Mr. John Wallace reports
CALDWELL REPORTS STRONG GROWTH IN REVENUE AND OPERATING PROFIT
The Caldwell Partners International Inc. has issued its financial results for the fiscal 2021 first quarter ended Nov. 30, 2020. All references to quarters or years are for the fiscal periods unless otherwise noted, and all currency amounts are in Canadian dollars. Financial results do not include those of IQTalent Partners Inc.; financial results will be consolidated prospectively beginning on the date of acquisition of Dec. 31, 2020.
(in $000s except per-share amounts)
Three months ended Nov. 30,
Professional fees $18,027 $17,498
Licence fees $26 $59
Direct expense reimbursements $74 $519
Revenues $18,127 $18,076
Cost of sales $13,337 $13,467
Government stimulus grants (110) -
Reimbursed direct expenses $74 $519
Gross profit $4,826 $4,090
Selling, general and administrative expenses $3,399 $3,695
Government stimulus grants - -
Operating profit $1,427 $395
Interest expense on lease liability $107 $66
Investment income ($9) ($71)
Foreign exchange loss (gain) $34 ($153)
Earnings before tax $1,295 $553
Income tax expense $361 $91
Net earnings after tax $934 $462
Net earnings per share $0.046 $0.023
"This was a strong start to the year by any measure, and it was an exceptional start in this instance, given what the world has been through in the last 12 months," said John Wallace, chief executive officer. "We saw a significant rebound in search activity in the first quarter of fiscal 2021, effecting a 61-per-cent rise in quarter-over-quarter revenue from the fourth quarter of fiscal 2020 and a 1-per-cent increase over the first quarter of fiscal 2020."
Mr. Wallace continued: "As a result of the cost-reduction initiatives enacted in the third and fourth quarters of fiscal 2020, coupled with ongoing support from government stimulus programs, we have maintained profitability and fortified our liquidity during the pandemic. This has allowed us to re-engage our growth strategy with great success, as evidenced by our Dec. 31
acquisition of IQTalent Partners, a technology-driven talent acquisition firm offering consulting, candidate sourcing, candidate research and full life cycle recruiting. Together, our two organizations will leverage IQTP's expertise and advanced artificial intelligence to specialize in all levels of professional recruitment, driving revenue growth and increased profitability. Additionally, we were pleased to announce five partner additions to the team during the first quarter: Peter Anselmo, technology and professional services (New York); Liz Bernich, financial services (New York);
Rui Di, consumer, retail and e-commerce (Dallas); Allison Dubrow, insurance (New York/Stamford); and Ryan Mason, energy, mining and infrastructure (Sydney). We expect to make further partner additions in the coming months as the industry continues to see the stability and exciting opportunities that Caldwell has to offer."
Financial highlights (all numbers expressed in thousands of dollars)
Professional fees for the first quarter of 2021 increased 3.0 per cent (3.3 per cent excluding an unfavourable 0.3-per-cent variance from exchange rate fluctuations) over the comparable period last year to $18,027 (2020: $17,498). The increase in professional fees results from a higher average fee per assignment of $162 ($163 excluding exchange rate fluctuations; 2020: $155), partially offset by a slight reduction in the number of assignments to 111 (2020: 113). The number of assignments decreased on a lower number of assignments per partner at 2.8 (2020: 2.9) and a slightly higher average number of partners at 39.1 (2020: 39.0). On a segment basis, $14,581 of professional fees were generated from the United States (2020: $12,885), $2,993 from Canada (2020: $3,729) and $453 from Europe (2020: $884).
Licence fees from the company's affiliate in New Zealand for the use of the Caldwell brand and intellectual property for the fiscal 2020 first quarter were $26 (2020: $29). Last year's results included $30 in licence fees from Hattonneale of Australia, with which the company ended its licensing relationship effective Aug. 31, 2020.
Direct expenses incurred and billed to clients during the fiscal 2021 first quarter were $74 (2020: $519).
The operating profit for the first quarter of 2021 was $1,427, a $1,032 increase over $395 last year. (2020: $395). The increase was the result of higher revenue, net of reimbursements ($496), lower cost of sales ($130), lower selling, general and administrative expenses ($296), and government stimulus grants obtained in fiscal 2021 ($110).
As a percentage of professional fees, cost of sales decreased 3.0 per cent to 74.0 per cent from 77.0 per cent in the same period last year. The decrease was due to lower partner support personnel compensation, which is semi-fixed, on the higher revenue (2.0 per cent of professional fees); lower average commission tiers on a relatively more evenly distributed billing among the partner group, resulting in lower partner compensation (0.9 per cent of professional fees); and lower search delivery materials expenses (0.1 per cent of professional fees).
In the first quarter, expenses decreased 8.0 per cent or $296 over the same period in the prior year to $3,339 (2020: $3,695). Excluding the impact of exchange rate variances of $5, expenses decreased $291 or 7.9 per cent over the same period last year. This constant currency decrease resulted from not holding the company's annual partner meeting in the current year due to travel restrictions ($374); lower office expenses on a reduced property footprint ($232); and lower marketing and business development expenses due to reduced travel as a result of COVID-19 travel restrictions ($206). These favourable variances were partially offset by increased share-based compensation expense, the result of a higher share price and an increase in performance factors from exceeding targeted performance ($198); higher management bonus accrual as a result of exceeding targeted performance ($186); and higher professional fees ($137).
On a segment basis, first-quarter operating profit was $75 (2020: $287) from Canada, $1,370 (2020: $121) from the U.S. and a loss of $18 (2020: loss of $13) from Europe.
Net earnings after tax
First-quarter net income was $934 (4.6 cents per share), as compared with net income of $462 (2.3 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. Please refer to section "non-GAAP financial measures and other operating measures" in the company's management discussion and analysis 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.
About The Caldwell Partners International Inc.
Caldwell Partners is a technology-powered talent acquisition firm specializing in recruitment at all levels.
Caldwell, a retained executive search firm, enables clients around the world to thrive and succeed by helping them identify, recruit and retain the best people. The company's reputation -- 50 years in the making -- has been built on transformative searches across functions and geographies at the very highest levels of management and operations. Caldwell is a leading licensed certified partner of the Predictive Index (PI), an award-winning talent optimization platform with a suite of talent strategy and assessment tools that, when integrated with the company's search process, helps clients hire the right people, then manage and inspire them to achieve maximum business results as fast as possible.
IQTalent Partners offers consulting, candidate sourcing, candidate research and full life cycle recruiting to its clients. Using a unique on-demand business model, IQTP augments the client's in-house talent acquisition team in a partnership without commissions or long-term contracts. Founded in 2009 with a mission to find a better, more cost-effective and efficient way for organizations and candidates to find a match, the company has partnered with more than 300 corporations from Fortune 500s to start-ups. IQTP's IQTalent Xchange is an original market concept using advanced artificial intelligence combined with human expertise to create a passive candidate marketplace. The proprietary talent exchange platform includes more than 300 million global professionals, offering clients unprecedented access to the most qualified candidates.
Caldwell's common shares are listed on the Toronto Stock Exchange (TSX: CWL).
CONSOLIDATED INTERIM STATEMENTS OF EARNINGS
(in $000s, except per-share amounts)
Three months ended
Professional fees $18,027 $17,498
Licence fees 26 59
Direct expense reimbursements 74 519
Cost of sales expenses
Cost of sales 13,337 13,467
Government stimulus grants (110) -
Reimbursed direct expenses 74 519
Gross profit 4,826 4,090
Selling, general and administrative 3,399 3,695
Operating profit 1,427 395
Finance expenses (income)
Interest expense on lease liability 107 66
Investment income (9) (71)
Foreign exchange loss (income) 34 (153)
Earnings before income tax 1,295 553
Income tax expense 361 91
Net earnings for the year attributable to owners of the company 934 462
Earnings per share
Basic and diluted $0.046 $0.023
We seek Safe Harbor.
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