Heidrick & Struggles Reports Second Quarter 2023 Results
- Positive impact of recent acquisitions of Atreus and businessfourzero
- Demonstrated organic sequential growth across all business segments
- Maintains a strong balance sheet post-acquisitions
- Focus on diversification and digital capabilities for next-generation talent and leadership advisory services
- None.
Maintains Strong Balance Sheet Post-Acquisitions of Atreus and businessfourzero
Second Quarter Highlights:
- Net revenue of
increased$271.2 million 13% sequentially,10% organically - Operating income of
decreased$13.6 million sequentially and operating margin was$4.2 million 5.0% - Adjusted operating income of
increased$20.8 million 17% sequentially and adjusted operating margin was7.7% - Adjusted EBITDA of
increased$36.4 million 33% sequentially and adjusted EBITDA margin was13.4% - Net income was
and diluted earnings per share was$9.0 million ; adjusted net income was$0.44 and adjusted diluted earnings per share was$15.0 million $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
On a sequential basis, 2023 second quarter net revenue increased
Executive Search net revenue of
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
On-Demand Talent net revenue of
Heidrick Consulting net revenue of
Consolidated salaries and benefits decreased
General and administrative expenses increased
The Company's cost of services was
The Company's research and development expenses were
In the 2023 second quarter, the Company recorded a non-cash goodwill impairment charge of
Including the previously mentioned non-cash impairment charge, operating income was
Adjusted EBITDA was
Net income was
Net cash provided by operating activities was
2023 Six Months Results
For the six months ended June 30, 2023, consolidated net revenue was
Executive Search net revenue in the first six months of 2023 decreased
On-Demand Talent net revenue in the first six months of 2023 was
Heidrick Consulting net revenue in the first six months of 2023 increased
Operating income for the first six months of 2023 was
Adjusted EBITDA for the first six months of 2023 was
Net income for the first six months of 2023 was
Dividend
The Board of Directors declared a 2023 second quarter cash dividend of
2023 Third Quarter Outlook
The Company expects 2023 third quarter consolidated net revenue of between
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
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
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 | % | 2023 | 2022 | ||||||
Revenue | |||||||||||
Executive Search | |||||||||||
Americas | $ (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 | $ (27,332) | (9.1) % | |||||||||
Operating income (loss) | |||||||||||
Executive Search | |||||||||||
Americas | $ (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 | $ (20,281) | (59.9) % | 5.0 % | 11.3 % |
1 Margin based on revenue before reimbursements (net revenue). |
2 Includes impairment charges of |
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 | % | 2023 | 2022 | ||||||
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 |
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 |
Heidrick & Struggles International, Inc. Consolidated Balance Sheets (In thousands) (Unaudited) | |||
June 30, | December 31, | ||
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 | $ 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 | On-Demand | Heidrick | Research & | Global | Total | ||||||
Revenue before reimbursements (net | $ 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 | On-Demand | Heidrick | Research & | Global | Total | ||||||
Revenue before reimbursements (net | $ 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 | ( | $ (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 |
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 | On-Demand | Heidrick | Research & | Global | Total | ||||||
Revenue before reimbursements (net | $ 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 | On-Demand | Heidrick | Research & | Global | Total | ||||||
Revenue before reimbursements (net | $ 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 |
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SOURCE Heidrick & Struggles International, Inc.
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