CHICAGO, Feb. 28, 2022 /PRNewswire/ -- Heidrick &
Struggles International, Inc. (Nasdaq: HSII) ("Heidrick &
Struggles" or the "Company"), today announced financial results for
its fourth quarter and fiscal year ended December 31, 2021.
Fourth Quarter Highlights:
- Net revenue reached a quarterly record of $285.5 million with growth of 77% over the
4th quarter of 2020.
- Operating income grew to $16.6
million, while adjusted operating income achieved
$28.0 million (an increase of 119%)
at a margin of 9.8%.
- Net income climbed to $12.5
million and adjusted net income and adjusted diluted
earnings per share were $20.8 million
(an increase of 78%) and $1.02 (an
increase of 73%), respectively.
- Adjusted EBITDA was $36.8 million
(an increase of 69%) and adjusted EBITDA margin was 12.9%.
"We are very pleased with our outstanding fourth quarter and
year-end performance, which continues to build the foundation for
ongoing shareholder value creation," stated Heidrick &
Struggles' President and Chief Executive Officer, Krishnan Rajagopalan. "2021 was an
exciting year of geographic expansion and industry-leading
productivity in Executive Search, increased demand for our broad
array of leadership, organizational effectiveness and culture
shaping offerings from Heidrick Consulting, the addition of our
high-growth On-Demand Talent business segment, and the initiation
of a partnership for future digital innovation. Our record
results demonstrate that our differentiated strategy is
working."
Mr. Rajagopalan continued, "Companies across all industries and
regions know that top talent and quality work environments are
business imperatives now more than ever, contributing to our
momentum in to 2022. Heidrick is on its front foot moving
forward."
2021 Fourth Quarter Results
Record consolidated net revenue of $285.5
million grew by $124.6
million, or 77.4%, compared to $161.0
million in the 2020 fourth quarter. Excluding the impact of
exchange rate fluctuations, which negatively impacted year over
year results by $1.0 million, or 60
basis points, consolidated net revenue increased $125.5 million, or 78.0%. Net revenue
growth was driven by all regions in Executive Search, Heidrick
Consulting, and by the addition of On-Demand Talent.
Consolidated salaries and benefits were $204.1 million compared to $120.8 million in the 2020 fourth
quarter. Year over year, fixed compensation expense
increased $9.7 million due to
increases in base salaries and payroll taxes, and retirement and
benefits, partially offset by decreases in the deferred
compensation plan, and stock compensation. Variable compensation
increased $73.6 million year over
year due to an increase in production. Salaries and benefits
expense was 71.5% of net revenue for the quarter, compared to 75.0%
in the 2020 fourth quarter.
General and administrative expenses were $46.9 million compared to $25.9 million in the 2020 fourth quarter due to a
one-time adjustment to the earnout payment obligation in connection
with the acquisition of the Company's On-Demand Talent business,
professional fees, corporate development and internal travel,
office occupancy, information technology, and intangible
amortization. As a percentage of net revenue, general and
administrative expenses were 16.4% compared to 16.1% in the 2020
fourth quarter.
The Company's cost of services was $18.0
million, compared to $1.5
million in the 2020 fourth quarter, primarily due to the
acquisition of On-Demand Talent and an increase in the volume of
consulting engagements. Cost of services consists of third-party
contractor costs related to the delivery of various services in the
Company's On-Demand Talent and Heidrick Consulting operating
segments.
The Company recorded a one-time earnout charge of $11.4 million in the 2021 fourth quarter
associated with its On-Demand Talent business. In the 2020
fourth quarter the Company recorded a restructuring charge of
$4.3 million primarily related to a
reduction in the Company's real estate footprint. Including these
charges, operating income was $16.6
million, compared to $8.5
million in the 2020 fourth quarter. Operating margin was
5.8%, compared to 5.3% in the 2020 fourth quarter. Excluding
these charges, adjusted operating income was $28.0 million, compared to $12.8 million in the 2020 fourth quarter.
Adjusted operating margin was 9.8%, compared to 7.9% in the 2020
fourth quarter.
Net income was $12.5 million and
diluted earnings per share was $0.61
with an effective tax rate of 30.3%. This compares to net income of
$5.5 million and diluted earnings per
share of $0.28, with an effective tax
rate of 54.0%, in the 2020 fourth quarter. Excluding the
previously mentioned non-recurring charges, adjusted net income was
$20.8 million, compared to
$11.6 million in the 2020 fourth
quarter. Adjusted diluted earnings per share was $1.02, compared to $0.59 for the 2020 fourth quarter.
Adjusted EBITDA increased 69.6% to $36.8
million compared to adjusted EBITDA of $21.7 million in the 2020 fourth quarter.
Adjusted EBITDA margin was 12.9%, compared to 13.5% in the 2020
fourth quarter.
Net cash provided by operating activities was $206.6 million, compared to $96.3 million in the 2020 fourth quarter.
Cash, cash equivalents and marketable securities at December 31, 2021 was $545.2 million, compared to $336.5 million at December
31, 2020, and $348.3 million
at September 30, 2021. The
Company's cash position typically builds throughout the year as
employee bonuses are accrued, mostly to be paid out in the first
quarter.
Executive Search net revenue increased 66.3%, or
$97.0 million, to $243.4 million compared to net revenue of
$146.3 million in the 2020 fourth
quarter. Excluding the impact of exchange rate fluctuations,
which negatively impacted year over year results by $1.0 million, or 70 basis points, net revenue
increased $98.0 million, or
67.0%. Net revenue increased 75.1% in the Americas (75.1% on
a constant currency basis), 40.3% in Europe (42.4% on a constant currency basis),
and 65.6% in Asia Pacific (67.6%
on a constant currency basis). All industry practices exhibited
growth over the prior year.
The Company had 365 Executive Search consultants at December 31, 2021, compared to 361 at
December 31, 2020.
Productivity, as measured by annualized Executive Search net
revenue per consultant, was $2.7
million compared to $1.6
million in the 2020 fourth quarter. Average revenue
per executive search was approximately $144,000 compared to $125,000 a year earlier. The number of
confirmed searches reached a quarterly record, increasing 44.9%
compared to the year-ago period.
On-Demand Talent, a new business segment which the Company
acquired on April 1, 2021, generated
net revenue of $23.6 million and
exceeded the Company's expectations. This increase in performance
required a one-time adjustment to the earnout obligation of
$11.4 million, resulting in an
operating loss of $10.3 million for
the quarter.
Heidrick Consulting net revenue of $18.5 million increased by $3.9 million, or 26.4%, compared to net revenue
of $14.7 million in the 2020 fourth
quarter. Operating loss improved to $5.3
million, or 21.1%, compared to the prior year. Heidrick
Consulting continues to build momentum from collaboration within
the Company and is a a critical component of the growth strategy
driving Executive Search and On-Demand Talent. There was no impact
from exchange rate fluctuations in the quarter for Heidrick
Consulting. The Company had 69 Heidrick Consulting
consultants at December 31, 2021,
compared to 65 at December 31,
2020.
Fiscal 2021 Results
Consolidated net revenue was a record $1,003.0 million compared to $621.6 million in 2020, an increase of 61.4%.
Excluding the impact of exchange rate fluctuations, which
positively impacted results by 210 basis points, or $13.3 million, consolidated net revenue increased
59.2% or $368.1 million.
Including restructuring charges of $3.8
million and $52.4 million in
2021 and 2020, respectively, and the one-time On-Demand Talent
earnout charge of $11.4 million
recorded in 2021, and the non-cash impairment charge of
$33.0 million recorded in 2020,
operating income for 2021 was $98.3
million compared to an operating loss of $35.5 million in 2020. Operating margin was 9.8%
in 2021 compared to (5.7)% in 2020. Excluding charges in both
years, adjusted operating income for 2021 more than doubled to
$113.4 million compared to
$49.8 million in the prior year, and
the adjusted operating margin was 11.3% compared to 8.0% in the
prior year.
Net income was $72.6 million and
diluted earnings per share was $3.58,
with an effective tax rate of 31.6%. This compares to a net loss of
$37.7 million and diluted loss per
share of $1.95 in 2020, with an
effective tax rate of (20.1)%. Excluding the previously mentioned
non-recurring charges, adjusted net income was $83.5 million with adjusted diluted earnings per
share of $4.11, compared to
$35.2 million and $1.77, respectively, in the prior year. The
adjusted effective tax rate was 31.1% in 2021 compared to 34.7% in
2020.
Adjusted EBITDA for 2021 increased 89.0% to $141.3 million compared to adjusted EBITDA of
$74.8 million in 2020. Adjusted
EBITDA margin increased 210 basis points to14.1% compared to 12.0%
in 2020.
Executive Search net revenue increased 53.7% to
$868.8 million compared to
$565.2 million in 2020. Excluding the
impact of exchange rate fluctuations, which positively impacted
results by 210 basis points, or $11.9
million, net revenue increased $291.7
million, or 51.6%. Net revenue increased 60.9% in the
Americas (60.7% on a constant currency basis), 37.1% in
Europe (30.8% on a constant
currency basis), and 47.2% in Asia
Pacific (42.9% on a constant currency basis). All practice
groups exhibited growth over the prior year period.
Productivity was $2.4 million
compared to $1.5 million in 2020. The
average revenue per executive search was $131,000 compared to $123,000 in 2020, while confirmations increased
44.6%.
On-Demand Talent, acquired on April 1,
2021, recorded year-to-date net revenue of $66.6 million and exceeded the Company's
expectations due to increases in large account penetration, project
wins, and higher than anticipated average project size when
compared to the prior year.
Heidrick Consulting net revenue increased 19.8% to
$67.6 million compared to
$56.4 million in 2020. Excluding the
impact of exchange rate fluctuations, which positively impacted
results by 240 basis points, or $1.4
million, Heidrick Consulting revenue increased 17.4%, or
$9.8 million. Heidrick Consulting's
results reflect continued increases in confirmation values, average
client value, Executive Search referred work, and the value of
confirmations due to Executive Search collaborations.
Dividend
The Board of Directors declared a 2021 fourth quarter cash
dividend of $0.15 per share payable
on March 18, 2022, to shareholders of
record at the close of business on March
4, 2022.
2022 First Quarter Outlook
The Company expects 2022 first quarter consolidated net revenue
of between $270 million and
$280 million, while acknowledging the
continued fluidity of the COVID-19 pandemic and instability in
Ukraine and Russia that may impact quarterly
results. In addition, this outlook is based on the average
currency rates in December 2021 and
reflects, among other factors, management's assumptions for the
anticipated volume of new Executive Search confirmations, Heidrick
Consulting assignments, On-Demand Talent projects and the current
backlog, consultant productivity, consultant retention, and the
seasonality of the business.
Quarterly Webcast and Conference Call
Heidrick & Struggles will host a conference call to review
its fourth quarter and 2021 results today, February 28, 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 (866) 211-4120 or (647) 689-6618, conference ID#
1554329. 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. Pursuant
to the requirements of Regulation G, this earnings release contains
the most directly comparable GAAP financial measure to the non-GAAP
financial measure.
The non-GAAP financial measures used within this earnings
release are adjusted operating income, adjusted operating income
margin, adjusted net income, adjusted basic and diluted earnings
per share, adjusted effective tax rate, adjusted EBITDA, adjusted
EBITDA margin, and impacts of foreign currency on current period
results using prior period translation rates. 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. Reconciliations of these
non-GAAP financial measures with 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 one-time
earnout obligation adjustments, goodwill impairment, and
restructuring charges.
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 one-time earnout obligation adjustments,
goodwill impairment, and restructuring charges, net of tax.
Adjusted effective tax rate reflects the exclusion of one-time
earnout obligation adjustments, goodwill impairment, and
restructuring charges, net of tax.
Adjusted EBITDA refers to earnings before interest, taxes,
depreciation, intangible amortization, equity-settled stock
compensation expense, earnout accretion, one-time earnout
obligation adjustments, contingent compensation related to
acquisitions, restructuring charges, goodwill impairment, deferred
compensation plan expenses 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. 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," 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, the
impacts, direct and indirect, of the COVID-19 pandemic (including
the emergence of variant strains) on our business, our consultants
and employees, and the overall economy; leadership changes, 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; the
fact that our net revenue may be affected by adverse economic
conditions; our clients' ability to restrict us from recruiting
their employees; the aggressive competition we face; our heavy
reliance on information management systems; 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; social, political, regulatory and legal risks in markets
where we operate; any challenges to the classification of our
on-demand talent as independent contractors; the impact of foreign
currency exchange rate fluctuations; the fact that we may not be
able to align our cost structure with net revenue; unfavorable tax
law changes and tax authority rulings; our ability to realize our
tax losses; the timing of the establishment or reversal of
valuation allowance on deferred tax assets; any impairment of our
goodwill, other intangible assets and other long-lived assets; our
ability to execute and integrate future acquisitions; the fact that
we have anti-takeover provisions that make an acquisition of us
difficult and expensive; our ability to access additional credit;
and 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. We caution the reader that the list of
factors may not be exhaustive. For more information on the
factors that could affect the outcome of forward-looking
statements, refer to our Annual Report on Form 10-K for the year
ended December 31, 2021, under the
heading "Risk Factors" in Item 1A. We caution the reader that the
list of factors may not be exhaustive. 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:
Wendy Webb, Investor Relations
wwebb@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
December
31,
|
|
|
|
2021
|
|
2020
|
|
$
Change
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
$
285,539
|
|
$
160,987
|
|
$
124,552
|
|
77.4%
|
Reimbursements
|
1,654
|
|
1,200
|
|
454
|
|
37.8%
|
Total
revenue
|
287,193
|
|
162,187
|
|
125,006
|
|
77.1%
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Salaries and
benefits
|
204,090
|
|
120,784
|
|
83,306
|
|
69.0%
|
General and
administrative expenses
|
46,873
|
|
25,860
|
|
21,013
|
|
81.3%
|
Cost of
services
|
17,968
|
|
1,548
|
|
16,420
|
|
NM
|
Restructuring
charges
|
—
|
|
4,257
|
|
(4,257)
|
|
(100.0)%
|
Reimbursed
expenses
|
1,654
|
|
1,200
|
|
454
|
|
37.8%
|
Total operating
expenses
|
270,585
|
|
153,649
|
|
116,936
|
|
76.1%
|
|
|
|
|
|
|
|
|
Operating
income
|
16,608
|
|
8,538
|
|
8,070
|
|
94.5%
|
|
|
|
|
|
|
|
|
Non-operating
income
|
|
|
|
|
|
|
|
Interest,
net
|
95
|
|
44
|
|
|
|
|
Other, net
|
1,203
|
|
3,467
|
|
|
|
|
Net non-operating
income
|
1,298
|
|
3,511
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
17,906
|
|
12,049
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
5,429
|
|
6,511
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
12,477
|
|
5,538
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of tax
|
(393)
|
|
988
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
12,084
|
|
$
6,526
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
19,592
|
|
19,360
|
|
|
|
|
Diluted
|
20,301
|
|
19,865
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share
|
|
|
|
|
|
|
|
Basic
|
$
0.64
|
|
$
0.29
|
|
|
|
|
Diluted
|
$
0.61
|
|
$
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
as a % of net revenue
|
71.5%
|
|
75.0%
|
|
|
|
|
General and
administrative expenses as a % of net revenue
|
16.4%
|
|
16.1%
|
|
|
|
|
Cost of services as a
% of net revenue
|
6.3%
|
|
1.0%
|
|
|
|
|
Operating
margin
|
5.8%
|
|
5.3%
|
|
|
|
|
Heidrick &
Struggles International, Inc.
Segment
Information
(In
thousands)
(Unaudited)
|
|
|
Three Months Ended
December 31,
|
|
2021
|
|
2020
|
|
$
Change
|
|
%
Change
|
|
2021
Margin1
|
|
2020
Margin1
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
168,700
|
|
$
96,328
|
|
$
72,372
|
|
75.1%
|
|
|
|
|
Europe
|
45,084
|
|
32,135
|
|
12,949
|
|
40.3%
|
|
|
|
|
Asia
Pacific
|
29,579
|
|
17,857
|
|
11,722
|
|
65.6%
|
|
|
|
|
Total Executive
Search
|
243,363
|
|
146,320
|
|
97,043
|
|
66.3%
|
|
|
|
|
On-Demand
Talent
|
23,630
|
|
—
|
|
23,630
|
|
NM
|
|
|
|
|
Heidrick
Consulting
|
18,546
|
|
14,667
|
|
3,879
|
|
26.4%
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
285,539
|
|
160,987
|
|
124,552
|
|
77.4%
|
|
|
|
|
Reimbursements
|
1,654
|
|
1,200
|
|
454
|
|
37.8%
|
|
|
|
|
Total
revenue
|
$
287,193
|
|
$
162,187
|
|
$
125,006
|
|
77.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas2
|
$
42,218
|
|
$
21,906
|
|
$
20,312
|
|
92.7%
|
|
25.0%
|
|
22.7%
|
Europe3
|
5,110
|
|
4,047
|
|
1,063
|
|
26.3%
|
|
11.3%
|
|
12.6%
|
Asia
Pacific4
|
4,926
|
|
(171)
|
|
5,097
|
|
NM
|
|
16.7%
|
|
(1.0)%
|
Total Executive
Search
|
52,254
|
|
25,782
|
|
26,472
|
|
102.7%
|
|
21.5%
|
|
17.6%
|
On-Demand
Talent5
|
(10,306)
|
|
—
|
|
(10,306)
|
|
NM
|
|
(43.6)%
|
|
—%
|
Heidrick
Consulting6
|
(5,265)
|
|
(6,670)
|
|
1,405
|
|
21.1%
|
|
(28.4)%
|
|
(45.5)%
|
Total
segments
|
36,683
|
|
19,112
|
|
17,571
|
|
91.9%
|
|
12.8%
|
|
11.9%
|
Global Operations
Support7
|
(20,075)
|
|
(10,574)
|
|
(9,501)
|
|
(89.9)%
|
|
(7.0)%
|
|
(6.6)%
|
Total operating income
(loss)
|
$
16,608
|
|
$
8,538
|
|
$
8,070
|
|
94.5%
|
|
5.8%
|
|
5.3%
|
|
1 Margin
based on revenue before reimbursements (net revenue).
|
2 Includes
restructuring charges of $2.9 million for the three months ended
December 31, 2020.
|
3 Includes
restructuring reversals of $1.0 million for the three months ended
December 31, 2020.
|
4 Includes
restructuring charges of $0.1 million for the three months ended
December 31, 2020.
|
5 Includes
a one-time earnout obligation adjustment of $11.4 million for the
three months ended December 31, 2021.
|
6 Includes
restructuring charges of $0.2 million for the three months ended
December 31, 2020.
|
7 Includes
restructuring charges of $2.1 million for the three months ended
December 31, 2020.
|
Heidrick &
Struggles International, Inc.
Consolidated
Statements of Comprehensive Income (Loss)
(In thousands, except
per share amounts)
(Unaudited)
|
|
|
Year
Ended
December
31,
|
|
|
|
2021
|
|
2020
|
|
$
Change
|
|
%
Change
|
Revenue
|
|
|
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
$
1,003,001
|
|
$
621,615
|
|
$
381,386
|
|
61.4%
|
Reimbursements
|
5,473
|
|
7,755
|
|
(2,282)
|
|
(29.4)%
|
Total
revenue
|
1,008,474
|
|
629,370
|
|
379,104
|
|
60.2%
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Salaries and
benefits
|
717,411
|
|
450,424
|
|
266,987
|
|
59.3%
|
General and
administrative expenses
|
130,749
|
|
116,982
|
|
13,767
|
|
11.8%
|
Cost of
services
|
52,785
|
|
4,396
|
|
48,389
|
|
NM
|
Impairment
charges
|
—
|
|
32,970
|
|
(32,970)
|
|
(100.0)%
|
Restructuring
charges
|
3,792
|
|
52,372
|
|
(48,580)
|
|
(92.8)%
|
Reimbursed
expenses
|
5,473
|
|
7,755
|
|
(2,282)
|
|
(29.4)%
|
Total operating
expenses
|
910,210
|
|
664,899
|
|
245,311
|
|
36.9%
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
98,264
|
|
(35,529)
|
|
133,793
|
|
NM
|
|
|
|
|
|
|
|
|
Non-operating
income
|
|
|
|
|
|
|
|
Interest,
net
|
302
|
|
204
|
|
|
|
|
Other, net
|
7,463
|
|
3,927
|
|
|
|
|
Net non-operating
income
|
7,765
|
|
4,131
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
106,029
|
|
(31,398)
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
33,457
|
|
6,309
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
72,572
|
|
(37,707)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss, net of tax
|
(1,742)
|
|
(407)
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss)
|
$
70,830
|
|
$
(38,114)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
19,515
|
|
19,301
|
|
|
|
|
Diluted
|
20,296
|
|
19,301
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share
|
|
|
|
|
|
|
|
Basic
|
$
3.72
|
|
$
(1.95)
|
|
|
|
|
Diluted
|
$
3.58
|
|
$
(1.95)
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
as a % of net revenue
|
71.5%
|
|
72.5%
|
|
|
|
|
General and
administrative expenses as a % of net revenue
|
13.0%
|
|
18.8%
|
|
|
|
|
Cost of services as a
% of net revenue
|
5.3%
|
|
0.7%
|
|
|
|
|
Operating
margin
|
9.8%
|
|
(5.7)%
|
|
|
|
|
Heidrick &
Struggles International, Inc.
Segment
Information
(In
thousands)
(Unaudited)
|
|
|
Year Ended Ended
December 31,
|
|
2021
|
|
2020
|
|
$
Change
|
|
%
Change
|
|
2021
Margin1
|
|
2020
Margin1
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
581,440
|
|
$
361,416
|
|
$
220,024
|
|
60.9%
|
|
|
|
|
Europe
|
170,312
|
|
124,243
|
|
46,069
|
|
37.1%
|
|
|
|
|
Asia
Pacific
|
117,008
|
|
79,511
|
|
37,497
|
|
47.2%
|
|
|
|
|
Total Executive
Search
|
868,760
|
|
565,170
|
|
303,590
|
|
53.7%
|
|
|
|
|
On-Demand
Talent
|
66,636
|
|
—
|
|
66,636
|
|
NM
|
|
|
|
|
Heidrick
Consulting
|
67,605
|
|
56,445
|
|
11,160
|
|
19.8%
|
|
|
|
|
Revenue before
reimbursements (net revenue)
|
1,003,001
|
|
621,615
|
|
381,386
|
|
61.4%
|
|
|
|
|
Reimbursements
|
5,473
|
|
7,755
|
|
(2,282)
|
|
(29.4)%
|
|
|
|
|
Total
revenue
|
$
1,008,474
|
|
$
629,370
|
|
$
379,104
|
|
60.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
Americas2
|
$
142,040
|
|
$
62,806
|
|
$
79,234
|
|
126.2%
|
|
24.4%
|
|
17.4%
|
Europe3
|
18,424
|
|
(22,827)
|
|
41,251
|
|
180.7%
|
|
10.8%
|
|
(18.4)%
|
Asia
Pacific4
|
18,167
|
|
(6,724)
|
|
24,891
|
|
NM
|
|
15.5%
|
|
(8.5)%
|
Total Executive
Search
|
178,631
|
|
33,255
|
|
145,376
|
|
NM
|
|
20.6%
|
|
5.9%
|
On-Demand
Talent5
|
(9,272)
|
|
—
|
|
(9,272)
|
|
NM
|
|
(13.9)%
|
|
—%
|
Heidrick
Consulting6
|
(16,162)
|
|
(28,369)
|
|
12,207
|
|
43.0%
|
|
(23.9)%
|
|
(50.3)%
|
Total
segments
|
153,197
|
|
4,886
|
|
148,311
|
|
NM
|
|
15.3%
|
|
0.8%
|
Global Operations
Support7
|
(54,933)
|
|
(40,415)
|
|
(14,518)
|
|
(35.9)%
|
|
(5.5)%
|
|
(6.5)%
|
Total operating income
(loss)
|
$
98,264
|
|
$
(35,529)
|
|
$
133,793
|
|
NM
|
|
9.8%
|
|
(5.7)%
|
|
1 Margin
based on revenue before reimbursements (net revenue).
|
2 Includes restructuring charges of
$3.9 million and $30.5 million for the years ended December
31, 2021 and 2020, respectively.
|
3 Includes a restructuring reversal
of $0.1 million for the year ended December 31, 2021 and
restructuring charges of $8.6 million for the year ended December
31, 2020. Includes goodwill impairment charges of
$24.5 million for the year ended December 31, 2020.
|
4 Includes
a restructuring reversal of $0.1 million for the year ended
December 31, 2021 and restructuring charges of $4.6 million for the
year ended December 31, 2020. Includes goodwill impairment charges
of $8.5 million for the year ended December 31,
2020.
|
5 Includes a one-time earnout
obligation adjustment of $11.4 million for the year ended December
31, 2021.
|
6 Includes
restructuring charges of $0.4 million and $4.7 million for the
years ended December 31, 2021 and 2020, respectively.
|
7 Includes
a restructuring reversal of $0.2 million for the year ended
December 31, 2021 and restructuring charges of $4.0 million for the
year ended December 31, 2020.
|
Heidrick &
Struggles International, Inc.
Reconciliation of
Operating Income (Loss) and Adjusted Operating Income
(Non-GAAP)
(In
thousands)
(Unaudited)
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenue before
reimbursements (net revenue)
|
$
285,539
|
|
$
160,987
|
|
$
1,003,001
|
|
$
621,615
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
16,608
|
|
8,538
|
|
98,264
|
|
(35,529)
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
Earnout obligation fair
value adjustments1
|
11,368
|
|
—
|
|
11,368
|
|
—
|
Impairment
charges2
|
—
|
|
—
|
|
—
|
|
32,970
|
Restructuring
charges3
|
—
|
|
4,257
|
|
3,792
|
|
52,372
|
Total
adjustments
|
11,368
|
|
4,257
|
|
15,160
|
|
85,342
|
|
|
|
|
|
|
|
|
Adjusted operating
income
|
$
27,976
|
|
$
12,795
|
|
$
113,424
|
|
$
49,813
|
|
|
|
|
|
|
|
|
Operating
margin
|
5.8%
|
|
5.3%
|
|
9.8%
|
|
(5.7)%
|
Adjusted operating
margin
|
9.8%
|
|
7.9%
|
|
11.3%
|
|
8.0%
|
|
1 The
Company incurred a one-time earnout obligation adjustment of $11.4
million for the three months and year ended December 31, 2021 in
the On-Demand Talent operating segment.
|
2
The Company incurred goodwill impairment charges of approximately
$33.0 million in the Europe and Asia Pacific operating segments for
the year ended December 31, 2020.
|
3 The
Company incurred restructuring charges of $4.3 million for the
three months ended December 31, 2020. The Company incurred
restructuring charges of $3.8 million and $52.4 million for the
years ended December 31, 2021 and 2020, respectively.
|
Heidrick &
Struggles International, Inc.
Reconciliation of
Net Income (Loss) and Adjusted Net Income (Non-GAAP)
(In
thousands)
(Unaudited)
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income
(loss)
|
$
12,477
|
|
$
5,538
|
|
$
72,572
|
|
$
(37,707)
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
Earnout obligation fair
value adjustments1
|
8,282
|
|
—
|
|
8,282
|
|
—
|
Impairment charges, net
of tax2
|
—
|
|
—
|
|
—
|
|
32,970
|
Restructuring charges,
net of tax3
|
—
|
|
6,093
|
|
2,642
|
|
39,956
|
Total
adjustments
|
8,282
|
|
6,093
|
|
10,924
|
|
72,926
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
$
20,759
|
|
$
11,631
|
|
$
83,496
|
|
$
35,219
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
19,592
|
|
19,360
|
|
19,515
|
|
19,301
|
Diluted
|
20,301
|
|
19,865
|
|
20,296
|
|
19,893
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share
|
|
|
|
|
|
|
|
Basic
|
$
0.64
|
|
$
0.29
|
|
$
3.72
|
|
$
(1.95)
|
Diluted
|
$
0.61
|
|
$
0.28
|
|
$
3.58
|
|
$
(1.95)
|
|
|
|
|
|
|
|
|
Adjusted earnings
per common share
|
|
|
|
|
|
|
|
Basic
|
$
1.06
|
|
$
0.60
|
|
$
4.28
|
|
$
1.82
|
Diluted
|
$
1.02
|
|
$
0.59
|
|
$
4.11
|
|
$
1.77
|
|
1 The
Company incurred a one-time earnout obligation adjustment of $11.4
million for the three months and year ended December 31, 2021 in
the On-Demand Talent operating segment.
|
2
The Company incurred goodwill impairment charges of approximately
$33.0 million in the Europe and Asia Pacific operating segments for
the year ended December 31, 2020.
|
3 The
Company incurred restructuring charges of $4.3 million for the
three months ended December 31, 2020. The Company incurred
restructuring charges of $3.8 million and $52.4 million for the
years ended December 31, 2021 and 2020, respectively.
|
Heidrick &
Struggles International, Inc.
Consolidated
Balance Sheets
(In
thousands)
(Unaudited)
|
|
|
December
31,
2021
|
|
December
31,
2020
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
545,225
|
|
$
316,473
|
Marketable
securities
|
—
|
|
19,999
|
Accounts receivable,
net
|
133,750
|
|
88,123
|
Prepaid
expenses
|
21,754
|
|
18,956
|
Other current
assets
|
41,449
|
|
23,279
|
Income taxes
recoverable
|
3,210
|
|
5,856
|
Total current
assets
|
745,388
|
|
472,686
|
|
|
|
|
Non-current
assets
|
|
|
|
Property and equipment,
net
|
27,085
|
|
23,492
|
Operating lease
right-of-use assets
|
72,320
|
|
92,671
|
Assets designated for
retirement and pension plans
|
12,715
|
|
14,425
|
Investments
|
36,051
|
|
31,369
|
Other non-current
assets
|
23,377
|
|
24,439
|
Goodwill
|
138,524
|
|
91,643
|
Other intangible
assets, net
|
9,169
|
|
1,129
|
Deferred income
taxes
|
42,169
|
|
35,958
|
Total non-current
assets
|
361,410
|
|
315,126
|
|
|
|
|
Total
assets
|
$
1,106,798
|
|
$
787,812
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
20,374
|
|
$
8,799
|
Accrued salaries and
benefits
|
409,026
|
|
217,908
|
Deferred
revenue
|
51,404
|
|
38,050
|
Operating lease
liabilities
|
19,332
|
|
28,984
|
Other current
liabilities
|
24,554
|
|
23,311
|
Income taxes
payable
|
10,004
|
|
1,186
|
Total current
liabilities
|
534,694
|
|
318,238
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Accrued salaries and
benefits
|
73,779
|
|
56,925
|
Retirement and pension
plans
|
55,593
|
|
53,496
|
Operating lease
liabilities
|
65,625
|
|
86,816
|
Other non-current
liabilities
|
41,087
|
|
4,735
|
Total non-current
liabilities
|
236,084
|
|
201,972
|
|
|
|
|
Total
liabilities
|
770,778
|
|
520,210
|
|
|
|
|
Stockholders'
equity
|
336,020
|
|
267,602
|
|
|
|
|
Total liabilities
and stockholders' equity
|
$
1,106,798
|
|
$
787,812
|
Heidrick &
Struggles International, Inc.
Consolidated
Statements of Cash Flows
(In
thousands)
(Unaudited)
|
|
|
|
Three Months
Ended
December
31,
|
|
|
2021
|
|
2020
|
Cash flows -
operating activities
|
|
|
|
|
Net income
|
|
$
12,477
|
|
$
5,538
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
2,984
|
|
6,018
|
Deferred income
taxes
|
|
(5,995)
|
|
(2,380)
|
Stock-based
compensation expense
|
|
4,088
|
|
3,053
|
Accretion expense
related to earnout payments
|
|
123
|
|
—
|
Gain on marketable
securities
|
|
—
|
|
(10)
|
Loss (gain) on
disposal of property and equipment
|
|
8
|
|
(2)
|
Impairment
charges
|
|
—
|
|
—
|
Changes in assets and
liabilities, net of effects of acquisition:
|
|
|
|
|
Accounts
receivable
|
|
48,058
|
|
32,260
|
Accounts
payable
|
|
(3,263)
|
|
(2,358)
|
Accrued
expenses
|
|
140,772
|
|
51,263
|
Restructuring
accrual
|
|
(37)
|
|
(3,810)
|
Deferred
revenue
|
|
6,330
|
|
204
|
Income taxes
recoverable and payable, net
|
|
(3,560)
|
|
7,444
|
Retirement and pension
plan assets and liabilities
|
|
(298)
|
|
490
|
Prepaid
expenses
|
|
4,948
|
|
2,871
|
Other assets and
liabilities, net
|
|
(10)
|
|
(4,323)
|
Net cash provided by
operating activities
|
|
206,625
|
|
96,258
|
|
|
|
|
|
Cash flows -
investing activities
|
|
|
|
|
Acquisition of
business, net of cash acquired
|
|
(1,549)
|
|
—
|
Capital
expenditures
|
|
(2,338)
|
|
(201)
|
Purchases of marketable
securities and investments
|
|
(326)
|
|
(236)
|
Proceeds from sales of
marketable securities and investments
|
|
169
|
|
47,219
|
Net cash provided by
(used in) investing activities
|
|
(4,044)
|
|
46,782
|
|
|
|
|
|
Cash flows -
financing activities
|
|
|
|
|
Cash dividends
paid
|
|
(3,450)
|
|
(3,044)
|
Payment of employee tax
withholdings on equity transactions
|
|
(50)
|
|
—
|
Net cash used in
financing activities
|
|
(3,500)
|
|
(3,044)
|
|
|
|
|
|
Effect of exchange
rate fluctuations on cash, cash equivalents and restricted
cash
|
|
(2,148)
|
|
5,916
|
|
|
|
|
|
Net increase in cash,
cash equivalents and restricted cash
|
|
196,933
|
|
145,912
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
348,326
|
|
170,577
|
Cash, cash
equivalents and restricted cash at end of period
|
|
$
545,259
|
|
$
316,489
|
Heidrick &
Struggles International, Inc.
Consolidated
Statements of Cash Flows
(In
thousands)
(Unaudited)
|
|
|
|
Year
Ended
December
31,
|
|
|
2021
|
|
2020
|
Cash flows -
operating activities
|
|
|
|
|
Net income
(loss)
|
|
$
72,572
|
|
$
(37,707)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
19,560
|
|
26,656
|
Deferred income
taxes
|
|
(7,481)
|
|
(1,680)
|
Stock-based
compensation expense
|
|
12,760
|
|
10,199
|
Accretion expense
related to earnout payments
|
|
486
|
|
—
|
Gain on marketable
securities
|
|
(1)
|
|
(154)
|
Loss on disposal of
property and equipment
|
|
135
|
|
287
|
Impairment
charges
|
|
—
|
|
32,970
|
Changes in assets and
liabilities, net of effects of acquisition:
|
|
|
|
|
Accounts
receivable
|
|
(36,819)
|
|
22,644
|
Accounts
payable
|
|
(332)
|
|
451
|
Accrued
expenses
|
|
230,177
|
|
(26,513)
|
Restructuring
accrual
|
|
(5,061)
|
|
2,479
|
Deferred
revenue
|
|
12,783
|
|
(3,688)
|
Income taxes
recoverable and payable, net
|
|
11,377
|
|
(4,016)
|
Retirement and pension
plan assets and liabilities
|
|
1,145
|
|
1,794
|
Prepaid
expenses
|
|
(2,776)
|
|
1,642
|
Other assets and
liabilities, net
|
|
(37,124)
|
|
(2,011)
|
Net cash provided by
operating activities
|
|
271,401
|
|
23,353
|
|
|
|
|
|
Cash flows -
investing activities
|
|
|
|
|
Acquisition of
businesses, net of cash acquired
|
|
(33,518)
|
|
—
|
Capital
expenditures
|
|
(6,240)
|
|
(7,322)
|
Purchases of marketable
securities and investments
|
|
(2,323)
|
|
(118,904)
|
Proceeds from sales of
marketable securities and investments
|
|
20,822
|
|
158,852
|
Net cash provided by
(used in) investing activities
|
|
(21,259)
|
|
32,626
|
|
|
|
|
|
Cash flows -
financing activities
|
|
|
|
|
Proceeds from line of
credit
|
|
—
|
|
100,000
|
Payments on line of
credit
|
|
—
|
|
(100,000)
|
Cash dividends
paid
|
|
(12,377)
|
|
(12,063)
|
Payment of employee tax
withholdings on equity transactions
|
|
(3,140)
|
|
(1,550)
|
Acquisition earnout
payments
|
|
—
|
|
(2,789)
|
Net cash used in
financing activities
|
|
(15,517)
|
|
(16,402)
|
|
|
|
|
|
Effect of exchange
rate fluctuations on cash, cash equivalents and restricted
cash
|
|
(5,855)
|
|
5,193
|
|
|
|
|
|
Net increase in cash,
cash equivalents and restricted cash
|
|
228,770
|
|
44,770
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
316,489
|
|
271,719
|
Cash, cash
equivalents and restricted cash at end of period
|
|
$
545,259
|
|
$
316,489
|
Heidrick &
Struggles International, Inc.
Reconciliation of
Net Income (Loss) and Operating Income (Loss) to Adjusted EBITDA
(Non-GAAP)
(In
thousands)
(Unaudited)
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenue before
reimbursements (net revenue)
|
$
285,539
|
|
$
160,987
|
|
$
1,003,001
|
|
$
621,615
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
12,477
|
|
5,538
|
|
72,572
|
|
(37,707)
|
Interest,
net
|
(95)
|
|
(44)
|
|
(302)
|
|
(204)
|
Other, net
|
(1,203)
|
|
(3,467)
|
|
(7,463)
|
|
(3,927)
|
Provision for (benefit
from) income taxes
|
5,429
|
|
6,511
|
|
33,457
|
|
6,309
|
Operating income
(loss)
|
16,608
|
|
8,538
|
|
98,264
|
|
(35,529)
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
4,014
|
|
3,038
|
|
12,325
|
|
9,679
|
Depreciation
|
1,839
|
|
1,906
|
|
7,150
|
|
8,100
|
Intangible
amortization
|
1,146
|
|
153
|
|
2,898
|
|
738
|
Earnout
accretion
|
123
|
|
—
|
|
486
|
|
—
|
Earnout obligation
fair value adjustments
|
11,368
|
|
—
|
|
11,368
|
|
—
|
Acquisition contingent
consideration
|
575
|
|
460
|
|
1,973
|
|
1,942
|
Restructuring
charges
|
—
|
|
4,257
|
|
3,792
|
|
52,372
|
Impairment
charges
|
—
|
|
—
|
|
—
|
|
32,970
|
Deferred compensation
plan
|
1,108
|
|
3,388
|
|
3,057
|
|
4,495
|
Total
adjustments
|
20,173
|
|
13,202
|
|
43,049
|
|
110,296
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
36,781
|
|
$
21,740
|
|
$
141,313
|
|
$
74,767
|
Adjusted EBITDA
margin
|
12.9%
|
|
13.5%
|
|
14.1%
|
|
12.0%
|
View original
content:https://www.prnewswire.com/news-releases/heidrick--struggles-achieves-over-1-billion-in-annual-net-revenue-attains-record-profitability-301492010.html
SOURCE Heidrick & Struggles International, Inc.