Heidrick & Struggles International Inc (HSII) 2012 Q3 法說會逐字稿

Good day everyone andwelcome to today's Heidrick & Struggles third quarter 2012 conference call. (Operator Instructions).

Now I will turn the conference over to Ms. Julie Creed, Vice President of investor Relations and Real Estate. Please go ahead ma'am.

Good morning everyone, and thank you for participating in our third quarter conference call today. Join me on my call are Kevin Kelly our Chief Executive Officer and Rich Pehlke our Chief Financial Officer. As a reminder, we will be referring to supporting slides that are available on our website at www.heidrick.com, and we encourage you to follow along or print them. As always, we again advise you that this call may not be reproduced or retransmitted without our consent.

In today's call, we will be using the terms operating income and operating margin excluding impairment charges. These are NonGAAP financial measures that we believe better explain some of our results. A reconciliation between GAAP and non-GAAP financial measures can be found on Slide 29 in our supporting slides. Also we will be making Forward-looking statements on our call today, and ask that you please refer to the Safe Harbour language contained in our news release and on slide one of our presentation.

Our slide numbers refer to the slide numbers in the bottom right-hand corner of each slide. Now I will turn the call over to you Kevin. Please start on slide two.

Thank you, Julie. Good morning everyone, and thank you for joining today's call. Before I begin, I do want to take a minute to acknowledge all those who are dealing with the devastation caused earlier this week by Hurricane Sandy.

As you know, Heidrick & Struggles has offices in Boston, New York, Philadelphia, and Washington DC. So many of our employees and their families were directly impacted by the storm. We also have many clients who are in the storm's path as well. We know it will take a while before life returns to normal, but we are glad everyone is safe and our thoughts and prayers are with those of you who are dealing with the clean-up process.

As you will see in our press release, many of the same trends we saw in the second quarter continued into the third quarter. We reported revenue of $117.3 million slightly better than the second quarter but down approximately 18% over the same period a year ago. Our challenge throughout 2012 has been lower revenue due to fewer confirmations.

As you can see on slide three, search confirmations in the third quarter were down 20% compared to last year's third quarter and about 5% sequentially. Despite fewer confirmations, moving on to slide four you will see that our average revenue per search has conditioned to increase. In fact, on a trailing 12- month basis, the average revenue per search has been flat or has improved every quarter since the second quarter of 2010.

We attribute this to our historical strength of working at the top of clients' organizations and strong relationships our consultants have cultivated at the C-suite and board levels. We truly believe this is a competitive advantage that differentiates Heidrick & Struggles in the marketplace, and one that willprovide a competitive advantage as we continue to build up our Leadership Advisory Platform. Importantly, we continue to improve our profitability largely as a result of initiatives we undertook last year about this time to adjust our cost structure for the current environment. Compared to last year's third quarter, salary and employee benefits declined 20% and general and administrative expenses were down about 5%.

Despite significantly lower year-over-year revenue, we generated $10.2 million of operating income and an operating margin of 8.7%. The lower revenue trend was consistent across all of our regions.

As shown on slide five, America s revenue in the third quarter declined 15% year-over-year, but increased 11% compared to the second quarter. The industrial and consumer market's practices drove the sequential improvement partially as a result of a number of high level and noteworthy assignments during the quarterincluding the placement of Chiquita's Brands' new CEO Board and Interim CEO Services at Navistar, and CEO placements at both Visteon Corporations and Federal-Mogul's after market division..

Moving to slide six our European operations were down in the quarter. A bit more than we had expected. Revenue declined 43% year-over-year or 38% on a constant currency basis. The quarterly and year-to-date revenue declines were both driven by continued economic crisis and consultant turnover especially in a Consumer Market and Industrial Practices. Summer vacations typically impact the region's third quarter performance, but the Summer Olympics in London seemed to compound the effect.

We are however, pleased that our European operations are more profitable even at the lower revenue level due to the actions we took last year to improve our cost structure. Now on slide seven Asia-Pacific's revenue was down 15% year-over-year or about 12% on a constant currency basis and is essentially flat compared to the second quarter. The third quarter and year-to -date declines were primarily driven by weakness in the Consumer Markets Financial Services practice.

In recent years, Financial Services has represented 30% or more of the region's revenue. Year-to-date, it represents approximately 20% and this has put pressure on the margin s especially in Hong Kong and Sidney. There are some positives worth mentioning though.

Our Tokyo office is performing very well. Revenue is up 64% year-to-date and margins are much improved as well, and smaller offices, Bangkok and Seoul are also having great years.

Our newly expanded Dubai office is ramping up as expected, and I am looking forward to a trip out there next month. And finally, it is worth mentioning that Heidrick & Struggles will be celebrating its 10th anniversary in Mainland, China for the celebration in mid November. Looking at slides eight and nine, you will see that our practice performance in the third quarter looks also looks a lot like it did in the second quarter. All practice groups except Education and Social Enterprise experienced year -over-year revenue declines. We did see some sequential revenue improvement where growth in Consumer Markets, Financial Services, and Industrial Practices offset declines in the Education and Social Enterprise and Life Sciences practices.

Turning now to slide eleven, revenue in the third quarter from Leadership Consulting was $8.9 million down 31% compared to last year's third quarter and 8% compared to the second quarter. The $4 million decline came about equally from both America and Europe. Year-to-date, the Leadership Consulting practice is down $5.2 million or 15% primarily as a result of the loss of a few consultants globally.

The revenue impact we have seen underscores the need to continue to invest in and properly scale this business. We continue to better define our service offerings with the goal of building a much larger more sustainable consulting platform from which to serve our clients ' leader ship needs. As you see on slide twelve, we ended the quarter with 332 consultants, compared to 340 at the end of June. Since the end of September, we have hired 8 consultants with others in the pipeline.

As in the past, we have become more active in our hiring in the fourth quarter with our goal to bring new hires on in the beginning of the year. Productivity on slide thirteen is measured by annualized net revenue per consultant increased to $1.4 million in the third quarter from $1.3 million in the second quarter.

Productivity was lower in last year's third quarter due to lower revenue. Increasing the productivity of our consultants continues to be a priority in the course of both our performance management processes and our recruiting efforts. As we begin to wind down the year, and look forward to the start of 2013, our view is that the current environment will likely persist for the foreseeable future. This has made it more important than ever for to us stick to our core strategic initiatives. Our focus remains on providing our clients with unparalleled excellence and search as we continue to invest and strengthen our Leadership Advisory platform with the goal of seeking sustainable profitable growth..

More specifically, our strategic priorities are to expand our share of premium work at the top, grow our Leadership Consulting business by increasing consulting skills and cross-selling capabilities, and continuing to evaluate tuck-in acquisitions to increase scale and to build our brand through investment and talent, thought leadership and client satisfaction, while maintaining our rigor around cost discipline. It is these priorities that drive our daily decisions as we continuously look to innovate where we believe there's benefit to our clients and shareholders.

For example, earlier this month we launched a Big Data and Analytics practice. This subpractice is dedicated to helping our clients identify and attract leaders who understand how the application of technology can move their business. It's a first among the major firms in our industry and puts us front and center in this new war for talent. Heidrick & Struggles holds extremely valuable relationships at the top of many of the world's leading organizations.

Our vision is to leverage these relationships and our search capabilities to serve our clients with a broad array of Leadership Advisory services. We have the expertise in a global network to not only identify their top leaders, but to help develop and retain them. With that overview, I will turn the call over to Rich.

Thanks, Kevin. Good morning everyone. I will start with a review of some of our other key operating metrics and then talk a bit more on our operating expenses.

As Kevin mentioned, the changes that we made over the last year to improve our cost structure has helped us weather the challenging revenue environment. For the first nine months of 2012, compared to 2011, revenue declined by 15%,but our operating income was slightly higher than 2011 when you exclude the impairment charges that were recorded last year.

We are pleased with this accomplishment, and we look forward to leveraging this cost structure as revenue begins to expand . We also have more work to do as well.

Now looking at operating expenses, please turn to slides fourteen and fifteen. Salaries and employees benefits expense declined $20.1 million or 20% year-over -year.

Variable compensation accounted for $11 million of the decline reflecting lower bonus accruals related to the lower net revenue levels. Fixed compensation expense accounted for the other $9.1 million of the year-over-year decline, mostly reflecting the reduction in the worldwide employee headcount of approximately 9% compared to last year's third quarter.

Turning to slide sixteen, general and administrative expenses declined year-over-year by $1.3 million or 4.5 % reflecting expense reductions in a number of areas, but the two largest were declines in travel and entertainment expense and premise-related costs. G & A would have been down about another $2.5 million

if not for the recurring cost of Global Partners meeting that we held in July. The cost of this meeting is reflected in Global Operations Support not in the regions which is the primary reason you see an increase in the segment presentation .

Looking at slide seventeen and eighteen, operating income was $10.2 million in the third quarter and operating margin was 8.7%. These are slight declines compared to last year's third quarter operating income and margin excluding the impairment charge, but again showcase of the improvements we have made in our cost structure have yielded prospective results to our operating margin despite the decline in revenue.

Moving to slides nineteen and twenty, net income in the third quarter was $4.1 million and diluted earning per share were $0.23. The effected tax rate in the quarter was 59% which was based on the full year projected tax rate of approximately 67%.

The full year rate is up from where we expected it to be after the second quarter at that time approximately 57%,and the increase is primarily due to refinements in shifts in the projection and mix of income that we expect to earn worldwide in 2012.

Please turn to slide twenty-one. Our cash position remains strong with $127.1 million in cash and cash equivalents, well above our global cash needs that we usually expect to keep at about $40 million to $60 million. Net cash provided by operating activities was $33.8 million in the third quarter compared to $51 million in the last year's third quarter.

Slide twenty-two shows our backlog. And slide twenty-three shows our monthly search and Leadership Consulting confirmations . As you will see on slide twenty-three, October confirmations are trending higher then September with improvement in every region.

Based on our current backlog confirmation trend average retainers and upticks, we are forecasting net revenue of between. $105 million and $115 million. Our forecast is also based on the typical seasonal trends that we see between the third quarter and fourth quarter as well as historical confirmation trends we experienced in the fourth quarter. And with that, I will turn it back over to Kevin.

Thank you, Rich. 2012 has been one of the most difficult years during my 15- year tenure with the firm. The uncertainty we have seen throughout our regions and practices has made it sometimes even difficult to predict what is going to happen from one month to the next.

But as we navigate through the current cycle, our focus continues to be on serving our clients while forging ahead with our Leadership Advisory strategy. We firmly believe remaining committed to providing service excellence while building a fully integrated leadership platform will position us for long-term sustainable opportunity in the future. Next year marks the 60th anniversary of Heidrick & Struggles.

We have a long great history which we are very proud of butrather than resting on our lorels we have been very much focused on what the future of the leadership industry looks like. Thanks again for your time today and joining us this morning, and at this time Rich and I would be happy to take any of your questions.

Thank you. (Operator Instructions). We will go to Kelly Flynn with Credit Suisse.

Thanks. I just have a couple questions. I think you mentioned in your comments some turnover in Consumer and Industrial. Could you just kind of clarify that is what you were implying because you also were talking about general weakness. So I just wanted to make sure that was a turnover-specific comment for those industries, and kind of maybe a little more detail on what is going on with that turnover. And then I have a follow-up. Thank you.

Kelly, sorry. The turnover I was referring to was more of a decrease in revenue in those practices. The turn over for the quarter was 10 people -- excuse me 13 people, 3 involuntary, 10 voluntary of which 6 went to competitors.

Okay. Great. And then can you just elaborate on Life Sciences and Consumer, and of what - - I could see the large declines in the slide presentation year-over -year. We all know what is happening in Financial Services, but maybe a little more color on what is driving that for those practices. Thanks.

Obviously, Life Sciences for us as an organization provides a tremendous opportunity to help us scale and grow that business, and is one of the key focal points right now when it comes to both recruiting for the search side of the business and leadership consulting side. As you can see, what is happening with some of the big pharma companies globally there's been a shift in terms of not recruiting as much as they historical have. So that has impacted the business.

However, we do see other opportunities in that area such as Biotech etc.. coming back. With Consumer Goods, it's just right now it's the markets. We have seen over the last three to four weeks an increase in our consumer confirmation. So we saw that at as a trend that hit us in September where the confirmations were lower than expected but they have definitely bounced back in October.

Okay. Thanks a lot.

Next we will go to Kevin Steinke with Barrington Research.

Hello, good morning. Your press release, you made the comment that you believe you are winning a strong share of C- Suite and board level searches. I am just wondering what gives you that belief, and also why you think that might be occurring.

Well, we have, Kevin, it's Kevin Kelly. We have a very strong CEO and board practice. It's a combination of leveraging it our Leadership Consulting side of the business, and using that to really work on succession planning with boards on development of executives and on retention of key individuals as well. So if you take those two together, it's really helped us develop strong relationships with boards of directors, CEOs, and we are very proud of. Those that we have tracked, the number of wins we have had in the CEO and board suites.

Okay. And you also mentioned brought up again tuck-in acquisitions as a possible growth avenue for you going forward. I'm just wondering if you could give us your updated thoughts on what the acquisition environment feels like right now in the industry.

Sure. First and foremost, as you see from the Leadership Consulting revenue, it's great that we have roughly a $50 million business in Leadership Consulting, but when you lose one individual in that or two individuals in that practice, there's a significant impact on the revenue. So it's key to us not only are we going to continue to drive the organic growth of that business, but also the fact that we need to scale the business. And that's the second key focal point, recruiting, as I mentioned earlier, to drive revenue on the search side at the CEO and board level is a key focal point, simultaneously scaling and growing the Leadership Consulting business is the other.

All right. I'll jump out of the queue for now. Thanks.

We will go next to Tim McHugh with William Blair and Company.

Yes, I want to just ask a little bit more about Europe. You mentioned the Olympics probably exacerbated things and then you face both some turnovers in the macro. Can you help us try and understand how much each of those factors might have been, and I am just trying to get a sense of what to model or expect going forward for Europe at this point.

Hello, Tim, this is Rich. Good morning. I think the combination of economic activity in Europe has still been a major driver in the performance relative to the region. When we look at continuing individual productivity of our consultant base, those who were obviously were not affect ed by turnover, we have seen a slight decline in productivity which I think is really driven by the fact that we have very troubled environment there.

As you know, we serve a lot of multinationals and what we have seen is just projects be either pulled back, not near the volume because of the uncertainty at both the sovereign and economic level at individual countries. And so I would say probably when we look at it from a numeric standpoint, probably about -- it's pretty close to even relative the contribution of just overall economic impact combined with some consultant turnover. The good news is that as we factor that in we are seeing a of couple positive trends. Number one, increased profitability in the region because of the actions we have taken in restructuring the cost structure in Europe.

Even when we had some of the individuals who we lost, we weren't running at optimal profitability. And we had to address that. And there was no certainty in any case that some of the consultants that departed in recent times would have been producing at historical levels just given the economics. In fact, we think it's probably exactly the case.

We saw this coming and that's why we took the action. The good news is, we are starting to see the trend turn around. We are seeing more activities pick up.

We think we will have a better fourth quarter in Europe than we did in the third quarter for a variety of reasons. And we are pretty confident that we are going to continue on a very constructive path.

Okay. Great. And then I guess as we look at some of the segments. The US profit margin this quarter was far stronger than it normally is.

I guess, how sustainable is that ? I know the revenue per consultant was very strong there as well. But are you hitting some sort of, I guess, kind of peak productivity levels in the US that make you concerned about sustaining that margin and make you think about having to adding more people and so on?

Well, there's a lot of points you put in there. You always load a question. I will compliment you on that. You are trick that way.

We are confident about the ability to sustain better profitability as an organization. And as I indicated in my comments earlier, we still have more work to do on that front. That's been a keen level of our focus.

In terms of the North American profitability and productivity, I think we have to get credit to our colleagues. As Kevin mentioned earlier that we have we have a very strong board CEO practice, and we are doing a tremendous amount of work in that area and that was a key contributor to our third quarter. We had some very strong results there with some very large assignments.

This is a business that really is impacted by operating leverage both on the upside and the down side. So it's all about getting the right scale, the right productivity levels. I don't believe we are at peak productivity levels, but I also don't believe we are in an economy right now that drives peak productivity levels. I think we can still do better.

And that's our focus. But we have to give credit to our people. We have got a lot of great consultants who are really having very strong years who have been doing great client work and have also been running a business at a better expense level than we have seen in the last couple of years. So a combination of all those effects particularly in North America have driven those results.

Okay. And then last, Kevin, last quarter you talked a little about seeing some clients, trying to hire so some of your people internally and use web 2.0technologies. Can you give us any updated thoughts on that. Are you still seeing that or has that changed at all ?

We lost one in the quarter, Tim, but what we are seeing also is -- you don't see the top producers in organizations leave. Usually it's the individuals that are at the senior associate principal level who end up moving to those organizations, and we haven't seen a large trend continue in that area. They do try to leverage the web 2.0 technologies, but as Rich and I have conveyed to you al, it's more at the junior level. It's not creeped in to the senior level yet, and that's the are in which we operate at the CEO and board levels .

Okay. Kevin if you could give your updated thoughts on the Financial Services sector. It is still obviously somewhat weak as I think we all know, but it doesn't seem to be as weak as what you have seen in the last two years at least, or it wasn't the standout area of weakness for you. I guess updated thoughts just on where you see that sector at this point and where it's headed kind of.

It's great if you look back a few years ago, we rode the storm, and we had a great $190 million Financial Services practice. It's close to $110 million now. And it's going to be lumpy for a while.

Ironically Tim, you saw September / August was the best month in Financial Services all year. So Financial Services is a little erratic. It's still a lot of recruiting going on in places like the backoffice, technology, a lot of the smaller boutique investment banks continue to grow and expand and hire . So it is kind of bumpy, but we have entrepreneurial group of Financial Services consultants who are aggressively attacking the market and serving our clients.

We have also seen Leadership Consulting move into Financial Services as well. We keep an eye on Financial Services all the time given the strength of that practice. However, as I mentioned earlier, we have a tremendous opportunity and all of our other practices, Life Sciences in particular to really grow and invest and offset some of the falloff in Financial Services. That's one of our goals. We are going to keep investing to have a broad array of practices to make sure we are not living and dying by one individual practice.

Okay thanks.

We will go next to Randy Reece with Avondale Partners.

Good morning.

Good morning.

Just talking to other people in the industry, I get the impression that they see customers poised to react kind of on a polarized basis to the elections next week. One of the quotes that I got was they expected hiring to move fast if a Republican is suddenly in the Whitehouse. But that there would be further squeezeing if Obama were reelected. I was wondering if that was consistent with what you have been hearing from employers, or if this is just kind of a wildhair anecdote.

What I would say is I think usurp is the key. That's the one word we hear over and over. There is a lot of pent -up demand within organizations that are waiting to see the macro economic in Europe is impacting some of it. The uncertainty here what we are hearing from client is after the uncertainty of the election is over despite who may win, there will probably be a ramp up to what extent we don't know yet, but at least filling in some of that pent up demand going forward into the fourth quarter and then starting next year.

Yes. I guess the key variable that I hear from the industry, let's say impasse over the fiscal would be more likely to occur with a divided Congress and Whitehouse as opposed to a Republican in charge. But I'm not sure that's definitely of merit either. Just in terms of regional performance and expectations, it seems like the different markets of the Asia-Pacific region are moving in different directions. Is that accurate ?

I would say it's fairly accurate. We saw a little bumpiiness in China. We saw a little bumpiness at the beginning of the year first six months in Australia and New Zealand. A lot of it due to the regulatory environment when it came to the metals and mining industry. So industrial were off a little bit. Financial Services were off,but we have seen over the course of the last three months is both sequentially Australia and New Zealand has really come back much stronger than it started the year. We have seen somewhat of a bounce bounce back in Financial Services. Again, our goal is to invest in the other practices in that region to offset our risks when it comes to Financial Services.

Finally, my over arching observation about the world is that a lot of the issues that agencies such as yours have had involve the amount, the lack of penalty for customers because of the lack of economic growth, there's much less penalty for under hiring, much less penalty for taking more time to do hiring, not moving forward on projects and so on. And I was wondering if you had a feeling on how much growth it would take to create a multiplier effect through the whole employment supply demand chain.

Well, I think it's -- I think it's pretty difficult from our seat to make a statement about the overall supply chain of growth and hiring environment. But I'll just give you a couple thoughts and this is pretty easy math to understand the leverage in our business. If you take our base of consultants and they were able to average an additional search, that's about a $40 million swing in our business which creates a lot of positive operating leverage.

And we would like to see that go up by a couple of searches a year. And as Kevin indicated, because of a lot of uncertainty that's been driven by everything from political , economic, tax, currency, risk and uncertainties, our business is driven a lot more by overall confidence in investing capital. And when we get to an environment where people feel more confident about investing that surplus of capital or that pent up demand in capital in either expending their operations or growing in other regions, etc..., it certainly could have a very positive move for our industry and for our company by just generating a small amount of activity, if you really think about it. Predicting that is very hard.

The visibility in this business, I don't think anyone is thinking that, it's going to be the good old days again. It just seems to be a more of a new normal where it's very choppy and companies and clients especially on a multinational level are proceeding with a bit more caution about how they invest growth capital. And that's why we have to be as well positioned as possible to both serve that need as it presents itself presents itself as well as react to it if it doesn't present itself. And that's how we are positioning the company.

Have you seen any direct impact for clients bracing for the fiscal cliff in their expectations over the next six months ?

I think we have already seen some of that impact over the course of this year as we have indicated. There has been choppiness relative to -- we have probably seen an unprecedented level of things projects that have either extended in time or been on again off again and decisions taking a lot longer and execution taking a lot longer. Very difficult to call whether or not that will sustain lengthen or whatever , but I think we have kind of been living in that environment for some time.

All right. Very good.

Thank you alot.

Thank you.

(Operator Instructions). We will go to Mark Marcon with R.W. Baird.

I was wondering did you give us the bonus accrual for the quarter?

No, the bonus expense is in one of the slides, Mark, which we provide every quarter.

I just missed it.

Can you repeat what it is ?

Sure, salaries and employees benefits -- I'm sorry . It is --

Yeah, it's on page -- it's on slide fourteen, $79.6 million

67.9%

That's.

Is that what --

67.9%is salaries and emploees benefits. But the variable bonus expense in the quarter was $21.5 million. It's slide fifteen.

Yes, the next slide.

Great, thank you. Then can you talk a little bit about what percentage of the searches now are C-Suite and board level ?

It's been 50% and 60%. Probably hovering in the neighbor hood of mid level of that range.

My recollection is that it used to be more like 30%. Is that, I'm talking about going back over, say, 12 years or so.

No, actually it's been 50% for several years.

Yes, I'm talking about way back.

Oh. I have it back -- oh, no. I have it back to '2004 and it's been between 49% and 51%.

And now it's 50% to 60%? Okay. What percentage of the searches would you say are coming from larger enterprises versus you mentioned in some of the commentary looking at new markets, new clients. I'm wondering how much of the searches are coming from mid market clients as opposed to, you know --

We talk about new markets, new clients it's places like the Middle East where we just made that acquisition. So we are entering a lot of the local markets versus the multinationals that Rich refer to before. We are also starting to see more work from local companies, be they Asian, Russian, Middle Easterners. We are looking to expand into other parts of the world. Those are the new markets and new clients we are referring to. Historically it had been mostly multinational companies looking to expand. That's the fundamental shift, Mark, we have seen in the last 12 to 18 months.

Within the US, how are you viewing larger enterprises relative to smaller/medium sized enterprises ?

I would say that hasn't really changed much. Again the only thing we are seeing different is some of these other companies entering into the US markets were large foreign companies looking to expand here.

Okay. And going back to Kelly's question, any color in terms of the consultants who left to go to other competitors ? Was it basically because they ended up getting some big guarantees ? Is that the primary driver ?

I think that's been a driver in quarters past. I don't think that was a huge driver relative to any of the turnover we saw in third quarter in a material way. It is not uncommon that we experience some turnover just because it's the nature of the business and in some cases, particularly in years where there's a lot of volatility, some people run to higher ground where they might have a guarantee and a little time to sort things out. But we have been a lot more aggressive about our performance management over recent quarters as evidenced by the action we have taken over the last 12 months, and sometimes that contributes to be it as well.

Mark it is also a timing issue with a couple other people who left in the third quarter. They actually resigned in the second quarter, but because of leave etc... in Europe pushes us off into the next quarter.

Got it. Great Thanks for the color.

Thanks, Mark

(Operator Instructions). We will go to Tobey Sommer with SunTrust.

Thank you. I was wondering if you could give us some color on your marketshare gain commentary? If you can tell who you might be taking the share from and perhaps in what industry you think you are advancing ?

I think from a standpoint of what we commented about marketshare is that we are certainly getting our fair share relative to the C-Suite and board level assignments. We don't talk too publicly or track, it's difficult to track hard marketshare data relative to our industry. Clearly we have held our own in the space of the C-Suite which has been a primary driver what we saw in the quarter.

If you look at areas where we have been a little more challenged on revenue because of turnover like we commented on Europe earlier, we - - there might be some slight shifts because of either number of consultants or economic activity. But I don't think there's been any mid measurable moves that we are aware of.

Okay. What's the year- to -date variable in bonus related compensation ?

I will have to get back to Mark on a 9 month year to day, or you could take each quarter and add it up.

Yes. Do you happen to have that figure handy?.

I don't. I could call you back what the year to date is or you could take the last three quarter slides and add them. But I can call you back on that.

Perfect. Thank you. I can track that down.

Kevin, but for your comment on Leadership Consulting and that being down year-to-date. You mentioned some key consultants leaving. Could you describe that business ? I didn't think it was quite as kind of rainmaker centric as the Executive Search business. I thought it was a little bit more diffuse. I wondered if you could just provide some more color on that. Thanks.

Sure. We went down a path to grow the business organically. And we have done that. We need to scale and grow the business in terms of compensation intellectual property leverage model etc.. that are different in a consulting business.

To answer your question, absolutely there are rainmakers in that space. In fact, one gentleman who left one was one of the top two producers in the organization. So and he proved even more that -- and he went off and started his own business. It proves to us, Rich and myself and the Executive Committee that growing and scaling that business and looking at acquisitions in that space is one of the key priorities for us as the management team going forward.

And were those individuals dedicated Leadership Consult ants, or were they Executive Search Consult ants who happened to be able to bring a lot of revenue to bare in Leader ship Consulting as well ?

Pure 100% Leader ship Consultant.

Okay, and I know you ran through it with Kelly at the beginning, but my pen didn't quite write fast enough. Could you give that break down of turnover that you gave earlier in the call?

Yes, three involuntary, 10 voluntary, six went to a competitor, two went to a boutique, one we don't know and one went to a client.

There was a drag on a couple of those from the second quarter in Europe.

Right. Thank you very much. My other questions have been answered.

Thank you.

Thank you ?

(Operator Instructions). With no questions in the queue, I'll turn the call back over to our speakers for any additional or closing remarks.

Thank you I would like to thank all you have our colleagues across the globe. We are continuing to serve clients on a daily basis. Appreciate all of the support from all our investors and shareholders. And I hope you all have a great Halloween. Thank you very much.

Ladies and gentlemen that does conclude today's conference. Thank you all for joining.