Heidrick & Struggles(US:HSII)2025-11-03 11:37Merger and Acquisition - The Company has entered into a Merger Agreement with Heron BidCo, LLC, where each share of common stock will be converted into the right to receive $59.00 in cash[133]. - The Merger is subject to stockholder approval and customary closing conditions, including regulatory approvals[133]. Revenue Performance - Total revenue increased by $45.1 million, or 15.9%, to $327.9 million for the three months ended September 30, 2025, compared to $282.8 million for the same period in 2024[147]. - Net revenue before reimbursements rose by $44.3 million, or 15.9%, to $322.8 million for the three months ended September 30, 2025, with a positive impact of $4.6 million from foreign exchange fluctuations[148]. - Executive Search net revenue was $239.1 million for the three months ended September 30, 2025, an increase of $34.7 million, or 17.0%, compared to the same period in 2024[148]. - Consolidated total revenue increased by $102.5 million, or 12.3%, to $937.2 million for the nine months ended September 30, 2025, compared to $834.8 million for the same period in 2024[183]. - Executive Search net revenue was $690.6 million for the nine months ended September 30, 2025, an increase of $74.8 million, or 12.1%, compared to the same period in 2024, driven by a 5.9% increase in the number of executive search confirmations[184]. Segment Performance - The Americas segment reported net revenue of $162.5 million for the three months ended September 30, 2025, an increase of 20.8% compared to $134.5 million for the same period in 2024[161]. - The Europe segment reported net revenue of $50.9 million for the three months ended September 30, 2025, an increase of 18.0% compared to $43.1 million for the same period in 2024[165]. - The Asia Pacific segment reported net revenue of $25.6 million for the three months ended September 30, 2025, a decrease of 3.9% compared to $26.7 million for the same period in 2024[169]. - The Americas segment reported net revenue of $467.1 million for the nine months ended September 30, 2025, an increase of 11.7% compared to $418.3 million for the same period in 2024[199]. - The Europe segment reported net revenue of $148.8 million for the nine months ended September 30, 2025, an increase of 19.3% compared to $124.7 million for the same period in 2024[204]. - The Asia Pacific segment reported net revenue of $74.8 million for the nine months ended September 30, 2025, an increase of 2.7% compared to $72.8 million for the same period in 2024[210]. Expenses and Costs - Salaries and benefits expense increased by $34.8 million, or 19.0%, to $217.8 million for the three months ended September 30, 2025, compared to $183.0 million for the same period in 2024[150]. - General and administrative expenses rose by $2.0 million, or 5.1%, to $41.8 million for the three months ended September 30, 2025, compared to $39.7 million for the same period in 2024[152]. - Cost of services increased by $6.6 million, or 21.3%, to $37.6 million for the three months ended September 30, 2025, compared to $31.0 million for the same period in 2024[154]. - Salaries and benefits expense increased by $81.2 million, or 15.2%, to $616.5 million for the nine months ended September 30, 2025, compared to $535.3 million for the same period in 2024[186]. - General and administrative expenses decreased by $2.3 million, or 12.1%, for the nine months ended September 30, 2025, due to reduced business development travel and office occupancy costs[225]. - Cost of services rose by $3.6 million, or 47.3%, for the nine months ended September 30, 2025, attributed to an increase in the volume of consulting projects[226]. Adjusted EBITDA - Adjusted EBITDA was $34.2 million for the three months ended September 30, 2025, an increase of $3.8 million, or 12.6%, compared to $30.4 million for the same period in 2024[157]. - Consolidated Adjusted EBITDA increased by $12.1 million, or 14.2%, to $97.2 million for the nine months ended September 30, 2025, with an Adjusted EBITDA margin of 10.5%[195]. - Adjusted EBITDA for the Americas segment was $48.9 million for the three months ended September 30, 2025, an increase of $8.4 million, or 20.8%, compared to $40.5 million for the same period in 2024[164]. - Adjusted EBITDA for the Europe segment was $6.6 million for the three months ended September 30, 2025, an increase of $1.6 million, or 31.0%, compared to $5.0 million for the same period in 2024[168]. - The On-Demand Talent segment achieved an Adjusted EBITDA of $4.3 million for the nine months ended September 30, 2025, improving from an Adjusted EBITDA loss of $0.8 million for the same period in 2024[222]. - Adjusted EBITDA loss for Heidrick Consulting improved by $1.0 million, or 23.4%, to a loss of $3.4 million for the nine months ended September 30, 2025, compared to a loss of $4.4 million in 2024[227]. Consultant Metrics - Key performance indicators include net revenue, Adjusted EBITDA, and Adjusted EBITDA margin, with a focus on consultant headcount and productivity metrics[136]. - The Company utilizes a tiered payout model for consultant compensation, linking a portion of compensation to net revenue generated[142]. - The average revenue per executive search was $162,000 for the three months ended September 30, 2025, compared to $149,000 for the same period in 2024[149]. - The number of Executive Search consultants increased to 421 as of September 30, 2025, compared to 414 as of September 30, 2024[149]. Digital Solutions and Innovation - The Company has integrated new digital solutions for consulting services, enhancing virtual delivery capabilities[131]. - Consolidated R&D expense increased by $1.8 million, or 10.9%, to $18.8 million for the nine months ended September 30, 2025, reflecting the company's focus on developing new technologies[192]. Cash and Financial Position - Cash used in operating activities was $28.9 million for the nine months ended September 30, 2025, primarily due to an increase in accounts receivable of $63.6 million[238]. - Cash, cash equivalents, and marketable securities totaled $528.1 million as of September 30, 2025, including $214.3 million held by foreign subsidiaries[237]. - The company had no outstanding borrowings as of September 30, 2025, and was in compliance with financial covenants under the Amended Credit Agreement[236]. - Net non-operating income increased to $14.6 million for the nine months ended September 30, 2025, compared to $12.3 million for the same period in 2024[196]. - A 10% change in average exchange rates for foreign currencies would have impacted net income by approximately $1.2 million for the nine months ended September 30, 2025[249].