Highlights:
- Fourth quarter net revenue (revenue before reimbursements) increased 2.8% (approximately 5% on a constant currency basis) to
$121.3 million from$118.0 million in the 2013 fourth quarter. - Adjusted EBITDA(1) in the fourth quarter improved to
$9.5 million and Adjusted EBITDA margin(1) was 7.9%, compared to Adjusted EBITDA of$7.4 million and Adjusted EBITDA margin of 6.3% in the 2013 fourth quarter. - For the year, net revenue of
$494.3 million increased 7.0% from$462.0 million in 2013. Exchange rate fluctuations had less than a one percent impact on 2014 net revenue. - Adjusted EBITDA improved to
$48.9 million in 2014 and Adjusted EBITDA margin was 9.9%, compared to Adjusted EBITDA of$39.7 million and Adjusted EBITDA margin of 8.6% in 2013. - The number of
Executive Search and Leadership Consulting consultants was 307 atDecember 31, 2014 compared to 293 atDecember 31 , 2013. - Specific to
Executive Search and Leadership Consulting , consultant productivity, as measured by net revenue per consultant, was$1.4 million in the fourth quarter and$1.5 million for the year.
(1) Adjusted EBITDA refers to earnings before interest, taxes, depreciation, intangible amortization, stock-based compensation expense, compensation expense associated with
"Our fourth quarter and full-year results show year-over-year growth in net revenue, profitability, consultant headcount and year-end productivity," said
2014 Fourth Quarter Results
Consolidated net revenue (revenue before reimbursements) increased 2.8 percent, or
Net revenue from Culture Shaping services increased 18.6 percent, or
The company ended the fourth quarter and 2014 with 307
Salaries and employee benefits expense in the fourth quarter increased 2.5 percent, or
General and administrative expenses declined 4.6 percent, or
Adjusted EBITDA(1) in the 2014 fourth quarter improved to
Operating income in the fourth quarter increased by
Net income in the 2014 fourth quarter was
Net cash provided by operating activities in the 2014 fourth quarter was
2014 Results
For the year ended
Net revenue from Culture Shaping services increased 40.2 percent, or
Productivity, as measured by annualized
Adjusted EBITDA(1) in 2014 improved to
Net income in 2014 was
2015 First Quarter Outlook
The company is forecasting 2015 first quarter consolidated net revenue of between
Wolstencroft added, "We are optimistic about the outlook for our business in 2015. Our priorities are to deploy capital to attract and retain the best consultants in the world while continuing to invest in service offerings that enable
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:
312.496.1788, lrandazzo@heidrick.com
Logo - http://photos.prnewswire.com/prnh/20140822/139029
Heidrick & Struggles International, Inc. |
||||||||
Consolidated Statements of Comprehensive (Loss) Income |
||||||||
(In thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
Three months ended |
||||||||
December 31, |
||||||||
2014 |
2013 |
$ Change |
% Change |
|||||
Revenue: |
||||||||
Revenue before reimbursements (net revenue) |
$121,262 |
$118,003 |
$3,259 |
2.8% |
||||
Reimbursements |
5,226 |
4,850 |
376 |
7.8% |
||||
Total revenue |
126,488 |
122,853 |
3,635 |
3.0% |
||||
Operating expenses: |
||||||||
Salaries and employee benefits |
85,359 |
83,283 |
2,076 |
2.5% |
||||
General and administrative expenses |
32,099 |
33,639 |
(1,540) |
-4.6% |
||||
Reimbursed expenses |
5,226 |
4,850 |
376 |
7.8% |
||||
Total operating expenses |
122,684 |
121,772 |
(912) |
-0.7% |
||||
Operating income |
3,804 |
1,081 |
2,723 |
251.9% |
||||
Non-operating expense: |
||||||||
Interest, net |
(126) |
(55) |
||||||
Other, net |
(1,664) |
(327) |
||||||
Net non-operating expense |
(1,790) |
(382) |
||||||
Income before income taxes |
2,014 |
699 |
||||||
Provision for (benefit from) income taxes |
1,252 |
(803) |
||||||
Net income |
762 |
1,502 |
||||||
Other comprehensive (loss) income, net of tax |
(2,847) |
919 |
||||||
Comprehensive income |
($2,085) |
$2,421 |
||||||
Basic weighted average common shares outstanding |
18,240 |
18,115 |
||||||
Dilutive common shares |
293 |
191 |
||||||
Diluted weighted average common shares outstanding |
18,533 |
18,306 |
||||||
Basic net income per common share |
$0.04 |
$0.08 |
||||||
Diluted net income per common share |
$0.04 |
$0.08 |
||||||
Salaries and employee benefits as a % of net revenue |
70.4% |
70.6% |
||||||
General and administrative expense as a % of net revenue |
26.5% |
28.5% |
||||||
Operating income as a % of net revenue |
3.1% |
0.9% |
Heidrick & Struggles International, Inc. |
||||||||||||
Segment Information |
||||||||||||
(In thousands) |
||||||||||||
(Unaudited) |
||||||||||||
Three Months Ended December 31, |
||||||||||||
$ |
% |
2014 |
2013 |
|||||||||
2014 |
2013 |
Change |
Change |
Margin * |
Margin * |
|||||||
Revenue: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$67,796 |
$63,800 |
$3,996 |
6.3% |
||||||||
Europe |
24,347 |
25,039 |
(692) |
-2.8% |
||||||||
Asia Pacific |
20,570 |
21,954 |
(1,384) |
-6.3% |
||||||||
Total Executive Search and Leadership Consulting |
112,713 |
110,793 |
1,920 |
1.7% |
||||||||
Culture Shaping |
8,549 |
7,210 |
1,339 |
18.6% |
||||||||
Revenue before reimbursements (net revenue) |
121,262 |
118,003 |
3,259 |
2.8% |
||||||||
Reimbursements |
5,226 |
4,850 |
376 |
7.8% |
||||||||
Total revenue |
$126,488 |
$122,853 |
$3,635 |
3.0% |
||||||||
Operating income: ^ |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$14,416 |
$13,143 |
$1,273 |
9.7% |
21.3% |
20.6% |
||||||
Europe |
433 |
(1,773) |
2,206 |
124.4% |
1.8% |
-7.1% |
||||||
Asia Pacific |
96 |
(1,119) |
1,215 |
108.6% |
0.5% |
-5.1% |
||||||
Total Executive Search and Leadership Consulting |
14,945 |
10,251 |
4,694 |
45.8% |
13.3% |
9.3% |
||||||
Culture Shaping |
978 |
(524) |
1,502 |
286.6% |
11.4% |
-7.3% |
||||||
Total segments |
15,923 |
9,727 |
6,196 |
63.7% |
13.1% |
8.2% |
||||||
Global Operations Support |
(12,119) |
(8,646) |
(3,473) |
-40.2% |
-10.0% |
-7.3% |
||||||
Operating income |
$3,804 |
$1,081 |
$2,723 |
251.9% |
3.1% |
0.9% |
* Margin based on revenue before reimbursements (net revenue). |
||||||||
^ During 2014, consistent with the Company's practice to periodically review its reporting structure and segments, the Company evaluated its allocation of corporate and support costs to each of its regions. In conjunction with that review, to better align our cost and reporting structure, additional costs were allocated to the regions reflecting the Company's current view of the costs necessary to support the regional operations. The prior period results have been recast to reflect these changes and present comparative year-over-year results. |
||||||||
Heidrick & Struggles International, Inc. |
|||||||||
Consolidated Statements of Comprehensive Income |
|||||||||
(In thousands, except per share amounts) |
|||||||||
(Unaudited) |
|||||||||
Twelve months ended |
|||||||||
December 31, |
|||||||||
2014 |
2013 |
$ Change |
% Change |
||||||
Revenue: |
|||||||||
Revenue before reimbursements (net revenue) |
$494,292 |
$461,995 |
$32,297 |
7.0% |
|||||
Reimbursements |
18,947 |
18,998 |
(51) |
-0.3% |
|||||
Total revenue |
513,239 |
480,993 |
32,246 |
6.7% |
|||||
Operating expenses: |
|||||||||
Salaries and employee benefits |
337,448 |
319,499 |
17,949 |
5.6% |
|||||
General and administrative expenses |
130,191 |
126,931 |
3,260 |
2.6% |
|||||
Reimbursed expenses |
18,947 |
18,998 |
(51) |
-0.3% |
|||||
Total operating expenses |
486,586 |
465,428 |
21,158 |
4.5% |
|||||
Operating income |
26,653 |
15,565 |
11,088 |
71.2% |
|||||
Non-operating expense: |
|||||||||
Interest, net |
(358) |
(175) |
|||||||
Other, net |
(2,108) |
(2,002) |
|||||||
Net non-operating expense |
(2,466) |
(2,177) |
|||||||
Income before income taxes |
24,187 |
13,388 |
|||||||
Provision for income taxes |
17,390 |
7,041 |
|||||||
Net income |
6,797 |
6,347 |
|||||||
Other comprehensive (loss) income, net of tax |
(3,746) |
9 |
|||||||
Comprehensive income |
$3,051 |
$6,356 |
|||||||
Basic weighted average common shares outstanding |
18,210 |
18,077 |
|||||||
Dilutive common shares |
222 |
155 |
|||||||
Diluted weighted average common shares outstanding |
18,432 |
18,232 |
|||||||
Basic net income per common share |
$0.37 |
$0.35 |
|||||||
Diluted net income per common share |
$0.37 |
$0.35 |
|||||||
Salaries and employee benefits as a % of net revenue |
68.3% |
69.2% |
|||||||
General and administrative expense as a % of net revenue |
26.3% |
27.5% |
|||||||
Operating income as a % of net revenue |
5.4% |
3.4% |
Heidrick & Struggles International, Inc. |
||||||||||||
Segment Information |
||||||||||||
(In thousands) |
||||||||||||
(Unaudited) |
||||||||||||
Twelve Months Ended December 31, |
||||||||||||
$ |
% |
2014 |
2013 |
|||||||||
2014 |
2013 |
Change |
Change |
Margin * |
Margin * |
|||||||
Revenue: |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$260,830 |
$256,706 |
$4,124 |
1.6% |
||||||||
Europe |
108,979 |
90,081 |
18,898 |
21.0% |
||||||||
Asia Pacific |
89,732 |
90,418 |
(686) |
-0.8% |
||||||||
Total Executive Search and Leadership Consulting |
459,541 |
437,205 |
22,336 |
5.1% |
||||||||
Culture Shaping |
34,751 |
24,790 |
9,961 |
40.2% |
||||||||
Revenue before reimbursements (net revenue) |
494,292 |
461,995 |
32,297 |
7.0% |
||||||||
Reimbursements |
18,947 |
18,998 |
(51) |
-0.3% |
||||||||
Total revenue |
$513,239 |
$480,993 |
$32,246 |
6.7% |
||||||||
Operating income: ^ |
||||||||||||
Executive Search and Leadership Consulting |
||||||||||||
Americas |
$57,682 |
$60,171 |
($2,489) |
-4.1% |
22.1% |
23.4% |
||||||
Europe |
4,806 |
(6,513) |
11,319 |
173.8% |
4.4% |
-7.2% |
||||||
Asia Pacific |
4,886 |
3,678 |
1,208 |
32.8% |
5.4% |
4.1% |
||||||
Total Executive Search and Leadership Consulting |
67,374 |
57,336 |
10,038 |
17.5% |
14.7% |
13.1% |
||||||
Culture Shaping |
4,621 |
(4,215) |
8,836 |
209.6% |
13.3% |
-17.0% |
||||||
Total segments |
71,995 |
53,121 |
18,874 |
35.5% |
14.6% |
11.5% |
||||||
Global Operations Support |
(45,342) |
(37,556) |
(7,786) |
-20.7% |
-9.2% |
-8.1% |
||||||
Operating income |
$26,653 |
$15,565 |
$11,088 |
71.2% |
5.4% |
3.4% |
* Margin based on revenue before reimbursements (net revenue). |
||||||||
^ During 2014, consistent with the Company's practice to periodically review its reporting structure and segments, the Company evaluated its allocation of corporate and support costs to each of its regions. In conjunction with that review, to better align our cost and reporting structure, additional costs were allocated to the regions reflecting the Company's current view of the costs necessary to support the regional operations. The prior period results have been recast to reflect these changes and present comparative year-over-year results. |
||||||||
Heidrick & Struggles International, Inc |
||||||
Consolidated Balance Sheets |
||||||
(In thousands) |
||||||
December 31, |
December 31, |
|||||
2014 |
2013 |
|||||
(Unaudited) |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$211,352 |
$181,646 |
||||
Restricted cash |
6,501 |
130 |
||||
Accounts receivable, net |
68,353 |
71,666 |
||||
Other receivables |
10,613 |
6,906 |
||||
Prepaid expenses |
14,536 |
14,786 |
||||
Other current assets |
1,592 |
1,807 |
||||
Income taxes recoverable |
5,288 |
5,772 |
||||
Deferred income taxes |
12,094 |
8,061 |
||||
Total current assets |
330,329 |
290,774 |
||||
Non-current assets: |
||||||
Property and equipment, net |
30,417 |
34,961 |
||||
Restricted cash |
1,411 |
7,878 |
||||
Assets designated for retirement and pension plans |
19,426 |
22,685 |
||||
Investments |
13,989 |
13,848 |
||||
Other non-current assets |
6,601 |
5,693 |
||||
Goodwill |
122,176 |
123,274 |
||||
Other intangible assets, net |
20,939 |
26,637 |
||||
Deferred income taxes |
23,413 |
27,474 |
||||
Total non-current assets |
238,372 |
262,450 |
||||
Total assets |
$568,701 |
$553,224 |
||||
Current liabilities: |
||||||
Current portion of debt |
$6,000 |
$6,000 |
||||
Accounts payable |
5,493 |
7,791 |
||||
Accrued salaries and employee benefits |
130,434 |
109,943 |
||||
Deferred revenue, net |
30,452 |
27,714 |
||||
Other current liabilities |
26,835 |
18,938 |
||||
Income taxes payable |
6,684 |
5,401 |
||||
Total current liabilities |
205,898 |
175,787 |
||||
Non-current liabilities: |
||||||
Non-current debt, less current maturities |
23,500 |
29,500 |
||||
Retirement and pension plans |
39,892 |
38,735 |
||||
Other non-current liabilities |
54,747 |
61,329 |
||||
Total non-current liabilities |
118,139 |
129,564 |
||||
Stockholders' equity |
244,664 |
247,873 |
||||
Total liabilities and stockholders' equity |
$568,701 |
$553,224 |
||||
Heidrick & Struggles International, Inc. |
|||||||
Consolidated Statements of Cash Flows |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
Twelve Months Ended |
|||||||
December 31, |
|||||||
2014 |
2013 |
||||||
Cash flows - operating activities: |
|||||||
Net income |
$6,797 |
$6,347 |
|||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
15,312 |
16,275 |
|||||
Deferred income taxes |
237 |
(3,749) |
|||||
Stock-based compensation expense |
3,579 |
3,747 |
|||||
Accretion expense related to earnout payments |
1,854 |
2,082 |
|||||
Cash paid for restructuring charges |
(142) |
(999) |
|||||
Changes in assets and liabilities, net of effects of acquisitions: |
|||||||
Accounts and other receivables |
(4,129) |
236 |
|||||
Accounts payable |
(2,113) |
(504) |
|||||
Accrued expenses |
29,979 |
12,888 |
|||||
Deferred revenue |
3,486 |
2,735 |
|||||
Income taxes recoverable, net |
1,482 |
4,292 |
|||||
Retirement and pension assets and liabilities |
4,477 |
1,201 |
|||||
Prepaid expenses |
(207) |
(625) |
|||||
Other assets and liabilities, net |
(3,848) |
107 |
|||||
Net cash provided by operating activities |
56,764 |
44,033 |
|||||
Cash flows - investing activities: |
|||||||
Restricted cash |
(53) |
26 |
|||||
Acquisition of business and earnout payments, net of cash acquired |
- |
(1,023) |
|||||
Capital expenditures |
(3,359) |
(3,731) |
|||||
Purchases of available for sale investments |
(963) |
(749) |
|||||
Proceeds from sale of available for sale investments |
1,084 |
252 |
|||||
Net cash used in investing activities |
(3,291) |
(5,225) |
|||||
Cash flows - financing activities: |
|||||||
Proceeds from debt issuance |
- |
40,000 |
|||||
Debt repayment |
(6,000) |
(4,500) |
|||||
Cash dividends paid |
(9,864) |
(7,260) |
|||||
Payment of employee tax withholdings on equity transactions |
(406) |
(713) |
|||||
Acquisition earnout payments |
(3,390) |
(357) |
|||||
Net cash (used in) provided by financing activities |
(19,660) |
27,170 |
|||||
Effect of exchange rate fluctuations on cash and cash equivalents |
(4,107) |
(1,937) |
|||||
Net increase in cash and cash equivalents |
29,706 |
64,041 |
|||||
Cash and cash equivalents at beginning of period |
181,646 |
117,605 |
|||||
Cash and cash equivalents at end of period |
$ 211,352 |
$ 181,646 |
Heidrick & Struggles International, Inc. |
||||||||
Consolidated Statements of Cash Flows |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
Three Month Ended |
||||||||
December 31, |
||||||||
2014 |
2013 |
|||||||
Cash flows - operating activities: |
||||||||
Net income |
$762 |
$1,502 |
||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
3,953 |
4,229 |
||||||
Deferred income taxes |
(5,396) |
(3,249) |
||||||
Stock-based compensation expense |
694 |
972 |
||||||
Accretion expense related to earnout payments |
546 |
532 |
||||||
Cash paid for restructuring charges |
(34) |
(81) |
||||||
Changes in assets and liabilities, net of effects of acquisitions: |
||||||||
Accounts and other receivables |
23,067 |
21,843 |
||||||
Accounts payable |
64 |
1,877 |
||||||
Accrued expenses |
31,753 |
24,961 |
||||||
Deferred revenue |
(1,000) |
771 |
||||||
Income taxes (payable) recoverable, net |
3,702 |
(534) |
||||||
Retirement and pension assets and liabilities |
4,377 |
627 |
||||||
Prepaid expenses |
350 |
2,582 |
||||||
Other assets and liabilities, net |
(4,026) |
(133) |
||||||
Net cash provided by operating activities |
58,812 |
55,899 |
||||||
Cash flows - investing activities: |
||||||||
Restricted cash |
50 |
76 |
||||||
Acquisition of business and earnout payments, net of cash acquired |
- |
(1,023) |
||||||
Capital expenditures |
(750) |
(1,811) |
||||||
Purchases of available for sale investments |
(67) |
(88) |
||||||
Proceeds from sale of available for sale investments |
118 |
97 |
||||||
Net cash used in investing activities |
(649) |
(2,749) |
||||||
Cash flows - financing activities: |
||||||||
Debt repayment |
(1,500) |
(1,500) |
||||||
Cash dividends paid |
(2,500) |
(2,385) |
||||||
Payment of employee tax withholdings on equity transactions |
- |
(66) |
||||||
Net cash used in financing activities |
(4,000) |
(3,951) |
||||||
Effect of exchange rate fluctuations on cash and cash equivalents |
(2,348) |
(343) |
||||||
Net increase in cash and cash equivalents |
||||||||
Cash and cash equivalents at beginning of period |
51,815 |
48,856 |
||||||
Cash and cash equivalents at end of period |
159,537 |
132,790 |
||||||
$211,352 |
$181,646 |
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, |
|||||||||
2014 |
2013 |
2014 |
2013 |
|||||||
Revenue before reimbursements (net revenue) |
$121,262 |
$118,003 |
$494,292 |
$461,995 |
||||||
Net income |
762 |
1,502 |
6,797 |
6,347 |
||||||
Interest, net |
(126) |
(55) |
(358) |
(175) |
||||||
Other, net |
(1,664) |
(327) |
(2,108) |
(2,002) |
||||||
Provision for (benefit from) income taxes |
1,252 |
(803) |
17,390 |
7,041 |
||||||
Operating income |
3,804 |
1,081 |
26,653 |
15,565 |
||||||
Adjustments |
||||||||||
Salaries and employee benefits |
||||||||||
Stock-based compensation expense |
694 |
972 |
3,128 |
3,447 |
||||||
Senn Delaney retention awards |
542 |
582 |
2,000 |
2,332 |
||||||
General and administrative expenses |
||||||||||
Depreciation |
2,589 |
2,754 |
9,802 |
10,443 |
||||||
Intangible amortization |
1,364 |
1,475 |
5,510 |
5,832 |
||||||
Earnout accretion |
546 |
532 |
1,854 |
2,082 |
||||||
Total adjustments |
5,735 |
6,315 |
22,294 |
24,136 |
||||||
Adjusted EBITDA |
$9,539 |
$7,396 |
$48,947 |
$39,701 |
||||||
Adjusted EBITDA Margin |
7.9% |
6.3% |
9.9% |
8.6% |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/heidrick--struggles-reports-fourth-quarter-and-2014-financial-results-300040108.html
SOURCE