Mr. John Wallace reports
THE CALDWELL PARTNERS INTERNATIONAL ISSUES FISCAL 2018 THIRD QUARTER FINANCIAL RESULTS
The Caldwell Partners International Inc. has issued its financial results for the fiscal 2018 third quarter ended May 31, 2018. All references to quarters or years are for the fiscal periods unless otherwise noted.
FINANCIAL HIGHLIGHTS
(in $000s except per-share amounts)
Three months ended Nine months ended
May 31, May 31,
2018 2017 2018 2017
Professional fees $17,942 $14,443 $47,769 $41,737
Licence fees $86 $81 $229 $218
Revenues $18,028 $14,524 $47,998 $41,955
Cost of sales $13,099 $10,771 $35,416 $30,717
Expenses $3,648 $3,131 $9,690 $8,911
Operating profit $1,281 $622 $2,892 $2,327
Investment income (loss) from marketable securities $2 ($142) $6 ($142)
Earnings before tax $1,283 $480 $2,898 $2,185
Net earnings after tax (1) $987 $224 $1,667 $1,253
Net earnings per share $0.048 $0.011 $0.082 $0.062
(1) As a result of the new substantively enacted tax rate, the company's U.S. entity deferred tax
balances were adjusted during the second quarter, resulting in additional deferred tax expense of
$204 during the nine-month period ended May 31, 2018. No such expense was incurred in the prior
year.
"This was an outstanding quarter, bringing the firm to a new high watermark for revenue," said John Wallace, chief executive officer. "Our search teams throughout our geographic regions drove strong growth in both search volume and the value of assignments, despite pressure from foreign currency rates. We are especially pleased with the quarterly profit of our U.K. operations. With the largest level of new bookings and revenue in a single quarter in our history, we are positioned well for the fourth quarter. The significant increase in volume and our sustained focus on strategic additions to our partner team is creating search execution support needs, for which we will continue to hire in the fourth quarter."
Mr. Wallace continued: "There is a lot of positive momentum inside our firm right now -- our updated brand has been very well received since its debut, and we are excited about the recent expansion of our agile talent offering with the launch of our value creation advisory solution. We have an exceptional team of talented professionals at every level, all working towards a common goal: to provide value to our clients and shareholders, and it shows."
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 19, 2018, and to be paid on Sept. 13, 2018.
Financial highlights (all numbers expressed in thousands):
-
Operating revenue:
-
Third quarter:
-
Professional fees for the third quarter of 2018 increased 24.2 per cent (up 28.2 per cent excluding an unfavourable 4-per-cent variance from exchange rate fluctuations) over the comparable period last year to $17,942 (2017: $14,443):
- Third quarter professional fees in the United States were up 22.8 per cent (up 28.9 per cent excluding an unfavourable 6.1-per-cent variance from exchange rate fluctuations) to $13,492 (2017: $10,988). This was the result of increases in the average number of partners, number of assignments per partner and average fee per assignment.
-
Third quarter professional fees in Canada were up 10.0 per cent to $3,527 (2017: $3,205). A higher average fee per assignment and a higher number of assignments per partner were partially offset by a lower average number of partners.
-
Third quarter professional fees in Europe were up 269.2 per cent (up 252.7 per cent excluding a favourable 16.5-per-cent variance from exchange rate fluctuations) to $923 (2017: $250), with a lower number of assignments per partner being more than offset by a higher average number of partners and a significantly higher average fee per assignment.
-
Licence fees from the company's licensees in Latin America and New Zealand for the use of the Caldwell brand and intellectual property for the third quarter 2018 were $86 (2017: $81).
-
Year to date:
-
Professional fees for the first nine months of 2018 increased 14.5 per cent (18.4 per cent excluding an unfavourable 3.9-per-cent variance from exchange rate fluctuations) over the comparable period last year to $47,769 (2017: $41,737):
-
Year-to-date professional fees in the United States were up 14.0 per cent (up 19.6 per cent excluding an unfavourable 5.6-per-cent variance from exchange rate fluctuations) to $35,526 (2017: $31,166). This was the result of increases in the average number of partners, number of assignments per partner and average fee per assignment.
-
Year-to-date professional fees in Canada were up 9.6 per cent to $10,710 (2017: $9,773), with a higher average fee per assignment and a higher number of assignments per partner being partially offset by a lower average number of partners.
-
Year-to-date professional fees in Europe were up 92.1 per cent (up 83.2 per cent excluding a favourable 8.9-per-cent variance from exchange rate fluctuations) to $1,533 (2017: $798), with a lower number of assignments per partner being more than offset by the higher average number of partners and higher average fee per assignment.
-
Year-to-date licence fees for the nine-month period ended May 31, 2018, were $229 (2017: $218).
-
Operating profit:
-
Third quarter:
- For the third quarter of 2018, increased revenue ($3,504), partially offset by increased cost of sales ($2,328) and expenses ($517) increased operating profit by $659 to $1,281 (2017: $622).
- Third quarter cost of sales increased 21.6 per cent (25.9 per cent excluding a favourable 4.3-per-cent variance from exchange rate fluctuations), or $2,328 to $13,099 (2017: $10,771).
-
Expenses in the third quarter increased 16.5 per cent or $517 over the same period in the prior year to $3,648 (2017: $3,131). Excluding exchange rate variances, expenses increased $603 or 19.3 per cent over the same period last year. This constant currency increase was the result of expenses from the partner conference held in the current quarter this year versus the second quarter in the prior year ($376), higher bonus accruals on firm performance ($94), foreign exchange losses on intercompany loans and U.S.-dollar bank account balances in the current period versus gains in the prior period ($65), increased marketing costs due to brand update initiative ($62), and a net increase across other expense categories ($6).
-
Excluding exchange rate variances, operating profit increased $695 to $1,317. On a segment basis, $621 of operating profit was from the U.S. ($926 net of intercompany licence fees), $388 of operating profit was from Canada ($83 net of intercompany licence fees) and $272 was from Europe.
- Year to date:
-
Year to date, higher revenue ($6,043), partially offset by higher cost of sales ($4,699) and expenses ($779) increased operating profit by $565 to $2,892 (2017: $2,327):
-
Year-to-date cost of sales increased 15.3 per cent (19.5 per cent excluding a favourable 4.2-per-cent variance from exchange rate fluctuations), or $4,699 to $35,416 (2017: $30,717).
- Year-to-date expenses increased $779 over the same period in the prior year to $9,690 (2017: $8,911). Excluding exchange rate variances, expenses increased $1,020 or 11.4 per cent over the same period last year. Constant currency increases were the result of share-based compensation expense caused by an increase in the share price in the current year versus a decline in the share price in the same period last year ($225), increased marketing expenses related to the company's brand update initiative that is now complete ($210), firmwide search team practice meetings for business development and training being held during the current year but not in the prior year ($182), a reduction in the final Hawksmoor acquisition earnout amount payable recognized in the prior year with no such reduction in the current year as the amount was fully settled ($115), increased business development costs on higher revenue ($113), and net general increases across other categories ($175).
-
Excluding exchange rate variances, operating profit increased $716 to $3,043. On a segment basis, $1,710 of operating profit was from the U.S. ($2,513 net of intercompany license fees), $1,566 of operating profit was from Canada ($763 net of intercompany license fee revenue) and Europe's operating loss was $383.
-
Net earnings after tax:
-
Third quarter net income was $987 (4.8 cents per share), as compared with $224 (1.1 cents per share) in the comparable period a year earlier.
- Year-to-date net income was $1,667 (8.2 cents per share), as compared with $1,253 (6.2 cents 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 international financial reporting standards and may not be comparable with measures presented by other companies. These operating measures are used by the company to analyze its results.
For a complete discussion of the quarterly financial results, please see the company's management's discussion and analysis posted on SEDAR.
About The Caldwell Partners International Inc.
As a leading provider of executive talent, it enables its clients to thrive and succeed by helping them identify, recruit and retain their best people. Its 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. It leverages its 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, it takes pride in delivering an unmatched level of service and expertise to its clients.
CONSOLIDATED INTERIM STATEMENTS OF EARNINGS
(in $000s)
Three months ended Nine months ended
May 31, May 31,
2018 2017 2018 2017
Revenues
Professional fees $17,942 $14,443 $47,769 $41,737
Licence fees 86 81 229 218
-------- -------- -------- --------
18,028 14,524 47,998 41,955
Cost of sales 13,099 10,771 35,416 30,717
-------- -------- -------- --------
Gross profit 4,929 3,753 12,582 11,238
Expenses
General and administrative 3,234 2,903 8,782 8,275
Sales and marketing 395 277 964 716
Foreign exchange (gain) loss 19 (49) (56) (80)
-------- -------- -------- --------
3,648 3,131 9,690 8,911
-------- -------- -------- --------
Operating profit 1,281 622 2,892 2,327
Investment income (loss) 2 (142) 6 (142)
-------- -------- -------- --------
Earnings before income tax 1,283 480 2,898 2,185
Income tax expense 296 256 1,231 932
-------- -------- -------- --------
Net earnings for the period attributable to owners of the company 987 224 1,667 1,253
======== ======== ======== ========
Earnings per share
Basic and diluted $0.048 $0.011 $0.082 $0.062
======== ======== ======== ========
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.