LOS ANGELES, Dec. 6, 2017 /PRNewswire/ --
Highlights
- Korn Ferry reports record fee
revenue of $443.0 million in Q2 FY'18
driven by organic growth in all three lines of business as compared
to Q2 FY'17:
|
Futurestep
|
|
16.7%
|
|
|
Executive
Search
|
|
13.2%
|
|
|
Hay Group
|
|
5.9%
|
|
- Operating income was $51.2
million in Q2 FY'18 with an operating margin of 11.6%.
Adjusted EBITDA was $69.6 million
with Adjusted EBITDA margin of 15.7%.
- Q2 FY'18 diluted earnings per share was $0.64 compared to diluted earnings per share of
$0.52 in Q2 FY'17. Adjusted diluted
earnings per share was $0.67 in Q2
FY'18, compared to adjusted diluted earnings per share in Q2 FY'17
of $0.59.
- The Company continued to return capital to stockholders during
the quarter, paying $5.7 million in
dividends and repurchasing $25.2
million worth of its outstanding shares.
- The Company declared a quarterly dividend of $0.10 per share on December 6, 2017 payable on January 12, 2018 to stockholders of record on
December 20, 2017.
Korn/Ferry International (NYSE: KFY), the preeminent global
people and organizational advisory firm, today announced record fee
revenue of $443.0 million for its
second quarter of fiscal 2018. In addition, second quarter
diluted earnings per share was $0.64
and adjusted earnings per share was $0.67. Adjusted diluted earnings per share
for the second quarter excluded $1.5
million, or $0.03 per share,
mainly driven by integration/acquisition costs net of related
taxes.
"I am pleased to report fee revenue of $443 million, an all-time high, up 10% year over
year for our recently completed second quarter. Profits were
solid, with diluted earnings per share and adjusted diluted
earnings per share of $0.64 and
$0.67 and Adjusted EBITDA of
approximately $70 million," said
Gary D. Burnison, CEO of
Korn Ferry. "Korn Ferry has evolved into a full-fledged
consulting firm, with offerings that span search, organizational
advisory services, strategy execution, leadership development,
compensation and rewards and more. The acquisitions we have
made over the years, the talent we have brought on board and our
relentless focus on solutions aligned toward our clients' business
outcomes are making a notable impact. I look forward to what
the future holds as we enter calendar year 2018."
Selected Financial
Results
|
(dollars in millions,
except per share amounts) (a)
|
|
|
|
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
Fee
revenue
|
$
443.0
|
|
$
401.9
|
|
$
844.3
|
|
$
777.5
|
|
|
Total
revenue
|
$
455.5
|
|
$
415.0
|
|
$
870.4
|
|
$
807.9
|
|
|
Operating
income
|
$
51.2
|
|
$
46.5
|
|
$
92.0
|
|
$
51.1
|
|
|
Operating
margin
|
11.6%
|
|
11.6%
|
|
10.9%
|
|
6.6%
|
|
|
Net income
attributable to Korn Ferry
|
$
36.3
|
|
$
30.2
|
|
$
65.4
|
|
$
33.4
|
|
|
Basic earnings per
share
|
$
0.65
|
|
$
0.53
|
|
$
1.16
|
|
$
0.59
|
|
|
Diluted earnings per
share
|
$
0.64
|
|
$
0.52
|
|
$
1.15
|
|
$
0.58
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(b):
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
EBITDA
|
$
67.4
|
|
$
57.5
|
|
$
123.9
|
|
$
77.7
|
|
|
EBITDA
margin
|
15.2%
|
|
14.3%
|
|
14.7%
|
|
10.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(c):
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
Adjusted fee
revenue
|
$
443.0
|
|
$
401.9
|
|
$
844.3
|
|
$
781.1
|
|
|
Adjusted EBITDA
(b)
|
$
69.6
|
|
$
63.3
|
|
$
128.9
|
|
$
119.7
|
|
|
Adjusted EBITDA
margin (b)
|
15.7%
|
|
15.7%
|
|
15.3%
|
|
15.3%
|
|
|
Adjusted net income
attributable to Korn Ferry
|
$
37.8
|
|
$
34.1
|
|
$
69.0
|
|
$
63.6
|
|
|
Adjusted basic
earnings per share
|
$
0.68
|
|
$
0.60
|
|
$
1.23
|
|
$
1.12
|
|
|
Adjusted diluted
earnings per share
|
$
0.67
|
|
$
0.59
|
|
$
1.21
|
|
$
1.11
|
|
|
___________
|
(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 restructuring (recoveries) charges, net and
integration/acquisition costs and includes the FY'17 deferred
revenue adjustment related to the acquisition of HG (Luxembourg)
S.à.r.l ("Legacy Hay"). 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):
|
|
Second
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Integration/acquisition costs
|
$
2.4
|
|
$
5.8
|
|
$
5.0
|
|
$
13.8
|
|
Restructuring
(recoveries) charges, net
|
$
(0.2)
|
|
$
—
|
|
$
0.1
|
|
$
24.5
|
|
Deferred revenue
adjustment related to the Legacy Hay acquisition
|
$
—
|
|
$
—
|
|
$
—
|
|
$
3.5
|
|
Write-off of debt
issuance costs
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1.0
|
|
The Company reported record fee revenue in Q2 FY'18 of
$443.0 million, an increase of
$41.1 million or 10.2% (an increase
of $35.9 million or 8.9% on a
constant currency basis) compared to Q2 FY'17. The organic
growth was driven by all three lines of business:
Futurestep
|
|
16.7%
|
|
Executive
Search
|
|
13.2%
|
|
Hay Group
|
|
5.9%
|
|
Fee revenue growth in the quarter was partially offset by
increased compensation and benefits as well as general and
administrative expenses resulting
in operating income and Adjusted EBITDA each growing 10% as
compared to Q2 FY'17 and diluted earnings per share and Adjusted
diluted earnings per share growing 23.1% and almost 13.6%,
respectively, as compared to Q2 FY'17.
Results by
Segment
|
|
|
|
Selected Executive
Search Data
|
|
(dollars in millions)
(a)
|
|
|
|
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
Fee
revenue
|
$
176.8
|
|
$
156.2
|
|
$
338.0
|
|
$
302.6
|
|
|
Total
revenue
|
$
180.6
|
|
$
160.6
|
|
$
346.4
|
|
$
312.1
|
|
|
Operating
income
|
$
35.2
|
|
$
37.4
|
|
$
68.0
|
|
$
64.4
|
|
|
Operating
margin
|
19.9%
|
|
24.0%
|
|
20.1%
|
|
21.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of
consultants
|
538
|
|
501
|
|
538
|
|
501
|
|
|
Average number of
consultants
|
535
|
|
495
|
|
528
|
|
495
|
|
|
Engagements
billed
|
3,723
|
|
3,486
|
|
5,752
|
|
5,312
|
|
|
New engagements
(b)
|
1,578
|
|
1,509
|
|
3,171
|
|
2,955
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(c):
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
EBITDA
|
$
37.6
|
|
$
39.0
|
|
$
72.8
|
|
$
67.9
|
|
|
EBITDA
margin
|
21.3%
|
|
25.0%
|
|
21.5%
|
%
|
22.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(d):
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
Adjusted EBITDA
(c)
|
$
37.9
|
|
$
39.0
|
|
$
73.1
|
|
$
70.7
|
|
|
Adjusted EBITDA
margin (c)
|
21.5%
|
|
25.0%
|
|
21.6%
|
%
|
23.4%
|
|
|
___________
|
(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 exclude the following (see
attached reconciliations):
|
|
Second
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Restructuring
charges, net
|
$
0.3
|
|
$
—
|
|
$
0.3
|
|
$
2.8
|
|
Fee revenue was $176.8 million in
Q2 FY'18, an increase of $20.6
million or 13.2% (an increase of $18.6 million or 11.9% on a constant currency
basis) compared to Q2 FY'17. The overall increase in fee
revenue was attributable to higher fee revenue in the North
American, EMEA and APAC regions.
Operating income was $35.2 million
in Q2 FY'18 compared to $37.4 million
in Q2 FY'17. Operating margin was 19.9% in Q2 FY'18 compared
to 24.0% in the year-ago quarter. The decrease in operating
income was due to increases in compensation expenses driven by an
8.4% increase in headcount and an increase in the amounts owed
under certain deferred compensation plans. In addition, there
were increases in general and administrative expenses due to
unfavorable impact of foreign exchange rates and slightly higher
bad debt expense.
Adjusted EBITDA was $37.9 million
in Q2 FY'18 with an adjusted EBITDA margin of 21.5% compared to
$39.0 million and 25.0%,
respectively, in the year-ago quarter.
Selected Hay Group
Data
|
|
(dollars in millions)
(a)
|
|
|
|
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
Fee
revenue
|
$
200.0
|
|
$
188.8
|
|
$
379.4
|
|
$
363.4
|
|
|
Total
revenue
|
$
203.8
|
|
$
192.4
|
|
$
387.1
|
|
$
373.9
|
|
|
Operating
income
|
$
26.4
|
|
$
22.9
|
|
$
45.5
|
|
$
15.2
|
|
|
Operating
margin
|
13.2%
|
|
12.1%
|
|
12.0%
|
|
4.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of
consultants (b)
|
594
|
|
563
|
|
594
|
|
563
|
|
|
Staff utilization
(c)
|
67%
|
|
69%
|
|
65%
|
|
68%
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(d):
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
EBITDA
|
$
34.6
|
|
$
31.0
|
|
$
61.8
|
|
$
31.5
|
|
|
EBITDA
margin
|
17.3%
|
|
16.4%
|
|
16.3%
|
|
8.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(e):
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
Adjusted fee
revenue
|
$
200.0
|
|
$
188.8
|
|
$
379.4
|
|
$
367.0
|
|
|
Adjusted EBITDA
(d)
|
$
36.4
|
|
$
35.3
|
|
$
66.4
|
|
$
65.1
|
|
|
Adjusted EBITDA
margin (d)
|
18.2%
|
|
18.7%
|
|
17.5%
|
|
17.7%
|
|
|
___________
|
(a)
|
Numbers may not total
due to rounding.
|
(b)
|
Represents number of
employees originating consulting services.
|
(c)
|
Calculated by
dividing the number of hours our full-time Hay Group professional
staff record to engagements during the period, by the total
available working hours during the same 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, as
applicable (see attached reconciliations):
|
|
Second
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Integration/acquisition costs
|
$
2.3
|
|
$
4.4
|
|
$
4.9
|
|
$
8.6
|
|
Restructuring
(recoveries) charges, net
|
$
(0.5)
|
|
$
—
|
|
$
(0.2)
|
|
$
21.5
|
|
Deferred revenue
adjustment related to the Legacy Hay acquisition
|
$
—
|
|
$
—
|
|
$
—
|
|
$
3.5
|
|
Fee revenue was $200.0 million in
Q2 FY'18 compared to $188.8 million
in Q2 FY'17, an increase of $11.2
million or 5.9% (an increase of $8.9
million or 4.7% on a constant currency basis) compared to Q2
FY'17. The increase in fee revenue was primarily driven by
increases in consulting services.
Operating income was $26.4 million
in Q2 FY'18 with an operating margin of 13.2% in the current
quarter compared to $22.9 million and
12.1%, respectively, in the year-ago quarter. The change in
operating income was primarily due to higher fee revenue compared
to the year-ago quarter, offset by increases in compensation and
benefits expense and general and administrative expenses driven by
a 2.5% increase in headcount and the unfavorable impact of foreign
exchange rates.
Adjusted EBITDA was $36.4 million
in Q2 FY'18 with an Adjusted EBITDA margin of 18.2% compared to
$35.3 million and 18.7%,
respectively, in the year-ago quarter.
Selected Futurestep
Data
|
|
(dollars in millions)
(a)
|
|
|
|
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
Fee
revenue
|
$
66.3
|
|
$
56.8
|
|
$
126.9
|
|
$
111.5
|
|
|
Total
revenue
|
$
71.0
|
|
$
62.0
|
|
$
136.9
|
|
$
121.9
|
|
|
Operating
income
|
$
9.4
|
|
$
7.8
|
|
$
17.6
|
|
$
15.3
|
|
|
Operating
margin
|
14.2%
|
|
13.7%
|
|
13.9%
|
|
13.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Engagements billed
(b)
|
1,228
|
|
1,025
|
|
1,907
|
|
1,595
|
|
|
New engagements
(c)
|
711
|
|
559
|
|
1,443
|
|
1,078
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(d):
|
Second
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
EBITDA
|
$
10.2
|
|
$
8.5
|
|
$
19.2
|
|
$
16.6
|
|
|
EBITDA
margin
|
15.4%
|
|
14.9%
|
|
15.2%
|
|
14.9%
|
|
|
___________
|
(a)
|
Numbers may not total
due to rounding.
|
(b)
|
Represents search
engagements billed.
|
(c)
|
Represents new search
engagements opened in the respective period.
|
(d)
|
EBITDA and EBITDA
margin are non-GAAP financial measures (see attached
reconciliations).
|
Fee revenue was $66.3 million in
Q2 FY'18, an increase of $9.5 million
or 16.7% (a $8.6 million or 15.1%
increase on a constant currency basis), compared to the year-ago
quarter. The higher fee revenue was primarily driven by an
increase in recruitment process outsourcing and professional search
of $7.3 million and $2.8 million, respectively, in Q2 FY'18 compared
to Q2 FY'17.
Operating income was $9.4 million
in Q2 FY'18, an increase of $1.6
million compared to Q2 FY'17 operating income of
$7.8 million. Operating margin
was 14.2% in the current quarter compared to 13.7% in the year-ago
quarter. The change in operating income was primarily due to
higher fee revenue compared to the year-ago quarter, offset by
increases in compensation and benefits expense and general and
administrative expenses driven by a 16.1% increase in headcount
associated with increased recruitment process outsourcing
engagements and higher premise costs and bad debt expense.
EBITDA was $10.2 million during Q2
FY'18, an increase of $1.7 million
compared to Q2 FY'17. EBITDA margin was 15.4% in Q2 FY'18 compared
to 14.9% in the year-ago quarter.
Outlook
Assuming worldwide economic conditions, financial markets and
foreign exchange rates remain steady and no changes in U.S. tax
laws, on a consolidated basis:
- Q3 FY'18 fee revenue is expected to be in the range of
$406 million and $426 million; and
- Q3 FY'18 diluted earnings per share is likely to range between
$0.51 to $0.59.
On a consolidated adjusted basis:
- Q3 FY'18 adjusted diluted earnings per share is expected to be
in the range from $0.54 to
$0.62.
|
Q3
FY'18
Earnings Per
Share
Outlook (1)
|
|
|
Low
|
|
High
|
|
Consolidated diluted
earnings per share
|
$
0.51
|
|
$
0.59
|
|
Retention
bonuses
|
0.04
|
|
0.04
|
|
Tax rate
impact
|
(0.01)
|
|
(0.01)
|
|
Consolidated adjusted
diluted earnings per share
|
$
0.54
|
|
$
0.62
|
|
___________
|
(1)
|
Consolidated adjusted
diluted earnings per share is a non-GAAP financial measure that
excludes the items listed in the table.
|
Earnings Conference Call Webcast
The earnings conference call will be held today at 4:30 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 the preeminent
global people and organizational advisory firm. We help
leaders, organizations and societies succeed by releasing the full
power and potential of people. Our more than 7,000 colleagues
deliver services through Executive Search, Hay Group and Futurestep
divisions. 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. 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 attracting and retaining qualified and experienced
consultants, our ability to successfully integrate acquired
businesses including Legacy Hay, our ability to recognize the
anticipated benefits of the acquisition of Legacy Hay which may be
affected by, among other things, competition, our ability to grow
and manage growth profitability, maintain relationships with
customers and suppliers and retain key employees, costs related to
the acquisition of Legacy Hay, maintaining our brand name and
professional reputation, potential legal liability, the portability
of client relationships, 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 with our growth,
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, consolidation of industries we serve, our
ability to successfully recover from a disaster or other business
continuity problems, changes in our accounting
estimates/assumptions, changes in U.S. tax laws, impairment of
goodwill and other intangible assets, deferred tax assets,
seasonality, our ability to successfully rationalize our cost
structure 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
International, adjusted to exclude restructuring (recoveries)
charges, net, integration/acquisition costs and write-off of debt
issuance costs and to include the deferred revenue adjustment
related to the Legacy Hay acquisition, net of income tax
effect;
- adjusted basic and diluted earnings per share, adjusted to
exclude restructuring (recoveries) charges, net,
integration/acquisition costs and write-off of debt issuance costs
and to include the deferred revenue adjustment related to the
Legacy Hay acquisition, net of income tax effect; and in the case
of the outlook section, also adjusted for tax rate impact;
- constant currency (calculated using a quarterly average)
amounts that represent the outcome that would have resulted had
exchange rates in the reported period been the same as those in
effect in the comparable prior year period;
- EBITDA, or earnings before interest, taxes, depreciation and
amortization and EBITDA margin;
- Adjusted EBITDA, which is EBITDA further adjusted to exclude
restructuring (recoveries) charges, net and integration/acquisition
costs and to include the deferred revenue adjustment related to the
Legacy Hay acquisition and Adjusted EBITDA margin; and
- adjusted fee revenue, which includes revenue that Hay Group
would have realized over the ensuing year 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.
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 and other items 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
represent 1) costs we incurred to acquire and integrate the Legacy
Hay acquisition, 2) charges we incurred to restructure the combined
company due to the acquisition of Legacy Hay, 3) debt issuance
costs written-off upon replacement of our credit facility and 4)
revenue that Hay Group 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. As such, reported fee revenue can make fee
revenue and operating results appear to fluctuate more than they
would if business combination accounting did not require deferred
revenue to be written off. Adjusted fee revenue is not a
measure that substitutes an individually tailored revenue
recognition or measurement method for those of GAAP, rather, it is
an adjustment for a short period of time that will provide better
comparability in the current and future periods. Management
believes the presentation of adjusted fee revenue assists
management in its evaluation of ongoing operations and provides
useful information to investors because it 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 distorted by write-offs required under business
combination accounting 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. Management no longer has adjusted fee
revenue after Q1 FY'17. 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. 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 amounts, 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
|
|
Six Months
Ended
|
|
|
October
31
|
|
October
31
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(unaudited)
|
Fee
revenue
|
|
$ 443,018
|
|
$ 401,917
|
|
$ 844,272
|
|
$ 777,538
|
Reimbursed
out-of-pocket engagement expenses
|
|
12,450
|
|
13,037
|
|
26,113
|
|
30,349
|
Total revenue
|
|
455,468
|
|
414,954
|
|
870,385
|
|
807,887
|
|
|
|
|
|
|
|
|
|
Compensation
and benefits
|
|
301,043
|
|
270,609
|
|
574,997
|
|
533,576
|
General and
administrative expenses
|
|
58,603
|
|
54,134
|
|
116,864
|
|
109,476
|
Reimbursed
expenses
|
|
12,450
|
|
13,037
|
|
26,113
|
|
30,349
|
Cost of
services
|
|
19,883
|
|
18,874
|
|
35,696
|
|
35,706
|
Depreciation
and amortization
|
|
12,447
|
|
11,752
|
|
24,656
|
|
23,196
|
Restructuring
(recoveries) charges, net
|
|
(202)
|
|
-
|
|
78
|
|
24,520
|
Total operating expenses
|
|
404,224
|
|
368,406
|
|
778,404
|
|
756,823
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
51,244
|
|
46,548
|
|
91,981
|
|
51,064
|
Other income
(loss), net
|
|
3,626
|
|
(879)
|
|
7,158
|
|
3,380
|
Interest
expense, net
|
|
(2,579)
|
|
(2,736)
|
|
(5,239)
|
|
(5,797)
|
Income before provision for income taxes and equity in earnings of unconsolidated
subsidiaries
|
|
52,291
|
|
42,933
|
|
93,900
|
|
48,647
|
Equity in
earnings of unconsolidated subsidiaries
|
|
60
|
|
29
|
|
90
|
|
108
|
Income tax
provision
|
|
15,619
|
|
11,906
|
|
27,829
|
|
13,631
|
Net
income
|
|
36,732
|
|
31,056
|
|
66,161
|
|
35,124
|
Net income attributable to noncontrolling interest
|
|
(401)
|
|
(904)
|
|
(789)
|
|
(1,764)
|
Net income
attributable to Korn/Ferry International
|
|
$
36,331
|
|
$
30,152
|
|
$
65,372
|
|
$
33,360
|
|
|
|
|
|
|
|
|
|
Earnings per
common share attributable to Korn/Ferry
International:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.65
|
|
$
0.53
|
|
$
1.16
|
|
$
0.59
|
Diluted
|
|
$
0.64
|
|
$
0.52
|
|
$
1.15
|
|
$
0.58
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
55,390
|
|
56,614
|
|
55,592
|
|
56,401
|
Diluted
|
|
55,978
|
|
56,983
|
|
56,252
|
|
56,863
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share:
|
|
$
0.10
|
|
$
0.10
|
|
$
0.20
|
|
$
0.20
|
KORN FERRY AND
SUBSIDIARIES
|
FINANCIAL SUMMARY
BY SEGMENT
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
2017
|
|
|
|
2016
|
|
%
Change
|
|
2017
|
|
|
|
2016
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
search:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$ 101,544
|
|
|
|
$
92,732
|
|
9.5%
|
|
$ 193,377
|
|
|
|
$ 174,534
|
|
10.8%
|
|
EMEA
|
41,346
|
|
|
|
34,779
|
|
18.9%
|
|
81,467
|
|
|
|
70,149
|
|
16.1%
|
|
Asia
Pacific
|
25,912
|
|
|
|
19,470
|
|
33.1%
|
|
47,490
|
|
|
|
39,096
|
|
21.5%
|
|
Latin
America
|
7,964
|
|
|
|
9,247
|
|
(13.9%)
|
|
15,623
|
|
|
|
18,810
|
|
(16.9%)
|
Total executive
search
|
176,766
|
|
|
|
156,228
|
|
13.1%
|
|
337,957
|
|
|
|
302,589
|
|
11.7%
|
Hay Group
|
199,953
|
|
|
|
188,842
|
|
5.9%
|
|
379,406
|
|
|
|
363,424
|
|
4.4%
|
Futurestep
|
66,299
|
|
|
|
56,847
|
|
16.6%
|
|
126,909
|
|
|
|
111,525
|
|
13.8%
|
|
Total fee
revenue
|
443,018
|
|
|
|
401,917
|
|
10.2%
|
|
844,272
|
|
|
|
777,538
|
|
8.6%
|
Reimbursed
out-of-pocket engagement expenses
|
12,450
|
|
|
|
13,037
|
|
(4.5%)
|
|
26,113
|
|
|
|
30,349
|
|
(14.0%)
|
|
Total
revenue
|
$ 455,468
|
|
|
|
$ 414,954
|
|
9.8%
|
|
$ 870,385
|
|
|
|
$ 807,887
|
|
7.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss):
|
|
|
Margin
|
|
|
|
Margin
|
|
|
|
Margin
|
|
|
|
Margin
|
Executive
search:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
22,945
|
|
22.6%
|
|
$
26,272
|
|
28.3%
|
|
$
44,940
|
|
23.2%
|
|
$
42,740
|
|
24.5%
|
|
EMEA
|
6,345
|
|
15.3%
|
|
6,847
|
|
19.7%
|
|
13,020
|
|
16.0%
|
|
12,874
|
|
18.4%
|
|
Asia
Pacific
|
4,381
|
|
16.9%
|
|
2,028
|
|
10.4%
|
|
7,522
|
|
15.8%
|
|
4,130
|
|
10.6%
|
|
Latin
America
|
1,527
|
|
19.2%
|
|
2,284
|
|
24.7%
|
|
2,553
|
|
16.3%
|
|
4,614
|
|
24.5%
|
Total executive
search
|
35,198
|
|
19.9%
|
|
37,431
|
|
24.0%
|
|
68,035
|
|
20.1%
|
|
64,358
|
|
21.3%
|
Hay Group
|
26,370
|
|
13.2%
|
|
22,943
|
|
12.1%
|
|
45,453
|
|
12.0%
|
|
15,200
|
|
4.2%
|
Futurestep
|
9,409
|
|
14.2%
|
|
7,787
|
|
13.7%
|
|
17,646
|
|
13.9%
|
|
15,300
|
|
13.7%
|
Corporate
|
(19,733)
|
|
|
|
(21,613)
|
|
|
|
(39,153)
|
|
|
|
(43,794)
|
|
|
|
Total operating
income
|
$
51,244
|
|
11.6%
|
|
$
46,548
|
|
11.6%
|
|
$
91,981
|
|
10.9%
|
|
$
51,064
|
|
6.6%
|
KORN FERRY AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
October
31,
|
|
April
30,
|
|
|
2017
|
|
2017
|
ASSETS
|
|
(unaudited)
|
|
|
Cash and cash
equivalents
|
|
$
282,625
|
|
$
410,882
|
Marketable
securities
|
|
13,671
|
|
4,363
|
Receivables due from
clients, net of allowance for doubtful accounts of $15,930 and $15,455 at October 31, 2017 and April
30, 2017, respectively
|
|
397,374
|
|
345,314
|
Income taxes and
other receivables
|
|
40,312
|
|
31,573
|
Prepaid expenses and
other assets
|
|
66,809
|
|
51,542
|
Total current
assets
|
|
800,791
|
|
843,674
|
|
|
|
|
|
Marketable
securities, non-current
|
|
117,566
|
|
115,574
|
Property and
equipment, net
|
|
115,090
|
|
109,567
|
Cash surrender value
of company owned life insurance policies, net of loans
|
|
115,627
|
|
113,067
|
Deferred income
taxes
|
|
22,167
|
|
20,175
|
Goodwill
|
|
581,780
|
|
576,865
|
Intangible assets,
net
|
|
210,016
|
|
217,319
|
Investments and other
assets
|
|
99,064
|
|
66,657
|
Total
assets
|
|
$
2,062,101
|
|
$
2,062,898
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Accounts
payable
|
|
$
34,645
|
|
$
37,481
|
Income taxes
payable
|
|
14,687
|
|
4,526
|
Compensation and
benefits payable
|
|
191,512
|
|
248,354
|
Term loan
|
|
21,473
|
|
19,754
|
Other accrued
liabilities
|
|
150,855
|
|
148,464
|
Total current
liabilities
|
|
413,172
|
|
458,579
|
|
|
|
|
|
Deferred compensation
and other retirement plans
|
|
222,755
|
|
219,905
|
Term loan,
non-current
|
|
224,626
|
|
236,222
|
Deferred tax
liabilities
|
|
16,807
|
|
7,014
|
Other
liabilities
|
|
50,018
|
|
54,130
|
Total
liabilities
|
|
927,378
|
|
975,850
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Common stock: $0.01
par value, 150,000 shares authorized, 71,529 and 70,811
shares
issued and 56,511 and
56,938 shares outstanding at October 31, 2017 and April
30,
2017,
respectively
|
|
674,105
|
|
692,527
|
Retained
earnings
|
|
515,811
|
|
461,976
|
Accumulated other
comprehensive loss, net
|
|
(57,902)
|
|
(71,064)
|
Total Korn/Ferry
International stockholders' equity
|
|
1,132,014
|
|
1,083,439
|
Noncontrolling
interest
|
|
2,709
|
|
3,609
|
Total stockholders'
equity
|
|
1,134,723
|
|
1,087,048
|
Total liabilities and
stockholders' equity
|
|
$
2,062,101
|
|
$
2,062,898
|
KORN FERRY AND
SUBSIDIARIES
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES
|
(in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
October
31,
|
|
October
31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(unaudited)
|
Fee
revenue
|
|
$ 443,018
|
|
$ 401,917
|
|
$ 844,272
|
|
$ 777,538
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
3,535
|
Adjusted fee revenue
|
|
$ 443,018
|
|
$ 401,917
|
|
$ 844,272
|
|
$ 781,073
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$
51,244
|
|
$
46,548
|
|
$
91,981
|
|
$
51,064
|
Depreciation
and amortization
|
|
12,447
|
|
11,752
|
|
24,656
|
|
23,196
|
Other income
(loss), net
|
|
3,626
|
|
(879)
|
|
7,158
|
|
3,380
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
60
|
|
29
|
|
90
|
|
108
|
EBITDA
|
|
67,377
|
|
57,450
|
|
123,885
|
|
77,748
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
3,535
|
Restructuring
(recoveries) charges, net (2)
|
|
(202)
|
|
-
|
|
78
|
|
24,520
|
Integration/acquisition costs
(3)
|
|
2,393
|
|
5,820
|
|
4,981
|
|
13,847
|
Adjusted EBITDA
|
|
$
69,568
|
|
$
63,270
|
|
$ 128,944
|
|
$ 119,650
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
11.6%
|
|
11.6%
|
|
10.9%
|
|
6.6%
|
Depreciation
and amortization
|
|
2.8%
|
|
2.9%
|
|
2.9%
|
|
3.0%
|
Other income
(loss), net
|
|
0.8%
|
|
(0.2%)
|
|
0.9%
|
|
0.4%
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
-
|
|
-
|
|
-
|
|
-
|
EBITDA margin
|
|
15.2%
|
|
14.3%
|
|
14.7%
|
|
10.0%
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
0.4%
|
Restructuring
(recoveries) charges, net (2)
|
|
-
|
|
-
|
|
-
|
|
3.1%
|
Integration/acquisition costs
(3)
|
|
0.5%
|
|
1.4%
|
|
0.6%
|
|
1.8%
|
Adjusted EBITDA margin
|
|
15.7%
|
|
15.7%
|
|
15.3%
|
|
15.3%
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn/Ferry International
|
|
$
36,331
|
|
$
30,152
|
|
$
65,372
|
|
$
33,360
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
3,535
|
Restructuring
(recoveries) charges, net (2)
|
|
(202)
|
|
-
|
|
78
|
|
24,520
|
Integration/acquisition costs
(3)
|
|
2,393
|
|
5,820
|
|
4,981
|
|
13,847
|
Write-off of
debt issuance costs (4)
|
|
-
|
|
-
|
|
-
|
|
954
|
Tax effect on
the above items (5)
|
|
(681)
|
|
(1,916)
|
|
(1,405)
|
|
(12,634)
|
Adjusted net income attributable to Korn/Ferry
International
|
|
$
37,841
|
|
$
34,056
|
|
$
69,026
|
|
$
63,582
|
|
|
|
|
|
|
|
|
|
Basic earnings
per common share
|
|
$
0.65
|
|
$
0.53
|
|
$
1.16
|
|
$
0.59
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
0.06
|
Restructuring
(recoveries) charges, net (2)
|
|
-
|
|
-
|
|
-
|
|
0.43
|
Integration/acquisition costs
(3)
|
|
0.04
|
|
0.10
|
|
0.10
|
|
0.25
|
Write-off of
debt issuance costs (4)
|
|
-
|
|
-
|
|
-
|
|
0.02
|
Tax effect on
the above items (5)
|
|
(0.01)
|
|
(0.03)
|
|
(0.03)
|
|
(0.23)
|
Adjusted basic earnings per share
|
|
$
0.68
|
|
$
0.60
|
|
$
1.23
|
|
$
1.12
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share
|
|
$
0.64
|
|
$
0.52
|
|
$
1.15
|
|
$
0.58
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
0.06
|
Restructuring
(recoveries) charges, net (2)
|
|
-
|
|
-
|
|
-
|
|
0.43
|
Integration/acquisition costs
(3)
|
|
0.04
|
|
0.10
|
|
0.09
|
|
0.24
|
Write-off of
debt issuance costs (4)
|
|
-
|
|
-
|
|
-
|
|
0.02
|
Tax effect on
the above items (5)
|
|
(0.01)
|
|
(0.03)
|
|
(0.03)
|
|
(0.22)
|
Adjusted diluted earnings per share
|
|
$
0.67
|
|
$
0.59
|
|
$
1.21
|
|
$
1.11
|
|
|
Explanation of
Non-GAAP Adjustments
|
(1)
|
This represents the
deferred revenue recorded on the opening balance sheet of Hay
Group, required by fair value accounting. The adjustment is included in the Hay Group segment
for the six months ended October 31, 2016. Management has no
longer adjusted fee revenue after
Q1 FY'17.
|
(2)
|
Restructuring plan
implemented in order to rationalize our cost structure by
eliminating redundant positions and consolidating office
space due to the acquisition of Legacy
Hay on December 1, 2015.
|
(3)
|
Costs associated with
completing the acquisition of Legacy Hay, such as legal and
professional fees, and the on-going integration expenses to combine the companies.
|
(4)
|
Write-off of debt
issuance costs as a result of replacing our prior Credit Agreement
with a new senior secured Credit Agreement.
|
(5)
|
Tax effect on
deferred revenue adjustment associated with the acquisition of
Legacy Hay, restructuring (recoveries) charges, net,
integration/acquisition costs 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 October 31, 2017
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
Hay
Group
|
|
Futurestep
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue
|
|
$
101,544
|
|
$ 41,346
|
|
$
25,912
|
|
$
7,964
|
|
$
176,766
|
|
$
199,953
|
|
$
66,299
|
|
$
-
|
|
$
443,018
|
|
Total
revenue
|
|
$
104,329
|
|
$ 42,073
|
|
$
26,187
|
|
$
7,994
|
|
$
180,583
|
|
$
203,836
|
|
$
71,049
|
|
$
-
|
|
$
455,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn/Ferry International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
36,331
|
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401
|
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,626)
|
|
Interest
expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,579
|
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(60)
|
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,619
|
|
Operating
income (loss)
|
|
$
22,945
|
|
$
6,345
|
|
$
4,381
|
|
$
1,527
|
|
$
35,198
|
|
$
26,370
|
|
$
9,409
|
|
$
(19,733)
|
|
51,244
|
|
Depreciation
and amortization
|
|
984
|
|
459
|
|
371
|
|
111
|
|
1,925
|
|
8,143
|
|
784
|
|
1,595
|
|
12,447
|
|
Other income,
net
|
|
290
|
|
43
|
|
94
|
|
39
|
|
466
|
|
57
|
|
-
|
|
3,103
|
|
3,626
|
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
60
|
|
-
|
|
-
|
|
-
|
|
60
|
|
-
|
|
-
|
|
-
|
|
60
|
|
EBITDA
|
|
24,279
|
|
6,847
|
|
4,846
|
|
1,677
|
|
37,649
|
|
34,570
|
|
10,193
|
|
(15,035)
|
|
67,377
|
|
EBITDA
margin
|
|
23.9%
|
|
16.6%
|
|
18.7%
|
|
21.1%
|
|
21.3%
|
|
17.3%
|
|
15.4%
|
|
|
|
15.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
(recoveries) charges, net
|
|
-
|
|
-
|
|
273
|
|
-
|
|
273
|
|
(481)
|
|
6
|
|
-
|
|
(202)
|
|
Integration/acquisition costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,313
|
|
-
|
|
80
|
|
2,393
|
|
Adjusted
EBITDA
|
|
$
24,279
|
|
$
6,847
|
|
$
5,119
|
|
$
1,677
|
|
$
37,922
|
|
$
36,402
|
|
$
10,199
|
|
$
(14,955)
|
|
$
69,568
|
|
Adjusted EBITDA
margin
|
|
23.9%
|
|
16.6%
|
|
19.8%
|
|
21.1%
|
|
21.5%
|
|
18.2%
|
|
15.4%
|
|
|
|
15.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended October 31, 2016
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
Hay
Group
|
|
Futurestep
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue
|
|
$
92,732
|
|
$ 34,779
|
|
$
19,470
|
|
$
9,247
|
|
$
156,228
|
|
$
188,842
|
|
$
56,847
|
|
$
-
|
|
$
401,917
|
|
Total
revenue
|
|
$
95,902
|
|
$ 35,507
|
|
$
19,929
|
|
$
9,296
|
|
$
160,634
|
|
$
192,352
|
|
$
61,968
|
|
$
-
|
|
$
414,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn/Ferry International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
30,152
|
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
904
|
|
Other loss,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
879
|
|
Interest
expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,736
|
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29)
|
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,906
|
|
Operating
income (loss)
|
|
$
26,272
|
|
$
6,847
|
|
$
2,028
|
|
$
2,284
|
|
$
37,431
|
|
$
22,943
|
|
$
7,787
|
|
$
(21,613)
|
|
46,548
|
|
Depreciation
and amortization
|
|
990
|
|
229
|
|
264
|
|
174
|
|
1,657
|
|
8,025
|
|
669
|
|
1,401
|
|
11,752
|
|
Other (loss)
income, net
|
|
(92)
|
|
(80)
|
|
24
|
|
24
|
|
(124)
|
|
(11)
|
|
-
|
|
(744)
|
|
(879)
|
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
29
|
|
-
|
|
-
|
|
-
|
|
29
|
|
-
|
|
-
|
|
-
|
|
29
|
|
EBITDA
|
|
27,199
|
|
6,996
|
|
2,316
|
|
2,482
|
|
38,993
|
|
30,957
|
|
8,456
|
|
(20,956)
|
|
57,450
|
|
EBITDA
margin
|
|
29.3%
|
|
20.1%
|
|
11.9%
|
|
26.8%
|
|
25.0%
|
|
16.4%
|
|
14.9%
|
|
|
|
14.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration/acquisition costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4,365
|
|
-
|
|
1,455
|
|
5,820
|
|
Adjusted
EBITDA
|
|
$
27,199
|
|
$
6,996
|
|
$
2,316
|
|
$
2,482
|
|
$
38,993
|
|
$
35,322
|
|
$
8,456
|
|
$
(19,501)
|
|
$
63,270
|
|
Adjusted EBITDA
margin
|
|
29.3%
|
|
20.1%
|
|
11.9%
|
|
26.8%
|
|
25.0%
|
|
18.7%
|
|
14.9%
|
|
|
|
15.7%
|
|
KORN FERRY AND
SUBSIDIARIES
|
|
RECONCILIATION OF
NET INCOME AND OPERATING INCOME (GAAP) TO
|
|
EBITDA AND
ADJUSTED EBITDA (NON-GAAP)
|
|
(in
thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Six Months
Ended October 31, 2017
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
Hay
Group
|
|
Futurestep
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue
|
|
$
193,377
|
|
$ 81,467
|
|
$
47,490
|
|
$
15,623
|
|
$ 337,957
|
|
$
379,406
|
|
$
126,909
|
|
$
-
|
|
$
844,272
|
|
Total
revenue
|
|
$
199,534
|
|
$ 83,131
|
|
$
48,067
|
|
$
15,658
|
|
$ 346,390
|
|
$
387,132
|
|
$
136,863
|
|
$
-
|
|
$
870,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn/Ferry International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
65,372
|
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
789
|
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,158)
|
|
Interest
expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,239
|
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(90)
|
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,829
|
|
Operating
income (loss)
|
|
$
44,940
|
|
$ 13,020
|
|
$
7,522
|
|
$
2,553
|
|
$
68,035
|
|
$
45,453
|
|
$
17,646
|
|
$
(39,153)
|
|
91,981
|
|
Depreciation
and amortization
|
|
1,933
|
|
887
|
|
691
|
|
218
|
|
3,729
|
|
16,228
|
|
1,580
|
|
3,119
|
|
24,656
|
|
Other income,
net
|
|
572
|
|
99
|
|
199
|
|
59
|
|
929
|
|
89
|
|
8
|
|
6,132
|
|
7,158
|
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
90
|
|
-
|
|
-
|
|
-
|
|
90
|
|
-
|
|
-
|
|
-
|
|
90
|
|
EBITDA
|
|
47,535
|
|
14,006
|
|
8,412
|
|
2,830
|
|
72,783
|
|
61,770
|
|
19,234
|
|
(29,902)
|
|
123,885
|
|
EBITDA
margin
|
|
24.6%
|
|
17.2%
|
|
17.7%
|
|
18.1%
|
|
21.5%
|
|
16.3%
|
|
15.2%
|
|
|
|
14.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
(recoveries) charges, net
|
|
-
|
|
-
|
|
313
|
|
-
|
|
313
|
|
(241)
|
|
6
|
|
-
|
|
78
|
|
Integration/acquisition costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4,862
|
|
-
|
|
119
|
|
4,981
|
|
Adjusted
EBITDA
|
|
$
47,535
|
|
$ 14,006
|
|
$
8,725
|
|
$
2,830
|
|
$
73,096
|
|
$
66,391
|
|
$
19,240
|
|
$
(29,783)
|
|
$
128,944
|
|
Adjusted EBITDA
margin
|
|
24.6%
|
|
17.2%
|
|
18.4%
|
|
18.1%
|
|
21.6%
|
|
17.5%
|
|
15.2%
|
|
|
|
15.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended October 31, 2016
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
Hay
Group
|
|
Futurestep
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue
|
|
$
174,534
|
|
$ 70,149
|
|
$
39,096
|
|
$
18,810
|
|
$ 302,589
|
|
$
363,424
|
|
$
111,525
|
|
$
-
|
|
$
777,538
|
|
Deferred
revenue adjustment due to acquisition
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3,535
|
|
-
|
|
-
|
|
3,535
|
|
Adjusted fee
revenue
|
|
$
174,534
|
|
$ 70,149
|
|
$
39,096
|
|
$
18,810
|
|
$ 302,589
|
|
$
366,959
|
|
$
111,525
|
|
$
-
|
|
$
781,073
|
|
Total
revenue
|
|
$
181,327
|
|
$ 71,756
|
|
$
40,109
|
|
$
18,910
|
|
$ 312,102
|
|
$
373,860
|
|
$
121,925
|
|
$
-
|
|
$
807,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn/Ferry International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
33,360
|
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,764
|
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,380)
|
|
Interest
expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,797
|
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(108)
|
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,631
|
|
Operating
income (loss)
|
|
$
42,740
|
|
$ 12,874
|
|
$
4,130
|
|
$
4,614
|
|
$
64,358
|
|
$
15,200
|
|
$
15,300
|
|
$
(43,794)
|
|
51,064
|
|
Depreciation
and amortization
|
|
1,820
|
|
440
|
|
489
|
|
288
|
|
3,037
|
|
16,041
|
|
1,292
|
|
2,826
|
|
23,196
|
|
Other income
(loss), net
|
|
196
|
|
(56)
|
|
111
|
|
97
|
|
348
|
|
224
|
|
(2)
|
|
2,810
|
|
3,380
|
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
108
|
|
-
|
|
-
|
|
-
|
|
108
|
|
-
|
|
-
|
|
-
|
|
108
|
|
EBITDA
|
|
44,864
|
|
13,258
|
|
4,730
|
|
4,999
|
|
67,851
|
|
31,465
|
|
16,590
|
|
(38,158)
|
|
77,748
|
|
EBITDA
margin
|
|
25.7%
|
|
18.9%
|
|
12.1%
|
|
26.6%
|
|
22.4%
|
|
8.7%
|
|
14.9%
|
|
|
|
10.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
charges, net
|
|
1,706
|
|
128
|
|
622
|
|
360
|
|
2,816
|
|
21,488
|
|
-
|
|
216
|
|
24,520
|
|
Integration/acquisition costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
8,629
|
|
-
|
|
5,218
|
|
13,847
|
|
Deferred
revenue adjustment due to acquisition
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3,535
|
|
-
|
|
-
|
|
3,535
|
|
Adjusted
EBITDA
|
|
$
46,570
|
|
$ 13,386
|
|
$
5,352
|
|
$
5,359
|
|
$
70,667
|
|
$
65,117
|
|
$
16,590
|
|
$
(32,724)
|
|
$
119,650
|
|
Adjusted EBITDA
margin
|
|
26.7%
|
|
19.1%
|
|
13.7%
|
|
28.5%
|
|
23.4%
|
|
17.7%
|
|
14.9%
|
|
|
|
15.3%
|
|
View original
content:http://www.prnewswire.com/news-releases/korn-ferry-international-announces-second-quarter-fiscal-2018-results-of-operations-300567971.html
SOURCE Korn Ferry