Form 8-K - Current report

0001066605☐00010666052024-11-042024-11-04

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K

 CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 4, 2024 

HEIDRICK & STRUGGLES INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware			0-25837			36-2681268
(State or Other Jurisdiction of Incorporation or Organization)			(Commission File Number)			(I.R.S. Employer Identification Number)

233 South Wacker Drive, Suite 4900, Chicago, Illinois						60606-6303
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: [phone]

N/A

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

HSII

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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Item 2.02 Results of Operations and Financial Condition.

On November 4, 2024, Heidrick & Struggles International, Inc. (“Heidrick & Struggles” or the “Company”) reported its earnings for the third quarter ended September 30, 2024. A copy of the Company’s press release containing the information is being furnished as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Heidrick & Struggles under the Securities Act of 1933 or the Exchange Act.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are being furnished as part of this Report on Form 8-K:

Exhibit No.						Description
99.1						Heidrick & Struggles International, Inc. Press Release dated November 4, 2024.
104						Inline XBRL for the cover page of this Current Report on Form 8-K (included as Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			Heidrick & Struggles International, Inc.
			(Registrant)
Dated: November 4, 2024			/s/ Tracey Heaton
			Name: Tracey Heaton
			Title: Chief Legal Officer & Corporate Secretary

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

Heidrick & Struggles Reports Third Quarter 2024 Results

Quarterly Revenue Up 6% Year Over Year to $279 Million

All Business Segments Contribute to Top Line Growth

Delivers Strong Profitability with Diluted EPS of $0.71

Declares $0.15 Per Share Cash Dividend

CHICAGO, November 4, 2024 – Heidrick & Struggles International, Inc. (Nasdaq: HSII) (“Heidrick & Struggles”, “Heidrick” or the “Company”), a premier provider of global leadership advisory and on-demand talent solutions, today announced financial results for its third quarter ended September 30, 2024.

Third Quarter Highlights:

•Net revenue of $278.6 million increased 5.9% year-over-year

•Adjusted EBITDA of $30.4 million

•Adjusted EBITDA margin of 10.9%

“Our Heidrick colleagues delivered solid quarterly results, outperforming industry trends and reaching the upper end of our outlook. This performance reflects our team’s sharp focus on market opportunities and client needs even as we implemented significant change across our organization,” said CEO Tom Monahan. “Looking ahead, there is still much work to be done as we pursue growth opportunities in Executive Search, more tightly focus our suite of leadership solutions, and drive profitability and scalability across the portfolio.”

“This work will allow us to take advantage of a large and growing market opportunity as clients increasingly put leadership strategy at the heart of their corporate strategy. With an iconic brand, deep expertise across regions and sectors, and a robust financial position, we believe Heidrick is well positioned to attract top talent and cultivate deeper and more durable client relationships. Combining these assets with disciplined execution will enable us to achieve sustained and profitable organic growth while enhancing long-term shareholder value.”

2024 Third Quarter Results

Consolidated net revenue of $278.6 million increased $15.4 million, or 5.9%, compared to $263.2 million in the 2023 third quarter. The Company experienced revenue growth in On-Demand Talent, Heidrick Consulting, and Executive Search in the Americas and Asia Pacific, partially offset by a decrease in Executive Search in Europe.

Adjusted EBITDA was $30.4 million compared to $29.3 million in the 2023 third quarter. Adjusted EBITDA margin was 10.9%, compared to 11.2% in the 2023 third quarter. In Executive Search, Adjusted EBITDA was $50.7 million compared to $51.0 million in the prior year period. In On-Demand Talent, Adjusted EBITDA was $1.8 million versus a loss of $0.6 million in the prior year period. In Heidrick Consulting, Adjusted EBITDA was a loss of $1.0 million compared to a loss of $2.4 million in the prior year period.

Net income was $14.8 million and diluted earnings per share was $0.71 with an effective tax rate of 29.7% compared to net income of $15.0 million and diluted earnings per share of $0.73, with an effective tax rate of 37.5% in the 2023 third quarter. The 2024 third quarter effective tax rate was positively impacted by a decrease in the Company’s estimated annual effective tax rate. 2024 third quarter adjusted net income was $15.1 million and adjusted diluted earnings per share was $0.72, with an adjusted effective tax rate of 28.5%.

Executive Search net revenue of $204.4 million increased $5.6 million, or 2.8%, compared to net revenue of $198.8 million in the 2023 third quarter. Excluding the impact of exchange rate fluctuations, which positively impacted results

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by $0.2 million, or 0.1%, net revenue increased 2.7%, or $5.4 million from the 2023 third quarter. Net revenue increased 1.7% in the Americas (up 2.1% on a constant currency basis), decreased 3.3% in Europe (down 5.0% on a constant currency basis), and increased 22.0% in Asia Pacific (up 22.0% on a constant currency basis) when compared to the prior year third quarter.

The Company had 414 Executive Search consultants at September 30, 2024, compared to 417 at September 30, 2023. Productivity, as measured by annualized Executive Search net revenue per consultant, was $2.0 million compared to $1.9 million in the 2023 third quarter, reflecting a lower number of consultants combined with higher revenue. Average revenue per executive search was approximately $149,000 compared to $153,000 in the prior year period. The number of search confirmations increased 5.4% compared to the year-ago period.

On-Demand Talent net revenue of $46.2 million increased $5.2 million, or 12.6%, compared to net revenue of $41.1 million in the 2023 third quarter. Excluding the impact of exchange rate fluctuations, which positively impacted results by $0.4 million, or 0.9%, net revenue increased 11.7%, or $4.8 million from the 2023 third quarter.

Heidrick Consulting net revenue of $27.9 million increased $4.6 million, or 19.9%, compared to net revenue of $23.3 million in the 2023 third quarter. Excluding the impact of exchange rate fluctuations, which positively impacted results by $0.3 million, or 1.1%, net revenue increased 18.9%, or $4.4 million. The Company had 84 Heidrick Consulting consultants at September 30, 2024, compared to 90 at September 30, 2023.

Consolidated salaries and benefits increased $15.8 million, or 9.5%, to $183.0 million compared to $167.2 million in the 2023 third quarter. Year-over-year, fixed compensation expense increased $9.9 million primarily reflecting increases in expenses related to the non-cash mark-to-market adjustments associated with the deferred compensation and stock compensation plans. Variable compensation increased $5.9 million due to an increase in consultant production. Salaries and benefits expense was 65.7% of net revenue for the quarter, compared to 63.5% in the 2023 third quarter.

General and administrative expenses increased $2.2 million, or 5.8%, to $39.7 million compared to $37.6 million in the 2023 third quarter. The increase was due to bad debt, office occupancy costs, expenses related to information technology, and business development travel, partially offset by decreases in professional fees, intangible amortization, and insurance and bank fees. As a percentage of net revenue, general and administrative expenses were 14.3% for both the 2024 and 2023 third quarters.

The Company’s cost of services was $31.0 million, or 11.1% of net revenue for the quarter, compared to $30.7 million, or 11.7% of net revenue in the 2023 third quarter. This primarily related to an increase in the volume of On-Demand Talent and Heidrick Consulting projects.

The Company’s research and development expenses were $5.7 million, or 2.0%, of net revenue for the quarter compared to $5.6 million, or 2.1%, of net revenue for the third quarter 2023.

Net cash provided by operating activities was $101.1 million compared to net cash provided by operating activities of $109.5 million in the 2023 third quarter. Cash, cash equivalents and marketable securities at September 30, 2024, was $409.4 million compared to $334.0 million at September 30, 2023, and $478.2 million at December 31, 2023. The Company’s cash position typically builds throughout the year as employee bonuses are accrued, mostly to be paid out in the first half of the year following the year in which they are earned.

Dividend

The Board of Directors declared a 2024 fourth quarter cash dividend of $0.15 per share payable on November 21, 2024, to shareholders of record at the close of business on November 14, 2024.

2024 Fourth Quarter Outlook

The Company expects 2024 fourth quarter consolidated net revenue of between $255 million and $275 million, while acknowledging that continued fluidity in external factors, such as the foreign exchange and interest rate environments, foreign conflicts, inflation and macroeconomic constraints on pricing actions, may impact quarterly results. In addition,

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this outlook is based on the average currency rates in September 2024 and reflects, among other factors, management's assumptions for the anticipated volume of new Executive Search confirmations, On-Demand Talent projects, and Heidrick Consulting assignments, consultant productivity, consultant retention, and the seasonality of the business along with the current backlog.

Quarterly Webcast and Conference Call

Heidrick & Struggles will host a conference call to review its third quarter results today, November 4, 2024 at 5:00 pm Eastern Time. Participants may access the Company’s call and supporting slides through its website at www.heidrick.com or by dialing [phone] or [phone], conference ID# 4805686. For those unable to participate on the live call, a webcast and copy of the slides will be archived at www.heidrick.com and available for up to 30 days following the investor call.

About Heidrick & Struggles International, Inc.

Heidrick & Struggles (Nasdaq: HSII) is a premier provider of global leadership advisory and on-demand talent solutions, serving the senior-level talent and consulting needs of the world's top organizations. In our role as trusted leadership advisors, we partner with our clients to develop future-ready leaders and organizations, bringing together our services and offerings in executive search, diversity and inclusion, leadership assessment and development, organization and team acceleration, culture shaping and on-demand, independent talent solutions. Heidrick & Struggles pioneered the profession of executive search more than 70 years ago. Today, the firm provides integrated talent and human capital solutions to help our clients change the world, one leadership team at a time. ® www.heidrick.com

Non-GAAP Financial Measures

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.

Non-GAAP financial measures used within this earnings release are Adjusted EBITDA, Adjusted EBITDA margin, and consolidated net revenue excluding the impact of exchange rate fluctuations (referred to as on a constant currency basis). These measures are presented because management uses this information to monitor and evaluate financial results and trends. Management believes this information is also useful for investors to evaluate the comparability of financial information presented. Reconciliations of these non-GAAP financial measures to the most directly comparable measures calculated and presented in accordance with GAAP are provided as schedules attached to this release.

Adjusted EBITDA refers to net income before interest, other income or expense, income taxes, depreciation and amortization, as adjusted, to the extent they occur, for earnout accretion, earnout fair value adjustments, contingent compensation, deferred compensation plan income or expense, certain reorganization costs, impairment charges and restructuring charges.

Adjusted EBITDA margin refers to Adjusted EBITDA as a percentage of net revenue in the same period.

Adjusted net income and adjusted diluted earnings per share reflect the exclusion of goodwill impairment, restructuring charges and earnout fair value adjustments, net of tax.

Adjusted effective tax rate reflects the exclusion of goodwill impairment, restructuring charges and earnout fair value adjustments, net of tax.

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

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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.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the federal securities laws, including statements regarding guidance for the fourth quarter of 2024. 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 and the conflict in Israel and the Gaza strip, the risks of an expansion or escalation of those conflicts and our ability to quickly and completely recover from any disruption to our business; 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, 2023, 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.

Contacts:

Investors & Analysts:

Suzanne Rosenberg, Vice President, Investor Relations

[e-mail]

Media:

Bianca Wilson, Director of Public Marketing

[e-mail]

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Heidrick & Struggles International, Inc.

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

			Three Months Ended September 30,
			2024						2023						$ Change						% Change
Revenue
Revenue before reimbursements (net revenue)			$	278,559					$	263,160					$	15,399					5.9		%
Reimbursements			4,256						4,736						(480)						(10.1)		%
Total revenue			282,815						267,896						14,919						5.6		%
Operating expenses
Salaries and benefits			183,025						167,219						15,806						9.5		%
General and administrative expenses			39,740						37,564						2,176						5.8		%
Cost of services			31,030						30,680						350						1.1		%
Research and development			5,682						5,560						122						2.2		%
Reimbursed expenses			4,256						4,736						(480)						(10.1)		%
Total operating expenses			263,733						245,759						17,974						7.3		%
Operating income			19,082						22,137						(3,055)						(13.8)		%
Non-operating income (loss)
Interest, net			2,570						2,505
Other, net			(555)						(649)
Net non-operating income			2,015						1,856
Income before income taxes			21,097						23,993
Provision for income taxes			6,268						9,006
Net income			14,829						14,987
Other comprehensive income (loss), net of tax			6,996						(4,001)
Comprehensive income			$	21,825					$	10,986
Weighted-average common shares outstanding
Basic			20,357						20,076
Diluted			21,024						20,553
Earnings per common share
Basic			$	0.73					$	0.75
Diluted			$	0.71					$	0.73
Salaries and benefits as a % of net revenue			65.7		%				63.5		%
General and administrative expenses as a % of net revenue			14.3		%				14.3		%
Cost of services as a % of net revenue			11.1		%				11.7		%
Research and development as a % of net revenue			2.0		%				2.1		%
Operating margin			6.9		%				8.4		%

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Heidrick & Struggles International, Inc.

Segment Information

(In thousands)

(Unaudited)

			Three Months Ended September 30,
			2024						2023						$ Change						% Change						2024 Margin1						2023 Margin1
Revenue
Executive Search
Americas			$	134,545					$	132,320					$	2,225					1.7		%
Europe			43,143						44,606						(1,463)						(3.3)		%
Asia Pacific			26,701						21,888						4,813						22.0		%
Total Executive Search			204,389						198,814						5,575						2.8		%
On-Demand Talent			46,231						41,053						5,178						12.6		%
Heidrick Consulting			27,939						23,293						4,646						19.9		%
Revenue before reimbursements (net revenue)			278,559						263,160						15,399						5.9		%
Reimbursements			4,256						4,736						(480)						(10.1)		%
Total revenue			$	282,815					$	267,896					$	14,919					5.6		%
Adjusted EBITDA
Executive Search
Americas			$	40,465					$	39,354					$	1,111					2.8		%				30.1		%				29.7		%
Europe			5,022						8,950						(3,928)						(43.9)		%				11.6		%				20.1		%
Asia Pacific			5,247						2,704						2,543						94.0		%				19.7		%				12.4		%
Total Executive Search			50,734						51,008						(274)						(0.5)		%				24.8		%				25.7		%
On-Demand Talent			1,763						(580)						2,343						NM						3.8		%				(1.4)		%
Heidrick Consulting			(1,025)						(2,391)						1,366						57.1		%				(3.7)		%				(10.3)		%
Total segments			51,472						48,037						3,435						7.2		%				18.5		%				18.3		%
Research and Development			(4,606)						(4,927)						321						6.5		%				(1.7)		%				(1.9)		%
Global Operations Support			(16,451)						(13,761)						(2,690)						(19.5)		%				(5.9)		%				(5.2)		%
Total Adjusted EBITDA			$	30,415					$	29,349					$	1,066					3.6		%				10.9		%				11.2		%

1 Margin based on revenue before reimbursements (net revenue).

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Heidrick & Struggles International, Inc.

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

			Nine Months Ended September 30,
			2024						2023						$ Change						% Change
Revenue
Revenue before reimbursements (net revenue)			$	822,382					$	773,702					$	48,680					6.3		%
Reimbursements			12,408						10,090						2,318						23.0		%
Total revenue			834,790						783,792						50,998						6.5		%
Operating expenses
Salaries and benefits			535,330						504,994						30,336						6.0		%
General and administrative expenses			127,556						112,405						15,151						13.5		%
Cost of services			88,158						78,818						9,340						11.9		%
Research and development			17,002						16,746						256						1.5		%
Impairment charges			16,224						7,246						8,978						123.9		%
Restructuring charges			6,939						—						6,939						100.0		%
Reimbursed expenses			12,408						10,090						2,318						23.0		%
Total operating expenses			803,617						730,299						73,318						10.0		%
Operating income			31,173						53,493						(22,320)						(41.7)		%
Non-operating income
Interest, net			9,268						7,667
Other, net			3,013						2,537
Net non-operating income			12,281						10,204
Income before income taxes			43,454						63,697
Provision for income taxes			19,750						24,142
Net income			23,704						39,555
Other comprehensive income (loss), net of tax			811						(3,633)
Comprehensive income			$	24,515					$	35,922
Weighted-average common shares outstanding
Basic			20,254						19,998
Diluted			21,144						20,716
Earnings per common share
Basic			$	1.17					$	1.98
Diluted			$	1.12					$	1.91
Salaries and benefits as a % of net revenue			65.1		%				65.3		%
General and administrative expenses as a % of net revenue			15.5		%				14.5		%
Cost of services as a % of net revenue			10.7		%				10.2		%
Research and development as a % of net revenue			2.1		%				2.2		%
Operating margin			3.8		%				6.9		%

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Heidrick & Struggles International, Inc.

Segment Information

(In thousands)

(Unaudited)

			Nine Months Ended September 30,
			2024						2023						$ Change						% Change						2024 Margin1						2023 Margin1
Revenue
Executive Search
Americas			$	418,302					$	398,210					$	20,092					5.0		%
Europe			124,706						129,104						(4,398)						(3.4)		%
Asia Pacific			72,829						68,766						4,063						5.9		%
Total Executive Search			615,837						596,080						19,757						3.3		%
On-Demand Talent			125,983						111,410						14,573						13.1		%
Heidrick Consulting			80,562						66,212						14,350						21.7		%
Revenue before reimbursements (net revenue)			822,382						773,702						48,680						6.3		%
Reimbursements			12,408						10,090						2,318						23.0		%
Total revenue			$	834,790					$	783,792					$	50,998					6.5		%
Adjusted EBITDA
Executive Search
Americas			$	130,448					$	127,557					$	2,891					2.3		%				31.2		%				32.0		%
Europe			11,215						16,487						(5,272)						(32.0)		%				9.0		%				12.8		%
Asia Pacific			10,182						7,901						2,281						28.9		%				14.0		%				11.5		%
Total Executive Search			151,845						151,945						(100)						(0.1)		%				24.7		%				25.5		%
On-Demand Talent			(787)						660						(1,447)						NM						(0.6)		%				0.6		%
Heidrick Consulting			(4,447)						(6,848)						2,401						35.1		%				(5.5)		%				(10.3)		%
Total segments			146,611						145,757						854						0.6		%				17.8		%				18.8		%
Research and Development			(14,312)						(15,396)						1,084						7.0		%				(1.7)		%				(2.0)		%
Global Operations Support			(47,205)						(40,501)						(6,704)						(16.6)		%				(5.7)		%				(5.2)		%
Total Adjusted EBITDA			$	85,094					$	89,860					$	(4,766)					(5.3)		%				10.3		%				11.6		%

1 Margin based on revenue before reimbursements (net revenue).

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Heidrick & Struggles International, Inc.

Reconciliation of Net Income and Adjusted Net Income (Non-GAAP)

(In thousands, except per share amounts)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Net income			$	14,829					$	14,987					$	23,704					$	39,555
Adjustments
Impairment charges, net of tax(1)			—						—						14,190						6,038
Earnout fair value adjustment, net of tax(2)(4)			39						—						788						—
Restructuring charges, net of tax(3)(4)			225						—						4,516						—
Total adjustments			264						—						19,494						6,038
Adjusted net income			$	15,093					$	14,987					$	43,198					$	45,593
Weighted-average common shares outstanding
Basic			20,357						20,076						20,254						19,998
Diluted			21,024						20,553						21,144						20,716
Earnings per common share
Basic			$	0.73					$	0.75					$	1.17					$	1.98
Diluted			$	0.71					$	0.73					$	1.12					$	1.91
Adjusted earnings per common share
Basic			$	0.74					$	0.75					$	2.13					$	2.28
Diluted			$	0.72					$	0.73					$	2.04					$	2.20

1 The Company recorded goodwill impairment charges of $14.8 million in the On-Demand Talent segment and $1.5 million in the Europe segment for the nine months ended September 30, 2024. The Company recorded a goodwill impairment charge of $7.2 million in the Heidrick Consulting segment for the nine months ended September 30, 2023.

2 The Company recorded a fair value adjustment to increase the On-Demand Talent earnout by $1.1 million and increase the Heidrick Consulting earnout by $0.1 million for the nine months ended September 30, 2024.

3 The Company recorded restructuring charges of $6.9 million for the nine months ended September 30, 2024.

4 Amounts for the three months ended September 30, 2024 reflect the impact of a change to the estimated annual effective tax rate. There were no further impairment charges, earnout fair value adjustments, or restructuring charges recorded during the period.

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Heidrick & Struggles International, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

			September 30, 2024						December 31, 2023
Current assets
Cash and cash equivalents			$	363,422					$	412,618
Marketable securities			46,005						65,538
Accounts receivable, net			186,252						133,128
Prepaid expenses			27,682						23,597
Other current assets			48,928						47,923
Income taxes recoverable			10,795						10,410
Total current assets			683,084						693,214
Non-current assets
Property and equipment, net			53,508						35,752
Operating lease right-of-use assets			83,262						86,063
Assets designated for retirement and pension plans			11,203						11,105
Investments			59,089						47,287
Other non-current assets			25,507						17,071
Goodwill			185,400						202,252
Other intangible assets, net			15,110						20,842
Deferred income taxes			29,617						28,005
Total non-current assets			462,696						448,377
Total assets			$	1,145,780					$	1,141,591
Current liabilities
Accounts payable			$	21,517					$	20,837
Accrued salaries and benefits			277,498						322,744
Deferred revenue			47,106						45,732
Operating lease liabilities			18,985						21,498
Other current liabilities			23,394						21,823
Income taxes payable			6,891						6,057
Total current liabilities			395,391						438,691
Non-current liabilities
Accrued salaries and benefits			55,338						52,108
Retirement and pension plans			75,048						62,100
Operating lease liabilities			84,623						78,204
Other non-current liabilities			46,158						41,808
Deferred income taxes			5,937						6,402
Total non-current liabilities			267,104						240,622
Total liabilities			662,495						679,313
Stockholders’ equity			483,285						462,278
Total liabilities and stockholders’ equity			$	1,145,780					$	1,141,591

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Heidrick & Struggles International, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

						Three Months Ended September 30,
						2024						2023
Cash flows - operating activities
Net income						$	14,829					$	14,987
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization						4,950						4,740
Deferred income taxes						273						(6,994)
Stock-based compensation expense						3,792						3,559
Accretion expense related to earnout payments						478						455
Gain on marketable securities						(1,343)						(346)
Loss on disposal of property and equipment						3						61
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable						4,135						7,785
Accounts payable						(10,968)						1,257
Accrued expenses						83,375						76,113
Restructuring accrual						(1,396)						—
Deferred revenue						1,836						(2,165)
Income taxes recoverable and payable, net						(5,021)						9,205
Retirement and pension plan assets and liabilities						585						294
Prepaid expenses						595						(1,136)
Other assets and liabilities, net						5,022						1,659
Net cash provided by operating activities						101,145						109,474
Cash flows - investing activities
Acquisition of businesses, net of cash acquired						—						(2,204)
Capital expenditures						6,891						(2,805)
Purchases of marketable securities and investments						(346)						(47,781)
Proceeds from sales of marketable securities and investments						62,496						21,571
Net cash provided by (used in) investing activities						69,041						(31,219)
Cash flows - financing activities
Cash dividends paid						(3,211)						(3,149)
Payment of employee tax withholdings on equity transactions						(53)						—
Acquisition earnout payments						—						(2,038)
Net cash used in financing activities						(3,264)						(5,187)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash						6,578						(4,414)
Net increase in cash, cash equivalents and restricted cash						173,500						68,654
Cash, cash equivalents and restricted cash at beginning of period						189,922						217,817
Cash, cash equivalents and restricted cash at end of period						$	363,422					$	286,471

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Heidrick & Struggles International, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

						Nine Months Ended September 30,
						2024						2023
Cash flows - operating activities
Net income						$	23,704					$	39,555
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization						13,650						13,432
Deferred income taxes						(2,060)						(548)
Stock-based compensation expense						9,901						7,331
Accretion expense related to earnout payments						1,413						1,097
Gain on marketable securities						(2,323)						(2,040)
Loss on disposal of property and equipment						264						192
Impairment charges						16,224						7,246
Changes in assets and liabilities:
Accounts receivable						(51,707)						(52,205)
Accounts payable						(13,292)						(1,657)
Accrued expenses						(41,372)						(197,698)
Restructuring accrual						2,990						—
Deferred revenue						1,163						(1,622)
Income taxes recoverable and payable, net						347						6,617
Retirement and pension plan assets and liabilities						6,385						6,697
Prepaid expenses						(4,057)						(3,771)
Other assets and liabilities, net						(987)						(3,243)
Net cash used in operating activities						(39,757)						(180,617)
Cash flows - investing activities
Acquisition of business, net of cash acquired						—						(37,953)
Capital expenditures						(9,647)						(9,619)
Purchases of marketable securities and investments						(115,608)						(75,464)
Proceeds from sales of marketable securities and investments						129,070						289,689
Net cash provided by investing activities						3,815						166,653
Cash flows - financing activities
Repurchases of common stock						—						(904)
Cash dividends paid						(9,609)						(9,383)
Payment of employee tax withholdings on equity transactions						(3,800)						(4,141)
Acquisition earnout payments						—						(37,984)
Net cash used in financing activities						(13,409)						(52,412)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash						155						(2,642)
Net decrease in cash, cash equivalents and restricted cash						(49,196)						(69,018)
Cash, cash equivalents and restricted cash at beginning of period						412,618						355,489
Cash, cash equivalents and restricted cash at end of period						$	363,422					$	286,471

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Heidrick & Struggles International, Inc.

Reconciliation of Net Income to Adjusted EBITDA (Non-GAAP)

(In thousands)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Revenue before reimbursements (net revenue)			$	278,559					$	263,160					$	822,382					$	773,702
Net income			14,829						14,987						23,704						39,555
Interest, net			(2,570)						(2,505)						(9,268)						(7,667)
Other, net			555						649						(3,013)						(2,537)
Provision for income taxes			6,268						9,006						19,750						24,142
Operating income			19,082						22,137						31,173						53,493
Adjustments
Depreciation			2,997						2,387						7,480						6,563
Intangible amortization			1,953						2,353						6,170						6,869
Earnout accretion			478						455						1,413						1,097
Earnout fair value adjustments			—						—						1,211						—
Acquisition contingent consideration			2,947						3,268						8,220						8,711
Deferred compensation plan			2,958						(1,427)						6,264						2,309
Reorganization costs			—						176						—						3,572
Impairment charges			—						—						16,224						7,246
Restructuring charges			—						—						6,939						—
Total adjustments			11,333						7,212						53,921						36,367
Adjusted EBITDA			$	30,415					$	29,349					$	85,094					$	89,860
Adjusted EBITDA margin			10.9		%				11.2		%				10.3		%				11.6		%

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Heidrick & Struggles International, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA by Line of Business (Non-GAAP)

(In thousands)

(Unaudited)

																					Three Months Ended September 30, 2024
																					Executive Search						On-Demand Talent						Heidrick Consulting						Research & Development						Global Operations Support						Total
Revenue before reimbursements (net revenue)																					$	204,389					$	46,231					$	27,939					$	—					$	—					$	278,559
Operating income (loss)1																					46,270						(2,036)						(2,835)						(5,682)						(16,635)						19,082
Adjustments
Depreciation																					1,389						175						227						1,029						177						2,997
Intangible amortization																					17						1,560						376						—						—						1,953
Earnout accretion																					—						436						42						—						—						478
Acquisition contingent compensation																					209						1,628						1,110						—						—						2,947
Deferred compensation plan																					2,849						—						55						47						7						2,958
Total adjustments																					4,464						3,799						1,810						1,076						184						11,333
Adjusted EBITDA																					$	50,734					$	1,763					$	(1,025)					$	(4,606)					$	(16,451)					$	30,415
Adjusted EBITDA margin																					24.8		%				3.8		%				(3.7)		%				(1.7)		%				(5.9)		%				10.9		%
																					Three Months Ended September 30, 2023
																					Executive Search						On-Demand Talent						Heidrick Consulting						Research & Development						Global Operations Support						Total
Revenue before reimbursements (net revenue)																					$	198,814					$	41,053					$	23,293					$	—					$	—					$	263,160
Operating income (loss)1																					50,290						(4,595)						(4,075)						(5,560)						(13,923)						22,137
Adjustments
Depreciation																					1,288						125						156						655						163						2,387
Intangible amortization																					40						1,869						444						—						—						2,353
Earnout accretion																					—						397						58						—						—						455
Acquisition contingent compensation																					649						1,559						1,060						—						—						3,268
Deferred compensation plan																					(1,370)						—						(34)						(22)						(1)						(1,427)
Reorganization costs																					111						65						—						—						—						176
Total adjustments																					718						4,015						1,684						633						162						7,212
Adjusted EBITDA																					$	51,008					$	(580)					$	(2,391)					$	(4,927)					$	(13,761)					$	29,349
Adjusted EBITDA margin																					25.7		%				(1.4		%)				(10.3		%)				(1.9)		%				(5.2)		%				11.2		%

1 The Company does not allocate interest income or expense, other income or expense, and the provision for income taxes to the Company’s reportable operating segments. As such, the Company has concluded that operating income (loss) represents the most directly comparable measure of financial performance presented in accordance with U.S. GAAP for the reconciliation of Adjusted EBITDA in this presentation.

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Heidrick & Struggles International, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA (Non-GAAP)

(In thousands)

(Unaudited)

																					Nine Months Ended September 30, 2024
																					Executive Search						On-Demand Talent						Heidrick Consulting						Research & Development						Global Operations Support						Total
Revenue before reimbursements (net revenue)																					$	615,837					$	125,983					$	80,562					$	—					$	—					$	822,382
Operating income (loss)1																					138,623						(28,580)						(13,207)						(17,002)						(48,661)						31,173
Adjustments
Depreciation																					3,493						423						506						2,592						466						7,480
Intangible amortization																					54						4,928						1,188						—						—						6,170
Earnout accretion																					—						1,251						162						—						—						1,413
Earnout fair value adjustments																					—						1,125						86						—						—						1,211
Acquisition contingent compensation																					(126)						5,019						3,327						—						—						8,220
Deferred compensation plan																					6,028						—						124						98						14						6,264
Impairment charges																					1,463						14,761						—						—						—						16,224
Restructuring charges																					2,310						286						3,367						—						976						6,939
Total adjustments																					13,222						27,793						8,760						2,690						1,456						53,921
Adjusted EBITDA																					$	151,845					$	(787)					$	(4,447)					$	(14,312)					$	(47,205)					$	85,094
Adjusted EBITDA margin																					24.7		%				(0.6		%)				(5.5		%)				(1.7		%)				(5.7)		%				10.3		%
																					Nine Months Ended September 30, 2023
																					Executive Search						On-Demand Talent						Heidrick Consulting						Research & Development						Global Operations Support						Total
Revenue before reimbursements (net revenue)																					$	596,080					$	111,410					$	66,212					$	—					$	—					$	773,702
Operating income (loss)1																					140,923						(11,821)						(17,877)						(16,746)						(40,986)						53,493
Adjustments
Depreciation																					3,928						326						507						1,319						483						6,563
Intangible amortization																					145						5,737						987						—						—						6,869
Earnout accretion																					—						982						115						—						—						1,097
Acquisition contingent compensation																					2,449						4,144						2,118						—						—						8,711
Deferred compensation plan																					2,220						—						56						31						2						2,309
Reorganization costs																					2,280						1,292						—						—						—						3,572
Impairment charges																					—						—						7,246						—						—						7,246
Total adjustments																					11,022						12,481						11,029						1,350						485						36,367
Adjusted EBITDA																					$	151,945					$	660					$	(6,848)					$	(15,396)					$	(40,501)					$	89,860
Adjusted EBITDA margin																					25.5		%				0.6		%				(10.3		%)				(2.0		%)				(5.2		%)				11.6		%

1 The Company does not allocate interest income or expense, other income or expense, and the provision for income taxes to the Company’s reportable operating segments. As such, the Company has concluded that operating income (loss) represents the most directly comparable measure of financial performance presented in accordance with U.S. GAAP for the reconciliation of Adjusted EBITDA in this presentation.

Cover	Nov. 04, 2024
Cover [Abstract]
City Area Code	312
Local Phone Number	496-1200
Document Type	8-K
Entity File Number	0-25837
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-2681268
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	HSII
Security Exchange Name	NASDAQ
Entity Registrant Name	HEIDRICK & STRUGGLES INTERNATIONAL, INC.
Written Communications	false
Soliciting Material	false
Entity Address, Postal Zip Code	60606-6303
Entity Central Index Key	0001066605
Document Period End Date	Nov. 04, 2024
Amendment Flag	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Address, Address Line One	233 South Wacker Drive
Entity Address, Address Line Two	Suite 4900
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL

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