Korn Ferry Announces Record First Quarter Fiscal 2022 Results of Operations | Financial Buzz

Korn Ferry Announces Record First Quarter Fiscal 2022 Results of Operations

Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced record first quarter fee revenue of $585.4 million. In addition, first quarter diluted earnings per share was $1.37, an all-time high.

“I am extremely pleased with our results during the fiscal first quarter, as Korn Ferry once again achieved all-time financial performance highs. We generated a record $585 million in fee revenue, up 70% year over year. Our profitability was also strong with diluted earnings per share at $1.37 and Adjusted EBITDA margin at 20.7%,” said Gary D. Burnison, CEO, Korn Ferry.

“The purposeful decisions and moves we’ve made with great intention throughout the years have now come together in a critical mass of opportunity. As a result, today’s Korn Ferry is the right firm for the right time, offering scaled capabilities that include organizational strategy, leadership and professional development, assessment and succession, rewards, talent acquisition and more. From the depth of pandemic lockdowns and economic contractions, we are truly helping clients in this digitally enabled, new world of work. I am grateful for the grit and grace demonstrated by our colleagues who have propelled our firm to new heights.”

Selected Financial Results

(dollars in millions, except per share amounts) (a)

 

 

First Quarter

 

 

FY’22

 

FY’21

Fee revenue

 

$

585.4

 

 

$

344.1

 

Total revenue

 

$

588.1

 

 

$

346.9

 

Operating income (loss)

 

$

101.3

 

 

$

(43.8

)

Operating margin

 

 

17.3

%

 

 

(12.7

%)

Net income (loss) attributable to Korn Ferry

 

$

74.8

 

 

$

(30.8

)

Basic earnings (loss) per share

 

$

1.38

 

 

$

(0.58

)

Diluted earnings (loss) per share

 

$

1.37

 

 

$

(0.58

)

Adjusted Results (b):

 

First Quarter

 

 

FY’22

 

FY’21

Adjusted EBITDA

 

$

121.3

 

 

$

10.6

 

Adjusted EBITDA margin

 

 

20.7

%

 

 

3.1

%

Adjusted net income (loss) attributable to Korn Ferry

 

$

74.8

 

 

$

(10.2

)

Adjusted basic earnings (loss) per share

 

$

1.38

 

 

$

(0.19

)

Adjusted diluted earnings (loss) per share

 

$

1.37

 

 

$

(0.19

)

___________

(a)

Numbers may not total due to rounding.

(b)

Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs and net restructuring charges when applicable. Adjusted results on a consolidated basis are non-GAAP financial measures that adjust for the following, as applicable (see attached reconciliations):

 

 

First Quarter

 

 

FY’22

 

FY’21

Integration/acquisition costs

 

$

 

 

$

0.7

 

Restructuring charges, net

 

$

 

 

$

27.5

 

The Company reported record fee revenue in Q1 FY’22 of $585.4 million, an increase of 70% (up 63% on a constant currency basis) compared to Q1 FY’21. Fee revenue increased in all lines of business. The increase in fee revenue when compared to Q1 FY’21 was primarily due to the increasing relevance of the Company’s solutions in helping businesses solve their organizational and human capital issues in today’s business environment, as well as the Company’s recovery from the economic impact of the coronavirus pandemic (“COVID-19”) which adversely impacted the Company on a worldwide basis in Q1 FY’21.

Operating margin was 17.3% in Q1 FY’22 compared to (12.7%) in the year-ago quarter. Adjusted EBITDA margin was 20.7%, compared to Adjusted EBITDA margin of 3.1% in the year-ago quarter. Net income attributable to Korn Ferry was $74.8 million in Q1 FY’22 compared to net loss attributable to Korn Ferry of $30.8 million in Q1 FY’21.

The year-over-year improvement in each of the above measures of profitability was due to the increase in fee revenue discussed above, as well as cost savings realized from work being conducted virtually. Partially offsetting this were increases in both compensation and benefits expense and cost of services expense due in large part to an increase in new business and the related fee revenue. The increase in compensation and benefits expense was driven by higher salaries and related payroll taxes and performance related bonus expense due to revenue growth through the recovery combined with an increase in overall profitability and headcount. In addition, the profitability in operating income improved as we did not incur restructuring charges in Q1 FY’22 as compared to $27.5 million incurred in Q1 FY’21.

Results by Line of Business

Selected Consulting Data

(dollars in millions) (a)

 

 

First Quarter

 

 

FY’22

 

FY’21

Fee revenue

 

$

148.5

 

 

$

99.3

 

Total revenue

 

$

149.0

 

 

$

99.6

 

 

 

 

 

 

 

 

 

 

Ending number of consultants and execution staff (b)

 

 

1,651

 

 

 

1,511

 

Hours worked in thousands (c)

 

 

426

 

 

 

367

 

Average billed rate (d)

 

$

349

 

 

$

271

 

Adjusted Results (e):

 

First Quarter

 

 

FY’22

 

FY’21

Adjusted EBITDA

 

$

26.8

 

 

$

6.6

 

Adjusted EBITDA margin

 

 

18.1

%

 

 

6.6

%

___________

(a)

Numbers may not total due to rounding.

(b)

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

(c)

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

(d)

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

(e)

Adjusted results exclude the following:

 

 

First Quarter

 

 

FY’22

 

FY’21

Restructuring charges, net

 

$

 

 

$

12.7

 

Fee revenue was $148.5 million in Q1 FY’22 compared to $99.3 million in Q1 FY’21, an increase of $49.2 million or 50% (up 44% on a constant currency basis). The increase in fee revenue was due to the diversity and increasing relevance of our consulting services and our ability to adapt to delivering the services in a virtual world as well as the Company’s recovery from the economic impact of COVID-19, which negatively impacted the Company on a worldwide basis in Q1 FY’21.

Adjusted EBITDA was $26.8 million in Q1 FY’22 with an Adjusted EBITDA margin of 18.1% compared to Adjusted EBITDA of $6.6 million with an associated margin of 6.6%, respectively, in the year-ago quarter. This change resulted from the increase in fee revenue outlined above, as well as cost savings realized from work being conducted virtually. These changes were partially offset by increases in both compensation and benefits expense and cost of services expense due in large part to an increase in new business and the related fee revenue. The increase in compensation and benefits expense was driven by higher salaries and related payroll taxes and performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability and headcount.

Selected Digital Data

(dollars in millions) (a)

Digital leverages an artificial intelligence powered, machine-learning platform to identify the best structures, roles, capabilities, and behaviors needed to drive business forward. This end-to-end platform combines Korn Ferry proprietary data, client data, and external market data to help make better, faster decisions about organizations, leadership, and people.

 

 

First Quarter

 

 

FY’22

 

FY’21

Fee revenue

 

$

80.7

 

 

$

56.0

 

Total revenue

 

$

80.7

 

 

$

56.0

 

 

 

 

 

 

 

 

 

 

Ending number of consultants

 

 

297

 

 

 

352

 

Subscription & License fee revenue

 

$

24.4

 

 

$

21.1

 

Adjusted Results (b):

 

First Quarter

 

 

FY’22

 

FY’21

Adjusted EBITDA

 

$

25.6

 

 

$

7.9

 

Adjusted EBITDA margin

 

 

31.8

%

 

 

14.2

%

___________

(a)

Numbers may not total due to rounding.

(b)

Adjusted results exclude the following:

 

 

First Quarter

 

 

FY’22

 

FY’21

Integration/acquisition costs

 

$

 

 

$

0.6

 

Restructuring charges, net

 

$

 

 

$

2.9

 

Fee revenue was $80.7 million in Q1 FY’22 compared to $56.0 million in Q1 FY’21, an increase of $24.7 million or 44% (up 39% on a constant currency basis). The increase in fee revenue was due to the Company’s recovery from the economic impact of COVID-19, which negatively impacted the Company on a worldwide basis in Q1 FY’21. As economies around the world recover and companies pivot from in person training to virtual delivery of training courses, the demand for our digital products and services continues to recover, which resulted in an increase in fee revenue on a worldwide basis in Q1 FY’22.

Adjusted EBITDA was $25.6 million in Q1 FY’22 with an Adjusted EBITDA margin of 31.8% compared to $7.9 million and 14.2%, respectively, in the year-ago quarter. Contributing to the increase were higher fee revenues as well as cost savings realized from work being conducted virtually. Partially offsetting this were increases in compensation and benefits expense and cost of services expense. The increase in compensation and benefits expense was driven by higher salaries and related payroll taxes and commission expenses as a result of revenue growth through the recovery.

Selected Executive Search Data(a)

(dollars in millions) (b)

 

 

First Quarter

 

 

FY’22

 

FY’21

Fee revenue

 

$

216.9

 

 

$

120.1

 

Total revenue

 

$

217.7

 

 

$

120.9

 

 

 

 

 

 

 

 

 

 

Ending number of consultants

 

 

565

 

 

 

510

 

Average number of consultants

 

 

544

 

 

 

533

 

Engagements billed

 

 

4,175

 

 

 

2,671

 

New engagements (c)

 

 

1,745

 

 

 

1,115

 

Adjusted Results (d):

 

First Quarter

 

 

FY’22

 

FY’21

Adjusted EBITDA

 

$

61.6

 

 

$

8.1

 

Adjusted EBITDA margin

 

 

28.4

%

 

 

6.7

%

________

(a)

Executive Search is the sum of the individual Executive Search Reporting Segments and is presented on a consolidated basis as it is consistent with the Company’s discussion of its Lines of Business, and financial metrics used by the Company’s investor base.

(b)

Numbers may not total due to rounding.

(c)

Represents new engagements opened in the respective period.

(d)

Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures that adjust for the following:

 

 

First Quarter

 

 

FY’22

 

FY’21

Restructuring charges, net

 

$

 

 

$

9.2

 

Fee revenue was $216.9 million and $120.1 million in Q1 FY’22 and Q1 FY’21, respectively, a year-over-year increase of $96.8 million or 81% (up 74% on a constant currency basis). Fee revenue increased in all regions with the largest increase in North America where demand for our products and services has exceeded pre-pandemic levels in conjunction with the worldwide economic recovery.

Adjusted EBITDA was $61.6 million in Q1 FY’22 with an Adjusted EBITDA margin of 28.4% compared to Adjusted EBITDA of $8.1 million and Adjusted EBITDA margin of 6.7%, respectively, in the year-ago quarter. This change resulted from an increase in fee revenue due to the Company’s recovery from the economic impact of COVID-19 as well as cost savings realized from work being conducted virtually. These changes were offset by an increase in compensation and benefits expense due to an increase in salaries and related payroll taxes and performance related bonus expense as a result of revenue growth through the recovery combined with an increase in overall profitability and headcount.

Selected RPO and Professional Search Data

(dollars in millions) (a)

 

 

First Quarter

 

 

FY’22

 

FY’21

Fee revenue

 

$

139.3

 

 

$

68.7

 

Total revenue

 

$

140.8

 

 

$

70.4

 

 

 

 

 

 

 

 

 

 

Engagements billed (b)

 

 

1,824

 

 

 

1,027

 

New engagements (c)

 

 

988

 

 

 

564

 

Adjusted Results (d):

 

First Quarter

 

 

FY’22

 

FY’21

Adjusted EBITDA

 

$

34.0

 

 

$

6.0

 

Adjusted EBITDA margin

 

 

24.4

%

 

 

8.8

%

___________

(a)

Numbers may not total due to rounding.

(b)

Represents professional search engagements billed.

(c)

Represents new professional search engagements opened in the respective period.

(d)

Adjusted results exclude the following:

 

 

First Quarter

 

 

FY’22

 

FY’21

Restructuring charges, net

 

$

 

 

$

2.7

 

Fee revenue was $139.3 million in Q1 FY’22, an increase of $70.6 million or 103% (up 93% on a constant currency basis), compared to the year-ago quarter. The higher fee revenue was driven by an increase in recruitment process outsourcing (“RPO”) fee revenue of $43.1 million or 97% (87% at constant currency) and an increase in Professional Search fee revenue of $27.6 million or 114% (105% at constant currency) due to the wider adoption of RPO services in the market and the Company’s recovery from the economic impact of COVID-19, which negatively impacted the Company on a worldwide basis in Q1 FY’21.

Adjusted EBITDA was $34.0 million in Q1 FY’22 with an Adjusted EBITDA margin of 24.4% in Q1 FY’22 compared to $6.0 million and 8.8%, respectively, in the year-ago quarter. The increase in Adjusted EBITDA was due to the higher fee revenue discussed above, as well as cost savings realized from work being conducted virtually. Partially offsetting this were increases in compensation and benefits expense and cost of services expense. The increase in compensation and benefits was driven by higher salaries and related payroll taxes and performance related bonus expense as a result of revenue growth through the recovery combined with an increase in overall profitability and headcount.

Outlook

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

  • Q2 FY’22 fee revenue is expected to be in the range of $585 million and $615 million; and
  • Q2 FY’22 diluted earnings per share is expected to range between $1.30 to $1.44.

Earnings Conference Call Webcast

The earnings conference call will be held today at 12:00 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 our outlook, projections, goals, strategies, future plans and expectations, and other statements of future events or conditions are forward-looking statements that involve a number of risks and uncertainties. Words such as “believes”, “expects”, “anticipates”, “goals”, “estimates”, “guidance”, “may”, “should”, “could”, “will” or “likely”, and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements that refer to or are based on estimates, forecasts, projections, uncertain events or assumptions, including statements relating to expected demand for our products and services, the magnitude and duration of the impact of the COVID-19 outbreak on our business, employees, customers and our ability to provide services in affected regions, and the potential opportunities for our business as a result of worldwide changes in how companies conduct business as a result of COVID-19. Readers are cautioned not to place undue reliance on such statements. Such statements are based on current expectations; actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn Ferry. The potential risks and uncertainties include those relating to the ultimate magnitude and duration of COVID-19 and any future pandemic or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to provide services in affected regions, global and local political or economic developments in or affecting countries where we have operations, competition, changes in demand for our services as a result of automation, the dependence on and costs of attracting and retaining qualified and experienced consultants, our ability to maintain relationships with customers and suppliers and retain key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, the portability of client relationships, consolidation of the industries we serve, changes and developments in government laws and regulations, evolving investor and customer expectations with regard to environmental matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities, changes to data security, data privacy and data protection laws, limited protection of our intellectual property, our ability to enhance and develop new technology, our ability to develop new products and services, the utilization and billing rates of our consultants, dependence on third parties for the execution of critical functions, our ability to successfully recover from a disaster or other business continuity problems, changes in our accounting estimates/assumptions, technical guidance relating to the Tax Act, treaties, or regulations on our business and our company, impairment of goodwill and other intangible assets, deferred tax assets that we may not be able to use, our indebtedness, the phase-out of the London Interbank Offered Rate, the withdrawal of the United Kingdom from the European Union, expansion of social media platforms, seasonality, ability to effect acquisition and integrate 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 (loss) attributable to Korn Ferry, adjusted to exclude integration/acquisition costs and restructuring charges net of income tax effect;
  • Adjusted basic and diluted earnings (loss) per share, adjusted to exclude integration/acquisition costs and restructuring charges net of income tax effect;
  • Constant currency (calculated using a quarterly average) percentages that represent the percentage change that would have resulted had exchange rates in the prior period been the same as those in effect in the current period;
  • Consolidated and Executive Search Adjusted EBITDA, which is earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs and restructuring charges, and Consolidated and Executive Search Adjusted EBITDA margin.

This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Management believes the presentation of non-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges that may not be indicative of Korn Ferry’s ongoing operating results. These non-GAAP financial measures are performance measures and are not indicative of the liquidity of Korn Ferry. These charges, which are described in the footnotes in the attached reconciliations, represent 1) costs we incurred to acquire and integrate a portion of our Digital business and 2) charges we incurred to restructure the Company as a result of COVID-19. 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 (loss) attributable to Korn Ferry, adjusted basic and diluted earnings (loss) per share and Consolidated and Executive Search 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 Consolidated and Executive Search Adjusted 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,

 

 

2021

 

2020

 

 

(unaudited)

Fee revenue

 

$

585,395

 

 

$

344,097

 

Reimbursed out-of-pocket engagement expenses

 

 

2,703

 

 

 

2,786

 

Total revenue

 

 

588,098

 

 

 

346,883

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

396,236

 

 

 

284,012

 

General and administrative expenses

 

 

50,267

 

 

 

47,089

 

Reimbursed expenses

 

 

2,703

 

 

 

2,786

 

Cost of services

 

 

21,993

 

 

 

14,269

 

Depreciation and amortization

 

 

15,644

 

 

 

15,035

 

Restructuring charges, net

 

 

 

 

 

27,487

 

Total operating expenses

 

 

486,843

 

 

 

390,678

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

101,255

 

 

 

(43,795

)

Other income, net

 

 

4,447

 

 

 

11,162

 

Interest expense, net

 

 

(5,426

)

 

 

(6,894

)

Income (loss) before provision (benefit) for income taxes

 

 

100,276

 

 

 

(39,527

)

Income tax provision (benefit)

 

 

23,879

 

 

 

(8,672

)

Net income (loss)

 

 

76,397

 

 

 

(30,855

)

Net (income) loss attributable to noncontrolling interest

 

 

(1,574

)

 

 

22

 

Net income (loss) attributable to Korn Ferry

 

$

74,823

 

 

$

(30,833

)

 

 

 

 

 

 

 

Earnings (loss) per common share attributable to Korn Ferry:

 

 

 

 

 

 

Basic

 

$

1.38

 

 

$

(0.58

)

Diluted

 

$

1.37

 

 

$

(0.58

)

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

52,760

 

 

 

53,264

 

Diluted

 

 

53,320

 

 

 

53,264

 

 

 

 

 

 

 

 

Cash dividends declared per share:

 

$

0.12

 

 

$

0.10

 

KORN FERRY AND SUBSIDIARIES

FINANCIAL SUMMARY BY REPORTING SEGMENT

(dollars in thousands)

(unaudited)

 

 

 

Three Months Ended July 31,

 

 

2021

 

 

 

2020

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

$

148,478

 

 

 

 

$

99,318

 

 

 

49.5

%

Digital

 

 

80,671

 

 

 

 

 

55,973

 

 

 

44.1

%

Executive Search:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

138,678

 

 

 

 

 

69,315

 

 

 

100.1

%

EMEA

 

 

42,747

 

 

 

 

 

30,081

 

 

 

42.1

%

Asia Pacific

 

 

28,703

 

 

 

 

 

17,252

 

 

 

66.4

%

Latin America

 

 

6,776

 

 

 

 

 

3,495

 

 

 

93.9

%

Total Executive Search (a)

 

 

216,904

 

 

 

 

 

120,143

 

 

 

80.5

%

RPO and Professional Search

 

 

139,342

 

 

 

 

 

68,663

 

 

 

102.9

%

Total fee revenue

 

 

585,395

 

 

 

 

 

344,097

 

 

 

70.1

%

Reimbursed out-of-pocket engagement expenses

 

 

2,703

 

 

 

 

 

2,786

 

 

 

(3.0

%)

Total revenue

 

$

588,098

 

 

 

 

$

346,883

 

 

 

69.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Total Executive Search is the sum of the individual Executive Search Reporting Segments and is presented on a consolidated basis as it is consistent with the Company’s discussion of its Lines of Business, and financial metrics used by the Company’s investor base.

KORN FERRY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

 

 

July 31,

 

April 30,

 

 

2021

 

2021

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

649,304

 

 

$

850,778

 

Marketable securities

 

 

68,247

 

 

 

63,667

 

Receivables due from clients, net of allowance for doubtful accounts of $32,039 and $29,324 at July 31, 2021 and April 30, 2021, respectively

 

 

512,921

 

 

 

448,733

 

Income taxes and other receivables

 

 

34,113

 

 

 

40,024

 

Unearned compensation

 

 

61,293

 

 

 

53,206

 

Prepaid expenses and other assets

 

 

41,049

 

 

 

30,724

 

Total current assets

 

 

1,366,927

 

 

 

1,487,132

 

 

 

 

 

 

 

 

Marketable securities, non-current

 

 

186,735

 

 

 

182,692

 

Property and equipment, net

 

 

129,056

 

 

 

131,778

 

Operating lease right-of-use assets, net

 

 

162,941

 

 

 

174,121

 

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

 

 

163,210

 

 

 

161,295

 

Deferred income taxes

 

 

68,179

 

 

 

73,106

 

Goodwill

 

 

625,395

 

 

 

626,669

 

Intangible assets, net

 

 

88,156

 

 

 

92,949

 

Unearned compensation, non-current

 

 

131,543

 

 

 

102,356

 

Investments and other assets

 

 

20,339

 

 

 

24,428

 

Total assets

 

$

2,942,481

 

 

$

3,056,526

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Accounts payable

 

$

46,945

 

 

$

44,993

 

Income taxes payable

 

 

28,578

 

 

 

23,041

 

Compensation and benefits payable

 

 

220,948

 

 

 

394,606

 

Operating lease liability, current

 

 

47,394

 

 

 

47,986

 

Other accrued liabilities

 

 

239,673

 

 

 

239,444

 

Total current liabilities

 

 

583,538

 

 

 

750,070

 

 

 

 

 

 

 

 

Deferred compensation and other retirement plans

 

 

363,543

 

 

 

346,455

 

Operating lease liability, non-current

 

 

143,378

 

 

 

155,998

 

Long-term debt

 

 

394,962

 

 

 

394,794

 

Deferred tax liabilities

 

 

3,607

 

 

 

3,832

 

Other liabilities

 

 

32,283

 

 

 

36,602

 

Total liabilities

 

 

1,521,311

 

 

 

1,687,751

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock: $0.01 par value, 150,000 shares authorized, 75,420 and 74,915 shares issued and 54,506 and 54,008 shares outstanding at July 31, 2021 and April 30, 2021, respectively

 

 

574,123

 

 

 

583,260

 

Retained earnings

 

 

902,906

 

 

 

834,949

 

Accumulated other comprehensive loss, net

 

 

(59,843

)

 

 

(51,820

)

Total Korn Ferry stockholders’ equity

 

 

1,417,186

 

 

 

1,366,389

 

Noncontrolling interest

 

 

3,984

 

 

 

2,386

 

Total stockholders’ equity

 

 

1,421,170

 

 

 

1,368,775

 

Total liabilities and stockholders’ equity

 

$

2,942,481

 

 

$

3,056,526

 

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended

 

July 31,

 

2021

 

2020

 

 

Net income (loss) attributable to Korn Ferry

$

74,823

 

 

$

(30,833

)

Net income (loss) attributable to non-controlling interest

 

1,574

 

 

 

(22

)

Net income (loss)

 

76,397

 

 

 

(30,855

)

Income tax provision (benefit)

 

23,879

 

 

 

(8,672

)

Income (loss) before provision (benefit) for income taxes

 

100,276

 

 

 

(39,527

)

Other (income), net

 

(4,447

)

 

 

(11,162

)

Interest expense, net

 

5,426

 

 

 

6,894

 

Operating income (loss)

 

101,255

 

 

 

(43,795

)

Depreciation and amortization

 

15,644

 

 

 

15,035

 

Other income, net

 

4,447

 

 

 

11,162

 

Integration/acquisition costs (1)

 

 

 

 

737

 

Restructuring charges, net (2)

 

 

 

 

27,487

 

Adjusted EBITDA

$

121,346

 

 

$

10,626

 

 

 

 

 

 

 

Operating margin

 

17.3

%

 

 

(12.7

%)

Depreciation and amortization

 

2.7

%

 

 

4.4

%

Other income, net

 

0.7

%

 

 

3.2

%

Integration/acquisition costs (1)

 

 

 

 

0.2

%

Restructuring charges, net (2)

 

 

 

 

8.0

%

Adjusted EBITDA margin

 

20.7

%

 

 

3.1

%

 

 

 

 

 

 

Net income (loss) attributable to Korn Ferry

$

74,823

 

 

$

(30,833

)

Integration/acquisition costs (1)

 

 

 

 

737

 

Restructuring charges, net (2)

 

 

 

 

27,487

 

Tax effect on the adjusted items (3)

 

 

 

 

(7,604

)

Adjusted net income (loss) attributable to Korn Ferry

$

74,823

 

 

$

(10,213

)

 

 

 

 

 

 

Basic earnings (loss) per common share

$

1.38

 

 

$

(0.58

)

Integration/acquisition costs (1)

 

 

 

 

0.01

 

Restructuring charges, net (2)

 

 

 

 

0.52

 

Tax effect on the adjusted items (3)

 

 

 

 

(0.14

)

Adjusted basic earnings (loss) per share

$

1.38

 

 

$

(0.19

)

 

 

 

 

 

 

Diluted earnings (loss) per common share

$

1.37

 

 

$

(0.58

)

Integration/acquisition costs (1)

 

 

 

 

0.01

 

Restructuring charges, net (2)

 

 

 

 

0.52

 

Tax effect on the adjusted items (3)

 

 

 

 

(0.14

)

Adjusted diluted earnings (loss) per share

$

1.37

 

 

$

(0.19

)

Explanation of Non-GAAP Adjustments

(1)

Costs associated with the acquisition of a portion of our Digital business, such as legal and professional fees, retention awards and the on-going integration expenses to combine the companies.

(2)

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

(3)

Tax effect on integration/acquisition costs and restructuring charges, net.

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) AND

OPERATING INCOME (LOSS) (GAAP) TO ADJUSTED EBITDA (NON-GAAP)

(in thousands)

(unaudited)

 

 

 

Three Months Ended July 31, 2021

 

 

 

 

 

 

 

 

Executive Search

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

Digital

 

North

America

 

EMEA

 

Asia

Pacific

 

Latin

America

 

Subtotal

 

RPO and

Professional

Search

 

Corporate

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee revenue

 

$

148,478

 

 

$

80,671

 

 

$

138,678

 

 

$

42,747

 

 

$

28,703

 

 

$

6,776

 

 

$

216,904

 

 

$

139,342

 

 

$

 

 

$

585,395

 

Total revenue

 

$

149,007

 

 

$

80,681

 

 

$

139,300

 

 

$

42,843

 

 

$

28,732

 

 

$

6,779

 

 

$

217,654

 

 

$

140,756

 

 

$

 

 

$

588,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Korn Ferry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

74,823

 

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,574

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,447

)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,426

 

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,879

 

Operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101,255

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,644

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,447

 

Adjusted EBITDA

 

$

26,841

 

 

$

25,632

 

 

$

43,330

 

 

$

7,585

 

 

$

8,320

 

 

$

2,354

 

 

$

61,589

 

 

$

33,967

 

 

$

(26,683

)

 

$

121,346

 

Adjusted EBITDA margin

 

 

18.1

%

 

 

31.8

%

 

 

31.2

%

 

 

17.7

%

 

 

29.0

%

 

 

34.7

%

 

 

28.4

%

 

 

24.4

%

 

 

 

 

 

20.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended July 31, 2020

 

 

 

 

 

 

 

 

Executive Search

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

Digital

 

North

America

 

EMEA

 

Asia

Pacific

 

Latin

America

 

Subtotal

 

RPO and

Professional

Search

 

Corporate

 

Consolidated

Fee revenue

 

$

99,318

 

 

$

55,973

 

 

$

69,315

 

 

$

30,081

 

 

$

17,252

 

 

$

3,495

 

 

$

120,143

 

 

$

68,663

 

 

$

 

 

$

344,097

 

Total revenue

 

$

99,590

 

 

$

56,022

 

 

$

69,856

 

 

$

30,195

 

 

$

17,340

 

 

$

3,495

 

 

$

120,886

 

 

$

70,385

 

 

$

 

 

$

346,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Korn Ferry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(30,833

)

Net loss attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22

)

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,162

)

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,894

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,672

)

Operating loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(43,795

)

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,035

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,162

 

Integration/acquisition costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

737

 

Restructuring, charges, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,487

 

Adjusted EBITDA

 

$

6,604

 

 

$

7,943

 

 

$

5,312

 

 

$

1,710

 

 

$

1,594

 

 

$

(562

)

 

$

8,054

 

 

$

6,024

 

 

$

(17,999

)

 

$

10,626

 

Adjusted EBITDA margin

 

 

6.6

%

 

 

14.2

%

 

 

7.7

%

 

 

5.7

%

 

 

9.2

%

 

 

(16.1

%)

 

 

6.7

%

 

 

8.8

%

 

 

 

 

 

3.1

%

 

Contacts

Investor Relations: Gregg Kvochak, (310) 556-8550

Media: Dan Gugler, (310) 226-2645

Opt-into our eNewsletter NOW! For the Latest Trending Financial News Topics in Cannabis, Tech, Biotechs, Precious Metals, Energy, Renewable Energy and much more!