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Caldwell Reports Fourth Quarter and Full Year Results

Caldwell Partners International, Inc.

TORONTO, ON / ACCESSWIRE / November 28, 2023 / Talent acquisition firm The Caldwell Partners International Inc. (TSX:CWL)(OTCQX:CWLPF) today issued its financial results for the fiscal 2023 fourth quarter and full year ended August 31, 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

Twelve Months Ended


8.31.23

8.31.22

8.31.23

8.31.22

Professional fees - Caldwell

21,934

23,580

77,102

103,964

Professional fees - IQTalent1

3,924

12,153

19,831

51,596

Consolidated professional fees

25,858

35,733

96,933

155,560

Direct expense reimbursements

295

186

868

605

Revenues

26,153

35,919

97,801

156,165

Cost of sales

20,394

28,028

80,712

120,911

Reimbursed direct expenses

295

186

868

605

Gross profit

5,464

7,705

16,221

34,649

Selling, general and administrative expenses2

4,235

4,356

19,218

21,448

Restructuring expenses3

8,061

-

10,591

-

Acquisition-related expenses4

-

616

879

2,611

Operating (loss) profit

(6,832

)

2,733

(14,467

)

10,590

Finance (income) expenses5

596

(458

)

(531

)

(120

)

(Loss) earnings before tax

(7,428

)

3,191

(13,936

)

10,710

Income tax expense (recovery)

(923

)

616

(2,633

)

2,532

Net earnings (loss) after tax

(6,505

)

2,575

(11,303

)

8,178

Basic earnings (loss) per share

$

(0.248

)

$

0.100

$

(0.432

)

$

0.318

  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 $43 in the current quarter compared to a benefit of $1,319 in the same quarter last year.

  3. Restructuring expenses of $10,591 include $2,264 of severance 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 in the first quarter and a charge of $8,061 related to the decision to sublease IQTalent's Nashville premises in the fourth quarter.

  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.

  5. Finance income for the current year includes a one-time gain of $1,625 from the spin-off of IQTalent's software business into IQRecruit Inc., effective 3/1/23, net of our pro-rata share of IQRecruit's year-to-date losses of $302. Please refer to our MD&A and annual consolidated Financial Statements for the years ended 8/31/23 and 8/31/22 filed on www.sedar.com for further details.

"Fiscal 2023 was a challenging year," said John Wallace, chief executive officer. "We are a talent acquisition services firm fueled by hiring demand, and we saw a significant pullback in hiring at our clients that impacted both of our businesses."

"In our executive search segment, Caldwell's fourth quarter revenue of $21.9 million represents a sequential quarterly increase of 2.3% and another profitable quarter. Our executive search team continues to leverage their experience and expertise to push through a slower market, resulting in positive outcomes. We look forward to leveraging our all-time high partner count at Caldwell when hiring demand returns to historically normal levels."

"In our on-demand talent acquisition support segment, IQTalent had the dual challenge of being an on-demand business with a heavy weighting in the technology sector, which has been the hardest hit sector during this negative economic cycle. Consequently, we saw both sequential and year-over-year decreases in revenue for the quarter. As hiring demand fell, leadership implemented significant restructuring initiatives to right size our staff to match revenue levels. We took a significant lease impairment charge to our IQTalent Nashville office of $8.1 million in the fourth quarter, reflecting the scaling back of our real estate footprint and intent to sublease two-thirds of our office space to match the reduced size of our operations. We are currently negotiating an opportunity to terminate our lease in its entirety which, if successful, may result in a reversal of up to the $8.1 million charge in fiscal 2024. We cannot accurately predict the likelihood of that transaction closing at this time; as such, we have reflected traditional sublease market rates to calculate the charge in our presented financials. We have also proactively adjusted our IQTalent leadership team structure in October, which now reflects a leaner team and stronger go-to-market strategy. With these measures completed, we are positioned for profitable growth with a return of hiring demand."

Wallace continued: "We continue to benefit from a solid balance sheet, cash, and liquidity position that has given us the financial flexibility to navigate through this past fiscal year while still allowing us to implement our strategic growth plans. We are confident in 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 services and cross-collaborating between our two business segments, we expect to continue to grow both businesses together."

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

(in $000s Canadian)

As at

As at

August 31

August 31

2023

2022

adjusted

Assets

Current assets

Cash and cash equivalents

22,053

35,668

Accounts receivable

12,886

22,882

Income taxes receivable

197

1,280

Unbilled revenue

8,237

6,495

Prepaid expenses and other assets

2,712

2,758

46,085

69,083

Non-current assets

Prepaid expenses and other assets

593

-

Investments

2,039

736

Advances

811

241

Deferred income taxes

8,676

4,730

Property and equipment

1,779

2,035

Right-of-use assets

13,305

21,256

Intangible assets

142

190

Goodwill

11,214

8,928

Total assets

84,644

107,199

Liabilities

Current liabilities

Accounts payable

3,181

4,021

Compensation payable

28,384

43,866

Other liabilities

687

-

Lease liability

2,788

1,817

35,040

49,704

Non-current liabilities


Compensation payable

1,948

2,105


Other liabilities

921

-

Lease liability

19,011

20,325

56,920

72,134

Equity attributable to owners of the Company

Share capital

15,392

12,554

Contributed surplus

15,282

15,045

Accumulated other comprehensive income

1,847

960

(Deficit) Retained earnings

(4,797

)

6,506

Total equity

27,724

35,065

Total liabilities and equity

84,644

107,199

THE CALDWELL PARTNERS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS

(in $000s Canadian, except per share amounts)

Twelve months ended
August 31

2023

2022

Revenues

Professional fees

96,933

155,560

Direct expense reimbursements

868

605

97,801

156,165

Cost of sales expenses

Cost of sales

80,712

120,911

Reimbursed direct expenses

868

605

81,580

121,516

Gross profit

16,221

34,649

Selling, general and administrative

19,218

21,448

Restructuring expenses

10,591

-

Acquisition-related expenses

879

2,611

30,688

24,059

Operating profit (loss)

(14,467

)

10,590

Finance expenses (income)

Interest expense on lease liability

898

419

Realized gain on lease modification

-

(182

)

Investment income

(1,635

)

(129

)

Foreign exchange loss (income)

206

(228

)

Earnings (loss) before income tax

(13,936

)

10,710

Income tax expense (recovery)

(2,633

)

2,532

Net earnings (loss) for the year attributable to owners of the Company

(11,303

)

8,178

Earnings (loss) per share

Basic

$

(0.432

)

$

0.318

Diluted

$

(0.432

)

$

0.315

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(in $000s Canadian)

Twelve months ended
August 31

2023

2022

Net earnings (loss) for the period

(11,303

)

8,178

Other comprehensive income (loss):

Items that may be reclassified subsequently to net earnings

(Loss) gain on marketable securities

44

(72

)

Cumulative translation adjustment

843

828

Comprehensive earnings (loss) for the year attributable to owners of the Company

(10,416

)

8,934

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

Accumulated Other Comprehensive

Income (Loss)

Cumulative

Loss on

Retained Earnings/

Contributed

Translation

Marketable

Total

(Deficit)

Share Capital

Surplus

Adjustment

Securities

Equity

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

Net loss for the year

(11,303

)

-

-

-

-

(11,303

)

Share issuance in the year

-

2,838

-

-

-

2,838

Share-based payment expense

-

-

237

-

-

237

Gain on marketable securities available for sale

-

-

-

-

44

44

Change in cumulative translation adjustment

-

-

-

843

-

843

Balance - August 31, 2023

(4,797

)

15,392

15,282

1,886

(39

)

27,724

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

Twelve months ended

August 31

2023

2022

Cash flow provided by (used in)

Operating activities

Net (loss) earnings for the period

(11,303

)

8,178

Add (deduct) items not affecting cash

Depreciation of property and equipment

450

421

Depreciation of right-of-use assets

2,168

2,095

Amortization of intangible assets

54

51

Amortization of advances

699

705

Interest expense on lease liabilities

898

419

Share based payment expense

237

16

(Gain) loss on unrealized foreign exchange on subsidiary loans

25

(320

)

Gain related to equity accounted associate, net of related losses

(1,323

)

-

Right-of-use asset impairment and disposal

6,750

-

Gain on early termination of lease

-

(182

)

Changes in working capital

(9,878

)

(4,282

)

Net cash used in operating activities

(11,223

)

7,101

Investing activities

Acquisition of business, net of cash acquired

(2,494

)

(314

)

Investment in convertible promissory note

- #

(655

)

Purchase of property and equipment

(167

)

(466

)

Payment of advances

(1,200

)

(609

)

Repayment of advances

211

-

Proceeds from sale of marketable securities

54

127

Net cash used in investing activities

(3,596

)

(1,917

)

Financing activities

Decrease in restricted cash

-

2,624

Payment of lease liabilities

(2,222

)

(2,341

)

Sublease payments received

48

29

Payment of loans payable

-

(176

)

Proceeds from share issuance under employee stock option plan

-

363

Issuance of shares net of direct expenses

2,838

-

Net cash (used in) provided by financing activities

664

499

Effect of exchange rate changes on cash and cash equivalents

540

771

Net (decrease) increase in cash and cash equivalents

(13,615

)

6,454

Cash and cash equivalents, beginning of year

35,668

29,214

Cash and cash equivalents, end of period

22,053

35,668

SOURCE: Caldwell Partners International, Inc.



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