2017 Third Quarter Financial Results

• Third quarter revenue of $14,524,000.
• Operating profit of $622,000.
• Board declares twenty-second consecutive quarterly dividend of 2.0 cents.

Toronto, Ontario– July 5, 2017 – Retained executive search firm The Caldwell Partners International Inc. (TSX: CWL) today issued its financial results for the fiscal 2017 third quarter ended May 31, 2017. 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)

*Months Ended May 31

*Months Ended May 31
“We continue to focus on growing our firm in a way that will serve to make our clients better, more competitive and more successful,” said John Wallace, chief executive officer. “We have found that keeping our clients at the centre of our strategy has been the catalyst for our growth and the driver behind our position as one of the fastest-growing search firms in our space and category.”

Wallace continued: “We added five new high calibre partners to our team during the third quarter and a sixth partner subsequent to quarter-end. This brings the number of partners in our wholly-owned offices to 40 – a new high water mark for the firm. We will continue to make strategic additions to the firm where it will expand the products and services that we are able to provide to our clients and to the benefit of our shareholders.”

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 July 14, 2017 and to be paid on September 8, 2017.

Operating revenue:

Third Quarter

• Professional fees for the third quarter of 2017 increased 5.6% (2.8% excluding a 2.8% variance from exchange rate fluctuations) over the comparable period last year to $14,443 (2016: $13,680).
  • Third quarter professional fees in the US were up 6.6% (up 2.8% excluding a 3.8% variance from exchange rate fluctuations) to $10,988 (2016: $10,305). Increases in the Number of Assignments per Partner and Average Fee per Assignment were partially offset by a lower Average Number of Partners.
  • Third quarter professional fees in Canada were up 6.1% to $3,205 (2016: $3,020). A higher Average Number of Partners and higher Number of Assignments per Partner were partially offset by a lower Average Fee per Assignment.
  • Third quarter professional fees in Europe were down 6% (down 23.6% excluding a 6.0% variance from exchange rate fluctuations) to $250 (2016: $355). 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. As a result, there was a significant decrease during the quarter in the Average Number of Partners, exacerbated by a decrease in Average Fee per Assignment and partially offset by an increase in the Number of Assignments per Partner.
• Investment income pertains to realized gains on equity positions taken in client companies as part of our professional fees. During fiscal 2016, the firm monetized an equity position obtained in a prior period. This monetization resulted in the recognition of $877 of investment income recorded during the second quarter ($787) and third quarter ($90) of fiscal 2016.
• License fees from our licensees in Latin America and New Zealand for the use of the Caldwell Partners brand and intellectual property for the 2017 third quarter were $81 (2016: $57).

Year to date

• Professional fees for the first nine months of 2017 decreased 0.4% (an increase of 0.3% excluding a 0.7% variance from exchange rate fluctuations) over the comparable period last year to $41,737 (2016: $41,906).
  • Year to date professional fees in the US were up 0.2% (up 0.6% excluding a 0.4% variance from exchange rate fluctuations) to $31,166 (2016: $31,106). A lower Average Fee per Assignment and a lower Average Number of Partners was more than offset by an increase in the Number of Assignments per Partner.
  • Year to date professional fees in Canada were up 7.1% to $9,773 (2016: $9,122), similarly caused by a higher Average Number of Partners and higher Number of Assignments per Partner being partially offset by a lower Average Fee per Assignment.
  • Year to date professional fees in Europe were down 4% (down 43.4% excluding an 9.0% variance from exchange rate fluctuations) to $798 (2016: $1,678), with the lower Number of Assignments per Partner and lower Average Number of Partners being only slightly offset by a higher Average Fee per Assignment, for the reasons noted above.
• License fees from our licensees in Latin America and New Zealand for the use of the Caldwell Partners brand and intellectual property for the nine-month period ended May 31, 2017 were $218 (2016: $189).

Operating profit:

Third Quarter

• For the third quarter of 2017, higher revenue ($697) was more than offset by higher cost of sales ($175) and higher expenses ($580). This resulted in a decrease in operating profit by $58 to $622 over the comparable period in the prior year (2016: $680). Exchange rate variances relative to the prior year period had a favourable impact of $134 on operating profit.
• Higher expenses were the result of increases in share-based compensation expense caused by increases in the share price in the current year compared with share price declines in the previous year and increases in management operating performance bonus accruals based on achievement of performance targets in the current year versus non-attainment in the prior year, partially offset by general decreases across other categories.
• On a segment basis, $500 of operating profit was from the US ($746 net of intercompany license fees), $216 (a loss of $30 net of intercompany license fees) of operating profit was from Canada and Europe’s operating loss was $94

Year to date

• Year to date, lower revenue ($1,017) was more than offset by lower cost of sales ($2,440) and net of higher expenses ($338). The net of these changes was an increase in operating profit of $1,085 to $2,327 (2016: $1,242). Exchange rate variances relative to the prior year period had a favourable impact of $66 on operating profit.
• Higher expenses were driven by increases in management operating performance bonus accruals based on achievement of performance targets in the current year versus non-attainment in the prior year and increases in share-based compensation expense caused by increases in the share price in the current year compared with share price declines in the previous year. These increases were offset by a reduction in the contingent consideration payable related to the Hawksmoor acquisition based on final earn?out achievement calculations and net lower expenses in other cost categories.
• On a segment basis, $1,684 of operating profit was from the US ($2,384 net of intercompany license fees), $989 of operating profit was from Canada ($288 net of intercompany license fee revenue) and Europe’s operating loss was $346.

Net earnings after tax:

• For the third quarter of 2017, we reported investment losses of $142 representing capital losses on the sale of marketable securities compared to the prior year when there were no sales. Year to date, investment losses are $142 compared to investment income of $404 in the prior year.
• Third quarter net income was $224 ($0.011 per share), as compared to $339 ($0.017 per share) in the comparable period a year earlier.
• Year-to-date net income was $1,253 ($0.062 per share), as compared to $939 ($0.046 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

Click to read full financial statement.

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.caldwell.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; volatility of the market price and volume of common shares; and legal matters.

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.

For further information, please contact:

Investors & Analysts:

Chris Beck, CPA, Chief Financial Officer
The Caldwell Partners International
cbeck@caldwellpartners.com
+1 617 934 1843

Media:

Caroline Lomot, Director of Marketing
The Caldwell Partners International
clomot@caldwellpartners.com
+1 516 830 3535

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