Heidrick & Struggles International Inc. (NASDAQ:HSII) Q1 2018 Earnings Conference Call - Final Transcript

Apr 23, 2018 • 05:00 pm ET


Heidrick & Struggles International Inc. (NASDAQ:HSII) Q1 2018 Earnings Conference Call - Final Transcript


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This is the Heidrick & Struggles First Quarter 2018 Quarterly Conference Call. This call is being recorded. It may not be reproduced or retransmitted without the company's consent. (Operator Instructions)

Now I will turn the call over to Julie Creed, Vice President of Investor Relations and Real Estate. Please go ahead.

Julie Creed

Good afternoon, everyone, and thank you for participating in Heidrick & Struggles 2018 first quarter conference call. Joining me on today's call is our President and CEO, Krishnan Rajagopalan; and our Chief Financial Officer, Mark Harris. We posted our first quarter slides on the IR home page of our website at heidrick.com, and we encourage you to print them for additional context, but we won't be referring to specific page numbers during our opening comments.

Today, we'll be using the terms adjusted EBITDA and adjusted EBITDA margin. These are non-GAAP financial measures that we believe better explain some of our results. A reconciliation between GAAP and non-GAAP financial measures can be found in the schedule at the end of our release and in our supporting slides. Throughout the course of our remarks, we'll be making some forward-looking statements, and ask that you please refer to the safe harbor language contained in our news release and on Slide 1 of our deck.

And Krishnan, now I'll turn it over to you.

Krishnan Rajagopalan

Julie, thank you. Good afternoon and thank you for joining our call. Last quarter we introduced Mark Harris as our incoming CFO following Rich Pehlke's retirement. Mark, it's great to have you here today, now fully entrenched in your role.

As you've seen from our press release, we reported a strong first quarter, continuing on the positive momentum that we saw at year-end, both momentum in the market and momentum inside the firm. On almost every meaningful metric, we reported growth and improvement in year-over-year results. Consolidated net revenue increased 14%. Executive Search revenue was up 17%. Operating income grew 98%. Operating margin improved to 8.2%, and diluted earnings per share was $0.53 compared to $0.03 in last year's first quarter.

I'd like to thank our employees around the world for driving these strong first quarter results. I'm quite proud of what we achieved financially, while executing on a number of strategic and operational initiatives. We finished formally integrating Leadership Consulting and Culture Shaping and launched a new business, Heidrick Consulting. We launched our digital client portal and our new IP-based assessment methodology and are now active with clients globally on both. And we continued executing the restructuring that was announced in early January.

Now let me turn the call over to Mark to further discuss the financial results.

Mark R. Harris

Thank you, Krishnan. And let me reaffirm what was just said, supplemented through financial analytics. At the conclusion, it will be obvious. This was an outstanding first quarter for me to be a part of. Before I get into the results, I'll discuss the impact of the new revenue recognition methodology, commonly referred to as ASC 606. As we previously discussed