THE CALDWELL PARTNERS INTERNATIONAL INC.
-- Annual revenue of $57.8 million
-- Operating profit of $3.1 million
-- Board declares twenty-third consecutive quarterly dividend of 2.0 cents
TORONTO, Nov. 9, 2017 /PRNewswire/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2017 fourth quarter and year ended August 31, 2017. All references to quarters or years are for the fiscal periods unless otherwise noted and all currency amounts are in Canadian dollars.
Financial Highlights (in $000s except per share amounts)
Three Months Ended Year Ended
August 31 August 31
--------- ---------
2017 2016 2017 2016
---- ---- ---- ----
Professional fees $15,758 $15,712 $57,495 $57,618
----------------- ------- ------- ------- -------
Investment income - - - $877
----------------- --- --- --- ----
License fee revenue $92 $64 $310 $253
------------------- --- --- ---- ----
Operating revenue $15,850 $15,776 $57,805 $58,748
----------------- ------- ------- ------- -------
Cost of sales $11,588 $11,447 $42,305 $44,604
------------- ------- ------- ------- -------
Expenses(1) $3,476 $4,291 $12,387 $12,866
---------- ------ ------ ------- -------
Operating profit $786 $37 $3,113 $1,278
---------------- ---- --- ------ ------
Investment income
from marketable
securities $180 - $38 $404
----------------- ---- --- --- ----
Earnings before tax $966 $37 $3,151 $1,682
------------------- ---- --- ------ ------
Net earnings after tax $704 $(57) $1,957 $881
---------------------- ---- ---- ------ ----
Net earnings per share $0.034 $(0.003) $0.096 $0.044
---------------------- ------ ------- ------ ------
1. During the
fourth
quarter and
full year
of 2016,
the Company
recorded
charges
totalling
$1,009 with
$759 related to the sublease and relocation of our New York office premises and $250 of separation
costs
associated
with
aligning
our support
staff
structure
to current-
state
business
needs.
"We are pleased with our team's performance in both the quarter and the full year," said John Wallace, chief executive officer. "Our Canadian team had a significant rebound from last year's challenges, the US saw higher search volumes in a steady economic environment, the UK team's two new partners will contribute favourably towards profitability in the coming year, and we are seeing increased traction in cross-border collaboration with our colleagues in Latin America and New Zealand. We have a strong and well-functioning team overall, and the seven new partner teams in Stamford, New York, Miami, Atlanta and London have further expanded our ability to make our clients better, more competitive and more successful by connecting them with transformational talent."
Wallace continued: "We believe the results we were able to deliver are reflective of the manner in which we are running this firm - balancing growth through the continued investment in the firm with profitability that allows us to reward our shareholders with a sustainable dividend."
The Board of Directors today also declared the payment of a quarterly dividend of 2.0 cents per Common Share payable to holders of Common Shares of record on November 20, 2017 and to be paid on December 15, 2017.
Financial Highlights (all numbers expressed in $000s)
-- Operating revenue:Fourth quarter
-- Professional fees for the fourth quarter of 2017 increased 0.3% (0.9%
excluding an unfavourable 0.6% variance from exchange rate fluctuations)
over the comparable period last year to $15,758 (2016: $15,712).
-- The positive impact of a higher Average Number of Partners at 39.5
compared to 38.5 in the prior year period and higher productivity per
partner was partially offset by a lower Average Fee. The Number of
Assignments per Partner increased to 2.8 (2016: 2.4), resulting in an
increase in the total Number of Assignments to 112 (2016: 94). The
Average Fee per Assignment decreased to $141 (2016: $167).
-- Fourth quarter professional fees in the US were down 13.0% (12.3%
excluding an unfavourable 0.7% variance from exchange rate
fluctuations) to $10,492 (2016: $12,063). Increases in both the
Average Number of Partners and Number of Assignments per Partner
were more than offset by a decrease in the Average Fee per
Assignment during the period.
-- Fourth quarter professional fees in Canada were up 61.9% to $5,079
(2016: $3,139). The impact of a slightly lower Average Number of
Partners was more than offset by a higher Number of Assignments per
Partner and a higher Average Fee per Assignment. Two specific
assignments generating Professional Fees in excess of $800 drove
professional fees and the Average Fee per Assignment in the current
year quarter.
-- Fourth quarter professional fees in Europe were down 63.3% (down
59.4% excluding an unfavourable 3.9% variance from exchange rate
fluctuations) to $187 (2016: $509). During the fourth quarter of
fiscal 2016 and first quarter of fiscal 2017, two partners, whose
aggregate related costs were significantly higher than the revenue
produced, left the firm and corresponding reductions were made to
the support staff. Despite a new partner being hired near the end of
the current year third quarter, there was still a decrease during
the quarter in the Average Number of Partners, exacerbated by a
decrease in the Number of Assignments per Partner and only partially
offset by an increase in the Average Fee per Assignment.
-- License fees from our affiliations in Latin America and New Zealand for
the use of the Caldwell Partners brand and intellectual property were
$92 (2016: $64) for the fourth quarter.Full year:
-- Professional fees for the year decreased 0.2% (an increase of 0.4%
excluding an unfavourable 0.6% variance from exchange rate fluctuations)
over the comparable period last year to $57,495 (2016: $57,618).
-- A slightly lower Average Number of Partners at 37.5 compared to 38.0 in
the prior year and a lower Average Fee per Assignment were partially
offset by higher productivity per partner. The Average Fee per
Assignment decreased to $133 (2016: $150). The year-to-date Number of
Assignments per Partner increased to 11.5 (2016: 10.1), resulting in an
increase in the total Number of Assignments to 432 (2016: 383).
-- Operating profit:Fourth quarter:
-- For the 2017 fourth quarter, higher revenue ($74) and lower expenses
($816) partially offset by higher cost of sales ($141) resulted in an
increase in operating profit of $749 over the comparable period in the
prior year to $786 (2016: $37). Exchange rate variances accounted for
net reduction of $47 in operating profit relative to the rates in effect
in the prior year period.
-- Fourth quarter cost of sales increased 1.2% or $141 to $11,588 (1.8%
excluding a favourable 0.6% variance from exchange rate
fluctuations) from $11,447.
-- Fourth quarter expenses decreased 19.0% or $816 from the prior year
comparable period to $3,476 (2016: $4,292). Excluding exchange rate
variances of $15, expenses on a constant currency basis decreased
$831 or 19.3% versus the same period last year. During the fourth
quarter of the previous year we incurred certain expenses in
connection with reducing the fixed costs of the Company. This
included charges of $759 related to the sublease and relocation of
our New York office premises and $250 of separation costs associated
with aligning our support staff structure to current-state business
needs. Adjusting for the charges taken as well as the foreign
exchange variances, the remaining expenses increased $178 on a
constant currency basis or 5.6% over the same period last year.
-- On a segment basis, the fourth quarter operating profit of $786 came
from the US producing $216 ($450 income excluding the impact of
intercompany license fees), Canada $712 ($478, excluding intercompany
license fee revenue) and Europe generating an operating loss of
$142.Full year:
-- For the 2017 full year, lower revenue ($943) more than offset by
decreases in cost of sales ($2,299) and expenses ($479) resulted in an
increase in operating profit of $1,835 to $3,113 (2016: $1,278).
Exchange rate variances accounted for a net $23 increase in operating
profit relative to the rates in effect in the prior year.
-- Cost of sales for the year decreased 5.2% to $42,305 (4.5% excluding
a favourable 0.7% variance from exchange rate fluctuations) from
$44,604. As a percentage of professional revenue, cost of sales
decreased to 73.6%, down $2,299 or 2.7% of professional revenue from
76.3% in the same period last year. Lower partner compensation (down
1.1% as a percentage of professional revenue) was driven by lower
variable commission tiers in the current year compensation plan
compared to the prior year lower partner support personnel
compensation (down 1.7% as a percentage of professional revenue).
These favourable variances were partially offset by slightly higher
costs of search delivery materials (up 0.1% as a percentage of
professional revenue).
-- Full year expenses decreased 3.7% or $479 over the prior year to
$12,387 (2016: $12,866). Excluding exchange rate variances of $119,
remaining expenses on a constant currency basis decreased $360 or
2.8% over the same period last year. The decrease includes the
charges taken in the fourth quarter of 2016 discussed above of $759
in constant currency related to the sublease and relocation of our
New York office space as well as the separation costs of $250.
Adjusting for the charges taken as well as the foreign exchange
variances, year over year expenses increased $649 on a constant
currency basis, or 5.5%.
-- On a segment basis, full year operating profit of $3,113 came from
operating profit in the US of $1,900 ($2,835 net of intercompany license
fees) and operating profit in Canada of $1,701 ($766 net of intercompany
license fee revenue) being offset by an operating loss in Europe of
$488.
-- Net earnings:
-- Fourth quarter net earnings were $704 ($0.034 per share) in 2017, as
compared to a net loss of $57 ($0.003 per share) in the comparable
period a year earlier.
-- The full year net earnings after tax were $1,957 ($0.096 per share)
in 2017, versus $881 ($0.044 per share) in 2016.
Average Number of Partners, Professional Fees per Partner, Number of Assignments, Number of Assignments per Partner and Average Fee per Assignment do not have any standardized meaning under IFRS and may not be comparable to measures presented by other companies. These operating measures are used by the Company to analyze its results. Please refer to section "Non?GAAP Financial Measures and Other Operating Measures" in the Company's MD&A for a definition of these terms.
For a complete discussion of the quarterly financial results, please see the company's Management Discussion and Analysis posted on SEDAR at www.sedar.com
About Caldwell Partners
Caldwell Partners is a leading international provider of executive search and has been for more than 45 years. As one of the world's most trusted advisors in executive search, the firm has a sterling reputation built on successful searches for boards, chief and senior executives, and selected functional experts. With offices and partners across North America, Europe, Latin America and Asia Pacific, the firm takes pride in delivering an unmatched level of service and expertise to its clients.
The Caldwell Partners' Common shares are listed on The Toronto Stock Exchange (TSX: CWL). Please visit our website at www.caldwellpartners.com for further information.
Forward-Looking Statements
Forward-looking statements in this document are based on current expectations that are subject to the significant risks and uncertainties cited. These forward-looking statements generally can be identified by use of statements that include phrases such as "believe," "expect," "anticipate," "intend," "plan," "foresee," "may," "will," "likely," "estimates," "potential," "continue" or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals also are forward-looking statements. The Company is subject to many factors that could cause our actual results to differ materially from those contemplated by the relevant forward looking statement including, but not limited to, the Company's ability to attract and retain key personnel; the performance of the Canadian, US domestic and international economies; competition from other companies directly or indirectly engaged in executive search; the possibility of a significant shareholder impacting shareholder votes; foreign currency exchange rate risks; the Company's ability to invest retained earnings in marketable securities and in short-term money market instruments to generate consistent investment income returns; and volatility of the market price and volume of common shares. For more information on the factors that could affect the outcome of forward-looking statements, refer to the "Risk Factors" section of our Annual Information Form and other public filings (copies of which may be obtained at www.sedar.com). These factors should be considered carefully and the reader should not place undue reliance on the forward-looking statements. Although any forward-looking statements are based on what management currently believes to be reasonable assumptions, we cannot assure readers that actual results, performance or achievements will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. Except as required by Canadian securities laws, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in $000s Canadian)
==================
As at As at
August 31 August 31
2017 2016
---- ----
Assets
Current assets
Cash and cash equivalents 10,917 8,422
Marketable securities 5,048 5,056
Accounts receivable 9,393 10,031
Prepaid expenses and other assets 1,848 2,416
--------------------------------- ----- -----
27,206 25,925
Non-current assets
Restricted cash 133 187
Marketable securities 172 573
Advances 503 502
Property and equipment 1,699 1,838
Intangible assets 178 279
Goodwill 2,761 2,920
Deferred income taxes 1,650 2,475
--------------------- ----- -----
Total assets 34,302 34,699
============ ====== ======
Liabilities
Current liabilities
Accounts payable 2,044 2,384
Compensation payable 15,896 16,125
Dividends payable 408 403
Income taxes payable 636 513
Contingent consideration - 289
Deferred revenue 1,107 1,187
---------------- ----- -----
20,091 20,901
Non-current liabilities
Compensation payable 958 687
Provisions 133 184
---------- --- ---
21,182 21,772
Equity attributable to owners of the Company
Share capital 7,515 7,295
Contributed surplus 14,992 15,025
Accumulated other comprehensive
income 1,179
Deficit (10,237) (10,572)
------- ------- -------
Total equity 13,120 12,927
------------ ------ ------
Total liabilities and equity 34,302 34,699
============================ ====== ======
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in $000s Canadian, except per share amounts)
=============================================
Twelve months
ended
August 31
2017 2016
---- ----
Revenues
Professional fees 57,495 57,618
Investment income - 877
Licence fees 310 253
------------ --- ---
57,805 58,748
Cost of sales 42,305 44,604
------------- ------ ------
Gross profit 15,500 14,144
Expenses
General and administrative 11,210 11,682
Sales and marketing 1,173 1,144
Foreign exchange loss 4 40
--------------------- --- ---
12,387 12,866
------ ------
Operating profit 3,113 1,278
Investment income 38 404
----------------- --- ---
Earnings before income taxes 3,151 1,682
Income taxes 1,194 801
------------ ----- ---
Net earnings for the year attributable to owners of
the Company 1,957 881
=================================================== ===== ===
Earnings per share
Basic $0.096 $0.044
Diluted $0.096 $0.043
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(in $000s Canadian)
==================
Twelve months
ended
August 31
2017 2016
Net earnings for the year 1,957 881
Other comprehensive income:
Items that may be reclassified subsequently to net
earnings
Realization of gains on marketable
securities included in net
earnings (38) (403)
Unrealized gain (loss) on
marketable securities 123 (100)
Cumulative translation adjustment (414) (430)
--------------------------------- ---- ----
Comprehensive earnings (loss) for the year
attributable to owners of the Company 1,628 (52)
========================================== ===== ===
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in $000s Canadian)
==================
Accumulated Other
Comprehensive
Income (Loss)
Unrealized
Gains (Loss) on
Marketable
Securities
----------
Cumulative
Translation
Adjustment
----------
Contributed Total
Surplus Equity
------- ------
Deficit Share Capital
------- -------------
Balance -August 31,
2015 (9,843) 7,295 15,025 1,272 840 14,589
=================== ====== ===== ====== ===== === ======
Net earnings for the
year 881 - - - - 881
Dividend payments
declared (1,610) - - - - (1,610)
Realization of gains on marketable
securities included in net
earnings - - - - (403) (403)
Change in unrealized
loss on marketable
securities - - - - (100) (100)
Change in cumulative
translation
adjustment - - - (430) - (430)
-------------------- --- --- --- ---- --- ----
Balance -August 31,
2016 (10,572) 7,295 15,025 842 337 12,927
=================== ======= ===== ====== === === ======
Net earnings for the
year 1,957 - - - - 1,957
Dividend payments
declared (1,622) - - - - (1,622)
Employee share
option plan share
issue - 220 (33) - - 187
Realization of gains on marketable
securities included in net
earnings - - - - (38) (38)
Change in unrealized
loss on marketable
securities - - - - 123 123
Change in cumulative
translation
adjustment - - - (414) - (414)
-------------------- --- --- --- ---- --- ----
Balance -August 31,
2017 (10,237) 7,515 14,992 428 422 13,120
=================== ======= ===== ====== === === ======
THE CALDWELL PARTNERS INTERNATIONAL
INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(in $000s Canadian)
==================
Twelve months ended
August 31
2017 2016
---- ----
Cash flow provided by (used in)
Operating activities
Net earnings for
the year 1,957 881
Adjustments for:
Depreciation 559 539
Amortization 94 94
Amortization of advances 803 992
Realized gain on marketable
securities (38) (403)
Change in fair value of contingent
consideration (109) 10
Unrealized foreign exchange on
subsidiary loans (12) 28
Non-cash professional fees
received as equity - (1,121)
Reduction in marketable securities
following assignment to partner 432 -
Decrease in deferred taxes 723 403
Increase (decrease) in cash
settled share-based compensation 271 (377)
Loss on disposal of property and
equipment - 77
Decrease (increase) in accounts
receivable 338 (1,916)
Decrease (increase) in prepaid
expenses and other assets 759 (473)
(Decrease) increase in accounts
payable (277) 401
Increase (decrease) in
compensation payable 929 (95)
Increase in income taxes payable 162 193
Payment of cash settled share-
based compensation (709) (449)
Payment of contingent
consideration (181) (254)
(Decrease) increase in deferred
revenue (65) 245
(Decrease) increase in provisions (51) 184
--------------------------------- --- ---
Net cash provided by (used in)
operating activities 5,585 (1,041)
------------------------------ ----- ------
Investing activities
Proceeds from
sale of
marketable
securities 1,101 3,171
Purchase of
marketable
securities (1,000) -
Payment of
advances (1,125) (592)
Decrease in
restricted cash 48 313
Additions to
property and
equipment (469) (414)
------------- ---- ----
Net cash (used in) provided by
investing activities (1,445) 2,478
------------------------------ ------ -----
Financing activities
Share issuance
from employee
share option
plan 187 -
Share purchase
and cancellation - (1,604)
Dividend payments (1,622) (1,633)
----------------- ------ ------
Net cash used in financing activities (1,435) (3,237)
------------------------------------- ------ ------
Effect of exchange rate changes on
cash and cash equivalents (210) 266
---------------------------------- ---- ---
Net increase (decrease) in cash and
cash equivalents 2,495 (1,534)
----------------------------------- ----- ------
Cash and cash equivalents, beginning
of year 8,422 9,956
------------------------------------ ----- -----
Cash and cash equivalents, end of
year 10,917 8,422
================================= ====== =====
SOURCE The Caldwell Partners International Inc.
