Highlights:
- Fourth quarter net revenue (revenue before reimbursements) increased 19.2% to
$144.5 million from$121.3 million in the 2014 fourth quarter. Net revenue increased 23.4% on a constant currency basis. - Adjusted EBITDA(1) in the fourth quarter improved to
$11.4 million and Adjusted EBITDA margin(1) was 7.9%, compared to Adjusted EBITDA of$9.5 million and Adjusted EBITDA margin of 7.9% in the 2014 fourth quarter. - For the year, net revenue of
$531.1 million increased 7.5% from$494.3 million in 2014. Net revenue in 2015 increased 12.3% on a constant currency basis. - Adjusted EBITDA in 2015 improved to
$55.8 million and Adjusted EBITDA margin was 10.5%, compared to Adjusted EBITDA of$48.9 million and Adjusted EBITDA margin of 9.9% in 2014. - The number of
Executive Search and Leadership Consulting consultants was 334 atDecember 31, 2015 compared to 307 atDecember 31 , 2014. - Specific to
Executive Search and Leadership Consulting , consultant productivity, as measured by net revenue per consultant, was$1.6 million in the fourth quarter and$1.5 million for the year. - Invested in the growth of its
Leadership Consulting business with new leadership together with the acquisition ofCo Company .
"Our fourth quarter and 2015 results reflect a second year of year-over-year growth in net revenue, profitability, and consultant headcount," said
(1) Adjusted EBITDA refers to earnings before interest, taxes, depreciation, intangible amortization, stock-based compensation expense, compensation expense associated with
2015 Fourth Quarter Results
Consolidated net revenue (revenue before reimbursements) increased 19.2 percent, or
Net revenue from Culture Shaping services increased 24.7 percent, or
The company ended the fourth quarter and 2015 with 334
Salaries and employee benefits expense in the 2015 fourth quarter increased 22.4 percent, or
General and administrative expenses increased 8.3 percent, or
Adjusted EBITDA in the 2015 fourth quarter increased 19.0 percent, or
Operating income in the 2015 fourth quarter increased 38.9 percent year over year, or
Net income in the 2015 fourth quarter increased to
Net cash provided by operating activities in the 2015 fourth quarter was
2015 Results
For the fiscal year ended
Net revenue from Culture Shaping services increased 4.5 percent in 2015, or
Productivity, as measured by annualized
Adjusted EBITDA in 2015 improved to
Net income in 2015 was
First Quarter 2016 Outlook
The company is forecasting first quarter 2016 consolidated net revenue of between
Wolstencroft added, "I want to thank all of our employees for their contributions to last year's results. We begin 2016 with a strong foundation of global professionals and distinctive service offerings from which to serve our clients as trusted advisors, accelerating performance at the leader, leadership team, and organizational levels of an organization. To grow and strengthen our business around the world, and provide greater return to our shareholders, we must continue to attract, develop and retain the very best professionals, increase the depth and breadth of our service capabilities and further improve our internal operations."
Quarterly Conference Call
Executives of
About
Non-GAAP Financial Measures
This earnings release contains 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 EBITDA and Adjusted EBITDA margin. Adjusted EBITDA refers to earnings before interest, taxes, depreciation, intangible amortization, stock-based compensation expense, compensation expense associated with
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.
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, our ability to attract, integrate, manage and retain qualified executive search consultants; our ability to develop and maintain strong, long-term relationships with our clients; declines in the global economy and our ability to execute successfully through business cycles; the timing, speed or robustness of any future economic recovery; social or political instability in markets where we operate; the impact of foreign currency exchange rate fluctuations; unfavorable tax law changes and tax authority rulings; price competition; the ability to forecast, on a quarterly basis, variable compensation accruals that ultimately are determined based on the achievement of annual results; our ability to utilize our tax losses; the timing of the establishment or reversal of valuation allowances on deferred tax assets; the mix of profit and loss by country; our reliance on information management systems; any impairment of our goodwill and other intangible assets; and the ability to align our cost structure and headcount with net revenue. 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
Press Release Contacts:
1.312.496.1774, jcreed@heidrick.com
H&S Media Contact:
1.312.496.1788, lrandazzo@heidrick.com
Heidrick & Struggles International, Inc. |
|||||||
Consolidated Statements of Comprehensive Income (Loss) |
|||||||
(In thousands, except per share data) |
|||||||
(Unaudited) |
|||||||
Three months ended |
|||||||
December 31, |
|||||||
2015 |
2014 |
$ Change |
% Change |
||||
Revenue: |
|||||||
Revenue before reimbursements (net revenue) |
$144,520 |
$121,262 |
$23,258 |
19.2% |
|||
Reimbursements |
4,776 |
5,226 |
(450) |
-8.6% |
|||
Total revenue |
149,296 |
126,488 |
22,808 |
18.0% |
|||
Operating expenses: |
|||||||
Salaries and employee benefits |
104,471 |
85,359 |
19,112 |
22.4% |
|||
General and administrative expenses |
34,764 |
32,099 |
2,665 |
8.3% |
|||
Reimbursed expenses |
4,776 |
5,226 |
(450) |
-8.6% |
|||
Total operating expenses |
144,011 |
122,684 |
21,327 |
17.4% |
|||
Operating income |
5,285 |
3,804 |
1,481 |
38.9% |
|||
Non-operating expense: |
|||||||
Interest, net |
178 |
(126) |
|||||
Other, net |
(690) |
(1,664) |
|||||
Net non-operating expense |
(512) |
(1,790) |
|||||
Income before income taxes |
4,773 |
2,014 |
|||||
Provision for income taxes |
3,513 |
1,252 |
|||||
Net income |
1,260 |
762 |
|||||
Other comprehensive income (loss), net of tax |
561 |
(2,847) |
|||||
Comprehensive income (loss) |
$1,821 |
($2,085) |
|||||
Basic weighted average common shares outstanding |
18,379 |
18,240 |
|||||
Dilutive common shares |
381 |
293 |
|||||
Diluted weighted average common shares outstanding |
18,760 |
18,533 |
|||||
Basic net income per common share |
$0.07 |
$0.04 |
|||||
Diluted net income per common share |
$0.07 |
$0.04 |
|||||
Salaries and employee benefits as a % of net revenue |
72.3% |
70.4% |
|||||
General and administrative expense as a % of net revenue |
24.1% |
26.5% |
|||||
Operating income as a % of net revenue |
3.7% |
3.1% |
Heidrick & Struggles International, Inc. |
||||||||||||
Segment Information |
||||||||||||
(In thousands) |
||||||||||||
(Unaudited) |
||||||||||||
Three Months Ended December 31, |
||||||||||||
$ |
% |
2015 |
2014 |
|||||||||
2015 |
2014 |
Change |
Change |
Margin * |
Margin * |
|||||||
Revenue: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$81,913 |
$67,796 |
$14,117 |
20.8% |
||||||||
Europe |
30,927 |
24,347 |
6,580 |
27.0% |
||||||||
Asia Pacific |
21,021 |
20,570 |
451 |
2.2% |
||||||||
Total Executive Search and Leadership Consulting |
133,861 |
112,713 |
21,148 |
18.8% |
||||||||
Culture Shaping |
10,659 |
8,549 |
2,110 |
24.7% |
||||||||
Revenue before reimbursements (net revenue) |
144,520 |
121,262 |
23,258 |
19.2% |
||||||||
Reimbursements |
4,776 |
5,226 |
(450) |
-8.6% |
||||||||
Total revenue |
$149,296 |
$126,488 |
$22,808 |
18.0% |
||||||||
Operating income: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$17,109 |
$14,416 |
$2,693 |
18.7% |
20.9% |
21.3% |
||||||
Europe |
1,216 |
433 |
783 |
180.8% |
3.9% |
1.8% |
||||||
Asia Pacific |
(2,245) |
96 |
(2,341) |
NM |
-10.7% |
0.5% |
||||||
Total Executive Search and Leadership Consulting |
16,080 |
14,945 |
1,135 |
7.6% |
12.0% |
13.3% |
||||||
Culture Shaping |
1,965 |
978 |
987 |
100.9% |
18.4% |
11.4% |
||||||
Total segments |
18,045 |
15,923 |
2,122 |
13.3% |
12.5% |
13.1% |
||||||
Global Operations Support |
(12,760) |
(12,119) |
(641) |
5.3% |
-8.8% |
-10.0% |
||||||
Operating income |
$5,285 |
$3,804 |
$1,481 |
38.9% |
3.7% |
3.1% |
* Margin based on revenue before reimbursements (net revenue). |
Heidrick & Struggles International, Inc. |
|||||||
Consolidated Statements of Comprehensive Income |
|||||||
(In thousands, except per share amounts) |
|||||||
(Unaudited) |
|||||||
Twelve months ended |
|||||||
December 31, |
|||||||
2015 |
2014 |
$ Change |
% Change |
||||
Revenue: |
|||||||
Revenue before reimbursements (net revenue) |
$531,139 |
$494,292 |
$36,847 |
7.5% |
|||
Reimbursements |
17,172 |
18,947 |
(1,775) |
-9.4% |
|||
Total revenue |
548,311 |
513,239 |
35,072 |
6.8% |
|||
Operating expenses: |
|||||||
Salaries and employee benefits |
369,385 |
337,448 |
31,937 |
9.5% |
|||
General and administrative expenses |
127,692 |
130,191 |
(2,499) |
-1.9% |
|||
Reimbursed expenses |
17,172 |
18,947 |
(1,775) |
-9.4% |
|||
Total operating expenses |
514,249 |
486,586 |
27,663 |
5.7% |
|||
Operating income |
34,062 |
26,653 |
7,409 |
27.8% |
|||
Non-operating expense: |
|||||||
Interest, net |
(122) |
(358) |
|||||
Other, net |
(2,386) |
(2,108) |
|||||
Net non-operating expense |
(2,508) |
(2,466) |
|||||
Income before income taxes |
31,554 |
24,187 |
|||||
Provision for income taxes |
14,422 |
17,390 |
|||||
Net income |
17,132 |
6,797 |
|||||
Other comprehensive loss, net of tax |
(1,964) |
(3,746) |
|||||
Comprehensive income |
$15,168 |
$3,051 |
|||||
Basic weighted average common shares outstanding |
18,334 |
18,210 |
|||||
Dilutive common shares |
381 |
222 |
|||||
Diluted weighted average common shares outstanding |
18,715 |
18,432 |
|||||
Basic net income per common share |
$0.93 |
$0.37 |
|||||
Diluted net income per common share |
$0.92 |
$0.37 |
|||||
Salaries and employee benefits as a % of net revenue |
69.5% |
68.3% |
|||||
General and administrative expense as a % of net revenue |
24.0% |
26.3% |
|||||
Operating income as a % of net revenue |
6.4% |
5.4% |
Heidrick & Struggles International, Inc. |
||||||||||||
Segment Information |
||||||||||||
(In thousands) |
||||||||||||
(Unaudited) |
||||||||||||
Twelve Months Ended December 31, |
||||||||||||
$ |
% |
2015 |
2014 |
|||||||||
2015 |
2014 |
Change |
Change |
Margin * |
Margin * |
|||||||
Revenue: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$300,473 |
$260,830 |
$39,643 |
15.2% |
||||||||
Europe |
100,606 |
108,979 |
(8,373) |
-7.7% |
||||||||
Asia Pacific |
93,733 |
89,732 |
4,001 |
4.5% |
||||||||
Total Executive Search and Leadership Consulting |
494,812 |
459,541 |
35,271 |
7.7% |
||||||||
Culture Shaping |
36,327 |
34,751 |
1,576 |
4.5% |
||||||||
Revenue before reimbursements (net revenue) |
531,139 |
494,292 |
36,847 |
7.5% |
||||||||
Reimbursements |
17,172 |
18,947 |
(1,775) |
-9.4% |
||||||||
Total revenue |
$548,311 |
$513,239 |
$35,072 |
6.8% |
||||||||
Operating income: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$67,672 |
$57,682 |
$9,990 |
17.3% |
22.5% |
22.1% |
||||||
Europe |
2,234 |
4,806 |
(2,572) |
-53.5% |
2.2% |
4.4% |
||||||
Asia Pacific |
5,843 |
4,886 |
957 |
19.6% |
6.2% |
5.4% |
||||||
Total Executive Search and Leadership Consulting |
75,749 |
67,374 |
8,375 |
12.4% |
15.3% |
14.7% |
||||||
Culture Shaping |
4,913 |
4,621 |
292 |
6.3% |
13.5% |
13.3% |
||||||
Total segments |
80,662 |
71,995 |
8,667 |
12.0% |
15.2% |
14.6% |
||||||
Global Operations Support |
(46,600) |
(45,342) |
(1,258) |
2.8% |
-8.8% |
-9.2% |
||||||
Operating income |
$34,062 |
$26,653 |
$7,409 |
27.8% |
6.4% |
5.4% |
* Margin based on revenue before reimbursements (net revenue). |
Heidrick & Struggles International, Inc. |
||||||
Consolidated Balance Sheets |
||||||
(In thousands) |
||||||
As Adjusted |
||||||
December 31, |
December 31, |
|||||
2015 |
2014 |
|||||
(Unaudited) |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$190,452 |
$211,352 |
||||
Restricted cash |
7,197 |
6,501 |
||||
Accounts receivable, net |
76,058 |
68,353 |
||||
Prepaid expenses |
19,197 |
14,536 |
||||
Other current assets |
11,250 |
12,205 |
||||
Income taxes recoverable |
4,809 |
5,288 |
||||
Total current assets |
308,963 |
318,235 |
||||
Non-current assets: |
||||||
Property and equipment, net |
36,498 |
30,417 |
||||
Assets designated for retirement and pension plans |
16,857 |
19,426 |
||||
Investments |
14,145 |
13,709 |
||||
Other non-current assets |
11,115 |
8,292 |
||||
Goodwill |
131,122 |
122,176 |
||||
Other intangible assets, net |
18,687 |
20,939 |
||||
Deferred income taxes |
35,331 |
35,427 |
||||
Total non-current assets |
263,755 |
250,386 |
||||
Total assets |
$572,718 |
$568,621 |
||||
Current liabilities: |
||||||
Current portion of debt |
$ - |
$6,000 |
||||
Accounts payable |
6,150 |
5,493 |
||||
Accrued salaries and employee benefits |
158,875 |
130,434 |
||||
Deferred revenue, net |
29,724 |
30,452 |
||||
Other current liabilities |
31,239 |
26,785 |
||||
Income taxes payable |
3,442 |
6,684 |
||||
Total current liabilities |
229,430 |
205,848 |
||||
Non-current liabilities: |
||||||
Non-current debt, less current maturities |
- |
23,500 |
||||
Retirement and pension plans |
35,949 |
39,892 |
||||
Other non-current liabilities |
52,537 |
54,717 |
||||
Total non-current liabilities |
88,486 |
118,109 |
||||
Stockholders' equity |
254,802 |
244,664 |
||||
Total liabilities and stockholders' equity |
$572,718 |
$568,621 |
Heidrick & Struggles International, Inc. |
|||||||
Consolidated Statements of Cash Flows |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
Twelve Months Ended |
|||||||
December 31, |
|||||||
2015 |
2014 |
||||||
Cash flows - operating activities: |
|||||||
Net income |
$17,132 |
$6,797 |
|||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
13,696 |
15,312 |
|||||
Deferred income taxes |
(1,166) |
237 |
|||||
Stock-based compensation expense |
5,066 |
3,579 |
|||||
Accretion expense related to earnout payments |
1,294 |
1,854 |
|||||
Cash paid for restructuring charges |
- |
(142) |
|||||
Changes in assets and liabilities, net of effects of acquisitions: |
|||||||
Accounts receivable |
(8,714) |
217 |
|||||
Accounts payable |
810 |
(2,113) |
|||||
Accrued expenses |
37,207 |
29,979 |
|||||
Deferred revenue |
(236) |
3,486 |
|||||
Income taxes (payable) recoverable, net |
(3,257) |
1,482 |
|||||
Retirement and pension assets and liabilities |
(1,142) |
4,477 |
|||||
Prepaid expenses |
(4,388) |
(207) |
|||||
Other assets and liabilities, net |
1,281 |
(8,194) |
|||||
Net cash provided by operating activities |
57,583 |
56,764 |
|||||
Cash flows - investing activities: |
|||||||
Restricted cash |
- |
(53) |
|||||
Acquisition of business and earnout payments, net of cash acquired |
(10,312) |
- |
|||||
Capital expenditures |
(16,427) |
(3,359) |
|||||
Purchases of available for sale investments |
(1,526) |
(963) |
|||||
Proceeds from sale of available for sale investments |
758 |
1,084 |
|||||
Net cash used in investing activities |
(27,507) |
(3,291) |
|||||
Cash flows - financing activities: |
|||||||
Debt repayment |
(29,500) |
(6,000) |
|||||
Debt issuance costs |
(473) |
- |
|||||
Cash dividends paid |
(9,991) |
(9,864) |
|||||
Payment of employee tax withholdings on equity transactions |
(878) |
(406) |
|||||
Acquisition earnout payments |
(5,496) |
(3,390) |
|||||
Net cash used in financing activities |
(46,338) |
(19,660) |
|||||
Effect of exchange rate fluctuations on cash and cash equivalents |
(4,638) |
(4,107) |
|||||
Net (decrease) increase in cash and cash equivalents |
(20,900) |
29,706 |
|||||
Cash and cash equivalents at beginning of period |
211,352 |
181,646 |
|||||
Cash and cash equivalents at end of period |
$ 190,452 |
$ 211,352 |
Heidrick & Struggles International, Inc. |
||||||||
Consolidated Statements of Cash Flows |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
Three Month Ended |
||||||||
December 31, |
||||||||
2015 |
2014 |
|||||||
Cash flows - operating activities: |
||||||||
Net income |
$1,260 |
$762 |
||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
3,713 |
3,953 |
||||||
Deferred income taxes |
(1,013) |
(5,396) |
||||||
Stock-based compensation expense |
1,382 |
694 |
||||||
Accretion expense related to earnout payments |
433 |
546 |
||||||
Cash paid for restructuring charges |
- |
(34) |
||||||
Changes in assets and liabilities, net of effects of acquisitions: |
||||||||
Accounts receivable |
31,868 |
23,067 |
||||||
Accounts payable |
2,121 |
64 |
||||||
Accrued expenses |
42,568 |
31,753 |
||||||
Deferred revenue |
(4,157) |
(1,000) |
||||||
Income taxes (payable) recoverable, net |
(156) |
3,702 |
||||||
Retirement and pension assets and liabilities |
(1,211) |
4,377 |
||||||
Prepaid expenses |
(3,334) |
350 |
||||||
Other assets and liabilities, net |
4,149 |
(4,026) |
||||||
Net cash provided by operating activities |
77,623 |
58,812 |
||||||
Cash flows - investing activities: |
||||||||
Restricted cash |
- |
50 |
||||||
Acquisition of business and earnout payments, net of cash acquired |
(10,312) |
- |
||||||
Capital expenditures |
(2,530) |
(750) |
||||||
Purchases of available for sale investments |
(124) |
(67) |
||||||
Proceeds from sale of available for sale investments |
128 |
118 |
||||||
Net cash used in investing activities |
(12,838) |
(649) |
||||||
Cash flows - financing activities: |
||||||||
Debt repayment |
- |
(1,500) |
||||||
Debt issuance costs |
(51) |
- |
||||||
Cash dividends paid |
(2,495) |
(2,500) |
||||||
Net cash used in financing activities |
(2,546) |
(4,000) |
||||||
Effect of exchange rate fluctuations on cash and cash equivalents |
(747) |
(2,348) |
||||||
Net increase in cash and cash equivalents |
61,492 |
51,815 |
||||||
Cash and cash equivalents at beginning of period |
128,690 |
159,537 |
||||||
Cash and cash equivalents at end of period |
$ 190,452 |
$ 211,352 |
Heidrick & Struggles International, Inc. |
||||||||||
Reconciliation of Net Income and Operating Income (GAAP) to |
||||||||||
Adjusted EBITDA (Non-GAAP) |
||||||||||
(In thousands) |
||||||||||
(Unaudited) |
||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||
December 31, |
December 31, |
|||||||||
2015 |
2014 |
2015 |
2014 |
|||||||
Revenue before reimbursements (net revenue) |
$144,520 |
$121,262 |
$531,139 |
$494,292 |
||||||
Net income |
1,260 |
762 |
17,132 |
6,797 |
||||||
Interest, net |
178 |
(126) |
(122) |
(358) |
||||||
Other, net |
(690) |
(1,664) |
(2,386) |
(2,108) |
||||||
Provision for income taxes |
3,513 |
1,252 |
14,422 |
17,390 |
||||||
Operating income |
5,285 |
3,804 |
34,062 |
26,653 |
||||||
Adjustments |
||||||||||
Salaries and employee benefits |
||||||||||
Stock-based compensation expense |
1,382 |
694 |
4,616 |
3,128 |
||||||
Senn Delaney retention awards |
542 |
542 |
2,167 |
2,000 |
||||||
General and administrative expenses |
||||||||||
Depreciation |
2,303 |
2,589 |
8,788 |
9,802 |
||||||
Intangible amortization |
1,410 |
1,364 |
4,908 |
5,510 |
||||||
Earnout accretion |
433 |
546 |
1,294 |
1,854 |
||||||
Total adjustments |
6,070 |
5,735 |
21,773 |
22,294 |
||||||
Adjusted EBITDA |
$11,355 |
$9,539 |
$55,835 |
$48,947 |
||||||
Adjusted EBITDA Margin |
7.9% |
7.9% |
10.5% |
9.9% |
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