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Heidrick & Struggles International Inc. Reports Operating Results (10-Q)

November 02, 2009 | About:
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10qk

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Heidrick & Struggles International Inc. (HSII) filed Quarterly Report for the period ended 2009-09-30.

Heidrick & Struggles International is one of the leading global executive search firms. With years of experience in fulfilling their clients' leadership needs Heidrick & Struggles offers and conducts executive search services in every major business center in the world. They focus on identifying evaluating and recommending qualified candidates for senior level executive positions. Through their worldwide network of professionals they provide executive search services to a broad range of clients. Heidrick & Struggles International Inc. has a market cap of $465.75 million; its shares were traded at around $27.36 with and P/S ratio of 0.72. The dividend yield of Heidrick & Struggles International Inc. stocks is 1.9%. Heidrick & Struggles International Inc. had an annual average earning growth of 73.8% over the past 5 years.

Highlight of Business Operations:

Revenue before reimbursements (net revenue). Consolidated net revenue decreased $54.8 million, or 34.6%, to $103.5 million for the three months ended September 30, 2009 from $158.3 million for the three months ended September 30, 2008. The negative impact of exchange rate fluctuations resulted in approximately 2 percentage points of the decline. Net revenue declined in all regions and industry groups. The number of confirmed executive searches decreased 16.9% compared to the third quarter of 2008. The number of consultants was 365 as of September 30, 2009 compared to 416 as of September 30, 2008. Productivity, as measured by annualized net revenue per consultant, was $1.1 million in the third quarter of 2009 compared to $1.5 million in the third quarter of 2008, and average revenue per executive search was $97,300 in the 2009 third quarter compared to $127,200 in the 2008 third quarter.

Net revenue in the Americas was $50.9 million for the three months ended September 30, 2009, a decrease of $30.9 million, or 37.7%, from $81.8 million in the third quarter of 2008. Net revenue in Europe was $31.5 million for the three months ended September 30, 2009, a decrease of $18.4 million, or 36.9%, from $49.9 million in the third quarter of 2008. The negative impact of exchange rate fluctuations resulted in approximately 6 percentage points of the net revenue decline in the third quarter of 2009. In Asia Pacific, net revenue was $21.1 million for the three months ended September 30, 2009, a decrease of $5.5 million, or 20.7%, from $26.6 million in the third quarter of 2008. The negative impact of exchange rate fluctuations resulted in approximately 2 percentage points of the net revenue decline in the third quarter of 2009.

decrease primarily reflects savings of $3.8 million associated with cost containment initiatives including decreased travel and entertainment expenses and other operating and infrastructure expenses. The savings were offset by higher fees for professional services of $3.6 million, including $2.4 million related to a process improvement project aimed at increasing operational effectiveness and efficiency and $0.7 million of other professional services expenses. During the third quarter of 2009, we wrote off $0.8 million of costs related to a software development project of which $0.3 million was incurred during the third quarter of 2008.

Corporate expenses for the three months ended September 30, 2009 increased $1.8 million or 26.9% to $8.3 million from $6.5 million for the three months ended September 30, 2008. Compensation expense decreased by $1.0 million primarily due to the reduction in performance-related compensation expense related to lower net revenue and operating margin expectations for 2009. The savings were offset by a $0.5 million write-off of capitalized salaries expense related to a software development project. General and administrative expenses increased $2.8 million due to due to higher professional service fees of $3.1 million, partially offset by $0.3 million of cost containment initiatives. The increase in professional service fees is primarily due to $2.4 million incurred in the three months ended September 30, 2009 due to a process improvement project aimed at increasing operational effectiveness and efficiency and $0.2 million of other professional services expenses. Additionally, we wrote off $0.8 million of costs related to a software development project, of which $0.3 million was incurred during the third quarter of 2008.

Revenue before reimbursements (net revenue). Consolidated net revenue decreased $195.2 million, or 40.6%, to $285.8 million for the nine months ended September 30, 2009 from $481.0 million for the nine months ended September 30, 2008. The negative impact of exchange rate fluctuations resulted in approximately 4 percentage points of the decline. Net revenue declined in all regions and industry groups. The number of confirmed executive searches decreased 31.4% compared to the nine months ended 2008. The number of consultants decreased to 365 as of September 30, 2009 compared to 416 as of September 30, 2008. Productivity, as measured by annualized net revenue per consultant, decreased to $1.0 million in the nine months ended 2009 from $1.6 million in the nine months ended 2008, and average revenue per executive search was $99,500 for the nine months ended September 30, 2009 compared to $118,200 in for the nine months ended September 30, 2008.

Net revenue in the Americas was $145.7 million for the nine months ended September 30, 2009, a decrease of $100.5 million, or 40.8%, from $246.2 million for the nine months ended September 30, 2008. Net revenue in Europe was $87.1 million for the nine months ended September 30, 2009, a decrease of $69.0 million, or 44.2%, from $156.1 million for the nine months ended September 30, 2008. The negative impact of exchange rate fluctuations resulted in approximately 9 percentage points of the revenue decline for the nine months ended 2009. In Asia Pacific, net revenue was $53.0 million for the nine months ended September 30, 2009, a decrease of $25.6 million, or 32.6%, from $78.7 million for the nine months ended September 30, 2008. The negative impact of exchange rate fluctuations resulted in approximately 5 percentage points of the revenue decline for the nine months ended September 30, 2009.

Read the The complete ReportHSII is in the portfolios of HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC.

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