The Caldwell Partners International Issues Fiscal 2015 Fourth Quarter and Full Year Financial Results

  • Company posts annual revenue of $54.5 million, up 21% over prior year.
  • Fourth quarter revenue up 16% over prior year to $15.4 million.
  • Board declares 15th consecutive quarterly dividend – 2.0 cents per share.

TORONTO, Nov. 17, 2015 /CNW/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2015 fourth quarter and year ended August 31, 2015. 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

August 31

Year Ended

 August 31


2015

2014

2015

2014

Operating revenue

$15,404

$13,231

$54,527

$45,086

Expenses

$14,951

$13,059

$52,351

$43,823

Operating profit

$453

$172

$2,176

$1,263

Investment income

$5

$13

$63

$24

Earnings before tax

$459

$185

$2,239

$1,287

Net earnings after tax1,2

$650

$892

$1,976

$1,967

Net earnings per share1,2

$0.031

$ 0.044

$0.093

$ 0.101



1.

During the fourth quarter and full year of 2015, the Company was able to utilize prior unrecognized net operating losses of the Canadian parent to help reduce taxable income in Canada. Accordingly, the Company recognized a net tax benefit in 2015 of $191 for the quarter and expense of $263 for the year.

2.

During the fourth quarter and full year of 2014, the Company was able to utilize prior unrecognized net operating losses of the Canadian parent to help reduce taxable income in Canada. The Company also determined it was probable that it would be able to utilize deferred tax assets within its US subsidiary. Accordingly, the Company recognized a net tax benefit in 2014 of $707 for the quarter and $680 for the year.

"2015 was an exceptional year for Caldwell Partners," said John Wallace, chief executive officer. "We began the year with the acquisition of Hawksmoor search, establishing our footprint in the United Kingdom and Europe, welcomed 5 new partners to our firm over the course of the year, and ended it having entered into an affiliation agreement with the 16 partners and 7 offices of CPGroup Latam, catapulting us into position as one of the top search providers in Latin America. This expansion further solidified our ability to conduct international and cross-border searches for our clients."

Wallace continued: "Over the last 24 months we have increased our annual revenues from $34M to $54M, a growth rate of 60%. It is an accomplishment of which we are understandably proud. We will continue to build our practice and functional offerings with exceptional partner hires across geographies in the United States, Canada and Europe, and will review select expansion opportunities in Asia and the Australia/New Zealand regions where it allows us to strengthen the services we are able to provide to our clients on a global basis.

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 27, 2015 and to be paid on December 11, 2015.

Financial Highlights (all numbers expressed in $000s)

  • Operating revenue:
    • 2015 fourth quarter professional fees increased by 16% (4% excluding a 12% variance from exchange rate fluctuations) over the comparable period last year to $15,365 (2014: $13,231).
    • Full year professional fees increased 21% (12% excluding a 9% variance from exchange rate fluctuations) over the prior year to $54,488 (2014: $45,086).
    • Professional fees in the US for the quarter were up 14% (down 4% excluding an 18% favourable variance from exchange rate fluctuations) to $10,794 (2014: $9,503) driven by an increase in the Average Number of Partners and higher Average Fees per Assignment from exchange rate movements offset by lower search volumes during the current year.
    • Fourth quarter professional fees in Canada were up 11% to $4,145 (2014: $3,728) with significantly higher Average Fees per Assignment more than offsetting a lower Average Number of Partners and decrease in Number of Assignments.
    • For the year, US professional fees increased 17% (4% excluding a 13% favourable variance from exchange rate fluctuations) to $37,136 (2014: $31,692) on an increase in the Average Number of Partners, a higher Number of Assignments and higher Average Fees per Assignment.
    • Full year professional fees for Canada increased 22% to $16,377 (2014: $13,394), from a higher Number of Assignments on higher Average Fees per Assignment partially offset by a decrease in the Average Number of Partners.
    • In its first year of existence, fourth quarter and full year professional fees for the UK were $426 and $975, respectively.
    • Beginning in the fourth quarter, the Company began licensing its third party Latin American affiliate CPGroup for the use of its brand and intellectual property (IP). For the 2015 fourth quarter and year to date, third party license fee revenue was $39.

  • Operating profit:
    • For the 2015 fourth quarter, higher revenue ($2,173) offset by higher cost of sales ($1,263) and expenses ($629) resulted in an increase in operating profit of $281 over the comparable period in the prior year. On a segment basis, $1,048 of profit was from Canada ($139, excluding intercompany IP license fee revenue implemented in the fourth quarter), the US experienced a $420 operating loss ($489 income excluding the impact of intercompany IP fees implemented in the fourth quarter), and Europe's operating loss was $175 from the variances discussed in revenue, cost of sales and expenses.
    • For the 2015 full year, higher revenue ($9,441) less related increased cost of sales ($6,204) and expenses ($2,323) from the variances discussed above resulted in operating profit of $2,176; a $913 increase over the prior year's operating profit of $1,263. On a segment basis, $1,859 of operating profit was from Canada ($950 net of intercompany IP license fee revenue) $547 of operating profit was from the US ($1,456 net of intercompany IP license fees), offset by an operating loss of $230 from Europe from the variances discussed in revenue, cost of sales and expenses.

  • Net earnings after tax:
    • The fourth quarter net earnings were $650 ($0.031 per share) in 2015, as compared to $892 of net earnings ($0.044 per share) in the comparable period a year earlier.
    • The full year net earnings after tax were $1,976 ($0.093 per share) in 2015, versus $1,967 ($0.101 per share) in 2014.

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 "NonGAAP Financial Measures and Other Operating Measures" in the Company's MD&A for a definition of these terms.

In its fourth quarter, the Company was selected for a comprehensive disclosure review by the Ontario Securities Commission (OSC). Based on the OSC Staff's determination that the Q3 MD&A did not contain information to materially satisfy the content of certain items required by National Instrument 51-102, we have agreed to modify our MD&A disclosures in future filings to more clearly identify, define and delineate the reasons for utilizing non-GAAP and Other Operating Measures to measure business performance, add quantitative analysis to our qualitative discussion of revenue and cost of sales results, clarify our Forward Looking Information disclosure, and expand the discussion on financial liquidity to include quantitative amounts from the Statement of Financial Position to more clearly demonstrate the Company's ability to fund its compensation payable on an on-going basis.

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 40 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, Latin America and in London, 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 $Canadian)











As at


As at





August 31


August 31





2015


2014

Assets







Current assets








Cash and cash-equivalents




9,956,402


12,742,873


Marketable securities




7,765,260


7,809,403


Accounts receivable




8,329,257


8,141,145


Prepaid expenses and other assets




1,947,624


1,364,383





27,998,543


30,057,804








Non-current assets








Restricted cash




497,632


452,138


Advances




1,022,118


195,033


Property and equipment




1,817,873


1,609,811


Intangible assets




374,561


384,470


Goodwill




3,220,443


1,072,315


Deferred income taxes




2,900,083


2,443,435








Total assets




37,831,253


36,215,006








Liabilities







Current liabilities








Accounts payable




1,736,559


1,399,983


Compensation payable




16,613,619


15,752,702


Accrued share purchase




1,603,840


-


Dividends payable




425,503


367,513


Income taxes payable




320,833


1,790,091


Contingent consideration




270,824


-


Deferred revenue




945,270


1,974,144





21,916,448


21,284,433

Non-current liabilities








Compensation payable




1,063,848


552,799


Contingent consideration




262,116


-





23,242,412


21,837,232

Equity attributable to owners of the Company








Share capital




7,294,900


7,330,563


Contributed surplus




15,025,252


16,253,631


Accumulated other comprehensive income




2,112,140


911,417


Deficit




(9,843,451)


(10,117,837)

Total equity




14,588,841


14,377,774

Total liabilities and equity




37,831,253


36,215,006

 


THE CALDWELL PARTNERS INTERNATIONAL INC.


CONSOLIDATED STATEMENTS OF EARNINGS 

(in $Canadian)








Twelve months ended




August 31




2015

2014






Revenues






Professional fees



54,488,421

45,086,251


License fees



39,055

-




54,527,476

45,086,251






Cost of sales



40,256,812

34,052,702

Gross profit



14,270,664

11,033,549






Expenses






General and administrative



11,156,790

9,097,474


Sales and marketing



943,356

751,408


Foreign exchange gain



(5,627)

(78,128)




12,094,519

9,770,754

Operating profit



2,176,145

1,262,795






Investment income



62,880

23,944

Earnings before income tax



2,239,025

1,286,739











Income tax



262,627

(680,047)

Net earnings for the year attributable to owners of the Company



1,976,398

1,966,786






Earnings per share






Basic



$0.093

$0.101


Diluted



$0.092

$0.100







CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(in $Canadian)




Twelve months ended




August 31




2015

2014






Net earnings for the year



1,976,398

1,966,786






Other comprehensive income:





Items that may be reclassified subsequently to net earnings






Unrealized (loss) gain on marketable securities



(71,596)

231,632


Cumulative translation adjustment



1,272,319

98,826

Comprehensive earnings for the year attributable to owners of the Company



3,177,121

2,297,244

 



THE CALDWELL PARTNERS INTERNATIONAL INC.









CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



(in $Canadian)











Accumulated Other Comprehensive






Income (Loss)







Unrealized






Cumulative

Gains/(Loss) on





Contributed

Translation

Marketable

Total


Deficit

Capital Stock

Surplus

Adjustment

Securities

Equity








Balance - August 31, 2013

(10,683,347)

4,080,020

16,247,987

(99,623)

680,582

10,225,619








Net earnings for the year

1,966,786

-

-

-

-

1,966,786








Dividend payments declared

(1,401,276)

-

-

-

-

(1,401,276)








Share-based payment expense

-

-

5,644

-

-

5,644








Common share issuance

-

3,250,543

-

-

-

3,250,543








Change in unrealized gains on







     marketable securities

-

-

-

-

231,632

231,632








Change in cumulative translation adjustment

-

-

-

98,826

-

98,826








Balance - August 31, 2014

(10,117,837)

7,330,563

16,253,631

(797)

912,214

14,377,774








Net earnings for the year

1,976,398

-

-

-

-

1,976,398








Dividend payments declared

(1,702,012)

-

-

-

-

(1,702,012)








Share-based payment expense

-

-

656

-

-

656








Common share issuance

-

379,500

-

-

-

379,500








Repurchase and cancellation of 

-

(415,163)

(1,229,035)

-

-

(1,644,198)

common shares














Change in unrealized loss on







     marketable securities 

-

-

-

-

(71,596)

(71,596)








Change in cumulative translation adjustment

-

-

-

1,272,319

-

1,272,319








Balance - August 31, 2015

(9,843,451)

7,294,900

15,025,252

1,271,522

840,618

14,588,841

 





THE CALDWELL PARTNERS INTERNATIONAL INC.





CONSOLIDATED STATEMENTS OF CASH FLOW

(in $Canadian)








Twelve months ended





August 31





2015


2014








Cash flow provided by (used in)










Operating activities







Net earnings for the year




1,976,398


1,966,786


Adjustments for:









Depreciation




433,860


354,256



Amortization




85,705


76,326



Share-based payment expense




656


5,644



Change in fair value of contingent consideration




20,498


-



Unrealized foreign exchange on subsidiary loans




(41,436)


(60,689)



Decrease in non-current severance accrual




-


(148,750)



Increase (decrease) in deferred taxes




76,196


(2,458,962)



Increase in non-current compensation payable




511,049


321,568



Disposal of property and equipment




4,932


20,079



Decrease (increase) in accounts receivable




1,017,546


(1,024,956)



Increase in prepaid expenses and other assets




(336,356)


(291,772)



Increase in accounts payable 




57,623


35,971



(Decrease) increase in compensation payable




(227,094)


6,798,423



(Decrease) increase in income taxes payable




(1,498,357)


1,787,888



Increase in dividends payable 




57,990


111,530



Payment of compensation payable




(597,589)


(330,313)



(Decrease) increase in deferred revenue




(1,186,614)


599,825

Net cash provided by operating activities




355,007


7,762,854










Investing activities








Acquisition of business, net of cash acquired




(1,017,702)


-


Increase in marketable securities




(27,453)


(4,000,960)


(Increase) decrease in advances




(678,599)


105,466


Increase in restricted cash




(3,078)


(198,364)


Additions to property and equipment




(473,706)


(608,558)

Net cash used in investing activities




(2,200,538)


(4,702,416)









Financing activities







Dividend payments




(1,702,012)


(1,401,276)


Common share issuance




-


3,250,543

Net cash (used in) provided by financing activities




(1,702,012)


1,849,267










Effect of exchange rate changes on cash and cash equivalents




761,072


220,211

Net (decrease) increase in cash and cash equivalents




(2,786,471)


5,129,916

Cash and cash equivalents, beginning of year




12,742,873


7,612,957

Cash and cash equivalents, end of year




9,956,402


12,742,873

 

SOURCE The Caldwell Partners International Inc.

For further information: Investors & Analysts: Chris Beck, CPA, Chief Financial Officer, The Caldwell Partners International, cbeck@caldwellpartners.com, +1.617.934.1843; Media: Caroline Lomot, Director of Marketing, The Caldwell Partners International, clomot@caldwellpartners.com, +1.516.830.3535


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