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Caldwell Partners International Inc (The)
Symbol CWL
Shares Issued 25,505,690
Close 2021-01-14 C$ 1.20
Recent Sedar Documents

ORIGINAL: Caldwell Reports Strong Growth in Revenue and Operating Profit

2021-01-14 17:33 ET - News Release

  • First quarter revenue of $18.1 million, a 61% increase quarter over quarter and a 1% increase year over year.
  • Operating profit of $1.4 million, a 261% increase year over year.
  • Net earnings after tax of $934,000, a 102% increase year over year.

TORONTO, Jan. 14, 2021 /PRNewswire/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2021 first quarter ended November 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 December 31, 2020.

Financial Highlights (in $000s except per share amounts)


Three Months Ended
November 30


2020

2019

Professional fees

$18,027

$17,498

License 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% rise in quarter over quarter revenue from the fourth quarter of fiscal 2020 and a 1% increase over the first quarter of fiscal 2020."

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 reengage our growth strategy with great success, as evidenced by our December 31acquisition of IQTalent Partners, a technology-driven talent acquisition firm offering consulting, candidate sourcing, candidate research, and full lifecycle 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 & 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 $000s)

  • Operating revenue:

    First Quarter
    • Professional fees for the first quarter of 2021 increased 3.0% (3.3% excluding an unfavourable 0.3% 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 US (2020: $12,885), $2,993 from Canada (2020: $3,729) and $453 from Europe (2020: $884).

    • License fees from our 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 license fees from Hattonneale of Australia, with whom the Company ended its licensing relationship effective August 31, 2020.

    • Direct expenses incurred and billed to clients during the fiscal 2021 first quarter were $74 (2020: $519)
  • Operating profit:

    First Quarter
    • 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% to 74.0% from 77.0% 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% 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% of professional fees); and lower search delivery materials expenses (0.1% of professional fees). 

    • In the first quarter, expenses decreased 8.0% 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% over the same period last year. This constant currency decrease resulted from not holding our 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 US and a loss of $18 (2020: loss of $13) from Europe.
  • Net earnings after tax:
    • First quarter net income was $934 ($0.046 per share), as compared to net income of $462 ($0.023 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 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 Partners

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. Our 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. We are 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 our 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 lifecycle 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 startups. 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). 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, software that we license from third parties, our ability to successfully recover from a disaster or other business continuity issues, successfully integrating or realizing the expected benefits from our acquisitions, adverse operating issues from acquired businesses, 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, including the impact of pandemic diseases; 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 governmental and tax law rulings; our ability to generate sufficient cash flow from operations to support our growth and fund any dividends; 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



November 30


August 31



2020


2020

Assets





Current assets





Cash and cash equivalents


19,388


14,481

Accounts receivable


7,801


7,316

Income taxes receivable


563


928

Unbilled revenue


2,918


2,430

Prepaid expenses and other assets


2,254


2,553



32,924


27,708

Non-current assets





Restricted cash


-


45

Marketable securities


107


71

Advances


552


695

Property and equipment


2,051


2,128

Right-of-use assets


7,250


7,691

Goodwill


1,280


1,288

Deferred income taxes


1,238


1,245

Total assets


45,402


40,871






Liabilities





Current liabilities





Accounts payable


1,879


1,764

Compensation payable


16,425


12,812

Lease liability


1,886


1,873



20,190


16,449

Non-current liabilities





Compensation payable


1,144


734

Lease liability


6,411


6,932



27,745


24,115

Equity attributable to owners of the Company





Share capital


7,515


7,515

Contributed surplus


15,018


15,013

Accumulated other comprehensive income


381


419

Deficit 


(5,257)


(6,191)

Total equity


17,657


16,756

Total liabilities and equity


45,402


40,871






The accompanying notes are an integral part of these consolidated financial statements.

 


THE CALDWELL PARTNERS INTERNATIONAL INC.








CONSOLIDATED INTERIM STATEMENTS OF EARNINGS


Three months ended



November 30,

(unaudited - in $000s Canadian, except per share amounts)


2020

2019





Revenues




Professional fees


18,027

17,498

Licence fees


26

59

Direct expense reimbursements


74

519



18,127

18,076





Cost of sales expenses




Cost of sales


13,337

13,467

Government stimulus grants


(110)

-

Reimbursed direct expenses


74

519



13,301

13,986

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 & Diluted


$0.046

$0.023





CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE EARNINGS

(unaudited - in $000s Canadian)






Three months ended



November 30,



2020

2019





Net earnings for the year


934

462





Other comprehensive income:




Items that may be reclassified subsequently to net earnings




Gain on marketable securities


37

-

Cumulative translation adjustment


(75)

(134)

Comprehensive earnings for the year attributable to owners of the Company


896

328





Certain comparative figures have been restated to conform with current year presentation.





The accompanying notes are an integral part of these consolidated financial statements.

 




THE CALDWELL PARTNERS INTERNATIONAL INC.










CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY



(unaudited - in $000s Canadian)











Accumulated Other Comprehensive






Income (Loss)







Unrealized






Cumulative

Gains (Loss) on





Contributed

Translation

Marketable

Total


Deficit

Share Capital

Surplus

Adjustment

Securities

Equity








Balance - August 31, 2019

(9,256)

7,515

15,005

967

(386)

13,845








Adoption of IFRS 16

1,137

-

-

-

-

1,137








Net earnings for the three month period ended 

462

-

-

-

-

462

    November 30, 2019














Dividend payments declared

(459)

-

-

-

-

(459)








Change in cumulative translation adjustment

-

-

-

(134)

-

(134)








Balance - November 30, 2019

(8,116)

7,515

15,005

833

(386)

14,851








Balance - August 31, 2020

(6,191)

7,515

15,013

595

(176)

16,756








Net earnings for the three month period ended 

934

-

-

-

-

934

    November 30, 2020














Share-based payment expense

-

-

5

-

-

5








Change in unrealized gain on

-

-

-

-

37

37

     marketable securities available for sale 














Change in cumulative translation adjustment

-

-

-

(75)

-

(75)








Balance - November 30, 2020

(5,257)

7,515

15,018

520

(139)

17,657








The accompanying notes are an integral part of these consolidated financial statements.



 


THE CALDWELL PARTNERS INTERNATIONAL INC.











CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW



(unaudited - in $000s Canadian)













Three months ended








   November 30,








2020


2019











Cash flow provided by (used in)

















Operating activities









Net earnings for the year




934


462


Add (deduct) items not affecting cash








Depreciation of property and equipment


93


109



Depreciation of right-of-use assets



421


333



Amortization of advances



162


239



Interest expense on lease liabilities



107


66



Loss (gain) on marketable securities classified as FVPL


-


(64)



Share based payment expense



5


-



Loss (gain) on unrealized foreign exchange on subsidiary loans


24


(162)



(Increase) decrease in unbilled revenue


(503)


233



Increase in cash settled share-based compensation


409


233


Changes in working capital




3,853


1,470

Net cash provided by operating activities



5,505


2,919











Investing activities









Proceeds from release of restricted cash



45


-


Purchase of property and equipment



(20)


(167)

Net cash provided by (used in) investing activities



25


(167)











Financing activities









Dividend payments




-


(459)


Payment of lease liabilities




(592)


(424)


Sublease payments received




90


76

Net cash used in financing activities



(502)


(807)

Effect of exchange rate changes on cash and cash equivalents


(121)


21

Net increase in cash and cash equivalents



4,907


1,966

Cash and cash equivalents, beginning of year



14,481


10,623

Cash and cash equivalents, end of period



19,388


12,589











The accompanying notes are an integral part of these consolidated financial statements.



 


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SOURCE The Caldwell Partners International Inc.

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