Europe and Americas boost Heidrick & Struggles Q2 2016 revenue
Heidrick & Struggles International has today announced its Q2 2016 consolidated net revenue (revenue before reimbursements) increased 11.9%, or $15.8%, to $148.9m from $133.0m in the 2015 second quarter.
As the company announced its financial results for its second quarter ended 30th June 2016, it confirmed its net revenue increased 12.2% on a constant currency basis.
The number of executive search and leadership consulting consultants was 336 as of 30th June 2016, compared to 332 as of 31st March 2016, and 325 as of 30th June 2015.
The company’s operating income increased 27.5%, or $2.5m, to $11.7m and adjusted EBITDA increased 29.1%, or $4.1m, to $18.1m compared to the 2015 second quarter.
Productivity, as measured by annualized executive search and leadership consulting net revenue per consultant, was $1.7m in the 2016 second quarter, compared to $1.5m in the 2015 second quarter.
Consolidated net revenue (revenue before reimbursements) increased 11.9%, or $15.8m, to $148.9m from $133m in the 2015 second quarter. Excluding the impact of exchange rate fluctuations which negatively impacted results by $0.4m, consolidated net revenue increased $16.2m or 12.2%.
Executive Search and Leadership Consulting net revenue increased 11.6% year over year, or $14.5m, to $139.2m from $124.7m in the 2015 second quarter. The impact of exchange rate fluctuations was less than 1%. The Americas and Europe regions drove second quarter revenue growth with Americas up 11% and Europe up 30.3% (32.6 percent on a constant currency basis). Asia Pacific revenue declined 4.6% (3.2 percent on a constant currency basis). Every industry practice contributed to growth in the second quarter, except Education & Social Enterprise.
Net revenue from Culture Shaping services increased 15.9%, or $1.3m, to $9.7m from $8.4m in the 2015 second quarter reflecting a higher volume of client work. The impact of exchange rate fluctuations adversely impacted results by $0.1m or 1.4%.
The company ended the second quarter with 336 Executive Search and Leadership Consulting consultants compared to 325 at June 30, 2015. Productivity, as measured by annualized Executive Search and Leadership Consulting net revenue per consultant, was $1.7 million in the 2016 second quarter, compared to $1.5 million in the 2015 second quarter. Specific to Executive Search, the company's largest business, the number of Executive Search consultants was 316 compared to 305 at June 30, 2015. The number of confirmed searches in the 2016 second quarter increased 4.5 percent compared to the 2015 second quarter. The average revenue per executive search was $114,400 compared to $109,700 in the 2015 second quarter.
"Our strong second quarter results were driven by revenue growth in the Americas and Europe, as well as in Culture Shaping," said Tracy Wolstencroft, Heidrick & Struggles' president and chief executive. "Our continued focus on attracting and retaining the highest calibre consultants in the industry contributed to increases in all our key metrics and revenue growth in almost every practice. The solid revenue growth achieved in the second quarter helped drive good improvements in operating income and margin and adjusted EBITDA and margin."
Operating income in the 2016 second quarter increased 27.5 percent, or $2.5 million, to $11.7 million, and operating margin (operating income as a percentage of net revenue) was 7.9 percent. This compares to operating income of $9.2 million and operating margin of 6.9 percent in the 2015 second quarter. Adjusted EBITDA(1) in the 2016 second quarter increased 29.1 percent, or $4.1 million, to $18.1 million compared to $14.0 million in the 2015 second quarter. The Adjusted EBITDA margin (Adjusted EBITDA as a percentage of net revenue) in the 2016 second quarter was 12.2 percent compared to 10.5 percent in the 2015 second quarter. The year-over-year improvements in operating income and Adjusted EBITDA reflect the increase in net revenue, partially offset by the increases in salaries and employee benefits and general and administrative expenses.
The company is forecasting third quarter 2016 consolidated net revenue of between $140m and $150m. This forecast is based on the average currency rates in June 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.
Wolstencroft added, "Our second quarter revenue growth and third quarter revenue guidance reflect the strength of our consultant teams and our business in general. There continues to be uncertainty relative to the impact of economic, market and political changes, with new inputs regularly. What remains constant is our clients' needs for talent, leadership and culture-shaping services that ensure they have the very best leaders in their organization. We are making important investments in our non-search businesses, and will continue to do so selectively, in order to provide added value and service to our clients, and improve operating performance and shareholder value going forward."