■Performance Trends for Step ＜9795＞

1. Summary of financial results for the fiscal year ending 2024/9

The financial results for the fiscal year ending 2024/9 were 15098 million yen, up 4.5% from the previous fiscal year in terms of sales, 3511 million yen, up 10.0% from the same period in operating income, 3564 million yen, an increase of 10.5%, and net income of 2508 million yen, an increase of 4.3%, all of which exceeded the company plan. Recruitment of new students progressed smoothly against the backdrop of high passing records in high school and university entrance exams, etc., and the steady expansion of the average number of students during the term increased by 3.9% from the same period, which was a factor in the increase in sales. In terms of profit, while there was an increase in labor costs associated with an increase in the number of teachers and improvements in treatment, the cost ratio improved as investment costs (about 0.2 billion yen) to improve the learning environment recorded in the previous and second half went round, and the operating profit margin rose 1.2 points from the previous fiscal year. Note, the reason why the rate of increase in net income remained in the 1-digit range is due to a decrease in tax credits under the wage increase promotion tax system from 151 million yen in the previous fiscal year to 68 million yen.

(1) Factors contributing to the increase in sales

Looking at the breakdown of sales, the elementary and middle school student division increased 3.8% from the previous fiscal year to 11975 million yen, and the high school student division increased 7.6% to 3123 million yen, both of which hit record highs. The average number of midterm students increased 3.7% in the elementary and middle school division and 4.8% in the high school student division. Since tuition fees have remained almost unchanged since the first semester*1, changes in average unit prices are expected to be due to changes in the grade structure ratio. In particular, for high school students, the number of students in exam grades with high unit prices increased, and the average unit sales price increased 2.6% from the same period. As for the elementary and middle school student division, there were schools where recruitment stagnated in western Kanagawa prefecture and Yokosuka city, etc., where the declining birthrate progressed, but the number of students in Yokohama City and Kawasaki City expanded steadily due to the effects of opening new schools, leading the overall growth. In particular, the growth rate was high, with an increase of about 8% in elementary school students. The number of schools that are fully booked for middle school students has reached about 30% *2 of the total, and it seems that one reason is that the timing of commuting to “STEP,” which boasts a high track record in going on to difficult high schools, is getting faster in such areas. Also, it is noteworthy that among 111 schools that have been in operation for 10 years or more, 30 schools recorded a record high number of students as of the end of 2024/10. It is proof that they have continued to maintain high praise and trust in the local community over a long period of time.

*1 Minor adjustments were made, such as implementing a price increase of several hundred yen per month in the elementary school division starting in the spring of 2024, but the overall impact was minor.

*2 Out of 145 schools, the number of schools that are fully booked and have closed their recruitment (as of 11/1 week) is 43 for middle school 1st graders, 56 schools for 2nd graders, and 35 schools for 3rd graders.

Meanwhile, the student acquisition situation at the new school building was also strong enough in 2024 to be unprecedented in the past. In terms of school building development, 4 schools (of which 1 school is Hi-step) in the elementary and middle school division opened in 2024/3 in Yokohama City (Higashitotsuka-Hirado, Hiyoshi Honcho) and Kawasaki City (Kashimada, Hi-STEP Shin-Yurigaoka), which are priority areas, and the number of students as of 2024/10 was 546. The average number of students per school is over 130, which is significantly higher than the average value for the past few years (after 70 names).

Of these, Higashi Totsuka Hirado School has grown to over 300 students, so it is a school newly established on the opposite side across JR Higashi-Totsuka Station, and since students who have moved from Higashi-Totsuka School are also included, it has acquired a large number of students from the first year, over 200 students. However, even if the same school is excluded, it is at a level of over 100 students per school. In particular, Hiyoshi Honcho School attracted over 150 students, the highest number of students among newly opened schools in recent years. It is also located right next to Hiyoshidai Junior High School, which has over 1,000 students, but considering that there was no “STEP” nearby, it was a better start than expected. Also, Hi-STEP Shin-Yurigaoka School opened on the opposite side across the station from Step Shin-Yurigaoka School, which continues to be fully booked, and this is also a strong start with over 110 students. In the case of Hi-STEP, it is common for around 50 people in the first year, which shows how popular it is in the Shin-Yurigaoka area. Kashimada School is located along the JR Nambu Line, which is currently being focused on, and it will be the second school in Saiwai-ku, Kawasaki-shi. The number of students was just under 70, which was an average start.

Furthermore, in 2024/3, Ayase School in Fujisawa City was integrated into Chogo School (school name is Chogo/Ayase School). The distance between the two schools is only about 50 meters apart (both are rental properties), and the response is in anticipation of the effects of the declining birthrate in the future. The declining birthrate is expected to progress in the future in the western Kanagawa prefecture area, etc., and it is a policy to proceed with response while observing the situation.

There were no new openings in the high school student division, and the Sagami-Ono School was expanded in 2023/11 and Yokosuka School in 2024/3. As for the high school student division, large-scale school buildings are being developed at major stations, and currently they are responding to an increase in the number of students due to floor increases, etc. The average number of students per school building is 190 in the elementary and middle school division, up 1.5% from the previous term, and 405 in the high school student division, and it can be seen that no new schools have been opened in the high school student division since the 15-school system became established in 2019, and sales continue to grow due to an increase in the number of students in existing school buildings. However, the Yokohama school continues to be fully booked in all grades and subjects, and it is also true that there are a certain number of students who are not suitable to enter the school and go to neighboring competitor cram schools, and in order to resolve this situation, floor expansion was carried out in 2024/12.

(2) Cost Status

The cost of sales increased 2.6% from the previous fiscal year to 10713 million yen, and the cost of sales ratio decreased 1.3 points from 71.0%. Looking at each of the main categories, labor costs, which account for about 70% of the cost of sales, increased by 5.1% due to an increase in the number of employees and implementation of a base increase, and rose 0.2 points in terms of ratio to sales, teaching material costs also increased 7.6% due to the effects of the increase in the price of paper, and increased 0.1 point in terms of ratio to sales. Meanwhile, utility costs decreased by 7.5%, and in addition to a 0.2 point decrease in the ratio to sales, everything else, including equipment costs, decreased by 21.5%, and fell 1.6 points in the ratio to sales, which was a factor in improving the cost ratio. In the first and second half of the fiscal year, expenses of approximately 0.2 billion yen were invested in the purchase of notebook PCs, installation work of study rooms, etc. for the purpose of improving and improving the learning environment, but the return to normal expenses in the 2024/9 fiscal year was another factor in the decline.

SG&A expenses increased 8.2% from the previous fiscal year to 873 million yen, and the SG&A fee ratio rose 0.2 points to 5.8%. Labor costs increased 2.8% from the same period due to salary level increases, etc., recruitment costs increased 27.4% from the same period due to active recruitment activities, and other expenses increased 14.2% from the same period. The increase in other expenses is mainly due to an increase in securities agency fees due to the approximately doubling of the number of individual shareholders.

(Author: FISCO Visiting Analyst Joe Sato)