February 23, 2010 / 12:35 PM / in 8 years

UPDATE 2-Heidrick & Struggles sees Q1 rev above Street

* Q4 adj EPS $0.58 vs est. $0.35

* Restoring base pay, 401(k) contribution

* Shares down 3 pct after rising 8 pct (Adds conference call details, analyst comments; updates share movement)

BANGALORE, Feb 23 (Reuters) - Executive recruiter Heidrick & Struggles International Inc (HSII.O) posted a better-than-expected quarterly profit, helped by a rise in the number of search confirmations, and forecast first-quarter revenue above market expectations.

The company, which is anticipating more significant contributions from financial services and leadership consulting in 2010, said it is restoring the 5 percent base pay cut and 401(k) contributions, which had been suspended in 2009.

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, forecast first-quarter revenue of $110 million to $117 million. Analysts were expecting revenue of $103.5 million, according to Thomson Reuters I/B/E/S.

For 2010, the company forecast revenue of $440 million to $480 million, above analysts’ expectations of $439.2 million.

However, SunTrust Robinson Humphrey analyst Tobey Sommer believes the guidance, which suggested very little sequential revenue improvement from the first quarter 2010 level, is conservative.

“Revenue has improved every month for the last six or seven months, but their guidance doesn’t assume any more improvement,” he said.

    Shares of the company, which rose as much as 8 percent to $31.38 in early morning trade Tuesday, were down 75 cents at $28.34 on Nasdaq.


    For the fourth quarter, the company, which competes with companies such as Korn/Ferry International (KFY.N), posted net income of $9.4 million, or 52 cents a share, compared with $5.3 million, or 30 cents a share, a year ago.

    Excluding items, the company earned 58 cents, above analysts’ estimates of 35 cents a share, according to Thomson Reuters I/B/E/S.

    Tax rate for the current quarter was 11.4 percent, much lower than the year-ago 27.9 percent.

    Net revenue fell 19 percent to $109.9 million. Analysts were expecting revenue of $105.8 million.

    The number of executive search confirmations in the quarter increased 7.1 percent. (Reporting by Amulya Nagaraj and A.Ananthalakshmi in Bangalore; Editing by Maju Samuel)

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