The Caldwell Partners International Issues Fiscal 2011 Fourth Quarter and Full Year Financial Results

- Company achieves fourth quarter 7% operating margin, with net income of $675,000 -

  • Annual revenues up 27% over last year
  • Growth of US operations continues - percentage of consolidated annual revenues grows to 63%

TORONTO, Nov. 17, 2011 /CNW/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2011 fourth quarter and year ended August 31, 2011. 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)

  Three Months Ended August 31 Year Ended August 31
  2011 2010 2011 2010
Operating revenue $9,377 $10,426 $34,238 $26,904
Expenses 8,728 9,650 34,156 27,518
Operating profit 649 776 82 (614)
Investment income, net 195 83 246 363
Net earnings before restructuring charges 844 859 328 (251)
Restructuring costs 0 0 0 (1,001)
Income taxes 169 0 169 0
Net earnings $ 675 $ 859 $ 159 ($ 1,252)
Net earnings per share $ 0.039 $ 0.052 $ 0.009 ($ 0.076)

"I am pleased by the great effort our team made this year, and by the results we are beginning to see," said John N. Wallace, chief executive officer. We continue to grow revenues, our team is getting stronger and more cohesive, we are extending our reach with like-minded allies in important international markets and we remain relentlessly focused on delivering superior service to our clients."

Wallace continued: "In the last two years we have made substantial progress toward our overall goals, and remain committed to driving increasing profitability and sustainable value to our shareholders."

Financial Highlights (all numbers expressed in $000s)

  • Operating revenue:
    • 2011 fourth quarter operating revenue decreased by 10% over the comparable period last year to $9,377. Although the current quarter's revenue reflects favourably against recent quarters, last year's fourth quarter revenues were unusually high.
    • Revenues generated in the United States of America (US) represent 66% or $6,147 of the 2011 fourth quarter total, decreasing from $6,491 in the comparable period of 2010.
    • Revenues from Canadian operations were $3,230 in the fourth quarter of 2011 also down from $3,935 in the comparable period of 2010.
    • 2011 annual operating revenues increased 27% over the same period a year earlier to $34,238. The increase is attributable to solid year over year growth in search revenues in Canada (6% increase) and strong year over year growth in the US (44% increase).
    • After the exceptional 2010 fourth quarter revenues led to a comparably softer 2011 first quarter, the last three quarters' revenues rebounded to levels more representative of the Company's current productive resources. Given the Company's size, sector focus, and market volatility, sequential quarterly revenues may continue to be somewhat variable.
  • Operating profit:
    • Operating margin in the fourth quarter of 2011 was 7%, in line with the comparable period a year earlier. Operating income in the fourth quarter of 2011 was down 16% to $649 (2010: $776).
    • The company achieved a slight annual operating profit of $82 in 2011, up from an operating loss of $614 in the previous year.
  • Net earnings:
    • Fourth quarter net earnings after tax were $675 in 2011 as compared to $859 in the comparable period a year earlier.
    • Decline in quarterly net earnings largely attributed to unusually high level of revenue in the 2010 fourth quarter, as well as a $169 provision for income taxes recorded in the 2011 fourth quarter.

The Company reported annual net earnings after tax of $159 as compared to a loss of $1.25 million in the comparable period of 2010.  2010 annual results reflect a one-time restructuring charge of $1.0 million relating to the retirement of the Company's founder, executive chairman and director, and the related agreement to accelerate the planned conversion of the Company's voting Class B Shares to non-voting Class A shares

Having achieved multiple years of strong revenue growth from strategic investments made to expand the business, the Company will continue to devote its energies in 2012 to improving profitability. The Company's strong focus will remain on enhancing shareholder value with strategic additions of quality people being made to the team.

Despite the persistent global economic uncertainty, the executive search business remains relatively healthy in most industry sectors. However, given the relative size of the Company's client-facing team, its sector focus and market variability, fluctuations in quarterly revenues will likely continue. The first quarter of each fiscal year in particular is typically affected by the seasonal impact of slower summer bookings.

Operating revenue, gross profit/loss and operating income/loss are non-GAAP (generally accepted accounting principles) measures. The company believes, however, that they provide a useful understanding of the performance of its core human capital services operations as they exclude income or loss from investments and taxes.

For a complete discussion of the quarterly and annual financial results, please see the company's Management Discussion and Analysis posted on SEDAR at www.sedar.com

About Caldwell Partners

Caldwell Partners is one of North America's premier providers of executive search and has been for over 40 years. As one of the region'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 in Vancouver, San Francisco, Los Angeles, Dallas, Calgary, Atlanta, Toronto, Stamford, New York City, and a strategic presence in London and Hong Kong, the firm takes pride in delivering an unmatched level of service and expertise to its clients.

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 significant risks and uncertainties. Actual results might differ materially due to various factors such as the competitive nature of the executive search industry, the ability of the company to execute its growth strategies, the performance of the Canadian domestic and international economies, and the company's ability to retain key personnel. The Caldwell Partners assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.

                 
THE CALDWELL PARTNERS INTERNATIONAL INC.              
CONSOLIDATED BALANCE SHEET              
               
            As at August 31
            2011 2010
Assets              
Current Assets              
  Cash and short-term deposits           $6,944,084 $6,456,274
  Marketable securities           3,126,827 4,124,785
  Accounts receivable           6,537,347 5,875,065
  Income taxes receivable           80,053 87,377
  Prepaid expenses and other assets           1,178,793 1,693,133
            17,867,104 18,236,634
               
  Restricted cash           250,000 0
  Loans receivable, long-term            162,543 471,020
  Property and equipment           1,781,892 1,655,907
  Intangible assets           682,829 1,015,728
  Goodwill           1,235,218 723,390
  Future income taxes           72,834 0
            $22,052,420 $22,102,679
               
Liabilities              
Current Liabilities              
  Accounts payable and accrued liabilities           10,724,428 $9,174,008
  Deferred revenue           0 207,346
  Current portion of incentive accrual            530,250 1,639,818
            11,254,678 11,021,172
               
Long-term incentive accrual           53,490 466,614
               
Shareholders' equity              
  Capital stock            16,064,078 16,064,078
  Contributed surplus            4,179,399 4,154,196
  Deficit            (9,729,821) (9,888,438)
  Accumulated other comprehensive income           230,596 285,057
            10,744,252 10,614,893
               
            $22,052,420 $22,102,679

 

                       
THE CALDWELL PARTNERS INTERNATIONAL INC.                    
CONSOLIDATED STATEMENT OF EARNINGS (LOSS)                    
                     
            Three months ended   Year Ending
            August 31   August 31
            2011 2010   2011 2010
                     
Operating revenue           $9,376,749 $10,425,848   $34,237,803 $26,903,811
                     
Direct cost of revenue           6,911,543 7,989,438   26,696,894 20,741,431
Gross operating profit           2,465,206 2,436,410   7,540,909 6,162,380
                     
Expenses:                    
  Other employee compensation, general and administration           1,551,542 1,591,798   6,415,995 6,201,296
  Depreciation of property and equipment           95,090 87,394   381,051 325,812
  Amortization of intangibles           197,144 64,257   334,579 271,372
  Foreign exchange (gain) loss           (28,130) (83,117)   327,463 (21,766)
            1,815,646 1,660,332   7,459,088 6,776,714
Earnings (loss) before the following           649,560 776,078   81,821 (614,334)
                     
Investment income, net           194,800 83,365   246,261 362,629
Earnings (loss) before the following           844,360 859,443   328,082 (251,705)
                     
Restructuring costs           0 0   0 (1,001,055)
Net earnings (loss) before tax           844,360 859,443   328,082 (1,252,760)
                     
Provision for (recovery of) income taxes                    
  Current           19,688 0   242,299 0
  Future           149,777 0   (72,834) 0
            169,465 0   169,465 0
                     
Net earnings (loss) for the period           $674,895 $859,443   $158,617 ($1,252,760)
                     
Earnings (loss) per share           $0.039 $0.052   $0.009 ($0.076)
                     
                     
CONSOLIDATED STATEMENTS OF                     
COMPREHENSIVE EARNINGS (LOSS)                    
                     
            Three months ended   Year Ending
            August 31   August 31
            2011 2010   2011 2010
                     
Net earnings (loss) for the period           $674,895 $859,443   $158,617 ($1,252,760)
                     
Other comprehensive income:                    
  Unrealized gain on marketable securities           2,244 151,798   230,596 285,057
Reclassification of gains included in the consolidated                    
  statement of earnings (loss)           (285,057) (35,342)   (285,057) (175,384)
            (282,813) 116,456   (54,461) 109,673
Comprehensive earnings (loss)           $392,082 $975,899   $104,156 ($1,143,087)

 

               
THE CALDWELL PARTNERS INTERNATIONAL INC.    
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND    
ACCUMULATED OTHER COMPREHENSIVE INCOME         
               
               
            Accumulated Other Total
       Contributed Comprehensive Shareholders'
  Deficit Capital Stock Surplus Income Equity
      Class A Class B      
    Common Non-Voting Voting      
    Shares Shares Shares      
               
               
Balance - August 31, 2009 ($8,635,678) $0 $16,046,899 $17,179 $4,098,998 $175,384 $11,702,782
               
Net loss for the year ended August 31, 2010 (1,252,760) 0 0 0 0 0 (1,252,760)
               
Conversion of Class B to Class A share, and reclassification to Common shares (note 10) 0 16,064,078  (16,046,899)  (17,179) 0 0 0
               
Stock compensation (note 10) 0 0 0 0 55,198 0 55,198
               
Change in unrealized gains and losses on marketable securities available for sale  0 0 0 0 0 109,673 109,673
               
Balance - August 31, 2010 ($9,888,438)  $16,064,078 $0 $0 $4,154,196 $285,057 $10,614,893
               
Net profit for the period ended August 31, 2011 158,617 0 0 0 0 0 158,617
               
Stock compensation (note 10) 0 0 0 0 25,203 0 25,203
               
Change in unrealized gains and losses on marketable securities available for sale  0 0 0 0 0 (54,461) (54,461)
               
Balance - August 31, 2011 ($9,729,821) $16,064,078 $0 $0 $4,179,399 $230,596 $10,744,252

 

 

                     
THE CALDWELL PARTNERS INTERNATIONAL INC.      
CONSOLIDATED STATEMENT OF CASH FLOWS          
                     
            Three months ended   Yearn Ending
            August 31   August 31
            2011 2010   2011 2010
Operating Activities                
  Net earnings (loss) for the period       $674,895 $859,443   $158,617 ($1,252,760)
  Items not affecting cash                
    Depreciation of property and equipment       95,090 87,394   381,051 325,812
    Amortization of intangibles       197,144 64,257   334,579 271,372
    Gain on sale of marketable securities       (176,206) 0   (176,206) (198,567)
    Stock compensation expense       6,276 14,547   25,203 55,198
    Non-cash incentive compensation       21,396 47,725   117,122 294,300
    Future income taxes       149,777 0   (72,834) 0
            968,372 1,073,366   767,532 (504,645)
                     
Net changes in working capital balances related to operations                
    Increase in accounts receivable       (364,967) (733,323)   (662,282) (2,777,731)
    (Increase) decrease in income taxes receivable       (44,983) (87,709)   7,324 233,201
    Decrease (increase) in prepaid expenses and other assets       121,772 (44,891)   514,340 (673,104)
    Increase in accounts payable and accrued liabilities       1,136,688 4,049,322   1,550,420 4,931,529
    Decrease in incentive accrual       (605,870) 0   (1,639,814) (439,374)
    Decrease in deferred revenue       (200,831) (509,528)   (207,346) (118,863)
            1,010,181 3,747,237   330,174 651,013
                     
Investment Activities                
  Proceeds on sale of marketable securities       2,119,703 0   2,119,703 1,508,615
  Purchase of marketable securities       (1,000,000) 0   (1,000,000) 0
  Decrease (increase) in loans receivable, long-term       115,256 166,872   308,477 (52,083)
  Additions to property and equipment       (41,497) (47,033)   (507,036) (264,434)
  Disposals of property and equipment       0 0   0 4,615
  Acquisition of business costs       (511,828) 0   (511,828) (3,758)
  Acquisition of intangible assets       0 (104,138)   (1,680) (105,708)
  Increase in restricted cash       (250,000) 0   (250,000) 0
            431,634 15,701   157,636 1,087,247
                     
Net increase in cash and cash equivalents during the period       1,441,815 3,762,938   487,810 1,738,260
Cash and cash equivalents, beginning of period       5,502,269 2,693,336   6,456,274 4,718,014
Cash and cash equivalents, end of period       $6,944,084 $6,456,274   $6,944,084 $6,456,274

 

 

 

 

 

SOURCE The Caldwell Partners International Inc.

For further information:

Investors & Analysts: 
Karen Richards, CA, Chief Financial Officer
The Caldwell Partners International
krichards@caldwellpartners.com
+1.416.934.2228

Media: 
Caroline Lomot, Director of Marketing
The Caldwell Partners International
clomot@caldwellpartners.com
+1.416.934.2239


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