LOS ANGELES, March 10, 2020 /PRNewswire/ --
Highlights
- Korn Ferry reports fee revenue
of $515.3 million in Q3 FY'20.
- Net income attributable to Korn
Ferry was $20.0 million in Q3
FY'20.
- Operating income was $31.6
million in Q3 FY'20 with an operating margin of 6.1%.
Adjusted EBITDA was $78.1 million
with an Adjusted EBITDA margin of 15.2%.
- Q3 FY'20 diluted earnings per share and adjusted diluted
earnings per share was $0.36 and
$0.75, respectively.
- During the third quarter, the Company completed the acquisition
of Miller Heiman Group, AchieveForum and Strategy Execution
("acquired companies") that are part of a newly branded reporting
segment— Korn Ferry Digital (formerly the Products Group).
- During the third quarter, the Company renegotiated its existing
revolving line of credit on more favorable terms and conditions and
repaid the outstanding balance using proceeds from the issuance of
$400 million, 4.625% Senior
Notes.
- The Company continued with its balanced approach to capital
allocation, buying back 0.2 million shares or $6.1 million of stock during the quarter and
declaring a quarterly dividend of $0.10 per share on March
10, 2020 payable on April 15,
2020 to stockholders of record on March 26, 2020.
Korn Ferry (NYSE: KFY), a global
organizational consulting firm, today announced third quarter fee
revenue of $515.3 million.
Third quarter diluted earnings per share was $0.36 and adjusted diluted earnings per share was
$0.75. Adjusted diluted
earnings per share for the third quarter excludes an aggregate of
$27.4 million, or $0.39 per share, of restructuring charges, net,
and integration/acquisition costs, both associated with the
recently completed acquisition of the acquired companies,
separation costs and debt refinancing costs.
"For Korn Ferry's recently completed third quarter, we generated
fee revenue of approximately $515
million (up 8.6 percent using actual rates; up 9.4 percent
on a constant currency basis) with net income attributable to
Korn Ferry of $20 million and solid Adjusted EBITDA of
$78 million," said Gary D. Burnison, CEO, Korn Ferry.
"Organically and through M&A, our global scope and
capability continues to expand. Today Korn Ferry is much more
diversified and balanced, with almost two-thirds of our fee revenue
generated outside of our historical core Executive Search
business," added Burnison. "We believe the expansion of our
business into larger addressable markets offers higher growth
potential and more durable and visible revenue streams. More
recently, the acquisitions of Miller
Heiman, Strategy Execution and AchieveForum have added
professional development and upskill capabilities to our Korn Ferry
Digital business, giving us a bigger presence in the learning and
development space. Indeed, today's Korn Ferry is the firm that synchronizes a
client's talent and strategy which will enable individuals, teams
and organizations to exceed their potential. Finally, as we manage
our way through the global COVID-19 situation, our unwavering
commitment to protecting the health and safety of our colleagues,
as well as our focus on our clients' success remain, as always, our
top priorities."
Selected Financial Results
(dollars in millions,
except per share amounts) (a)
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Fee
revenue
|
$
|
515.3
|
|
$
|
474.5
|
|
$
|
1,492.3
|
|
$
|
1,435.3
|
Total
revenue
|
$
|
528.0
|
|
$
|
486.2
|
|
$
|
1,528.4
|
|
$
|
1,471.3
|
Operating
income
|
$
|
31.6
|
|
$
|
62.7
|
|
$
|
153.8
|
|
$
|
78.6
|
Operating
margin
|
|
6.1%
|
|
|
13.2%
|
|
|
10.3%
|
|
|
5.5%
|
Net income
attributable to Korn Ferry
|
$
|
20.0
|
|
$
|
45.0
|
|
$
|
105.7
|
|
$
|
52.4
|
Basic earnings per
share
|
$
|
0.37
|
|
$
|
0.81
|
|
$
|
1.92
|
|
$
|
0.94
|
Diluted earnings per
share
|
$
|
0.36
|
|
$
|
0.80
|
|
$
|
1.90
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(b):
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
EBITDA
|
$
|
51.5
|
|
$
|
76.9
|
|
$
|
202.2
|
|
$
|
115.5
|
EBITDA
margin
|
|
10.0%
|
|
|
16.2%
|
|
|
13.5%
|
|
|
8.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(c):
|
Third
Quarter
|
|
Year to
Date
|
|
|
|
|
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Adjusted EBITDA
(b)
|
$
|
78.1
|
|
$
|
77.7
|
|
$
|
231.4
|
|
$
|
228.8
|
Adjusted EBITDA
margin (b)
|
|
15.2%
|
|
|
16.4%
|
|
|
15.5%
|
|
|
15.9%
|
Adjusted net income
attributable to Korn Ferry
|
$
|
41.0
|
|
$
|
45.8
|
|
$
|
128.7
|
|
$
|
138.2
|
Adjusted basic
earnings per share
|
$
|
0.75
|
|
$
|
0.82
|
|
$
|
2.33
|
|
$
|
2.47
|
Adjusted diluted
earnings per share
|
$
|
0.75
|
|
$
|
0.81
|
|
$
|
2.31
|
|
$
|
2.43
|
___________
|
(a)
|
Numbers may not total
due to rounding.
|
(b)
|
EBITDA refers to
earnings before interest, taxes, depreciation and
amortization. Adjusted EBITDA further adjusts EBITDA to
exclude integration/acquisition costs, restructuring charges, net,
separation costs and tradename write-offs. EBITDA, EBITDA margin,
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial
measures (see attached reconciliations).
|
(c)
|
Adjusted results are
non-GAAP financial measures that adjust for the following, as
applicable (see attached reconciliations):
|
|
|
|
|
|
|
|
|
|
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Integration/acquisition costs
|
$
|
6.7
|
|
$
|
0.8
|
|
$
|
9.3
|
|
$
|
6.7
|
Restructuring charges, net
|
$
|
18.1
|
|
$
|
—
|
|
$
|
18.1
|
|
$
|
—
|
Separation
costs
|
$
|
1.8
|
|
$
|
—
|
|
$
|
1.8
|
|
$
|
—
|
Tradename
write-offs
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
106.6
|
Debt refinancing
costs
|
$
|
0.8
|
|
$
|
—
|
|
$
|
0.8
|
|
$
|
—
|
Fee revenue was $515.3 million in
Q3 FY'20, an increase of 9% (9% increase on a constant currency
basis) compared to Q3 FY'19. The increase in fee revenue was
primarily due to the fee revenue generated by the acquired
companies and the increase in fee revenue in RPO and Professional
Search, partially offset by a decline in Executive Search.
Net income attributable to Korn
Ferry was $20.0 million in Q3
FY'20 as compared to $45.0 million in
Q3 FY'19. The decrease in net income attributable to
Korn Ferry was primarily due to
restructuring charges, net and integration/acquisition costs, both
associated with the acquisition of the acquired companies,
management separation costs, and an increase in interest expense
related to the newly issued 4.625% Senior Notes.
Operating margin was 6.1% in Q3 FY'20 compared to 13.2% in the
year-ago quarter.
Adjusted EBITDA margin was 15.2%, compared to 16.4% in the
year-ago quarter.
Results by Segment
Selected Consulting Data(a)
(dollars in
millions) (b)
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Fee
revenue
|
$
|
140.5
|
|
$
|
139.0
|
|
$
|
422.1
|
|
$
|
424.0
|
Total
revenue
|
$
|
144.3
|
|
$
|
143.2
|
|
$
|
433.8
|
|
$
|
437.2
|
Operating income
(loss)
|
$
|
2.7
|
|
$
|
11.8
|
|
$
|
24.3
|
|
$
|
(47.4)
|
Operating
margin
|
|
1.9%
|
|
|
8.5%
|
|
|
5.8%
|
|
|
(11.2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of
consultants and execution staff (c)
|
|
1,792
|
|
|
1,832
|
|
|
1,792
|
|
|
1,832
|
Hours worked in
thousands (d)
|
|
428
|
|
|
406
|
|
|
1,344
|
|
|
1,263
|
Average billed rate
(e)
|
$
|
328
|
|
$
|
342
|
|
$
|
314
|
|
$
|
336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(f):
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
EBITDA
|
$
|
7.6
|
|
$
|
16.4
|
|
$
|
38.9
|
|
$
|
(34.1)
|
EBITDA
margin
|
|
5.4%
|
|
|
11.8%
|
|
|
9.2%
|
|
|
(8.0%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(g):
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Adjusted EBITDA
(f)
|
$
|
18.7
|
|
$
|
17.0
|
|
$
|
50.0
|
|
$
|
48.2
|
Adjusted EBITDA
margin (f)
|
|
13.3%
|
|
|
12.2%
|
|
|
11.8%
|
|
|
11.4%
|
___________
|
(a)
|
In the third quarter
of fiscal 2020, the Company changed the composition of its global
segments. Consulting segment represents the consulting
business that was previously included in the Advisory segment.
Segment data for Q3 FY'19 and YTD FY19 have been recast to
reflect the division of the Advisory segment into the Consulting
and Digital segments.
|
(b)
|
Numbers may not total
due to rounding.
|
(c)
|
Represents number of
employees originating, delivering and executing consulting
services.
|
(d)
|
The number of hours
worked by consultant and execution staff during the
period.
|
(e)
|
The amount of fee
revenue divided by the number of hours worked by consultants and
executive staff.
|
(f)
|
EBITDA, EBITDA
margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures (see attached reconciliations).
|
(g)
|
Adjusted results are
non-GAAP financial measures that adjust for the following (see
attached reconciliations):
|
|
|
|
|
|
|
|
|
|
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Integration/acquisition costs
|
$
|
—
|
|
$
|
0.7
|
|
$
|
—
|
|
$
|
5.3
|
Restructuring charges, net
|
$
|
11.1
|
|
$
|
—
|
|
$
|
11.1
|
|
$
|
—
|
Tradename
write-offs
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
77.0
|
Fee revenue was $140.5 million in
Q3 FY'20 compared to $139.0 million
in Q3 FY'19, an increase of $1.5
million or 1% (up 2% on a constant currency basis).
Operating income was $2.7 million
in Q3 FY'20 with an operating margin of 1.9% compared to
$11.8 million and an operating margin
of 8.5%, respectively, in the year-ago quarter. The decrease
in operating income was primarily due to restructuring charges, net
incurred in Q3 FY'20.
Adjusted EBITDA was $18.7 million
in Q3 FY'20 with an Adjusted EBITDA margin of 13.3% compared to
$17.0 million and 12.2%,
respectively, in the year-ago quarter.
Selected Digital Data(a)
(dollars in
millions) (b)
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Fee
revenue
|
$
|
99.4
|
|
$
|
62.5
|
|
$
|
223.1
|
|
$
|
190.0
|
Total
revenue
|
$
|
100.7
|
|
$
|
62.5
|
|
$
|
224.4
|
|
$
|
190.0
|
Operating
income
|
$
|
8.5
|
|
$
|
17.5
|
|
$
|
41.0
|
|
$
|
23.1
|
Operating
margin
|
|
8.5%
|
|
|
28.0%
|
|
|
18.4%
|
|
|
12.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of
consultants
|
|
464
|
|
|
370
|
|
|
464
|
|
|
370
|
Subscription &
License fee revenue
|
$
|
21.3
|
|
$
|
14.2
|
|
$
|
52.7
|
|
$
|
42.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(c):
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
EBITDA
|
$
|
14.5
|
|
$
|
21.0
|
|
$
|
54.7
|
|
$
|
33.1
|
EBITDA
margin
|
|
14.6%
|
|
|
33.6%
|
|
|
24.5%
|
|
|
17.4%
|
|
|
|
|
Adjusted Results
(d):
|
Third
Quarter
|
|
Year to
Date
|
|
|
|
|
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Adjusted EBITDA
(c)
|
$
|
25.9
|
|
$
|
21.1
|
|
$
|
66.1
|
|
$
|
63.9
|
Adjusted EBITDA
margin (c)
|
|
26.0%
|
|
|
33.8%
|
|
|
29.6%
|
|
|
33.6%
|
|
___________
|
(a)
|
In the third quarter
of fiscal 2020, the Company changed the composition of its global
segments. Digital segment represents the products business
that was previously included in the Advisory segment. Segment
data for Q3 FY'19 and YTD FY19 have been recast to reflect the
division of the Advisory segment into the Consulting and Digital
segments.
|
(b)
|
Numbers may not total
due to rounding.
|
(c)
|
EBITDA, EBITDA
margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures (see attached reconciliations).
|
(d)
|
Adjusted results are
non-GAAP financial measures that adjust for the following (see
attached reconciliations):
|
|
|
|
|
|
|
|
|
|
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Integration/acquisition costs
|
$
|
4.3
|
|
$
|
0.1
|
|
$
|
4.3
|
|
$
|
1.3
|
Restructuring charges, net
|
$
|
7.0
|
|
$
|
—
|
|
$
|
7.0
|
|
$
|
—
|
Tradename
write-offs
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
29.6
|
Fee revenue was $99.4
million in Q3 FY'20 compared to $62.5
million in Q3 FY'19, an increase of $36.9 million or 59% (up 61% on a constant
currency basis). The increase in fee revenue was primarily
due to fee revenue generated by the acquired companies.
Operating income was $8.5 million
in Q3 FY'20 with an operating margin of 8.5% compared to
$17.5 million and an operating margin
of 28.0% in the year-ago quarter. The decrease in operating
income was due to restructuring charges, net incurred in Q3 FY'20
and an increase in integration/acquisition costs incurred in Q3
FY'20, both associated with the acquisition of the acquired
companies, compared to the year-ago quarter.
Adjusted EBITDA was $25.9 million
in Q3 FY'20 with an Adjusted EBITDA margin of 26.0% compared to
$21.1 million and 33.8%,
respectively, in the year-ago quarter.
Selected Executive Search Data
(dollars in millions)
(a)
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Fee
revenue
|
$
|
183.6
|
|
$
|
193.4
|
|
$
|
564.6
|
|
$
|
584.0
|
Total
revenue
|
$
|
188.0
|
|
$
|
198.0
|
|
$
|
578.0
|
|
$
|
598.0
|
Operating
income
|
$
|
32.7
|
|
$
|
44.7
|
|
$
|
119.6
|
|
$
|
137.0
|
Operating
margin
|
|
17.8%
|
|
|
23.1%
|
|
|
21.2%
|
|
|
23.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of
consultants
|
|
582
|
|
|
552
|
|
|
582
|
|
|
552
|
Average number of
consultants
|
|
583
|
|
|
554
|
|
|
573
|
|
|
546
|
Engagements
billed
|
|
3,767
|
|
|
3,849
|
|
|
8,077
|
|
|
8,201
|
New engagements
(b)
|
|
1,565
|
|
|
1,608
|
|
|
4,835
|
|
|
5,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(c):
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
EBITDA
|
$
|
38.9
|
|
$
|
48.2
|
|
$
|
131.8
|
|
$
|
144.1
|
EBITDA
margin
|
|
21.2%
|
|
|
24.9%
|
|
|
23.3%
|
|
|
24.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(d):
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Adjusted EBITDA
(c)
|
$
|
40.7
|
|
$
|
48.2
|
|
$
|
133.6
|
|
$
|
144.1
|
Adjusted EBITDA
margin (c)
|
|
22.1%
|
|
|
24.9%
|
|
|
23.7%
|
|
|
24.7%
|
________
|
(a)
|
Numbers may not total
due to rounding.
|
(b)
|
Represents new
engagements opened in the respective period.
|
(c)
|
EBITDA, EBITDA
margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures (see attached reconciliations).
|
(d)
|
Adjusted results are
non-GAAP financial measures that adjust for the following (see
attached reconciliations):
|
|
|
|
|
|
|
|
|
|
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Separation
costs
|
$
|
1.8
|
|
$
|
—
|
|
$
|
1.8
|
|
$
|
—
|
Fee revenue was $183.6 million and
$193.4 million in Q3 FY'20 and Q3
FY'19, respectively, a decrease of $9.8
million or 5% (5% decrease on a constant currency
basis). The decrease in fee revenue was attributable to a
decline in fee revenue in all regions.
Operating income was $32.7 million
in Q3 FY'20 compared to $44.7 million
in Q3 FY'19. Operating margin was 17.8% in Q3 FY'20 compared
to 23.1% in the year-ago quarter. The decrease in operating
income was mainly due to a decrease in fee revenue and an increase
in compensation and benefits expense due to management separation
costs incurred in Q3 FY'20.
Adjusted EBITDA was $40.7 million
in Q3 FY'20 with an Adjusted EBITDA margin of 22.1% compared to
$48.2 million and 24.9%,
respectively, in the year-ago quarter.
Selected RPO and Professional Search Data
(dollars in
millions) (a)
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
Fee
revenue
|
$
|
91.9
|
|
$
|
79.6
|
|
$
|
282.4
|
|
$
|
237.4
|
Total
revenue
|
$
|
95.0
|
|
$
|
82.5
|
|
$
|
292.2
|
|
$
|
246.1
|
Operating
income
|
$
|
14.1
|
|
$
|
12.2
|
|
$
|
44.3
|
|
$
|
36.3
|
Operating
margin
|
|
15.4%
|
|
|
15.3%
|
|
|
15.7%
|
|
|
15.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Engagements billed
(b)
|
|
1,375
|
|
|
1,296
|
|
|
3,030
|
|
|
2,809
|
New engagements
(c)
|
|
711
|
|
|
652
|
|
|
2,171
|
|
|
2,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and
Adjusted Results (d):
|
Third
Quarter
|
|
Year to
Date
|
|
FY'20
|
|
FY'19
|
|
FY'20
|
|
FY'19
|
EBITDA and Adjusted
EBITDA
|
$
|
15.2
|
|
$
|
13.1
|
|
$
|
47.5
|
|
$
|
38.8
|
EBITDA and Adjusted
EBITDA margin
|
|
16.6%
|
|
|
16.4%
|
|
|
16.8%
|
|
|
16.3%
|
___________
|
(a)
|
Numbers may not total
due to rounding.
|
(b)
|
Represents
professional search engagements billed.
|
(c)
|
Represents new
professional search engagements opened in the respective
period.
|
(d)
|
EBITDA, EBITDA
margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures (see attached reconciliations).
|
Fee revenue was $91.9 million in
Q3 FY'20, an increase of $12.3
million or 15% (16% increase on a constant currency basis),
compared to the year-ago quarter. The higher fee revenue was
driven by an increase in fee revenue in recruitment process
outsourcing and professional search of $9.1
million and $3.2 million,
respectively, in Q3 FY'20 compared to Q3 FY'19.
Operating income was $14.1 million
in Q3 FY'20, an increase of $1.9
million compared to Q3 FY'19 operating income of
$12.2 million. Operating margin
was 15.4% in the current quarter compared to 15.3% in the year-ago
quarter. The increase in operating income was due to higher
fee revenue in Q3 FY'20 compared to Q3 FY'19, partially offset by
an increase in compensation and benefits expense driven by a 24%
increase in average headcount.
EBITDA was $15.2 million during Q3
FY'20, an increase of $2.1 million
compared to Q3 FY'19. EBITDA margin was 16.6% in Q3 FY'20 and
16.4% in Q3 FY'19.
Outlook
The uncertainty caused by the coronavirus, primarily due to the
largescale efforts being taken to contain its continued spread and
the number of conflicting and rapidly changing datapoints regarding
the impact of the virus on society, has clouded the near-term
predictability of our business. In recent weeks and days, out
of an abundance of caution, select governments and companies have
implemented social distancing - limiting either travel or in person
individual or group face-to-face interaction. The extent to
which further, incremental measures are put in place or additional
authoritative bodies adopt such measures is a major unknown.
The measures taken to date will most certainly impact our business
for the fiscal fourth quarter and potentially beyond and due to the
rapidly changing nature of this crisis, combined with the lack of
visibility with respect to further measures to be taken, it is too
difficult for us to accurately assess and quantify the impact at
this point. Consequently, we will not be issuing any specific
revenue and earnings guidance for the fourth quarter. We will
reassess the suspension of our guidance once we are comfortable
that the coronavirus uncertainties have passed.
Earnings Conference Call Webcast
The earnings conference call will be held today at 4:30 PM (EDT) and hosted by CEO Gary Burnison, CFO Robert Rozek and SVP Finance Gregg Kvochak. The conference call will be
webcast and available online at ir.kornferry.com. We will
also post to this section of our website earnings slides, which
will accompany our webcast, and other important information, and
encourage you to review the information that we make available on
our website.
About Korn
Ferry
Korn Ferry is a global
organizational consulting firm. We help clients synchronize
strategy and talent to drive superior performance. We work
with organizations to design their structures, roles, and
responsibilities. We help them hire the right people to bring
their strategy to life. And we advise them on how to reward,
develop, and motivate their people. Visit kornferry.com for
more information.
Forward-Looking Statements
Statements in this press release and our conference call that
relate to future results and events ("forward-looking statements")
are based on Korn Ferry's current
expectations. These statements, which include words such as
"believes", "expects" or "likely", include references to our
outlook as well as the expected benefits of the acquisition of the
acquired companies (as defined below, the timing and expected
benefits of our recently adopted restructuring plan and the
potential negative impact of the coronavirus (COVID-19) outbreak on
our business, employees, customers and our ability to provide
services in affected regions. Readers are cautioned not to
place undue reliance on such statements. Actual results in
future periods may differ materially from those currently expected
or desired because of a number of risks and uncertainties that are
beyond the control of Korn
Ferry. The potential risks and uncertainties include
those relating to competition, changes in demand for our services
as a result of automation, the dependence on and costs of
attracting and retaining qualified and experienced consultants, our
ability to maintain relationships with customers and suppliers and
retain key employees, maintaining our brand name and professional
reputation, potential legal liability and regulatory developments,
the portability of client relationships, consolidation of the
industries we serve, global and local political or economic
developments in or affecting countries where we have operations,
currency fluctuations in our international operations, risks
related to growth, alignment of our cost structure, restrictions
imposed by off-limits agreements, reliance on information
processing systems, cyber security vulnerabilities, changes to data
security, data privacy and data protection laws, limited protection
of our intellectual property, our ability to enhance and develop
new technology, our ability to develop new products and services,
the utilization and billing rates of our consultants, dependence on
third parties for the execution of critical functions, our ability
to successfully recover from a disaster or other business
continuity problems, changes in our accounting
estimates/assumptions, technical guidance relating to the Tax Act,
impairment of goodwill and other intangible assets, deferred tax
assets that we may not be able to use, our indebtedness, the
phase-out of the London Interbank Offered Rate, the potential
negative impact of the coronavirus (COVID-19) outbreak on our
business, employees, customers and our ability to provide services
in affected regions, expansion of social media platforms,
seasonality, ability to effect acquisition and integrate recently
acquired companies, including those of Miller Heiman Group,
AchieveForum, and Strategy Execution (collectively, the "acquired
companies"); the ability to recognize the anticipated benefits of
the acquisition of the acquired companies; the costs related to the
acquisition of the acquired companies; employment liability
risk, the impact of rebranding on the Company's products and
services; the expected timing of the Company's rebranding and
entity rationalization plan, and the costs of the Company's
rebranding and entity rationalization plan. For a detailed
description of risks and uncertainties that could cause
differences, please refer to Korn
Ferry's periodic filings with the Securities and Exchange
Commission. Korn Ferry
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Use of Non-GAAP Financial Measures
This press release contains financial information calculated
other than in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP"). In particular, it includes:
- Adjusted net income attributable to Korn Ferry, adjusted to exclude
integration/acquisition costs, restructuring charges, separation
costs, tradename write-offs, and debt refinancing costs, net of
income tax effect;
- Adjusted basic and diluted earnings per share, adjusted to
exclude integration/acquisition costs, restructuring charges,
separation costs, tradename write-offs, and debt refinancing costs,
net of income tax effect;
- Constant currency (calculated using a quarterly average)
percentages that represent the percentage change that would have
resulted had exchange rates in the prior period been the same as
those in effect in the current period;
- EBITDA, or earnings before interest, taxes, depreciation and
amortization and EBITDA margin; and
- Adjusted EBITDA, which is EBITDA further adjusted to exclude
integration/acquisition costs, restructuring charges, separation
costs and tradename write-offs and Adjusted EBITDA margin.
This non-GAAP disclosure has limitations as an analytical
tool, should not be viewed as a substitute for financial
information determined in accordance with GAAP, and should not be
considered in isolation or as a substitute for analysis of the
Company's results as reported under GAAP, nor is it necessarily
comparable to non-GAAP performance measures that may be presented
by other companies.
Management believes the presentation of non-GAAP financial
measures in this press release provides meaningful supplemental
information regarding Korn Ferry's
performance by excluding certain charges that may not be indicative
of Korn Ferry's ongoing operating
results. These non-GAAP financial measures are performance
measures and are not indicative of the liquidity of Korn Ferry. These charges, which are
described in the footnotes in the attached reconciliations,
represent 1) costs we incurred to acquire and integrate a portion
of our Digital business, 2) charges we incurred to restructure the
Company due to acquisition of the acquired companies, 3)
separation costs, 4) tradename write-offs associated with the
rebranding plan initiated by Korn
Ferry and 5) debt refinancing costs. The use of
non-GAAP financial measures facilitates comparisons to Korn Ferry's historical performance.
Korn Ferry includes non-GAAP
financial measures because management believes they are useful to
investors in allowing for greater transparency with respect to
supplemental information used by management in its evaluation of
Korn Ferry's ongoing operations and
financial and operational decision-making. Adjusted net
income attributable to Korn Ferry,
adjusted basic and diluted earnings per share and Adjusted EBITDA,
exclude certain charges that management does not consider on-going
in nature and allows management and investors to make more
meaningful period-to-period comparisons of the Company's operating
results. Management further believes that EBITDA is useful to
investors because it is frequently used by investors and other
interested parties to measure operating performance among companies
with different capital structures, effective tax rates and tax
attributes and capitalized asset values, all of which can vary
substantially from company to company. In the case of
constant currency percentages, management believes the presentation
of such information provides useful supplemental information
regarding Korn Ferry's performance
as excluding the impact of exchange rate changes on Korn Ferry's financial performance allows
investors to make more meaningful period-to-period comparisons of
the Company's operating results, to better identify operating
trends that may otherwise be masked or distorted by exchange rate
changes and to perform related trend analysis, and provides a
higher degree of transparency of information used by management in
its evaluation of Korn Ferry's
ongoing operations and financial and operational
decision-making.
[Tables attached]
KORN FERRY AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(in thousands,
except per share amounts)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
January
31,
|
|
January
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(unaudited)
|
Fee
revenue
|
$
|
515,325
|
|
$
|
474,504
|
|
$
|
1,492,263
|
|
$
|
1,435,277
|
Reimbursed
out-of-pocket engagement expenses
|
|
12,654
|
|
|
11,668
|
|
|
36,091
|
|
|
36,050
|
Total revenue
|
|
527,979
|
|
|
486,172
|
|
|
1,528,354
|
|
|
1,471,327
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
and benefits
|
|
348,597
|
|
|
321,835
|
|
|
1,014,475
|
|
|
979,575
|
General and
administrative expenses
|
|
71,355
|
|
|
61,179
|
|
|
199,171
|
|
|
287,641
|
Reimbursed
expenses
|
|
12,654
|
|
|
11,668
|
|
|
36,091
|
|
|
36,050
|
Cost of
services
|
|
30,822
|
|
|
17,066
|
|
|
66,371
|
|
|
55,020
|
Depreciation
and amortization
|
|
14,863
|
|
|
11,741
|
|
|
40,355
|
|
|
34,490
|
Restructuring
charges, net
|
|
18,093
|
|
|
-
|
|
|
18,093
|
|
|
-
|
Total operating expenses
|
|
496,384
|
|
|
423,489
|
|
|
1,374,556
|
|
|
1,392,776
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
31,595
|
|
|
62,683
|
|
|
153,798
|
|
|
78,551
|
Other income,
net
|
|
5,055
|
|
|
2,463
|
|
|
8,014
|
|
|
2,483
|
Interest
expense, net
|
|
(6,919)
|
|
|
(4,282)
|
|
|
(15,186)
|
|
|
(12,722)
|
Income before provision for income taxes
|
|
29,731
|
|
|
60,864
|
|
|
146,626
|
|
|
68,312
|
Income tax
provision
|
|
8,775
|
|
|
15,420
|
|
|
38,988
|
|
|
14,143
|
Net
income
|
|
20,956
|
|
|
45,444
|
|
|
107,638
|
|
|
54,169
|
Net income attributable to noncontrolling interest
|
|
(963)
|
|
|
(480)
|
|
|
(1,890)
|
|
|
(1,782)
|
Net income
attributable to Korn Ferry
|
$
|
19,993
|
|
$
|
44,964
|
|
$
|
105,748
|
|
$
|
52,387
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share attributable to Korn Ferry:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.37
|
|
$
|
0.81
|
|
$
|
1.92
|
|
$
|
0.94
|
Diluted
|
$
|
0.36
|
|
$
|
0.80
|
|
$
|
1.90
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
53,999
|
|
|
55,233
|
|
|
54,611
|
|
|
55,358
|
Diluted
|
|
54,264
|
|
|
55,753
|
|
|
55,006
|
|
|
56,181
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share:
|
$
|
0.10
|
|
$
|
0.10
|
|
$
|
0.30
|
|
$
|
0.30
|
KORN FERRY AND
SUBSIDIARIES
|
FINANCIAL SUMMARY
BY SEGMENT
|
(in
thousands)
|
(unaudited)
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
2020
|
|
|
|
2019
|
|
% Change
|
|
2020
|
|
|
|
2019
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
$
|
140,525
|
|
|
|
$
|
139,029
|
|
1.1 %
|
|
$
|
422,103
|
|
|
|
$
|
423,958
|
|
(0.4%)
|
Digital
|
|
99,389
|
|
|
|
|
62,473
|
|
59.1 %
|
|
|
223,097
|
|
|
|
|
190,008
|
|
17.4%
|
Executive
Search:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
106,888
|
|
|
|
|
114,215
|
|
(6.4%)
|
|
|
332,428
|
|
|
|
|
342,175
|
|
(2.8%)
|
|
EMEA
|
|
44,301
|
|
|
|
|
45,940
|
|
(3.6%)
|
|
|
130,652
|
|
|
|
|
137,522
|
|
(5.0%)
|
|
Asia
Pacific
|
|
25,089
|
|
|
|
|
25,687
|
|
(2.3%)
|
|
|
78,395
|
|
|
|
|
79,918
|
|
(1.9%)
|
|
Latin
America
|
|
7,283
|
|
|
|
|
7,554
|
|
(3.6%)
|
|
|
23,140
|
|
|
|
|
24,339
|
|
(4.9%)
|
Total Executive
Search
|
|
183,561
|
|
|
|
|
193,396
|
|
(5.1%)
|
|
|
564,615
|
|
|
|
|
583,954
|
|
(3.3%)
|
RPO and Professional
Search
|
|
91,850
|
|
|
|
|
79,606
|
|
15.4%
|
|
|
282,448
|
|
|
|
|
237,357
|
|
19.0%
|
|
Total fee
revenue
|
|
515,325
|
|
|
|
|
474,504
|
|
8.6%
|
|
|
1,492,263
|
|
|
|
|
1,435,277
|
|
4.0%
|
Reimbursed
out-of-pocket engagement expenses
|
|
12,654
|
|
|
|
|
11,668
|
|
8.5%
|
|
|
36,091
|
|
|
|
|
36,050
|
|
0.1%
|
|
Total
revenue
|
$
|
527,979
|
|
|
|
$
|
486,172
|
|
8.6%
|
|
$
|
1,528,354
|
|
|
|
$
|
1,471,327
|
|
3.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
Margin
|
|
|
|
|
Margin
|
|
|
|
|
Margin
|
|
|
|
|
Margin
|
Consulting
|
$
|
2,663
|
|
1.9%
|
|
$
|
11,782
|
|
8.5%
|
|
$
|
24,272
|
|
5.8%
|
|
$
|
(47,431)
|
|
(11.2%)
|
Digital
|
|
8,463
|
|
8.5%
|
|
|
17,497
|
|
28.0%
|
|
|
41,036
|
|
18.4%
|
|
|
23,057
|
|
12.1%
|
Executive
Search:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
21,808
|
|
20.4%
|
|
|
30,596
|
|
26.8%
|
|
|
80,254
|
|
24.1%
|
|
|
92,438
|
|
27.0%
|
|
EMEA
|
|
4,644
|
|
10.5%
|
|
|
7,525
|
|
16.4%
|
|
|
18,466
|
|
14.1%
|
|
|
21,813
|
|
15.9%
|
|
Asia
Pacific
|
|
5,070
|
|
20.2%
|
|
|
5,929
|
|
23.1%
|
|
|
17,866
|
|
22.8%
|
|
|
19,337
|
|
24.2%
|
|
Latin
America
|
|
1,198
|
|
16.4%
|
|
|
653
|
|
8.6%
|
|
|
2,999
|
|
13.0%
|
|
|
3,460
|
|
14.2%
|
Total Executive
Search
|
|
32,720
|
|
17.8%
|
|
|
44,703
|
|
23.1%
|
|
|
119,585
|
|
21.2%
|
|
|
137,048
|
|
23.5%
|
RPO and Professional
Search
|
|
14,144
|
|
15.4%
|
|
|
12,176
|
|
15.3%
|
|
|
44,279
|
|
15.7%
|
|
|
36,337
|
|
15.3%
|
Corporate
|
|
(26,395)
|
|
|
|
|
(23,475)
|
|
|
|
|
(75,374)
|
|
|
|
|
(70,460)
|
|
|
|
Total operating
income
|
$
|
31,595
|
|
6.1%
|
|
$
|
62,683
|
|
13.2%
|
|
$
|
153,798
|
|
10.3%
|
|
$
|
78,551
|
|
5.5%
|
KORN FERRY AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands,
except per share amounts)
|
|
|
January
31,
|
|
April
30,
|
|
2020
|
|
2019
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
563,708
|
|
$
|
626,360
|
Marketable
securities
|
|
41,022
|
|
|
8,288
|
Receivables due from
clients, net of allowance for doubtful accounts of $25,168 and
$21,582 at January 31, 2020 and April 30, 2019,
respectively
|
|
472,261
|
|
|
404,857
|
Income taxes and
other receivables
|
|
38,656
|
|
|
26,767
|
Unearned
compensation
|
|
46,386
|
|
|
42,003
|
Prepaid expenses and
other assets
|
|
35,094
|
|
|
28,535
|
Total current
assets
|
|
1,197,127
|
|
|
1,136,810
|
|
|
|
|
|
|
Marketable
securities, non-current
|
|
143,789
|
|
|
132,463
|
Property and
equipment, net
|
|
143,230
|
|
|
131,505
|
Operating lease
right-of-use assets, net
|
|
209,236
|
|
|
-
|
Cash surrender value
of company-owned life insurance policies, net of loans
|
|
145,305
|
|
|
126,000
|
Deferred income
taxes
|
|
44,928
|
|
|
43,220
|
Goodwill
|
|
615,513
|
|
|
578,298
|
Intangible assets,
net
|
|
116,882
|
|
|
82,948
|
Unearned
compensation, non-current
|
|
93,934
|
|
|
80,924
|
Investments and other
assets
|
|
29,705
|
|
|
22,684
|
Total
assets
|
$
|
2,739,649
|
|
$
|
2,334,852
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Accounts
payable
|
$
|
36,044
|
|
$
|
39,156
|
Income taxes
payable
|
|
17,128
|
|
|
21,145
|
Compensation and
benefits payable
|
|
258,789
|
|
|
328,610
|
Operating lease
liability, current
|
|
53,592
|
|
|
-
|
Other accrued
liabilities
|
|
194,838
|
|
|
162,047
|
Total current
liabilities
|
|
560,391
|
|
|
550,958
|
|
|
|
|
|
|
Deferred compensation
and other retirement plans
|
|
283,293
|
|
|
257,635
|
Operating lease
liability, non-current
|
|
194,209
|
|
|
-
|
Long-term
debt
|
|
393,986
|
|
|
222,878
|
Deferred tax
liabilities
|
|
837
|
|
|
1,103
|
Other
liabilities
|
|
29,280
|
|
|
58,891
|
Total
liabilities
|
|
1,461,996
|
|
|
1,091,465
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Common stock: $0.01
par value, 150,000 shares authorized, 73,210 and 72,442 shares
issued and 55,258 and 56,431 shares outstanding at January 31, 2020
and April 30, 2019, respectively
|
|
604,609
|
|
|
656,463
|
Retained
earnings
|
|
749,301
|
|
|
660,845
|
Accumulated other
comprehensive loss, net
|
|
(78,810)
|
|
|
(76,652)
|
Total Korn Ferry
stockholders' equity
|
|
1,275,100
|
|
|
1,240,656
|
Noncontrolling
interest
|
|
2,553
|
|
|
2,731
|
Total stockholders'
equity
|
|
1,277,653
|
|
|
1,243,387
|
Total liabilities and
stockholders' equity
|
$
|
2,739,649
|
|
$
|
2,334,852
|
KORN FERRY
AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(in thousands,
except per share amounts)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
January
31,
|
|
January
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(unaudited)
|
Net income
attributable to Korn Ferry
|
$
|
19,993
|
|
$
|
44,964
|
|
$
|
105,748
|
|
$
|
52,387
|
Net income
attributable to non-controlling interest
|
|
963
|
|
|
480
|
|
|
1,890
|
|
|
1,782
|
Net
income
|
|
20,956
|
|
|
45,444
|
|
|
107,638
|
|
|
54,169
|
Income tax
provision
|
|
8,775
|
|
|
15,420
|
|
|
38,988
|
|
|
14,143
|
Income before
provision for income taxes
|
|
29,731
|
|
|
60,864
|
|
|
146,626
|
|
|
68,312
|
Other income,
net
|
|
(5,055)
|
|
|
(2,463)
|
|
|
(8,014)
|
|
|
(2,483)
|
Interest
expense, net
|
|
6,919
|
|
|
4,282
|
|
|
15,186
|
|
|
12,722
|
Operating
income
|
|
31,595
|
|
|
62,683
|
|
|
153,798
|
|
|
78,551
|
Depreciation
and amortization
|
|
14,863
|
|
|
11,741
|
|
|
40,355
|
|
|
34,490
|
Other income,
net
|
|
5,055
|
|
|
2,463
|
|
|
8,014
|
|
|
2,483
|
EBITDA
|
|
51,513
|
|
|
76,887
|
|
|
202,167
|
|
|
115,524
|
Integration/acquisition costs (1)
|
|
6,704
|
|
|
804
|
|
|
9,319
|
|
|
6,746
|
Restructuring
charges, net (2)
|
|
18,093
|
|
|
-
|
|
|
18,093
|
|
|
-
|
Separation
costs (3)
|
|
1,783
|
|
|
-
|
|
|
1,783
|
|
|
-
|
Tradename
write-offs (4)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
106,555
|
Adjusted EBITDA
|
$
|
78,093
|
|
$
|
77,691
|
|
$
|
231,362
|
|
$
|
228,825
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
6.1%
|
|
|
13.2%
|
|
|
10.3%
|
|
|
5.5%
|
Depreciation
and amortization
|
|
2.9%
|
|
|
2.5%
|
|
|
2.7%
|
|
|
2.4%
|
Other income,
net
|
|
1.0%
|
|
|
0.5%
|
|
|
0.5%
|
|
|
0.1%
|
EBITDA margin
|
|
10.0%
|
|
|
16.2%
|
|
|
13.5%
|
|
|
8.0%
|
Integration/acquisition costs (1)
|
|
1.3%
|
|
|
0.2%
|
|
|
0.7%
|
|
|
0.5%
|
Restructuring
charges, net (2)
|
|
3.5%
|
|
|
-
|
|
|
1.2%
|
|
|
-
|
Separation
costs (3)
|
|
0.4%
|
|
|
-
|
|
|
0.1%
|
|
|
-
|
Tradename
write-offs (4)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7.4%
|
Adjusted EBITDA margin
|
|
15.2%
|
|
|
16.4%
|
|
|
15.5%
|
|
|
15.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn Ferry
|
$
|
19,993
|
|
$
|
44,964
|
|
$
|
105,748
|
|
$
|
52,387
|
Integration/acquisition costs (1)
|
|
6,704
|
|
|
804
|
|
|
9,319
|
|
|
6,746
|
Restructuring
charges, net (2)
|
|
18,093
|
|
|
-
|
|
|
18,093
|
|
|
-
|
Separation
costs (3)
|
|
1,783
|
|
|
-
|
|
|
1,783
|
|
|
-
|
Tradename
write-offs (4)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
106,555
|
Debt
refinancing costs (5)
|
|
828
|
|
|
-
|
|
|
828
|
|
|
-
|
Tax effect on
the adjusted items (6)
|
|
(6,451)
|
|
|
31
|
|
|
(7,119)
|
|
|
(27,496)
|
Adjusted net income attributable to Korn Ferry
|
$
|
40,950
|
|
$
|
45,799
|
|
$
|
128,652
|
|
$
|
138,192
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per common share
|
$
|
0.37
|
|
$
|
0.81
|
|
$
|
1.92
|
|
$
|
0.94
|
Integration/acquisition costs (1)
|
|
0.12
|
|
|
0.01
|
|
|
0.17
|
|
|
0.12
|
Restructuring
charges, net (2)
|
|
0.34
|
|
|
-
|
|
|
0.33
|
|
|
-
|
Separation
costs (3)
|
|
0.03
|
|
|
-
|
|
|
0.03
|
|
|
-
|
Tradename
write-offs (4)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1.92
|
Debt
refinancing costs (5)
|
|
0.02
|
|
|
-
|
|
|
0.02
|
|
|
-
|
Tax effect on
the adjusted items (6)
|
|
(0.13)
|
|
|
-
|
|
|
(0.14)
|
|
|
(0.51)
|
Adjusted basic earnings per share
|
$
|
0.75
|
|
$
|
0.82
|
|
$
|
2.33
|
|
$
|
2.47
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share
|
$
|
0.36
|
|
$
|
0.80
|
|
$
|
1.90
|
|
$
|
0.92
|
Integration/acquisition costs (1)
|
|
0.12
|
|
|
0.01
|
|
|
0.17
|
|
|
0.12
|
Restructuring
charges, net (2)
|
|
0.34
|
|
|
-
|
|
|
0.33
|
|
|
-
|
Separation
costs (3)
|
|
0.03
|
|
|
-
|
|
|
0.03
|
|
|
-
|
Tradename
write-offs (4)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1.89
|
Debt
refinancing costs (5)
|
|
0.02
|
|
|
-
|
|
|
0.02
|
|
|
-
|
Tax effect on
the adjusted items (6)
|
|
(0.12)
|
|
|
-
|
|
|
(0.14)
|
|
|
(0.50)
|
Adjusted diluted earnings per share
|
$
|
0.75
|
|
$
|
0.81
|
|
$
|
2.31
|
|
$
|
2.43
|
|
Explanation of
Non-GAAP Adjustments
|
(1)
|
Costs associated with
current and previous acquisitions, such as legal and professional
fees, retention awards and the on-going integration expenses to
combine the companies.
|
(2)
|
Restructuring plan
implemented in order to rationalize our cost structure by
eliminating redundant positions due to the acquisition of Miller
Heiman Group, AchieveForum and Strategy Execution on November 1,
2019.
|
(3)
|
Costs associated with
certain senior management separation charges.
|
(4)
|
The Company
implemented a plan to go to market under a single, master brand
architecture to simplify the Company's organizational structure by
eliminating and/or consolidating certain legal entities and
implemented a rebranding of the Company to offer the Company's
current products and services using the "Korn Ferry" name, branding
and trademarks. As a result of this the Company was required under
U.S. generally accepted accounting principles to record a one-time,
non-cash tradename write-offs.
|
(5)
|
Costs to write-off
debt issuance costs and interest rate swap as a result of replacing
our prior Credit Agreement with a new senior secured Credit
Agreement.
|
(6)
|
Tax effect on
integration/acquisition costs, restructuring charges, net,
separation costs, tradename write-offs and write-off of debt
issuance cost.
|
KORN FERRY AND
SUBSIDIARIES
|
RECONCILIATION OF
NET INCOME AND OPERATING INCOME (GAAP) TO
|
EBITDA AND
ADJUSTED EBITDA (NON-GAAP)
|
(in
thousands)
|
(unaudited)
|
|
.
|
Three Months Ended
January 31, 2020
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
Digital
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
RPO and
Professional
Search
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee revenue
|
$
|
140,525
|
|
$
|
99,389
|
|
$
|
106,888
|
|
$
|
44,301
|
|
$
|
25,089
|
|
$
|
7,283
|
|
$
|
183,561
|
|
$
|
91,850
|
|
$
|
-
|
|
$
|
515,325
|
Total
revenue
|
$
|
144,298
|
|
$
|
100,663
|
|
$
|
110,230
|
|
$
|
45,077
|
|
$
|
25,365
|
|
$
|
7,351
|
|
$
|
188,023
|
|
$
|
94,995
|
|
$
|
-
|
|
$
|
527,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn Ferry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,993
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
963
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,055)
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,919
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,775
|
Operating income
(loss)
|
$
|
2,663
|
|
$
|
8,463
|
|
$
|
21,808
|
|
$
|
4,644
|
|
$
|
5,070
|
|
$
|
1,198
|
|
$
|
32,720
|
|
$
|
14,144
|
|
$
|
(26,395)
|
|
|
31,595
|
Depreciation and
amortization
|
|
4,417
|
|
|
5,832
|
|
|
847
|
|
|
422
|
|
|
329
|
|
|
295
|
|
|
1,893
|
|
|
979
|
|
|
1,742
|
|
|
14,863
|
Other income (loss),
net
|
|
558
|
|
|
193
|
|
|
3,963
|
|
|
29
|
|
|
106
|
|
|
162
|
|
|
4,260
|
|
|
88
|
|
|
(44)
|
|
|
5,055
|
EBITDA
|
|
7,638
|
|
|
14,488
|
|
|
26,618
|
|
|
5,095
|
|
|
5,505
|
|
|
1,655
|
|
|
38,873
|
|
|
15,211
|
|
|
(24,697)
|
|
|
51,513
|
EBITDA
margin
|
|
5.4%
|
|
|
14.6%
|
|
|
24.9%
|
|
|
11.5%
|
|
|
21.9%
|
|
|
22.7%
|
|
|
21.2%
|
|
|
16.6%
|
|
|
|
|
|
10.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration/acquisition costs
|
|
-
|
|
|
4,332
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,372
|
|
|
6,704
|
Restructuring,
charges, net
|
|
11,061
|
|
|
7,032
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
18,093
|
Separation
costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,783
|
|
|
-
|
|
|
-
|
|
|
1,783
|
|
|
-
|
|
|
-
|
|
|
1,783
|
Adjusted
EBITDA
|
$
|
18,699
|
|
$
|
25,852
|
|
$
|
26,618
|
|
$
|
6,878
|
|
$
|
5,505
|
|
$
|
1,655
|
|
$
|
40,656
|
|
$
|
15,211
|
|
$
|
(22,325)
|
|
$
|
78,093
|
Adjusted EBITDA
margin
|
|
13.3%
|
|
|
26.0%
|
|
|
24.9%
|
|
|
15.5%
|
|
|
21.9%
|
|
|
22.7%
|
|
|
22.1%
|
|
|
16.6%
|
|
|
|
|
|
15.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
January 31, 2019
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
Digital
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
RPO and
Professional
Search
|
|
Corporate
|
|
Consolidated
|
Fee revenue
|
$
|
139,029
|
|
$
|
62,473
|
|
$
|
114,215
|
|
$
|
45,940
|
|
$
|
25,687
|
|
$
|
7,554
|
|
$
|
193,396
|
|
$
|
79,606
|
|
$
|
-
|
|
$
|
474,504
|
Total
revenue
|
$
|
143,204
|
|
$
|
62,473
|
|
$
|
117,725
|
|
$
|
46,639
|
|
$
|
26,046
|
|
$
|
7,573
|
|
$
|
197,983
|
|
$
|
82,512
|
|
$
|
-
|
|
$
|
486,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn Ferry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
44,964
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
480
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,463)
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,282
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,420
|
Operating income
(loss)
|
$
|
11,782
|
|
$
|
17,497
|
|
$
|
30,596
|
|
$
|
7,525
|
|
$
|
5,929
|
|
$
|
653
|
|
$
|
44,703
|
|
$
|
12,176
|
|
$
|
(23,475)
|
|
|
62,683
|
Depreciation and
amortization
|
|
4,001
|
|
|
3,306
|
|
|
970
|
|
|
402
|
|
|
338
|
|
|
97
|
|
|
1,807
|
|
|
803
|
|
|
1,824
|
|
|
11,741
|
Other income (loss),
net
|
|
582
|
|
|
204
|
|
|
1,626
|
|
|
26
|
|
|
(134)
|
|
|
133
|
|
|
1,651
|
|
|
77
|
|
|
(51)
|
|
|
2,463
|
EBITDA
|
|
16,365
|
|
|
21,007
|
|
|
33,192
|
|
|
7,953
|
|
|
6,133
|
|
|
883
|
|
|
48,161
|
|
|
13,056
|
|
|
(21,702)
|
|
|
76,887
|
EBITDA
margin
|
|
11.8%
|
|
|
33.6%
|
|
|
29.1%
|
|
|
17.3%
|
|
|
23.9%
|
|
|
11.7%
|
|
|
24.9%
|
|
|
16.4%
|
|
|
|
|
|
16.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration/acquisition costs
|
|
650
|
|
|
127
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
27
|
|
|
804
|
Adjusted
EBITDA
|
$
|
17,015
|
|
$
|
21,134
|
|
$
|
33,192
|
|
$
|
7,953
|
|
$
|
6,133
|
|
$
|
883
|
|
$
|
48,161
|
|
$
|
13,056
|
|
$
|
(21,675)
|
|
$
|
77,691
|
Adjusted EBITDA
margin
|
|
12.2%
|
|
|
33.8%
|
|
|
29.1%
|
|
|
17.3%
|
|
|
23.9%
|
|
|
11.7%
|
|
|
24.9%
|
|
|
16.4%
|
|
|
|
|
|
16.4%
|
|
|
KORN FERRY AND
SUBSIDIARIES
|
RECONCILIATION OF
NET INCOME AND OPERATING INCOME (GAAP) TO
|
EBITDA AND
ADJUSTED EBITDA (NON-GAAP)
|
(in
thousands)
|
(unaudited)
|
|
|
Nine Months Ended
January 31, 2020
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
Digital
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
RPO and
Professional
Search
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee revenue
|
$
|
422,103
|
|
$
|
223,097
|
|
$
|
332,428
|
|
$
|
130,652
|
|
$
|
78,395
|
|
$
|
23,140
|
|
$
|
564,615
|
|
$
|
282,448
|
|
$
|
-
|
|
$
|
1,492,263
|
Total
revenue
|
$
|
433,832
|
|
$
|
224,371
|
|
$
|
342,753
|
|
$
|
132,830
|
|
$
|
79,201
|
|
$
|
23,211
|
|
$
|
577,995
|
|
$
|
292,156
|
|
$
|
-
|
|
$
|
1,528,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn Ferry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
105,748
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,890
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,014)
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,186
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,988
|
Operating income
(loss)
|
$
|
24,272
|
|
$
|
41,036
|
|
$
|
80,254
|
|
$
|
18,466
|
|
$
|
17,866
|
|
$
|
2,999
|
|
$
|
119,585
|
|
$
|
44,279
|
|
$
|
(75,374)
|
|
|
153,798
|
Depreciation and
amortization
|
|
13,188
|
|
|
13,156
|
|
|
2,617
|
|
|
1,328
|
|
|
1,004
|
|
|
938
|
|
|
5,887
|
|
|
2,961
|
|
|
5,163
|
|
|
40,355
|
Other income (loss),
net
|
|
1,469
|
|
|
528
|
|
|
5,740
|
|
|
148
|
|
|
193
|
|
|
249
|
|
|
6,330
|
|
|
216
|
|
|
(529)
|
|
|
8,014
|
EBITDA
|
|
38,929
|
|
|
54,720
|
|
|
88,611
|
|
|
19,942
|
|
|
19,063
|
|
|
4,186
|
|
|
131,802
|
|
|
47,456
|
|
|
(70,740)
|
|
|
202,167
|
EBITDA
margin
|
|
9.2%
|
|
|
24.5%
|
|
|
26.7%
|
|
|
15.3%
|
|
|
24.3%
|
|
|
18.1%
|
|
|
23.3%
|
|
|
16.8%
|
|
|
|
|
|
13.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration/acquisition costs
|
|
-
|
|
|
4,332
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,987
|
|
|
9,319
|
Restructuring charges,
net
|
|
11,061
|
|
|
7,032
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
18,093
|
Separation
costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,783
|
|
|
-
|
|
|
-
|
|
|
1,783
|
|
|
-
|
|
|
-
|
|
|
1,783
|
Adjusted
EBITDA
|
$
|
49,990
|
|
$
|
66,084
|
|
$
|
88,611
|
|
$
|
21,725
|
|
$
|
19,063
|
|
$
|
4,186
|
|
$
|
133,585
|
|
$
|
47,456
|
|
$
|
(65,753)
|
|
$
|
231,362
|
Adjusted EBITDA
margin
|
|
11.8%
|
|
|
29.6%
|
|
|
26.7%
|
|
|
16.6%
|
|
|
24.3%
|
|
|
18.1%
|
|
|
23.7%
|
|
|
16.8%
|
|
|
|
|
|
15.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
January 31, 2019
|
|
|
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
Digital
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
RPO and
Professional
Search
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee revenue
|
$
|
423,958
|
|
$
|
190,008
|
|
$
|
342,175
|
|
$
|
137,522
|
|
$
|
79,918
|
|
$
|
24,339
|
|
$
|
583,954
|
|
$
|
237,357
|
|
$
|
-
|
|
$
|
1,435,277
|
Total
revenue
|
$
|
437,235
|
|
$
|
190,008
|
|
$
|
352,804
|
|
$
|
140,024
|
|
$
|
80,817
|
|
$
|
24,388
|
|
$
|
598,033
|
|
$
|
246,051
|
|
$
|
-
|
|
$
|
1,471,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn Ferry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
52,387
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,782
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,483)
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,722
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,143
|
Operating income
(loss)
|
$
|
(47,431)
|
|
$
|
23,057
|
|
$
|
92,438
|
|
$
|
21,813
|
|
$
|
19,337
|
|
$
|
3,460
|
|
$
|
137,048
|
|
$
|
36,337
|
|
$
|
(70,460)
|
|
|
78,551
|
Depreciation and
amortization
|
|
12,219
|
|
|
9,483
|
|
|
2,917
|
|
|
867
|
|
|
1,083
|
|
|
305
|
|
|
5,172
|
|
|
2,325
|
|
|
5,291
|
|
|
34,490
|
Other income (loss),
net
|
|
1,107
|
|
|
514
|
|
|
1,146
|
|
|
388
|
|
|
118
|
|
|
263
|
|
|
1,915
|
|
|
103
|
|
|
(1,156)
|
|
|
2,483
|
EBITDA
|
|
(34,105)
|
|
|
33,054
|
|
|
96,501
|
|
|
23,068
|
|
|
20,538
|
|
|
4,028
|
|
|
144,135
|
|
|
38,765
|
|
|
(66,325)
|
|
|
115,524
|
EBITDA
margin
|
|
(8.0%)
|
|
|
17.4%
|
|
|
28.2%
|
|
|
16.8%
|
|
|
25.7%
|
|
|
16.5%
|
|
|
24.7%
|
|
|
16.3%
|
|
|
|
|
|
8.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration/acquisition costs
|
|
5,304
|
|
|
1,255
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
187
|
|
|
6,746
|
Tradename
write-offs
|
|
76,967
|
|
|
29,588
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
106,555
|
Adjusted
EBITDA
|
$
|
48,166
|
|
$
|
63,897
|
|
$
|
96,501
|
|
$
|
23,068
|
|
$
|
20,538
|
|
$
|
4,028
|
|
$
|
144,135
|
|
$
|
38,765
|
|
$
|
(66,138)
|
|
$
|
228,825
|
Adjusted EBITDA
margin
|
|
11.4%
|
|
|
33.6%
|
|
|
28.2%
|
|
|
16.8%
|
|
|
25.7%
|
|
|
16.5%
|
|
|
24.7%
|
|
|
16.3%
|
|
|
|
|
|
15.9%
|
View original
content:http://www.prnewswire.com/news-releases/korn-ferry-announces-third-quarter-fiscal-2020-results-of-operations-301020994.html
SOURCE Korn Ferry