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Executives

Julie Creed - Vice President of Investor Relations and Director of Workplace Strategies

L. Kevin Kelly - Chief Executive Officer, President and Director

Richard W. Pehlke - Chief Financial Officer and Executive Vice President

Analysts

Kevin D. McVeigh - Macquarie Research

Frank Atkins - SunTrust Robinson Humphrey, Inc., Research Division

Anjaneya Singh

Stephen Sheldon

Kevin M. Steinke - Barrington Research Associates, Inc., Research Division

Heidrick & Struggles International (HSII) Q4 2012 Earnings Call February 26, 2013 10:00 AM ET

Operator

Good morning, ladies and gentlemen. This is Heidrick & Struggles Fourth Quarter 2012 Conference Call. Just a reminder, this program is being recorded. It may not be reproduced or retransmitted without the company's consent. [Operator Instructions] Now I would like to turn the conference over to Ms. Julie Creed, Vice President of Investor Relations and Real Estate. Please go ahead, ma'am.

Julie Creed

Good morning, everyone, and thank you for participating in Heidrick & Struggles Fourth Quarter 2012 Conference Call.

Joining me on the call today are Kevin Kelly, Chief Executive Officer; and Rich Pehlke, our Chief Financial Officer. As a reminder, we'll be referring to supporting slides that are available on our website at heidrick.com. We encourage you to follow along or print them.

In today's call, we'll be using the terms operating income and operating margin, excluding impairment charges. These are non-GAAP financial measures that we believe better explain some of our results. A reconciliation between GAAP and the non-GAAP financial measures can be found at the end of our press release and on Slide 50 in our supporting slides. We'll be making forward-looking statements on today's call and ask that you please refer to the Safe Harbor language contained in our news release and on Slide 1 of our presentation. The slide number that we'll be referring to are shown in the bottom right-hand corner of each slide.

And now I'll turn the call over to you, Kevin. Please start on Slide 2.

L. Kevin Kelly

Thanks, Julie. Good morning, and thank you for joining today's call.

I'll start today's call with a review of our 2012 results. Then Rich will go into some additional details on the financial performance and outlook for 2013. And I'll conclude with an overview of our priorities and how we are positioning Heidrick & Struggles to take advantage of today's marketplace.

I'd summarize 2012 by saying that it was an extremely challenging year, but one that ended on a very positive note with our acquisition of Senn Delaney, which we will believe -- we believe will be an integral part of our future. We are pleased that 2012 is behind us and have a lot to look forward to in 2013, but more on that later.

It is hard to quantify the impact that globally weak economic conditions had on our 2012 results, but one thing is clear, the lack of confidence among senior executives around the world about the future affects decisions about investments and expansion. This has created strong headwinds for our business. More precisely, it created a volume issue that persisted throughout the year. Fewer executive search confirmations and leadership consulting assignments led to lower revenue.

Slide 3 shows that executive search confirmations, which account for more than 90% of our revenue, were down 16% compared to 2011.

Turn to Slide 4 and you'll see that 2012 net revenue of $444 million was also down 16% year-over-year.

As you'll see on Slides 5 through 7, the revenue trends were similar across each of our regions' industry practices and in Leadership Consulting. We also had fewer consultants completing searches and consulting assignments in 2012. We had an average of 342 consultants in 2012 compared to 376 in 2011. And we ended the year, as you'll see on Slide 8, with 331 consultants.

Slide 9 shows consultant productivity or revenue divided by the average number of consultants in the year. It was $1.3 million in 2012 compared to $1.4 million in 2011.

Offsetting lower confirmations, headcount and productivity was an increase in the average fee per executive search.

Turning to Slide 10, revenue per search confirmation was $113,700 compared to $112,900 in 2011. This reinforces Heidrick & Struggles' historical strength of working at the top of client organizations, which we view as a distinct competitive advantage, and the importance of continuing to build and strengthen our C-suite and Board level relationships.

While revenue did not meet our expectations, we are pleased with the improvements we made to our cost structure and the positive impact these actions have had on operating profitability. Despite the 16% decline in net revenue, you'll see on Slides 11 and 12 that we achieved an operating income of $19.6 million and an operating margin of 4.4%. Excluding restructuring charges of $800,000 and $1.7 million of cost related to our acquisition of Senn Delaney, which we believe provides a better picture of our true operating profitability, operating income was $22.2 million and our operating margin was 5%.

I'd like to point out that the Americas achieved an operating margin of 24.2%, the highest since 1999, when Heidrick & Struggles went public.

We ended 2012 with the acquisition of Senn Delaney, the undisputed global leader of corporate culture shaping. Culture ranks high in the list of priority among executives around the globe, making it a natural complement to our Executive Search and Leadership Consulting offerings. This acquisition is a significant milestone in our strategy to build a premier professional services firm focused on serving the leadership talent needs of the world's top organizations.

I think many of you know that Heidrick & Struggles holds the unique position of being the only leadership talent firm to be a strategic partner of the World Economic Forum. This status provides us the opportunity to interact with leaders of some of the world's most respected organizations, including many of our clients.

During this year's conference in Davos, we were pleasantly surprised to the extent at which our conversations with clients and prospects focused on the need to align culture with a company's long-term objectives. These conversations further affirmed our belief that culture shaping is a natural extension of our executive search and leadership consulting capabilities, and that Senn Delaney will be a positive contributor to our future growth.

And at this point, I'm going to turn the call over to Rich.

Richard W. Pehlke

Thanks, Kevin, and good morning, everyone.

If you turn to Slides 14 and 15, I'd like to provide some details on our 2012 operating expenses. Salaries and employee benefits expense of $309.5 million in 2012 declined $62.9 million or 17% from the levels in 2011. Variable compensation accounted for $31.8 million of the decline, reflecting lower bonus accruals related to lower net revenue levels. And fixed compensation expense accounted for $31.1 million of the year-over-year decline, primarily reflecting the reduction in worldwide employee headcount of approximately 4% compared to last year.

On Slide 16, general and administrative expenses declined year-over-year by $9.8 million or 8% to $113.8 million. This decline reflects the expense reductions in a number of areas, but the 2 largest were declines in travel and entertainment expense and premise-related costs.

On Slide 17, you'll see that we lowered our rent expense by $4.6 million in 2012 to $28.1 million. In 4 years, we have reduced our occupancy costs by $12.5 million. G&A expenses in 2012 included $2.5 million related to the Global Partners Meeting that we held in July and $1.7 million related to expenses associated with our acquisition of Senn Delaney in the fourth quarter. Excluding those 2 items, G&A expenses would have declined $14 million or about 11%.

The improvements we've made to our cost structure over the last 16 months have gone a long way toward mitigating the impact that a volatile revenue environment has on our operating margin. But we know there is more work to be done. We continue to focus on process improvement to both gain efficiencies and achieve additional savings.

Moving to Slides 18 and 19, 2012 net income was $6.2 million and diluted earnings per share were $0.34. The effective tax rate for the year was 69.2%. About 20% of this rate is a result of our inability to recognize current tax benefits on losses because of valuation allowances in more than a dozen countries.

Certain other items that cause the effective tax rate to go up have absolutely no impact on our cash tax rate. As a reminder, we anticipate paying taxes at a significantly lower rate than the reported effective tax rate.

Please turn to Slide 20. Our cash position remains strong. Cash and cash equivalents at December 31 were $117.6 million, which reflected the $60 million of payments related to our acquisition of Senn Delaney. On January 31, we added $40 million in cash in the form of a 5-year term loan facility to refinance a portion of the acquisition. Those of you who are familiar with our business know that our cash position typically builds throughout the year as we accrue for cash bonus payments, which are paid out in the following year. In March and April, we expect to pay approximately $77 million in variable compensation related to 2012 performance. We will also pay approximately $10 million related to the portion of bonuses that were deferred in 2009, 2010 and 2011. If you refer to the cash roadmap on Slide 20, you'll see that we expect to be in a strong cash position after all the bonuses are paid.

Economic conditions around the world will continue to impact our business in 2013. GDP is expected to grow at just 1.4% in the U.S.; just under 1% in the U.K.; 8.4% in China and 2.5% in Japan. These aren't the kind of growth rates that give our clients, the C-suite and Board level executives that Kevin referred to earlier, overwhelming confidence to expand and invest in their business or in leadership talent. But we aren't just sitting on the sidelines waiting for market conditions to improve, I speak for my colleagues around the world when I say that we come to work every day focused on growing Heidrick & Struggles and delivering improved financial results.

That said, it's worth reminding you that because of how revenue is recognized, confirmations in November and December impact our first quarter revenue. November and December confirmations are seasonally lower compared to October because of the holidays. That is why the first quarter is traditionally our lowest revenue and operating margin quarter.

As you can see on Slide 21, 2012 confirmation trends were no different, although the decline was more significant. Based on our current backlog, shown on Slide 22, confirmation trends, average retainers and upticks, we are forecasting first quarter net revenue of between $100 million and $110 million. This guidance includes Senn Delaney's operations.

As we said when we announced the acquisition, Senn Delaney's revenue was approximately $29 million in 2012 with an EBITDA margin of approximately 30%. It will operate as a subsidiary of Heidrick & Struggles from its Huntington Beach, California headquarters and we are pleased to be already welcoming many of their visiting consultants into our offices around the world. We're very excited about the opportunity to broaden conversations with senior executive teams at each of our clients, concerning Senn Delaney's offering.

With that, I'll turn it back to you, Kevin.

L. Kevin Kelly

Thank you, Rich. Although 2012 results were disappointing, considerable growth opportunities lie ahead for us and our industry. The need to align leadership talent with strategy was once again a key topic at this year's World Economic Forum, both among the public sessions and the one-on-one meetings we had with key leaders of more than 50 companies. Our conversations centered on the globalization of the workforce, the shortage of leadership talent and as I already mentioned, the importance of culture to an organization's success. These all present significant opportunities for our firm.

60 years ago, Heidrick & Struggles created the executive search industry. Today, we are committed to shaping the future of leadership talent by positioning Heidrick & Struggles as a leadership company, the professional services firm that top organizations globally turn to for all their leadership needs. While clients may not be hiring as aggressively as they have in the past, their leadership needs are more complex than ever. So we are tailoring our business development efforts and service offerings and expertise to meet those needs. We are committed to growing our core Executive Search business by recruiting and retaining the best consultants in the industry. We have increased our professional development efforts and accelerated our hiring initiatives with highly targeted consultant hires in specific industry practices and key geographies.

In the first 2 months of the year, we added 8 new search and leadership consulting partners and principals in offices throughout the globe. Our recruiting efforts are focused on higher-producing experienced consultants to bring valuable client relationships as well as seasoned professionals with industry experience and context. Heidrick & Struggles has a long history of cultivating talent and we're currently in the middle of our annual promotion process and we look forward to announcing our new consultants in the second quarter.

If 2012 taught us anything, it's that staying in top-of-mind with clients in candidate placements is key to our business development efforts. We are fortunate to have relationships with many of the leading global companies, and many of these relationships go back many years. One of our priorities in 2013 is to grow our key accounts by instituting a more focused approach to servicing these clients. We also believe that by taking a more disciplined approach to other business development efforts, we have an opportunity to capture market share by increasing our winning percentage.

Our strategy to address all of our client needs has been validated. It's a strategy that we remain fully committed to and we'll continue to grow our leadership consulting capabilities, both recruiting and strategic acquisitions like Senn Delaney.

2012 was a difficult year for our Leadership Consulting Services, but we firmly believe that this -- that investing in the growth of this business and expanding our leadership talent platform will enable us to collaborate more effectively with clients and help us better insulate the company from market turndowns. It is already absolutely the right long-term strategy for Heidrick & Struggles' clients, employees and shareholders.

Before I open the call up for questions, I want to take 1 minute to thank our employees for their efforts during what was an extremely difficult 12 months. There's no question that our people are one of our biggest competitive advantages, and our future success depends on our ability to provide our clients with unparalleled service excellence.

Thank you for joining us today, this morning. And at this time, Rich and I will be happy take any questions.

Question-and-Answer Session

Operator

[Operator Instructions] We'll take a question from Kevin McVeigh, Macquarie.

Kevin D. McVeigh - Macquarie Research

I just wonder if you could give us a sense, was there anything that really stepped down relative to when you announced the Senn Delaney deal? Or any reason why we didn't adjust the guidance when you announced that transaction?

L. Kevin Kelly

Are you talking about the quarterly guidance for revenue of the fourth quarter?

Kevin D. McVeigh - Macquarie Research

Yes.

L. Kevin Kelly

Well, at that point in time, Kevin, we still -- and I think where we ended up was reasonably close to the guidance. We actually -- I think, our low end of our guidance was 105. What we don't know at the period, the things that can impact our revenue and probably drop us slightly below the bottom end of that range was some of our revenue recognition deferrals and -- that we experienced in our final year-end closing adjustments. So at that period of time, we knew we were right around the bottom end of the range, so we didn't see a reason to change it.

Kevin D. McVeigh - Macquarie Research

Got it, got it. And then, Rich, as we're thinking about the business going forward, is this kind of a new normal growth rate in the business? Any sense of kind of targeted revenue over the course of a cycle and then ultimately how we should think about margins? And just any incremental thoughts on Senn Delaney would be helpful as well.

Richard W. Pehlke

Well, sure. There's a lot of questions in there. So let me try and break it down. From the standpoint of at least in the short-term, a new normal, I think we're going to continue to kind of give a quarterly indication relative to our revenue run rate. We do not expect a huge contribution in the first quarter because, as we booked the Senn Delaney acquisition, they had some deferred revenue that will -- we won't actually benefit from on the revenue line in the early part of the year, but we'll still get the financial contribution of. So we'll give more color on that as we report Q1 and go forward. And so that's right on line, we expect that operation to be exactly where we thought it would be. In terms of our growth rate relative to our business, as we mentioned in our comments, I mean certainly, we were a little bit disappointed in the growth rate relative to 2012 from our existing base. We were down an average of about 1 search per consultant across the firm, and that's an impact of about $35 million to $40 million at our current productivity level. We don't expect that to be the sustainable run rate. We expect it to be higher. But clearly, we've got some work to do to make sure we realize that. And at the end of the day, this is about having the right number of productive consultants across the region. We still believe in the offices where we operate, we still believe in the people we have, but it was a very challenging year.

Operator

Up next from SunTrust is Tobey Sommer.

Frank Atkins - SunTrust Robinson Humphrey, Inc., Research Division

This is actually Frank in for Tobey. Wanted to ask about Asia a little bit. What are your thoughts of going forward in terms of what you're seeing in demand and kind of investing in that region?

L. Kevin Kelly

Sure. It's Kevin. So having spent a lot of time out there, what's great for our Asia business is we're still in a predominant position out there. We have a strong group of consultants. We had, as you saw with many companies, there was a slowdown in China last year. There's some regulatory challenges in Australia and New Zealand vis-à-vis the metals and mining industries, so our industrial practice was off. But what we have seen is a rebound starting about 6 to 7 weeks ago in that region, in particularly China. And this gives us -- we're 1 of 5 companies globally who can serve clients in each and every office in which we operate. What I mean specifically by that is what we're seeing now as a trend is we're helping more Indian companies, Chinese companies, Korean companies, Japanese companies, look to expand into other parts of the world and we have the footprint to do that. So that's -- it's still a key market for us.

Richard W. Pehlke

This is Rich, Frank. I would add to that the fact that we commented all through year that we were a bit disappointed on what happened in the Asia Pacific region relative to some of the financial services impact in a couple of our offices, as well as what Kevin touched on, the impact of some of the mining and materials aspect, which it certainly hurt our Australian operations in a big way in 2012. And as Kevin said, we've seen a little bit of a rebound there. I can't stress enough the importance of that region. We will continue and invest in it. There are a number of emerging markets and developing countries there that are really becoming big factors. I think it's worth pointing out the fact that we place executives in more countries where we don't have offices in terms of numbers than where we do have offices. So we are still feeding a client base all over the world, and there's going to be continued demand for executive talent all over the world. So these are important regions for us to be invested in. We just have to make sure that we have the right people and are focused on the right space. And we still believe very much in that region.

Frank Atkins - SunTrust Robinson Humphrey, Inc., Research Division

Okay, great. And then a couple of quick questions on tax. What's your outlook for tax rate going forward in 2013? And then, 2, could you give some sort of either after-tax or tax adjustment related to the acquisition's costs in the quarter?

Richard W. Pehlke

Well, the first thing relative to our outlook, until we start making profits in a couple of key countries where I can reverse some of these valuation allowances, our book of factored tax rate is still going to remain pretty high, probably in the 60% range, et cetera, at least for the near term. Our effective tax rate on a cash basis is much lower than that. We actually do a very good job of efficiently managing our tax position across the globe. And at least from a cash perspective, have done -- do a very good job of utilizing our foreign tax credits where applicable. But at the end of the day, growth is going to solve that problem. And then we've got to have key growth in a couple of our key markets, both in Europe and Asia. I'm not sure I caught got the exact second question you asked me. So please repeat it so I can make sure I address it properly.

Frank Atkins - SunTrust Robinson Humphrey, Inc., Research Division

I just want to get any type of tax impact related to the acquisition's costs for the Senn Delaney acquisition in 4Q. I'm just trying to get to kind of an adjusted...

Richard W. Pehlke

Well, the expenses that we -- the expense that we incurred are fully deductible. I mean, they were basically professional services related in both legal financial due diligence exercise in the fourth quarter. That's where the $1.7 million was. We had basically no P&L impact of Senn Delaney because we closed it on the last day of the year. We will be able to deduct some of the future amortization of the intangibles going forward, and we'll give a lot more color on that when we report our first quarter.

Frank Atkins - SunTrust Robinson Humphrey, Inc., Research Division

Okay, great. And finally, could you just remind us of the seasonality going from 4Q to 1Q? And do you think that remains intact?

Richard W. Pehlke

I think the seasonal trends usually have been intact. But again, back to the first question we had, I'm not sure what the new normal is. At the end of the day, we saw a little bit more drop off in the end of 2012 than we would have normally liked. We usually see a bit of a dip in the first quarter and then it bounces back in the second quarter. What we're actually forecasting for 1Q of 2013 is that we're actually going to see it be level or slightly up relative to the fourth quarter 2012.

Operator

[Operator Instructions] Next up is Anj Singh, Credit Suisse.

Anjaneya Singh

Calling in for Kelly Flynn. First question is just regarding the regions and the industry. Did you see any particular or relative pockets of strength or weakness? I noticed on Slide 34, the Financial Services industry was relatively resilient and Consumer Markets down the most. If you could just comment on what might be driving the slowdown or the resilience between -- on a relative basis?

L. Kevin Kelly

Sure. We did see a slow start to Financial Services in 2012, but they did hold their ground. Consumer Markets was off. If you look at consumer spending, given what was happening last year with potential tax issues in the United States, some of the challenges in Europe, Consumer Markets was definitely off the most. However, we expect that to bounce back. There are pockets of Industrial and Life Sciences and Technology where we expect growth this year as well. So I think net-net, there's opportunity as we talked about in the script in terms of capturing market share in each of the practices. And we've already seen Consumer bounce back and Industrial bounce back. And amazingly, Financial Services is, the last 6 to 8 weeks, has come back as well. So we're pretty optimistic that there is opportunity to capture market share in each of the practices in which we operate.

Anjaneya Singh

Okay. Great. And you also mentioned some deferred revenue for Senn Delaney impacting the revenue contribution for Q1. Will that make for higher-than-normal contribution in Q2 and going forward? Or is it too early to tell at this point?

Richard W. Pehlke

Yes, slightly. What it will probably mean is that from the standpoint of what we report as their revenue on an annual basis, at least what we will recognize in the first year of acquisition may not be slightly as high, because we had to put some of that on -- deal with some of that in the opening the balance sheet. But at the end of the day, the true financial contribution will be about the same as what we expect. So, yes. So we will see it trend upward as the year goes out.

Anjaneya Singh

Okay, got it. And building off the previous question, could you clarify what the adjusted net income was for Q4?

Julie Creed

You mean with our restructuring and Senn Delaney?

Anjaneya Singh

Correct.

L. Kevin Kelly

We only do that at an operating margin level. But you could probably assume a normal statutory tax rate on the other -- on those expenses, because those are not things that are affected by the valuation allowances, et cetera.

Anjaneya Singh

Okay. And one final question. Can you comment on what you might be assuming for Q1 operating margin?

L. Kevin Kelly

No, I'm not going to give operating margin guidance.

Operator

[Operator Instructions] From William Blair, we'll hear from Stephen Sheldon.

Stephen Sheldon

This is Stephen calling in for Tim McHugh this morning. You've seen reduced headcount and specifically, have made efforts to eliminate some lower performing consultants, but yet the average revenue per consultant has continued to trend downward. Could you provide some additional color on what you're seeing in that metric and how we should be thinking about that going forward?

L. Kevin Kelly

Well, it's -- a lot of it had to do with the hires, the number of new hires that we bring on board, so that kind of skews that number. Plus, if you look in just the pure volume, as we mentioned earlier, was down significantly last year. Our goal, longer term, over the next 3 years, is to get between 350 and 400 consultants. We're -- as I mentioned earlier, we have a fairly aggressive recruiting plan in place to add productive consultants. But at the same time, through natural attrition, through performance management, we'll also see some reduced headcount. But again, 3 years from now, we're hoping to be closer to the 390, 400 range.

Richard W. Pehlke

Yes, and I think from a -- and this is Rich. From a revenue per consultant range, the productivity, we're actually pretty pleased at what we've seen in the Americas region. We've actually held pretty strong and we've been operating at near historically high levels, at least, for the -- any of the recent past, which is over 1/2 our business. What's been a little disappointing is the productivity in our international regions. We've touched on this in much of our commentary over the course of the year. In Europe, I think it was driven by some macroeconomic conditions, as well as some ramp up productivity as Kevin just indicated. But we're certainly looking for that to be stronger. In Asia Pacific, we had a couple of key sectors that had tough years, as we indicated. And again, that's a region of the world where we do expect that to go up by at least 10%, 20% in terms of normal operating level. So I think the opportunity is still there. We're counting on some people that maybe had lower-than-expected productivity to return. This isn't about necessarily getting rid of unproductive consultants, but making sure we get better productivity from a good group of people that we have.

Operator

And we'll now go to Kevin Steinke, Barrington.

Kevin M. Steinke - Barrington Research Associates, Inc., Research Division

Kevin, did you just say you expect about 390 to 400 consultants by the end of this year?

L. Kevin Kelly

No, no, no. I said over the next 3 years, our goal would be to get back up to where we were, in the 390 range. So that's -- we have a fairly aggressive -- what we've done, Kevin, is we've analyzed our market opportunities, both by geography and by practice, and we have a tremendous opportunity to gain market share in a lot of places where we don't have coverage right now. So that's our key goal for the next 3 years. How do we get people in place? How do we get them productive? And how do we cover sectors of the market where we currently don't have consultants?

Kevin M. Steinke - Barrington Research Associates, Inc., Research Division

Okay. And can you just remind us again how many people Senn Delaney will add? And then kind of you talked about you're hiring, you're stepping up hiring this year. Do you have a target for how many people you might add this year organically?

Richard W. Pehlke

Well, Kevin, this is Rich. A couple of things. I wouldn't confuse the Senn Delaney population with our core executive search because it's really not apples-to-apples. It's a different business model and they work differently. Overall, we had I think about 100 employees that were brought on by the Senn Delaney acquisition. And they have a slightly different operating model and so forth relative to how they deliver their services. Much like in 2012, we actually expected, and you may remember this from past commentary, that our consultant base would have grown in 2012 over 2011. We had slightly higher turnover than we expected. In 2012, it was more abnormal. We are not expecting that level. Normally, we would expect turnover, between voluntary and involuntary, to range in the neighborhood of 7% to 9% on an annual basis. And we were up in the mid-teens last year. So we are always -- we are continuously working on our headcount base. We're continually working on the revenue production base. And our goal, as Kevin indicated, is to fully continue to build that up. But we don't want to make knee-jerk reactions either. We don't want to let a number on a page drive irrational economic behavior. Because there are, flat out, some markets where it just may not make sense to be that aggressive.

Kevin M. Steinke - Barrington Research Associates, Inc., Research Division

Okay. So if the environment continues to be soft or maybe if it's even softer than expected, do you -- would you perhaps scale back on your hiring plans? Or is that something you intend to stick to kind of regardless of the environment this year?

Richard W. Pehlke

Well, you kind of manage it in 2 different ways. First of all, I'd never say we scale back on hiring employees because, number one, we're a talent business. People are our assets. We're always looking for the best talent in the industry and that will never change. What will impact the overall headcount number is really managing from the issue of can people sustain a level of productivity that's acceptable for the business and acceptable for the investment level. But we'll always be hiring.

Operator

And at this time, there are no further questions. I'll turn the call back over to our speakers for any additional or closing remarks.

L. Kevin Kelly

All right. Well, listen, thank you very much for joining the call today. We are optimistic about the opportunities that lie ahead, both in Leadership Consulting and our core search business for 2013. And I hope you have a good day.

Julie Creed

Thank you.

Operator

And again, ladies and gentlemen, that does conclude today's conference. We would like to thank you, all, for your participation.

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