-  First quarter revenue of $18.1 million, a 14% increase year over year.
-  Net earnings after tax of $462,000, a 119% increase year over year.
-  Board declares 32nd consecutive quarterly dividend.

TORONTO, Jan. 9, 2020 /CNW/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2020 first quarter ended November 30, 2019. All references to quarters or years are for the fiscal periods unless otherwise noted and all currency amounts are in Canadian dollars.

As a leading provider of executive talent, Caldwell enables clients to thrive and succeed by helping them identify, recruit and retain the best people. (CNW Group/The Caldwell Partners International Inc.)

Financial Highlights (in $000s except per share amounts)


Three Months Ended

November 30


2019

2018

Professional fees

$17,498

$15,169

License fees

$59

$217

Direct expense reimbursements

$519

$506

Revenues

$18,076

$15,892

Cost of sales

$13,467

$11,578

Reimbursed direct expenses

$519

$506

Expenses

$3,542

$3,379

Operating profit

$548

$429

Interest expense on lease liability

$66

$-

Investment income

$71

($41)

Earnings before tax

$553

$388

Net earnings after tax

$462

$211

Net earnings per share

$0.023

$0.010



1

Effective September 1, 2019 IFRS 16 was implemented resulting in a change to the way leases are treated and giving rise to interest expense on lease liability. During periods prior to fiscal 2020, all lease related expenses were recognized as occupancy costs and included in expenses in arriving at operating profit.

 

"This was another excellent quarter and a strong start to our fiscal year," said John Wallace, chief executive officer. "We said we were well-positioned heading into fiscal 2020, and we are pleased to be delivering on that promise with a 14% increase in revenue and a 119% increase in net earnings after tax to start our fiscal year. This improvement is due in part to a stronger US market year-over-year, and a rebound by our UK team as new business booking and business development activity has increased substantially."

Wallace continued: "We are confident regarding the overall business climate as we head into the second quarter, and remain very positive about the coming year as a whole. We continue to recruit new partners and teams to strengthen and expand our industry and geographic coverage in order to better serve our clients." 

The Board of Directors today also declared the payment of a quarterly dividend of 2.25 cents per Common Share payable to holders of Common Shares of record on January 21, 2020 and to be paid on March 16, 2020.

Financial Highlights (all numbers expressed in $000s)

  • Operating revenue:

First Quarter

    • Professional fees for the first quarter of fiscal 2020 increased 15.4% (an increase of 14.5% excluding a favourable 0.9% variance from exchange rate fluctuations) over the comparable period last year to $17,498 (2019: $15,169). The increase in professional fees is attributable to a higher Average Fee per Assignment of $155 ($154 excluding exchange rate fluctuations; 2019: $140) and an increase in the Number of Assignments to 113 (2019: 108). The Number of Assignments grew on a higher Number of Assignments per Partner at 2.9 (2019: 2.7) partially offset by a lower Average Number of Partners at 39.0 (2019: 39.3). On a segment basis, $12,885 of professional fees were generated from the US (2019: $10,886), $3,729 from Canada (2019: $3,813) and $884 from Europe (2019: $470).

    • License fees from our licensees in Australia and New Zealand for the use of the Caldwell brand and intellectual property for the fiscal 2020 first quarter were $59 (2019: $217). Last year's results included $133 in license fees from CPGroup LatAm, with whom the Company ended its licensing relationship effective February 28, 2019.

    • Direct expenses incurred and billed to clients during the fiscal 2020 first quarter were $519 (2019: $506).

  • Operating profit:

First Quarter

    • The operating profit for the first quarter of 2020 was $548, a $119 increase over $429 Last year. (2019: $429). The $119 increase was the result of higher Revenue, Net of Reimbursements ($2,171) partially offset by the combination of higher cost of sales ($1,889) and higher expenses ($163).

    • As a percentage of professional fees, cost of sales increased 0.7% to 77.0%, up from 76.3% in the same period last year. The increase as a percentage of professional fees was due to higher partner compensation from higher average commission grid achievements on higher Annualized Professional Fees per Partner as well as partners in lower tiers earning draws greater than commission earnings (1.9% of professional fees). This increase was partially offset by lower partner support personnel compensation which is semi-fixed (down 1.3% of professional fees). Search delivery materials were flat as a percentage of professional fees.

    • Expenses in the first quarter increased 4.8% or $163 over the same period in the prior year to $3,542 (2019: $3,379). Excluding the impact of exchange rate variances of $22, expenses increased $141 or 4.2% over the same period last year. This constant currency increase was the result of our holding our annual partner conference in the first quarter this year but in the second quarter of the previous year ($335). We also experienced increases in consulting costs related to growth initiatives ($98), expanded marketing expenses ($52), higher corporate staff compensation on increased headcount ($62) and general increases across smaller categories ($52). These unfavourable variances were partially offset by a decrease in share-based compensation expense, the result of a significant share price increase in the prior year period leading to increased expense in the prior year ($203), foreign exchange gains on intercompany loans and US dollar bank account balances this year versus losses last year ($167) and lower occupancy expense caused by the adoption of IFRS 16 as discussed below ($66).

    • Effective September 1, 2019 we implemented IFRS 16 as discussed in the interim consolidated financial statements and related MD&A. An interest expense on lease liability of $66 (2018: $nil) was recognized during the quarter in accordance with IFRS 16. During periods prior to fiscal 2020, all lease related expenses were recognized as occupancy costs and included in expenses in arriving at operating profit.

    • On a segment basis, fourth quarter operating profit was $286 (2019: $550) from Canada, $122 (2019: $125) from the US and $140 (2019: loss of $246) from Europe
  • Net earnings after tax:
    • First quarter net income was $462 ($0.023 per share), as compared to $211 ($0.010 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

At Caldwell we believe Talent Transforms. As a leading provider of executive talent, we enable our clients to thrive and succeed by helping them identify, recruit and retain their best people. Our reputation–nearly 50 years in the making–has been built on transformative searches across functions and geographies at the very highest levels of management and operations. We leverage our skills and networks to also provide agile talent in the form of flexible and on-demand advisory solutions for companies looking for support in strategy and operations. With offices and partners across North America, Europe, Latin America and Asia Pacific, we take pride in delivering an unmatched level of service and expertise to our clients.

Caldwell's 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, our ability to attract and retain key personnel; exposure to our Partners taking our clients with them to another firm; the performance of the Canadian, US and international economies; competition from other companies directly or indirectly engaged in executive search; liability risk in the services we perform; potential legal liability from clients, employees and candidates for employment; cybersecurity requirements, vulnerabilities, threats and attacks; damage to our brand reputation; our ability to align our cost structure to changes in our revenue; adverse tax law rulings; our ability to generate sufficient cash flow from operations to support our growth and maintain our dividend; foreign currency exchange rate fluctuations; marketable securities valuation fluctuations; volatility of the market price and volume of our common shares; any potential impairment of our acquired goodwill and intangible assets; and the risk associated with license fee agreement renewals. 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










2019

2019

Assets










Current assets










Cash and cash equivalents





12,589

10,623


Marketable securities






5,895

5,832


Accounts receivable






9,872

11,915


Unbilled revenue






3,853

4,086


Prepaid expenses and other current assets




2,332

2,320










34,541

34,776

Non-current assets










Restricted cash






45

45


Marketable securities






85

85


Advances







900

1,047


Property and equipment 






1,438

1,379


Right-of-use assets






5,124

-


Goodwill 







1,312

1,313


Deferred income taxes 






1,542

1,963

Total assets







44,987

40,608












Liabilities









Current liabilities










Accounts payable






1,536

3,389


Compensation payable






20,466

21,222


Lease liability







1,679

-


Dividends payable






459

459


Income taxes payable






636

576










24,776

25,646

Non-current liabilities









Compensation payable






1,301

1,068


Provisions







-

49


Lease liability







4,059

-










30,136

26,763












Equity attributable to owners of the Company







Share capital







7,515

7,515


Contributed surplus






15,005

15,005


Accumulated other comprehensive income




447

581


Deficit







(8,116)

(9,256)

Total equity







14,851

13,845

Total liabilities and equity






44,987

40,608

 





THE CALDWELL PARTNERS INTERNATIONAL INC.




CONSOLIDATED INTERIM STATEMENTS OF EARNINGS



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














Three months ended










    November 30










2019

2018












Revenues










Professional fees






17,498

15,169


License fees







59

217


Direct expense reimbursements





519

506










18,076

15,892












Cost of sales







13,467

11,578

Reimbursed direct expenses






519

506










13,986

12,084

Gross profit







4,090

3,808












Expenses










General and administrative





3,348

3,076


Sales and marketing






347

292


Foreign exchange (gain) loss





(153)

11










3,542

3,379

Operating profit







548

429












Interest expense on lease liability





66

-












Investment (income) loss






(71)

41

Earnings before income taxes






553

388












Income taxes







91

177












Net earnings for the period attributable to owners of the Company



462

211












Earnings per share










Basic and diluted






0.023

0.010























CONSOLIDATED INTERIM STATEMENTS OF 





COMPREHENSIVE EARNINGS







(unaudited - in $000s Canadian)
















Three months ended










    November 30










2019

2018












Net earnings for the period






462

211












Other comprehensive income:








Item that may be reclassified subsequently to net earnings






Cumulative translation adjustment





(134)

169

Comprehensive earnings for the period attributable to owners of the Company

328

380

 






THE CALDWELL PARTNERS INTERNATIONAL INC.





CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY



(unaudited - in $000s Canadian)










Accumulated Other Comprehensive






Income (Loss)






Cumulative 

Gains/(losses)





Contributed

Translation

on Marketable

Total


Deficit

Share Capital

Surplus

Adjustment

Securities

Equity








Balance - August 31, 2018

(9,854)

7,515

15,002

770

487

13,920








Adoption of IFRS 9 

818

-

-

-

(818)

-








Adoption of IFRS 15

1,291

-

-

-

-

1,291








Net earnings for the three month period ended 






November 30, 2018

211

-

-

-

-

211








Dividend payments declared

(459)

-

-

-

-

(459)








Share based payment expense

-

-

1

-

-

1








Change in cumulative translation adjustment

-

-

-

169

-

169








Balance - November 30, 2018

(7,993)

7,515

15,003

939

(331)

15,133








Balance - August 31, 2019

(9,256)

7,515

15,005

967

(386)

13,845








Adoption of IFRS 16

1,137

-

-

-

-

1,137








Net earnings for the three month period ended 






November 30, 2019

462

-

-

-

-

462








Dividend payments declared

(459)

-

-

-

-

(459)








Change in cumulative translation adjustment

-

-

-

(134)

-

(134)








Balance - November 30, 2019

(8,116)

7,515

15,005

833

(386)

14,851








The accompanying notes are an integral part of these consolidated interim financial statements.







THE CALDWELL PARTNERS INTERNATIONAL INC.




CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW


(unaudited - in $000s Canadian)
















Three months ended










  November 30










2019

2018












Cash flow provided by (used in) 


















Operating activities










Net earnings for the period





462

211


Add (deduct) items not affecting cash









Depreciation of property and equipment




109

127



Amortization of intangible assets




-

23



Depreciation of right-of-use assets




333

-



Amortization of advances





239

186



Interest expense on lease liabilities




66

-



Gain (loss) on marketable securities classified as FVPL



(64)

56



Share based payment expense





-

1



Unrealized foreign exchange on subsidiary loans



(162)

13



Decrease in provisions





-

(11)



Decrease in deferred revenue





-

(436)



Decrease in unbilled revenue





233

297



Increase in deferred income taxes




-

(50)



Increase in cash settled share-based compensation



233

334


Changes in working capital









Decrease in accounts receivable





2,036

2,163



Decrease (increase) in prepaid expenses and other assets



382

(53)



Decrease in accounts payable 





(249)

(294)



Decrease in compensation payable




(759)

(3,145)



Increase in income taxes payable





60

227

Net cash provided by (used in) operating activities




2,919

(351)












Investing activities










Increase in advances






-

(845)


Decrease in restricted cash





-

47


Additions to property and equipment





(167)

(65)

Net cash used in investing activities





(167)

(863)












Financing activities










Dividend payments






(459)

(408)


Payment of lease liabilities





(424)

-


Sublease payments received





76

-

Net cash used in financing activities





(807)

(408)












Effect of exchange rate changes on cash and cash equivalents



21

173

Net increase (decrease) in cash and cash equivalents




1,966

(1,449)

Cash and cash equivalents, beginning of period




10,623

14,885

Cash and cash equivalents, end of period





12,589

13,436












The net impact of opening balance sheet adjustments as a result of implementing IFRS 16 have been eliminated in the creation of

the consolidated interim statrements of cash flow.






 

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SOURCE The Caldwell Partners International Inc.


Source: The Caldwell Partners International Inc.