Fullcast Holdings Co. Ltd. :FULCY-US: Earnings Analysis: 2016 By the Numbers : February 16, 2017

Fullcast Holdings Co. Ltd. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of Fullcast Holdings Co. Ltd. – On Assignment, Inc., Robert Half International Inc., TrueBlue, Inc., Mastech Digital, Inc., Kforce Inc. and Kelly Services, Inc. Class A (ASGN-US, RHI-US, TBI-US, MHH-US, KFRC-US and KELYA-US) that have also reported for this period.


  • Gross margins narrowed from 35.52% to 35.43% compared to the same period last year, operating (EBITDA) margins now 12.50% from 11.15%.
  • Year-on-year change in operating cash flow of 79.52% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 233.21 187.05 189.85 178.46 369.26
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 23.27 14.6 12.57 4.91 14.31
Earnings Growth (YOY) 59.45 16.11 156.27 -65.72 -46.28
Net Margin 9.98 7.8 6.62 2.75 3.88
EPS 0.61 0.38 0.33 0.13 0.37
Return on Equity 32.77 24.68 22.52 8.28 25.22
Return on Assets 22.13 15.82 14.81 5.54 13.71

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Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 11.15% to 12.50%. For comparison, gross margins were 35.52% and EBITDA margins were 11.15% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

FULCY-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 92.76 days from 100.24 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

FULCY-US‘s change in operating cash flow of 79.52% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 10.16% to 11.37% and (2) one-time items. The company’s pretax margins are now 11.82% compared to 9.77% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Fullcast Holdings Co. Ltd. provides human outsourcing business for various industries and occupations as a forerunner of short term human outsourcing companies in Japan. The company operates through the following divisions: Short-term operational support business, Security business and Sales support business. The Short-term operational support business involves temporary staffing and human resource dispatching. The Security business involves full scale guarding of client firms. The Sales support business involves dispatching engineers and technicians for the designing and development in the manufacturing field. The company was founded on September 14, 1990 and is headquartered in Tokyo, Japan.

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