Korn Ferry Announces Third Quarter Fiscal 2021 Results of Operations

FY’21 Third Quarter Highlights

  • Fee revenue of $475.4 million in Q3 FY’21, a sequential increase of 9% from Q2 FY’21.
  • Record net income attributable to Korn Ferry of $51.3 million in Q3 FY’21.
  • Operating income and Adjusted EBITDA were both all-time highs at $65.2 million (operating margin of 13.7%) and $96.7 million (Adjusted EBITDA margin of 20.3%), respectively.
  • Highest diluted earnings per share and adjusted diluted earnings per share to date at $0.94 and $0.95, respectively, for Q3 FY’21.
  • Repurchased 0.2 million shares or $7.6 million of stock during the quarter consistent with disciplined capital allocation approach.
  • Declared a quarterly dividend of $0.10 per share on February 21, 2021 payable on April 15, 2021 to stockholders of record on March 10, 2021.
  • Revenue and earnings guidance being reinstated starting with Q4 FY'21

LOS ANGELES--(BUSINESS WIRE)-- Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced third quarter fee revenue of $475.4 million. Third quarter diluted earnings per share was $0.94 and adjusted diluted earnings per share was $0.95, both are all-time highs. Adjusted diluted earnings per share for the third quarter excludes an aggregate of $0.6 million, or $0.01 per share, of restructuring charges net of tax, due to the coronavirus pandemic (“COVID-19”).

“Our performance for the fiscal third quarter demonstrates the resilience of our business and continued extension of our brand, with strong sequential fee revenue growth of 9% and our earnings and profitability reaching record highs,” said Gary D. Burnison, CEO, Korn Ferry. “I am incredibly proud of the tireless commitment that all our Korn Ferry colleagues have shown in helping our clients re-imagine their organizational structures, recruit and retain talent and develop their people in the face of extraordinary challenges.”

“In a post-pandemic world, there will continue to be heightened demand for transformational consulting skills and expertise,” Burnison continued. “The steps we have taken to evolve our business into a more efficient, profitable, growth-oriented organization have positioned Korn Ferry to provide our clients with unparalleled expertise, data, and innovation support. With people at the center of our strategy, we are achieving our growth objectives, delivering long-term value creation to shareholders and establishing Korn Ferry as the preeminent global organizational consultancy.”

Selected Financial Results
(dollars in millions, except per share amounts) (a)

 

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Fee revenue

 

$

475.4

 

 

$

515.3

 

 

$

1,254.9

 

 

$

1,492.3

 

Total revenue

 

$

477.9

 

 

$

528.0

 

 

$

1,262.6

 

 

$

1,528.4

 

Operating income

 

$

65.2

 

 

$

31.6

 

 

$

69.5

 

 

$

153.8

 

Operating margin

 

 

13.7

%

 

 

6.1

%

 

 

5.5

%

 

 

10.3

%

Net income attributable to Korn Ferry

 

$

51.3

 

 

$

20.0

 

 

$

48.3

 

 

$

105.7

 

Basic earnings per share

 

$

0.95

 

 

$

0.37

 

 

$

0.89

 

 

$

1.92

 

Diluted earnings per share

 

$

0.94

 

 

$

0.36

 

 

$

0.88

 

 

$

1.90

 

EBITDA Results (b):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

EBITDA

 

$

95.8

 

 

$

51.5

 

 

$

142.0

 

 

$

202.2

 

EBITDA margin

 

 

20.2

%

 

 

10.0

%

 

 

11.3

%

 

 

13.5

%

Adjusted Results (c):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Adjusted EBITDA (b)

 

$

96.7

 

 

$

78.1

 

 

$

173.4

 

 

$

231.4

 

Adjusted EBITDA margin (b)

 

 

20.3

%

 

 

15.2

%

 

 

13.8

%

 

 

15.5

%

Adjusted net income attributable to Korn Ferry

 

$

51.9

 

 

$

41.0

 

 

$

71.1

 

 

$

128.7

 

Adjusted basic earnings per share

 

$

0.96

 

 

$

0.75

 

 

$

1.31

 

 

$

2.33

 

Adjusted diluted earnings per share

 

$

0.95

 

 

$

0.75

 

 

$

1.30

 

 

$

2.31

 

___________

(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, net restructuring charges and separation costs. 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’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Integration/acquisition costs

 

$

 

 

$

6.7

 

 

$

0.7

 

 

$

9.3

 

Restructuring charges, net

 

$

0.8

 

 

$

18.1

 

 

$

30.7

 

 

$

18.1

 

Separation costs

 

$

 

 

$

1.8

 

 

$

 

 

$

1.8

 

Debt refinancing costs

 

$

 

 

$

0.8

 

 

$

 

 

$

0.8

 

Fee revenue was $475.4 million in Q3 FY’21, a decrease of 8% (down 9% on a constant currency basis) compared to Q3 FY’20. While RPO and Professional Search saw a year-over-year increase of almost 4%, Digital and Executive Search declined year-over-year as those businesses continued on the path to full recovery from the impact of COVID-19 on economies around the world.

Operating margin was 13.7% in Q3 FY’21 compared to 6.1% in the year-ago quarter. Adjusted EBITDA margin was 20.3%, compared to 15.2% in the year-ago quarter. Net income attributable to Korn Ferry was $51.3 million in Q3 FY’21 compared to $20.0 million in Q3 FY’20.

The year-over-year improvement in each of the above measures of profitability was due to the cost saving actions the Company took in response to the impact of COVID-19 as well as the fact that the Company recorded $18 million in restructuring charges in Q3 FY’20 in connection with the acquisitions of Miller Heiman Group, Achieve Forum and Strategy Execution (collectively, the “acquired companies”). These positive factors were partially offset by the decline in revenues described above.

Results by Segment
Selected Consulting Data
(dollars in millions) (a)

 

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Fee revenue

 

$

136.3

 

 

$

140.5

 

 

$

362.3

 

 

$

422.1

 

Total revenue

 

$

136.6

 

 

$

144.3

 

 

$

363.2

 

 

$

433.8

 

Operating income

 

$

22.2

 

 

$

2.7

 

 

$

25.9

 

 

$

24.3

 

Operating margin

 

 

16.3

%

 

 

1.9

%

 

 

7.1

%

 

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending number of consultants and execution staff (b)

 

 

1,528

 

 

 

1,792

 

 

 

1,528

 

 

 

1,792

 

Hours worked in thousands (c)

 

 

372

 

 

 

428

 

 

 

1,137

 

 

 

1,344

 

Average billed rate (d)

 

$

367

 

 

$

328

 

 

$

319

 

 

$

314

 

EBITDA Results (e):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

EBITDA

 

$

27.2

 

 

$

7.6

 

 

$

40.1

 

 

$

38.9

 

EBITDA margin

 

 

19.9

%

 

 

5.4

%

 

 

11.1

%

 

 

9.2

%

Adjusted Results (f):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Adjusted EBITDA (e)

 

$

27.5

 

 

$

18.7

 

 

$

54.3

 

 

$

50.0

 

Adjusted EBITDA margin (e)

 

 

20.2

%

 

 

13.3

%

 

 

15.0

%

 

 

11.8

%

___________

(a)

Numbers may not total due to rounding.

(b)

Represents number of employees originating, delivering and executing consulting services.

(c)

The number of hours worked by consultant and execution staff during the period.

(d)

The amount of fee revenue divided by the number of hours worked by consultants and execution staff.

(e)

EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).

(f)

Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations):

 

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Restructuring charges, net

 

$

0.3

 

 

$

11.1

 

 

$

14.2

 

 

$

11.1

 

 

Fee revenue was $136.3 million in Q3 FY’21 compared to $140.5 million in Q3 FY’20, a decrease of $4.2 million or 3% (down 4% on a constant currency basis). While COVID-19 has had an impact on Consulting fee revenue when compared to the year-ago quarter, the diversity of our consulting services and our ability to adapt to delivering the services in a virtual world has led to an increase in fee revenue of 37% over the past two fiscal quarters.

Operating income was $22.2 million in Q3 FY’21 with an operating margin of 16.3% compared to operating income of $2.7 million and an operating margin of 1.9% in the year-ago quarter. This change resulted from a decrease in net restructuring charges, a decrease in compensation and benefits expense driven by a reduction in headcount and decreases in both general and administrative expenses and cost of services expense, all of which resulted from the cost saving initiatives that were put in place. These expense reductions were partially offset by the decline in fee revenue as outlined above.

Adjusted EBITDA was $27.5 million in Q3 FY’21 with an Adjusted EBITDA margin of 20.2% compared to $18.7 million and 13.3%, respectively, in the year-ago quarter. The increase in Adjusted EBITDA was due to the same factors impacting operating income outlined above except for net restructuring charges.

Selected Digital Data
(dollars in millions) (a)

Digital is an integrated platform that gives clients direct access to people and organizational data, insights, analytics, and digital assets that when used together, give clients a common language for all talent matters.

 

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Fee revenue

 

$

75.8

 

 

$

99.4

 

 

$

206.8

 

 

$

223.1

 

Total revenue

 

$

76.0

 

 

$

100.7

 

 

$

207.0

 

 

$

224.4

 

Operating income

 

$

19.2

 

 

$

8.5

 

 

$

32.4

 

 

$

41.0

 

Operating margin

 

 

25.4

%

 

 

8.5

%

 

 

15.7

%

 

 

18.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending number of consultants

 

 

302

 

 

 

464

 

 

 

302

 

 

 

464

 

Subscription & License fee revenue

 

$

22.6

 

 

$

21.3

 

 

$

66.3

 

 

$

52.7

 

EBITDA Results (b):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

EBITDA

 

$

27.1

 

 

$

14.5

 

 

$

54.7

 

 

$

54.7

 

EBITDA margin

 

 

35.8

%

 

 

14.6

%

 

 

26.4

%

 

 

24.5

%

Adjusted Results (c):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Adjusted EBITDA (b)

 

$

27.1

 

 

$

25.9

 

 

$

58.2

 

 

$

66.1

 

Adjusted EBITDA margin (b)

 

 

35.8

%

 

 

26.0

%

 

 

28.1

%

 

 

29.6

%

___________

(a)

Numbers may not total due to rounding.

(b)

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 (see attached reconciliations):

 

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Integration/acquisition costs

 

$

 

 

$

4.3

 

 

$

0.6

 

 

$

4.3

 

Restructuring charges, net

 

$

 

 

$

7.0

 

 

$

2.9

 

 

$

7.0

 

Fee revenue was $75.8 million in Q3 FY’21 compared to $99.4 million in Q3 FY’20, a decrease of $23.6 million or 24% (down 25% on a constant currency basis). Due to COVID-19 and the related contraction in economic activity, the Company experienced a decline in demand for pay data and professional development products and services. As economies around the world recover and companies pivot from in person to virtual delivery, the Company expects demand for these products and services to return to pre-pandemic levels.

Operating income was $19.2 million in Q3 FY’21 with an operating margin of 25.4% compared to operating income of $8.5 million and an operating margin of 8.5% in the year-ago quarter. Contributing to the increase were decreases in compensation and benefits expense, general and administrative expenses, net restructuring charges, cost of services expense and integration/acquisition costs relating to the acquired companies, partially offset by a decrease in fee revenue as outlined above.

Adjusted EBITDA was $27.1 million in Q3 FY’21 with an Adjusted EBITDA margin of 35.8% compared to $25.9 million and 26.0%, respectively, in the year-ago quarter. The increase in Adjusted EBITDA was due to the same factors impacting operating income described above except for restructuring charges and integration/acquisition costs.

Selected Executive Search Data
(dollars in millions) (a)

 

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Fee revenue

 

$

168.1

 

 

$

183.6

 

 

$

436.3

 

 

$

564.6

 

Total revenue

 

$

168.5

 

 

$

188.0

 

 

$

438.0

 

 

$

578.0

 

Operating income

 

$

26.9

 

 

$

32.7

 

 

$

40.2

 

 

$

119.6

 

Operating margin

 

 

16.0

%

 

 

17.8

%

 

 

9.2

%

 

 

21.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending number of consultants

 

 

522

 

 

 

582

 

 

 

522

 

 

 

582

 

Average number of consultants

 

 

517

 

 

 

583

 

 

 

539

 

 

 

573

 

Engagements billed

 

 

3,260

 

 

 

3,767

 

 

 

6,464

 

 

 

8,077

 

New engagements (b)

 

 

1,301

 

 

 

1,565

 

 

 

3,747

 

 

 

4,835

 

EBITDA Results (c):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

EBITDA

 

$

41.3

 

 

$

38.9

 

 

$

67.6

 

 

$

131.8

 

EBITDA margin

 

 

24.6

%

 

 

21.2

%

 

 

15.5

%

 

 

23.3

%

Adjusted Results (d):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Adjusted EBITDA (c)

 

$

41.7

 

 

$

40.7

 

 

$

78.0

 

 

$

133.6

 

Adjusted EBITDA margin (c)

 

 

24.8

%

 

 

22.1

%

 

 

17.9

%

 

 

23.7

%

________

(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’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Restructuring charges, net

 

$

0.4

 

 

$

 

 

$

10.4

 

 

$

 

Separation costs

 

$

 

 

$

1.8

 

 

$

 

 

$

1.8

 

Fee revenue was $168.1 million and $183.6 million in Q3 FY’21 and Q3 FY’20, respectively, a year-over-year decrease of $15.5 million or 8% (down 10% on a constant currency basis). The decrease in fee revenue was attributable to a decline in fee revenue in all regions, except North America which was essentially flat, due to the decrease in demand for our products and services because of the worldwide economic downturn associated with COVID-19.

Operating income was $26.9 million in Q3 FY’21 compared to operating income of $32.7 million in Q3 FY’20. Operating margin was 16.0% in Q3 FY’21 compared to 17.8% in the year-ago quarter. The change was mainly due to a decrease in fee revenue in Q3 FY’21 as compared to the year-ago quarter, partially offset by a decrease in compensation and benefits expense driven by a reduction in headcount and a decline in general and administrative expenses, all of which resulted from the cost saving initiatives that were put in place.

Adjusted EBITDA was $41.7 million in Q3 FY’21 with an Adjusted EBITDA margin of 24.8% compared to $40.7 million and 22.1%, respectively, in the year-ago quarter. The increase in Adjusted EBITDA was due to the same factors impacting operating income described above and an increase in other income, net compared to year-ago quarter.

Selected RPO and Professional Search Data
(dollars in millions) (a)

 

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Fee revenue

 

$

95.2

 

 

$

91.9

 

 

$

249.5

 

 

$

282.4

 

Total revenue

 

$

96.8

 

 

$

95.0

 

 

$

254.3

 

 

$

292.2

 

Operating income

 

$

18.4

 

 

$

14.1

 

 

$

33.0

 

 

$

44.3

 

Operating margin

 

 

19.3

%

 

 

15.4

%

 

 

13.2

%

 

 

15.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engagements billed (b)

 

 

1,430

 

 

 

1,375

 

 

 

2,659

 

 

 

3,030

 

New engagements (c)

 

 

867

 

 

 

711

 

 

 

2,088

 

 

 

2,171

 

EBITDA Results (d):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

EBITDA

 

$

19.5

 

 

$

15.2

 

 

$

36.3

 

 

$

47.5

 

EBITDA margin

 

 

20.5

%

 

 

16.6

%

 

 

14.5

%

 

 

16.8

%

Adjusted Results (e):

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Adjusted EBITDA (d)

 

$

19.6

 

 

$

15.2

 

 

$

39.5

 

 

$

47.5

 

Adjusted EBITDA margin (d)

 

 

20.6

%

 

 

16.6

%

 

 

15.8

%

 

 

16.8

%

___________

(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).

(e)

Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations):

 

 

Third Quarter

 

 

Year to Date

 

 

 

FY’21

 

 

FY’20

 

 

FY’21

 

 

FY’20

 

Restructuring charges, net

 

$

0.1

 

 

$

 

 

$

3.2

 

 

$

 

 

Fee revenue was $95.2 million in Q3 FY’21, an increase of $3.3 million or 4% (1% increase on a constant currency basis), compared to the year-ago quarter. The higher fee revenue was driven by an increase in recruitment process outsourcing (“RPO”) fee revenue of $4.0 million, partially offset by a small decrease in Professional Search of $0.7 million due to the worldwide economic downturn associated with COVID-19. For the quarter, RPO fee revenue was up 7% (5% at constant currency) while professional search was down 2% (4% on a constant currency), both compared to the year-ago quarter.

Operating income was $18.4 million in Q3 FY’21, an increase of $4.3 million compared to operating income of $14.1 million in Q3 FY’20. Operating margin was 19.3% in the current quarter compared to 15.4% in the year-ago quarter. Adjusted EBITDA was $19.6 million in Q3 FY’21 with an Adjusted EBITDA margin of 20.6% in Q3 FY’21 compared to $15.2 million and 16.6%, respectively, in the year-ago quarter. The increase in operating income and Adjusted EBITDA was due to the higher fee revenue discussed above and lower general and administrative expenses, partially offset by an increase in compensation and benefits expense.

Outlook

Assuming no new major pandemic lockdowns, worldwide economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:

  • Q4 FY’21 fee revenue is expected to be in the range of $475 million and $500 million; and
  • Q4 FY’21 diluted earnings per share is expected to range between $0.95 to $1.05.

Earnings Conference Call Webcast

The earnings conference call will be held today at 12:00 PM (EST) 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 our outlook, projections, goals, strategies, future plans and expectations, and other statements of future events or conditions are forward-looking statements that involve a number of risks and uncertainties. Words such as “believes”, “expects”, “anticipates”, “goals”, “estimates”, “guidance”, “may”, “should”, “could”, “will” or “likely”, and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements that refer to or are based on estimates, forecasts, projections, uncertain events or assumptions, including statements relating to expected demand for our products and services, the expected benefits of the acquisition of the acquired companies (as defined below), the timing and expected benefits of our restructuring plan, the magnitude and duration of the impact of the COVID-19 outbreak on our business, employees, customers and our ability to provide services in affected regions, and the potential opportunities for our business as a result of worldwide changes in how companies conduct business as a result of COVID-19. Readers are cautioned not to place undue reliance on such statements. Such statements are based on current expectations; 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 the magnitude and duration of the negative impact of the COVID-19 outbreak on our business, employees, customers and our ability to provide services in affected regions, global and local political or economic developments in or affecting countries where we have operations, 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, 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, treaties, or regulations on our business and our company, 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, 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 and employment liability risk. 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 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 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 and separations costs, 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 as a result of COVID-19 and due to the acquisition of the acquired companies, 3) separation costs and 4) 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,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(unaudited)

Fee revenue

 

$

475,360

 

 

 

$

515,325

 

 

 

$

1,254,896

 

 

 

$

1,492,263

 

Reimbursed out-of-pocket engagement expenses

 

 

2,520

 

 

 

 

12,654

 

 

 

 

7,656

 

 

 

 

36,091

 

Total revenue

 

 

477,880

 

 

 

 

527,979

 

 

 

 

1,262,552

 

 

 

 

1,528,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

326,333

 

 

 

 

348,597

 

 

 

 

917,530

 

 

 

 

1,014,475

 

General and administrative expenses

 

 

47,271

 

 

 

 

71,355

 

 

 

 

140,836

 

 

 

 

199,171

 

Reimbursed expenses

 

 

2,520

 

 

 

 

12,654

 

 

 

 

7,656

 

 

 

 

36,091

 

Cost of services

 

 

20,028

 

 

 

 

30,822

 

 

 

 

50,198

 

 

 

 

66,371

 

Depreciation and amortization

 

 

15,735

 

 

 

 

14,863

 

 

 

 

46,068

 

 

 

 

40,355

 

Restructuring charges, net

 

 

838

 

 

 

 

18,093

 

 

 

 

30,732

 

 

 

 

18,093

 

Total operating expenses

 

 

412,725

 

 

 

 

496,384

 

 

 

 

1,193,020

 

 

 

 

1,374,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

65,155

 

 

 

 

31,595

 

 

 

 

69,532

 

 

 

 

153,798

 

Other income, net

 

 

14,935

 

 

 

 

5,055

 

 

 

 

26,374

 

 

 

 

8,014

 

Interest expense, net

 

 

(7,298

)

 

 

 

(6,919

)

 

 

 

(21,686

)

 

 

 

(15,186

)

Income before provision for income taxes

 

 

72,792

 

 

 

 

29,731

 

 

 

 

74,220

 

 

 

 

146,626

 

Income tax provision

 

 

21,204

 

 

 

 

8,775

 

 

 

 

25,409

 

 

 

 

38,988

 

Net income

 

 

51,588

 

 

 

 

20,956

 

 

 

 

48,811

 

 

 

 

107,638

 

Net income attributable to noncontrolling interest

 

 

(269

)

 

 

 

(963

)

 

 

 

(547

)

 

 

 

(1,890

)

Net income attributable to Korn Ferry

 

$

51,319

 

 

 

$

19,993

 

 

 

$

48,264

 

 

 

$

105,748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share attributable to Korn Ferry:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.95

 

 

 

$

0.37

 

 

 

$

0.89

 

 

 

$

1.92

 

Diluted

 

$

0.94

 

 

 

$

0.36

 

 

 

$

0.88

 

 

 

$

1.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

52,596

 

 

 

 

53,999

 

 

 

 

53,030

 

 

 

 

54,611

 

Diluted

 

 

53,013

 

 

 

 

54,264

 

 

 

 

53,396

 

 

 

 

55,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share:

 

$

0.10

 

 

 

$

0.10

 

 

 

$

0.30

 

 

 

$

0.30

 

KORN FERRY AND SUBSIDIARIES

FINANCIAL SUMMARY BY SEGMENT

(dollars in thousands)

(unaudited)

 

 

 

Three Months Ended January 31,

 

Nine Months Ended January '31,

 

 

2021

 

 

 

 

 

2020

 

 

% Change

 

2021

 

 

 

 

 

2020

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

$

136,268

 

 

 

 

 

 

$

140,525

 

 

 

 

(3.0

%)

 

$

362,271

 

 

 

 

 

 

$

422,103

 

 

 

 

(14.2

%)

Digital

 

 

75,791

 

 

 

 

 

 

 

99,389

 

 

 

 

(23.7

%)

 

 

206,807

 

 

 

 

 

 

 

223,097

 

 

 

 

(7.3

%)

Executive Search:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

106,002

 

 

 

 

 

 

 

106,888

 

 

 

 

(0.8

%)

 

 

266,485

 

 

 

 

 

 

 

332,428

 

 

 

 

(19.8

%)

EMEA

 

 

35,991

 

 

 

 

 

 

 

44,301

 

 

 

 

(18.8

%)

 

 

97,701

 

 

 

 

 

 

 

130,652

 

 

 

 

(25.2

%)

Asia Pacific

 

 

21,643

 

 

 

 

 

 

 

25,089

 

 

 

 

(13.7

%)

 

 

59,702

 

 

 

 

 

 

 

78,395

 

 

 

 

(23.8

%)

Latin America

 

 

4,468

 

 

 

 

 

 

 

7,283

 

 

 

 

(38.7

%)

 

 

12,419

 

 

 

 

 

 

 

23,140

 

 

 

 

(46.3

%)

Total Executive Search

 

 

168,104

 

 

 

 

 

 

 

183,561

 

 

 

 

(8.4

%)

 

 

436,307

 

 

 

 

 

 

 

564,615

 

 

 

 

(22.7

%)

RPO and Professional Search

 

 

95,197

 

 

 

 

 

 

 

91,850

 

 

 

 

3.6

%

 

 

249,511

 

 

 

 

 

 

 

282,448

 

 

 

 

(11.7

%)

Total fee revenue

 

 

475,360

 

 

 

 

 

 

 

515,325

 

 

 

 

(7.8

%)

 

 

1,254,896

 

 

 

 

 

 

 

1,492,263

 

 

 

 

(15.9

%)

Reimbursed out-of-pocket engagement expenses

 

 

2,520

 

 

 

 

 

 

 

12,654

 

 

 

 

(80.1

%)

 

 

7,656

 

 

 

 

 

 

 

36,091

 

 

 

 

(78.8

%)

Total revenue

 

$

477,880

 

 

 

 

 

 

$

527,979

 

 

 

 

(9.5

%)

 

$

1,262,552

 

 

 

 

 

 

$

1,528,354

 

 

 

 

(17.4

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

Margin

 

 

 

 

 

Margin

 

 

 

 

 

Margin

 

 

 

 

 

Margin

Consulting

 

$

22,175

 

 

 

 

16.3

%

 

$

2,663

 

 

 

 

1.9

%

 

$

25,869

 

 

 

 

7.1

%

 

$

24,272

 

 

 

 

5.8

%

Digital

 

 

19,214

 

 

 

 

25.4

%

 

 

8,463

 

 

 

 

8.5

%

 

 

32,410

 

 

 

 

15.7

%

 

 

41,036

 

 

 

 

18.4

%

Executive Search:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

17,655

 

 

 

 

16.7

%

 

 

21,808

 

 

 

 

20.4

%

 

 

32,411

 

 

 

 

12.2

%

 

 

80,254

 

 

 

 

24.1

%

EMEA

 

 

3,114

 

 

 

 

8.7

%

 

 

4,644

 

 

 

 

10.5

%

 

 

(1,596

)

 

 

 

(1.6

%)

 

 

18,466

 

 

 

 

14.1

%

Asia Pacific

 

 

5,844

 

 

 

 

27.0

%

 

 

5,070

 

 

 

 

20.2

%

 

 

9,958

 

 

 

 

16.7

%

 

 

17,866

 

 

 

 

22.8

%

Latin America

 

 

264

 

 

 

 

5.9

%

 

 

1,198

 

 

 

 

16.4

%

 

 

(578

)

 

 

 

(4.7

%)

 

 

2,999

 

 

 

 

13.0

%

Total Executive Search

 

 

26,877

 

 

 

 

16.0

%

 

 

32,720

 

 

 

 

17.8

%

 

 

40,195

 

 

 

 

9.2

%

 

 

119,585

 

 

 

 

21.2

%

RPO and Professional Search

 

 

18,360

 

 

 

 

19.3

%

 

 

14,144

 

 

 

 

15.4

%

 

 

33,027

 

 

 

 

13.2

%

 

 

44,279

 

 

 

 

15.7

%

Corporate

 

 

(21,471

)

 

 

 

 

 

 

(26,395

)

 

 

 

 

 

 

(61,969

)

 

 

 

 

 

 

(75,374

)

 

 

 

 

Total operating income

 

$

65,155

 

 

 

 

13.7

%

 

$

31,595

 

 

 

 

6.1

%

 

$

69,532

 

 

 

 

5.5

%

 

$

153,798

 

 

 

 

10.3

%

KORN FERRY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

   

 

 

January 31,

 

 

April 30,

 

 

2021

 

 

2020

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

694,128

 

 

 

$

689,244

 

Marketable securities

 

 

45,931

 

 

 

 

41,951

 

Receivables due from clients, net of allowance for doubtful accounts of $29,174 and $23,795 at January 31, 2021 and April 30, 2020, respectively

 

 

448,448

 

 

 

 

397,165

 

Income taxes and other receivables

 

 

45,154

 

 

 

 

38,755

 

Unearned compensation

 

 

53,188

 

 

 

 

43,117

 

Prepaid expenses and other assets

 

 

28,737

 

 

 

 

26,851

 

Total current assets

 

 

1,315,586

 

 

 

 

1,237,083

 

 

 

 

 

 

 

 

 

Marketable securities, non-current

 

 

157,023

 

 

 

 

132,134

 

Property and equipment, net

 

 

134,226

 

 

 

 

142,728

 

Operating lease right-of-use assets, net

 

 

182,675

 

 

 

 

195,077

 

Cash surrender value of company-owned life insurance policies, net of loans

 

 

162,549

 

 

 

 

146,408

 

Deferred income taxes

 

 

57,865

 

 

 

 

55,479

 

Goodwill

 

 

625,549

 

 

 

 

613,943

 

Intangible assets, net

 

 

97,696

 

 

 

 

111,926

 

Unearned compensation, non-current

 

 

104,650

 

 

 

 

79,510

 

Investments and other assets

 

 

25,648

 

 

 

 

29,540

 

Total assets

 

$

2,863,467

 

 

 

$

2,743,828

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Accounts payable

 

$

37,858

 

 

 

$

45,684

 

Income taxes payable

 

 

9,664

 

 

 

 

21,158

 

Compensation and benefits payable

 

 

301,147

 

 

 

 

280,911

 

Operating lease liability, current

 

 

48,998

 

 

 

 

54,851

 

Other accrued liabilities

 

 

237,743

 

 

 

 

221,603

 

Total current liabilities

 

 

635,410

 

 

 

 

624,207

 

 

 

 

 

 

 

 

 

Deferred compensation and other retirement plans

 

 

333,551

 

 

 

 

289,136

 

Operating lease liability, non-current

 

 

164,656

 

 

 

 

180,766

 

Long-term debt

 

 

394,629

 

 

 

 

394,144

 

Deferred tax liabilities

 

 

380

 

 

 

 

1,056

 

Other liabilities

 

 

39,847

 

 

 

 

30,828

 

Total liabilities

 

 

1,568,473

 

 

 

 

1,520,137

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

Common stock: $0.01 par value, 150,000 shares authorized, 74,911 and 73,205 shares issued and 53,997 and 54,450 shares outstanding at January 31, 2021 and April 30, 2020, respectively

 

 

576,798

 

 

 

 

585,560

 

Retained earnings

 

 

774,303

 

 

 

 

742,993

 

Accumulated other comprehensive loss, net

 

 

(57,914

)

 

 

 

(107,172

)

Total Korn Ferry stockholders' equity

 

 

1,293,187

 

 

 

 

1,221,381

 

Noncontrolling interest

 

 

1,807

 

 

 

 

2,310

 

Total stockholders' equity

 

 

1,294,994

 

 

 

 

1,223,691

 

Total liabilities and stockholders' equity

 

$

2,863,467

 

 

 

$

2,743,828

 

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands, except per share amounts)

   

 

Three Months Ended

 

 

Nine Months Ended

 

January 31,

 

 

January 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

(unaudited)

Net income attributable to Korn Ferry

$

51,319

 

 

 

$

19,993

 

 

 

$

48,264

 

 

 

$

105,748

 

Net income attributable to non-controlling interest

 

269

 

 

 

 

963

 

 

 

 

547

 

 

 

 

1,890

 

Net income

 

51,588

 

 

 

 

20,956

 

 

 

 

48,811

 

 

 

 

107,638

 

Income tax provision

 

21,204

 

 

 

 

8,775

 

 

 

 

25,409

 

 

 

 

38,988

 

Income before provision for income taxes

 

72,792

 

 

 

 

29,731

 

 

 

 

74,220

 

 

 

 

146,626

 

Other income, net

 

(14,935

)

 

 

 

(5,055

)

 

 

 

(26,374

)

 

 

 

(8,014

)

Interest expense, net

 

7,298

 

 

 

 

6,919

 

 

 

 

21,686

 

 

 

 

15,186

 

Operating income

 

65,155

 

 

 

 

31,595

 

 

 

 

69,532

 

 

 

 

153,798

 

Depreciation and amortization

 

15,735

 

 

 

 

14,863

 

 

 

 

46,068

 

 

 

 

40,355

 

Other income, net

 

14,935

 

 

 

 

5,055

 

 

 

 

26,374

 

 

 

 

8,014

 

EBITDA

 

95,825

 

 

 

 

51,513

 

 

 

 

141,974

 

 

 

 

202,167

 

Integration/acquisition costs (1)

 

-

 

 

 

 

6,704

 

 

 

 

737

 

 

 

 

9,319

 

Restructuring charges, net (2)

 

838

 

 

 

 

18,093

 

 

 

 

30,732

 

 

 

 

18,093

 

Separation costs (3)

 

-

 

 

 

 

1,783

 

 

 

 

-

 

 

 

 

1,783

 

Adjusted EBITDA

$

96,663

 

 

 

$

78,093

 

 

 

$

173,443

 

 

 

$

231,362

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

13.7

%

 

 

 

6.1

%

 

 

 

5.5

%

 

 

 

10.3

%

Depreciation and amortization

 

3.3

%

 

 

 

2.9

%

 

 

 

3.7

%

 

 

 

2.7

%

Other income, net

 

3.2

%

 

 

 

1.0

%

 

 

 

2.1

%

 

 

 

0.5

%

EBITDA margin

 

20.2

%

 

 

 

10.0

%

 

 

 

11.3

%

 

 

 

13.5

%

Integration/acquisition costs (1)

 

-

 

 

 

 

1.3

%

 

 

 

0.1

%

 

 

 

0.7

%

Restructuring charges, net (2)

 

0.1

%

 

 

 

3.5

%

 

 

 

2.4

%

 

 

 

1.2

%

Separation costs (3)

 

-

 

 

 

 

0.4

%

 

 

 

-

 

 

 

 

0.1

%

Adjusted EBITDA margin

 

20.3

%

 

 

 

15.2

%

 

 

 

13.8

%

 

 

 

15.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Korn Ferry

$

51,319

 

 

 

$

19,993

 

 

 

$

48,264

 

 

 

$

105,748

 

Integration/acquisition costs (1)

 

-

 

 

 

 

6,704

 

 

 

 

737

 

 

 

 

9,319

 

Restructuring charges, net (2)

 

838

 

 

 

 

18,093

 

 

 

 

30,732

 

 

 

 

18,093

 

Separation costs (3)

 

-

 

 

 

 

1,783

 

 

 

 

-

 

 

 

 

1,783

 

Debt refinancing costs (4)

 

-

 

 

 

 

828

 

 

 

 

-

 

 

 

 

828

 

Tax effect on the adjusted items (5)

 

(276

)

 

 

 

(6,451

)

 

 

 

(8,597

)

 

 

 

(7,119

)

Adjusted net income attributable to Korn Ferry

$

51,881

 

 

 

$

40,950

 

 

 

$

71,136

 

 

 

$

128,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.95

 

 

 

$

0.37

 

 

 

$

0.89

 

 

 

$

1.92

 

Integration/acquisition costs (1)

 

-

 

 

 

 

0.12

 

 

 

 

0.01

 

 

 

 

0.17

 

Restructuring charges, net (2)

 

0.02

 

 

 

 

0.34

 

 

 

 

0.57

 

 

 

 

0.33

 

Separation costs (3)

 

-

 

 

 

 

0.03

 

 

 

 

-

 

 

 

 

0.03

 

Debt refinancing costs (4)

 

-

 

 

 

 

0.02

 

 

 

 

-

 

 

 

 

0.02

 

Tax effect on the adjusted items (5)

 

(0.01

)

 

 

 

(0.13

)

 

 

 

(0.16

)

 

 

 

(0.14

)

Adjusted basic earnings per share

$

0.96

 

 

 

$

0.75

 

 

 

$

1.31

 

 

 

$

2.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.94

 

 

 

$

0.36

 

 

 

$

0.88

 

 

 

$

1.90

 

Integration/acquisition costs (1)

 

-

 

 

 

 

0.12

 

 

 

 

0.01

 

 

 

 

0.17

 

Restructuring charges, net (2)

 

0.02

 

 

 

 

0.34

 

 

 

 

0.57

 

 

 

 

0.33

 

Separation costs (3)

 

-

 

 

 

 

0.03

 

 

 

 

-

 

 

 

 

0.03

 

Debt refinancing costs (4)

 

-

 

 

 

 

0.02

 

 

 

 

-

 

 

 

 

0.02

 

Tax effect on the adjusted items (5)

 

(0.01

)

 

 

 

(0.12

)

 

 

 

(0.16

)

 

 

 

(0.14

)

Adjusted diluted earnings per share

$

0.95

 

 

 

$

0.75

 

 

 

$

1.30

 

 

 

$

2.31

 

Explanation of Non-GAAP Adjustments

(1)

Costs associated with previous acquisitions, such as legal and professional fees, retention awards and the on-going integration expenses to combine the companies.

(2)

Restructuring charges we incurred to rationalize our cost structure by eliminating redundant positions because of COVID-19 and 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)

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.

(5)

Tax effect on integration/acquisition costs, restructuring charges, net, separation costs and write-offs of debt issuance costs.

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, 2021

 

 

 

 

 

 

 

 

 

 

Executive Search

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

Digital

 

 

North
America

 

 

EMEA

 

 

Asia
Pacific

 

 

Latin
America

 

 

Subtotal

 

 

RPO and
Professional
Search

 

 

Corporate

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue

 

$

136,268

 

 

 

$

75,791

 

 

 

$

106,002

 

 

 

$

35,991

 

 

 

$

21,643

 

 

 

$

4,468

 

 

 

$

168,104

 

 

 

$

95,197

 

 

 

$

-

 

 

 

$

475,360

 

Total revenue

 

$

136,593

 

 

 

$

75,967

 

 

 

$

106,325

 

 

 

$

36,016

 

 

 

$

21,680

 

 

 

$

4,468

 

 

 

$

168,489

 

 

 

$

96,831

 

 

 

$

-

 

 

 

$

477,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Korn Ferry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

51,319

 

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

269

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,935

)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,298

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,204

 

Operating income (loss)

 

$

22,175

 

 

 

$

19,214

 

 

 

$

17,655

 

 

 

$

3,114

 

 

 

$

5,844

 

 

 

$

264

 

 

 

$

26,877

 

 

 

$

18,360

 

 

 

$

(21,471

)

 

 

 

65,155

 

Depreciation and amortization

 

 

4,051

 

 

 

 

7,403

 

 

 

 

680

 

 

 

 

345

 

 

 

 

231

 

 

 

 

193

 

 

 

 

1,449

 

 

 

 

929

 

 

 

 

1,903

 

 

 

 

15,735

 

Other income, net

 

 

943

 

 

 

 

494

 

 

 

 

12,611

 

 

 

 

61

 

 

 

 

323

 

 

 

 

1

 

 

 

 

12,996

 

 

 

 

242

 

 

 

 

260

 

 

 

 

14,935

 

EBITDA

 

 

27,169

 

 

 

 

27,111

 

 

 

 

30,946

 

 

 

 

3,520

 

 

 

 

6,398

 

 

 

 

458

 

 

 

 

41,322

 

 

 

 

19,531

 

 

 

 

(19,308

)

 

 

 

95,825

 

EBITDA margin

 

 

19.9

%

 

 

 

35.8

%

 

 

 

29.2

%

 

 

 

9.8

%

 

 

 

29.6

%

 

 

 

10.3

%

 

 

 

24.6

%

 

 

 

20.5

%

 

 

 

 

 

 

 

20.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring, charges, net

 

 

346

 

 

 

 

23

 

 

 

 

(5

)

 

 

 

398

 

 

 

 

(23

)

 

 

 

-

 

 

 

 

370

 

 

 

 

99

 

 

 

 

-

 

 

 

 

838

 

Adjusted EBITDA

 

$

27,515

 

 

 

$

27,134

 

 

 

$

30,941

 

 

 

$

3,918

 

 

 

$

6,375

 

 

 

$

458

 

 

 

$

41,692

 

 

 

$

19,630

 

 

 

$

(19,308

)

 

 

$

96,663

 

Adjusted EBITDA margin

 

 

20.2

%

 

 

 

35.8

%

 

 

 

29.2

%

 

 

 

10.9

%

 

 

 

29.5

%

 

 

 

10.3

%

 

 

 

24.8

%

 

 

 

20.6

%

 

 

 

 

 

 

 

20.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

%

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, 2021

 

 

 

 

 

 

 

 

 

 

Executive Search

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

Digital

 

 

North
America

 

 

EMEA

 

 

Asia
Pacific

 

 

Latin
America

 

 

Subtotal

 

 

RPO and
Professional
Search

 

 

Corporate

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue

 

$

362,271

 

 

 

$

206,807

 

 

 

$

266,485

 

 

 

$

97,701

 

 

 

$

59,702

 

 

 

$

12,419

 

 

 

$

436,307

 

 

 

$

249,511

 

 

 

$

-

 

 

 

$

1,254,896

 

Total revenue

 

$

363,234

 

 

 

$

207,027

 

 

 

$

267,790

 

 

 

$

97,925

 

 

 

$

59,840

 

 

 

$

12,419

 

 

 

$

437,974

 

 

 

$

254,317

 

 

 

$

-

 

 

 

$

1,262,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Korn Ferry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

48,264

 

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

547

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,374

)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,686

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,409

 

Operating income (loss)

 

$

25,869

 

 

 

$

32,410

 

 

 

$

32,411

 

 

 

$

(1,596

)

 

 

$

9,958

 

 

 

$

(578

)

 

 

$

40,195

 

 

 

$

33,027

 

 

 

$

(61,969

)

 

 

 

69,532

 

Depreciation and amortization

 

 

12,123

 

 

 

 

21,134

 

 

 

 

2,126

 

 

 

 

1,062

 

 

 

 

756

 

 

 

 

597

 

 

 

 

4,541

 

 

 

 

2,814

 

 

 

 

5,456

 

 

 

 

46,068

 

Other income (loss), net

 

 

2,067

 

 

 

 

1,114

 

 

 

 

21,944

 

 

 

 

111

 

 

 

 

715

 

 

 

 

56

 

 

 

 

22,826

 

 

 

 

462

 

 

 

 

(95

)

 

 

 

26,374

 

EBITDA

 

 

40,059

 

 

 

 

54,658

 

 

 

 

56,481

 

 

 

 

(423

)

 

 

 

11,429

 

 

 

 

75

 

 

 

 

67,562

 

 

 

 

36,303

 

 

 

 

(56,608

)

 

 

 

141,974

 

EBITDA margin

 

 

11.1

%

 

 

 

26.4

%

 

 

 

21.2

%

 

 

 

(0.4

%)

 

 

 

19.1

%

 

 

 

0.6

%

 

 

 

15.5

%

 

 

 

14.5

%

 

 

 

 

 

 

 

11.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Integration/acquisition costs

 

 

-

 

 

 

 

556

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

181

 

 

 

 

737

 

Restructuring charges, net

 

 

14,223

 

 

 

 

2,947

 

 

 

 

958

 

 

 

 

8,868

 

 

 

 

181

 

 

 

 

405

 

 

 

 

10,412

 

 

 

 

3,150

 

 

 

 

-

 

 

 

 

30,732

 

Adjusted EBITDA

 

$

54,282

 

 

 

$

58,161

 

 

 

$

57,439

 

 

 

$

8,445

 

 

 

$

11,610

 

 

 

$

480

 

 

 

$

77,974

 

 

 

$

39,453

 

 

 

$

(56,427

)

 

 

$

173,443

 

Adjusted EBITDA margin

 

 

15.0

%

 

 

 

28.1

%

 

 

 

21.6

%

 

 

 

8.6

%

 

 

 

19.4

%

 

 

 

3.9

%

 

 

 

17.9

%

 

 

 

15.8

%

 

 

 

 

 

 

 

13.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

%