Heidrick & Struggles International, Inc. (NASDAQ:HSII)
Q2 2016 Results Earnings Conference Call
July 25, 2016 05:00 PM ET
Julie Creed - VP, IR & Real Estate
Tracy Wolstencroft - CEO
Rich Pehlke - CFO
Tobey Sommer - SunTrust
Tim McHugh - William Blair
Kevin Steinke - Barrington Research
Good day. This is the Heidrick & Struggles’ Second Quarter 2016 Quarterly Conference Call. This call is being recorded. It may not be reproduced or retransmitted without the Company’s consent. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instruction will be provided at that time. [Operator Instructions]
Now, I will turn the call over to Julie Creed, Vice President of Investor Relations and Real Estate. Please go ahead ma’am.
Good afternoon, everyone, and thank you for participating in Heidrick & Struggles second quarter 2016 conference call. Joining me on the call today is our CEO, Tracy Wolstencroft; and our Chief Financial Officer, Rich Pehlke.
During the call today, we are going to be referring to some supporting slides that are available on the IR home page of our website at heidrick.com and we encourage you to follow along or print them. Today, we will be using the terms adjusted EBITDA and adjusted EBITDA margin. These are non-GAAP financial measures that we believe better explain some of our results. A reconciliation between GAAP and non-GAAP financial measures can be found in the last page of our press release and on slide 22 in our supporting slides. Throughout the course of our remarks, we will be making forward-looking statements and I ask you please refer to the Safe Harbor language contained in our news release and on slide one of our presentation. The slide numbers that we’re going to be referring to are shown in the bottom right hand corner of each slide.
And with that, Tracy, I’ll turn the call over to you.
Thanks, Julie and good afternoon, everyone. Today we reported solid second quarter results. The 12% year-over-year growth and consolidated net revenue were driven by both business lines, Executive Search and Leadership Consulting, and Culture Shaping of 12% and 16% respectively. Specific to Executive Search and Leadership Consulting, revenue in the Americas grew 11% and Europe grew 30% compared to the last year’s second quarter partially offset by Asia Pacific revenue which declined 5%.
Our five largest industry practices achieved year-over-year revenue growth and all of our key business metrics improved. The revenue growth in the second quarter drove the improvements in operating income and adjusted EBITDA. Operating income in the second quarter increased 28% and the operating margin improved to 8%. Adjusted EBITDA increased 29% and the adjusted EBITDA margin was 12%.
I would attribute our solid second quarter results to several drivers, first and foremost, our people. We have made significant and important investments in our people especially in Executive Search through hiring and development over the last few years. The impact of those investments is most evident in North America and Europe. Two, our recent acquisitions in Leadership Consulting of Co Company in October and DSI in February. They contributed to revenue growth in the second quarter, but more importantly helped us establish our platform for growing Leadership Consulting. I would encourage you to visit our website and download an outstanding piece of thought leadership that we recently published titled, Accelerating Performance. This is an example of distinguishing content that is resonating with our clients and elevating our capability as a leadership advisor. And three, our brand and the access it gives us to working at the top. We believe that our reputation in the global marketplace is strengthening, especially in the boardroom. This in turn is fuelling new client relationships and deeper advisory assignments.
I will turn the call over to Rich, who will give you further details about the second quarter and then and I’ll finish with some additional color on our strategic initiatives.
Thanks Tracy and good afternoon, everyone. I will start with some additional details from the second quarter results beginning on slide two.
Second quarter net revenue of a $149 million was up 12% compared to last year’s second quarter and the impact of currency exchange rates was less than 1%. As Tracy mentioned, both segments drove this growth. As in the first quarter, the Americas and Europe had great quarters, up 11% and 30% respectively year-over-year; it was a key to our business growth in the segment. Asia Pacific was down 5%, although a 3% in constant currency. It’s worth reminding you, when looking at slide five, six and seven that these results reflect the trailing 12-month results for the regions, this removes some of the quarter-to-quarter volatility and gives you a better perspective to the run rate of each of these segments.
Referring to slides eight and nine, we ended the quarter with 336 Executive Search and Leadership Consulting consultants, of which 316 are specific to Executive Search. Beginning in 2016 Leadership Consulting consultants include only partners of which there were 20 at June 30th. Consulting productivity as shown on slide 10 rose to $1.7 million in the quarter and $1.6 million on a trailing 12-month basis.
Turning to slide 11, all of our major industry practices contributed to the year-over-year growth. Specific to Executive Search and referring to slide 13 and 14, we confirmed 5% more in Executive Searches in the year’s second quarter and the average revenue for search worldwide on a trailing 12-month basis increased almost $117,000.
Turning to slide 15, the Culture Shaping segment reported 16% year-over-year increase. We are also showing trailing 12-month results for this segment to account for the quarter-to-quarter variability, our results which are largely a function of the timing of project executions.
Looking at slide 16, salaries and employee benefits expense increased 12% or about $11 million in the second quarter. Variable compensation expense accounted for approximately $3 million, mostly highly related to -- mostly related to higher bonus accruals for consulting performance. Fixed compensation expense increased approximately $8 million, related to acquisitions and new hires made over the last year and the investments we are making in new and existing partners in Culture Shaping.
Looking at slide 17, general and administrative expenses increased 7% year-over-year or approximately $2 million to $35.6 million in the quarter and were essentially flat when compared to the first quarter. As I’ve discussed in previous calls, our G&A line now includes, both the administrative expenses of our Leadership Consulting acquisitions as well as the cost of the independent contractors that are used to leverage resources within both, the Leadership Consulting and Culture Shaping businesses. In the second quarter, these amounted to over $3 million, well above the increase overall for G&A expense in the quarter.
Now, I’ll refer to slides 18 through 22. Second quarter results are more reflective of our business model than the first quarter, where we have made a number of investments that impacted operating income and adjusted EBITDA. We experienced a 12% increase in second quarter net revenue that helped drive 28% increase in operating income and 29% increase in adjusted EBITDA.
Now, looking at slide 23, cash and cash equivalents at June 30 was $85 million compared to $93 million net of debt on June 30, 2015. The difference compared to last year reflects the combination of higher cash bonus payments, two acquisitions and contractual payments related to the Senn Delaney acquisition. Cash generated by operating activities was $34 million compared to $25 million in last year’s second quarter. Our cash position plus the cash we have access to through our revolving credit facility is quite strong, and we’re in an excellent position to continue to invest in and grow our business.
Referring to slides 24 and 25, the effective tax rate in the second quarter was 44%, based on a full year estimated tax rate of 45%. Higher net revenue, improved operating income and the mix of that income, plus a lower tax rate, all contributed to a 34% increase in net income and diluted earnings per share of $0.35 compared to $0.27, in the last year’s second quarter.
Now, looking out to the third quarter, our Executive Search backlog is shown on slide 26 and monthly confirmation trends are shown on slide 27. Other factors upon which we based our forecast include anticipated fees, the expectations of our Leadership Consulting and Culture Shaping segment assignments, the number of consultants, their productivity, the seasonality of the business, the current economic climate, and foreign currency exchange rates.
We’re forecasting 2016 third quarter net revenue of between $140 million and $150 million. Reported net revenue was $138 million in the third quarter of 2015.
With that, I’ll turn the call back over to Tracy.
Thanks, Rich. I’m pleased with what Heidrick & Struggles accomplished in the first quarter -- in the first half of 2016 and the improved profitability in the second quarter. We integrated two acquisitions, into our Leadership Consulting business, creating a stronger platform from which to grow. And we’re investing in Culture Shaping, to build on our leadership in this market and support our long-term growth. Overall, we continue to lay the foundation for a more diversified business, building on the strength of our people, our brand and our content.
I do Heidrick & Struggles is well-positioned to capitalize on the growing demand for leadership services. In the most recent 2016 CEO Challenge survey conducted by the Conference Board, more than 500 CEOs from around the world were asked to identify their most critical hot button issues. The top two issues cited were one, the ability to attract and retain talent; and two, developing next generation leaders. These responses reinforced Heidrick’s strategic relevance and are aligned with our stated purpose. Executives are concerned about their organizational readiness to tackle the transformational change they believe will be necessary to remain competitive in tomorrow’s market. And at Heidrick, we’re no different. While our efforts are ongoing, I’m encouraged by the progress we have made. Our stabilization and subsequent growth have given us the room to begin to put a sharper focus on the longer term competitive prospects of the firm.
To that end, our executive management team recently convened for a set of meetings to review and validate our strategic direction. And the basis of those discussions in anticipation of further work to come, we continue to believe that the most attractive path, the creation of shareholder value lies in one, the improvement of our competitiveness in the critical markets for premium Executive Search; two, the ongoing development of a diversified portfolio of leadership advisory and culture solutions that permit us to partner with boards and senior executives to improve individual team and organizational performance; and three, the connectivity with our clients between Executive Search, Leadership Consulting and Culture Shaping.
We understand that achieving success in this path will necessarily require a combination of strong focus, outstanding operational execution and efficient capital allocation. However, we also believe that success in this regard permits us to create tremendous value for our clients, our shareholders and our people.
As a trusted leadership advisor, we bring clients a unique global perspective. And while there will always be changing political, economical market variables around the world, one thing is certain. Now, more than ever, organizations need the right leaders to see them through uncertain volatile times. Leadership talent is being called on more than ever across every organization in all geographies. The value we bring to our clients in helping them get that talent right in turbulent times is even more important than during high tides.
And with that, Rich and I are happy to take your questions. I’ll turn it back to Mellissa.
Thank you. [Operator Instructions] Our first question will come from Tobey Sommer with SunTrust.
Thank you. I’m wondering if you could comment on what your recent monthly trends have been. You don’t have the numbers in the graphic, but it looks like June and July confirmations were down year-over-year and in the backlog down mid-single-digit sequentially from last quarter? Thank you.
Sure Tobey, couple of things. On the recent monthly trends, we have seen slight dip on year-over-year in terms of the number of transactions. I think that’s being offset by couple of things. Number one, we’re seeing a higher value and higher quality assignments, as we continue to make the shift in our business that we believe is contributing to some of the revenue growth that we’re seeing. So, while I’m not deeply excited about that, I’m also not overly concerned at this point in time. I think what we’re trying to read out is some of the smaller assignments that maybe came in to our business that frankly we just don’t have interest in using our resources on smaller value assignments.
On a backlog situation, one of the things that I think that’s -- and turning to backlog a little bit is the fact that we’ve seen upticks become more and more of a factor relative to our revenue and our revenue recognition. It’s been the changing mix that we probably commented on over the course of the last year. So again, while not deeply surprising, it is a shift that we’ve seen in terms of a little bit more on a backend that represents the fact that there’s been a higher value completion of our assignments. And we have been getting rewarded for that. So again, it’s a little bit of the change in the mix, but doesn’t really take away from our outlook going forward.
So, in this kind of environment with both of those factors, is it possible for you to generate revenue growth with volume declines in the mid-single-digits?
Well, I think we can achieve revenue growth, although albeit, it’s not going to be extremely robust. I mean, I think there is revenue growth factored into our forecast. A couple of things have to happen. Number one, I think, again, we see month-to-month variability. There hasn’t been -- probably over the last two years, there hasn’t been a consistent monthly pattern every time in each of our quarters. And then, we’ve seen many times one month is down and the next month is up. But I think we need to make sure that we see the higher value come through in both the retainers and we continue to be the high completion rates with the upticks on the search side.
The other way that we will experience revenue growth is that we’re going to continue to benefit from the growth in integration of our LC business, which is continuing to ramp up and it should be a good contributor in the second half of the year. And in addition, I think -- and then, we saw a little bit in this quarter Senn Delaney is back on track with the integration of the new people. So that will help our business as well.
Thank you. Just two other questions for me and I’ll get back in the queue. What are your plans for internal hiring going forward? Last year, you were adding bodies at a pretty rapid pace and the impact of that is may be for slowing year-over-year growth based on the numbers we know so far? And then, I was curious, if you could enumerate for us, what your spendable cash is? Thank you.
On the first question on hiring plans and people, last year, you’re right to point out, was a big higher yield for us in terms of numbers as well as the overall experience that we’re bringing into the firm. We continue to look for experienced talent that we think will blend well with our culture, will differentiate us where we need further resources. But, I would say the overall number of people that we will hire in 2016 will be less than what we hired in 2015, because frankly we just we don’t have as many spots that we need; always looking for high quality people up.
But you do anticipate growth in internal headcount?
We will have some growth, yes.
And then, the spendable cash, Rich?
Sure. We finished, as I finished, we finished the quarter at about $85 million of cash on hand. As we’ve said a number of times, I think we’re comfortable. And as long as -- I think it’s about a $40 million balance that on a global basis at any one point in time we look to as kind of our for lack of a better word, a cash operating reserve. So, we have twice that in our current balance sheet and we’re growing more cash every day. The cash generation in the quarter is very solid on a year-over-year basis. And obviously should anything come up in the interim, we certainly have the working capital reserves but we’re not going to use that unless the credit facility -- unless we have a significant reason to do so. So, I’m still very comfortable and I am very pleased with how we’ve managed the cash to-date and absorbed the additional payments that I mentioned in my comments. And so, I think we’re in good shape.
[Operator Instructions] Next, we will go to Tim McHugh of William Blair.
I guess maybe pulling back to cover a little bit more and the comment about the search confirmation, I guess besides the size of the engagements or the revenue size of the engagements. What about from a geographic or kind of industry perspective? I think most people I get a lot of questions about obviously Brexit and the European environment toward the end of the quarter and here in July as well as the financial services vertical, so any comment if there is any story there in terms of what you are seeing?
Tim, I’ll give you an overall perspective on this. I think it’s fair to say and this goes to Tobey’s question as well that the world -- all the headlines around the world would summarize and tell you to be a little bit guarded with respect to economic growth and outlook. At the same time, what we are seeing in our business right now is just not that much of a reaction to those headlines. In United States, we see good flows, Europe and UK post Brexit, we just have not felt the impact yet in the core business from Brexit. Will that come, to be determined but we haven’t seen that; we haven’t seen that in UK; we haven’t seen that in Europe yet. So, I don’t know that gives you as much colors as you would like but there is, if you will, headline risk and this is actually what’s happening in the business. We just haven’t seen those headlines pull to our business.
That’s fair. I guess, is there a story in terms of -- by geography or by vertical for I guess you comment on smaller type of searches are weaker; is that in a particular area or is that just across the business that you are kind of thinking?
Tim, great question; it’s Rich. Traditionally we have had lower retainers and fees for search in our international geographies compared to the Americas, and our results to-date are no different. The strongest contributor from a fee perspective is still the Americans are almost across the board. We have seen some good improvement in Europe. And it’s reflected in the results, both in terms of some of the people that we have hired that have made a good contribution in terms of volume of business. We certainly would like to continue to move up the fee scale in that geography. We are not quite where we want to be but it’s improving.
The Asia Pacific region, which has been battling its comparison against last year all year, we’d like to see that be a bit stronger. That’s been hurt early on by some of the things we talked about last quarter in terms of uncertainty and the Far East, particularly in China, and again with some assignments that we would like to see at a higher value. So that’s again a region where we would like to see a few of our people working at the top than what we have experienced to-date. So, there is room for improvement. What I think gets us some encouragement in that region is that even though there has been a drop in revenue, we have maintained relatively good operating income contribution from that region. So, we’ve kind of got the ratios and some of the costs in a little bit better shape but there is no question we would like to see more contribution out of that region.
The final comment I’d just say to it and it speaks to what Tracy commented too as well as the unknown of the future. We’re not sure exactly how much the currency will move and how much variation will happen in our reported revenues going forward. Obviously because of Brexit, there is very little impact as we noted in the quarter. We’re going to watch that very carefully; we’ve got a little bit of a natural hedge against that with the expenses as you well know. But, we’re hoping that as things calm down and as UK deals with the issue and the issues across Europe, that at least stability will come into play and that the lack of impact, either in transactions or in clients reacting to it, will more than offset any impact on currency.
I’ll come back and just say one last comment, which is the headline risk that we see, tends to impact the market opportunities that are below the top of the companies. So, if you’re working at the top, you’re working in the boardroom; you’re working in the C-suite, we see the demand relatively protected. When you get below that that’s when you start to feel it.
And Tracy, you made a comment on the strategy kind of meetings, the third piece there, you talked about your relationship with the clients in between, I guess both Executive Search and in between Leadership. What were you trying to say with that, I guess I’m not…?
My comment is really the interconnectivity between Search, LC and Culture, i.e. a client may initially present to us as focused on [Technical Difficulty] some clients who are coming to us and start with Search, we’re seeing some clients who come to us starting with Culture, some were starting with LC, and it doesn’t limit the interest of that client to do other services with Heidrick. That was the point.
[Operator Instructions] Our next question will come from Kevin Steinke with Barrington Research.
Following up on the question about your strategic meetings, the second point that you discussed was continued investment in your diversified offering. And obviously, you made some investments in Culture Shaping and Leadership Consulting in the first quarter. Can you just update us on your plans in terms of investments in those areas, for the remainder of 2016 and also longer term?
I think overall the -- I’ll just start with the foundation here, which is acquiring Co Company and acquiring DSI has given us the opportunity to build a platform around Leadership Consulting, which is just different than what we’ve had before, and the best expression of that is what I referenced early on with regard to the accelerating performance document that we have on our website and the content that gives us in the developing a dialog and a relationship with the client that goes beyond the actual assessment of any talent that gets to the broader equation of accelerating their performance.
We are open, but we are open quite carefully. Should other opportunities, there is a greater demand at this point to consolidate around what we have, get that working even more fluidly and get that working with our clients and getting them use to what Heidrick can deliver with the new LC platform. We’re not opposed to inorganic opportunities, but I would say that the principal focus there are right now is consolidate what we have. Again, we look at things opportunistically.
With regard to Culture Shaping, the same applies, which is we are right now investigating, a number of opportunities we see in the broader marketplace where we can partner more effectively with our clients who are doing other business with us, as I referenced in Tim’s question. But also the broader narrative out in the marketplace around culture, it is one that continues to grow, it’s one that continues to be important, and we’re always looking for ways that we can intersect with that narrative more broadly. Again, our focus here is much more organic in building the team that we have and that we’re investing in; as Rich described, we invested in it in the first quarter, we invested in the second quarter, you will see us continue to invest in our people throughout the remainder of the year. That’s the primary focus.
Okay, that’s helpful. And following up on those comments here talking about consolidating what you already have and getting it to work more fluidly; and Rich, I think in your comments you talked about the investments you have already made this year, and Culture Shaping and Leadership Consulting should help the results in the second half of the year. So, are you talking about not only the top-line, but also just getting more leverage out of those investments and having more drop to the bottom-line in the second half, as you generate more revenue and kind of leverage the spend you’ve done there?
The second quarter is certainly much more reflective, Kevin, of how we would expect the model to work than we’ve seen in couple of quarters previously. If you take into account what I indicated about the fact that our G&A now includes inorganic G&A that came in from the acquisitions which includes the cost of independent contractors, as well as small amount of independent contractors in Senn Delaney, on a year-to-date basis, would have basically all of our revenue increase on flat to down G&A, when you take away that, as well as that first quarter charge that we did LC.
So, I’m pleased; we’re never done, but I’m pleased that we saw it work that way in the second quarter and kind of through the first six months. That’s our intention to go forward. We’re constantly trying to tweak it. Now, given the size of acquisitions we’ve made, unfortunately it doesn’t create a lot of immediate expense synergies on day one, because in many cases, as we’re bringing companies into the fold of a public company, there is some infrastructure investments or control investments we have to make that can may be offset the loss of a few people here or there. So, it doesn’t give you a whole big lump sum. So, the key in our mind is always to dive more revenue and to drive more productivity and get the right kind of people in here and then leverage our cost resources to drive margin. So, we’re encouraged that it worked that way, it worked a bit better in the second quarter that would be our hope going forward as we continue to see some revenue growth from across all lines of business.
And again, I’ll just come back and say that the takeaway you should have on this is we’re going to continue to invest in these businesses and we’re going to continue to invest because the impact that we see that we’re having with clients, both existing clients as well as new clients in the marketplace is positive. And as long as we see clients responding to the diversified solutions that we can bring, may be Search and LC and may be LC and Culture Shaping and may be Culture Shaping and Search, we’re going to continue to do that as we help clients answer the question, who, why and how.
Okay. Fair enough. And I think, Tracy, in your prepared remarks you talked about one of the factors that you felt is driving your growth is that your relationships are strengthening at the top of your client organization. So, could you may be talk a little bit more about some examples that would lead you to believe that; and also if you believe those strengthened relationships are enabling you to take more share of the client spending perhaps or market share from others?
Sure. I think the broader connection here is that certainly one of the rhythms that you read out there in the marketplace is continued volatility. And volatility almost always means that the leadership and leadership tea is broadly defined, whether that’s in the boardroom or that’s in the C-suite are going to be looking for how do they respond and how are they best positioned for the market opportunities out there, whether or not they are positive opportunities or they are some negative headwinds that they’re going to confront?
So, what we’ve found is that in some ways success breeds success, which is we’ve got a good run here at the top of the house of the client as it were, both in the boardroom and the CEO level; and the more you do, the more you have the opportunity to explain the experience that you’ve gained from those and the more opportunity you have to do others. And so, without putting specific numbers on it, we’ve seen that particularly in the United States in the opening of -- or the first half of 2016; we’ve seen that in some markets within Europe; and then, I’d say selectively we’ve seen that in Asia as well. So, connecting at the top is really aligned with the way we think about the brand of Heidrick and we think about the opportunities that that brand gives us in the marketplace. And then, as you point out, once you’re in the top, the opportunity to expand that conversation beyond anyone of our services, beyond Search, beyond LC or beyond Culture Shaping is again this point about that interconnectivity.
Okay, that’s helpful. And then, just one last question, Rich, you talked about or both of you talked about the fact that you really haven’t seen an impact from Brexit on your business, although obviously British pound is weak. So, I just am wondering what you have factored into your second quarter guidance if anything, in terms of overall impact on currency on revenue growth?
Kevin, we’ve factored a slight impact relative to the devaluation of the currency into that outlook. Without giving you an exact number, as I mentioned, it was a minimal impact in the current quarter; I think it was about less than 1%, about 1% in terms of overall currency impact, and couple of million bucks maybe in terms of overall revenue. So, at the end of the day -- and again, the key thing is going to be far more. And I think I said this in my comments for your question, it’s really going to depend more upon the pure operational impact as how many confirmations or how business resumes relative to especially post holiday in the UK, and in Europe how the quarter finishes out. Again, the early signs are lots of headlines, lots of talk but not a lot of impact from the business.
And again, I’d just differentiate between impact at the top of our clients’ needs versus one step below and the middle is there you see a difference, right, there you absolutely see a difference. So, it is a little bit too soon to tell. You are reading same new stories, we are. I am we are talking to parallel people here in terms of their insight. And so, we have factored it in but we try to be prudent about it in terms of any hard and fast landings here now. We are obviously -- that said, we are watching it extremely carefully.
Okay, makes sense. Thanks for taking my questions.
[Operator Instructions] We do have a follow-up question from Tobey Sommer from SunTrust.
I wanted to ask you about consultant productivity, which had a pretty impressive number in the quarter. Is there anything, any kind of refining thoughts you may have about where that can go on, maybe not a quarterly basis but sort of an annualized basis?
Again, without getting too forward looking on things, we are certainly pleased. And I don’t think what we have seen to-date, while it’s certainly a high number for us and has boosted a little bit, and I think we have indicated this with the inclusion of fewer consultants from the LC side, because we only include partners, it certainly helps to be at the higher side and it’s 1.6 million on a trailing 12 months basis. If we could start to get the productivity up even more importantly the fees up in our international regions, it certainly would help; and certainly, it could go higher. We’ve got great-- but at the end of the day, and again the strategy is based upon this is that we believe we are going to get a higher value productivity number across our lines of business by the fact that working at the top, staying near the strong decision makers and more clients, it’s a little bit more recession resilient or cyclical resilient work. And so, our concern now is maintaining and hopefully driving that up a little bit, and continuing to drive lower cost leverage and executing our assignments. It’s a journey, but we’re at least encouraged with the current trend.
When you get back into these numbers, our most productive consultants are in United States; our next most are sitting in Europe and then Asia. And Europe, with the improvement in Europe, that also corresponds to improvement in productivity and that’s helping the overall numbers. So, it gives you a little more direction as to where it’s coming from.
Thank you. Last question for me, if overall confirmations in June and July are down year-over-year and Europe and the UK are holding up, does that imply that the Americas -- North America is the region where the decline has occurred? And if so, what kind of change are we talking about?
Yes, we’ve seen -- I think, we’ve seen not as much of decline as we’ve seen kind of holding steady in Americas, maybe slightly off.
Where is the decline, if Europe is holding in and Americas is holding in?
It would be in the Americas. But again, just to be clear, that in part because it’s been such a strong region, it has a bit deeply concerning from the standpoint that we have seen times where we’ve seen a robust period of time and it backs off a little bit for a month or two and then kicks back up. The narrative we’re hearing in our business is consistent with what’s reflected in our guidance and in our tone. In the Americas, we’ve still seen pretty good strength in our CEO and board practice and across our major industry groups and particular financial services, consumer, healthcare life sciences and GTS. So that’s where it would be. But again, we don’t think it’s a long-term trend, nor at this point in time do we see it as a major issue.
[Operator Instructions] And at this time, I show no further questions in the queue.
Okay, thank you very much. Thank you all. Have a good week.
That does conclude our conference for today. Thank you for your participation.