エル・ティー・エス（6560） – [Delayed]Q1 FY2022 Financial Results(Presentation Material)

OpenQ1 FY2022Financial Results(Securities code 6560)5/2022LTS, Inc.OpenCopyright ©2022 LTS Inc. All rights reserved.1Table of Contents1. Business Overview2. Overview of Q1 FY2022 Financial Results3. Medium-Term Business Plan (2021-2024)4. Forecast for FY20225. Reference MaterialOpenCopyright ©2022 LTS Inc. All rights reserved.2Service(s)MissionSynergy of servicesCustomersProfit modelServicesiProfessonal services business PlatformbusinessStrategy establishment/ digital utilizationBusiness processmanagementImprovement ofcorporate customercapabilities toutilize digitaltechnology andadapt to changeDX projectimplementation/maximization ofvalueConsulting /engineeringConsultant JobAssign NaviCS Clip• Establishment of business strategy and business model• Data analysis and utilization of AICreation of new projects• Development, management, and improvement of management/business foundation (business processes)• Planning of reform projectsCreation of DX projects• Comprehensive DX project support• Development/operation of corporate customer DX platform• Training of reform/DX human resourcesProvision ofhuman resources• Support for activities of independent consultantsjMaor corporations (andgroup companies) servcesiSMEs/communities/public Project-based contracts (high gross profit)Long-term support-based contracts for corporate customer reform/DXProject-based contracts (high gross profit)Long-term contracts for development/operation of digital platformsMembership dues+ service fee-basedIT industryinnovation• Matching of projects, professionals, and IT companiescompanies• Matching of operating companies and DX • Growth support for DX companiesIT service industry/companiesOpenCopyright ©2022 LTS Inc. All rights reserved.3Making Reform Routine (Background behind Favorable Performance of Professional Services)In these times, companies work on various reform, whether large, medium, or small, on a daily basis, and it is necessary not only to promote individual projects but to acquire the ability to respond to changeBefore[Accuracy over speed]Accurate predictions and steady implementation From now on[Fast course correction]Organizational ability to adapt quickly to changesOne-in-a-decade large-scale reformStrategyHierarchicalorganizationMaking reform routineIncrease ability to respond to change through daily changes Network-based organization• Teams actively implement tasks • Teams coordinate proactivelyImplementationOpenCopyright ©2022 LTS Inc. All rights reserved.4Characteristic 1 of Professional Services Business LTS supports the promotion of individual projects and the acquisition of the ability to respond to changeConventional consulting/IT servicesLTS professional servicesGrowth support does not equal support for success of large-scale projectsGrowth support equals acquiring the ability to respond to change and support for promoting high ROI project planningCorporate customerMajor IT/consulting companyCorporate customerLTSEstablishment of medium-to long-term strategyEstablishment of medium- to long-term plan requiring large-scale budgetLarge-scale project • Large-scale M&A• Backbone system upgrade• Group reorganization, etc.Form large-scale project spanning several years to sell solutions Generate profits by increasing project size and sending large numbers of consultantsSupport for coming up with a business modelBusiness process/reform program managementSupport for new business planning and process developmentSupport development, management, and improvement of customer’s management/business foundation Plan high ROI reform projectsIT system introductionBusiness process developmentAI imple-mentationExpand sales by delaying/enlarging the projectData analysis/utilizationTraining of reform human resourcesForm and continually execute appropriate projects according to challengesOperational reform• Large scale of measures makes them easily affected by sudden environmental changes, delaying response• Can quickly respond to environmental changes with reform planning• Medium- to long-term relationship with a customer that does not end with individual • Withdraws at the end of the project and looks for a new customer with a projectslarge project• Solves customer challenges that conform to its own solutions• Launch various projects according to customer challenges and respond with a system that includes platform service members (freelancers and IT/DX companies)OpenCopyright ©2022 LTS Inc. All rights reserved.5Characteristic 2 of Professional Services BusinessReceives a large number of inquiries from new customers by promoting a customer cultivation model and quickly producing a track record of support for advanced topicsBusiness modelUniqueness/strengthsBusiness processmanagementLong-term supportCustomer cultivation cycleProjectVisualization of business process(operational and management issues)Building of long-term customerrelationships and continuous cycle of reformGrasping of reform cycle(Issue selection, budgeting, etc.) Comprehensive support from DX project consulting to IT developmentSeizing opportunities forprogressive projects and acquiring ability to attract new customersMajor customers (of 10 years or more)ITOCHU Corporation•• ORIX Corporation• Kirin Holdings Company, Limited• Yazaki Corporation• DIC Corporation• Nissan Motor Co, Ltd.Major themes• Comprehensive DX support• Automation of shelving allocation utilizing AI• DX/SX for municipalities New customers (2019-2021)• Hiroshima Prefecture, Shizuoka Prefecture,Shizuoka City, Ichikawa City (Chiba Prefecture) • NEC Corporation• Osaka Metro Co., Ltd.• Suzuyo System Technology Co., Ltd.• SEVEN-ELEVEN JAPAN CO., LTD.OpenCopyright ©2022 LTS Inc. All rights reserved.6Table of Contents1. Business Overview2. Overview of Q1 FY2022 Financial Results3. Medium-Term Business Plan (2021-2024)4. Forecast for FY20225. Reference MaterialOpenCopyright ©2022 LTS Inc. All rights reserved.7Q1 FY2022 Summary LTS Group overallNet sales: Operating profit: Ordinary profit: Record high net sales, operating profit, and ordinary profit¥2,154 million (up 23.6% YoY)¥265 million (up 54.0% YoY)¥262 million (up 46.8% YoY)Professional services businessNet sales: Operating profit: Improved unit prices through increase in high value-added projects¥2,089 million (up 24.2% YoY)¥243 million (up 54.6% YoY)Platform businessNet sales: Operating profit: Revenues and earnings up with aggressive investment in structural ¥21 million (up 48.4% YoY) ¥100 million (up 37.6% YoY)enhancement, service development, etc.OpenCopyright ©2022 LTS Inc. All rights reserved.8Q1 FY2022 Consolidated Profit and Loss StatementGross profit margin35.4%+ 2.7 point35.4%+ 2.7 point(Millions of yen)Net salesGross profitSG&AEBITDA*EBITDA marginOperating profitOperating marginOrdinary profitProfit before income taxesProfit attributable to owners of parentQ1FY20222,15481938.1%55428313.2%26512.3%262262180Q1 FY2021YoY % changeQ4 FY2021vs. previous quarterFY2022 forecastPercentage achievement1,742+ 23.6%2,050+ 5.0%8,54225.2%616+ 32.9%725+ 13.1%444188+ 24.8%+ 50.4%569177- 2.7%+ 59.9%58948.2%10.8%+ 2.4 point8.7% + 4.5 point172+ 54.0%155+ 70.7%48055.2%9.9%+ 2.4 point7.6%+ 4.7 point178178121+ 46.8%+ 46.8%+48.9%155142125+ 68.8%46057.0%+ 83.8%+ 43.7%29760.8%————OpenCopyright ©2022 LTS Inc. All rights reserved.* EBITDA = Operating profit +depreciation +amortization of goodwill9Gross ProfitQ1 gross profit (and gross profit margin) trending favorably compared to forecastGross profit results / forecastQ1 FY2022 results41.9%Gross profitGross profit margin5,600 40.0%39.4%40.0%4,290 39.0%3,246 36.8%2,627 38.0%2,000(Millions of yen)1,196 1,009 2,046 1,493 35.6%6,0005,0004,0003,0001,000043.0%42.0%41.0%40.0%39.0%38.0%37.0%36.0%35.0%34.0%33.0%32.0%(Millions of yen)FY2022forecastQ1 resultsNet sales8,5422,154Gross profitGross profit marginSG&A3,24681938.0%38.1%2,766554SG&A ratio32.4%25.7%Operating profit480265Operating margin5.6%12.3%FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024ResultsCurrent year forecastOpenCopyright ©2022 LTS Inc. All rights reserved.10Breakdown of SG&AOut of SG&A, hiring/training and advertising will be actively utilized starting in Q2Breakdown of SG&AFY2022Q1 FY2022Forecastvs. Net salesResultsvs. Net sales(Millions of yen)Consolidated net salesSG&APersonnel expensesHiring/training expensesAdvertising expensesLand/office rentIT/operations platform developmentRemuneration paidAmortization of goodwillDepreciationOutsourcing expensesOther8,5422,7661,5413681838511720740488192‐32.4%18.0%4.3%2.1%1.0%1.4%2.4%0.5%0.6%0.9%1.1%2,15455438424191429251042025-25.7%17.7%1.1%0.8%0.6%1.3%1.1%0.4%0.1%0.9%1.1%Hiring/training expensesImplementing or will implement efforts below・Hiring events for new graduates・Expansion of structure for mid-career hiring members・Increase in hiring feeAdvertising expensesWill implement efforts below in H2・Platform business promotions・20th anniversary events・Hiring PR/brand enhancementOpenCopyright ©2022 LTS Inc. All rights reserved.11Q1 FY2022 Consolidated Balance Sheet(Millions of yen)FY2021Q1FY2022Current assets(Cash and deposits)Non-current assetsTotal assetsCurrent liabilities(Income taxes payable)Non-current liabilitiesNet assets4,2062,4308735,0802,2151177872,0763,4582,0208324,2901,614517141,961Change- 747- 409- 41- 789- 601- 65- 72- 114OpenCopyright ©2022 LTS Inc. All rights reserved.12Quarterly Trend in Consolidated Net Sales+23.6% YoY(Millions of yen)SOFTEC made group companyWAKUTO made group company1,3731,3021,2761,410 1,4682,154 2,0501,7421,7321,8495585706236557736568207398607708832,2002,0001,8001,6001,4001,2001,0008006004002000１Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １QQ1Q3Q1Q3Q2Q1Q4Q2Q3Q2Q1Q2Q1Q4Q4Q1Q3Q3Q4Q2Q4FY2017FY2018FY2019FY2020FY2021FY2022OpenCopyright ©2022 LTS Inc. All rights reserved.13Quarterly Trend in Consolidated Operating Profit+54.0% YoY(Millions of yen)300250200150100011699(104)9850504358317651437121265Expenses associated withbusiness combination160172170155(138)(117)1329095102１Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １QQ1Q3Q1Q2Q1Q4Q3Q2Q2Q1Q3Q2Q1Q4Q1Q3Q4Q3Q2Q4Q4FY2017FY2018FY2019FY2020FY2021FY2022OpenCopyright ©2022 LTS Inc. All rights reserved.14Quarterly Trend in Number of Employees (Consolidated)(People)50045040035030025020015010050980Sales/business positionsCorporateEngineersConsultantsWAKUTO made group companySOFTEC made group company448413944837404613546236464841533391801851852031962861929289212711111031626273162729323293411211511618311173518511173518281835179721381611017361997204020672443208724472381125227827637819952749108120122121113132132130129124127131151145144147165191195193Q11QQ22QQ33QQ44QQ11QQ22QQ33QQ44QQ11QQ22QQ33QQ44QQ11QQ22QQ33QQ44QQ11QQ44QQ11QFY2017FY2018FY2019FY2020FY2022Q22QQ33Q(*)FY2021OpenCopyright ©2022 LTS Inc. All rights reserved.* Changes were made to the tabulation method for employee numbers by job type from Q3 2021.15Progress on hiring consultants / engineersIn Q1, 8 consultants and engineers were hired. In Q2, 36 have been hired as of May 10Consultants / engineersPlan for number at year-end (consolidated)Consultants / engineers Hiring plan (consolidated)(People)FY2020FY2021FY2022FY2023FY2024FY2021FY2022FY2023FY2024resultsresultsplanplanplanresultsplanplanplanNumber of consultantsNumber of engineers1681952302903709318522027535050507575100100Total261380450565720100150200Vs. previous year-+17.6%+18.4%+25.6%+27.4%Comparison is based on number (307 in 2021) prior to SOFTEC (73 engineers) joining the Group in 2021Number1.9x(2021-2024)Hiring resultsConsultantsEngineersQ1 FY202244OpenCopyright ©2022 LTS Inc. All rights reserved.[Reference information: As of May 10]Number of consultants / engineers hired in Q2 (including new graduates): 3616392665Quarterly Trend in Professional Services Business ResultsNet sales +24.2% YoY, operating profit +54.6% YoY(Millions of yen)2,2002,0001,8001,6001,4001,2001,0008004002000Net sales Operating profitWAKUTO made group companySOFTEC made groupcompany2,0891,9831,7821,6811,6771,3271,2631,2431,4091,366600520531622585740623785706828848746• Sales continue to grow in response to increased demand for large-scale operational reform promotion projects• Unit prices improving through increase in high value-added projects based on DX243• Subsidiary profitability improving through development projects carried out in collaboration with LTS4938543073489542113748835136881297715792156143１Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １QQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1FY2017FY2018FY2019FY2020FY2021FY2022OpenCopyright ©2022 LTS Inc. All rights reserved.* Net sales includes internal sales17Quarterly Trend in Platform Business ResultsNet sales +37.6% YoY, operating profit +48.4% YoY(Millions of yen)Net sales Operating profit1201008060402070737158565241 42 4139 38 38 3838 40444432540.800.922312-13 -2Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1１Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １QFY2017FY2018FY2019FY2020FY2021FY202223107212 1414119100• Number of Assign Navi members increasing• 4,563 corporate members• 7,091 individual members9088• Quarterly sales also surpassed ¥0.1 billion• Continued aggressive investment• Structural enhancement at 21Consultant Job• Assign Navi marketing activitiesInvestment in development of •CS ClipOpenCopyright ©2022 LTS Inc. All rights reserved.* Net sales includes internal sales18Non-Consolidated/Group Company Sales(Millions of yen)Non-consolidated salesGroup company sales*Excluding new sales from M&A during the periodNew sales from M&A during the periodElimination of intra-company transactions1,122465194- 39Q1 FY2021 resultsQ1 FY2022 results1,438(+316 YoY)801(+336 YoY)―(- 194 YoY)- 86(- 47 YoY)1,742 (+369 YoY)2,154 (+412 YoY)OpenCopyright ©2022 LTS Inc. All rights reserved.19(Millions of yen)600550500450400350300250200150100500Factors Behind Change in Consolidated Operating Profit in Q1 FY2022- 127+412- 127+ 6-3-1- 67172Q1FY2021OperatingprofitUp ¥93 million (54.0%) YoYNet salesPersonnelexpensesOutsourcingexpensesRecruitingexpensesAdvertising expensesLand/office rentOther265Q1FY2022OperatingprofitOpenCopyright ©2022 LTS Inc. All rights reserved.20Table of Contents1. Business Overview2. Overview of Q1 FY2022 Financial Results3. Medium-Term Business Plan (2021-2024)4. Forecast for FY20225. Reference MaterialOpenCopyright ©2022 LTS Inc. All rights reserved.21VisionBest Partner for the Digital EraOur society continues to change rapidly with advances in digital technology.Our customers are all companies looking to address such rapid changes in the social structure.In the coming era, taking the lead in bringing about change rather than simply adapting to changes in the social structure will be the key to survival.Shifting to an organizational structure that is better equipped to respond to change and producing human resources that create change by fully leveraging digital technology is essential for surviving and thriving in this era.Providing support to help customers improve their ability to implement change, we aim to be the best partner for companies that continue to change themselves and take the lead in social changes.OpenCopyright ©2022 LTS Inc. All rights reserved.2222ThemeHuman resourcesConsultant unit prices are on the rise. Also working on sharing knowledge across the GroupEnhancement of hiringEnhancement of educationCoordination of knowledge Aim for net increase of 100 people annually across Group Enhance educational measures with Group education system and production site initiative Establish special organization for coordinating knowledge within Group Continue to promote hiring activities separate from M&A Active human resources exchange (including temporary transfers) within Group Enhance opportunities for consultant and engineer career change Reorganize knowledge, redesign education system, and enhance structureNumber of employeesOrganizational abilityIndividual skillsQ1 FY2022 Results• Received gold prize in Venture category of ONE CAREER Review Award 2022 announced by ONE CAREER Inc., which runs job search site ONE CAREER• Enhancement of brand communication capabilities• Recognized in Large Enterprise category of 2022 Certified Health & Productivity Management Outstanding Organizations RecognitionProgram• Activities to enhance structure of hiring team• Expansion of hiring measures, including revamping of referral hiring programOpenCopyright ©2022 LTS Inc. All rights reserved.23Received gold prize in job search review awards selected by studentsRanked as a company students were glad to have applied for out of roughly 45,000 companies based on feedback from more than 60,000 student reviewsONE CAREER Job Search Review Award 2022https://service.onecareercloud.jp/lp/award_reviews/2022/Received gold prize in Venture category of ONE CAREER Job Search Review Award 2022• The Venture category in which LTS won the gold prize was presented to 10 companies that are ventures established within the past 20 years with 500 or fewer employees and that are supported by many student job seekers. • The award program is held by ONE CAREER in the aim of evaluating companies on the basis of how they provide reliable information to uneasy student job seekers looking for sincere companies where they can participate in internships, explanatory meetings or employment screening.OpenCopyright ©2022 LTS Inc. All rights reserved.24Brand communication measuresEnhance activities for improving brand recognition beyond the consulting and IT markets• Steadily expanding communication and media outreach since AprilPublication of articles in business magazines and on business siteshttps://forbesjapan.com/articles/detail/46241LTS 20th Anniversary ProjectEnhancement of communication, including seminarshttps://lt-s.jp/compasshttps://lt-s.jp/newshttps://bizzine.jp/article/detail/7242https://prtimes.jp/main/html/rd/p/000000136.000032743.htmlhttps://cs-clip.jp/eventsOpenCopyright ©2022 LTS Inc. All rights reserved.25Promotion of Health ManagementRecognized under 2022 Certified Health & Productivity Management Outstanding Organizations Recognition Program promoted jointly by Ministry of Economy, Trade and Industry and NIPPON KENKO KAIGIRecognized as “2022 Large Enterprise with Outstanding Health and Productivity Management”Based on the thinking that the wellbeing (physical, mental, and social) of employees is the basis of sustainable growth of companies, LTS is promoting health management activities with the wellbeing of employees and their families as a top priority management theme.LTS Health Management Declarationhttps://lt-s.jp/about_us/sustainability/health

1. Disease prevention and health education2. Diet, sleep and exercise improvement3. Workstyle reform4. Enhancement of self-management skills5. Building and strengthening of human relationshipsMain health management themes based on LTS business and organizational characteristicsOpenCopyright ©2022 LTS Inc. All rights reserved.26ThemeCustomersStrengthened relationship with advanced DX companies. Promoted cooperation and tie-ups for each service.Developed services through industry-academia collaboration and provided programs to municipalitiesStrengthening of relationshipswith progressive companiesExpansion of area Further strengthen relationships with progressive companies with strongintent to change through the provision of LTS Group services Strengthen system in West Japan area Engage in full-scale service provision in Asia and globally (coordination with FPT)Promotion of industry-academia collaborationand services for municipalities and SMEs Further promotion of industry-academia collaboration involving customers and research institutes Further promotion of services for municipalities and SMEsService developmentCustomer baseCustomer baseService developmentBrandimprovementQ1 FY2022 Results• Participation in management of Effectuation Conference held by Hiroshima University as service leader• LTS activities in operational reform promotion project recognized by Kirin Holdings Company, Limited• Certified as AWS Select Tier Service Partner in AWS Partner Network (APN) partner program of Amazon Web Service (AWS)• 9 new customersOpenCopyright ©2022 LTS Inc. All rights reserved.27Effectuation ConferenceCommunicating “regional community development” and “human resources development and industrial creation” activities to the world from HiroshimaHeld in Hiroshima and online with a large overseas audiencehttps://effectuation.site/International conference with effectuation advocate and lecturer Saras SarasvathyThe LTS Group took the stage at this conference and also participated and provided planning and operational support as the secretariat.We will strengthen partnerships with players on the cutting edge of creating innovation and solving social problems in Japan and around the world based on effectuation.OpenCopyright ©2022 LTS Inc. All rights reserved.28ThemeGroup managementIncreased number of cross-Group project deliveries to improve corporate valueCreation of synergyEnhancement of corporate functions Optimize sales personnel, improve unit prices, and expand support topics by cultivating customers and acquiring projects utilizing Group assets Increase project delivery across the Group and further promote the provision of value as an all-around team Balance improving functions with optimizing costs by communizing the management functions of group companies Establish new work styles and improve productivity by strengthening the Group’s IT infrastructure and relocating officesIncreasing valueStreamliningIncreasing valueStreamliningQ1 FY2022 Results• Participation in management of Effectuation Conference in Hiroshima Prefecture as service leader through LTS and WAKUTO partnership• Mutual participation in projects by LTS and subsidiary OpenCopyright ©2022 LTS Inc. All rights reserved.29ThemeGroup management (M&A)The policy for M&A is to promote it as part of recruiting and team-building effortsProviding comprehensive proposals as LTS Group, we plan to further boost the profitability of each group company by 2023Individual project proposal and deliveryProject proposal and delivery as LTS GroupLTSWAKUTOSOFTECCorporatecustomerCorporatecustomerLTSWAKUTOSOFTECEngineering services tend to face price competition as they entail participation starting from downstream processes with fixed requirementSalesEngineering service subsidiaries can propose appropriate services at appropriate prices while LTS accurately identifies entry requirements starting from upstream processesSales and back-office functions must be developed and implemented by individual companiesCostCross-selling and sharing of back-office functions possibleOpenCopyright ©2022 LTS Inc. All rights reserved.30PlatformsMaintain the investment level until 2022 and move to a profit-increasing phase in 2023Investment and development of currentservices and growth of profitsContribution to Group as a whole(Millions of yen) Net salesOperating profit1,000 700 520 323 237 45 49 50 300 150 FY2020FY2021FY2022FY2023FY2024 Provision of independent consultants to Professional Services Provision of information on excellent IT/DX companies to Professional Services Reference for companies considering M&A using member base and various dataOpenCopyright ©2022 LTS Inc. All rights reserved.31Policy of Medium-Term Business PlanMode change for rapid growthThrough our activities over the four years since listing, we are confident that we can further grow the business.Starting this year (2022), we will review the steady growth scenario to date and implement a “mode change” for rapid growth. Based on the thinking that expanding personnel and individual growth are the driving factors for achieving the numerical targets of the Medium-Term Business Plan, we will carry out more aggressive activities to build these up, thereby achieving the Medium-Term Business Planand accelerating growth in 2025 and beyond.OpenCopyright ©2022 LTS Inc. All rights reserved.32Numerical targetsCompound average growth rate of net salesContinuing to exceed 20% through 2022Exceeding 25% in 2023 and beyondOperating margin15% by 2024(Millions of yen)FY2020FY2021ResultsForecastResultsFY2022ForecastFY2023ResultsFY2024PlanVs FY2020Consolidated net salesConsolidated operating profitConsolidated operating margin5,5007,0007,3008,50011,00014,0002.5×4705806004801,2002,0004.3×8.6%8.2%8.1%5.6%10.9%14.3%OpenCopyright ©2022 LTS Inc. All rights reserved.+5.7pointUpward revision of figures announced with FY2021 financial results33Policy in each fiscal yearFY2022Promoting efforts below as first year of rapid growth•Active hiring of consultants and engineers(Recruiting expenses: up ¥257 million vs FY2021)Growth of professional servicesEnhancement of advertising activities and holding of 20th anniversary events (Advertising expenses: up ¥147 million vs FY2021)Growth of platform business and enhancement of branding and hiring capabilitiesRelocation of office and IT-related investmentExpansion of business and organizational foundation for continued growth••The forecast for FY2022 is for increased revenues but decreased earnings as we implement various efforts in accordance with the growth scenarioFY2023-2024We will continue efforts for ramping up hiring and individual growth and accelerate growth by taking the consolidated net sales CAGR from over 20% to over 25% starting in 2023SG&A ratio will be lower than in 2022 due to the reduction of spot costs and measures to increase efficiencyOpenCopyright ©2022 LTS Inc. All rights reserved.34Aiming for further growth in 2025 and beyondWe aim to continue growing net sales at a rate of more than 25% in 2025 and later to reach ¥50,000 million in 2030Consolidated net salesLarge-scale M&A Overseas business development, etc.Strengthening of hiring of consultants and engineersImprovement of engineer unit prices (subsidiary revenue) Contribution to platform business revenue, etc.¥50,000 million¥36,000 million(Plan prior to upward revision) ¥5,500 million¥7,300 millionMedium-TermBusiness Plan(2021-2024)Maintain net sales growth of morethan 25% in 2025 and beyond¥14,000 million (Revised upward)FY2020FY2021FY2024FY2030OpenCopyright ©2022 LTS Inc. All rights reserved.35Table of Contents1. Business Overview2. Overview of Q1 FY2022 Financial Results3. Medium-Term Business Plan (2021-2024)4. Forecast for FY20225. Reference MaterialOpenCopyright ©2022 LTS Inc. All rights reserved.36Forecast for FY2022(Millions of yen)FY2021 ResultsFY2022forecastNet sales7,3758,542YoYchange+ 1,167YoY %change+ 15.8%EBITDA*Operating profitOrdinary profitProfit attributable to owners of parent674600579388589480460297- 85- 12.6%- 120- 20.0%- 119- 20.7%- 90- 23.4%OpenCopyright ©2022 LTS Inc. All rights reserved.* EBITDA = Operating profit +depreciation +amortization of goodwill37FY2022 Consolidated Net Sales ForecastExpect to see higher revenue for 11th consecutive year(Millions of yen) 9,0008,0007,0006,0005,0004,0003,0002,0001,0000July 2020 Listingchanged to 1st section of TSE8,542 7,375 December 2017 Listed on TSE Mothers5,555 3,790 2,989 2,408 1,376 1,474 931 1,897 1,976 Average annual growth+30.5%(FY2019-FY2022)+ 19.7%(FY2015-FY2018)11th termFY201212th termFY201313th termFY201414th termFY201515th termFY201616th termFY201717th termFY201818th termFY201919th termFY202020th termFY202121st termFY2022OpenCopyright ©2022 LTS Inc. All rights reserved.38FY2022 Consolidated Operating Profit ForecastPlan for FYE December 2022 is for lower profit(Millions of yen)July 2020 Listingchanged to 1st section of TSEDecember 2017 Listedon TSE Mothers6004784807006005004003002000307270160126103100771841211th termFY201212th termFY201313th termFY201414th termFY201515th termFY201616th termFY201717th termFY201818th termFY201919th termFY202020th termFY202121st termFY2022OpenCopyright ©2022 LTS Inc. All rights reserved.39FY2022 Consolidated Forecast: Full-year ProgressNet sales forecast¥8,542 millionOperating profit forecast¥480 millionSales progress25.2 %Operating profit progress55.2 %Q1¥2,154 millionNet salesQ1¥265 millionOperating profitOpenCopyright ©2022 LTS Inc. All rights reserved.40(%)100806040200Factors Behind Change in Consolidated Operating Profit in FY2022(Millions of yen) 2,0001,8001,6001,4001,2001,0008006004002000- 414- 97+1,167- 257Including (-52) in IT/operations platform expenses- 147-74- 298600FY2021OperatingprofitDown ¥120 million (20.0%) YoYNet salesPersonnelexpensesOutsourcingexpensesRecruitingexpensesAdvertisingexpensesLand/officerentOther480FY2022OperatingprofitOpenCopyright ©2022 LTS Inc. All rights reserved.41FY2022 Forecasts by SegmentProfessional services business(Millions of yen)Net salesOperating profit(Millions of yen)Net salesOperating profitPlatform businessFY2021 Results7,125550 FY2021 Results32349 FY2022Forecast(Initial)8,112430 FY2022Forecast(Initial)52050YoY changeYoY % change+ 986- 120 + 13.9%- 21.8%YoY changeYoY % change+ 196+ 0+ 60.8%+ 0.5%OpenCopyright ©2022 LTS Inc. All rights reserved.* Net sales includes internal sales42FY2022 Non-Consolidated/Group Company Sales Forecast(Millions of yen)Non-consolidated salesGroup company sales*Excluding new sales from M&Aduring the yearNew sales from M&A during the yearElimination of intra-company transactions4,9101,944730- 210FY21ResultsFY22Forecast5,467(+556 YoY)3,285(+1,341 YoY)Not included- 210(Expect same level as previous year)7,375 (+1,819 YoY)8,542 (+1,167 YoY)OpenCopyright ©2022 LTS Inc. All rights reserved.43Table of Contents1. Business Overview2. Overview of Q1 FY2022 Financial Results3. Medium-Term Business Plan (2021-2024)4. Forecast for FY20225. Reference MaterialOpenCopyright ©2022 LTS Inc. All rights reserved.44Foundation:Capital:Address: Services: Subsidiaries:(As of March 31, 2022)Group company:(As of March 31, 2022)Memberships: (As of March 31, 2022)Overview of LTS, Inc.Representative:Hiroaki Kabashima, President and CEOMarch 2002¥575,150,600 (As of March 31, 2022)Number of employees:331 non-consolidated* / 462 consolidated (As of March 31, 2022)* Includes borrowed/loaned employeesKDX Shinjuku 286 Building 4F, 2-8-6 Shinjuku Shinjuku-ku, Tokyo, 160-0022, JapanProfessional services businessPlatform businessAssign Navi, Inc.LTS ASIA CO., LIMITED (Hong Kong)WAKUTO Co., Ltd.IoToI Japan Inc.SOFTEC Co., Ltd.FPT CONSULTING JAPAN CO., LTD.Japan Users Association of Information SystemsJapan Institute of Information TechnologyProject Management Institute Japan ChapterThe Open GroupShizuoka Information Industry AssociationHamamatsu Software / Contents Industry AssociationOpenCopyright ©2022 LTS Inc. All rights reserved.45President and CEORepresentative Director of Assign Navi, Inc.1998 Joined ING Life Insurance Co., Ltd.(Now NN Life Insurance Company, Ltd.)DirectorsHiroakiKabashimaGraduated Keio UniversityDirector Yuichi KanagawaGraduated Waseda University2000 Joined IQ3 Inc.2001 Joined Learning Technology Consulting Inc.2002 Founding director of the Company2002 President and CEO of the Company2019 Representative Director of Assign Navi, Inc.1982 Joined Yokogawa Electric Works, Inc.(Now Yokogawa Electric Corporation)1996 Founding President and Representative Director of Yokogawa Multimedia Co., Ltd.2001 Chairman and Representative Director of Yokogawa Q&A Corporation (Now Q&A Corporation)2003 President and Representative Director of Yokogawa 2015 Chairman and Representative Director of Q&A Q&A CorporationCorporation2016 Director (part-time) of Yokogawa Rental & Lease CorporationPresident and Representative Director of Yokogawa Rental & Lease Corporation2020 Chairman and Representative Director of Yokogawa Rental & Lease CorporationOutside Director of SMN Corporation (current position)2021 Board Member of Japan Volleyball Association2021 Outside Director of the Company2021 Director of the Company2022 Director and Chairperson of the Company2008 Joined the Company2017 Head of Business Consulting Division II of the Company2018 Executive Officer and Head of Business Consulting Division II of the Company2019 Director, Executive Officer and Head of Business Consulting Division II of the CompanyExecutive Vice PresidentDirector of IoToI Japan Inc.Corporate Auditor of WAKUTO Co., Ltd.Sungil LeeGraduated The University of Tokyo1998 Joined Andersen Consulting Ltd.(Now Accenture Japan Ltd.)2000 Joined IQ3 Inc.2001 Joined Learning Technology Consulting Inc.2002 Founding director of the Company2005 Executive Vice President of the Company2021 Director of IoToI Japan Inc.Director and CSODirector of IoToI Japan Inc.Yu KamemotoGraduated Keio University2009 Joined Finchjapan Co., Ltd.2011 Joined the Company2017 Head of Business Development & Insights of the Company2018 Executive Officer and Head of Business Development & Insights of the Company2019 Director, Executive Officer and Head of Strategy & Insights of the Company2020 Director of IoToI Japan Inc.DirectorPresident and Representative Director of SOFTEC Co., Ltd.Atsushi TsukaharaGraduated Tsukuba University1999 Joined Andersen Consulting Ltd.(Now Accenture Japan Ltd.)2000 Joined IQ3 Inc.2001 Joined Learning Technology Consulting Inc.2002 Founding director of the Company2005 Resigned as director, joined the Company2014 Head of EA-IT Business Unit of the Company2015 Executive Officer and Assistant to Business Consulting Division of the Company2018 Executive Officer and Head of ICT Engineering Department of the Company2020 Director, Executive Officer and Head of ICT Engineering Department of the CompanyPresident and Representative Director of SOFTEC Co., Ltd.OpenCopyright ©2022 LTS Inc. All rights reserved.46Director and COORyosuke UenoGraduated Tsukuba University and Advanced Institute of Industrial TechnologyOutside Director (Audit and Supervisory Committee Member)Toshio Awata1972 Joined MITSUI & CO., LTD.2007 Managing Executive Officer and President of Chubu Office of MITSUI & CO., LTD.2015 Auditor of the Company2019 Outside Director of the Company(Audit and Supervisory Committee Member)DirectorsOutside Director(Audit and Supervisory Committee Member)Fumio Takemura1973 Joined IBM Japan, Ltd.2004 Executive Officer of IBM Japan, Ltd.2007 Senior Managing Director of IBM Japan Services Company Ltd.2008 President and Representative Director of JAL Information Technology Co., Ltd.2011 Advisor to IBM Japan, Ltd.2014 Adjunct Lecturer at Tokyo City University Faculty of Knowledge Engineering2018 Statutory Auditor of the Company2019 Outside Director of the Company(Audit and Supervisory Committee Member)Outside Director (Audit and Supervisory Committee Member)Naoki Takahashi1985 Joined Nissan Motor Co., Ltd.1993 Licensed as an attorney at law in New York, USA1995 Joined Tokyo Office of White & Case LLP2001 Joined American International Group, Inc.2009 Director and Managing Executive Officer of AIG Japan Holdings Kabushiki Kaisha2016 Auditor of the Company2019 Outside Director of the Company(Audit and Supervisory Committee Member)2020 Auditor of IoToI Japan Inc.OpenCopyright ©2022 LTS Inc. All rights reserved.47List of CustomersTrade/RetailITOCHU CorporationInabata & Co., Ltd.SEVEN-ELEVEN JAPAN CO., LTD.Mitsubishi CorporationMitsubishi Shokuhin Co., Ltd.Metal One CorporationEnergyi BUSINESS PARTNERS Corp. (Idemitsu Kosan Group)Idemitsu Kosan Co., Ltd.SHOWA SHELL SEKIYU K. K.Taiyo Oil Company, LimitedTOKYO GAS i NET CORP. (TOKYO GAS Group)Tokyo Gas Co., Ltd.Tokyo Gas Urban Development Co., Ltd. (TOKYO GAS Group)Tokyo Gas Auto Service Co, Ltd. (TOKYO GAS Group)Plant EngineeringChiyoda CorporationManufacturingIHI CorporationISHIDA TEC Co., Ltd.Oki Electric Industry Co., Ltd.Canon Software Inc. (Canon Group)Canon Business Support Inc. (Canon Group)KOKUYO Co., Ltd.GE Healthcare Japan CorporationSiemens Japan KKNIPPON STEEL & SUMITOMO METAL CORPORATION (Now: NIPPON STEEL CORPORATION)TATSUNO CorporationDIC CorporationNEC CorporationBANDAI CO., LTD.Hitachi Solutions, Ltd. (Hitachi Group)FUSO CorporationYamaha Motor Co., Ltd.TransportationOsaka Metro Co., Ltd. (Osaka Metro)JALPAK Co., Ltd. (JAL Group)Japan Airlines Co., Ltd. (JAL)West Japan Railway Company (JR WEST)East Japan Railway Company (JR EAST)AutomotiveSHIZUOKA TOYOPET CO., LTD.Nissan Motor Co., Ltd.Nissan Buhin Chuo Sales Co., Ltd.Yazaki CorporationFood/Restaurant/Agriculture/Medical/PharmaceuticalKirin Holdings Company, LimitedKIRIN BUSINESS SYSTEM COMPANY, LIMITED (KIRIN Group)TAKANAWAKAI (Dental Cruise)The Nisshin OilliO Group, Ltd.Japan Tobacco Inc.NIHON CHOUZAI Co., Ltd.JAPAN NUTRITION Co., Ltd. (ITOCHU Group)NH Foods Ltd.ROYAL HOLDINGS Co., Ltd.ServiceNTT Communications CorporationThe Board Director Training Institute of JapanKOSAIDO Co., Ltd.Jiji Press Ltd.Sony Network Communications Inc.Technology Networks Inc. (J: COM Group)TV Asahi CorporationJAPAN POST HOLDINGS Co., Ltd.JAPAN POST Co., Ltd.famima.com Co., Ltd.Benesse CorporationMonotaRO Co., Ltd.Yuko Montoro Co., Ltd.Recruit Jobs Co., Ltd.Relia, Inc.Financial/Securities/InsuranceAioi Nissay Dowa Insurance Co., Ltd.ORIX CorporationORIX Business Center Okinawa CorporationSUMITOMO LIFE INSURANCE COMPANYNisshin Fire & Marine Insurance Co., Ltd.Mitsui Life Insurance Company LimitedGovernmentIchikawa CityMinistry of Economy, Trade and IndustryShizuoka PrefectureShizuoka City HallMinistry of Internal Affairs and CommunicationsConsulting/ITABeam Consulting Ltd.ITOCHU Techno-Solutions Corporation (ITOCHU Group)SAP Japan Co., Ltd.EDISON CO., LTD.CRESCO LTD.SATORI Inc.JFE Systems, Inc.SIGMAXYZ IncSuzuyo System Technology Co., Ltd.IBM Japan, Ltd.IBM Japan Services Company Ltd. (IBM Japan Group)Oracle Corporation JapanTata Consultancy Services Japan LimitedHewlett-Packard Japan, Ltd.Microsoft Japan Co., Ltd.PricewaterhouseCoopers LLPMARUBENI INFORMATION SYSTEMS CO., LTD. (MARUBENI Group)* Company names published with permission (hiragana order by industry; some not listed).OpenCopyright ©2022 LTS Inc. All rights reserved.48ESG investments/SDG initiativesWe believe that it is necessary to fulfill our social responsibility by building better relationships with customers, employees, shareholders, local communities, and the global environment.As a member of society, we will contribute to solutions to social problems to achieve a sustainable society together with everyone and engage in activities to remain an excellent company that creates new value.Contribution to solutions to social problemsContinued existence as an excellent company that creates new valueActivities through business management and service provisionTogether with the environmentTogether with local communities and societyTogether withCustomers andTrading partnersActivities through extra investment and activitiesTogether withemployeesOpenCopyright ©2022 LTS Inc. All rights reserved.49Introduction of activities for contributing to solutions to social problemsPro bonoFamily DayTogether withlocal communitiesand societyVisiting lectures at universitiesConnections to local communitiesSupport solutions to problems provided by NPOs and NGOs leveraging our business skillsExpand possibilities for children by thinking about and working on social problems together with themand more…OpenCopyright ©2022 LTS Inc. All rights reserved.50Introduction of activities for remaining an excellent company that creates new valueHealth managementDiversity & gender equalityDevelopment of rewarding workplaceTogetherWith employeesAiming toobtain certificationunder Health &ProductivityManagementOutstandingOrganizationsRecognitionProgramAiming tobecome acompany in whichall human resourcescan play anactive roleAiming to builda company in whichall employees playthe leading roleSkill/career developmentEnhancement of health examinationsImprovement of employee satisfactionCulture of mutual learningInfection control measuresHealth eventsCulture of mutual gratitude and praiseDevelopment of a participatory companyand more…OpenCopyright ©2022 LTS Inc. All rights reserved.51Corporate governance structureWe consider strengthening of corporate governance to be an important management issue and are working on the necessary measures in order to expand our corporate value, ensure our continued existence, and contribute to societyGeneral Meeting of ShareholdersEfforts to dateCompensationComm itteeiNomnatingand Board of DirectorsDirectors(Excluding Audit and Supervisory Committee members)Audit and Supervisory Committee(Audit and Supervisory Committee members)Compliance CommitteeManagement MeetingOperating departments Transition to company with audit and supervisory committee Increased number of outside directors Establishment of Nominating and Compensation Committee Disclosure of summaries of financial results and briefing material in English Analysis and evaluation of effectiveness of Board of Directors utilizing third-party agency Ensuring of diversity of Board of Directors Establishment and implementation of succession plan for chief executive officerAccounting auditorLegal advsoriPresident and CEOGroup Internal Audit Office(In charge of internal audits)Themes being considered for future effortsOpenCopyright ©2022 LTS Inc. All rights reserved.52Disclaimer and Note Disclaimer LTS, Inc. (“the Company”) provides financial information, management indicators, and other information only as a reference. No representations or warranties are made, express or implied, with regard to the content herein. The Company prepared this material using current generally known information about social and economic conditions and certain assumptions that we deemed to be reasonable. The information found in this material is subject to change without notice due to changes in business conditions or for other reasons. Note on Forward-Looking Statements The material and information provided with this announcement contain forward-looking statements. These forward-looking statements are based on current expectations, forecasts, and assumptions that are subject to risks and include uncertainties, which may cause actual results to differ substantially from these statements. These risks and uncertainties include general industry and market conditions as well as general Japanese and international economic conditions such as changes in interest rates and exchange rates. The Company has no obligation to update or correct the forward-looking statements contained in this material, regardless of any new information, future events, etc.OpenCopyright ©2022 LTS Inc. All rights reserved.53End of FileOpenCopyright ©2022 LTS Inc. All rights reserved.