Heidrick & Struggles International : 2021 Q2 Financial Results Slides

SECOND QUARTER 2021 RESULTS

July 26, 2021

SAFE HARBOR STATEMENT

This press release contains forward-looking statements. The forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry in which we operate and management's beliefs and assumptions. Forward-looking statements may be identified by the use of words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts," and similar expressions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted or implied in the forward-looking statements. Factors that may affect the outcome of the forward-looking statements include, among other things, the impacts, direct and indirect, of the COVID-19 pandemic (including the emergence of variant strains) on our business, our consultants and employees, and the overall economy; leadership changes, our ability to attract, integrate, develop, manage and retain qualified consultants and senior leaders; our ability to prevent our consultants from taking our clients with them to another firm; our ability to maintain our professional reputation and brand name; the fact that our net revenue may be affected by adverse economic conditions; our clients' ability to restrict us from recruiting their employees; the aggressive competition we face; our heavy reliance on information management systems; the fact that we face the risk of liability in the services we perform; the fact that data security, data privacy and data protection laws and other evolving regulations and cross-border data transfer restrictions may limit the use of our services and adversely affect our business; social, political, regulatory and legal risks in markets where we operate; any challenges to the classification of our on-demand talent as independent contractors; the impact of foreign currency exchange rate fluctuations; the fact that we may not be able to align our cost structure with net revenue; unfavorable tax law changes and tax authority rulings; our ability to realize our tax losses; the timing of the establishment or reversal of valuation allowance on deferred tax assets; any impairment of our goodwill, other intangible assets and other long-lived assets; our ability to execute and integrate future acquisitions; the fact that we have anti-takeover provisions that make an acquisition of us difficult and expensive; our ability to access additional credit; and the increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted cyber-related attacks that could pose a risk to our systems, networks, solutions, services and data. For more information on the factors that could affect the outcome of forward-looking statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2020, under the heading "Risk Factors" in Item 1A, as updated in Part II, Item 1A or this report. We caution the reader that the list of factors may not be exhaustive. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

• Amounts may not foot due to rounding.

SECOND QUARTER 2021 CONSOLIDATED RESULTS

2021 SECOND QUARTER HIGHLIGHTS

• Record net revenue (revenue before reimbursements) of $260.0 million increased $114.4 million, or 78.6%, from the 2020 second quarter and increased $66.3 million, or 34.2%, from the 2021 first quarter.
• Operating income, before adjustments, of $28.7 million includes an anticipated restructuring charge of $3.2 million. Adjusted operating income, before restructuring, of $31.9 million more than tripled from last year's second quarter and adjusted operating margin of 12.3% increased 610 basis points.
• Net income of $20.8 million and diluted earnings per share of $1.03 includes an anticipated restructuring charge.
• Adjusted net income of $22.9 million and adjusted diluted earnings per share of $1.14 more than tripled from the 2020 second quarter.
• General and administrative expenses improved to 10.5% of revenue compared to 21.2% of revenue from last year's second quarter, an improvement of $3.5 million.
• Adjusted EBITDA of $37.6 million more than doubled from the 2020 second quarter and adjusted EBITDA margin increased 590 basis points to 14.4%.
• The Company established a newly branded reporting segment - On-Demand Talent - to reflect the acquisition of Business Talent Group ("BTG") and entry into this high growth segment of the market.
• The Company renewed and expanded its credit facility to $200 million with an option to increase up to $275 million; same terms as previous credit facility, opening the balance sheet for future growth.

SECOND QUARTER 2021 FINANCIAL HIGHLIGHTS (SEQUENTIAL COMPARISON)

$ in millions except Diluted EPS

Consolidated Net Revenue

$260.0

$17.1

$193.7$18.7 $14.0

$224.1

$179.6

	1Q	2021		2Q 2021
	Exec. Search			On-Demand Talent		Heidrick Consulting

Adjusted Profitability*

Consultant Headcount

437434

6465

373369

1Q 2021		2Q 2021
Executive Search		Heidrick Consulting

Adjusted Net Income & EPS*

$31.9

$23.5

$37.6

$28.9

$22.9

$17.4

$1.14

$0.86

Adjusted Operating Income	Adjusted EBITDA
		1Q 2021		2Q 2021

Net Income		Diluted EPS
		1Q 2021		2Q 2021

• Refer to appendix for a reconciliation of non-GAAP measures.