using in-house facilities for semiconductor and precision factories.
• Battery Evaluation and Regeneration Service (BRS) : Using patented technology to restore the capacity of degraded forklift batteries, reducing costs and environmental impact for customers.
• Various Training and Special Education Services : Conducting safety training as a certified institution for skill certifications.

Through the expansion of such high-value services and the optimization of the product lineup, the average rental unit price recorded a +6.2% increase YoY . The synergy between increased product inventory (+5.7% YoY) and higher unit prices has bolstered the foundation of profitability.

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4. Strengthening Financial Foundation and Capital Allocation Strategy

The fiscal year ended May 2026 marked a milestone with the company's new listing on the Tokyo Stock Exchange Standard Market, further improving its financial soundness.

• Total Assets : 68.201 billion yen (+10.291 billion yen / +17.8% from previous year-end)
• Net Assets : 20.066 billion yen (+4.831 billion yen / +31.7% from previous year-end)
• Equity Ratio : 25.8% → 29.3% (+3.5pt increase)
• Net D/E Ratio : 1.5x → 1.4x (improvement)

Financial safety has significantly increased due to the new share issuance associated with the listing (2.5 billion yen) and the accumulation of net profit. In terms of cash flow, the company generated 12.32 billion yen in operating cash flow . Combined with funds raised from the listing and financial institutions (4.71 billion yen), it actively allocated a total of 12.44 billion yen for growth investments , including 9.34 billion yen for rental asset enhancement , 1.80 billion yen for facility and system upgrades , and 1.29 billion yen for strengthening group companies .

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5. FYE May 2027 Earnings Forecast and Shareholder Returns

Full-Year Earnings Forecast

For the fiscal year ending May 2027, while anticipating a 5.4% increase in overall construction investment, LENT plans for consecutive revenue and profit growth by aggressively promoting key growth initiatives.

• Net Sales : 58.0 billion yen ( +9.5% YoY )
• Operating Profit : 4.95 billion yen ( +12.9% YoY / Operating margin rising to 8.5%)
• Ordinary Profit : 4.25 billion yen ( +7.7% YoY )
• Net Profit : 3.0 billion yen ( +3.4% YoY )

By increasing product inventory by +5.0%, improving average rental unit prices by +3.0%, and raising the utilization rate by +1.0pt, the equity ratio is expected to further rise to 31.4% .

Expansion of Dividend Policy (Introduction of Interim Dividend and Dividend Increase)

Based on profits exceeding expectations, the year-end dividend for the fiscal year ended May 2026 was set at 220 yen per share (a 40 yen increase from the previous year's 180 yen) .

Furthermore, starting from the fiscal year ending May 2027, the company will introduce an interim dividend system to increase opportunities for shareholder returns. The dividend forecast is 117.5 yen for the interim and 117.5 yen for the year-end, totaling 235 yen annually (a 15 yen increase YoY) , with a policy of providing stable and proactive returns based on a consolidated dividend payout ratio of approximately 30% .

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6. Mid-to-Long-Term Growth Strategy: Alliances and Global Expansion

The company is expanding its unique business model for sustainable future growth.

1. Formation of a "Third Pole" through Alliance Strategy : In a rental industry polarized between large national network companies and local independent firms, LENT is building a "Third Pole" alliance model by forming business and capital alliances with leading regional companies (e.g., Kumamoto Chuo Lease, Katagiri Machinery, Rentec Daikei), sharing products, logistics, and know-how.
2. Expansion of Group Bases : The company operates a network of 73 domestic sales offices and 13 maintenance centers, with plans to establish or consolidate new locations such as the Kakogawa Office, Ichinomiya Office, and Kumamoto Chuo Center for the fiscal year ending May 2027.
3. Deepening Overseas Business (ASEAN Region) : Operating in Thailand (8 locations, 244 employees), Vietnam (2 locations, 62 employees), and Indonesia (2 locations, 50 employees), the company is actively capturing demand in the rapidly growing Asian market through the mutual utilization of rental assets and human resources within the group.

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7. Conclusion

LENT Co., Ltd.'s financial results for the fiscal year ended May 2026 were strong, exceeding profit targets due to successful demand capture in the Tokyo metropolitan area, Kansai, and Kyushu, as well as growth in the industrial machinery sector and "Value Plus Services," alongside unit price optimization. While strengthening its financial structure, the company has presented an ambitious plan for the fiscal year ending May 2027, aiming for 9.5% revenue growth and 12.9% operating profit growth, driven by alliances and overseas expansion, while also introducing interim dividends and increasing payouts.