Heidrick & Struggles International, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Hydric and Struggle's Q1 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would now 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 in Hydric & Struggle's 2021 First Quarter Conference Call. Joining me on today's call is our President and CEO, Krishnan Rajagopalan, and Chief Financial Officer, Mark Harris. We have posted our first quarter slides on the IR homepage of our website at hydric.com, and we encourage you to view them for additional context but we won't be referring to specific page numbers during our opening remarks. In our materials, we refer to non-GAAP financial measures that we believe provide additional insights into our underlying results. A reconciliation between GAAP and non-GAAP financial measures can be found in the release. 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. Christian, I'll now turn the call over to you.

Thank you, Suzanne. 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 in our business, which exceeded market expectations. While we're not done with COVID 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 or finding new ways to serve our clients and we continue 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're beginning to see the effects of our bolstered efforts in our strong financial and operating results, which Mark will take us through in a moment. Right now, I'll highlight a few first quarter growth metrics and achievements relative to the prior year period, much of which, of course, was pre-pandemic. 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 in healthcare and life sciences, industrial, financial services, and global technology and services. We also experienced positive trends in consumer markets as this practice rebounded and increased 38% sequentially. Across all industry groups, private equity activity remains robust. Hybrid 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 a 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 64 hydric consulting consultants. Overall, our strong first quarter performance combined with the strength of our brand, improving client sentiment, and our business momentum heading into the second quarter all serve to underscore my conviction that we are emerging from the pandemic a 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 Hydric to our clients, to help them accelerate their transformation using our integrated suite of offerings across Executive Search and Hydric Consulting. Our collaborative efforts and joint go-to-market strategy has resulted in attractive opportunities across multiple industries and regions with multi-year 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 serve as longer-term drivers for our business as we look ahead at a post-pandemic environment. Diversity, Equity, and Inclusion, or DE&I, continues to receive heightened attention across all of our practices and businesses. In particular, there is a strong focus reflected in rising numbers on placing diverse leaders into top executive roles. As organizations with 2020 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. In addition to increased demand at the board and CEO levels, we're also seeing increased activity across the C-suite, including the CFO, CHRO, and CIO and CTO levels. Executive assessments, succession planning, team acceleration, and more recently, organization design and transformation are other areas where we have seen a rise in demand. Given 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 in 2021. An increasing number of clients are also implementing our culture and inclusion solutions as they continue to navigate the challenges of leading teams in a virtual environment. Our clients are seeking our leadership assessment and development capabilities to better understand how to operate in a highly volatile and distributed working environment. Environmental, social, and governance, or ESG issues, are being addressed in 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 in 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, 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 among our employees and clients. This is an important milestone for us as we are the first in 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 of the secular trends I've taken you through play to hydric strength and current macro business and economic trends are supportive. Demand at the start of this year has outpaced our initial expectations, and our pipeline is strong. Against this backdrop, Hydric is well positioned not only to continue producing the strong results we have been generating, but also to optimize our positioning for the future. While we caution that the economic trends remain fluid, and we do expect our current growth rate to moderate, we are certainly on solid footing in making important strategic moves to drive our future success. We remain committed to driving strategic investments in diversification, innovation, data, and tech enablement to capitalize on even more growth opportunities in the future. One 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 the pioneer of high-end, on-demand, independent talent marketplace to the Hydric family. It is clear that clients want agility, 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 believe that on-demand talent will be core to their ability to compete in 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, Hydric is the first global leadership advisory firm to offer the full spectrum of executive and high-end talent solutions. From on-demand independent professionals who can lead critical, project-based initiatives, to interim executives, to permanent placements, alongside our consulting services. As we've seen, there isn't a one-size-fits-all approach to talent acquisition, and the combination of Hydric and BTG's capabilities creates a strong differentiated offering for the on-demand independent model with our clients. Among many advantages, three key themes emerge. First, BTG aligns with our firm's overall global account strategy and go-to-market approach and allows us to diversify and offer an expanded range of talent solutions. Second, Hydric serves as a tremendous growth engine for BTG's platform. And third, perhaps most importantly, 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 continue to build on our strategy as we seek to diversify and expand our capabilities and invest in new ideas. This involves broadening our service offerings across search and consulting while moving into adjacent and complementary areas with an increasingly tech-driven approach. We see technology as the backbone for our expanded service offerings, allowing us to deliver our solutions in a more rapid, automated, and scalable way. And in the coming quarters, we plan to make additional investments in both our technology solutions and new service offerings. All of this exciting news to date is just the beginning and perfectly reflects the long-term direction of Hydric. 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 Hydric 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 number three, investing in new product development and strategic expansion into adjacent and complementary areas with innovative tech-driven offerings to drive future growth and shareholder value. In closing, I'd like to thank our teams around the world, welcome our colleagues from BTG, and express how excited I am about all the opportunities we have ahead. With that, I'm gonna hand the call over to Mark to walk us through Hydric's very strong quarterly performance. Mark.