Caldwell Reports Record Results

Rhea-AI Summary

The Caldwell Partners International reported record fiscal 2022 revenue of $156.2 million and an operating profit of $10.6 million, marking a 30% increase in revenue and a 79% increase in profit year-over-year. The results reflect the inclusion of IQTalent Partners, acquired in late 2020. However, the firm noted a decrease in hiring demand due to economic concerns, particularly in the technology sector, leading to potential staffing adjustments. The CEO expressed confidence in the company's future and ongoing acquisition opportunities.

Positive

• Achieved record revenue of $156.2 million, a 30% increase from the prior year.
• Operating profit reached $10.6 million, up 79% year-over-year, highest in company history.

Negative

• Decrease in hiring demand, especially in technology and retail sectors, indicating potential economic downturn.
• Possible staffing adjustments due to reduced business levels.

• Record full year revenue of $156.2 million
• Record full year operating profit of $10.6 million

TORONTO, ON / ACCESSWIRE / November 17, 2022 / Talent acquisition firm The Caldwell Partners International Inc. (TSX:CWL)(OTCQX:CWLPF) today issued its financial results for the fiscal 2022 fourth quarter and full year ended August 31, 2022. All references to quarters or years are for the fiscal periods unless otherwise noted and all currency amounts are in Canadian dollars. Financial results include those of IQTalent Partners, Inc. (IQTalent) beginning on the date of acquisition of December 31, 2020.

Financial Highlights (in $000s except per share amounts)

		Three Months Ended								Year Ended
			8.31.22				8.31.21				8.31.22				8.31.211
Professional fees - Caldwell			23,580				31,429				103,964				96,120
Professional fees - IQTalent2			12,153				10,181				51,596				23,287
Consolidated professional fees			35,733				41,610				155,560				119,407
Direct expense reimbursements			186				128				605				359
Revenues			35,919				41,738				156,165				119,766
Cost of sales			28,028				32,468				120,911				90,621
Gross profit			7,705				9,142				34,649				29,120
Selling, general and administrative expenses			4,356				7,117				21,448				20,738
Acquisition-related expenses3			616				793				2,611				2,453
Operating profit			2,733				1,232				10,590				5,929
Earnings before tax			3,191				1,423				10,710				5,417
Income tax expense			616				440				2,532				898
Net earnings after tax			2,575				983				8,178				4,519
Basic earnings per share		$	0.100			$	0.039			$	0.318			$	0.190
Results for the 12 months ended 8/31/21, exclude the pre-acquisition results of IQTalent, which had $5,931 of revenue. Professional fees of IQTalent are presented net of eliminations of intercompany revenue. Acquisition-related expenses consist of transaction fees and IQTalent purchase price structured as compensation expense, which will end on 12/31/22.

"This was an exceptional year in our firm's history, as we shattered previous records for revenue and profit" said John Wallace, chief executive officer. "Consolidated revenue for the year was $156.2 million, representing a year-over-year increase of over 30 percent, and our operating profit of $10.6 million was 79 percent higher than the prior year and the highest in our history, including our recording $2.6 million in purchase price costs related to the IQTalent acquisition. Fiscal 2022 was a year of revenue and profit achievement and execution excellence. We couldn't be prouder of the entire Caldwell/IQTalent team."

"While we celebrate our accomplishments in fiscal 2022, we are focused on the future. We have seen the business leaders at our clients become more cautious with concerns about an economic downturn or recession on the horizon. This has translated into a reduction in hiring demand, especially in the technology and retail sectors. We saw headwinds begin late summer and build through early fall - especially in our IQTalent segment, whose clients are weighted towards the technology sector. Accordingly, we have taken actions to right size the staff with business levels for the near term."

Wallace continued: "We are superbly confident regarding 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 products and services and identify opportunities to cross-collaborate between our two business segments, we expect to amplify our current success in the long-term. We also continue to seek out strategic business and technology acquisition opportunities that align with our client-driven talent offerings. Our most recent acquisition of The Counsel Network has been a terrific addition to our Caldwell service offering in Canada, bringing a high-caliber group of search professionals focused on legal roles for law firms and corporate in-house functions."

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; 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; 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 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
		2022				2021
Assets
Current assets
Cash and cash equivalents			35,668				29,214
Accounts receivable			22,882				23,218
Income taxes receivable			1,280				-
Unbilled revenue			6,495				4,217
Prepaid expenses and other assets			2,758				2,332
			69,083				58,981
Non-current assets
Restricted cash			-				2,624
Investments			736				242
Advances			241				506
Property and equipment			2,035				1,970
Right-of-use assets			5,345				9,549
Intangible assets			190				234
Goodwill			8,928				7,960
Deferred income taxes			4,730				5,067
Total assets			91,288				87,133
Liabilities
Current liabilities
Accounts payable			4,021				4,640
Compensation payable			43,866				36,852
Income taxes payable			-				3,007
Lease liability			1,817				1,868
Loans Payable			-				176
			49,704				46,543
Non-current liabilities
Compensation payable			2,105				6,278
Lease liability			4,414				8,560
			56,223				61,381
Equity attributable to owners of the Company
Share capital			12,554				12,157
Contributed surplus			15,045				15,063
Accumulated other comprehensive income			960				204
Retained earnings (deficit)			6,506				(1,672	)
Total equity			35,065				25,752
Total liabilities and equity			91,288				87,133

THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in $000s Canadian, except per share amounts)

		Twelve months ended
		August 31
		2022				2021
Revenues
Professional fees			155,560				119,407
Direct expense reimbursements			605				359
			156,165				119,766
Cost of sales expenses
Cost of sales			120,911				90,621
Government stimulus grants			-				(334	)
Reimbursed direct expenses			605				359
			121,516				90,646
Gross profit			34,649				29,120
Selling, general and administrative			21,448				20,738
Acquisition-related expenses			2,611				2,453
			24,059				23,191
Operating profit			10,590				5,929
Finance expenses (income)
Interest expense on lease liability			419				464
Realized gain on lease modification			(182	)			-
Interest expense on loans payable			-				27
Investment income			(129	)			(32	)
Foreign exchange (gain) loss			(228	)			53
Earnings before income tax			10,710				5,417
Income tax expense			2,532				898
Net earnings for the year attributable to owners of the Company			8,178				4,519
Earnings per share
Basic and Diluted		$	0.318			$	0.190
Diluted		$	0.315			$	0.186
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (in $000s Canadian)
		Twelve months ended
		August 31
			2022				2021
Net earnings for the period			8,178				4,519
Other comprehensive income:
Items that may be reclassified subsequently to net earnings
Gain (loss) on marketable securities			(72	)			165
Cumulative translation adjustment			828				(380	)
Comprehensive earnings for the year attributable to owners of the Company			8,934				4,304

THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in $000s Canadian)

														Accumulated Other Comprehensive
														Income (Loss)
		Retained												Cumulative				Gain/(loss) on
		Earnings								Contributed				Translation				Marketable				Total
		(Deficit)				Share Capital				Surplus				Adjustment				Securities				Equity
Balance - August 31, 2020			(6,191	)			7,515				15,013				595				(176	)			16,756
Net earnings for the year			4,519				-				-				-				-				4,519
Common share issuance			-				4,642				-				-				-				4,642
Share based payment expense			-				-				50				-				-				50
Gain on marketable securities available for sale			-				-				-				-				165				165
Change in cumulative translation adjustment			-				-				-				(380	)			-				(380	)
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

THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(in $000s Canadian)

		Twelve months ended
		August 31
		2022				2021
Cash flow provided by (used in)
Operating activities
Net earnings for the year			8,178				4,519
Add (deduct) items not affecting cash
Depreciation of property and equipment			421				393
Depreciation of right-of-use assets			2,095				1,982
Amortization of intangible assets			51				19
Amortization of advances			705				646
Interest expense on lease liabilities			419				464
Interest on loans payable			-				27
Share based payment expense			16				50
(Gain) loss on unrealized foreign exchange on subsidiary loans			(320	)			13
Gain on early termination of lease			(182	)			(37	)
Changes in working capital			(4,282	)			16,802
Net cash provided by operating activities			7,101				24,878
Investing activities
Acquisition of business, net of cash			(314	)			(3,238	)
Investment in convertible promissory note			(655	)			-
Purchase of property and equipment			(466	)			(251	)
Payment of advances			(609	)			(437	)
Proceeds from sale of marketable securities			127				289
Purchase of marketable securities			-				(180	)
Purchase of intangible assets			-				(108	)
Net cash used in investing activities			(1,917	)			(3,925	)
Financing activities
Decrease (increase) in restricted cash			2,624				(2,619	)
Payment of lease liabilities			(2,341	)			(2,619	)
Proceeds from share issuance under employee stock option plan			363				-
Sublease payments received			29				346
Payment of loans payable			(176	)			(1,043	)
Net cash provided by (used in) financing activities			499				(5,935	)
Effect of exchange rate changes on cash and cash equivalents			771				(285	)
Net increase in cash and cash equivalents			6,454				14,733
Cash and cash equivalents, beginning of year			29,214				14,481
Cash and cash equivalents, end of period			35,668				29,214

SOURCE: Caldwell Partners International, Inc.

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FAQ

What were Caldwell Partners' revenue and profit for the fiscal year 2022?

Caldwell Partners reported a revenue of $156.2 million and an operating profit of $10.6 million for the fiscal year 2022.

How much did Caldwell Partners' revenue increase year-over-year for 2022?

The revenue increased by over 30% year-over-year.

What challenges did Caldwell Partners face in the second half of 2022?

The company faced reduced hiring demand due to concerns about an economic downturn, particularly affecting the technology sector.

What is the stock symbol for Caldwell Partners?

The stock symbol for Caldwell Partners is CWLPF.

How does Caldwell Partners plan to address the reduction in hiring demand?

Caldwell Partners plans to right size its staff in response to the reduction in hiring demand.