Completes Acquisitions of Atreus and
businessfourzero; Augments Diversification Strategy
Maintains Strong Profitability Despite
Macroeconomic Headwinds
Declares $0.15 Per Share Cash Dividend
CHICAGO, April 24,
2023 /PRNewswire/ -- Today Heidrick & Struggles
International, Inc. (Nasdaq: HSII) ("Heidrick & Struggles",
"Heidrick" or the "Company") announced financial results for its
first quarter ended March 31,
2023.
First Quarter Highlights:
- Net revenue of $239.3 million; on
a constant currency basis net revenue was $244.8 million
- Operating income of $17.8 million
and operating margin of 7.4%
- Adjusted EBITDA (adjusted to exclude acquisition accounting and
deferred compensation expense) of $27.5
million with Adjusted EBITDA margin of 11.5%
- Net income of $15.6 million and
diluted earnings per share of $0.76
- Completed acquisition of businessfourzero on April 1, 2023
"As we anticipated, we saw a slowdown in first quarter revenue
from a year ago and adjusted our costs accordingly, as demonstrated
by our Adjusted EBITDA margin of nearly 12%. While we expect to see
some continued volatility in our markets, which is reflected in our
guidance, we will continue to navigate through these complexities
prudently," stated Heidrick & Struggles' President and Chief
Executive Officer, Krishnan
Rajagopalan. "Importantly, we continued to advance our
diversification strategy with the acquisition of businessfourzero
to augment our Heidrick Consulting offering, as well as the ongoing
integration of Atreus into our On-Demand Talent
platform."
2023 First Quarter Results
Consolidated net revenue of $239.3
million compared to record consolidated net revenue of
$283.9 million in the 2022 first
quarter. Excluding the impact of exchange rate fluctuations, which
negatively impacted results by 1.9%, or $5.5
million, consolidated net revenue decreased 13.7%, or
$39.0 million from the 2022 first
quarter.
Executive Search net revenue of $190.5 million compared to net revenue of
$242.5 million in the 2022 first
quarter reflecting an anticipated market slowdown. Excluding the
impact of exchange rate fluctuations, which negatively impacted
results by 1.8%, or $4.3 million, net
revenue decreased 19.7%, or $47.8
million from the 2022 first quarter. Net revenue decreased
21.7% in the Americas (down 21.5% on a constant currency basis),
decreased 21.7% in Europe (down
16.3% on a constant currency basis), and decreased 19.9% in
Asia Pacific (down 15.6% on a
constant currency basis) when compared to the prior year first
quarter. The Social Impact practice group exhibited growth over the
prior year.
The Company had 432 Executive Search consultants at March 31, 2023, compared to 394 at March 31, 2022. Productivity, as measured by
annualized Executive Search net revenue per consultant, was
$1.8 million compared to $2.5 million in the 2022 first quarter,
reflecting a higher number of consultants combined with lower
revenue. Average revenue per executive search was approximately
$124,000, flat with the prior year
period. The number of search confirmations decreased 21.8% compared
to the year-ago period.
On-Demand Talent net revenue of $31.1
million increased 33.1% compared to net revenue of
$23.4 million in the 2022 first
quarter, primarily due to the acquisition of Atreus, partially
offset by a decrease in the volume of legacy on-demand projects.
Foreign exchange rate fluctuations negatively impacted results by
$0.6 million, or 2.5%.
Heidrick Consulting net revenue of $17.7 million compared to net revenue of
$17.9 million in the 2022 first
quarter. Excluding the impact of exchange rate fluctuations, which
negatively impacted results by 3.8%, or $0.7
million, Heidrick Consulting net revenue increased 2.5%, or
$0.5 million, compared to the prior
year period. The Company had 78 Heidrick Consulting consultants at
March 31, 2023, compared to 70 at
March 31, 2022.
Consolidated salaries and benefits decreased $42.6 million, or 21.1%, to $158.9 million compared to $201.4 million in the 2022 first quarter.
Year-over-year, fixed compensation expense increased $13.1 million due to base salaries and payroll
taxes, the deferred compensation plan and retirement and benefits,
as well as the acquisition of Atreus, partially offset by talent
acquisition and retention costs, and stock compensation. Variable
compensation decreased $55.7 million
due to a decrease in production. Salaries and benefits expense was
66.4% of net revenue for the quarter, compared to 71.0% in the 2022
first quarter.
General and administrative expenses increased $4.5 million, or 15.2%, to $34.3 million compared to $29.8 million in the 2022 first quarter. The
increase was due to business development travel, intangible
amortization and accretion, office occupancy, IT, professional
services and the acquisition of Atreus, partially offset by hiring
fees. As a percentage of net revenue, general and administrative
expenses were 14.3% for the 2023 first quarter compared to 10.5% in
the 2022 first quarter.
The Company's cost of services was $22.8
million, or 9.5% of net revenue for the quarter, compared to
$18.0 million, or 6.3% of net revenue
in the 2022 first quarter. This related to an increase in the
volume of On-Demand Talent projects, the acquisition of Atreus and
Heidrick Consulting's project mix, where more of the projects were
serviced externally.
The Company's research and development expenses were
$5.5 million, or 2.3%, of net revenue
for the quarter compared to $4.4
million, or 1.6%, of net revenue for the first quarter
2022.
Operating income was $17.8 million
for the quarter compared to $30.2
million in the 2022 first quarter. Operating income margin
was 7.4% versus 10.7% in the 2022 first quarter.
Adjusted EBITDA was $27.5 million
compared to $35.7 million in the 2022
first quarter. Adjusted EBITDA margin was 11.5%, compared to 12.6%
in the 2022 first quarter. In Executive Search, Adjusted EBITDA was
$48.4 million compared to
$51.9 million in the prior year
period. In On-Demand Talent, Adjusted EBITDA was a loss of
$1.3 million versus income of
$0.3 million in the prior year
period. In Heidrick Consulting, Adjusted EBITDA was a loss of
$2.7 million compared to a loss of
$1.8 million in the prior year
period.
Net income was $15.6 million and
diluted earnings per share was $0.76,
with an effective tax rate of 31.7%. This compares to net income of
$18.5 million and diluted earnings
per share of $0.90, with an effective
tax rate of 33.7%, in the 2022 first quarter.
Net cash used in operating activities was $337.0 million, compared to net cash used by
operating activities of $262.2
million in the 2022 first quarter. Cash, cash equivalents
and marketable securities at March 31,
2023 was $204.7 million
compared to $268.0 million at
March 31, 2022 and $621.6 million at December
31, 2022. The Company's cash position typically builds
throughout the year as employee bonuses are accrued, mostly to be
paid out in the first half of the year.
Acquisition of businessfourzero
On April 1, 2023, the Company
completed the acquisition of businessfourzero which was announced
in March 2023. businessfourzero is a
London-headquartered next
generation consultancy specializing in developing and implementing
purpose-driven change and will now become part of the Company's
Heidrick Consulting segment.
Dividend
The Board of Directors declared a 2023 first quarter cash
dividend of $0.15 per share payable
on May 19, 2023, to shareholders of
record at the close of business on May 5,
2023.
2023 Second Quarter Outlook
The Company expects 2023 second quarter consolidated net revenue
of between $260 million and
$280 million, while acknowledging
that continued fluidity in external factors, such as the foreign
exchange and interest rate environments, foreign conflicts,
inflation and macroeconomic constraints on pricing actions, may
impact quarterly results. In addition, this outlook is based on the
average currency rates in March 2023
and reflects, among other factors, management's assumptions for the
anticipated volume of new Executive Search confirmations, On-Demand
Talent projects, and Heidrick Consulting assignments, consultant
productivity, consultant retention, and the seasonality of the
business along with the current backlog.
Quarterly Webcast and Conference Call
Heidrick & Struggles will host a conference call to review
its first quarter results today, April 24,
2023 at 5:00 pm Eastern Time.
Participants may access the Company's call and supporting slides
through its website at www.heidrick.com or by dialing (888)
440-4091 or (646) 960-0846, conference ID# 6106012. For those
unable to participate on the live call, a webcast and copy of the
slides will be archived at www.heidrick.com and available for up to
30 days following the investor call.
About Heidrick & Struggles International, Inc.
Heidrick & Struggles (Nasdaq: HSII) is a premier provider of
global leadership advisory and on-demand talent solutions, serving
the senior-level talent and consulting needs of the world's top
organizations. In our role as trusted leadership advisors, we
partner with our clients to develop future-ready leaders and
organizations, bringing together our services and offerings in
executive search, diversity and inclusion, leadership assessment
and development, organization and team acceleration, culture
shaping and on-demand, independent talent solutions. Heidrick &
Struggles pioneered the profession of executive search more than 65
years ago. Today, the firm provides integrated talent and human
capital solutions to help our clients change the world, one
leadership team at a time. ® www.heidrick.com
Non-GAAP Financial Measures
To supplement the financial results presented in accordance with
generally accepted accounting principles in the United States ("GAAP"), Heidrick &
Struggles presents certain non-GAAP financial measures. A "non-GAAP
financial measure" is defined as a numerical measure of a company's
financial performance that excludes or includes amounts different
than the most directly comparable measure calculated and presented
in accordance with GAAP in the statements of comprehensive income,
balance sheets or statements of cash flow of the Company.
Non-GAAP financial measures used within this earnings release
are adjusted EBITDA, adjusted EBITDA margin, and consolidated net
revenue excluding the impact of exchange rate fluctuations. These
measures are presented because management uses this information to
monitor and evaluate financial results and trends. Management
believes this information is also useful for investors to evaluate
the comparability of financial information presented.
Reconciliations of these non-GAAP financial measures to the most
directly comparable measures calculated and presented in accordance
with GAAP are provided as schedules attached to this release.
Adjusted EBITDA refers to earnings before interest, taxes,
depreciation, intangible amortization, equity-settled stock
compensation expense, earnout accretion, earnout obligation
adjustments, contingent compensation related to acquisitions,
deferred compensation plan income and expense, restructuring
charges, and other non-operating income (expense).
Adjusted EBITDA margin refers to adjusted EBITDA as a percentage
of net revenue in the same period.
The Company evaluates its results of operations on both an as
reported and a constant currency basis. The constant currency
presentation is a non-GAAP financial measure, which excludes the
impact of fluctuations in foreign currency exchange rates. The
Company believes providing constant currency information provides
valuable supplemental information regarding its results of
operations, consistent with how it evaluates its performance. The
Company calculates constant currency percentages by converting its
financial results in a local currency for a period using the
average exchange rate for the prior period to which it is
comparing. This calculation may differ from similarly titled
measures used by other companies.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of the federal securities laws, including statements
regarding guidance for the second quarter of 2023. The
forward-looking statements are based on current expectations,
estimates, forecasts, and projections about the industry in which
we operate and management's beliefs and assumptions.
Forward-looking statements may be identified by the use of words
such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates," "outlook," "projects," "forecasts," "goal,"
"aim" and similar expressions. Forward-looking statements are not
guarantees of future performance, rely on a number of assumptions,
and involve certain known and unknown risks and uncertainties that
are difficult to predict, many of which are beyond our control.
Factors that may cause actual outcomes and results to differ
materially from what is expressed, forecasted, or implied in the
forward-looking statements include, among other things, our ability
to attract, integrate, develop, manage and retain qualified
consultants and senior leaders; our ability to prevent our
consultants from taking our clients with them to another firm; our
ability to maintain our professional reputation and brand name; our
clients' ability to restrict us from recruiting their employees;
our heavy reliance on information management systems; risks arising
from our implementation of new technology and intellectual property
to deliver new products and services to our clients; our dependence
on third parties for the execution of certain critical functions;
the fact that we face the risk of liability in the services we
perform; the fact that data security, data privacy and data
protection laws and other evolving regulations and cross-border
data transfer restrictions may limit the use of our services and
adversely affect our business; any challenges to the classification
of our on-demand talent as independent contractors; the increased
cybersecurity requirements, vulnerabilities, threats and more
sophisticated and targeted cyber-related attacks that could pose a
risk to our systems, networks, solutions, services and data; the
impacts, direct and indirect, of the COVID-19 pandemic (including
the emergence of variant strains) or other highly infectious or
contagious disease on our business, our consultants and employees,
and the overall economy; the aggressive competition we face; the
fact that our net revenue may be affected by adverse economic
conditions including inflation, the impact of foreign currency
exchange rate fluctuations; our ability to access additional
credit; social, political, regulatory, legal and economic risks in
markets where we operate, including the impact of the ongoing war
in Ukraine and the risks of an
expansion or escalation of that conflict; unfavorable tax law
changes and tax authority rulings; the timing of the establishment
or reversal of valuation allowance on deferred tax assets; the fact
that we may not be able to align our cost structure with net
revenue; any impairment of our goodwill, other intangible assets
and other long-lived assets; our ability to execute and integrate
future acquisitions; and the fact that we have anti-takeover
provisions that could make an acquisition of us difficult and
expensive. We caution the reader that the list of factors may not
be exhaustive. For more information on these risks, uncertainties
and other factors, refer to our Annual Report on Form 10-K for the
year ended December 31, 2022, under
the heading "Risk Factors" in Item 1A, as updated in Part II of our
subsequent Quarterly Reports on Form 10-Q, and other filings with
the Securities and Exchange Commission. The forward-looking
statements contained in this press release speak only as of the
date of this press release. We undertake no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Contacts:
Investors & Analysts:
Suzanne Rosenberg, Vice President, Investor
Relations
srosenberg@heidrick.com
Media:
Nina Chang, Vice
President, Corporate Communications
nchang@heidrick.com
Heidrick &
Struggles International, Inc.
Consolidated Statements of Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
$
239,317
|
|
$
283,861
|
|
$ (44,544)
|
|
(15.7) %
|
Reimbursements
|
2,802
|
|
1,676
|
|
1,126
|
|
67.2 %
|
Total
revenue
|
242,119
|
|
285,537
|
|
(43,418)
|
|
(15.2) %
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Salaries and
benefits
|
158,859
|
|
201,445
|
|
(42,586)
|
|
(21.1) %
|
General and
administrative expenses
|
34,327
|
|
29,794
|
|
4,533
|
|
15.2 %
|
Cost of
services
|
22,832
|
|
17,988
|
|
4,844
|
|
26.9 %
|
Research and
development
|
5,528
|
|
4,402
|
|
1,126
|
|
25.6 %
|
Reimbursed
expenses
|
2,802
|
|
1,676
|
|
1,126
|
|
67.2 %
|
Total operating
expenses
|
224,348
|
|
255,305
|
|
(30,957)
|
|
(12.1) %
|
|
|
|
|
|
|
|
|
Operating
income
|
17,771
|
|
30,232
|
|
(12,461)
|
|
(41.2) %
|
|
|
|
|
|
|
|
|
Non-operating income
(expense)
|
|
|
|
|
|
|
|
Interest,
net
|
3,249
|
|
110
|
|
|
|
|
Other, net
|
1,809
|
|
(2,471)
|
|
|
|
|
Net non-operating
income (expense)
|
5,058
|
|
(2,361)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
22,829
|
|
27,871
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
7,243
|
|
9,404
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
15,586
|
|
18,467
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of tax
|
443
|
|
(1,082)
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$ 16,029
|
|
$ 17,385
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
19,904
|
|
19,624
|
|
|
|
|
Diluted
|
20,569
|
|
20,511
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
0.78
|
|
$
0.94
|
|
|
|
|
Diluted
|
$
0.76
|
|
$
0.90
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
as a % of net revenue
|
66.4 %
|
|
71.0 %
|
|
|
|
|
General and
administrative expenses as a % of net revenue
|
14.3 %
|
|
10.5 %
|
|
|
|
|
Cost of services as a %
of net revenue
|
9.5 %
|
|
6.3 %
|
|
|
|
|
Research and
development as a % of net revenue
|
2.3 %
|
|
1.6 %
|
|
|
|
|
Operating
margin
|
7.4 %
|
|
10.7 %
|
|
|
|
|
Heidrick &
Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
2023
Margin1
|
|
2022
Margin1
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$ 127,327
|
|
$ 162,553
|
|
$
(35,226)
|
|
(21.7) %
|
|
|
|
|
Europe
|
38,931
|
|
49,745
|
|
(10,814)
|
|
(21.7) %
|
|
|
|
|
Asia
Pacific
|
24,229
|
|
30,251
|
|
(6,022)
|
|
(19.9) %
|
|
|
|
|
Total Executive
Search
|
190,487
|
|
242,549
|
|
(52,062)
|
|
(21.5) %
|
|
|
|
|
On-Demand
Talent
|
31,117
|
|
23,381
|
|
7,736
|
|
33.1 %
|
|
|
|
|
Heidrick
Consulting
|
17,713
|
|
17,931
|
|
(218)
|
|
(1.2) %
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
239,317
|
|
283,861
|
|
(44,544)
|
|
(15.7) %
|
|
|
|
|
Reimbursements
|
2,802
|
|
1,676
|
|
1,126
|
|
67.2 %
|
|
|
|
|
Total
revenue
|
$ 242,119
|
|
$ 285,537
|
|
$
(43,418)
|
|
(15.2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$ 38,699
|
|
$ 39,851
|
|
$
(1,152)
|
|
(2.9) %
|
|
30.4 %
|
|
24.5 %
|
Europe
|
1,712
|
|
5,403
|
|
(3,691)
|
|
(68.3) %
|
|
4.4 %
|
|
10.9 %
|
Asia
Pacific
|
3,282
|
|
5,054
|
|
(1,772)
|
|
(35.1) %
|
|
13.5 %
|
|
16.7 %
|
Total Executive
Search
|
43,693
|
|
50,308
|
|
(6,615)
|
|
(13.1) %
|
|
22.9 %
|
|
20.7 %
|
On-Demand
Talent
|
(4,364)
|
|
(582)
|
|
(3,782)
|
|
NM
|
|
(14.0) %
|
|
(2.5) %
|
Heidrick
Consulting
|
(3,116)
|
|
(2,084)
|
|
(1,032)
|
|
(49.5) %
|
|
(17.6) %
|
|
(11.6) %
|
Total
segments
|
36,213
|
|
47,642
|
|
(11,429)
|
|
(24.0) %
|
|
15.1 %
|
|
16.8 %
|
Research and
Development
|
(5,528)
|
|
(4,402)
|
|
(1,126)
|
|
(25.6) %
|
|
(2.3) %
|
|
(1.6) %
|
Global Operations
Support
|
(12,914)
|
|
(13,008)
|
|
94
|
|
0.7 %
|
|
(5.4) %
|
|
(4.6) %
|
Total operating
income
|
$ 17,771
|
|
$ 30,232
|
|
$
(12,461)
|
|
(41.2) %
|
|
7.4 %
|
|
10.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Margin based on revenue
before reimbursements (net revenue).
|
Heidrick &
Struggles International, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
|
|
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
204,691
|
|
$
355,447
|
Marketable
securities
|
—
|
|
266,169
|
Accounts receivable,
net
|
160,092
|
|
126,437
|
Prepaid
expenses
|
31,529
|
|
24,098
|
Other current
assets
|
42,830
|
|
40,722
|
Income taxes
recoverable
|
7,190
|
|
10,946
|
Total current
assets
|
446,332
|
|
823,819
|
|
|
|
|
Non-current
assets
|
|
|
|
Property and equipment,
net
|
32,517
|
|
30,207
|
Operating lease
right-of-use assets
|
69,589
|
|
71,457
|
Assets designated for
retirement and pension plans
|
11,479
|
|
11,332
|
Investments
|
42,547
|
|
34,354
|
Other non-current
assets
|
31,666
|
|
25,788
|
Goodwill
|
197,711
|
|
138,361
|
Other intangible
assets, net
|
25,263
|
|
6,333
|
Deferred income
taxes
|
34,361
|
|
33,987
|
Total non-current
assets
|
445,133
|
|
351,819
|
|
|
|
|
Total
assets
|
$
891,465
|
|
$ 1,175,638
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
16,975
|
|
$
14,613
|
Accrued salaries and
benefits
|
140,056
|
|
451,161
|
Deferred
revenue
|
43,345
|
|
43,057
|
Operating lease
liabilities
|
20,584
|
|
19,554
|
Other current
liabilities
|
33,318
|
|
56,016
|
Income taxes
payable
|
5,896
|
|
4,076
|
Total current
liabilities
|
260,174
|
|
588,477
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Accrued salaries and
benefits
|
48,138
|
|
59,467
|
Retirement and pension
plans
|
56,882
|
|
48,456
|
Operating lease
liabilities
|
60,851
|
|
63,299
|
Other non-current
liabilities
|
36,778
|
|
5,293
|
Deferred income
taxes
|
7,530
|
|
—
|
Total non-current
liabilities
|
210,179
|
|
176,515
|
|
|
|
|
Total
liabilities
|
470,353
|
|
764,992
|
|
|
|
|
Stockholders'
equity
|
421,112
|
|
410,646
|
|
|
|
|
Total liabilities
and stockholders' equity
|
$
891,465
|
|
$ 1,175,638
|
Heidrick &
Struggles International, Inc.
Consolidated Statements of Cash Flows (In thousands)
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2023
|
|
2022
|
Cash flows -
operating activities
|
|
|
|
|
Net income
|
|
$
15,586
|
|
$
18,467
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
3,873
|
|
2,620
|
Deferred income
taxes
|
|
6,669
|
|
(477)
|
Stock-based
compensation expense
|
|
1,853
|
|
3,698
|
Accretion expense
related to earnout payments
|
|
191
|
|
271
|
Gain on marketable
securities
|
|
(1,645)
|
|
—
|
Loss on disposal of
property and equipment
|
|
130
|
|
167
|
Changes in assets and
liabilities, net of effects of acquisition:
|
|
|
|
|
Accounts
receivable
|
|
(24,332)
|
|
(53,142)
|
Accounts
payable
|
|
(1,137)
|
|
(4,156)
|
Accrued
expenses
|
|
(325,975)
|
|
(227,424)
|
Deferred
revenue
|
|
147
|
|
4,137
|
Income taxes
recoverable and payable, net
|
|
(3,083)
|
|
5,028
|
Retirement and pension
plan assets and liabilities
|
|
6,070
|
|
3,497
|
Prepaid
expenses
|
|
(7,135)
|
|
(9,081)
|
Other assets and
liabilities, net
|
|
(8,243)
|
|
(5,801)
|
Net cash used in
operating activities
|
|
(337,031)
|
|
(262,196)
|
|
|
|
|
|
Cash flows -
investing activities
|
|
|
|
|
Acquisition of
business, net of cash acquired
|
|
(29,907)
|
|
—
|
Capital
expenditures
|
|
(3,808)
|
|
(1,804)
|
Purchases of marketable
securities and investments
|
|
(6,172)
|
|
(5,011)
|
Proceeds from sales of
marketable securities and investments
|
|
267,965
|
|
763
|
Net cash provided by
(used in) investing activities
|
|
228,078
|
|
(6,052)
|
|
|
|
|
|
Cash flows -
financing activities
|
|
|
|
|
Cash dividends
paid
|
|
(3,112)
|
|
(3,119)
|
Payment of employee tax
withholdings on equity transactions
|
|
(4,141)
|
|
(3,219)
|
Acquisition earnout
payments
|
|
(35,946)
|
|
—
|
Net cash used in
financing activities
|
|
(43,199)
|
|
(6,338)
|
|
|
|
|
|
Effect of exchange rate
fluctuations on cash, cash equivalents and restricted
cash
|
|
1,396
|
|
(2,671)
|
|
|
|
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
|
(150,756)
|
|
(277,257)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
355,489
|
|
545,259
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$ 204,733
|
|
$ 268,002
|
Heidrick & Struggles International,
Inc.
Reconciliation of Net Income and Operating Income to
Adjusted EBITDA (Non-GAAP)
(In
thousands)
(Unaudited)
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2023
|
|
2022
|
|
Revenue before
reimbursements (net revenue)
|
$
239,317
|
|
$
283,861
|
|
|
|
|
|
|
Net
income
|
15,586
|
|
18,467
|
|
Interest,
net
|
(3,249)
|
|
(110)
|
|
Other, net
|
(1,809)
|
|
2,471
|
|
Provision for income
taxes
|
7,243
|
|
9,404
|
|
Operating
income
|
17,771
|
|
30,232
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Stock-based
compensation expense
|
1,828
|
|
3,675
|
|
Depreciation
|
2,004
|
|
1,808
|
|
Intangible
amortization
|
1,869
|
|
812
|
|
Earnout
accretion
|
191
|
|
271
|
|
Acquisition contingent
consideration
|
1,659
|
|
1,089
|
|
Deferred compensation
plan
|
2,133
|
|
(2,232)
|
|
Total
adjustments
|
9,684
|
|
5,423
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 27,455
|
|
$ 35,655
|
|
Adjusted EBITDA
margin
|
11.5 %
|
|
12.6 %
|
|
Heidrick &
Struggles International, Inc.
Reconciliation of Operating Income to Adjusted EBITDA by Line of
Business (Non-GAAP)
(In thousands)
(Unaudited)
|
|
|
|
Three Months Ended
March 31, 2023
|
|
Executive
Search
|
|
On-Demand
Talent
|
|
Heidrick
Consulting
|
|
Research &
Development
|
|
Global
Operations
Support
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
$
190,487
|
|
$ 31,117
|
|
$ 17,713
|
|
$
—
|
|
$
—
|
|
$
239,317
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)1
|
43,693
|
|
(4,364)
|
|
(3,116)
|
|
(5,528)
|
|
(12,914)
|
|
17,771
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
617
|
|
6
|
|
75
|
|
65
|
|
1,065
|
|
1,828
|
Depreciation
|
1,343
|
|
85
|
|
168
|
|
248
|
|
160
|
|
2,004
|
Intangible
amortization
|
52
|
|
1,717
|
|
100
|
|
—
|
|
—
|
|
1,869
|
Earnout
accretion
|
—
|
|
191
|
|
—
|
|
—
|
|
—
|
|
191
|
Acquisition contingent
compensation
|
635
|
|
1,024
|
|
—
|
|
—
|
|
—
|
|
1,659
|
Deferred compensation
plan
|
2,049
|
|
—
|
|
53
|
|
29
|
|
2
|
|
2,133
|
Total
adjustments
|
4,696
|
|
3,023
|
|
396
|
|
342
|
|
1,227
|
|
9,684
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 48,389
|
|
$
(1,341)
|
|
$
(2,720)
|
|
$
(5,186)
|
|
$ (11,687)
|
|
$ 27,455
|
Adjusted EBITDA
margin
|
25.4 %
|
|
(4.3) %
|
|
(15.4) %
|
|
(2.2) %
|
|
(4.9) %
|
|
11.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2022
|
|
Executive
Search
|
|
On-Demand
Talent
|
|
Heidrick
Consulting
|
|
Research &
Development
|
|
Global
Operations
Support
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
$
242,549
|
|
$ 23,381
|
|
$ 17,931
|
|
$
—
|
|
$
—
|
|
$
283,861
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)1
|
50,308
|
|
(582)
|
|
(2,084)
|
|
(4,402)
|
|
(13,008)
|
|
30,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
1,070
|
|
6
|
|
109
|
|
33
|
|
2,457
|
|
3,675
|
Depreciation
|
1,492
|
|
22
|
|
133
|
|
46
|
|
115
|
|
1,808
|
Intangible
amortization
|
83
|
|
629
|
|
100
|
|
—
|
|
—
|
|
812
|
Earnout
accretion
|
—
|
|
271
|
|
—
|
|
—
|
|
—
|
|
271
|
Acquisition contingent
compensation
|
1,089
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,089
|
Deferred compensation
plan
|
(2,144)
|
|
—
|
|
(63)
|
|
(25)
|
|
—
|
|
(2,232)
|
Total
adjustments
|
1,590
|
|
928
|
|
279
|
|
54
|
|
2,572
|
|
5,423
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 51,898
|
|
$
346
|
|
$
(1,805)
|
|
$
(4,348)
|
|
$ (10,436)
|
|
$ 35,655
|
Adjusted EBITDA
margin
|
21.4 %
|
|
1.5 %
|
|
(10.1) %
|
|
(1.5) %
|
|
(3.7) %
|
|
12.6 %
|
1
|
The Company does not
allocate interest income or expense, other income or expense, and
the provision for income taxes to the Company's reportable
operating segments. As such, the Company has concluded that
operating income (loss) represents the most directly comparable
measure of financial performance presented in accordance with U.S.
GAAP for the reconciliation of Adjusted EBITDA in this
presentation.
|
View original
content:https://www.prnewswire.com/news-releases/heidrick--struggles-reports-first-quarter-2023-results-301805896.html
SOURCE Heidrick & Struggles International, Inc.