2019 First Quarter Financial Results

The Caldwell Partners International Issues Fiscal 2019 first Quarter Financial Results

  • First quarter revenue of $15.9 million.
  • Operating profit of $429,000.
  • Board declares 28th consecutive quarterly dividend.

Toronto – January 10, 2019 – Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2019 first quarter ended November 30, 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 $000s except per share amounts)

Three Months Ended

November 30

2018 2017
Professional fees $15,169 $14,973
License fees $217 $76
Direct expense reimbursements1 $506
     Revenues $15,892 $15,049
Cost of sales $11,578 $11,073
Reimbursed direct expenses1 $506
Expenses $3,379 $3,072
     Operating profit $429 $904
Investment (loss) income from marketable securities ($41) $2
     Earnings before tax $388 $906
     Net earnings after tax $211 $410
     Net earnings per share $0.010 $0.020
  1. As a result of the implementation of IFRS 15, the Company now shows the gross amount of direct expenses billed and recovered from clients as revenue, with the gross amount incurred recorded as a cost of sales. Prior to the adoption of IFRS 15 direct expense reimbursements and reimbursed direct expenses were shown as a net zero amount within cost of sales. For further information, please refer to note 3 of consolidated interim financial statements for the first quarter ended November 30, 2018.

“Though we delivered an increase in revenue over last year, we did experience developing headwinds against recent growth trends,” said John Wallace, chief executive officer. “There was a softening to our overall search market in the latter part of the first quarter and early into the second quarter, as economic uncertainty in the United States and United Kingdom gave pause to many of our clients. While a number of our clients have expressed optimism that search roles will ultimately be filled, we are uncertain at this juncture as to timing.”

Wallace added: “Growth remains the priority for Caldwell, at a measured pace that will not impede the long-term profitability and financial stability of the firm. We are focused on making targeted partner hires and further building our practice and functional offerings across the United States, Canada and Europe. To that end, we have added four high caliber partners to our team to date. The additions of Frank Morogiello (Dallas), David Bernard (London), Kenneth Baillie (Houston), and Andrew Willson (London) to our partner team adds significant depth to our Aviation, Transportation and Hospitality, Financial Services, Oil & Gas, and Mining and Extractive delivery capabilities; and specifically incorporates regional expertise to further strengthen our London and UK presence.”

“Additionally, we continue to make prudent expansions to our service lines. We recently launched Agile Talent solutions that leverage our executive search network to provide talent and knowledge services to our clients when full time hires are not required. Our teams place executives who are experts in the fields of cybersecurity, blockchain, and diversity and inclusion in ongoing advisory capacities to aid clients in a variety of critical strategic and operational areas. This week we also announced the launch of Caldwell Advance, a mid-management search offering that directly responds to expressed client interest in the Caldwell search process at the emerging leader and advancing professional level. These service extensions will provide immediate meaningful differentiation and added value to our clients.”

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 January 22, 2019 and to be paid on March 18, 2019.

Financial Highlights (all numbers expressed in $000s)

  • Operating revenue:

First Quarter

  • Professional fees for the first quarter of fiscal 2019 were $15,169. The application of IFRS 15 resulted in a $362 decrease in professional fees during the quarter. Excluding the IFRS 15 impact, professional fees increased 3.7% (1.8% excluding a favourable 1.9% variance from exchange rate fluctuations) over the comparable period last year to $15,531 (2018: $14,973).


The increase in professional fees is attributable to a higher Average Number of Partners at 39.3 compared to 38.0 in the prior year period and an increase in Average Fee per Assignment to $140 ($144 excluding the IFRS 15 impact) (2018: $131) partially offset by a lower Number of Assignments per Partner at 2.7 (2018: 3.0) resulting in a decrease in number of assignments to 108 (2018: 114).

  • First quarter professional fees in the US were $10,886. The adoption of IFRS 15 resulted in a $368 decrease in professional fees for the US during the quarter. Excluding that adjustment, professional fees in the US decreased 2.5% (6.2% excluding a favourable 3.7% variance from exchange rate fluctuations) to $11,254 (2018: 11,545). The decrease excluding the IFRS 15 impact was the result of increases in the Average Number of Partners and the Average Fee per Assignment being more than offset by a lower Number of Assignments per Partner.
  • First quarter professional fees in Canada were $3,813. The adoption of IFRS 15 resulted in a $5 increase in professional fees for Canada during the quarter. Excluding that adjustment, professional fees increased 12.5% to $3,808 (2018: $3,384). The increase in professional fees excluding the IFRS 15 impact resulted from a lower Average Fee per Assignment and a lower Number of Partners being more than offset by a higher Number of Assignments per Partner.
  • First quarter professional fees in Europe were $470. The adoption of IFRS 15 resulted in a $1 increase in professional fees for Europe on the quarter. Excluding that adjustment, professional fees increased 965.9% (947.2% excluding a favourable 18.7% variance from exchange rate fluctuations) to $469 (2018: $44). The increase excluding the IFRS 15 impact was the result of a higher Average Fee per Assignment and a higher Number of Partners resulting from the addition of one new partner in the current period partially offset by a slightly lower Number of Assignments per Partner. Given the low number of partners in the region and recent tenure of two of the three, the Company expects ongoing quarterly revenue fluctuations and profit suppression as the newly hired partners ramp up their businesses.
  • License fees from our licensees in Latin America and New Zealand for the use of the Caldwell Partners brand and intellectual property for the fiscal 2019 first quarter were $217 (2018: $76). The increase was a result of a step-up in the license fee rate from Latin America and New Zealand as well as higher revenue within the Latin American affiliates upon which the license fee is based.
  • Direct expenses incurred and billed to clients during the fiscal 2019 first quarter were $506 (2018: $354, with the revenue billed and cost of sale amounts presented as net zero). See the Adoption of IFRS 15 discussion on page 3.


  • Operating profit:

First Quarter

  • Operating profit for the first quarter of 2019 was $429. The adoption of IFRS 15 resulted in a $181 decrease in operating profit on the quarter. Excluding the IFRS 15 impact, operating profit decreased $294 to $610 (2018: $904). This $294 decrease came from higher revenue ($699) more than offset by the combination of higher cost of sales ($686) and higher expenses ($307).
  • First quarter cost of sales was $11,578. The adoption of IFRS 15 resulted in a $181 decrease in cost of sales on the quarter. Excluding the IFRS 15 impact, cost of sales increased 6.2% (3.0% on a constant currency basis) to $11,759 (2018: $11,073).
  • Expenses in the first quarter increased 10.0% or $307 over the same period in the prior year to $3,379 (2018: $3,072). Excluding exchange rate variances, expenses increased $253 or 8.2% over the same period last year. This constant currency increase was the result of increases in share-based compensation expense caused from a significant increase in the share price in the current year ($281) and foreign exchange losses on intercompany loans and US dollar bank account balances versus gains las year ($82) and general increases across other categories ($28). These unfavourable variances were partially offset by a decrease in expenses related to firm-wide search team practice meetings for business development and training that were held during the period in the previous period but not scheduled for future periods in the current year ($138).
  • On a segment basis, $796 of profit was generated from Canada ($550 net of intercompany license fee revenue) which was partially offset by operating losses in the US of $121 (profit of $125 net of intercompany license fees) and Europe of $246
  • Net earnings after tax:
    • On December 22, 2017, the US tax reform (“Tax Cuts and Jobs Act”) was substantively enacted and reduced the maximum federal corporate income tax rate for the company’s US entity from 35% to 21%. In 2018, a hybrid rate derived from the previous and new tax rates was applied to US taxable income. In the current year, the new, lower tax rate is being applied.
    • There was net income tax expense of $177 in the first quarter of 2019 (2018: $496). On a segment basis Canada had income tax expense of $211 (2018: $146) and the US income tax recovery of $34 (2018: $350 expense). No income tax recovery was recognized in the UK. Within these results, the adoption of IFRS 15 reduced income tax expense by $50 during the quarter.
    • First quarter net income was $211 ($0.010 per share), as compared to $410 ($0.020 per share) in the comparable period a year earlier. The adoption of IFRS 9 resulted in a $56 decrease ($0.003 per share) in net income on the quarter. The adoption of IFRS 15 resulted in a $131 decrease ($0.007 per share) in net income on the quarter. Excluding these adjustments, net profit decreased $12 to $398 ($0.020 per share).

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

At Caldwell we believe Talent Transforms. As a leading provider of executive talent, we enable our clients to thrive and succeed by helping them identify, recruit and retain their best people. Our 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. We leverage our 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, we take pride in delivering an unmatched level of service and expertise to our clients.

Caldwell’s Common shares are listed on The Toronto Stock Exchange (TSX: CWL). 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 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, our ability to attract and retain key personnel; exposure to our Partners taking our clients with them to another firm; the performance of the Canadian, US and international economies; 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 tax law rulings; our ability to generate sufficient cash flow from operations to support our growth and maintain our dividend; foreign currency exchange rate fluctuations; marketable securities valuation fluctuations; volatility of the market price and volume of our common shares; any potential impairment of our acquired goodwill and intangible assets; and the risk associated with license fee agreement renewals. 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 the 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.

For further information, please contact:

Chris Beck, CPA, Chief Operating and Financial Officer
+1 (617) 934-1843

Caroline Lomot, Director of Marketing
+1 (516) 830-3535

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