New book by Larry Connors Click here Improve your trading - See how
Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL.A) today issued its financial results for the fiscal 2009 third quarter ended May 31, 2009. All references to quarters or years are for the fiscal periods unless otherwise noted and all currency amounts are in Canadian dollars.
Financial Highlights
<<
-------------------------------------------------------------------------
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
May 31, May 31, May 31, May 31,
2009 2008 2009 2008
-------------------------------------------------------------------------
Operating
revenue $4,091,551 $4,634,839 $11,539,547 $12,680,812
-------------------------------------------------------------------------
Expenses 5,609,652 4,550,436 14,484,665 13,073,004
-------------------------------------------------------------------------
Operating (loss)
income (1,518,101) 84,403 (2,945,118) (392,192)
-------------------------------------------------------------------------
Investment
income
(loss)
net (1,223,930) 154,308 (1,079,968) 842,838
-------------------------------------------------------------------------
Net (loss)
earnings ($2,459,733) $69,145 ($3,277,826) $441,480
-------------------------------------------------------------------------
(Loss) earnings
per share ($0.15) $0.004 ($0.20) $0.026
-------------------------------------------------------------------------
>>
"The economic recession has significantly affected our business in the 2009 third quarter. As to comparing it with our performance a year ago, it also is noteworthy that the company achieved a strong third-quarter performance in 2008," said John N. Wallace, President and Chief Executive Officer. "We entered the economic downturn with a lean organization and have not had to eliminate many positions as the result of the slump.
"More significantly, we have taken advantage of our financial strength and market opportunities to strategically expand our organization and business, and to build a solid platform for sustainable revenue and profitable future returns. Our planned expansion into the United States continues. Since February, we have added offices in Los Angeles, San Francisco, and Dallas, and additional partners in New York City and Chicago. We also recently have added partners in our Toronto and Calgary offices. Today, nearly one-third of our 23 partners are located in the U.S. In the coming year, we are planning further growth in the U.S. through the addition of accomplished search partners, and will also remain focussed on strengthening our Canadian team." he continued.
"It is our intention that The Caldwell Partners will emerge from the recession in a significantly stronger industry position. We plan to have a greater number of highly experienced, accomplished partners located in key cities across North America, serving a broader base of business geographically and by sectors and practices. We believe that this will result in strong revenue growth in 2010 and beyond," Mr. Wallace said.
"We have made very good progress thus far in executing our plan to strengthen The Caldwell Partners for the future and have incurred additional costs as anticipated. The net loss that we incurred in the 2009 third quarter and for the first nine months of the year reflects the impact of the recession on our business, particularly in Canada and the costs related to our adding new partners to grow our organization. As well, the company is transitioning to an new compensation plan for our partners that is expected to facilitate our attracting and retaining high-calibre talent. This transition has added incrementally to our costs. Also, the decision to increase our liquidity through the sale of a substantial portion of our equity investments contributed significantly to this loss." Mr. Wallace said.
Financial Results
Operating revenue declined 11.7 percent in the third quarter and 9.0 percent in the first nine months compared with the comparable 2008 periods. The addition of partners in the United States generated operating revenue of $675,558 in the 2009 third quarter and $956,471 through the first nine months of the year (no revenue in the 2008 period), however this did not offset the effects of the recession on the company's business in Canada, which declined approximately 23 percent in the third quarter and 17 percent for the nine-month period compared with the respective 2008 levels. Although the number of search assignments in Canada was lower in 2009 than a year ago, average fee revenues per engagement were higher. Revenue for interim executive fulfillments also significantly increased in the 2009 periods compared with the 2008 levels, however, this was more than offset by a decline in print advertising revenue.
Direct costs associated with the generation of revenue increased about 18 percent in the 2009 third quarter and approximately 12 percent for the first nine months, compared to the 2008 periods. This increase is largely attributable to the execution of the Company's announced plan to invest in new offices, and new partners and search staff in the United States. While all of these partners are established search professionals, it will take some time for their revenues to properly align with compensation levels. In the interim, as anticipated, continued investment in the United States will put pressure on profitability in 2009 and 2010. As well, the Company is transitioning to a new partner compensation plan this year to better attract and retain high-calibre talent. This has added incrementally to operating costs in fiscal 2009.
Reflecting the lower operating revenue levels and increased direct costs, gross operating profit before general and administrative expenses decreased in the 2009 third quarter and first nine months to $492,000 and $1,571,000, respectively, compared with $1,586,000 and $3,803,000 in the comparable 2008 period. Gross margins were 12.0 percent and 13.6 percent in the 2009 third quarter and first nine months, down from 34.2 percent and 30.0 percent in the respective 2008 periods.
The additional overhead of establishing and running the new offices in the United States was the principal reason for a 33.9 percent increase in general and administrative expenses before amortization to $2,010,000 in the 2009 third quarter from $1,501,000 in the 2008 period; in the first nine months of 2009, these expenses were $4,516,000, up 7.7 percent from $4,195,000 in the 2008 period. The nine-month 2009 expenses also reflect reduced legal costs, compared with the level in the 2008 period, as well as recoveries amounting to $399,000 from the company's insurer of costs incurred for litigation that has been settled. Compensation costs also rose in the first nine months of 2009 compared with the 2008 period as the result of the addition of Mr. Wallace.
For the 2009 third quarter and first nine months, the company had an operating loss of $1,518,101 and $2,945,118, respectively; in the 2008 periods, the company reported operating income of $84,403 and an operating loss of $392,192 in the comparable 2008 periods.
Operating revenue and operating income are non-GAAP (generally accepted accounting principles) measures. The company believes, however, that they provide a useful understanding of the performance of its core human capital services operations as they exclude income or loss from investments and taxes.
The company determined that to preserve its capital and to increase its liquidity, in part to provide funds to finance the expansion of The Caldwell Partners' business in the U.S., it would sell its holdings in a professionally managed equity fund in the 2009 third quarter. This resulted in the recognition of losses that had previously been unrealized and recorded as part of other comprehensive income. Proceeds from the sale of the equity fund were then reinvested in a professionally managed income fund. Further capital losses are expected in the fourth quarter as The Caldwell Partners continues to increase its liquidity while reducing the company's exposure to the vagaries of common and preferred shares.
The company recorded a loss on its investments of $1,223,930 in the 2009 third quarter, compared with investment income of $154,308 in the 2008 period; for the first nine months of 2009, the loss on investments amounted to $1,079,968, compared with investment income of $842,838 in the 2008 nine-month period. In the 2008 second quarter, the company had recorded investment income of $568,000 that had been earned in 2007 (according to the issuance of tax receipts) by the professionally managed funds used for a portion of its investment portfolio. Subsequently, it was concluded that, given the nature of these managed funds, recognition of this income was not appropriate under the new accounting standards for financial instruments and the amount was reversed in the 2008 fourth quarter.
Reflecting the dramatic decline in stock markets, the market value of the company's investments was $1,806,000 below book cost as at May 31, 2009. Total cash, short-term deposits, and marketable securities amounted to $12,547,980 at May 31, 2009, compared with $18,917,566 at August 31, 2008. The decline is due mainly to the realized and unrealized losses on marketable securities, the decrease in working capital balances, and the net loss experienced by the company in the first nine months of 2009.
After recording a recovery for income taxes ($282,298), the company had a net loss of $2,459,733 ($0.15 per share) in the 2009 third quarter, compared with net income in the 2008 period of $69,145 ($0.004 per share). For the first nine months of 2009, the net loss after a recovery for income taxes of $742,260 was $3,277,826 ($0.20 per share), compared with net income in the first nine months of 2008 of $441,480 ($0.026 per share).
On April 8, 2009, The Caldwell Partners announced that the Toronto Stock Exchange had accepted its notice of intention to conduct a normal-course issuer bid (NCIB) to enable it to purchase up to 626,000 of its Class A Non-Voting Shares, representing approximately five per cent of the approximately 12,523,423 Class A Shares outstanding as at March 31, 2009. Purchases under the bid may continue until April 12, 2010 or until the company completes its permitted purchases or until the date of notice by The Caldwell Partners of termination of the bid. The company is currently in a deficit position and, as a result, has been unable to make purchases under this NCIB.
Outlook
"It is evident that the weak economies will continue to affect our industry in our fourth quarter and into at least the first part of our fiscal 2010 year. We expect to continue to experience pressure on our Canadian business, but the impact of this will be somewhat mitigated by the continuing growth of our expanding operations in the United States. While we are planning for revenue growth over the course of the next year, the costs of growing our business will continue to place pressure on our margins," said Mr. Wallace.
"We remain financially strong and well able to fund the planned growth of our North American organization. Our focus is on positioning The Caldwell Partners to enjoy significant growth as the economies recover and through this we expect to increase the value of our company for our shareholders. We are pleased with the progress that we have been making throughout this year in executing our strategic growth plan," he said.
About The Caldwell Partners
Retained executive search firm The Caldwell Partners International Inc., founded in 1970, provides human-capital services to its clients through its offices in Vancouver, San Francisco, Los Angeles, Dallas, Calgary, Toronto, and Montreal, and its partners in Chicago and New York City. The Caldwell Partners focuses, in particular, on recruiting "C-class" executives (chief executive, chief financial, chief information officers, as well as other senior executives). The Caldwell Partners takes pride in delivering unmatched depth of service and expertise to its clients, the calibre and experience of its staff, and the successful completion of its engagements. The Caldwell Partners founded and continues to promote the prestigious national awards programs recognizing Canada's Outstanding CEO of the Year(TM) and Canada's Top 40 Under 40(TM), and advises and supports the Canada's CFO of the Year Award(TM) program. In 2009, the Canada's Outstanding CEO of the Year(TM) and Canada's Top 40 Under 40(TM) programs are marking their respective 19th and 14th anniversaries.
The Caldwell Partners' Class-A non-voting shares are listed on The Toronto Stock Exchange (TSX: CWL.A). 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 significant risks and uncertainties. Actual results might differ materially due to various factors such as the competitive nature of the executive search industry, the ability of the company to execute its growth strategies, the performance of the Canadian domestic and international economies, and the company's ability to retain key personnel. The Caldwell Partners assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.
<<
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
-------------------------------------------------------------------------
As at As at As at
May 31 May 31 August 31
2009 2008 2008
-------------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $4,103,749 $8,651,424 $8,007,963
Accounts receivable 2,253,787 2,882,846 3,029,381
Income taxes receivable 1,188,401 910,976 1,080,959
Prepaid expenses 242,518 185,750 181,222
-------------------------------------------------------------------------
7,788,455 12,630,996 12,299,525
Marketable securities 8,444,231 11,541,355 10,909,603
Loans receivable, net 1,223,559 422,746 418,978
Property and equipment 1,985,522 1,964,043 1,859,562
Future income taxes 340,000 20,236 340,000
-------------------------------------------------------------------------
$19,781,767 $26,579,376 $25,827,668
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities
Current Liabilities
Accounts payable and accrued
liabilities $3,053,880 $3,292,564 $4,637,343
Deferred revenue 269,301 410,004 256,409
Current portion of incentive
accrual 530,250 530,250 530,250
-------------------------------------------------------------------------
3,853,431 4,232,818 5,424,002
Long-term incentive accrual 1,595,979 1,360,640 1,599,266
Future income taxes 339,928 351,417 339,928
Shareholders' equity
Capital stock 16,064,122 20,445,059 19,603,150
Contributed surplus 4,078,444 204,803 488,693
(Deficit) retained earnings (4,343,948) 450,553 (1,066,076)
Accumulated other comprehensive
loss (1,806,189) (465,914) (561,295)
-------------------------------------------------------------------------
13,992,429 20,634,501 18,464,472
-------------------------------------------------------------------------
$19,781,767 $26,579,376 $25,827,668
-------------------------------------------------------------------------
-------------------------------------------------------------------------
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
(unaudited)
-------------------------------------------------------------------------
Three months ended Six months ended
May 31 May 31
2009 2008 2009 2008
-------------------------------------------------------------------------
Operating revenue $4,091,551 $4,634,839 $11,539,547 $12,680,812
Expenses
Employee compensation,
general and
administration $5,505,393 4,468,247 14,210,328 12,809,950
Amortization 104,259 82,189 274,337 263,054
-------------------------------------------------------------------------
5,609,652 4,550,436 14,484,665 13,073,004
-------------------------------------------------------------------------
(Loss) earnings before
the following (1,518,101) 84,403 (2,945,118) (392,192)
Investment (loss)
income, net (1,223,930) 154,308 (1,079,968) 842,838
-------------------------------------------------------------------------
Net (loss) earnings
before tax (2,742,031) 238,711 (4,025,086) 450,646
Income tax (recovery)
expense (282,298) 169,566 (747,260) 9,166
-------------------------------------------------------------------------
Net (loss) earnings
for the period ($2,459,733) $69,145 ($3,277,826) $441,480
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Loss) earnings per
share ($0.150) $0.004 ($0.200) $0.026
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(unaudited)
-------------------------------------------------------------------------
Three months ended Six months ended
May 31 May 31
2009 2008 2009 2008
-------------------------------------------------------------------------
Net (loss) earnings
for the period ($2,459,733) $69,145 ($3,277,826) $441,480
Other comprehensive
income:
Unrealized gain/(loss)
on marketable
securities 2,480,395 330,061 (1,244,895) (807,777)
-------------------------------------------------------------------------
Comprehensive earnings
(loss) $20,662 $399,206 ($4,522,721) ($366,297)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
ACCUMULATED OTHER COMPREHENSIVE INCOME
(unaudited)
-------------------------------------------------------------------------
Three months ended Six months ended
May 31 May 31
2009 2008 2009 2008
-------------------------------------------------------------------------
Shareholders' equity -
beginning of period $13,951,257 $21,424,421 $18,464,472 $21,832,879
Net (loss) earnings
for the period (2,459,733) 69,145 (3,277,826) 441,480
Issuance of stock
options 20,511 0 58,116 0
Repurchase of Class
A shares 0 (52,108) (7,437) (150,600)
Dividends on Class A
and Class B shares 0 (341,043) 0 (1,023,344)
Realized loss on
available-for-sale
marketable
securities 1,220,477 0 1,220,477 0
Other comprehensive
gain (loss) 1,259,918 0 (2,465,371) 0
-------------------------------------------------------------------------
Shareholders' equity -
end of period $13,992,430 $21,100,415 $13,992,430 $21,100,415
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other
comprehensive
loss - beginning
of period ($4,286,584) ($795,975) ($561,295) $0
Adoption of new
handbook
standard (net
of tax) 0 0 0 341,863
Realized loss on
available-for-sale
marketable
securities 1,220,477 0 1,220,477 0
Change in unrealized
gains (losses) on
available-for-sale
marketable
securities 1,259,918 330,061 (2,465,371) (807,777)
-------------------------------------------------------------------------
Accumulated other
comprehensive
loss - end of
period ($1,806,189) ($465,914) ($1,806,189) ($465,914)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
-------------------------------------------------------------------------
Three months ended Six months ended
May 31 May 31
2009 2008 2009 2008
-------------------------------------------------------------------------
Operating Activities
Net (loss) earnings
for the period ($2,459,733) $69,145 ($3,277,826) $441,480
Items not affecting
cash
Amortization 104,259 82,189 274,337 263,054
Loss on sale of
marketable
securities 1,220,477 19,811 1,220,477 160,757
Other realized
losses on
investments 0 (71,016) 0 (638,992)
Future income taxes 0 106,875 0 106,874
Stock compensation
expense 20,511 0 58,116 0
Increase (decrease)
in non-cash
incentive
compensation 125,277 238,626 (3,288) 553,742
-------------------------------------------------------------------------
(989,209) 445,630 (1,728,184) 886,915
Net increase (decrease)
in working capital
balances related to
operations 661,975 982,518 (1,768,296) 1,032,279
-------------------------------------------------------------------------
(327,234) 1,428,148 (3,496,480) 1,919,194
-------------------------------------------------------------------------
Investment Activities
Proceeds on sale of
marketable
securities (2,791,079) 452,099 (2,791,079) 2,103,006
Purchase of
marketable
securities 2,791,079 0 2,791,079 0
Additions to property
and equipment (205,941) 32,990 (400,297) (36,124)
-------------------------------------------------------------------------
(205,941) 485,089 (400,297) 2,066,882
-------------------------------------------------------------------------
Financing Activities
Dividends paid 0 (341,043) 0 (1,023,344)
Repurchase of Class
A Shares 0 (52,108) (7,437) (150,600)
-------------------------------------------------------------------------
0 (393,151) (7,437) (1,173,944)
-------------------------------------------------------------------------
Net (decrease) increase
in cash and cash
equivalents during the
period (533,175) 1,520,086 (3,904,214) 2,812,132
Cash and cash
equivalents,
beginning of
period 4,636,924 7,131,338 8,007,963 5,839,292
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of
period $4,103,749 $8,651,424 $4,103,749 $8,651,424
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
%SEDAR: 00003230E
SOURCE: The Caldwell Partners International Inc.
Richard W. Wertheim, Wertheim + Company Inc., wertheim@wertheim.ca, (416) 594-1600, (416) 518-8479 (cell)
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.