13% Sequential Revenue Growth Including 10%
Organic
Maintains Strong Balance Sheet
Post-Acquisitions of Atreus and businessfourzero
CHICAGO, July 31,
2023 /PRNewswire/ -- Today Heidrick & Struggles
International, Inc. (Nasdaq: HSII) ("Heidrick & Struggles",
"Heidrick" or the "Company") announced financial results for its
second quarter ended June 30,
2023.
Second Quarter Highlights:
- Net revenue of $271.2 million
increased 13% sequentially, 10% organically
- Operating income of $13.6 million
decreased $4.2 million sequentially
and operating margin was 5.0%
- Adjusted operating income of $20.8
million increased 17% sequentially and adjusted operating
margin was 7.7%
- Adjusted EBITDA of $36.4 million
increased 33% sequentially and adjusted EBITDA margin was
13.4%
- Net income was $9.0 million and
diluted earnings per share was $0.44;
adjusted net income was $15.0 million
and adjusted diluted earnings per share was $0.73
"We are very pleased with the second quarter results which
included the first full quarter of results from our recent
acquisition of Atreus Group ("Atreus") in our On-Demand Talent
segment, as well as the results from businessfourzero ("B4Z") in
our Heidrick Consulting segment. Even before the positive
effects of these acquisitions, each of our lines of business
demonstrated organic sequential growth, despite ongoing macro
uncertainty and an anticipated return to more normalized levels of
business performance. This validates our focus on the steadfast
execution of our strategy while maintaining strong profitability,"
stated Heidrick & Struggles' President and Chief Executive
Officer, Krishnan Rajagopalan.
"Importantly, the integrations of both our recent acquisitions are
progressing smoothly. We are advancing our diversification strategy
while continuing to make appropriate investments in our digital
capabilities and technologies throughout the company. These
initiatives are aimed at providing our clients with the next
generation of talent and leadership advisory services, enabling
them to achieve higher performance through their leaders and teams
in an ever-evolving business landscape."
2023 Second Quarter Results
Consolidated net revenue of $271.2
million compared to record consolidated net revenue of
$298.7 million in the 2022 second
quarter. Consolidated financial results include the first
full quarter of contribution from the Company's recent acquisitions
of Atreus and B4Z.
On a sequential basis, 2023 second quarter net revenue increased
13.3% from the 2023 first quarter, 10% of that growth was organic,
as the Company experienced growth in Executive Search driven by the
Americas and Europe markets,
partially offset by a decline in the Asia
Pacific market, along with sequential revenue growth in
Heidrick Consulting and On-Demand Talent. 2023 second quarter
adjusted operating income increased 17.2% and adjusted operating
margin increased 30 basis points to 7.7% compared to 7.4% in the
2023 first quarter. Adjusted EBITDA of $36.4
million in the 2023 second quarter increased 33%
sequentially and adjusted EBITDA margin increased 190 basis points
to 13.4% compared to 11.5% in the 2023 first quarter. 2023
second quarter adjusted net income was $15.0
million compared to $15.6
million in the 2023 first quarter. This generated adjusted
diluted earnings per share in the 2023 second quarter of
$0.73 compared to $0.76 in the 2023 first quarter.
Executive Search net revenue of $206.8 million compared to net revenue of
$253.9 million in the 2022 second
quarter reflecting an anticipated market slowdown combined with a
return to more normalized operating levels. Excluding the impact of
exchange rate fluctuations, which negatively impacted results by
0.3%, or $0.8 million, net revenue
decreased 18.2%, or $46.3 million,
from the 2022 second quarter. Net revenue decreased 21.3% in the
Americas (down 21.2% on a constant currency basis), decreased 5.3%
in Europe (down 6.1% on a constant
currency basis), and decreased 23.9% in Asia Pacific (down 20.5% on a constant
currency basis) when compared to the prior year second quarter. The
Social Impact and Industrial practice groups exhibited growth over
the prior year.
The Company had 423 Executive Search consultants at June 30, 2023, compared to 388 at June 30, 2022. Productivity, as measured by
annualized Executive Search net revenue per consultant, was
$1.9 million compared to $2.6 million in the 2022 second quarter,
reflecting a higher number of consultants combined with lower
revenue. Average revenue per executive search was
approximately $143,000 compared to
$153,000 in the prior year
period. The number of search confirmations decreased 12.7%
compared to the year-ago period.
On-Demand Talent net revenue of $39.2 million, an increase of 75.5% compared to
net revenue of $22.4 million in the
2022 second quarter, primarily due to the acquisition of Atreus,
partially offset by a decrease in the volume of legacy on-demand
projects.
Heidrick Consulting net revenue of $25.2 million compared to net revenue of
$22.4 million in the 2022 second
quarter. The Company had 89 Heidrick Consulting consultants at
June 30, 2023, compared to 66 at
June 30, 2022.
Consolidated salaries and benefits decreased $28.8 million, or 13.9%, to $178.9 million compared to $207.7 million in the 2022 second quarter.
Year-over-year, fixed compensation expense increased $18.8 million due to base salaries and payroll
taxes, the deferred compensation plan, reorganization, and
retirement and benefits, as well as the acquisitions of Atreus and
B4Z, partially offset by a decrease in stock compensation. Variable
compensation decreased $47.6 million
due to lower bonus accruals related to decreased consultant
productivity. Salaries and benefits expense was 66.0% of net
revenue for the quarter compared to 69.5% in the 2022 second
quarter.
General and administrative expenses increased $5.3 million, or 15.1%, to $40.5 million compared to $35.2 million in the 2022 second quarter. The
increase was due to intangible amortization and accretion, office
occupancy, IT, and taxes and licenses, partially offset by a
decrease in business development travel. As a percentage of net
revenue, general and administrative expenses were 14.9% for the
2023 second quarter compared to 11.8% in the 2022 second
quarter.
The Company's cost of services was $25.3
million, or 9.3% of net revenue for the quarter, compared to
$17.4 million, or 5.8% of net revenue
in the 2022 second quarter. This related to an increase in the
volume of On-Demand Talent projects driven by the acquisition of
Atreus.
The Company's research and development expenses were
$5.7 million, or 2.1%, of net revenue
for the quarter compared to $4.5
million, or 1.5%, of net revenue for the second quarter
2022.
In the 2023 second quarter, the Company recorded a non-cash
goodwill impairment charge of $7.2
million associated with the Company's Heidrick Consulting
segment. In the 2022 fourth quarter, the Company conducted its most
recent annual goodwill impairment evaluation, which indicated that
the carrying value of the Heidrick Consulting reporting unit was
less than its fair value. During the 2023 second quarter, the
Company acquired B4Z and recorded approximately $7.1 million of goodwill in the Heidrick
Consulting reporting unit. Due to the inclusion of goodwill in a
reporting unit with a pre-existing fair value shortfall, the
Company identified a triggering event and performed an interim
goodwill impairment evaluation during the 2023 second quarter,
which resulted in the impairment of the recently acquired B4Z
goodwill.
Including the previously mentioned non-cash impairment charge,
operating income was $13.6 million
for the quarter compared to $33.9
million in the 2022 second quarter. Operating income margin
was 5.0% versus 11.3% in the 2022 second quarter. Excluding
the non-cash impairment charge, adjusted operating income in the
2023 second quarter was $20.8 million
and adjusted operating margin was 7.7%.
Adjusted EBITDA was $36.4 million
compared to $36.8 million in the 2022
second quarter. Adjusted EBITDA margin was 13.4%, compared to 12.3%
in the 2022 second quarter. In Executive Search, adjusted EBITDA
was $53.9 million compared to
$52.3 million in the prior year
period. In On-Demand Talent, adjusted EBITDA was $2.6 million versus $0.6
million in the prior year period. In Heidrick
Consulting, adjusted EBITDA was a loss of $1.6 million compared to a loss of $0.1 million in the prior year period.
Net income was $9.0 million and
diluted earnings per share was $0.44,
with an effective tax rate of 46.8%. This compares to net income of
$24.1 million and diluted earnings
per share of $1.19, with an effective
tax rate of 30.9% in the 2022 second quarter. Excluding the
non-cash impairment charge recorded in the 2023 second quarter,
adjusted net income was $15.0 million
and adjusted diluted earnings per share was $0.73, with an adjusted effective tax rate of
37.7%.
Net cash provided by operating activities was $46.9 million, compared to $82.7 million in the 2022 second quarter. Cash,
cash equivalents and marketable securities at June 30, 2023 was $239.0
million compared to $336.6
million at June 30, 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.
2023 Six Months Results
For the six months ended June 30,
2023, consolidated net revenue was $510.5 million compared to $582.6 million in the first six months of
2022. Excluding the impact of exchange rate fluctuations, which
negatively impacted results by 1.0%, or $6.1
million, consolidated net revenue decreased 11.3%, or
$65.9 million, compared to the prior
year period.
Executive Search net revenue in the first six months of 2023
decreased 20.0%, or $99.2 million, to
$397.3 million from $496.5 million in the first six months of 2022.
Excluding the impact of exchange rate fluctuations, which
negatively impacted results by 1.0%, or $5.1
million, net revenue decreased 19.0%, or $94.1 million. Net revenue decreased 21.5% in the
Americas (decreased 21.3% on a constant currency basis), decreased
13.7% in Europe (decreased 11.3%
on a constant currency basis), and decreased 21.9% in Asia Pacific (decreased 18.0% on a constant
currency basis). Only the Social Impact and Industrial practice
groups exhibited growth over the prior year. Productivity was
$1.9 million for the first six months
of 2023 compared to $2.6 million in
the first six months of 2022. The average revenue per executive
search was $133,000 in the first six
months of 2023 compared to $137,000
the same period in 2022, while search confirmations decreased
17.6%.
On-Demand Talent net revenue in the first six months of 2023 was
$70.4 million compared to
$45.7 million in the same period of
2022. The increase in net revenue was primarily driven by the
acquisition of Atreus, as well as an increase in the volume of
legacy on-demand projects.
Heidrick Consulting net revenue in the first six months of 2023
increased 6.3%, or $2.5 million, to
$42.9 million from $40.4 million
in the first six months of 2022. Excluding the impact of exchange
rate fluctuations, which negatively impacted results by 2.0%, or
$0.8 million, Heidrick Consulting
revenue increased 8.3%, or $3.3
million, compared to the prior year period.
Operating income for the first six months of 2023 was
$31.4 million compared to operating
income of $64.1 million in the same
period of 2022. The operating income margin was 6.1% compared to
11.0% in the first six months of 2022. Excluding the non-cash
impairment charge recorded in the 2023 year-to-date period,
adjusted operating income was $38.6
million and adjusted operating income margin was 7.6%.
Adjusted EBITDA for the first six months of 2023 was
$63.8 million and adjusted EBITDA
margin was 12.5%, compared to adjusted EBITDA of $72.5 million and adjusted EBITDA margin of 12.4%
for the same period in 2022. In Executive Search, adjusted
EBITDA was $102.3 million compared to
$104.2 million in the prior year
period. In On-Demand Talent, adjusted EBITDA was $1.2 million versus $0.9
million in the prior year period. In Heidrick
Consulting, adjusted EBITDA was a loss of $4.3 million compared to a loss of $1.9 million in the prior year period.
Net income for the first six months of 2023 was $24.6 million and diluted earnings per share was
$1.19, with an effective tax rate of
38.1%. This compares to net income of $42.6
million and diluted earnings per share of $2.08, with an effective tax rate of 32.2%, in
the first six months of 2022. Excluding the restructuring charge
recorded in the 2023 year-to-date period, adjusted net income was
$30.6 million and adjusted diluted
earnings per share was $1.48 with an
adjusted effective tax rate of 34.8%.
Dividend
The Board of Directors declared a 2023 second quarter cash
dividend of $0.15 per share payable
on August 25, 2023, to shareholders
of record at the close of business on August
11, 2023.
2023 Third Quarter Outlook
The Company expects 2023 third quarter consolidated net revenue
of between $245 million and
$265 million, which reflects typical
summer seasonality, 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
June 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 second quarter results today, July 31,
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 operating income, adjusted operating income margin,
adjusted net income, adjusted diluted earnings per share, adjusted
effective tax rate, 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 operating income reflects the exclusion of goodwill
impairment.
Adjusted operating income margin refers to adjusted operating
income as a percentage of net revenue in the same period.
Adjusted net income and adjusted diluted earnings per share
reflect the exclusion of goodwill impairment, net of tax.
Adjusted effective tax rate reflects the exclusion of goodwill
impairment, net of tax.
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, reorganization
costs, impairment charges, 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 third 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," "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
June
30,
|
|
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
$
271,225
|
|
$
298,701
|
|
$ (27,476)
|
|
(9.2) %
|
Reimbursements
|
2,552
|
|
2,408
|
|
144
|
|
6.0 %
|
Total
revenue
|
273,777
|
|
301,109
|
|
(27,332)
|
|
(9.1) %
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Salaries and
benefits
|
178,916
|
|
207,684
|
|
(28,768)
|
|
(13.9) %
|
General and
administrative expenses
|
40,514
|
|
35,203
|
|
5,311
|
|
15.1 %
|
Cost of
services
|
25,306
|
|
17,403
|
|
7,903
|
|
45.4 %
|
Research and
development
|
5,658
|
|
4,545
|
|
1,113
|
|
24.5 %
|
Impairment
charges
|
7,246
|
|
—
|
|
7,246
|
|
100.0 %
|
Reimbursed
expenses
|
2,552
|
|
2,408
|
|
144
|
|
6.0 %
|
Total operating
expenses
|
260,192
|
|
267,243
|
|
(7,051)
|
|
(2.6) %
|
|
|
|
|
|
|
|
|
Operating
income
|
13,585
|
|
33,866
|
|
(20,281)
|
|
(59.9) %
|
|
|
|
|
|
|
|
|
Non-operating
income
|
|
|
|
|
|
|
|
Interest,
net
|
1,913
|
|
299
|
|
|
|
|
Other, net
|
1,377
|
|
774
|
|
|
|
|
Net
non-operating income
|
3,290
|
|
1,073
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
16,875
|
|
34,939
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
7,893
|
|
10,790
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
8,982
|
|
24,149
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss, net of tax
|
(75)
|
|
(7,524)
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
8,907
|
|
$ 16,625
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
20,010
|
|
19,726
|
|
|
|
|
Diluted
|
20,637
|
|
20,314
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
0.45
|
|
$
1.22
|
|
|
|
|
Diluted
|
$
0.44
|
|
$
1.19
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
as a % of net revenue
|
66.0 %
|
|
69.5 %
|
|
|
|
|
General and
administrative expenses as a % of net revenue
|
14.9 %
|
|
11.8 %
|
|
|
|
|
Cost of services as a %
of net revenue
|
9.3 %
|
|
5.8 %
|
|
|
|
|
Research and
development as a % of net revenue
|
2.1 %
|
|
1.5 %
|
|
|
|
|
Operating
margin
|
5.0 %
|
|
11.3 %
|
|
|
|
|
Heidrick & Struggles International,
Inc.
Segment Information
(In
thousands)
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
2023
Margin1
|
|
2022
Margin1
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$ 138,563
|
|
$ 176,020
|
|
$
(37,457)
|
|
(21.3) %
|
|
|
|
|
Europe
|
45,567
|
|
48,131
|
|
(2,564)
|
|
(5.3) %
|
|
|
|
|
Asia
Pacific
|
22,649
|
|
29,758
|
|
(7,109)
|
|
(23.9) %
|
|
|
|
|
Total Executive
Search
|
206,779
|
|
253,909
|
|
(47,130)
|
|
(18.6) %
|
|
|
|
|
On-Demand
Talent
|
39,240
|
|
22,353
|
|
16,887
|
|
75.5 %
|
|
|
|
|
Heidrick
Consulting
|
25,206
|
|
22,439
|
|
2,767
|
|
12.3 %
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
271,225
|
|
298,701
|
|
(27,476)
|
|
(9.2) %
|
|
|
|
|
Reimbursements
|
2,552
|
|
2,408
|
|
144
|
|
6.0 %
|
|
|
|
|
Total
revenue
|
$ 273,777
|
|
$ 301,109
|
|
$
(27,332)
|
|
(9.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$ 43,144
|
|
$ 44,250
|
|
$
(1,106)
|
|
(2.5) %
|
|
31.1 %
|
|
25.1 %
|
Europe
|
2,432
|
|
4,606
|
|
(2,174)
|
|
(47.2) %
|
|
5.3 %
|
|
9.6 %
|
Asia
Pacific
|
1,364
|
|
3,912
|
|
(2,548)
|
|
(65.1) %
|
|
6.0 %
|
|
13.1 %
|
Total Executive
Search
|
46,940
|
|
52,768
|
|
(5,828)
|
|
(11.0) %
|
|
22.7 %
|
|
20.8 %
|
On-Demand
Talent
|
(2,862)
|
|
(349)
|
|
(2,513)
|
|
NM
|
|
(7.3) %
|
|
(1.6) %
|
Heidrick
Consulting2
|
(10,686)
|
|
(408)
|
|
(10,278)
|
|
NM
|
|
(42.4) %
|
|
(1.8) %
|
Total
segments
|
33,392
|
|
52,011
|
|
(18,619)
|
|
(35.8) %
|
|
12.3 %
|
|
17.4 %
|
Research and
Development
|
(5,658)
|
|
(4,545)
|
|
(1,113)
|
|
(24.5) %
|
|
(2.1) %
|
|
(1.5) %
|
Global
Operations Support
|
(14,149)
|
|
(13,600)
|
|
(549)
|
|
(4.0) %
|
|
(5.2) %
|
|
(4.6) %
|
Total operating
income
|
$ 13,585
|
|
$ 33,866
|
|
$
(20,281)
|
|
(59.9) %
|
|
5.0 %
|
|
11.3 %
|
|
1 Margin based on revenue
before reimbursements (net revenue).
|
2 Includes impairment charges
of $7.2 million for the three months ended June 30,
2023.
|
Heidrick & Struggles International,
Inc.
Consolidated Statements of Comprehensive
Income
(In thousands, except
per share amounts)
(Unaudited)
|
|
|
Six Months
Ended
June
30,
|
|
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
$
510,542
|
|
$
582,562
|
|
$ (72,020)
|
|
(12.4) %
|
Reimbursements
|
5,354
|
|
4,084
|
|
1,270
|
|
31.1 %
|
Total
revenue
|
515,896
|
|
586,646
|
|
(70,750)
|
|
(12.1) %
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Salaries and
benefits
|
337,775
|
|
409,129
|
|
(71,354)
|
|
(17.4) %
|
General and
administrative expenses
|
74,841
|
|
64,997
|
|
9,844
|
|
15.1 %
|
Cost of
services
|
48,138
|
|
35,391
|
|
12,747
|
|
36.0 %
|
Research and
development
|
11,186
|
|
8,947
|
|
2,239
|
|
25.0 %
|
Impairment
charges
|
7,246
|
|
—
|
|
7,246
|
|
100.0 %
|
Reimbursed
expenses
|
5,354
|
|
4,084
|
|
1,270
|
|
31.1 %
|
Total operating
expenses
|
484,540
|
|
522,548
|
|
(38,008)
|
|
(7.3) %
|
|
|
|
|
|
|
|
|
Operating
income
|
31,356
|
|
64,098
|
|
(32,742)
|
|
(51.1) %
|
|
|
|
|
|
|
|
|
Non-operating income
(expense)
|
|
|
|
|
|
|
|
Interest,
net
|
5,162
|
|
409
|
|
|
|
|
Other, net
|
3,186
|
|
(1,697)
|
|
|
|
|
Net
non-operating income (expense)
|
8,348
|
|
(1,288)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
39,704
|
|
62,810
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
15,136
|
|
20,194
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
24,568
|
|
42,616
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of tax
|
368
|
|
(8,606)
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$ 24,936
|
|
$ 34,010
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
19,958
|
|
19,675
|
|
|
|
|
Diluted
|
20,701
|
|
20,485
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
1.23
|
|
$
2.17
|
|
|
|
|
Diluted
|
$
1.19
|
|
$
2.08
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
as a % of net revenue
|
66.2 %
|
|
70.2 %
|
|
|
|
|
General and
administrative expenses as a % of net revenue
|
14.7 %
|
|
11.2 %
|
|
|
|
|
Cost of services as a %
of net revenue
|
9.4 %
|
|
6.1 %
|
|
|
|
|
Research and
development as a % of net revenue
|
2.2 %
|
|
1.5 %
|
|
|
|
|
Operating
margin
|
6.1 %
|
|
11.0 %
|
|
|
|
|
Heidrick & Struggles International,
Inc.
Segment Information
(In
thousands)
(Unaudited)
|
|
|
Six Months Ended
June 30,
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
2023
Margin1
|
|
2022
Margin1
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
265,890
|
|
$
338,573
|
|
$
(72,683)
|
|
(21.5) %
|
|
|
|
|
Europe
|
84,498
|
|
97,876
|
|
(13,378)
|
|
(13.7) %
|
|
|
|
|
Asia
Pacific
|
46,878
|
|
60,009
|
|
(13,131)
|
|
(21.9) %
|
|
|
|
|
Total Executive
Search
|
397,266
|
|
496,458
|
|
(99,192)
|
|
(20.0) %
|
|
|
|
|
On-Demand
Talent
|
70,357
|
|
45,734
|
|
24,623
|
|
53.8 %
|
|
|
|
|
Heidrick
Consulting
|
42,919
|
|
40,370
|
|
2,549
|
|
6.3 %
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
510,542
|
|
582,562
|
|
(72,020)
|
|
(12.4) %
|
|
|
|
|
Reimbursements
|
5,354
|
|
4,084
|
|
1,270
|
|
31.1 %
|
|
|
|
|
Total
revenue
|
$
515,896
|
|
$
586,646
|
|
$
(70,750)
|
|
(12.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$ 81,843
|
|
$ 84,101
|
|
$
(2,258)
|
|
(2.7) %
|
|
30.8 %
|
|
24.8 %
|
Europe
|
4,144
|
|
10,009
|
|
(5,865)
|
|
(58.6) %
|
|
4.9 %
|
|
10.2 %
|
Asia
Pacific
|
4,646
|
|
8,966
|
|
(4,320)
|
|
(48.2) %
|
|
9.9 %
|
|
14.9 %
|
Total Executive
Search
|
90,633
|
|
103,076
|
|
(12,443)
|
|
(12.1) %
|
|
22.8 %
|
|
20.8 %
|
On-Demand
Talent
|
(7,226)
|
|
(931)
|
|
(6,295)
|
|
NM
|
|
(10.3) %
|
|
(2.0) %
|
Heidrick
Consulting2
|
(13,802)
|
|
(2,492)
|
|
(11,310)
|
|
NM
|
|
(32.2) %
|
|
(6.2) %
|
Total
segments
|
69,605
|
|
99,653
|
|
(30,048)
|
|
(30.2) %
|
|
13.6 %
|
|
17.1 %
|
Research and
Development
|
(11,186)
|
|
(8,947)
|
|
(2,239)
|
|
(25.0) %
|
|
(2.2) %
|
|
(1.5) %
|
Global
Operations Support
|
(27,063)
|
|
(26,608)
|
|
(455)
|
|
(1.7) %
|
|
(5.3) %
|
|
(4.6) %
|
Total operating
income
|
$ 31,356
|
|
$ 64,098
|
|
$
(32,742)
|
|
(51.1) %
|
|
6.1 %
|
|
11.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Margin based on revenue
before reimbursements (net revenue).
|
2 Includes impairment charges
of $7.2 million for the six months ended June 30,
2023.
|
Heidrick & Struggles International,
Inc.
Reconciliation of Net Income and Adjusted Net Income
(Non-GAAP)
(In thousands, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
income
|
$
8,982
|
|
$
24,149
|
|
$
24,568
|
|
$
42,616
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
Impairment charges, net
of tax1
|
6,038
|
|
—
|
|
6,038
|
|
—
|
Total
adjustments
|
6,038
|
|
—
|
|
6,038
|
|
—
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
$
15,020
|
|
$
24,149
|
|
$
30,606
|
|
$
42,616
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
20,010
|
|
19,726
|
|
19,958
|
|
19,675
|
Diluted
|
20,637
|
|
20,314
|
|
20,701
|
|
20,485
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
0.45
|
|
$
1.22
|
|
$
1.23
|
|
$
2.17
|
Diluted
|
$
0.44
|
|
$
1.19
|
|
$
1.19
|
|
$
2.08
|
|
|
|
|
|
|
|
|
Adjusted earnings
per common share
|
|
|
|
|
|
|
|
Basic
|
$
0.75
|
|
$
1.22
|
|
$
1.53
|
|
$
2.17
|
Diluted
|
$
0.73
|
|
$
1.19
|
|
$
1.48
|
|
$
2.08
|
|
|
1
|
The Company recorded a
goodwill impairment charge of $7.2 million in the Heidrick
Consulting segment for the three and six months ended June 30,
2023.
|
Heidrick & Struggles International,
Inc.
Consolidated Balance Sheets
(In
thousands)
(Unaudited)
|
|
|
June 30,
2023
|
|
December 31,
2022
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
217,776
|
|
$
355,447
|
Marketable
securities
|
21,240
|
|
266,169
|
Accounts receivable,
net
|
197,899
|
|
126,437
|
Prepaid
expenses
|
27,401
|
|
24,098
|
Other current
assets
|
50,622
|
|
40,722
|
Income taxes
recoverable
|
8,397
|
|
10,946
|
Total current
assets
|
523,335
|
|
823,819
|
|
|
|
|
Non-current
assets
|
|
|
|
Property and equipment,
net
|
33,330
|
|
30,207
|
Operating lease
right-of-use assets
|
69,692
|
|
71,457
|
Assets designated for
retirement and pension plans
|
11,552
|
|
11,332
|
Investments
|
44,357
|
|
34,354
|
Other non-current
assets
|
22,082
|
|
25,788
|
Goodwill
|
198,639
|
|
138,361
|
Other intangible
assets, net
|
26,903
|
|
6,333
|
Deferred income
taxes
|
34,565
|
|
33,987
|
Total
non-current assets
|
441,120
|
|
351,819
|
|
|
|
|
Total
assets
|
$
964,455
|
|
$ 1,175,638
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
15,477
|
|
$
14,613
|
Accrued salaries and
benefits
|
193,858
|
|
451,161
|
Deferred
revenue
|
44,102
|
|
43,057
|
Operating lease
liabilities
|
21,221
|
|
19,554
|
Other current
liabilities
|
36,017
|
|
56,016
|
Income taxes
payable
|
8,118
|
|
4,076
|
Total current
liabilities
|
318,793
|
|
588,477
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Accrued salaries and
benefits
|
48,444
|
|
59,467
|
Retirement and pension
plans
|
58,951
|
|
48,456
|
Operating lease
liabilities
|
60,326
|
|
63,299
|
Other non-current
liabilities
|
42,005
|
|
5,293
|
Deferred income
taxes
|
7,619
|
|
—
|
Total
non-current liabilities
|
217,345
|
|
176,515
|
|
|
|
|
Total
liabilities
|
536,138
|
|
764,992
|
|
|
|
|
Stockholders'
equity
|
428,317
|
|
410,646
|
|
|
|
|
Total liabilities
and stockholders' equity
|
$
964,455
|
|
$ 1,175,638
|
Heidrick & Struggles International,
Inc.
Consolidated Statements of Cash
Flows
(In
thousands)
(Unaudited)
|
|
|
|
Three Months
Ended
June
30,
|
|
|
2023
|
|
2022
|
Cash flows -
operating activities
|
|
|
|
|
Net income
|
|
$
8,982
|
|
$
24,149
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
4,819
|
|
2,621
|
Deferred income
taxes
|
|
(223)
|
|
231
|
Stock-based
compensation expense
|
|
1,919
|
|
3,784
|
Accretion
expense related to earnout payments
|
|
451
|
|
274
|
Gain on
marketable securities
|
|
(49)
|
|
—
|
Loss on disposal
of property and equipment
|
|
1
|
|
142
|
Impairment
charges
|
|
7,246
|
|
—
|
Changes in
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
|
(35,658)
|
|
(31,641)
|
Accounts
payable
|
|
(1,777)
|
|
212
|
Accrued
expenses
|
|
52,164
|
|
103,143
|
Deferred
revenue
|
|
396
|
|
(5,664)
|
Income taxes
recoverable and payable, net
|
|
495
|
|
(13,142)
|
Retirement and pension
plan assets and liabilities
|
|
333
|
|
(200)
|
Prepaid
expenses
|
|
4,500
|
|
4,411
|
Other assets and
liabilities, net
|
|
3,341
|
|
(5,636)
|
Net cash provided by
operating activities
|
|
46,940
|
|
82,684
|
|
|
|
|
|
Cash flows -
investing activities
|
|
|
|
|
Acquisition of
business, net of cash acquired
|
|
(5,842)
|
|
—
|
Capital
expenditures
|
|
(3,006)
|
|
(2,432)
|
Purchases of marketable
securities and investments
|
|
(21,511)
|
|
(347)
|
Proceeds from sales of
marketable securities and investments
|
|
153
|
|
227
|
Net cash used in
investing activities
|
|
(30,206)
|
|
(2,552)
|
|
|
|
|
|
Cash flows -
financing activities
|
|
|
|
|
Repurchases of common
stock
|
|
(904)
|
|
—
|
Cash dividends
paid
|
|
(3,122)
|
|
(3,104)
|
Net cash used in
financing activities
|
|
(4,026)
|
|
(3,104)
|
|
|
|
|
|
Effect of exchange rate
fluctuations on cash, cash equivalents and restricted
cash
|
|
376
|
|
(8,380)
|
|
|
|
|
|
Net increase in cash,
cash equivalents and restricted cash
|
|
13,084
|
|
68,648
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
204,733
|
|
268,002
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
217,817
|
|
$
336,650
|
|
|
|
|
|
Heidrick & Struggles International,
Inc.
Consolidated Statements of Cash
Flows
(In
thousands)
(Unaudited)
|
|
|
|
Six Months
Ended
June
30,
|
|
|
2023
|
|
2022
|
Cash flows -
operating activities
|
|
|
|
|
Net income
|
|
$
24,568
|
|
$
42,616
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
8,692
|
|
5,241
|
Deferred income
taxes
|
|
6,446
|
|
(246)
|
Stock-based
compensation expense
|
|
3,772
|
|
7,482
|
Accretion
expense related to earnout payments
|
|
642
|
|
545
|
Gain on
marketable securities
|
|
(1,694)
|
|
—
|
Loss on disposal
of property and equipment
|
|
131
|
|
309
|
Impairment
charges
|
|
7,246
|
|
—
|
Changes in
assets and liabilities, net of effects of acquisition:
|
|
|
|
|
Accounts
receivable
|
|
(59,990)
|
|
(84,783)
|
Accounts
payable
|
|
(2,914)
|
|
(3,944)
|
Accrued
expenses
|
|
(273,811)
|
|
(124,281)
|
Deferred
revenue
|
|
543
|
|
(1,527)
|
Income taxes
recoverable and payable, net
|
|
(2,588)
|
|
(8,114)
|
Retirement and pension
plan assets and liabilities
|
|
6,403
|
|
3,297
|
Prepaid
expenses
|
|
(2,635)
|
|
(4,670)
|
Other assets and
liabilities, net
|
|
(4,902)
|
|
(11,437)
|
Net cash used in
operating activities
|
|
(290,091)
|
|
(179,512)
|
|
|
|
|
|
Cash flows -
investing activities
|
|
|
|
|
Acquisition of
businesses, net of cash acquired
|
|
(35,749)
|
|
—
|
Capital
expenditures
|
|
(6,814)
|
|
(4,236)
|
Purchases of marketable
securities and investments
|
|
(27,683)
|
|
(5,358)
|
Proceeds from sales of
marketable securities and investments
|
|
268,118
|
|
990
|
Net cash provided by
(used in) investing activities
|
|
197,872
|
|
(8,604)
|
|
|
|
|
|
Cash flows -
financing activities
|
|
|
|
|
Repurchases of common
stock
|
|
(904)
|
|
—
|
Cash dividends
paid
|
|
(6,234)
|
|
(6,223)
|
Payment of employee tax
withholdings on equity transactions
|
|
(4,141)
|
|
(3,219)
|
Acquisition earnout
payments
|
|
(35,946)
|
|
—
|
Net cash used in
financing activities
|
|
(47,225)
|
|
(9,442)
|
|
|
|
|
|
Effect of exchange rate
fluctuations on cash, cash equivalents and restricted
cash
|
|
1,772
|
|
(11,051)
|
|
|
|
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
|
(137,672)
|
|
(208,609)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
355,489
|
|
545,259
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$ 217,817
|
|
$ 336,650
|
Heidrick & Struggles International,
Inc.
Reconciliation of Net Income and Operating Income to
Adjusted EBITDA (Non-GAAP)
(In
thousands)
(Unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue before
reimbursements (net
revenue)
|
$
271,225
|
|
$
298,701
|
|
$
510,542
|
|
$
582,562
|
|
|
|
|
|
|
|
|
Net
income
|
8,982
|
|
24,149
|
|
24,568
|
|
42,616
|
Interest,
net
|
(1,913)
|
|
(299)
|
|
(5,162)
|
|
(409)
|
Other, net
|
(1,377)
|
|
(774)
|
|
(3,186)
|
|
1,697
|
Provision for income
taxes
|
7,893
|
|
10,790
|
|
15,136
|
|
20,194
|
Operating
income
|
13,585
|
|
33,866
|
|
31,356
|
|
64,098
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
1,499
|
|
3,351
|
|
3,327
|
|
7,026
|
Depreciation
|
2,172
|
|
1,810
|
|
4,176
|
|
3,618
|
Intangible
amortization
|
2,647
|
|
810
|
|
4,516
|
|
1,622
|
Earnout
accretion
|
451
|
|
273
|
|
642
|
|
544
|
Acquisition contingent
consideration
|
3,784
|
|
971
|
|
5,443
|
|
2,060
|
Deferred compensation
plan
|
1,603
|
|
(4,255)
|
|
3,736
|
|
(6,487)
|
Reorganization
costs
|
3,396
|
|
—
|
|
3,396
|
|
—
|
Impairment
charges
|
7,246
|
|
—
|
|
7,246
|
|
—
|
Total
adjustments
|
22,798
|
|
2,960
|
|
32,482
|
|
8,383
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 36,383
|
|
$ 36,826
|
|
$ 63,838
|
|
$ 72,481
|
Adjusted EBITDA
margin
|
13.4 %
|
|
12.3 %
|
|
12.5 %
|
|
12.4 %
|
Heidrick & Struggles International,
Inc.
Reconciliation of Operating Income to Adjusted EBITDA
by Line of Business (Non-GAAP)
(In
thousands)
(Unaudited)
|
|
|
Three Months Ended
June 30, 2023
|
|
Executive
Search
|
|
On-Demand
Talent
|
|
Heidrick
Consulting
|
|
Research &
Development
|
|
Global
Operations
Support
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net
revenue)
|
$
206,779
|
|
$ 39,240
|
|
$ 25,206
|
|
$
—
|
|
$
—
|
|
$
271,225
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)1
|
46,940
|
|
(2,862)
|
|
(10,686)
|
|
(5,658)
|
|
(14,149)
|
|
13,585
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
706
|
|
2
|
|
47
|
|
57
|
|
687
|
|
1,499
|
Depreciation
|
1,297
|
|
116
|
|
183
|
|
416
|
|
160
|
|
2,172
|
Intangible
amortization
|
53
|
|
2,151
|
|
443
|
|
—
|
|
—
|
|
2,647
|
Earnout
accretion
|
—
|
|
394
|
|
57
|
|
—
|
|
—
|
|
451
|
Acquisition contingent
compensation
|
1,165
|
|
1,561
|
|
1,058
|
|
—
|
|
—
|
|
3,784
|
Deferred compensation
plan
|
1,541
|
|
—
|
|
37
|
|
24
|
|
1
|
|
1,603
|
Reorganization
costs
|
2,169
|
|
1,227
|
|
—
|
|
—
|
|
—
|
|
3,396
|
Impairment
charges
|
—
|
|
—
|
|
7,246
|
|
—
|
|
—
|
|
7,246
|
Total
adjustments
|
6,931
|
|
5,451
|
|
9,071
|
|
497
|
|
848
|
|
22,798
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 53,871
|
|
$
2,589
|
|
$
(1,615)
|
|
$
(5,161)
|
|
$ (13,301)
|
|
$ 36,383
|
Adjusted EBITDA
margin
|
26.1 %
|
|
6.6 %
|
|
(6.4) %
|
|
(1.9) %
|
|
(4.9) %
|
|
13.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2022
|
|
Executive
Search
|
|
On-Demand
Talent
|
|
Heidrick
Consulting
|
|
Research &
Development
|
|
Global
Operations
Support
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net
revenue)
|
$
253,909
|
|
$ 22,353
|
|
$ 22,439
|
|
$
—
|
|
$
—
|
|
$
298,701
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)1
|
52,768
|
|
(349)
|
|
(408)
|
|
(4,545)
|
|
(13,600)
|
|
33,866
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
1,098
|
|
8
|
|
160
|
|
57
|
|
2,028
|
|
3,351
|
Depreciation
|
1,486
|
|
31
|
|
124
|
|
64
|
|
105
|
|
1,810
|
Intangible
amortization
|
78
|
|
632
|
|
100
|
|
—
|
|
—
|
|
810
|
Earnout
accretion
|
—
|
|
273
|
|
—
|
|
—
|
|
—
|
|
273
|
Acquisition contingent
compensation
|
971
|
|
—
|
|
—
|
|
—
|
|
—
|
|
971
|
Deferred compensation
plan
|
(4,089)
|
|
—
|
|
(113)
|
|
(53)
|
|
—
|
|
(4,255)
|
Total
adjustments
|
(456)
|
|
944
|
|
271
|
|
68
|
|
2,133
|
|
2,960
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 52,312
|
|
$
595
|
|
($137)
|
|
$
(4,477)
|
|
$ (11,467)
|
|
$ 36,826
|
Adjusted EBITDA
margin
|
20.6 %
|
|
2.7 %
|
|
(0.6 %)
|
|
(1.5) %
|
|
(3.8) %
|
|
12.3 %
|
|
|
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.
|
Heidrick & Struggles International,
Inc.
Reconciliation of Operating Income to Adjusted EBITDA
by Line of Business (Non-GAAP)
(In
thousands)
(Unaudited)
|
|
|
Six Months Ended
June 30, 2023
|
|
Executive
Search
|
|
On-Demand
Talent
|
|
Heidrick
Consulting
|
|
Research &
Development
|
|
Global
Operations
Support
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net
revenue)
|
$
397,266
|
|
$ 70,357
|
|
$ 42,919
|
|
$
—
|
|
$
—
|
|
$
510,542
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)1
|
90,633
|
|
(7,226)
|
|
(13,802)
|
|
(11,186)
|
|
(27,063)
|
|
31,356
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
1,323
|
|
8
|
|
122
|
|
122
|
|
1,752
|
|
3,327
|
Depreciation
|
2,640
|
|
201
|
|
351
|
|
664
|
|
320
|
|
4,176
|
Intangible
amortization
|
105
|
|
3,868
|
|
543
|
|
—
|
|
—
|
|
4,516
|
Earnout
accretion
|
—
|
|
585
|
|
57
|
|
—
|
|
—
|
|
642
|
Acquisition contingent
compensation
|
1,800
|
|
2,585
|
|
1,058
|
|
—
|
|
—
|
|
5,443
|
Deferred compensation
plan
|
3,590
|
|
—
|
|
90
|
|
53
|
|
3
|
|
3,736
|
Reorganization
costs
|
2,169
|
|
1,227
|
|
—
|
|
—
|
|
—
|
|
3,396
|
Impairment
charges
|
—
|
|
—
|
|
7,246
|
|
—
|
|
—
|
|
7,246
|
Total
adjustments
|
11,627
|
|
8,474
|
|
9,467
|
|
839
|
|
2,075
|
|
32,482
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
102,260
|
|
$
1,248
|
|
$
(4,335)
|
|
$ (10,347)
|
|
$ (24,988)
|
|
$ 63,838
|
Adjusted EBITDA
margin
|
25.7 %
|
|
1.8 %
|
|
(10.1) %
|
|
(2.0) %
|
|
(4.9) %
|
|
12.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2022
|
|
Executive
Search
|
|
On-Demand
Talent
|
|
Heidrick
Consulting
|
|
Research &
Development
|
|
Global
Operations
Support
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net
revenue)
|
$
496,458
|
|
$ 45,734
|
|
$ 40,370
|
|
$
—
|
|
$
—
|
|
$
582,562
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)1
|
103,076
|
|
(931)
|
|
(2,492)
|
|
(8,947)
|
|
(26,608)
|
|
64,098
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
2,168
|
|
14
|
|
269
|
|
90
|
|
4,485
|
|
7,026
|
Depreciation
|
2,978
|
|
53
|
|
257
|
|
110
|
|
220
|
|
3,618
|
Intangible
amortization
|
161
|
|
1,261
|
|
200
|
|
—
|
|
—
|
|
1,622
|
Earnout
accretion
|
—
|
|
544
|
|
—
|
|
—
|
|
—
|
|
544
|
Acquisition contingent
compensation
|
2,060
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,060
|
Deferred compensation
plan
|
(6,233)
|
|
—
|
|
(176)
|
|
(78)
|
|
—
|
|
(6,487)
|
Total
adjustments
|
1,134
|
|
1,872
|
|
550
|
|
122
|
|
4,705
|
|
8,383
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
104,210
|
|
$
941
|
|
$
(1,942)
|
|
$
(8,825)
|
|
$ (21,903)
|
|
$ 72,481
|
Adjusted EBITDA
margin
|
21.0 %
|
|
2.1 %
|
|
(4.8) %
|
|
(1.5) %
|
|
(3.8) %
|
|
12.4 %
|
|
|
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-second-quarter-2023-results-301889569.html
SOURCE Heidrick & Struggles International, Inc.