Heidrick & Struggles Reports Third Quarter 2013 Financial Results
Heidrick & Struggles International, Inc. has announced financial results for its third quarter ended September 30, 2013.
Consolidated net revenue was $119.0 million in the third quarter, up 1.4 percent or $1.7 million from $117.3 million in the 2012 third quarter. Year over year, net revenue decreased 1.9 percent in the Americas, but increased 13.2 percent in Europe (approximately 12 percent on a constant currency basis) and 0.8 percent in Asia Pacific (approximately 7 percent on a constant currency basis). Growth in the Consumer Markets and Life Sciences Executive Search practices was offset by declines in the Industrial, Education and Social Enterprise, and Global Technology and Services practices. Net revenue from Leadership Consulting was $9.1 million, an increase of 2.3 percent from the 2012 third quarter, and revenue from Senn Delaney, the firm acquired on December 31, 2012, was on plan at $6.6 million.
"Our third quarter results showed progress in certain areas, but we are capable of more," said Jory Marino, Interim Chief Executive Officer. "We are committed to providing clients with unparalleled expertise and service in order to help them build winning leadership teams. As part of this commitment, we will provide our employees with the best platform from which to work and build a career. By staying focused on these initiatives, we believe we can deliver the long-term growth and financial results that all our stakeholders expect."
Excluding Senn Delaney, the company ended the third quarter with 308 executive search and leadership consulting consultants compared to 332 at September 30, 2012. Partly reflecting lower consultant headcount, the number of executive search confirmations in the quarter decreased 5.3 percent compared to the 2012 third quarter. The average revenue per executive search increased to $124,500 compared to $123,700 in the 2012 third quarter. Excluding Senn Delaney, productivity, as measured by annualized net revenue per consultant, was $1.4 million, the same as in the 2012 third quarter.
Salaries and employee benefits expense increased 2.6 percent, or $2.0 million, to $81.7 million from $79.6 million in the 2012 third quarter. Included in the 2013 third quarter is $3.0 million of expense related to a separation agreement with the company's former chief executive officer. The $2.0 million year-over-year increase reflected an increase in variable compensation expense of $3.2 million, primarily related to consultant performance, and a decline in fixed compensation expense of $1.2 million, driven by decreases in guarantee and sign-on bonus expense and lower headcount, partially offset by the severance expense and the addition of Senn Delaney. Salaries and employee benefits expense was 68.6 percent of net revenue for the quarter, compared to 67.9 percent in the 2012 third quarter.
General and administrative expenses increased 5.3 percent, or $1.5 million, to $29.0 million from $27.5 million in the 2012 third quarter. The addition of Senn Delaney represented $3.3 million in the quarter, including $1.4 million related to the amortization of the acquired intangible assets and $0.5 million associated with the accretion of the expected earnout payments. The 2012 third quarter included $2.5 million of expenses related to a global partners' meeting. As a percentage of net revenue, general and administrative expenses were 24.3 percent, compared to 23.4 percent in the 2012 third quarter.
As a result of the acquisition of Senn Delaney on December 31, 2012, the company began providing Adjusted EBITDA and Adjusted EBITDA margin comparisons, non-GAAP financial measures which management believes more appropriately reflect core operations. Adjusted EBITDA in the 2013 third quarter was $13.8 million and Adjusted EBITDA margin was 11.6 percent, compared to Adjusted EBITDA of $14.1 million and Adjusted EBITDA margin of 12.1 percent in the 2012 third quarter.
search-consult is published by Dillistone Systems, supplier of FileFinder Executive Search software. Dillistone Systems is part of Dillistone Group Plc, as are Voyager Recruitment Software and FCP Internet, supplier of the Evolve Recruitment Software SaaS system.