fy2/12first quarter results presentation
TRANSCRIPT
1
July 1, 2011Code: 2178
URL: http://www.tri-stage.jp/
FY2/12 First Quarter Results Presentation
2
Highlights
Net Sales continue to increase. Operating income down year on year due to earthquake disaster
NetSales ¥9,381million(YoY change up2.7%)Operating Income ¥591million(YoY change down25.9%)
FY2/12 1Q Results Steady Progress against Forecasts
Net Sales and Operating Income mostly in line with planNet Sales progress rate 50.0% Operating Income progress rate 48.4%
Part 1 : FY2/12 1Q Results
Part 2 : Progress against FY2/12 forecasts, and 2Q measures
Part 3: Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
End of terrestrial analog broadcast in July 2011 expected to lead to the gradual adoption of multichannel terrestrial broadcasts over the medium to long term.
The number of slots for TV shopping programs and commercials is also expected to steadily increase.
3
Contents
Part 1 : FY2/12 1Q ResultsPart 1 : FY2/12 1Q Results
Part 2 : Progress against FY2/12 forecasts, and 2Q measuresPart 2 : Progress against FY2/12 forecasts, and 2Q measures
Part 3: Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
Part 3: Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
Reference MaterialsReference Materials
4
FY2/12 1Q Results Highlights①
FY2/121Q
FY2/111Q
FY2/101Q
FY2/121Q
FY2/111Q
FY2/101Q
10,000
0
2,000
4,000
6,000
8,000
1,750
1,250
750
0
250
500
1,000
1,5008,0009,137
963 964798
+2.7%
ー25.9%591
Net Sales Gross Profit Operating Income
1,240
1,750
1,250
750
0
250
500
1,000
1,500
ー13.9%
Part 1 : FY2/12 1Q Results
1,119
9,381
Net Sales YoY up 2.7%, Gross Profit YoY down13.9%, Operating Income YoY down25.9%
(¥ mn) (¥ mn) (¥ mn)
FY2/121Q
FY2/111Q
FY2/101Q
5
FY2/111Q
(Actual)
FY2/121Q
(Actual)
Increase/Decrease
YoYChange
Net Sales 9,137 9,381 +243 +2.7%Cost of Sales 8,017 8,417
(%) (87.7%) (89.7%)
Gross Profit 1,119 963 (%) (12.3%) (10.3%)
SG&A Expenses 320 372 (%) (3.5%) (4.0%)
Operating Income 798 591 (%) (8.7%) (6.3%)
Ordinary Income 801 593 (%) (8.8%) (6.3%)
Net Income 475 327 (%) (5.2%) (3.5%)
-147
-208
-207
+51
-26.0%
-31.1%
+16.0%
-25.9%
+5.0%
-13.9%-155
+399
FY2/12 1Q Results Highlights②
(¥mn)
Net Sales YoY up 2.7%, Gross Profit YoY down13.9%, Operating Income YoY down25.9%
Part 1 : FY2/12 1Q Results
6
Results by Quarter
10,000
0
2,000
4,000
6,000
8,000
(¥mn)
(¥mn)
1,250
750
0
250
500
1,000
1,500
(¥mn)(¥mn)
FY2/12FY2/11FY2/10
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
FY2/12FY2/11FY2/10
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
FY2/12FY2/11FY2/10
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
+2.7%
ー13.9%ー25.9%
9,3818,000
963
591
1,240
964
9,137
1,119
798
1,250
750
0
250
500
1,000
1,500
Net Sales YoY up 2.7%, Gross Profit YoY down13.9%, Operating Income YoY down25.9%
Part 1 : FY2/12 1Q Results
Net Sales Gross Profit Operating Income
FY2/12
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Net Sales 8,000 8,258 8,785 9,208 9,137 9,375 9,230 9,829 9,381Gross Profit 1,240 1,168 1,163 1,284 1,119 1,006 1,012 1,387 963Operating Income 964 866 853 934 798 650 639 1,131 591
Gross Profit Margin 15.5% 14.1% 13.2% 13.9% 12.3% 10.7% 11.0% 14.1% 10.3%Operating Margin 12.1% 10.5% 9.7% 10.1% 8.7% 6.9% 6.9% 11.5% 6.3%
FY2/10 FY2/11
7
FY2/111Q
(Actual)
FY2/121Q
(Actual)
Increase/Decrease
YoYChange
Net Sales 9,137 9,381 +243 +2.7%Solution Sales 9,067 9,318
(%) (99.2%) (99.3%)
Product Sales 70 62 (%) (0.8%) (0.7%)
+2.8%
-10.1%
+250
-7
Net Sales
Increase in volume of
media space sales,
program production
and call center
operations
(¥mn)
Sales declined in March as a result of the earthquake, but are gradually recovering.
Part 1 : FY2/12 1Q Results
8
FY2/111Q
(Actual)
Costcomposition ratio
FY2/121Q
(Actual)
Costcomposition ratio
Increase/Decrease
YoYChange
Cost of Sales 8,017 8,417 (%) (87.7%) (89.7%)
6,989 7,255
(%) (76.5%) (77.3%)
TV (programs) 5,050 4,895 (%) (55.3%) (52.2%)
TV (commercials) 1,671 2,135 (%) (18.3%) (22.8%)
Other 267 224 (%) (2.9%) (2.4%)
Outsourcing Costs 966 1,106 (%) (10.6%) (11.8%)
Cost of Goods Sold 61 55 (%) (0.7%) (0.6%)
Gross Profit 1,119 963 (%) (12.3%) (10.3%)
-13.9%
3.3%
12.1%
2.7%
13.1%
0.7%
-155
-43
+27.7%
-3.1%
+3.8%
+5.0%+399
+265
-154
+463
100.0%
-9.7%
+14.5%
-16.2%
+139
-5
58.2%
25.4%
Media AcquisitionCosts(Media Buying)
100.0%
0.8%
86.2%87.2%
63.0%
20.8%
Increase in volume of TV
commercials inparticular
Cost of Sales, Gross Profit
Cost of sales was affected by cancellations of TV programs and commercials and decline in media acquisitions as a result of the earthquake,
but is slowly recovering.Gross profit was down year on year due to the earthquake.
Increase involume of call
center operations
(¥mn)
Part 1 : FY2/12 1Q Results
9
FY2/111Q
(Actual)
FY2/121Q
(Actual)
Increase/Decrease
YoYChange
SG&A Expenses 320 372 (%) (3.5%) (4.0%)
Personnel Costs 181 214 (%) (2.0%) (2.3%)
Depreciation 9 10 (%) (0.1%) (0.1%)
Other 129 147 (%) (1.4%) (1.6%)
Operating Income 798 591 (%) (8.7%) (6.3%)
No. of Employees 80 100 +20 +25.0%
+0
+17
-207
+51
+33
+7.7%
+13.6%
-25.9%
+16.0%
+18.2%
SG&A Expenses, Operating Income
SG&A expenses up 16.0% year on year. The personnel recruitment was positively executed.
– Number of regular employees up 25.0% year on year.
Increase of 20 regularemployees
(7 new graduates,
13 mid-career hires)
(¥mn)
Part 1 : FY2/12 1Q Results
Increase in Outsourcing costs
10
Affects of the Great East Japan Earthquake
Affects of the Great East Japan Earthquake
1. Changes or cancellations in TV program schedule; Cancellation of TV commercials
2. Client companies refrained from broadcasting programs or placing TV commercials
3. Supply chain disruptions and delays at client companies forced changes in media placement plans
Part 1 : FY2/12 1Q Results
11
FY2/111Q
(Actual)
FY2/121Q
(Actual)Operating C/F -362 -150Investing C/F -68 43Financing C/F 0 -136
2,859 868Cash and cash equivalents
Financial Position
End of FY2/12 1Q
End of FY2/11
Strengthened financial base
(¥mn)
Assets
Increase in accountsPayable-tradeup ¥283million
Decrease in income taxes payable
Down ¥308million
Increase in accountsreceivable-tradeup ¥455million
Decrease in cash anddeposits
down ¥292million
current assets noncurrent assets net assets
Increase in retainedearnings
up ¥176million
(¥mn)
11,178
10,909
268
7,396
3,563
27
(¥mn)
End of FY2/12 1Q
End of FY2/11
10,000
0
2,000
4,000
6,000
8,000
10,98810,000
0
2,000
4,000
6,000
8,000
10,988
10,750
237
7,574
3,532
11,178
71
Dividend payments down ¥136milion
Part 1 : FY2/12 1Q Results
Balance Sheets
Cash Flows
Liabilities and Net Assetscurrent liabilities noncurrent liabilities
Income before income taxes up ¥556millionIncrease in accounts payable-trade up ¥283millionIncrease in accounts receivable-trade down ¥455millionIncome taxes paid down ¥528milion
12
Contents
Part 1 : FY2/11 1Q ResultsPart 1 : FY2/11 1Q Results
Part 2 : Progress against FY2/12 forecasts, and 2Q measuresPart 2 : Progress against FY2/12 forecasts, and 2Q measures
Part 3: Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
Part 3: Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
Reference MaterialsReference Materials
13
FY2/11 Forecast Highlights
Net Sales and Operating Income mostly in line with plan
(¥mn)
Part 2 :Progress against FY2/12 forecasts, and 2Q measures
FY2/121Q
(Actual)
FY2/12First Half(Forecast)
ProgressRate
FY2/12Full year
(Forecast)
ProgressRate
Net Sales 9,381 18,760 50.0% 40,102 23.4%Operating Income 591 1,222 3,018
(%) (6.3%) (6.5%) (7.5%)
Ordinary Income 593 1,222 3,018 (%) (6.3%) (6.5%) (7.5%)
Net Income 327 684 1,726 (%) (3.5%) (3.7%) (4.3%)
19.7%
19.6%
19.0%47.8%
48.4%
48.6%
14
Current Status and Outlook – Client Companies
70
60
50
0
10
20
30
40
54
9
6
8
31
45
26
74
8
65
41
10
6
8
FY2/12FY2/11FY2/10
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
FY2/12FY2/11FY2/10
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
(¥mn)
12,000
10,000
0
2,000
4,000
6,000
8,000
20%
100%
80%
60%
40%
0%
Net sales
65.5%57.8% 57.2%
Part 2 :Progress against FY2/12 forecasts, and 2Q measures
(Number of clients)
Analysis of Client Base by Sales Level
Over ¥250 million ¥125 million to ¥250 million
¥50 million to ¥125 million
Other
Net Sales and Top-Five Clients' Ratio of Net Sales
Top-5 Clients’ Share of Net Sales
Client companies continue to express strong willingness to make media placements.Number of client companies is steadily increasing
Share of net sales by top five client companies down year on year.
15
Current Status and Outlook – Media Buying
TV(commercials)
(¥mn)6,000
4,000
5,000
1,000
0
2,000
3,000
1,841
345
FY2/12FY2/11FY2/10
1Q4Q3Q2Q1Q4Q3Q2Q1Q
4,4714,434
1,334 1,488
4,7285,050
1,671
267179 188 270
1,674
4,710
Media buying declined temporarily due to the earthquake, but is recovering.Media buying needs remain firm, centered on television.
Outlook remains promising for media buying tailored to customer needs.
4,9004,879 4,8954,943
2,076 2,1351,828
2,086
276 244 317 224
Part 2 :Progress against FY2/12 forecasts, and 2Q measures
Purchases of TV Program and TV Commercial Slots
TV (programs) Other media buying
16
2Q measures
Expand existing business focused on support for TV shopping, expand business fields for support of direct marketing,
and secure an overwhelming leading position in direct marketing support.
Radio,Newspapers,Magazines,
Internet,Mobile devices,
Out of home
TV(Programs),TV(commercials)
Business Planning, Creative Planning, Media Planning,
Order Management, Performance Analysis
ProductDevelopment
Data Processing, Distribution andPayment, CRM
media
Direct marketing support business field
HouseholdMiscellaneous,
Beauty, Health food
Conceptual Diagram of Second Phase Strategies
Category
1 Measures to expand existing business
3 Development of cross-media business
2 Strengthening of solution services
service
etc
16
Part 2 :Progress against FY2/12 forecasts, and 2Q measures
17
Contents
Part 1 : FY2/12 1Q ResultsPart 1 : FY2/12 1Q Results
Part 2 : Progress against FY2/12 forecasts, and 2Q measuresPart 2 : Progress against FY2/12 forecasts, and 2Q measures
Part 3: Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
Part 3: Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
Reference MaterialsReference Materials
18
Current Status and Outlook- TV Shopping Market Trends and Future Measures
Tri-Stage Other companies
31.9%29.9%
December 2010
Tri-Stage has an approximately 30% or more share of the market for terrestrial TV shopping programs.
There are still many TV program slots available to us, and we expect an expansion in market share.
31.6%
March 2011
The share of the market for terrestrial TV shopping programs
TV shopping programs of 3minutes,4minutes,14minutes,29minutes and 54minutes
August 2010
Source: Tri-Stage, random three-week average in January, May and August 2010
Source: Tri-Stage, random three-week average in May, August and December 2010
Source: Tri-Stage, random three-week average in August, December 2010 and March 2011
Part3;Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
1919
Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
End of terrestrial analog broadcast in July 2011 expected to lead to the gradual adoption of multichannel terrestrial broadcasts over the medium to long term.
The number of slots for TV shopping programs and commercials is also expected to steadily increase.
1 98765432 10 11 12 13
Terrestrial digital broadcast band: 13 Segments (6MHz)
Potential for multichannel terrestrial broadcasts
Potential for increase in number of slots for
TV shopping programs and commercialsHigh-definition (HD) broadcast (12 segments)
Standard-definition (SD) image
Broadcast 1 (4 segments)
Overview of a single station's terrestrial digital broadcast service
Standard-definition (SD) image
Broadcast 2(4 segments)
Standard-definition (SD) image
Data Broadcast (4 segments)
Part3;Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
20
Increase in Broadcast Satellite (BS) Channels
NHK BS1
NHK BS2
NHK BShi
BS4
BS-TBS
BS Asahi
BS Japan
BS11 Digital
BS Fuji
TwellV
WOWOW Star ChannelHi-Vision
NHK BS Premium
NHK BS1
BS4
BS-TBS
BS Asahi
BS Japan
BS11 Digital
BS Fuji
TwellV
The University of the Air Foundation
WOWOW
WOWOW 2
WOWOW 3
Star ChannelPlus
Star ChannelClassic
GREENCHANNEL
Animax
BS-FOX
Sukachan 804
J sports 2
J sports 1
NHK BS Premium
NHK BS1
BS 4
BS-TBS
BS Asahi
BS Japan
BS11 Digital
BS Fuji
TwellV
The University of the Air Foundation
D-Life
WOWOW J sports 1
J sports 2
J sports ESPN
GREEN CHANNEL
Animax
BS-FOX
J sports Plus
Sukachan 804WOWOW 2
WOWOW 3
Star ChannelHi-Vision
Star ChannelPlus
Star ChannelClassic
CinefilImagica
BS-F(provisional name)
Japanese Movie Channel
DisneyChannel
Source: Weekly Toyo Keizai, February 19,2011 edition2011,Toyo Keizai Inc.
Currently12Channels
Oct.201122Channels
Spring 201229 Channels
Free-to-air broadcasts
Pay-TV broadcasts
Newly added channels
Part3;Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
Star ChannelHi-Vision
21
Contents
Part 1 : FY2/11 1Q ResultsPart 1 : FY2/11 1Q Results
Part 2 : Progress against FY2/12 forecasts, and 2Q measuresPart 2 : Progress against FY2/12 forecasts, and 2Q measures
Part 3: Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
Part 3: Expected increase in available broadcast slots from switch to digital terrestrial broadcasting
Reference MaterialsReference Materials
22
(Number of clients)
Analysis of Client Base by Sales LevelReference Materials
FY2/12
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1QOver ¥250million 7 9 10 9 9 11 11 12 10
¥125 million to ¥250million 4 2 3 3 6 4 5 6 6¥50 million to ¥125 million 8 11 9 5 8 8 7 5 8
Other 26 26 31 33 31 32 40 39 41Total 45 48 53 50 54 55 63 62 65
FY2/11FY2/10
23
Company Profile
Established March 2006 Head Office 2-4-1, Shiba-koen, Minato-ku, Tokyo, Japan Representatives Isao Senoo (CEO); Akio Maruta(COO) Business Content Support services for direct marketing,
centered on television shopping sales Capital ¥633million (As of May 31, 2011) Shares Issued 7,528,200shares (As of May 31, 2011) No. of Employees 100 (As of May 31, 2011)
Providing a phone number, URL or other contact information through TV,
Internet or other media outlets, and selling products and services through
direct, interactive communication with consumers via telephone or email.
Definition of “Direct Marketing”
Reference Materials
24
We will contribute to society as a company that striveswholeheartedly to resolve issues in order to properly establishbonds between our clients’ products and services and consumers.
Philosophy, Creed and Management Principles
CorporatePhilosophy
The consumer’s satisfaction is the client’s satisfaction, and ours.Company
Creed
ManagementPrinciples Speedy Going Concern Innovation
Reference Materials
25
Business Domain
The direct marketing value chain
CRMDistribution
andPayment
Data ProcessingPerformance
Analysis
OrderManagement
MediaPlanning
Creative PlanningBusiness
Planning
Product Development
Pro
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Eff
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Comprehensive Suite of Services for Direct Marketing
Exa
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Reference Materials
26
Tri-Stage acquires the various services necessary for TV shopping from suppliers and outsourcers.
We then add our unique expertise to provide client companies with comprehensive support for direct marketing.
Suppliers/Outsourcers
Client Companies Tri-Stage
Provide Solutions
Various services
Purchase Solutions
Consumers
Products
Payment
Advertising agency
Program/creative producer
Call centers
Logistics companies
etc
Tri-Stage’s Business ModelReference Materials
Purchase payments
2727
Source of Competitiveness (Strengths)
Many premium TV time slotsMany premium TV time slots Order management expertise Order management expertise Data analysis capabilitiesData analysis capabilities
Pre-purchasesLarge volume purchasesFixed period purchases
Comprehensive order managementat call centers
In-house developed quantitativeassessment system
Maximize cost-effectivenessby lowering media costs
Maximize the lifetime valueof customers and products
Effective media typeand creative planning
Total solutions based on data analysis
Help expand business for companies using direct marketing
1. Media: Media ratio (sales to ad costs)1. Efficient call center management
2. Content: Monitoring system2. Response scripts (talk manuals)
3. Order Management: Various data evaluation systems
Reference Materials
28
38,648
52,43449,233
42,43146,032
55,39758,029
21,67923,131
24,71026,910
29,837
34,042
20,914
0
10,000
20,000
30,000
40,000
50,000
60,000
99 00 01 02 03 04 05 06 07 08 09 10 11 12
Direct Marketing (Merchandise) Trends
Appearance of full-time TV shopping
channelsNumerous on-line shopping services established
Increase in PC ownership and the Internet
Satellite digital broadcasts begin
(E) (Projection)
Direct marketing (merchandise) — ¥5.5 trillion market in FY2011
Reference Materials
Source:2010-2011 Direct Marketing and eCommerce Market: Situation and Outlook, Nov. 2010, Fuji-Keizai Co., Ltd.
(¥ 100mn)
(Projection)
29
OtherRetail outlets
インターネット
54%カタログ28%
テレビ
8%
Internet
54%
28%
TV8%
Direct Marketing (TV Shopping) Trends
【 Market Share by Media Type 】
【 TV Shopping Market 】
Satellite digitalbroadcasts begin
Appearance of fulltimeTV shopping channels
(E)
Sales through Internet, TV and mobile devices growing
Level-off or marginal rise tendency and forecast
Catalogs
MobileDevices
8%
20105.2 trillion
up6.5% YoY
1%
1%
Reference Materials
(Projection)
Source:2010-2011 Direct Marketing and eCommerce Market: Situation and Outlook, Nov. 2010, Fuji-Keizai Co., Ltd.
3,074
3,5573,747
3,9064,0444,0054,0093,934
1,8901,606 1,564
1,714
2,198
2,595
0
1,000
2,000
3,000
4,000
5,000
99 00 01 02 03 04 05 06 07 08 09 10 11 12
(¥100mn)
3030
FAQ
・ We do not recognize any other company as a true competitor at this point.・ While there is always the potential for a competitor to arise in the future,
we believe that our expertise founded on many years of experience, along with continual refinements that will enable us to retain the highest skill levels, will allow us to remain solidly competitive (in terms of market share, skill, expertise and personnel).
There are three methods: (1) a fluctuating rate based on client company sales and other results on top of costs from services provided; (2) a fixed fee on top of total costs from services provided; and (3) a fixed percentage of client company sales.
What is the potential for the rise of competitors?
How does Tri-Stage charge client companies?
・ The benefits of cross media are (1) greater earnings from new markets and an increase in customers; (2) an increase in sales synergies from cross-selling; and (3) reduced risk of earnings fluctuation. We feel that cross-media marketing will allow us to both increase earnings and reduce risk.
・ We are aggressively hiring new graduates each year, equalizing our age groups.
・ We will invest to expand business, including investing in internal IT systems, paying deposits to suppliers, and promoting the development of cross-media marketing.
How will earnings change with the increase in cross-media marketing?
What are your plans for increasing personnel (consultants), and your investment plans (financing needs)?
・ We expect the market for direct marketing to continue to grow, though the rate of growth is slowing as the market scale expands overall.
Will the market for direct marketing continue to grow?
Reference Materials
31
Contact
2-4-1, Shiba-koen, Minato-ku, Tokyo 105-0011, Japan
Head Office
Tri-Stage inc.Management Adiministration Dept.
Contact
81-3-5402-4111TEL
http://www.tri-stage.jpURL
Reference Materials
32
Disclaimer
Forecasts regarding future earnings presented in this presentation are estimated by the Company based on information available at the time of release, and include risks and other uncertainties. Accordingly, there is no guarantee that the Company will achieve these forecast figures.
Changes in the internal circumstances of the Company or external business environment may have an impact, whether direct or indirect, on the Company’s earnings. Please be aware of the possibility that the forecasts presented in this presentation may change.