The Caldwell Partners International Issues Fiscal 2016 First Quarter Financial Results

  • Year-over-year first quarter revenue increase of 12.7%.
  • First quarter operating loss of $148,000.
  • Board declares sixteenth consecutive quarterly dividend of 2.0 cents.

TORONTO, Jan. 7, 2016 /CNW/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2016 first quarter ended November 30, 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

November 30,


2015

2014

Professional fees

$13,945

$12,436

License fee revenue

$65

0

Operating revenue

$14,010

$12,436

Expenses

$14,158

$12,129

Operating profit (loss)

($148)

$307

Investment income

$1

$13

Earnings before tax

($147)

$320

Net earnings after tax

($165)

$277

Net earnings per share

($0.008)

$0.013

"Despite absolute revenue growth, we are disappointed in our first quarter results. Our revenue was flat on a constant currency basis and this, coupled with higher direct costs from our investment in Europe, led to an operating loss on the quarter," said John Wallace, chief executive officer. "However, we are seeing a stronger start early in this quarter, relative to last year. Our new partners have now fully transitioned to our platform and are seeing traction in the marketplace." 

Wallace continued: "We continue to spend a great deal of time and focus assimilating our new geographic teams, to the long-term benefit of both our clients and our shareholders. We feel very positive about the steps we've made and about the expanded reach and capability we are now delivering."

After careful review and consideration, the Board of Directors today also declared the payment of a quarterly dividend of 2.0 cents per Common Share payable on March 14, 2016 to shareholders of record on January 19, 2016.

Financial Overview (all numbers expressed in $000s, except per share amounts)

  • Operating revenue:
    • Professional fees for the first quarter of 2016 increased 12.1% (down 0.3% excluding a 12.4% variance from exchange rate fluctuations) over the comparable period last year to $13,945 (2015: $12,436).
    • First quarter professional fees in the US were up 22.5% (3.6% excluding an 18.9% favourable variance from exchange rate fluctuations) to $9,973 (2015: $8,145) driven by an increase in the Average Number of Partners and higher Average Fees from favourable exchange rates partially offset by lower search volumes during the current year.
    • First quarter professional fees in Canada were down 20.8% to $3,369 (2015: $4,256) due to lower search volumes more than offsetting higher Average Fees per Assignment.
    • First quarter Europe professional fees were $602 versus $36 last year. The Europe operation was acquired and initiated business on October 1, 2014, and as a result, last year's figure includes only two months of operations in which we had one partner compared to the current period which covered a full three month quarter and had three partners for its entirety.
    • License fees from our licensees in Latin America and New Zealand for the use of the Caldwell Partners brand and intellectual property for the fiscal 2016 first quarter were $65 (2015: nil). As the licensing agreements were signed in the fourth quarter of fiscal 2015 and first quarter of fiscal 2016, there was no corresponding license fee revenue in the first quarter of last year.
  • Operating profit (loss):
    • For the first quarter of 2016, higher revenue ($1,574) offset by higher cost of sales ($1,696) and expenses ($332) led to a decrease in operating profit of $454 over the comparable period in the prior year and a reported operating loss of $148. Included in this loss was an investment of $325 in the new European operations--reflecting the transition of two newly hired partners at the end of fiscal 2015 and a full quarter (versus two months a year ago) of operations in the London office.
    • Cost of sales were up 18.5% over last year (4.7% excluding increases related to foreign exchange fluctuations). As a percentage of professional fees, first quarter cost of sales was 77.6%, up 3.8% from 73.8% in the same period last year. The increase as a percentage of professional fees was attributable to higher partner compensation expense which arose from a proportional shift of more revenue from partners in higher compensation tiers combined with fixed draw amounts for some partners that exceeded commission earnings in the period (1.4%), higher search delivery personnel costs resulting from a higher average headcount hired to support added partners (2.0%) and higher costs of search delivery materials (0.4%). See the company's Management Discussion and Analysis for a further discussion of cost of sales.
    • Expenses were up 11.2% (2.4% excluding foreign exchange fluctuations). The 2.4% constant currency increase of $70 represented higher occupancy costs from the addition of our London location from the acquisition of Hawksmoor part way through the first quarter of last fiscal year and higher lease costs in certain US relocations ($109) and higher share based compensation expense on the increase in share price during the current quarter ($72), offset by lower management operating performance bonus accruals ($173) and general increases across other categories ($62).
    • On a segment basis, $388 of profit was from Canada ($164, excluding $224 in intercompany license fee revenue), the US experienced a $211 operating loss (operating profit of $13 excluding the impact of the intercompany license fees), and Europe's operating loss was $325 from the operational investment discussed above.
  • Net profit:
    • First quarter net loss was $165 ($0.008 per share), as compared to $277 of net earnings ($0.013 per share) in the comparable period a year earlier.

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 INTERIM STATEMENTS OF FINANCIAL POSITION

(unaudited - in $000s Canadian)














As at









November 30

August 31









2015

2015

Assets









Current assets









Cash and cash equivalents





7,306

9,956


Marketable securities





7,790

7,765


Accounts receivable





7,156

8,329


Prepaid expenses and other current assets




2,158

1,948









24,410

27,998

Non-current assets









Restricted cash






500

498


Advances






1,292

1,022


Property and equipment





1,985

1,818


Intangible assets






354

375


Goodwill






3,207

3,220


Deferred income taxes





2,921

2,900

Total assets






34,669

37,831











Liabilities








Current liabilities









Accounts payable 





2,274

1,736


Compensation payable





16,076

16,614


Accrued share purchase





-

1,604


Dividends payable





403

425


Income taxes payable





161

321


Contingent consideration





536

271


Deferrred revenue






634

945









20,084

21,916

Non-current liabilities









Compensation payable





526

1,064


Contingent consideration





-

262









20,610

23,242











Equity attributable to owners of the Company







Share capital






7,295

7,295


Contributed surplus





15,025

15,025


Accumulated other comprehensive income




2,150

2,112


Deficit






(10,411)

(9,843)

Total equity






14,059

14,589

Total liabilities and equity





34,669

37,831











THE CALDWELL PARTNERS INTERNATIONAL INC.












CONSOLIDATED INTERIM STATEMENTS OF EARNINGS (LOSS)

(unaudited - in $000s Canadian, except per share amounts)












Three months ended









November 30









2015

2014











Revenues










Professional fees






13,945

12,436


License fees






65

-









14,010

12,436











Cost of sales






10,868

9,172

Gross profit






3,142

3,264











Expenses










General and administrative





3,036

2,674


Sales and marketing





260

273


Foreign exchange (gain) loss





(6)

10









3,290

2,957

Operating (loss) profit






(148)

307











Investment income






1

13

(Loss) earnings before income taxes





(147)

320











Income tax expense






18

43











Net (loss) earnings for the period attribtuable to owners of the Company


(165)

277











(Loss) earnings per share









Basic and diluted






(0.008)

0.013





















CONSOLIDATED INTERIM STATEMENTS OF 




COMPREHENSIVE EARNINGS






(unaudited - in $000s Canadian)














Three months ended









November 30









2015

2014











Net (loss) earnings for the period





(165)

277











Other comprehensive income:







Items that may be reclassified subsequently to net earnings






Unrealized gain (loss) on marketable securities




24

(17)


Cumulative translation adjustment




14

253

Comprehensive (loss) earnings for the period attributable to owners of the Company


(127)

513








THE CALDWELL PARTNERS INTERNATIONAL INC.









CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY


(unaudited - in $000s Canadian)











Accumulated Other Comprehensive






Income (Loss)







Unrealized






Cumulative 

Gains (Loss) on





Contributed

Translation

Marketable

Total


Deficit

Capital Stock

Surplus

Adjustment

Securities

Equity








Balance - September 1, 2014

(10,118)

7,331

16,254

(1)

912

14,378








Net earnings for the three month period ended 








November 30, 2014

277

-

-

-

-

277








Dividend payments declared

(425)

-

-

-

-

(425)








Common share issuance

-

379

-

-

-

379








Change in unrealized loss on








marketable securities available for sale

-

-

-

-

(17)

(17)








Change in cumulative translation adjustment

-

-

-

253

-

253








Balance - November 30, 2014

(10,266)

7,710

16,254

252

895

14,845















Balance - September 1, 2015

(9,843)

7,295

15,025

1,271

841

14,589








Net earnings for the three month period ended 








November 30, 2015

(165)

-

-

-

-

(165)








Dividend payments declared

(403)

-

-

-

-

(403)








Change in unrealized loss on








marketable securities available for sale

-

-

-

-

24

24








Change in cumulative translation adjustment

-

-

-

14

-

14








Balance - November 30, 2015

(10,411)

7,295

15,025

1,285

865

14,059











THE CALDWELL PARTNERS INTERNATIONAL INC.














CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW


(unaudited - in $000s Canadian)














Three months ended









November 30









2015

2014











Cash flow (used in) provided by

















Operating activities









Net (loss) earnings for the period




(165)

277


Adjustments for:










Depreciation





139

93



Amortization





23

20



Amortization of advances





160

115



Change in fair value of contingent consideration



3

-



Unrealized foreign exchange on subsidiary loans



(8)

14



Decrease in non-current compensation payable



(537)

(80)


Changes in items of working capital








Decrease in accounts receivable




1,205

1,480



Decrease in prepaid expenses and other assets



33

60



Increase (decrease) in accounts payable 




286

(22)



Decrease in compensation payable




(842)

(1,014)



Decrease in income taxes payable




(161)

(1,833)



Payment of compensation payable




(449)

-



Decrease in deferred revenue




(313)

(1,282)

Net cash used in  operating activities





(626)

(2,172)











Investing activities









Acquisition of  business, net of cash acquired




-

(419)


Increase in advances





-

(290)


Increase in restricted cash





(1)

(1)


Additions to property and equipment




(58)

(58)

Net cash provided by (used in) investing activities




(59)

(768)











Financing activities









Share purchase and cancellation





(1,604)

-


Dividend payments





(425)

(368)

Net cash used in financing activities





(2,029)

(368)











Effect of exchange rate changes on cash and cash equivalents



64

277

Net decrease in cash and cash equivalents




(2,650)

(3,031)

Cash and cash equivalents, beginning of period




9,956

12,743

Cash and cash equivalents, end of period




7,306

9,712

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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