TORONTO, ON / ACCESSWIRE / April 11, 2024 / Talent acquisition firm The Caldwell Partners International Inc. (TSX:CWL)(OTCQX:CWLPF) today issued its financial results for the fiscal 2024 second quarter ended February 29, 2024. 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 | Six Months Ended | |||||||||||||||
| 2.29.24 | 2.28.23 | 2.29.24 | 2.28.23 | |||||||||||||
Professional fees - Caldwell | 14,946 | 16,705 | 29,112 | 33,680 | ||||||||||||
Professional fees - IQTalent1 | 2,741 | 4,745 | 5,911 | 11,459 | ||||||||||||
Consolidated professional fees | 17,687 | 21,450 | 35,023 | 45,139 | ||||||||||||
Direct expense reimbursements | 179 | 133 | 378 | 352 | ||||||||||||
Revenues | 17,866 | 21,583 | 35,401 | 45,491 | ||||||||||||
Cost of sales | 14,061 | 18,266 | 29,105 | 39,191 | ||||||||||||
Reimbursed direct expenses | 179 | 133 | 378 | 352 | ||||||||||||
Gross profit | 3,626 | 3,184 | 5,918 | 5,948 | ||||||||||||
Selling, general and administrative expenses2 | 4,783 | 6,070 | 9,305 | 11,159 | ||||||||||||
Restructuring (income) expenses3 | - | - | (7,979 | ) | 2,530 | |||||||||||
Acquisition-related expenses4 | - | 204 | - | 879 | ||||||||||||
Operating profit (loss) | (1,157 | ) | (3,090 | ) | 4,592 | (8,620 | ) | |||||||||
Finance expenses (income) | 83 | 56 | 495 | (64 | ) | |||||||||||
Earnings (loss) before tax | (1,240 | ) | (3,146 | ) | 4,097 | (8,556 | ) | |||||||||
Income tax expense (recovery) | (375 | ) | (826 | ) | 1,184 | (2,293 | ) | |||||||||
Net earnings (loss) after tax | (865 | ) | (2,320 | ) | 2,913 | (6,263 | ) | |||||||||
Basic earnings (loss) per share | $ | (0.029 | ) | $ | (0.090 | ) | $ | 0.099 | $ | (0.242 | ) | |||||
Professional fees of IQTalent are presented net of elimination of intercompany revenue.
Selling, general and administrative expenses include a benefit from a lower share price reducing share-based compensation expense by $12 in the current quarter compared to a benefit of $344 in the same quarter last year.
Restructuring income of $7,979 in the first half of the current year includes separation expense of $1,089 for management staff reductions at IQTalent, more than offset by a net gain on lease termination of $9,068 as IQTalent negotiated a termination of its Nashville leased facility resulting in a recovery of lease impairment charges expensed in the fourth quarter of the prior year. Restructuring expenses of $2,530 in the first quarter of the prior year include $2,264 of separation expense for staff reductions at IQTalent and $266 in onerous lease costs at Caldwell for the sublease of our San Francisco office as a result of our transition to a remote work environment.
Acquisition-related expenses consist of transaction fees and IQTalent purchase price structured as compensation expense, which were fully amortized into income as at 12/31/22.
"We saw modest sequential improvement in our results, as the softness in executive search bookings that we experienced in the first quarter dampened our second quarter revenue," said John Wallace, chief executive officer. "There has been a measurable uplift in new executive search bookings and activity so far this calendar year and we therefore anticipate significantly higher revenue in the third quarter."
"The increased confidence we've seen coming into the new calendar year from Caldwell's executive level clients has led to a strong upturn in new bookings, as they look to fill out their executive teams. There are still suppressed hiring levels at the mid-level, which is impacting IQTalent on a more prolonged basis than Caldwell. Positively, beginning next quarter, IQTalent will realize the benefit of significant cost reduction initiatives. The Nashville office lease termination and the right sizing of software license agreements to reduced headcount levels will further align our cost structure with current revenue levels."
Wallace added: "Our executive search team has leveraged their wealth of experience and knowledge to navigate what has been a challenging market. We do expect higher search volumes as hiring demand continues to improve. Our clients appreciate our ability to support their talent acquisition requirements across every level, ensuring a seamless experience. By continuing to expand and strengthen our coverage across industry sectors and functional roles, and leverage opportunities for both business segments to collaborate, we anticipate continued growth for the remainder of the year."
About Caldwell Partner
Caldwell Partners is a technology-powered talent acquisition firm specializing in recruitment at all levels. Through two distinct brands - Caldwell and IQTalent - the firm leverages the latest innovations in AI to offer an integrated spectrum of services delivered by teams with deep knowledge in their respective areas. Services include candidate research and sourcing through to full recruitment at the professional, executive and board levels, as well as a suite of talent strategy and assessment tools that can help clients hire the right people, then manage and inspire them to achieve maximum business results.
Caldwell Partners' common shares are listed on The Toronto Stock Exchange (TSX: CWL) and trade on the OTCQX Market (OTCQX:CWLPF). Please visit our website at www.caldwell.com for further information.
Forward-Looking Statements
Forward-looking statements in this document are based on current expectations subject to the significant risks and uncertainties cited. These forward-looking statements generally can be identified by the 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.
We are 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, the impact of pandemic diseases, 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; risks related to deposit-taking institutions; foreign currency exchange rate fluctuations; competition from other companies directly or indirectly engaged in talent acquisition; cybersecurity requirements, vulnerabilities, threats and attacks; damage to our brand reputation; our ability to align our cost structure to changes in our revenue; liability risk in the services we perform; potential legal liability from clients, employees and candidates for employment; reliance on software that we license from third parties; reliance on third-party contractors for talent acquisition support; the classification of third-party labour as contractors versus employee relationships; our ability to successfully recover from a disaster or other business continuity issues; adverse governmental and tax law rulings; successfully integrating or realizing the expected benefits from our acquisitions, adverse operating issues from acquired businesses; volatility of the market price and trading volume of our common shares; technological advances may significantly disrupt the labour market and weaken demand for human capital at a rapid rate; affiliation agreements may fail to renew or affiliates may be acquired; the impact on profitability from marketable securities valuation fluctuations; increasing dependence on third parties for the execution of critical functions; our ability to generate sufficient cash flow from operations to support our growth and fund any dividends; 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. 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.
For further information, please contact:
Investors:
Chris Beck, President, and Chief Financial Officer
cbeck@caldwell.com
+1 (617) 934-1843
Media:
Caroline Lomot, Director of Marketing
clomot@caldwell.com
+1 (516) 830-3535
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | As at | As at | ||||||
(unaudited - in $000s Canadian) | November 30 | August 31 | ||||||
| 2023 | 2023 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 16,310 | 22,053 | ||||||
Accounts receivable | 11,638 | 12,886 | ||||||
Income taxes receivable | 263 | 197 | ||||||
Unbilled revenue | 7,194 | 8,237 | ||||||
Prepaid expenses and other assets | 1,854 | 2,712 | ||||||
| 37,259 | 46,085 | |||||||
Non-current assets | ||||||||
Prepaid expenses and other assets | 304 | 593 | ||||||
Investments | 1,979 | 2,039 | ||||||
Advances | 702 | 811 | ||||||
Deferred income taxes | 7,102 | 8,676 | ||||||
Property and equipment | 1,609 | 1,779 | ||||||
Right-of-use assets | 4,275 | 13,305 | ||||||
Intangible assets | 129 | 142 | ||||||
Goodwill | 11,248 | 11,214 | ||||||
Total assets | 64,607 | 84,644 | ||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable | 2,893 | 3,181 | ||||||
Compensation payable | 24,036 | 28,384 | ||||||
Other liabilities | 236 | 687 | ||||||
Lease liability | 1,564 | 2,788 | ||||||
| 28,729 | 35,040 | |||||||
Non-current liabilities | ||||||||
Compensation payable | 558 | 1,948 | ||||||
Other liabilities | - | 921 | ||||||
Lease liability | 3,744 | 19,011 | ||||||
| 33,031 | 56,920 | |||||||
Equity attributable to owners of the Company | ||||||||
Share capital | 15,392 | 15,392 | ||||||
Contributed surplus | 15,348 | 15,282 | ||||||
Accumulated other comprehensive income | 1,855 | 1,847 | ||||||
Deficit | (1,019 | ) | (4,797 | ) | ||||
Total equity | 31,576 | 27,724 | ||||||
Total liabilities and equity | 64,607 | 84,644 | ||||||
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS | Three months ended | |||||||
| November 30 | ||||||||
(unaudited - in $000s Canadian, except per share amounts) | 2023 | 2022 | ||||||
Revenues | ||||||||
Professional fees | 17,336 | 23,689 | ||||||
Direct expense reimbursements | 199 | 220 | ||||||
| 17,535 | 23,909 | |||||||
Cost of sales expenses | ||||||||
Cost of sales | 15,044 | 20,926 | ||||||
Reimbursed direct expenses | 199 | 220 | ||||||
| 15,243 | 21,146 | |||||||
Gross profit | 2,292 | 2,763 | ||||||
Selling, general and administrative | 4,522 | 5,088 | ||||||
Restructuring and other (income) expense | (7,979 | ) | 2,530 | |||||
Acquisition-related expenses | - | 675 | ||||||
| (3,457 | ) | 8,293 | ||||||
Operating profit (loss) | 5,749 | (5,530 | ) | |||||
Finance expenses (income) | ||||||||
Interest expense on lease liability | 397 | 70 | ||||||
Investment (income) expense | 10 | (160 | ) | |||||
Foreign exchange loss (income) | 5 | (30 | ) | |||||
Earnings (loss) before income tax | 5,337 | (5,410 | ) | |||||
Income tax expense (recovery) | 1,559 | (1,467 | ) | |||||
Net earnings (loss) for the period attributable to owners of the Company | 3,778 | (3,943 | ) | |||||
Earnings (loss) per share | ||||||||
Basic and diluted | $ | 0.128 | $ | (0.152 | ) | |||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS | ||||||||
(unaudited - in $000s Canadian) | ||||||||
| Three months ended | ||||||||
| November 30 | ||||||||
| 2023 | 2022 | |||||||
Net earnings (loss) for the period | 3,778 | (3,943 | ) | |||||
Other comprehensive income (loss): | ||||||||
Items that may be reclassified subsequently to net earnings | ||||||||
(Loss) gain on marketable securities | 5 | (4 | ) | |||||
Cumulative translation adjustment | 3 | 815 | ||||||
Comprehensive earnings (loss) for the period attributable to owners of the Company | 3,786 | (3,132 | ) | |||||
THE CALDWELL PARTNERS INTERNATIONAL INC.
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||||||||||||
(unaudited - in $000s Canadian) | ||||||||||||||||||||||||||
| Accumulated Other Comprehensive | ||||||||||||||||||||||||||
| Income (Loss) | ||||||||||||||||||||||||||
| Cumulative | (Loss) Gain on | |||||||||||||||||||||||||
| Retained Earnings/ | Contributed | Translation | Marketable | Total | ||||||||||||||||||||||
| (Deficit) | Share Capital | Surplus | Adjustment | Securities | Equity | |||||||||||||||||||||
Balance - August 31, 2022 | 6,506 | 12,554 | 15,045 | 1,043 | (83 | ) | 35,065 | |||||||||||||||||||
Net loss for the three month period ended November 30, 2022 | (3,943 | ) | - | - | - | - | (3,943 | ) | ||||||||||||||||||
Share-based payment expense | - | - | 44 | - | - | 44 | ||||||||||||||||||||
Loss on marketable securities available for sale | - | - | - | - | (4 | ) | (4 | ) | ||||||||||||||||||
Change in cumulative translation adjustment | - | - | - | 815 | - | 815 | ||||||||||||||||||||
Balance - November 30, 2022 | 2,563 | 12,554 | 15,089 | 1,858 | (87 | ) | 31,977 | |||||||||||||||||||
Balance - August 31, 2023 | (4,797 | ) | 15,392 | 15,282 | 1,886 | (39 | ) | 27,724 | ||||||||||||||||||
Net earnings for the three month period ended November 30, 2023 | 3,778 | - | - | - | - | 3,778 | ||||||||||||||||||||
Share-based payment expense | - | - | 66 | - | - | 66 | ||||||||||||||||||||
Gain on marketable securities available for sale | - | - | - | - | 5 | 5 | ||||||||||||||||||||
Change in cumulative translation adjustment | - | - | - | 3 | - | 3 | ||||||||||||||||||||
Balance - November 30, 2023 | (1,019 | ) | 15,392 | 15,348 | 1,889 | (34 | ) | 31,576 | ||||||||||||||||||
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOW | Three months ended | |||||||
(unaudited - in $000s Canadian) | November 30 | |||||||
| 2023 | 2022 | |||||||
Cash flow provided by (used in) | ||||||||
Operating activities | ||||||||
Net (loss) earnings for the period | 3,778 | (3,943 | ) | |||||
Add (deduct) items not affecting cash | ||||||||
Depreciation of property and equipment | 92 | 111 | ||||||
Depreciation of right-of-use assets | 462 | 534 | ||||||
Amortization of intangible assets | 14 | 14 | ||||||
Amortization of advances | 124 | 172 | ||||||
Interest expense on lease liabilities | 397 | 70 | ||||||
Share based payment expense | 66 | 44 | ||||||
Gain on unrealized foreign exchange on subsidiary loans | (3 | ) | (59 | ) | ||||
Losses related to equity accounted associate | 137 | - | ||||||
(Gain) loss on lease modification, net | (7,741 | ) | 297 | |||||
Changes in working capital | (2,386 | ) | (7,849 | ) | ||||
Net cash used in operating activities | (5,060 | ) | (10,609 | ) | ||||
Investing activities | ||||||||
Acquisition of business, net of cash acquired | - | (2,179 | ) | |||||
Purchase of property and equipment | (40 | ) | (37 | ) | ||||
Payment of advances | (21 | ) | - | |||||
Purchase of marketable securities | (64 | ) | - | |||||
Purchase of marketable securities | - | - | ||||||
Purchase of intangible assets | - | - | ||||||
Net cash used in investing activities | (125 | ) | (2,216 | ) | ||||
Financing activities | ||||||||
Payment of lease liabilities | (559 | ) | (615 | ) | ||||
Sublease payments received | 16 | - | ||||||
Net cash used in financing activities | (543 | ) | (615 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (15 | ) | 513 | |||||
Net decrease in cash and cash equivalents | (5,743 | ) | (12,927 | ) | ||||
Cash and cash equivalents, beginning of year | 22,053 | 35,668 | ||||||
Cash and cash equivalents, end of period | 16,310 | 22,741 | ||||||
SOURCE: Caldwell Partners International, Inc.
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