The Caldwell Partners International Issues Fiscal 2016 First Quarter Financial Results

• Year-over-year first quarter revenue increase of 12.7%.
• First quarter operating loss of $148,000.
• Board declares sixteenth consecutive quarterly dividend of 2.0 cents.

TORONTO, Jan. 7, 2016 /CNW/ - Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2016 first quarter ended November 30, 2015. 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,
	2015	2014
Professional fees	$13,945	$12,436
License fee revenue	$65	0
Operating revenue	$14,010	$12,436
Expenses	$14,158	$12,129
Operating profit (loss)	($148)	$307
Investment income	$1	$13
Earnings before tax	($147)	$320
Net earnings after tax	($165)	$277
Net earnings per share	($0.008)	$0.013

"Despite absolute revenue growth, we are disappointed in our first quarter results. Our revenue was flat on a constant currency basis and this, coupled with higher direct costs from our investment in Europe, led to an operating loss on the quarter," said John Wallace, chief executive officer. "However, we are seeing a stronger start early in this quarter, relative to last year. Our new partners have now fully transitioned to our platform and are seeing traction in the marketplace." 

Wallace continued: "We continue to spend a great deal of time and focus assimilating our new geographic teams, to the long-term benefit of both our clients and our shareholders. We feel very positive about the steps we've made and about the expanded reach and capability we are now delivering."

After careful review and consideration, the Board of Directors today also declared the payment of a quarterly dividend of 2.0 cents per Common Share payable on March 14, 2016 to shareholders of record on January 19, 2016.

Financial Overview (all numbers expressed in $000s, except per share amounts)

• Operating revenue:
  • Professional fees for the first quarter of 2016 increased 12.1% (down 0.3% excluding a 12.4% variance from exchange rate fluctuations) over the comparable period last year to $13,945 (2015: $12,436).
  • First quarter professional fees in the US were up 22.5% (3.6% excluding an 18.9% favourable variance from exchange rate fluctuations) to $9,973 (2015: $8,145) driven by an increase in the Average Number of Partners and higher Average Fees from favourable exchange rates partially offset by lower search volumes during the current year.
  • First quarter professional fees in Canada were down 20.8% to $3,369 (2015: $4,256) due to lower search volumes more than offsetting higher Average Fees per Assignment.
  • First quarter Europe professional fees were $602 versus $36 last year. The Europe operation was acquired and initiated business on October 1, 2014, and as a result, last year's figure includes only two months of operations in which we had one partner compared to the current period which covered a full three month quarter and had three partners for its entirety.
  • 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 2016 first quarter were $65 (2015: nil). As the licensing agreements were signed in the fourth quarter of fiscal 2015 and first quarter of fiscal 2016, there was no corresponding license fee revenue in the first quarter of last year.

• Operating profit (loss):
  • For the first quarter of 2016, higher revenue ($1,574) offset by higher cost of sales ($1,696) and expenses ($332) led to a decrease in operating profit of $454 over the comparable period in the prior year and a reported operating loss of $148. Included in this loss was an investment of $325 in the new European operations--reflecting the transition of two newly hired partners at the end of fiscal 2015 and a full quarter (versus two months a year ago) of operations in the London office.
  • Cost of sales were up 18.5% over last year (4.7% excluding increases related to foreign exchange fluctuations). As a percentage of professional fees, first quarter cost of sales was 77.6%, up 3.8% from 73.8% in the same period last year. The increase as a percentage of professional fees was attributable to higher partner compensation expense which arose from a proportional shift of more revenue from partners in higher compensation tiers combined with fixed draw amounts for some partners that exceeded commission earnings in the period (1.4%), higher search delivery personnel costs resulting from a higher average headcount hired to support added partners (2.0%) and higher costs of search delivery materials (0.4%). See the company's Management Discussion and Analysis for a further discussion of cost of sales.
  • Expenses were up 11.2% (2.4% excluding foreign exchange fluctuations). The 2.4% constant currency increase of $70 represented higher occupancy costs from the addition of our London location from the acquisition of Hawksmoor part way through the first quarter of last fiscal year and higher lease costs in certain US relocations ($109) and higher share based compensation expense on the increase in share price during the current quarter ($72), offset by lower management operating performance bonus accruals ($173) and general increases across other categories ($62).
  • On a segment basis, $388 of profit was from Canada ($164, excluding $224 in intercompany license fee revenue), the US experienced a $211 operating loss (operating profit of $13 excluding the impact of the intercompany license fees), and Europe's operating loss was $325 from the operational investment discussed above.

• Net profit:
  • First quarter net loss was $165 ($0.008 per share), as compared to $277 of net earnings ($0.013 per share) in the comparable period a year earlier.

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 Partners

Caldwell Partners is a leading international provider of executive search and has been for more than 45 years. As one of the world's most trusted advisors in executive search, the firm has a sterling reputation built on successful searches for boards, chief and senior executives, and selected functional experts. With offices and partners across North America, Europe, Latin America and Asia Pacific, the firm takes pride in delivering an unmatched level of service and expertise to its clients. The Caldwell Partners' Common shares are listed on The Toronto Stock Exchange (TSX: CWL). Please visit our website at www.caldwellpartners.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, the Company's ability to attract and retain key personnel; the performance of the Canadian, US domestic and international economies; competition from other companies directly or indirectly engaged in executive search; the possibility of a significant shareholder impacting shareholder votes; foreign currency exchange rate risks; the Company's ability to invest retained earnings in marketable securities and in short-term money market instruments to generate consistent investment income returns; and volatility of the market price and volume of common shares. 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.

THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(unaudited - in $000s Canadian)
								As at
								November 30	August 31
								2015	2015
Assets
Current assets
	Cash and cash equivalents							7,306	9,956
	Marketable securities							7,790	7,765
	Accounts receivable							7,156	8,329
	Prepaid expenses and other current assets							2,158	1,948
								24,410	27,998
Non-current assets
	Restricted cash							500	498
	Advances							1,292	1,022
	Property and equipment							1,985	1,818
	Intangible assets							354	375
	Goodwill							3,207	3,220
	Deferred income taxes							2,921	2,900
Total assets								34,669	37,831
Liabilities
Current liabilities
	Accounts payable							2,274	1,736
	Compensation payable							16,076	16,614
	Accrued share purchase							-	1,604
	Dividends payable							403	425
	Income taxes payable							161	321
	Contingent consideration							536	271
	Deferrred revenue							634	945
								20,084	21,916
Non-current liabilities
	Compensation payable							526	1,064
	Contingent consideration							-	262
								20,610	23,242
Equity attributable to owners of the Company
	Share capital							7,295	7,295
	Contributed surplus							15,025	15,025
	Accumulated other comprehensive income							2,150	2,112
	Deficit							(10,411)	(9,843)
Total equity								14,059	14,589
Total liabilities and equity								34,669	37,831

THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED INTERIM STATEMENTS OF EARNINGS (LOSS)
(unaudited - in $000s Canadian, except per share amounts)
								Three months ended
								November 30
								2015	2014
Revenues
	Professional fees							13,945	12,436
	License fees							65	-
								14,010	12,436
Cost of sales								10,868	9,172
Gross profit								3,142	3,264
Expenses
	General and administrative							3,036	2,674
	Sales and marketing							260	273
	Foreign exchange (gain) loss							(6)	10
								3,290	2,957
Operating (loss) profit								(148)	307
Investment income								1	13
(Loss) earnings before income taxes								(147)	320
Income tax expense								18	43
Net (loss) earnings for the period attribtuable to owners of the Company								(165)	277
(Loss) earnings per share
	Basic and diluted							(0.008)	0.013
CONSOLIDATED INTERIM STATEMENTS OF
COMPREHENSIVE EARNINGS
(unaudited - in $000s Canadian)
								Three months ended
								November 30
								2015	2014
Net (loss) earnings for the period								(165)	277
Other comprehensive income:
Items that may be reclassified subsequently to net earnings
	Unrealized gain (loss) on marketable securities							24	(17)
	Cumulative translation adjustment							14	253
Comprehensive (loss) earnings for the period attributable to owners of the Company								(127)	513

THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
(unaudited - in $000s Canadian)
					Accumulated Other Comprehensive
					Income (Loss)
						Unrealized
					Cumulative	Gains (Loss) on
				Contributed	Translation	Marketable	Total
		Deficit	Capital Stock	Surplus	Adjustment	Securities	Equity
Balance - September 1, 2014		(10,118)	7,331	16,254	(1)	912	14,378
Net earnings for the three month period ended
	November 30, 2014	277	-	-	-	-	277
Dividend payments declared		(425)	-	-	-	-	(425)
Common share issuance		-	379	-	-	-	379
Change in unrealized loss on
	marketable securities available for sale	-	-	-	-	(17)	(17)
Change in cumulative translation adjustment		-	-	-	253	-	253
Balance - November 30, 2014		(10,266)	7,710	16,254	252	895	14,845
Balance - September 1, 2015		(9,843)	7,295	15,025	1,271	841	14,589
Net earnings for the three month period ended
	November 30, 2015	(165)	-	-	-	-	(165)
Dividend payments declared		(403)	-	-	-	-	(403)
Change in unrealized loss on
	marketable securities available for sale	-	-	-	-	24	24
Change in cumulative translation adjustment		-	-	-	14	-	14
Balance - November 30, 2015		(10,411)	7,295	15,025	1,285	865	14,059

THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW
(unaudited - in $000s Canadian)
								Three months ended
								November 30
								2015	2014
Cash flow (used in) provided by
Operating activities
	Net (loss) earnings for the period							(165)	277
	Adjustments for:
		Depreciation						139	93
		Amortization						23	20
		Amortization of advances						160	115
		Change in fair value of contingent consideration						3	-
		Unrealized foreign exchange on subsidiary loans						(8)	14
		Decrease in non-current compensation payable						(537)	(80)
	Changes in items of working capital
		Decrease in accounts receivable						1,205	1,480
		Decrease in prepaid expenses and other assets						33	60
		Increase (decrease) in accounts payable						286	(22)
		Decrease in compensation payable						(842)	(1,014)
		Decrease in income taxes payable						(161)	(1,833)
		Payment of compensation payable						(449)	-
		Decrease in deferred revenue						(313)	(1,282)
Net cash used in  operating activities								(626)	(2,172)
Investing activities
	Acquisition of  business, net of cash acquired							-	(419)
	Increase in advances							-	(290)
	Increase in restricted cash							(1)	(1)
	Additions to property and equipment							(58)	(58)
Net cash provided by (used in) investing activities								(59)	(768)
Financing activities
	Share purchase and cancellation							(1,604)	-
	Dividend payments							(425)	(368)
Net cash used in financing activities								(2,029)	(368)
Effect of exchange rate changes on cash and cash equivalents								64	277
Net decrease in cash and cash equivalents								(2,650)	(3,031)
Cash and cash equivalents, beginning of period								9,956	12,743
Cash and cash equivalents, end of period								7,306	9,712

SOURCE The Caldwell Partners International Inc.

Investors & Analysts: Chris Beck, CPA, Chief Financial Officer, The Caldwell Partners International, [email protected], +1.617.934.1843; Media: Caroline Lomot, Director of Marketing, The Caldwell Partners International, [email protected], +1.516.830.3535