UPDATE 3-Heidrick & Struggles Q1 profit misses Street; shrs fall
* Q1 adj EPS $0.02 vs. est $0.15
* Sees Q2 rev $117 mln-$123 mln
* Shares down as much as 16 pct (Adds conference call details, analyst comments; updates share movement)
BANGALORE, April 27 (Reuters) - Heidrick & Struggles International Inc (HSII.O) posted a lower-than-expected adjusted quarterly profit, hurt by higher operating expenses, sending the executive recruiter's shares down as much as 16 percent.
Operating expenses in the first quarter included higher salaries and employee benefits, and general expenses as the company reinstated several initiatives like training and business development.
Macquarie Securities analyst Kevin McVeigh expects 2010 results to be impacted by these higher costs, as well as some unexpected occupancy charges the company incurred during the quarter, among other things.
Demand for executive searches and talent consulting services had been declining since the beginning of the economic slowdown, which forced many employers to cut jobs and others to hire fewer workers.
Heidrick & Struggles, which is one of the two publicly traded executive search firms in the United States, cut its operating margin outlook to 3 to 5 percent, from previous expectations of 4 to 6 percent for 2010, but backed its full-year revenue forecast of $440 million and $480 million.
Second-quarter revenue is expected to range between $117 million and $123 million, compared with analysts' expectations of $113.9 million, according to Thomson Reuters I/B/E/S.
"Fundamentals are very encouraging but there continues to be company-specific misexecution issues that is negatively impacting their margins," McVeigh said, adding that the company would focus on these issues in 2010.
Financial services, which was the main contributor to revenue in the first quarter, and leadership consulting will see continued strong growth in 2010, the company said on a conference call with analysts.
FIRST QUARTER RESULTS
Heidrick & Struggles, which competes with companies such as Korn/Ferry International (KFY.N), posted a first-quarter loss of $1.8 million, or 10 cents a share, compared with a loss of $18.9 million, or $1.15 a share, a year earlier.
Excluding certain items, earnings were 2 cents a share, compared with analysts' expectations of 15 cents a share, according to Thomson Reuters I/B/E/S.
Revenue, excluding reimbursements, rose 28 percent to $113.7 million.
Shares of the company were down 9 percent at $27.51 Tuesday afternoon on Nasdaq. They touched a low of $25.32 earlier in the session. (Reporting by Amulya Nagaraj in Bangalore; Editing by Maju Samuel)
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