- First quarter revenue of $15.9
million.
- Operating profit of $429,000.
- Board declares 28th consecutive quarterly
dividend.
TORONTO, Jan. 10, 2019 /CNW/ - Retained executive search
firm The Caldwell Partners International Inc. (TSX: CWL) today
issued its financial results for the fiscal 2019 first quarter
ended November 30, 2018. 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
|
|
2018
|
2017
|
Professional
fees
|
$15,169
|
$14,973
|
License
fees
|
$217
|
$76
|
Direct expense
reimbursements1
|
$506
|
-
|
Revenues
|
$15,892
|
$15,049
|
Cost of
sales
|
$11,578
|
$11,073
|
Reimbursed direct
expenses1
|
$506
|
-
|
Expenses
|
$3,379
|
$3,072
|
Operating profit
|
$429
|
$904
|
Investment (loss)
income from marketable securities
|
($41)
|
$2
|
Earnings before
tax
|
$388
|
$906
|
Net earnings after
tax
|
$211
|
$410
|
Net earnings per
share
|
$0.010
|
$0.020
|
1.
|
As a result of the
implementation of IFRS 15, the Company now shows the gross amount
of direct expenses billed and recovered from clients as revenue,
with the gross amount incurred recorded as a cost of sales. Prior
to the adoption of IFRS 15 direct expense reimbursements and
reimbursed direct expenses were shown as a net zero amount within
cost of sales. For further information, please refer to note 3 of
consolidated interim financial statements for the first quarter
ended November 30, 2018.
|
"Though we delivered an increase in revenue over last year, we
did experience developing headwinds against recent growth trends,"
said John Wallace, chief executive
officer. "There was a softening to our overall search market in the
latter part of the first quarter and early into the second quarter,
as economic uncertainty in the United
States and United Kingdom
gave pause to many of our clients. While a number of our clients
have expressed optimism that search roles will ultimately be
filled, we are uncertain at this juncture as to timing."
Wallace added: "Growth remains the priority for Caldwell, at a measured pace that will not
impede the long-term profitability and financial stability of the
firm. We are focused on making targeted partner hires and further
building our practice and functional offerings across the United States, Canada and Europe. To that end, we have added four high
caliber partners to our team to date. The additions of Frank Morogiello (Dallas), David
Bernard (London),
Kenneth Baillie (Houston), and Andrew
Willson (London) to our
partner team adds significant depth to our Aviation, Transportation
and Hospitality, Financial Services, Oil & Gas, and Mining and
Extractive delivery capabilities; and specifically incorporates
regional expertise to further strengthen our London and UK presence."
"Additionally, we continue to make prudent expansions to our
service lines. We recently launched Agile Talent solutions that
leverage our executive search network to provide talent and
knowledge services to our clients when full time hires are not
required. Our teams place executives who are experts in the fields
of cybersecurity, blockchain, and diversity and inclusion in
ongoing advisory capacities to aid clients in a variety of critical
strategic and operational areas. This week we also announced the
launch of Caldwell Advance, a mid-management search offering that
directly responds to expressed client interest in the Caldwell search process at the emerging leader
and advancing professional level. These service extensions will
provide immediate meaningful differentiation and added value to 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 22, 2019 and to be paid on
March 18, 2019.
Financial Highlights (all numbers expressed in $000s)
- Operating revenue:
First Quarter
-
- Professional fees for the first quarter of fiscal 2019 were
$15,169. The application of IFRS 15
resulted in a $362 decrease in
professional fees during the quarter. Excluding the IFRS 15 impact,
professional fees increased 3.7% (1.8% excluding a favourable 1.9%
variance from exchange rate fluctuations) over the comparable
period last year to $15,531 (2018:
$14,973)
The increase in professional fees is attributable to a higher
Average Number of Partners at 39.3 compared to 38.0 in the prior
year period and an increase in Average Fee per Assignment to
$140 ($144 excluding the IFRS 15 impact) (2018:
$131) partially offset by a lower
Number of Assignments per Partner at 2.7 (2018: 3.0) resulting in a
decrease in number of assignments to 108 (2018: 114).
-
- First quarter professional fees in the US were $10,886. The adoption of IFRS 15 resulted in a
$368 decrease in professional fees
for the US during the quarter. Excluding that adjustment,
professional fees in the US decreased 2.5% (6.2% excluding a
favourable 3.7% variance from exchange rate fluctuations) to
$11,254 (2018: 11,545). The decrease
excluding the IFRS 15 impact was the result of increases in the
Average Number of Partners and the Average Fee per Assignment being
more than offset by a lower Number of Assignments per Partner.
- First quarter professional fees in Canada were $3,813. The adoption of IFRS 15 resulted in a
$5 increase in professional fees for
Canada during the quarter.
Excluding that adjustment, professional fees increased 12.5% to
$3,808 (2018: $3,384). The increase in professional fees
excluding the IFRS 15 impact resulted from a lower Average Fee per
Assignment and a lower Number of Partners being more than offset by
a higher Number of Assignments per Partner.
- First quarter professional fees in Europe were $470. The adoption of IFRS 15 resulted in a
$1 increase in professional fees for
Europe on the quarter. Excluding
that adjustment, professional fees increased 965.9% (947.2%
excluding a favourable 18.7% variance from exchange rate
fluctuations) to $469 (2018:
$44). The increase excluding the IFRS
15 impact was the result of a higher Average Fee per Assignment and
a higher Number of Partners resulting from the addition of one new
partner in the current period partially offset by a slightly lower
Number of Assignments per Partner. Given the low number of partners
in the region and recent tenure of two of the three, the Company
expects ongoing quarterly revenue fluctuations and profit
suppression as the newly hired partners ramp up their
businesses.
- 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 2019 first
quarter were $217 (2018: $76). The increase was a result of a step-up in
the license fee rate from Latin
America and New Zealand as
well as higher revenue within the Latin American affiliates upon
which the license fee is based.
- Direct expenses incurred and billed to clients during the
fiscal 2019 first quarter were $506
(2018: $354, with the revenue billed
and cost of sale amounts presented as net zero). See the Adoption
of IFRS 15 discussion on page 3.
- Operating profit:
First Quarter
-
- Operating profit for the first quarter of 2019 was $429. The adoption of IFRS 15 resulted in a
$181 decrease in operating profit on
the quarter. Excluding the IFRS 15 impact, operating profit
decreased $294 to $610 (2018: $904).
This $294 decrease came from higher
revenue ($699) more than offset by
the combination of higher cost of sales ($686) and higher expenses ($307).
- First quarter cost of sales was $11,578. The adoption of IFRS 15 resulted in a
$181 decrease in cost of sales on the
quarter. Excluding the IFRS 15 impact, cost of sales increased 6.2%
(3.0% on a constant currency basis) to $11,759 (2018: $11,073).
- Expenses in the first quarter increased 10.0% or $307 over the same period in the prior year to
$3,379 (2018: $3,072). Excluding exchange rate variances,
expenses increased $253 or 8.2% over
the same period last year. This constant currency increase was the
result of increases in share-based compensation expense caused from
a significant increase in the share price in the current year
($281) and foreign exchange losses on
intercompany loans and US dollar bank account balances versus gains
las year ($82) and general increases
across other categories ($28). These
unfavourable variances were partially offset by a decrease in
expenses related to firm-wide search team practice meetings for
business development and training that were held during the period
in the previous period but not scheduled for future periods in the
current year ($138).
-
- On a segment basis, $796 of
profit was generated from Canada
($550 net of intercompany license fee
revenue) which was partially offset by operating losses in the US
of $121 (profit of $125 net of intercompany license fees) and
Europe of $246
- Net earnings after tax:
-
- On December 22, 2017, the US tax
reform ("Tax Cuts and Jobs Act") was substantively enacted and
reduced the maximum federal corporate income tax rate for the
company's US entity from 35% to 21%. In 2018, a hybrid rate derived
from the previous and new tax rates was applied to US taxable
income. In the current year, the new, lower tax rate is being
applied.
- There was net income tax expense of $177 in the first quarter of 2019 (2018:
$496). On a segment basis
Canada had income tax expense of
$211 (2018: $146) and the US income tax recovery of
$34 (2018: $350 expense). No income tax recovery was
recognized in the UK. Within these results, the adoption of IFRS 15
reduced income tax expense by $50
during the quarter.
- First quarter net income was $211
($0.010 per share), as compared to
$410 ($0.020 per share) in the comparable period a year
earlier. The adoption of IFRS 9 resulted in a $56 decrease ($0.003 per share) in net income on the quarter.
The adoption of IFRS 15 resulted in a $131 decrease ($0.007 per share) in net income on the quarter.
Excluding these adjustments, net profit decreased $12 to $398
($0.020 per share).
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
|
|
2018
|
2018
|
Assets
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
13,436
|
14,885
|
|
Marketable
securities
|
5,599
|
5,654
|
|
Accounts
receivable
|
8,807
|
10,858
|
|
Unbilled
revenue
|
3,331
|
-
|
|
Prepaid expenses and
other current assets
|
2,005
|
1,711
|
|
|
33,178
|
33,108
|
Non-current
assets
|
|
|
|
Restricted
cash
|
93
|
138
|
|
Marketable
securities
|
140
|
137
|
|
Advances
|
595
|
146
|
|
Property and
equipment
|
1,333
|
1,378
|
|
Intangible
assets
|
71
|
92
|
|
Goodwill
|
2,912
|
2,885
|
|
Deferred income
taxes
|
1,473
|
1,897
|
Total
assets
|
39,795
|
39,781
|
|
|
|
|
Liabilities
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
2,428
|
2,693
|
|
Compensation
payable
|
18,082
|
19,205
|
|
Dividends
payable
|
459
|
408
|
|
Income taxes
payable
|
1,660
|
1,409
|
|
Deferred
revenue
|
-
|
438
|
|
|
22,629
|
24,153
|
Non-current
liabilities
|
|
|
|
Compensation
payable
|
1,949
|
1,615
|
|
Provisions
|
84
|
93
|
|
|
24,662
|
25,861
|
|
|
|
|
Equity attributable
to owners of the Company
|
|
|
|
Share
capital
|
7,515
|
7,515
|
|
Contributed
surplus
|
15,003
|
15,002
|
|
Accumulated other
comprehensive income
|
608
|
1,257
|
|
Deficit
|
(7,993)
|
(9,854)
|
Total
equity
|
15,133
|
13,920
|
Total liabilities and
equity
|
39,795
|
39,781
|
THE CALDWELL
PARTNERS INTERNATIONAL INC.
|
CONSOLIDATED
INTERIM STATEMENTS OF EARNINGS
|
(unaudited - in
$000s Canadian, except per share amounts)
|
|
Three months
ended
|
|
November
30
|
|
2018
|
2017
|
|
|
|
Revenues
|
|
|
|
Professional
fees
|
15,169
|
14,973
|
|
License
fees
|
217
|
76
|
|
Direct expense
reimbursements
|
506
|
-
|
|
|
15,892
|
15,049
|
|
|
|
|
Cost of
sales
|
11,578
|
11,073
|
Reimbursed direct
expenses
|
506
|
-
|
|
|
12,084
|
11,073
|
Gross
profit
|
3,808
|
3,976
|
|
|
|
|
Expenses
|
|
|
|
General and
administrative
|
3,076
|
2,813
|
|
Sales and
marketing
|
292
|
329
|
|
Foreign exchange loss
(gain)
|
11
|
(70)
|
|
|
3,379
|
3,072
|
Operating
profit
|
429
|
904
|
|
|
|
|
Investment (loss)
income
|
(41)
|
2
|
Earnings before
income taxes
|
388
|
906
|
|
|
|
|
Income
taxes
|
177
|
496
|
|
|
|
|
Net earnings for the
period attributable to owners of the Company
|
211
|
410
|
|
|
|
|
Earnings per
share
|
|
|
|
Basic and
diluted
|
0.010
|
0.020
|
CONSOLIDATED
INTERIM STATEMENTS OF
|
COMPREHENSIVE
EARNINGS
|
(unaudited - in
$000s Canadian)
|
|
Three months
ended
|
|
November
30
|
|
2018
|
2017
|
|
|
|
Net earnings for the
period
|
211
|
410
|
|
|
|
Other comprehensive
income:
|
|
|
Items that may be
reclassified subsequently to net earnings
|
|
|
|
Gain on marketable
securities
|
-
|
59
|
|
Cumulative
translation adjustment
|
169
|
278
|
Comprehensive
earnings for the period attributable to owners of the
Company
|
380
|
747
|
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, 2017
|
(10,237)
|
7,515
|
14,992
|
428
|
422
|
13,120
|
|
|
|
|
|
|
|
Net earnings for the
three month period ended
November 30,
2017
|
410
|
-
|
-
|
-
|
-
|
410
|
|
|
|
|
|
|
|
Dividend payments
declared
|
(408)
|
-
|
-
|
-
|
-
|
(408)
|
|
|
|
|
|
|
|
Share based payment
expense
|
-
|
-
|
3
|
-
|
-
|
3
|
|
|
|
|
|
|
|
Change in gains on
marketable
securities available for sale
|
-
|
-
|
-
|
-
|
59
|
59
|
|
|
|
|
|
|
|
Change in cumulative
translation adjustment
|
-
|
-
|
-
|
278
|
-
|
278
|
|
|
|
|
|
|
|
Balance - November
30, 2017
|
(10,235)
|
7,515
|
14,995
|
706
|
481
|
13,462
|
|
|
|
|
|
|
|
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
|
THE CALDWELL
PARTNERS INTERNATIONAL INC.
|
CONSOLIDATED
INTERIM STATEMENTS OF CASH FLOW
|
(unaudited - in
$000s Canadian)
|
|
Three months
ended
|
|
November
30
|
|
2018
|
2017
|
Cash flow provided by
(used in)
|
|
|
|
|
|
Operating
activities
|
|
|
|
Net earnings for the
period
|
211
|
410
|
|
Add (deduct) items
not affecting cash
|
|
|
|
|
Depreciation
|
127
|
130
|
|
|
Amortization
|
23
|
22
|
|
|
Amortization of
advances
|
186
|
208
|
|
|
Loss on marketable
securities classified as FVPL
|
56
|
-
|
|
|
Share based payment
expense
|
1
|
3
|
|
|
Unrealized foreign
exchange on subsidiary loans
|
13
|
(86)
|
|
|
Decrease in
provisions
|
(11)
|
(7)
|
|
|
Decrease in deferred
revenue
|
(436)
|
(884)
|
|
|
Decrease in unbilled
revenue
|
297
|
-
|
|
|
Increase in deferred
income taxes
|
(50)
|
-
|
|
Increase in cash
settled share-based compensation
|
334
|
220
|
|
Decrease in accounts
receivable
|
2,163
|
295
|
|
(Increase) decrease
in prepaid expenses and other assets
|
(53)
|
163
|
|
(Decrease) increase
in accounts payable
|
(294)
|
62
|
|
Decrease in
compensation payable
|
(3,145)
|
(1,970)
|
|
Increase in income
taxes payable
|
227
|
329
|
Net cash used in
operating activities
|
(351)
|
(1,105)
|
|
|
|
Investing
activities
|
|
|
|
Increase in
advances
|
(845)
|
-
|
|
Decrease in
restricted cash
|
47
|
-
|
|
Additions to property
and equipment
|
(65)
|
(50)
|
Net cash used in
investing activities
|
(863)
|
(50)
|
|
|
|
Financing
activities
|
|
|
|
Dividend
payments
|
(408)
|
(408)
|
Net cash used in
financing activities
|
(408)
|
(408)
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
173
|
101
|
Net decrease in cash
and cash equivalents
|
(1,449)
|
(1,462)
|
Cash and cash
equivalents, beginning of period
|
14,885
|
10,917
|
Cash and cash
equivalents, end of period
|
13,436
|
9,455
|
|
The net impact of
opening balance sheet adjustments as a result of implementing IFRS
15 have been eliminated in the creation of the consolidated
interim statrements of cash flow.
|
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SOURCE The Caldwell Partners International Inc.