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CALDWELL PARTNERS INTERNATIONAL, INC. (:CWL) Caldwell Repots First Quarter Results

Directive transparence : information réglementée

11/01/2024 23:05

TORONTO, ON / ACCESSWIRE / January 11, 2024 / Talent acquisition firm The Caldwell Partners International Inc. (TSX:CWL)(OTCQX:CWLPF) today issued its financial results for the fiscal 2024 first quarter ended November 30, 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
11.30.23 11.30.22
Professional fees - Caldwell
14,166 16,975
Professional fees - IQTalent
3,170 6,714
Consolidated professional fees
17,336 23,689
Direct expense reimbursements
199 220
Revenues
17,535 23,909
Cost of sales
15,044 20,926
Reimbursed direct expenses
199 220
Gross profit
2,292 2,763
Selling, general and administrative expenses 2
4,522 5,088
Restructuring (income) expenses 3
(7,979) 2,530
Acquisition-related expenses 4
- 675
Operating profit (loss)
5,749 (5,530)
Finance expenses (income)
412 (120)
Earnings (loss) before tax
5,337 (5,410)
Income tax expense (recovery)
1,559 (1,467)
Net earnings (loss) after tax
3,778 (3,943)
Basic earnings (loss) per share
$0.128 $(0.152)
  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 $155 in the current quarter compared to a benefit of $488 in the same quarter last year.
  3. Restructuring income of $7,979 in the first quarter 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.
  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.

"From a revenue perspective, this remained a challenging quarter, as client focus on the uncertain macroeconomic environment continued to dampen and delay hiring decisions," said John Wallace, chief executive officer. "With improving economic news and expectations of falling interest rates, our client conversations indicate increased plans for hiring with the new calendar year-in both our Caldwell executive search and IQTalent on-demand/RPO businesses."

"From a profit perspective, we are extremely pleased that we favourably resolved IQTalent's Nashville lease obligation. We had recognized a lease impairment charge of $8.1 million in the fourth quarter of the prior year with our decision to reduce our real estate footprint and sublease a substantial portion of the leased space in Nashville based on sublease market conditions at the time. Effective November 30, 2023, we successfully executed a penalty-free termination agreement of the lease, which we will fully exit on February 29, 2024, resulting in a net gain in our first quarter of $9.1 million. Eliminating these future payment obligations gives us the financial flexibility to continue adjusting and investing in the business as needed and solidifies and strengthens our capital structure. The restructuring at IQTalent throughout the last fiscal year has had the desired outcome of stabilizing the business, to return to growth on both the revenue and operating profit lines in the second half of the year."

Wallace added: "We anticipate improved demand conditions in calendar 2024. Our business pipelines are deep and growing, and we are forecasting an upward revenue trend for the remainder of the year."

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
(unaudited - in $000s Canadian)

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

Three months ended
November 30
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
(unaudited - in $000s Canadian)

Three months ended
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) -
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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