EX-99.1 2 hsii-20240630earningsrelea.htm EX-99.1 Document

Exhibit 99.1
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FOR IMMEDIATE RELEASE

Heidrick & Struggles Reports Second Quarter 2024 Results

Delivers Strong Revenue Performance with Robust Profitability
Restructuring for Accelerated Growth Implemented in the Quarter
Declares $0.15 Per Share Cash Dividend

CHICAGO, July 29, 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 second quarter ended June 30, 2024.

Second Quarter Highlights:

•Net revenue grew to $278.6 million driven by all businesses
•Adjusted EBITDA was $28.8 million
•Adjusted EBITDA margin was 10.3%

“Our team delivered a strong second quarter. In a very complex operating environment, clients continue to need help engaging, assessing and enabling critical leadership talent – and our world-class colleagues met those needs with energy and creativity. This work helped propel our second quarter revenue beyond the high end of our outlook range while generating a double-digit EBITDA margin,” stated CEO Tom Monahan.

“Even as we continued to deliver value to clients, we also made important changes to our leadership team and staffing levels. As a result, we enter the second half of the year with more targeted solutions and better alignment of our organization with client needs. Going forward, we are tightly focused on accelerating returns from our recent investment cycle and on creating unmatched value for clients, colleagues and investors.”

2024 Second Quarter Results

Consolidated net revenue of $278.6 million compared to $271.2 million in the 2023 second 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 $28.8 million compared to $34.9 million in the 2023 second quarter. Adjusted EBITDA margin was 10.3%, compared to 12.9% in the 2023 second quarter. In Executive Search, Adjusted EBITDA was $52.7 million compared to $53.2 million in the prior year period. In On-Demand Talent, Adjusted EBITDA was a loss of $1.6 million versus a gain of $2.6 million in the prior year period. In Heidrick Consulting, Adjusted EBITDA was a loss of $1.4 million compared to a loss of $1.7 million in the prior year period.

In the 2024 second quarter, the company recorded a non-cash goodwill impairment charge of $16.2 million primarily related to the Company’s On-Demand Talent segment, a $6.9 million restructuring charge and a $1.2 million earnout fair value adjustment. In the 2023 second quarter, the Company recorded a non-cash goodwill impairment charge of $7.2 million associated with the Company’s Heidrick Consulting segment.

Including these unusual charges in the 2024 second quarter, net loss was $5.2 million and diluted loss per share was $0.25. Excluding these unusual charges in both the 2024 and 2023 second quarters, adjusted net income was $14.1 million and adjusted diluted earnings per share was $0.67, with an adjusted effective tax rate of 40.9%, in the 2024 second quarter. This compares to adjusted net income of $15.0 million and adjusted diluted earnings per share of $0.73, with an adjusted effective tax rate of 37.7% in the 2023 second quarter.



Executive Search net revenue of $210.0 million increased 1.5% compared to net revenue of $206.8 million in the 2023 second quarter. Excluding the impact of exchange rate fluctuations, which negatively impacted results by 0.4%, or $0.9 million, net revenue increased 2.0%, or $4.1 million from the 2023 second quarter. Net revenue increased 6.1% in the Americas (up 6.3% on a constant currency basis), decreased 12.0% in Europe (down 11.7% on a constant currency basis), and increased 0.7% in Asia Pacific (up 3.3% on a constant currency basis) when compared to the prior year second quarter. All practice groups, except for Consumer and Industrial, exhibited growth over the prior year period.

The Company had 415 Executive Search consultants at June 30, 2024, compared to 423 at June 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 second quarter, reflecting a lower number of consultants combined with higher revenue. Average revenue per executive search was approximately $151,000 compared to $146,000 in the prior year period. The number of search confirmations decreased 1.6% compared to the year-ago period.

On-Demand Talent net revenue of $41.9 million increased 6.8% compared to net revenue of $39.2 million in the 2023 second quarter. Excluding the impact of exchange rate fluctuations, which negatively impacted results by $0.2 million, or 0.5%, net revenue increased 7.3%, or $2.9 million from the 2023 second quarter.

Heidrick Consulting net revenue of $26.8 million increased 6.2% compared to net revenue of $25.2 million in the 2023 second quarter. The Company had 85 Heidrick Consulting consultants at June 30, 2024, compared to 89 at June 30, 2023.

Consolidated salaries and benefits decreased $1.0 million to $177.9 million compared to $178.9 million in the 2023 second quarter. Year-over-year, fixed compensation expense decreased $3.0 million due to decreases in separation expense, talent acquisition and retention costs, retirement and benefits expenses and expenses related to the deferred compensation plan, partially offset by increases in stock compensation, and base salaries and payroll taxes. Variable compensation increased $1.9 million due to an increase in consultant production. Salaries and benefits expense was 63.8% of net revenue for the quarter, compared to 66.0% in the 2023 second quarter.

General and administrative expenses increased $5.9 million, or 14.7%, to $46.5 million compared to $40.5 million in the 2023 second quarter. The increase was due to the 2024 Global Conference, earnout fair value adjustments, professional fees, office occupancy, hiring fees, IT, and marketing, partially offset by decreases in intangible amortization, travel and entertainment, and the use of external third-party consultants. As a percentage of net revenue, general and administrative expenses were 16.7% for the 2024 second quarter compared to 14.9% in the 2023 second quarter.

The Company’s cost of services was $29.7 million, or 10.7% of net revenue for the quarter, compared to $25.3 million, or 9.3% of net revenue in the 2023 second 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 $5.6 million, or 2.0%, of net revenue for the quarter compared to $5.7 million, or 2.1%, of net revenue for the second quarter 2023.

Net cash provided by operating activities was $62.5 million compared to net cash provided by operating activities of $46.9 million in the 2023 second quarter. Cash, cash equivalents and marketable securities at June 30, 2024 was $296.9 million compared to $239.0 million at June 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 second quarter cash dividend of $0.15 per share payable on August 22, 2024, to shareholders of record at the close of business on August 9, 2024.



2024 Third Quarter Outlook

The Company expects 2024 third quarter consolidated net revenue of between $260 million and $280 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, this outlook is based on the average currency rates in June 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 second quarter results today, July 29, 2024 at 5:30 pm Eastern Time. Participants may access the Company’s call and supporting slides through its website at www.heidrick.com or by dialing (800) 715-9871 or (646) 307-1963, 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 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 third 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
srosenberg@heidrick.com

Media:
Bianca Wilson, Director of Public Marketing
bwilson@heidrick.com

Heidrick & Struggles International, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
June 30,
20242023$ Change% Change
Revenue
Revenue before reimbursements (net revenue)$278,626 $271,225 $7,401 2.7 %
Reimbursements4,251 2,552 1,699 66.6 %
Total revenue282,877 273,777 9,100 3.3 %
Operating expenses
Salaries and benefits177,892 178,916 (1,024)(0.6)%
General and administrative expenses46,453 40,514 5,939 14.7 %
Cost of services29,696 25,306 4,390 17.3 %
Research and development5,605 5,658 (53)(0.9)%
Impairment charges16,224 7,246 8,978 123.9 %
Restructuring charges6,939 — 6,939 100.0 %
Reimbursed expenses4,251 2,552 1,699 66.6 %
Total operating expenses287,060 260,192 26,868 10.3 %
Operating income (loss)(4,183)13,585 (17,768)(130.8)%
Non-operating income
Interest, net2,612 1,913 
Other, net997 1,377 
Net non-operating income3,609 3,290 
Income (loss) before income taxes(574)16,875 
Provision for income taxes4,583 7,893 
Net income (loss)(5,157)8,982 
Other comprehensive loss, net of tax(2,094)(75)
Comprehensive income (loss)$(7,251)$8,907 
Weighted-average common shares outstanding
Basic20,259 20,010 
Diluted20,259 20,637 
Earnings (loss) per common share
Basic$(0.25)$0.45 
Diluted$(0.25)$0.44 
Salaries and benefits as a % of net revenue63.8 %66.0 %
General and administrative expenses as a % of net revenue16.7 %14.9 %
Cost of services as a % of net revenue10.7 %9.3 %
Research and development as a % of net revenue2.0 %2.1 %
Operating margin(1.5)%5.0 %

Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
Three Months Ended June 30,
20242023$
Change		% Change
2024 Margin1
2023 Margin1
Revenue
Executive Search
Americas$147,078 $138,563 $8,515 6.1 %
Europe40,082 45,567 (5,485)(12.0)%
Asia Pacific22,807 22,649 158 0.7 %
Total Executive Search209,967 206,779 3,188 1.5 %
On-Demand Talent41,895 39,240 2,655 6.8 %
Heidrick Consulting26,764 25,206 1,558 6.2 %
Revenue before reimbursements (net revenue)278,626 271,225 7,401 2.7 %
Reimbursements4,251 2,552 1,699 66.6 %
Total revenue$282,877 $273,777 $9,100 3.3 %
Adjusted EBITDA
Executive Search
Americas$48,112 $46,079 $2,033 4.4 %32.7 %33.3 %
Europe2,840 5,456 (2,616)(47.9)%7.1 %12.0 %
Asia Pacific1,740 1,630 110 6.7 %7.6 %7.2 %
Total Executive Search52,692 53,165 (473)(0.9)%25.1 %25.7 %
On-Demand Talent
(1,629)2,587 (4,216)(163.0)%(3.9)%6.6 %
Heidrick Consulting(1,395)(1,662)267 16.1 %(5.2)%(6.6)%
Total segments49,668 54,090 (4,422)(8.2)%17.8 %19.9 %
Research and Development(4,781)(5,218)437 8.4 %(1.7)%(1.9)%
Global Operations Support(16,076)(13,988)(2,088)(14.9)%(5.8)%(5.2)%
Total operating income$28,811 $34,884 $(6,073)(17.4)%10.3 %12.9 %

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







Heidrick & Struggles International, Inc.
Consolidated Statements of Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
Six Months Ended
June 30,
20242023$ Change% Change
Revenue
Revenue before reimbursements (net revenue)$543,823 $510,542 $33,281 6.5 %
Reimbursements8,152 5,354 2,798 52.3 %
Total revenue551,975 515,896 36,079 7.0 %
Operating expenses
Salaries and benefits352,305 337,775 14,530 4.3 %
General and administrative expenses87,816 74,841 12,975 17.3 %
Cost of services57,128 48,138 8,990 18.7 %
Research and development11,320 11,186 134 1.2 %
Impairment charges16,224 7,246 8,978 123.9 %
Restructuring charges6,939 — 6,939 100.0 %
Reimbursed expenses8,152 5,354 2,798 52.3 %
Total operating expenses539,884 484,540 55,344 11.4 %
Operating income12,091 31,356 (19,265)(61.4)%
Non-operating income
Interest, net6,698 5,162 
Other, net3,568 3,186 
Net non-operating income10,266 8,348 
Income before income taxes22,357 39,704 
Provision for income taxes13,482 15,136 
Net income8,875 24,568 
Other comprehensive income (loss), net of tax(6,185)368 
Comprehensive income$2,690 $24,936 
Weighted-average common shares outstanding
Basic20,202 19,958 
Diluted21,061 20,701 
Earnings per common share
Basic$0.44 $1.23 
Diluted$0.42 $1.19 
Salaries and benefits as a % of net revenue64.8 %66.2 %
General and administrative expenses as a % of net revenue16.1 %14.7 %
Cost of services as a % of net revenue10.5 %9.4 %
Research and development as a % of net revenue2.1 %2.2 %
Operatingmargin2.2 %6.1 %

Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
Six Months Ended June 30,
20242023$
Change		%
Change
2024 Margin1
2023 Margin1
Revenue
Executive Search
Americas$283,757 $265,890 $17,867 6.7 %
Europe81,563 84,498 (2,935)(3.5)%
Asia Pacific46,128 46,878 (750)(1.6)%
Total Executive Search411,448 397,266 14,182 3.6 %
On-Demand Talent79,752 70,357 9,395 13.4 %
Heidrick Consulting52,623 42,919 9,704 22.6 %
Revenue before reimbursements (net revenue)543,823 510,542 33,281 6.5 %
Reimbursements8,152 5,354 2,798 52.3 %
Total revenue$551,975 $515,896 $36,079 7.0 %
Adjusted EBITDA
Executive Search
Americas$89,983 $88,203 $1,780 2.0 %31.7 %33.2 %
Europe6,193 7,537 (1,344)(17.8)%7.6 %8.9 %
Asia Pacific4,935 5,197 (262)(5.0)%10.7 %11.1 %
Total Executive Search101,111 100,937 174 0.2 %24.6 %25.4 %
On-Demand Talent(2,550)1,240 (3,790)NM(3.2)%1.8 %
Heidrick Consulting(3,422)(4,457)1,035 23.2 %(6.5)%(10.4)%
Total segments95,139 97,720 (2,581)(2.6)%17.5 %19.1 %
Research and Development(9,706)(10,469)763 7.3 %(1.8)%(2.1)%
Global Operations Support(30,754)(26,740)(4,014)(15.0)%(5.7)%(5.2)%
Total Adjusted EBITDA$54,679 $60,511 $(5,832)(9.6)%10.1 %11.9 %
1 Margin based on revenue before reimbursements (net revenue).





Heidrick & Struggles International, Inc.
Reconciliation of Net Income (Loss) and Adjusted Net Income (Non-GAAP)
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net income (loss)$(5,157)$8,982 $8,875 $24,568 
Adjustments
Impairment charges, net of tax1
14,190 6,038 14,190 6,038 
Earnout fair value adjustment, net of tax2
749 — 749 — 
Restructuring charges, net of tax3
4,291 — 4,291 — 
Total adjustments19,230 6,038 19,230 6,038 
Adjusted net income$14,073 $15,020 $28,105 $30,606 
Weighted-average common shares outstanding
Basic20,259 20,010 20,202 19,958 
Diluted20,865 20,637 21,061 20,701 
Earnings (loss) per common share
Basic$(0.25)$0.45 $0.44 $1.23 
Diluted$(0.25)$0.44 $0.42 $1.19 
Adjusted earnings per common share
Basic$0.69 $0.75 $1.39 $1.53 
Diluted$0.67 $0.73 $1.33 $1.48 

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 three and six months ended June 30, 2024. The Company recorded a goodwill impairment charge of $7.2 million in the Heidrick Consulting segment for the three and six months ended June 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 three and six months ended June 30, 2024.
3 The Company recorded restructuring charges of $6.9 million for the three and six months ended June 30, 2024.

Heidrick & Struggles International, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30,
2024		December 31,
2023
Current assets
Cash and cash equivalents$189,922 $412,618 
Marketable securities106,963 65,538 
Accounts receivable, net187,113 133,128 
Prepaid expenses28,016 23,597 
Other current assets43,745 47,923 
Income taxes recoverable7,660 10,410 
Total current assets563,419 693,214 
Non-current assets
Property and equipment, net48,434 35,752 
Operating lease right-of-use assets82,114 86,063 
Assets designated for retirement and pension plans10,779 11,105 
Investments55,927 47,287 
Other non-current assets26,875 17,071 
Goodwill183,150 202,252 
Other intangible assets, net16,411 20,842 
Deferred income taxes29,216 28,005 
Total non-current assets452,906 448,377 
Total assets$1,016,325 $1,141,591 
Current liabilities
Accounts payable$19,515 $20,837 
Accrued salaries and benefits190,225 322,744 
Deferred revenue44,679 45,732 
Operating lease liabilities18,044 21,498 
Other current liabilities25,693 21,823 
Income taxes payable8,593 6,057 
Total current liabilities306,749 438,691 
Non-current liabilities
Accrued salaries and benefits51,404 52,108 
Retirement and pension plans70,855 62,100 
Operating lease liabilities78,120 78,204 
Other non-current liabilities42,562 41,808 
Deferred income taxes5,703 6,402 
Total non-current liabilities248,644 240,622 
Total liabilities555,393 679,313 
Stockholders’ equity460,932 462,278 
Total liabilities and stockholders’ equity$1,016,325 $1,141,591 

Heidrick & Struggles International, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
June 30,
20242023
Cash flows - operating activities
Net income$(5,157)$8,982 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization3,910 4,819 
Deferred income taxes(2,246)(223)
Stock-based compensation expense3,465 1,919 
Accretion expense related to earnout payments469 451 
Gain on marketable securities(441)(49)
Loss on disposal of property and equipment247 1 
Impairment charges16,224 7,246 
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable(14,717)(35,658)
Accounts payable(255)(1,777)
Accrued expenses57,843 52,164 
Restructuring accrual4,386 — 
Deferred revenue(2,624)396 
Income taxes recoverable and payable, net645 495 
Retirement and pension plan assets and liabilities347 333 
Prepaid expenses3,339 4,500 
Other assets and liabilities, net(2,913)3,341 
Net cash provided by operating activities62,522 46,940 
Cash flows - investing activities
Acquisition of businesses, net of cash acquired— (5,842)
Capital expenditures(10,365)(3,006)
Purchases of marketable securities and investments(109,862)(21,511)
Proceeds from sales of marketable securities and investments289 153 
Net cash used in investing activities(119,938)(30,206)
Cash flows - financing activities
Repurchases of common stock— (904)
Cash dividends paid(3,182)(3,122)
Payment of employee tax withholdings on equity transactions(885)— 
Net cash used in financing activities(4,067)(4,026)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash(1,426)376 
Net increase (decrease) in cash, cash equivalents and restricted cash(62,909)13,084 
Cash, cash equivalents and restricted cash at beginning of period252,831 204,733 
Cash, cash equivalents and restricted cash at end of period$189,922 $217,817 

Heidrick & Struggles International, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
20242023
Cash flows - operating activities
Net income$8,875 $24,568 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization8,700 8,692 
Deferred income taxes(2,333)6,446 
Stock-based compensation expense6,109 3,772 
Accretion expense related to earnout payments935 642 
Gain on marketable securities(980)(1,694)
Loss on disposal of property and equipment261 131 
Impairment charges16,224 7,246 
Changes in assets and liabilities:
Accounts receivable(55,842)(59,990)
Accounts payable(2,324)(2,914)
Accrued expenses(124,747)(273,811)
Restructuring accrual4,386 — 
Deferred revenue(673)543 
Income taxes recoverable and payable, net5,368 (2,588)
Retirement and pension plan assets and liabilities5,800 6,403 
Prepaid expenses(4,652)(2,635)
Other assets and liabilities, net(6,009)(4,902)
Net cash used in operating activities(140,902)(290,091)
Cash flows - investing activities
Acquisition of business, net of cash acquired— (35,749)
Capital expenditures(16,538)(6,814)
Purchases of marketable securities and investments(115,262)(27,683)
Proceeds from sales of marketable securities and investments66,574 268,118 
Net cash provided by (used in) investing activities(65,226)197,872 
Cash flows - financing activities
Repurchases of common stock— (904)
Cash dividends paid(6,398)(6,234)
Payment of employee tax withholdings on equity transactions(3,747)(4,141)
Acquisition earnout payments— (35,946)
Net cash used in financing activities(10,145)(47,225)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash(6,423)1,772 
Net decrease in cash, cash equivalents and restricted cash(222,696)(137,672)
Cash, cash equivalents and restricted cash at beginning of period412,618 355,489 
Cash, cash equivalents and restricted cash at end of period$189,922 $217,817 

Heidrick & Struggles International, Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA (Non-GAAP)
(In thousands)
(Unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Revenue before reimbursements (net revenue)$278,626 $271,225 $543,823 $510,542 
Net income (loss)(5,157)8,982 8,875 24,568 
Interest, net(2,612)(1,913)(6,698)(5,162)
Other, net(997)(1,377)(3,568)(3,186)
Provision for income taxes4,583 7,893 13,482 15,136 
Operating income (loss)(4,183)13,585 12,091 31,356 
Adjustments
Depreciation1,990 2,172 4,483 4,176 
Intangible amortization1,920 2,647 4,217 4,516 
Earnout accretion469 451 935 642 
Earnout fair value adjustments1,211 — 1,211 — 
Acquisition contingent consideration3,285 3,784 5,273 5,443 
Deferred compensation plan956 1,603 3,306 3,736 
Reorganization costs— 3,396 — 3,396 
Impairment charges16,224 7,246 16,224 7,246 
Restructuring charges6,939 — 6,939 — 
Total adjustments32,994 21,299 42,588 29,155 
Adjusted EBITDA$28,811 $34,884 $54,679 $60,511 
Adjusted EBITDA margin10.3 %12.9 %10.1 %11.9 %

Heidrick & Struggles International, Inc.
Reconciliation of Operating Income (Loss) to Adjusted EBITDA by Line of Business (Non-GAAP)
(In thousands)
(Unaudited)
Three Months Ended June 30, 2024
Executive SearchOn-Demand TalentHeidrick ConsultingResearch & DevelopmentGlobal Operations SupportTotal
Revenue before reimbursements (net revenue)$209,967 $41,895 $26,764 $— $— $278,626 
Operating income (loss)1
46,821 (21,695)(6,530)(5,605)(17,174)(4,183)
Adjustments
Depreciation863 117 82 809 119 1,990 
Intangible amortization20 1,533 367 — — 1,920 
Earnout accretion— 409 60 — — 469 
Earnout fair value adjustments— 1,125 86 — — 1,211 
Acquisition contingent compensation295 1,835 1,155 — — 3,285 
Deferred compensation plan920 — 18 15 3 956 
Impairment charges1,463 14,761 — — — 16,224 
Restructuring charges2,310 286 3,367 — 976 6,939 
Total adjustments5,871 20,066 5,135 824 1,098 32,994 
Adjusted EBITDA$52,692 $(1,629)$(1,395)$(4,781)$(16,076)$28,811 
Adjusted EBITDA margin25.1 %(3.9)%(5.2)%(1.7)%(5.8)%10.3 %
Three Months Ended June 30, 2023
Executive SearchOn-Demand TalentHeidrick ConsultingResearch & DevelopmentGlobal Operations SupportTotal
Revenue before reimbursements (net revenue)$206,779 $39,240 $25,206 $— $— $271,225 
Operating income (loss)1
46,940 (2,862)(10,686)(5,658)(14,149)13,585 
Adjustments
Depreciation1,297 116 183 416 160 2,172 
Intangible amortization53 2,151 443 — — 2,647 
Earnout accretion— 394 57 — — 451 
Acquisition contingent compensation1,165 1,561 1,058 — — 3,784 
Deferred compensation plan1,541 — 37 24 1 1,603 
Reorganization costs2,169 1,227 — — — 3,396 
Impairment charges— — 7,246 — — 7,246 
Total adjustments6,225 5,449 9,024 440 161 21,299 
Adjusted EBITDA$53,165 $2,587 $(1,662)$(5,218)$(13,988)$34,884 
Adjusted EBITDA margin25.7 %6.6 %(6.6 %)(1.9)%(5.2)%12.9 %

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.

Heidrick & Struggles International, Inc.
Reconciliation of Operating Income (Loss) to Adjusted EBITDA (Non-GAAP)
(In thousands)
(Unaudited)
Six Months Ended June 30, 2024
Executive SearchOn-Demand TalentHeidrick ConsultingResearch & DevelopmentGlobal Operations SupportTotal
Revenue before reimbursements (net revenue)$411,448 $79,752 $52,623 $— $— $543,823 
Operating income (loss)1
92,353 (26,544)(10,372)(11,320)(32,026)12,091 
Adjustments
Depreciation2,104 248 279 1,563 289 4,483 
Intangible amortization37 3,368 812 — — 4,217 
Earnout accretion— 815 120 — — 935 
Earnout fair value adjustments— 1,125 86 — — 1,211 
Acquisition contingent compensation(335)3,391 2,217 — — 5,273 
Deferred compensation plan3,179 — 69 51 7 3,306 
Impairment charges1,463 14,761 — — — 16,224 
Restructuring charges2,310 286 3,367 — 976 6,939 
Total adjustments8,758 23,994 6,950 1,614 1,272 42,588 
Adjusted EBITDA$101,111 $(2,550)$(3,422)$(9,706)$(30,754)$54,679 
Adjusted EBITDA margin24.6 %(3.2 %)(6.5 %)(1.8 %)(5.7)%10.1 %
Six Months Ended June 30, 2023
Executive SearchOn-Demand TalentHeidrick ConsultingResearch & DevelopmentGlobal Operations SupportTotal
Revenue before reimbursements (net revenue)$397,266 $70,357 $42,919 $— $— $510,542 
Operating income (loss)1
90,633 (7,226)(13,802)(11,186)(27,063)31,356 
Adjustments
Depreciation2,640 201 351 664 320 4,176 
Intangible amortization105 3,868 543 — — 4,516 
Earnout accretion— 585 57 — — 642 
Acquisition contingent compensation1,800 2,585 1,058 — — 5,443 
Deferred compensation plan3,590 — 90 53 3 3,736 
Reorganization costs2,169 1,227 — — — 3,396 
Impairment charges— — 7,246 — — 7,246 
Total adjustments10,304 8,466 9,345 717 323 29,155 
Adjusted EBITDA$100,937 $1,240 $(4,457)$(10,469)$(26,740)$60,511 
Adjusted EBITDA margin25.4 %1.8 %(10.4 %)(2.1 %)(5.2 %)11.9 %

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.