Slides
Page 1
First Quarter 2025 Results May 5, 2025
Page 2
Cautionary Statement Regarding Forward-Looking Information This press release contains forward-looking statements within the meaning of the federal securities laws, including statements regarding guidance for the second quarter of 2025. 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,” “outlook,” “projects,” “forecasts,” “aim” and similar expressions. Forward-looking statements are not guarantees of future performance, rely on a number of assumptions, and involve certain known and unknown risks and uncertainties that are difficult to predict, many of which are beyond our control. Factors that may cause actual outcomes and results to differ materially from what is expressed, forecasted or implied in the forward-looking statements include, among other things, our ability to attract, integrate, develop, manage, retain and motivate qualified consultants and senior leaders; our ability to prevent our consultants from taking our clients with them to another firm; our ability to maintain our professional reputation and brand name; our clients’ ability to restrict us from recruiting their employees; our heavy reliance on information management systems; risks arising from our implementation of new technology and intellectual property to deliver new products and services to our clients; our dependence on third parties for the execution of certain critical functions; the fact that we face the risk of liability in the services we perform; the fact that data security, data privacy and data protection laws and other evolving regulations and cross-border data transfer restrictions may limit the use of our services and adversely affect our business; any challenges to the classification of our on-demand talent as independent contractors; the fact that increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted cyber-related attacks could pose a risk to our systems, networks, solutions, services and data; the fact that our net revenue may be affected by adverse macroeconomic or labor market conditions, including impacts of inflation and effects of geopolitical instability; the aggressive competition we face; the impact of foreign currency exchange rate fluctuations; our ability to access additional credit; social, political, regulatory, legal and economic risks in markets where we operate, including the impact of the ongoing war in Ukraine, the conflict between Israel and Hamas and any broader regional conflict in the Middle East, the risks of an expansion or escalation of those conflicts and our ability to quickly and completely recover from any disruption to our business; the impact from actions by the U.S. presidential administration and Congress; unfavorable tax law changes and tax authority rulings; our ability to realize the benefit of our net deferred tax assets; the fact that we may not be able to align our cost structure with net revenue; any impairment of our goodwill, other intangible assets and other long-lived assets; our ability to maintain an effective system of disclosure controls and internal control over our financial reporting and produce accurate and timely financial statements; our ability to execute and integrate future acquisitions; and the fact that we have anti- takeover provisions that make an acquisition of us difficult and expensive. We caution the reader that the list of factors may not be exhaustive. For more information on these risks, uncertainties and other factors, refer to our Annual Report on Form 10-K for the year ended December 31, 2024, under the heading "Risk Factors" in Item 1A. The forward-looking statements contained in this press release speak only as of the date of this press release. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Page 3
Non-GAAP Financial Measures & Currency Presentation NON - GAAP F I N A N C I A L M E A S U R E S To supplement the financial results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Heidrick & Struggles presents 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. Reconciliations of these non-GAAP financial measures with the most directly comparable measures calculated and presented in accordance with GAAP are provided in the appendix. The Company evaluates its results of operations on both an as reported and a constant currency basis. The constant currency presentation is a non-GAAP financial measure, which excludes the impact of fluctuations in foreign currency exchange rates. The Company believes providing constant currency information provides valuable supplemental information regarding its results of operations, consistent with how it evaluates its performance. The Company calculates constant currency percentages by converting its financial results in a local currency for a period using the average exchange rate for the prior period to which it is comparing. This calculation may differ from similarly-titled measures used by other companies. C U R R E N C Y P R E S E N T A T I O N All currency amounts presented in millions except for earnings per share data. A P P E N D I X C U R R E N C Y P R E S E N T A T I O N All currency amounts presented in thousands except for earnings per share data.
Page 4
Overview
Page 5
Investment Highlights P R E E M I N E N T L E A D E R S H I P C O N S U L T A N C Y • World class brand with top of the house relationships • Strong and unique collection of assets enable Right to Win • Powerful platform to grow scale and impact – technology and IP E V E R E X P A N D I N G A D D R E S S A B L E M A R K E T • Conduct vital work that serves a huge and growing market • Client needs continue to grow in scale and urgency • Major opportunity to grow firm’s impact and value Immense opportunity to create value for clients, colleagues and investors by discovering, assessing and enabling exceptional leaders E X P A N S I O N O F C A P A B I L I T I E S & E X P E R T I S E • Expanding in areas of greatest growth potential, capitalizing on secular tailwinds and growing global digital platform • Creating solutions that lift client performance and leaders • Leveraging technology and AI to enable consultant impact M A R G I N E X P A N S I O N O P P O R T U N I T Y • Enhanced operating model and focused execution create significant room for margin expansion both organically and inorganically • Integrated product positioning with One Heidrick approach N E W L E A D E R S H I P • CEO Tom Monahan and President Tom Murray appointed in early 2024; CFO Nirupam Sinha appointed in January 2025 • New service line leaders • Establishment of a culture of client-led excellence • Continue to optimize resource allocation, drive efficiency, and invest opportunistically for future growth S T R O N G C A S H F L O W A N D B A L A N C E S H E E T • Zero debt • Strong free cash flow • Disciplined and balanced capital allocation underscores commitment to growth and returning capital to shareholders
Page 6
Growing our impact and scale in the era of who and how Focus on growing differentiated, deep, and durable client relationships through insight- enabled discovery and enablement of great leadership. Clarifying what we can do for clients Simplifying how we bring them the best of Heidrick Amplifying the power of our collective work RELENTLESS FOCUS ON A CULTURE OF INCLUSION, COLLABORATION & EXCELLENCE D I F F E R E N T I AT E D Secure C-Suite & Board Primacy D E E P Embed in Client Transformations D U R A B L E Create Continuous Engagement C R E AT I N G U N R I VA L E D VA LU E F O R C L I E N T S CONSISTENTLY IMPROVING THE FOUNDATIONS OF “ONE HEIDRICK” WITH CLEAR, CONSISTENT BRAND MESSAGING
Page 7
Multiple Drivers of Growth & Profit Heidrick & Struggles is the only global leadership advisory firm to focus exclusively on the full spectrum of executive and high-end talent solutions. HEIDRICK SEARCH HEIDRICK ON-DEMAND HEIDRICK CONSULTING Targeting ‘through cycle’ consolidated organic revenue growth of 4-6% and organic adjusted EBITDA growth of 5-8% per year
Page 8
Financial Highlights “Our first quarter results exceeded the high end of our outlook, a testament to our resilient business model, our team’s intense focus, and the deep trust that clients place in Heidrick. When navigating economic uncertainty, we remain committed to serving as a highly strategic advisor, helping organizations turn complexity into opportunity. In addition, our new leadership team is focused on sharpening execution and ensuring our professionals have the resources to deliver exceptional results. While mindful of current macroeconomic conditions, we know that by staying close to our clients and enabling our exceptional professionals with new tools and solutions, we can continue to engineer differentiated, deep and durable client partnerships. We are confident in our ability to create lasting value for our clients, our people and our shareholders.” - Tom Monahan, CEO R E V E N U E • Quarterly net revenue of $283.6 million; on a constant currency basis*, net revenue was $286.8 million for the first quarter A D J U S T E D E B I T D A * • Adjusted EBITDA* of $29.1 million and Adjusted EBITDA Margin* of 10.3% for the first quarter N E T I N C O M E • Net income of $13.3 million for the first quarter • Adjusted net income* of $14.2 million E A R N I N G S P E R S H A R E • Diluted earnings per share of $0.62 for the first quarter • Adjusted diluted earnings per share* of $0.67 Heidrick & Struggles continues to deliver strong financial performance * Non-GAAP Financial Measure
Page 9
E X E C U T I V E S E A R C H • 5.9% year over year revenue growth for the first quarter; on a constant currency basis*, revenue growth was 7.0% • Adjusted EBITDA margin* of 24.5% for the first quarter • Performance highlights versus Q1’24 include: • Confirmations, productivity and average revenue per executive search increased ON – D E M A N D T A L E N T Creating a Portfolio of Solutions that Addresses Urgent Client Need and Amplifies Search Impact H E I D R I C K C O N S U L T I N G R & D A N D D I G I T A L E N A B L E M E N T • Advancing enterprise platform through digital enhancements, proprietary data and IP • Developing digital product portfolio, including Leadership Intelligence and Digital Assessments • 6.8% year over year revenue growth for the first quarter; on a constant currency basis*, revenue growth was 7.8% • Adjusted EBITDA margin* loss of 7.6% for the first quarter • Leadership Assessments drove business in Q1’25 • 12.4% year over year revenue growth for the first quarter; on a constant currency basis*, revenue growth was 14.3% • Adjusted EBITDA margin* of 0.9% for the first quarter • Total volume of wins and extensions increased versus Q1’24 * Non-GAAP Financial Measure
Page 10
Consolidated Results
Page 11
Consolidated Financial Highlights * Non-GAAP Financial Measure Q U A R T E R L Y N E T R E V E N U E A N D A D J U S T E D E B I T D A * T R E N D S C O N S O L I D A T E D N E T R E V E N U E Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 Executive Search Heidrick Consulting On-Demand Talent $160.1M $283.6M Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 Adjusted EBITDA A D J U S T E D E B I T D A * $16.6M $29.1M 8.5% CAGR since Q1 2018 8.36% CAGR since Q1 2018 Pandemic
Page 12
Consolidated Financial Highlights * Non-GAAP Financial Measure Q U A R T E R L Y A D J U S T E D E B I T D A M A R G I N * A N D A D J U S T E D D I L U T E D E P S * T R E NDS A D J U S T E D E B I T D A M A R G I N * Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 10.4% 10.3% Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 A D J U S T E D D I L U T E D E P S * $0.53 $0.67 Consistently profitable High single-digit/double-digit margin quarters 44 consecutive quarters of profitability
Page 13
Segment Financial Highlights * Non-GAAP Financial Measure Q U A R T E R L Y N E T R E V E N U E E X E C U T I V E S E A R C H ON - D E M A N D T A L E N T 5.6% CAGR since Q1 2018 12% year over year growth Q1 2022 Q1 2023 Q1 2024 Q1 2025 $23.4M Atreus Acquired $42.6M Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 Americas Europe Asia Pacific $145.8M $213.4M Pandemic
Page 14
Segment Financial Highlights * Non-GAAP Financial Measure Q U A R T E R L Y N E T R E V E N U E H E I D R I C K C O N S U L T I N G 9.9% CAGR since Q1 2018 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 $14.2M B4Z Acquired $27.6M
Page 15
Executive Search Operational Highlights C O N S U L T A N T H E A D C O U N T S E A R C H C O N F I R M A T I O N S 5% year-over-year increase in confirmation volume C O N S U L T A N T P R O D U C T I V I T Y ( $ M ) Trailing twelve-month productivity remains robust 424 427 Q1 2024 Q1 2025 1,482 1,561 Q1 2024 Q1 2025 $1.9 $2.0 TTM Q1 2024 TTM Q1 2025 1% year-over-year consultant headcount increase
Page 16
Balance Sheet & Liquidity
Page 17
Strong & Flexible Balance Sheet C A S H & M A R K E T A B L E S E C U R I T I E S , N E T O F D E B T C A S H U S E D I N O P E R A T I N G A C T I V I T I E S ($M) March 31, 2025 March 31, 2024 For the quarter ending: $232.2 $203.4 U S E O F C A S H P R I O R I T I Z A T I O N Bonus Accruals that were paid in March of the following year ($M) Available Cash & Marketable Securities ($M) $383.1 $422.0 $289.8 $317.8 $184.1 $237.8 $348.3 $545.2 $268.0 $336.6 $456.0 $621.6 $204.7 $239.0 $334.0 $478.2 $252.8 $296.9 $409.4 $563.5 $324.7 3. RETURN OF CAPITAL 1.O PERATIONS 2.ORGANIC & INORGANIC GROW TH
Page 18
Appendix Reconciliation of GAAP to Non-GAAP Financial Measures
Page 19
Adjusted Net Income & Earnings Per Share We define Adjusted Net Income as net income excluding impairment charges, restructuring charges and earnout fair value adjustments, net of tax. 2025 1 ST QUARTER AND YEAR -TO -DATE
Page 20
Vance Edelson Vance.Edelson@icrinc.com