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Heidrick & Struggles International (HSII)
NASDAQ:HSII
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Heidrick & Struggles
(NASDAQ:HSII)71Outperform
Positive Factors
Business Strategies
Heidrick continues to diversify its revenue stream and is generating an increasing percentage of revenue from its non-search businesses.
Earnings
Q4/24 revenue increased 9% YOY to $276.2 million, which exceeded the estimate and consensus while coming in above the high end of the guidance range.
Negative Factors
Financial Performance
Q4/24 adjusted EBITDA margin declined 460 basis points YOY to 9.5% due to increased variable compensation.
Heidrick & Struggles (HSII) vs. S&P 500 (SPY)
Market Cap
$907.83M
Dividend Yield1.35%
Average Volume (3M)133.57K
Price to Earnings (P/E)108.0
Beta (1Y)1.21
Revenue Growth7.15%
EPS Growth-83.77%
CountryUS
Employees2,212
SectorIndustrials
Sector Strength66
IndustryCorporate Services
Share Statistics
EPS (TTM)0.38
Shares Outstanding20,409,836
10 Day Avg. Volume189,865
30 Day Avg. Volume133,575
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.83
Price to Cash Flow (P/CF)2.20
P/FCF Ratio2.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$52.50Price Target Upside16.33% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Heidrick & Struggles Business Overview & Revenue Model
Company DescriptionHeidrick & Struggles International, Inc. is a global executive search and consulting firm specializing in leadership solutions. The company operates in various sectors, including healthcare, technology, financial services, and industrial markets. Its core services include executive search, leadership consulting, and culture shaping, helping organizations find and develop effective leaders and foster high-performing cultures.
How the Company Makes MoneyHeidrick & Struggles generates revenue primarily through fees for its executive search and leadership consulting services. The company charges clients a percentage of the total compensation for the executive placements it facilitates. Additionally, it earns income from consulting services aimed at improving organizational effectiveness and leadership capabilities. Significant partnerships with global corporations and organizations contribute to its revenue by expanding its client base and enhancing service offerings. Heidrick & Struggles' focus on high-level executive talent and strategic advisory services enables it to maintain a strong revenue stream in the competitive consulting industry.
Heidrick & Struggles Financial Statement Overview
Summary
Heidrick & Struggles exhibits solid financial health with a strong cash flow recovery and a stable balance sheet. Revenue growth is positive, but profitability margins are under pressure. The low leverage and improved cash flow provide a cushion for future growth opportunities, although enhancing profitability remains crucial.Income Statement
Heidrick & Struggles shows steady revenue growth with a 7.1% increase from 2023 to 2024, indicating a positive trend. Gross Profit Margin remains stable, showcasing operational efficiency. However, Net Profit Margin is low at 0.8%, affected by a drop in EBIT, suggesting pressure on profitability. The EBIT and EBITDA margins have declined significantly from previous years, indicating challenges in maintaining cost controls.75
Positive
Balance Sheet
The company maintains a strong equity position with an Equity Ratio of 37.9% for 2024, reflecting financial stability. The Debt-to-Equity Ratio is manageable at 0.22, suggesting low leverage risk. ROE is modest at 1.9%, indicating room for improvement in profit generation from equity.80
Positive
Cash Flow
Significant improvement in Free Cash Flow from 2023 to 2024, bouncing back from negative territory to a healthy positive level. Operating Cash Flow to Net Income ratio is robust, indicating efficient cash generation from operations. The company has successfully turned around its cash flow situation, enhancing liquidity.85
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.12B | 1.04B | 1.08B | 1.01B | 629.37M | Gross Profit |
| 281.10M | 276.11M | 275.48M | 238.28M | 178.95M | EBIT |
| 7.53M | 87.49M | 112.27M | 98.26M | 135.16M | EBITDA |
| 7.53M | 101.11M | 122.87M | 125.59M | 161.81M | Net Income Common Stockholders |
| 8.73M | 54.41M | 79.49M | 72.57M | -37.71M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 563.52M | 478.16M | 621.62M | 545.23M | 336.47M | Total Assets |
| 1.19B | 1.14B | 1.18B | 1.11B | 787.81M | Total Debt |
| 100.81M | 99.70M | 82.85M | 84.96M | 115.80M | Net Debt |
| -414.82M | -312.92M | -272.59M | -460.27M | -200.67M | Total Liabilities |
| 741.37M | 679.31M | 764.99M | 770.78M | 520.21M | Stockholders Equity |
| 452.82M | 462.28M | 410.65M | 336.02M | 267.60M |
| Cash Flow | Free Cash Flow | |||
| 124.12M | -40.23M | 108.15M | 265.16M | 16.03M | Operating Cash Flow |
| 150.43M | -26.79M | 119.29M | 271.40M | 23.35M | Investing Cash Flow |
| -14.62M | 133.60M | -279.60M | -21.26M | 32.63M | Financing Cash Flow |
| -16.74M | -53.53M | -15.69M | -15.52M | -16.40M |
Heidrick & Struggles Technical Analysis
Positive
45.13
Price Trends
44.41
Positive
43.74
Positive
39.58
Positive
Market Momentum
-0.76
Negative
58.14
Neutral
42.44
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HSII, the sentiment is Positive. The current price of 45.13 is above the 20-day moving average (MA) of 43.28, above the 50-day MA of 44.41, and above the 200-day MA of 39.58, indicating a bullish trend. The MACD of -0.76 indicates Negative momentum. The RSI at 58.14 is Neutral, neither overbought nor oversold. The STOCH value of 42.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HSII.
Heidrick & Struggles Risk Analysis
Heidrick & Struggles disclosed 23 risk factors in its most recent earnings report. Heidrick & Struggles reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Heidrick & Struggles Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $3.30B | 13.67 | 14.20% | 2.25% | -3.59% | 138.97% | |
73 Outperform | $1.01B | 19.66 | 25.20% | 0.79% | 7.03% | 7.75% | |
71 Outperform | $907.83M | 107.99 | 1.91% | 1.35% | 7.15% | -83.77% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
60 Neutral | $5.62B | 22.51 | 16.96% | 3.96% | -9.33% | -37.06% | |
58 Neutral | $2.68B | 19.09 | 6.67% | 5.37% | -5.61% | 77.92% | |
44 Neutral | $168.15M | ― | -32.53% | ― | -17.78% | -820.48% |
* Industrials Sector Average
Performance Comparison
HSII
Heidrick & Struggles
45.13
12.59
38.69%
BBSI
Barrett Business Services
39.23
9.46
31.78%
KFY
Korn Ferry
64.80
1.14
1.79%
MAN
ManpowerGroup
58.61
-13.12
-18.29%
RHI
Robert Half
55.45
-22.17
-28.56%
TBI
Trueblue
5.62
-6.04
-51.80%
Heidrick & Struggles Earnings Call Summary
Earnings Call Date: Mar 3, 2025 | % Change Since: 13.94% | Next Earnings Date: Apr 28, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth and profitability in several segments, particularly in Executive Search and Heidrick Consulting. However, challenges were noted in the On-Demand Talent segment with an EBITDA loss and a significant goodwill impairment charge. Overall, the sentiment is cautiously optimistic with a focus on strategic priorities to drive future growth.Highlights
Strong Fourth Quarter Revenue Growth
Fourth quarter revenue reached $276.2 million, marking a 9.1% increase compared to Q4 2023.
Full Year Revenue Increase
Full year 2024 revenue was $1.1 billion, a 7% increase versus 2023.
Executive Search Performance
Executive Search revenue grew 10% in Q4, with strong profitability at an adjusted EBITDA margin of 25%.
Heidrick Consulting Revenue Growth
Heidrick Consulting saw a Q4 organic revenue increase of 11.5% year-over-year.
Strong Cash Position
Ended Q4 with a cash position of $563 million, up $85 million from December 2023.
Lowlights
On-Demand Talent EBITDA Loss
On-Demand Talent reported an adjusted EBITDA loss of $1.2 million in Q4.
Heidrick Consulting EBITDA Loss
Heidrick Consulting reported an adjusted EBITDA loss of $1.8 million in Q4 due to increased variable compensation.
Non-Cash Goodwill Impairment Charge
A non-cash goodwill impairment charge of $43.3 million was reported in Q4 related to the On-Demand Talent business.
Company Guidance
During the Heidrick & Struggles fourth quarter and year-end earnings call for fiscal year 2024, the company provided guidance that emphasized its strong financial performance and strategic priorities for 2025. The company reported a 9.1% increase in fourth-quarter revenue, reaching $276.2 million, and a full-year revenue of $1.1 billion, marking a 7% increase versus 2023. Adjusted EBITDA for the fourth quarter was $26.1 million, with a margin of 9.5%, while the full-year adjusted EBITDA was $111.2 million with a 10.1% margin. The company anticipates first-quarter 2025 revenue in the range of $263 million to $273 million and expects adjusted EBITDA margin expansion throughout 2025, primarily in the second half. Heidrick & Struggles' strategic focus includes becoming a trusted leadership partner, aiding clients in transformation, and innovating for continuous client engagement. They also highlighted strong performance across their service lines, including executive search, which saw a 10% revenue increase and a 25% adjusted EBITDA margin. Despite challenges in the broader temporary staffing market, On-Demand Talent revenue grew by 3%, while Heidrick Consulting saw an 11.5% revenue increase. The company remains optimistic about its growth prospects and its ability to deliver value to clients and shareholders.Heidrick & Struggles Corporate Events
Executive/Board Changes
Heidrick & Struggles Announces Leadership Transition Plans
Neutral
Jan 30, 2025
On January 27, 2025, Heidrick & Struggles International, Inc. announced that Sarah Payne will transition from her role as Chief Human Resources Officer to an advisory position, effective March 31, 2025. The company will begin an executive search for her successor and expects to finalize an agreement detailing any payments or benefits related to her transition and eventual departure by June 30, 2025.
Executive/Board ChangesBusiness Operations and Strategy
Heidrick & Struggles Appoints New Chief Financial Officer
Positive
Dec 9, 2024
Heidrick & Struggles International, Inc. has appointed Nirupam Sinha as the new Chief Financial Officer effective January 6, 2025. With a robust background in finance and strategy from leading roles at Checkout.com, T. Rowe Price, and McKinsey & Company, Sinha is poised to drive financial management and organizational growth at Heidrick & Struggles. His leadership aims to enhance value creation and strengthen the company’s position as a trusted partner in leadership and talent solutions, crucial for those interested in the dynamic financial markets.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.