Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2017 fourth quarter and year ended August 31, 2017. All references to quarters or years are for the fiscal periods unless otherwise noted and all currency amounts are in Canadian dollars.

"We are pleased with our team's performance in both the quarter and the full year," said John Wallace, chief executive officer. "Our Canadian team had a significant rebound from last year's challenges, the US saw higher search volumes in a steady economic environment, the UK team's two new partners will contribute favourably towards profitability in the coming year, and we are seeing increased traction in cross-border collaboration with our colleagues in Latin Americaand New Zealand. We have a strong and well-functioning team overall, and the seven new partner teams in Stamford, New York, Miami, Atlanta and London have further expanded our ability to make our clients better, more competitive and more successful by connecting them with transformational talent."

Wallace continued: "We believe the results we were able to deliver are reflective of the manner in which we are running this firm - balancing growth through the continued investment in the firm with profitability that allows us to reward our shareholders with a sustainable dividend."

The Board of Directors today also declared the payment of a quarterly dividend of 2.0 cents per Common Share payable to holders of Common Shares of record on November 20, 2017 and to be paid on December 15, 2017.

Financial Highlights (all numbers expressed in $000s)

Operating revenue: 

Fourth quarter

  • Professional fees for the fourth quarter of 2017 increased 0.3% (0.9% excluding an unfavourable 0.6% variance from exchange rate fluctuations) over the comparable period last year to $15,758 (2016: $15,712).
  • The positive impact of a higher Average Number of Partners at 39.5 compared to 38.5 in the prior year period and higher productivity per partner was partially offset by a lower Average Fee. The Number of Assignments per Partner increased to 2.8 (2016: 2.4), resulting in an increase in the total Number of Assignments to 112 (2016: 94). The Average Fee per Assignment decreased to $141 (2016: $167).
    • Fourth quarter professional fees in the US were down 13.0% (12.3% excluding an unfavourable 0.7% variance from exchange rate fluctuations) to $10,492 (2016: $12,063). Increases in both the Average Number of Partners and Number of Assignments per Partner were more than offset by a decrease in the Average Fee per Assignment during the period.
    • Fourth quarter professional fees in Canada were up 61.9% to $5,079 (2016: $3,139). The impact of a slightly lower Average Number of Partners was more than offset by a higher Number of Assignments per Partner and a higher Average Fee per Assignment. Two specific assignments generating Professional Fees in excess of $800 drove professional fees and the Average Fee per Assignment in the current year quarter.
    • Fourth quarter professional fees in Europe were down 63.3% (down 59.4% excluding an unfavourable 3.9% variance from exchange rate fluctuations) to $187 (2016: $509). During the fourth quarter of fiscal 2016 and first quarter of fiscal 2017, two partners, whose aggregate related costs were significantly higher than the revenue produced, left the firm and corresponding reductions were made to the support staff. Despite a new partner being hired near the end of the current year third quarter, there was still a decrease during the quarter in the Average Number of Partners, exacerbated by a decrease in the Number of Assignments per Partner and only partially offset by an increase in the Average Fee per Assignment.
  • License fees from our affiliations in Latin America and New Zealand for the use of the Caldwell Partners brand and intellectual property were $92 (2016: $64) for the fourth quarter.

Full year:

  • Professional fees for the year decreased 0.2% (an increase of 0.4% excluding an unfavourable 0.6% variance from exchange rate fluctuations) over the comparable period last year to $57,495 (2016: $57,618).
  • A slightly lower Average Number of Partners at 37.5 compared to 38.0 in the prior year and a lower Average Fee per Assignment were partially offset by higher productivity per partner. The Average Fee per Assignment decreased to $133 (2016: $150). The year-to-date Number of Assignments per Partner increased to 11.5 (2016: 10.1), resulting in an increase in the total Number of Assignments to 432 (2016: 383).

Operating profit:

Fourth quarter:

  • For the 2017 fourth quarter, higher revenue ($74) and lower expenses ($816) partially offset by higher cost of sales ($141) resulted in an increase in operating profit of $749 over the comparable period in the prior year to $786 (2016: $37). Exchange rate variances accounted for net reduction of $47 in operating profit relative to the rates in effect in the prior year period.
    • Fourth quarter cost of sales increased 1.2% or $141 to $11,588 (1.8% excluding a favourable 0.6% variance from exchange rate fluctuations) from $11,447.
    • Fourth quarter expenses decreased 19.0% or $816 from the prior year comparable period to $3,476 (2016: $4,292). Excluding exchange rate variances of $15, expenses on a constant currency basis decreased $831 or 19.3% versus the same period last year. During the fourth quarter of the previous year we incurred certain expenses in connection with reducing the fixed costs of the Company. This included charges of $759 related to the sublease and relocation of our New York office premises and $250 of separation costs associated with aligning our support staff structure to current-state business needs. Adjusting for the charges taken as well as the foreign exchange variances, the remaining expenses increased $178 on a constant currency basis or 5.6% over the same period last year.
  • On a segment basis, the fourth quarter operating profit of $786 came from the US producing $216 ($450 income excluding the impact of intercompany license fees), Canada $712 ($478, excluding intercompany license fee revenue) and Europe generating an operating loss of $142.

Full year:

  • For the 2017 full year, lower revenue ($943) more than offset by decreases in cost of sales ($2,299) and expenses ($479) resulted in an increase in operating profit of $1,835 to $3,113 (2016: $1,278). Exchange rate variances accounted for a net $23 increase in operating profit relative to the rates in effect in the prior year.
    • Cost of sales for the year decreased 5.2% to $42,305 (4.5% excluding a favourable 0.7% variance from exchange rate fluctuations) from $44,604. As a percentage of professional revenue, cost of sales decreased to 73.6%, down $2,299 or 2.7% of professional revenue from 76.3% in the same period last year. Lower partner compensation (down 1.1% as a percentage of professional revenue) was driven by lower variable commission tiers in the current year compensation plan compared to the prior year lower partner support personnel compensation (down 1.7% as a percentage of professional revenue). These favourable variances were partially offset by slightly higher costs of search delivery materials (up 0.1% as a percentage of professional revenue).
    • Full year expenses decreased 3.7% or $479 over the prior year to $12,387 (2016: $12,866). Excluding exchange rate variances of $119, remaining expenses on a constant currency basis decreased $360 or 2.8% over the same period last year. The decrease includes the charges taken in the fourth quarter of 2016 discussed above of $759 in constant currency related to the sublease and relocation of our New York office space as well as the separation costs of $250. Adjusting for the charges taken as well as the foreign exchange variances, year over year expenses increased $649 on a constant currency basis, or 5.5%.
  • On a segment basis, full year operating profit of $3,113 came from operating profit in the US of $1,900 ($2,835 net of intercompany license fees) and operating profit in Canada of $1,701 ($766 net of intercompany license fee revenue) being offset by an operating loss in Europe of $488.
  • Net earnings:
    • Fourth quarter net earnings were $704 ($0.034 per share) in 2017, as compared to a net loss of $57 ($0.003per share) in the comparable period a year earlier.
    • The full year net earnings after tax were $1,957 ($0.096 per share) in 2017, versus $881 ($0.044 per share) in 2016.

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

SOURCE: Press Release