Quarterly trends and results

Earnings (cumulative)		FY03/21				FY03/22				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Revenue		3,607	7,271	11,068	14,837	3,555	7,402	11,440	15,589	92.0%	16,943
	YoY	19.3%	17.8%	15.9%	13.1%	-1.4%	1.8%	3.4%	5.1%		14.2%
Gross profit		961	2,015	3,153	4,298	1,064	2,234	3,530	4,845		5,155
	YoY	-4.3%	-1.5%	-1.0%	-1.8%	10.7%	10.8%	12.0%	12.7%		20.0%
	Gross profit margin	26.6%	27.7%	28.5%	29.0%	29.9%	30.2%	30.9%	31.1%		30.4%
SG&A expenses		763	1,484	2,195	2,860	786	1,601	2,409	3,223		3,500
	YoY	8.1%	7.8%	7.0%	2.7%	3.0%	7.9%	9.8%	12.7%		22.4%
	SG&A ratio	21.2%	20.4%	19.8%	19.3%	22.1%	21.6%	21.1%	20.7%		20.7%
Operating profit		198	532	958	1,438	278	633	1,121	1,621	98.0%	1,655
	YoY	-33.6%	-20.7%	-15.6%	-9.7%	40.0%	19.0%	17.1%	12.8%		15.1%
	Operating profit margin	5.5%	7.3%	8.7%	9.7%	7.8%	8.5%	9.8%	10.4%		9.8%
Recurring profit		198	534	960	1,440	277	631	1,120	1,620	97.8%	1,657
	YoY	-33.2%	-20.0%	-14.8%	-9.2%	39.8%	18.1%	16.6%	12.5%		15.1%
	Recurring profit margin	5.5%	7.3%	8.7%	9.7%	7.8%	8.5%	9.8%	10.4%		9.8%
Net income		189	405	690	1,009	154	328	620	963	89.4%	1,077
	YoY	2.0%	-7.3%	-5.9%	-6.9%	-18.4%	-18.9%	-10.2%	-4.6%		6.7%
	Net margin	5.2%	5.6%	6.2%	6.8%	4.3%	4.4%	5.4%	6.2%		6.4%
Earnings (quarterly)		FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue		3,607	3,664	3,797	3,768	3,555	3,847	4,038	4,149
	YoY	19.3%	16.4%	12.5%	5.4%	-1.4%	5.0%	6.3%	10.1%
Gross profit		961	1,054	1,137	1,145	1,064	1,170	1,296	1,315
	YoY	-4.3%	1.1%	-0.1%	-3.9%	10.7%	11.0%	14.0%	14.8%
	Gross profit margin	26.6%	28.8%	30.0%	30.4%	29.9%	30.4%	32.1%	31.7%
SG&A expenses		763	721	711	665	786	815	808	815
	YoY	8.1%	7.5%	5.5%	-9.3%	3.0%	13.1%	13.6%	22.5%
	SG&A ratio	21.2%	19.7%	18.7%	17.6%	22.1%	21.2%	20.0%	19.6%
Operating profit		198	334	426	480	278	355	489	500
	YoY	-33.6%	-10.3%	-8.2%	4.7%	40.0%	6.4%	14.7%	4.2%
	Operating profit margin	5.5%	9.1%	11.2%	12.7%	7.8%	9.2%	12.1%	12.1%
Recurring profit		198	336	426	479	277	354	489	500
	YoY	-33.2%	-9.3%	-7.3%	4.7%	39.8%	5.3%	14.7%	4.3%
	Recurring profit margin	5.5%	9.2%	11.2%	12.7%	7.8%	9.2%	12.1%	12.1%
Net income		189	216	285	319	154	174	291	343
	YoY	2.0%	-14.2%	-3.8%	-9.0%	-18.4%	-19.3%	2.2%	7.5%
	Net margin	5.2%	5.9%	7.5%	8.5%	4.3%	4.5%	7.2%	8.3%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Temporary staffing services for construction and plant technicians

		FY03/21				FY03/22
(%)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Permanent employees: retention rate		84.5	85.8	85.2	85.2	78.9	77.0	78.9	80.7
Fixed-term employees: retention rate		71.5	70.6	68.7	66.7	65.8	68.0	67.5	66.4
Utilization rate		94.4	97.7	97.8	95.8	97.4	97.0	97.3	98.3
Contract renewal rate		63.2	67.6	67.8	67.3	74.1	82.2	75.9	75.9

		FY03/21				FY03/22
(People)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Number of technicians (Copro-Engineerd.)		2,044	2,002	2,054	2,020	2,044	1,978	2,010	1,995

		FY03/21				FY03/22
(JPY'000/month)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Revenue per head		624	628	629	633	628	637	639	643

Contract amount per head		FY03/21				FY03/22
(JPY'000/month)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Companywide average		544	542	542	546	552	553	554	60
	1st year	414	426	439	444	442	432	432	444
	2nd year	456	459	466	469	476	474	472	464
	3rd–5th year	492	491	494	498	506	504	506	507
	6th–10th year	541	535	535	550	557	562	573	582
	11th year or more	628	624	624	628	637	639	639	646

Revenue by industry (cumulative)		FY03/21				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Construction		1,115	2,243	3,399	4,496	1,114	2,283	3,473	4,771
	% of total	30.9%	30.8%	30.7%	30.3%	31.3%	30.8%	30.4%	30.6%
Civil engineering		641	1,332	2,037	2,745	630	1,276	1,941	2,600
	% of total	17.8%	18.3%	18.4%	18.5%	17.7%	17.2%	17.0%	16.7%
Facilities construction		918	1,844	2,775	3,698	817	1,647	2,511	3,462
	% of total	25.5%	25.4%	25.1%	24.9%	23.0%	22.3%	21.9%	22.2%
Plant construction		547	1,093	1,648	2,202	555	1,131	1,732	2,169
	% of total	15.2%	15.0%	14.9%	14.8%	15.6%	15.3%	15.1%	13.9%
CAD operation		282	563	876	1,208	319	625	933	1,232
	% of total	7.8%	7.7%	7.9%	8.1%	9.0%	8.4%	8.2%	7.9%
Construction administration		98	185	211		103	237	380	525
	% of total	2.7%	2.5%	1.9%		2.9%	3.2%	3.3%	3.4%
Staffing agency		2	7	118		14	36	58	68
	% of total	0.1%	0.1%	1.1%		0.4%	0.5%	0.5%	0.4%
Other		-	-	-	485
	% of total	-	-	-	3.3%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Starting in FY03/21, the contract amount is no longer based on years of service at the company, but on years of experience, including years of service prior to joining the company.

Temporary staffing services for mechanical design and development engineers

		FY03/21				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
	Dispatched						73	154	215
	Contracted						89	203	446
Total revenue							163	358	662

		FY03/21				FY03/22
(%)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Retention rate		88.6	87.7	89.0	90.1	90.9	92.3	87.3	88.9
Utilization rate							98.1	99.1
Contract renewal rate		93.1	91.7	94.4	86.7	89.7	93.8	92.9	90.5

		FY03/21				FY03/22
(People)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Number of engineers (Atmos)							108	106	116

		FY03/21				FY03/22
(JPY'000/month)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Revenue per head							555	556	628

Contract fee		FY03/21				FY03/22
(JPY/hour)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Companywide average							3,359	3,343	3,481
	1st–5th year						2,830	2,827	2,871
	6th–10th year						3,260	3,267	3,160
	11th year or more						3,749	3,748	3,836

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Full-year FY03/22 results

Results summary

Revenue: JPY15.6bn (+5.1% YoY)
Operating profit: JPY1.6bn (+12.8% YoY)
Recurring profit: JPY1.6bn (+12.5% YoY)
Net income attributable to owners of the parent: JPY963mn (-4.6% YoY)

In Copro's core business of construction and plant technician dispatching, the company actively recruited experienced construction workers through paid media and revamped its Gen-Kyari recruiting site to secure high-value-added technicians, which undergird growth. However, due to the tightening labor market, especially for experienced workers, the hiring of technicians progressed slowly, especially for mid-career hires. As a result, the number of technicians in the construction and plant technician dispatching business was 1,995 at end-FY03/22 (2,020 at end-FY03/21). The company is now aggressively spending on recruitment in response to strong demand for personnel (the number of orders from clients exceeds 2,000 per month). It is changing course to focus on further bolstering its recruitment strategy.

To improve the cost of revenue ratio, the company continued to focus on negotiations to increase the contract amount per technician, which had been one of its management priorities since FY03/21. It also worked to improve productivity in back-office operations by revamping its core system to automate attendance management and invoicing.

The company made Atmos Co., Ltd. a subsidiary in April 2021. This move was in line with the goal of accelerating business growth and improving earnings stability throughout the group. In this same vein, in September 2021 the company acquired Value Ark Consulting Co., Ltd., making it a wholly owned subsidiary, to create a business portfolio centered on high-value-added technicians.

In the overseas business, the company in April 2021 established Copro Vietnam Co., Ltd. in the Socialist Republic of Vietnam. Amid COVID-related restrictions on overseas travel, the company made internal preparations, including partnerships with local educational institutions, to solidify the foundation for service development in anticipation of the end of the pandemic.

FY03/22 revenue amounted to JPY15.6bn (+5.1% YoY) as a result of the increase in technicians to 2,201 at end-FY03/22 (from 2,020 at end-FY03/21) stemming from the June 2021 consolidation of Atmos, which focuses mainly on the dispatching of mechanical design engineers, and the October 2021 consolidation of Value Ark Consulting, which is engaged in the systems engineering services (SES) business. The company incurred one-off expenses related to M&A. At the same time, it curtailed other expenses, and the cost of revenue ratio improved on the back of higher contract amounts achieved through negotiations. As a result, operating profit came to JPY1.6bn (+12.8% YoY) and recurring profit to JPY1.6bn (+12.5% YoY). Net income attributable to owners of the parent fell 4.6% YoY to JPY963mn, largely due to the absence of extraordinary gains booked a year ago and an impairment loss on the consolidation of branches during FY03/22.

FY03/23 company forecast

	FY03/22			FY03/23			YoY
(JPYmn)	1H Act.	2H Act.	FY Act.	1H Act.	2H Est.	FY Est.	1H Est.	2H Est.	FY Est.
Revenue	7,402	8,187	15,589	8,144	9,710	17,854	10.0%	18.6%	14.5%
Cost of revenue	5,168	5,576	10,744
Gross profit	2,234	2,611	4,845
Gross profit margin	30.2%	31.9%	31.1%
SG&A expenses	1,601	1,622	3,223
SG&A ratio	21.6%	19.8%	20.7%
Operating profit	633	989	1,621	289	735	1,024	-54.3%	-25.7%	-36.8%
Operating profit margin	8.5%	12.1%	10.4%	3.5%	7.6%	5.7%
Recurring profit	631	989	1,620	290	734	1,024	-54.0%	-25.8%	-36.8%
Recurring profit margin	8.5%	12.1%	10.4%	3.6%	7.6%	5.7%
Net income	328	635	963	158	446	604	-51.9%	-29.7%	-37.3%
Net margin	4.4%	7.8%	6.2%	1.9%	4.6%	3.4%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Revenue: JPY17.9bn (+14.5% YoY)
Operating profit: JPY1.0bn (-36.8% YoY)
Recurring profit: JPY1.0bn (-36.8% YoY)
Net income attributable to owners of the parent: JPY604mn (-37.3% YoY)

Major initiatives in the core business include:

With more than 2,000 orders acquired per month, demand for personnel is brisk. The company is working to improve productivity through digital transformation and strengthen its sales force to acquire more orders.

Aggressive upfront spending on recruitment and efforts to increase the volume of recruiting activities, such as by increasing the number of interviews, which are the entry point to the market. The company is also working to improve retention of talented personnel by focusing sales activities on certain customers and implementing system changes.

In FY03/23, the company forecasts:

Revenue increasing 14.5% YoY on the accumulation of technicians dispatched, mainly in the core business of construction and plant technician dispatching.

The recruitment budget growing by approximately 1.5x YoY to secure talented technicians who will serve as the foundation for growth and resolve the current opportunity loss caused by recruitment bottlenecks. The company forecasts the number of consolidated technicians at 3,024 (the number of consolidated technicians is the number of technicians at end-FY03/23 including IT freelancers in the SES business).

Non-GAAP operating profit declining by 27.6% YoY due to an increase in SG&A expenses resulting from aggressive recruitment. Non-GAAP operating profit is a profit indicator representative of the company's true earnings, calculated by adding back depreciation, goodwill amortization, and stock-based compensation expenses to operating profit. The company forecasts non-GAAP operating profit of JPY1.3bn for FY03/23.

COPRO-Holdings 7059