Print Version2011 Year-over-Year Highlights
2011 net revenue of$527.8 million increased 7.0% withAmericas up 12.1%,Europe up 4.3%, andAsia Pacific down 1.4% Operating income, excluding impairment and restructuring charges, (1) improved to$31.8 million and operating margin improved to 6.0% General and administrative expenses declined$7.0 million or 5.4% Net revenue from Leadership Consulting Services increased 14.4% to$45.3 million , representing 8.6% of total net revenue Net revenue grew 20% in the Consumer practice, 17% in the Education & Social Enterprise practice, 16% in the Industrial practice and 15% in the Life Sciences practice, further improving the company's industry diversification, and more than offsetting a difficult year for the Financial Services practice
"We are pleased with our 2011 performance. Our net revenue was up 7 percent in a volatile economic environment and in line with our original 2011 guidance," said Chief Executive Officer
(1) These represent non-GAAP financial measures because the impairment charges in the 2011 third quarter and the restructuring charges in the 2011 fourth quarter have been excluded. Including the impairment and restructuring charges, the operating loss was
2011 Fourth Quarter Results
Consolidated net revenue was
The number of executive search and leadership consulting consultants at
Salaries and employee benefits increased 2.9 percent to
General and administrative expenses declined 14.1 percent to
Restructuring charges of
The company reported an operating loss of
The net loss was
Net cash provided by operating activities in the quarter was
2011 Results
For the year ended
The company confirmed 4,274 executive searches in 2011, a 2.2 percent increase compared to 2010. The average number of consultants in 2011 was 376 compared to an average of 353 in 2010, and productivity, as measured by 2011 net revenue per consultant, remained
The operating loss for 2011 was
The reported net loss for 2011 was
Regional Review
For segment purposes, reimbursements of out-of-pocket expenses classified as revenue, restructuring charges, impairment charges, and other operating income are reported separately and, therefore, are not included in the results of each geographic region. The company believes that analyzing trends in net revenue (before reimbursements) and operating income (loss) excluding restructuring charges, impairment charges, and other operating income more appropriately reflects the company's core operations.
$ in millions 4Q 11 4Q 10 Change 2011 2010 Change
Americas
Net revenue $ 69.4 $ 66.5 $ 2.9 $ 286.5 $255.7 $ 30.8
Operating income $ 16.4 $ 10.2 $ 6.1 $ 60.6 $ 40.3 $ 20.3
Consultants 160 157 3
Europe
Net revenue $ 32.9 $ 34.9 $ (2.0) $ 132.7 $ 127.3 $ 5.5
Operating income (loss) $ 3.3 $ 4.3 $ (1.1) $ 1.3 $ (0.6) $ 1.9
Consultants 104 116 (12)
Asia Pacific
Net revenue $ 24.9 $ 25.8 $ (0.9) $ 108.6 $110.1 $ (1.6)
Operating income $ 2.8 $ 6.3 $ (3.5) $ 13.0 $ 24.5 $ (11.5)
Consultants 83 74 9
Global Operations Support $ (10.6) $ (11.5) $ 1.0 $ (43.1) $ (46.1) $ 3.1
Restructuring charges $ (16.3) $ -- $(16.3) $ (16.3) $ (1.6) $ (14.7)
Impairment charges $ -- $ -- $ -- $ (26.4) $ -- $ (26.4)
Other operating income $ -- $ -- $ -- $ -- $ 1.1 $ (1.1)
Total operating income (loss) $ (4.5) $ 9.3 $ (13.8) $ (10.9) $ 17.5 $(28.4)
Totals and subtotals may not equal the sum of individual line items due to rounding.
Net revenue in the
Net revenue in
The
Expenses related to Global Operations Support declined 8.5 percent, or
2012 Outlook
Kelly said, "Considerable opportunities exist to further develop and build both our search and leadership consulting businesses, while integrating these services to become our clients' strategic leadership advisor. With this distinguishing platform, the best people in the business, and the most prestigious brand in the world, we will increase mind and market share in the C-Suite. We do not expect robust growth in 2012 unless we begin to see material movements in economic growth rates and investment patterns. However, we believe that we can improve productivity and increase our profitability. The initiatives we took in late 2011 have started us on the right course and we look forward to the year ahead."
The company is currently forecasting 2012 first quarter net revenue of between
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 income, balance sheets or statements of cash flow of the company. Pursuant to the requirements of Regulation G, the press release contains the most directly comparable GAAP financial measure near the non-GAAP financial measure.
The non-GAAP financial measures used within this earnings release are:
Operating income (loss), net income (loss), and operating margin to the extent presented as "excluding restructuring charges" or "excluding impairment and restructuring charges"; and Constant currency amounts that represent the outcome that would have resulted had exchange rates in the reported period been the same as those in effect in the comparable prior year period.
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.
$ in thousands Three months ended
December 31, 2011 Year ended
December 31, 2011
Operating Income
GAAP operating loss $ (4,502) $ (10,915)
Impairment charges -- 26,366
Restructuring charges 16,344 16,344
Non-GAAP operating income $ 11,842 $ 31,795
Operating Margin
GAAP operating loss as % of net revenue -3.5% -2.1%
Non-GAAP operating income as % of net revenue 9.3% 6.0%
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 and retain qualified executive search consultants; our ability to develop and maintain strong, long-term relationships with our clients; further 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; 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 realize 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; the effect of our goodwill & intangible asset impairment charges and our restructuring initiatives; delays in the development and/or implementation of new or improved technology and systems; and the ability to align our cost structure and headcount with net revenue. Our reports filed with the
Heidrick & Struggles International, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended
December 31,
2011 2010 $ Change % Change
Revenue:
Revenue before reimbursements (net revenue) $ 127,159 $ 127,223 $ (64) -0.1%
Reimbursements 7,023 5,771 1,252 21.7%
Total revenue 134,182 132,994 1,188 0.9%
Operating expenses:
Salaries and employee benefits 85,106 82,729 2,377 2.9%
General and administrative expenses 30,211 35,167 (4,956) -14.1%
Reimbursed expenses 7,023 5,771 1,252 21.7%
Restructuring charges 16,344 -- 16,344
Total operating expenses 138,684 123,667 15,017 12.1%
Operating income (loss) (4,502) 9,327 (13,829) -148.3%
Non-operating income (expense):
Interest income, net 549 240
Other, net (1,785) 272
Net non-operating income (expense) (1,236) 512
Income (loss) before income taxes (5,738) 9,839
Provision for (benefit from) income taxes (1,649) 4,656
Net income (loss) $ (4,089) $ 5,183
Basic weighted average common shares outstanding 17,850 17,548
Diluted weighted average common shares outstanding 17,850 17,893
Basic earnings (loss) per common share $ (0.23) $ 0.30
Diluted earnings (loss) per common share $ (0.23) $ 0.29
Salaries and employee benefits as a percentage of net revenue 66.9% 65.0%
General and administrative expense as a percentage of net revenue 23.8% 27.6%
Operating income (loss) as a percentage of net revenue -3.5% 7.3%
Effective income tax rate 28.7% 47.3%
Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
Three Months Ended December 31,
2011 2010 $ Change % Change 2011
Margin * 2010
Margin *
Revenue:
Americas $ 69,395 $ 66,513 $ 2,882 4.3%
Europe 32,864 34,879 (2,015) -5.8%
Asia Pacific 24,900 25,831 (931) -3.6%
Revenue before reimbursements (net revenue) 127,159 127,223 (64) -0.1%
Reimbursements 7,023 5,771 1,252 21.7%
Total revenue $ 134,182 $ 132,994 $ 1,188 0.9%
Operating income (loss):
Americas $ 16,358 $ 10,215 $ 6,143 60.1% 23.6% 15.4%
Europe 3,262 4,344 (1,082) -24.9% 9.9% 12.5%
Asia Pacific 2,786 6,316 (3,530) -55.9% 11.2% 24.5%
Total regions 22,406 20,875 1,531 7.3% 17.6% 16.4%
Global Operations Support (10,564) (11,548) 984 8.5%
Operating income before restructuring charges 11,842 9,327 2,515 27.0% 9.3% 7.3%
Restructuring charges (16,344) -- (16,344)
Operating income (loss): $ (4,502) $ 9,327 $ (13,829) -148.3% 7.3%
* Margin based on revenue before reimbursements (net revenue).
Heidrick & Struggles International, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
Twelve Months Ended
December 31,
2011 2010 $ Change % Change
(Unaudited)
Revenue:
Revenue before reimbursements (net revenue) $ 527,793 $ 493,091 $ 34,702 7.0%
Reimbursements 26,187 20,145 6,042 30.0%
Total revenue 553,980 513,236 40,744 7.9%
Operating expenses:
Salaries and employee benefits 372,406 340,178 32,228 9.5%
General and administrative expenses 123,592 130,622 (7,030) -5.4%
Other charges -- 4,218 (4,218) -100.0%
Reimbursed expenses 26,187 20,145 6,042 30.0%
Restructuring charges 16,344 1,621 14,723 908.3%
Impairment charges 26,366 -- 26,366
Other operating income -- (1,072) 1,072 100.0%
Total operating expenses 564,895 495,712 69,183 14.0%
Operating income (loss) (10,915) 17,524 (28,439) -162.3%
Non-operating income (expense):
Interest income, net 1,402 813
Other, net (5,262) (1,389)
Net non-operating expense (3,860) (576)
Income (loss) before income taxes (14,775) 16,948
Provision for income taxes 18,947 9,455
Net income (loss) $ (33,722) $ 7,493
Basic weighted average common shares outstanding 17,780 17,437
Diluted weighted average common shares outstanding 17,780 17,869
Basic earnings (loss) per common share $ (1.90) $ 0.43
Diluted earnings (loss) per common share $ (1.90) $ 0.42
Salaries and employee benefits as a percentage of net revenue 70.6% 69.0%
General and administrative expense as a percentage of net revenue 23.4% 26.5%
Operating income (loss) as a percentage of net revenue -2.1% 3.6%
Effective income tax rate -128.2% 55.8%
Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
Twelve Months Ended December 31 ,
2011 2010 $ Change % Change 2011
Margin * 2010
Margin *
(Unaudited)
Revenue:
Americas $ 286,503 $ 255,690 $ 30,813 12.1%
Europe 132,722 127,267 5,455 4.3%
Asia Pacific 108,568 110,134 (1,566) -1.4%
Revenue before reimbursements (net revenue) 527,793 493,091 34,702 7.0%
Reimbursements 26,187 20,145 6,042 30.0%
Total revenue $ 553,980 $ 513,236 $ 40,744 7.9%
Operating income (loss):
Americas $ 60,612 $ 40,307 $ 20,305 50.4% 21.2% 15.8%
Europe 1,250 (604) 1,854 307.0% 0.9%
Asia Pacific 12,983 24,517 (11,534) -47.0% 12.0% 22.3%
Total regions 74,845 64,220 10,625 16.5% 14.2% 13.0%
Global Operations Support (43,050) (46,147) 3,097 6.7%
Operating income before restructuring charges, impairment charges, and other operating income 31,795 18,073 13,722 75.9% 6.0% 3.7%
Restructuring charges (16,344) (1,621) (14,723) -908.3%
Impairment charges (26,366) -- (26,366)
Other operating income -- 1,072 (1,072) -100.0%
Operating income (loss): $ (10,915) $ 17,524 $ (28,439) -162.3% 3.6%
* Margin based on revenue before reimbursements (net revenue).
Heidrick & Struggles International, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
December 31,
2011 December 31,
2010
(Unaudited)
Current assets:
Cash and cash equivalents $ 185,390 $ 181,124
Restricted cash 440 393
Accounts receivable, net 69,081 83,360
Other receivables 9,404 7,724
Prepaid expenses 16,551 15,323
Other current assets 1,382 1,871
Income taxes recoverable 19,866 11,912
Deferred income taxes 8,211 10,759
Total current assets 310,325 312,466
Non-current assets:
Property and equipment, net 44,781 34,406
Restricted cash 1,470 1,609
Assets designated for retirement and pension plans 22,883 23,647
Investments 9,868 11,021
Other non-current assets 6,480 8,593
Goodwill 90,696 109,888
Other intangible assets, net 2,556 6,480
Deferred income taxes 26,506 36,917
Total non-current assets 205,240 232,561
Total assets $ 515,565 $ 545,027
Current liabilities:
Accounts payable $ 9,157 $ 8,408
Accrued salaries and employee benefits 131,697 124,969
Other current liabilities 39,362 34,064
Income taxes payable 4,868 3,208
Deferred income taxes 6 1,807
Total current liabilities 185,090 172,456
Non-current liabilities:
Retirement and pension plans 31,747 30,907
Other non-current liabilities 47,396 47,015
Deferred income taxes 37 107
Total non-current liabilities 79,180 78,029
Stockholders' equity 251,295 294,542
Total liabilities and stockholders' equity $ 515,565 $ 545,027
Heidrick & Struggles International, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
December 31,
2011 2010
Cash flows from operating activities:
Net income (loss) $ (4,089) $ 5,183
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 3,056 2,260
Deferred income taxes 756 3,942
Net realized and unrealized losses on investments (277) 492
Stock-based compensation expense 1,342 1,738
Allowance for doubtful accounts (2,086) 256
Restructuring charges 16,344 --
Cash paid for restructuring charges (6,833) (621)
Changes in assets and liabilities:
Trade and other receivables 34,059 30,263
Accounts payable (1,621) (2,472)
Accrued expenses 18,676 14,141
Income taxes recoverable (payable), net (8,544) 2,409
Retirement and pension plan assets and liabilities 957 (875)
Prepayments 802 4,384
Other assets and liabilities, net 2,884 (14)
Net cash provided by operating activities 55,426 61,086
Cash flows from investing activities:
Restricted cash 70 (142)
Capital expenditures (1,766) (1,498)
Purchases of available for sale investments (187) (499)
Proceeds from sale of available for sale investments 25 12
Other, net (15) --
Net cash used in investing activities (1,873) (2,127)
Cash flows from financing activities:
Cash dividends paid (2,343) (2,329)
Payment of employee tax withholdings on equity transactions (101) (16)
Net cash used in financing activities (2,444) (2,345)
Effect of exchange rate fluctuations on cash and cash equivalents (1,218) 1,747
Net increase in cash and cash equivalents 49,891 58,361
Cash and cash equivalents at beginning of period 135,499 122,763
Cash and cash equivalents at end of period $ 185,390 $ 181,124
Heidrick & Struggles International, Inc.
Consolidated Statements of Cash Flows
(In thousands)
Year ended
December 31 ,
2011 2010
(Unaudited)
Cash flows from operating activities:
Net income (loss) $ (33,722) $ 7,493
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 10,263 11,584
Write-off of investment 2,810 --
Deferred income taxes 10,571 7,093
Net realized and unrealized losses on investments 211 1,509
Stock-based compensation expense 5,503 7,765
Other operating income -- (1,072)
Allowance for doubtful accounts (2,753) 1,735
Impairment charges 26,366 --
Restructuring charges 16,344 1,621
Cash paid for restructuring charges (7,491) (3,439)
Changes in assets and liabilities:
Trade and other receivables 13,572 (18,946)
Accounts payable (732) 2,203
Accrued expenses 5,960 65,162
Income taxes recoverable (payable), net (6,886) 3,726
Retirement and pension plan assets and liabilities 667 (483)
Prepayments (1,186) 672
Other assets and liabilities, net 5,277 (2,329)
Net cash provided by operating activities 44,774 84,294
Cash flows from investing activities:
Restricted cash 83 2,620
Acquisition earnout payments (3,930) (554)
Capital expenditures (18,016) (17,564)
Purchases of available for sale investments (986) (1,046)
Proceeds from sale of available for sale investments 83 292
Loan to equity method investment (1,008) --
Other, net 74 --
Net cash used in investing activities (23,700) (16,252)
Cash flows from financing activities:
Cash dividends paid (9,723) (9,696)
Payment of employee tax withholdings on equity transactions (2,853) (4,585)
Net cash used in financing activities (12,576) (14,281)
Effect of exchange rate fluctuations on cash and cash equivalents (4,232) 4,333
Net increase in cash and cash equivalents 4,266 58,094
Cash and cash equivalents at beginning of period 181,124 123,030
Cash and cash equivalents at end of period $ 185,390 $ 181,124
CONTACT: Investors & Analysts:
Julie Creed , Vice President, Investor Relations
& Real Estate:
+1 312 496 1774 or jcreed@heidrick.com
Media:
Jennifer Nelson , Director, Global Marketing:
+1 404 682 7373 or jnelson@heidrick.com
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