CTPartners Executive Search Inc. Announces Second Quarter 2013 Financial Results

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CTPartners Executive Search Inc. Announces Second Quarter 2013 Financial Results

Net Revenue Increased to $34.2 Million

Reported Net Loss Per Share of $0.05; Adjusted Net Income Per Share of $0.08

Third Quarter 2013 Net Revenue Guidance Between $32.5 million to $34.5 million; Adjusted Earnings Per Share in the Range of $0.07 to $0.09

Conference Call Scheduled at 9:00 AM ET on Thursday August 8th

NEW YORK--(BUSINESS WIRE)-- CTPartners Executive Search Inc. (NYSE MKT: CTP), a global retained executive search firm, today announced its financial results for the second quarter and six months ended June 30, 2013.

"Our strong second quarter financial results reflect a combination of execution by our experienced consultants and improved market conditions. Revenue growth was higher than our original expectation, and came in at 1% year over year and 17% sequentially with all six practices showing improvement over the first quarter of 2013. Augmentum, acquired in May, performed as expected in the quarter and has already made a significant contribution to our business development activities. We improved the leverage in our business model and delivered better than expected adjusted earnings per share of $.08 cents, an increase over last year's second quarter, and a significant improvement over this year's first quarter result," said Brian Sullivan, Chief Executive Officer.


Net revenue for the second quarter increased to a record high $34.2 million compared with $33.8 million in the prior year's second quarter. North American revenue increased 1.7% to $21.7 million; EMEA was up 24.5% at $8.3 million, including a $0.9 million contribution from Augmentum Consulting Ltd; and Latin America was relatively flat at $3.0 million. Asia Pacific revenue was $1.2 million compared to $2.6 million in the prior year quarter. On a practice basis, year-over-year, Professional Services increased 39.1% to $5.8 million, Industrial grew 28.4% to $3.7 million, Life Sciences improved 24.9% to $6.8 million and Technology Media & Telecom rose 19.1% to $4.5 million. Financial Services and Consumer/Retail declined 27.6% and 15.1%, respectively, due to tougher comparables.

Compensation expense, excluding reorganization costs, increased $0.5 million to $25.9 million compared to the second quarter of 2012. This represented 75.7% of revenue, one of the lowest levels in CTPartners history. General and Administrative expenses, excluding non-operating expenses, remained flat year over year at $7.2 million or approximately 20.9% of revenue.

GAAP net loss attributable to the Company for the second quarter was $0.4 million, or $0.05 per share, compared to a net loss of $0.3 million, or $0.05 per share for last year's second quarter. Excluding after-tax non-operating charges of $1.0 million, adjusted net income was $0.6 million, or $0.08 per share compared to adjusted net income of $0.5 million, or $0.07 per share in the prior year's second quarter. A reconciliation of non-GAAP measures is included in this news release.


  • The Company was engaged in 364 new search assignments compared to 350 in the year-ago quarter, and up sequentially from 348 in the 2013 first quarter.
  • The number of placements was 272, a 77% placement rate flat with 272, or a 75% placement rate in last year's comparable quarter and 231 placements, or a 78% placement rate in the 2013 first quarter.
  • CTPartners had 121 consultants compared with 109 consultants in the year-ago quarter and up sequentially from 107 consultants, reflecting the Augmentum Consulting Ltd acquisition.
  • The Company's voluntary turnover was one consultant, maintaining one of the lowest turnovers in the executive search industry.
  • Net revenue per consultant was $1.2 million, flat with the year-ago second quarter and up 9%, or $0.1 million, from the 2013 first quarter.
  • Average revenue per search increased to $103,100, an increase of 9% compared to $94,400 in last year's second quarter and a 14% increase compared to $90,300 in the 2013 first quarter.
  • The number of clients representing repeat business was 72% in the quarter compared with 76% in both last year's second quarter and 2013 first quarter.

Six-Month Financial Results

For the six months ended June 30, 2013, net revenue totaled $63.4 million compared to net revenue $66.2 million reported for the six months ended June 30, 2012. GAAP net loss attributable to the Company for the six months ended June 30, 2013 was $2.4 million, or $0.34 per share compared to a net loss of $0.9 million, or $0.12 per share for the six months ended June 30, 2012. Excluding after-tax non-operating charges of $2.7 million, adjusted net income was $0.3 million, or $0.04 per share compared to adjusted net income of $0.9 million, or $0.13 per share in the prior year's six month period. A reconciliation of non-GAAP measures is included in this news release.


For the third quarter ending September 30, 2013, the Company expects to report net revenue in the range of $32.5 million to $34.5 million and adjusted earnings per share between $0.07 to $0.09, excluding the non-operating charges.

Conference Call

The Company will host a conference call and webcast for the investment community on Thursday, August 8 at 9:00 AM ET. Investors within the United States interested in participating are invited to call 866- 318-8612 and reference the Participant Passcode: 25419570. All other international participants can use the dial-in number 617- 399-5131, 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 888-286-8010 and reference the Replay Access Code: 86188004. 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.


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 August 7, 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.




(in thousands except share and per share amounts)

Three Months Ended

June 30,

  Six Months Ended

June 30,

2013   2012   2013   2012
Net revenue $ 34,223 $ 33,754 $ 63,406 $ 66,157
Reimbursable expenses 1,142     1,169     1,942   2,191  
Total revenue 35,365 34,923 65,348 68,348
Operating expenses
Compensation and benefits 26,240 26,890 50,307 53,365
General and administrative 8,349 7,084 16,630 13,810
Reimbursable expenses 1,255     1,318     2,092   2,345  
Total operating expenses 35,844     35,292     69,029   69,520  
Operating loss (479 ) (369 ) (3,681 ) (1,172 )
Interest expense, net (65 )   (40 )   (119 ) (79 )
Loss before income taxes (544 ) (409 ) (3,800 ) (1,251 )
Income tax benefit 220     85     1,443   361  
Net loss (324 ) (324 ) (2,357 ) (890 )
Net income attributable to redeemable noncontrolling interest (58 )   (58 )  
Net loss attributable to the Company $ (382 ) $ (324 ) $ (2,415 ) $ (890 )
Basic and diluted loss per common share $ (0.05 ) $ (0.05 ) $ (0.34 ) $ (0.12 )
Basic and diluted weighted average common shares 7,035,919 7,151,227 7,027,120 7,143,380


(in thousands except share and per share amounts)

(in thousands, except per share amounts)
Three Months Ended June 30   Six Months Ended June 30
2013   2012   2013   2012
Net loss $ (324 ) $ (324 ) $ (2,357 ) $ (890 )
Post-combination compensation and reorganization expense 426 1,525 2,304 3,050
Foreign exchange loss/(gain) on funding of foreign subsidiaries 230 (149 ) 907 (362 )
Costs incurred for restatement, acquisition and integration 874 79 1,086 335
Tax effect of the adjustments (589 ) (599 )   (1,677 )   (1,185 )
Adjusted net income/ (loss) $ 617   $ 532     $ 263     $ 948  
Earnings per common share, as adjusted $ 0.08 $0.07 $ 0.04 $ 0.13

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

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 measures 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
  • Reorganization charges
  • Gain or loss on foreign currency related to funding of foreign subsidiaries
  • 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 earnings/(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.




(in thousands, except share and per share amounts)


    June 30,    

December 31,

Current Assets
Cash $ 5,690 $ 15,947
Accounts receivable, net 30,625 23,100
Prepaid expenses 2,698 2,949
Deferred income taxes 2,192 1,932
Income taxes receivable 1,555


Total current assets 44,971 47,703
Non-current assets
Leasehold improvements and equipment, net 3,395 3,473
Goodwill 5,219 215
Intangibles, net 4,475 3,195
Other assets 2,902 1,867
Deferred income taxes 4,359   4,021  
$ 65,321   $ 60,474  
Liabilities and Stockholders' Equity
Current Liabilities
Current portion of long-term debt $ 3,766 $ 3,186
Line of credit 4,568
Accounts payable 2,447 1,762
Accrued compensation 20,713 24,401
Accrued business taxes 2,147 1,465
Income taxes payable 233
Accrued expenses 4,780   3,762  
Total current liabilities 38,421 34,809
Long-Term Liabilities
Long-term debt, less current maturities 2,916 3,488
Deferred rent, less current maturities 1,130   1,367  
Total long-term liabilities 4,046 4,855
Redeemable noncontrolling interest 3,765
Stockholders' Equity
Preferred stock
Common stock 7 7
Additional paid-in capital 37,551 36,846
Accumulated deficit (15,026 ) (12,611 )
Accumulated other comprehensive loss (1,368 ) (1,357 )
Treasury stock (2,075 ) (2,075 )
Total stockholders' equity 19,089   20,810  
$ 65,321   $ 60,474  



(In thousands)

For the Six Months

Ended June 30,

2013   2012
Cash Flows From Operating Activities
Net loss $ (2,357 ) $ (890 )
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 846 793
Reorganization charges 33
Share-based compensation 377 558
Amortization of discount on seller notes 61 87
Amortization of post-combination compensation 1,878 3,050
Deferred income taxes (522 ) (114 )
Changes in operating assets and liabilities, net of effect of acquired businesses:
Accounts receivable, net (5,938 ) (5,702 )
Prepaid expenses 208 (460 )
Income taxes receivable (1,555 ) (475 )
Other assets and receivables (1,375 )
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