Q1 2021 Heidrick & Struggles International Inc Earnings Call
[music].
Okay.
And ladies and gentlemen, thank you for standing by and.
Welcome to Heidrick <unk> struggles Q1, 2021 and earnings conference call.
At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.
Ask a question during the session and you will need to press star one on your telephone keypad.
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And I would like to hand, the conference over to your speaker today, Suzanne Rosenberg Vice President of Investor Relations. Please go ahead.
Good afternoon, everyone and thank you for participating and Heidrick <unk> struggles 2021 and first quarter conference call. Joining me on today's call is our president and CEO Krishnan radical pollen and Chief Financial Officer, Mark Harris, and we have posted our first quarter slides on the IR homepage of our website and heidrick Dot com and we encourage you to view.
And for additional context, but we won't be referring to specific page numbers during our opening remarks and.
And our materials, we refer to non-GAAP financial measures that we believe provide additional insight into our underlying results a reconciliation between GAAP and non-GAAP financial measures can be found and the relief also in our remarks, we will be making forward looking statements and ask that you. Please refer to the safe Harbor language contained in our news release Krishnan.
Now I'll turn the call over to you.
Thank you Suzanne and good afternoon, everyone and thank you for joining us today.
I'm extremely pleased with our robust financial performance this quarter and the pace of recovery and our business, which exceeded market expectations.
We're not done with COVID-19, yet our momentum is strong and we're very excited about the opportunities that lie ahead.
Last year, we were very well positioned ahead of the pandemic, we never stopped innovating for finding new ways to serve our clients and we continued to diversify and expand our capabilities.
For example, our recently announced acquisition of BTG, which already has this year off to an exciting start.
Most important we are beginning to see the effects of our bolstered efforts and our strong financial and operating results, which mark will take us through and a moment.
Right now I'll highlight a few first quarter growth metrics and achievement relative to the prior year period.
Much of which of course was pre pandemic.
Yeah.
Record net revenues increased approximately 13%.
Operating margins returned to double digit levels.
And adjusted net income more than doubled.
Executive search delivered an excellent performance with a record breaking level of confirmations that steadily improved each month of the quarter.
And we experienced increases in each of our regions.
In terms of our verticals, we saw strong increases from a year ago, and healthcare and life Sciences, industrial and financial services and global technology and services.
We also experienced positive trends and consumer markets as this practice rebounded and increased 38% sequentially.
Across all industry groups private equity activity remains robust.
Heidrick consulting delivered a solid performance revenue was down slightly reflecting a large project included in the year ago results. However, confirmations were strong and the pipeline heading into Q2 is encouraging.
Our strong results reflect the dedication and tireless efforts of our team and the strength of our culture.
As we recently announced we remain committed to developing and promoting top talent from within and congratulated and new class of consultants, who have demonstrated a strong ability to drive business growth and deliver for our clients.
We also have seen very low turnover across the firm.
In addition, we've been hiring strategically and continue to attract new top talent to drive expansion into markets and practices, where we see compelling opportunities for growth.
As a result, we ended the first quarter with 373 search consultants and 60 for Heidrick consulting consultants.
Overall, our strong first quarter performance combined with the strength of our brand.
Proving client sentiment and our business momentum heading into the second quarter all serve to underscore my conviction that we are emerging from the pandemic even stronger company.
Our firm's focus remains on expanding client relationships based on our trusted advisor role to top leaders and teams.
We've demonstrated great success, bringing the full power of heidrick to our clients to help them accelerate their transformation using our integrated suite of offerings across executive search and.
And heidrick consulting.
Our collaborative efforts and joint go to market strategy has resulted and attractive opportunities across multiple industries and regions with multiyear large projects.
In addition over the past year, we saw a few key themes emerge and we believe that these will continue to gain strength and service longer term drivers for our business as we look ahead and a post pandemic environment.
Diversity equity and inclusion for day Eni continues to receive heightened attention across all of our practices and businesses and.
In particular, there is a strong focus reflected and rising numbers on placing diverse leaders and to top executive roles.
As organizations for 'twenty, and 'twenty behind them and charge forward our search teams across the board are engaged with their clients at the top of the organizations, we work with to address pent up demand and.
In addition to increased demand at the board and CEO levels. We're also seeing increased activity across the C suite, including the CFO.
<unk> and CIO and CTO levels.
Executive assessment succession planning team acceleration and more recently organization design and transformation.
And our other areas, where we have seen a rise in demand.
And the unprecedented events over the past year. It is no surprise organizations are focused on driving change and learning new strategies for operating in an agile environment with people transformation and culture at the top of their agendas and 2021.
And increasing number of clients are also implementing our culture and inclusion solutions as they continue to navigate the challenges of leading teams and a virtual environment.
Clients for seeking our leadership assessment and development capabilities to better understand how to operate and a highly volatile and distributed work environment.
Environmental social and governance or ESG issues are being addressed and boardrooms and organizations around the world as leaders assess how these areas will influence their future business opportunities stakeholder strategies and long term success.
With the growing focus on ESG and sustainability, we're seeing more demand for our services and both search and consulting.
Also as you may have seen we are proud to have recently launched our firm's inaugural ESG report highlighting the work we have been doing within the firm and with our clients on ESG initiatives.
In tandem with this report and we announced a new partnership with Indigo AG.
As part of our collaboration with Indigo AG, we will begin to address how to offset our firm's carbon emissions and raise the profile of environmental sustainability and among our employees and clients.
This is an important milestone for us as we are the first and our industry to issue a comprehensive ESG report, providing an in depth look into our sustainability efforts, while also outlining a commitment to offset our carbon impact.
All other secular trends I've taken you through play to heidrick strength and current macro business and economic trends are supported day.
Demand at the start of this year has outpaced our initial expectations and our pipeline and strong.
Against this backdrop heidrick is well positioned not only to continue producing strong results, we have been generating but also to optimize our positioning for the future.
While we cautioned that the economic trends remain fluid and we do expect our current growth rate to moderate we are.
Certainly on solid footing, and making important strategic moves to drive our future success.
We remain committed to driving strategic investments and diversification innovation data and tech enablement to capitalize on even more growth opportunities and the future.
An important example of this journey is our recent acquisition of BTG.
After two years of a very successful exclusive partnership we are thrilled to welcome BTG and the pioneer of high and on demand independent talent marketplace to the Heidrick family.
It is clear that clients want to <unk>.
Flexibility and speed along with the right talent and the right solution.
And they want it now.
A recent study highlighted that almost 90% of corporate leaders believed and on demand talent will be core to their ability to compete and the future.
The seismic changes over the past year have only accelerated the future of work and underscored the importance of agile leaders.
And Workforces as companies look to close critical leadership gaps and as professionals seek to work differently.
With this acquisition Heidrick as the first global leadership advisory firm to offer the full spectrum of executive and high and talent solutions.
From on demand independent professionals, who can lead critical project based initiatives.
And the interim executive to permanent placements.
Along side, our consulting services.
As we've seen there isn't a one size fits all approach to talent acquisition and the combination of heidrick and btg's capabilities creates a strong differentiated offering for the <unk>.
And demand independent model with our clients.
Many advantages three key themes emerge.
First BTG aligns with our firm's overall global accounts strategy and go to market approach and allows us to diversify and offer an expanded range of talent solutions.
Second Heidrick serves as a tremendous growth engine for bvd platform.
And third perhaps most importantly, there.
And there is a clear culture fit with BTG, having already been embraced by our organization over the past few years.
In addition to BTG, we continued to build on our strategy as we seek to diversify and expand our capabilities and invest and new ideas.
This involves broadening our service offerings across search and consulting while moving into adjacent and complementary areas with an increasingly driven approach.
We see technology is the backbone for our expanded service offerings, allowing us to deliver our solutions and a more rapid automated and scalable way.
And in the coming quarters, we plan to make additional investments in both for technology solutions and new service offerings.
All of this exciting news to date is just the beginning and perfectly reflects for long term direction of heidrick and we.
We remain focused on executing our three growth initiatives, which include number one.
Growing the scale and impact of both search and consulting delivering a premium service experience and the heidrick way to clients.
Number two expanding the development of leadership solutions and capabilities to address new and ongoing client imperatives, such as on demand talent and.
And number three investing in new product development and strategic expansion into adjacent and complementary areas with innovative tectum and offerings to drive future growth and shareholder value.
In closing I'd like to thank our teams around the world.
And welcome our colleagues from BTG and express how excited I am about all the opportunities we have ahead.
With that I'm going to hand, the call over to Mark to walk us through Heidrick is very strong quarterly performance Mark.
Thank you Christian and good afternoon, everyone. Thank you for joining our call today.
As Christopher mentioned and by all accounts. This was an outstanding first quarter for our company with record breaking results.
Net revenue and the first quarter market double digit improvement both sequentially and year over year, driven by broad based strength across all regions and nearly all practices.
This record growth coupled with operational savings resulted and returned to double digit operating margins with significant improvements and bottom line profitability.
While COVID-19 still presents many challenges for our business clearly our performance exceeded our own expectations to the continued hard work of our great Heidrick team.
When discussing our first quarter results I will focus on year over year comparisons as the first quarter of 2020 was predominantly a pre pandemic and this is a good comparison for us given the seasonality, we usually experienced and our business.
With that I'm pleased to report record net revenue of $193 7 million, which was $12, 9% above the $171 $5 million reported and the first quarter of 2020, which was also a near record quarter of its own.
On a constant currency basis, our net revenue increased 10, 2%.
Provide some details for you on how this was achieved.
Turning to executive search and we delivered a record breaking performance and the first quarter with net revenue of $179 $6 million.
Up $24.2 million or.
For 15, 5% on a constant currency basis, net revenue increased $19 9 million or 12, 8%.
We experienced growth in all regions with the Americas up 16, 2% or 16, 5% on a constant currency basis.
Europe, increasing 13, 8% are for 8% on a constant currency basis, with particular strength and Germany, Italy, the UK and France and in Asia Pacific, We saw growth of 15, 4% or eight 2% on a constant currency basis with strong performance and Korea, China, Hong Kong and India.
This growth is reflected in our company's new confirmation record, which increased 21, 4% to nearly 600 confirmations compared to the <unk> hundred and the same period a year ago.
We believe much of the strength and the market reflects suppressed demand from the COVID-19 Lockdowns, a reassessment of talent by our clients after navigating through such an impactful event.
As well as an increased number of candidates looking for new opportunities post pandemic.
And to Heidrick consulting net revenue was $14 million, which was down compared to the $16 million last year due to a large consulting engagement included in last year's results and the impact of COVID-19 on the team's ability to conduct consulting engagements in person today.
The headwinds they had to contend with heidrick consulting and net revenue was ahead of our expectations. As we saw confirmation increased 17, 5%, giving us a strong pipeline as we entered the second quarter, which we were very pleased with.
Turning to expenses, we saw salary and employee benefits increase with fixed compensation, increasing modestly by $2 million and variable compensation and increasing by $21 million, primarily due to the record revenue performance and the quarter.
Salary and benefits as a percentage of revenue was 73% compared to 76% and 2000, twenty's first quarter and compared to 75% and the 2024th quarter.
This increase was due to the revenue outperformance, which will unlock bonus tiers earlier and the year than usual, but we believe our annual rate will remain intact.
General and administrative expenses improved year over year by 10, 6% to $28 $8 million.
Primarily due to office occupancy savings travel and entertainment reductions and partially offset by increases in professional services bad debt and use of external third party consultants.
As a percentage of net revenue general and administrative expenses were 14, 9% compared to 18, 8% and the 2021st quarter, a 390 basis point improvement.
While we're very pleased to see G&A move downs under 15% for <unk>.
Expectations would be that we would see a return to a more normalized annual rate of approximately 18%, which is much lower than the historical rate of 23% or 19, 5% annual rate and we had in 2020.
As previously discussed we recorded a restructuring charge of $3 9 million and the first quarter.
Due to our real estate strategy.
This charge is accounting related due to the specific timing of office closings moving.
Moving forward, we do expect additional restructuring charges pertaining to real estate and the second quarter of approximately $3 million to $4 million and then the third quarter of approximately $1 million.
Excluding the restructuring charge I just discussed we're very pleased to report that our adjusted operating income and the first quarter of 2021 was $23 $5 million for a 29, 1% increase from the $18 2 million and the first quarter of 2020.
Further adjusted operating margin expanded 150 basis points to 12, 1% from 10, 6% driven by record revenue performance and the quarter and the G&A reductions discussed.
This translated to adjusted EBITDA of $28 9 million and adjusted EBITDA margin of 14, 9%, which was 110 basis points up from last year's first quarter.
Our adjusted net income and the first quarter of 2021 of $17 $4 million more than doubled from $8 7 million and the 2021st quarter.
And the adjusted diluted earnings per share of <unk> 86 cents nearly doubled from 44 and last year's first quarter.
Now, let me turn to our balance sheet.
We ended the first quarter with cash and cash equivalents of $184 1 million.
Compared to a 151.0 million at March 31, 2020 after adjusting for the outstanding facility, we had at the time, allowing us to finish the 2020, one first quarter with cash and cash equivalents $33 1 million or 21, 9% over the same period last year.
As a reminder, and March of last year.
We proactively drew down $100 million of our $175 million unsecured revolving credit facility, but this was subsequently repaid in September of 2020.
Given our performance and the first quarter, our board of directors approved and we announced that we will pay a <unk> 15 per share cash dividend in may for all shareholders of record on May seven.
Before I turn to the expectation for the second quarter I'd, just like to reiterate how pleased we are with the acquisition of BTG, which closed on April one.
As you can see and today's press release, we acquired BTG for an initial consideration of $32 6 million.
Which was paid and the second quarter of this year and with and anticipated future payment in 2023 subject to achievement of certain agreed upon financial performance targets.
For your reference BTG generated revenue of approximately $50 million and 2020.
And from an EBIT perspective, theres minimal impact until we grow the business, which you'll see and our segment reporting beginning in the second quarter.
For your reference the on demand market is a rapidly developing high growth industry that the market values strongly given the expectations around the potential levels of EBITDA when they hit maturity inflection point.
We believe we can catapult door growth with Heidrick, <unk> global scale and account platform.
Finally, we are equally excited that BTG provides us with another avenue of diversification and a revenue stream along with Heidrick consulting.
Now, let me turn to the second quarter outlook.
And given the strong performance, we are seeing and our markets and looking at our models. We believe our second quarter revenue will be and a range of $215 million to $225 million.
Of course, this can change materially if we see other spikes and COVID-19 within the countries we operate.
And how those respective governments choose to respond or if the government and not take necessary steps and stimulus as well as other macro events or acute business events that are unforeseen of heidrick at this time.
In summary, we delivered truly outstanding quarter and have every intention of continuing our growth trajectory.
We will maintain discipline with regard to our balance sheet investments for future growth and as always continue to be cost conscience.
With that we'd be happy to take your questions operator over to you.
Thank you and as a reminder, and I wanted to ask a question you will need to press star one on your telephone keypad if.
If you wish to withdraw a question simply press the pound key.
Our first question will come from Josh Vogel of Sidoti and company. Please go ahead.
Thank you good evening guys. Thanks for taking my questions.
First question.
Very very impressive results here.
And I get you.
And we're more than half way through the quarter when you issued Q1 guidance.
He came in I think it was like 14% above the high end of your range and clearly is showing up and your Q2 guidance, but what and where specifically drove the delta between what you were seeing on February 22nd versus the rest of the quarter.
Hey, Josh it's mark Thanks for the question, so here's kind of what we saw we started to see ourselves.
And ramp up in terms of the amount of engagements that were coming into the quarter.
What I would tell you is that the month of March was and absolutely robust month and <unk>.
Terms of what we saw the amount of engagements that kind of same through.
Not just beyond anything we could have expected it was beyond any months and.
We had ever seen and the history of our firm that just was not expected. So we saw that kind of come in we saw our average engagements in terms of the average tenors were very strong as well and maintain their strength, even more so into March and that was all.
Always the more difficult one to predict is the uptick and that.
Obviously came in very strong as well so.
Fulfill an overused phrase, but it really was kind of a perfect storm of those three really coming together.
At the end of the quarter and last month for the quarter and that impacted two things, one and absolutely changed and moves obviously in terms of the guidance we gave and.
And what we accomplished and it but as you can tell by Q2, because a lot of that March is going to be recognized through our backlog into the second quarter, you're really seeing it come through there.
Right great. Thanks for the insights there.
Had a question around consultant productivity.
Obviously.
Given the strong revenue performance, but near an all time high does that mean that the 373 consultants are at or near capacity and can you just talk about plans for head count additions over the balance and share outside of recent promotions.
Yes, Josh it's Krishnan and thank you.
Look I think those productivity numbers are heady numbers number one so let me acknowledge that.
And everybody is very very busy.
We are also completing searches faster.
So that's another part of the equation that didn't change and before but we're noticing that with our tech platform and how people are working as well.
And we plan on adding head count I mean, we're strategically continuing to hire into market. So.
And that's what I would say and and we've got people starting and have already started in April and.
And our head count so.
There is an opportunity to continue to grow but I think those are.
I think I would say that people are very busy right now and those are very high productivity numbers that we that we hope to try to maintain.
Okay. Okay. Thank you and a couple of quick ones on T. G.
Very interesting deal I think its great fit for you.
And if I inferred, what youre, saying correctly, mark youre going to be breaking that out as its own segment.
For <unk> for reporting purposes, starting in Q2.
Correct.
Because it's on demand and it is very different for heidrick consulting and different <unk>.
<unk> search yet, obviously pretty adjacent but we believe for our Investor base, we want to break that out separately for you.
Sure, Okay and can you just give.
Directional commentary just what the margin profile was on that business.
In 2020 and then.
Also when we think about the balance of this year and.
And the $50 million that they did in 2021 is there any seasonality to the business and can you maybe give us a sense of what was built into your guidance for Q2 knowing that.
Participating in for full quarter.
Yes, I mean, so we want to get away from segmental guidance. If you will Josh I think the way to do it is as I mentioned, they did about $50 million last year, you can break that out on a quarterly basis and youre going to be in the ballpark. Obviously, we expect some growth as we would and a high growth area.
In terms of the margin my comment would be it's just not meaningful margin negative nor positive so.
And so it's very much near breakeven as you would expect and that sense and would maintain that because it is and a high growth market like you see with others in that space, even though they play further downstream.
It's a business that you want to continue to make your reinvestment and as such and early point of its development and we expect the same so I don't want to kind of get into margin expectations until it really hits debt maturity inflection point.
Totally understand and congrats rise.
I'll just for less.
And just last question and is there any other restructurings or one time.
Items that we should expect to hit up in Q2, or even later quarters and.
And sort of drag for.
Integration related costs related to BTG.
No so.
Johnny gave and my script there'll be a restructuring charge in Q2 between three and $4 million and in Q3 of about $1 million that really pertains to the real estate stuff. We started it back in Q3 last year, so nothing related to BTG on that sense, the synergy side of it.
It's a smaller business obviously will.
<unk> be looking at synergies with them and see what makes sense and what doesn't but right now I think what's really is to do no harm as the internal way that we're seeing at that is to have them really go on their own. They are very different business. It's not like it can be leveraged with executive search per se and <unk>.
<unk>.
How they are doing and how they need to attack the market. So I wouldn't expect a lot there and.
And then again as they grow the business as we hit maturity inflection points I think thats really when you start looking at the business and saying, Okay now might be a good time debt to turn to that.
A long way down the road because of the growth for the business that they have in front of them.
Alright.
Thanks for taking my questions and again really impressive results.
Appreciate that.
Our next question will come from.
Kevin Steinke Barrington Research. Please go ahead.
Hey, good afternoon.
I wanted to follow up on the discussion about BTG.
If you can just give us a sense.
As to.
How the relationship between BTG and Heidrick.
Blossomed over the last couple of years and how debt.
And we benefited their ability to grow.
And kind of the synergies that you were able to build and that you see going forward between those two businesses.
Yes, Kevin Thank you.
Look we this has been a great relationship we started as an exclusive partnership.
With them a little over two years ago and.
We dedicated resources to make and that relationship work and and.
And BTG.
BTG did as well.
And and over time.
And there's so many projects that popped up across the radar screen joint projects that we were able to work on together.
Recognize that heidrick.
And on that journey could be a really important part of helping BTG grow as well and with so many go to market synergies with our clients.
We saw that so that's been the <unk>.
Great part of this relationship and as I mentioned in my opening.
A real chance to test out the culture, the values and and.
And see what the alignment we like so we've been really pleased.
And with all of that that's what makes US excited about this deal as well.
Okay, Great can you maybe give us a sense as to how.
And <unk> business performed.
During the downturn of the last few quarters or in 2020 I mean.
Was there something for the for their business model is that there was maybe a little more resilient or just any comments on how they performed last year, specifically, yes, let me just at a high level I mean look we were incredibly impressed with their hub for.
Performance.
During COVID-19 I mean.
This was the kind of.
Market offering to clients, we're looking at and looking for they wanted it.
Fast they wanted right there and then and BTG was there so their business model held up really well and and Mark maybe you could add.
More to that but we were very pleased to see that very resilient and through that downturn.
Yes, correct with net debt was really kind of the attraction side, a and it's like nothing is really counter cyclical, but and it is absolutely less cyclical than you normally would see in executive search business. Their business was impacted single digit low single digits in terms of the COVID-19 impact as you can imagine when and when you turn on economy off and everybody gets kind of.
Rental and that one so.
That really was a very very pleasant.
For us not to their company they understood that it was going to play out and it did a great job forecasting and so.
And it was one of the attractions for our diversification strategy and.
Kevin, which you know we've been.
And quite hard and trying to figure out.
The proper way to do it to ensuring that we still have a product suite that is still very much appealing to at the top for replay so.
It's definitely less cyclical than what we see typically and our business.
Okay. That's helpful.
So with the.
Month to month confirmation and growth in the first quarter and the executive search side and you mentioned the.
And kind of a perfect storm the great month of March that you had I don't know if theres any way for you to pinpoint kind of how much you would it should.
Debt to pent up demand.
Just coming back in terms of searches that were may be put on hold or delayed.
Obviously, you said you didn't expect this type of growth.
Continue that would be.
Pretty lofty, but just trying to get a sense for how the overall market feels and.
Going forward and how much like I said do you think is pent up demand coming back here.
Sure.
So I mean, obviously the first answer is it's hard to unscramble scrambled eggs and I can tell you from the on hold.
Is it isn't as relevant in terms of what we saw kind of come through because that would be able to be some predictive analytics right. What we know is a lot of the COVID-19 searches that went on hold came off they came off actually more in Q3 Q4 than in Q1 and.
So we had a pretty good line of sight on that it really is new engagements.
Came through non on hold reversals and.
And the reason I think it caught many of us off guard in the industry and certainly our side of it.
It's just the ferociousness of it so what I comment is we were expecting that more towards the second half of this year versus the first half of this year.
And now to your question how much of that is pent up demand from people, putting things on hold and just generally versus you know.
And what we're seeing and my answer is I think Theres a couple of things right systemically first we thought and all three regions right. So it wasn't just and Americas issue, we saw that and Americas and Europe, We sought and Asia Pacific. So we know globally. It was kind of a global demand curve shift then the second element to it is.
I think there's new roles new ways of looking at the market going forward, new norm as people refer to it out. So I think there was kind of recasting and repositioning themselves for that and I think the other area was.
And kind of when the tide goes out right you can kind of see what's underneath it and I think there was some upgrade opportunities that some companies have also decided.
To double click down on so I can't give you a percentage of how much is one over the other we'd have to go back by each of the respective engagements and almost categorize them, which we don't do like that so we just know generally thats kind of whats happening and I guess to.
And so the question of trend, while obviously, where we saw kind of come through and you can see it and the guidance that I gave you were expecting Q2 to be somewhat similar I think it will abate a little bit. So I don't think it will be as <unk>.
Continuous front and the month of March into April May June and the <unk>.
For the summer months, we'll have better insights from our current with our Q2 earnings how we think thats going to plan and I really don't know yet, but as we get closer hopes up some better vision for Ya.
And I'd just add that the current month feels quite healthy to us.
So.
It doesn't feel maybe record level the way Mark.
Which may have been but quite healthy.
Okay, Great. That's all very helpful commentary there I appreciate it.
Hump back in the queue and thanks for taking the questions.
Our next question will come from Tobey Sommer of Truth Securities. Please go ahead.
Thanks, and what does it start out to buy.
Asking your opinion of how you think of this.
Cycle and expansion.
Do you consider it and you're hearing from customers and it's sort of a reset of and economic cycle. Because it was very violence and happened very quickly, but it was kind of brief and condensed.
Or is this and extension of the prior extent.
Expansion sort of.
How are you thinking about it in terms of the potential duration. Thanks.
Yes, I don't know if I can answer your duration question I think about it as a as a reset and some and at how people are doing work the things that they're focused on the driving of digital transfer formation.
And.
The amount of dollars on the sidelines and for private equity and how they want to leverage that to be able to drive business growth. These are all the factors that are creating is so so some of that is reset some of that is stuff that was there before and people are worried about cycles, ending maybe and just sitting on the sidelines fill but.
So and that's why I draw the line to say it and people are looking ahead, right now and saying.
How we're going to work at a different as well and the opportunities that have been created as a result of this look different and let's go so thats whats happening.
And how do you look at your what's your intention to deploy capital and manage the balance sheet.
You've got <unk>.
Surging demand and the core business, you've done a little bit but could you have here recently, but could you clueless and to sort of the multi year view on how you would like to not only deploy cash, but but thresholds that you would like to manage the balance sheet too.
Sure, let me try and take that one on something.
And so obviously look we're sensitive to our balance sheet, our capital structure, we're always evaluating what we want to do with it et cetera, I think the way that we looked at and we finished.
In terms of our cash position and strong.
Clearly the Q1 cash position doesn't have the transaction price that we just did it for $32 6 million for BTG. So you had a pro forma that out with our current pipeline.
In terms of potential M&A partnerships etcetera is still very strong and robust I think it's on.
And accelerated curve in that sense that we're continuing to look more aggressively.
At those as we pivot into our.
Strategic journey that we started last year, even a little bit the year before that so unfortunately valuations still aren't cooperating as you can imagine when you look at the Dow and the S&P.
There is still pretty high valuations, but nonetheless, our view is that we will have to use some of that cash for our strategic sense, It's where we think the good growth rate is and to the extent.
We have the discretionary cash that we don't need then I think that's what we'll start looking at R.
Our capital options as you can imagine stock buyback dividends and onetime dividends and all sorts of ideas around the table, but we think pretty strongly that it's going to be capital, we want to use and we want to deploy for our growth strategy.
Let me, let me just add to and I think.
And we've become a bit more sophisticated and how we.
We think about the markets as well, we kind of think theres, an ecosystem out there and there are opportunities to learn and partners as well so it isn't all just.
Pure acquisition play, there's partnership opportunities and some of which require capital as well by the way so.
Our lenses broadened and we thought that was a positive experience with BTG and what we learned through our partnership that we did with <unk>.
Thank you that's helpful and.
What are you hearing from clients about what's driving turnover and executive search any any feeling you have for <unk>.
Demographic changes would be helpful.
Yes, so look I think there are some underlying.
Teams that are out there.
Alluded to them and the.
And our comments earlier.
There was a lot of there is some.
C suite pent up demand I would say.
From from last year for individuals to want to change roles, who are planning on changing roles maybe looking at the next five years of their career and COVID-19 Delta a bit of a reset I think great leaders. They wanted to stay with their teams and.
And now they sort of solidified and some of those teams and ready to move on so on and individual level you have that trend line and that's out there and you've got businesses that are transforming as well and that mismatch between do I want to be here to transform the business are not creates opportunities.
Opportunities and and.
The executive search clearly day.
<unk> is a huge theme that's out there as well and.
So we see.
A lot of mandates out there, particularly at the board level and others relate.
Related to.
Debt that topic.
So that creates some demand as well. So these are all the things that we're seeing that our fuel.
Fueling.
The executive search market.
Thank you.
And if there are any additional questions at this time simply press star one on your telephone keypad just as a reminder, if you happen to want to withdraw question if the pound key.
And we have no further questions. So I'll turn the call back over to Krishnan for closing remarks.
Okay.
Thank you for joining us on the call today I'd like to close by saying Thank you to our global team for all your hard work and I would be remiss if I didn't also acknowledge.
That COVID-19 is a long battle and it continues to be a battle that's fought around the world and I mean, particularly in countries like India, and Brazil, where it still surging.
Together our teams are working through this very difficult situation, we're doing everything we can to support our colleagues and clients here and there.
Those areas and markets as well.
We continue to forge ahead and remain excited about the good work and the opportunities in front of US we look forward to working closely with BTG as we continue to execute on our growth initiatives. Thanks, again, and we'll speak with you soon.
This concludes today's conference call. Thank you for joining you may now disconnect.
Total revenue.
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