LOS ANGELES, Sept. 5, 2019 /PRNewswire/ --
Highlights
- Korn Ferry reports fee revenue
of $484.5 million in Q1 FY'20, an
increase of 4% (7% at constant currency) from Q1 FY'19.
- Net income attributable to Korn
Ferry was $43.0 million in Q1
FY'20.
- Operating income was $60.3
million in Q1 FY'20 with an operating margin of 12.5%.
EBITDA was $74.9 million with EBITDA
margin of 15.5%.
- Q1 FY'20 diluted earnings per share and adjusted diluted
earnings per share was $0.76.
- The Company continued with its balanced approach to capital
allocation, buying back 968,000 shares or $37.2 million of stock through today and
declaring a quarterly dividend of $0.10 per share on September 4, 2019 payable on October 15, 2019 to stockholders of record on
September 27, 2019.
Korn Ferry (NYSE: KFY), a global
organizational consulting firm, today announced first quarter fee
revenue of $484.5 million with
diluted earnings per share of $0.76.
"I am pleased to report fee revenue of $484.5 million, an increase of 4% quarter over
quarter with 7% growth at constant currency for the fiscal first
quarter, led by our RPO & Professional Search offering, which
grew 24% quarter over quarter or 27% at constant currency – the
21st consecutive quarter of near double-digit growth at actual and
constant currency. Earnings remained strong in the first quarter
with net income attributable to Korn
Ferry of $43.0 million and
EBITDA at $74.9 million. We also
continue to allocate capital to share repurchases, buying back,
fiscal year to date, approximately 968,000 shares, using total cash
of approximately $37.2 million," said
Gary D. Burnison, CEO, Korn Ferry.
"Our financial results for the first quarter demonstrate the
durability of our business model. We are substantially different
today than we were even a few years ago. We've evolved from a
mono-line business to a global organizational consulting firm –
synchronizing a client's strategy and talent to drive superior
performance. More than organizational strategy or compensation
advisory, more than talent acquisition and more than leadership
development – Korn Ferry enables
people and organizations to be more than: simply put, to exceed
their potential."
Selected Financial Results
(dollars in millions, except per share amounts) (a)
|
|
First
Quarter
|
|
|
|
|
|
|
FY'20
|
|
FY'19
|
Fee
revenue
|
|
$
|
484.5
|
|
$
|
465.6
|
Total
revenue
|
|
$
|
496.2
|
|
$
|
478.4
|
Operating income
(loss)
|
|
$
|
60.3
|
|
$
|
(55.1)
|
Operating
margin
|
|
|
12.5%
|
|
|
(11.8%)
|
Net income (loss)
attributable to Korn Ferry
|
|
$
|
43.0
|
|
$
|
(38.6)
|
Basic earnings (loss)
per share
|
|
$
|
0.77
|
|
$
|
(0.70)
|
Diluted earnings
(loss) per share
|
|
$
|
0.76
|
|
$
|
(0.70)
|
|
EBITDA Results
(b):
|
|
First
Quarter
|
|
|
|
|
|
|
FY'20
|
|
FY'19
|
EBITDA
|
|
$
|
74.9
|
|
$
|
(38.9)
|
EBITDA
margin
|
|
|
15.5%
|
|
|
(8.3%)
|
|
Adjusted Results
(c):
|
|
First
Quarter
|
|
|
FY'20
|
|
FY'19
|
Adjusted EBITDA
(b)
|
|
$
|
74.9
|
|
$
|
70.8
|
Adjusted EBITDA
margin (b)
|
|
|
15.5%
|
|
|
15.2%
|
Adjusted net income
attributable to Korn Ferry
|
|
$
|
43.0
|
|
$
|
44.2
|
Adjusted basic
earnings per share
|
|
$
|
0.77
|
|
$
|
0.79
|
Adjusted diluted
earnings per share
|
|
$
|
0.76
|
|
$
|
0.78
|
__________________
|
|
(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 tradename write-offs and integration/acquisition
costs. EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted
EBITDA margin are non-GAAP financial measures (see attached
reconciliations).
|
(c)
|
Adjusted results are
non-GAAP financial measures that adjust for the following, as
applicable (see attached reconciliations):
|
|
|
|
|
|
First
Quarter
|
|
|
|
|
|
|
FY'20
|
|
FY'19
|
Tradename
write-offs
|
|
$
|
—
|
|
$
|
106.6
|
Integration/acquisition costs
|
|
$
|
—
|
|
$
|
3.1
|
Fee revenue was $484.5 million in
Q1 FY'20, an increase of 4% (7% increase on a constant currency
basis) compared to Q1 FY'19. The increase in fee revenue was
due to growth in RPO and Professional Search.
Net income attributable to Korn
Ferry was $43.0 million in Q1
FY'20 as compared to a loss of $38.6
million in Q1 FY'19. The increase in net income
attributable to Korn Ferry resulted
from a decrease in general and administrative expenses mainly due
to the $106.6 million tradename
write-offs in Q1 FY'19, partially offset by an increase in income
tax provision in Q1 FY'20.
Operating margin was 12.5% in Q1 FY'20 compared to (11.8%) in
the year-ago quarter. The increase in operating margin was
primarily due to the decrease in general and administrative
expenses as described above and an increase in fee revenue,
partially offset by an increase in compensation and benefits.
Adjusted EBITDA margin was 15.5%, compared to 15.2% in the
year-ago quarter.
Results by Segment
Selected Advisory Data
(dollars in millions) (a)
|
|
First
Quarter
|
|
|
|
|
|
|
FY'20
|
|
FY'19
|
Fee
revenue
|
|
$
|
195.5
|
|
$
|
195.4
|
Total
revenue
|
|
$
|
199.3
|
|
$
|
200.1
|
Operating income
(loss)
|
|
$
|
25.8
|
|
$
|
(83.1)
|
Operating
margin
|
|
|
13.2%
|
|
|
(42.5%)
|
|
|
|
|
|
|
|
Ending number of
consultants and execution staff (b)
|
|
|
1,758
|
|
|
1,621
|
Staff utilization
(c)
|
|
|
67%
|
|
|
67%
|
|
EBITDA Results
(d):
|
|
First
Quarter
|
|
|
FY'20
|
|
FY'19
|
EBITDA
|
|
$
|
34.6
|
|
$
|
(75.1)
|
EBITDA
margin
|
|
|
17.7%
|
|
|
(38.4%)
|
|
Adjusted Results
(e):
|
|
First
Quarter
|
|
|
FY'20
|
|
FY'19
|
Adjusted EBITDA
(d)
|
|
$
|
34.6
|
|
$
|
34.5
|
Adjusted EBITDA
margin (d)
|
|
|
17.7%
|
|
|
17.7%
|
___________________________
|
|
|
(a)
|
Numbers may not total
due to rounding.
|
(b)
|
Represents number of
employees originating, delivering and executing advisory
services.
|
(c)
|
Calculated by
dividing the number of hours our full-time Advisory 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):
|
|
|
|
First
Quarter
|
|
|
FY'20
|
|
FY'19
|
Tradename
write-offs
|
|
$
|
—
|
|
$
|
106.6
|
Integration/acquisition costs
|
|
$
|
—
|
|
$
|
3.0
|
Fee revenue was $195.5 million in
Q1 FY'20 compared to $195.4 million
in Q1 FY'19, flat as reported and up 3% on a constant currency
basis.
Operating income was $25.8 million
in Q1 FY'20 with an operating margin of 13.2% compared to an
operating loss of $83.1 million and
an operating margin of (42.5%) in the year-ago quarter. The
change of $108.9 million from the
operating loss in the year-ago quarter to operating income in the
current quarter was primarily due to the tradename write-offs in Q1
FY'19 of $106.6 million.
Adjusted EBITDA was $34.6 million
in Q1 FY'20 with an Adjusted EBITDA margin of 17.7% compared to
$34.5 million and 17.7%,
respectively, in the year-ago quarter.
Selected Executive Search Data
(dollars in millions) (a)
|
|
First
Quarter
|
|
|
FY'20
|
|
FY'19
|
Fee
revenue
|
|
$
|
193.2
|
|
$
|
192.9
|
Total
revenue
|
|
$
|
198.0
|
|
$
|
198.0
|
Operating
income
|
|
$
|
45.6
|
|
$
|
40.9
|
Operating
margin
|
|
|
23.6%
|
|
|
21.2%
|
|
|
|
|
|
|
|
Ending number of
consultants
|
|
|
569
|
|
|
545
|
Average number of
consultants
|
|
|
567
|
|
|
543
|
Engagements
billed
|
|
|
3,855
|
|
|
3,822
|
New engagements
(b)
|
|
|
1,695
|
|
|
1,708
|
|
EBITDA and
Adjusted Results (c):
|
|
First
Quarter
|
|
|
FY'20
|
|
FY'19
|
EBITDA and Adjusted
EBITDA
|
|
$
|
48.9
|
|
$
|
46.8
|
EBITDA and Adjusted
EBITDA margin
|
|
|
25.3%
|
|
|
24.2%
|
____________________
|
|
(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).
|
Fee revenue was $193.2 million and
$192.9 million in Q1 FY'20 and Q1
FY'19, respectively, flat as reported and up 2% on a constant
currency basis.
Operating income was $45.6 million
in Q1 FY'20 compared to $40.9 million
in Q1 FY'19. Operating margin was 23.6% in Q1 FY'20 compared
to 21.2% in the year-ago quarter. The increase in operating
income was mainly due to a decrease in compensation and benefits
expense.
EBITDA was $48.9 million in Q1
FY'20 with an EBITDA margin of 25.3% compared to $46.8 million and 24.2%, respectively, in the
year-ago quarter.
Selected RPO and Professional Search Data
(dollars in millions) (a)
|
|
First
Quarter
|
|
|
FY'20
|
|
FY'19
|
Fee
revenue
|
|
$
|
95.8
|
|
$
|
77.3
|
Total
revenue
|
|
$
|
98.9
|
|
$
|
80.2
|
Operating
income
|
|
$
|
15.0
|
|
$
|
11.6
|
Operating
margin
|
|
|
15.7%
|
|
|
15.1%
|
|
|
|
|
|
|
|
Engagements billed
(b)
|
|
|
1,436
|
|
|
1,346
|
New engagements
(c)
|
|
|
767
|
|
|
771
|
|
EBITDA and
Adjusted Results (d):
|
|
First
Quarter
|
|
|
|
|
|
|
FY'20
|
|
FY'19
|
EBITDA and Adjusted
EBITDA
|
|
$
|
16.1
|
|
$
|
12.5
|
EBITDA and Adjusted
EBITDA margin
|
|
|
16.8%
|
|
|
16.2%
|
_________________
|
|
(a)
|
Numbers may not total
due to rounding.
|
(b)
|
Represents
professional search engagements billed.
|
(c)
|
Represents new
professional search engagements opened in the respective
period.
|
(d)
|
EBITDA, EBITDA
margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures (see attached reconciliations).
|
Fee revenue was $95.8 million in
Q1 FY'20, an increase of $18.5
million or 24% (27% increase on a constant currency basis),
compared to the year-ago quarter. The higher fee revenue was
primarily driven by an increase in fee revenue in recruitment
process outsourcing and professional search of $11.9 million and $6.6
million, respectively, in Q1 FY'20 compared to Q1 FY'19.
Operating income was $15.0 million
in Q1 FY'20, an increase of $3.4
million compared to Q1 FY'19 operating income of
$11.6 million. Operating margin
was 15.7% in the current quarter compared to 15.1% in the year-ago
quarter. The increase in operating income was due to higher
fee revenue in Q1 FY'20 compared to Q1 FY'19, partially offset by
an increase in compensation and benefits expense driven by a 31%
increase in average headcount.
EBITDA was $16.1 million during Q1
FY'20, an increase of $3.6 million
compared to Q1 FY'19. EBITDA margin was 16.8% in Q1 FY'20 and
16.2% in Q1 FY'19.
Outlook
Assuming worldwide economic conditions, financial markets and
foreign exchange rates remain steady, on a consolidated basis:
- Q2 FY'20 fee revenue is expected to be in the range of
$485 million and $505 million; and
- Q2 FY'20 diluted earnings per share is likely to range between
$0.76 to $0.84.
Earnings Conference Call Webcast
The earnings conference call will be held today at 4:30 PM (EDT) and hosted by CEO Gary Burnison, CFO Robert Rozek and SVP Finance Gregg Kvochak. The conference call will be
webcast and available online at ir.kornferry.com. We will
also post to this section of our website earnings slides, which
will accompany our webcast, and other important information, and
encourage you to review the information that we make available on
our website.
About Korn
Ferry
Korn Ferry is a global
organizational consulting firm. We help clients synchronize
strategy and talent to drive superior performance. We work
with organizations to design their structures, roles, and
responsibilities. We help them hire the right people to bring
their strategy to life. And we advise them on how to reward,
develop, and motivate their people. Visit kornferry.com for
more information.
Forward-Looking Statements
Statements in this press release and our conference call that
relate to future results and events ("forward-looking statements")
are based on Korn Ferry's current
expectations. These statements, which include words such as
"believes", "expects" or "likely", include references to our
outlook. Readers are cautioned not to place undue reliance on
such statements. Actual results in future periods may differ
materially from those currently expected or desired because of a
number of risks and uncertainties that are beyond the control of
Korn Ferry. The
potential risks and uncertainties include those relating to
competition, changes in demand for our services as a result of
automation, the dependence on and costs of attracting and retaining
qualified and experienced consultants, our ability to maintain
relationships with customers and suppliers and retain key
employees, maintaining our brand name and professional reputation,
potential legal liability and regulatory
developments, the portability of client relationships,
consolidation of the industries we serve, global and local
political or economic developments in or affecting countries where
we have operations, currency fluctuations in our international
operations, risks related to growth, alignment of our cost
structure, restrictions imposed by off-limits agreements, reliance
on information processing systems, cyber security vulnerabilities,
changes to data security, data privacy and data protection laws,
limited protection of our intellectual property, our ability to
enhance and develop new technology, our ability to develop new
products and services, the utilization and billing rates of
our consultants, dependence on third parties for the execution of
critical functions, our ability to successfully recover from
a disaster or other business continuity problems, changes in our
accounting estimates/assumptions, technical guidance relating to
the Tax Act, impairment of goodwill and other intangible
assets, deferred tax assets that we may not be able to
use, our indebtedness, the phase-out of the London Interbank
Offered Rate, expansion of social media platforms, seasonality,
ability to effect acquisition and integrate recently
acquired businesses, employment liability risk, the impact
of rebranding on the Company's products and services; the expected
timing of the Company's rebranding and entity rationalization plan,
and the costs of the Company's rebranding and entity
rationalization plan. For a detailed description of risks and
uncertainties that could cause differences, please refer to
Korn Ferry's periodic filings with
the Securities and Exchange Commission. Korn Ferry disclaims
any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Use of Non-GAAP Financial Measures
This press release contains financial information calculated
other than in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP"). In particular, it includes:
- Adjusted net income attributable to Korn Ferry, adjusted to exclude
integration/acquisition costs and tradename write-offs, net of
income tax effect;
- Adjusted basic and diluted earnings per share, adjusted to
exclude integration/acquisition costs and tradename write-offs, 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)
percentages that represent the percentage change that would have
resulted had exchange rates in the prior period been the same as
those in effect in the current period;
- EBITDA, or earnings before interest, taxes, depreciation and
amortization and EBITDA margin; and
- Adjusted EBITDA, which is EBITDA further adjusted to exclude
integration/acquisition costs and tradename write-offs, and
Adjusted EBITDA margin.
This non-GAAP disclosure has limitations as an analytical
tool, should not be viewed as a substitute for financial
information determined in accordance with GAAP, and should not be
considered in isolation or as a substitute for analysis of the
Company's results as reported under GAAP, nor is it necessarily
comparable to non-GAAP performance measures that may be presented
by other companies.
Management believes the presentation of non-GAAP financial
measures in this press release provides meaningful supplemental
information regarding Korn Ferry's
performance by excluding certain charges that may not be indicative
of Korn Ferry's ongoing operating
results. These non-GAAP financial measures are performance
measures and are not indicative of the liquidity of Korn Ferry. These charges represent 1)
costs we incurred to acquire and integrate a portion of our
Advisory business and 2) tradename write-offs associated with the
rebranding plan initiated by Korn
Ferry. The use of non-GAAP financial measures
facilitates comparisons to Korn
Ferry's historical performance. Korn Ferry includes non-GAAP financial measures
because management believes they are useful to investors in
allowing for greater transparency with respect to supplemental
information used by management in its evaluation of Korn Ferry's ongoing operations and financial
and operational decision-making. Adjusted net income
attributable to Korn Ferry, adjusted
basic and diluted earnings per share and Adjusted EBITDA, exclude
certain charges that management does not consider on-going in
nature and allows management and investors to make more meaningful
period-to-period comparisons of the Company's operating
results. Management further believes that EBITDA is useful to
investors because it is frequently used by investors and other
interested parties to measure operating performance among companies
with different capital structures, effective tax rates and tax
attributes and capitalized asset values, all of which can vary
substantially from company to company. In the case of
constant currency percentages, management believes the presentation
of such information provides useful supplemental information
regarding Korn Ferry's performance
as excluding the impact of exchange rate changes on Korn Ferry's financial performance allows
investors to make more meaningful period-to-period comparisons of
the Company's operating results, to better identify operating
trends that may otherwise be masked or distorted by exchange rate
changes and to perform related trend analysis, and provides a
higher degree of transparency of information used by management in
its evaluation of Korn Ferry's
ongoing operations and financial and operational
decision-making.
[Tables attached]
KORN FERRY AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(in thousands,
except per share amounts)
|
|
|
|
Three Months
Ended
|
|
July
31,
|
|
2019
|
|
2018
|
|
|
|
|
|
(unaudited)
|
Fee
revenue
|
$
|
484,549
|
|
$
|
465,568
|
Reimbursed
out-of-pocket engagement expenses
|
|
11,649
|
|
|
12,794
|
Total revenue
|
|
496,198
|
|
|
478,362
|
|
|
|
|
|
|
Compensation
and benefits
|
|
328,496
|
|
|
321,905
|
General and
administrative expenses
|
|
65,807
|
|
|
168,724
|
Reimbursed
expenses
|
|
11,649
|
|
|
12,794
|
Cost of
services
|
|
17,135
|
|
|
18,327
|
Depreciation
and amortization
|
|
12,777
|
|
|
11,731
|
Total operating expenses
|
|
435,864
|
|
|
533,481
|
|
|
|
|
|
|
Operating
income (loss)
|
|
60,334
|
|
|
(55,119)
|
Other income,
net
|
|
1,826
|
|
|
4,520
|
Interest
expense, net
|
|
(4,057)
|
|
|
(4,103)
|
|
|
|
|
|
|
Income (loss) before provision (benefit) for income
taxes
|
|
58,103
|
|
|
(54,702)
|
Income tax
provision (benefit)
|
|
14,453
|
|
|
(16,110)
|
Net income
(loss)
|
|
43,650
|
|
|
(38,592)
|
Net income attributable to noncontrolling interest
|
|
(699)
|
|
|
(19)
|
Net income
(loss) attributable to Korn Ferry
|
$
|
42,951
|
|
$
|
(38,611)
|
|
|
|
|
|
|
Earnings (loss)
per common share attributable to Korn Ferry:
|
|
|
|
|
|
Basic
|
$
|
0.77
|
|
$
|
(0.70)
|
Diluted
|
$
|
0.76
|
|
$
|
(0.70)
|
|
|
|
|
|
|
Weighted-average common shares
outstanding:
|
|
|
|
|
|
Basic
|
|
55,266
|
|
|
55,378
|
Diluted
|
|
55,635
|
|
|
55,378
|
|
|
|
|
|
|
Cash dividends
declared per share:
|
$
|
0.10
|
|
$
|
0.10
|
KORN FERRY AND
SUBSIDIARIES
|
FINANCIAL SUMMARY
BY SEGMENT
|
(in
thousands)
|
(unaudited)
|
|
|
|
Three Months Ended
July 31,
|
|
|
2019
|
|
|
|
2018
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue:
|
|
|
|
|
|
|
|
|
|
|
Advisory
|
$
|
195,526
|
|
|
|
$
|
195,375
|
|
|
0.1%
|
Executive
Search:
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
111,722
|
|
|
|
|
112,097
|
|
|
(0.3%)
|
|
EMEA
|
|
46,530
|
|
|
|
|
46,654
|
|
|
(0.3%)
|
|
Asia
Pacific
|
|
27,362
|
|
|
|
|
26,295
|
|
|
4.1%
|
|
Latin
America
|
|
7,585
|
|
|
|
|
7,878
|
|
|
(3.7%)
|
Total Executive
Search
|
|
193,199
|
|
|
|
|
192,924
|
|
|
0.1%
|
RPO and Professional
Search
|
|
95,824
|
|
|
|
|
77,269
|
|
|
24.0%
|
|
Total fee
revenue
|
|
484,549
|
|
|
|
|
465,568
|
|
|
4.1%
|
Reimbursed
out-of-pocket engagement expenses
|
|
11,649
|
|
|
|
|
12,794
|
|
|
(8.9%)
|
|
Total
revenue
|
$
|
496,198
|
|
|
|
$
|
478,362
|
|
|
3.7%
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
Margin
|
|
|
|
|
Margin
|
Advisory
|
$
|
25,791
|
|
13.2%
|
|
$
|
(83,079)
|
|
|
(42.5%)
|
Executive
Search:
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
30,322
|
|
27.1%
|
|
|
26,514
|
|
|
23.7%
|
|
EMEA
|
|
7,311
|
|
15.7%
|
|
|
6,969
|
|
|
14.9%
|
|
Asia
Pacific
|
|
6,993
|
|
25.6%
|
|
|
6,641
|
|
|
25.3%
|
|
Latin
America
|
|
1,010
|
|
13.3%
|
|
|
754
|
|
|
9.6%
|
Total Executive
Search
|
|
45,636
|
|
23.6%
|
|
|
40,878
|
|
|
21.2%
|
RPO and Professional
Search
|
|
15,041
|
|
15.7%
|
|
|
11,645
|
|
|
15.1%
|
Corporate
|
|
(26,134)
|
|
|
|
|
(24,563)
|
|
|
|
|
Total operating
income (loss)
|
$
|
60,334
|
|
12.5%
|
|
$
|
(55,119)
|
|
|
(11.8%)
|
KORN FERRY AND
SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands,
except per share amounts)
|
|
|
|
July
31,
|
|
April
30,
|
|
|
2019
|
|
2019
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
424,637
|
|
$
|
626,360
|
Marketable
securities
|
|
8,508
|
|
8,288
|
Receivables due from
clients, net of allowance for doubtful accounts of $21,732 and
$21,582 at July 31, 2019 and April 30, 2019,
respectively
|
|
432,758
|
|
404,857
|
Income taxes and
other receivables
|
|
30,529
|
|
26,767
|
Unearned
compensation
|
|
45,380
|
|
42,003
|
Prepaid expenses and
other assets
|
|
33,311
|
|
28,535
|
Total current
assets
|
|
975,123
|
|
1,136,810
|
|
|
|
|
|
Marketable
securities, non-current
|
|
134,148
|
|
132,463
|
Property and
equipment, net
|
|
137,367
|
|
131,505
|
Operating lease
right-of-use assets, net
|
|
219,412
|
|
-
|
Cash surrender value
of company-owned life insurance policies, net of loans
|
|
126,752
|
|
126,000
|
Deferred income
taxes
|
|
41,191
|
|
43,220
|
Goodwill
|
|
578,567
|
|
578,298
|
Intangible assets,
net
|
|
79,581
|
|
82,948
|
Unearned
compensation, non-current
|
|
92,365
|
|
80,924
|
Investments and other
assets
|
|
22,052
|
|
22,684
|
Total
assets
|
|
$
|
2,406,558
|
|
$
|
2,334,852
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Accounts
payable
|
|
$
|
33,174
|
|
$
|
39,156
|
Income taxes
payable
|
|
19,199
|
|
21,145
|
Compensation and
benefits payable
|
|
156,208
|
|
328,610
|
Operating lease
liability, current
|
|
46,854
|
|
-
|
Other accrued
liabilities
|
|
156,218
|
|
162,047
|
Total current
liabilities
|
|
411,653
|
|
550,958
|
|
|
|
|
|
Deferred compensation
and other retirement plans
|
|
269,380
|
|
257,635
|
Operating lease
liability, non-current
|
|
207,603
|
|
-
|
Long-term
debt
|
|
223,094
|
|
222,878
|
Deferred tax
liabilities
|
|
1,048
|
|
1,103
|
Other
liabilities
|
|
29,386
|
|
58,891
|
Total
liabilities
|
|
1,142,164
|
|
1,091,465
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Common stock: $0.01
par value, 150,000 shares authorized, 73,076 and 72,442 shares
issued and 56,596 and 56,431 shares outstanding at July 31, 2019
and April 30, 2019, respectively
|
|
645,299
|
|
656,463
|
Retained
earnings
|
|
697,715
|
|
660,845
|
Accumulated other
comprehensive loss, net
|
|
(82,114)
|
|
(76,652)
|
Total Korn Ferry
stockholders' equity
|
|
1,260,900
|
|
1,240,656
|
Noncontrolling
interest
|
|
3,494
|
|
2,731
|
Total stockholders'
equity
|
|
1,264,394
|
|
1,243,387
|
Total liabilities and
stockholders' equity
|
|
$
|
2,406,558
|
|
$
|
2,334,852
|
|
|
|
KORN FERRY AND
SUBSIDIARIES
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(in thousands,
except per share amounts)
|
|
|
|
Three Months
Ended
|
|
|
July
31,
|
|
|
2019
|
|
2018
|
|
|
(unaudited)
|
Net income
(loss) attributable to Korn Ferry
|
|
$
|
42,951
|
|
$
|
(38,611)
|
Net income
attributable to non-controlling interest
|
|
|
699
|
|
|
19
|
Net income
(loss)
|
|
|
43,650
|
|
|
(38,592)
|
Income tax
provision (benefit)
|
|
|
14,453
|
|
|
(16,110)
|
Income (loss)
before provision (benefit) for income taxes
|
|
|
58,103
|
|
|
(54,702)
|
Other income,
net
|
|
|
(1,826)
|
|
|
(4,520)
|
Interest
expense, net
|
|
|
4,057
|
|
|
4,103
|
Operating
income (loss), net
|
|
|
60,334
|
|
|
(55,119)
|
Depreciation
and amortization
|
|
|
12,777
|
|
|
11,731
|
Other income,
net
|
|
|
1,826
|
|
|
4,520
|
EBITDA
|
|
|
74,937
|
|
|
(38,868)
|
Integration/acquisition costs (1)
|
|
|
-
|
|
|
3,107
|
Tradename
write-offs (2)
|
|
|
-
|
|
|
106,555
|
Adjusted EBITDA
|
|
$
|
74,937
|
|
$
|
70,794
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
12.5%
|
|
|
(11.8%)
|
Depreciation
and amortization
|
|
|
2.6%
|
|
|
2.5%
|
Other income,
net
|
|
|
0.4%
|
|
|
1.0%
|
EBITDA margin
|
|
|
15.5%
|
|
|
(8.3%)
|
Integration/acquisition costs (1)
|
|
|
-
|
|
|
0.6%
|
Tradename
write-offs (2)
|
|
|
-
|
|
|
22.9%
|
Adjusted EBITDA margin
|
|
|
15.5%
|
|
|
15.2%
|
|
|
|
|
|
|
|
Net income
(loss) attributable to Korn Ferry
|
|
$
|
42,951
|
|
$
|
(38,611)
|
Integration/acquisition costs (1)
|
|
|
-
|
|
|
3,107
|
Tradename
write-offs (2)
|
|
|
-
|
|
|
106,555
|
Tax effect on
the adjusted items (3)
|
|
|
-
|
|
|
(26,893)
|
Adjusted net income attributable to Korn Ferry
|
|
$
|
42,951
|
|
$
|
44,158
|
|
|
|
|
|
|
|
Basic earnings
(loss) per common share
|
|
$
|
0.77
|
|
$
|
(0.70)
|
Integration/acquisition costs (1)
|
|
|
-
|
|
|
0.06
|
Tradename
write-offs (2)
|
|
|
-
|
|
|
1.92
|
Tax effect on
the adjusted items (3)
|
|
|
-
|
|
|
(0.49)
|
Adjusted basic earnings per share
|
|
$
|
0.77
|
|
$
|
0.79
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per common share
|
|
$
|
0.76
|
|
$
|
(0.70)
|
Integration/acquisition costs (1)
|
|
|
-
|
|
|
0.06
|
Tradename
write-offs (2)
|
|
|
-
|
|
|
1.90
|
Tax effect on
the adjusted items (3)
|
|
|
-
|
|
|
(0.48)
|
Adjusted diluted earnings per share
|
|
$
|
0.76
|
|
$
|
0.78
|
|
|
|
|
|
|
|
Explanation of
Non-GAAP Adjustments
|
(1) Costs associated
with completing a previous acquisition, such as legal and
professional fees, retention awards and the on-going integration
expenses to combine the companies.
|
(2) The Company
implemented a plan to go to market under a single, master brand
architecture to simplify the Company's organizational structure by
eliminating and/or consolidating certain legal entities implemented
a rebranding of the Company to offer the Company's current products
and services using the "Korn Ferry" name, branding and trademarks.
As a result of this the Company was required under U.S. generally
accepted accounting principles to record a one-time, non-cash
tradename write-offs.
|
(3) Tax effect on
integration/acquisition costs and tradename write-offs.
|
KORN FERRY AND
SUBSIDIARIES
|
RECONCILIATION OF
NET INCOME (LOSS) AND OPERATING INCOME (LOSS) (GAAP)
TO
|
EBITDA AND
ADJUSTED EBITDA (NON-GAAP)
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
Three Months Ended
July 31, 2019
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
Advisory
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
RPO and
Professional Search
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue
|
$
|
195,526
|
|
$
|
111,722
|
|
$
|
46,530
|
|
$
|
27,362
|
|
$
|
7,585
|
|
$
|
193,199
|
|
$
|
95,824
|
|
$
|
-
|
|
$
|
484,549
|
Total
revenue
|
$
|
199,320
|
|
$
|
115,446
|
|
$
|
47,312
|
|
$
|
27,668
|
|
$
|
7,587
|
|
$
|
198,013
|
|
$
|
98,865
|
|
$
|
-
|
|
$
|
496,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Korn Ferry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
42,951
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
699
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,826)
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,057
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,453
|
Operating income
(loss)
|
$
|
25,791
|
|
$
|
30,322
|
|
$
|
7,311
|
|
$
|
6,993
|
|
$
|
1,010
|
|
$
|
45,636
|
|
$
|
15,041
|
|
$
|
(26,134)
|
|
|
60,334
|
Depreciation and
amortization
|
|
8,053
|
|
|
901
|
|
|
456
|
|
|
346
|
|
|
328
|
|
|
2,031
|
|
|
992
|
|
|
1,701
|
|
|
12,777
|
Other income (loss),
net
|
|
726
|
|
|
1,140
|
|
|
12
|
|
|
15
|
|
|
57
|
|
|
1,224
|
|
|
74
|
|
|
(198)
|
|
|
1,826
|
EBITDA and Adjusted
EBITDA
|
$
|
34,570
|
|
$
|
32,363
|
|
$
|
7,779
|
|
$
|
7,354
|
|
$
|
1,395
|
|
$
|
48,891
|
|
$
|
16,107
|
|
$
|
(24,631)
|
|
$
|
74,937
|
EBITDA and Adjusted
EBITDA margin
|
|
17.7%
|
|
|
29.0%
|
|
|
16.7%
|
|
|
26.9%
|
|
|
18.4%
|
|
|
25.3%
|
|
|
16.8%
|
|
|
|
|
|
15.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
July 31, 2018
|
|
|
|
|
Executive
Search
|
|
|
|
|
|
|
|
Advisory
|
|
North
America
|
|
EMEA
|
|
Asia
Pacific
|
|
Latin
America
|
|
Subtotal
|
|
RPO and
Professional Search
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee
revenue
|
$
|
195,375
|
|
$
|
112,097
|
|
$
|
46,654
|
|
$
|
26,295
|
|
$
|
7,878
|
|
$
|
192,924
|
|
$
|
77,269
|
|
$
|
-
|
|
$
|
465,568
|
Total
revenue
|
$
|
200,147
|
|
$
|
115,757
|
|
$
|
47,749
|
|
$
|
26,625
|
|
$
|
7,903
|
|
$
|
198,034
|
|
$
|
80,181
|
|
$
|
-
|
|
$
|
478,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to Korn Ferry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(38,611)
|
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,520)
|
Interest expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,103
|
Income tax
benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,110)
|
Operating income
(loss)
|
$
|
(83,079)
|
|
$
|
26,514
|
|
$
|
6,969
|
|
$
|
6,641
|
|
$
|
754
|
|
$
|
40,878
|
|
$
|
11,645
|
|
$
|
(24,563)
|
|
|
(55,119)
|
Depreciation and
amortization
|
|
7,431
|
|
|
979
|
|
|
370
|
|
|
370
|
|
|
107
|
|
|
1,826
|
|
|
761
|
|
|
1,713
|
|
|
11,731
|
Other income (loss),
net
|
|
570
|
|
|
3,501
|
|
|
340
|
|
|
175
|
|
|
37
|
|
|
4,053
|
|
|
105
|
|
|
(208)
|
|
|
4,520
|
EBITDA
|
|
(75,078)
|
|
|
30,994
|
|
|
7,679
|
|
|
7,186
|
|
|
898
|
|
|
46,757
|
|
|
12,511
|
|
|
(23,058)
|
|
|
(38,868)
|
EBITDA
margin
|
|
(38.4%)
|
|
|
27.6%
|
|
|
16.5%
|
|
|
27.3%
|
|
|
11.4%
|
|
|
24.2%
|
|
|
16.2%
|
|
|
|
|
|
(8.3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration/acquisition costs
|
|
3,027
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
80
|
|
|
3,107
|
Tradename
write-offs
|
|
106,555
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
106,555
|
Adjusted
EBITDA
|
$
|
34,504
|
|
$
|
30,994
|
|
$
|
7,679
|
|
$
|
7,186
|
|
$
|
898
|
|
$
|
46,757
|
|
$
|
12,511
|
|
$
|
(22,978)
|
|
$
|
70,794
|
Adjusted EBITDA
margin
|
|
17.7%
|
|
|
27.6%
|
|
|
16.5%
|
|
|
27.3%
|
|
|
11.4%
|
|
|
24.2%
|
|
|
16.2%
|
|
|
|
|
|
15.2%
|
View original
content:http://www.prnewswire.com/news-releases/korn-ferry-announces-first-quarter-fiscal-2020-results-of-operations-300912809.html
SOURCE Korn Ferry