Consolidated net revenue (revenue before reimbursements) increased 10.0 percent, or
Net revenue from Culture Shaping services declined 11.2 percent, or
"Solid revenue growth in the third quarter, up 15.8 percent in constant currency, drove good improvements in adjusted EBITDA(1) , operating income and net income," said
The company ended the third quarter with 334
Salaries and employee benefits expense in the 2015 third quarter increased 13.9 percent, or
General and administrative expenses declined 7.6 percent, or
(1) Adjusted EBITDA refers to earnings before interest, taxes, depreciation, intangible amortization, stock-based compensation expense, compensation expense associated with
Adjusted EBITDA(1) in the 2015 third quarter increased 20.9 percent, or
Operating income in the 2015 third quarter increased 35.3 percent year over year, or
Net income in the 2015 third quarter increased to
Net cash provided by operating activities in the 2015 third quarter was
Nine Months Results
For the nine months ended
Net revenue from Culture Shaping services declined 2.0 percent, or
Productivity, as measured by annualized
Adjusted EBITDA(1) for the first nine months of 2015 improved to
Net income for the first nine months of 2015 was
Fourth Quarter 2015 Outlook
The company is forecasting fourth quarter 2015 consolidated net revenue of between
Wolstencroft added, "We began the fourth quarter with the acquisition of
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 allowance 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:
+1 312.496.1593, jharmon@heidrick.com
Heidrick & Struggles International, Inc. |
||||||||
Condensed Consolidated Statements of Comprehensive Income |
||||||||
(In thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
Three months ended |
||||||||
2015 |
2014 |
$ Change |
% Change |
|||||
Revenue: |
||||||||
Revenue before reimbursements (net revenue) |
$138,421 |
$125,829 |
$12,592 |
10.0% |
||||
Reimbursements |
4,429 |
4,432 |
(3) |
-0.1% |
||||
Total revenue |
142,850 |
130,261 |
12,589 |
9.7% |
||||
Operating expenses: |
||||||||
Salaries and employee benefits |
95,724 |
84,046 |
11,678 |
13.9% |
||||
General and administrative expenses |
29,764 |
32,226 |
(2,462) |
-7.6% |
||||
Reimbursed expenses |
4,429 |
4,432 |
(3) |
-0.1% |
||||
Total operating expenses |
129,917 |
120,704 |
9,213 |
7.6% |
||||
Operating income |
12,933 |
9,557 |
3,376 |
35.3% |
||||
Non-operating expense: |
||||||||
Interest, net |
(54) |
(152) |
||||||
Other, net |
(1,742) |
(488) |
||||||
Net non-operating expense |
(1,796) |
(640) |
||||||
Income before income taxes |
11,137 |
8,917 |
||||||
Provision for income taxes |
3,647 |
5,925 |
||||||
Net income |
7,490 |
2,992 |
||||||
Other comprehensive loss, net of tax |
(1,288) |
(2,587) |
||||||
Comprehensive income |
$6,202 |
$405 |
||||||
Basic weighted average common shares outstanding |
18,372 |
18,233 |
||||||
Dilutive common shares |
277 |
233 |
||||||
Diluted weighted average common shares outstanding |
18,649 |
18,466 |
||||||
Basic net income per common share |
$0.41 |
$0.16 |
||||||
Diluted net income per common share |
$0.40 |
$0.16 |
||||||
Salaries and employee benefits as a % of net revenue |
69.2% |
66.8% |
||||||
General and administrative expenses as a % of net revenue |
21.5% |
25.6% |
||||||
Operating income as a % of net revenue |
9.3% |
7.6% |
Heidrick & Struggles International, Inc. |
||||||||||||
Segment Information |
||||||||||||
(In thousands) |
||||||||||||
(Unaudited) |
||||||||||||
Three Months Ended September 30, |
||||||||||||
$ |
% |
2015 |
2014 |
|||||||||
2015 |
2014 |
Change |
Change |
Margin * |
Margin * |
|||||||
Revenue: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$78,265 |
$64,982 |
$13,283 |
20.4% |
||||||||
Europe |
25,946 |
27,207 |
(1,261) |
-4.6% |
||||||||
Asia Pacific |
25,031 |
23,305 |
1,726 |
7.4% |
||||||||
Total Executive Search and Leadership Consulting |
129,242 |
115,494 |
13,748 |
11.9% |
||||||||
Culture Shaping |
9,179 |
10,335 |
(1,156) |
-11.2% |
||||||||
Revenue before reimbursements (net revenue) |
138,421 |
125,829 |
12,592 |
10.0% |
||||||||
Reimbursements |
4,429 |
4,432 |
(3) |
-0.1% |
||||||||
Total revenue |
$142,850 |
$130,261 |
$12,589 |
9.7% |
||||||||
Operating income: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$18,193 |
$14,257 |
$3,936 |
27.6% |
23.2% |
21.9% |
||||||
Europe |
1,470 |
1,946 |
(476) |
-24.5% |
5.7% |
7.2% |
||||||
Asia Pacific |
2,630 |
2,228 |
402 |
18.0% |
10.5% |
9.6% |
||||||
Total Executive Search and Leadership Consulting |
22,293 |
18,431 |
3,862 |
21.0% |
17.2% |
16.0% |
||||||
Culture Shaping |
1,539 |
2,866 |
(1,327) |
-46.3% |
16.8% |
27.7% |
||||||
Total Segments |
23,832 |
21,297 |
2,535 |
11.9% |
17.2% |
16.9% |
||||||
Global Operations Support |
(10,899) |
(11,740) |
841 |
-7.2% |
-7.9% |
-9.3% |
||||||
Operating income |
$12,933 |
$9,557 |
$3,376 |
35.3% |
9.3% |
7.6% |
||||||
* Margin based on revenue before reimbursements (net revenue). |
Heidrick & Struggles International, Inc. |
||||||||
Condensed Consolidated Statements of Comprehensive Income |
||||||||
(In thousands, except per share amounts) |
||||||||
(Unaudited) |
||||||||
Nine months ended |
||||||||
2015 |
2014 |
$ Change |
% Change |
|||||
Revenue: |
||||||||
Revenue before reimbursements (net revenue) |
$386,619 |
$373,030 |
$13,589 |
3.6% |
||||
Reimbursements |
12,396 |
13,721 |
(1,325) |
-9.7% |
||||
Total revenue |
399,015 |
386,751 |
12,264 |
3.2% |
||||
Operating expenses: |
||||||||
Salaries and employee benefits |
264,914 |
252,089 |
12,825 |
5.1% |
||||
General and administrative expenses |
92,928 |
98,092 |
(5,164) |
-5.3% |
||||
Reimbursed expenses |
12,396 |
13,721 |
(1,325) |
-9.7% |
||||
Total operating expenses |
370,238 |
363,902 |
6,336 |
1.7% |
||||
Operating income |
28,777 |
22,849 |
5,928 |
25.9% |
||||
Non-operating expense: |
||||||||
Interest, net |
(300) |
(232) |
||||||
Other, net |
(1,696) |
(444) |
||||||
Net non-operating expense |
(1,996) |
(676) |
||||||
Income before income taxes |
26,781 |
22,173 |
||||||
Provision for income taxes |
10,909 |
16,138 |
||||||
Net income |
15,872 |
6,035 |
||||||
Other comprehensive loss, net of tax |
(2,525) |
(899) |
||||||
Comprehensive income |
$13,347 |
$5,136 |
||||||
Basic weighted average common shares outstanding |
18,318 |
18,200 |
||||||
Dilutive common shares |
277 |
197 |
||||||
Diluted weighted average common shares outstanding |
18,595 |
18,397 |
||||||
Basic net income per common share |
$0.87 |
$0.33 |
||||||
Diluted net income per common share |
$0.85 |
$0.33 |
||||||
Salaries and employee benefits as a % of net revenue |
68.5% |
67.6% |
||||||
General and administrative expense as a % of net revenue |
24.0% |
26.3% |
||||||
Operating income as a % of net revenue |
7.4% |
6.1% |
Heidrick & Struggles International, Inc. |
||||||||||||
Segment Information |
||||||||||||
(In thousands) |
||||||||||||
(Unaudited) |
||||||||||||
Nine Months Ended September 30, |
||||||||||||
$ |
% |
2015 |
2014 |
|||||||||
2015 |
2014 |
Change |
Change |
Margin* |
Margin* |
|||||||
Revenue: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$218,560 |
$193,034 |
$25,526 |
13.2% |
||||||||
Europe |
69,679 |
84,632 |
(14,953) |
-17.7% |
||||||||
Asia Pacific |
72,712 |
69,162 |
3,550 |
5.1% |
||||||||
Total Executive Search and Leadership Consulting |
360,951 |
346,828 |
14,123 |
4.1% |
||||||||
Culture Shaping |
25,668 |
26,202 |
(534) |
-2.0% |
||||||||
Revenue before reimbursements (net revenue) |
386,619 |
373,030 |
13,589 |
3.6% |
||||||||
Reimbursements |
12,396 |
13,721 |
(1,325) |
-9.7% |
||||||||
Total revenue |
$399,015 |
$386,751 |
$12,264 |
3.2% |
||||||||
Operating income: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$50,563 |
$43,266 |
$7,297 |
16.9% |
23.1% |
22.4% |
||||||
Europe |
1,018 |
4,373 |
(3,355) |
-76.7% |
1.5% |
5.2% |
||||||
Asia Pacific |
8,088 |
4,790 |
3,298 |
68.9% |
11.1% |
6.9% |
||||||
Total Executive Search and Leadership Consulting |
59,669 |
52,429 |
7,240 |
13.8% |
16.5% |
15.1% |
||||||
Culture Shaping |
2,948 |
3,643 |
(695) |
-19.1% |
11.5% |
13.9% |
||||||
Total Segments |
62,617 |
56,072 |
6,545 |
11.7% |
16.2% |
15.0% |
||||||
Global Operations Support |
(33,840) |
(33,223) |
(617) |
1.9% |
-8.8% |
-8.9% |
||||||
Operating income |
$28,777 |
$22,849 |
$5,928 |
25.9% |
7.4% |
6.1% |
||||||
* Margin based on revenue before reimbursements (net revenue). |
Heidrick & Struggles International, Inc. |
||||
Condensed Consolidated Balance Sheets |
||||
(In thousands) |
||||
September 30, |
December 31, |
|||
(Unaudited) |
||||
Current assets: |
||||
Cash and cash equivalents |
$128,960 |
$211,352 |
||
Restricted cash |
7,171 |
6,501 |
||
Accounts receivable, net |
106,674 |
68,353 |
||
Prepaid expenses |
15,715 |
14,536 |
||
Other current assets |
13,464 |
12,205 |
||
Income taxes recoverable |
5,669 |
5,288 |
||
Deferred income taxes |
12,436 |
12,094 |
||
Total current assets |
290,089 |
330,329 |
||
Non-current assets: |
||||
Property and equipment, net |
35,597 |
30,417 |
||
Assets designated for retirement and pension plans |
17,949 |
19,426 |
||
Investments |
14,185 |
13,989 |
||
Other non-current assets |
12,169 |
8,012 |
||
Goodwill |
120,150 |
122,176 |
||
Other intangible assets, net |
17,327 |
20,939 |
||
Deferred income taxes |
22,553 |
23,413 |
||
Total non-current assets |
239,930 |
238,372 |
||
Total assets |
$530,019 |
$568,701 |
||
Current liabilities: |
||||
Current portion of debt |
$ — |
$6,000 |
||
Accounts payable |
4,056 |
5,493 |
||
Accrued salaries and employee benefits |
120,023 |
130,434 |
||
Deferred revenue, net |
33,739 |
30,452 |
||
Other current liabilities |
28,697 |
26,835 |
||
Income taxes payable |
4,388 |
6,684 |
||
Total current liabilities |
190,903 |
205,898 |
||
Non-current liabilities: |
||||
Non-current debt, less current maturities |
— |
23,500 |
||
Retirement and pension plans |
38,186 |
39,892 |
||
Other non-current liabilities |
46,835 |
54,747 |
||
Total non-current liabilities |
85,021 |
118,139 |
||
Stockholders' equity: |
254,095 |
244,664 |
||
Total liabilities and stockholders' equity |
$530,019 |
$568,701 |
Heidrick & Struggles International, Inc. |
||||
Condensed Consolidated Statements of Cash Flows |
||||
(In thousands) |
||||
(Unaudited) |
||||
Nine Months Ended |
||||
2015 |
2014 |
|||
Cash flows—operating activities: |
||||
Net income |
$15,872 |
$6,035 |
||
Adjustments to reconcile net income to net cash used in operating activities: |
||||
Depreciation and amortization |
9,983 |
11,359 |
||
Deferred income taxes |
(153) |
5,633 |
||
Stock-based compensation expense |
3,684 |
2,885 |
||
Accretion expense related to earnout payments |
861 |
1,308 |
||
Changes in assets and liabilities: |
||||
Accounts receivables |
(40,582) |
(24,001) |
||
Accounts payable |
(1,311) |
(2,177) |
||
Accrued expenses |
(5,361) |
(1,774) |
||
Deferred revenue |
3,921 |
4,486 |
||
Income taxes payable, net |
(3,101) |
(2,220) |
||
Retirement and pension plan assets and liabilities |
69 |
100 |
||
Prepaid expenses |
(1,054) |
(557) |
||
Other assets and liabilities, net |
(2,868) |
(3,125) |
||
Net cash used in operating activities |
(20,040) |
(2,048) |
||
Cash flows—investing activities: |
||||
Restricted cash |
— |
(103) |
||
Capital expenditures |
(13,897) |
(2,609) |
||
Purchases of available for sale investments |
(1,402) |
(896) |
||
Proceeds from sales of available for sale investments |
630 |
966 |
||
Net cash used in investing activities |
(14,669) |
(2,642) |
||
Cash flows—financing activities: |
||||
Debt repayment |
(29,500) |
(4,500) |
||
Debt issuance costs |
(422) |
— |
||
Cash dividends paid |
(7,496) |
(7,364) |
||
Payment of employee tax withholdings on equity transactions |
(878) |
(406) |
||
Acquisition earnout payments |
(5,496) |
(3,390) |
||
Net cash used in financing activities |
(43,792) |
(15,660) |
||
Effect of exchange rates fluctuations on cash and cash equivalents |
(3,891) |
(1,759) |
||
Net decrease in cash and cash equivalents |
(82,392) |
(22,109) |
||
Cash and cash equivalents at beginning of period |
211,352 |
181,646 |
||
Cash and cash equivalents at end of period |
$128,960 |
$159,537 |
Heidrick & Struggles International, Inc. |
|||||
Condensed Consolidated Statement of Cash Flows |
|||||
(In thousands) |
|||||
(Unaudited) |
|||||
Three Months Ended |
|||||
2015 |
2014 |
||||
Cash flows—operating activities: |
|||||
Net income |
$7,490 |
$2,992 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||
Depreciation and amortization |
3,323 |
3,711 |
|||
Deferred income taxes |
(119) |
1,071 |
|||
Stock-based compensation expense |
1,094 |
1,044 |
|||
Accretion expense related to earnout payments |
276 |
409 |
|||
Changes in assets and liabilities: |
|||||
Accounts receivables |
(11,036) |
8,573 |
|||
Accounts payable |
(1,569) |
289 |
|||
Accrued expenses |
43,259 |
28,236 |
|||
Deferred revenue |
782 |
(3,586) |
|||
Income taxes receivable (payable), net |
662 |
(1,160) |
|||
Retirement and pension plan assets and liabilities |
(1,154) |
270 |
|||
Prepaid expenses |
(493) |
1,128 |
|||
Other assets and liabilities, net |
583 |
17 |
|||
Net cash provided by operating activities |
43,098 |
42,994 |
|||
Cash flows—investing activities: |
|||||
Restricted cash |
— |
(1) |
|||
Capital expenditures |
(3,649) |
(742) |
|||
Purchases of available for sale investments |
(126) |
(68) |
|||
Proceeds from sales of available for sale investments |
375 |
374 |
|||
Net cash used in investing activities |
(3,400) |
(437) |
|||
Cash flows—financing activities: |
|||||
Debt repayment |
(26,500) |
(1,500) |
|||
Debt issuance costs |
(41) |
— |
|||
Cash dividends paid |
(2,493) |
(2,515) |
|||
Payment of employee tax withholdings on equity transactions |
(58) |
— |
|||
Net cash used in financing activities |
(29,092) |
(4,015) |
|||
Effect of exchange rates fluctuations on cash and cash equivalents |
(1,530) |
(2,355) |
|||
Net increase in cash and cash equivalents |
9,076 |
36,187 |
|||
Cash and cash equivalents at beginning of period |
119,884 |
123,350 |
|||
Cash and cash equivalents at end of period |
$128,960 |
$159,537 |
Heidrick & Struggles International, Inc. |
||||||||
Reconciliation of Net Income and Operating Income (GAAP) to |
||||||||
Adjusted EBITDA (Non-GAAP) |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
Nine Months Ended |
|||||||
2015 |
2014 |
2015 |
2014 |
|||||
Revenue before reimbursements (net revenue) |
$138,421 |
$125,829 |
$386,619 |
$373,030 |
||||
Net income |
7,490 |
2,992 |
15,872 |
6,035 |
||||
Interest, net |
(54) |
(152) |
(300) |
(232) |
||||
Other, net |
(1,742) |
(488) |
(1,696) |
(444) |
||||
Provision for income taxes |
3,647 |
5,925 |
10,909 |
16,138 |
||||
Operating income |
12,933 |
9,557 |
28,777 |
22,849 |
||||
Adjustments |
||||||||
Salaries and employee benefits |
||||||||
Stock-based compensation expense |
1,094 |
1,044 |
3,234 |
2,434 |
||||
Senn Delaney retention awards |
542 |
291 |
1,625 |
1,458 |
||||
General and administrative expenses |
||||||||
Depreciation |
2,158 |
2,329 |
6,485 |
7,213 |
||||
Intangible amortization |
1,165 |
1,400 |
3,498 |
4,146 |
||||
Earnout accretion |
276 |
409 |
861 |
1,308 |
||||
Total adjustments |
5,235 |
5,473 |
15,703 |
16,559 |
||||
Adjusted EBITDA |
$18,168 |
$15,030 |
$44,480 |
$39,408 |
||||
Adjusted EBITDA Margin |
13.1% |
11.9 % |
11.5% |
10.6 % |
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