The Caldwell Partners International Issues Fiscal 2016 Fourth Quarter and Full Year Financial Results

  • Company posts annual operating revenue of $58.7 million, up 8% over prior year.
  • Fourth quarter operating revenue up 2% over prior year to $15.8 million.
  • Operating Profit of $37 for the quarter and $1,278 for the year includes cost alignment charges totalling $1,009 in the fourth quarter.
  • Board declares 2.0 cent quarterly dividend.

TORONTO, Nov. 10, 2016 /CNW/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2016 fourth quarter and year ended August 31, 2016. 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


2016

2015

2016

2015

Professional fees

$15,712

$15,365

$57,618

$54,488

Investment income

-

-

$877

-

License fee revenue

$64

$39

$253

$39


Operating revenue

$15,776

$15,404

$58,748

$54,527

Cost of sales

$11,447

$11,433

$44,604

$40,257

Expenses1

$4,291

$3,518

$12,866

$12,095


Operating profit

$37

$454

$1,278

$2,176

Investment income from marketable securities

-

$5

$404

$63


Earnings before tax

$37

$459

$1,682

$2,239


Net earnings after tax2

$ (57)

$650

$881

$1,976


Net earnings per share

$ (0.003)

$0.031

$0.044

$0.093

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.

2.

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.

 

"A strong performance by our team over the last two quarters allowed us to deliver profitable full year results," said John Wallace, chief executive officer. "We are pleased with the manner in which we weathered several challenges this fiscal year, including investments in our UK operation and a 25% decline in year-over-year professional fees in Canada due to weakness in the Canadian financial services and oil and gas industries. The staffing alignment, real estate relocation and cost reduction initiatives we implemented, coupled with revenue strengthening seen in Q4, have us well-positioned for a strong 2017."

Wallace continued: "We remain committed to being an annuity-based firm. Subsequent to the cost alignment initiatives that we took in the later part of Fiscal 2016, we are confident that in normal markets we will deliver an operating profit that will allow us to reward our shareholders through a sustainable dividend, to continue to organically grow the company's revenues, and to maintain a cash position that will underpin the firm."

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 21, 2016 and to be paid on December 16, 2016.

Financial Highlights (all numbers expressed in $000s)

  • Operating revenue:
    • Professional fees for the fourth quarter of 2016 increased 2.3% (1.8% excluding a 0.5% favourable variance from exchange rate fluctuations) over the comparable period last year to $15,712 (2015: $15,365).
    • Professional fees for the year increased 5.7% (a decline of 0.8% excluding a 6.5% favourable variance from exchange rate fluctuations) over the comparable period last year to $57,618 (2015: $54,488).
    • Professional fees in the US for the quarter were up 11.8% (10.5% excluding a 1.3% favourable variance from exchange rate fluctuations) to $12,063 (2015: $10,794) driven by growth in the Average Fee per Assignment and the Number of Assignments per Partner with the Average Number of Partners remaining constant.
    • Fourth quarter professional fees in Canada continued to be pressured by economic conditions in Western Canada as well as the Financial Services sector across Canada and were down 24.3% to $3,139 (2015: $4,145). The impact of a higher Average Number of Partners was more than offset by a lower Number of Assignments per Partner and a lower Average Fee per Assignment.
    • Fourth quarter Europe professional fees were up 19.5% to $509 (2015: $426) last year.
    • For the year, US professional fees increased 16.2% (6.8% excluding a 9.4% favourable variance from exchange rate fluctuations) to $43,170 (2015: $37,136) on an increase in the Average Fee per Assignment and Average Number of Partners.
    • Full year professional fees for Canada were down 25.1% to $12,260 (2015: $16,377), with a lower Number of Assignments per Partner and a lower Average Fee per Assignment being only slightly offset by a higher Average Number of Partners.
    • Full year professional fees in Europe were $2,188 versus $975 last year.
    • License fees from our affiliations in Latin America and New Zealand for the use of the Caldwell Partners brand and intellectual property were $64 (2015: $39) for the fourth quarter and $253 (2015: $39) for the full year.

  • Operating profit:
    • For the 2016 fourth quarter, higher revenue ($372) was more than offset by the higher cost of sales ($14) and higher expenses ($774) driven by the net of cost-alignment charges, reduction in bonuses and the other fluctuations, resulting in a decrease in operating profit of $416 over the comparable period in the prior year to $37 (2015: $453). On a segment basis, the fourth quarter operating profit of $37 came from the US experiencing a $55 operating loss ($243 income excluding the impact of intercompany license fees) and inclusive of the $759 New York office sublease and relocation charge, Canada producing $360 of profit ($62, excluding intercompany license fee revenue) and Europe having an operating loss of $268 driven by investment expansion and the related costs.
    • For the 2016 full year, higher revenue ($4,221) less related increased cost of sales ($4,347) and expenses ($772) from the cost-alignment, reduced management bonuses and other variances resulted in a decrease in operating profit of $898 to $1,278 (2015: $2,176). On a segment basis, for the full year operating profit of $1,278 came from operating profit in the US of $1,380 ($2,370 net of intercompany license fees) and inclusive of the $759 New York office sublease charge, and operating profit in Canada of $1,122 ($133 net of intercompany license fee revenue) being offset by an operating loss of $1,224 from Europe from investment expansion and the related costs.

  • Net earnings after tax:
    • The fourth quarter net loss was ($57) (loss of $0.003 per share) in 2016, as compared to $650 of net earnings ($0.031 per share) in the comparable period a year earlier.
    • The full year net earnings after tax were $881 ($0.044 per share) in 2016, versus $1,976 ($0.093 per share) in 2015.

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



2016


2015

Assets




Current assets





Cash and cash equivalents

8,422


9,956


Marketable securities

5,056


7,765


Accounts receivable

10,031


8,329


Prepaid expenses and other assets

2,416


1,948



25,925


27,998







Non-current assets





Restricted cash

187


498


Marketable securities

573


-


Advances

502


1,022


Property and equipment 

1,838


1,818


Intangible assets

279


375


Goodwill

2,920


3,220


Deferred income taxes

2,475


2,900


Total assets

34,699


37,831


Liabilities

Current liabilities





Accounts payable

2,384


1,736


Compensation payable

16,125


16,614


Accrued share purchase

-


1,604


Dividends payable

403


425


Income taxes payable

513


321


Contingent consideration

289


271


Deferred revenue

1,187


945



20,901


21,916

Non-current liabilities





Compensation payable

687


1,064


Provisions

184


-


Contingent consideration

-


262



21,772


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

1,179


2,112


Deficit 

(10,572)


(9,843)

Total equity

12,927


14,589

Total liabilities and equity

34,699


37,831

 


THE CALDWELL PARTNERS INTERNATIONAL INC.


CONSOLIDATED STATEMENTS OF EARNINGS

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


Twelve months ended


August 31


2016

2015




Revenues




Professional fees

57,618

54,488


Investment income

877

-


License fees

253

39



58,748

54,527





Cost of sales

44,604

40,257

Gross profit

14,144

14,270





Expenses




General and administrative

11,682

11,158


Sales and marketing

1,144

943


Foreign exchange loss (gain)

40

(6)



12,866

12,095

Operating profit

1,278

2,176





Investment income

404

63

Earnings before income tax

1,682

2,239








Income tax

801

263

Net earnings for the year attributable to owners of the Company

881

1,976




Earnings per share




Basic

$0.044

$0.093


Diluted

$0.043

$0.092



CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(in $000s Canadian)


Twelve months ended


August 31


2016

2015




Net earnings for the year

881

1,976




Other comprehensive income:



Items that may be reclassified subsequently to net earnings




Realization of gains on marketable securities included in net income

(403)

-


Unrealized loss on marketable securities

(100)

(72)


Cumulative translation adjustment

(430)

1,273

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

(52)

3,177

 

 


THE CALDWELL PARTNERS INTERNATIONAL INC.


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in $000s Canadian)





Accumulated Other Comprehensive






Income







Unrealized






Cumulative

Gain/(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 year

1,976

-

-

-

-

1,976








Dividend payments declared

(1,701)

-

-

-

-

(1,701)








Common share issuance

-

379

-

-

-

379








Repurchase and cancellation of common shares

-

(415)

(1,229)

-

-

(1,644)








Change in unrealized loss on marketable securities 

-

-

-

-

(72)

(72)








Change in cumulative translation adjustment

-

-

-

1,273

-

1,273








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 income

-

-

-

-

(403)

(403)








Change in unrealized gain on marketable securities available for sale 

-

-

-

-

(100)

(100)








Change in cumulative translation adjustment

-

-

-

(430)

-

(430)








Balance - August 31, 2016

(10,572)

7,295

15,025

842

337

12,927

 

 


THE CALDWELL PARTNERS INTERNATIONAL INC.


CONSOLIDATED STATEMENTS OF CASH FLOW

(in $000s Canadian)




Twelve months ended




August 31




2016


2015







Cash flow provided by (used in)










Operating activities





Net earnings for the year

881


1,976


Adjustments for:






Depreciation

539


434



Amortization

94


86



Realized gain on marketable securities

(403)


-



Change in fair value of contingent consideration

10


21



Unrealized foreign exchange on subsidiary loans

28


(41)



Non-cash professional fees received as equity

(1,121)


-



Increase in deferred taxes

403


76



(Decrease) increase in long term incentive accrual

(377)


511



Loss on disposal of property and equipment

77


5



(Increase) decrease in accounts receivable

(1,916)


1,019



Increase in prepaid expenses and other assets

(473)


(336)



Increase in accounts payable 

401


58



Decrease in compensation payable

(95)


(227)



Increase (decrease) in income taxes payable

193


(1,498)



(Decrease) increase in dividends payable 

-


58



Increase in provisions

184


-



Payment of cash-settled share-based compensation

(449)


(598)



Payment of contingent consideration

(254)


-



Increase (decrease) in deferred revenue

245


(1,187)

Net cash (used in) provided by operating activities

(2,033)


357







Investing activities





Proceeds from sale of marketable securities

3,171


-


Acquisition of business, net of cash acquired

-


(1,018)


Increase in marketable securities

-


(27)


Decrease (increase) in advances

400


(679)


Decrease (increase) in restricted cash

313


(3)


Additions to property and equipment

(414)


(474)

Net cash provided by (used in) investing activities

3,470


(2,201)







Financing activities





Repurchase and cancellation of common shares

(1,604)


-


Dividend payments

(1,633)


(1,701)

Net cash used in financing activities

(3,237)


(1,701)







Effect of exchange rate changes on cash and cash equivalents

266


758

Net decrease in cash and cash equivalents

(1,534)


(2,787)

Cash and cash equivalents, beginning of year

9,956


12,743

Cash and cash equivalents, end of year

8,422


9,956

 

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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