• Third quarter revenue of $14,524,000.
  • Operating profit of $622,000.
  • Board declares twenty-second consecutive quarterly dividend of 2.0 cents.

TORONTO, July 5, 2017 /CNW/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2017 third quarter ended May 31, 2017. 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

May 31

Nine Months Ended
May 31


2017

2016

2017

2016

Professional fees

$14,443

$13,680

$41,737

$41,906

Investment income

-

$90

-

$877

License fees

$81

$57

$218

$189


Revenues

$14,524

$13,827

$41,955

$42,972

Cost of sales

$10,771

$10,596

$30,717

$33,157

Expenses (1)

$3,131

$2,551

$8,911

$8,573


Operating profit

$622

$680

$2,327

$1,242

Investment (loss) income from marketable securities

($142)

-

($142)

$404


Earnings before tax

$480

$680

$2,185

$1,646


Net earnings after tax

$224

$339

$1,253

$939


Net earnings per share

$0.011

$0.017

$0.062

$0.046

"We continue to focus on growing our firm in a way that will serve to make our clients better, more competitive and more successful," said John Wallace, chief executive officer. "We have found that keeping our clients at the centre of our strategy has been the catalyst for our growth and the driver behind our position as one of the fastest-growing search firms in our space and category."

Wallace continued: "We added five new high calibre partners to our team during the third quarter and a sixth partner subsequent to quarter-end. This brings the number of partners in our wholly-owned offices to 40 – a new high water mark for the firm. We will continue to make strategic additions to the firm where it will expand the products and services that we are able to provide to our clients and to the benefit of our shareholders."

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 July 14, 2017 and to be paid on September 8, 2017.

Financial Highlights (all numbers expressed in $000s)

  • Operating revenue:


    Third Quarter
  • Professional fees for the third quarter of 2017 increased 5.6% (2.8% excluding a 2.8% variance from exchange rate fluctuations) over the comparable period last year to $14,443 (2016: $13,680).
    • Third quarter professional fees in the US were up 6.6% (up 2.8% excluding a 3.8% variance from exchange rate fluctuations) to $10,988 (2016: $10,305). Increases in the Number of Assignments per Partner and Average Fee per Assignment were partially offset by a lower Average Number of Partners.
    • Third quarter professional fees in Canada were up 6.1% to $3,205 (2016: $3,020). A higher Average Number of Partners and higher Number of Assignments per Partner were partially offset by a lower Average Fee per Assignment.
    • Third quarter professional fees in Europe were down 29.6% (down 23.6% excluding a 6.0% variance from exchange rate fluctuations) to $250 (2016: $355). During the fourth quarter of fiscal 2016 and first quarter of fiscal 2017, two partners, whose aggregate related costs were significantly higher than the revenue produced, left the firm and corresponding reductions were made to the support staff. As a result, there was a significant decrease during the quarter in the Average Number of Partners, exacerbated by a decrease in Average Fee per Assignment and partially offset by an increase in the Number of Assignments per Partner.
  • Investment income pertains to realized gains on equity positions taken in client companies as part of our professional fees. During fiscal 2016, the firm monetized an equity position obtained in a prior period. This monetization resulted in the recognition of $877 of investment income recorded during the second quarter ($787) and third quarter ($90) of fiscal 2016.
  • License fees from our licensees in Latin America and New Zealand for the use of the Caldwell Partners brand and intellectual property for the 2017 third quarter were $81 (2016: $57).


    Year to date
  • Professional fees for the first nine months of 2017 decreased 0.4% (an increase of 0.3% excluding a 0.7% variance from exchange rate fluctuations) over the comparable period last year to $41,737 (2016: $41,906).
    • Year to date professional fees in the US were up 0.2% (up 0.6% excluding a 0.4% variance from exchange rate fluctuations) to $31,166 (2016: $31,106). A lower Average Fee per Assignment and a lower Average Number of Partners was more than offset by an increase in the Number of Assignments per Partner.
    • Year to date professional fees in Canada were up 7.1% to $9,773 (2016: $9,122), similarly caused by a higher Average Number of Partners and higher Number of Assignments per Partner being partially offset by a lower Average Fee per Assignment.
    • Year to date professional fees in Europe were down 52.4% (down 43.4% excluding an 9.0% variance from exchange rate fluctuations) to $798 (2016: $1,678), with the lower Number of Assignments per Partner and lower Average Number of Partners being only slightly offset by a higher Average Fee per Assignment, for the reasons noted above.
  • License fees from our licensees in Latin America and New Zealand for the use of the Caldwell Partners brand and intellectual property for the nine-month period ended May 31, 2017 were $218 (2016: $189).

  • Operating profit:


    Third Quarter
  • For the third quarter of 2017, higher revenue ($697) was more than offset by higher cost of sales ($175) and higher expenses ($580). This resulted in a decrease in operating profit by $58 to $622 over the comparable period in the prior year (2016: $680). Exchange rate variances relative to the prior year period had a favourable impact of $134 on operating profit.
  • Higher expenses were the result of increases in share-based compensation expense caused by increases in the share price in the current year compared with share price declines in the previous year and increases in management operating performance bonus accruals based on achievement of performance targets in the current year versus non-attainment in the prior year, partially offset by general decreases across other categories.
  • On a segment basis, $500 of operating profit was from the US ($746 net of intercompany license fees), $216 (a loss of $30 net of intercompany license fees) of operating profit was from Canada and Europe's operating loss was $94


    Year to date
  • Year to date, lower revenue ($1,017) was more than offset by lower cost of sales ($2,440) and net of higher expenses ($338). The net of these changes was an increase in operating profit of $1,085 to $2,327 (2016: $1,242). Exchange rate variances relative to the prior year period had a favourable impact of $66 on operating profit.
  • Higher expenses were driven by increases in management operating performance bonus accruals based on achievement of performance targets in the current year versus non-attainment in the prior year and increases in share-based compensation expense caused by increases in the share price in the current year compared with share price declines in the previous year. These increases were offset by a reduction in the contingent consideration payable related to the Hawksmoor acquisition based on final earn‐out achievement calculations and net lower expenses in other cost categories.
  • On a segment basis, $1,684 of operating profit was from the US ($2,384 net of intercompany license fees), $989 of operating profit was from Canada ($288 net of intercompany license fee revenue) and Europe's operating loss was $346.

  • Net earnings after tax:
    • For the third quarter of 2017, we reported investment losses of $142 representing capital losses on the sale of marketable securities compared to the prior year when there were no sales. Year to date, investment losses are $142 compared to investment income of $404 in the prior year.
    • Third quarter net income was $224 ($0.011 per share), as compared to $339 ($0.017 per share) in the comparable period a year earlier.
    • Year-to-date net income was $1,253 ($0.062 per share), as compared to $939 ($0.046 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; volatility of the market price and volume of common shares; and legal matters. 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 $Canadian)


As at

As at


May 31

August 31


2017

2016

Assets



Current assets




Cash and cash-equivalents

7,574

8,422


Marketable securities

5,012

5,056


Accounts receivable

9,510

10,031


Prepaid expenses and other assets

1,924

2,416


24,020

25,925

Non-current assets




Restricted cash

143

187


Marketable securities

295

573


Advances

618

502


Property and equipment

1,879

1,838


Intangible assets

215

279


Goodwill

2,972

2,920


Deferred income taxes

2,542

2,475

Total assets

32,684

34,699




Liabilities



Current liabilities




Accounts payable

2,116

2,384


Compensation payable

14,056

16,125


Dividends payable

408

403


Income taxes payable

891

513


Contingent consideration

-

289


Deferred revenue

536

1,187


18,007

20,901

Non-current liabilities




Compensation payable

846

687


Provisions

154

184


19,007

21,772

Equity attributable to owners of the Company




Share capital

7,515

7,295


Contributed surplus

14,992

15,025


Accumulated other comprehensive income

1,702

1,179


Deficit

(10,532)

(10,572)

Total equity

13,677

12,927

Total liabilities and equity

32,684

34,699

 


THE CALDWELL PARTNERS INTERNATIONAL INC.


CONSOLIDATED INTERIM STATEMENTS OF EARNINGS

(unaudited - in $Canadian)



Three months ended

Nine months ended



May 31

May 31



2017

2016

2017

2016







Revenues






Professional fees 

14,443

13,680

41,737

41,906


Investment income

-

90

-

877


License fees

81

57

218

189



14,524

13,827

41,955

42,972







Cost of sales

10,771

10,596

30,717

33,157

Gross profit

3,753

3,231

11,238

9,815







Expenses






General and administrative

2,903

2,313

8,275

7,787


Sales & marketing

277

257

716

787


Foreign exchange gain

(49)

(19)

(80)

(1)



3,131

2,551

8,911

8,573

Operating profit 

622

680

2,327

1,242







Investment (loss) income

(142)

-

(142)

404

Earnings before income tax

480

680

2,185

1,646







Income tax

256

341

932

707







Net earnings for the period attributable to owners of the Company

224

339

1,253

939







Earnings per share






Basic and diluted

$0.011

$0.017

$0.062

$0.046













CONSOLIDATED INTERIM STATEMENTS OF 





COMPREHENSIVE EARNINGS





(unaudited - in $Canadian)







Three months ended

Nine months ended



May 31

May 31



2017

2016

2017

2016







Net earnings for the period

224

339

1,253

939







Other comprehensive income:





Items that may be reclassified subsequently to net income






Realization of loss (gain) included in net earnings

142

-

142

(403)


Unrealized gain on marketable securities

37

142

190

114


Cumulative translation adjustment

219

(152)

191

(188)

Comprehensive earnings for the period attributable to owners of the Company

622

329

1,776

462

 








THE CALDWELL PARTNERS INTERNATIONAL INC.










CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY


(unaudited - in $Canadian)











Accumulated Other Comprehensive

Income (Loss)



Deficit

Capital Stock

Contributed

Surplus

Cumulative

Translation

Adjustment

Unrealized

Gains on

Marketable

Securities

Total

Equity








Balance - September 1, 2015

(9,843)

7,295

15,025

1,271

841

14,589








Net earnings for the nine month period ended 








May 31, 2016

939

-

-

-

-

939








Dividend payments declared

(1,209)

-

-

-

-

(1,209)








Realization of gains included in net income 

-

-

-

-

(403)

(403)








Change in unrealized gain on








marketable securities available for sale

-

-

-

-

114

114








Change in cumulative translation adjustment

-

-

-

(188)

-

(188)








Balance - May 31, 2016

(10,113)

7,295

15,025

1,083

552

13,842















Balance - September 1, 2016

(10,572)

7,295

15,025

841

338

12,927








Net earnings for the nine month period ended 








May 31, 2017

1,253

-

-

-

-

1,253








Dividend payments declared

(1,213)

-

-

-

-

(1,213)








Employee share option plan share issue

-

220

(33)

-

-

187








Realization of losses included in net earnings

-

-

-

-

142

142








Change in unrealized gain on








marketable securities available for sale

-

-

-

-

190

190








Change in cumulative translation adjustment

-

-

-

191

-

191








Balance - May 31, 2017

(10,532)

7,515

14,992

1,032

670

13,677

 


THE CALDWELL PARTNERS INTERNATIONAL INC.


CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW

(unaudited - in $Canadian)


Nine months ended


May 31


2017

2016




Cash flow provided by (used in)






Operating activities




Net earnings for the period

1,253

939


Adjustments for:





Depreciation

419

403



Amortization

71

71



Amortization of advances

566

775



Realization of capital loss (gain)

142

(403)



Change in fair value of contingent consideration

(109)

8



Unrealized foreign exchange on subsidiary loans

(89)

42



Increase (decrease) in long term incentive accrual

159

(450)



Decrease (incease) in marketable securities

432

(1,309)



Decrease in accounts receivable

706

225



Decrease (increase) in prepaid expenses and other assets

514

(98)



Decrease in accounts payable

(298)

(282)



Increase in income taxes payable

356

345



Decrease in compensation payable

(1,565)

(3,355)



Payment of contingent consideration

(181)

(254)



Payment of compensation payable

(709)

(449)



Decrease in deferred revenue

(644)

(114)



Decrease in provisions

(30)

-

Net cash provided by (used in) operating activities

993

(3,906)




Investment activities




Proceeds from sale of marketable securities

101

3,171


Advances

(669)

(642)


Decrease in restricted cash

48

313


Additions to property and equipment

(426)

(267)

Net cash (used in) provided by investing activities

(946)

2,575




Financing activities




Share issuance from employee share option plan

187

-


Share purchase and cancellation

-

(1,603)


Dividend payments

(1,208)

(1,231)

Net cash used in investing activities

(1,021)

(2,834)




Effect of exchange rate changes on cash and cash equivalents

126

247

Net decrease in cash and cash equivalents

(848)

(3,918)

Cash and cash equivalents, beginning of period

8,422

9,956

Cash and cash equivalents, end of period

7,574

6,038

SOURCE The Caldwell Partners International Inc.


Source: The Caldwell Partners International Inc.