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CALDWELL PARTNERS INTERNATIONAL, INC. (:CWL) Caldwell Reports Fourth Quarter and Full Year Results

Directive transparence : information réglementée

28/11/2023 23:05

TORONTO, ON / ACCESSWIRE / November 28, 2023 / Talent acquisition firm The Caldwell Partners International Inc. (TSX:CWL)(OTCQX:CWLPF) today issued its financial results for the fiscal 2023 fourth quarter and full year ended August 31, 2023. 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 Twelve Months Ended

8.31.23 8.31.22 8.31.23 8.31.22
Professional fees - Caldwell
21,934 23,580 77,102 103,964
Professional fees - IQTalent1
3,924 12,153 19,831 51,596
Consolidated professional fees
25,858 35,733 96,933 155,560
Direct expense reimbursements
295 186 868 605
Revenues
26,153 35,919 97,801 156,165
Cost of sales
20,394 28,028 80,712 120,911
Reimbursed direct expenses
295 186 868 605
Gross profit
5,464 7,705 16,221 34,649
Selling, general and administrative expenses2
4,235 4,356 19,218 21,448
Restructuring expenses3
8,061 - 10,591 -
Acquisition-related expenses4
- 616 879 2,611
Operating (loss) profit
(6,832) 2,733 (14,467) 10,590
Finance (income) expenses5
596 (458) (531) (120)
(Loss) earnings before tax
(7,428) 3,191 (13,936) 10,710
Income tax expense (recovery)
(923) 616 (2,633) 2,532
Net earnings (loss) after tax
(6,505) 2,575 (11,303) 8,178
Basic earnings (loss) per share
$(0.248) $0.100 $(0.432) $0.318
  1. Professional fees of IQTalent are presented net of elimination of intercompany revenue.
  2. Selling, general and administrative expenses include a benefit from a lower share price reducing share-based compensation expense by $43 in the current quarter compared to a benefit of $1,319 in the same quarter last year.
  3. Restructuring expenses of $10,591 include $2,264 of severance 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 in the first quarter and a charge of $8,061 related to the decision to sublease IQTalent's Nashville premises in the fourth quarter.
  4. 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.
  5. Finance income for the current year includes a one-time gain of $1,625 from the spin-off of IQTalent's software business into IQRecruit Inc., effective 3/1/23, net of our pro-rata share of IQRecruit's year-to-date losses of $302. Please refer to our MD&A and annual consolidated Financial Statements for the years ended 8/31/23 and 8/31/22 filed on www.sedar.com for further details.

"Fiscal 2023 was a challenging year," said John Wallace, chief executive officer. "We are a talent acquisition services firm fueled by hiring demand, and we saw a significant pullback in hiring at our clients that impacted both of our businesses."

"In our executive search segment, Caldwell's fourth quarter revenue of $21.9 million represents a sequential quarterly increase of 2.3% and another profitable quarter. Our executive search team continues to leverage their experience and expertise to push through a slower market, resulting in positive outcomes. We look forward to leveraging our all-time high partner count at Caldwell when hiring demand returns to historically normal levels."

"In our on-demand talent acquisition support segment, IQTalent had the dual challenge of being an on-demand business with a heavy weighting in the technology sector, which has been the hardest hit sector during this negative economic cycle. Consequently, we saw both sequential and year-over-year decreases in revenue for the quarter. As hiring demand fell, leadership implemented significant restructuring initiatives to right size our staff to match revenue levels. We took a significant lease impairment charge to our IQTalent Nashville office of $8.1 million in the fourth quarter, reflecting the scaling back of our real estate footprint and intent to sublease two-thirds of our office space to match the reduced size of our operations. We are currently negotiating an opportunity to terminate our lease in its entirety which, if successful, may result in a reversal of up to the $8.1 million charge in fiscal 2024. We cannot accurately predict the likelihood of that transaction closing at this time; as such, we have reflected traditional sublease market rates to calculate the charge in our presented financials. We have also proactively adjusted our IQTalent leadership team structure in October, which now reflects a leaner team and stronger go-to-market strategy. With these measures completed, we are positioned for profitable growth with a return of hiring demand."

Wallace continued: "We continue to benefit from a solid balance sheet, cash, and liquidity position that has given us the financial flexibility to navigate through this past fiscal year while still allowing us to implement our strategic growth plans. We are confident in the strength of our company, our team, our service offerings, our balance sheet and our future. Our clients value our ability to provide seamless support for their talent acquisition needs at all levels, and by continuing to diversify our mix of services and cross-collaborating between our two business segments, we expect to continue to grow both businesses together."

About Caldwell Partners

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
(in $000s Canadian)
As at As at
August 31 August 31
2023 2022
adjusted
Assets
Current assets
Cash and cash equivalents
22,053 35,668
Accounts receivable
12,886 22,882
Income taxes receivable
197 1,280
Unbilled revenue
8,237 6,495
Prepaid expenses and other assets
2,712 2,758
46,085 69,083
Non-current assets
Prepaid expenses and other assets
593 -
Investments
2,039 736
Advances
811 241
Deferred income taxes
8,676 4,730
Property and equipment
1,779 2,035
Right-of-use assets
13,305 21,256
Intangible assets
142 190
Goodwill
11,214 8,928
Total assets
84,644 107,199
Liabilities
Current liabilities
Accounts payable
3,181 4,021
Compensation payable
28,384 43,866
Other liabilities
687 -
Lease liability
2,788 1,817
35,040 49,704
Non-current liabilities

Compensation payable
1,948 2,105

Other liabilities
921 -
Lease liability
19,011 20,325
56,920 72,134
Equity attributable to owners of the Company
Share capital
15,392 12,554
Contributed surplus
15,282 15,045
Accumulated other comprehensive income
1,847 960
(Deficit) Retained earnings
(4,797) 6,506
Total equity
27,724 35,065
Total liabilities and equity
84,644 107,199
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in $000s Canadian, except per share amounts) Twelve months ended
August 31
2023 2022
Revenues
Professional fees
96,933 155,560
Direct expense reimbursements
868 605
97,801 156,165
Cost of sales expenses
Cost of sales
80,712 120,911
Reimbursed direct expenses
868 605
81,580 121,516
Gross profit
16,221 34,649
Selling, general and administrative
19,218 21,448
Restructuring expenses
10,591 -
Acquisition-related expenses
879 2,611
30,688 24,059
Operating profit (loss)
(14,467) 10,590
Finance expenses (income)
Interest expense on lease liability
898 419
Realized gain on lease modification
- (182)
Investment income
(1,635) (129)
Foreign exchange loss (income)
206 (228)
Earnings (loss) before income tax
(13,936) 10,710
Income tax expense (recovery)
(2,633) 2,532
Net earnings (loss) for the year attributable to owners of the Company
(11,303) 8,178
Earnings (loss) per share
Basic
$(0.432) $0.318
Diluted
$(0.432) $0.315
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(in $000s Canadian)
Twelve months ended
August 31
2023 2022
Net earnings (loss) for the period
(11,303) 8,178
Other comprehensive income (loss):
Items that may be reclassified subsequently to net earnings
(Loss) gain on marketable securities
44 (72)
Cumulative translation adjustment
843 828
Comprehensive earnings (loss) for the year attributable to owners of the Company
(10,416) 8,934
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in $000s Canadian)
Accumulated Other Comprehensive
Income (Loss)
Cumulative Loss on
Retained Earnings/ Contributed Translation Marketable Total
(Deficit) Share Capital Surplus Adjustment Securities Equity
Balance - August 31, 2021
(1,672) 12,157 15,063 215 (11) 25,752

Net earnings for the year
8,178 - - - - 8,178

Employee share option plan share issue
- 397 (34) - - 363
Share-based payment expense
- - 16 - - 16
Loss on marketable securities available for sale
- - - - (72) (72)
Change in cumulative translation adjustment
- - - 828 - 828
Balance - August 31, 2022
6,506 12,554 15,045 1,043 (83) 35,065
Net loss for the year
(11,303) - - - - (11,303)
Share issuance in the year
- 2,838 - - - 2,838
Share-based payment expense
- - 237 - - 237
Gain on marketable securities available for sale
- - - - 44 44
Change in cumulative translation adjustment
- - - 843 - 843
Balance - August 31, 2023
(4,797) 15,392 15,282 1,886 (39) 27,724
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(in $000s Canadian)
Twelve months ended
August 31
2023 2022
Cash flow provided by (used in)
Operating activities
Net (loss) earnings for the period
(11,303) 8,178
Add (deduct) items not affecting cash
Depreciation of property and equipment
450 421
Depreciation of right-of-use assets
2,168 2,095
Amortization of intangible assets
54 51
Amortization of advances
699 705
Interest expense on lease liabilities
898 419
Share based payment expense
237 16
(Gain) loss on unrealized foreign exchange on subsidiary loans
25 (320)
Gain related to equity accounted associate, net of related losses
(1,323) -
Right-of-use asset impairment and disposal
6,750 -
Gain on early termination of lease
- (182)
Changes in working capital
(9,878) (4,282)
Net cash used in operating activities
(11,223) 7,101
Investing activities
Acquisition of business, net of cash acquired
(2,494) (314)
Investment in convertible promissory note
- # (655)
Purchase of property and equipment
(167) (466)
Payment of advances
(1,200) (609)
Repayment of advances
211 -
Proceeds from sale of marketable securities
54 127
Net cash used in investing activities
(3,596) (1,917)
Financing activities
Decrease in restricted cash
- 2,624
Payment of lease liabilities
(2,222) (2,341)
Sublease payments received
48 29
Payment of loans payable
- (176)
Proceeds from share issuance under employee stock option plan
- 363
Issuance of shares net of direct expenses
2,838 -
Net cash (used in) provided by financing activities
664 499
Effect of exchange rate changes on cash and cash equivalents
540 771
Net (decrease) increase in cash and cash equivalents
(13,615) 6,454
Cash and cash equivalents, beginning of year
35,668 29,214
Cash and cash equivalents, end of period
22,053 35,668

SOURCE: Caldwell Partners International, Inc.



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