CTPartners Executive Search Inc. (NYSE MKT: CTP), a global retained executive search firm, today announced its financial results for the fourth quarter and full year end December 31, 2013.

"Our exceptional finish to the year, driven by strong execution by our consultants and an increase in demand, allowed CTPartners to exceed its financial expectations for the fourth quarter. During the quarter our business showed strong improvement in key practices in all of our major geographic markets leading to record quarterly revenue of $34.3 million and EPS growth to $0.12 per share on an adjusted basis. We also continued to make strategic investments in talent acquisition, business development and marketing to raising our brand awareness and build a strong platform for future growth," commented Brian Sullivan, Chief Executive Officer. The momentum we experienced in the fourth quarter has continued into 2014 as reflected in the guidance we have provided for the first quarter of 2014. We are increasingly optimistic that the growth initiatives we have in place will lead to significantly improved performance for the full year," added Mr. Sullivan.

Fourth Quarter 2013 Results

Net revenue for the fourth quarter was $34.3 million, a record high for the Company, and represented a 13.6% increase compared with $30.2 million in the prior year's fourth quarter. North America revenue increased 19.7% to $20.3 million; EMEA was up 12.3% at $9.0 million and Asia Pacific revenue grew to $2.4 million, a 35.9% increase compared to $1.8 million. Latin America revenue declined to $2.6 million compared to $3.5 million in the prior year quarter. On a practice basis, year-over-year, Industrial grew 47% to $3.6 million; Professional Services increased 32.6% to $6.8 million; Life Sciences increased 21.3% to $5.7 million and Financial Services improved 16.6% to $10.2 million. Consumer/Retail and Technology Media & Telecom were lower compared to the year-ago fourth quarter, each with revenue of $4.0 million.

Compensation expense, excluding non-operating expenses, was $25.4 million, or 73.9% of revenue, compared to $23.3 million, or 77.1% of revenue, in the fourth quarter of 2012. General and administrative expenses, excluding non-operating expenses, were $7.3 million, or 21.3% of revenue.

GAAP net income attributable to the Company for the fourth quarter was $0.1 million, or $0.02 per share, compared to a net loss of $1.5 million, or $0.21 per share loss, for last year's fourth quarter. Excluding after-tax non-operating items of $0.8 million and $1.3 million for 2013 and 2012, respectively, adjusted net income was $0.9 million, or $0.12 per share, compared to an adjusted net loss of $0.2 million, or a loss of $0.03 per share, in the prior year's fourth quarter. A reconciliation of non-GAAP measures is included in this news release.

Performance Metrics - Fourth Quarter 2013/ Full Year 2013

  • The Company was engaged in 342 new search assignments, a 14.4% increase compared to 299 in the year-ago quarter and 1,395 for the full year 2013 compared to 1,352 in 2012.
  • The number of placements was 275 compared with 270 in last year's comparable quarter. The placement rate for this year's fourth quarter was 80%, resulting in the 2013 full year placement rate at 80% compared to the 2012 placement rate of 78%.
  • CTPartners had 128 consultants compared with 103 consultants in 2012, primarily reflecting the Augmentum Consulting Ltd. acquisition and the addition of leading executive search consultants in the second half of 2013. Excluding the new consultants added in the 2013 fourth quarter, the net revenue per consultant was $1.2 million.
  • Average revenue per search was up 11.4% at $101,800 compared to $91,400 in the year-ago quarter.
  • The Company's voluntary turnover was one consultant in the fourth quarter of 2013, allowing CTPartners to maintain one of the lowest turnover rates in the executive search industry.
  • The number of clients representing repeat business was 79% in the fourth quarter compared with 76% in last year's fourth quarter and 79% in the 2013 third quarter.

2013 Full Year Financial Results

Net revenue for the full year ended was $130.3 million, a 1.5% increase compared to net revenue of $128.4 million for the year ended December 31, 2012. Compensation expense, excluding non-operating expenses, was $97.9 million, or 75.1% of revenue, compared to $98.3 million, or 76.5% of revenue, in 2012. General and administrative expenses, excluding non-operating expenses, were $28.8 million, or 22.1% of revenue.

GAAP net loss attributable to the Company for the year ended December 31, 2013 was $1.6 million, or $0.23 per share, compared to a net loss of $3.6 million, or $0.51 per share loss, for 2012. Excluding after-tax non-operating items of $3.4 million and $4.7 million for 2013 and 2012 respectively, adjusted net income was $1.8 million, or $0.24 per share compared to adjusted net income of $1.1 million, or $0.16 per share in the prior year. A reconciliation of non-GAAP measures is included in this news release.

Guidance

For the first quarter ending March 31, 2014, the Company expects to report net revenue in the range of $36.0 million to $38.0 million and adjusted EPS between $0.12 to $0.17, excluding non-operating items.

Conference Call

The Company will host a conference call and webcast for the investment community on Thursday, March 13, 2014 at 9:00 AM ET. Investors within the United States interested in participating are invited to call 866-318-8616 and reference the Participant Passcode: 99008912. All other international participants can use the dial-in number 617-399-5135, using the same Participant Passcode. A replay of the event will be available for one week following the conclusion of the call. To access the replay, callers in the United States can call 888-286-8010 and reference the Replay Access Code: 57974737. International callers can dial 617-801-6888, using the same Replay Access Code. To access the webcast, please visit http://investor.ctnet.com.

About CTPartners

CTPartners is a leading performance-driven executive search firm serving clients across the globe. Committed to a philosophy of partnering with its clients, CTPartners offers a proven record in C-Suite, senior executive, and board searches, as well as expertise serving private equity and venture capital firms. With origins dating back to 1980, CTPartners serves clients with a global organization of more than 400 professionals and employees, offering expertise in board advisory services and executive recruiting services in the financial services, life sciences, industrial, professional services, retail and consumer, and technology, media and telecom industries. Headquartered in New York, CTPartners has 27 offices in 17 countries.

www.ctnet.com

Safe Harbor Statement

The following is a Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release includes forward-looking statements. As a general matter, forward-looking statements reflect our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be identified by the use of forward looking terminology such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words, but the absence of these words does not necessarily mean that a statement is not forward-looking. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for the disclosure of forward-looking statements.

The forward-looking statements contained in this press release are based upon our historical performance, current plans, estimates, expectations and other factors we believe are appropriate under the circumstances. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved since these forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. Some of the key uncertainties and factors that could affect our future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements are: our expectations regarding our revenues, expenses and operations and our ability to sustain profitability; our ability to recruit and retain qualified executive search consultants to staff our operations appropriately; our ability to expand our customer base and relationships, especially given the off-limit arrangements we are required to enter into with certain of our clients; further declines in the global economy and our ability to execute successfully through business cycles; our anticipated cash needs; projected cost savings as a result of reorganization; our ability to amend certain provisions of previously executed purchase agreements; our anticipated growth strategies and sources of new revenues; unanticipated trends and challenges in our business and the markets in which we operate; social or political instability in markets where we operate; the impact of foreign currency exchange rate fluctuations; price competition; the ability to forecast, on a quarterly basis, variable compensation accruals that ultimately are determined based on the achievement of annual results; and the mix of profit and loss by country in which we operate.

The above list should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in our annual report on Form 10-K filed on March 12, 2014 . The forward looking statements included in this press release are made only as of the date hereof. We do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission.

Adjusted Performance Measure, Excluding Non-Operational Charges

We utilize Adjusted Net Income/(Loss) and Adjusted Income/(Loss) per common share, non-GAAP financial measures, as a measures of our results of operations. We calculated Adjusted Net Income/(Loss) as Net Income/(Loss) excluding the following charges which we do not believe are reflective of our operational results:

  • Post-combination compensation expense
  • Reorganization charges
  • Gain or loss on foreign currency related to funding of foreign subsidiaries
  • Fees and expenses incurred by us in connection with the restatement of our 2012 interim financial statements
  • Fees and expenses incurred in connection with acquisitions
  • Tax effect of the above adjustments

We calculate Adjusted earnings/(loss) per common share using the weighted average shares outstanding amounts used in the calculation of diluted earnings per share in accordance with GAAP.

Management utilizes this information to measure performance, and believes it more appropriately reflects the results of ongoing operations.

 

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands except share and per share amounts)

   
Three Months

Ended

December 31,

2013

Three Months

Ended

December 31,

2012

Revenue
Net revenue $ 34,319 $ 30,220
Reimbursable expenses 972   1,191  
Total revenue 35,291 31,411
Operating expenses
Compensation and benefits 25,579 25,080
General and administrative 8,483 7,073
Reimbursable expenses 1,116   1,176  
Total Operating Expenses 35,178   33,329  
Operating income/ (loss) 113 (1,918 )
Interest expense, net (23 ) (36 )
Income/(loss) before income taxes 90 (1,954 )
Income tax (expense)/benefit (5 ) 461  
Net income/(loss) $ 85 $ (1,493 )
Net loss attributable to redeemable noncontrolling interest $ 40   $ --  
Net income/(loss) attributable to the Company $ 125   $ (1,493 )
 
Basic income/(loss) per common share $ 0.02 $ (0.21 )
Diluted income/(loss) per common share $ 0.02 $ (0.21 )
Basic weighted average common shares 7,097,584 6,983,561
Diluted weighted average common shares 7,644,971 6,983,561
 
(in thousands, except per share) amounts)
Three months ended December 31
2013   2012
CALCULATION OF "AS ADJUSTED" PERFORMANCE MEASURE
Net income/(loss) $ 85 $ (1,493 )
Adjustments:
Post-combination compensation and reorganization expense 143 1,772
Foreign exchange loss/(gain) on funding of foreign subsidiaries 47 (112 )
Costs incurred for restatement, acquisition and integration 610 35
Impairment charges 594 --
Tax effect of the adjustments (533 ) (418 )
Adjusted net income $ 946   $ (216 )
 
Earnings per common share, as adjusted $ 0.12 $ (0.03 )
 

Use of non-GAAP measures: The table above contains selected financial information calculated other than in accordance with U.S. Generally Acceptable Accounting Principles ("GAAP").

   

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except share and per share amounts)

 
Year

Ended

December 31,

2013

Year

Ended

December 31,

2012

Revenue
Net revenue $ 130,278 $ 128,382
Reimbursable expenses 4,002   4,534  
Total revenue 134,280 132,916
Operating expenses
Compensation and benefits 100,553 105,732
General and administrative 31,985 27,503
Reimbursable expenses 4,448   4,785  
Total Operating Expenses 136,986   138,020  
Operating loss (2,706 ) (5,104 )
Interest expense, net (179 ) (160 )
Loss before income taxes (2,885 ) (5,264 )
Income tax benefit 1,115   1,680  
Net loss (1,770 ) (3,584 )
Net loss attributable to redeemable noncontrolling interest 138   --  
Net loss attributable to the Company $ (1,632 ) $ (3,584 )
 
Basic and diluted loss per common share $ (0.23 ) $ (0.51 )
Basic and diluted weighted average common shares 7,055,734 7,087,769
 
(in thousands, except per share) amounts)
Year ended December 31
2013   2012
CALCULATION OF "AS ADJUSTED" PERFORMANCE MEASURE
Net income/(loss) $ (1,770 ) $ (3,584 )
Adjustments:
Post-combination compensation and reorganization expense 2,659 7,311
Foreign exchange loss/(gain) on funding of foreign subsidiaries 867 (468 )
Costs incurred for restatement, acquisition and integration 1,748 462
Impairment charges 594 --
Tax effect of the adjustments (2,280 ) (2,593 )
Adjusted net income $ 1,818   $ 1,128  
 
Earnings per common share, as adjusted $ 0.24 $ 0.16
 

Use of non-GAAP measures: The table above contains selected financial information calculated other than in accordance with U.S. Generally Acceptable Accounting Principles ("GAAP").

   

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 
December 31, 2013 December 31, 2012
Assets
Current Assets
Cash $ 5,654 $ 15,947
Accounts receivable, net 26,381 23,100
Other receivables 433 91
Prepaid expenses 3,974 2,949
Deferred income taxes 3,184 1,932
Other 4,411   3,684  
Total current assets 44,037 47,703
Non-current assets
Leasehold Improvements and Equipment, net 4,149 3,473
Goodwill 5,811 215
Intangibles, net 3,746 3,195
Other Assets 5,517 1,868
Deferred Income Taxes 5,482   4,021  
$ 68,742   $ 60,475  
Liabilities and Stockholders' Equity
Current Liabilities
Current portion of long-term debt $ 4,762 $ 3,186
Accounts payable 3,813 1,762
Accrued compensation 25,201 24,401
Accrued business taxes 2,079 1,465
Income taxes payable 710 233
Accrued expenses 5,571   3,762  
Total current liabilities 42,136   34,809  
Long-Term Liabilities
Long-term debt, less current maturities 1,295 3,488
Deferred rent, less current maturities 1,050   1,367  
Total long-term liabilities 2,345   4,855  
Noncontrolling redeemable interest 4,088 --
Stockholders' Equity
Preferred stock -- --
Common stock 8 7
Additional paid-in capital 37,778 36,846
Accumulated deficit (14,242 ) (12,610 )
Accumulated other comprehensive (loss), net of tax (1,275 ) (1,357 )
Treasury stock (2,096 ) (2,075 )
20,173   20,811  
$ 68,742   $ 60,475  
 

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
Years Ended December 31,
2013   2012
Cash Flows From Operating Activities
Net loss $ (1,770 ) $ (3,584 )
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 1,982 1,313
Reorganization charges 48 882
Share-based compensation 796 734
Amortization of discount on seller notes 116 183
Amortization of post-combination compensation 1,878 6,347
Impairment charges 594 --
Deferred income taxes (2,736 ) (3,504 )
Changes in operating assets and liabilities, net of effect of acquired businesses:
Accounts receivable, net (1,104 ) (3,264 )
Prepaid expenses 423 (596 )
Income taxes receivable -- 1,593
Other assets and receivables (1,027 ) (3,307 )
Accounts payable 1,792 745
Accrued compensation 908 907
Accrued business taxes (22 ) 692
Income taxes payable 323 233
Accrued expenses 983 281
Deferred rent (266 ) (169 )
Net cash provided by (used in) operating activities 2,918   (514 )
Cash Flows From Investing Activities
Acquisition of businesses (1,033 ) (3,564 )
Purchase of leasehold improvements and equipment (1,665 ) (270 )
Notes receivable issued (7,210 ) --
Repayment of notes receivable 173   --  
Net cash used in investing activities (9,735 ) (3,834 )
Cash Flows From Financing Activities
Principal payments on long-term debt (3,745 ) (155 )
Repurchase of common stock --   (1,024 )
Net cash used in financing activities (3,745 ) (1,179 )
Net decrease in cash (10,562 ) (5,527 )
Effect of foreign currency on cash 269 (356 )
Cash:
Beginning 15,947   21,830  
Ending $ 5,654   $ 15,947  
           

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

SUPPLEMENTAL PERFORMANCE METRICS

 

REVENUE BY REGION

 
YEAR OVER YEAR Q4 2013 Q4 2012    
By Region Revenue % Revenue %

Increase /
(Decrease)

%
North America $ 20,296,200 59.1 % $ 16,956,100 56.1 % $ 3,340,100   19.7 %
EMEA   8,983,700 26.2 %   7,996,700 26.4 %   987,000   12.3 %
Asia Pacific   2,447,500 7.1 %   1,801,000 6.0 %   646,500   35.9 %
Latin America   2,592,600 7.6 %   3,465,400 11.5 %   (872,800 ) -25.2 %
TOTAL $ 34,320,000 100 % $ 30,219,200 100 % $ 4,100,800   13.6 %
           

REVENUE BY PRACTICE

 
YEAR OVER YEAR Q4 2013 Q4 2012    
By Practice

Revenue

% Revenue %

Increase /
(Decrease)

%
Financial Services $ 10,179,700 29.7 % $ 8,733,600 28.9 % $ 1,446,100   16.6 %
TMT   4,038,300 11.8 %   4,604,400 15.2 %   (566,100 ) -12.3 %
Life Sciences   5,653,000 16.4 %   4,660,900 15.4 %   992,100   21.3 %
Professional Services   6,851,900 20.0 %   5,165,800 17.1 %   1,686,100   32.6 %
Consumer/Retail   4,009,900 11.7 %   4,613,400 15.3 %   (603,500 ) -13.1 %
Industrial   3,587,200 10.4 %   2,441,100 8.1 %   1,146,100   47.0 %
TOTAL $ 34,320,000 100 % $ 30,219,200 100 % $ 4,100,800   13.6 %
           

REVENUE BY REGION, SEQUENTIAL

 
SEQUENTIALLY Q4 2013 Q3 2013    
By Region Revenue % Revenue %

Increase /
(Decrease)

%
North America $ 20,296,200 59.1 % $ 18,686,400 57.4 % $ 1,609,800   8.6 %
EMEA   8,983,700 26.2 %   8,595,700 26.4 %   388,000   4.5 %
Asia Pacific   2,447,500 7.1 %   1,627,500 5.0 %   820,000   50.4 %
Latin America   2,592,600 7.6 %   3,642,900 11.2 %   (1,050,300 ) -28.8 %
TOTAL $ 34,320,000 100 % $ 32,552,500 100 % $ 1,767,500   5.4 %
           

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

SUPPLEMENTAL PERFORMANCE METRICS

 

REVENUE BY PRACTICE, SEQUENTIAL

 
SEQUENTIALLY Q4 2013 Q3 2013    
By Practice Revenue % Revenue %

Increase /
(Decrease)

%
Financial Services $ 10,179,700 29.7 % $ 8,834,800 27.1 % $ 1,344,900   15.2 %
TMT   4,038,300 11.8 %   2,746,300 8.5 %   1,292,000   47.0 %
Life Sciences   5,653,000 16.4 %   6,261,100 19.2 %   (608,100 ) -9.7 %
Professional Services   6,851,900 20.0 %   6,521,000 20.0 %   330,900   5.1 %
Consumer/Retail   4,009,900 11.7 %   4,458,700 13.7 %   (448,800 ) -10.1 %
Industrial   3,587,200 10.4 %   3,730,600 11.5 %   (143,400 ) -3.8 %
TOTAL $ 34,320,000 100 % $ 32,552,500 100 % $ 1,767,500   5.4 %
           

REVENUE BY REGION, FULL YEAR

 
YEAR OVER YEAR FY 2013 FY 2012    
By Region Revenue % Revenue %

Increase /
(Decrease)

%
North America $ 78,139,400 60.0 % $ 77,559,100 60.4 % $ 580,300   0.7 %
EMEA   32,610,300 25.0 %   28,438,600 22.2 %   4,171,700   14.7 %
Asia Pacific   6,982,200 5.4 %   8,986,300 7.0 %   (2,004,100 ) -22.3 %
Latin America   12,545,700 9.6 %   13,397,600 10.4 %   (851,900 ) -6.4 %
TOTAL $ 130,277,600 100 % $ 128,381,600 100 % $ 1,896,000   1.5 %
           

REVENUE BY PRACTICE, FULL YEAR

 
YEAR OVER YEAR FY 2013 FY 2012    
By Practice Revenue % Revenue %

Increase /
(Decrease)

%
Financial Services $ 33,988,600 26.1 % $ 39,272,800 30.6 % $ (5,284,200 ) -13.5 %
TMT   14,753,900 11.3 %   16,949,100 13.2 %   (2,195,200 ) -13.0 %
Life Sciences   24,397,200 18.7 %   21,979,000 17.1 %   2,418,200   11.0 %
Professional Services   24,035,600 18.5 %   18,538,500 14.4 %   5,497,100   29.7 %
Consumer/Retail   18,494,900 14.2 %   20,631,800 16.1 %   (2,136,900 ) -10.4 %
Industrial   14,607,400 11.2 %   11,010,400 8.6 %   3,597,000   32.7 %
TOTAL $ 130,277,600 100 % $ 128,381,600 100 % $ 1,896,000   1.5 %
     

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

SUPPLEMENTAL PERFORMANCE METRICS

 

SUPPLEMENTAL INFORMATION

 
 

Three Month Period Ended
December 31

Increase /
(Decrease)

% Increase /
(Decrease)

  2013   2012    
# of new search assignments 342 299 43 14.4%
# of executive search consultants 128 103 25 24.3%
Productivity $ 1,071,900 $ 1,173,600 $ (101,700 ) -8.7%
Avg. revenue per executive search $ 101,800 $ 91,400 $ 10,400   11.4%
     
 

Twelve Month Period
Ended December 31

Increase /
(Decrease)

% Increase /
(Decrease)

  2013   2012    
# of new search assignments 1395 1352 43 3.2%
# of executive search consultants 128 103 25 24.3%
Productivity $ 1,018,000 $ 1,246,400 $ (228,400 ) -18.3%
Avg. revenue per executive search $ 97,300 $ 91,900 $ 5,400   5.9%

CTPartners
William J. Keneally, 216-682-3103
Chief Financial Officer
wkeneally@ctnet.com
or
EVC Group
Michael Polyviou/Robert Jones, 212-850-6020
Investor Relations
mpolyviou@evcgroup.com