HSII - Earnings call transcript Q2 2024 | Heidrick & Struggles International, Inc.

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Operator

Thank you for standing by. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Heidrick & Struggles Second Quarter 2024 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Suzanne Rosenberg, Vice President of Investor Relations. Suzanne, you may begin.

Suzanne Rosenberg

to second welcome conference and you, our quarter XXXX call. Thank

results. into homepage provide Tom today refer accompanying measures non-GAAP be CFO, included most in IR call these at slides Tom, release. Also underlying these is We comparable note to me may you refer context. in GAAP may encourage Monahan additional and slides turn the over our now release. ask to I'll you. we we heidrick.com, the that our between measures the and statements. please for we our Joining we view to posted Reconciliations financial the financial CEO, and press certain materials today's to you remarks, today, website measures found insight in non-GAAP the also We the in press Mark forward-looking that language make on believe Please safe may our additional earnings of that Harris. harbor presented

Thomas Monahan

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Mark Harris

kind for but words. unexpected Thank you, Tom, appreciated. very very was the That

afternoon strong a on top-line across and solid of joining end allowed businesses, Today, you call our today, I'll We of So, which our evening. adjusted exceed results, second reflects of performance appreciate good us guidance us with quarter range the the the today. morning, a review our to that high achieve in thorough provide quarter. EBITDA performance all you and

our before let X standout in begin doing quarterly However, with results. so, me items

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facing moved was detail and discuss higher remarks, used I in rates which well issue, culprit Irrespective, discount main a to we to would imagine will rate more our ensure well. impairment later had I in to reasonable principles, are our partial in as accounting acquisitions. that WACC other discount conformity take As my companies an more interest XX.XX%, rates our prepared above the to

of for business. align One ago a a recorded mentioned on onetime you changes related are a my in and today like-for-like underlying force the they both performance XXXX the point. also true Results Atreus strategy of second the items period so operating the results and leadership of in implemented will the as both second charge X.X to new of reduction organic last both USD periods, growth comments give unusual now Therefore, quarter to we businessfourzero. the Second, indication the full adjust to are fully for quarter. include basis and better in million restructuring the quarter and earlier, quarter these year

was above XXXX XX.X% Looking quarter second consolidated basis, compared of the was XXX of margin results, EBITDA at driven our quarter to businesses. year. million X% million million revenue second a USD Adjusted last and adjusted our XXXX on EBITDA XX.X all second of USD or performance to USD XX.X quarter compares in by XX.X%

adjusted to EBITDA second last year, impacted at our and quarter as a April related important dual appears moving revenue administrative call to higher that While underperforming as lease was general offices. levels London of it's performance and XXXX, adjusted Conference Consulting to out be expenses the similar EBITDA we're by Global

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our grew of from each XXXX Executive X.X% businesses XXX to for second details. Search, of turn In quarter revenue let's to Now the USD million. further

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in consultant compared same saw of in year million pleased also in to also million margin million maintaining USD on We're X.X of range million quarter, a USD million of of USD the to with Search strong compared to the year X second ago is commented last or the the profitability productivity X.X we to USD very quarter within XX.X million with long-term basis X EBITDA on USD XX.X%. adjusted quarter We compared XX.X% USD annualized previously. same have Executive the which XX.X

XX.X%, XX.X over have nonrecurring better EBITDA points million second adjusted quarter of Excluding been the would than XXXX been margin second basis the have costs, EBITDA X XXX XXXX. adjusted and quarter USD would

was to the USD XXXX. Turning million, to quarter revenue second XX X% Talent, On-Demand up compared of

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expand in The we to growth. the Let to while On-Demand me innovation growth the and and internalize as operations. increasingly improve accelerate Talent and in reiterate. areas Talent made potential to place, leader all changes have a efficiency business plan new companies a services fostering On-Demand across we streamlined With their our operating for products as continues model of and pivot

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Now nimble simplify we with on structure, as its along focused refine and core Heidrick strength our Consulting leadership, a solutions. is new organizational with

salary prior expenses, benefits the and increased operating to quarter. Turning from X%

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a XX frame. continue to for normalized slightly our over revenue the months earn-out expectations We next to G&A expenses and to time expect of down inflated will XX%, that remain approximately off while run level the more XX given

USD second USD primarily services. Turning increase the has of USD XX.X business, of to This revenue the million increase. XXXX XX% X.X to On-Demand XX% in approximately of our a increase typically XX.X the versus saw we quarter, Talent which million and million previous an cost of of to XX% services, quarter reflects in segment's cost

discussed, XXXX As period. second quarter increase mix the was due in to product geographic the in of and the

product approximately development remain million our assessments, second net The was for advancing digital Lastly, spend continue of second the quarter to USD the net revenue through And R&D portfolio, USD Heidrick or of we including in R&D for XXXX. versus enhancements. progressing platform spending expect Navigator while quarter with prior focused we full is our the year, X% enterprise X.X digital quarters. X.X of or the USD on of and million revenue consistent XX to X.X% million. our be

line costs, forma income per X.XX, USD basis, share. pro been diluted adjusted to million last XX income adjusted XX.X USD EPS excluding On million, net the the X.XX of EPS in diluted profitability, USD compares quarter X.XX for have nonrecurring X would EPS a our net year. to adjusted and USD same was and USD quarter on which of adjusted bottom the Moving was

our and we be XX%, acquisition around moving expect of by forward, the earn-out driven a rate As in tax XXXX, reminder, costs. non-deductibility XXXX temporarily

once tax the be expect other statutory back low in these run However, to XX% rate we tax acquisition off, costs assuming changes. no our range,

Now million, million position and XXXX. up USD payments was ended quarter driven which this cash I'll turn strong XX June mainly for from We balance with the to year-over-year acquisitions, not the improvement The of have the second XXX.X a the of by end at earnouts did USD XXX we million sheet. year. USD

bonuses are and As tax costs. associated we've bonuses first are typically as employee Employee their out along through related before, our quarter, builds discussed in accrued. with cash year the position the paid

Our debt, our strong million of or cash of gives great strength strategic with over capital no flexibility execute position credit our facility liquidity, XXX with billion to along USD plan USD return accordion us to shareholders. X.X and and

Moving across range good lines. million. choppy USD expect our signals environment, third and we see continue between we while forward, macro to Therefore, demand revenue navigate still quarter USD XXX we to XXX million business

team, the of for and The with greater firm. at a tenure entirety say ahead are a company Hedrick setting it's can days wanted I and early success terrific people iconic lines questions. XXXX. a team. please I work & work Struggles, a with coupled Our thoroughly small and Monahan such would in Heidrick to to I up is guidance have bright operator, honestly both performances I support my played [indiscernible] performance APAC, in anticipates the pleasure closing, the could in with finance Search, Tom Talent a Heidrick that, truly outstanding the On-Demand see say hope at the along privilege volatility to you in given what a with last professionals. operating enjoy the and and [indiscernible] be of & my even continued With and call the take if under continued least Tom for slowdown that businesses. In groups. in I with happy as a Heidrick Consulting I an such in it's strong open role environment, the came world-class earnings and such Europe Executive Struggles stronger world-class dedicated been first this potential for including been and with both and I Heidrick of leadership to company with to

Operator

session. question-and-answer We will Tobey from [Operator now with begin Your question first Sommer Truist comes Securities. Instructions] the

Tobey Sommer

wanted First to On-Demand I was one Talent. ask

aiming and sides I better improved managing profitability going think profit terms on you've of based is revenue management. the that business efforts the on -- or for narrowed forward? that Where growth you and how expense getting and in are both margin losses

Thomas Monahan

let's peers This to, top-line, bit that quarters, holding thinking the margins coming performed see will of Yes, single-digit do how let well focused a talk we're environment we're it to pleased that expect see in world and the -- are give really in on high about now bottom integration really up areas to pretty line. X We're X out key pleased of a or pressure. obviously, where ODT to the benefits buckets, a me say, way from of on and strength real little difficult obviously, getting we're and we'd economic it's well scaling solution We take. come from Atreus. our across X on

tough the what So, continue now those integrating need sector. showed a we shows in was in distinct make meeting that important. important think market I the for is is on performance and and time otherwise the quarter pathways we growth progress top-line particularly we're a the to important right X that to real profitability, But particularly Atreus with

Tobey Sommer

experienced? the some and we've what of elongation demand multinational is on decision-making particularly conversations heard or that Search multinational inconsistent your with Executive on In companies, what like with timelines, Is you've side. side, the consistent reticence --

Thomas Monahan

sword is clients right? double-edged This a Yes. us, We countries. have X,XXX XX for in

to coming a one its So, is work. themes headwinds imagine [indiscernible] each basic think few our with them don't I a you any a or own can C-suite. consuming are mitigants of issues snowflake out. safely necessarily of them

no global to a year, divisions. vote world, the going political uncertainty, implication world in across creates nearly Elections First, countries, of that a starts in and midterm give is role and all there societal near a quality, as on economy. global of issues and take, on the people Obviously, or of near-term the the and In how about economy this my policy, what's change half geopolitical surprise. the that is investment is the nation to thinking lot ballot stuff. one trade are our the

So up place, shows kind elevating and in. new bringing lot. leaders of that of they're lots and need whether new of And leadership the or changes they that the less in agility a great more putting mindset

of people unsurprising. is it going obviously be to this work. factors beyond this but on It completely lead labor going their the the to we to client right right the to there moving demography, of control, A technology-driven that that technology talent geography, broadly, is focus the to demand benefits there. the stimulated even market critical there to around due Gen businesses. third, company's exceed organization cooled most of difficulty AI are scarce grow massive is in skill capture due Second, people is remaking have due out It's due the this the reality was is that and and little need they to bit, to AI people that talent in every already again, markets mixes, for revolution, is And particular. confronting serve, supply reality intends by having as demographic a

a actually business, and positioned our big environment, long-term really though them uniquely it's dynamics those those So, really tailwinds we for challenges. to see feel operating confront we're help we complex

Tobey Sommer

growth And know I in back on Navigator, and that us it an early, dollars-and-cents That profitability, me for from you're be for how perspective? the that how stands bit versus update manage give you where Could get helpful. to might one little going from could to an speak but that? queue. you a you're I'll last actual be And if would still solving

Thomas Monahan

Sure. talking per And product actual not Tobey, Navigator of about size as the you se. know, the we're

are at just philosophy even every one One -- clients. can making tools, of said, parts core we business, This impact pull broadly. do forms. is, level. so more our enablement put through to data Like and assets on exciting to our opportunity place necessarily technology digital of clients, think are for and energy. work, that of teams here. more. and it make the There will our our key are straightforward enormous things scale call about kind move We more back are We resource [indiscernible] see our X which of continue great to that that There faster business. takes an me perform tremendous already infuses on technology workflows and core in of just our Let our repeatable. we're enable talk I as digital investments this highest to the There new at platforms

The second solutions that market we've which client related new we're and [ platform. work. client work And but assessment platform we is a christened our solutions, to our great needs. They directly different beta already these with One closely built Navigator ] connect in launching for already X solutions. digital is target

workflows. platform. our assessment second They with The both but Intelligence leadership is resonate clients existing client right now, digital is to closer

the sales and the But attention. client faces cycle. core longer since It it's is AI-based it brand-new catches Navigator which a more shorter sales them, just really a therefore, intelligence, a really is cycle. platform for of category Leadership easier, So tool. it's complex powerful an

that's there. just processes organization. technology, [ We're bit inside back every and ] -- to intelligence platform, we with through products, new great So, digital think the for we reorganize now, Navigator themselves assessment such true point, previous you think of to huge a but the opportunity on that quicker as leadership platform clients and in succession some it entire see is leadership interest and of platform, market right learning our the the to there's X my tools the are

from that Allows great Investor investments. Day. both know our say course, you return some that -- these excited and these we're But stuff to our value we're investments. won't demoing miss we're So, to we'll client -- us earn invest invest be to impact plug shameless against a about the at for and going of of sure investors. cool And I

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Operator

comes line Your Barrington with of Research. the Kevin Steinke next from question

Kevin Steinke

digital the little more you're more, engage side. just realigning on that in about what accomplish? You've you in into provide you if what bit little how your and to talked a there Wondering could remarks, a color you with on bit particularly delve hope maybe prepared clients, doing

Thomas Monahan

pretty in get the Navigator Sure. people succession our understand straightforward, receptivity have the already innovative actually. have It we won't We it's great companies, come I relationships. surprise we running greatest under place banner are development places know the we we space where processes, and mean, the as understand we their the any that leadership and the platforms start. digital to a

with every the clients we of in the our customers. opportunity everywhere term, don't our to digital with can our integrating conversations Go-To-Market work ways But of Heidrick go come products existing in do leveraging into Europe, which use having is to around in great digital they our platforms put have platform, onto in teams much different our of a work on to teams Go-To-Market it. near very to introduce products -- business relationships them, spear our we service as we're so Now lines the saw them and businesses can that and we point be and other behind at an the seamlessly our link our the can great get that's company since global existing solutions both to focused face to on flow

market a most great was is we're most compelling the accelerate. What already seeing important this and So, dynamic. opportunity to

Kevin Steinke

digital Are looking about accelerate tied returns cycle. investments would growth investment your And recent from? returns that recent the what Or you there? comments about primarily to be from or other and to talking accelerate are looking probably investments the I you products in your directly to growth guess

Thomas Monahan

build-out there, Look, scale we opportunity product see our in an by question, I have within propositions the ODT Consulting, to been obviously, area just to Heidrick an responded -- portfolio there. that focus. I And profitability of we put a see our accelerate highly investment to previous opportunity in And opportunity portfolio, our of faster. we as growth at most Consulting value the economics Heidrick we see powerful And of platform we scaling the has portions certainly, arrive continue the in would also as area. resonant see

Kevin Steinke

had the kind pretty the had market, about it of facing in there, talent, nice market of headwinds but and it seems particular of you're variance. On-Demand a quarters, maybe decoupled few that on tracking the it the last talked back seems you along like and here in bit the quarter. growth circling a second just with like second kind then positive in part market backdrop quarter, And And had the you the

I particular bit seems to just want outperformance an a you'd the relative know like anything in of if in So, to is terms what don't to market there trending? more of where make there's highlight

Thomas Monahan

macro ] was I and Well, levels. leadership mostly at the real proposition and obviously, proposition value I'm -- to it's obviously. being new On-Demand Marie Tom the if Look, isn't I at kidding, chair the Talent, [ level, think in think just it by due news about you value

to Officer want going our don't leadership -- Security No you portfolio, say, look -- of interim need, example about Information up On-Demand urgent the we there's is easiest inside are think most we client have, if So, Talent that and Security to not really have to one. the use wake team cases quit, --but tightly a Chief Information series so Officer. tied the Chief

ability executive project the et information of finance, great cetera, kind security to talent. tap or our critical interim So, or a get and team for

value target We; has. and points we them, known create you're If solution the teams our at we to known we number place times. to create do you've X pharma think one drug Again, that so in target I no and a cases when market, big but pain done else you a number of that serve you use a a specificity not create we got got we get much in of power want serve. the model, and company that's workflows,

Kevin Steinke

environment, talked macro quarter, the second lastly, some about environment solid for and seeing continuing quarter the the overall you've up Obviously, what see. And overall performance quarter some third the in the quarter last you here is choppiness like to good you just environment. been you're X, pretty outlook how changes a macro over or in put or case sounds much you've demand from last would the then It in what that's X? but the characterize any

Thomas Monahan

are I It's by that pockets geo. times remembering exceptional simple. by do strength really the need either clients when more pockets There think knows complex and when always than at through are of have very client so of it's finding teams it's times [indiscernible] industry, our worth lord are chop, and but choppy, far. year real are consistent need they

there shareholders lever to companies right incredibly to entering where grow roles [ first great talent, testament performance are are being corporate to as grow but great clients, doing value The it's teams behind create out And and important believe aware great more our the So, who more long-term thing. got single and more It great more than and leaders -- impact and business an that for great worth for we've powerful. as this also headwinds is most the noting well. our ] doing colleagues and great is the right is in for what. how important We important and this a opportunity leadership, work. are that macro then business foremost the who the for era we're

Operator

next Your Instructions] Sidoti. comes [Operator question Marc with Riddick from

Marc Riddick

best together, you this timing work a of Anything there? there think year? as Just that -- It's chance what the all, timing about caught should as working little the at first the bit lumpy? been thinking thank as thinking be though little for Anything that. we I R&D, far [indiscernible] one as USD remainder want you're about were be everything. I the I appreciate for moving had if made to that that all you've with on Mark, pleasure the -- -- we've there. over help did wanted so you, touch time a comment given the bit of everything working for you had and of you forward to things and to certainly a start, should year, the would back seems the that we of R&D far on? a anything around right, a How for XX be as of of looking That spend half. pickup million that in Is the being in

Mark Harris

running X% year. half between So, around we've of in the and X.X% the first been

marginal a the So, [indiscernible] increase half in also the year. going of second to be very

which start start we half will projects, bleed have to of The to done, some second as we the through. launch

on And the want launch we when amortization will sheet. So, P&L. balance some through also capitalizing we've the it, flowing then been to that start

of that's you'll pickup. So bit a little where see

So, ] will [ in really hitting. mind, be keep be it cash that on just balance It, our an won't will amortization be more sheet.

Marc Riddick

is was thought is Day. bit but host nice I to if bigger maybe to thoughts touch the you to of the but out all commentary get that's some what just to there then behind decision other picture, and I Investor could little the sense made uncertainty to with have wanted and I certainly, that the It wanted touch around And just appreciated an It's certainly the Day. you to wondering Investor certainly on see, get you, I that? the that and you've maybe on more on thoughts wanted a a the but some why? know as process I

Thomas Monahan

Sure.

Investor We and look shareholders there are communicating business. that a it's love the in an we're real think a for our I my giving always -- day around with doing mind, Day. you reasons at X what good

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created into businesses get we've newer format let of that doesn't a set about. much as us traditional the Secondly, detail quarterly

to of you mentioned, than is to so the in and let way do problems we case an use use. something call. And our them I those valuable it use showcase third, normal innovative are own them a from? what Investor quarterly a client to kind a was more ability saying have to level, get really, the down for people It's can both to I just and live. platforms, problems and And invested and in client to in see gather format in room technology some do solve tools Day we our do get as bit only those for direct more, us little So, down unpack you as now, why solve for

exceptional So, our I keyboards kind think little see a in pain fingers points leadership team, and a investment. digital chance chance what we on a to R&D the those X engage chance with we put get solve for reasons: with to that of and deeper into to our do

be great business. to should into day, the you So, deeper opportunity have I a for and we'll little think a compelling think I us take a it

Operator

comes question Sommer from next of line Your Truist with the Tobey Securities.

Tobey Sommer

a we revenue count a closeout the confirmations to wanted just is Search kind the particular bit decline Executive about ask before on business in mid-single modest. do more little productivity head The is like sequentially digit question looks I business Search a for a within How that It and down of on here. basis sequential think sequentially. guide?

Mark Harris

see in do promotions. when always I we we of Please think a it QX So, remember our ways. is different in couple

you absolutely QX, QX We QX some So, well. expect hit not that bit of little in and motion. down talent downward to to will would I it's start in bring is probably a drag think bit. And as it little a uncommon right, just which

very comment productivity, the would I starting we're but upsized is get is the in which the which of So, overall would at the harder, again, high to generally Those that that Americas, the heat sometimes we that And the is a would why million X.X-X.X overall. terms that of where seeing. I in lot in headcount. you to is generating what's falling coming USD trust better of range say on neutral moves a harder little also again, I it show strength really X average, is is, come end where down. make obviously what on more don't with agreements, see averages, would Europe bit

at data of There's expect bloody just for the normal nothing Europe saw it's to hard in and so of that stuff. a the what I in more terms our all an of but coming we that interesting bit, be we down in in or be Europe just less QX. think modulating Americas to terms course would of just look time -- it's So, we there locations

pickup. to nice Pacific see It showed about. Asia some worry nothing was to So, good

region region. really done job good and other really So, in to of what they it. taking Greater parts embracing had advantage a congratulations the to in that China They've of

Operator

to And now will our I Monahan the back remarks. for Tom over call concludes closing session. that question-and-answer turn

Thomas Monahan

our of the excited to thanks Struggles at share extend to listening story today. December & important for accomplish work collective for the we here in wouldn't our just it is I make dialing one be Heidrick clients, our We'll create have, objective to unmatched more everyone, Day. We're our and and for shameless And me our value plug our Investor which investors. if to colleagues didn't most

and patched gotten If in you yet if do reach in. please us, to haven't you out details, haven't much. blocked And just you get all Thanks so. your we'll calendar, an need or invitation so

Operator

conference This call. for your disconnect. may concludes today's Thank now and you participation, you

Heidrick & Struggles International (HSII) 29 Jul 242024 Q2 Earnings call transcript