Heidrick & Struggles (NASDAQ: HSII) reported Q1 EPS of $0.74, $0.21 better than the analyst estimate of $0.53. Revenue for the quarter came in at $194.7 million versus the consensus estimate of $163.47 million.

Highlights:

• Record net revenue (revenue before reimbursements) of $193.7 million increased $22.2 million, or 12.9%, from $171.5 million in the 2020 first quarter and increased $32.7 million, or 20.3%, from $161.0 in the 2020 fourth quarter.
• Operating income, before adjustments, of $19.6 million and operating margin of 10.1% include a restructuring charge of $3.9 million, as anticipated. In the 2020 first quarter, operating income was $18.2 million and operating margin was 10.6%.
• Adjusted operating income, before restructuring, of $23.5 million increased $5.3 million, or 29.3%, from $18.2 million in last year's first quarter and adjusted operating margin of 12.1% increased 150 basis points.
• Net income of $14.8 million and diluted earnings per share of $0.74 includes restructuring charge. In the 2020 first quarter, net income was $8.7 million and diluted earnings per share was $0.44.
• Adjusted net income of $17.4 million more than doubled from the 2020 first quarter and adjusted diluted earnings per share of $0.86 increased 95.5% from last year's first quarter. Adjusted net income increased 49.7% from $11.6 million in the 2020 fourth quarter and adjusted diluted earnings per share increased 45.8% sequentially.
• General and administrative expenses improved $3.4 million, or 10.6%, from last year's first quarter and improved 390 basis points to 14.9% of revenue.
• Adjusted EBITDA of $28.9 million increased $5.3 million from $23.6 million in the 2020 first quarter and adjusted EBITDA margin increased 110 basis points to 14.9% from 13.8%.

"Our results reflect a strong rebound from the global downturn. Record net revenue in the first quarter marked a double-digit improvement both sequentially and year over year, driven by broad based strength across all businesses and geographies," stated Heidrick & Struggles' President and Chief Executive Officer, Krishnan Rajagopalan. "This strong growth coupled with savings in general and administrative expenses resulted in significant improvements in overall profitability with adjusted operating margin of 12.1%, the highest since 2008."

Mr. Rajagopalan continued, "We are also very excited to welcome BTG to Heidrick & Struggles and to offer our clients a full spectrum of executive and high-end on-demand talent solutions – a key strategy we set out to achieve – as we make the future of work a reality today. We look to build on our momentum as we execute our 2021 initiatives to grow our scale and impact with clients, expand our suite of leadership solutions and capabilities, and invest in new innovative, tech-driven offerings to drive future growth and shareholder value."

GUIDANCE:

Heidrick & Struggles sees Q2 2021 revenue of $215-225 million, versus the consensus of $165.59 million.

The Company expects 2021 second quarter consolidated net revenue of between $215 million and $225 million, while acknowledging the continued fluidity of the COVID-19 pandemic that may impact quarterly results. In addition, this outlook is based on the average currency rates in March 2021 and reflects, among other factors, management's assumptions for the anticipated volume of new Executive Search confirmations, Heidrick Consulting assignments, BTG projects and the current backlog, consultant productivity, consultant retention, and the seasonality of its business.

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