Heidrick & Struggles Reports Fourth Quarter & 2015 Financial Results

Heidrick & Struggles International, Inc. has announced financial results for its fourth quarter and fiscal year ended December 31, 2015.

Highlights:

• Fourth quarter net revenue (revenue before reimbursements) increased 19.2% to $144.5 million from $121.3 million in the 2014 fourth quarter.
• Net revenue increased 23.4% on a constant currency basis. Adjusted EBITDA(1) in the fourth quarter improved to $11.4 million and Adjusted EBITDA margin(1) was 7.9%, compared to Adjusted EBITDA of $9.5 million and Adjusted EBITDA margin of 7.9% in the 2014 fourth quarter.
• For the year, net revenue of $531.1 million increased 7.5% from $494.3 million in 2014.
• Net revenue in 2015 increased 12.3% on a constant currency basis. Adjusted EBITDA in 2015 improved to $55.8 million and Adjusted EBITDA margin was 10.5%, compared to Adjusted EBITDA of $48.9 million and Adjusted EBITDA margin of 9.9% in 2014.
• The number of Executive Search and Leadership Consulting consultants was 334 at December 31, 2015 compared to 307 at December 31, 2014.
• Specific to Executive Search and Leadership Consulting, consultant productivity, as measured by net revenue per consultant, was $1.6 million in the fourth quarter and $1.5 million for the year.
• Invested in the growth of its Leadership Consulting business with new leadership together with the acquisition of Co Company.

2015 Fourth Quarter Results

Consolidated net revenue (revenue before reimbursements) increased 19.2 percent, or $23.2 million, to $144.5 million from $121.3 million in the 2014 fourth quarter. Excluding the impact of exchange rate fluctuations which negatively impacted results by $5.1 million, or 4.2 percent, consolidated net revenue increased $28.4 million or 23.4 percent.

Executive Search and Leadership Consulting net revenue increased 18.8 percent year over year, or $21.2 million, to $133.9 million from $112.7 million in the 2014 fourth quarter. Excluding the impact of exchange rate fluctuations which negatively impacted results by $5.0 million, or 4.4 percent, net revenue in this business increased $26.2 million or 23.2 percent. All regions contributed to fourth quarter revenue growth in this business with Americas up 20.8 percent (22.2 percent on a constant currency basis), Europe up 27.0 percent (37.2 percent on a constant currency basis), and Asia Pacific up 2.2 percent (9.9 percent on a constant currency basis). From a global practices perspective, the Global Technology & Services, Healthcare & Life Sciences, and Financial Services practices were the primary drivers of fourth quarter year-over-year growth in this business.

Net revenue from Culture Shaping services increased 24.7 percent, or $2.2 million, to $10.7 million from $8.5 million in the 2014 fourth quarter. The year-over-year increase largely reflects the timing of project executions. The impact of exchange rate fluctuations negatively impacted results by $0.1 million or 1.2 percent.

The company ended the fourth quarter and 2015 with 334 Executive Search and Leadership Consulting consultants compared to 307 at December 31, 2014 and 334 at September 30, 2015. Productivity, as measured by annualized Executive Search and Leadership Consulting net revenue per consultant, was $1.6 million in the 2015 fourth quarter, compared to $1.4 million in the 2014 fourth quarter. Specific to Executive Search, the company's largest business, the number of confirmed searches in the 2015 fourth quarter increased 12.7 percent compared to the 2014 fourth quarter. The average revenue per executive search was $128,600, or $133,500 on a constant currency basis, compared to $124,800 in the 2014 fourth quarter.

First Quarter 2016 Outlook

The company is forecasting first quarter 2016 consolidated net revenue of between $120 million and $130 million. This forecast is based on the average currency rates in January 2016 and reflects, among other factors, management's 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.