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Heidrick & Struggles Continues to Deliver Record Results

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CHICAGO, July 26, 2021 /PRNewswire/ -- Heidrick & Struggles International, Inc. (Nasdaq: HSII) ("Heidrick & Struggles" or the "Company"), today announced financial results for its second quarter ended June 30, 2021.

Second Quarter Highlights:

  • Record net revenue (revenue before reimbursements) of $260.0 million increased $114.4 million, or 78.6%, from the 2020 second quarter and grew $66.3 million, or 34.2%, from the 2021 first quarter.
  • Operating income of $28.7 million includes an anticipated restructuring charge of $3.2 million
  • Adjusted operating income more than tripled to $31.9 million with adjusted operating margin up 610 basis points to 12.3%.
  • Net income of $20.8 million and diluted earnings per share of $1.03, before restructuring charge.
  • Adjusted net income and adjusted diluted earnings per share tripled to $22.9 million and $1.14, respectively, over last year's second quarter.
  • General and administrative expenses improved to 10.5% of revenue compared to 21.2% of revenue from last year's second quarter, an improvement of $3.5 million.
  • Adjusted EBITDA of $37.6 million more than doubled and adjusted EBITDA margin increased 590 basis points to 14.4% from the 2020 second quarter.
  • Established a newly branded reporting segment – On-Demand Talent – to reflect the acquisition of Business Talent Group ("BTG") and entry into this high growth segment of the market.
  • Renewed and extended credit facility to July 2026; expanded credit facility to $200 million with an option to increase up to $275 million with the same terms as previous credit facility; further strengthens the balance sheet for future growth.

"We are proud of our accomplishments and the breadth of our rebound as evidenced by our record second quarter performance, delivering robust revenue and profitability growth both sequentially and over the prior year.  Results were driven by strong contributions from all regions and lines of business," stated Heidrick & Struggles' President and Chief Executive Officer, Krishnan Rajagopalan. "While we see a number of positive market trends underway, we recognize that many of our clients and communities around the world continue to navigate through the pandemic. We remain vigilant and are closely monitoring the situation as we advise our clients through the difficult challenges while positioning them to meet the new opportunities of a post-pandemic world."

Mr. Rajagopalan continued, "Across our business – Executive Search, Heidrick Consulting and On-Demand Talent – our global team is strongly executing on all aspects of our strategy.  Moving forward, we are building on these successes while continuing to invest to drive client offerings in unique spaces with significant opportunity for further growth and diversification. Our recently completed acquisition of BTG catapults our firm into the high growth on-demand talent segment of the market and allows us to bring another talent solution to our clients, which strongly complements our portfolio of leadership advisory and talent services. We will continue to make targeted investments in tech-driven offerings to support future growth and shareholder value."

2021 Second Quarter Results

Record consolidated net revenue of $260.0 million grew $114.4 million, or 78.6%compared to $145.6 million in the 2020 second quarter. Excluding the impact of exchange rate fluctuations, which positively impacted results by $7.3 million, consolidated net revenue increased $107.1 million or 73.5%. Net revenue growth was driven by all regions in Executive Search, Heidrick Consulting and On-Demand Talent.

Executive Search net revenue increased 67.1%, or $90.0 million, to $224.1 million compared to $134.2 million in the 2020 second quarter. Excluding the impact of exchange rate fluctuations, which positively impacted results by $6.6 million, or 3.1%, Executive Search net revenue increased $83.3 million. Net revenue increased 73.7% in the Americas (73.1% on a constant currency basis), 49.1% in Europe (35.0% on a constant currency basis) and 65.9% in Asia Pacific (56.3% on a constant currency basis). All industry practices exhibited growth over the prior year.

The Company had 369 Executive Search consultants at June 30, 2021 compared to 394 at June 30, 2020 and 373 at March 31, 2021.  Productivity, as measured by annualized Executive Search net revenue per consultant, was $2.4 million compared to $1.4 million in the 2020 second quarter. The average revenue per executive search was $132,700 compared to $141,500 a year earlier, while the number of confirmed searches reached a new record for the Company and increased 78.0% compared to the year-ago period. 

Heidrick Consulting net revenue was grew $5.7 million or 49.6% to $17.1 million compared to $11.4 million in the 2020 second quarter. Excluding the impact from exchange rate fluctuations, which positively impacted revenue by $0.6 million, or 3.9%, Heidrick Consulting net revenue increased $5.0 million. The Company had 65 Heidrick Consulting consultants at June 30, 2021 compared to 68 at June 30, 2020 and 64 at March 31, 2021. 

On-Demand Talent, a new business segment, generated net revenue of $18.7 million which exceeded the Company's expectations.

Consolidated salaries and benefits were $186.1 million compared to $104.7 million in the 2020 second quarter. Fixed compensation expense increased by $8.5 million, primarily due to increases in base salaries and payroll taxes, stock compensation, talent acquisition and retention costs, retirement and benefits, and separation, partially offset by fair value adjustments to the deferred compensation plan and the elimination of certain consultant deferred bonus programs. Variable compensation increased $72.9 million, primarily due to the record revenue performance in the quarter. Salaries and benefits expense was 71.6% of net revenue for the quarter compared to 71.9% in the 2020 second quarter and 73.0% in the 2021 first quarter.

General and administrative expenses improved by 11.3%, or $3.5 million, to $27.4 million from $30.8 million in the 2020 second quarter, primarily due to office occupancy, professional services and bad debt partially offset by increases in intangible amortization associated with BTG, information technology, and travel and entertainment. As a percentage of net revenue, general and administrative expenses were 10.5% compared to 21.2% in the 2020 second quarter and 14.9% in the 2021 first quarter.

The Company's new cost of services expense category was $14.7 million compared to $1.1 million in the 2020 second quarter.  Cost of services expense consists of third-party contractor costs related to the delivery of various services and products, primarily in the new On-Demand Talent business segment established with the recent acquisition of BTG.

The Company recorded a restructuring charge of $3.2 million in the 2021 second quarter primarily related to the timing of office closures associated with the Company's real estate strategy. In the 2020 second quarter, the Company recorded a $33.0 million non-cash goodwill impairment charge. Including the charges in both periods, operating income was $28.7 million compared to an operating loss of $24.0 million in the 2020 second quarter. Operating margin was 11.0% in the 2021 second quarter compared to (16.5)% in the 2020 second quarter. Excluding the restructuring charge, adjusted operating income was $31.9 million compared to $9.0 million and adjusted operating margin was 12.3% compared to 6.2%.  Adjusted EBITDA in the 2021 second quarter was $37.6 million compared to $12.4 million in the 2020 second quarter. Adjusted EBITDA margin was 14.4% compared to 8.5%. 

Net income in the 2021 second quarter was $20.8 million and diluted earnings per share was $1.03 with an effective tax rate of 34.6%. This compares to net loss of $25.7 million and diluted loss per share of $1.33 with an effective tax rate of (21.1)% in last year's second quarter. Excluding the previously mentioned restructuring and goodwill impairment charges in both periods, adjusted net income was $22.9 million compared to $7.2 million and adjusted diluted earnings per share was $1.14 compared to $0.37.

Net cash provided by operating activities was $90.3 million in the 2021 second quarter compared to $40.8 million in the 2020 second quarter. Cash, cash equivalents and marketable securities, net of debt, at June 30, 2021 were $237.8 million, compared to $336.5 million at December 31, 2020, and $287.8 million at June 30, 2020.  The Company's cash position typically builds throughout the year as employee bonuses are accrued, mostly to be paid out in the first quarter. 

2021 Six Months Results

For the six months ended June 30, 2021 consolidated net revenue was $453.6 million compared to $317.1 million in the first six months of 2020. Excluding the impact of exchange rate fluctuations, which positively impacted results by 2.7%, or $12.0 million, consolidated net revenue increased 39.3% or $124.6 million.

Executive Search net revenue in the first six months of 2021 increased 39.4%, or $114.1 million, to $403.8 million from $289.6 million in the first six months of 2020. Excluding the impact of exchange rate fluctuations, which positively impacted results by 2.8%, or $10.9 million, net revenue increased $103.2 million. Net revenue increased 42.5% in the Americas (or 42.4% on a constant currency basis), increased 30.6% in Europe (increased 19.2% on a constant currency basis), and increased 38.9% in Asia Pacific (increased 30.6% on a constant currency basis). All industry practices exhibited growth over the prior year. Productivity was $2.2 million for the first six months of 2021 compared to $1.5 million in the first six months of 2020. The average revenue per executive search was $123,100 in the first six months of 2021 compared to $128,300 the same period in 2020, while confirmations increased 45.3%.

Heidrick Consulting net revenue in the first six months of 2021 increased 13.4%, or $3.7 million, to $31.2 million from $27.5 million in the first six months of 2020. Excluding the impact of exchange rate fluctuations, which positively impacted results by 3.5%, or $1.1 million, Heidrick Consulting revenue increased 9.6%, or $2.6 million.

On-Demand Talent net revenue was $18.7 million.

Operating income for the first six months of 2021 was $48.3 million compared to operating loss of $5.8 million in the same period of 2020. The operating margin was 10.7% compared to (1.8)% in the first six months of 2020. Excluding the restructuring and goodwill impairment charges recorded in 2021 and 2020 year-to-date periods, respectively, adjusted operating income for the first six months of 2021 was $55.4 million compared to $27.1 million and the adjusted operating margin was 12.2% compared to 8.6%. Adjusted EBITDA for the first six months of 2021 was $66.5 million and adjusted EBITDA margin was 14.7%, compared to adjusted EBITDA of $36.1 million and adjusted EBITDA margin of 11.4% for the same period in 2020.

Net income for the first six months of 2021 was $35.6 million and diluted earnings per share was $1.76, with an effective tax rate of 34.7%. This compares to a net loss of $17.1 million and diluted loss per share of $0.89 in the first six months of 2020, with an effective tax rate of (149.0)%. Excluding the restructuring and goodwill impairment charges, adjusted net income was $40.3 million with adjusted diluted earnings per share of $2.00 compared to $15.9 million and $0.81 in the prior year.  The adjusted effective tax rate was 34.6% in 2021 compared to 39.1% in 2020.

New Credit Facility

On July 13, 2021, the Company further strengthened its balance sheet for future growth by renewing and extending its credit facility to July 2026. This Agreement provides for a senior unsecured revolving credit facility in an aggregate amount of $200 million, with an option to  increase up to $275 million in aggregate principal amount, subject to the lenders' approval and provided the company is in compliance with certain conditions of the Agreement. Prior to this Agreement, the Company had a $175 million revolving credit facility, with an option to increase up to $250 million. The facility was led by Bank of America and Truist Bank, supported further by HSBC Bank.

Dividend

The Board of Directors declared a 2021 third quarter cash dividend of $0.15 per share payable on August 20, 2021 to shareholders of record at the close of business on August 6, 2021.

2021 Third Quarter Outlook

The Company expects 2021 third quarter consolidated net revenue of between $245 million and $255 million, while acknowledging the continued fluidity of the COVID-19 pandemic that may impact quarterly results.  In addition, this outlook is based on the average currency rates in June 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 its business.

Quarterly Webcast and Conference Call

Heidrick & Struggles will host a conference call to review its 2021 second quarter results today, July 26 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, conference ID# 7626859.  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 restructuring charges and 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 restructuring charges and goodwill impairment, net of tax.

Adjusted effective tax rate reflects the exclusion of restructuring charges and goodwill impairment, net of tax.

Adjusted EBITDA refers to earnings before interest, taxes, depreciation, intangible amortization, equity-settled stock compensation expense, earnout accretion, contingent compensation related to acquisitions, restructuring charges, goodwill impairment 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. 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," "projects," "forecasts," and similar expressions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted or implied in the forward-looking statements. Factors that may affect the outcome of 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. 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, 2020, under the heading "Risk Factors" in Item 1A, as updated in Part II, Item 1A or this report. We caution the reader that the list of factors may not be exhaustive. 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
+1 212 551 0554, srosenberg@heidrick.com

Media:
Nina Chang – Vice President, Corporate Communications

 


Heidrick & Struggles International, Inc.
Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share amounts)
(Unaudited)



Three Months Ended

June 30,




2021


2020


$ Change


% Change

Revenue








Revenue before reimbursements (net revenue)

$

259,981



$

145,603



$

114,378



78.6

%

Reimbursements

1,254



2,232



(978)



(43.8)

%

Total revenue

261,235



147,835



113,400



76.7

%









Operating expenses








Salaries and benefits

186,054



104,658



81,396



77.8

%

General and administrative expenses

27,353



30,846



(3,493)



(11.3)

%

Cost of services

14,675



1,115



13,560



NM


Impairment charges



32,970



(32,970)



NM


Restructuring charges

3,193





3,193



NM


Reimbursed expenses

1,254



2,232



(978)



(43.8)

%

Total operating expenses

232,529



171,821



60,708



35.3

%









Operating income (loss)

28,706



(23,986)



52,692



NM










Non-operating income (expense)








Interest, net

35



(339)






Other, net

3,033



3,076






Net non-operating income

3,068



2,737














Income (loss) before income taxes

31,774



(21,249)














Provision for income taxes

11,009



4,484














Net income (loss)

20,765



(25,733)














Other comprehensive income, net of tax

5



1,501














Comprehensive income (loss)

$

20,770



$

(24,232)














Weighted-average common shares outstanding








Basic

19,510



19,298






Diluted

20,115



19,298














Earnings (loss) per common share








Basic

$

1.06



$

(1.33)






Diluted

$

1.03



$

(1.33)














Salaries and benefits as a % of net revenue

71.6

%


71.9

%





General and administrative expenses as a % of net revenue

10.5

%


21.2

%





Cost of services as a % of net revenue

5.6

%


0.8

%





Operating margin

11.0

%


(16.5)

%





 


Heidrick & Struggles International, Inc.
Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share amounts)
(Unaudited)



Six Months Ended

June 30,




2021


2020


$ Change


% Change

Revenue








Revenue before reimbursements (net revenue)

$

453,637



$

317,084



$

136,553



43.1

%

Reimbursements

2,329



5,598



(3,269)



(58.4)

%

Total revenue

455,966



322,682



133,284



41.3

%









Operating expenses








Salaries and benefits

327,417



225,747



101,670



45.0

%

General and administrative expenses

54,721



62,223



(7,502)



(12.1)

%

Cost of services

16,131



1,978



14,153



NM


Impairment charges



32,970



(32,970)



NM


Restructuring charges

7,054





7,054



NM


Reimbursed expenses

2,329



5,598



(3,269)



(58.4)

%

Total operating expenses

407,652



328,516



79,136



24.1

%









Operating income (loss)

48,314



(5,834)



54,148



NM










Non-operating income (expense)








Interest, net

117



340






Other, net

6,115



(1,359)






Net non-operating income (expense)

6,232



(1,019)














Income (loss) before income taxes

54,546



(6,853)














Provision for income taxes

18,949



10,214














Net income (loss)

35,597



(17,067)














Other comprehensive loss, net of tax

(688)



(2,245)














Comprehensive income (loss)

$

34,909



$

(19,312)














Weighted-average common shares outstanding








Basic

19,449



19,245






Diluted

20,197



19,245














Earnings (loss) per common share








Basic

$

1.83



$

(0.89)






Diluted

$

1.76



$

(0.89)














Salaries and benefits as a % of net revenue

72.2

%


71.2

%





General and administrative expenses as a % of net revenue

12.1

%


19.6

%





Cost of services as a % of net revenue

3.6

%


0.6

%





Operating margin

10.7

%


(1.8)

%





 


Heidrick & Struggles International, Inc.
Segment Information

(In thousands)
(Unaudited)



Three Months Ended June 30,


2021


2020


$

Change


% Change


2021
Margin1


2020
Margin1

Revenue












Executive Search












Americas

$

147,390



$

84,840



$

62,550



73.7

%





Europe

44,909



30,124



14,785



49.1

%





Asia Pacific

31,834



19,190



12,644



65.9

%





Total Executive Search

224,133



134,154



89,979



67.1

%





On-Demand Talent

18,719





18,719



NM






Heidrick Consulting

17,129



11,449



5,680



49.6

%





Revenue before reimbursements (net revenue)

259,981



145,603



114,378



78.6

%





Reimbursements

1,254



2,232



(978)



(43.8)

%





Total revenue

$

261,235



$

147,835



$

113,400



76.7

%





























Operating income (loss)












Executive Search












Americas2

$

34,594



$

23,102



$

11,492



49.7

%


23.5

%


27.2

%

Europe3

3,979



(23,067)



27,046



117.2

%


8.9

%


(76.6)

%

Asia Pacific4

4,385



(7,329)



11,714



159.8

%


13.8

%


(38.2)

%

Total Executive Search

42,958



(7,294)



50,252



NM



19.2

%


(5.4)

%

On-Demand Talent

153





153



NM



0.8

%


%

Heidrick Consulting5

(3,631)



(8,321)



4,690



56.4

%


(21.2)

%


(72.7)

%

Total segments

39,480



(15,615)



55,095



352.8

%


15.2

%


(10.7)

%

Global Operations Support6

(10,774)



(8,371)



(2,403)



(28.7)

%


(4.1)

%


(5.7)

%

Total operating income (loss)

$

28,706



$

(23,986)



$

52,692



219.7

%


11.0

%


(16.5)

%


1 Margin based on revenue before reimbursements (net revenue).

2 Includes restructuring charges of $3.1 million for the three months ended June 30, 2021.

3 Includes restructuring reversals of less than $0.1 million for the three months ended June 30, 2021. Includes goodwill impairment charges of $24.5 million for the three months ended June 30, 2020.

4 Includes goodwill impairment charges of $8.5 million for the three months ended June 30, 2020.

5 Includes restructuring charges of $0.3 million for the three  months ended June 30, 2021.

6 Includes restructuring reversals of $0.1 million for the three months ended June 30, 2021.

 


Heidrick & Struggles International, Inc.
Segment Information

(In thousands)
(Unaudited)



Six Months Ended June 30,


2021


2020


$

Change


% Change


2021
Margin1


2020
Margin1

Revenue












Executive Search












Americas

$

263,896



$

185,141



$

78,755



42.5

%





Europe

82,552



63,206



19,346



30.6

%





Asia Pacific

57,303



41,260



16,043



38.9

%





Total Executive Search

403,751



289,607



114,144



39.4

%





On-Demand Talent

18,719





18,719



NM






Heidrick Consulting

31,167



27,477



3,690



13.4

%





Revenue before reimbursements (net revenue)

453,637



317,084



136,553



43.1

%





Reimbursements

2,329



5,598



(3,269)



(58.4)

%





Total revenue

$

455,966



$

322,682



$

133,284



41.3

%





























Operating income (loss)












Executive Search












Americas2

$

60,850



$

48,834



$

12,016



24.6

%


23.1

%


26.4

%

Europe3

8,519



(20,018)



28,537



142.6

%


10.3

%


(31.7)

%

Asia Pacific4

8,529



(4,827)



13,356



276.7

%


14.9

%


(11.7)

%

Total Executive Search

77,898



23,989



53,909



224.7

%


19.3

%


8.3

%

On-Demand Talent

153





153



NM



0.8

%


%

Heidrick Consulting5

(8,341)



(12,413)



4,072



32.8

%


(26.8)

%


(45.2)

%

Total segments

69,710



11,576



58,134



502.2

%


15.4

%


3.7

%

Global Operations Support6

(21,396)



(17,410)



(3,986)



(22.9)

%


(4.7)

%


(5.5)

%

Total operating income (loss)

$

48,314



$

(5,834)



$

54,148



928.1

%


10.7

%


(1.8)

%


1 Margin based on revenue before reimbursements (net revenue).

2 Includes restructuring charges of $6.8 million for the six months ended June 30, 2021.

3 Includes restructuring reversals of $0.1 million for the six months ended June 30, 2021. Includes goodwill impairment charges of $24.5 million for the six months ended June 30, 2020.

4 Includes restructuring reversal of $0.1 million for the six months ended June 30, 2021. Includes goodwill impairment charges of $8.5 million for the six months ended June 30, 2020.

5 Includes restructuring charges of $0.6 million for the six months ended June 30, 2021.

6 Includes restructuring reversals of $0.1 million for the six months ended June 30, 2021.

 

Heidrick & Struggles International, Inc.
Reconciliation of Operating Income (Loss) and Adjusted Operating Income (Non-GAAP)

(In thousands)
(Unaudited)



Three Months Ended

June 30,


Six Months Ended

June 30,


2021


2020


2021


2020

Revenue before reimbursements (net revenue)

$

259,981



$

145,603



$

453,637



$

317,084










Operating income (loss)

28,706



(23,986)



48,314



(5,834)










Adjustments








Impairment charges1



32,970





32,970


Restructuring charges2

3,193





7,054




Total adjustments

3,193



32,970



7,054



32,970










Adjusted operating income

$

31,899



$

8,984



$

55,368



$

27,136










Operating margin

11.0

%


(16.5)

%


10.7

%


(1.8)

%

Adjusted operating margin

12.3

%


6.2

%


12.2

%


8.6

%


1 The Company incurred goodwill impairment charges of approximately $33.0 million in the Europe and Asia Pacific operating segments for the three and six months ended June 30, 2020.

2 The Company incurred restructuring charges of approximately $3.2 million and $7.1 million across all operating segments for the three and six months ended June 30, 2021, respectively.


 

Heidrick & Struggles International, Inc.
Reconciliation of Net Income (Loss) and Adjusted Net Income (Non-GAAP)

(In thousands)
(Unaudited)



Three Months Ended

June 30,


Six Months

June 30,


2021


2020


2021


2021

Net income (loss)

$

20,765



$

(25,733)



$

35,597



$

(17,067)










Adjustments








Impairment charges, net of tax1



32,970





32,970


Restructuring charges, net of tax2

2,142





4,717




Total adjustments

2,142



32,970



4,717



32,970










Adjusted net income

$

22,907



$

7,237



$

40,314



$

15,903










Weighted-average common shares outstanding








Basic

19,510



19,298



19,449



19,245


Diluted

20,115



19,558



20,197



19,722










Earnings (loss) per common share








Basic

$

1.06



$

(1.33)



$

1.83



$

(0.89)


Diluted

$

1.03



$

(1.33)



$

1.76



$

(0.89)










Adjusted earnings per common share








Basic

$

1.17



$

0.38



$

2.07



$

0.83


Diluted

$

1.14



$

0.37



$

2.00



$

0.81



1 The Company incurred goodwill impairment charges of approximately $33.0 million in the Europe and Asia Pacific operating segments for the three and six months ended June 30, 2020.

2 The Company incurred restructuring charges of approximately $3.2 million and $7.1 million across all operating segments for the three and six months ended June 30, 2021, respectively.

 


Heidrick & Struggles International, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)



June 30,
2021


December 31,
2020





Current assets




Cash and cash equivalents

$

237,832



$

316,473


Marketable securities



19,999


Accounts receivable, net

168,504



88,123


Prepaid expenses

25,040



18,956


Other current assets

33,781



23,279


Income taxes recoverable

5,447



5,856


Total current assets

470,604



472,686






Non-current assets




Property and equipment, net

22,682



23,492


Operating lease right-of-use assets

77,840



92,671


Assets designated for retirement and pension plans

14,001



14,425


Investments

35,365



31,369


Other non-current assets

26,706



24,439


Goodwill

137,401



91,643


Other intangible assets, net

10,903



1,129


Deferred income taxes

36,564



35,958


Total non-current assets

361,462



315,126






Total assets

$

832,066



$

787,812






Current liabilities




Accounts payable

$

17,789



$

8,799


Accrued salaries and benefits

198,120



217,908


Deferred revenue

41,915



38,050


Operating lease liabilities

27,572



28,984


Other current liabilities

19,042



23,311


Income taxes payable

13,356



1,186


Total current liabilities

317,794



318,238






Non-current liabilities




Accrued salaries and benefits

53,553



56,925


Retirement and pension plans

56,919



53,496


Operating lease liabilities

75,993



86,816


Other non-current liabilities

28,254



4,735


Total non-current liabilities

214,719



201,972






Total liabilities

532,513



520,210






Stockholders' equity

299,553



267,602






Total liabilities and stockholders' equity

$

832,066



$

787,812


 


Heidrick & Struggles International, Inc.
Consolidated Statements of Cash Flows

(In thousands)
(Unaudited)




Three Months Ended

June 30,



2021


2020

Cash flows - operating activities





Net income (loss)


$

20,765



$

(25,733)


Adjustments to reconcile net income (loss) to net cash used in operating activities:





Depreciation and amortization


5,974



2,130


Deferred income taxes


(644)



270


Stock-based compensation expense


2,861



1,320


Accretion expense related to earnout payments


181




Gain on marketable securities




(11)


Loss on disposal of property and equipment


94



274


Impairment charges




32,970


Changes in assets and liabilities, net of effects of acquisition:





Accounts receivable


(29,771)



7,643


Accounts payable


1,132



248


Accrued expenses


92,035



17,423


Restructuring accrual


(1,761)



(1,342)


Deferred revenue


1,915



(3,510)


Income taxes recoverable and payable, net


5,696



2,673


Retirement and pension plan assets and liabilities


201



(758)


Prepaid expenses


1,912



2,025


Other assets and liabilities, net


(10,362)



5,213


Net cash provided by operating activities


90,228



40,835







Cash flows - investing activities





Acquisition of business, net of cash acquired


(31,969)




Capital expenditures


(1,761)



(2,803)


Purchases of marketable securities and investments


(317)



(69,294)


Proceeds from sales of marketable securities and investments


162



1,072


Net cash used in investing activities


(33,885)



(71,025)







Cash flows - financing activities





Cash dividends paid


(2,993)



(2,995)


Net cash used in financing activities


(2,993)



(2,995)







Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash


427



945







Net increase (decrease) in cash, cash equivalents and restricted cash


53,777



(32,240)


Cash, cash equivalents and restricted cash at beginning of period


184,071



251,000


Cash, cash equivalents and restricted cash at end of period


$

237,848



$

218,760


 


Heidrick & Struggles International, Inc.
Consolidated Statements of Cash Flows

(In thousands)
(Unaudited)




Six Months Ended

June 30,



2021


2020

Cash flows - operating activities





Net income (loss)


$

35,597



$

(17,067)


Adjustments to reconcile net income (loss) to net cash used in operating activities:





Depreciation and amortization


12,042



4,467


Deferred income taxes


(1,139)



380


Stock-based compensation expense


5,852



3,934


Accretion expense related to earnout payments


181




Gain on marketable securities


(1)



(122)


Loss on disposal of property and equipment


115



275


Impairment charges




32,970


Changes in assets and liabilities, net of effects of acquisition:





Accounts receivable


(70,980)



(17,013)


Accounts payable


2,497



2,145


Accrued expenses


(24,292)



(129,842)


Restructuring accrual


(4,663)



(1,480)


Deferred revenue


2,878



(2,673)


Income taxes recoverable and payable, net


12,515



6,755


Retirement and pension plan assets and liabilities


1,436



1,275


Prepaid expenses


(5,982)



(4,541)


Other assets and liabilities, net


(18,399)



(4,228)


Net cash used in operating activities


(52,343)



(124,765)







Cash flows - investing activities





Acquisition of business, net of cash acquired


(31,969)




Capital expenditures


(2,706)



(4,556)


Purchases of marketable securities and investments


(1,671)



(71,419)


Proceeds from sales of marketable securities and investments


20,315



62,467


Net cash used in investing activities


(16,031)



(13,508)







Cash flows - financing activities





Proceeds from line of credit




100,000


Cash dividends paid


(6,065)



(5,997)


Payment of employee tax withholdings on equity transactions


(3,090)



(1,550)


Acquisition earnout payments




(2,789)


Net cash (used in) provided by financing activities


(9,155)



89,664







Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash


(1,112)



(4,350)







Net decrease in cash, cash equivalents and restricted cash


(78,641)



(52,959)


Cash, cash equivalents and restricted cash at beginning of period


316,489



271,719


Cash, cash equivalents and restricted cash at end of period


$

237,848



$

218,760


 

Heidrick & Struggles International, Inc.
Reconciliation of Net Income (Loss) and Operating Income (Loss) to Adjusted EBITDA (Non-GAAP)

(In thousands)
(Unaudited)



Three Months Ended

June 30,


Six Months Ended

June 30,


2021


2020


2021


2020

Revenue before reimbursements (net revenue)

$

259,981



$

145,603



$

453,637



$

317,084










Net income (loss)

20,765



(25,733)



35,597



(17,067)


Interest, net

(35)



339



(117)



(340)


Other, net

(3,033)



(3,076)



(6,115)



1,359


Provision for income taxes

11,009



4,484



18,949



10,214


Operating income (loss)

28,706



(23,986)



48,314



(5,834)










Adjustments








Stock-based compensation expense

2,492



844



5,465



3,446


Depreciation

1,744



1,936



3,537



4,065


Intangible amortization

766



194



1,001



402


Earnout accretion

181





181




Acquisition contingent consideration

469



462



923



1,020


Restructuring charges

3,193





7,054




Impairment charges



32,970





32,970


Total adjustments

8,845



36,406



18,161



41,903










Adjusted EBITDA

$

37,551



$

12,420



$

66,475



$

36,069


Adjusted EBITDA margin

14.4

%


8.5

%


14.7

%


11.4

%

 

Cision View original content:https://www.prnewswire.com/news-releases/heidrick--struggles-continues-to-deliver-record-results-301341351.html

SOURCE Heidrick & Struggles International, Inc.

Heidrick & Struggles International, Inc.

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we help our clients change the world, one leadership team at a time®. heidrick & struggles international, inc., (nasdaq:hsii) serves the executive talent and leadership needs of the worlds top organizations as the premier provider of leadership consulting, culture shaping and senior-level executive search services.heidrick & struggles pioneered the profession of executive search more than 60 years ago. today, the firm serves as a trusted advisor, providing integrated leadership solutions that transform leaders, teams and organizations. heidrick & struggles experts operate from principal business centers in north america, latin america, europe and asia pacific. for more information about heidrick & struggles, please visit www.heidrick.com. to learn more about our culture change business, visit www.senndelaney.com