Leadership advisory firm Heidrick & Struggles International Inc (HSII) Tuesday reported a loss for the fourth quarter, as it took charges on workforce reduction. Revenues were down marginally while Street had expected a rise. The company's revenue outlook is also weaker than Street estimate.
Net loss for the fourth quarter was $4.1 million or $0.23 per share, compared to net income of $5.2 million or $0.29 per share in the year-ago quarter.
On average, 6 analysts polled by Thomson Reuters expected earnings of $0.40 per share for the quarter. Analysts' estimates typically exclude special items.
Results for the quarter included restructuring charges of $16.3 million, related to initiatives the company took to reduce overall costs and improve operational efficiencies.
The charges consist of employee-related costs, including severance, associated with a global workforce reduction of approximately 10 percent, and expenses associated with consolidating and closing 11 smaller offices in the Americas and Europe regions.
Consolidated net revenue was $127.2 million in the quarter, down 0.1 percent from last year. Five Street analysts had a consensus revenue estimate of $133.2 million for the quarter.
Net revenue increased 4.3 percent in the Americas, but declined 5.8 percent in Europe and 3.6 percent in Asia Pacific.
Revenue growth in the Consumer, Life Sciences, Education & Social Enterprise and Industrial practices was mostly offset by a decline in the Financial Services practice.
Executive search confirmations in the quarter declined 10.4 percent from the year-ago quarter.
Average revenue per executive search increased to $128,300 compared to $112,600 in the 2010 fourth quarter and $117,600 in the 2011 third quarter.
Productivity, as measured by annualized net revenue per consultant, was $1.4 million, compared to $1.5 million in the 2010 fourth quarter and 2011 third quarter.
The number of executive search and leadership consulting consultants at December 31, 2011 was 347, the same as at December 31, 2010, and down from 386 consultants at September 30, 2011 as a result of the workforce reduction in the fourth quarter.
Excluding the impact of restructuring charges, operating income for the quarter would have been $11.8 million and operating margin would have been 9.3 percent. In the year-ago quarter, the company reported operating income of $9.3 million and operating margin of 7.3 percent.
For the full year, the company reported a net loss of $33.7 million or $1.90 per share, reflecting a tax rate of negative 128.2 percent, compared to net income for 2010 of $7.5 million or $0.42 per share, reflecting an effective tax rate of 55.8 percent. Net revenue for the full year increased 7 percent to $527.8 million from $493.1 million in 2010.
The Chicago, Illinois-headquartered company confirmed 4,274 executive searches in 2011, a 2.2 percent increase compared to 2010.
For the first quarter, the company expects net revenue of between $105 million and $115 million, which is weaker than the Street estimate of $120.8 million.
For the full year, the company expects net revenue of between $510 million and $540 million, also weaker than $543.2 million expected currently by analysts.
The company is targeting a full-year 2012 operating margin of between 7 percent and 9 percent.
HSII is currently trading at $19.99, down $2.67 or 11.78%, on the Nasdaq. Over the past year, the stock traded in a range of $15.57 - $28.32.
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