Heidrick & Struggles Reports Fourth Quarter and 2014 Financial Results

Feb 24, 2015

CHICAGO, Feb. 24, 2015 /PRNewswire/ -- Heidrick & Struggles, a premier provider of senior-level Executive Search, Leadership Consulting and Culture Shaping services globally, today announced financial results for its fourth quarter and year ended December 31, 2014. 

Heidrick & Struggles Logo

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 at December 31, 2014 compared to 293 at December 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 Senn Delaney retention awards, earnout accretion expense related to acquisitions, restructuring charges, and other non-operating income (expense).  Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures which the company believes are useful to management and meaningful to investors because they provide insight into the ongoing operating results of the company's core business.  A reconciliation to the most directly comparable GAAP measures are provided on the last page of the financial statements in this release.

"Our fourth quarter and full-year results show year-over-year growth in net revenue, profitability, consultant headcount and year-end productivity," said Tracy Wolstencroft, Heidrick & Struggles' President and Chief Executive Officer.  "The results represent solid progress toward many of the initial goals we established when I arrived at Heidrick a year ago, namely to attract and retain exceptional consultant talent while fostering collaboration and teamwork across our global platform.  We are focused on leveraging what we accomplished in 2014 to deliver unparalleled expertise and service to our clients, accelerate growth and drive shareholder value."

2014 Fourth Quarter Results

Consolidated net revenue (revenue before reimbursements) increased 2.8 percent, or $3.3 million, to $121.3 million from $118.0 million in the 2014 fourth quarter.  Exchange rate fluctuations negatively impacted results by $2.7 million, or approximately 2 percent.

Executive Search and Leadership Consulting net revenue increased 1.7 percent year over year, or $1.9 million, to $112.7 million. The improvement was driven by performance in the Americas, where revenue increased 6.3 percent or $4.0 million, offset by year-over-year declines of $0.7 million in Europe (an increase of $0.8 million on a constant currency basis) and $1.4 million in Asia Pacific ($0.6 million on a constant currency basis).  From a global practices perspective, the Financial Services and Consumer Markets industry practices were the drivers of year-over-year growth.

Net revenue from Culture Shaping services increased 18.6 percent, or $1.3 million, to $8.5 million from $7.2 million in the 2014 fourth quarter. The improvement in net revenue primarily reflects a higher volume of business.

The company ended the fourth quarter and 2014 with 307 Executive Search and Leadership Consulting consultants compared to 293 at December 31, 2013 and 311 at September 30, 2014.  Productivity, as measured by annualized Executive Search and Leadership Consulting net revenue per consultant, was $1.4 million in the 2014 fourth quarter compared to $1.5 million in the 2013 fourth quarter.  Specific to Executive Search, the company's primary business, the number of confirmed searches in the 2014 fourth quarter was essentially the same as in the 2013 fourth quarter, while the average revenue per executive search was $124,800 compared to $118,800 in the 2013 fourth quarter.

Salaries and employee benefits expense in the fourth quarter increased 2.5 percent, or $2.1 million, to $85.4 million from $83.3 million in the 2013 fourth quarter.  Fixed compensation expense increased $1.2 million mostly reflecting an increase salaries and employee benefits expense. Variable compensation expense increased $0.9 million, primarily related to improved company performance. Salaries and employee benefits expense was 70.4 percent of net revenue for the quarter, compared to 70.6 percent in the 2013 fourth quarter. 

General and administrative expenses declined 4.6 percent, or $1.5 million, to $32.1 million from $33.6 million in the 2013 fourth quarter.  The decrease primarily reflects the timing of professional services fees. As a percentage of net revenue, general and administrative expenses were 26.5 percent compared to 28.5 percent in the 2013 fourth quarter. 

Adjusted EBITDA(1)  in the 2014 fourth quarter improved to $9.5 million compared to $7.4 million in the 2013 fourth quarter.  The Adjusted EBITDA margin (Adjusted EBITDA as a percentage of net revenue) in the 2014 fourth quarter was 7.9 percent, compared to 6.3 percent in the 2013 fourth quarter.  The year-over-year improvement in Adjusted EBITDA reflects higher net revenue and a decline in general and administrative expenses, partially offset by the increase in salaries and employee benefits expense. 

Operating income in the fourth quarter increased by $2.7 million to $3.8 million and operating margin (operating income as a percentage of net revenue) improved to 3.1 percent, compared to operating income of $1.1 million and operating margin of 0.9 percent in the 2013 fourth quarter. 

Net income in the 2014 fourth quarter was $0.8 million and diluted earnings per share were $0.04, based on an effective tax rate of 62.2 percent in the quarter.  The effective tax rate was higher than the statutory rate primarily because of losses incurred that could not be benefitted for tax purposes due to valuation allowances in certain jurisdictions. Net income in the 2013 fourth quarter was $1.5 million and diluted earnings per share were $0.08, based on an effective tax benefit rate of 115 percent that primarily reflected the release of a valuation allowance. 

Net cash provided by operating activities in the 2014 fourth quarter was $58.8 million, compared to $55.9 million in the 2013 fourth quarter. Cash and cash equivalents at December 31, 2014 were $211.4 million ($181.9 million net of debt), compared to $159.5 million at September 30, 2014 ($128.5 million net of debt), and $181.6 million at December 31, 2013 ($146.1 million net of debt).  

2014 Results

For the year ended December 31, 2014 consolidated net revenue of $494.3 million increased 7.0 percent from $462.0 million in 2013. The impact of exchange rate fluctuations was less than 1 percent.

Executive Search and Leadership Consulting net revenue increased 5.1 percent year over year, or $22.3 million, to $459.5 million, driven a 21.0 percent increase in Europe (approximately 18 percent on a constant currency basis).  Compared to 2013, revenue in the Americas increased 1.6 percent and revenue in Asia Pacific was essentially flat (increased approximately 2 percent on a constant currency basis).  From a global practices perspective, the Consumer Markets, Financial Services and Global Technology & Services industry groups were the drivers of year-over-year growth.

Net revenue from Culture Shaping services increased 40.2 percent, or $10.0 million, to $34.8 million from $24.8 million in 2013.  Reported results in 2013 excluded $4.1 million of pre-acquisition deferred revenue related to Senn Delaney that the company was unable to recognize as a result of purchase accounting, compared to $0.4 million in 2014.

Productivity, as measured by annualized Executive Search and Leadership Consulting net revenue per consultant, increased to $1.5 million in 2014 compared to $1.4 million 2013.  Specific to Executive Search, the company's primary business, the number of confirmed searches was 3,750 in 2014 compared to 3,567 in 2013 and the average revenue per executive search was $116,000 compared to $113,400 in 2013. 

Adjusted EBITDA(1)  in 2014 improved to $48.9 million and Adjusted EBITDA margin was 9.9 percent, compared to Adjusted EBITDA of $39.7 million and Adjusted EBITDA margin of 8.6 percent in 2013. Operating income in 2014 improved to $26.7 million and operating margin was 5.4 percent compared to operating income of $15.6 million and operating margin of 3.4 percent in 2013.

Net income in 2014 was $6.8 million and diluted earnings per share were $0.37, reflecting an effective tax rate of 71.9 percent.  Net income in 2013 was $6.3 million and diluted earnings per share were $0.35, reflecting an effective tax rate of 52.6 percent.  In addition to valuation allowances established in 2014 that negatively impacted the 2014 tax rate, the effective tax rates in both years are higher than the statutory rate primarily because of losses incurred that could not be benefitted for tax purposes.

2015 First Quarter Outlook

The company is forecasting 2015 first quarter consolidated net revenue of between $108 million and $118 million. This forecast is based on the average currency rates in January 2015 and reflects, among other factors, assumptions for the anticipated volume of new Executive Search confirmations, Leadership Consulting assignments and Culture Shaping services, the current backlog, consultant productivity, consultant retention, and the seasonality of its business.

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 Heidrick & Struggles to provide increasing value to our clients as a fully integrated leadership advisory firm.  We believe we are in a stronger position today to drive revenue growth, improve market share, and increase profitability."

Quarterly Conference Call

Executives of Heidrick & Struggles will host a conference call to review the fourth quarter and 2014 results today, February 24, at 9 a.m. Central Time. Participants may access the company's call and supporting slides through its website at www.heidrick.com.  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 senior-level Executive Search, Culture Shaping and Leadership Consulting services. For more than 60 years, we have helped our clients build strong leadership teams through quality service, deep insights and our relationships with talented individuals worldwide. Today, Heidrick & Struggles' leadership experts operate from principal business centers in North America, Latin America, Europe, Asia Pacific, Africa and the Middle East. For more information about Heidrick & Struggles, please visit www.heidrick.com.

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 Senn Delaney retention awards, earnout accretion expense related to acquisitions, restructuring charges, and other non-operating income (expense).  Adjusted EBITDA margin refers to Adjusted EBITDA (as explained above) as a percentage of net revenue in the same period. A reconciliation of Adjusted EBITDA to Net Income is provided on the last page of this release.

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 December 31, 2013, under Risk Factors in Item 1A and our quarterly filings with the SEC. We caution the reader that the list of factors may not be exhaustive. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Press Release Contacts:

H&S Investors & Analysts Contact:
Julie Creed - Vice President, Investor Relations & Real Estate:
1 312 496 1774, jcreed@heidrick.com

H&S Media Contact:
Lia Randazzo - Marketing Manager:
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 Heidrick & Struggles


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