11:42:04 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Caldwell Partners International Inc (The)
Symbol CWL
Shares Issued 20,404,552
Close 2018-11-13 C$ 1.45
Market Cap C$ 29,586,600
Recent Sedar Documents

Caldwell Partners earns $2.01-million in 2018

2018-11-13 17:34 ET - News Release

Mr. John Wallace reports

THE CALDWELL PARTNERS INTERNATIONAL ISSUES STRONG FISCAL 2018 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS

The Caldwell Partners International Inc. has issued its financial results for the fiscal 2018 fourth quarter and year ended Aug. 31, 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 thousands of dollars, except per-share amounts)

                           Three months ended Aug. 31   Year ended Aug. 31
                                  2018           2017       2018      2017

Professional fees              $18,743        $15,758    $66,512   $57,495
Licence fees                      $142            $92       $371      $310
Revenues                       $18,885        $15,850    $66,883   $57,805
Cost of sales                  $13,552        $11,588    $48,968   $42,305
Expenses                        $4,259         $3,476    $13,949   $12,387
Operating profit                $1,074           $786     $3,966    $3,113
Investment income (loss) 
from marketable securities          $8           $180        $14       $38
Earnings before tax             $1,082           $966     $3,980    $3,151
Net earnings after tax (1)        $347           $704     $2,015    $1,957
Net earnings per share          $0.017         $0.034     $0.099    $0.096

(1) As a result of the new substantively enacted tax rate, the company's 
U.S. entity deferred tax balances were adjusted by $654 for the year, 
resulting in deferred tax expenses, with $204 being recognized in the 
second quarter when the deferred tax assets were adjusted to the hybrid 
fiscal 2018 rate and $450 in fourth quarter when the deferred tax assets 
were adjusted to the fully reduced rate the company anticipates to be 
able to utilize in future periods. No such expense was incurred in the 
prior year.

"This was an outstanding year of accomplishment and growth for Caldwell," said John Wallace, chief executive officer. "We exceeded expectations for both the quarter and the year, and saw significant year-over-year increases in revenue (plus 15.7 per cent) and operating profit (plus 27.4 per cent). Our fourth quarter brought record levels of revenue, positioning us well as we head into fiscal 2019."

Mr. Wallace added: "We continue to grow our scale and resultant impact in the marketplace. Collaboration among partner teams and geographies has further expanded, and there is now more significant breadth and depth to the expertise we can offer to our clients. Products and services that support our core competency of retained executive search, such as our Agile Talent Solutions, allow us to provide more seamless talent solutions to our clients, as does expanding our partner team in important geographies and industries, as we already have by adding three new partners in the new fiscal year thus far. In all things, our primary drive and focus remains on connecting our clients with transformational talent and our shareholders with increasing value."

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 Nov. 26, 2018, and to be paid on Dec. 14, 2018.

Financial highlights (all numbers expressed in thousands)

Operating revenue -- fourth quarter:

  • Professional fees for the fourth quarter of 2018 increased 18.9 per cent (16.2 per cent excluding a favourable 2.7-per-cent variance from exchange rate fluctuations) over the comparable period last year to $18,743 (2017: $15,758):
    • Fourth quarter professional fees in the United States were up 35.7 per cent (31.9 per cent excluding a favourable 3.8-per-cent variance from exchange rate fluctuations) to $14,244 (2017: $10,492). A decrease in the average number of partners was more than offset by increases in the number of assignments per partner and the average fee per assignment during the period.
    • Fourth quarter professional fees in Canada were down 24.5 per cent to $3,836 (2017: $5,079), the impact of a lower average number of partners, lower number of assignments per partner and a lower average fee per assignment. Two specific assignments generating collective professional fees in excess of $800 in the previous year without similar high fee searches in the current year drove much of the decrease in professional fees and the average fee per assignment in the current quarter.
    • Fourth quarter professional fees in Europe were up 254.5 per cent (up 244.6 per cent excluding a favourable 9.9-per-cent variance from exchange rate fluctuations) to $663 (2017: $187). A decrease in the average fee per assignment was more than offset by increases in the average number of partners and the number of assignments per partner.
  • 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 2018 fourth quarter were $142 (2017: $92).

Operating revenue -- full year:

  • Professional fees for the year increased 15.7 per cent (an increase of 17.9 per cent excluding an unfavourable 2.2-per-cent variance from exchange rate fluctuations) over the comparable period last year to $66,512 (2017: $57,495):
    • Year-to-date professional fees in the U.S. were up 19.5 per cent (22.7 per cent excluding an unfavourable 3.2-per-cent variance from exchange rate fluctuations) to $49,770 (2017: $41,658). This was the result of increases in the average number of partners, the number of assignments per partner and the average fee per assignment during the period.
    • Year-to-date professional fees in Canada were down 2.1 per cent to $14,546 (2017: $14,852), with a higher average fee per assignment and higher number of assignments per partner being more than offset by a lower average number of partners.
    • Year-to-date professional fees in Europe were up 122.9 per cent (up 113.8 per cent excluding a favourable 9.1-per-cent variance from exchange rate fluctuations) to $2,196 (2017: $985) with a higher average number of partners, number of assignments per partner and average fee per assignment.
  • Year-to-date licence fees for the year ended Aug. 31, 2018, were $371 (2017: $310).

Operating profit -- fourth quarter:

  • For the 2018 fourth quarter, higher revenue ($3,035) partially offset by higher cost of sales ($1,964) and expenses ($783) resulted in an increase in operating profit of $288 over the comparable period in the prior year to $1,074 (2017: $786).
  • Fourth quarter cost of sales increased 16.9 per cent or $1,964 to $13,552 (14.4 per cent excluding an unfavourable 2.5-per-cent variance from exchange rate fluctuations) from $11,588.
  • Fourth quarter expenses increased 22.5 per cent or $783 from the prior-year comparable period to $4,259 (2017: $3,476). Excluding exchange rate variances of $31, expenses on a constant-currency basis increased $752 or 21.7 per cent versus the same period last year. The constant-currency increase was the result of increased share-based compensation expense caused by an increase in the share price in the current year, as well as an increase in the performance factor as a result of exceeding operational performance targets ($541), increased legal fees ($118), increased director expenses resulting from higher deferred stock unit valuations on the higher share price ($116) and increased marketing expenses related to Caldwell's brand update initiative ($55). These increases were partially offset by lower foreign exchange gains on intercompany loan balances and U.S.-dollar-denominated bank account balances ($72) and general cost increases decreases across other categories ($6).
  • On a segment basis, the fourth quarter operating profit of $1,074 came from the U.S. producing $952 ($633 prior to eliminating $319 of intercompany licence fees), Canada $282 ($601 prior to eliminating $319 of intercompany licence fee revenue) and Europe generating an operating loss of $160.

Operating profit -- full year:

  • For the 2018 full year, higher revenue ($9,078) partially offset by higher cost of sales ($6,663) and expenses ($1,562) resulted in an increase in operating profit of $853 to $3,966 (2017: $3,113):
    • Cost of sales for the year increased 15.7 per cent to $48,968 (18.1 per cent excluding a favourable 2.4-per-cent variance from exchange rate fluctuations) from $42,305.
    • Full-year expenses increased 12.6 per cent or $1,562 over the prior year to $13,949 (2017: $12,387). Excluding exchange rate variances of $199, expenses on a constant-currency basis increased $1,761 or 14.2 per cent over the same period last year. Constant currency cost increases were seen in increased share-based compensation expense caused by the increase in the share price in the current year, as well as an increase in the performance factor as a result of exceeding operational performance targets ($766), increased marketing expenses related to Caldwell's brand update initiative which is now complete ($216), firm-wide search team practice meetings for business development and training being held during the current year but not in the prior year ($182), increased director expenses resulting from higher deferred stock unit valuations due to the increase in share price ($130), increased business development costs on higher revenue ($122), a reduction in the final earnout amount payable from the fiscal 2015 acquisition of Hawksmoor Search Ltd. benefiting the prior year with no such benefit in the current year as the amount was fully settled ($115), increased legal fees ($79), increased partner recruitment expenses ($77), and general increases across other categories ($74).
  • On a segment basis, full-year operating profit of $3,966 came from operating profit in the U.S. of $3,464 ($2,341 prior to eliminating $1,123 of intercompany licence fees) and operating profit in Canada of $1,044 ($2,167 prior to eliminating intercompany licence fee revenue) being offset by an operating loss in Europe of $542.

Net earnings after tax:

  • On Dec. 22, 2017, the U.S. tax reform (Tax Cuts and Jobs Act) was substantively enacted and reduced the maximum federal corporate income tax rate for the company's U.S. entity from 35 per cent to 21 per cent. As this rate change occurred partway into Caldwell's fiscal year, a hybrid rate derived from the current and new tax rates applies to the company's fiscal 2018 full-year U.S. taxable income. As a result of this new substantively enacted tax rate, the company's U.S. entity deferred tax balances were adjusted during the second quarter based on an estimated hybrid rate, and again in the fourth quarter to reflect the fully reduced rate to be realized in fiscal 2019 and future years. Including state and local taxes in addition to federal, the approximate overall impact in the United States is a reduction in Caldwell's blended U.S. statutory rate from 37.6 per cent in fiscal 2017 to 29.4 per cent in fiscal 2018, and 25.3 per cent in fiscal 2019 and future periods. While the newly lowered rates decrease Caldwell's current income tax expense accordingly, the rate reductions also result in deferred tax charges in the year to revalue the company's deferred tax assets originally recognized at the higher rates. This resulted in deferred tax expense for the full year of $654, with $204 recognized in the second quarter when the deferred tax assets were adjusted to the hybrid fiscal 2018 rate and $450 in fourth quarter when the deferred tax assets were adjusted to the fully reduced rate the company anticipates to be able to utilize in future periods.
  • Income tax expense in the fourth quarter of fiscal 2018 was $734 ($284 net of deferred tax expense for the enacted rate adjustment) (2017: $262) arising from a current income tax expense of $1,131 (2017: $462 recovery) offset by a deferred tax recovery of $398 (2017: $724 expense).
  • Fourth quarter net earnings were $347 (1.7 cents per share) in 2018, as compared with $704 (3.4 cents per share) in the comparable period a year earlier.
  • The full-year net earnings after tax were $2,015 (9.9 cents per share) in 2018, versus $1,957 (9.6 cents per share) in 2017.

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 (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. Please refer to section on non-GAAP (generally accepted accounting principles) financial measures and other operating measures in the company's MD&A (management's discussion and analysis) for a definition of these terms.

For a complete discussion of the quarterly financial results, please see the company's MD&A posted on SEDAR.

About The Caldwell Partners International Inc.

Caldwell believes talent transforms. As a leading provider of executive talent, the company enables its clients to thrive and succeed by helping them identify, recruit and retain their best people. Caldwell's 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. The company 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.

                     CONSOLIDATED STATEMENTS OF EARNINGS   
         (in thousands of Canadian dollars, except per-share amounts)

                                                                   12 months ended
                                                                           Aug. 31
                                                                     2018     2017
Revenues                                                                          
Professional fees                                                 $66,512  $57,495
Licence fees                                                          371      310
                                                                   66,883   57,805
                                                                                  
Cost of sales                                                      48,968   42,305
Gross profit                                                       17,915   15,500
Expenses                                                                          
General and administrative                                         12,487   11,210
Sales and marketing                                                 1,507    1,173
Foreign exchange loss (gain)                                          (45)       4
                                                                   13,949   12,387
Operating profit                                                    3,966    3,113
Investment income                                                      14       38
Earnings before income tax                                          3,980    3,151
Income tax expense                                                  1,965    1,194
Net earnings for the year attributable to owners of the company     2,015    1,957
Earnings per share                                                                
Basic and diluted                                                 $ 0.099  $ 0.096

We seek Safe Harbor.

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