Annual report pursuant to Section 13 and 15(d)

Segments

v3.19.2
Segments
12 Months Ended
Apr. 30, 2019
Segment Reporting [Abstract]  
Segments

11. Segments

The Company currently operates through three global segments: Executive Search, Advisory and RPO & Professional Search. The Executive Search segment focuses on recruiting board level, chief executive and other senior executive and general management positions, in addition to research-based interviewing and onboarding solutions, for clients predominantly in the consumer goods, financial services, industrial, life sciences/healthcare and technology industries. Advisory assists clients to synchronize strategy and talent by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership Development and Rewards and Benefits, all underpinned by a comprehensive array of world-leading IP, products and tools. RPO & Professional Search is a global industry leader in high-impact talent acquisition solutions. Its portfolio of services includes global and regional RPO, project recruitment, individual professional search and consulting. The Executive Search segment is managed by geographic regional leaders and Advisory and RPO & Professional Search worldwide operations are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and the Chief Executive Officers of Advisory and RPO & Professional Search report directly to the Chief Executive Officer of the Company. The Company also operates a Corporate segment to record global expenses of the Company.

The Company evaluates performance and allocates resources based on the Company’s chief operating decision maker’s (“CODM”) review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairment). The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies, except the items described above are excluded from EBITDA to arrive at Adjusted EBITDA. For fiscal 2017, Adjusted EBITDA included deferred revenue adjustment related to the Hay Group acquisition, reflecting revenue that Advisory would have realized if not for business combination accounting that requires a company to record the acquisition balance sheet at fair value and write-off deferred revenue where no future services are required to be performed to earn that revenue. For fiscal 2019 and 2018, management no longer had adjusted fee revenue. The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies, except the items described above are excluded from EBITDA to arrive at Adjusted EBITDA.

Financial highlights by operating segment are as follows:

 

 

 

Year Ended April 30, 2019

 

 

 

Executive Search

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North

America

 

 

EMEA

 

 

Asia Pacific

 

 

Latin

America

 

 

Subtotal

 

 

Advisory

 

 

RPO &

Professional

Search

 

 

Corporate

 

 

Consolidated

 

 

 

(in thousands)

 

Fee revenue

 

$

455,826

 

 

$

182,829

 

 

$

104,291

 

 

$

31,896

 

 

$

774,842

 

 

$

821,048

 

 

$

330,143

 

 

$

 

 

$

1,926,033

 

Total revenue

 

$

469,743

 

 

$

186,131

 

 

$

105,543

 

 

$

31,960

 

 

$

793,377

 

 

$

838,620

 

 

$

341,865

 

 

$

 

 

$

1,973,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Korn Ferry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

102,651

 

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,145

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,094

)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,891

 

Equity in earnings of unconsolidated subsidiaries, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(311

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,544

 

Operating income (loss)

 

$

120,754

 

 

$

29,974

 

 

$

24,364

 

 

$

3,998

 

 

$

179,090

 

 

$

5,617

 

 

$

50,884

 

 

$

(94,765

)

 

$

140,826

 

Depreciation and amortization

 

 

3,890

 

 

 

1,254

 

 

 

1,428

 

 

 

410

 

 

 

6,982

 

 

 

29,057

 

 

 

3,255

 

 

 

7,195

 

 

 

46,489

 

Other income (loss), net

 

 

6,388

 

 

 

432

 

 

 

281

 

 

 

322

 

 

 

7,423

 

 

 

3,198

 

 

 

268

 

 

 

(795

)

 

 

10,094

 

Equity in earnings of unconsolidated subsidiaries, net

 

 

311

 

 

 

 

 

 

 

 

 

 

 

 

311

 

 

 

 

 

 

 

 

 

 

 

 

311

 

EBITDA

 

 

131,343

 

 

 

31,660

 

 

 

26,073

 

 

 

4,730

 

 

 

193,806

 

 

 

37,872

 

 

 

54,407

 

 

 

(88,365

)

 

 

197,720

 

Integration/acquisition costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,559

 

 

 

 

 

 

187

 

 

 

6,746

 

Tradename write-offs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106,555

 

 

 

 

 

 

 

 

 

106,555

 

Adjusted EBITDA

 

$

131,343

 

 

$

31,660

 

 

$

26,073

 

 

$

4,730

 

 

$

193,806

 

 

$

150,986

 

 

$

54,407

 

 

$

(88,178

)

 

$

311,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Identifiable assets (1)

 

$

427,089

 

 

$

171,120

 

 

$

116,006

 

 

$

24,600

 

 

$

738,815

 

 

$

1,045,432

 

 

$

166,492

 

 

$

384,113

 

 

$

2,334,852

 

Long-lived assets (1)

 

$

19,864

 

 

$

9,266

 

 

$

9,255

 

 

$

2,711

 

 

$

41,096

 

 

$

46,689

 

 

$

8,980

 

 

$

34,740

 

 

$

131,505

 

Goodwill (1)

 

$

46,571

 

 

$

45,480

 

 

$

972

 

 

$

 

 

$

93,023

 

 

$

457,361

 

 

$

27,914

 

 

$

 

 

$

578,298

 

 

(1)

As of the end of the fiscal year.

 

 

 

Year Ended April 30, 2018

 

 

 

Executive Search

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North

America

 

 

EMEA

 

 

Asia

Pacific

 

 

Latin

America

 

 

Subtotal

 

 

Advisory

 

 

RPO &

Professional

Search

 

 

Corporate

 

 

Consolidated

 

 

 

(in thousands)

 

Fee revenue

 

$

408,098

 

 

$

173,725

 

 

$

96,595

 

 

$

30,624

 

 

$

709,042

 

 

$

785,013

 

 

$

273,162

 

 

$

 

 

$

1,767,217

 

Total revenue

 

$

421,260

 

 

$

177,234

 

 

$

98,062

 

 

$

30,717

 

 

$

727,273

 

 

$

801,005

 

 

$

291,241

 

 

$

 

 

$

1,819,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Korn Ferry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

133,779

 

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,118

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,119

)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,832

 

Equity in earnings of unconsolidated subsidiaries, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(297

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70,133

 

Operating income (loss)

 

$

100,397

 

 

$

26,768

 

 

$

18,425

 

 

$

4,022

 

 

$

149,612

 

 

$

100,535

 

 

$

39,396

 

 

$

(81,097

)

 

$

208,446

 

Depreciation and amortization

 

 

3,930

 

 

 

1,689

 

 

 

1,408

 

 

 

455

 

 

 

7,482

 

 

 

31,527

 

 

 

3,054

 

 

 

6,525

 

 

 

48,588

 

Other income, net

 

 

845

 

 

 

168

 

 

 

373

 

 

 

181

 

 

 

1,567

 

 

 

2,501

 

 

 

152

 

 

 

6,899

 

 

 

11,119

 

Equity in earnings of unconsolidated subsidiaries, net

 

 

297

 

 

 

 

 

 

 

 

 

 

 

 

297

 

 

 

 

 

 

 

 

 

 

 

 

297

 

EBITDA

 

 

105,469

 

 

 

28,625

 

 

 

20,206

 

 

 

4,658

 

 

 

158,958

 

 

 

134,563

 

 

 

42,602

 

 

 

(67,673

)

 

 

268,450

 

Restructuring charges (recoveries), net

 

 

 

 

 

 

 

 

313

 

 

 

 

 

 

313

 

 

 

(241

)

 

 

6

 

 

 

 

 

 

78

 

Integration/acquisition costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,151

 

 

 

 

 

 

279

 

 

 

9,430

 

Adjusted EBITDA

 

$

105,469

 

 

$

28,625

 

 

$

20,519

 

 

$

4,658

 

 

$

159,271

 

 

$

143,473

 

 

$

42,608

 

 

$

(67,394

)

 

$

277,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Identifiable assets (1)

 

$

411,347

 

 

$

198,815

 

 

$

98,599

 

 

$

23,832

 

 

$

732,593

 

 

$

1,092,474

 

 

$

144,160

 

 

$

318,687

 

 

$

2,287,914

 

Long-lived assets (1)

 

$

22,813

 

 

$

11,018

 

 

$

10,834

 

 

$

3,203

 

 

$

47,868

 

 

$

42,605

 

 

$

6,390

 

 

$

23,038

 

 

$

119,901

 

Goodwill (1)

 

$

47,757

 

 

$

47,501

 

 

$

972

 

 

$

 

 

$

96,230

 

 

$

458,169

 

 

$

29,823

 

 

$

 

 

$

584,222

 

 

(1)

As of the end of the fiscal year.

 

 

 

Year Ended April 30, 2017

 

 

 

Executive Search

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North

America

 

 

EMEA

 

 

Asia

Pacific

 

 

Latin

America

 

 

Subtotal

 

 

Advisory

 

 

RPO &

Professional

Search

 

 

Corporate

 

 

Consolidated

 

 

 

(in thousands)

 

Fee revenue

 

$

356,625

 

 

$

146,506

 

 

$

80,169

 

 

$

34,376

 

 

$

617,676

 

 

$

724,186

 

 

$

223,659

 

 

$

 

 

$

1,565,521

 

Deferred revenue adjustment due to acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,535

 

 

 

 

 

 

 

 

 

3,535

 

Adjusted fee revenue

 

$

356,625

 

 

$

146,506

 

 

$

80,169

 

 

$

34,376

 

 

$

617,676

 

 

$

727,721

 

 

$

223,659

 

 

$

 

 

$

1,569,056

 

Total revenue

 

$

369,803

 

 

$

150,113

 

 

$

81,744

 

 

$

34,533

 

 

$

636,193

 

 

$

741,533

 

 

$

243,943

 

 

$

 

 

$

1,621,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Korn Ferry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

84,181

 

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,057

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,328

)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,607

 

Equity in earnings of unconsolidated subsidiaries, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(333

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,104

 

Operating income (loss)

 

$

81,621

 

 

$

27,854

 

 

$

8,580

 

 

$

6,268

 

 

$

124,323

 

 

$

47,429

 

 

$

29,995

 

 

$

(81,459

)

 

$

120,288

 

Depreciation and amortization

 

 

3,812

 

 

 

1,030

 

 

 

1,060

 

 

 

483

 

 

 

6,385

 

 

 

32,262

 

 

 

2,818

 

 

 

5,795

 

 

 

47,260

 

Other income (loss), net

 

 

844

 

 

 

(15

)

 

 

300

 

 

 

684

 

 

 

1,813

 

 

 

1,900

 

 

 

(91

)

 

 

6,706

 

 

 

10,328

 

Equity in earnings of unconsolidated subsidiaries, net

 

 

333

 

 

 

 

 

 

 

 

 

 

 

 

333

 

 

 

 

 

 

 

 

 

 

 

 

333

 

EBITDA

 

 

86,610

 

 

 

28,869

 

 

 

9,940

 

 

 

7,435

 

 

 

132,854

 

 

 

81,591

 

 

 

32,722

 

 

 

(68,958

)

 

 

178,209

 

Restructuring charges, net

 

 

1,719

 

 

 

629

 

 

 

1,495

 

 

 

773

 

 

 

4,616

 

 

 

29,663

 

 

 

101

 

 

 

220

 

 

 

34,600

 

Integration/acquisition costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,440

 

 

 

 

 

 

7,939

 

 

 

22,379

 

Deferred revenue adjustment due to acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,535

 

 

 

 

 

 

 

 

 

3,535

 

Separation costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

609

 

 

 

 

 

 

 

 

 

609

 

Adjusted EBITDA

 

$

88,329

 

 

$

29,498

 

 

$

11,435

 

 

$

8,208

 

 

$

137,470

 

 

$

129,838

 

 

$

32,823

 

 

$

(60,799

)

 

$

239,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Identifiable assets (1)

 

$

340,069

 

 

$

158,927

 

 

$

87,845

 

 

$

26,897

 

 

$

613,738

 

 

$

1,057,611

 

 

$

116,717

 

 

$

274,832

 

 

$

2,062,898

 

Long-lived assets (1)

 

$

23,746

 

 

$

11,089

 

 

$

8,371

 

 

$

3,262

 

 

$

46,468

 

 

$

37,846

 

 

$

6,693

 

 

$

18,560

 

 

$

109,567

 

Goodwill (1)

 

$

46,201

 

 

$

44,976

 

 

$

972

 

 

$

 

 

$

92,149

 

 

$

457,241

 

 

$

27,475

 

 

$

 

 

$

576,865

 

 

(1)

As of the end of the fiscal year.

Fee revenue attributed to an individual customer or country, other than the U.S. and United Kingdom, did not account for more than 10% of the total fee revenue in fiscal 2019, 2018 or 2017. Fee revenue classified by country in which the Company derives revenues are as follows:

 

 

 

Year Ended April 30,

 

 

 

2019

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

U.S.

 

$

859,969

 

 

$

778,470

 

 

$

728,871

 

United Kingdom

 

 

202,055