PR Newswire
TORONTO, July 10, 2019
TORONTO, July 10, 2019 /PRNewswire/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2019 third quarter ended May 31, 2019. 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 | |||
2019 | 2018 | 2019 | 2018 | |
Professional fees | $19,535 | $17,942 | $49,247 | $47,769 |
License fees | $38 | $86 | $629 | $229 |
Direct expense reimbursements1 | $374 | - | $1,291 | - |
Revenues | $19,947 | $18,028 | $51,167 | $47,998 |
Cost of sales | $14,704 | $13,099 | $38,208 | $35,416 |
Reimbursed direct expenses1 | $374 | - | $1,291 | - |
Expenses | $3,330 | $3,648 | $9,677 | $9,690 |
Operating profit | $1,539 | $1,281 | $1,991 | $2,892 |
Investment income | $88 | $2 | $144 | $6 |
Earnings before tax | $1,627 | $1,283 | $2,135 | $2,898 |
Net earnings after tax2 | $1,035 | $987 | $1,279 | $1,667 |
Net earnings per share | $0.51 | $0.048 | $0.063 | $0.082 |
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 third quarter ended May 31, 2019. |
2. | As a result of new substantively enacted tax rate, the Company's US entity deferred tax balances were adjusted during the prior year's second quarter, resulting in additional deferred tax expense of $204. No such expense was incurred in the year. |
"New search engagements strengthened significantly in the third quarter, leading to a record-breaking quarter for revenue and a very strong performance with regard to operating profit," said John Wallace, chief executive officer. "The quarter's robustness narrowed the operating shortfall from the relative softness we experienced in the first half of the year. Based on our current trends, we do expect to gain additional ground in the fourth quarter."
Wallace continued: "We continue to strengthen our market presence and client capabilities with the addition of high calibre partners in strategic sectors and geographies. The addition of Carlos Cata to our Chicago team is a significant expansion of our recruiting competencies across the marketing and digital transformation space."
"We also further expanded our Caldwell Advance team - focused on the recruitment of emerging leaders and advancing professionals - with the addition of talent optimization executive Todd Lingle. This addition strengthens our ability to connect our clients with transformational talent in a more comprehensive way. We will continue to make strategic additions to our teams where it allows us to deliver long term 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 July 19, 2019 and to be paid on September 13, 2019.
Financial Highlights (all numbers expressed in $000s)
Year-to-date
On a consolidated basis, Revenue, Net of Reimbursements year to date was up slightly from the prior year. A lower Number of Assignments was more than offset by a higher Average Fee per Assignment and favourable IFRS 15 revenue adjustments and the early termination payment received from our Latin American licensee in the second quarter.
Year-to-date
Average Number of Partners, Professional Fees per Partner, Number of Assignments, Number of Assignments per Partner, Average Fee per Assignment and Revenue, Net of Reimbursements 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 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 US, Canadian 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; technological advances may significantly disrupt the labour market and weaken demand for human capital at a rapid rate; foreign currency exchange rate fluctuations; affiliation agreements may fail to renew or affiliates may be acquired; marketable securities valuation fluctuations; increasing dependence on third parties for the execution of critical functions; volatility of the market price and volume of our common shares; potential impairment of our acquired goodwill and intangible assets; and disruption as a result of actions of certain stockholders or potential acquirers of the Company. 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 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 | As at | |||
May 31 | August 31 | |||
2019 | 2018 | |||
Assets | ||||
Current assets | ||||
Cash and cash-equivalents | 8,241 | 14,885 | ||
Marketable securities | 5,772 | 5,654 | ||
Accounts receivable | 9,116 | 10,858 | ||
Income taxes receivable | 537 | - | ||
Unbilled revenue | 4,568 | - | ||
Prepaid expenses and other assets | 2,576 | 1,711 | ||
30,810 | 33,108 | |||
Non-current assets | ||||
Restricted cash | 46 | 138 | ||
Marketable securities | 142 | 137 | ||
Advances | 1,219 | 146 | ||
Property and equipment | 1,509 | 1,378 | ||
Intangible assets | 24 | 92 | ||
Goodwill | 2,944 | 2,885 | ||
Deferred income taxes | 1,227 | 1,897 | ||
Total assets | 37,921 | 39,781 | ||
Liabilities | ||||
Current liabilities | ||||
Accounts payable | 2,770 | 2,693 | ||
Compensation payable | 18,221 | 19,205 | ||
Dividends payable | 459 | 408 | ||
Income taxes payable | - | 1,409 | ||
Deferred revenue | - | 438 | ||
21,450 | 24,153 | |||
Non-current liabilities | ||||
Compensation payable | 957 | 1,615 | ||
Provisions | 62 | 93 | ||
22,469 | 25,861 | |||
Equity attributable to owners of the Company | ||||
Share Capital | 7,515 | 7,515 | ||
Contributed surplus | 15,004 | 15,002 | ||
Accumulated other comprehensive income | 776 | 1,257 | ||
Deficit | (7,843) | (9,854) | ||
Total equity | 15,452 | 13,920 | ||
Total liabilities and equity | 37,921 | 39,781 | ||
The accompanying notes are an integral part of these consolidated interim financial statements. |
THE CALDWELL PARTNERS INTERNATIONAL INC. | |||||||
CONSOLIDATED INTERIM STATEMENTS OF EARNINGS | |||||||
(unaudited - in $000s Canadian) | |||||||
Three months ended | Nine months ended | ||||||
May 31 | May 31 | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Revenues | |||||||
Professional fees | 19,535 | 17,942 | 49,247 | 47,769 | |||
License fees | 38 | 86 | 629 | 229 | |||
Direct expense reimbursements | 374 | - | 1,291 | - | |||
19,947 | 18,028 | 51,167 | 47,998 | ||||
Cost of sales | 14,704 | 13,099 | 38,208 | 35,416 | |||
Reimbursed direct expenses | 374 | - | 1,291 | - | |||
15,078 | 13,099 | 39,499 | 35,416 | ||||
Gross profit | 4,869 | 4,929 | 11,668 | 12,582 | |||
Expenses | |||||||
General and administrative | 2,788 | 3,234 | 8,631 | 8,782 | |||
Sales and marketing | 440 | 395 | 983 | 964 | |||
Foreign exchange loss (gain) | 102 | 19 | 63 | (56) | |||
3,330 | 3,648 | 9,677 | 9,690 | ||||
Operating profit | 1,539 | 1,281 | 1,991 | 2,892 | |||
Investment income | 88 | 2 | 144 | 6 | |||
Earnings before income tax | 1,627 | 1,283 | 2,135 | 2,898 | |||
Income tax expense | 592 | 296 | 856 | 1,231 | |||
Net earnings for the period attributable to owners of the Company | 1,035 | 987 | 1,279 | 1,667 | |||
Earnings per share | |||||||
Basic and diluted | $0.051 | $0.048 | $0.063 | $0.082 | |||
CONSOLIDATED INTERIM STATEMENTS OF | |||||||
COMPREHENSIVE EARNINGS | |||||||
(unaudited - in $000s Canadian) | |||||||
Three months ended | Nine months ended | ||||||
May 31 | May 31 | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Net earnings for the period | 1,035 | 987 | 1,279 | 1,667 | |||
Other comprehensive income (loss): | |||||||
Items that may be reclassified subsequently to net earnings | |||||||
(Loss) gain on marketable securities | (17) | - | 72 | ||||
Cumulative translation adjustment | 238 | 53 | 337 | 299 | |||
Comprehensive earnings for the period attributable to owners of the Company | 1,273 | 1,023 | 1,616 | 2,038 | |||
The accompanying notes are an integral part of these consolidated interim financial statements. |
THE CALDWELL PARTNERS INTERNATIONAL INC. | |||||||
CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY | |||||||
(unaudited - in $000s Canadian) | |||||||
Accumulated Other Comprehensive | |||||||
Income | |||||||
Unrealized | |||||||
Cumulative | Gains on | ||||||
Contributed | Translation | Marketable | Total | ||||
Deficit | Capital Stock | Surplus | Adjustment | Securities | Equity | ||
Balance - August 31, 2017 | (10,237) | 7,515 | 14,992 | 428 | 422 | 13,120 | |
Net earnings for the nine month period ended | |||||||
May 31, 2018 | 1,667 | - | - | - | - | 1,667 | |
Dividend payments declared | (1,224) | - | - | - | - | (1,224) | |
Share based payment expense | - | - | 8 | - | - | 8 | |
Change in unrealized gains on | |||||||
marketable securities available for sale | - | - | - | - | 72 | 72 | |
Change in cumulative translation adjustment | - | - | - | 299 | - | 299 | |
Balance - May 31, 2018 | (9,794) | 7,515 | 15,000 | 727 | 494 | 13,942 | |
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 nine month period ended | |||||||
May 31, 2019 | 1,279 | - | - | - | - | 1,279 | |
Dividend payments declared | (1,377) | - | - | - | - | (1,377) | |
Share based payment expense | - | - | 2 | - | - | 2 | |
Change in cumulative translation adjustment | - | - | - | 337 | - | 337 | |
Balance - May 31, 2019 | (7,843) | 7,515 | 15,004 | 1,107 | (331) | 15,452 | |
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) | ||||||
Nine months ended | ||||||
May 31 | ||||||
2019 | 2018 | |||||
Cash flow provided by (used in) | ||||||
Operating Activities | ||||||
Net earnings for the period | 1,279 | 1,667 | ||||
Add (deduct) items not affecting cash | ||||||
Depreciation | 387 | 399 | ||||
Amortization | 70 | 67 | ||||
Amortization of advances | 632 | 589 | ||||
Gain on marketable securities classified as FVPL | (118) | - | ||||
Share based payment expense | 2 | 8 | ||||
Unrealized foreign exchange on subsidiary loans | 34 | (76) | ||||
Decrease in provisions | (31) | (29) | ||||
Decrease in deferred revenue | (438) | (927) | ||||
Increase in unbilled revenue | (980) | - | ||||
Decrease in deferred income taxes | 214 | 204 | ||||
(Decrease) increase in cash settled share-based compensation | (658) | 189 | ||||
Decrease (increase) in accounts receivable | 2,065 | (341) | ||||
Increase in income taxes receivable | (570) | - | ||||
Increase in prepaid expenses and other assets | (260) | (276) | ||||
Increase in accounts payable | 12 | 271 | ||||
Decrease in income taxes payable | (1,409) | (161) | ||||
(Decrease) increase in compensation payable | (2,268) | 215 | ||||
Payment of cash settled share-based compensation | (943) | (553) | ||||
Net cash (used in) provided by operating activities | (2,980) | 1,246 | ||||
Investment Activities | ||||||
Purchase of marketable securities | - | (500) | ||||
Payment of advances | (2,234) | - | ||||
Proceeds from release of restricted cash | 94 | - | ||||
Purchase of property and equipment | (487) | (147) | ||||
Net cash used in investing activities | (2,627) | (647) | ||||
Financing Activities | ||||||
Dividend payments | (1,326) | (1,224) | ||||
Net cash used in financing activities | (1,326) | (1,224) | ||||
Effect of exchange rate changes on cash and cash equivalents | 289 | 168 | ||||
Net decrease in cash and cash equivalents | (6,644) | (457) | ||||
Cash and cash equivalents, beginning of period | 14,885 | 10,917 | ||||
Cash and cash equivalents, end of period | 8,241 | 10,460 | ||||
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 statements of cash flow. | ||||||
The accompanying notes are an integral part of these consolidated interim financial statements. |
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SOURCE The Caldwell Partners International Inc.