CTPartners Executive Search Inc. Announces First Quarter 2013 Financial Results

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CTPartners Executive Search Inc. Announces First Quarter 2013 Financial Results

Revenue of $29.2 million in line with guidance

Reported net loss per share of $0.29; Adjusted net loss per share of $0.05, consistent with guidance


Second quarter 2013 revenue guidance between $31.5 to $33.5 million

Adjusted earnings per share in the range of $0.01 to $0.06

Company conference call at 5:00 PM ET today

NEW YORK--(BUSINESS WIRE)-- CTPartners Executive Search Inc. (NYSE MKT: CTP), a global retained executive search firm, today announced its financial results for the first quarter ended, March 31, 2013.

"While our first quarter results were consistent with our guidance, we continue to operate in a challenging economic environment for executive recruitment services. We successfully delivered quality results to our growing list of clients and improved our client coverage and enhanced our expertise. We took a significant step in that direction with the recent acquisition of Augmentum, a premier global executive recruitment firm based in London, with an outstanding reputation for producing excellent client results. Augmentum will increase our UK presence and significantly improve our global competitive position while making a positive contribution to our financial results immediately," said Brian Sullivan, Chief Executive Officer.

FIRST QUARTER RESULTS

Revenue for the first quarter was $29.2 million compared with revenue of $32.4 million in the prior year's first quarter. North American revenue decreased 13.4% to $17.4 million; EMEA was essentially flat at $6.7 million; and Asia Pacific revenue was $1.7 million compared to $2.6 million in the first quarter of 2012. Latin America partially offset these decreases as revenue increased 13.4% to $3.3 million. On a practice basis, Life Sciences grew 8.6% to $5.7 million and Industrial increased 28% to $3.6 million while Financial Services, Consumer/Retail, Technology Media & Telecom and Professional Services declined 29.8%, 20.1%, 6% and 3.2%, respectively, due to softer market conditions.

Excluding post-combination compensation expense mainly related to the Latin America acquisition in 2012, the Company decreased its compensation expense by $2.8 million to $22.2 million. Excluding non-operating expenses, this decrease in compensation expense was offset by a $0.7 million increase in general and administrative expenses to $7.4 million, primarily as a result of a global branding initiative and business development costs.

The net loss for the first quarter was $2.0 million, or $0.29 per share, compared to a net loss of $0.6 million, or $0.08 per share for last year's first quarter. Excluding non-operating charges of $1.7 million net of tax for the three months ended March 31, 2013, and $1.0 million for the three months ended March 31, 2012, the adjusted net loss was $0.4 million, or $0.05 per share compared to adjusted net income of $0.4 million, or $0.06 per share in last year's first quarter, as defined in the reconciliation of non-GAAP measures included in the press release.

The cash balance at March 31, 2013 was $6.5 million compared to $7.2 million for the quarter ended March 31, 2012 and $15.9 million at year end 2012.

PERFORMANCE METRICS

  • The Company was engaged in 348 new search assignments compared to 385 in the year-ago quarter, and up sequentially from 299 in the 2012 fourth quarter.
  • The number of placements was 231, a 78% placement rate compared to 234, or a 75% placement rate in last year's comparable quarter and 270 placements, or an 82% placement rate in the 2012 fourth quarter.
  • CTPartners had 107 consultants compared with 113 consultants in the year-ago quarter and up sequentially from 103 consultants, reflecting the Company's goal of continually replacing non-performers with high-caliber consultants.
  • Net revenue per consultant was $1.1 million, flat with last year's first quarter and down slightly from $1.2 million in the 2012 fourth quarter.
  • Average revenue per search increased to $90,300 compared to $89,100 in last year's first quarter and was slightly down from $91,400 in the 2012 fourth quarter.
  • The number of clients representing repeat business was 72% in the quarter compared with 76% in both last year's first quarter and 2012 fourth quarter.

Guidance

CTPartners growth strategy is to continue to deliver more searches to existing clients, add new clients, and diligently add new consultants through strategic acquisitions. The company also is focused on reducing costs as appropriate to meet its objective of expanding its operating margin in 2013. For the second quarter ending June 30, 2013, the Company expects to report revenue in the range of $31.5 to $33.5 million and adjusted earnings per share between $0.01 to $0.06, excluding the non-operating charges.

Conference Call

The Company will host a conference call and webcast for the investment community today at 5:00 PM ET. Investors within the United States interested in participating are invited to call (866) 202-3048 and reference the Participant Passcode: 21213467. All other international participants can use the dial-in number (617) 213-8843, using the same Participant Passcode. A replay of the event will be available for one week following the conclusion of the call. To access the replay, callers in the United States can call (866) 286-8010 and reference the Replay Access Code: 61717137. International callers can dial (617) 801-6888, using the same Replay Access Code. To access the webcast, please visit http://investor.ctnet.com.

About CTPartners

CTPartners is a leading performance-driven executive search firm serving clients across the globe. Committed to a philosophy of partnering with its clients, CTPartners offers a proven record in C-Suite, senior executive, and board searches, as well as expertise serving private equity and venture capital firms.

With origins dating back to 1980, CTPartners serves clients with a global organization of more than 400 professionals and employees, offering expertise in board advisory services and executive recruiting services in the financial services, life sciences, industrial, professional services, retail and consumer, and technology, media and telecom industries. Headquartered in New York, CTPartners has 22 offices in 15 countries.

www.ctnet.com

Safe Harbor Statement

The following is a Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release includes forward-looking statements. As a general matter, forward-looking statements reflect our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be identified by the use of forward looking terminology such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words, but the absence of these words does not necessarily mean that a statement is not forward-looking. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for the disclosure of forward-looking statements.

The forward-looking statements contained in this press release are based upon our historical performance, current plans, estimates, expectations and other factors we believe are appropriate under the circumstances. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved since these forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. Some of the key uncertainties and factors that could affect our future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements are: our expectations regarding our revenues, expenses and operations and our ability to sustain profitability; our ability to recruit and retain qualified executive search consultants to staff our operations appropriately; our ability to expand our customer base and relationships, especially given the off-limit arrangements we are required to enter into with certain of our clients; further declines in the global economy and our ability to execute successfully through business cycles; our anticipated cash needs; projected cost savings as a result of reorganization; our ability to amend certain provisions of previously executed purchase agreements; our anticipated growth strategies and sources of new revenues; unanticipated trends and challenges in our business and the markets in which we operate; social or political instability in markets where we operate; the impact of foreign currency exchange rate fluctuations; price competition; the ability to forecast, on a quarterly basis, variable compensation accruals that ultimately are determined based on the achievement of annual results; and the mix of profit and loss by country in which we operate.

The above list should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in our annual report on Form 10-K filed on March 20, 2013 and 10-Q filed on May 9, 2013. The forward looking statements included in this press release are made only as of the date hereof. We do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 
 March 31,
2013
 December 31,

2012

 
Assets
Current Assets
Cash$6,509,588$15,947,102
Accounts receivable, net24,651,61723,100,348
Other receivables91,62890,524
Prepaid expenses2,689,2982,948,694
Deferred income taxes2,529,0821,931,988
Income taxes receivable532,593
Other1,938,9003,684,677
Total current assets38,942,70647,703,333
Non-current assets
Leasehold improvements and equipment, net3,187,7353,472,645
Goodwill214,967214,967
Intangibles, net3,117,9063,195,480
Other assets2,959,6441,867,334
Deferred income taxes4,194,8204,020,800
$52,617,778$60,474,559 
Liabilities and Stockholders' Equity
Current Liabilities
Current portion of long-term debt$3,246,228$3,186,349
Line of credit5,862,402
Accounts payable3,009,4261,761,706
Accrued compensation15,228,36224,400,563
Accrued business taxes1,243,3421,464,538
Income taxes payable232,967
Accrued expenses2,992,4843,762,231
Total current liabilities31,582,24434,808,354
Long-Term Liabilities
Long-term debt, less current maturities784,8173,488,439
Deferred rent, less current maturities1,230,5791,366,506
Total long-term liabilities2,015,3964,854,945
Stockholders' Equity
Preferred stock
Common stock7,4437,410
Additional paid-in capital37,018,67736,846,114
Accumulated deficit(14,641,755)(12,610,113)
Accumulated other comprehensive (loss), net of tax(1,288,862)(1,356,786)
Treasury stock(2,075,365)(2,075,365

)

Total stockholders' equity19,020,13820,811,260 
$52,617,778$60,474,559 
 

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 
 Three Months Ended

March 31,

2013 2012
Revenue
Net revenue$29,183,367$32,402,745
Reimbursable expenses800,043 1,022,399 
Total revenue29,983,41033,425,144
Operating expenses
Compensation and benefits24,067,14026,474,958
General and administrative8,280,2026,726,797
Reimbursable expenses836,942 1,026,736 
Total operating expenses33,184,284 34,228,491 
Operating loss(3,200,874)(803,347)
Interest expense, net(54,048)(39,302)
Loss before income taxes(3,254,922)(842,649)
Income tax benefit1,223,282 276,045 
Net loss$(2,031,640)$(566,604)
Basic and diluted loss per common share$(0.29)$(0.08)
Basic and diluted weighted average common shares7,019,2377,135,485
 

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 
 For the Three Months

Ended March 31,

2013 2012
Cash Flows From Operating Activities
Net loss$(2,031,640)$(566,604)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization413,569404,041
Reorganization charges
Share-based compensation175,348321,574
Amortization of discount on seller notes30,06542,629
Amortization of post-combination compensation1,877,9551,525,180
Deferred income taxes(771,114)(261,931)
Changes in operating assets and liabilities, net of effect of acquired business:
Accounts receivable, net(1,839,296)(5,179,037)
Prepaid expenses215,166(190,877)
Income taxes receivable(532,593)10,912
Other assets and receivables(1,263,438)(2,316,204)
Accounts payable1,284,718378,274
Accrued compensation(8,860,939)(6,254,189)
Accrued business taxes(155,778)273,875
Income taxes payable(232,967)
Accrued expenses(814,658)523,033
Deferred rent(140,335)(25,314)
Net cash used in operating activities(12,645,937)(11,314,638)
Cash Flows From Investing Activities
Acquisition of business(3,046,563)
Purchase of leasehold improvements and equipment(94,000)(59,589)
Net cash used in investing activities(94,000)(3,106,152)
Cash Flows From Financing Activities
Principal payments on long-term debt(2,664,528)(38,423)
Net proceeds from revolving line of credit5,862,402
Repurchase of common stock (78,599)
Net cash provided by (used in) financing activities3,197,874 (117,022)
Net decrease in cash(9,542,063)(14,537,812)
Effect of foreign currency on cash104,549(109,364)
Cash:
Beginning15,947,102 21,830,120 
Ending$6,509,588 $7,182,944 
 

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

Adjusted Performance Measure, Excluding Non-Operational Charges

We utilize Adjusted Net Income/(Loss) and Adjusted Income/(Loss) per common share, non-GAAP financial measures, as a measure of our results of operations. We calculated Adjusted Net Income/(Loss) as Net Income/(Loss) excluding the following charges which we do not believe are reflective of our operational results:

  • Post-combination compensation expense
  • Restructuring charges
  • Gain or loss on foreign currency
  • Fees and expenses incurred by us in connection with the restatement of our 2012 interim financial statements
  • Fees and expenses incurred in connection with acquisitions
  • Tax effect of the above adjustments

We calculate Adjusted loss per common share using the weighted average shares outstanding amounts used in the calculation of diluted earnings per share in accordance with GAAP.

Management utilizes this information to measure performance, and believes it more appropriately reflects the results of ongoing operations.

 Three Months Ended March 31
2013  2012
CALCULATION OF "AS ADJUSTED" PERFORMANCE MEASURE
Net loss$(2,031,640)$(566,604)
Adjustments:
Post-combination compensation expense1,877,9551,525,180
Foreign exchange loss/(gain) on funding of foreign subsidiaries677,000(213,181)
Costs incurred for restatement and acquisition211,556255,950
Tax effect of the adjustments(1,088,492)(586,433)
Adjusted net income/ (loss)$(353,621)$414,912 
 
Loss per common share, as adjusted$(0.05)$0.06

Use of non-GAAP measures: The tables above contain selected financial information calculated other than in accordance with U.S. Generally Acceptable Accounting Principles ("GAAP").

CTPARTNERS EXECUTIVE SEARCH INC. AND SUBSIDIARIES

SUPPLEMENTAL PERFORMANCE METRICS

 
REVENUE BY REGION
  Q1 2013 Q1 2012    
By Region Revenue 

% of Net
Revenue

 Revenue 

% of Net
Revenue

 

Increase/
(Decrease)

 

% Increase/
Decrease

North America $17,432,900 59.7 Read Full Story

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