LOS ANGELES, June 13, 2018 /PRNewswire/ --
Highlights
- Korn Ferry reports record annual
fee revenue of $1,767.2 million, an
increase of almost 13% year-over-year.
- Korn Ferry reports record fee
revenue of $475.4 million in Q4 FY'18
an increase of 17% as compared to Q4 FY'17.
- Operating income was $63.3
million in Q4 FY'18 with an operating margin of 13.3%.
Adjusted EBITDA was $74.6 million
with an Adjusted EBITDA margin of 15.7%.
- Q4 FY'18 diluted earnings per share was $0.73 compared to diluted earnings per share of
$0.47 in Q4 FY'17. Adjusted
diluted earnings per share was $0.80
in Q4 FY'18, compared to Adjusted diluted earnings per share in Q4
FY'17 of $0.62.
- The Company declared a quarterly dividend of $0.10 per share on June
12, 2018 payable on July 13,
2018 to stockholders of record on June 26, 2018.
Korn/Ferry International (NYSE: KFY), a global organizational
consulting firm, today announced record fourth quarter and annual
fee revenue of $475.4 million and
$1,767.2 million, respectively.
In addition, fourth quarter diluted earnings per share and Adjusted
diluted earnings per share were $0.73
and $0.80, respectively.
Adjusted diluted earnings per share for the fourth quarter excluded
$4.5 million, or $0.07 per share, comprised of the impact of the
United States Tax Cut and Jobs Act ("Tax Act") and retention awards
related to the Hay Group acquisition.
"I am pleased to report fee revenue of $475 million and strong profitability, with
diluted earnings per share and Adjusted diluted earnings per share
of $0.73 and $0.80 and Adjusted EBITDA of approximately
$75 million during our recently
completed fourth quarter. We achieved the highest fiscal year
fee revenue in our firm's history – up 13% year over year," said
Gary D. Burnison, CEO of
Korn Ferry. "We've come a long
way on our journey and I'm excited about the future – to be the
preeminent organizational consultancy. Today's Korn Ferry is all about synchronizing our
clients' strategy and talent to help them drive superior
performance. We are never more powerful than when we come
together as one firm – to help companies design their organization,
to offer expertise on how they compensate, develop and motivate
their people and to find out who candidates are. Korn Ferry has the proven expertise to transform
individuals, teams, even entire organizations. In the fiscal
year ahead, we will continue to bring talent and organizational
strategies to life and unlock the potential within global
workforces."
Selected Financial Results
(dollars in millions, except per share amounts) (a)
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Fee
revenue
|
$
475.4
|
|
$
406.1
|
|
$ 1,767.2
|
|
$ 1,565.5
|
|
Total
revenue
|
$
488.4
|
|
$
419.6
|
|
$ 1,819.5
|
|
$ 1,621.7
|
|
Operating
income
|
$
63.3
|
|
$
32.8
|
|
$
203.9
|
|
$
114.4
|
|
Operating
margin
|
13.3%
|
|
8.1%
|
|
11.5%
|
|
7.3%
|
|
Net income
attributable to Korn Ferry
|
$
41.2
|
|
$
26.9
|
|
$
133.8
|
|
$
84.2
|
|
Basic earnings per
share
|
$
0.74
|
|
$
0.48
|
|
$
2.39
|
|
$
1.48
|
|
Diluted earnings per
share
|
$
0.73
|
|
$
0.47
|
|
$
2.35
|
|
$
1.47
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(b):
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
EBITDA
|
$
71.8
|
|
$
49.5
|
|
$
264.3
|
|
$
173.9
|
|
EBITDA
margin
|
15.1%
|
|
12.2%
|
|
15.0%
|
|
11.1%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(c):
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Adjusted fee
revenue
|
$
475.4
|
|
$
406.1
|
|
$
1,767.2
|
|
$
1,569.1
|
|
Adjusted EBITDA
(b)
|
$
74.6
|
|
$
60.1
|
|
$
273.8
|
|
$
235.0
|
|
Adjusted EBITDA
margin (b)
|
15.7%
|
|
14.8%
|
|
15.5%
|
|
15.0%
|
|
Adjusted net income
attributable to Korn Ferry
|
$
45.6
|
|
$
35.2
|
|
$
154.6
|
|
$
128.8
|
|
Adjusted basic
earnings per share
|
$
0.82
|
|
$
0.62
|
|
$
2.76
|
|
$
2.27
|
|
Adjusted diluted
earnings per share
|
$
0.80
|
|
$
0.62
|
|
$
2.72
|
|
$
2.24
|
|
|
|
|
|
|
|
|
|
|
___________________
|
(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 charges, net, integration/acquisition costs,
separation 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):
|
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Income tax impact due
to the enactment of the Tax Act
|
$
|
2.2
|
|
$
|
—
|
|
$
|
13.6
|
|
$
|
—
|
|
Restructuring
charges, net
|
$
|
—
|
|
$
|
6.3
|
|
$
|
0.1
|
|
$
|
34.6
|
|
Integration/acquisition costs
|
$
|
2.8
|
|
$
|
3.7
|
|
$
|
9.4
|
|
$
|
22.4
|
|
Deferred revenue
adjustment related to the Legacy Hay acquisition
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3.5
|
|
Separation
costs
|
$
|
—
|
|
$
|
0.6
|
|
$
|
—
|
|
$
|
0.6
|
|
Write-off of debt
issuance costs
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1.0
|
|
Fiscal 2018 Fourth Quarter Results
The Company reported record fee revenue in Q4 FY'18 of
$475.4 million, an increase of
$69.3 million or 17.1% (an increase
of $51.7 million or 12.7% on a
constant currency basis) compared to Q4 FY'17. The organic
growth was driven by all three lines of business:
|
|
|
|
Futurestep
|
|
31.4%
|
|
Executive
Search
|
|
17.5%
|
|
Hay Group
|
|
12.1%
|
|
Fee revenue growth in the fourth quarter was partially offset by
increased compensation and benefits as well as general and
administrative expenses resulting in operating income and Adjusted
EBITDA growing 93.0% and 24.1%, respectively, as compared to Q4
FY'17 and diluted earnings per share and Adjusted diluted earnings
per share growing 55.3% and 29.0%, respectively, as compared to Q4
FY'17.
Fiscal 2018 Results
The Company reported record fee revenue in FY'18 of $1,767.2 million, an increase of $201.7 million or 12.9% (10.6% increase on a
constant currency basis) compared to FY'17. The organic
growth was driven by all three lines of business:
|
|
|
|
Futurestep
|
|
22.1%
|
|
Executive
Search
|
|
14.8%
|
|
Hay Group
|
|
8.4%
|
|
Operating income was $203.9
million in FY'18 with an operating margin of 11.5% as
compared to $114.4 million and 7.3%,
respectively, in FY'17. This increase in operating income
resulted from higher fee revenue and a decrease in restructuring
charges, net offset by increases in compensation and benefits
expense and in general and administrative expenses.
Adjusted EBITDA was $273.8 million
in FY'18 with an Adjusted EBITDA margin of 15.5% compared to
$235.0 million and 15.0%,
respectively, in the year-ago period.
Results by Segment
Selected Executive Search Data
(dollars in millions) (a)
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Fee
revenue
|
$
190.7
|
|
$
162.3
|
|
$
709.0
|
|
$
617.7
|
|
Total
revenue
|
$
195.4
|
|
$
167.0
|
|
$
727.3
|
|
$
636.2
|
|
Operating
income
|
$
46.9
|
|
$
30.6
|
|
$
149.3
|
|
$
124.3
|
|
Operating
margin
|
24.6%
|
|
18.8%
|
|
21.0%
|
|
20.1%
|
|
|
|
|
|
|
|
|
|
|
Ending number of
consultants
|
541
|
|
517
|
|
541
|
|
517
|
|
Average number of
consultants
|
539
|
|
512
|
|
529
|
|
503
|
|
Engagements
billed
|
3,876
|
|
3,530
|
|
9,808
|
|
9,008
|
|
New engagements
(b)
|
1,590
|
|
1,525
|
|
6,325
|
|
5,933
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(c):
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
EBITDA
|
$
48.6
|
|
$
33.6
|
|
$
158.6
|
|
$
132.8
|
|
EBITDA
margin
|
25.5%
|
|
20.7%
|
|
22.4%
|
|
21.5%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(d):
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Adjusted EBITDA
(c)
|
$
48.6
|
|
$
34.2
|
|
$
158.9
|
|
$
137.4
|
|
Adjusted EBITDA
margin (c)
|
25.5%
|
|
21.1%
|
|
22.4%
|
|
22.2%
|
|
|
|
|
|
|
|
|
|
|
________________
|
(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):
|
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Restructuring
charges, net
|
$
—
|
|
$
0.6
|
|
$
0.3
|
|
$
4.6
|
|
Fee revenue was $190.7 million in
Q4 FY'18, an increase of $28.4
million or 17.5% (an increase of $22.5 million or 13.9% on a constant currency
basis) compared to Q4 FY'17. The overall increase in fee
revenue was attributable to higher fee revenue in all regions.
Operating income was $46.9 million
in Q4 FY'18 compared to $30.6 million
in Q4 FY'17. Operating margin was 24.6% in Q4 FY'18 compared
to 18.8% in the year-ago quarter. The increase in operating
income was due to higher fee revenue, partially offset by an
increase in compensation and benefits expense driven by a 4.8%
increase in average headcount and performance related bonus
expense.
Adjusted EBITDA was $48.6 million
in Q4 FY'18 with an Adjusted EBITDA margin of 25.5% compared to
$34.2 million and 21.1%,
respectively, in the year-ago quarter.
Selected Hay Group Data
(dollars in millions) (a)
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
Fee
revenue
|
$
207.6
|
|
$
185.1
|
|
$
785.0
|
|
$
724.2
|
|
|
Total
revenue
|
$
211.9
|
|
$
188.7
|
|
$
801.0
|
|
$
741.5
|
|
|
Operating
income
|
$
28.4
|
|
$
16.1
|
|
$
100.9
|
|
$
47.3
|
|
|
Operating
margin
|
13.7%
|
|
8.7%
|
|
12.9%
|
|
6.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of
consultants (b)
|
577
|
|
557
|
|
577
|
|
557
|
|
|
Staff utilization
(c)
|
70%
|
|
69%
|
|
66%
|
|
67%
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(d):
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
EBITDA
|
$
36.0
|
|
$
24.3
|
|
$
133.1
|
|
$
79.9
|
|
|
EBITDA
margin
|
17.3%
|
|
13.1%
|
|
17.0%
|
|
11.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(e):
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
|
Adjusted fee
revenue
|
$
207.6
|
|
$
185.1
|
|
$
785.0
|
|
$
727.7
|
|
|
Adjusted EBITDA
(d)
|
$
38.7
|
|
$
33.0
|
|
$
142.0
|
|
$
128.2
|
|
|
Adjusted EBITDA
margin (d)
|
18.6%
|
|
17.8%
|
|
18.1%
|
|
17.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
_________________
|
(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 (see
attached reconciliations):
|
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Restructuring charges
(recoveries), net
|
$
|
—
|
|
$
|
5.7
|
|
$
|
(0.2)
|
|
$
|
29.7
|
|
Integration/acquisition costs
|
$
|
2.7
|
|
$
|
2.4
|
|
$
|
9.2
|
|
$
|
14.4
|
|
Deferred revenue
adjustment related to the Legacy Hay acquisition
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3.5
|
|
Separation
costs
|
$
|
—
|
|
$
|
0.6
|
|
$
|
—
|
|
$
|
0.6
|
|
Fee revenue was $207.6 million in
Q4 FY'18 compared to $185.1 million
in Q4 FY'17, an increase of $22.5
million or 12.1% (7.3% on a constant currency basis)
compared to the year-ago quarter. The higher fee revenue was
primarily driven by a $16.9 million
increase in consulting services with the remaining increase of
$5.6 million generated by the
products business.
Operating income was $28.4 million
in Q4 FY'18, resulting in an operating margin of 13.7% in the
current quarter compared to 8.7% in the year-ago quarter.
Operating income increased by $12.3
million from operating income of $16.1 million in Q4 FY'17. The change in
operating income was primarily due to higher fee revenue compared
to the year-ago quarter and a $5.7
million decline in restructuring charges in the current
quarter compared to the year-ago quarter, partially offset by an
increase in compensation and benefits expense driven by a 4.6%
increase in average consultant headcount in Q4 FY'18 compared to Q4
FY'17 and an increase in performance related bonus expense.
Adjusted EBITDA was $38.7 million
in Q4 FY'18 with an Adjusted EBITDA margin of 18.6% compared to
$33.0 million and 17.8%,
respectively, in the year-ago quarter.
Selected Futurestep Data
(dollars in millions) (a)
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Fee
revenue
|
$
77.1
|
|
$
58.7
|
|
$
273.2
|
|
$
223.7
|
|
Total
revenue
|
$
81.0
|
|
$
63.9
|
|
$
291.2
|
|
$
243.9
|
|
Operating
income
|
$
11.7
|
|
$
8.1
|
|
$
39.4
|
|
$
30.0
|
|
Operating
margin
|
15.1%
|
|
13.9%
|
|
14.4%
|
|
13.4%
|
|
|
|
|
|
|
|
|
|
|
Engagements billed
(b)
|
1,313
|
|
1,095
|
|
3,423
|
|
2,800
|
|
New engagements
(c)
|
809
|
|
576
|
|
2,982
|
|
2,193
|
|
|
|
|
|
|
|
|
|
|
EBITDA Results
(d):
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
EBITDA
|
$
12.5
|
|
$
8.8
|
|
$
42.6
|
|
$
32.7
|
|
EBITDA
margin
|
16.3%
|
|
15.0%
|
|
15.6%
|
|
14.6%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Results
(e):
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Adjusted EBITDA
(d)
|
$
12.5
|
|
$
8.8
|
|
$
42.6
|
|
$
32.8
|
|
Adjusted EBITDA
margin (d)
|
16.3%
|
|
15.0%
|
|
15.6%
|
|
14.7%
|
|
|
|
|
|
|
|
|
|
|
_________________
|
(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, 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 exclude the following (see
attached reconciliations):
|
|
Fourth
Quarter
|
|
Year to
Date
|
|
|
FY'18
|
|
FY'17
|
|
FY'18
|
|
FY'17
|
|
Restructuring
charges, net
|
$
—
|
|
$
—
|
|
$
—
|
|
$
0.1
|
|
Fee revenue was $77.1 million in
Q4 FY'18, an increase of $18.4
million or 31.4% (26.7% 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 and professional search of $11.0
million and $8.0 million,
respectively, in Q4 FY'18 compared to Q4 FY'17.
Operating income was $11.7 million
in Q4 FY'18, an increase of $3.6
million compared to Q4 FY'17 operating income of
$8.1 million. Operating margin
was 15.1% in the current quarter compared to 13.9% in the year-ago
quarter. The change in operating income was primarily due to
higher fee revenue compared to the year-ago quarter, partially
offset by an increase in compensation and benefits expense driven
by a 37.0% increase in average headcount in Q4 FY'18 compared to Q4
FY'17 and an increase in performance related bonus expense.
Adjusted EBITDA was $12.5 million
during Q4 FY'18, an increase of $3.7
million compared to Q4 FY'17. Adjusted EBITDA margin
was 16.3% in Q4 FY'18 compared to 15.0% in the year-ago
quarter.
Recent Developments
On June 12, 2018, the Company's
Board of Directors voted to approve a rebranding plan for the
Company. This plan includes going to market under a single,
master brand architecture, solely as Korn
Ferry and sunsetting of all the Company's sub-brands,
including Futurestep, Hay Group and Lominger, among others.
The Company is harmonizing under one brand to help accelerate the
firm's positioning as the preeminent organizational consultancy and
bring more client awareness to its broad range of talent management
solutions. The Hay Group back office was fully integrated as
of the beginning of FY'18 and the Company then focused on its
integrated go-to-market activities. This integrated
go-to-market approach was a key driver in the 13% fee revenue
growth in FY'18, which led to the decision to further integrate our
go-to-market activities under one master brand – Korn Ferry. In the near term the Company
will discontinue the use of all sub-brands. Two of the
Company's sub-brands, Hay Group and Lominger came to Korn Ferry through acquisitions. In
connection with the accounting for these acquisitions, $106 million of the purchase price was allocated
to indefinite lived tradename intangible assets. As a result
of the decision to discontinue their use, the Company will take a
one-time, non-cash intangible asset impairment charge of
$106 million, or $79 million on an after-tax basis in Q1
FY'19.
Outlook
Assuming worldwide economic conditions, financial markets and
foreign exchange rates remain steady, on a consolidated basis:
- Q1 FY'19 fee revenue is expected to be in the range of
$450 million and $470 million; and
- Q1 FY'19 diluted loss per share is likely to range
between ($0.74) to ($0.66).
On a consolidated adjusted basis:
- Q1 FY'19 Adjusted diluted earnings per share is expected to be
in the range from $0.67 to $0.75.
|
Q1
FY'19
Earnings
(Loss) Per Share Outlook (1)
|
|
|
Low
|
|
High
|
|
Consolidated diluted
loss per share
|
$
(0.74)
|
|
$
(0.66)
|
|
Impairment charge
|
1.87
|
|
1.87
|
|
Retention bonuses
|
0.04
|
|
0.04
|
|
Tax rate impact
|
(0.50)
|
|
(0.50)
|
|
Consolidated Adjusted
diluted earnings per share
|
$
0.67
|
|
$
0.75
|
|
_________________
|
(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 8:30 AM (EDT) and hosted by CEO Gary Burnison, CFO Robert Rozek and SVP Finance Gregg Kvochak. The conference call will be
webcast and available online at ir.kornferry.com. We will
also post to this section of our website earnings slides, which
will accompany our webcast, and other important information, and
encourage you to review the information that we make available on
our website.
About Korn
Ferry
Korn Ferry is a global
organizational consulting firm. We help companies design
their organization – the structure, the roles and responsibilities,
as well as how they compensate, develop and motivate their
people. As importantly, we help organizations select and hire
the talent they need to execute their strategy. Our
approximately 7,000 colleagues serve clients in more than 50
countries. 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, 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, global and local political or economic developments
in or affecting countries where we have operations, currency
fluctuations in our international operations, risks related to
growth, alignment of our cost structure, restrictions imposed by
off-limits agreements, reliance on information processing systems,
cyber security vulnerabilities, changes to data security, data
privacy and data protection laws, limited protection of our
intellectual property, our ability to enhance and develop new
technology, our ability to develop new products and services,
the utilization and billing rates of our consultants, our
ability to successfully recover from a disaster or other business
continuity problems, changes in our accounting
estimates/assumptions, tax accounting effects of the Tax Act,
impairment of goodwill and other intangible assets, deferred
tax assets that we may not be able to use, seasonality,
risks related to the integration of recently acquired
businesses 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 the tax impact associated with
the Tax Act, restructuring (recoveries) charges, net,
integration/acquisition costs, separation 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 the tax impact associated with the Tax Act, restructuring
(recoveries) charges, net, integration/acquisition costs,
separation 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, integration/acquisition
costs, separation 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 after acquisition 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) the tax impact associated with the Tax Act, 2) costs
we incurred to acquire and integrate the Legacy Hay acquisition, 3)
charges we incurred to restructure the combined company due to the
acquisition of Legacy Hay, 4) separation costs, 5) debt issuance
costs written-off upon replacement of our credit facility and 6)
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
|
|
Year
Ended
|
|
|
April
30
|
|
April
30
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(unaudited)
|
|
|
|
|
Fee
revenue
|
|
$
475,364
|
|
$
406,065
|
|
$
1,767,217
|
|
$
1,565,521
|
Reimbursed
out-of-pocket engagement expenses
|
|
13,000
|
|
13,522
|
|
52,302
|
|
56,148
|
Total revenue
|
|
488,364
|
|
419,587
|
|
1,819,519
|
|
1,621,669
|
|
|
|
|
|
|
|
|
|
Compensation
and benefits
|
|
317,871
|
|
275,493
|
|
1,203,619
|
|
1,071,507
|
General and
administrative expenses
|
|
62,010
|
|
59,938
|
|
237,390
|
|
226,232
|
Reimbursed
expenses
|
|
13,000
|
|
13,522
|
|
52,302
|
|
56,148
|
Cost of
services
|
|
20,495
|
|
19,231
|
|
73,658
|
|
71,482
|
Depreciation
and amortization
|
|
11,707
|
|
12,290
|
|
48,588
|
|
47,260
|
Restructuring
charges, net
|
|
-
|
|
6,279
|
|
78
|
|
34,600
|
Total operating expenses
|
|
425,083
|
|
386,753
|
|
1,615,635
|
|
1,507,229
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
63,281
|
|
32,834
|
|
203,884
|
|
114,440
|
Other (loss)
income, net
|
|
(3,322)
|
|
4,240
|
|
11,525
|
|
11,820
|
Interest
expense, net
|
|
(1,772)
|
|
(2,052)
|
|
(9,676)
|
|
(10,251)
|
Income before provision for income taxes and equity in earnings of unconsolidated
subsidiaries
|
|
58,187
|
|
35,022
|
|
205,733
|
|
116,009
|
Equity in
earnings of unconsolidated subsidiaries
|
|
110
|
|
112
|
|
297
|
|
333
|
Income tax
provision
|
|
15,988
|
|
7,398
|
|
70,133
|
|
29,104
|
Net
income
|
|
42,309
|
|
27,736
|
|
135,897
|
|
87,238
|
Net income attributable to noncontrolling interest
|
|
(1,149)
|
|
(812)
|
|
(2,118)
|
|
(3,057)
|
Net income
attributable to Korn/Ferry International
|
|
$
41,160
|
|
$
26,924
|
|
$
133,779
|
|
$
84,181
|
|
|
|
|
|
|
|
|
|
Earnings per
common share attributable to Korn/Ferry
International:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.74
|
|
$
0.48
|
|
$
2.39
|
|
$
1.48
|
Diluted
|
|
$
0.73
|
|
$
0.47
|
|
$
2.35
|
|
$
1.47
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
55,266
|
|
55,845
|
|
55,426
|
|
56,205
|
Diluted
|
|
56,147
|
|
56,571
|
|
56,254
|
|
56,900
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share:
|
|
$
0.10
|
|
$
0.10
|
|
$
0.40
|
|
$
0.40
|
KORN FERRY AND
SUBSIDIARIES
|
FINANCIAL SUMMARY
BY SEGMENT
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
Three Months Ended
April 30,
|
|
Year Ended April
30,
|
|
|
2018
|
|
|
|
2017
|
|
%
Change
|
|
2018
|
|
|
|
2017
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
search:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
112,005
|
|
|
|
$
97,264
|
|
15.2%
|
|
$
408,098
|
|
|
|
$
356,625
|
|
14.4%
|
|
EMEA
|
45,476
|
|
|
|
37,210
|
|
22.2%
|
|
173,725
|
|
|
|
146,506
|
|
18.6%
|
|
Asia
Pacific
|
24,612
|
|
|
|
20,061
|
|
22.7%
|
|
96,595
|
|
|
|
80,169
|
|
20.5%
|
|
Latin
America
|
8,576
|
|
|
|
7,731
|
|
10.9%
|
|
30,624
|
|
|
|
34,376
|
|
(10.9%)
|
Total executive
search
|
190,669
|
|
|
|
162,266
|
|
17.5%
|
|
709,042
|
|
|
|
617,676
|
|
14.8%
|
Hay Group
|
207,551
|
|
|
|
185,100
|
|
12.1%
|
|
785,013
|
|
|
|
724,186
|
|
8.4%
|
Futurestep
|
77,144
|
|
|
|
58,699
|
|
31.4%
|
|
273,162
|
|
|
|
223,659
|
|
22.1%
|
|
Total fee
revenue
|
475,364
|
|
|
|
406,065
|
|
17.1%
|
|
1,767,217
|
|
|
|
1,565,521
|
|
12.9%
|
Reimbursed
out-of-pocket
engagement expenses
|
13,000
|
|
|
|
13,522
|
|
(3.9%)
|
|
52,302
|
|
|
|
56,148
|
|
(6.8%)
|
|
Total
revenue
|
$
488,364
|
|
|
|
$
419,587
|
|
16.4%
|
|
$
1,819,519
|
|
|
|
$
1,621,669
|
|
12.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss):
|
|
|
Margin
|
|
|
|
Margin
|
|
|
|
Margin
|
|
|
|
Margin
|
Executive
search:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
33,784
|
|
30.2%
|
|
$
21,092
|
|
21.7%
|
|
$
100,037
|
|
24.5%
|
|
$
81,550
|
|
22.9%
|
|
EMEA
|
6,419
|
|
14.1%
|
|
6,805
|
|
18.3%
|
|
26,768
|
|
15.4%
|
|
27,854
|
|
19.0%
|
|
Asia
Pacific
|
5,614
|
|
22.8%
|
|
2,364
|
|
11.8%
|
|
18,425
|
|
19.1%
|
|
8,580
|
|
10.7%
|
|
Latin
America
|
1,061
|
|
12.4%
|
|
302
|
|
3.9%
|
|
4,022
|
|
13.1%
|
|
6,268
|
|
18.2%
|
Total executive
search
|
46,878
|
|
24.6%
|
|
30,563
|
|
18.8%
|
|
149,252
|
|
21.0%
|
|
124,252
|
|
20.1%
|
Hay Group
|
28,407
|
|
13.7%
|
|
16,114
|
|
8.7%
|
|
100,939
|
|
12.9%
|
|
47,302
|
|
6.5%
|
Futurestep
|
11,661
|
|
15.1%
|
|
8,137
|
|
13.9%
|
|
39,363
|
|
14.4%
|
|
29,986
|
|
13.4%
|
Corporate
|
(23,665)
|
|
|
|
(21,980)
|
|
|
|
(85,670)
|
|
|
|
(87,100)
|
|
|
|
Total operating
income
|
$
63,281
|
|
13.3%
|
|
$
32,834
|
|
8.1%
|
|
$
203,884
|
|
11.5%
|
|
$
114,440
|
|
7.3%
|
KORN FERRY AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
April
30
|
|
April
30,
|
|
|
2018
|
|
2017
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
520,848
|
|
$
410,882
|
Marketable
securities
|
|
14,293
|
|
4,363
|
Receivables due from
clients, net of allowance for doubtful accounts of $17,845 and
$15,455 at April 30, 2018 and 2017, respectively
|
|
384,996
|
|
345,314
|
Income taxes and
other receivables
|
|
29,089
|
|
31,573
|
Prepaid expenses and
other assets
|
|
65,033
|
|
51,542
|
Total current
assets
|
|
1,014,259
|
|
843,674
|
|
|
|
|
|
Marketable
securities, non-current
|
|
122,792
|
|
115,574
|
Property and
equipment, net
|
|
119,901
|
|
109,567
|
Cash surrender value
of company owned life insurance policies, net of loans
|
|
120,087
|
|
113,067
|
Deferred income
taxes
|
|
25,520
|
|
20,175
|
Goodwill
|
|
584,222
|
|
576,865
|
Intangible assets,
net
|
|
203,216
|
|
217,319
|
Investments and other
assets
|
|
97,917
|
|
66,657
|
Total
assets
|
|
$
2,287,914
|
|
$
2,062,898
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Accounts
payable
|
|
$
35,196
|
|
$
37,481
|
Income taxes
payable
|
|
23,034
|
|
4,526
|
Compensation and
benefits payable
|
|
304,980
|
|
248,354
|
Term loan
|
|
24,911
|
|
19,754
|
Other accrued
liabilities
|
|
170,339
|
|
148,464
|
Total current
liabilities
|
|
558,460
|
|
458,579
|
|
|
|
|
|
Deferred compensation
and other retirement plans
|
|
227,729
|
|
219,905
|
Term loan,
non-current
|
|
211,311
|
|
236,222
|
Deferred tax
liabilities
|
|
9,105
|
|
7,014
|
Other
liabilities
|
|
61,694
|
|
54,130
|
Total
liabilities
|
|
1,068,299
|
|
975,850
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Common stock: $0.01
par value, 150,000 shares authorized, 71,631 and 70,811 shares
issued and 56,517 and 56,938 shares outstanding at April 30, 2018
and 2017, respectively
|
|
683,942
|
|
692,527
|
Retained
earnings
|
|
572,800
|
|
461,976
|
Accumulated other
comprehensive loss, net
|
|
(40,135)
|
|
(71,064)
|
Total Korn/Ferry
International stockholders' equity
|
|
1,216,607
|
|
1,083,439
|
Noncontrolling
interest
|
|
3,008
|
|
3,609
|
Total stockholders'
equity
|
|
1,219,615
|
|
1,087,048
|
Total liabilities and
stockholders' equity
|
|
$
2,287,914
|
|
$
2,062,898
|
|
|
|
|
|
KORN FERRY AND
SUBSIDIARIES
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES
|
(in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
April
30
|
|
April
30
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(unaudited)
|
|
|
|
|
Fee
revenue
|
|
$
475,364
|
|
$
406,065
|
|
$
1,767,217
|
|
$
1,565,521
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
3,535
|
Adjusted fee revenue
|
|
$
475,364
|
|
$
406,065
|
|
$
1,767,217
|
|
$
1,569,056
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$
63,281
|
|
$
32,834
|
|
$
203,884
|
|
$
114,440
|
Depreciation
and amortization
|
|
11,707
|
|
12,290
|
|
48,588
|
|
47,260
|
Other (loss)
income, net
|
|
(3,322)
|
|
4,240
|
|
11,525
|
|
11,820
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
110
|
|
112
|
|
297
|
|
333
|
EBITDA
|
|
71,776
|
|
49,476
|
|
264,294
|
|
173,853
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
3,535
|
Restructuring
charges, net (2)
|
|
-
|
|
6,279
|
|
78
|
|
34,600
|
Integration/acquisition costs
(3)
|
|
2,776
|
|
3,702
|
|
9,430
|
|
22,379
|
Separation
costs (4)
|
|
-
|
|
609
|
|
-
|
|
609
|
Adjusted EBITDA
|
|
$
74,552
|
|
$
60,066
|
|
$
273,802
|
|
$
234,976
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
13.3%
|
|
8.1%
|
|
11.5%
|
|
7.3%
|
Depreciation
and amortization
|
|
2.5%
|
|
3.0%
|
|
2.8%
|
|
3.0%
|
Other (loss)
income, net
|
|
(0.7%)
|
|
1.1%
|
|
0.7%
|
|
0.8%
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
-
|
|
-
|
|
-
|
|
-
|
EBITDA margin
|
|
15.1%
|
|
12.2%
|
|
15.0%
|
|
11.1%
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
0.2%
|
Restructuring
charges, net (2)
|
|
-
|
|
1.5%
|
|
-
|
|
2.2%
|
Integration/acquisition costs
(3)
|
|
0.6%
|
|
0.9%
|
|
0.5%
|
|
1.4%
|
Separation
costs (4)
|
|
-
|
|
0.2%
|
|
-
|
|
0.1%
|
Adjusted EBITDA margin
|
|
15.7%
|
|
14.8%
|
|
15.5%
|
|
15.0%
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn/Ferry International
|
|
$
41,160
|
|
$
26,924
|
|
$
133,779
|
|
$
84,181
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
3,535
|
Restructuring
charges, net (2)
|
|
-
|
|
6,279
|
|
78
|
|
34,600
|
Integration/acquisition costs
(3)
|
|
2,776
|
|
3,702
|
|
9,430
|
|
22,379
|
Separation
costs (4)
|
|
-
|
|
609
|
|
-
|
|
609
|
Write-off of
debt issuance costs (5)
|
|
-
|
|
-
|
|
-
|
|
954
|
Tax effect on
the above items (6)
|
|
(541)
|
|
(2,364)
|
|
(2,314)
|
|
(17,438)
|
Impact of Tax
Act (7)
|
|
2,237
|
|
-
|
|
13,582
|
|
-
|
Adjusted net income attributable to Korn/Ferry
International
|
|
$
45,632
|
|
$
35,150
|
|
$
154,555
|
|
$
128,820
|
|
|
|
|
|
|
|
|
|
Basic earnings
per common share
|
|
$
0.74
|
|
$
0.48
|
|
$
2.39
|
|
$
1.48
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
0.06
|
Restructuring
charges, net (2)
|
|
-
|
|
0.10
|
|
-
|
|
0.61
|
Integration/acquisition costs
(3)
|
|
0.05
|
|
0.07
|
|
0.17
|
|
0.40
|
Separation
costs (4)
|
|
-
|
|
0.01
|
|
-
|
|
0.01
|
Write-off of
debt issuance costs (5)
|
|
-
|
|
-
|
|
-
|
|
0.02
|
Tax effect on
the above items (6)
|
|
(0.01)
|
|
(0.04)
|
|
(0.04)
|
|
(0.31)
|
Impact of Tax
Act (7)
|
|
0.04
|
|
-
|
|
0.24
|
|
-
|
Adjusted basic earnings per share
|
|
$
0.82
|
|
$
0.62
|
|
$
2.76
|
|
$
2.27
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share
|
|
$
0.73
|
|
$
0.47
|
|
$
2.35
|
|
$
1.47
|
Deferred
revenue adjustment due to acquisition (1)
|
|
-
|
|
-
|
|
-
|
|
0.06
|
Restructuring
charges, net (2)
|
|
-
|
|
0.10
|
|
-
|
|
0.60
|
Integration/acquisition costs
(3)
|
|
0.05
|
|
0.07
|
|
0.17
|
|
0.39
|
Separation
costs (4)
|
|
-
|
|
0.01
|
|
-
|
|
0.01
|
Write-off of
debt issuance costs (5)
|
|
-
|
|
-
|
|
-
|
|
0.02
|
Tax effect on
the above items (6)
|
|
(0.01)
|
|
(0.03)
|
|
(0.04)
|
|
(0.31)
|
Impact of Tax
Act (7)
|
|
0.03
|
|
-
|
|
0.24
|
|
-
|
Adjusted diluted earnings per share
|
|
$
0.80
|
|
$
0.62
|
|
$
2.72
|
|
$
2.24
|
|
|
|
|
|
|
|
|
|
|
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 year-ended April 30, 2017. Management no longer has
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)
|
Certain senior
management separation charges.
|
(5)
|
Write-off of debt
issuance costs as a result of replacing our prior Credit Agreement
with a new senior secured Credit Agreement.
|
(6)
|
Tax effect on
deferred revenue adjustment associated with the acquisition of
Legacy Hay, restructuring charges,
net, integration/acquisition costs, separation costs and
write-off of debt issuance cost.
|
(7)
|
The tax impact due to
provisional tax charge recorded as a result of the Tax
Act.
|
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 April 30, 2018
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
Hay
Group
|
|
Futurestep
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue
|
|
$
112,005
|
|
$
45,476
|
|
$
24,612
|
|
$
8,576
|
|
$
190,669
|
|
$
207,551
|
|
$
77,144
|
|
$
-
|
|
$
475,364
|
Total
revenue
|
|
$
115,394
|
|
$
46,340
|
|
$
25,053
|
|
$
8,603
|
|
$
195,390
|
|
$
211,912
|
|
$
81,062
|
|
$
-
|
|
$
488,364
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn/Ferry
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
41,160
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,149
|
Other
loss, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,322
|
Interest
expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,772
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(110)
|
Income
tax provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,988
|
Operating income
(loss)
|
|
$
33,784
|
|
$
6,419
|
|
$
5,614
|
|
$
1,061
|
|
$
46,878
|
|
$
28,407
|
|
$
11,661
|
|
$
(23,665)
|
|
63,281
|
Depreciation and
amortization
|
|
1,007
|
|
344
|
|
356
|
|
124
|
|
1,831
|
|
7,417
|
|
741
|
|
1,718
|
|
11,707
|
Other
(loss) income, net
|
|
(312)
|
|
32
|
|
(11)
|
|
82
|
|
(209)
|
|
140
|
|
142
|
|
(3,395)
|
|
(3,322)
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
110
|
|
-
|
|
-
|
|
-
|
|
110
|
|
-
|
|
-
|
|
-
|
|
110
|
EBITDA
|
|
34,589
|
|
6,795
|
|
5,959
|
|
1,267
|
|
48,610
|
|
35,964
|
|
12,544
|
|
(25,342)
|
|
71,776
|
EBITDA
margin
|
|
30.9%
|
|
14.9%
|
|
24.2%
|
|
14.8%
|
|
25.5%
|
|
17.3%
|
|
16.3%
|
|
|
|
15.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration/acquisition
costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,696
|
|
-
|
|
80
|
|
2,776
|
Adjusted
EBITDA
|
|
$
34,589
|
|
$
6,795
|
|
$
5,959
|
|
$
1,267
|
|
$
48,610
|
|
$
38,660
|
|
$
12,544
|
|
$
(25,262)
|
|
$
74,552
|
Adjusted EBITDA
margin
|
|
30.9%
|
|
14.9%
|
|
24.2%
|
|
14.8%
|
|
25.5%
|
|
18.6%
|
|
16.3%
|
|
|
|
15.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended April 30, 2017
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
Hay
Group
|
|
Futurestep
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue
|
|
$
97,264
|
|
$
37,210
|
|
$
20,061
|
|
$
7,731
|
|
$
162,266
|
|
$
185,100
|
|
$
58,699
|
|
$
-
|
|
$
406,065
|
Total
revenue
|
|
$
100,501
|
|
$
38,392
|
|
$
20,299
|
|
$
7,767
|
|
$
166,959
|
|
$
188,711
|
|
$
63,917
|
|
$
-
|
|
$
419,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn/Ferry International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
26,924
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
812
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,240)
|
Interest
expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,052
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(112)
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,398
|
Operating income
(loss)
|
|
$
21,092
|
|
$
6,805
|
|
$
2,364
|
|
$
302
|
|
$
30,563
|
|
$
16,114
|
|
$
8,137
|
|
$
(21,980)
|
|
32,834
|
Depreciation
and amortization
|
|
996
|
|
364
|
|
303
|
|
216
|
|
1,879
|
|
8,160
|
|
737
|
|
1,514
|
|
12,290
|
Other income
(loss), net
|
|
332
|
|
22
|
|
129
|
|
526
|
|
1,009
|
|
(5)
|
|
(87)
|
|
3,323
|
|
4,240
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
112
|
|
-
|
|
-
|
|
-
|
|
112
|
|
-
|
|
-
|
|
-
|
|
112
|
EBITDA
|
|
22,532
|
|
7,191
|
|
2,796
|
|
1,044
|
|
33,563
|
|
24,269
|
|
8,787
|
|
(17,143)
|
|
49,476
|
EBITDA
margin
|
|
23.2%
|
|
19.3%
|
|
13.9%
|
|
13.5%
|
|
20.7%
|
|
13.1%
|
|
15.0%
|
|
|
|
12.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
charges, net
|
|
13
|
|
501
|
|
(20)
|
|
104
|
|
598
|
|
5,656
|
|
21
|
|
4
|
|
6,279
|
Integration/acquisition costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,447
|
|
-
|
|
1,255
|
|
3,702
|
Separation
costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
609
|
|
-
|
|
-
|
|
609
|
Adjusted
EBITDA
|
|
$
22,545
|
|
$
7,692
|
|
$
2,776
|
|
$
1,148
|
|
$
34,161
|
|
$
32,981
|
|
$
8,808
|
|
$
(15,884)
|
|
$
60,066
|
Adjusted EBITDA
margin
|
|
23.2%
|
|
20.7%
|
|
13.8%
|
|
14.8%
|
|
21.1%
|
|
17.8%
|
|
15.0%
|
|
|
|
14.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KORN FERRY AND
SUBSIDIARIES
|
RECONCILIATION OF
NET INCOME AND OPERATING INCOME (GAAP) TO
|
EBITDA AND
ADJUSTED EBITDA (NON-GAAP)
|
(in
thousands)
|
|
|
|
Year Ended
April 30, 2018
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
Hay
Group
|
|
Futurestep
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
133,779
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,118
|
Other
income, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,525)
|
Interest
expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,676
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(297)
|
Income
tax provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,133
|
Operating income
(loss)
|
|
$
100,037
|
|
$
26,768
|
|
$
18,425
|
|
$
4,022
|
|
$
149,252
|
|
$
100,939
|
|
$
39,363
|
|
$
(85,670)
|
|
203,884
|
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
|
|
599
|
|
152
|
|
9,207
|
|
11,525
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
297
|
|
-
|
|
-
|
|
-
|
|
297
|
|
-
|
|
-
|
|
-
|
|
297
|
EBITDA
|
|
105,109
|
|
28,625
|
|
20,206
|
|
4,658
|
|
158,598
|
|
133,065
|
|
42,569
|
|
(69,938)
|
|
264,294
|
EBITDA
margin
|
|
25.8%
|
|
16.5%
|
|
20.9%
|
|
15.2%
|
|
22.4%
|
|
17.0%
|
|
15.6%
|
|
|
|
15.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges (recoveries),
net
|
|
-
|
|
-
|
|
313
|
|
-
|
|
313
|
|
(241)
|
|
6
|
|
-
|
|
78
|
Integration/acquisition
costs
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
9,151
|
|
-
|
|
279
|
|
9,430
|
Adjusted
EBITDA
|
|
$
105,109
|
|
$
28,625
|
|
$
20,519
|
|
$
4,658
|
|
$
158,911
|
|
$
141,975
|
|
$
42,575
|
|
$
(69,659)
|
|
$
273,802
|
Adjusted EBITDA
margin
|
|
25.8%
|
|
16.5%
|
|
21.2%
|
|
15.2%
|
|
22.4%
|
|
18.1%
|
|
15.6%
|
|
|
|
15.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
April 30, 2017
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
Hay
Group
|
|
Futurestep
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
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 International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
84,181
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,057
|
Other
income, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,820)
|
Interest
expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,251
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(333)
|
Income
tax provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,104
|
Operating income
(loss)
|
|
$
81,550
|
|
$
27,854
|
|
$
8,580
|
|
$
6,268
|
|
$
124,252
|
|
$
47,302
|
|
$
29,986
|
|
$
(87,100)
|
|
114,440
|
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
|
|
341
|
|
(91)
|
|
9,757
|
|
11,820
|
Equity in
earnings of unconsolidated subsidiaries, net
|
|
333
|
|
-
|
|
-
|
|
-
|
|
333
|
|
-
|
|
-
|
|
-
|
|
333
|
EBITDA
|
|
86,539
|
|
28,869
|
|
9,940
|
|
7,435
|
|
132,783
|
|
79,905
|
|
32,713
|
|
(71,548)
|
|
173,853
|
EBITDA
margin
|
|
24.3%
|
|
19.7%
|
|
12.4%
|
|
21.6%
|
|
21.5%
|
|
11.0%
|
|
14.6%
|
|
|
|
11.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
88,258
|
|
$
29,498
|
|
$
11,435
|
|
$
8,208
|
|
$
137,399
|
|
$
128,152
|
|
$
32,814
|
|
$
(63,389)
|
|
$
234,976
|
Adjusted EBITDA
margin
|
|
24.7%
|
|
20.1%
|
|
14.3%
|
|
23.9%
|
|
22.2%
|
|
17.6%
|
|
14.7%
|
|
|
|
15.0%
|
View original
content:http://www.prnewswire.com/news-releases/korn-ferry-international-announces-fourth-quarter-and-fiscal-2018-results-of-operations-300665379.html
SOURCE Korn Ferry